County of Los Angeles – West District 

Beverly Hills Courthouse / Department 205 

BACKGROUND 

This action relates to a dispute over payment for services performed by Plaintiff Hume Street Management Consultants Limited at the Maybourne Beverly Hills hotel located in Los Angeles, California (the “Hotel”).  Plaintiff alleges it is owed millions of dollars in fees for day-to-day management of the Hotel, overseeing and designing its redevelopment, and navigating the local government planning and permitting requirements for the redevelopment.  (Compl. ¶5.)  

The operative complaint alleges claims for (1) breach of contract, (2) account stated, (3) quantum meruit, (4) promissory estoppel, and (5) unjust enrichment.   

Only the unjust enrichment claim is alleged against specially appearing Defendant Sheikh Hamad Bin Jassim Bin Jaber Bin Mohammed Bin Thani Al Thani (“HBJ”).  Plaintiff alleges HBJ (together with other defendants) were unjustly enriched by inducing Plaintiff to redevelop and manage the Hotel, then refusing to pay any fees for Plaintiff’s work or repay costs incurred by Plaintiff on HBJ’s behalf.  (Compl. ¶76.)   

This hearing is on HBJ’s motion to quash service of summons.  HBJ argues that service is defective because the Complaint was left with a security guard who was not his agent for service of process, at a dwelling that is not his place of residence.     

LEGAL STANDARD 

“Service of process, under longstanding tradition in our system of justice, is fundamental to any procedural imposition on a named defendant.”¿ (AO Alfa-Bank v. Yakovlev (2018) 21¿Cal.App.5th 189, 202.)¿ “To establish personal jurisdiction, compliance with statutory procedures for service of process is essential.”¿ (Kremerman v. White (2021). 71 Cal.App.5th 358, 371.)¿  

But the statutory requirements are to be liberally construed to uphold jurisdiction, rather than defeat it.  (Pasadena Medi-Center Assocs. v. Sup.Ct. (Houts)¿(1973) 9 Cal.3d 773, 778 (“The provisions of this chapter should be liberally construed to effectuate service and uphold the jurisdiction of the court if actual notice has been received by the defendant,¿and in the last analysis the question of service should be resolved by considering each situation from a practical standpoint.”)  

Defendant’s knowledge of the action does not dispense with statutory requirements for service of summons.¿ (Kappel v. Bartlett (1988) 200 Cal.App.3d 1457, 1466.)  However, as long as the defendant receives actual notice of the lawsuit,¿substantial compliance¿with the Code provisions governing service of summons will generally be held sufficient.  (Summers v. McClanahan¿(2006) 140 Cal.App.4th 403, 410-411 (¿“It is well settled that strict compliance with statutes governing service of process is not required.  Rather, in deciding whether service was valid, the statutory provisions regarding service of¿process should be liberally construed to effectuate service and uphold the jurisdiction of the court if actual notice has been received by the defendant.”).) 

“A defendant, on or before the last day of his or her time to plead or within any further time that the court may for good cause allow” may move “to quash service of summons on the ground of lack of jurisdiction of the court over him or her” that results from lack of proper service.¿ (Code of Civ. Proc. §418.10(a)(1).¿ A defendant has 30 days after the service of the summons to file a responsive pleading.¿ (Code Civ. Proc., §412.20(a)(3).)¿¿ 

“When a defendant challenges the court’s personal jurisdiction on the ground of improper service of process ‘the burden is on the plaintiff to prove the existence of jurisdiction by proving, inter alia, the facts requisite to an effective service.’” (Summers, 140 Cal.App.4th at 413.)¿    

DISCUSSION 

Personal Service 

The Code authorizes service on an individual through personal service or substitute service.  (Code Civ. Proc. §§ 415.20, 415.30.)   Section 416.90¿authorizes personal service on a defendant “by delivering a copy of the summons and of the complaint … to a person authorized by him to receive service of process.”  In its comments on this provision, the Judicial Council stated: “If the process is delivered to an agent of defendant, such agent must be one who is¿authorized by law or appointment to receive service of process, and the agent of an individual for other purposes is not necessarily authorized to receive such process.” 

Here, Plaintiff claims to have served HBJ personally by leaving a copy of the summons and complaint with a “Ryan Doe” at a property located in Los Angeles, California (the “Property”).  “Ryan Doe” – whose real name is Ryan Smith – is a security guard at the Property who has never met with or spoken to HBJ and was never authorized to accept service on HBJ’s behalf.  (Smith Decl. ¶¶ 7, 9.)  Contrary to the proof of service, Smith also never told the process server he was authorized to accept service of process on behalf of HBJ.  (Smith Decl. ¶¶ 3, 20.)   On these facts, the Court concludes there was no personal service.   

Summers v. McClanahan is instructive.  There, plaintiff produced a declaration claiming that the service was effected on defendant by leaving copies of the summons and complaint with defendant’s alleged “authorized agent” in Los Angeles.  (140 Cal.App.4th at 405.)  However, the purported agent provided a sworn statement that although she was the defendant’s “personal manager” at the time of the service, she had “never been authorized by [defendant] to accept service of process on her behalf” and had never “represented to anyone either expressly or impliedly that [she had] authority to accept service of process on defendant’s behalf.”  (Id. at 414.)  Thus, the Court held that plaintiff failed to establish that the defendant granted her personal manager authority to accept service of process and found that the trial court did not acquire jurisdiction over defendant.  (Id. at 415.) 

Likewise, in Lebel v. Mai (2012) 210 Cal.App.4th 1154, the appellate court affirmed the trial court’s order granting defendant’s motion to quash service where the defendant lived abroad and plaintiff attempted to serve the complaint on his mother living in California.  (Id. at 1163-1164.)  Plaintiff argued that the defendant held his mother out as his ostensible agent because he told plaintiff to mail her rent checks to his mother’s California address and to contact his mother for any “emergencies and maintenance needs.”  (Id. at 1163.)  The court rejected this argument, holding that the trial court “correctly concluded plaintiff failed to present sufficient evidence warranting a finding that [defendant’s mother] was defendant’s agent for service of process.”  (Id. at 1164.)  The court reasoned that “[a]t best, plaintiff presented some evidence that [defendant’s mother] was arguably a limited agent for defendant for the collection of rent and as an alternate contact person for maintenance issues at the rental unit, but no evidence [defendant’s mother] was expressly or impliedly authorized to accept service of process on defendant’s behalf.”  (Id.)    

The facts here are even weaker than those in Summers and Lebel.  Unlike there, here, there was no business or personal relationship between the security guard and HBJ (Smith Decl. ¶8), much less a relationship that was so close and personal that it was “‘highly probable’” HBJ would receive actual notice of the service of process as a result of the service on Smith.  (Summers, 140 Cal. App. 4th at 414.)  Smith had never met or spoken to HBJ.  (Smith Decl. ¶7).  Indeed, he did not even know HBJ’s name prior to preparing his declaration.  (Smith ¶6.) 

Notwithstanding, Plaintiff argues that Smith had ostensible authority to accept service because the guard identified himself as “in charge” and blocked the entrance to the residence.  Further, the guard telephoned a colleague after the process server informed him the papers were for HBJ, and he then indicated he was authorized to accept the papers.  (Mikulasch Decl. ¶¶ 6-7.)  The process server’s declaration is in conflict with the guard’s own declaration.  The guard maintains he did not represent he was authorized to accept service.  (Smith Decl. ¶3.)  Because the evidence is in equipoise and Plaintiff bears the burden of showing proper service, Plaintiff loses.       

Substitute Service 

While the Code authorizes substitute service in lieu of personal service, certain conditions must be satisfied.  “[A]n¿individual may be served by¿substitute service only after a good faith effort at¿personal service has first been made: the burden is on the plaintiff to show that the summons and complaint cannot with reasonable diligence be personally delivered to the individual defendant.” (American Express Centurion Bank v. Zara¿(2011) 191 Cal.App.4th 383, 389¿(citations and internal quotation marks omitted).)   

Plaintiff argues that personal delivery on HBJ cannot be made with reasonable diligence.  HBJ is a former prime minister of Qatar and a high-ranking member of the Qatari royal family.  His residence is heavily secured with layers of personnel that prevent outsiders from reaching the front door.  (McKillen Decl. ¶7; Mikulasch Decl. ¶4.)  When outside his home, HBJ is accompanied by one or more security guards, such that it would be difficult and even unwise for a stranger to try to serve him.  (McKillen Decl. ¶7.)  This blockade was demonstrated when HBJ’s security stopped the process server from reaching the front door and discouraged him from returning, saying: “Don’t bother.  You’ll never be able to serve that person.”  (Mikulasch Decl. ¶5.)   

On these facts, the court concludes that personal delivery on HBJ cannot be made with reasonable diligence.  In similar circumstances, courts have held that a single attempt at service can constitute reasonable diligence particularly when, as here, the defendant received actual notice.  In Falco v. Nissan N. Am. Inc. (C.D. Cal. 2013) 987 F.Supp.2d 1071, 1080, the plaintiffs made a single unsuccessful attempt to personally serve the chairperson of Nissan North America at the company’s U.S. headquarters before performing substitute service by mail.  The court held that the plaintiffs’ single attempt at service satisfied the diligence requirement in light of the realties involved in attempting service on a high level executive.  “[C]onsidering the relatively low likelihood that the chairperson of a corporation as large as Nissan-America would be made accessible to a process server,” the court explained, “multiple attempts at personal service would likely have been futile.”  (Id.)  The court also observed that “California courts have set forth no hard and fast rule requiring that Plaintiffs make three or any other number of attempts at personal service.”  (Id.)   

As in Falco, multiple attempts at personal service here would have been futile.  It would be dangerous for a process server to try to evade HBJ’s security detail to personally serve him, and it would be futile to return to HBJ’s Bel Air address multiple times given the extremely low likelihood that HBJ would be made accessible to a process server.      

The Court next considers whether the Bel Air address is HBJ’s “dwelling house” or “usual place of abode.”  One method of effecting substitute service is to leave a copy of the summons and complaint with a competent adult at the defendant’s “dwelling house” or “usual place of abode.”  (Code Civ. Proc. §425.20(b).)  Here, HBJ has described the Bel Air mansion as “my home”.  (Ex. G to Kramer Decl.)  Further, according to public records, the Bel Air mansion was purchased by an entity affiliated with HBJ.  (Kramer Decl. ¶¶2-4; Ex. A-C).  Additional facts support a finding that the Bel Air mansion is HBJ’s “dwelling house”:  the mansion has custom designed living quarters for HBJ and his wife; HBJ worked for many years to design the estate with a world-renowned architect and designer; the home is furnished and decorated to HBJ’s personal tastes including with his personal art collection; HBJ expressed interest in purchasing neighboring lots for his children, to create a large family compound; and HBJ sought out help to identify household staff for his Bel Air residence and to install outdoor heaters on the property.  (McKillen Decl. ¶¶3-6.)   

Together, these facts support a finding that the Bel Air mansion is HBJ’s dwelling house, even though he may only have spent limited time at the property.  The terms “dwelling house” and “usual place of abode” take their meaning from the Federal Rules, and California courts often look to federal authorities to interpret their meaning.  (Zirbes v. Stratton (1986) 187 Cal.App.3d 1407, 1416, 1417-18.)   

Nat’l Dev. Co. v. Triad Holding Corp. (2nd Cir. 1991) 930 F.2d 253, 257, is instructive.   There, the defendant described as a “wealthy man and a frequent intercontinental traveler, argued his condo in New York was not his “usual place of abode” because he was a citizen of Saudi Arabia, considered his compound in Riyadh to be his domicile, had spent only 34 days in New York in the preceding year, and the New York condo “was only one of twelve locations around the world where he spen[t] his time”.  (Id.)   The court rejected the argument, noting that the New York condo had “sufficient indicia of permanence” including that the defendant owned the apartment (through two layers of entities), furnished it, and spent considerable amount of money remodeling it to his personal tastes.  (Id.; see also Reynolds Corp. v. Nat’l Operator Servs, Inc. (W.D.N.Y. 2002) 208 F.R.D. 50, 53 (San Francisco residence where defendants spent “three days per month” was proper place for service by mail under California law despite affidavits from the defendants stating they did not receive mail at the residence and that their primary residence was in Florida); 131 Main Street Assocs v. Manko (S.D.N.Y. 1995) 897 F.Supp. 1507, 1524 (New York penthouse was defendant’s “dwelling place” or “usual place of abode” even though his stays were “episodic rather than constant;” he did not own or pay rent for the apartment, and he maintained a separate long time residence in Florida).)   

The frequency of HBJ’s presence at the Bel Air mansion compares to the defendants in Triad Holding and Reynolds who occupied their part-time homes on a limited basis.  And like the defendant in Triad Holding, HBJ has spent considerable money customizing the property.   

HBJ’s cited authorities are inapposite as each involved service at addresses where the defendants did not stay or reside—even on an episodic or part-time basis.  (See Kremerman v. White (2021) 71 Cal.App.5th 358, 365, 373 (plaintiff left summons and complaint with an employee at private mailbox, rather than a residence); Lebel v. Mai (2012) 210 Cal.App.4th 1154, 1158 (attempted service at the house of defendant’s mother without evidence that defendant stayed there); Zirbes, 187 Cal.App.3d at 1417 (attempted service at the home of defendant’s parents where she did not stay); Corcoran v. Arouh (1994) 24 Cal.App.4th 310, 315 (attempted service at address of defendant’s business colleague without evidence that defendant stayed there himself).)   

The Court next considers whether the security guard was a competent member of HBJ’s household.  In Bein v. Brechtel-Jochim Group (1992) 6 Cal.App.4th 1387, 1393, the Court of Appeal upheld substitute service on a security guard who denied access to the defendant’s residence in a gated community, concluding that the guard “must be considered a competent member of the household.”  The court explained: “Litigants have the right to choose their abodes; they do not have the right to control who may sue or serve them by denying them physical access.”  (Id.; see also Hupp v. Freedom Communications, Inc. (2013) 221 Cal.App.4th 398, 406 (citing Bein for the proposition that “leaving copies of the papers with the security guard at the front of the gated community” was a “permissible means of service”).)  Similarly, in Khourie, Crew & Jaeger v. Sabek, Inc. (1990) 220 Cal.App.3d 1009, 1012, the Court of Appeal held substitute service was proper where the process server left the summons and complaint outside a locked door because defendant’s employee refused to unlock the door and told the server she would not accept service.  The court explained: “It is established that a defendant will not be permitted to defeat service by rendering physical service impossible.”  Under Bein and Khourie, Plaintiff’s service on HBJ’s security guard clearly met the requirement of leaving the summons and complaint with a competent member of HBJ’s household. 

The final step of substitute service is to mail a copy of the summons and complaint by first class mail to the place they were previously left.  (Code Civ. Proc. §415.20(b).)  There is no deadline or timing requirement for the follow-on mailing.  Here, Plaintiff sent a copy of the summons and complaint by first class mail to the Bel Air mansion, perfecting substitute service.  (Kramer Decl. ¶6; Ex. D.)        

Mail Service 

Even if HBJ were treated as a pure foreign resident with no residence in California, he has been properly served by mail at his foreign residence in Doha, Qatar.  Because Qatar is not a signatory to the Hague Service Convention, HBJ can be served there by “any method conforming to California law and consistent with due process.”  (Standard Microsystems Corp v. Winbond Elecs. Corp. (2009) 179 Cal.App.4th 868,  897.)  One such method is service by mail under Code Civ. Proc. §415.40 which states: “A summons may be served on a person outside this state … by sending a copy of the summons and of the complaint to the person to be served by first class mail, postage prepaid, requiring a return receipt.”  California courts allow service by mail for defendants in countries that are not signatories to the Hague Convention.  (See, e.g., Standard Microsystems, 179 Cal.App.4th at 897 (service by mail pursuant to Code Civ. Proc. §415.40 was proper on a defendant in Taiwan which is not a signatory to the Hague Convention).)   

Here, Plaintiff mailed the summons and complaint to a PO Box associated with HBJ in public records: Al Wajiba Palace, Al Wajiba Dukhan Road, PO Box 4044, Doha Qatar.  (Kramer Decl. ¶7, Ex. E.)  The package was sent by first class mail with postage prepaid and a return receipt requested.  Service through this mailing became effective on April 3, 2023 (the tenth day after mailing).  (Code Civ. Proc. §415.40.)       

In sum, the Court concludes the service of process was proper and denies the motion to quash.          

CONCLUSION 

Based on the foregoing, the Court DENIES specially appearing Defendant HBJ’s motion to quash service of summons. 

IT IS SO ORDERED. 

DATED: April 28, 2023 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court 

Superior Court of California 

County of Los Angeles – West District 

Beverly Hills Courthouse / Department 205 

BACKGROUND 

This action relates to a dispute over payment for services performed by Plaintiff Hume Street Management Consultants Limited at the Maybourne Beverly Hills hotel located in Los Angeles, California (the “Hotel”).  Plaintiff alleges it is owed millions of dollars in fees for day-to-day management of the Hotel, overseeing and designing its redevelopment, and navigating the local government planning and permitting requirements for the redevelopment.  (Compl. ¶5.)   

The operative complaint alleges claims for (1) breach of contract, (2) account stated, (3) quantum meruit, (4) promissory estoppel, and (5) unjust enrichment.   

As relevant here, Plaintiff alleges that specially appearing Defendant Coroin Beverly Hills Properties, Inc. (“Coroin”) owns specially appearing Defendant Beverly Hills Mezzanine LLC (“BHM”) which owns Defendant Beverly Hills Acquisition LLC (“BHA”) which in turn owns the Hotel.  (Compl. 17-18.)  Plaintiff also alleges that BHM and Coroin are the alter egos of Defendant Sheikh Hamad bin Khalifa bin Hamad bin Abdullah bin Jassin bin Mohammed Al Thani (“Father Emir”), who holds ownership interests in Defendant Maybourne Hotels Limited which manages the Hotel and receives a portion of its revenues.  (Compl. ¶ 23.) 

This hearing is on BHM and Coroin’s motion to quash service of process for lack of personal jurisdiction.  BHM and Coroin argue that they are not subject to general jurisdiction because they are not “at home” in California, and the Court cannot exercise specific jurisdiction because (1) they have not purposefully availed themselves of the benefits of conducting business within California; (2) they have no contacts with California upon which Plaintiff can base any claims, and (3) exercising specific jurisdiction would offend traditional notions of fair play and substantial justice.  Plaintiff does not oppose the motion except in so far as it seeks an order that (1) conclusively establishes the Court has no personal jurisdiction over BHM and Coroin and (2) dismisses BHM and Coroin with prejudice.      

LEGAL STANDARD 

Code Civ. Proc. §418.10(a)(1) provides that a defendant may move “[t]o quash service of summons on the ground of lack of jurisdiction of the court over him or her.”  Although the defendant is the moving party, the burden of proof is on the plaintiff to demonstrate sufficient minimum contacts exist. (Milhon v. Superior Court (1985) 169 Cal.App.3d 703, 710 (“[W]hen jurisdiction is challenged by a nonresident defendant, the burden of proof is upon the plaintiff to demonstrate that ‘minimum contacts’ exists between defendant and the forum state to justify imposition of personal jurisdiction.”).)  If the plaintiff is able to meet its burden, the burden then shifts to the defendant to demonstrate the exercise of jurisdiction would be unreasonable. (Buchanan v. Soto (2015) 241 Cal.App.4th 1353, 1362.)¿  

DISCUSSION 

General Jurisdiction 

 There are two kinds of personal jurisdiction, general and specific.  General jurisdiction over a corporation exists when that corporation might be “fairly regarded as at home” in that state.  (Brue v. Shabaab (2020) 54 Cal.App.5th 578, 590.)  Traditionally, a corporation or limited liability company is “at home” in its place of incorporation and its principal place of business.  (Id.; James Malinchak Int'l, Inc. v. Suzanne Evans Coaching, LLC, 2016 U.S. Dist. LEXIS 135825 at *5.)  “But in an exceptional case, a corporation's operations in a forum other than its formal place of incorporation or principal place of business may be so substantial and of such a nature as to render the corporation at home in that state.”¿(Brue, 54 Cal.App.5th at 590.)  To test that possibility, courts look to a variety of factors, including “maintenance of offices, the presence of employees, use of bank accounts and¿marketing or selling products¿in the forum state, to analyze whether a corporation's contacts render it effectively at home in that state.”  (Id. at 590-591.) 

Here, BHM was formed under the laws of Delaware and it is a holding company with no principal place of business.  (Clot Decl. ¶¶2-3.)  Its listed business address is in Luxembourg.  (Id. at ¶3.)  BHM has no employees.  (Id. at ¶4.)  It does not maintain offices in California.  (Id. at ¶11.)  It owns no real property in California.  (Id. at ¶10.)  Its sole member is a Delaware corporation.  (Id. at ¶4.)  It does not provide services in California, nor does it provide services to California residents.  (Id. at ¶12.)  Its only activity is its passive investment in Defendant BHA.  (Id. at ¶4.) 

Likewise, Coroin is incorporated in Delaware and is a holding company with no principal place of business.  (Clot Decl. ¶¶2-3.)  Its listed business address is in Luxembourg.  (Id. at ¶3.)  It has no employees in California.  (Id. at ¶4).  It does not maintain any offices in California.  (Id. at ¶11.)  It owns no real property in California.  (Id. at ¶10.)  It does not provide services in California, nor does it provide services to California residents.  (Id. at ¶12.)  Its only activity is its passive investment in its subsidiaries including BHM.  (Id. at ¶4.) 

On these facts, the Court concludes there is no general jurisdiction over either BHM or Coroin.  They have no contacts with the State that can be characterized as systematic or continuous sufficient to conclude they are “at home” in California.  Their sole contact with the State, a passive investment in the entity that owns the Hotel, cannot give rise to general jurisdiction.  (In re Automobile Antitrust Cases I & II (2005) 135 Cal. App. 4th 100, 121 (“General jurisdiction will not lie when the parent is a true holding company, the business of which is not operations but¿passive investment in a subsidiary company.¿ Investment alone is not a sufficient ground to exercise general jurisdiction, even if the foreign corporation could have chosen to simply run the local business itself.  To hold otherwise would ignore federal constitutional law.”)   

Plaintiff’s alter ego allegations do not create general jurisdiction.  Plaintiff alleges that BHM and Coroin are alter egos of Father Emir, a Qatari national.  (Compl. ¶23.)  Plaintiff does not allege that BHM and Coroin are the alter egos of BHA, the only California entity in the case.  Nor could it.  

The courts have recognized that¿if a state may exercise jurisdiction over a subsidiary¿corporation, it may also have jurisdiction over the¿parent corporation if the¿elements of alter ego or principal/agent theories are present.  (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal. App. 4th 523, 536-537.)  When the¿elements of alter ego are present, the ordinary rule that treats a corporation as separate from its shareholders is disregarded; the court will deem the corporation’s acts as the acts of those persons who own and control the entity, and the jurisdiction over the corporation is passed through to its shareholders.¿ (Id.¿at 538-539.)  Under the principal/agent theory, if the forum may assert jurisdiction over the subsidiary, the forum may extend its jurisdiction to the parent if the parent exerts a sufficiently high degree of control over its subsidiary to reasonably deem the subsidiary the agent of the parent under traditional agency principles. (Id.¿at pp. 540-541.) 

The assertion of jurisdiction under either theory requires a fact-specific examination of numerous elements.¿¿The two principal questions to establish alter ego are whether there is “such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist” and whether there would be “an inequitable result if the acts in question are¿treated as those of the corporation alone.” (Id. at 538.)  The courts consider numerous factors, including inadequate capitalization, commingling of funds and other assets of the two entities, the holding out by one entity that it is liable for the debts of the other, identical equitable ownership in the two entities, use of the same offices and employees, use of one as a mere conduit for the affairs of the other, disregard of corporate formalities, lack of segregation of corporate records, and identical directors and officers.¿(See¿Tomaselli v. Transamerica Ins. Co.¿(1994) 25 Cal. App. 4th 1269, 1285.)  No single factor is determinative, and instead a court must examine all the circumstances to determine whether to apply the doctrine. (Talbot v. Fresno-Pacific Corp.¿(1960) 181 Cal. App. 2d 425, 432.)  Moreover, even if the unity of interest and ownership element is shown, alter ego will not be applied absent evidence that an injustice would result from the recognition of separate corporate identities, and “[d]ifficulty in enforcing a judgment or collecting a debt does not satisfy this standard.” (Sonora Diamond Corp. v. Superior Court, supra,¿83 Cal. App. 4th at 539.) 

Similarly,¿the principal/agent theory is a fact-driven inquiry that requires examination of whether the parent exercises a sufficient degree of control over its subsidiary to establish that the subsidiary can be described as a means through¿which the parent acts, or is nothing more than an incorporated department of the parent.  Under those circumstances, the subsidiary will be deemed to be the agent of the parent in the forum state and jurisdiction will extend to the parent. (Sonora Diamond Corp. v. Superior Court, supra,¿83 Cal. App. 4th at 541.)¿ It is the nature of the control exercised by the parent over the subsidiary that is crucial, because some degree of control is an ordinary and necessary incident of the parent’s ownership¿of the subsidiary.  Only when the degree of control exceeds this level and reflects the parent’s purposeful disregard of the subsidiary’s independent corporate existence that the principal/agent theory will be invoked.  “As a practical matter, the parent must be shown to have moved beyond the establishment of general policy and direction for the subsidiary and in effect taken over performance of the subsidiary's¿day-to-day¿operations in carrying out that policy.”  (Id.¿at 541-542, original italics.) 

Here, the facts do not support a finding of either alter ego or a principal/agent theory.  While BHM is the sole member of BHA, it observes all corporate formalities with respect to BHA.  (Clot Decl. ¶6.)  BHM only has a passive investment in BHA, which means it is not involved in the day to day operations of BHA.  (Clot Decl. ¶4.)  Similarly, Coroin observes all corporate formalities with respect to BHM and BHM’s subsidiary, BHA.  (Clot Decl. ¶5.)  There is no evidence that Coroin or BHM dominates the day-to-day operations of BHA.  Indeed, neither has any employees who could oversee the day-to-day operations.  (Clot Decl. ¶4.)  There is nothing in the record which establishes that the degree of supervision or control exercised by BHM or Coroin over BHA went beyond that usually found in a parent-subsidiary relationship.  Further, BHA is adequately capitalized to meet all of its financial obligations.  (Clot Decl. ¶7.)       

In sum, the Court concludes it does not have general jurisdiction over either Coroin or BHM.   

Specific Jurisdiction 

  For specific jurisdiction, “courts consider the relationship among the defendant, the forum and the litigation.”  (Snowney v. Harrah’s Entertainment, Inc. (2005) 35 Cal.4th 1054, 1062.)  A court may exercise specific jurisdiction over a nonresident defendant only if: “(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 contacts with the forum, and (3) the assertion of personal jurisdiction would comport with fair play and substantial justice.”  (Id.)   

Here, the only actual contact BHM has with California is that it is the parent of an LLC that owns a hotel in California.  Likewise, the only actual contact Coroin has with California is that it is the parent of BHM who in turn is the parent of an LLC that owns the Hotel.  These facts are insufficient to demonstrate “purposeful availment” sufficient to support specific jurisdiction over either BHM or Coroin. 

It is a “firm proposition that neither ownership nor control of a subsidiary corporation by a foreign parent corporation” on its own can subject a parent to jurisdiction.  (Sonora Diamond, 83 Cal.App.4th at 540.)  Rather, only where a parent exercises substantial control in connection with the controversy is specific jurisdiction found.  (Id. at 554 (there is purposeful availment  “only if the parent's acts are connected or related to the cause of action on which jurisdiction is sought”).)  ¿The question is whether “the parent for all intents and purposes has done an act in the forum state of a nature as to make reasonable the forum state’s exercise of jurisdiction over the parent with respect to that act and its consequences.”  (Id.)¿ 

Here, the only act attributed to BHM or Coroin is their passive investment in a company that owns the Hotel.  But passive investment alone cannot create purposeful availment.  (HealthMarkets, Inc. v. Superior Court (2009) 171 Cal. App. 4th 1160, 1169 (“Ownership of a subsidiary alone does not constitute purposeful availment.¿Rather, purposeful availment requires some manner of deliberately directing the subsidiary's activities in, or having a substantial connection with, the forum state.”)     

The second requirement for specific jurisdiction is also not met.  Plaintiff’s causes of action do not “arise out of” or “relate to” BHM or Coroin’s contacts with California.  When a complaint includes a parent company, the parent company’s contacts—not just the subsidiary’s contacts—must relate to the causes of action.  (In re Auto Antitrust Cases I&II, 135 Cal.App.4th at 116 (“If the operative facts of the allegations of the complaint do not relate to the parent manufacturers’ contacts in this state, then the cause of action does not arise from that contact such that California courts may exercise specific jurisdiction.”).)  Here, the only contact BHM and Coroin have with California is their passive investment in BHA who owns the Hotel.  But this lawsuit does not relate to the passive investment itself, but rather relates to services performed on the Hotel for which Plaintiff seeks reimbursement.     

Because the first and second requirement for specific jurisdiction are not met, the Court will not go on to consider the third requirement.   

CONCLUSION 

Based on the foregoing, the Court GRANTS specially appearing Defendants BHM and Coroin’s motions to quash service of summons for lack of personal jurisdiction.  Defendants BHM and Coroin are dismissed without prejudice.