When a NY Defendant Moves to Brazil, Can You Still Sue?
This post is a little bit of a change of pace for us because it concerns the mechanics of initiating a lawsuit, rather than substantive legal issues of interest to managers and business owners.
We review a recent decision of the New York Court of Appeals which held that service of process outside the state may be made by any method valid within the state, as long as New York has jurisdiction. For our non-lawyer readers: service of process (normally, delivery of a summons and complaint in civil cases) on the defendant is essential for a court to obtain personal jurisdiction over the defendant and, therefore, essential to begin a lawsuit.
The case was brought to our attention by the New York Law Digest, No. 589, January 2009, edited by David D. Siegel, perhaps the top authority on New York civil procedure, and distributed via e-mail by the New York State Bar Association. The case is Morgenthau v. Avion Resources, Ltd., 11 N.Y.3d 383 (2008).
In this case, the defendants were in Brazil. But, the decision is applicable to service outside New York generally. The case involved an attempt to seize assets in New York for wrong-doing in Brazil. Under the circumstances of the case, there was no dispute that the New York courts had subject matter jurisdiction – the courts had jurisdiction over the dispute. The issue that went to New York’s highest court was whether the methods of service that were valid under New York law were also valid out of state.
To shorten the suspense, the Court said, “yes.”
First, the New York statute in question, N.Y.C.P.L.R. §313, does not require that service adhere to local (in this case, Brazilian) law. As an appellate court is sometimes apt to do, it reminds us all that when interpreting a statute, we need to be mindful of what the statute doesn’t say as well as what it does say. The statute does not say that it is necessary to comply with methods of service prescribed by (out-of-state) local law.
In addition, the Court points out that the concept of comity does not apply. Comity is a concept that involves a “spirit of cooperation” between the courts of different sovereign states (including other states in the U.S. and in foreign countries). However, the Court said:
we have never applied the doctrine to import the laws of a foreign country into a New York lawsuit -- and we decline to do so in this case.
International Treaties, of which the United States is a signatory, can mandate a particular method of service. But, Brazil is not a signatory to one treaty that does mandate a method and it is a signatory to another that does not mandate a method of service. That, made the case for this plaintiff. But, note that other countries may have signed treaties that do mandate a method of service.
I’m sure the defendants in this case were fairly frustrated. But, the bottom line is that the defendants were required to defend the lawsuit in a New York court. And, applying the case generally, if the defendant (or the person you would like to make a defendant) moves to Brazil, yes, under circumstances similar to this case, you can still sue.
What is the takeaway or, at least, the relevance? An important technical rule was clarified. Had the decision gone the other way, it could have stymied many attempts to even begin a lawsuit if the defendant was not within the borders of New York. Remember, the rule is as applicable with respect to an adjacent state as it is to Brazil. Thus, while it may be rare to deal with a defendant in a distant foreign country that has not signed a treaty that mandates the method of service, disputes crossing neighboring states are far more common and not subject to treaties.
Image: Locator map for Brazil; Wikipedia Commons
