Judge: Teresa A. Beaudet, Case: 23STCV27193, Date: 2024-05-30 Tentative Ruling

Case Number: 23STCV27193    Hearing Date: May 30, 2024    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiffs Alt Method Inc. and Jonathan Tabaroki (“Tabaroki “) (jointly, “Plaintiffs”) filed this action on November 6, 2023 against Defendants Bijan Mawji (“Mawji”) and Mawji Tait Holdings Inc. (“MTH”) (jointly, “Defendants”). The Complaint alleges causes of action for (1) dissolution of partnership, (2) for an accounting, (3) breach of fiduciary duty, (4) conversion, and (5) tortious interference with contractual relations.

In the Complaint, Plaintiffs allege that “[i]n or around the latter half of 2019, Defendant Mawji approached Plaintiff Tabaroki with a business proposition. Specifically, Mawji informed Tabaroki that Defendant Mawji wanted to start a merchandise production business tailored to online influencers and talent…In connection with his business proposition, Mawji proposed a 50/50 partnership with each of Mawji and Tabaroki investing $70,000.00 at the outset of the business…Plaintiff Tabaroki agreed to form this 50/50 partnership and, based upon Mawji’s representations and assurances, thereafter transferred the initial sum of $70,000.00 to Mawji.” (Compl., ¶¶ 17-19.) “Tabaroki then formed the company Alt Labs, LLC…in the State of California, which company was owned fifty percent (50%) by Mawji’s company, Mawji Tait Holdings, and fifty percent (50%) by Tabaroki’s company, Trousdale Group LLC…” (Compl., ¶ 20.)

Plaintiffs allege that “the partners decided to raise equity to expand the partnership and created Plaintiff Alt Method, a corporation, as a vehicle to bring on additional investors.” (Compl., ¶ 23.) Plaintiffs further allege that “[i]n or around 2021, after the partnership was an established and growing enterprise, Mawji, through his ‘uncle’ Raj, introduced the potential client Mecca USA…” (Compl., ¶ 29.) “Mawji intentionally delayed the finalization of a written contract between the partnership and Mecca USA…Following these deliberate delays, and before a formal order could be placed by Mecca, Mawji decided that he no longer wanted to share with Plaintiffs the prospective and anticipated revenues and profits that would be derived from doing business with Mecca.” (Compl., ¶¶ 31-32.)

Plaintiff alleges that “[r]ather than moving forward with the partnership, Mawji purported ‘resign’ [sic] from Alt Method, formed his own new competing company, and induced the partnership’s customers to sever their contracts and cease conducting business with Plaintiffs and to, instead, conduct the same business with Mawji’s new company.” (Compl., ¶ 33.) “Mawji’s first step in implementing this scheme was to unilaterally withdraw funds from the partnership bank account with Alt Method, redirecting all such funds for his own personal use and for his new competing company, which does business as Dominion…Mawji then began to unilaterally modify Alt Method’s customer invoices to cause payments that should have been directed to the partnership to instead be directed to bank accounts exclusively owned and/or controlled by Mawji.” (Compl., ¶¶ 35-36.) “In total, through this conduct, including directly withdrawing and converting monies from Alt Method’s bank accounts and directly diverting and converting payments from Alt Method’s customers, Mawji was able to unlawfully misappropriate and convert at least $300,000.00 in funds.” (Compl., ¶ 37.)

            On January 16, 2024, Plaintiffs filed proofs of service indicating that Defendants were personally served with the summons and Complaint on January 11, 2024 at the address 6801 Waxing Way, Sacramento, California 95842.

            Defendants now move for an order “to quash the service of summons on Defendants on the ground of lack of jurisdiction of the court over Defendants.” Plaintiffs oppose.

Evidentiary Objections

The Court rules on Plaintiffs’ evidentiary objections to the Supplemental Declaration of Daniel B. Lopez as follows:

Objection No. 1: overruled

The Court rules on Plaintiffs’ evidentiary objections to the Supplemental Declaration of Bijan Mawji as follows:

Objection No. 1: overruled

Objection No. 2: overruled

Discussion

Code of Civil Procedure section 418.10 provides in part: “[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.” ((Id., § 418.10, subd. (a).) Pursuant to Code of Civil Procedure section 418.10, subdivision (e), “[a] defendant or cross-defendant may make a motion under this section and simultaneously answer, demur, or move to strike the complaint or cross-complaint.”

Service

First, Defendants assert that “Plaintiffs failed to personally serve Defendants.” (Mot. at p. 3:10.) Defendants cite to Floveyor Internat., Ltd. v. Superior Court (1997) 59 Cal.App.4th 789, 793, where the Court of Appeal noted that “[i]n the absence of a voluntary submission to the authority of the court, compliance with the statutes governing service of process is essential to establish that court’s personal jurisdiction over a defendant…When a defendant challenges that jurisdiction by bringing a motion to quash, the burden is on the plaintiff to prove the existence of jurisdiction by proving, inter alia, the facts requisite to an effective service…” The Floveyor Court noted that “[t]he filing of a proof of service creates a rebuttable presumption that the service was proper. However, the presumption arises only if the proof of service complies with the applicable statutory requirements.” ((Id. at p. 795.)

As set forth above, on January 16, 2024, Plaintiffs filed proofs of service indicating that Defendants were personally served with the summons and Complaint on January 11, 2024 at the address 6801 Waxing Way, Sacramento, California 95842. The Court notes that pursuant to Code of Civil Procedure section 415.10, “[a] summons may be served by personal delivery of a copy of the summons and of the complaint to the person to be served. Service of a summons in this manner is deemed complete at the time of such delivery.”

In support of the motion, Defendants submit the Declaration of Bijan Mawji, who states that “[n]either on January 11, 2024 or otherwise was I personally served a Summons, Complaint or Notice of Case Assignment-Unlimited Civil Case at 6801 Waxwing Way, Sacramento, CA 95842.” (Mawji Decl., ¶ 3.) Mawji also states that “[n]either on January 11, 2024 or otherwise was I personally served a Summons, Complaint or Notice of Case Assignment-Unlimited Civil Case on behalf of Defendant Mawji Tait Holdings, Inc. (‘MTH’) at 6801 Waxwing Way, Sacramento, CA 95842.” (Mawji Decl., ¶ 4.) Defendants assert that accordingly, “Plaintiffs now have the burden to prove the existence of jurisdiction by proving, inter alia, the facts requisite to an effective service.” (Mot. at p. 3:20-21.)

In the opposition, Plaintiffs assert that they have effectuated service upon both Defendants. As discussed, on January 16, 2024, Plaintiffs filed proofs of service indicating that Defendants were personally served with the summons and Complaint on January 11, 2024 at the address 6801 Waxing Way, Sacramento, California 95842.

In his declaration in support of the opposition, Jonathan Tabaroki states that “[t]o locate the Defendants, I retained the services of E-Investigations, Inc. which, following its investigation, determined that defendant Mawji resided at 6801 Waxwing Way, Sacramento, California 95842.” (Tabaroki Decl., ¶ 20.) Tabaroki states that he “retained the process server company Capital Process Service to serve Defendants at the address E-Investigations, Inc. had uncovered, specifically 6801 Waxwing Way, Sacramento, California 95842,” and that “[o]n January 11, 2024, process server Jenice Rossner from Capital Process Service served the Summons, Complaint, and related documents upon an individual who indicated he was Defendant Mawji.” (Tabaroki Decl., ¶¶ 21-22.) Tabaroki states that “later that same day, on January 11, 2024, Defendant Mawji sent [Tabaroki] a text message communication stating, in part, ‘So now you’re suing me?’ while also threatening that a ‘Counter claim coming [sic] and daddy is included’ and exclaiming that the filing of the lawsuit was ‘[s]uch a dumb move.’” (Tabaroki Decl., ¶ 24, Ex. H.)

Plaintiffs assert that Mawji’s text message communications to Tabaroki on January 11, 2024, show that Mawji is aware of and in receipt of the summons and Complaint that were filed and served. (Tabaroki Decl., ¶ 24, Ex. H.) Defendants note that “[i]t is well settled that strict compliance with statutes governing service of process is not required. Rather, in deciding whether service was valid, the statutory provisions regarding service of process should be liberally construed to effectuate service and uphold the jurisdiction of the court if actual notice has been received by the defendant. Thus, substantial compliance is sufficient.” (Gibble v. Car-Lene Research, Inc. (1998) 67 Cal.App.4th 295, 313 [internal citations omitted].)

Based on the foregoing, the Court finds that Plaintiffs have demonstrated facts requisite to an effective service. The Court finds that Plaintiffs have demonstrated that notice of the summons and Complaint was received by Mawji. It cannot be disputed that Defendants received actual notice of this action. Therefore, Defendants’ attempt to defeat jurisdiction on technical grounds is unavailing.[1]  

Personal Jurisdiction

Defendants also assert that “Plaintiffs have not established minimum contacts for MTH.” (Mot. at p. 3:23.) The Court notes that “California courts may exercise jurisdiction on any basis that is not inconsistent with the state and federal Constitutions. Thus, the inquiry in California is whether the assertion of personal jurisdiction comports with the limits imposed by federal due process.” (Young v. Daimler AG (2014) 228 Cal.App.4th 855, 865 [internal quotations and citations omitted].) Due process permits courts to exercise personal jurisdiction over nonresidents who have “minimum contact” with the forum state such that the exercise of jurisdiction does not offend “traditional notions of fair play and substantial justice.” (Int’l Shoe Co. v. Wash. (1945) 326 U.S. 310, 316.)

“Personal jurisdiction may be either general or specific.” (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445.) “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.” (Id. at pp. 445-446 [internal quotations, citations, and emphasis omitted].)

“If general jurisdiction is not established, a nonresident defendant may still be subject to California’s specific jurisdiction if a three-prong test is met.” (Gilmore Bank v. AsiaTrust New Zealand Ltd. (2014) 223 Cal.App.4th 1558, 1568 [internal emphasis omitted].) “Specific jurisdiction will be found over an out-of-state defendant only when (1) the [out-of-state] defendant has purposefully availed himself or herself of forum benefits, (2) the controversy [giving rise to the present lawsuit] 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. The plaintiff asking the forum state to exert jurisdiction over the out-of-state defendant bears the initial burden of establishing the first two elements by a preponderance of the evidence, and if the plaintiff does so, the out-of-state defendant then bears the burden of convincing the court why the exertion of personal jurisdiction would not comport with fair play and substantial justice.” (Jacqueline B. v. Rawls Law Group, P.C. (2021) 68 Cal.App.5th 243, 253 [internal quotations, citations, and emphasis omitted].)

In his declaration in support of the motion, Mawji asserts that “MTH does not reside in the State of California,” and that “MTH does not conduct or transact any business in the State of California.” (Mawji Decl., ¶¶ 5-6.) Mawji appears to assert that accordingly, “Plaintiffs have not established minimum contacts for MTH.” (Mot. at p. 3:23.)

In the opposition, Plaintiffs assert that they “have established minimum contacts for Defendant MTH.” (Opp’n at p. 8:13.) Plaintiffs assert that “as part of the partnership formed between Defendant Mawji and Plaintiff Tabaroki in the State of California, including with the intent to conduct business in California, Defendant Mawji and Plaintiff Tabaroki formed a limited liability company in the State of California of which MTH was a member. Moreover, as part of this partnership formed and operated in the State of California, Defendants formed multiple California companies, operated those companies in California, were signatories on California bank accounts for these California companies, converted monies from these California entities,” and that “Plaintiffs’ claims arise out of these contacts and activities.” (Opp’n at p. 10:13-20, emphasis omitted.)

 In his supporting declaration, Tabaroki states that “[o]n September 12, 2019, as part of the process of commencing our 50/50 business partnership, Mawji and I together formed the California limited liability company 264626 LLC, which we later amended to be named Alt Labs, LLC (‘Alt Labs LLC’).” (Tabaroki Decl., ¶ 6.) Tabaroki states that “[a]t all times relevant, the California based Alt Labs LLC was owned fifty percent (50%) by Mawji’s company, Defendant Mawji Tait Holdings, and fifty percent (50%) by my company, Trousdale Group LLC…” (Tabaroki Decl., ¶ 8, emphasis added.) 

Tabaroki also states that “Mawji Tait Holding was added as a signatory to Alt Lab LLC’s Bank of America business bank account in California.” (Tabaroki Decl., ¶ 10, Ex. C.) Tabaroki’s declaration also provides that “Alt Labs LLC’s 2019 and 2020 tax filings further reflect Mawji Tait Holding’s fifty percent (50%) ownership interest in the California based Alt Labs. True and correct copies of Mawji Tait Holding’s 2019 and 2020 Partnership Form 1065 Schedule K-1 are attached hereto as composite Exhibit ‘D’.” (Tabaroki Decl., ¶ 11, Ex. D.)

As set forth above, the Complaint in this action alleges, inter alia, that “Tabaroki…formed the company Alt Labs, LLC…in the State of California, which company was owned fifty percent (50%) by Mawji’s company, Mawji Tait Holdings, and fifty percent (50%) by Tabaroki’s company, Trousdale Group LLC…” (Compl., ¶ 20.) The Complaint further alleges that “the partners decided to raise equity to expand the partnership and created Plaintiff Alt Method, a corporation, as a vehicle to bring on additional investors.” (Compl., ¶ 23.) As discussed, Plaintiffs allege that Mawji “unilaterally [withdrew] funds from the partnership bank account with Alt Method, redirecting all such funds for his own personal use and for his new competing company, which does business as Dominion…” (Compl., ¶ 35.)

In his supporting declaration, Tabroki further states that “at a certain point during the partnership, Defendant Mawji purported to ‘resign’ from Plaintiff Alt Method Inc. and then proceeded to form his own new competing company based in California while inducing our partnership’s customers to sever their contracts and dealings with our partnership, including to cease conducting business with me and Alt Method Inc. and to, instead, conduct the same business with Mawji’s new company, Dominion Apparel, Inc…Mawji’s first step in implementing this scheme was to unilaterally withdraw funds from our partnership bank account set up in the name of Alt Method Inc., redirecting all such funds for his own personal use and for his new competing company, Dominion Apparel, including to transfer money to bank accounts in Canada under his exclusive control. Upon information and belief, those Canadian bank accounts are owned and/or controlled by Defendant Mawji’s company, Defendant Mawji Tait Holding, of which Defendant Mawji is the sole owner.” (Tabroki Decl., ¶ 13.)

Based on the foregoing, the Court finds that Plaintiffs have sufficiently demonstrated that MTH “has purposefully availed [itself] of forum benefits,” and that “the controversy [giving rise to the present lawsuit] is related to or arises out of [MTH’s] contacts with the forum.” (Jacqueline B. v. Rawls Law Group, P.C., supra, 68 Cal.App.5th at p. 253 [internal quotations omitted].)

Conclusion

Based on the foregoing, the Court denies Defendants’ motion to quash. Defendants must respond to the Complaint within 30 days of the date of this Order.

Plaintiffs shall give notice of this ruling.  

DATED:  May 30, 2024                                 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court