Judge Serena R. Murillo, Case 19STCV20715 2023-05-16 Tentative Ruling

Defendant Royal Capital Corporation’s (“RCC”) Motion to Quash Service of Summons is DENIED.

On June 12, 2019, Plaintiff Osvaldo Cervantes (“Plaintiff”) filed a Complaint against Defendant BAH California, Inc. (“BAHCI”) and Does 1 to 20 for failure to accommodate a disability under the Fair Employment and Housing Act.

On October 25, 2019, BAHCI’s petition to compel arbitration was granted. The parties proceeded with arbitration before JAMS as well as written discovery.

On September 15, 2020, Plaintiff was deposed. BAHCI refused to produce any witnesses for deposition and proceeded to file for Chapter 7 bankruptcy. Since BAHCI refused to pay the arbitrator no further arbitration proceedings took place and this Court granted Plaintiff’s motion to remand on May 6, 2021.

On October 11, 2022, Plaintiff filed a First Amended Complaint naming Royal Capital Corporation as Doe 3.

Specially appearing Defendant Royal Capital Corporation (“RCC”) filed this instant motion to Quash Service of Summons for Lack of Personal Jurisdiction. The Motion was filed on December 02, 2022.

Plaintiff and Defendant RCC filed supplemental papers as delineated above.

LEGAL STANDARD

Code of Civil Procedure section 418.10 subdivision (a) states: “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 or file a motion…[t]o quash service of summon on the ground of lack of jurisdiction of the court over him or her.”¿¿¿

A court of this state may exercise jurisdiction on any basis not inconsistent with the California or United States Constitutions. (CCP § 410.10.) 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 Org. v. Superior Court¿(1999) 72 Cal.App.4th 1045, 1054-55; see also Aquila, Inc. v. Sup. Ct. (2007) 148 Cal.App.4th 556, 568 [“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.”].) This burden must be met by competent evidence in affidavits and authenticated documentary evidence. (Jewish Defense Org., supra, 72 Cal.App.4th at 1055.) “A court may exercise specific jurisdiction over a nonresident defendant only if: (1) the defendant has purposefully availed himself or herself of forum benefits; (2) the controversy is related to or arises out of the defendant’s contacts with the forum; and (3) the assertion of personal jurisdiction would comport with fair play and substantial justice.” (Snowey v. Harrah’s Entertainment, Inc. (2005) 35 Cal.4th 1054, 1062.)

The Court may take judicial notice of records of any court of record of the United States. (Evid. Code, § 452(d)(2).) However, the court may only judicially notice the existence of the record, not that its contents are the truth. (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1565.)¿

Plaintiff requests Judicial Notice of the materials submitted regarding Royal Capital Corp.’s motion to quash service of summons in Cristina Romero v. BAH California, Inc. (LASC Case # 19STCV17827). [1]

c. Exhibit 3, Plaintiff Cristina Romero’s Supplemental Brief re Personal Jurisdiction;

d. Exhibit 4, tentative ruling of the court re RCC’s Motion to Quash in Romero;

Defendant RCC filed Objections to Request for Judicial Notice on the grounds that it is untimely, it is not relevant, and the truth of statements are not subject judicial notice if those matters are reasonably disputable. [2]

Plaintiff’s request for Judicial Notice is GRANTED. As Plaintiff points out, the decision of Judge Fruin in the Romero matter is not binding on this Court in deciding the instant motion.

Defendant RCC filed Evidentiary Objections to the Declaration of Samuel Moorhead filed April 18, 2023 in Supplemental Brief Re Jurisdictional Discovery. [3]

Objections Nos. 1, 2, 3 in part, 4, 5 in part, 6 in part, 7, and 8 are OVERRULED

Objections Nos. 3 (k.) “which is improbable because RCC and BAHCI shared officers until recently,” 5 “[b]y contrast, RCC admittedly has been involved with Church’s Chicken Franchises,” and 6 “RCC was involved with the operation of Church’s Chicken restaurants in California after 2011” are SUSTAINED.

Defendant RCC moves for an Order quashing service of the summons on the basis that the Court lacks personal jurisdiction over Defendant RCC.

Defendant RCC asserts it is a Georgia corporation with its principal place of business in Atlanta, Georgia. (Motion, Bertram Decl. ¶ 3.) Defendant RCC asserts it has no physical presence and is not domiciled in California. (Id. ¶¶ 4, 5.) Defendant RCC further asserts that it was not a franchisee of any restaurant in California and did not contract with any party to manage any business in California after 2011. (Id. ¶ 6.)

Accordingly, Defendant RCC lacks minimum contacts with California and had stopped managing any businesses in California since 2011, long before Plaintiff started his employment with Defendant BAH California, Inc. (“BAHCI”) in 2014. (Compl. ¶ 15.)

Plaintiff does not dispute that the Court does not have general jurisdiction over Defendant RCC because Defendant RCC was served in Atlanta Georgia. Instead, Plaintiff argues that the Court has specific jurisdiction over Defendant RCC. “A nonresident defendant is subject to specific personal jurisdiction only if (1) the defendant purposefully availed itself of the benefits of conducting activities in the forum state; (2) the controversy arises out of or is related to the defendant's forum contacts; and (3) the exercise of jurisdiction would be fair and reasonable.” (HealthMarkets, Inc. v. Superior Court¿(2009) 171 Cal.App.4th 1160, 1167.)

In opposition to a motion to quash based upon lack of personal jurisdiction, complainants have the initial burden of to file evidence to show minimum contacts. (See Muckle v. Superior Court (2002) 102 Cal.App.4th 218, 228.) “It is plaintiff's burden to prove facts of jurisdiction by a preponderance of evidence.” (Cornelison v. Chaney (1976) 16 Cal.3d 143, 155.) “This burden must be met by competent evidence in affidavits and authenticated documentary evidence. An unverified complaint may not be considered as an affidavit supplying necessary facts.” (Ziller Electronics Lab GmbH v. Superior Court¿(1988) 206 Cal.App.3d 1222, 1233.)

Per the Minute Order of January 10, 2023, Plaintiff has not met his burden of showing that Defendant RCC had minimum contacts in California and is subject to this Court’s jurisdiction based on the following.

As evidence, Plaintiff submits a bankruptcy court transcript of BAHCI’s meeting with creditors that took place on January 26, 2022. (Moorhead Decl. ¶ 8 Ex. A.) Plaintiff asserts that RCC is the franchise owner of BAHCI and the true owner of the restaurant where Plaintiff worked. However, the transcript does not factually support this statement. Steve Neuroth, CFO of BAHCI, only testified that the franchisee’s name was “Royal California” and that he did not know where its corporate office is located: “I don't know where it's [sic] corporate office is located, but Atlanta, Georgia is I believe Atlanta, Georgia.”

Plaintiff asserts that Mr. Neuroth was referring to RCC since RCC is incorporated in Georgia and “[a] search for ‘Royal California’ on the Georgia Secretary of State website yields no result.” (Moorhead Decl. ¶ 8.) However, Mr. Neuroth could have been mistaken as to where Royal California’s corporate office is located since he stated he was unsure. Moreover, the fact that Steve Neuroth is the CFO of both BAHCI and RCC, and that BAHCI and RCC appear to share corporate officers, does not establish that RCC had minimum contacts in California or availed itself by doing business in the state. (See Moorhead Ex. B.) The inferences made by Plaintiff are not evidence that the RCC managed restaurants in California during the time of Plaintiff’s employment with BAHCI, that RCC reimbursed BAHCI for salaries and insurance experts, or that RCC leased the restaurant where Plaintiff worked.

(Id.) In concluding that Plaintiff has not met his burden, the Court exercised its discretion to continue the hearing on the Motion to Quash Service of Summons to allow Plaintiff to conduct limited discovery on jurisdictional issues. (Id.)

Plaintiff submits a supplemental brief regarding jurisdictional discovery along with the declaration of Samuel Moorhead, counsel for Plaintiff.

Plaintiff’s counsel’s declaration provides that on March 15, 2023, he took the deposition of William Betram, designated as person most knowledgeable by Defendant RCC regarding its contacts with California. (Supplemental Brief; Moorhead Decl. ¶ 8; Ex. “E.”) Mr. Betram testified that he is “the sole officer of RCC” and “the only employee of the company.” (Id.) He is “an attorney, who was hired in 2017 by an entity other than RCC to act as an attorney for RCC” but “was instructed not to answer a question about what third party hired him in this capacity.” (Id.) Further, “Mr. Bertram related that Catherine Hite is an attorney, and counsel instructed him not to discuss their conversations about this matter.” (Id.) Mr. Bertram also testified that “Steven Neuroth, the witness who testified about BAHCI and ‘Royal California’ in BAHCI’s bankruptcy case, ‘used’ to be the CFO of RCC around 2011, but that company ceased to operate….” (Id.) Mr. Betram “stated that he did not know whether RCC ever had business interests in California…[h]owever, he later indicated that based on his conversations with Ms. Hite, RCC was at one point previously the franchise of the restaurant…where Plaintiff later worked.” (Id.)

As to Defendant RCC’s alleged divestment of assets in 2011, “Mr. Bertram claims to have no knowledge of the transaction, whether it was a sale or transfer, or which came to own the assets after the divestment.” (Id.) Mr. Bertram “claimed that all documents from 2011 would have been destroyed pursuant to RCC’s document retention policy.” (Id.) He “averred that he has no knowledge of BAHCI.” (Id.) Also, as to Defendant RCC, “Mr. Bertram indicated he has seen the name in Mr. Neuroth’s deposition transcript, but had not other knowledge of that entity.” (Id.) He “denied that RCC would have remained a lessee of property on which the franchises were located after the alleged divestment.” (Id.)

In addition to taking the deposition of Mr. Bertram, Plaintiff’s counsel spoke with the President of Royal California, who declared that he is the sole owner and officer of Royal California, it is an Irvine based logistics company that has never been involved with fast food franchise restaurants, and he has never heard of the parties to this case. (Supplemental Brief; Moorhead Decl. ¶ 9; Ex. “F.”)

Moreover, Plaintiff asserts that Defendant RCC was involved with the operation of Church’s Chicken restaurants in California after 2011 based on a publicly available newsletter posted by the Office of the City Manager of the City of Pasadena on its website on October 11, 2018. (Supplemental Brief; Moorhead Decl. ¶ 11; Ex. “H.”) The document provides all properties within the city that the City owned and leased to third parties, which includes property at 710-720 Fair Oaks Ave. that was leased to Defendant RCC for use as a Church’s Chicken restaurant. (Id.)

In its supplemental reply brief, Defendant RCC argues that Plaintiff’s supplemental brief does not present admissible evidence and should be rejected. This seems incorrect. Plaintiff offers an affidavit of the owner of Royal California and a publicly available weekly newsletter from the Office of the City Manager of the City of Pasadena posted on its website on October 11, 2018. As to the latter document, Defendant RCC does not present evidence that the document’s date or list of properties within the City of Pasadena that the City owned and leased to third parties is inaccurate or unreliable. (Evid. Code § 1552.) Further, Defendant RCC’s argument that even if it was leasing real property in Pasadena, such information is irrelevant because Plaintiff’s claims arise from his employment at a restaurant located in Long Beach, California is incorrect because Plaintiff must show Defendant RCC had minimum contacts in California (i.e., the Defendant RCC managed restaurants in California during the time of Plaintiff’s employment with BAHCI).

Here, the Court exercised its discretion to continue the hearing on the Motion to Quash Service of Summons to allow Plaintiff to conduct limited discovery on jurisdictional issues. Subsequently, Plaintiff filed a supplemental brief regarding jurisdictional discovery, and Defendant RCC filed a supplemental reply brief, as delineated above. The Court denies the Motion to Quash Service of Summons filed by Defendant RCC for the following reasons.

Plaintiff’s deposition of Mr. Bertram, Defendant RCC’s person most knowledgeable about its contacts with California, demonstrates that Mr. Bertram’s denials are not credible. (Supplemental Brief; Moorhead Decl. ¶ 8; Ex. “E.”) Mr. Bertram testified that (1) Defendant RCC ceased to operate around 2011; (2) he did not know whether Defendant RCC ever had business interests in California; (3) he had no knowledge of Defendant RCC’s alleged divestment of assets in 2011, whether it was a sale or transfer, or who came to own the assets after the divestment; (4) he did not know why Defendant RCC decided to cease conducting business; (5) he believed no documents from 2011 are available now; (6) he had no knowledge of BAHCI; and (7) he denied that Defendant RCC would have remained a lessee of property on which the franchises were located after the alleged divestment. (Id.) On the other hand, Mr. Bertram states that (1) he is an attorney, who was hired in 2017; (2) he was only hired to process documents that Defendant RCC was obligated to filed with state authorities, which he failed to do; and (3) his knowledge of Defendant’s RCC’s business is based on what attorney Catherine Hite told him. (Id.) Thus, Mr. Bertram’s denials do not seem credible.

Further, Plaintiff proffered evidence in the form of the Declaration of Ali Can Yusuf Altan demonstrating that Royal California has no connection with this case and, thus, Mr. Neutroth did mean to refer to it instead of Defendant RCC per the bankruptcy court transcript of BAHCI’s meeting with creditors that took place on January 26, 2022. (Supplemental Brief; Moorhead Decl. ¶ 9; Ex. “F.”) Mr. Altan is President of Royal California, as well as sole owner and officer. (Id.) Royal California is a logistics company based in Irvine, California that has never been involved with fast food franchise restaurants; and, Mr. Altan has never heard of the parties to this case. (Id.)

Also, Plaintiff proffered evidence dated October 11, 2018, demonstrating that the City of Pasadena leased property to Defendant RCC to operate a Church’s Chicken in Pasadena, which seems to dispute that Defendant RCC was not involved with doing business in California after 2011. (Supplemental Brief; Moorhead Decl. ¶ 11; Ex. “H.”)

Plaintiff has met his burden of showing that Defendant RCC had minimum contacts in California and, thus, is subject to this Court’s jurisdiction. Defendant RCC does not meet its burden of showing that such exercise of jurisdiction would be unreasonable.

Accordingly, Defendant Royal Capital Corporation’s Motion to Quash Service of Summons is DENIED.

Defendant Royal Capital Corporation’s Motion to Quash Service of Summons is DENIED.

[1] Plaintiff filed Request for Judicial Notice in Support of Plaintiff’s Opposition to Defendant’s Moton to Quash on May 5, 2023.

[2] Defendant RCC filed Objections to Plaintiff’s Request for Judicial Notice filed on May 9, 2023.

[3] Defendant RCC filed Evidentiary Objections to Samuel Moorhead’s Declaration on May 9, 2023.