Judge: Kristin S. Escalante , Case: 22STCV33445, Date: 2023-03-27 Tentative Ruling
Case Number: 22STCV33445 Hearing Date: March 27, 2023 Dept: 24
NATURE OF PROCEEDINGS: Hearing on Motion to Quash Service of Summons and Complaint of Specially appearing Defendant Howie Dewey; Hearing on Motion to Quash Service of Summons and Complaint of Specially appearing Defendant Evan Hand;
The above-captioned matters are called for hearing.
The Court has read the moving papers in the above-captioned motions and announces its tentative rulings in open Court.
The Motion on behalf of specially appearing Defendant Evan Hand to Quash service of Summons and Complaint for lack of personal jurisdiction and Dismiss Action; reservation no.: 994842920375 filed by Defendant Evan Hand, specially appearing, on 02/27/2023 is GRANTED.
Defendant Evan Hand (“Defendant”) move for an order quashing service of summons on the grounds that the court lacks personal jurisdiction over him—a resident of the state of New York.
1. Legal Standard
A defendant may move to quash service on the ground that the court lacks jurisdiction by filing a noticed motion to quash the service of summons at any time before the expiration of its time to plead. (Code Civ. Proc., § 418.10 (a)(1).) When a defendant argues that service of summons did not bring him or her within the trial court's jurisdiction, the plaintiff has the burden of proving the facts that did give the court jurisdiction, that is, the facts requisite to an effective service. (Code Civ. Proc., §418.10; American Exp. Centurion Bank v. Zara (2011) 199 Cal.App.4th 383, 387.)
“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. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 449 (Vons Companies) [quoting State of Oregon v. Superior Court (1994) 24 Cal.App.4th 1550, 1557].) Once Plaintiff establish facts showing minimum contacts with the forum state, “it becomes the defendant’s burden to demonstrate that the exercise of jurisdiction would be unreasonable.” (Ibid. [referencing Burger King, 471 U.S. at 476-77].) “When an issue is tried on affidavits, . . . those affidavits favoring the contention of the prevailing party establish not only the facts stated therein but also all facts which reasonably may be inferred therefrom, and where there is a substantial conflict in the facts stated, a determination of the controverted facts by the trial court will not be disturbed.” (Ibid. [quoting Griffith Co. v. San Diego Col. for Women (1955) 45 Cal.2d 501, 508].)
2. Jurisdiction
The issue is whether the court has personal jurisdiction over Defendant.
To have personal jurisdiction over a party, jurisdiction must comply with the state’s long arm statute and the due process requirements of the United States Constitution. 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. (Code Civ. Proc., § 410.10.) 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.’ ” (International Shoe Co. v. Washington (1945) 326 U.S. 310, 316 (International Shoe).)
To establish minimum contacts, the court looks as whether the defendant purposefully established minimum contacts in the forum state and whether defendant’s conduct and connection to the forum state renders it reasonably foreseeable that defendant should anticipate being hauled into court. (Burger King Corp v. Rudzewicz (1985) 471 U.S. 462, 474 (Burger King).) The absence of physical contacts does not defeat personal jurisdiction in the forum state. (Id. at p. 476.) Additionally, the contacts may be specific or general. (Vons Companies, supra, 14 Cal.4th at p. 445.) General jurisdiction exists if the defendant’s contacts are substantial, continuous, and systematic. (Ibid.) Specific jurisdiction exists if the defendant has purposefully availed itself of the forum’s benefits and the controversy arises out of defendant’s contact with the forum. (Id. at p. 446.)
If the defendant has minimum contacts with the forum state, then the court next considers whether personal jurisdiction comports with fair play and substantial justice. (Burger King, supra, 471 U.S. at 474.) The court considers the “the forum State's interest in adjudicating the dispute, the plaintiff’s interest in obtaining convenient and effective relief, the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and the shared interest of the several States in furthering fundamental substantive social policies.” (Id. at p. 477 [internal quotations omitted].)
Plaintiff argues Defendant has minimum contacts with the forum state based on his contact with Cash Daddies LLC. Specifically, Defendant participated the formation, operation, and dissolution of Cash Daddies LLC, a California corporation. (Opp. at p. 2:12-17; see also Declaration of Chris Neff [‘Neff Decl.”], ¶8, 17, 51) In support of jurisdiction, Plaintiff submits his declaration attaching various exhibits, including text messages between the parties regarding the Cash Daddies podcast and Cash Daddies LLC; the articles of organization of Cash Daddies LLC; and emails between the parties regarding Cash Daddies LLC. (Neff Decl., ¶¶16, 17, 27, 28, 32, 45, 51 Exs. 2, 3, 11, 12, 28, 34.)
The evidence and declaration do not support that Defendant has minimum contacts with the forum state under a theory of general jurisdiction. The described conduct was not substantial or continuous. Even assuming arguendo Plaintiff had demonstrated general jurisdiction, Defendant successfully demonstrated exercising general jurisdiction would be unreasonable given his complete lack of contact with California. Defendant submits his declaration stating he has never been to California, never conducted business in California, and never owned property in California. (Declaration of Evan Hand [“Hand Decl.”], ¶6.) Defendant was born in New York, went to school in New York, and other than vacations has not spent substantial time outside of New York. (Hand Decl., ¶¶ 2-4.) Thus, the question is whether Defendant has minimum contacts with the state under a theory of specific jurisdiction such that he has purposefully availed himself of the forum’s benefits and the controversy arising based on those contacts. (See Vons Companies, supra, 14 Cal.4th at p. 446.)
As to the formation, Plaintiff caused the formation of Cash Daddies LLC. (Neff Decl., ¶17, Ex. 3.) When Plaintiff did so, he provided Defendant with a 16% membership interest. (Neff Decl., ¶ 17, Ex. 3 at p. 5.) However, mere membership in the limited liability company does not supply a cognizable relationship with California sufficient to establish the basis for personal jurisdiction. (See Ruger v. Superior Court (1981) 118 Cal.App.3d 427, 433 (Ruger) [stating that a corporate position as an officer, shareholder or employee is insufficient to confer personal jurisdiction]) While Ruger analyzes corporation relationships, the reasoning applies equally here. (Ibid.) The corporation, or in this case LLC, has a legal existence independent from its members or officers, and working with the corporation is not equivalent to working in the forum state.. (Ibid.) Thus, Plaintiff’s argument that Cash Daddies is subject to suit in California, does not mean Defendant is subject to suit in California. Without more evidence of involvement, Defendant’s membership alone is insufficient.
As to operation, Plaintiff provides no evidence that Defendant operated the LLC. Plaintiff created a bank account for the LLC and distributed the banking information to Defendants. (Neff Decl., ¶¶ 20, 28, Ex. 5, 12.) Defendants were aware of the bank account. However, there is no evidence Defendant used or managed the LLC’s bank account. Plaintiff cannot establish jurisdiction based on Defendant’s knowledge of the LLC’s bank account.
As to the dissolution, Plaintiff argues Defendants participation in the dissolution of Cash Daddies LLC was tantamount to purposeful availment of California law. Plaintiff’s citation to Bresler v. Stavros (1983) 141 Cal.App.3d 365 in support of this argument is inapt. In Bresler, defendant physician who was licensed in California had subjected himself to personal jurisdiction for the purchase of a California professional medical corporation. The court found personal jurisdiction appropriate because California had specific detailed regulations governing the formation and transfer of share in a California medical corporation. (Id. at p. 369.) As such it was not “incidental” that defendant invested in a California corporation. (Ibid.) Defendant could not credibly claim he was a passive investor. (Ibid.) However, the routine dissolving of an LLC by the methods governed in the corporate code is not equivalent to the detailed regulations of a medical corporation in California. Thus, it does not amount to purposeful availment of the benefits of California law. An LLC formed in California must be dissolved by the method governing dissolution of an LLC. (Corp. Code, §§17707.01-17707.09.)
Plaintiff attaches some communications between the parties indicating that Defendant was no longer a member of Cash Daddies LLC at the time of the dissolution, but does not attach any modification to the operating agreement or to the articles of incorporation regarding a change the membership details of the LLC. Assuming without deciding that Defendant was a member at that time, the question is whether his conduct in dissolving the LLC amounts to purposeful availment of California law. As discussed, it would not.
Additionally, Plaintiff does not attach the operating agreement stating that the members consented to California jurisdiction, as they could have. (Corp Code., §17701.17, subd. (a).) He does attach the articles of organization, but those have no information about consent to California jurisdiction (Neff Decl., ¶ 17, Ex. 3.)
Finally, Plaintiff raises an argument regarding an oral contract between the parties. The complaint and motion are unclear about what the parties’ oral contract was for, e.g., to from a partnership regarding the Cash Daddies podcast, or to form the Cash Daddies LLC. To the extent Plaintiff argues the oral contract between the parties was an oral agreement to form Cash Daddies LLC the court considers whether this would render Defendant subject to the court’s jurisdiction. To validly complete the formation of an LLC the member should enter into an operating agreement, though the agreement it need not be in writing. (Corp. Code, §§17701.02, subd. (s) [defining an operating agreement to include “an agreement of all members to organize a limited liability company pursuant to this title”]; 17701.10, subd. (d), 17701.11; B. Formation, Cal. Prac. Guide Pass--Through Entities Ch. 6-B.)
Plaintiff implicitly argues that the parties’ oral contract was made and formed in California and, thus, subjects Defendant to jurisdiction. (Opp. at p. 7:19-23 [“It is well settled jurisdiction attaches when a cause of action arises out of a breach of contract made and to be performed in this state.”]) However, any oral contract made between the parties could not have been exclusively made in California. Plaintiff was in California and Defendant was in New York. (Compl. ¶1; Hand Decl., ¶7.) “[A] party’s entry into a contract with an out-of-state party does not automatically demonstrate purposeful availment in the other party’s home forum. . .” (Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 572.) There is no indication Defendant voluntarily availed himself of California law based on an oral agreement.
Plaintiff has not met his initial burden of demonstrating facts justifying the exercise of jurisdiction. (See Vons Companies, supra, 14 Cal.4th at p. 449.) Accordingly, the motion to quash the service of summons on Defendant Evan Hands is granted.
Moving party is directed to give notice.
MOVING PARTY: Howie
Dewey (Defendant)
RESP. PARTY: Chris Neff (Plaintiff)
NATURE OF PROCEEDINGS: Hearing on Motion to Quash
Service of Summons and Complaint of Specially appearing Defendant Howie Dewey;
The
above-captioned matters are called for hearing.
The Court has
read the moving papers in the above-captioned motions and announces its
tentative rulings in open Court.
The Motion on behalf of specially appearing Defendant Howie
Dewey to Quash service of Summons and Complaint for lack of personal
jurisdiction and Dismiss Action; reservation no.: 957649546934 filed by
Defendant Howie Dewey, specially appearing, on 02/27/2023 is GRANTED.
Defendant Howie Dewey’s motion to vacate the default entered
against him is granted. Defendant’s motion to quash service of summons and
complaint for lack of personal jurisdiction is also granted.
Defendant Howie Dewey (“Defendant”) moves for an order
quashing service of summons on the grounds that the court lacks personal
jurisdiction over him as a resident of New York and for an order setting aside
the default entered against him on January 11, 2023 pursuant to Code of Civil
Procedure section 473, subdivision (b). (Notice of Mtn., at p. 2.) The parties have
stipulated to set aside the default judgment and attach that stipulation to the
motion. (Motion, Ex. A)
By way of background, Plaintiff Chris Neff (“Plaintiff”)
filed suit against Defendant, Howie Dewey, Sam Tripoli, and Cash Daddies
(collectively “Defendants”) alleging claims arising out of the parties’
relationship to the podcast Cash Daddies. Plaintiff alleges the parties were
co-hosts of Cash Daddies from February 2021 until July 2022. During that time
Plaintiff spent at least twenty hours a week working on the podcast, either
directly or through promotional efforts. In July 2022, Defendants requested
Plaintiff leave the podcast. Plaintiff alleges they excised him from the
podcast out of greed. Specifically, Defendants sought to use Plaintiff for his
talent only to oust him once Cash Daddies began succeeding.
1. Motion to
Set Aside Default
Plaintiff filed
a complaint on 10/13/2022 against Defendants. Plaintiff filed a proof of
service of the summon as complaint as to Defendant on 12/13/2022, indicating
Defendant was personally served on October 26, 2022 at 72 Barrow Street,
Apartment 6A, New York, New York, 10014. Default was entered against Defendant
on January 11, 2023. The Request for Entry of Default on Defendant includes a
proof of serve indicating Plaintiff served the request on Defendant on by mail
on January 11, 2023. The court has not entered default judgment against
Defendant. Defendant filed the instant motion on February 27, 2023.
“The court may, upon any terms as may be just,
relieve a party or his or her legal representative from a judgment, dismissal,
order, or other proceeding taken against him or her through his or her mistake,
inadvertence, surprise, or excusable neglect.” (Code Civ. Proc., §473)
Defendant
timely made the application for relief from default, but the application is not
procedurally correct. Defendant does provide the court with either his own or
his attorney’s declaration attesting to mistake, inadvertence, surprise or
excusable neglect. (Code Civ. Proc., §473) However,
the parties have stipulated Defendant’s relief from default. Accordingly, the
court grants the motion in consideration of the parties’ consent.
2. Motion to
Quash
a. Legal
Standard
A
defendant may move to quash service on the ground that the court lacks
jurisdiction by filing a noticed motion to quash the service of summons at any
time before the expiration of its time to plead. (Code Civ. Proc., § 418.10
(a)(1).) When a defendant argues that service of summons did not bring him or
her within the trial court's jurisdiction, the plaintiff has the burden of
proving the facts that did give the court jurisdiction, that is, the facts
requisite to an effective service. (Code Civ. Proc., §418.10; American Exp.
Centurion Bank v. Zara (2011) 199 Cal.App.4th 383, 387.)
“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. v. Seabest Foods, Inc. (1996) 14
Cal.4th 434, 449 (Vons Companies) [quoting State of Oregon v. Superior Court
(1994) 24 Cal.App.4th 1550, 1557].) Once Plaintiff establish facts showing
minimum contacts with the forum state, “it becomes the defendant’s burden to
demonstrate that the exercise of jurisdiction would be unreasonable.” (Ibid.
[referencing Burger King, 471 U.S. at 476-77].) “When an issue is tried on
affidavits, . . . those affidavits favoring the contention of the prevailing
party establish not only the facts stated therein but also all facts which
reasonably may be inferred therefrom, and where there is a substantial conflict
in the facts stated, a determination of the controverted facts by the trial
court will not be disturbed.” (Ibid. [quoting Griffith Co. v. San Diego Col.
for Women (1955) 45 Cal.2d 501, 508].)
b. Jurisdiction
The issue is whether the court has personal jurisdiction
over Defendant.
To have personal jurisdiction over a party, jurisdiction must
comply with the state’s long arm statute and the due process requirements of
the United States Constitution. 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. (Code
Civ. Proc., § 410.10.) 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.’ ” (International Shoe Co. v. Washington (1945) 326
U.S. 310, 316 (International Shoe).)
To establish minimum contacts, the court looks as whether
the defendant purposefully established minimum contacts in the forum state and
whether defendant’s conduct and connection to the forum state renders it
reasonably foreseeable that defendant should anticipate being hauled into
court. (Burger King Corp v. Rudzewicz (1985) 471 U.S. 462, 474 (Burger King).)
The absence of physical contacts does not defeat personal jurisdiction in the
forum state. (Id. at p. 476.) Additionally, the contacts may be specific or
general. (Vons Companies, supra, 14 Cal.4th at p. 445.) General jurisdiction
exists if the defendant’s contacts are substantial, continuous, and systematic.
(Ibid.) Specific jurisdiction exists if the defendant has purposefully availed
itself of the forum’s benefits and the controversy arises out of defendant’s
contact with the forum. (Id. at p. 446.)
If the defendant has minimum contacts with the forum state,
then the court next considers whether personal jurisdiction comports with fair
play and substantial justice. (Burger King, supra, 471 U.S. at 474.) The court
considers the “the forum State's interest in adjudicating the dispute, the
plaintiff’s interest in obtaining convenient and effective relief, the
interstate judicial system's interest in obtaining the most efficient
resolution of controversies, and the shared interest of the several States in
furthering fundamental substantive social policies.” (Id. at p. 477 [internal
quotations omitted].)
Plaintiff argues Defendant has
minimum contacts with the forum state based on his conduct with the Cash
Daddies podcast and Cash Daddies LLC. Specifically, Defendant performed in the
Cash Daddies podcast which was produced and based out of Los Angeles, and Defendant
participated the formation, operation, and improper or fraudulent dissolution
of Cash Daddies LLC, a California corporation. (Opp. at p. 2:12-17; see also
Declaration of Chris Neff [‘Neff Decl.”], ¶8, 17, 51) In support of
jurisdiction, Plaintiff submits his declaration attaching various exhibits,
including text messages between the parties regarding the Cash Daddies podcast
and Cash Daddies LLC; the articles of organization of Cash Daddies LLC; and
emails between the parties regarding Cash Daddies LLC. (Neff Decl., ¶¶16, 17,
27, 28, 32, 45, 51 Exs. 2, 3, 11, 12, 28, 34.)
The evidence and declaration do
not support that Defendant has minimum contacts with the forum state under a
theory of general jurisdiction. The described conduct was not substantial or
continuous. Even assuming arguendo Plaintiff had demonstrated general
jurisdiction, Defendant successfully demonstrated exercising general
jurisdiction would be unreasonable given his lack of contact with California.
Defendant submits his declaration stating he has never owned property in
California or lived in California. (Declaration of Howie Dewey [“Dewey Decl.”],
¶7.) Defendant has resided in New York and Atlanta Georgia. (Dewey Decl., ¶¶
2-6.) The only time he has visited California in the past five years is for two
trips lasting for a total of three days. (Dewey Decl., ¶7) Thus, the question
is whether Defendant has minimum contacts with the state under a theory
of specific jurisdiction such that he has purposefully availed himself of the
forum’s benefits and the controversy arising based on those contacts. (See Vons
Companies, supra, 14 Cal.4th at p. 446.)
As to the Cash Daddies podcast, Plaintiff argues the podcast
was produced and based out of Los Angeles California. The only evidence
Plaintiff submits in support of this argument is his declaration stating “the
podcast was centered in California.” (Neff Decl., ¶52.) Plaintiff does not
contest Dewey’s declaration that he is and was a New York resident during the
taping of the show. He also does not context that Dewey did not travel to
California. The complaint states that Defendant and producer Evan Hand were
both New York residents. (Compl., ¶¶2, 3, 14) Considering that the producer and
one of the podcast hosts were both based in New York and did not travel to
California, Plaintiff has not explained sufficiently, or supported with
evidence, that the podcast was produced and based out of California.
Accordingly, Plaintiff has not presented evidence that Dewey is subject to
California jurisdiction based on his participation in the podcast.
As to the formation, Plaintiff caused the formation of Cash
Daddies LLC. (Neff Decl., ¶17, Ex. 3.) When Plaintiff did so, he provided
Defendant with a 28% membership interest. (Neff Decl., ¶ 17, Ex. 3 at p. 5.) However,
mere membership in the limited liability company does not supply a cognizable
relationship with California sufficient to establish the basis for personal
jurisdiction. (See Ruger v. Superior Court (1981) 118 Cal.App.3d 427, 433
(Ruger) [stating that a corporate position as an officer, shareholder or
employee is insufficient to confer personal jurisdiction]) While Ruger analyzes
corporation relationships, the reasoning applies equally here. (Ibid.) The
corporation, or in this case LLC, has a legal existence independent from its
members or officers, and working with the corporation is not equivalent to
working in the forum state.. (Ibid.) Thus, Plaintiff’s argument that Cash
Daddies is subject to suit in California, does not mean Defendant is subject to
suit in California. Without more evidence of involvement, Defendant’s
membership alone is insufficient.
As to operation, Plaintiff provides no evidence that
Defendant operated the LLC. Plaintiff created a bank account for the LLC and
distributed the banking information to Defendants. (Neff Decl., ¶¶ 20, 28, Ex.
5, 12.) Defendants were aware of the bank account. However, there is no
evidence Defendant used or managed the LLC’s bank account. Plaintiff cannot
establish jurisdiction based on Defendant’s knowledge of the LLC’s bank
account.
As to the dissolution, Plaintiff argues Defendants
participation in the dissolution of Cash Daddies LLC was tantamount to
purposeful availment of California law. Plaintiff’s citation to Bresler v.
Stavros (1983) 141 Cal.App.3d 365 in support of this argument is inapt. In
Bresler, defendant physician who was licensed in California had subjected
himself to personal jurisdiction for the purchase of a California professional
medical corporation. The court found personal jurisdiction appropriate because
California had specific detailed regulations governing the formation and
transfer of share in a California medical corporation. (Id. at p. 369.) As such
it was not “incidental” that defendant invested in a California corporation.
(Ibid.) Defendant could not credibly claim he was a passive investor. (Ibid.)
However, the routine dissolving of an LLC by the methods governed in the
corporate code is not equivalent to the detailed regulations of a medical
corporation in California. Thus, it does not amount to purposeful availment of
the benefits of California law. An LLC formed in California must be dissolved
by the method governing dissolution of an LLC. (Corp. Code,
§§17707.01-17707.09.)
Additionally, Plaintiff does not attach the operating
agreement stating that the members consented to California jurisdiction, as
they could have. (Corp Code., §17701.17, subd. (a).) He does attach the
articles of organization, but those have no information about consent to
California jurisdiction (Neff Decl., ¶ 17, Ex. 3.)
Finally, Plaintiff raises an argument regarding an oral
contract between the parties. The complaint and motion are somewhat unclear
about what the parties’ oral contract was for, e.g., to form a partnership
regarding the Cash Daddies podcast, or to form the Cash Daddies LLC. To the
extent Plaintiff argues the oral contract between the parties was an oral
agreement to form Cash Daddies LLC the court considers whether this would
render Defendant subject to the court’s jurisdiction. To validly complete the
formation of an LLC the member should enter into an operating agreement, though
the agreement it need not be in writing. (Corp. Code, §§17701.02, subd. (s)
[defining an operating agreement to include “an agreement of all members to
organize a limited liability company pursuant to this title”]; 17701.10, subd.
(d), 17701.11; B. Formation, Cal. Prac. Guide Pass--Through Entities Ch. 6-B.)
Plaintiff implicitly argues that the parties’ oral contract
was made and formed in California and, thus, subjects Defendant to
jurisdiction. (Opp. at p. 7:19-23 [“It is well settled jurisdiction attaches
when a cause of action arises out of a breach of contract made and to be
performed in this state.”]) However, any oral contract made between the parties
could not have been exclusively made in California. Plaintiff was in California
and Defendant was in New York. (Compl. ¶1; Dewey Decl., ¶9.) “[A] party’s entry
into a contract with an out-of-state party does not automatically demonstrate
purposeful availment in the other party’s home forum. . .” (Aquila, Inc. v.
Superior Court (2007) 148 Cal.App.4th 556, 572.) There is no indication
Defendant voluntarily availed himself of California law based on an oral
agreement.
Plaintiff
has not met his initial burden of demonstrating facts justifying the exercise
of jurisdiction. (See Vons Companies, supra, 14 Cal.4th at p. 449.) Accordingly, the motion to quash the service of summons on
Defendant Howie Dewey is granted.
Moving party is directed to give notice.