Judge: Michael Shultz, Case: 23STCV12682, Date: 2025-02-04 Tentative Ruling
Case Number: 23STCV12682 Hearing Date: February 4, 2025 Dept: 40
23STCV12682
Paul Auchterlonie v. Altior Healthcare, LLC, et al.
Tuesday,
February 4, 2025
[TENTATIVE]
ORDER
I.
BACKGROUND
This
action arises from Plaintiff’s report of suspected illegal, unsafe, fraudulent
and substandard conditions and services at health facilities owned, managed
and/or operated by Defendants. Plaintiff alleges claims for statutory
violations of the Health and Safety and Labor Code, wrongful termination in
violation of public policy, tortious interference with economic advantage and
with contractual relations.
II.
ARGUMENTS
Specially
appearing Defendant, Pine Tree Equity Partners, LLC (the “LLC”), seeks an order
quashing service of summons and complaint on grounds the entity does not exist,
having been dissolved in 2015, and even if it did exist, the court lacks
personal jurisdiction over it because the LLC lacked minimum contacts with
California.
In opposition, Plaintiff argues that the
LLC was an active entity at least through November 2023. The LLC has an agency
relationship with its subsidiary co-defendants, exercised pervasive control
over these entities, and therefore, the court has jurisdiction over the LLC. If
the court disagrees, Plaintiff requests leave to conduct jurisdictional
discovery to develop the facts necessary to establish personal
jurisdiction.
In
reply, the LLC argues that Plaintiff is relying on an inadvertent and
inaccurate use of Pine Tree’s name that has since been corrected. Any claims against
the LLC was required to be commenced within three years of dissolution. It is
not subject to service of process, and it is not subject to judgment because it
doesn’t exist. No agency relationship exists between the LLC and other co-defendants
sufficient to support the court’s general jurisdiction over the LLC, who does
not have minimum contacts with California.
III.
LEGAL STANDARDS
The LLC can move to quash service of summons
based on the court’s lack of jurisdiction over them. (Code Civ. Proc., § 418.10, subd. (a)(1).) Plaintiff bears the burden
of proving by a preponderance of evidence that "all necessary
jurisdictional criteria are met." (Ziller Electronics Lab GmbH v. Superior
Court (1988) 206 Cal.App.3d
1222, 1233; Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1439-1440.) " This burden must be met by
competent evidence in affidavits and authenticated documentary evidence."
(Ziller
at 1233.)
California recognizes two ways in which
the constitutional “minimum contacts” requirement may be satisfied. General
jurisdiction exists where the nonresident defendant's contacts with the forum
state are so “extensive or wide-ranging” (Buckeye Boiler Co. v. Superior
Court (1969) 71 Cal.2d 893, 898-899 [80 Cal.Rptr.113, 458 P.2d 457]) as to
justify jurisdiction even for purposes unrelated to the defendant's contacts. (Safe-Lab,
Inc. v. Weinberger (1987) 193
Cal.App.3d 1050, 1053.”
Alternatively, specific jurisdiction is conferred where the plaintiff
establishes that the non-resident defendant has purposefully availed itself of
forum benefits by directing its activities at forum residents thus invoking the
benefits and protections of local law. (Hanson
v. Denckla (1958) 357 U.S. 235,
253.)
The “purposeful availment” requirement is
satisfied “where the forum-related contacts proximately result from actions by
the Defendant himself that created a ‘substantial connection’ with the forum state,
and the controversy is related to or ‘arises out of a defendant's contacts with
the forum.’” (Burger
King Corp. v. Rudzewicz (1985) 471
U.S. 462, 475.)
Where personal jurisdiction is challenged,
the burden shifts to the plaintiff to demonstrate by a preponderance of the
evidence that sufficient minimum contacts exist between the defendant and the
forum state.
IV.
DISCUSSION
The LLC relies on the declaration of
Joseph Walter, the managing director at Pine Tree Equity Partners (“Equity
Partners”). The LLC was the general partner of Pine Tree Equity I, LP, who
“completed its exit from each investment and distributed proceeds to limited
partners in 2015.” (Walter decl. ¶ 7.) Therefore, the LLC was “voluntary
cancelled” on September 11, 2015, as reflected in the records of the Delaware
Department of State. (Id. Ex.
A.) However, Mr. Walter acknowledges that the
LLC appears on Equity Partners’ website and signature blocks. (Id.) ¶ 8.) However, the LLC does not exist, has not engaged in any
activities, and has no assets. (Id.
¶ 9.)
Roberto Canto previously submitted a
declaration in support of a prior motion to quash that declares that the
process server attempted substituted service on him “at his place of
employment, Pine Tree Equity, Partners, LLC,” and the executive assistant of
the LLC was not present at the LLCs office. (Reply, Canto Decl., ¶ 14-16.)
Joseph Walter states he is a Managing
Director at Pine Tree Equity Partners, LLC which “is a private equity firm.”
(Walter decl., ¶ 1, 3.)
Both declarations support Plaintiff’s
contention that the LLC existed on November 13, 2023, when Mr. Canto signed his
declaration. LLC employed Canto and had a managing director and shared the same
address as other “Pine Tree” entities in
Miami, Florida. (Plaintiff’s Ex. 12, 13; Ex 5-9 [signature blocks by
individuals indicating they were working at Pine Tree Equity Partners LLC].)
Plaintiff contends that the court has
general jurisdiction over the LLC based on conduct by its agent’s forum-related
conduct that can imputed to the LLC. (DVI,
Inc. v. Superior Court (2002) 104
Cal.App.4th 1080, 1094 [“’agency
may confer general jurisdiction in the forum state over a foreign corporation,’
but only where “the nature and extent of the control exercised over the
subsidiary by the parent is so pervasive and continual that the subsidiary may
be considered nothing more than an agent or instrumentality of the parent,
notwithstanding the maintenance of separate corporate formalities ....” (Sonora,
supra, 83 Cal.App.4th at pp. 540-541.) The nature of the parent's
control over the subsidiary must ‘be over and above that to be expected as an
incident of the parent's ownership of the subsidiary,” but must ‘reflect the
parent's purposeful disregard of the subsidiary's independent corporate
existence.’ (Id. at p. 542.) “Accordingly, if a parent corporation
exercises such a degree of control over its subsidiary corporation that the
subsidiary can legitimately be described as only a means through which the
parent acts, or nothing more than an incorporated department of the parent, the
subsidiary will be deemed to be the agent of the parent in the forum state and
jurisdiction will extend to the parent." (Id.)
Plaintiff alleges he was employed in
California by Defendants, Innercept Holdings, LLC (“Innercept”); Altior
Healthcare, LLC (“Altior”) and or one of their subsidiaries or related entities
that provide healthcare services in California. (Complaint, ¶ 3-4.) Altior and
Innercept allegedly conduct business in California (Complaint, ¶ 4-5.)
Plaintiff’s evidence reveals the
following:
·
The LLC
owns Altior and its operating groups, including Paradigm Treatment Centers; (Plaintiff’s
Ex. 2 De Neve Deposition 30:10-13.)
·
LLC
controls the board of Altior (Canto deposition, Plaintiff’s Ex. 2, 15:14-18;
122:8-13.);
·
Plaintiff
was approached by the LLC to be CEO of Paradigm Treatment Centers.
(Auchterlonie Decl., Ex. 13, ¶ 3.);
·
Plaintiff
was later offered the position as CEO for Altior. (Id.);
·
The letter
offer was on “Pine Tree Equity Partners” letter head. (Pl’s decl., Ex. 1.);
·
Plaintiff
interacted by email with representatives of “Pine Tree Equity”.) (Pl.’s Ex. 4,
7-9);
·
The income
statement of Paradigm Treatment Center reflects an expense for “Pine Tree
Management Fee” (Pl’s Ex. 10.)
Plaintiff has
established by a preponderance of evidence that the contacts of LLC’s agents
and/or entities owned by the LLC may be imputed to the LLC.
V.
CONCLUSION
Based on the foregoing, Defendant’s Motion
to Quash is DENIED.