Superior Court of California¿ 

County of Los Angeles¿ 

Department 78¿ 

¿ 

 

I. BACKGROUND 

Plaintiff Anthony J. Sparano (“Plaintiff”) filed this action against defendants Casey's Cars, Inc. (“Casey’s Cars”), Woodside Credit, LLC (“Woodside”), Hudson Insurance Company (“Hudson Insurance”), Denali State Bank (“Denali”) and Does 1 through 75 pertaining to the purchase of a 2007 Porsche 911 Carrera. The complaint alleges that Plaintiff found the vehicle advertised by Casey’s Cars on Car Gurus, and after being told there were no problems with the vehicle, Plaintiff gave Casey’s Cars a $500 deposit to reserve the vehicle on February 16, 2024. (Compl. ¶¶ 12-14.) Plaintiff and Woodside signed a Loan Agreement regarding the purchase of the vehicle. (Id. ¶¶ 15-16.) After Plaintiff and Casey’s Cars signed the contract for the purchase of the vehicle, Plaintiff found significant issues with the vehicle. (Id. ¶¶ 20-23.) Plaintiff alleges that Casey’s Car noticed all these problems when it performed a safety inspection, and withheld the problems from Plaintiff such that Plaintiff would not have purchased the vehicle had he known of its true condition. (Id. ¶¶ 26-27.) Woodside transferred the Loan Agreement to Denali. (Id. ¶ 28.)  

Plaintiff sets forth six causes of action for (1) Violations of the Consumers Legal Remedies Act against Casey’s Cars, Woodside, Denali, and Does 1-75, (2) Intentional Misrepresentation against Casey’s Cars, Woodside, Denali, and Does 1-75, (3) Concealment against Casey’s Cars, Woodside, Denali, and Does 1-75, (4) Negligent Misrepresentation against Casey’s Cars, Woodside, Denali, and Does 1-75, (5) Violations of the Unfair Competition Law against Casey’s Cars, Woodside, Denali, and Does 1-75, and (6) Vehicle Code §11711 – against Hudson Insurance. 

Defendant Denali now moves to quash service of summons on the grounds that there is no personal jurisdiction over it. Plaintiff opposes the motion, and Denali filed its reply. 

 

II. REQUEST FOR JUDICIAL NOTICE 

Denali requests the Court take judicial notice of (1) the Federal Deposit Insurance Corporation’s (“FCIC”) record reflecting that Denali State Bank is chartered under the authority of the State of Alaska, and (2) FCIC record reflecting that Denali State Bank has its main office at 119 N. Cushman St., Fairbanks, Alaska 99701, and branch locations in Fairbanks and Tok, Alaska and in no other place.  

The unopposed requests for judicial notice are granted. (Cal. Evid. Code § 452(h).) 

 

III. LEGAL STANDARD 

California’s long-arm statute permits a court to exercise personal jurisdiction on any basis consistent with state or federal constitutional principles. (C.C.P. §410.10.) 

“Personal jurisdiction may be either general or specific. 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.’ In such a case, ‘it is not necessary that the specific cause of action alleged be connected with the defendant’s business relationship to the forum.’ Such a defendant’s contacts with the forum are so wide-ranging that they take the place of physical presence in the forum as a basis for jurisdiction.” (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445-446 (citations omitted).) 

“If the nonresident defendant does not have substantial and systematic contacts in the forum sufficient to establish general jurisdiction, he or she still may be subject to the specific jurisdiction of the forum, if the defendant has purposefully availed himself or herself of forum benefits, and the ‘controversy is related to or ‘arises out of’ a defendant’s contacts with the forum.’” (Id. at pg. 446, citations omitted.) The purposeful availment test is only satisfied if the defendant purposefully and voluntarily directs its activities toward California so that the defendant should expect, because of the benefits it receives, to be subject to jurisdiction here based on its contacts with California. (Snowney v. Harrah’s Entertainment, Inc. (2005) 35 Cal.4th 1054, 1062.)  Purposeful availment occurs when a nonresident defendant purposefully directs its activities at California residents, deliberately engages in significant activities here, or creates “continuing obligations” between itself and California residents.  (Id. at pg. 1063.) 

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.” (Vons, supra, 14 Cal.4th 434 at 449 (citations omitted).) 

 

IV. DISCUSSION 

“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, supra, 14 Cal.4th 434 at 449.) Plaintiff must meet his initial burden by a preponderance of competent and relevant evidence, as shown in affidavits and documentary evidence. (See Ziller Electronics Lab GmbH v. Superior Court (1988) 206 Cal.App.3d 1222, 1232-1233.) 

A. General Jurisdiction 

Defendant argues there is no general jurisdiction over it in California. General jurisdiction is an “exacting standard” which requires that the defendant's contacts with the forum state be both “substantial and continuous” as to “make it consistent with traditional notions of fair play and substantial justice to subject the defendant to the jurisdiction of the forum, even where the cause of action is unrelated to the contacts.” (Calvert v. Huckins (1995) 875 F. Supp. 674, 677.) 

The Court agrees that there is no evidence of any pervasive contact with California to support the exercise of general jurisdiction, and Plaintiff does not argue otherwise.  

 

B. Specific Jurisdiction 

Specific jurisdiction involves a three-part test in California.¿" "A court may exercise specific jurisdiction over a nonresident defendant only if: (1) “the defendant has purposefully availed himself or herself of forum benefits” [citation]; (2) “the ‘controversy is related to or “arises out of” [the] defendant's contacts with the forum’ ” [citation]; and (3) “ ‘the assertion of personal jurisdiction would comport with “fair play and substantial justice” ’ ” [Citations]." " (Pavlovich v. Superior Ct. (2002) 29 Cal. 4th 262, 269.) 

Plaintiff declares he arranged to have the vehicle financed by Woodside, and completed the loan documents on February 16, 2024. (Sparano Decl. ¶ 7-8.) In March 2024, Plaintiff received a letter from Denali stating that Denali would be collecting and processing Plaintiff’s loan payments, and Plaintiff subsequently made monthly payments to Denali. (Id. ¶ 12-14.) Plaintiff makes $440.76 in payment to Denali each month for the vehicle. (Id. ¶ 18.) Plaintiff argues that Denali purchasing the Loan Agreement from Woodside and accepting monthly payments from him as a California resident has created the requisite minimum contacts with California. The Court disagrees. “In any personal jurisdiction case we must evaluate all of a defendant's contacts with the forum state, whether or not those contacts involve wrongful activity by the defendant.” (Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme (9th Cir. 2006) 433 F.3d 1199, 1207.) Plaintiff acknowledges that Denali’s only involvement in this matter is that it is the current holder of Plaintiff’s loan agreement and receives payment from Plaintiff. There are no allegations that Denali participated in the sale of the vehicle or participated in Casey’s Cars alleged misrepresentations of the vehicle’s condition, nor was it directly involved with Plaintiff during the loan negotiation undertook in order to purchase the vehicle. The transfer of the loan was solely between Woodside and Denali. Further, Plaintiff does not dispute that, based on the documents judicially noticed, that Denali is headquartered in Alaska and has no business ties to California.  

 “[T]he “ ‘purposeful availment’ requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts [citations], or of the ‘unilateral activity of another party or a third person.’ [Citations.]” (Pavlovich, supra, 29 Cal. 4th at 269.) Plaintiff’s evidence does not meet his burden by preponderance of evidence that Denali expressly aimed any tortious conduct at or intentionally targeted California as to invoke the benefits and protections of this forum state, just because it assumed a loan initially held by Woodside, in which Plaintiff happens to be a California resident. (Snowney v. Harrah’s Entertainment, Inc. (2005) 35 Cal.4th 1054, 1062 [The purposeful availment test is only satisfied if the defendant purposefully and voluntarily directs its activities toward California so that the defendant should expect, because of the benefits it receives, to be subject to jurisdiction here based on its contacts with California.]  

Plaintiff argues that there is a relation between the loan agreement and Casey’s Cars, because Denali is benefiting from Casey’s Cars fraud, citing Ford Motor Co. v. Montana Eighth Jud. Dist. Ct. (2021) 592 U.S. 351 (Ford Motor) in support thereof. In Ford Motor, Ford was a global auto company that markets, sells, and services its products across the United States, in which a state court exercised jurisdiction over it in a products-liability suit stemming from a car accident. The Court held that specific jurisdiction attaches “when a company cultivates a market for a product in the forum State and the product malfunctions there.” (Id. at 352.) In other words, the Court found that Ford systematically served a market in two states for the very vehicles plaintiffs alleged malfunctioned, concluding “there is a strong “relationship among the defendant, the forum, and the litigation”—the “essential foundation” of specific jurisdiction.” (Id. at 353.) The facts connecting Denali’s assumption of the loan from Woodside, and Plaintiff’s allegations of fraudulent misrepresentations by Casey’s Cars, does not demonstrate any strong relationship to exercise specific jurisdiction. Further, Ford Motor provides that the phrase “relate to” “does not mean anything goes.” (Id. at 362.) "In the sphere of specific jurisdiction, the phrase “relate to” incorporates real limits, as it must to adequately protect defendants foreign to a forum." (Ibid.) 

As summarized in Walden v. Fiore (2014) 571 U.S. 277, 277 (emphasis original): 

“The inquiry into the “minimum contacts” necessary to create specific jurisdiction focuses “on the relationship among the defendant, the forum, and the litigation.” [citation]. For a State to exercise jurisdiction consistent with due process, that relationship must arise out of contacts that the “defendant himself ” creates with the forum, [citation], and must be analyzed with regard to the defendant's contacts with the forum itself, not with persons residing there, see, e.g., [citation]. The plaintiff cannot be the only link between the defendant and the forum. These same principles apply when intentional torts are involved. [citation].”  

Here, the only link between Denali and California is Plaintiff. The Court finds that Plaintiff has failed to demonstrate by preponderance of evidence that Denali purposely availed itself to this forum’s benefits based on Denali’s purchase of the Loan Agreement from Woodside, and that there is no substantial nexus or connection between Denali purchasing the loan and the underlying controversy premised upon Casey Car’s misrepresentations. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 448; Roman v. Liberty University, Inc. (2008) 162 Cal.App.4th 670, 680.) 

 

C. Forum Selection Clause 

Although the Court agrees that Denali does not have minimum contacts with California, such contacts are not necessary where it has contractually consented to jurisdiction. (National Equip. Rental, Ltd. v. Szukhent (1964) 375 U.S. 311, 315-316). 

Plaintiff argues that the Loan Agreement provides: “This Agreement is governed by federal law applicable to the Lender and, to the extent not preempted by federal law, the laws of the state of California without regard to its conflicts of law provisions. With respect to any claim arising out of this Agreement each party (a) irrevocably submits to the jurisdiction of the courts of Orange County, California, and (b) irrevocably waives (i) any objection which it may have at any time to the laying of venue of any suit, action or proceeding arising out of or relating hereto brought in any such court, (ii) any claim that any such suit, action or proceeding brought in any such court has been brought in any inconvenient forum and (iii) the right to object, with respect to such claim, suit, action or proceeding brought in any such court, that such court does not have jurisdiction over such party.” (Opp. Exh. D.) Plaintiff contends that Denali expressly waived its right to contest venue and jurisdiction. 

The court must first consider the mutual intention of the parties at the time the contract was formed. (Civ. Code § 1636.)  This initial inquiry is confined to the writing alone. (Civ. Code. § 1639.)  The “clear and explicit” meaning of the provisions, interpreted in their “ordinary and popular sense,” unless “used by the parties in a technical sense or a special meaning is given to them by usage,” (Civ. Code. § 1644), controls the court’s interpretation.  (Civ. Code. § 1638; see Griffin Dewatering Corp. v. Northern Ins. Co. of New York (2009) 176 Cal.App.4th 172, 204 (plain language is an important principle of contract interpretation).)  Therefore, if the meaning a layperson would give the contract language is not ambiguous, the court applies that meaning.  (Santisas v. Goodin (1998) 17 Cal.4th 599, 608.)  

As Denali points out in the reply, the promissory note is not a general waiver of venue and jurisdiction, and that it only applies: “With respect to any claim arising out of this Agreement.” (Opp. Exh. D.) The purpose of the agreement was that the lender would loan Plaintiff money, and Plaintiff granted the lender a security interest in the vehicle to secure payment. (Ibid.) However, as previously stated, the basis of Plaintiff’s action does not arise out of this loan agreement. Rather, the complaint specifically alleges that Casey’s Car’s made false representations regarding the vehicle, such that Plaintiff was fraudulently induced into entering a contract for the purchase of the vehicle. After being induced to purchase the vehicle, Plaintiff undertook a loan for the purchase. Based on a plain reading of the promissory note, there is no connection between the underlying suit and the loan agreement for the clause to be applicable here. (See Nat'l Equip. Rental, Ltd. v. Szukhent (1964) 375 U.S. 311, 315 for contrast [Upholding contractual provision which assured that any litigation under the lease should be conducted in the State of New York in an action arising from a farm equipment lease.].)  

D. Jurisdictional Discovery 

In the alternative, Plaintiff requests the Court defer ruling and allow him to conduct jurisdictional discovery. Plaintiff requests that he be allowed to serve written discovery and to take at least one deposition in order to discover the extent of Denali’s business engagements in California, its business relationship with Woodside, and the extent of which it is benefitting monetarily from transactions conducted in California. However, the standard is not whether discovery could lead to the production of evidence establishing jurisdiction, it is whether discovery is likely to do so. (In re Automobile Antitrust Cases I & II (2005) 135 Cal.App.4th 100, 127.) Plaintiff’s speculation does not meet this standard, especially considering the lack of connection between Plaintiff’s claims and Denali’s purchase of the loan agreement.   

 

V. CONCLUSION 

Defendant’s motion to quash service of summons is GRANTED.  

  

Moving Party is ordered to give notice. 

 

DATED: July 16, 2024 

__________________________ 

Hon. Michelle C. Kim 

Judge of the Superior Court 

 

PLEASE TAKE NOTICE: 

• Parties are encouraged to meet and confer after reading this tentative ruling to see if they can reach an agreement. 

• If a party intends to submit on this tentative ruling, the party must send an email to the court at SMCDEPT78@lacourt.org with the Subject line “SUBMIT” followed by the case number. The body of the email must include the hearing date and time, counsel’s contact information, and the identity of the party submitting. 

• Unless all parties submit by email to this tentative ruling, the parties should arrange to appear remotely (encouraged) or in person for oral argument. You should assume that others may appear at the hearing to argue. 

• If the parties neither submit nor appear at hearing, the Court may take the motion off calendar or adopt the tentative ruling as the order of the Court. After the Court has issued a tentative ruling, the Court may prohibit the withdrawal of the subject motion without leave.