The Rhode Island Supreme Court has held that a defendant forfeited his personal jurisdiction defense asserted in his answer by participating in extensive discovery and court-annexed arbitration before moving to dismiss on the eve of trial. Pullar v. Cappelli, No. 2015-303-Appeal, slip opinion (Nov. 17, 2016).
Defendant negotiated a contract with plaintiff in which plaintiff agreed to serve as the captain of a sailboat for three years. Plaintiff was a resident of Rhode Island at the time. Defendant was a New York resident. Defendant terminated the contract without cause. Plaintiff sued defendant in Superior Court alleging breach of contract. Defendant filed an answer asserting lack of personal jurisdiction.
Defendant served interrogatories, deposed plaintiff and moved to compel production of documents. Defendant participated in a court-annexed, non-binding arbitration that resulted in an award for plaintiff. Defendant rejected the award. Plaintiff moved to assign the case to trial. Defendant moved to assign the case to the continuous jury trial calendar. There was a hearing on defendant’s motion and the motion was granted. Defendant then moved to dismiss the case for lack of personal jurisdiction. Defendant argued that the actual owner of the sailboat was a corporation and, although he was an officer of the corporation, there could not be personal jurisdiction over him merely based on his corporate position. The Superior Court granted the motion to dismiss and plaintiff appealed.
On appeal, the Rhode Island Supreme Court looked to federal decisions for guidance. It commented that federal courts consistently hold that a defendant has forfeited a personal jurisdiction defense asserted in an answer by failing seasonably to argue its defense. The court said the defendant had participated extensively in the litigation, especially an arbitration, before pressing its defense. “[A] defendant forfeits the defense of lack of personal jurisdiction when the defendant, through delay or conduct, ‘give[s] a plaintiff a reasonable expectation that it will defend the suit on the merits or…cause[s] the court to go to some effort that would be wasted if personal jurisdiction is later found lacking.'” Id. at 10, quoting Mobile Anesthesiologists Chicago, LLC v. Anesthesia Associates of Houston Metroplex, PA., 623 F.3d 440, 443 (7th Cir. 2010). The Court held that “defendant had forfeited his jurisdictional defense through unjustified delay and active participation in litigation proceedings…” Id. at 11.
The lesson for out-of-state defendants sued in Rhode Island is to preserve the personal jurisdiction defense by asserting it in answer and by promptly moving to dismiss when the grounds for the motion have become clear. Failing to do so may result in the defense deemed forfeit.
Pullar v. Cappelli, No. 2015-303-Appeal, slip opinion (Nov. 17, 2016). This opinion is available at https://www.courts.ri.gov/Courts/SupremeCourt/SupremeOpinions/15-303.pdf
For information about our business litigation practice, please see /Practice-Areas/Business-Commercial-Litigation.shtml