Judge: Gail Killefer, Case: 23STCV000626, Date: 2024-04-12 Tentative Ruling
Case Number: 23STCV000626 Hearing Date: April 12, 2024 Dept: 37
HEARING DATE: Friday, April 12, 202
CASE NUMBER: 23STCV000626
CASE NAME: Zahem Al Zahem, et
al. v. Asia Top City LTD, et al.
MOVING PARTY: Special Appearing Defendants
Marco Vivian and Asia Top City LTD.
OPPOSING PARTY: Plaintiff Zahem Al Zahem, et al.
TRIAL DATE: Not Set
PROOF OF SERVICE: OK
PROCEEDING: Motion to Quash Service of
Summons for Lack of Personal Jurisdiction
OPPOSITION: 2 February 2024
REPLY: 8
February 2024
TENTATIVE: Defendants Markos Vivian and Asia Top City
Ltd.’s Motion to Quash for Lack of Personal Jurisdiction is denied. Defendants Vivian
and ATC are to file an Answer within 10 days.
The Court continues the Case Management Conference to May 2, 2024, at
8:30 a.m. Defendants to give notice.
Background
On January 11, 2023, Zahem Al
Zahem; the Estate of Subheyah Al Muqahwi by and through administrator Ahmad
Yousif Alomani; Fahad Al Omani; Mossaffa LLC; Abdulaziz Ahmad Alghannam &
Bros. Co. WLL; Khalil Almoni; and Moudhi Alrefai (collectively “Plaintiffs”) as
the minority shareholders of Marque Pacific View, LLC (“MPV”) individually and
derivatively on behalf of MPV filed a Complaint against Asia Top City (“ATC”);
Marcos Vivian (aka Marcos Vivian de la Pedroas) (“Vivian”); Michael James
Kiely; and Does 1 to 50.
The Complaint alleges 14 causes
of action:
1)
Breach of Fiduciary Duty Against Asia
Top, Marcos, and Kiely – Derivatively;
2)
Breach of Fiduciary Duty Against Asia
Top, Marcos, and Kiely – Individually;
3)
Aiding and Abetting Breach of Fiduciary
Duty Against Asia Top, Marcos, and Kiely – Derivatively;
4)
Aiding and Abetting Breach of Fiduciary
Duty Against Asia Top, Marcos, and Kiely – Individually;
5)
Intentional Misrepresentation Against
Asia Top, Marcos, and Kiely – Derivatively;
6)
Intentional Misrepresentation Against
Asia Top, Marcos, and Kiely – Individually;
7)
Intentional Omission Against Asia Top,
Marcos, and Kiely – Derivatively;
8)
Intentional Omission Against Asia Top,
Marcos, and Kiely – Individually;
9)
Fraud In The Inducement Against Asia
Top and Marcos – Individually;
10) Negligent
Misrepresentation Against Asia Top, Marcos, and Kiely – Derivatively;
11) Negligent
Misrepresentation Against Asia Top, Marcos, and Kiely – Individually;
12) Breach
of Operating Agreement Against Asia Top – Individually;
13) Negligence
Against Asia Top, Marcos, and Kiely – Derivatively; and
14) Negligence
Against Asia Top, Marcos, and Kiely – Individually.
On December 22, 2023, the court
granted Vivian and ATC’s request to set aside the entry of default.
Now Special Appearing
Defendants Vivian and ATC move to quash the service of summons based on lack of
personal jurisdiction. Plaintiffs oppose the Motion. The matter is now before
the court.
I. Legal Standard
CCP § 418.10(a) states:
“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 serve or file a
motion…[t]o quash service of summon on the ground of lack of jurisdiction of
the court over him or her.”¿¿¿¿
When a defendant moves
to quash service of process on jurisdictional grounds, the plaintiff has the
initial burden of demonstrating facts justifying the exercise of
jurisdiction.¿(State of Oregon v. Superior Court (1994) 24 Cal.App.4th
1550, 1557.)¿If the plaintiff meets his or her burden, the burden shifts to the
defendant to demonstrate that the exercise of jurisdiction would be
unreasonable. (Buchanan v. Soto (2015) 241 Cal.App.4th 1353, 1362.
[“When a motion to quash is properly brought, the burden of proof is placed
upon the plaintiff to establish the facts of jurisdiction by a preponderance of
the evidence.”].) This burden must be met by competent evidence in affidavits
and authenticated documentary evidence. (Jewish Defense Org. v. Superior
Court¿(1999) 72 Cal.App.4th 1045, 1055.) “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.” (Snowey v. Harrah’s Entertainment, Inc. (2005) 35
Cal.4th 1054, 1062.)¿
II. Evidentiary Objections
A. Special Appearing
Defendants’ Objections to the Declaration of Simon Duffy:
Objections Nos. 2
and 3 are sustained due to hearsay.
Objections
Nos. 1, 4, 6, 7, 9, 10, 11, 12, and 13 are overruled.
Objections
Nos. 5, 8, 14, and 15 are sustained due to lack of foundation as to personal
knowledge.
B. Special Appearing Defendants’ Objections to the Declaration of
Alexandre Ian Cornelius
Objection No. 16 is
sustained as the records of the California Secretary of State are not attached.
Objection No. 17 is
sustained due to hearsay.
Objection No. 18 is
sustained due to improper opinion.
C. Special Appearing Defendants’ Objections to the Declarations of Ahmad Alomani
All objections to
the Declaration of Ahmad Alomani, including his supplemental declaration, are
sustained as the Declarations are inadmissible because the Declarations are not
signed under penalty of perjury under the laws of the State of California. CCP
§ 2015.5 requires declarations to be made under penalty of perjury, subscribed
by the declarant, set forth the date and place of execution, and be made under
the laws of the State of California. Indeed, where a declaration in support of
a motion is not signed under penalty of perjury under the laws of the State of
California as required by Section 2015.5, it has no evidentiary value and a
court must not consider it. (ViaView, Inc. v. Retzlaff (2016) 1
Cal.App.5th 198, 217; see also Kulshrestha v. First Union Commercial Corp.
(2004) 33 Cal.App.4th 601, 610-611 [finding that nothing in the language of
Section 2015.5 suggests that the language of “under the laws of the State of
California” is pointless or optional].)
III. Request for Judicial Notice
The
court may take judicial notice of records of any court of record of the United
States. (Evid. Code, § 452(d)(2).) However, the court may only judicially
notice the existence of the record, not that its contents are the truth. (Sosinsky
v. Grant (1992) 6 Cal.App.4th 1548, 1565.)
A. Special Appearing
Defendants’ Request for Judicial Notice of the following:
1)
Exhibit 1: The Complaint filed in this case by Plaintiffs on January 11,
2023.
2)
Exhibit 2: The Proof of Service filed on July 19, 2023, as “MARCOS VIVIAN,
aka Marcos Vivian de la Pedrosa, an individual.”
3)
Exhibit 3: The Proof of Service filed on July 19, 2023, as to “ASIA TOP
CITY, LTD. a Hong Kong Company.”
4)
Exhibit 4: The Minute Order from December 29, 2021, ruling on Asia Top City,
Ltd.’s Motion to Quash the Service of Summons for lack of personal jurisdiction
in the matter styled Powers v. Vivian, et al., Superior Court of
California, County of Los Angeles, Case No. 19STCV40987.
Defendants’ request
for judicial notice is granted.
B. Plaintiffs’ Request
for Judicial Notice
Plaintiffs’ request
for judicial notice is granted.
III. Discussion
Special
Appearing Defendants Markos Vivian (“Vivian”) and Asia Top City Ltd. (“ATC”)
(collectively “Defendants”) move for an order quashing the service of Summons
and Complaint in this action on the grounds that the court lacks personal
jurisdiction over the Defendants.
Defendant
Vivian asserts that he is a resident of England and has never maintained a
personal residence in California. (Vivian Decl. ¶ 2.) Vivian is also a director
of ATC, a Hong Kong company registered in Hong Kong. (Vivian Decl. ¶¶ 4, 5.)
Vivian also asserts that ATC is not registered with the California Secretary of
State and has no employees, officers, or directors in California or anywhere
else in the United States. (Vivian Decl. ¶ 6.) Vivian also asserts that ATC
does not advertise, market or have any continuous or systematic contacts with
California nor does it own any real property in California. (Vivian Decl. ¶ 6.)
ATC is
the managing member of Marquez Pacific View, LLC (“MPV”) and it is MPV who owns
the property at issue located in Los Angeles, County (the “Marquez Property”).
(Vivian Decl. ¶ 6.) In 2016, Plaintiffs acquired a minority membership interest
in MPV, with Plaintiffs being based in Kuwait. (Vivian Decl. ¶¶ 8, 9.) Vivian
asserts neither he nor ATC had ever met nor discussed business with Plaintiffs,
or their agents, in California. (Vivian Decl. ¶¶ 10, 13.) For these reasons,
Defendants asserts that the court lacks personal jurisdiction over the
Defendants.
A. Plaintiffs’ Burden to Prove Personal Jurisdiction
In opposition to a motion to quash based upon lack of
personal jurisdiction, complainants have the initial burden of filing evidence
to show minimum contacts. (See Muckle v. Superior Court (2002) 102
Cal.App.4th 218, 228.) “It is plaintiff's burden to
prove facts of jurisdiction by a preponderance of evidence.” (Cornelison v.
Chaney (1976) 16 Cal.3d 143, 155.) “This
burden must be met by competent evidence in affidavits and authenticated
documentary evidence. An unverified complaint may not be considered as an
affidavit supplying necessary facts.” (Ziller Electronics Lab GmbH v.
Superior Court¿(1988) 206 Cal.App.3d 1222, 1233.)
The action stems from the alleged
misrepresentations made to the Plaintiffs by Vivian and ATC, as managing
members of MPV, regarding MPV’s sole asset the Marquez Property located in Los
Angeles, County in California. (See Defendants RJN Ex. 1 [Complaint].)
Plaintiffs do not dispute that ATC is a Hong
Kong company registered to do business in Hong Kong. (Duffy Decl. ¶ 5, Ex. 1.)
Plaintiffs point out that in a Bankruptcy
Proceeding, Vivian represented to the Bankruptcy court that he was the sole
director of ATC and ATC was the manager of MPV. (Cornelius Decl. ¶ 4., Ex. 16) These
facts are not disputed by Vivian.( (Vivian Decl. ¶¶ 4, 5., 6) Vivian also
signed the bankruptcy settlement not as a managing member of MPV, but as an
authorized signatory. (Cornelius Decl. ¶ 5, Ex. 17.) Plaintiffs also present
evidence that Vivian registered MPV as a Foreign Limited Liability Company in
California so that MPV could conduct business in California as a Delaware
corporation with an address for its executive office listed in the United
Kingdom. (Duffy Decl. ¶ 9, Ex. 3.) Plaintiffs also present evidence of the
Grant Deed transferring the Marquez Property, located in California to MPV.
(Duffy Decl. ¶ 9, Ex. 4.)
MPV’s Operating Agreement dated September 1,
2016, (the “Agreement”) is attached as Exhibit A to the Complaint. (Defendants’
RJN Ex. 1[Compl. Ex. A].)
The Agreement states that ATC will be the sole
Managing Member of MPV, and all other members
(here Plaintiffs) will be Non-Managing Members. (Compl. Ex. A, Recitals,
Definitions § 9.14.) Section 1.03 of the Agreement, titled “Nature of
Business” states “[t]he express, limited and
only purposes for which the Company is to exist are to (i) own, operate,
manage, entitle, develop, construct, lease and sell that certain vacant land
located along Sunset Boulevard, in the community of Pacific Palisades, in the
City of Los Angeles, County of Los Angeles, State of California,” meaning the
Marquez Property. (Compl. Ex. A.) Accordingly, MPV has no other assets than the
Marquez Property located in Los Angeles, California and the sole purpose of
forming MPV was to develop and sell the Marquez Property. Under Section 8.01 of
the Agreement, ATC as the Managing Member of MPV acts as the Non-Managing
Member’s attorney-in-fact with full power to bind MPV and its members. (Compl.
Ex. A.)
Section 2.01 of the Agreement specifies that the
Managing Member of MPV, here ATC, “shall the full and complete charge of all
affairs of [MPV] and the management and control of [MPV]’s business (including
all decision-making) shall rest exclusively with Managing Member subject to the
terms of this Agreement.” (Compl. Ex. A.) “Managing Member
acting alone is hereby authorized to bind the Company and all conveyances of
title to Company property or any interest therein, all loan documents, deeds of
trust, agreements, contracts and any and all other matters and documents
affecting or relating to the business of the Company may be executed on
the[MPV]’s behalf by Managing Member alone and without execution and/or consent
by any Non-Managing Member.” (Compl. Ex. A, § 2.01.)
Section 5.01(a) places a limitation on the
transfer of interest in MPV and provides that the “Managing Member may transfer (a) all, but not less than all, of
such Member’s Interest in the Company to any entity so long as Marcos Vivian at
all times retains the control of the management of such transferee[.]” (Compl.
Ex. A.) Lastly, the Agreement shows that Vivian signed the Agreement on behalf
of ATC as the sole director of ATC, which is the sole managing member of ATC.
(Compl. Ex. A.)
Accordingly, the facts above establish that Vivian,
as the sole director of ATC, formed MPV and registered MPV to do business in
California for the sole purpose of developing MPV’s sole asset, the Marquez
Property, located in California.
B. The Court Has Specific Jurisdiction over
Defendants
Plaintiffs do not dispute that the court lacks
general jurisdiction over the Defendants but instead argue that due to the
parties' relationships and the nature of the transaction at issue, the court
has specific personal jurisdiction over Defendants. “A nonresident defendant is subject to specific
personal jurisdiction only if (1) the defendant purposefully availed itself of
the benefits of conducting activities in the forum state; (2) the controversy
arises out of or is related to the defendant's forum contacts; and (3) the
exercise of jurisdiction would be fair and reasonable.” (HealthMarkets, Inc.
v. Superior Court¿(2009) 171 Cal.App.4th 1160, 1167.)
Here there is evidence of
purposeful availment because the Agreement shows that MPV was exclusively
formed to develop and sell the Marquez Property, which is located in
California. Moreover, Vivian, as the sole director of ATC, agreed that ATC
would be the sole Managing Member of MPV with sole power and control to manage
MPV’s contracts and investments related to the Marquez Property. As the sole
director of ATC, Vivian registered MPV with the California Secretary of State
so that it could purchase MPV’s sole asset, the Marquez Property. (Duffy Decl. ¶ 9, Ex. 3, 4.)
Plaintiffs have also shown that the Defendants'
ownership of MPV and its sole asset, the Marquez Property, are intertwined and
that Defendants availed themselves of the laws of California in seeking to
purchase and manage real property located in California by creating MPV and
registering it with the California Secretary of State to ensure that ATC as its
sole Managing Member and Vivian as ATC’s sole director retained control of MPV
as sole asset, the Marquez Property. Thus, Defendants availed themselves of the
benefits and protections of California’s laws.
By creating MPV to exclusively
manage a real property located in California, registering MPV to do business in
California, and enticing Plaintiffs to invest in a property located in
California in order sell the real property in California, Defendants engaged in
“additional conduct” sufficient to support the finding that they intended to
avail themselves of the California Market. (See Asahi Metal Industry Co.
Ltd. v. Superior Court of California (1987) 480 U.S. 102, 112.)
Second, Plaintiffs have presented evidence that
this action, filed individually and derivatively on behalf of MPV’s
Non-Managing Members, relates to the representations made by Vivian and ATC
regarding the Marquez Property located in Los Angeles, California. “One of the recognized bases for jurisdiction in California arises
when the defendant has caused an ‘effect’ in the state by an act or omission
which occurs elsewhere.” (Sibley v. Superior Court (1976) 16 Cal.3d 442,
445.) By ensuring via the Agreement that ATC, acting
via its sole director, Vivian, retained full and exclusive control over MPV and
its sole asset, Defendants have established minimum contacts with the state of
California and that this action relates to the representations made by
Defendants about a particular asset located in California, the Marquez
property.
Plaintiffs also show that the exercise of
jurisdiction would not be unfair as Defendants specifically bargained for the
right to be MPV’s sole-managing member and exercise exclusive control over its
sole asset, the Marquez Property. Accordingly, given that MPV is the owner of
the Marquez Property and is exclusively controlled by Defendants, it is
reasonable for them to anticipate that they could be sued in California.
C. Defendants’ Burden
to Show that Exercising Personal Jurisdiction Over Defendants Would Offend
Notions of Fair Play and Substantial Justice
Once facts showing minimum
contacts with the forum state are established, the burden is on Defendants to
demonstrate that the exercise of jurisdiction would be unreasonable. (See
Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 476-477; Buchanan,
supra, 241 Ca.App.4th at p. 1362.) “Courts may evaluate the burden on
the defendant of appearing in the forum, the forum state's interest in
adjudicating the claim, the plaintiff's interest in convenient and effective
relief within the forum, judicial economy, and ‘the shared interest of the
several States in furthering fundamental substantive social policies.’ ” (Vons
Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 446 quoting Burger
King Corp., supra, 417 U.S. at p. 476.) “An otherwise valid exercise
of personal jurisdiction ‘is presumed to be reasonable.’¿[Citation.] Therefore,
defendant ‘must present a compelling case that the presence of some other
considerations would render jurisdiction unreasonable. Most such considerations
usually may be accommodated through means short of finding jurisdiction
unconstitutional.’” (Integral Development Corp., supra, 99
Cal.App.4th at 591 quoting Burger King Corp., supra, 417 U.S. at
477.)
Defendants fail to show it would be unreasonable for
California to exercise jurisdiction because Defendants are the sole Managing
Member of MPV, and MPV is already involved in various lawsuits in California
related to its activities in California. (Defendants’ RJN Ex. 4 [LASC Case No. 19STCV40987];
Plaintiffs’ RJN Ex. D [LASC Case No. 20STCV38914].) Moreover,
Defendants, acting as MPV’s sole Managing Members, decided to purchase real
property in California, aware of the risk that litigating an action in
California concerning said property would be costly as they were foreign
nationals. Yet, Defendants negotiated
for the right to exclusively control MPV and its sole asset, the Marquez
Property. Therefore, exercising jurisdiction over Defendants would not offend
traditional notions of fair play and substantial justice.
Based on the foregoing, Defendants’ Motion to Quash based on
lack of personal jurisdiction is denied.
Conclusion
Defendants Markos Vivian and Asia Top City Ltd.’s Motion to Quash for Lack of Personal Jurisdiction is denied. Defendants Vivian and ATC are to file an Answer within 10 days. The Court continues the Case Management Conference to May 2, 2024, at 8:30 a.m. Defendants to give notice.