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Rah v. Lee

United States District Court, S.D. New York

March 20, 2014

YOUNG RAH, Plaintiff,
SANG CHUL LEE, et al., Defendants.


J. PAUL OETKEN, District Judge.

This action arises from the role of the pro se plaintiff, a New York lawyer, in a botched New Jersey real estate transaction. Plaintiff is being sued for malpractice in New Jersey state court. He filed this action seeking removal of or an injunction against the state court action, declaratory relief, and damages for the costs and fees he has incurred in defending against the malpractice suit. Because Defendants, Plaintiff's former clients, have not appeared in this action, Plaintiff moves for relief by default judgment. For the reasons that follow, that motion is denied and this case is dismissed.

I. Background[1]

Plaintiff seeks relief from a state court malpractice suit based on a prior federal court's order denying injunctive relief in a 2003 RICO suit that arose from the same underlying facts.

A. The Underlying Transaction

Disputes between two factions lie at the heart of this matter. In the five years leading up to 2003, Sang Chul Lee and Jun Gil Lee allegedly provided over $11 million in investments and loans for business ventures operated by Daniel Choi, his father Sung Su Choi, and his mother Ok Choi. In January 2003, after those loans and investments failed, the Chois tendered a deed to their residence in Closter, New Jersey (the "Closter House") to the Lees as partial repayment. The Lees hired Young Rah, a New York lawyer and Plaintiff in this action, to facilitate that transaction. Rah prepared a deed for the Closter House using a standard New York form (the "NY Deed"). Rah held the deed in escrow pending the sale of the Closter House. Rah subsequently prepared an Undertaking Agreement in which the Chois agreed to list the Closter House for sale and deliver the proceeds to Rah as the agent of Sang Chul Lee. It is unclear whether the Chois knowingly and voluntarily entered into this Agreement.

Pursuant to the Undertaking Agreement, the Lees arranged to sell the Closter House to a third party, the Ans. During a closing attempt on October 23, 2003, the Ans rejected the New York Deed based on insufficient warranties. Subsequently, the Lees' closing attorney, Jordan D. Yuelyes, tried to salvage the sale to the Ans by preparing a new deed (the "NJ Deed") and affidavit of title in compliance with New Jersey standards (collectively, the "revised title documents"). However, the Chois refused to execute the revised title documents.

B. The 2003 Federal RICO Case: Lee v. Choi

Shortly after the failed closing attempt with the Ans, the Lees sued the Chois in the Southern District of New York ("SDNY") under the Racketeering Influenced and Corrupt Organizations Act ("RICO"), alleging that the Chois fraudulently induced their investment in phony business ventures in the period leading up to 2003. In addition to damages, the Lees sought a preliminary injunction or declaratory relief directing the Chois to execute the revised title documents so that the sale to the Ans could be completed. After hearing the parties on the matter, the court denied the preliminary injunction ( Lee v. Choi, et al., 03 Civ. 8613 (SAS) (S.D.N.Y. November 26, 2003)). On appeal, the Second Circuit summarily affirmed the denial of a preliminary injunction, finding no irreparable harm. Sung Chul Lee v. Choi, 140 F.Appx. 299, 300 (2d Cir. 2005). The Lees did not further pursue their RICO claim.

C. The 2009 New Jersey Malpractice Case: Lee v. Rah

On October 30, 2009, the Lees sued Rah, their former attorney who had prepared the NY Deed, in the New Jersey Superior Court, Law Division, for breach of the legal services agreement, breach of fiduciary duty, and fraud, seeking damages arising from the failed real estate transactions. Lee v. Rah, BER-L-9556-09 (N.J.Super. Ct. Law Div. Oct. 30, 2009). The Lees alleged that Rah "knowingly misstated his ability and authority to provide legal services for New Jersey matters, " and alleged that Rah's mistakes caused the Lees to lose "the benefit of the Deed, " property rights in the Closter House, and the motion for injunctive relief or declaratory relief in the RICO action (Complaint, at 3-4).[2] Specifically, the Lees alleged that Rah was not licensed in New Jersey, was unfamiliar with New Jersey deed practices, used an improper form of deed, and prepared an invalid power of attorney in relation to the real estate transaction.

Rah sought dismissal of the suit based on lack of personal jurisdiction. The New Jersey trial court dismissed the case on that basis, and the Lees appealed. The New Jersey Superior Court Appellate Division reversed the dismissal "because of the foreseeable effects of Rah's conduct upon New Jersey" ( Lee v. Rah, A-5295-09T3, at 9 (N.J.Super. Ct. A.D. July 19, 2011)). Further appeals to the Supreme Court of New Jersey were unavailing. Rah reports that as of February 5, 2014, no further action had occurred in the New Jersey suit (Dkt. No. 13).

D. The Present Action: Rah v. Lee

On October 25, 2012, shortly after the New Jersey Supreme Court declined to review the case against him, Rah filed this action in federal court seeking an injunction against the New Jersey proceedings, declaratory relief, and damages covering the costs and fees incurred in that ...

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