Judge: Salvatore Sirna, Case: 23PSCV02792, Date: 2023-11-08 Tentative Ruling

Case Number: 23PSCV02792    Hearing Date: November 8, 2023    Dept: G

Defendants Arturo Salvador’s Motion to Quash Service of Summons for Lack of Personal Jurisdiction

Respondent: Plaintiff Wilfredo Machado Pacheco

TENTATIVE RULING

Defendants Arturo Salvador’s Motion to Quash Service of Summons for Lack of Personal Jurisdiction is DENIED.

Defendant Salvador to file a responsive pleading to Plaintiff’s Complaint in twenty (20) days.

BACKGROUND

This is an action for breach of contract and fraud. In March 2021, Plaintiff Wilfredo Machado Pacheco entered into an alleged agreement with Defendant Arturo Salvador in which Machado Pacheco agreed to invest $300,000 in Salvador’s transportation business. In exchange, Salvador allegedly promised to transfer the titles for twenty-one of the business’s tractor-trailer vehicles to Machado Pacheco. After Machado Pacheco transferred $307,200 to Salvador and Salvador’s business partners, Salvador allegedly failed to transfer the titles or return the money.

On September 12, 2023, Machado Pacheco filed a complaint against Salvador and Does 1-10, alleging the following causes of action: (1) fraud, (2) breach of oral contract, (3) conversion, and (4) common counts. On September 18, Machado Pacheco’s process server served Salvador with substitute service in Brentwood, New York.

On October 12, 2023, Salvador filed the present motion. A hearing on the motion is set for November 8 with a case management conference and OSC Re: Failure to File Proof of Service on February 14, 2024.

ANALYSIS

Salvador moves to quash Machado Pacheco’s service of summons on the grounds that the court lacks personal jurisdiction over Salvador. For the following reasons, the court DENIES Salvador’s motion.

Legal Standard

“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 . . . [t]o 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 nonresident defendant challenges personal jurisdiction the burden shifts to the plaintiff to demonstrate by a preponderance of the¿evidence that all necessary jurisdictional criteria are met.” (Jewish Defense Organization, Inc. v. Superior Court (1999) 72 Cal. App. 4th 1045, 1054-1055, quoting Ziller Electronics Lab GmbH v. Superior Court (1988) 206 Cal.App.3d 1222, 1232-1233 (Ziller).) A plaintiff meets this burden by providing “competent evidence in affidavits and authenticated documentary evidence.” (Id., at p. 1055, quoting Ziller, supra, 206 Cal.App.3d at p. 1232-1233.)

“Personal jurisdiction may be either general or specific.” (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445 (Vons Companies).) “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.’” (Ibid, quoting Perkins v. Benguet Consol. Mining Co. (1952) 342 U.S. 437, 445-446.) “In that situation, the cause of action need not be related to the defendant's contacts.” (Thomson v. Anderson (2003) 113 Cal.App.4th 258, 266.) “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, supra, 14 Cal.4th at p. 446.)

“Specific jurisdiction results when the defendant’s contacts with the forum state, though not enough to subject the defendant to the general jurisdiction of the forum, are sufficient to subject the defendant to suit in the forum on a cause of action related to or arising out of those contacts.” (Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 569-570, quoting Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 536 (Sonora Diamond).) “Specific jurisdiction exists if: (1) the defendant has purposefully availed itself of forum benefits with respect to the matter in controversy; (2) the controversy is related to or arises out of the defendant’s contacts with the forum; and (3) the assertion of jurisdiction would comport with fair play and substantial justice.” (Id., at p. 570, quoting Sonora Diamond, supra, 83 Cal.App.4th at p. 536.) “[C]ourts must additionally evaluate ‘the burden on the defendant of appearing in the forum, the forum state’s interest in adjudicating the claim, the plaintiff’s interest in convenient and effective relief within the forum, judicial economy, and the shared interest of the several states in furthering fundamental substantive social policies.’” (Id., quoting Vons Companies, supra, 14 Cal.4th at p. 447-448.)

Discussion

In this case, Salvador argues personal jurisdiction is lacking because Salvador is a resident of New York and has no contact with California. In response, Machado Pacheco argues the court has specific jurisdiction over Salvador.

Purposeful Availment

Purposeful availment is defined “as involving variously a nonresident who has ‘purposefully directed’ his or her activities at forum residents [Citation], or who has ‘purposefully derived benefit’ from forum activities [Citation], or ‘purposefully avail[ed himself or herself] of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.’ [Citation.]” (Vons Companies, supra, 14 Cal.4th at p. 446, quoting Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 472, 473, 475 (Burger King).)

Here, Machado Pacheco argues a contract with a California resident is sufficient to establish purposeful availment and relies on McGee v. International Life Ins. Co. (1957) 355 U.S. 220 (McGee). There, the U.S. Supreme Court held due process did not prevent an out-of-state insurer from being held liable in California where the insured was a California resident, the insurance contract was sent to California, and the insurance premiums were paid from California. (Id., at p. 223.) But the U.S. Supreme Court has also “emphasized the need for a ‘highly realistic’ approach that recognizes that a ‘contract’ is ‘ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction.’” (Burger King, supra, 471 U.S. at p. 479, quoting Hoopeston Canning Co. v. Cullen (1943) 318 U.S. 313, 316-317.) This approach requires a review of “prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing.” (Ibid.)

In this case, Machado Pacheco alleges Salvador voluntarily contacted Machado Pacheco in California with an offer to invest $300,000 in Salvador’s transportation business in exchange for the titles of twenty-one tractor-trailers. (Complaint, ¶ 6; Machado Pacheco Decl., ¶ 2.) Machado Pacheco claims the offer was accepted in California and that from March 2021 to April 2022, Machado Pacheco tendered performance in California by wiring $307,200 from Machado Pacheco’s California bank accounts to out-of-state and foreign bank accounts. (Complaint, ¶ 7; Machado Pacheco Decl., ¶ 4.) In response, Salvador argues this alleged contract was never performed or required to be performed in California as the transportation business operated in Central America and involved payments wired to financial institutions outside of California. But Salvador’s argument ignores the fact that those wire payments were made from California and induced by communications from Salvador to Machado Pacheco in California.

Furthermore, at least part of the performance was set to occur in California as Salvador had allegedly promised to send the titles for the twenty-one tractor-trailers to Machado Pacheco in California. (Complaint, ¶ 6.) Ultimately, when looking at the totality of the circumstances, the court finds purposeful availment as Salvador communicated an offer to a California resident, entered into an oral agreement with a California resident, received funds from a California resident, and breached the agreement by failing to send the vehicle titles or return the funds to the California resident.

In addition, “numerous courts have found the purposeful direction requirement met where the nonresident defendant purposefully sent tortious communications into a forum and thereby injured its residents.” (Casey v. Hill (2022) 79 Cal.App.5th 937, 966 [collecting cases].) Here, Machado Pacheco alleges Salvador purposefully sent communications to Machado Pacheco in California that constituted false representations with the intent and result of defrauding Machado Pacheco. (Complaint, ¶ 10-12.)

Thus, the court finds Plaintiff established the first element of purposeful availment.

Nexus of Controversy and Contact

The second prong of specific jurisdiction requires that “[t]he dispute must arise out of or have a substantial connection to the defendant's contacts with the forum state.” (Bridgestone Corp. v. Superior Court (2002) 99 Cal.App.4th 767, 777 (Bridgestone).) “A claim need not arise directly from the defendant's forum contacts in order to be sufficiently related to the contact to warrant the exercise of specific jurisdiction. Rather, as long as the claim bears a substantial connection to the nonresident's forum contacts, the exercise of specific jurisdiction is appropriate.” (Vons Companies, supra, 14 Cal.4th at p. 452.)

In this case, the controversy arises directly from Salvador’s contacts with California in the form of the communications sent to Machado Pacheco. These communications both created the promise to perform which Salvador allegedly breached and constituted false representations that induced Machado Pacheco to invest in Salvador’s business. Thus, the court finds Plaintiff established this required nexus.

Fair Play and Substantial Justice

“[I]n evaluating the reasonableness of personal jurisdiction, a court must consider (1) the burden on the foreign defendant of defending an action in the forum state; (2) the forum state’s interest in adjudicating the dispute; (3) the plaintiff's interest in obtaining relief; (4) judicial economy; and (5) the states’ shared interest ‘in furthering fundamental substantive social policies.’ [Citation.] When minimum contacts are established, the interests of the plaintiff and forum state often outweigh the serious burdens imposed on a foreign defendant.” (Bridgestone, supra, 99 Cal.App.4th at p. 778, quoting Asahi Metal Industry Co., Ltd v. Superior Court (1987) 480 U.S. 102, 113.)

In this case, it cannot be denied that California “has a manifest interest in providing a local forum for its residents to redress injuries inflicted by out-of-state defendants.” (Integral Development Corp. v. Weissenbach (2002) 99 Cal.App.4th 576, 591.) And by targeting a California resident, Salvador “could fairly expect to have been held ‘answerable on a claim related to those activities.’” (Dongxiao Yue v. Wenbin Yang (2021) 62 Cal.App.5th 539, 550, quoting Keeton v. Hustler Magazine, Inc. (1984) 465 U.S. 770, 776.)

In opposition, Salvador claims defending this action in California would impose “significant inconvenience, burdens, and prejudice.” (Salvador Decl., ¶ 10.) But while Salvador claims potential witnesses who can testify in support of Salvador’s defenses reside in El Salvador, Salvador does not provide any further detail to clarify who these witnesses are or what defenses they will support. (Salvador Decl., ¶ 10.) And while the court has no doubt that defending an action in California will be burdensome and inconvenient for a New York defendant, the court also notes Salvador has operated a transportation business in Central America while living in New York. Ultimately, as noted in Bridgestone, even a serious burden or inconvenience for Salvador is outweighed by the interests of Machado Pacheco and the state.

Accordingly, the court DENIES Salvador’s motion.

CONCLUSION

Based on the foregoing, Salvador’s motion to quash the service of summons is DENIED.

Defendant Salvador to file a responsive pleading to Plaintiff’s Complaint in twenty (20) days.