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First American Title Insurance Co. v. Kapchan

April 12, 2010


On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-1082-09.

Per curiam.


Argued January 27, 2010

Before Judges Sabatino and J. N. Harris.

This appeal arises from the Law Division's dismissal of a legal malpractice case against defendant Jordan W. Kapchan, Esq., for lack of in personam jurisdiction. The lawsuit stems from Kapchan's involvement in the closing of a mortgage loan secured by a residence in Princeton, New Jersey, and his alleged failure to properly disburse funds pursuant to the real estate closing agreement. Because we are satisfied that there are sufficient minimum contacts with New Jersey presented in the record to justify the fair exercise of this State's jurisdiction over Kapchan, we reverse the Law Division's order and remand for further proceedings.


Although no jurisdictional discovery was taken in this case and the record consequently is not exhaustive, the following facts and circumstances bearing upon our analysis may be gleaned from the parties' submissions.

As noted, the litigation grows out of a mortgage loan on property containing a single-family house, located in Princeton Borough, at Lot 25, Block 17.01. The record owner of the Princeton real estate was Gertrude G. Banks, a resident of Washington, D.C. In connection with the transaction, Gertrude Banks sought to borrow $400,000 from the lender, Accredited Home Lenders, Inc. ("Accredited"). Accredited is a California corporation, with offices in San Diego.

Title insurance for the refinancing transaction was procured through Allstates Title Service, Inc. ("Allstates").*fn1

It is undisputed that Allstates is a New Jersey corporation, with its offices in Mercerville (Hamilton Township) in Mercer County. The title insurer was plaintiff, First American Title Insurance Company ("plaintiff" or "First American"). First American is incorporated in California, with its principal offices located in that state.

Defendant Kapchan is an attorney licensed to practice law in the State of New York. According to the certification he filed in support of his motion to dismiss the complaint for lack of in personam jurisdiction, Kapchan maintains a law office on Park Avenue in New York City. He asserts that he does not maintain offices in New Jersey, nor does he advertise or "actively solicit" clients in this State. He is not licensed to practice law in New Jersey.

As Kapchan describes it in his certification, he functioned as a "settlement agent" in connection with the instant loan transaction between Gertrude Banks (as the mortgagor/borrower) and Accredited (as the mortgagee/lender). The funding for the transaction passed through Kapchan's mortgage trust account in a bank in New York City.

In connection with his role in the transaction, Kapchan received a set of written lenders' instructions, specifying how the funds generated from the loan were to be disbursed. Among other things, the instructions stated that five of Gertrude Banks' relatives--specifically, Clyde L. Banks, Emmet L. Banks, Isaac S. Banks, Phyllis Banks Hunt, and Bertha Banks Whitted (collectively "the Banks Five")--were each to receive $30,000 from the proceeds.

The Banks Five, who respectively reside in Virginia and North Carolina, are all grandchildren of Bertha Hill Brandon, who formerly owned the Princeton property and who died in 1969. Gertrude Banks is the surviving spouse of James Banks, who was the sixth grandchild of Brandon and the executor of Brandon's will.*fn2 James Banks died in October 2004. The Banks Five claimed an interest as tenants-in-common in the Princeton premises, apparently based on contentions that Gertrude Banks had improperly divested their interests as tenants-in-common. The $30,000 per-person payout to each member of the Banks Five was explicitly specified in an addendum to the lenders' instructions, signed by Gertrude Banks on May 12, 2005, and also by Kapchan as the "closing officer" on May 13, 2005.

Kapchan prepared the requisite HUD-1 Settlement Statement ("HUD-1") for the transaction. The handwritten notations on the HUD-1 includes a specification that the aggregate sum of $150,000 was due and payable to the Banks Five. The Addendum to the HUD-1, stated that it is "a true and accurate statement of all receipts and disbursements made . . . in [the] transaction."

There apparently was not an in-person "closing" session performed at a lawyer's office, where the mortgage transaction was consummated in its entirety. Instead, the transactional documents were sent from Kapchan to Gertrude Banks in Washington, D.C., where an unidentified attorney or other individual apparently met with her and obtained her signatures on the necessary closing documents that Kapchan had prepared.*fn3

According to the HUD-1, Kapchan charged a fee of $895.00 for his services in the transaction, which was paid out of the closing proceeds. On May 21, 2005, Kapchan sent a letter on his law firm stationery to Allstates in New Jersey, enclosing the executed ...

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