In order to hear a case, a court must have jurisdiction. Jurisdiction means that the court has legal authorization to hear that case. Without that authorization, parties must go somewhere else to try their case because that court cannot legally hear their arguments. There are two general types of jurisdiction: personal jurisdiction and subject matter jurisdiction. The type of court occasionally limits subject matter jurisdiction. The tax court, for example, can only hear cases regarding tax disputes. Personal jurisdiction means that the court has some authority over the person. Ususally, if the parties live in the same area as the court, the court will have jurisdiction in the case.
The Fourth Circuit Court of Appeals for the State of Louisiana recently explained personal jurisdiction and its requirements in a case arising from the St. Bernard 34th Judicial District Court. In that case, the plaintiff lived in Louisiana, but the defendant, a real estate company was incorporated and did business in Tennessee. The plaintiffs were a couple that rented a cabin in Pigeon Forge, Tennessee. They made the reservation online. When they went to the cabin, however, the couple both slipped and fell on the wet steps of the cabin. The couple attempted to sue the real estate company in Louisiana state court.
Generally, if the parties are from two different states, then it is likely more appropriate to file the case in federal court. Federal courts have diversity jurisdiction, which allows them to settle issues between residents of different states. However, state courts can also occasionally hear cases that involve parties who are not from the same state.