21-1919 Fantastic Indus., Inc. v. Kryman

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 TO 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 17th day of June, two thousand twenty-two.

PRESENT: GUIDO CALABRESI, GERARD E. LYNCH, RICHARD J. SULLIVAN, Circuit Judges. _____________________________________

FANTASTIC INDUSTRIES, INC.,

Plaintiff-Appellee,

v. No. 21-1919

JACOB KRYMAN and KCH CORPORATION,

Defendants-Appellants. *

* The Clerk of Court is respectfully directed to amend the official case caption as set forth above. FOR DEFENDANTS- JONATHAN L. ADLER (Jacob Lewin, on APPELLANTS: the brief), Stein Adler Dabah Zelkowitz LLP, New York, NY.

FOR PLAINTIFF-APPELLEE: GORDON E.R. TROY, Gordon E.R. Troy, P.C., West Windsor, VT.

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

District of New York (Edward R. Korman, Judge).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the judgment of the district court is

AFFIRMED.

Defendants-Appellants Jacob Kryman and KCH Corporation (collectively,

“Kryman”) appeal from the district court’s judgment granting the motion of

Plaintiff-Appellee Fantastic Industries, Inc. (“Fantastic”) to compel arbitration

under the Federal Arbitration Act (the “FAA”),

et seq. As asserted in

the complaint, Kryman had worked as the sales manager for Fantastic – a business

owned by his uncle, Shimshon Jalas – until he was fired in 2011, allegedly for

selling goods to Fantastic’s customers for his own financial gain. After

terminating Kryman, Fantastic discovered that he had also applied for and

2 obtained trademark registrations that purportedly belonged to Fantastic,

spawning litigation in New York state court and before the United States Patent

and Trademark Office (“USPTO”). In 2012, Kryman and Jalas – both members of

a close-knit Hasidic community – agreed to discontinue all litigation and instead

arbitrate before a rabbinical tribunal known as a beth din. Although the dispute

remained in abeyance for the next several years, Jalas eventually served a

summons on Kryman to appear before a beth din in 2017. When Kryman failed

to appear, Jalas served two more summonses and threatened Kryman with a seruv

– a rabbinical contempt order that entails ostracism from the Hasidic community.

Kryman ultimately agreed to appear before a beth din named Mechon

L’Hoyroa (“Mechon”). And to that end, the parties signed a standard arbitration

agreement, in which they agreed to “settle all [their] controversies (including all

[their] claims and counter claims)” before Mechon (the “Arbitration

Agreement”). J. App’x at 44. A handwritten provision included at the bottom of

the Arbitration Agreement specifies that “[a]t the first hearing[,] it will be

determined whether the parties are obligated to bring their dispute for litigation

in accordance with the Law of the Torah.”

3 The parties appeared before Mechon twice to arbitrate but to no avail. The

parties then attempted arbitration before a zabla panel, through a special

procedure that permitted the parties to constitute an ad hoc beth din by each

selecting one arbitrator who then – together – would appoint the third arbitrator.

The arbitration nevertheless stalled. When Kryman moved to reopen the USPTO

proceeding shortly thereafter, Fantastic brought this case in the district court to

compel arbitration under the Arbitration Agreement and the FAA. The district

court granted Fantastic’s motion, finding that the parties had agreed to arbitrate

and that the Arbitration Agreement applied to the parties’ dispute.

On appeal, Kryman argues, among other things, that the district court erred

by (1) ignoring the handwritten provision in the Arbitration Agreement, (2) failing

to resolve ambiguities in the Arbitration Agreement with extrinsic evidence, and

(3) enforcing the Arbitration Agreement notwithstanding the parties’ alleged oral

modification, which according to Kryman rendered it unenforceable.

We review “whether parties have contractually bound themselves to

arbitrate” de novo and “factual findings upon which that conclusion is based” for

clear error. Meyer v. Uber Techs., Inc.,

, 72–73 (2d Cir. 2017). “[O]n the

antecedent question of whether the parties actually agreed to arbitration,” we

4 apply “the law of the state at issue (which, as the parties here agree, is that of New

York).” Barrows v. Brinker Rest. Corp., ––– F.4th –––, No. 21-606-cv,

, at *4 (2d Cir. May 31, 2022). We assume the parties’ familiarity with

the underlying facts, procedural history, and issues on appeal.

First, the district court did not “ignor[e]” the handwritten provision in the

Arbitration Agreement. Kryman’s Br. at 14 (capitalization omitted). Instead,

the district court reviewed that provision against the rest of the Arbitration

Agreement and found no conflict. We agree. The printed provision with which

Kryman takes issue states that the parties shall “settle all [their] controversies”

before Mechon. J. App’x at 44. The handwritten provision states that “[a]t the

first hearing[,] it will be determined whether the parties are obligated to bring their

dispute for litigation in accordance with the Law of the Torah.”

(emphasis

added). Kryman claims that the handwritten provision limits the otherwise

broad scope of issues submitted for arbitration. But the handwritten provision

only stipulates a threshold question for Mechon to answer at the first hearing. It

says nothing of the scope of the entire arbitration, and nowhere suggests that the

beth din proceeding had been limited to the issue of arbitrability alone. Kryman

essentially asks us to read “[a]t the first hearing” out of the handwritten provision.

5 But he cites no authority permitting us to do so. Cf. Consedine v. Portville Cent.

Sch. Dist.,

(2009) (“Courts may not by construction add or excise

terms, nor distort the meaning of those used and thereby make a new contract for

the parties under the guise of interpreting the writing.” (internal quotation marks

omitted)).

Second, the district court correctly found that there is no ambiguity in the

Arbitration Agreement and appropriately refrained from considering extrinsic

evidence. Under New York law, “[e]xtrinsic or parol evidence is admissible only

if a court finds an ambiguity in the contract.” Donohue v. Cuomo,

, 13

(2022) (internal quotation marks omitted). Ambiguity “arises when the contract,

read as a whole, fails to disclose its purpose and the parties’ intent, or when

specific language is susceptible of two reasonable interpretations.”

But when

a contract “is complete, clear[,] and unambiguous on its face,” it “must be enforced

according to the plain meaning of its terms.”

Here, the Arbitration Agreement “is complete, clear[,] and unambiguous on

its face.”

Among other things, the Arbitration Agreement delineates the

scope of arbitration, the procedures for the proceedings, the members of the

arbitration panel, the powers of the panelists, and the rights of the parties.

6 See J. App’x at 44. Kryman contends that the Arbitration Agreement is

nonetheless ambiguous because it “provides no information about the parties’

specific claims at issue.” Kryman’s Br. at 19. But the Arbitration Agreement

states plainly that the parties “have accepted . . . to settle all [their] controversies

before” Mechon. J. App’x at 44 (emphasis added). To the extent that Kryman

argues that the Arbitration Agreement is ambiguous because its reach is broad, the

New York Court of Appeals has put that argument to rest. See Meisels v. Uhr,

(1992) (“[W]e consider it appropriate to reaffirm that broad

arbitration agreements are permissible. We have never required that arbitration

agreements identify with specificity those disputes which are being submitted.”).

The district court therefore did not err in finding the Arbitration Agreement

unambiguous and declining to consider extrinsic evidence to construe its terms.

Third, the district court properly enforced the Arbitration Agreement,

notwithstanding Kryman’s claim that Fantastic had abandoned it by oral

modification. Kryman relies in large part on Fantastic’s alleged admission in its

pleadings that the parties “orally modified” the Arbitration Agreement after two

appearances before Mechon. J. App’x at 11 ¶ 23. Kryman, however, takes the

phrase “orally modified” out of context. In its pleadings, Fantastic admits that

7 “the parties orally modified the Arbitration Agreement by choosing a different

panel to hear their disputes” – the zabla panel in lieu of Mechon.

But in the

very next paragraph, Fantastic states that it “rejected[] a revised arbitration

agreement that would replace the Arbitration Agreement that [Kryman] had

already signed.”

at 11 ¶ 24. When read in context, the alleged admission

merely suggests that the parties chose to be heard by a different panel than the one

they originally agreed to; it does not suggest that Fantastic had abandoned the

Arbitration Agreement altogether. See Bogoni v. Friedlander,

(1st Dep’t 1994) (“[I]t should be abundantly clear that modification is not

tantamount to rescission[.]”).

We have considered Kryman’s remaining arguments and find them to be

without merit. Accordingly, the district court was correct to grant the motion to

compel arbitration of all disputes between the parties before the parties’ mutually

constituted three-member arbitration panel, and we therefore AFFIRM its

judgment.

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

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