In a New York Conflict of Law Professional Malpractice Action, Appellate Court Affirmed Plaintiff Did Not Show that New Jersey Had Substantial Interest in the Litigation.

This matter deals with a conflict of law related to a professional malpractice action. The plaintiff, JZS, a New York company with a principal place of business in New Jersey, sued Kramer Levin Naftalis & Frankel, LLP, a New York law firm, and Jay Neveloff, Esq., a partner in the firm and a member of the New York Bar, for legal malpractice. 

Suit was filed in New Jersey, which has a six-year statute of limitations on professional malpractice claims. New York has a statute of limitations of three years. After limited discovery on this issue, the defendants filed a motion to dismiss, taking the position this was a New York matter and the New York statute of limitations applied. The defendants argued the plaintiff filed its complaint after the expiration of the New York statute of limitations and, therefore, the matter should be dismissed with prejudice. The trial court dismissed the matter with prejudice, holding that New York law applied on this issue and that the plaintiff failed to comply with the applicable statute of limitations. 

The plaintiff appealed, and the appellate court affirmed the trail court decision. The appellate court, applying the test set forth in McCarrell v. Hoffman-LaRouche, Inc., 227 N.J. 569 (2017), held that the plaintiff had failed to show that New Jersey had a substantial interest in the litigation. The fact that the plaintiff’s principal place of business was in New Jersey, its manager was a New Jersey resident and could be financially harmed, did not create a substantial interest in New Jersey. This was the matter’s only connection to New Jersey. All other information uncovered during discovery revealed that nearly all relevant facts point toward New York, including: (1) JZS had no certificate of authority to do business in New Jersey; (2) JZS did not own or lease any New Jersey real estate; (3) JZS was formed to own properties in New York; and (4) JZS’s registered office and registered agent were located in New York.

Based on the above, the court affirmed the trial court’s decision, dismissing the plaintiff’s complaint with prejudice for failure to comply with the New York statute of limitations. 

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