Yak v. BiggerPockets, L.L.C.

Background

Patricia Yak brought a diversity action against BiggerPockets, L.L.C. and its employee Craig Curelop. Yak alleged that she prepared Connecticut landlord legal forms, called the “Lease Packet,” for the defendants under two agreements. She claimed that BiggerPockets later sold the forms as an eBook for $99 without her authorization or consent and that she received no benefit from the sales.

The amended complaint asserted claims for misappropriation of trade secrets, unfair competition, unjust enrichment, conversion, fraud, fraudulent concealment, and breach of the implied covenant of good faith and fair dealing. The defendants moved to dismiss the entire case for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), or alternatively for failure to state a claim under Rules 12(b)(6) and 9(b).

Personal Jurisdiction

The court first considered whether it could exercise personal jurisdiction over the defendants. Under New York’s long-arm statute, the court examined whether the defendants conducted business in New York, committed an out-of-state tort that caused the required type of New York injury, or consented to jurisdiction through a forum-selection clause.

As to Curelop, the court held that Yak had not made the required initial showing that he conducted business in New York. The court found that the single completed 2017 agreement, which was arranged online, did not establish an ongoing relationship or show that Curelop purposefully took advantage of conducting activities in New York. The court also found that Yak had not adequately alleged jurisdiction based on an out-of-state tort. She did not identify a tortious act in the sale of the forms, did not allege the required New York-market injury, and did not explain why the defendants should reasonably have expected the sale of Connecticut forms to cause harm in New York.

As to BiggerPockets, Yak relied on an unsigned engagement letter containing language concerning New York law and courts in Westchester County. The court concluded that the language did not cover Yak’s claims because those claims were based on the defendants’ alleged unauthorized resale of the forms, not on rights or duties under the completed services agreement. The court also noted that Yak did not allege that BiggerPockets agreed to be bound by the unsigned letter.

Failure to State a Claim

The court alternatively held that the claims would be dismissed even if personal jurisdiction existed. It treated Yak’s trade-secret and unfair-competition theories as based on the same alleged conduct.

For misappropriation of trade secrets, the court held that Yak’s allegations contradicted the required secrecy of the Lease Packet. She alleged that she sold and provided the forms to the defendants without restrictions and did not allege that she took meaningful steps to protect their confidentiality. Because the unfair-competition claim relied on the same facts and was duplicative of the trade-secret claim, the court dismissed it as well.

The court dismissed the unjust-enrichment claim against BiggerPockets because Yak alleged that valid agreements compensated her for preparing and updating the forms. The court reasoned that the defendants’ later benefit from those agreements did not allow Yak to change the parties’ agreed payment terms after the work was completed.

The court dismissed the conversion claim because Yak claimed an interest in an idea, and the court stated that an idea itself is not property subject to conversion. The court also held that, even focusing on the forms themselves, Yak had provided them to the defendants under contract without limitation.

The court dismissed the fraud claim because Yak did not identify an affirmative misrepresentation. It treated the claim as one based on an omission instead. The fraudulent-concealment claim also failed because Yak did not establish a duty to disclose. The court found that information about the defendants’ business and possible resale of forms was sufficiently accessible to Yak, who was herself an attorney, that she could not rely on the alleged omission.

Finally, the court dismissed the good-faith-and-fair-dealing claim against Curelop. Yak did not identify a contract provision or the contracts’ central purpose that the alleged resale violated. The court concluded that the claim attempted to create new contractual rights that the parties had not agreed to.

Disposition

Judge Philip M. Halpern granted the defendants’ motion to dismiss the amended complaint. The order directed the Clerk of Court to terminate the pending motion and close the case. The opinion does not state that the dismissal was “with prejudice” or “without prejudice.”