Judge: Upinder S. Kalra, Case: 22STCV11220, Date: 2022-09-28 Tentative Ruling

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Case Number: 22STCV11220    Hearing Date: September 28, 2022    Dept: 51

Tentative Ruling

Judge Upinder S. Kalra, Department 51

HEARING DATE:   September 28, 2022                                       

CASE NAME:            D-MAS, LLC, et al. v. AFI Financial, Inc., et al

CASE NO.:                22STCV11220

DEFENDANT’S MOTION TO QUASH SERVICE OF SUMMONS

MOVING PARTY: Defendant Vladimir Keslin

RESPONDING PARTY(S): Plaintiff D-MAS, LLC, et al.

REQUESTED RELIEF:

1.      An order quashing the service of summons and dismissing the action for lack of personal jurisdiction, pursuant to CCP §§ 410.10, 418.10(a)(1), and 581(h).

TENTATIVE RULING:

1.      Motion to Quash Service of Summons due to lack of personal jurisdiction is GRANTED.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

On April 4, 2022, Defendants D-Mas, LLC, Israel Yagudaev, and Mairam Yagudaev (Plaintiffs) filed a compliant against Defendants AFI Financial Inc., Alexander Gudis, Igor Okhman, Erina Gilerman, Galina Blank, Larissa (Lora) Shor, Vladimir Keslin (Defendants.) The complaint alleges eleven causes of action based on breach of contract, fraud, conspiracy, and professional negligence. Plaintiffs allege that they loaned Defendant AFI $2.5 million. However, Defendant AFI began defaulting on the terms of the Promissory Note.

On April 6, 2022, Plaintiffs filed a First Amended Complaint.

Defendant Vladimir Keslin filed the current Motion to Quash Service of Summons on July 19, 2022. Plaintiff’s Opposition was filed on September 14, 2022. Defendant’s reply was filed on September 20, 2022.

LEGAL STANDARD

“A defendant . . . may serve and file a notice of motion for one or more of the following purposes:  (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(a).)  “[C]ompliance with the statutory procedures for service of process is essential to establish personal jurisdiction. [Citation.]”  (Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1444.)  “[T]he filing of a proof of service creates a rebuttable presumption that the service was proper” but only if it “complies with the statutory requirements regarding such proofs.”  (Id. at 1441-1442.)  When a defendant moves to quash service of the summons and complaint, the plaintiff has “the burden of proving the facts that did give the court jurisdiction, that is the facts requisite to an effective service.”  (Coulston v. Cooper (1966) 245 Cal.App.2d 866, 868.)  “A court lacks jurisdiction over a party if there has not been proper service of process.”  (Ruttenberg v. Ruttenberg (1997) 53 Cal.App.4th 801, 808.) 

Defendant’s Evidentiary Objections:

Declaration of Israel Yagudaev:

Sustained: 1, 2, 3, 7, 8, 9, 10, 12, 13

Overruled: 4, 5, 6, 11,

ANALYSIS:

Defendant Vladimir Keslin moves to quash the service of summons on the grounds that the Court does not have personal jurisdiction over him.

Under CCP § 418.10(a)(1), a defendant may move to quash the service of summons on the grounds that the Court lacks jurisdiction over him or her. Defendant asserts that none of the traditional basis for personal jurisdiction have been established to allow the Court to have jurisdiction over him.

Personal jurisdiction is constitutionally permissible when the defendant has sufficient “minimum contacts” so that the exercise of jurisdiction “does not offend ‘traditional notions of fair play and substantial justice.’” (Anglo Irish Bank Corp., PLC v. Superior Court (2008) 165 Cal.App.4th 969, 977). There are two types of personal jurisdiction: general and specific. “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.” (T.A.W. Performance, LLC v. Brembo, S.p.A. (2020) 53 Cal.App.5th 632, 641, review denied (Dec. 9, 2020)).

1. General Jurisdiction

Defendant argues that there is no general jurisdiction. Mr. Keslin is a resident of and domiciled in Florida, does not and has not owned any real property in California during this litigation (2019), and does not and has not done any business in California during this litigation. (Dec. Keslin, ¶¶ 7-10.) Thus, Defendant does not have enough contacts to be considered “substantial, continuous, and systematic as stated in Vons Companies, Inc.

 “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. [citation omitted] 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 [citation omitted]. 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, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445.)

“The standard for establishing general jurisdiction is ‘fairly high,’ [citation] and requires that the defendant’s contacts be of the sort that approximate physical presence.” (Elkman, v. National States Insurance Co. (2009) 173 Cal.App.4th 1305, 1315.) “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 has failed to meet its burden to establish general jurisdiction. The evidence provided merely indicates that Defendant Keslin was a shareholder with 6.25% stock ownership. (Opp. Ex. 2, pg. 35.) While Plaintiff claims that he “participated in acts in state was the initiator of overt acts in state that lead directly to Plaintiffs’ harm.” (Opp. 9: 12-13.) However, Plaintiff does not provide any evidence that Defendant Keslin’s acts were substantial, continuous, and systematic. Exhibit 4, which Plaintiff claims is indication that Defendant was a director, is a meeting of the director. However, the document does not indicate Mr. Keslin is a director, but rather contributed an investment and the amount of canceled shares. Thus, the evidence presented is insufficient to establish general jurisdiction, considering the standard is high and be the type that “approximate physical presence.” (Elkman, supra, 173 Cal.App.4^th at 1315.)

2.      Specific Jurisdiction

Defendant argues that Plaintiff does not provide sufficient facts to demonstrate how Mr. Keslin purposefully availed himself of the benefits of California. The Promissory note that memorializes the loan Mr. Keslin made to Defendant Afi states that it is governed by the laws of Florida. (Dec. Keslin §§ 2-3, Ex. 1-2.) Additionally, Defendant AFI approached Mr. Keslin about the loan, not Mr. Keslin approaching Defendant AFI. (Dec. ¶¶ 4,6.)

Plaintiff asserts that Defendant purposefully availed himself of the benefits of California. He issued two loans to AFI, “contracted in California, availed himself of California business benefits, acted as director, availed himself to California’s corporate laws, and finally initiated and then cooperated with the transfer of AFI’s funds to him to be used to show “proof of sufficient funds” (Exhibit 8) and then he kept the money, to the detriment of Plaintiffs and AFI.” (Opp. 10: 6-10.)

For specific jurisdiction over a nonresident, the court can only exercise jurisdiction 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.” (Anglo Irish Bank Corp., PLC v. Superior Court (2008) 165 Cal.App.4th 969, 978). Purposeful availment is satisfied when the defendant “purposefully and voluntarily directs [its] activities toward the forum so that [it] should expect, by virtue of the benefit [it] receives, to be subject to the court's jurisdiction based on” [its] contacts with the forum.’” (Jayone Foods, Inc. v. Aekyung Industrial Co. Ltd. (2019) 31 Cal.App.5th 543, 554). 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 v. Hansing (9th Cir. Cal. 2008) 539 F.3d 1011,1016.)

Plaintiff has not established that specific jurisdiction applies to the present matter because three factors state above have not been satisfied. First, Defendant has not purposefully availed himself of the forum state. Mr. Keslin has not performed “some type of affirmative conduct which allows or promotes the transaction of business within the forum state. (Id.) Further, as Defendant argues in the reply, Mr. Keslin’s position has a shareholder would not allow for personal jurisdiction. In Ruger, plaintiff was the president, director, and majority shareholder of the corporation. Even then, the court determined plaintiff’s position as a corporate employee was not enough to establish personal jurisdiction. Plaintiff’s “corporate position as officer, shareholder, and employee “does not supply the missing link for a constitutionally cognizable relationship with California supplying the basis for personal jurisdiction. For personal jurisdiction to lie, the character, quality, and nature of Ruger's activity must bear a substantial relationship to the causes of action beyond that derived solely from his official position with the corporation.” (Ruger v. Superior Court (1981) 118 Cal.App.3d 427, 433.)

Here, Mr. Keslin is not a majority shareholder, having only 6.25% in stock of AFI. Thus, Defendant’s position as a shareholder does not indicate that he purposefully availed himself of the forum state. Moreover, the promissory notes attached to Mr. Keslin’s declaration indicates that the $250,000 were loans. These loans are governed by the laws of Florida and indicate that amount is due “UPON DEMAND of any holder thereof.” (Motion, Dec. Keslin, Ex. 1 and 2.) As such, the loan that is purportedly the reason that California would have personal jurisdiction over Defendant is governed by the laws of Florida. Because Plaintiff has failed to establish that Defendant purposefully availed himself of the forum state, Plaintiff has not established and cannot establish that California has specific jurisdiction over Defendant Keslin.

Conclusion:

            For the foregoing reasons, the Court decides the pending motion as follows:

            Motion to Quash Service of Summons for lack of personal jurisdiction is GRANTED.

Moving party is to give notice.

IT IS SO ORDERED.

Dated: September 28, 2022                                        _________________________________                                                                                                                  Upinder S. Kalra

                                                                                    Judge of the Superior Court