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Carteret Sav. Bank, F.A. v. Shushan

filed: January 13, 1992; As Corrected February 14, 1992.


Appeal from the United States District Court for the District of New Jersey. (D.C. Civ. No. 88-05178)

Before: Mansmann, Nygaard and Garth, Circuit Judges.

Author: Mansmann


MANSMANN, Circuit Judge.

In this appeal, we are asked to determine whether the New Jersey long-arm statute confers personal jurisdiction in New Jersey over Louisiana attorneys who acted as local counsel for the plaintiff in a Louisiana real estate transaction by virtue of the fact that the plaintiff avers that the defendants committed a fraud in New Jersey. Because the New Jersey statute is coextensive with federal due process, and exercising personal jurisdiction over one who acts tortiously while within the forum state does not deny due process, we find that the district court erred in dismissing this action. Thus we will vacate the order of the district court and remand this matter for reinstatement of the Amended Complaint.


This dispute centers on the legal representation by Louisiana residents Louis Shushan and the law firm of Shushan, Meyer, Jackson, McPherson and Herzog as local counsel to the plaintiff in a 1985 real estate transaction concerning a Louisiana construction project. Because the district court granted a motion to dismiss, we state the facts as set forth in the plaintiff's Amended Complaint. Cf. Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir. 1988).*fn1

The plaintiff, Carteret Savings Bank, FA, which is a Federal Association with its principal place of business in New Jersey, Am. Compl. at para. 1, entered into a loan agreement with Three Lakeway for the construction of a multi-use project in Metairie, Louisiana. Am. Compl. at para. 6. As partial security on this loan, Three Lakeway assigned its rights and interests to Carteret under a "Collateral Assignment." Am. Compl. at para. 7. Algernon Blair was selected as the general contractor for this project. After construction had commenced, Three Lakeway filed for bankruptcy and ultimately Carteret was held liable to Algernon Blair, by a federal court in Louisiana, for a sum in excess of $1.4 million for work completed prior to Three Lakeway's bankruptcy filing.*fn2

In that Louisiana litigation, the court held Carteret liable to Algernon Blair under the terms of the "Contractor's Consent and Certification," 892 F.2d at 432, which was prepared by the defendants and executed by Carteret and Algernon Blair during the Three Lakeway closing in June of 1985. This agreement stated in relevant part:

Am. Compl. at para. 16.

It was during the pendency of the Louisiana litigation, on December 5, 1988, that Carteret sued his Louisiana lawyers in the United States District Court for the District of New Jersey, alleging that Shushan and its law firm had "breached their fiduciary duty to Carteret," in several particulars.*fn3

At the heart of its various causes of action, Carteret averred that Louis J. Shushan, Esq., failed to divulge several significant facts during a meeting in May of 1985 that took place in Roseland, New Jersey, for the purpose of reviewing the closing documents of the Three Lakeway project. Carteret alleged that, at the Roseland meeting, Shushan failed to inform Carteret officers of his prior and existing representation of Algernon Blair, his unauthorized addition of the term implicating Carteret in the Contractor's Consent, and the legal effect of that unauthorized modification. Am. Compl. at para. para. 12, 20. It was shortly after the Roseland meeting that the closing for the Three Lakeway project took place in June of 1985 in New Orleans.

After the defendants moved to dismiss the complaint for lack of personal jurisdiction, Carteret sought leave to file an Amended Complaint to add an intentional tort claim.*fn4 It also opposed the motion to dismiss for lack of personal jurisdiction. On May 22, 1989, at oral argument on the motion to amend the complaint, the district court suggested that the defendants move for a transfer order, which they did in June of 1989.

After oral argument on the motion to transfer, the district court ruled that it lacked personal jurisdiction over the defendants. App. at 135-37. Rather than granting the defendant's motion for a transfer under 28 U.S.C. § 1404(a), the district court ordered a transfer of venue under 28 U.S.C. § 1406(a). App. at 139. The district court denied Carteret's motion for reconsideration and did not act upon Carteret's motion to certify the case for appeal. Carteret Sav. Bank, F.A. v. Shushan, 721 F. Supp. 705 (1989). The district court reasoned that Carteret could not demonstrate that the defendants had sufficient contacts with New Jersey for purposes of general jurisdiction, nor could Carteret make a showing of specific jurisdiction arising out of the loan transaction. 721 F. Supp. at 708. The district court also rejected, as "factually incorrect", Carteret's assertion of an intentional tort at the Roseland meeting. Reasoning that it could order transfer in the interests of Justice, the district court transferred the case over Carteret's objections. App. at 137.

We consolidated Carteret's subsequent appeal from the transfer order and its petition for a writ of mandamus. In Carteret Savings Bank, FA v. Shushan, 919 F.2d 225 (3d Cir. 1990) (" Carteret I "), we dismissed the appeal for lack of appellate jurisdiction but granted partial relief on the mandamus petition, determining that a transfer of venue under section 1406(a) could not be invoked over the objection of the plaintiff. 919 F.2d at 232. We declined, however, to "reverse" the order of the district court on the personal jurisdiction issue, 919 F.2d at 233, and deleted only the transfer order to leave undisturbed the portion of the district court's order concerning personal jurisdiction. Id. In so doing, we stated:

We can only conceive of two courses which the case can then take in the district court. The court may dismiss the case because it has determined that it does not have in personam jurisdiction over Shushan in which event Carteret will have an adequate remedy to challenge the jurisdictional ruling by appealing from the final judgment. Alternatively, it is possible that the district court might grant Shushan's motion to transfer venue under section 1404(a) for the convenience of the parties as it has never been ruled on and thus is still pending.

Id. at 233.

Pursuant to the writ of mandamus on remand, in a letter opinion filed on May 2, 1991, the district court vacated the section 1406(a) transfer order, denied Shushan's outstanding motion for transfer under section 1404(a), and granted leave for Carteret to amend its complaint nunc pro tunc. App. at 609, 614, 612. Most importantly for this appeal, the district court denied Carteret's renewed request to reconsider its holding on personal jurisdiction and dismissed the Amended Complaint for lack of personal jurisdiction.*fn5

We exercise appellate jurisdiction over the district court's final order, pursuant to 28 U.S.C. § 1291. "To the extent that the district court's Conclusion relies upon the selection and application of legal precedent, our review is plenary." North Penn Gas Co. v. Corning Natural Gas Corp., 897 F.2d 687, 688 (3d Cir.) ...

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