News & Noteworthy

Authored - NJ Contract Law Update - 'Where To Sue' (Redux)
NOVEMBER 06, 2012

Stan v. Smith, 2012 WL 4490560 (N.J.App.Div. Sept. 19, 2012), dealt with the question of personal jurisdiction arising out of a contract. In this case, the facts and resolution were simple.

The Stans had purchased a New Jersey home from the Smiths. The Smiths then moved to Florida. The Stans complained about flooding in the home, repaired the home, and sued for that cost. The question was whether under those facts a lawsuit could be maintained against the Smiths in New Jersey, even though they ostensibly had cut all contacts with the State.

The Court's answer to this central question was direct:1 because "the Stans' claims relate to the New Jersey residential property they purchased from the Smiths...the court had personal jurisdiction over the Smiths". The Court invoked familiar principles regarding "specific" in personam jurisdiction relating to the subject matter of the dispute, as opposed to general contacts with the State.

The moral of the case is this: if you enter into a transaction in New Jersey, especially but not limited to sale of a home, you may have to expect to return to New Jersey to litigate issues arising from that transaction--especially where the property is New Jersey-specific, such as realty.

If you wish a different result, your counsel must draft a forum selection clause that varies from the common-law rule applied by the Stan Court. Remember that you cannot arbitrarily pick a jurisdiction and have the courts enforce that choice; the forum chosen has to have some reasonable relationship to the matter. Whether the hypothetical choice of Florida as a forum in Stan would have prevailed under that standard is beyond the scope of this Article.

Contact & Legal Disclaimer

Clark Alpert is the author of Guide to New Jersey Contract Law, published by the New Jersey Institute for Continuing Legal Education, originally published in 2007 and updated in November 2011. His updates on New Jersey contract law are based in recent issues and practical methods for addressing similar situations in your practice or business. They are not intended to serve as legal advice. Clark welcomes your questions and comments.

1 The procedural issues in the case are not dealt with in this Article.

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