23-1254 Seiden v. Baker Tilly H.K. Ltd.

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 8th day of October, two thousand twenty-four.

PRESENT:

RICHARD J. SULLIVAN, WILLIAM J. NARDINI, ALISON J. NATHAN, Circuit Judges. _____________________________________

ROBERT W. SEIDEN, ESQ., Receiver for China North East Petroleum Holdings Limited,

Plaintiff-Appellant,

v. No. 23-1254 BAKER TILLY HONG KONG LIMITED,

Defendant-Appellee. _____________________________________

For Plaintiff-Appellant: JASON VANACOUR, Vanacour Perkins PLLC, Plano, TX (Kevin Perkins, Vanacour Perkins PLLC, Plano, TX, Kenneth E. Aldous, Aldous PLLC, New York, NY, on the brief).

For Defendant-Appellee: MARY H. TOLBERT, Steptoe & Johnson PLLC, Oklahoma City, OK.

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

District of New York (Laura Taylor Swain, Chief Judge).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the August 14, 2023 judgment of the district

court is AFFIRMED.

Robert W. Seiden, in his capacity as the receiver for China North East

Petroleum Holdings Limited (“CNEP”), appeals from a judgment dismissing his

claims for breach of contract, negligence, breach of fiduciary duty, fraud, and

unjust enrichment against CNEP’s accounting firm, Baker Tilly Hong Kong

Limited (“BTHK”), based on the district court’s determination that it lacked

personal jurisdiction over BTHK pursuant to New York’s long-arm statute. We

2 assume the parties’ familiarity with the underlying facts, procedural history, and

issues on appeal.

CNEP is a petroleum holding company “with operations exclusively in the

People’s Republic of China.” App’x at 22. CNEP is formally incorporated in

Nevada. But, according to its filings with the Securities and Exchange

Commission, it maintains its “principal headquarters” in China, id. at 94, and its

“principal executive office” in New York City, id. at 74. BTHK is a Hong Kong

accounting firm that was retained by CNEP in 2010 after it absorbed the U.S. audit

practice of CNEP’s prior auditor, Jimmy C.H. Cheung & Co. (“JCHC”), in a merger

in January 2010. In May 2016, Seiden was appointed as receiver for CNEP by a

Nevada state court in order to effectuate a court-ordered shareholder buyout

following allegations of fraud against CNEP’s former corporate officers. Seiden’s

claims relate to BTHK’s allegedly improper audit of CNEP’s 2009 financial

statements.

Where a district court has dismissed an action for lack of personal

jurisdiction under Federal Rule of Civil Procedure 12(b)(2), we review “for clear

error on factual holdings and de novo on legal conclusions.” Fat Brands Inc. v.

Ramjeet,

(2d Cir. 2023) (internal quotation marks omitted). The

3 plaintiff bears the burden of showing that a court possesses personal jurisdiction

over a defendant. See Metro. Life Ins. Co. v. Robertson-Ceco Corp.,

(2d Cir. 1996). Nevertheless, a plaintiff need only make a prima facie showing of

personal jurisdiction where, as here, jurisdictional discovery has been conducted

but the court did not hold an evidentiary hearing. See

. A plaintiff may

meet this burden through “the plaintiff’s own affidavits and supporting materials,

containing an averment of facts that, if credited, would suffice to establish

jurisdiction over the defendant.” S. New Eng. Tel. Co. v. Glob. NAPs Inc.,

(2d Cir. 2010) (internal quotation marks omitted). We look to the law of

the state in which the district court sits to determine whether an out-of-state

defendant is subject to the court’s personal jurisdiction. See Sole Resort, S.A. de

C.V. v. Allure Resorts Mgmt., LLC,

, 102–03 (2d Cir. 2006); Metro. Life

Ins. Co.,

.

On appeal, Seiden asserts that the district court has specific personal

jurisdiction over BTHK based exclusively on

(a)(1), a provision

of New York’s long-arm statute. Under that section, “a court may exercise

personal jurisdiction over any non-domiciliary . . . who . . . transacts any business

4 within the state” so long as “the claim asserted” “arise[s] from that business

activity.” Sole Resort,

(internal quotation marks omitted).

An out-of-state defendant transacts business within the state of New York

only through “purposeful activity” – that is, “some act by which the defendant

purposefully avails itself of the privilege of conducting activities within the forum

State, thus invoking the benefits and protections of its laws.” Best Van Lines, Inc.

v. Walker,

(2d Cir. 2007) (internal quotation marks omitted). We

assess that activity based on “the totality of circumstances concerning the party’s

interactions with, and activities within, the state.” Bank Brussels Lambert v. Fiddler

Gonzalez & Rodriguez,

(2d Cir. 1999). While the parties’ briefing

and the district court’s opinion focus on the application of the four factors from

Agency Rent A Car System, Inc. v. Grand Rent A Car Corp., we need not rely on them

here.

, 29 (2d Cir. 1996) (explaining that the transacts-business inquiry

is not limited to the four listed factors and is instead based on the totality of the

circumstances). Having considered the totality of circumstances here, we agree

with the district court that Seiden failed to meet his burden of showing that BTHK

transacted business in New York within the meaning of

(a)(1).

5 Seiden contends that BTHK purposefully “reached into” New York when it

merged with JCHC as part of an effort to enter the U.S. accounting market.

Seiden Br. at 25. But even assuming that CNEP was a New York corporation –

which is by no means clear from the record – the mere fact that BTHK desired to

acquire clients located in New York is not, by itself, enough to demonstrate that it

actually transacted business in New York with CNEP. Instead, Seiden was

obliged to show that BTHK directly participated in that client relationship by, for

example, making “calls, faxes[,] and e-mails” into New York state “over many

months.” Fischbarg v. Doucet,

(2007); see also

at 382–83

(finding that “defendants established a substantial ongoing professional

commitment between themselves and plaintiff”). Our primary consideration is

whether “the defendant’s contacts with New York have been purposeful and

designed to permit it to conduct activities within New York.” Mayes v. Leipziger,

(2d Cir. 1982).

Seiden offered no such evidence here. The record reflects that JCHC sent a

single communication, by email, to CNEP relating to the solicitation of CNEP’s

business after the merger. That communication included (1) a cover letter

addressed to CNEP’s Chairman and Chief Executive Officer announcing JCHC’s

6 resignation as auditor, and (2) a new engagement letter on behalf of BTHK

addressed to the Chairman of CNEP’s audit committee requesting that CNEP sign

the letter if it wished to retain BTHK as its auditor. During oral argument, Seiden

conceded that there is nothing in the record to indicate where CNEP’s officers were

located or, more specifically, where the recipient was located when he or she read

the email. And beyond that email exchange, there is no other evidence in the

record concerning BTHK’s solicitation of CNEP’s business in New York. Not

surprisingly, courts have “consistently refused to sustain section 302(a)(1)

jurisdiction solely on the basis of defendant’s communication from another locale

with a party in New York.” Beacon Enters., Inc. v. Menzies,

(2d

Cir. 1983). We acknowledged this very point in Continental Industries Group, Inc.

v. Equate Petrochemical Co.,

(2d Cir. 2014), where we concluded

that entering a contractual relationship with a New York company and sending

invoices to New York amount to “limited contacts” that are insufficient to establish

specific personal jurisdiction under New York’s long-arm statute.

.

Seiden next argues that BTHK purposefully availed itself of New York as a

forum by partially performing the contract – that is, conducting the audit – in New

York. In support of this assertion, Seiden references a single October 2010 letter

7 sent by BTHK to CNEP’s Board of Directors at its New York office as “part of a

continuing dialogue between the company and ourselves” that attached a draft

memorandum to CNEP management raising matters that came to BTHK’s

attention during the 2009 audit. App’x at 347. But as the district court observed,

Seiden “present[ed] no facts regarding the performance of the actual audit,” much

less evidence that the audit occurred in New York. See Sp. App’x at 12 (emphasis

added). At most, the 2010 letter reflects that BTHK may have delivered some

work product to CNEP in New York or solicited comments from individuals based

there. It does not show that BTHK conducted the 2009 audit – or any subsequent

audit – in New York.

In an analogous case, we have held that an out-of-state law firm did not

transact business in New York within the meaning of

(a)(1)

when “[i]t performed all of its legal research and writing services in preparing [its]

opinion” out of state, and its communications with the New York plaintiff

“involved either the negotiation of the original agreement for legal services,

editorial comments during the process of preparing the final . . . opinion, or

interactions concerning the closing of . . . security documents.” See Bank Brussels

Lambert, 171 F.3d at 787–88. Nothing in the record below suggests that BTHK did

8 anything more substantive than that in New York. We therefore agree with the

district court that Seiden has not established that the court had personal

jurisdiction over BTHK under

(a)(1).

* * *

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

without merit. Accordingly, we AFFIRM the judgment of the district court.

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

9