The facts of this dispute are uncontested and clear. Carteret purposefully and without any solicitation, engaged the Louisiana law firm of Shushan, Meyer, Jackson, McPherson and Herzog to act as local counsel for Carteret in granting a loan on a Louisiana construction project known as Three Lakeway. As local counsel, the firm prepared all the relevant documents for the loan in Louisiana. On May 29, 1985, Louis Shushan ("Shushan") came to New Jersey to meet with Carteret to review documents relevant to the loan.
The loan was finalized and a closing was held in Louisiana on June 12, 1985. In connection with the Three Lakeway loan, Carteret entered into a Contractor's Consent Agreement with the project's general contractor, Algernon Blair. This Agreement provided that in the event of any default by the Borrower, Carteret agreed to pay Blair for any work done prior to the default. The Agreement also provided that the laws of Louisiana would govern any questions related to the Consent Agreement.
The borrower subsequently defaulted and, in an action litigated in the United States District Court for the Eastern District of Louisiana, Carteret was found liable to Algernon Blair and a judgment was entered against Carteret for approximately $ 1.5 million dollars.
Carteret then commenced this action in New Jersey alleging that Shushan fraudulently and surreptitiously inserted the default provision in the consent agreement to benefit his longtime client Algernon Blair. Carteret relies on Shushan's trip to New Jersey, allegedly in furtherance of his fraudulent scheme, as the significant New Jersey contact allowing this Court to exercise jurisdiction over Shushan. The facts and law, however, do not support this conclusion.
This Court can exercise jurisdiction over a non-resident of the state in which the Court sits only to "the extent authorized by the laws of that state." See Provident National Bank v. California Federal Savings & Loan Association, 819 F.2d 434, 436 (3d Cir. 1987). In New Jersey, courts are permitted to exercise jurisdiction to the outer limits of due process. See New Jersey Civil Practice Rules, R. 4:4-4(c). Jurisdiction is therefore permitted to the fullest extent under the Constitution. See Avdel Corp. v. MeCure, 58 N.J. 264, 268, 277 A.2d 207 (1971). The basic jurisdiction standard outlined by the Supreme Court in International Shoe Co. v. Washington, 326 U.S. 310, 316, 90 L. Ed. 95, 66 S. Ct. 154 (1945), is that the exercise of personal jurisdiction comports with due process if the non-resident defendant has such contacts with the forum state such that maintenance of the suit does not offend "traditional notions of fair play and substantial justice." This standard has been continually refined and clarified by the Court.
In Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 80 L. Ed. 2d 404, 104 S. Ct. 1868 (1984), the Court distinguished the exercise of specific jurisdiction from general jurisdiction. When a particular cause of action arises out of the defendant's activities in the forum state specific jurisdiction is appropriate. Provident Nat. Bank v. Cal. Fed Sav. v. Loan Ass'n., 819 F.2d 434, 437 (3rd Cir. 1987). For a court to exercise general jurisdiction, the defendant must have significantly greater "continuous and systematic" contacts with the forum state. In such a case, the cause of action does not have to arise out of the defendant's forum related activities. The threshold for exercising general jurisdiction is, therefore, greater than the exercise of specific jurisdiction.
Modern jurisdiction analysis also focuses on a determination of whether the defendant purposefully established a substantial connection with the forum state. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-475, 85 L. Ed. 2d 528, 105 S. Ct. 2174 (1984). In Hanson v. Denckla, 357 U.S. 235, 2 L. Ed. 2d 1283, 78 S. Ct. 1228 (1958), the Court outlined the central elements of this standard:
the unilateral activity of those who claim some relationship with a non-resident defendant cannot satisfy the requirement of contact with the forum state. The application of that rule will vary with the quality and nature of the defendant's activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.