Judge: Frank M. Tavelman, Case: 22AHCV00887, Date: 2023-11-03 Tentative Ruling

Case Number: 22AHCV00887    Hearing Date: January 26, 2024    Dept: A

MOTION TO QUASH SERVICE OF SUMMONS
Los Angeles Superior Court Case # 22AHCV00887

NOTICE: 

The Court is not requesting oral argument on this matter.  Pursuant to California Rules of Court, Rule 3.1308(a)(1) notice of intent to appear is required.  Unless the Court directs argument in the Tentative Ruling, no argument will be permitted unless a “party notifies all other parties and the court by 4:00 p.m. on the court day before the hearing of the party’s intention to appear and argue.  The tentative ruling will become the ruling of the court if no notice of intent to appear is received.”   

Notice may be given either by email at BurDeptA@LACourt.org or by telephone at (818) 260-8412. 

ALLEGATIONS:  

Bake Code 1001 Inc. (“Bake Code”) and Sam Leung (“Leung”) (collectively “Plaintiffs”) bring this action against La Kaffa International Co. Ltd. (“La Kaffa”) and Henry Wang (“Wang”), as well as several other parties. Wang is a resident of Taiwan where he operates La Kaffa. Plaintiffs allege Wang and La Kaffa conspired with parties in the U.S. to sell Leung a Bake Code franchise which did not exist with the promise that Leung would receive an EB-5 Visa. Plaintiffs’ action seeks restitution for the investment made into the nonexistent franchise. 

La Kaffa and Wang (“Moving Parties”) now move to quash the service of the summons for lack of jurisdiction. The Court notes that this is the third motion to quash service brought by Moving Parties. Some of Moving Parties arguments refer to statements made by Wang in a declaration made May 1, 2023, in response to the first motion to quash. The Court will refer to this declaration as the 5/1/23 declaration for purposes of this ruling.   

ANALYSIS: 

I.                LEGAL STANDARD  

A defendant, on or before the last day of her time to plead or within any further time that the court for good cause may allow, may move to quash service of summons on the ground of lack of jurisdiction over her. (C.C.P. § 418.10(a); see Greener v. Workers' Comp. Appeals Bd. (1993) 6 Cal.4th 1028, 1036.) For a court to have personal jurisdiction over a defendant, two elements are required: (1) there must be some basis for exercising personal jurisdiction over the defendant, i.e., defendant's consent, physical presence, domicile, or minimum contacts; and (2) service of summons must be proper. (Ziller Elecs. Lab. GmbH v. Superior Court (1988) 206 Cal.App.3d 1222, 1229.)

A motion to quash service of summons can be used to challenge one or both elements of personal jurisdiction. (Id.) When the defendant makes a motion to quash, the burden is on the plaintiff to prove, by a preponderance of the evidence facts justifying the exercise of jurisdiction over the defendant. (See id. at 1232-1233 [If a defendant files a motion to quash service of summons, the plaintiff has the burden to establish both elements of personal jurisdiction].) Thus, a plaintiff must file an opposition to defeat a motion to quash. (See Floveyor Internat., Ltd. v. Superior Court (1997) 59 Cal.App.4th 789, 794 [defendant does not have to act on motion to quash until plaintiff makes prima facie showing of jurisdiction].)  

Further, such a motion must establish personal jurisdiction on any grounds challenged by the defendants; if the defendant alleges that there is no basis for personal jurisdiction and that service was improper, the plaintiff must establish both a basis for personal jurisdiction and proper service. (See Ziller, supra, 206 Cal.App.3d at 1229.) The mere allegations of facts or allegations in an unverified complaint are insufficient to establish jurisdiction for these purposes. (In re Automobile Antitrust Cases I & II (2005) 145 Cal.App.4th 100, 100.)
 

II.              MERITS 

Validity of Service 

Moving Parties again argue the service of the summons should be quashed because service was never effectuated, and jurisdiction was never obtained. 

In California State Court, service upon foreign defendants is governed by C.C.P. § 413.10(c) which provides:

Except as otherwise provided by statute, a summons shall be served on a person: Outside the United States, as provided in this chapter or as directed by the court in which the action is pending, or, if the court before or after service finds that the service is reasonably calculated to give actual notice, as prescribed by the law of the place where the person is served or as directed by the foreign authority in response to a letter rogatory. These rules are subject to the provisions of the Convention on the “Service Abroad of Judicial and Extrajudicial Documents” in Civil or Commercial Matters (Hague Service Convention). 

Taiwan is not a signatory to the Hague Service Convention. As such, Moving Parties can be served by any method conforming to California law and consistent with due process. (Standard Microsystems Corp. v. Winbond Electronics Corp. (2009) 179 Cal.App.4th 868, 897.) 

The Court previously denied a motion to quash without prejudice because Plaintiff had not filed proofs of service via an acceptable method. Plaintiff now submits a proof of service showing that Chinese and English copies of the summons and complaint in this matter were sent via DHL to 98, Gaotie 9th Rd. Zhubei City, Hsinchu County, 302, Taiwan. The proof of service reflects that these documents were sent by DHL with proof of delivery attached. (See Proof of Service p. 15.) The proof of delivery shows the documents were delivered on July 19, 2023. (Id.) 

Moving Parties first argue that delivery by DHL is an impermissible method of service under California Law. California law permits any person outside the state to be served by certified mail, return receipt requested. (C.C.P. § 415.40.) There is functionally no difference between certified mail with return receipt requested and DHL mail with proof of delivery requested. Moving Parties argument is essentially one of semantics and the Court finds its unpersuasive. 

Moving Parties next argue that service is defective for failure to include a summons in the matter. Plaintiff presents the Proof of Service which declares under the penalty of perjury that the mailing included the summons. Moving Parties submit the declaration of Wang stating that the package did not contain a summons. The Court does not find that Wang’s self-serving declaration is sufficient evidence to rebut the assertion in the Proof of Service. 

Further, “It is axiomatic that strict compliance with the code's provisions for service of process is not required. (Ramos v. Homeward Residential, Inc., 223 Cal. App. 4th 1434, 1443.) “[I]n 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.” (Gibble v. Car-Lene Research, Inc. (1998) 67 Cal.App.4th 295, 313.) In essence, substantial compliance with the code’s requirements for service of process is sufficient. (Id.)  Here, Wang’s declaration specifically attests that he received notice of the suit which indicates Plaintiffs were in substantial compliance. 

Personal Jurisdiction 

A California court can exercise personal jurisdiction over a nonresident defendant who has “minimum contacts” with the state. (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 268; Virtualmagic Asia, Inc. v. Fil-Cartoons, Inc. (2002) 99 Cal.App.4th 228, 238.) A defendant has minimum contacts if the quality and nature of its activity in the forum state (referred to as “contacts”) is such that it is reasonable and fair to require the defendant to conduct a defense in that state. (Pavlovich, supra, at 268; Strasner v. Touchstone Wireless Repair & Logistics, LP (2016) 5 Cal.App.5th 215, 221.) 

The exists two types of personal jurisdiction: “general” (sometimes called “all-purpose”) jurisdiction and “specific” (sometimes called “case-linked”) jurisdiction. (Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County (2017) 582 U.S. 255, 262.) 

General Jurisdiction 

Under a “general” jurisdiction analysis, nonresident defendants may be sued on causes of action unrelated to their activities within the state. (Cornelison v. Chaney (1976) 16 Cal.3d 143, 147.) Only a “limited set” of affiliations with a forum state will render a defendant subject to general jurisdiction. “For an individual, the paradigm forum for the exercise of general jurisdiction is the individual’s domicile; for a corporation, it is an equivalent place, one in which the corporation is fairly regarded as at home” (Daimler AG v. Bauman (2014) 571 US 117, 137.) 

The Court finds that neither Wang nor La Kaffa can be considered subject to general personal jurisdiction. Wang is a permanent resident of Taiwan with no citizenship or permanent residency in the United States. (5/1/23 Wang Decl. ¶¶ 2, 5-7.) Nor does Wang own any real property in the state of California (Id. at ¶ 5.) There is no manner in which Wang could be considered to be domiciled in California. 

Similarly, La Kaffa has indisputably shown that it does not maintain any bank accounts in California and has no headquarters or corporate offices here. (Id. ¶¶ 8-9.) Nor has La Kaffa directly franchised any stores in California since 2017. (Wang Decl. ¶ 12.) It is clear that La Kaffa does not regard itself as home in California. 

Nor does the Court find that La Kaffa may be subject to personal jurisdiction through an “alter-ego” theory. California courts have held that the mere ownership of a subsidiary does not subject a nonresident parent company to general personal jurisdiction based on the subsidiary’s forum contacts. (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 540; DVI v. Superior Court (2002) 104 Cal.App.4th 1080, 1092.) Several courts have held or suggested, however, that principles of “alter ego” and “agency,” including the “representative services” doctrine, can justify the exercise of general personal jurisdiction over a nonresident defendant. (Sonora Diamond, supra, at 537-543; DVI, supra, at 1093-1094.) 

To pierce the corporate veil between a parent and subsidiary under the alter ego theory, the plaintiff must show (1) that there is such a unity of interest and ownership between the parent and subsidiary that the separate personalities of the entities no longer exists; and (2) that failure to disregard the corporate forms would result in fraud or injustice. (Sonora Diamond, supra, 83 Cal.App.4th at 539.) When the corporate form is used to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose, the courts will ignore the corporate entity and deem the corporation’s acts to be those of the persons or organizations actually controlling the corporation, in most instances the equitable owners. Alter ego is an extreme remedy, used sparingly. (Id.) 

Plaintiffs appear to argue that Redlands Management, LLC (“Redlands”) with whom Plaintiffs signed the Bake Code Franchise Agreement (“the Agreement”) is an alter-ego of La Kaffa. Regardless of Plaintiffs’ showing of ties between the two entities, there has been no showing that injustice would result from the failure to disregard Redlands in favor of La Kaffa. Redlands is a named defendant in this action and Plaintiffs have made no showing as to why its presence in this suit is insufficient.   

Specific Jurisdiction 

A court can exercise specific jurisdiction over a nonresident defendant if (1) the defendant has purposefully availed itself of the forum's benefits and protections and (2) the cause of action relates to or arises out of the defendant's contacts with the forum, and (3) the exercise of personal jurisdiction would comport with fair play and substantial justice. (Pavlovich, supra, 29 Cal.4th at 269.) The contacts for specific jurisdiction are those that existed when the plaintiff's cause of action arose. (Strasner, supra, 5 Cal.App.5th at 226.) 

Purposeful Availment 

To establish minimum contacts for specific jurisdiction, the plaintiff must show that the defendant has purposefully availed itself of the privilege of conducting activities in California to avail itself of the state’s benefits and protections. (See Axiom Foods, Inc. v. Acerchem Int'l (9th Cir. 2017) 874 F.3d 1064, 1068; Bristol-Myers supra, 1 Cal.5th 783, 799-800.) In this analysis, (1) only the defendant's contacts with California are considered, not the defendant's contacts with persons who reside there, (2) the defendant's contacts must have been purposeful rather than random, fortuitous, or attenuated, and (3) the defendant must have sought some benefit by availing itself of the jurisdiction. (See Walden v. Fiore (2014) 571 U.S. 277, 285-286; Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 474-475; Vons Cos., supra, 14 Cal.4th at pp. 446, 458.) 

Plaintiffs argue that sufficient contacts exist between La Kaffa and California to support specific personal jurisdiction. Plaintiff submits the following as evidence of La Kaffa’s contacts:

1.     The Agreement between Bake Code and Redlands. (Harrington Decl. Exh. C.)

2.     A Registered Trademark Bake Code by La Kaffa from 2016, (Harrington Decl. Exh.  D.)

3.     La Kaffa has been the subject of various regulatory and civil actions against it, attached as (Harrington Decl. Exhs. G & H.)

4.     The fact that La Kaffa refers to the franchises of Chatime USA, LLC (“Chatime”) and Bake Code interchangeably in internal documentation. ((Harrington Decl. ¶ 13.)

5.     That fact that, upon information and belief, Wang is the majority co-owner of Redlands. 

Plaintiff essentially argues that the above documents combined show a portrait of La Kaffa’s contacts with the forum of California in the aggregate. The Court finds this argument unpersuasive. 

Beginning with the Agreement, which explicitly states that “Bake Code intends to develop, operate, and manage a bakery and café…as per a Franchise Contract with Redlands Management, LLC.” (Harrington Decl. Exh. C p. 13.) The Agreement references Redlands as being the regional master franchisee of La Kaffa in the United States. (Id. at ¶ 4.) There is no reference in the portions of the Agreement produced which amount to any direct action undertaken by  La Kaffa such as to constitute purposeful availment. 

With respect to the trademark registration, the Court finds that La Kaffa’s registration of the Bake Code name with a federal agency does not constitute purposeful availment of the State of California. La Kaffa’s choice to register a trademark does not correspond to its willful intent to directly contract to open franchises in the State of California. 

Further, the regulatory action attached as Exhibit H does not appear to involve Bake Code franchising at all. The action instigated by the California Commissioner of Business Oversight concerns La Kaffa and the operation of Chatime. La Kaffa’s contacts must directly relate to or arise out of the cause of action stated against them. (Harrington Decl. Exh G.) The Court does not find that a regulatory action involving Chatime and La Kaffa directly relates to claims concerning Bake Code. Additionally, the regulatory action reflected in Exhibit H to the Harrington Declaration occurred in the state of New York and not California. The Civil Settlement in California State Court, attached as Exhibit I, also makes no mention of Bake Code, In fact, this Civil Settlement was made by Redlands and makes no mention of La Kaffa whatsoever. 

In short, the Court finds that none of the evidence accompanying Plaintiffs’ opposition amounts to purposeful availment of La Kaffa to the forum of California. While it appears there is some amount of interconnectedness between La Kaffa, Chatime, and Bake Code, there is no evidence La Kaffa directly engaged with the forum. In fact, it appears that Redlands was the party which directly franchised Bake Code locations for the State of California. 

As concerns Wang, the Court finds Plaintiffs have also not offered sufficient evidence of his purposeful availment in this forum. Plaintiffs’ state, on information and belief, that Wang was present in Los Angeles in 2015 for the opening of the Plaintiffs’ Bake Code location. (Lueng Decl. ¶ 34, Harrington Decl. Exh. K.) Plaintiffs also state, upon information and belief, that Wang was present at other location opening events in Los Angeles. (Lueng Decl. ¶ 35.) 

The Court finds these showings insufficient. Wang’s presence is only evidenced by a xeroxed photograph containing no date stamp and a simple line drawing claiming a person in the photo is Wang. Even if this photo were sufficient evidence and even if Wang were present at the Bake Code opening, his presence could be equally explained by his position as co-owner of Redlands. Wang’s presence at the opening of a location which Redlands franchised speaks more to his involvement as an officer of Redlands than his personal contacts with California. 

Conclusion 

The Court finds Plaintiffs have not shown sufficient minimum contacts between La Kaffa/Wang and the State of California to support the exercise of personal jurisdiction in this case. La Kaffa/Wang are not subject to general personal jurisdiction as neither is at home in the State of California. Further, La Kaffa/Wang have not been shown to have purposefully availed themselves of the State of California in a manner which is directly related to this action. Accordingly, the motion to quash service is GRANTED.

--- 

RULING: 

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records. 

ORDER  

La Kaffa International Co. Ltd. and Henry Wang’s Motion to Quash Service of Summons came on regularly for hearing on January 26, 2024, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows: 

THE MOTION TO QUASH SERVICE OF SUMMONS IS GRANTED.   

IT IS SO ORDERED. 

DATE:  January 26, 2024                            _______________________________ 

                                                                        Yolanda Orozco, Judge 

Superior Court of California 

County of Los Angeles