Yak v. BiggerPockets, L.L.C.

• Court: Court of Appeals for the Second Circuit
• Decided: January 7, 2022
• Docket: 20-3498
• Status: Unpublished

Opinion

20-3498 Yak v. BiggerPockets, L.L.C.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 7th day of January, two thousand twenty-two.

Present: DEBRA ANN LIVINGSTON, Chief Judge, SUSAN L. CARNEY, JOSEPH F. BIANCO Circuit Judges. _____________________________________

PATRICIA YAK,

Plaintiff-Appellant,

v. 20-3498

BIGGERPOCKETS, L.L.C., CRAIG CURELOP,

Defendants-Appellees. _____________________________________

For Plaintiffs-Appellants: STEVEN R. FAIRCHILD, Fairchild Law, LLC, Brooklyn, NY.

For Defendants-Appellees: JAY WARD BROWN (Joseph Slaughter, on the brief), Ballard Spahr, LLP, New York, NY.

Appeal from a judgment of the United States District Court for the Southern District of

New York (Halpern, J.).

1 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED that the judgment of the district court is AFFIRMED.

Plaintiff-Appellant Patricia Yak appeals from a district court order entered on September

10, 2020 that granted Defendants-Appellees BiggerPockets, L.L.C. (“BP”) and Craig Curelop’s

motion to dismiss Yak’s amended complaint under Federal Rule of Civil Procedure 12(b)(2) for

lack of personal jurisdiction over Defendants-Appellees or, in the alternative, under Federal Rule

of Civil Procedure 12(b)(6) for failure to state a claim on which relief can be granted. See Yak v.

BiggerPockets, L.L.C., No. 19-cv-05394, 2020 WL 5505351, at *8, *11 (S.D.N.Y. Sept. 10,

2020). On appeal, Yak argues that (1) the district court had jurisdiction over Defendants-

Appellees under N.Y. C.P.L.R. § 302(a)(3)(ii); (2) Defendants-Appellees consented to

jurisdiction in New York via a forum selection clause in an attorney engagement letter

(“Engagement Letter”) that Yak prepared; and (3) she adequately pled unjust enrichment,

fraudulent concealment, common law fraud, and breach of the implied covenant of good faith

and fair dealing. We agree with the district court’s determination that it lacked personal

jurisdiction over Defendants-Appellees and affirm the judgment of the district court on this basis.

We assume the parties’ familiarity with the underlying facts, the procedural history of the case,

and the issues on appeal.

“We review de novo a district court’s decision to dismiss a complaint for lack of personal

jurisdiction.” Porina v. Marward Shipping Co., 521 F.3d 122, 126 (2d Cir. 2008); see also

Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84 (2d Cir. 2013) (per curiam)

(noting that a district court has “considerable procedural leeway” in deciding such a motion and

“may determine the motion on the basis of affidavits alone” (internal quotation marks and

citation omitted)). The plaintiff bears the burden of establishing the court’s personal jurisdiction

2 over the defendant. Dorchester Fin., 722 F.3d at 84. “Prior to trial, however, when a motion to

dismiss for lack of jurisdiction is decided on the basis of affidavits and other written materials,

the plaintiff need only make a prima facie showing.” Seetransport Wiking Trader

Schiffarhtsgesellschaft MBH & Co., Kommanditgesellschaft v. Navimpex Centrala Navala, 989

F.2d 572, 580 (2d Cir. 1993) (quoting Taylor v. Phelan, 912 F.2d 429, 431 (10th Cir. 1990) (per

curiam)), as amended (May 25, 1993). A prima facie showing requires “making legally

sufficient allegations of jurisdiction, including an averment of facts that, if credited[,] would

suffice to establish jurisdiction over the defendant.” Penguin Grp. (USA) Inc. v. Am. Buddha,

609 F.3d 30, 35 (2d Cir. 2010) (alteration in original) (internal quotation marks and citation

omitted).

“In assessing whether personal jurisdiction is authorized, the court must look first to the

long-arm statute of the forum state.” Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2d

Cir. 2001) (internal quotation marks and citation omitted). If the long-arm statute allows for

personal jurisdiction, we next consider whether personal jurisdiction comports with due process

protections. Id. Where the dispute is governed by a “valid and enforceable forum selection

clause,” and the claim is included within the scope of the clause, we need not conduct a personal

jurisdiction analysis because the clause constitutes “‘consent to personal jurisdiction.’” NuMSP,

LLC v. St. Etienne, 462 F. Supp. 3d 330, 342 (S.D.N.Y. 2020) (quoting Gordian Grp., LLC v.

Syringa Expl., Inc., 168 F. Supp. 3d 575, 581 (S.D.N.Y. 2016)). On appeal, Yak argues two

grounds for personal jurisdiction over Defendants-Appellees: C.P.L.R. § 302(a)(3)(ii) and the

Engagement Letter’s forum selection clause.

3 I. Personal Jurisdiction Under C.P.L.R. § 302(a)(3)(ii)

C.P.L.R. § 302(a)(3)(ii) provides for jurisdiction over an out-of-state defendant who

“commits a tortious act without the state causing injury to person or property within the state, . . .

if he . . . expects or should reasonably expect the act to have consequences in the state and

derives substantial revenue from interstate or international commerce.” A plaintiff is thus

required to demonstrate that:

(1) the defendant’s tortious act was committed outside New York, (2) the cause of action arose from that act, (3) the tortious act caused an injury to a person or property in New York, (4) the defendant expected or should reasonably have expected that his or her action would have consequences in New York, and (5) the defendant derives substantial revenue from interstate or international commerce.

Penguin Grp., 609 F.3d at 35 (citing LaMarca v. Pak-Mor Mfg. Co., 95 N.Y.2d 210, 214, 735

N.E.2d 883 (N.Y. 2000)). Yak argues that she adequately pled the first four of these factors. 1

We disagree.

First, Defendants-Appellees’ conduct does not constitute tortious activity under New

York law. Yak alleges that Defendants-Appellees violated New York Judiciary Law § 478,

which prohibits the practice of law in New York by someone who is not an authorized attorney,

by holding themselves out as attorneys when reselling a package of real estate forms that she

created (“Lease Packet”). The essential element of legal practice is the representation and

advising of a client regarding a particular situation. See, e.g., In re N.Y. Cnty. Laws. Ass’n v.

Dacey, 28 A.D.2d 161, 171–74 (N.Y. App. Div. 1st Dep’t 1967) (Stevens, J., dissenting).

Conversely, “the publication of a multitude of forms for all manner of legal situations is a

1 The district court assumed that Yak had met the fifth factor and pled sufficient facts to show that Defendants-Appellees derive substantial revenue from international or interstate commerce. See Yak, 2020 WL 5505351, at *6. To affirm, we need find that Yak failed to meet only one of the five factors.

4 commonplace activity,” In re N.Y. Cnty. Laws. Ass’n v. Dacey, 21 N.Y. 2d 694, 694, 234 N.E.2d

459 (N.Y. 1967) (mem.) (summarizing Dacey, 28 A.D.2d 161 (Stevens, J., dissenting)), which

does not “purport to give personal advice on a specific problem peculiar to a designated or

readily identified person,” State v. Winder, 42 A.D.2d 1039, 1039 (N.Y. App. Div. 4th Dep’t

1973) (quoting Dacey, 28 A.D.2d at 174 (Stevens, J., dissenting)). Here, as in Dacey and

Winder, Defendants-Appellees allegedly sold the Lease Packet that Yak prepared to the public at

large, without any individualized modifications or personal advice. Their conduct thus did not

constitute the unauthorized practice of law and was not a tort in any event.

Yak also fails to plead the second factor. Because Yak fails to identify a tortious act, she

“ipso facto cannot present an injury arising from that act.” Yak, 2020 WL 5505351, at *6. The

third factor, the situs of injury, is likewise not met. Yak submits that she is a New York resident

who suffered financial injury because Defendants-Appellees did not share revenue from the

resale of the Lease Packet and “prevented [her] from soliciting customers” who instead

purchased the Lease Packet from BP’s website. Plaintiff-Appellant’s Br. at 10. But we have

consistently rejected as insufficient to support personal jurisdiction allegations of “remote or

consequential injuries such as lost commercial profits which occur in New York only because the

plaintiff is domiciled or doing business here.” Lehigh Valley Indus., Inc. v. Birenbaum, 527 F.2d

87, 94 (2d Cir. 1975). Finally, the fourth factor is not met because Yak’s residence in New York

and Defendants-Appellees’ operation in all 50 states are insufficient to establish foreseeability of

harm in New York. See Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 241 (2d Cir. 1999)

(explaining that “New York courts have asserted that the simple likelihood . . . that a defendant’s

product will find its way into New York does not satisfy” the test for foreseeability of harm

(internal quotation marks and citation omitted)). Because Yak has failed to make a prima facie

5 showing of jurisdiction under § 302(a)(3)(ii), we need not consider whether the exercise of

jurisdiction here would comport with due process protections.

II. Personal Jurisdiction Under Forum Selection Clause

Yak separately alleges that Defendants-Appellees consented to jurisdiction in New York

via a forum selection clause in the Engagement Letter. We once more disagree. The

Engagement Letter’s choice-of-law and forum selection clauses provide that “[t]his Agreement

shall be governed by and construed in accordance with the laws of the State of New York” and

that the parties “agree to the jurisdiction of the courts sitting in Westchester County, New York.”

Plaintiff-Appellant’s Br. at 12. “Whether a forum selection clause applies to tort claims depends

on whether resolution of the claims relates to interpretation of the contract.” Magi XXI, Inc. v.

Stato della Citta del Vaticano, 714 F.3d 714, 724 (2d Cir. 2013) (internal quotation marks and

citation omitted); see also Krock v. Lipsay, 97 F.3d 640, 645 (2d Cir. 1996) (“Under New York

law, a choice-of-law provision indicating that the contract will be governed by a certain body of

law does not dispositively determine that law which will govern a claim of fraud arising incident

to the contract.”). Consequently, we have consistently held that forum selection and choice-of-

law clauses like the one contained in the Engagement Letter are not broad enough to reach

claims that are only incidental to the contractual relationship. See Fin. One Pub. Co. v. Lehman

Bros. Special Fin., Inc., 414 F.3d 325, 335 (2d Cir. 2005) (holding that forum selection and

choice-of-law provisions were inapplicable to claims where the “right [asserted] does not arise

from the contract”); see also Knieriemen v. Bache Halsey Stuart Shields Inc., 427 N.Y.S.2d 10,

12–13 (N.Y. App. Div. 1st Dep’t 1980) (finding that plaintiff’s claims for fraud, breach of

contract, negligence, and churning were not governed by the at-issue choice-of-law clause).

Here, Yak brings tort claims that relate not to Defendants-Appellees’ violation of the terms of

6 their agreements with Yak, but to Defendants-Appellees’ alleged failures to refrain from

engaging in the unauthorized practice of law and to adequately compensate her. The

Engagement Letter’s forum selection clause does not confer personal jurisdiction over

Defendants-Appellees for such tort-based claims. 2

* * *

We have considered Yak’s remaining arguments and find them to be without merit.

Because we conclude that the district court lacked personal jurisdiction over Defendants-

Appellees, we need not consider Yak’s challenges to the district court’s dismissals under Rule

12(b)(6). Accordingly, we AFFIRM the judgment of the district court.

FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court

2 Although Yak attached a copy of the Engagement Letter to her complaint, the version she provided was not countersigned by BP, and the parties dispute whether BP is bound by the Engagement Letter’s forum selection clause. Whether parties have reached an enforceable agreement is a question of fact that is determined by reference to the totality of the circumstances. See Int’l Telemeter Corp. v. Teleprompter Corp., 592 F.2d 49, 56 (2d Cir. 1979). We need not reach this question here, however, because the Engagement Letter’s forum selection clause, even if binding, would not encompass Yak’s claims.