Judge Gary Y. Tanaka, Case 21TRCV00893 2023-01-10 Tentative Ruling

Judge: Gary Y. Tanaka, Case: 21TRCV00893, Date: 2023-01-10 Tentative Ruling

Case Number: 21TRCV00893 Hearing Date: January 10, 2023 Dept: B

LOS ANGELES SUPERIOR COURT – SOUTHWEST DISTRICT

Honorable Gary Y. Tanaka Tuesday, January 10, 2023

Department B Calendar No. 7

PROCEEDINGS

Chase Packaging, LLC v. Air Fayre CA, Inc., et al.

21TRCV00893

1. Journey Group Limited’s Motion to Quash Service of Summons and Complaint

TENTATIVE RULING

Journey Group Limited’s Motion to Quash Service of Summons and Complaint is denied.

Background

Plaintiff filed the Complaint on November 2, 2021. Plaintiff alleges the following facts. Plaintiff made and delivered meals to Defendant Air Fayre CA Inc. to be provided to its airline customers. Air Fayre’s purchase orders commonly omitted the price for the meals it ordered. Therefore, the parties used a system, designed and maintained by Air Fayre, to set the prices it owed to Chase. Air Fayre and Defendant Darryl Terrell manipulated the pricing system and underpaid Chase. Defendants also induced Chase to purchase a new, larger facility in reliance on Defendants’ promises of increasing future business. However, Air Fayre abruptly terminated the parties’ relationship. Plaintiff alleges that Air Fayre is a wholly owned subsidiary of Journey Group, Limited. Plaintiff alleges the following causes of action: (1) Breach of Contract; (2) Intentional Interference with Contract; (3) Unjust Enrichment; (4) Promissory Estoppel (meal production); (5) Promissory Estoppel (new facility); (6) Intentional Interference with Prospective Economic Advantage; (7) Intentional Misrepresentation; (8) Unfair Competition.

Defendant Air Fayre CA filed a Cross-Complaint on February 17, 2022. Cross-Complainant alleges the following facts. Air Fayre stopped sending Chase business via purchase orders after American Airlines terminated its contract with Air Fayre based on Chase’s substandard performance as an in-flight meal caterer. Rather than being coerced into buying a new facility, Chase willingly abandoned its old facility to move into a new facility that was not FDA approved. Thus, in-flight meals prepared in those facilities could not be accepted by any airline. Cross-Defendants made numerous assurances that it would perform its services properly and in reliance on those assurances Cross-Complainant continued its business relationship with Cross-Defendants which ultimately damaged Cross-Complainants’ business and contractual relationships with third parties. Cross-Complainant alleges the following causes of action: 1. Fraud; 2. Fraud by Omission; 3. Breach of Contract; 4. Intentional Interference with Contract; 5. Negligent Interference with Prospective Economic Relations; 6. Unjust Enrichment.

Motion to Quash Service of Summons and Complaint

Defendant Journey Group Limited (“Journey” or “Journey Group, or “Defendant”) moves for an order quashing service of the summons and complaint pursuant to Code of Civil Procedures section 418.10(a)(1). Defendant asserts that it is an English corporation and lacks minimum contacts with California for this Court to exercise personal jurisdiction.

Plaintiff has the burden to show that sufficient minimum contacts exist between Defendant and California to establish personal jurisdiction. See Mihlon v. Superior Court (1985) 169 Cal.App.3d 703, 710; See also Edmunds v. Superior Court (1994) 24 Cal.App.4th 221, 230-31. Plaintiff must meet this burden by a preponderance of the evidence. See Ziller Elec. Lab GmbH v. Superior Court (1988) 206 Cal.App.3d 1222, 1232.

General Jurisdiction

A non-resident defendant may be subject to the forum state’s general jurisdiction if the defendant’s contacts are substantial, continuous, and systematic. See Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445. Plaintiff must provide competent evidence to establish that Defendant’s connections with California are sufficiently continuous and systematic to impose general jurisdiction. See Int’l Shoe Co. v. Wash., 326 U.S. 310, 317 (1945). Plaintiff has failed to submit competent evidence to establish that Defendant has substantial, systematic, and continuous contacts to impose general jurisdiction upon Defendant.

Specific Jurisdiction

“When determining whether specific jurisdiction exists, courts consider the relationship among the defendant, the forum, and the litigation. 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.” Snowney v. Harrah’s Ent., Inc. (2005) 35 Cal.4th 1054, 1062 (internal citations and quotations omitted).

Ownership and control by a nonresident parent corporation of a subsidiary that does business in California does not, without more, subject the parent to jurisdiction. DVI, Inc. v Superior Court (2002) 104 Cal.App.4th 1080, 1092-97. However, a parent corporation may be subject to specific jurisdiction if it causes its subsidiary to engage in forum contacts despite the fact that the separateness of the corporations is maintained. Anglo Irish Bank Corp., PLC v Superior Court (2008) 165 Cal.App.4th 969, 982. So long as the parent entity purposefully directed its activities toward California, either directly or through its subsidiary, specific jurisdiction may be found. Healthmarkets, Inc. v Superior Court (2009) 171 Cal.App.4th 1160, 1169.

Here, Plaintiff has provided sufficient evidence that Journey Group purposefully availed itself of the forum benefits. The evidence developed through discovery indicates that Defendant Journey’s sole employee, director, and CFO, Alison Whittenbury, may have been directly and actively involved in the specific activities related to this action. Ms. Whittenbury, understandably, attempts to minimize her role as merely clerical and/or accounting dealing with accounts payable and attempting to simply answer questions without providing any input into the ultimate decisions of Air Fayre. However, Plaintiff “need not prove the merits of its case during this jurisdictional stage of the proceedings.” SK Trading Int’l Co. v. Superior Court (2022) 77 Cal. App. 5th 378, 390. The evidence submitted by Plaintiff provides an inference that Ms. Whittenbury’s role may have extended merely beyond a clerical function but also into active decision-making and policy making decisions. The Court cannot simply rely on Ms. Whittenbury’s self-serving declaration to the contrary.

The evidence submitted by Plaintiff includes but is not limited to the following: Ms. Whittenbury told Frances Chase in June 2018 that “there shouldn't be any more zero POs going forwards.” (Supp. Decl., McCauley, Ex. 9.) Here, Ms. Whittenbury appears to be making a decision in attempting to resolve the alleged issues stemming from zero pricing. In September 2018, Ms. Whittenbury told Frances Chase that she was “very keen to work with you to resolve all of this” and agreed to look at the “POs not having zeros on.” (Id., Ex. 11.) Later, Whittenbury asked Frances Chase in March 2020 to “continue to notify [her] as soon as you notice a problem” so that her team could “resolve it quickly.” (Id., Ex. 32.) Additionally, emails appear to indicate a supervisorial and/or managerial role as to Air Fayre. (Id. at Exs. 34-35, 38.) Plaintiff also submitted evidence that Journey Group described Air Fayre as its “Los Angeles Division.” (Id. at Ex. 6.) Finally, Plaintiff submitted evidence that Whittenbury met with Air Fayre and Chase personnel in person in California on more than one occasion which was ultimately confirmed by Ms. Whittenbury, herself. (Decl., Whittenbury, dated 12/5/22, ¶¶ 7-8.)

For purposes of the jurisdictional analysis, Plaintiff has adequately established that Journey Group has subjected itself to personal jurisdiction through acts of directing and/or controlling the activities of its subsidiary, Air Fayre. Finally, in view of the evidence submitted as outline above, the Court finds that the interests of fair play and substantial justice supports the imposition of personal jurisdiction.

Therefore, Journey Group, Ltd.’s Motion to Quash Service of Summons and Complaint is denied.

Plaintiff is ordered to given notice of this ruling.