Judge Christian R. Gullon, Case Number: 21STCV17437, Date: 2023-08-30 Tentative Ruling

Judge: Christian R. Gullon, Case: 21STCV17437, Date: 2023-08-30 Tentative Ruling

AXE WHEELS, INC.’S MOTION TO SET ASIDE DEFAULT AND QUASH PLAINTIFFS’ SUMMONS AND COMPLAINT FOR LACK OF PERSONAL JURISDICTION is GRANTED in that Specially Appearing Defendant (as to Plaintiffs’ complaint) is dismissed. The court requests EMS be prepared to discuss the merits of Axe’s motion as to EMS’ CC because the facts strongly evidence that Axe should be dismissed from the action entirely (rendering 4/22 motion moot).

This is a negligence case. Plaintiffs MELISSA MOORS (wife) and KAYLEAH MOORS (daughter) (collectively, “Plaintiffs”) bring forth the instant action for the death of Julian Moore (“decedent”) who was struck when the wheel of Defendant ALBERT BENJAMIN ESQUEDA’s vehicle detached and struck decedent’s motorcycle.

On September 28, 2022, Plaintiffs filed a first amended complaint (FAC) against Defendants ALBERT BENJAMIN ESQUEDA (“Esqueda”); ANGELINA ULLOA (“Ulloa”); ADRIANA SIORDIA JIMENEZ; MARIO SIORDIA JIMENEZ; IN AND OUT TIRE, LLC a limited liability; EMS DISTRIBUTING LLC d/b/a ELEMENT WHEELS COM (sued herein as DOE 1); EMS DISTRIBUTING, LLC, d/b/a ) ELEMENT WHEELS, (sued herein as DOE 2); (“EMS”);[1] and AFFORDABLE WHEEL REPAIR (sued) herein as DOE 3) for: 1. NEGLIGENCE 2. NEGLIGENCE PER SE 3. STRICT LIABILITY 4. PRODUCT LIABILITY and 5. SURVIVOR ACTION.

On February 10, 2023, default was entered against Axe Wheels 2/10/23 as to Plaintiff’s complaint.

On February 24, 2023, Defendants/Cross-Defendants ADRIANA SIORDIA JIMENEZ and MARIO SIORDIA JIMENEZ (collectively as the “Jimenez Defendants”) filed a motion for determination of good faith settlement, which the court granted.[2]

On August 4, 2023, EMS filed a motion for leave to file a cross-complaint against Axe Wheels and other defendants seeking equitable indemnity, negligence, contribution, apportionment of fault and declaratory relief regarding the duty to defend and duty to indemnify, which the court granted on 8/20/23.[3]

On August 30, 2023, EMS filed its cross-complaint (CC) against Axe Wheels, Esqueda, Ulloa, In and Out Tires, Flores, and Alberto Sr. dba Affordable Wheel Repair for:

On September 19, 2023, Esqueda and Ulloa filed his answer to EMS’ cross-complaint.

On September 19, 2023, Flores, Alberto Sr. dba Affordable Wheel Repair filed their answer to the CC of “Mission Oaks National Bank.”[4]

On February 9, 2024, Axe Wheels filed the instant motion to set aside/vacate default.

On February 16, 2024, Axe Wheels filed a Motion To Quash Service Of Summons And Cross-complaint For Lack Of Personal Jurisdiction. (Hearing on this motion is set for 4/22/24; CMC set for 7/1/24; and Trial Setting Conference set for 7/1/24.)

On March 4, 2024, Axe Wheels filed a ‘Notice of Non-Opposition to [the Motion]’ indicating that it received no opposition or any other party.

1. Axe Wheels, Inc. is not subject to this Court’s jurisdiction because it was not properly served with copies of Plaintiffs’ summons and complaint and

Defendant brings forth this motion pursuant to Code of Civil Procedure (CCP) section 473(d) [improper service].

Section 473(d) provides that “[t]he court may . . . on motion of either party after notice to the other party, set aside any void judgment or order.” (Code Civ. Proc., § 473(d).) A default judgment is void against a defendant who was not served with a summons in the manner prescribed by statute. (See Sakaguchi v. Sakaguchi (2009) 173 Cal.App.4th 852, 858). Relief pursuant to section 473(d) may be made at any time. (See Manson, Iver & York v. Black (2009) 176 Cal.App.4th 36, 42). “Because the law favors disposing of cases on their merits, any doubts in applying section 473 must be resolved in favor of the party seeking relief from default.” Lasalle v. Vogel (2019) 36 Cal.App.5th 127, 134-35.)

On 9/28/22, Plaintiffs filed a FAC. According to the proof of service (POS) filed on 10/26/22, Defendant was served on 10/19/22 via substituted service by leaving the documents with a “Frank Rivers –Person in Charge” at 5640 S. 40TH STREET, STE. 5 PHOENIX, AZ 85040. Richard Stokes, however, is the person authorized to accept service on behalf of the corporation.

To effectuate service on a corporation, summons may be delivered to the agent for service of process or to the president, chief executive officer, or other head of the corporation, a vice president, a secretary or assistant secretary, a treasurer or assistant treasurer, a controller or chief financial officer, a general manager, or a person authorized by the corporation to receive service of process. (See Code Civ. Proc., § 416.10(a), (b).)

“By its terms, section 416.10 permits service on a corporation [] by way of service on an individual or entity designated as an agent for service of process (§ 416.10, subd. (a)); service on one of the 11 officers or managers of the corporation specified in section 416.10, subdivision (b); service on a person authorized by the corporation to receive service (§ 416.10, subd. (c)); or service in a manner authorized by the Corporations Code (§ 416.10, subd. (d)). In turn, section 415.20 permits substituted service on a person specified in section 416.10 by leaving the summons and complaint “in his or her office ... with the person who is apparently in charge thereof.’ [Citation].” (Ramos v. Homeward Residential, Inc. (2014) 223 Cal.App.4th 1434, 1441, emphasis added.) Simply put, a required condition of proper service is that the POS identify the requisite person who is authorized to receive service by one of the ways prescribed by section 416.10. (Id. at pp. 1441-42 [“[W]here the proof of service fails to identify any such person, the proof of service is defective.”].)

That said, “[i]t is axiomatic that strict compliance with the code's provisions for service of process is not required.” (Id. at p. 1442.) The burden is on the plaintiff to make this showing of substantial compliance. (Ibid.) For example, substantial compliance occurs when the person to be served in fact actually received the summons (i.e., authorized person was received but plaintiff merely did not mail one olng f the persons to be served. (Id. at p. 1443.) “However, mere receipt of the summons by an unknown employee of the corporation who is not a person specified in section 416.10 does not necessarily establish substantial compliance. [Citation]. Evidence that shows the name of the person who received the summons and complaint as well as the person's title or capacity is required by statute (§ 417.10) and, without it, a trial court need not infer that a person specified in section 416.10 actually received the summons and complaint.” (Id. at p. 1443, emphasis and underline added.)

Here, Defendant states that the person served was merely an employee in a warehouse. (Motion p. 10, see als Stokes Decl., ¶7 [“I learned that Plaintiffs had these documents delivered to an employee at Axe Wheels, Inc.’s warehouse, who placed the documents in a desk drawer, and was later terminated for unrelated reasons, so I was not provided actual notice of Plaintiffs’ summons and complaint or their request for entry of default against Axe Wheels, Inc.”].)

To the extent that the person served was a person “in charge” of Stokes’ office, Plaintiffs have not filed an opposition to meet their burden.

Therefore, as Richard Stokes (or an otherwise statutorily authorized person) was not served in compliance with service upon a corporation, the default entered was improper, and consequently is set aside.

Personal jurisdiction refers to a court’s authority to adjudicate the rights and liabilities of a defendant. The doctrine arises from the US Constitution’s Due Process Clause of the Fourteenth Amendment which limits the power of a state court to assert personal jurisdiction (i.e., power) over a nonresident defendant. (Asahi Metal Indus. Co. v. Superior Court (1987) 480 U.S. 102, 113.) Under California’s long-arm statute, California state courts may exercise personal jurisdiction “on any basis not inconsistent with the Constitution of this state or of the United States.” (Civ. Proc. Section 410.10.) Thus, California’s exercise of personal jurisdiction must comport with the limits imposed by federal due process. In International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945), the Supreme Court explained that a state court may exercise personal jurisdiction over an out-of-state defendant who has “certain minimum contacts with [the State] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’”

“Personal jurisdiction may be either general or specific.” (Motion p. 12, citing Vons Companies, Inc. v. Seabest Foods, inc. (1996) 14 Cal.4th 434, 446.) General jurisdiction is also referred to as “all-purpose jurisdiction” and specific jurisdiction is referred to as “conduct-linked jurisdiction.” (See Goodyear Dunlop Tires Operations, S.A. v. Brown 564 U.S. 91, 919 (2011).) “The standard for general jurisdiction is considerably more stringent than that for specific jurisdiction.” (Strasner, supra, 5 Cal.App.5th at p. 222.)

(1) personal service of process on a defendant while he is physically present within the forum state (general jurisdiction).

(2) consent either by defendant’s consent in advance or general appearance in the action (general jurisdiction).

(4) contacts or affiliations with the forum state that are so continuous and systematic as to render them essentially at home in the forum state.

(5) some activity of the defendant in or affecting persons in the forum state (specific jurisdiction).

Here, Axe Wheels addresses both forms of personal jurisdiction, focusing largely on general jurisdiction.

Axe Wheels is a corporation organized under the laws of Arizona and maintains its principal place of business in Phoenix, Arizona. (Motion p. 14, see Stokes Decl.)

Therefore, absent service in California, absent consent to appear in the action, and absent domicile in California,[7] the remaining way for California to establish general jurisdiction over Axe Wheels is if its “affiliations with the State are so ‘continuous and systematic’ as to render [it] essentially at home in the forum State.” (Goodyear Dunlop Tires Operations, S.A. v. Brown 564 U.S. 91, 919 (2011), emphasis added; see also see also International Shoe, supra, 326 U.S. at p. 318 [“instances in which the continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit ... on causes of action arising from dealings entirely distinct from those activities” renders all-purpose jurisdiction appropriate.].)

The Supreme Court in Daimler AG v. Bauman clarified the general jurisdiction principles articled in Goodyear. Justice Ginsburg, in delivering the unanimous opinion of the Court, explained that the “paradigm” places where a corporation can be “fairly regarded” as at home are its place of incorporation and its principal place of business. (Daimler AG. v. Bauman, 571 U.S. 117, 137-138 (2014).) The Court also emphasized that Goodyear did not hold that a corporation may be subject to general jurisdiction only in a forum where it is incorporated or has its principal place of business. (Ibid.) The Court suggested there might be “exceptional case[s]” in which a corporation’s operations in a forum other than its place of incorporation and principal place of business are “so substantial and of such a nature as to render the corporation at home in that State.” (Motion p. 14, citing Daimler, supra, 571 U.S. at 139, n.19.) Put another way, general jurisdiction is proper when “a defendant's contacts with the forum are so wide-ranging that they take the place of physical presence in the forum as a basis for jurisdiction.” (Motion p. 13, quoting Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445-446, emphasis added.)

Absent explicit definitions, the court turns to a some seminal cases to illustrate what constitutes contacts that are so ‘continuous and systematic’ as to render [it] essentially at home in the forum State,” or the lack thereof.

In Perkins v. Benguet Consol. Mining Co., 342 U.S. 437 (1952), war had forced the defendant corporation's (Philippines mining corporation) owner to temporarily relocate the enterprise from the Philippines to Ohio. (Id. at pp. 447-448.) Although the claim-in-suit did not arise in Ohio, the Perkins determined Ohio’s exercise of general jurisdiction was permissible because the corporation's president maintained his office in Ohio, kept the company files in that Ohio office, and supervised from the Ohio office such that Ohio became the “center of the corporation’s wartime activities.” (Daimler, supra, 571 U.S. at p. 130, n. 8.) Thus, in summary, general jurisdiction is proper when all the defendant corporation’s activities were directed from the forum state. (Ibid.)

To the contrary, “mere purchases, even if occurring at regular intervals are not enough to warrant a State's assertion of in personam jurisdiction over a nonresident corporation in a cause of action not related to those purchase transactions.” (Id. at p. 131, citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984) [in a case arising from a helicopter crash in Peru, the Court determined that Texas could not exercise personal jurisdiction over the Colombian corporation even though the company had contacts with Texas (e.g., accept checks drawn from a Houston bank; purchasing helicopters, equipment, and training services from a Texas-based helicopter company for substantial sums; and sending personnel and chief effective officer to Houston].) Thus, in summary, a case is not exceptional merely because the corporation makes purchases from the forum state.

In Goodyear—a case that arose from a bus accident outside Paris that killed two boys from North Carolina—the Court determined that North Carolina lacked general jurisdiction over the foreign subsidiaries of Goodyear Tire and Rubber Company even though “[a] small percentage of tires manufactured by the foreign subsidiaries distributed in North Carolina.” (Daimler, supra, 571 U.S. at p. 131-132, citing Goodyear, supra.) Thus, in summary, a case is not exceptional merely because of the distribution (sales and purchase) of a corporation’s goods in the forum state.

In Daimler, the complaint alleged that during Argentina's 1976–1983 “Dirty War,” DaimlerChrysler Aktiengesellschaft’s (Daimler) Argentinian subsidiary, Mercedes-Benz Argentina (MB Argentina) collaborated with state security forces to kidnap, detain, torture, and kill certain MB Argentina workers, among them, plaintiffs or persons closely related to plaintiffs. The plaintiffs sued Daimler in California. The Court held that California could not exercise personal jurisdiction over Daimler, a German public stock company, because the corporation was neither incorporated in California nor have its principal place of business in California. As for the sufficiency of the contacts, Daimler's subsidiary had multiple California-based facilities; was the “largest supplier of luxury vehicles to the California market; 10% of all sales of new vehicles in the United States took place in California; and California sales accounted for 2.4 of Daimler’s worldwide sales. (Daimler, supra, 571 U.S. at p. 123.) Despite those numbers, the Court determined them insufficient to allow adjudication of the Argentina-rooted case in California because “the same global reach would presumably be available in every other State in which [the corporation’s] sales are sizable. No decision of this Court sanctions a view of general jurisdiction so grasping.” (Daimler, supra, 571 U.S. at p. 119.) Thus, in summary, a case is not exceptional merely because its sales in the forum state are sizable or because of the “magnitude of the defendant’s in-state contacts.” (Id. at p. 139, fn. 20, emphasis and underline added.)

The Supreme Court underscored the notion that a nonresident corporation’s operation of in-state business is insufficient to maintain general jurisdiction in BNSF Ry. Co. v. Tyrrell (2017) 581 U.S. 402. (See Motion p. 14.)[8] In BNSF, the plaintiffs sued the railroad company for work-related injuries in a Montana state court, even though “[n]either worker was injured in Montana; Neither incorporated nor headquartered there, [the company] maintains less than 5% of its work force and about 6% of its total track mileage in the State.” (Id. at p. 402.)[9] In emphasizing the canon that in-state business, as clarified in Daimler and Goodyear, does not suffice to permit the assertion of general jurisdiction over claims that are unrelated to any activity occurring in the forum state, the Court observed that “the general jurisdiction inquiry does not focus solely on the magnitude of the defendant's in-state contacts . . . Rather, the inquiry ‘calls for an appraisal of a corporation's activities in their entirety’; ‘[a] corporation that operates in many places can scarcely be deemed at home in all of them.’” (Id. at p. 414.) Thus, in summary, a case is not exceptional merely because it has as work force and some tracking (literally and figuratively) in the forum state.

Based on the foregoing cases, the specific issue is whether Axe Wheel’s contacts with California are “so exceptional” as to render it virtually “at home” in California. (Motion p. 14:9-11.)

Here, Plaintiffs allege no facts to support the proposition that Axe can be at home when it is not incorporated in the state nor even conducted temporary business here. Instead, the pleading merely sets forth a blanket jurisdictional allegation. (See FAC ¶13 [“Defendant AXE WHEELS, INC., is a Florida corporation operating in the county of Polk, Florida (hereinafter, “AXE WHEELS”). AXE WHEELS allegedly was the manufacturer or distributor who provided the WHEELS which were involved in the subject incident to EMS DISTRIBUTING.”]; see also EMS Cross-Complaint ¶2 [“Cross-Defendant Axe Wheels, Inc. was at all times mentioned, an entity qualified to do business in the State of California.”].)

Therefore, absent an opposition to meet their heavy burden, the court determines that California cannot exercise general jurisdiction over Defendant.[10]

Specific jurisdiction is concerned with the “relationship among the defendant, the forum, and the litigation.” (Daimler, supra, 571 U.S. at p. 132-133, quoting Shaffer v. Heitner, 433 U.S. 186, 204 (1977). “[I]t is the defendant's conduct that must form the necessary connection with the forum State that is the basis for its jurisdiction over him…. To be sure, a defendant's contacts with the forum State may be intertwined with his transactions or interactions with the plaintiff or other parties. But a defendant's relationship with a plaintiff or third party, standing alone, is an insufficient basis for jurisdiction.” (Walden v. Fiore, 571 U.S. 277, 285-286, emphasis added.)

California courts routinely apply a three-part test to determine whether a court may exercise specific jurisdiction over a nonresident defendant:

(1) the defendant has purposefully availed himself or herself of forum benefits,

(2) the controversy is related to or arises out of the defendant’s purposeful contacts with the forum, and

(3) the assertion of personal jurisdiction would comport with fair play and substantial justice. (Motion p. 14, citing See, e.g., Pavlovich v. Superior Court (2002) 29 Cal.4th 262, emphasis added.)

Here, Defendant focuses on the second prong and advances a point that is convincingly dispositive of the issue: it is inconceivable for Axe’s conduct to have given rise to Plaintiffs’ claims because the corporation did not exist at the time the subject wheel was “manufactured, distributed, sold, and provided,” as alleged in the complaint. (See Motion p. 19, see Ford Motor Co. v. Montana Eight Judicial District Court, 592 U.S. 351, 352-353 [“[B]ecause Ford had systematically served a market in Montana and Minnesota for the very vehicles that the plaintiffs allege malfunctioned and injured them in those States, there is a strong ‘relationship among the defendant, the forum, and the litigation’—the ‘essential foundation’ of specific jurisdiction.”], emphasis added.)[11]

Therefore, as Plaintiffs’ claims do arise out of or relate to any purposeful contacts between Axe Wheels and California (nor could they given that Axe Wheels was not incorporated until 9 months after Lenso Wheels sold the tire to EMS, it is impermissible for California to exercise specific jurisdiction over Defendant.[12]

Based on the foregoing, as Axe Wheels was not involved in any way with the subject wheel, to exercise personal jurisdiction would surely offend the traditional notions of fair play and substantial justice, which would circumvent the directive crafted in International Shoe.

Based on the foregoing, absent an opposition by any party, the motion is granted. The court requests all parties be prepared to discuss whether Axe Wheels should be entirely dismissed from the action.

[1] On January 21, 2022, Plaintiffs amended their Complaint to include EMS Distributing LLC. Specifically, against EMS, Plaintiffs allege causes of action (COAs) for negligence, strict liability – design/manufacturing defect, strict liability – failure to warn, product liability – negligence and failure to warn, and a survivor action.

[2] Their motion was unopposed, the insurance paid the maximum amount, and evidence shows that if it was not for the detached tire from Defendant Esqueda’s vehicle, then Defendant Adrianna Jimenez would have not run over decedent.

[3] According to the motion, EMS is the seller/distributor of the wheels and Axe Wheels fulfilled Esqueda’s order and the subject wheels. As for Esqueda, Ulloa, In and Out Tire, and Affordable Wheel Repair, they may have at some point prior to the incident repaired, maintained, and/or installed the subject wheel that detached from Esqueda's vehicle

[4] It is unclear as to the relevance of this party in this action.

[5] Though a meet and confer is not required for this motion, the lack of opposition(s) suggests that had Defense Counsel informally discussed the matters with Plaintiffs and other parties, there may have been no need to file this motion.

[6] Though the court may refer to Axe Wheels as defendant, it is only does so for brevity. It is understood that Axe Wheels is making a special appearance (not a general appearance) thus Axe Wheels is a specially appearing defendant.

[7] The “paradigm” places where a corporation can be “fairly regarded” as at home are its place of incorporation and its principal place of business. (Goodyear, supra, 564 U.S. at p. 924.)

[8] Because neither plaintiff alleged any injury from work in or related to Montana, only the propriety of general jurisdiction was at issue in the case. (Id. at p. 413.)

[9] More specifically, the corporation “operates railroad lines in 28 States. [citation omitted]. BNSF has 2,061 miles of railroad track in Montana (about 6% of its total track mileage of 32,500), employs some 2,100 workers there (less than 5% of its total work force of 43,000), generates less than 10% of its total revenue in the State, and maintains only one of its 24 automotive facilities in Montana (4%).”

[10] See also motion pp. 12-13, citing Monkton Ins. Services, Ltd. V. Ritter, 768 F.3d 429, 432 (5th Cir. 2014) [State and federal courts throughout the country have similarly recognized that it is “incredibly difficult to establish general jurisdiction in a forum other than the place of incorporation or the principal place of business.”]; see also Brown v. Lockheed Martin Corp., 814 F.3d 619, 627 (2d Cir. 2016) [explaining that plaintiff “bears a heavy burden when she asserts that [defendant’s] presence in Connecticut presents such an ‘exceptional’ case”]; see Cahen v. Toyota Motor Corp., 147 F.Supp.3d 955, 965 (N.D. Cal. 2015) [commenting that the “bar . . . is very high” to find that a forum state can exercise general jurisdiction over a nonresident defendant.

[11] It is unclear exactly what was discovered during discovery such that EMS claimed (in its motion for leave to file a cross-complaint) that Axe was responsible in some way for the subject tire.

[12] As to the timeline, as presented in the instant motion, on 2/15/2019, Lenso Wheels sold the wheel(s) to EMS. EMS then sold the wheels to the end user, Esqueda, who obtained fittings from EMS. On 11/12/2019, Axe Wheels was incorporated in Arizona. On 4/30/2020, after Esqueda used the wheels for more than one year without issue, he presented the tires to In and Out Tire for repair. The day after, on 5/1/2020, the subject wheel detached from Esqueda’s vehicle and struck Plaintiffs’ decedent. (See generally Motion p. 8.)