Judge Yolanda Orozco, Case 19STCV20715 2023-01-10 Tentative Ruling

Judge: Yolanda Orozco, Case: 19STCV20715, Date: 2023-01-10 Tentative Ruling

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Case Number: 19STCV20715 Hearing Date: January 10, 2023 Dept: 31

MOTION TO QUASH SERVICE OF SUMMONS

TENTATIVE RULING

Defendant Royal Capital Corporation’s (“RCC”) Motion to Quash Service of Summons is CONTINUED to April 3, 2023.

Background

On June 12, 2019, Plaintiff Osvaldo Cervantes 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 filed opposing papers on December 28, 2022.

Defendant RCC filed a reply on January 03, 2022.

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.)

Request for Judicial Notice

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.)

Defendant Royal Capital Corporation (“RCC”) requests Judicial Notice of the following:

1) The Complaint in this action filed on June 12, 2019, a true and correct copy of which is attached hereto as Exhibit 1.

2) The Amendment to Complaint naming Royal Capital Corporation as Doe 3 filed on October 11, 2022, a true and correct copy of which is attached hereto as Exhibit 2.

Defendant’s request for Judicial Notice is GRANTED.

Evidentiary Objections

Defendant Royal Capital Corporation (“RCC”) filed Evidentiary Objections to the Declaration of Samuel Moorhead filed in support of Plaintiff’s Opposition to Defendant’s Motion to Quash.

Defendant’s opposition is to a certified copy of the transcript of Steve Neuroth, CFO of BAHCI before the bankruptcy court is admissible under Evidence Code section 1530. (See People v. Skiles (2011) 51 Cal.4th 1178, 1185; see also People v. Reed (1996) 13 Cal.4th 217, 225 [preliminary hearing transcript admissible to prove events of prior proceeding.].)

Accordingly, the Court rules as follows:

Objections Nos. 1-3, 5, 6, 9, 10, 18, and 19-27 are OVERRULED

Objections Nos. 4, 7, 8, 11, 12, 13, 14, 15, 16, and 17 are SUSTAINED.

Discussion

Late Filed Opposition

Specially appearing Defendant Royal Capital Corporation (“RCC”) argues that Plaintiff’s opposition should not be considered because it was untimely served on December 28, 2022, rather than December 27, 2022. RCC does not argue that it was prejudiced by the delay and has filed a reply to Plaintiff’s opposition. Accordingly, the Court will consider the late-filed opposition.

Motion to Quash

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

RCC asserts it is a Georgia corporation with its principal place of business in Atlanta, Georgia. (Bertram Decl. ¶ 3.) RCC asserts it has no physical presence and is not domiciled in California. (Id. ¶¶ 4, 5.) 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, 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’s Burden to Prove Personal Jurisdiction

Plaintiff does not dispute that the Court does not have general jurisdiction over RCC because RCC was served in Atlanta Georgia. Instead, Plaintiff argues that the Court has specific jurisdiction over 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.)

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.”

(Moorhead Ex. A.)

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 as 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.

Accordingly, Plaintiff has not met his burden of showing that RCC had minimum contacts in California and is subject to this Court’s jurisdiction.

The bankruptcy transcript makes it clear that there were written agreements between BAHCI and Royal California, but Plaintiff does not produce those contracts to show that Royal California is in fact RCC. Plaintiff also does not produce testimony or a declaration from Mr. Neuroth confirming that RCC is the franchisee of BAHCI.

The Court will, however, exercise its discretion to continue the hearing to allow Plaintiff to conduct discovery on jurisdictional issues since at this juncture the Court cannot say that additional discovery will not lead to facts establishing specific jurisdiction over RCC. (See HealthMarkets, Inc., supra, 171 Cal.App.4th at 1173 [“A trial court has the discretion to continue the hearing on a motion to quash service of summons for lack of personal jurisdiction to allow the plaintiff to conduct discovery on jurisdictional issues.”]

The hearing is CONTINUED.

Conclusion

Defendant Royal Capital Corporation’s (“RCC”) Motion to Quash Service of Summons is CONTINUED to April 3, 2023, at 8:30 a.m.

The Court Orders that Plaintiff may take limited discovery on jurisdictional issues only and thereafter file additional declarations to support its position. Defendant may respond to any additional briefing or declarations filed by Plaintiff. The Court further orders that such discovery be completed within 45 days.

Moving party to give notice.