Judge Robert B. Broadbelt, Case Number: 23STCV00677, Date: 2023-12-01 Tentative Ruling

Judge: Robert B. Broadbelt, Case: 23STCV00677, Date: 2023-12-01 Tentative Ruling

RESPONDING PARTIES: Plaintiffs Peter L. Kaufman and Panish | Shea | Boyle | Ravipudi, LLP, f/k/a Panish, Shea & Boyle, LLP

The court considered the moving, opposition, and reply papers filed in connection with this motion. The court did not consider the supplemental reply papers filed on November 27, 2023.

The court denies defendants Mark Berlin and Prospect Funding Partners, LLC’s request for judicial notice, filed on November 22, 2023, as an improper attempt to introduce new evidence in reply. (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537.)

The court rules on defendants Mark Berlin and Prospect Funding Partners, LLC’s evidentiary objections, filed on November 22, 2023, as follows:

The court sustains plaintiffs Peter L. Kaufman and Panish | Shea | Boyle | Ravipudi, LLP, f//k/a Panish, Shea, & Boyle, LLP’s evidentiary objections to the supplemental declaration of Mark Berlin, filed by defendants Mark Berlin and Prospect Funding Partners, LLC on November 22, 2023. (Jay, supra, 218 Cal.App.4th at p. 1537.)

Defendants Mark Berlin (“Berlin”) and Prospect Funding Partners, LLC (“Prospect”) (collectively, “Defendants”) move the court for an order quashing the service of summons and complaint in this action, filed by plaintiffs Peter L. Kaufman and Panish | Shea | Boyle | Ravipudi, LLP, f//k/a Panish, Shea, & Boyle, LLP (“Plaintiffs”), on the ground that the court lacks personal jurisdiction over Defendants.

“A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States.” (Code Civ. Proc., §¿410.10.) “Under those Constitutions, jurisdiction is proper if a defendant has minimum contacts with California such that a suit in the state does not offend traditional notions of fair play and substantial justice.” (Farina v. SAVWCL III, LLC (2020) 50 Cal.App.5th 286, 294.) “A defendant, on or before the last day of his or her time to plead or within any further time that the court may for good cause allow, may serve and file a notice of motion . . . [¶] (1) To quash service of summons on the ground of lack of jurisdiction of the court over him or her.” (Code Civ. Proc.,¿§ 418.10, subd. (a)(1).) “‘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. [Citation.] 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. [Citation.]’” (Burdick v. Superior Court (2015) 233 Cal.App.4th 8, 17.)

“‘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.”’” (Jayone Foods, Inc. v. Aekyung Industrial Co. Ltd. (2019) 31 Cal.App.5th 543, 553.) Alternatively, to determine whether specific jurisdiction exists, “‘courts consider the “ ‘relationship among the defendant, the forum, and the litigation.’ ” [Citation.]’” (Ibid.)

The parties do not appear to argue that the court has general jurisdiction over Defendants, and the court finds that it does not have general jurisdiction over Defendants. (Opp., p. 3:3 [“Defendants are subject to specific jurisdiction in California”].) “A court has all-purpose jurisdiction over defendants who are at home in the court’s forum.” (Farina, supra, 50 Cal.App.5th at p. 286.) Thus, “‘general jurisdiction exists when a defendant is domiciled in the forum state or his activities there are substantial, continuous, and systematic.’” (Sacramento Suncreek Apartments, LLC v. Cambridge Advantaged Properties II, L.P. (2010) 187 Cal.App.4th 1, 9.) Here, Defendants have presented evidence showing that they do not reside in California and Plaintiffs have not submitted evidence showing that Defendants’ activities in California are substantial, continuous, and systematic. (Amended Berlin Decl., ¶¶ 2-6, 10-11, 13 [Berlin is a resident of Minnesota, and Prospect is a Delaware limited liability company with a principal place of business in Minnesota].)

Thus, the court does not have general jurisdiction over Defendants. The parties instead dispute whether the court has specific jurisdiction over Defendants.

The court finds that Plaintiffs have not met their burden to establish that the court has specific jurisdiction over Defendants. (Burdick, supra, 233 Cal.App.4th at p. 17 [“the plaintiff has the initial burden of demonstrating facts justifying the exercise of jurisdiction”].)

“‘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” ’ ” [citation].’” (Jayone Foods, Inc., supra, 31 Cal.App.5th at p. 553.) As to the first prong, “[a] defendant purposefully avails itself of a forum’s benefits if it intentionally directs its activities at a forum such that, by virtue of the benefits the defendant has received, it should reasonably expect to be haled into the forum’s courts.” (Farina, supra, 50 Cal.App.5th at p. 294 [emphasis in original].)

Plaintiffs contend that Defendants purposefully availed themselves of California benefits by (1) entering into a contract with a California resident, and (2) causing the allegedly sham entities Prospect Funding Holdings (N.Y.) LLC (“Holdings NY”) and Prospect Funding (N.Y.), LLC (“Funding NY”) to engage in activities directed to California.

First, as to the underlying contract, the parties have submitted the following evidence. On October 8, 2015, Holdings NY entered into a “Sale and Repurchase Agreement” with Lah-Phosa Sangkaphim (“Sangkaphim”) (the “Agreement”). (Amended Berlin Decl., Ex. C, Agreement, p. 1.) The Agreement (1) named Holdings NY as the purchaser, (2) used a logo for the entity “Prospect Funding Partners,” i.e., possibly referring to defendant Prospect, and (3) was signed by Berlin on behalf of Holdings NY. (Amended Berlin Decl., Ex. C, Agreement, pp. 1, 9; Amended Berlin Decl., ¶ 30 [Prospect “executed the Sangkaphim Agreement on behalf of Holdings NY as its agent, and I signed the agreement on behalf of [Prospect] as its manager from Minnesota using a signature stamp”].) Sangkaphim, at the time they entered into the Agreement, resided in California. (Amended Berlin Decl., Ex. C, Agreement, p. 1 [listing as Sangkaphim’s address “1633 Campus Ave. South Ontario, Ca 91761”].) On the signature page of the Agreement, there is a header stating “10/08/15 02:10PM PDT Prospect Funding Partners[,]” which Plaintiffs argue shows that the Agreement was faxed by defendant Prospect. (Amended Berlin Decl., Ex. C, Agreement, p. 9.)

The court finds that this is insufficient to establish that Defendants purposefully availed themselves of the benefits of California.

The court acknowledges that (1) Berlin’s signature appears on the Agreement; (2) Prospect’s logo appears to be on the first page of the Agreement; and (3) there appears to be another reference to Prospect on the final signature page of the Agreement. (Amended Berlin Decl., Ex. C, Agreement, pp. 1, 9.) However, the Agreement expressly names the parties to the contract to be Holdings NY and Sangkaphim, and Berlin signed the Agreement on behalf of Holdings NY, not on behalf of defendant Prospect, which was merely acting as Holdings NY’s agent. (Ibid; Berlin Decl., ¶¶ 14, 30.)

Thus, the court finds that Plaintiffs have not shown that (1) Defendants were parties to a contract with a California resident, or (2) Defendants “purposefully creat[ed] ‘continuing [contractual obligations’ between [themselves] and the residents of” California, including by targeting their actions toward California residents. (Jacqueline B. v. Rawls Law Group, P.C. (2021) 68 Cal.App.5th 243, 253, 254.) Even if Defendants had entered into the Agreement with Sangkaphim, a California resident, (1) “a discrete, shorter-term contract between an out-of-state defendant and a forum resident ‘does not automatically establish purposeful availment’ in the resident’s ‘home forum[,]’” and (2) the Agreement’s choice-of-law provision requiring disputes thereunder to be decided pursuant to the laws of the State of New York weighs against finding that the signees purposefully established minimum contacts with California. (Id. at p. 254; Amended Berlin Decl., Ex. C, Agreement, p. 7, § 8.10; Farina, supra, 50 Cal.App.5th at p. 299 [“Choice of law provisions are relevant” to the determination of minimum contacts based on a contract with a forum resident].)

The court also notes that, despite Plaintiffs’ argument that Defendants pursued litigation in California, Plaintiffs have not presented any evidence of that fact. (Opp., p. 7:23-24 [Defendants have purposefully availed themselves of forum benefits by “pursuing litigation in California”].) Arbitration was commenced in New York by an entity named “Prospect Funding,” i.e., not defendant Prospect Funding Partners, LLC, and the “Response to Petitioner’s Petition to Vacate Arbitration Award and Petition to Confirm Arbitration Award,” filed in County of Los Angeles Superior Court, case number BS169525 (1) was filed by Funding NY, not Prospect, and (2) appears to have been filed in response to Plaintiffs’ Petition and commencement of the action, since the caption names Plaintiffs as petitioners. (Linde Decl., Ex. B, Arbitration Decision and Award [listing the state of venue to be New York]; Linde Decl., Ex. A, p. 1 [arbitration claim naming applicant to be “Prospect Funding”], Ex. C, p. 1:11-22.) Thus, the court finds that Plaintiffs have not met their burden to show that Defendants have “availed [themselves] of the courts of California” and impliedly consented to jurisdiction in a related action. (Sea Foods Co., Ltd. v. O.M. Foods Co., Ltd. (2007) 150 Cal.App.4th 769, 786.)

Second, Plaintiffs contend that Defendants caused the sham entities Holdings NY and Funding NY to engage in activities directed to California.

Primarily, Plaintiffs contend Berlin has acted on behalf of Holdings NY on various occasions. In support of this contention, Plaintiffs have pointed to (1) Biennial Statements for Holdings NY, which were signed by Berlin as an authorized person and named as its service of process defendant Prospect; (2) a Certificate of Change for Holdings NY, which listed defendant Prospect’s address as the address to which the New York Secretary of State shall forward copies of process accepted on behalf of Holdings NY; and (3) the Agreement, which was signed by Berlin on behalf of Holdings NY. (Linde Decl., Ex. I, New York Department of State Biennial Statements; Amended Berlin Decl., Ex. C, p. 9; Amended Berlin Decl., ¶ 30.) Berlin testified that he did not recall how Prospect became the agent for servicing for Holdings NY. (Linde Decl., Ex. G, Berlin Dep., pp. 77:8-78:18.) Berlin further testified that he did not recall how he obtained the authority to enter into the Agreement on behalf of Holdings NY. (Linde Decl., Ex. G, Berlin Dep., pp. 32:17-33:2, 33:13-16.) Thus, Plaintiffs contend that Holdings NY is a sham entity.

The court finds that this evidence is insufficient to establish that Defendants purposefully availed themselves of the benefits of California (1) by directing Holdings NY and Funding NY to engage in activities directed to California, or (2) by creating these sham entities and using them to engage in activities directed to California.

The court acknowledges that Plaintiffs have presented some evidence linking Berlin and Prospect to Holdings NY, namely, Berlin’s signatures on Biennial Statements, the designation of Prospect as Holdings NY’s service of process agent, and Berlin’s signature on the Agreement on behalf of defendant Prospect as Holdings NY’s manager. (Linde Decl., Ex. I.) However, Plaintiffs have not presented evidence showing that Defendants “purposefully directed [their] activities at the forum state [i.e., California] by causing a separate person or entity [i.e., Holdings NY or Funding NY] to engage in forum contacts.” (SK Trading International Co. Ltd. v. Superior Court of San Francisco County (2022) 77 Cal.App.5th 378, 388.) Plaintiffs have not presented evidence showing that Defendants caused the other entities (1) to direct their activities toward California by, for example, creating continuing contractual obligations between them and California residents, (2) to initiate arbitration against Plaintiffs in California,[1] or (3) to initiate litigation against Plaintiffs in a California court. (Jacqueline B., supra, 68 Cal.App.5th at p. 253; Sea Foods Co., Ltd., supra, 150 Cal.App.4th at p. 786.)

Thus, after considering the evidence and arguments submitted by the parties, the court finds that Plaintiffs have not met their burden to show that Defendants “purposefully availed [themselves] of” the benefits of the State of California. (Jayone Foods, Inc., supra, 31 Cal.App.5th at p. 553 [internal citations omitted].) The court therefore finds that Plaintiffs have not met their burden to demonstrate facts justifying the exercise of jurisdiction and grants Defendants’ motion. (Ibid.; Code Civ. Proc., § 418.10, subd. (a)(1).)

The court grants defendants Mark Berlin and Prospect Funding Partners, LLC’s motion to quash service of summons.

The court orders that the service of summonses on defendants Mark Berlin and Prospect Funding Partners, LLC is quashed.

The court orders defendants Mark Berlin and Prospect Funding Partners, LLC to give notice of this ruling.

[1] It appears that the arbitration proceedings were conducted not in California, but in New York. (Linde Decl., Ex. B, p. 1, Arbitration Decision and Award [“State of Venue: New York”].)

peter l. kaufman , et al.; Plaintiffs, vs. prospect funding partners, llc , et al.; Defendants.	Case No.:	23STCV00677

	Hearing Date:	December 1, 2023

	Time:	10:00 a.m.

	[Tentative] Order RE: defendants’ motion to quash service of summons