Judge: H. Jay Ford, III, Case: 24SMCV02562, Date: 2025-03-28 Tentative Ruling

Case Number: 24SMCV02562    Hearing Date: March 28, 2025    Dept: O

  Case Name:  702 Crescent LLC v. United Texas Bank, et al.

SUBJECT:                 MOTION TO QUASH SERVICE OF PROCESS FOR LACK OF PJ

MOVING PARTY:   Specially Appearing Defendant Jarrod Beck

RESP. PARTY:         Plaintiff 702 Crescent, LLC

TENTATIVE RULING

            Specially Appearing Defendant Jarrod Beck Motion to Quash Service of Process for Lack of Personal Jurisdiction is DENIED.  Defendant Jarrod Beck is ordered to file and serve its answer to the FAC within 15 days of service of the order.  Plaintiff is to submit the proposed order.

REASONING

“California's long-arm statute authorizes California courts to exercise jurisdiction on any basis not inconsistent with the Constitution of the United States or the Constitution of California. A state court's assertion of personal jurisdiction over a nonresident defendant who has not been served with process within the state comports with the requirements of the due process clause of the federal Constitution if the defendant has such minimum contacts with the state that the assertion of jurisdiction does not violate “ ‘traditional notions of fair play and substantial justice.’ ” (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, citing International Shoe Co. v. Washington (1945) 326 U.S. 310, 316; see Code Civ. Proc., § 410.10; see also Burnham v. Superior Court (1990) 495 U.S. 604, 618–619.) “Personal jurisdiction may be either general or specific.” (Vons Companies, Inc., supra, 14 Cal.4th at p. 445.)

“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.” Vons Companies, Inc., supra, 14 Cal.4th at p. 445.) “Once facts showing minimum contacts with the forum state are established, however, it becomes the defendant's burden to demonstrate that the exercise of jurisdiction would be unreasonable.” (Ibid.)

“When a defendant moves to quash service of process on jurisdictional grounds, the plaintiff has the burden of proving, by a preponderance of the evidence, facts justifying the exercise of jurisdiction. [Citations.] ‘The plaintiff must come forward with affidavits and other competent evidence to carry this burden.’ [Citation.] A verified complaint is the functional equivalent of an affidavit. [Citation.] ‘If the plaintiff meets this burden, “it becomes the defendant's burden to demonstrate that the exercise of jurisdiction would be unreasonable.” (Safieddine v. MBC FZ, LLC (2024) 103 Cal.App.5th 1086, 1099, emphasis added.)

 “A nonresident defendant may be subject to the general jurisdiction of the forum if his or her contacts in the forum state are “substantial ... continuous and systematic.” (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444.)

I.                Plaintiff Does Not Argue The Court Has General Jurisdiction Over Beck

“Personal jurisdiction may be either general or specific.” (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 268–269.) “A nonresident defendant may be subject to the general jurisdiction of the forum if his or her contacts in the forum state are “substantial ... continuous and systematic.” (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445.)  The “standard for establishing general jurisdiction is ‘fairly high,’[citation], and requires that the defendant's contacts be of the sort that approximate physical presence. (Elkman v. National States Ins. Co. (2009) 173 Cal.App.4th 1305, 1315.) “Factors to be taken into consideration are whether the defendant makes sales, solicits or engages in business in the state, serves the state's markets, designates an agent for service of process, holds a license, or is incorporated there.” (Ibid.) 

Plaintiff 702 Crescent, LLL (“Plaintiff”) does not argue or submit evidence to show the Court has general jurisdiction over the Specially Appearing Defendant Jarrod Beck (“Beck”) Thus, Plaintiff has not met their burden to demonstrate general jurisdiction.

II.             Plaintiff Has Met its Burden to Show the Court has Specific Jurisdiction over Beck in this action. 

As the party asserting jurisdiction over Defendant, Plaintiff is responsible for establishing all elements of specific jurisdiction.  (See Ziller Electronics Lab GmbH v. Sup. Ct. (1988) 206 Cal.App.3d 1222, 1232.)  “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.’” (Jayone Foods, Inc. v. Aekyung Industrial Co. Ltd. (2019) 31 Cal.App.5th 543, 553, citing Pavlovich v. Supr. Ct. (2002) 29 Cal.4th 262, 268; Farina v. SAVWCL III, LLC (2020) 50 Cal.App.5th 286, 294.)

Beck argues that Plaintiff does not have specific jurisdiction over Beck. The initial burden is on the Plaintiff to show that Beck has purposefully availed themselves to forum benefits, the controversy is related to or arises out of Beck’s contacts with the forum, and the personal jurisdiction assertion is reasonable.

Beck further argues that Plaintiff’s verified FAC is not admissible evidence in support of their opposition to the motion to quash.  Beck is mistaken. Plaintiffs verified FAC may be considered a declaration or affidavit for the purpose of establishing personal jurisdiction when a Defendant moves to quash service of process on jurisdictional grounds. (See Safieddine, supra, 103 Cal.App.5th  at p. 1099 (“A verified complaint is the functional equivalent of an affidavit.”))

A.              Purposeful Availment

“The purposeful availment inquiry focuses on the defendant's intentionality.  This prong is only satisfied when the defendant purposefully and voluntarily directs his activities toward the forum so that he should expect, by virtue of the benefit he receives, to be subject to the court's jurisdiction based on his contacts with the forum.”  (Pavlovich, supra, 29 Cal.4th at 269.)  “When a defendant purposefully avails itself of the privilege of conducting activities within the forum State, it has clear notice that it is subject to suit there, and can act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to customers, or, if the risks are too great, severing its connection with the State.”  (Ibid.)

Purposeful action directed at a forum resident has been described by the Supreme Court as sufficient contacts for specific jurisdiction over a particular defendant.  (See Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 472.)  The purposeful availment requirement is intended to prevent jurisdiction to be exercised over a non-resident based upon random, fortuitous or attenuated contacts or of the unilateral activity of another party or a third person.  (See Pavlovich, supra, 29 Cal.4th at p. 268.)  “Parties who reach out beyond one state and create continuing relationships and obligations with citizens of another are subject to regulation and sanctions in the other State for the consequences of their activities.”  (Burger King Corp, supra, 471 U.S. at p. 473; Hall v. LaRonde (1997) 56 Cal.App.4th 1342, 1344 [the use of electronic mail and the telephone by a party in another state may establish sufficient minimum contacts with California to support personal jurisdiction]; Stone v. State of Tex. (1999)  

76 Cal.App.4th 1043, 1048–49.) “If the question is whether an individual's contract with an out-of-state party alone can automatically establish sufficient minimum contacts in the other party's home forum, we believe the answer clearly is that it cannot. (Burger King Corp., supra, 471 U.S. at p. 478.)

            Plaintiff alleges specific facts within the verified FAC, that Beck maintained constant communication directly with Plaintiff prior to, during, and after the Modification Agreement was formed, with Beck primarily involved in negotiating the deal points relating to the Modification Agreement between Plaintiff and Defendant United Texas Bank (“UTB’) (See FAC, ¶¶ 18–31.) Thus, Plaintiff has met their burden to show that Beck purposefully availed himself to the benefits of California as a forum state.

i.              Purposeful availment Based On Beck’s Alleged Torts

            In addition, Plaintiff argues Beck purposefully availed himself to California jurisdiction,  based on Beck’s alleged torts. Plaintiff argues and provides specific factual allegations within the verified FAC,  that Beck “fraudulently induc[ed] Plaintiff to enter into the Modification Agreement,” and, “Beck knew that the brunt of the injury would be felt by Plaintiff in California where the Plaintiff is domiciled.” (Oppo., p. 6; see FAC, ¶¶ 30–31)

To analyze specific jurisdiction for causes of action arising from torts, California courts employ the “effects test “requiring the plaintiff to show (1) the defendant committed an intentional tort; (2) the plaintiff felt the brunt of the harm caused by that tort in the forum state such that the forum state was the focal point of the plaintiff's injury; and (3) the defendant expressly aimed the tortious conduct at the forum state such that the forum state was the focal point of the tortious activity.” (Burdick v. Superior Court (2015) 233 Cal.App.4th 8, 19–20.) “To satisfy the third prong, the plaintiff must show the defendant knew that the plaintiff would suffer the brunt of the harm caused by the tortious conduct in the forum, and point to specific activity indicating that the defendant expressly aimed its tortious conduct at the forum.” (Ibid., citations omitted.)

Plaintiff alleges that Beck committed promissory fraud, an intentional tort. (See FAC, ¶¶ 58–64.) Plaintiff provides specific factual allegations to meet the heightened pleading standards for a fraud claim, and thus because a verified complaint is considered declaratory evidence within a motion to quash, Plaintiff has shown that Beck committed an intentional tort.

Plaintiff shows that the brunt of the harm caused by the alleged tortious conduct is within California because Plaintiff alleges they are a California LLC, that the property at issue is located in Beverly Hills, CA, and that Beck committed this fraud via emails to sent to Plaintiff while Plaintiff was located in California. (See FAC, ¶¶ 1, 3, 12, 17.)

Plaintiff shows that Beck expressly aimed the tortious conduct at the state of California through allegations that Beck was conducting business in California, and that the alleged fraudulent activity was related to a property located in California. (See FAC, ¶¶ 28–31.)

Beck argues that he did not have any contact with Plaintiff as an individual, and was only a representative of UTB, negotiating a modification agreement between Plaintiff and UTB, and not with Beck as an individual. However, Beck does not address his tortious activity or whether the tortious activity purposefully avails Beck to the specific jurisdiction of California. 

The Taylor-Rush v. Multitech Corp. Court held, “Corporate officers and directors cannot ordinarily be held personally liable for the acts or obligations of their corporation. However, they may become liable if they directly authorize or actively participate in wrongful or tortious conduct.” (Taylor-Rush v. Multitech Corp. (1990) 217 Cal.App.3d 103, 113, reh'g denied and opinion modified (Feb. 8, 1990).) The Taylor-Rush Court also reasoned that the “status as employee[] does not somehow insulate them from jurisdiction. Each defendant's contacts with the forum State must be assessed individually. (Id., at p. 116.) The Court rejects Beck’s blanket argument that because he is a representative of UTB, and not acting on an individual basis, he is insulated from liability for his fraudulent conduct directed against the Plaintiff.  Plaintiff alleges that Beck, on an individual basis, negotiated the modification agreement with the intent for the Plaintiff to rely on Beck’s fraudulent promises. Plaintiff alleges Beck personally negotiated this agreement, and thus Beck actively participated in the wrongful or tortious conduct at issue within the FAC.

Thus, Plaintiff has established the first step of the specific jurisdiction analysis that Beck has purposefully availed himself of the jurisdiction of the state of California.

B.        The Controversy Arises Out Of The Defendant’s Contacts With The California.

A lawsuit arises out of a defendant’s forum-related contacts if “there is a substantial nexus or connection between the defendant’s forum activities and the plaintiff’s claim.”  (Snowney v. Harrah’s Entertainment, Inc. (2005) 35 Cal.4th 1054, 1068.)  The ‘arising out of or relating to’ standard is in the disjunctive, and is intended as a relaxed, flexible standard.”  (Gilmore Bank v. AsiaTrust New Zealand Limited (2014) 223 Cal.App.4th 1558, 1573.  “A claim need not arise directly from the defendant's forum contacts in order to be sufficiently related to the contact to warrant the exercise of specific jurisdiction.  Moreover, the forum contacts need not be directed at the plaintiff in order to warrant the exercise of specific jurisdiction.  Indeed, only when the operative facts of the controversy are not related to the defendant's contact with the state can it be said that the cause of action does not arise from that contact.”  (Snowney v. Harrah's Entertainment, Inc. (2005) 35 Cal.4th 1054, 1068.) 

As analyzed above, Plaintiff provides specific factual allegations in the verified FAC that establish a substantial connection between Beck’s forum activities and Plaintiff’s claim. Beck’s only argument is that he cannot be held individually liable while acting in a corporate capacity for UTB does not overcome the facts showing the connection between Becks tortious conduct and California.

Thus, Plaintiff meets the second step to establish specific jurisdiction over Beck.

C.        Beck Does Not Show It Is Unreasonable For California To Exercise Personal Jurisdiction Over Beck. 

Once a plaintiff shows that the nonresident defendant has “purposefully availed” itself of benefits and protections of forum law, that defendant bears the burden of proving it would be unreasonable for local courts to exercise jurisdiction, i.e. violate notions of fair play and substantial justice.  (Burger King Corp, supra, 471 U.S. at p. 475.)  “[W]here a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.” (Id., at p. 477.)

 In determining whether assertion of jurisdiction would be unreasonable, the court must consider (1) the burden on the defendant; (2) the forum State's interest in adjudicating the dispute; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and (5) the shared interest of the several States in furthering fundamental substantive social policies.  (See World-Wide Volkswagen Corp. v. Woodson (1980) 444 US 286, 292.)

            Beck argues that it would be unreasonable for the Court to exercise jurisdiction over Beck because Beck has no personal contact with California other than visiting the state to see relatives or for a vacation, he is not a California resident, and his only connection is his actions as director for UTB. (See Motion., p. 10:18–24; see generally Beck Decl.)

            Plaintiff has provided persuasive evidence to show Beck directed his activities towards a California LLC, with the property at issue located in California, and therefore, the brunt of alleged tortious activity took place California. Beck does not show why or how exercising personal jurisdiction over him is unreasonable.

            Defendant’s Motion to Quash Service of Process due to lack of Personal Jurisdiction is DENIED.