If you’re a business owner being sued in New York but your company operates elsewhere, you may have a powerful argument to get the case dismissed—regardless of whether you “agreed” to submit to New York jurisdiction in your contract. Many plaintiffs (especially debt collectors) assume that a simple contract clause is enough to keep a case in New York. They’re wrong.
Why This Works
Under New York Business Corporation Law (BCL) § 1314(b), lawsuits between two foreign (non-NY) companies must meet specific criteria to be heard in a New York court. If the case doesn’t fit into one of these categories, the court lacks subject matter jurisdiction, and the lawsuit must be dismissed.
Here’s what that means for you:
- If your business isn’t registered in NY and doesn’t do business there, the case may not belong in a NY court.
- If the contract wasn’t signed or performed in NY, the lawsuit may be invalid in NY.
- Even if the contract includes a “we agree to NY jurisdiction” clause, that doesn’t create subject matter jurisdiction. Courts require more than just an agreement to litigate in NY—they need actual legal grounds for the case to be there.
Using This to Get a Case Dismissed (Or as Leverage)
If you’re sued in NY but your business:
- Operates in another state
- Signed the contract outside of NY
- Never performed the contract in NY
- Doesn’t own property in NY
- Didn’t transact business in NY
…then you may be able to file a motion to dismiss for lack of subject matter jurisdiction under BCL § 1314(b) and CPLR 3211(a)(2).
Even better? You can use this as leverage. If the plaintiff realizes they could lose the case before it even starts, they may be more willing to negotiate or drop the lawsuit altogether.
Bottom Line
Debt collectors and overzealous plaintiffs often assume a contract clause is enough to drag you into a lawsuit in New York. It’s not. If your business has no real connection to NY, you might have a strong argument to shut down the case before it even begins.
And when debt collectors realize they just wasted their time? That’s when they start scrambling.
