Judge Theresa M. Traber, Case 22STCV35206 2023-02-07 Tentative Ruling

Judge: Theresa M. Traber, Case: 22STCV35206, Date: 2023-02-07 Tentative Ruling

Case Number: 22STCV35206 Hearing Date: February 7, 2023 Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE: February 7, 2023 TRIAL DATE: NOT SET

CASE: Harlan Helvey v. Kamille Grey et al.

CASE NO.: 22STCV35206

MOTION TO QUASH SERVICE OF SUMMONS

MOVING PARTY: Specially Appearing Defendants Kamille Grey, James E. Stovall, and Hometown Classic Builders, LLC

RESPONDING PARTY(S): Plaintiff Harlan Helvey

CASE HISTORY:

· 11/04/22: Complaint filed.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

The complaint in this action was filed on November 4, 2022, asserting claims for breach of contract, conversion, and money had and received. Plaintiff alleges that the parties entered into an agreement concerning the development and management of real property located in Dallas, Texas. Plaintiff alleges that, when the property was sold, Defendants refused to compensate Plaintiff for his investment into the property from the proceeds of the sale.

Specially Appearing Defendants move to quash service of summons for lack of personal jurisdiction.

TENTATIVE RULING:

Defendants’ Motion to Quash Service of Summons is DENIED.

Defendants are deemed to have made a general appearance as of the date of this order.

Defendants shall have thirty days to file an answer, demurrer, or other responsive pleading to the Complaint.

DISCUSSION:

Specially Appearing Defendants move to quash service of the summons and complaint arguing the Court does not have personal jurisdiction over Specially Appearing Defendants.

“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.” (Aquila, Inc. v. Sup. Ct. (2007) 148 Cal.App.4th 556, 568; see also Elkman v. National States Ins. Co. (2009) 173 Cal.App.4th 1305, 1312-13 [“Where a nonresident defendant challenges jurisdiction by way of a motion to quash, the plaintiff bears the burden of establishing by a preponderance of the evidence that minimum contacts exist between the defendant and the forum state to justify imposition of personal jurisdiction.”].) Evidence of the facts giving rise to personal jurisdiction or their absence may be in the form of declarations. (Arensen v. Raymond Lee Organization, Inc. (1973) 31 Cal.App.3d 991, 995.) The Court should exclude evidence that would be inadmissible at trial. (See, e.g., Judd v. Superior Court (1976) 60 Cal.App.3d 38, 43-44 [Court of Appeal excluded inadmissible hearsay evidence offered in support of affirmation of trial court’s denial of motion to quash, and subsequently reversed the trial court’s denial].) A non-resident defendant may be subject to either general or specific jurisdiction. (See Elkman v. National States Insurance Co., supra, 173 Cal.App.4th at 1314.)

General Jurisdiction

Specially Appearing Defendants first contend that the Court lacks general personal jurisdiction over them.

General jurisdiction exists when a defendant is domiciled in the forum state or his activities there are substantial, continuous, and systematic. (F. Hoffman-La Roche, Inc. v. Sup. Ct. (2005) 130 Cal.App.4th 782, 796.) “In such circumstances, it is not necessary that the specific cause of action alleged be connected with the defendant’s business relationship to the forum.” (Id.) “The standard for establishing general jurisdiction is ‘fairly high,’ [citation] and requires that the defendant’s contacts be of the sort that approximates physical presence.” (Elkman, supra, 173 Cal.App.4th at 1315 (emphasis in original).) “Factors to be taken into consideration are whether the defendant makes sales, solicits or engages in business in the state, serves the state’s markets, designates an agent for service of process, holds a license, or is incorporated there.” (Id.)

Plaintiff does not contest Defendants’ argument that the Court lacks general personal jurisdiction over Defendants. Instead, Plaintiff claims that the basis for the Court’s jurisdiction over Defendants is specific.

Specific Jurisdiction

Defendants also contends that the Court lacks specific personal jurisdiction.

“Where general jurisdiction cannot be established, a court may assume specific jurisdiction over a defendant in a particular case if the plaintiff shows the defendant has purposefully availed himself or herself of forum benefits; [i.e.] the nonresident purposefully directed its activities at forum residents or purposefully availed itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of local law. (Hanson v. Denckla (1958) 357 U.S. 235.)

Specific jurisdiction involves a 3-part test in California. California courts adopt the same test as the test used by the court in Boschetto v. Hansing (9th Cir. 2008) 539 F.3d 1011,1016):

(1) The nonresident defendant must do some act or consummate some transaction

with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or results from the defendant's forum-related activities; and (3) exercise of jurisdiction must be reasonable.(Panavision International, L.P. v. Toeppen (9th Cir. 1998) 141 F.3d 1316, 1320 [applying California law].).

(Jewish Defense Organization, Inc. v. Sup. Ct. of Los Angeles County (Rambam) (1999) 72 Cal.App.4th 1045, 1054.) Purposeful availment as defined by Boschetto requires affirmative conduct promoting the transaction. “To have purposefully availed itself of the privilege of doing business in the forum, a defendant must have ‘performed some type of affirmative conduct which allows or promotes the transaction of business within the forum state.’” (Boschetto, 539 F.3d at 1016.) If the plaintiff satisfies the first two prongs of the test, the burden shifts to the defendant to present a compelling case that the exercise of jurisdiction would be unreasonable. (Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 476-78.)

1. Purposeful Availment or Direction

The parties agree that the proper test for the case at hand is whether Defendants purposefully directed their conduct at the forum state. (See Schwarzenneger v. Fred Martin Motor Co. (9th Cir. 2004) 374 F.3d 797, 803.) “Purposeful direction” requires that the defendant has (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state. (Id.) The proper inquiry is the nature and quality of the defendant’s activity in the forum state, not the quantity. (As You Sow v. Crawford Laboratories, Inc. (1996) 50 Cal.App.4th 1859, 1870.) Minimum contacts may be created via a non-resident’s use of telephone or email, and the Defendant need not set foot in the forum state. (See Hall v. LaRonde (1997) 56 Cal.App.4th 1342, 1344.) However, “merely asserting that a defendant knew or should have known that his intentional acts would cause harm in the forum state is not enough to establish jurisdiction under the effect test.” (Pavlovich v. Superior Court, (2002) 29 Cal.4th 262, 270.) The plaintiff must show that California was the “focal point” of the tortious activity. (Burdick v. Superior Court (2015) 233 Cal.App.4th 8, 20.)

Plaintiff contends that Defendants purposefully directed their activities at California. He asserts that, from the mid-1990s through 2011, Plaintiff and Defendant Stovall pursued numerous real estate development projects together in California, including in Los Angeles, the Pacific Palisades, the Inland Empire, Desert Hot Springs, the Salton See area, and various “fix and flip” real estate ventures in California. (Declaration of Harlan Helvey ISO Opp. ¶ 5.) Beginning in 2015, their development projects shifted to Texas based on Defendant Stovall’s invitation to Plaintiff to participate in several real estate projects in Dallas, Texas. (Id.) Defendants reached out to Plaintiff to solicit his participation and his investment of his funds from California in the Texas development project at the center of this case. (Id., ¶ 7.) Stovall and Grey knew from their ongoing dealings with Plaintiff that he was a California resident, and the three of them had at least one real estate development meeting in Manhattan Beach, California. (Id., ¶6.) In addition, Plaintiff focuses on the substantial correspondence between the parties while Plaintiff was in California to negotiate the underlying agreement at issue. (Id., ¶¶ 8-13.) Plaintiff also offers evidence of subsequent conduct in furtherance of the operation of the agreement, including Defendants’ conveyance to Plaintiff in California of liens for deeds of trust as securities on the properties that were the subject of the agreement, Plaintiff’s transferring of funds from his bank in California, and his online access from California to Hometown’s bank accounts in Texas, as well as correspondence showing the parties’ joint efforts to manage and dispose of the property. (Id. ¶¶ 9-13, 16.)

The Court finds that this evidence is sufficient to establish that Defendants purposefully directed their activities towards California. As in Hall v. LaRonde, cited by Plaintiff, the evidence offered indicates that Defendants created a “continuing obligation” between themselves and a resident of California that is sufficient to satisfy Plaintiff’s burden with respect to this prong. (See Hall v. Laronde, supra, 56 Cal.App.4th at 1347 [ongoing business relationship after establishment of contract was sufficient to establish minimum contacts with California by New York defendant].)

2. Claim Arising Out of Defendants’ Activities

Plaintiff contends that the claims asserted against Defendants arise out of the activities for which evidence is provided above. After reviewing the essential allegations in the Complaint, the Court agrees. The burden now shifts to Defendants to present a compelling case that the exercise of jurisdiction would be unreasonable.

3. Reasonableness of Exercise of Jurisdiction

Defendants contend that the assertion of jurisdiction in this matter over Defendants would be unreasonable.

If a plaintiff has satisfied their burden on a motion to quash for lack of personal jurisdiction, the burden shifts to the moving party to demonstrate that the exercise of jurisdiction would be unreasonable. (Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 476-78.) The moving party must show that litigating the case in a foreign state would be “so gravely difficult and inconvenient that it would put him at a severe disadvantage in comparison to his opponent.” (Doe v. Damron (2021) 70 Cal.App.5th 684, 693.) Mere inconvenience is insufficient to defeat jurisdiction. (Id.) When evaluating the reasonableness of the exercise of jurisdiction, courts commonly balance several factors in making that determination, including (1) the extent of the defendant’s purposeful interjection into the forum state; (2) the burden on the defendant; (3) the extent of conflict with the sovereignty of the defendant’s state; (4) the forum state’s interest in adjudicating the dispute; (5) the most efficient judicial resolution of the controversy; (6) the importance of the forum to the plaintiff’s interests in convenient and effective relief; and (7) the existence of an alternate forum. (See Core-Vent Corp. v. Nobel Indus. (9th Cir. 1993) 11 F.3d 1482, 1488-89.)

Here, the evidence before the Court indicates that the extent of the Defendants’ interjections into California consisted of negotiation of the underlying agreement, conveyance of deeds of trust to Plaintiff, and correspondence for the purposes of management and disposition of the real property that was the subject of the agreement. (See generally Helvey Decl.) The agreements were neither signed nor executed in California, nor was the property located in California. (See Complaint Ex. 3.) However, the property itself has been sold, and the issue at hand is not the property, but the money from the sale of the property. (See generally Complaint.) Defendants also argue that there would be a substantial burden on Defendants to hear this case in California because all the evidence and witnesses are located in Texas, rather than California. Defendants offer no evidence in support of this contention, nor do they provide any specific examples of relevant evidence or witnesses. Further, Defendants state that the ultimate enforcement and recovery on a judgment would have to take place in Texas “as the action involves a lien on real property in Texas.” Not so. The Complaint is exclusively concerned with money received by Defendants for the sale of a parcel of real property that has already been completed. (See Complaint ¶ 44.) Thus, for the purposes of judicial efficiency, while enforcement and recovery might be required in Texas rather than California, it is not apparent from the record that it would necessarily be so, or that doing so would be unduly burdensome.

Neither party addresses the extent of any conflict with the sovereignty of the state of Texas, nor do they address California’s interest in adjudication of this dispute, or the importance of the forum to securing effective and convenient relief for Plaintiff. It is undisputed that Texas courts would offer an alternative forum for this dispute.

In aggregate, Defendants offer very little in the way of evidence or substantive argument supporting their position that the exercise of jurisdiction by this Court would be gravely problematic or inconvenient for Defendants. Their minimal showing is not sufficient to satisfy Defendants’ burden on this prong of the determination of specific jurisdiction. The Court therefore does not find good cause to quash service of the summons.

In reply, Defendants also assert that the Court lacks subject matter jurisdiction and is an improper venue to hear this dispute. These issues were not raised in the notice of motion, nor were they briefed in Defendants’ initial moving papers, thereby depriving Plaintiff of any opportunity to address these arguments. The Court therefore declines to address these arguments in the context of this motion.

CONCLUSION:

Accordingly, Defendants’ Motion to Quash Service of Summons is DENIED.

Defendants are deemed to have made a general appearance as of the date of this order.

Defendants shall have thirty days to file an answer, demurrer, or other responsive pleading to the Complaint.

Moving Parties to give notice.

IT IS SO ORDERED.

Dated: February 7, 2023 ___________________________________

Theresa M. Traber

Judge of the Superior Court

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.