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Jurisdiction: "Subject Matter" and "Personal"

Posted by attorney Andrew Myers
Filed under: Starting an LLC

Jurisdiction is always an issue in any lawsuit and there are several different concepts that are sometimes referred to as "jurisdiction". For the purposes of this summary, let's look at civil cases and disputes.

A court must have both personal jurisdiction over the parties in a case, and subject matter jurisdiction. Let's take the easy one first.

Subject matter jurisdiction simply means that a case must be filed in the correct court designated to handle the type of case. Sometimes easy to figure out, sometimes not so easy. For example, bankruptcy petitions are filed only in U.S. Bankruptcy Court. Small claims are filed only in small claims court. Each state designates specific courts to exercise subject matter jurisdiction over divorce and other family related matters. These specially designated courts are the family courts, probate courts or other courts which handle such cases. Speaking of probate court, that is the court in many states, but not all, that handle administration of wills and complications in handling a trust. Many states have District Courts and Superior Courts. State statutes designate the types of cases over which those courts have subject matter jurisdiction. Sometimes the District Court will, for example, handle smaller civil disputes, and Superior Courts will have subject matter jurisdiction over the larger cases. For cases where the damages are unclear, the two courts might have concurrent jurisdiction and the attorney must carefully analyze the facts of the case before filing to avoid the risk of a dismissal and bringing the matter in the correct court later.

Personal jurisdiction: A U.S. court has authority to issue a binding order only over persons, corporations or other entities in the same geographic area over which the court presides, or those who have acted in such a manner as to confer personal jurisdiction there. This is easy when two people have a car accident in the same state in the same county. If the case doesn't settle, the case is filed in a court in that state and county. But, what if one person is injured, in a car accident or by the breach of a contract, by a party who is in a different state?

Where an out of state motor vehicle operator has negligently caused injury, most states will allow what is called "long arm" jurisdiction to reach out and bring that out of state driver into the local court of the injured person. In a breach of contract case, if a sales person from an out of state company was sent in to the injured person's state and the contract was signed there, the state where the contract was signed will usually have personal jurisdiction. Personal jurisdiction will exist in the state where a company is incorporated or in which LLC papers were filed, in any state in which a company has a resident agent, any state in which they maintain a business office, or any state in which they have acted intentionally such that it is "fair" and constitutional for a court to exercise personal jurisdiction. I've addressed this in a separate legal guide. [See link below.]

Finally, sometimes there are time requirements for living in a state before courts there have jurisdiction over the state. For example, some states require that you live there for a year or two before the divorce court obtains jurisdiction. For example, the Massachusetts divorce statute requires residency for one year before jurisdiction exists. To file bankruptcy in any state's U.S. District Bankruptcy Court, the filing party must have lived in that state for the majority of the last 180 days.

This is just a primer, summarizing some jurisdictional requirements. Here, we addressed personal jurisdiction and subject matter jurisdiction. But, like an onion, there are many more layers to jurisdiction. For example, in the federal courts, all civil cases filed must demonstrate jurisdiction under either 'federal question jurisdiction' or 'diversity jurisdiction'. Another guide for another day.

Additional resources provided by the author

This answer is offered for informational purposes only. It is not offered as, and does not constitute, legal advice. Laws vary widely from state to state. You should rely only on the advice given to you during a personal consultation by a local attorney who is thoroughly familiar with state laws and the area of practice in which your concern lies.

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