On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-9556-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Payne and Hayden.
Plaintiffs, Sang Chul Lee and Jun Gil Lee, appeal from an order dismissing their complaint alleging legal malpractice by defendant, Young Rah, a New York attorney, on grounds of lack of in personam jurisdiction.
At the time of the events at issue, Sang Chul Lee was a resident of Korea who maintained a business office in New York City located at 30 W. 39th Street, Third Floor. Jun Gil Lee was a resident of Edgewater, New Jersey. He owned and was employed as President of JGL International, Inc. a corporation located at the same address as the business address of Sang Chul Lee. From 1995 to 2002, he owned and was employed as President of Jun Trading Corp., maintaining offices in New York City.
Sang Chul Lee and Jun Gil Lee claim to have been the victims of a massive fraudulent scheme perpetrated by Daniel Choi in the period from 1999 to 2003, involving the manufacture and distribution of home AIDS/HIV testing kits and other projects. As a consequence, the Lees allege that they lost investments of more than $11,000,000. It is claimed that Choi was charged by the U.S. Attorney for the Southern District of New York with wire fraud, and he served time in custody for that crime. Additionally, in October 2003, he was named as a defendant, along with his companies, M&D Medical, L.L.C. and MDM Investments, Inc., his parents, Ok and Sung Su Choi, and his brother, Joseph Choi, in a RICO action instituted on behalf of Sang Chul Lee in the Southern District of New York and assigned to Judge Shira A. Scheindlin.
On September 22, 2002, defendant Young Rah was engaged to prepare a durable power of attorney authorizing Jun Gil Lee to act on behalf of Sang Chul Lee in connection with "bond, share and commodity transactions" involving MDM Diagnostics, Inc. and another entity. On January 23, 2003, defendant Young Rah was engaged by Sang Chul Lee and Jun Gil Lee to draft a deed transferring the ownership of residential property located in Closter, New Jersey from Daniel Choi's parents, Sung Su Choi and Ok Choi to Sang Chul Lee. Consideration for the property transfer was stated to be ten dollars. The deed was executed by the Chois on January 24, 2003. The accompanying escrow agreement, also executed by the two Chois and Sang Chul Lee on January 24, 2003, as well as by Rah as escrow agent, stated in relevant part:
Young Rah, Attorney at Law, as depositary ("Escrow Agent"), acknowledges receipt from the undersigned of the fully signed Deed ("Escrow Subject") of certain Real Property located [at designated address in] Closter, N.J. 07624 ("Premises") to Sang Chul Lee ("Grantee") for the purpose of holding in escrow until the Grantee gives notice of recording of Escrow Subject in writing to Escrow Agent or until the Grantee gives notice of release of the Escrow Subject to the undersigned. Within ten (10) business days from the receipt of such notice from Grantee, Escrow Agent shall either record or release the Escrow Subject in compliance thereto.
On June 4, 2003, Rah was again approached by Jun Gil Lee, who came to Rah's office with Ok Choi. Lee requested that Rah draft an "undertaking agreement" between Rah as Escrow Agent, Sung Su and Ok Choi, and Sang Chul Lee that recited the Chois' desire to sell the Closter property and their consent to entering into a sales listing agreement through real estate agent Mihae Lee, the wife of Jun Gil Lee, to executing a contract for the sale of the property, and to forwarding the net proceeds of sale to Rah as escrow agent to be held in trust for Sang Chul Lee. Once those steps were accomplished, the deed and escrow agreement previously entered by the parties would be deemed null and void. Additionally, the undertaking contained an agreement by the Chois to "indemnify and hold harmless Young Rah, Escrow Agent, from any claim, damage, breach of Escrow Agreement above-mentioned by any person whosoever and any governing body."
The undertaking agreement was signed by Jun Gil Lee on behalf of Sang Chul Lee by power of attorney, although Rah later testified that he never was shown the document and it has never been produced. Ok Choi executed the document for herself and on behalf of her husband, Sung Su Choi. However, when Young Rah determined that Ok Choi lacked the power to act for her husband, he drafted a power of attorney on her behalf, which she returned in executed form by telefax, later that day. The Chois were not represented by counsel at any stage of the proceedings involving the deed to their residence, the escrow agreement, the undertaking agreement, or the power of attorney. Rah claims to have had no further contact with any of the parties. He also claims that the deed was continuously held in escrow in New York and that it never was recorded in New Jersey.
At some point, the Chois defaulted on their mortgage and, at the request of Jun Gil Lee, they vacated their Closter residence. It appears that the mortgage default was cured by Jun Gil Lee, who also expended substantial sums improving the property. On August 20, 2003, a contract for the sale of the house for $775,000 to Yong Joon An and Sonjun Yoon was executed, with a closing date to be scheduled between October 30 and November 5, 2003. The real estate contract left blank the identity of the seller.
Thereafter, a copy of the deed given by the Chois to Sung Chul Lee was tendered as proof of ownership of the property. However, the purchaser's title company refused to accept the document, determining it to be irregular, having been drafted on a New York form. Instead, the company demanded that ...