Jack Sabatino New Jersey Appellate Division Judge Jack Sabatino/photo by Carmen Natale

A dispute over the online sale of a car by a California seller to a New Jersey buyer does not fall under the jurisdiction of New Jersey's court system, the Appellate Division ruled on Thursday.

The seller's act of listing the car on automotive website Hemmings.com and his brief interactions with the buyer did not rise to the level of minimum contacts to support personal jurisdiction under the due process clause, the appeals court ruled, upholding a 2018 decision by Superior Court Judge Mark Ciarrocca in Union County that dismissed the suit for lack of jurisdiction.

Online transactions are becoming increasingly common, and now make up 11% of all retail transactions in the United States, Appellate Division Judge Jack Sabatino wrote in the ruling. But the U.S. Supreme Court has declined to resolve the issue of whether a nonresident defendant's "virtual" presence within a state via the internet can support a finding of personal jurisdiction in that forum, saying in a 2014 case that it would leave "questions about virtual contacts for another day." Nor has the state Supreme Court definitively addressed the issue, Sabatino said.

According to Thursday's decision in Jardim v. Overley, the present case stems from the purchase of a 1960 Buick Invicta convertible by a New Jersey man, Joseph Jardim, from a seller in California, Michael Overley. Jardim's business associate responded to Overley's online ad via email, and through a series of emails and phone calls, the parties reached a deal. The bill of sale did not include a forum selection clause. After Jardim had the car shipped to New Jersey, he discovered its condition was not as promised, he claimed in a suit filed against Overley in Union County Superior Court. He claims he spent tens of thousands of dollars to address various problems with the vehicle.

Ciarocca dismissed the case, finding no personal jurisdiction in the New Jersey court over Overley. The judge found that Overley had not actively solicited business in New Jersey, had not initiated contact with a party in New Jersey, had not agreed to a choice-of-law provision picking that state, had no prior relationships with New Jersey residents and had not traveled to New Jersey. Jardim appealed.

On Thursday, Sabatino, along with Appellate Division Judges Thomas Sumners Jr. and Richard Geiger, said that deciding whether Overley had a sufficient jurisdictional nexus to New Jersey would depend on whether the defendant "purposefully avail[ed] itself of the privilege of conducting activities within the forum state," or "purposefully directed" its conduct into a forum state.

The panel relied on a 1989 case from the state Supreme Court, Lebel v. Everglades Marina, which held that a New Jersey court had personal jurisdiction over a Florida man who sold a boat to a New Jersey resident. But in Lebel, the seller engaged in persistent attempts to induce the plaintiff to purchase the boat. That distinguishes it from the present case, where the seller had a "comparatively passive" role in the transaction after the parties agreed on a price for the Buick, Sabatino wrote. In addition, the present case was a one-time transaction. Overley maintained he never used the Hemmings website before, is not in the business of selling cars, and he and Jardim never did business together, Sabatino wrote for the court.

"Perhaps there may come a day in which Internet transactions become so dominant that buyers and sellers should be expected to anticipate, in the absence of an express forum selection clause, that they could be sued in the other contracting party's home state without limitation," Sabatino wrote.

"That day has not arrived and it is unclear what the future will actually bring. For the present, we are satisfied that the motion judge in this case fairly and correctly determined that the California seller's activities in this one-time transaction did not comprise 'purposeful availment,' sufficient to confer personal jurisdiction over him in our state court," Sabatino wrote for the court.

The lawyer for the seller, Jeremy Cole of Flaster/Greenberg in Cherry Hill, noted that the Appellate Division "did not go so far as to say internet commerce cannot confer personal jurisdiction over a nonresident seller."

"Rather, it recognized that internet commerce could confer personal jurisdiction, but ruled that the specific facts of this case, including the one-off nature of the transaction and the fact that Mr. Jardim arranged for the car at issue in the litigation to be shipped from California to New Jersey, were insufficient to establish personal jurisdiction," Cole said.

Cole added that "while this ruling should help protect one-off sellers in internet commerce who are not residents of New Jersey from being hauled [into] the New Jersey courts relating to their internet sales, businesses in New Jersey and elsewhere that conduct significant business online should consider including forum selection clauses in contracts to avoid lawsuits in foreign jurisdictions."

James Mackevich of Mackevich, Burke & Stanicki in Clark, who represented the car buyer, had no comment about the ruling.