Judge: Mark A. Young, Case: 20SMCV00819, Date: 2023-02-07 Tentative Ruling
Case Number: 20SMCV00819 Hearing Date: February 7, 2023 Dept: M
CASE NAME: Yang v. Venice
Business Partners Inc., et al.
CASE NO.: 20SMCV00819
MOTION: Motion
to Quash Service of Summons and Demurrer
Demurrer
HEARING DATE: 2/7/2023
Legal
Standard
Motion to Quash
“A defendant . . . may serve and file a notice of
motion for one or more of the following purposes: (1) To quash service of summons on the ground of lack of
jurisdiction of the court over him or her. . . .” (CCP § 418.10(a).) “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.” (Aquila, Inc.
v. Sup. Ct. (2007) 148 Cal.App.4th 556, 568.) The plaintiff has “the burden
of proving the facts that did give the court jurisdiction, that is the facts
requisite to an effective service.” (Coulston v. Cooper (1966)
245 Cal.App.2d 866, 868; see also Elkman v. National States Ins. Co. (2009)
173 Cal.App.4th 1305, 1312-13 [“Where a nonresident defendant challenges
jurisdiction by way of a motion to quash, the plaintiff bears the burden of
establishing by a preponderance of the evidence that minimum contacts exist
between the defendant and the forum state to justify imposition of personal
jurisdiction.”].)
Demurrer
A
demurrer for sufficiency tests whether the complaint states a cause of action.
(Hahn v. Mirda (2007)
147 Cal.App.4th 740, 747.) When considering demurrers, courts read the
allegations liberally and in context. In a demurrer proceeding, the defects
must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co.
(2004) 116 Cal.App.4th 968, 994.) A demurrer tests the pleadings alone and not
the evidence or other extrinsic matters. Therefore, it lies only where the
defects appear on the face of the pleading or are judicially noticed. (CCP §§
430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate
facts sufficient to apprise the defendant of the factual basis for the claim
against him. (Semole v. Sansoucie
(1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit
contentions, deductions or conclusions of fact or law alleged in the pleading,
or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen
(1964) 226 Cal.App.2d 725, 732, internal citations omitted.)
EVIDENTIARY ISSUES
Plaintiff’s request for judicial notice is DENIED. The
certificate of title is not judicially noticeable.
Analysis
Motion
to Quash
Defendant VBP Motorsports II LLC (VBPM) moves to quash service of
summons on the grounds that there is no basis for personal jurisdiction.
VBPM is a Montana limited liability company, with its principal place of
business located in Montana. (Levine Decl., ¶ 2.) VBPM is not registered to do
business in California and does not regularly conduct business in California.
(¶¶ 3-5.)
A non-resident defendant may be subject to either general
or specific jurisdiction. (Elkman v. National States Insurance Co. (2009)
173 Cal.App.4th 1305, 1314.) “Where general jurisdiction cannot be established, a court
may assume specific jurisdiction over a defendant in a particular case if the
plaintiff shows the defendant has purposefully availed himself or herself of
forum benefits; [ie.] the nonresident purposefully directed its
activities at forum residents or purposefully availed itself of the privilege
of conducting activities within the forum state, thus invoking the benefits and
protections of local law. (Hanson v. Denckla (1958)
357 U.S. 235.) Specific jurisdiction involves a 3-part test: (1) the
nonresident defendant must do some act or consummate some transaction with the
forum or perform some act by which he purposefully avails himself of the
privilege of conducting activities in the forum, thereby invoking the benefits
and protections of its laws; (2) the claim must be one which arises out of or
results from the defendant's forum-related activities; and (3) exercise of
jurisdiction must be reasonable.” (Jewish Defense Organization,
Inc. v. Sup. Ct. of Los Angeles County (1999) 72 Cal.App.4th 1045, 1054 [purposeful availment exists
where a defendant performed some type of affirmative conduct which allows or
promotes the transaction of business within the forum state].)
Plaintiff
demonstrates Defendant purposefully availed itself to California’s laws by receiving
title to the subject G-Wagen vehicle. VBPI, a California corporation, controls
VBPM through its shared managing member, Michael Levine. (Levine Depo. at 36.) Yang,
a California resident, provided the funds necessary to purchase the G-Wagen to
VBP pursuant to a Promissory Note, executed by Levine in California. (Garber
Decl., Ex. D.) The vehicle is located and maintained in California. (VBP Supp.
Responses to SIs, set one, no. 24.) Critically, VBPM holds title to the subject
vehicle. (Ex. E.) The promissory note states that the Note is secured by the vehicle
itself. Since VBPM is the registered owner, it would be difficult to enforce
such collateral pursuant to the promissory note without VBPM’s involvement in
this lawsuit.
Defendant argues that its minimum
contacts with California are established only by the activities of its alleged
parent. However, as noted, VBPM voluntarily entered this transaction by taking
title of the subject vehicle from its parent company. Thus, jurisdiction is
based not on its parent’s activity, but VBPM’s own activities targeting
California residents. This business activity created continuing relationships
and obligations between VBPM and residents of the forum, such as its parent
company and Yang. VBPM directed its business activities at residents of
California, and derived benefit from its activities. Thus, exercise of
jurisdiction would be reasonable (and required to fully resolve this dispute).
Accordingly, VBPM’s motion is
DENIED.
Demurrer
VBPM demurs to the three causes of
action in the complaint on the same basis: that there is no agreement between
Yang and itself. Instead, the Note is between Yang and Venice Business
Partners, Inc., the parent of VBPM. Otherwise, VBPM argues that the complaint
fails to state facts to support non-direct theories of liability.
Relevantly, Yang filed a Doe
amendment, adding VBPM as Doe 1. Yang generally pleads that the Defendants are
agents and ratified each other’s decisions. The complaint alleges that under the terms of
the Promissory Note, Defendants agreed to pay to Yang the sum of $1,200,000.00,
plus a joint venture fee of $100,000.00 on or before January 1, 2019. (Compl.,
¶ 13.) However, the only two parties identified by the Note are the Borrower
(Venice Business Partners Inc.) and Lender (Yang). There is no mention of VBPM.
Yang does not explain how, as an agent, or through ratification, VBPM would be
liable under the Note. Similarly, the money lent cause of action provides a
conclusion that “Defendants” became indebted for the $1.3 million. However,
this conclusion is based on the Note, which does not show how VBPM is liable
for that amount. Thus, Yang failed to plead a direct cause of action for breach
of contract or common count against VBPM. Furthermore, the complaint alleges
representations that were made explicitly and solely on behalf of VBPI. (See
¶¶25-26.) These allegations do not establish liability against VBPM for
misrepresentation, generally, or under the heighted pleading standard.
The allegations do not establish
how, on a basis of agency or ratification, VBPM would be liable for the
promissory note, negligent misrepresentation, or money lent. Moreover,
Plaintiff failed to plead facts supporting an alternative form of liability, such
as alter ego liability. The Court finds that these deficiencies likely stem
from the doe amendment. Thus, Yang will be provided an opportunity to allege
further specific facts supporting liability against VBPM.
Accordingly, Defendant’s demurrer
is SUSTAINED with 10 days leave to amend.