Case Name: Kay & John Gabor v. Rebecca Harris; Kristen Humphrey
Case No.: 16CV291117

This is an action primarily alleging fraud and breach of fiduciary duty in the creation of management of trusts located in Washington State. Currently before the Court is a motion to quash service of summons by specially appearing Defendants Harris and Humphrey on the grounds that there is no basis for California to assert personal jurisdiction over them.

A defendant may specially appear and file a motion to quash service for lack of personal jurisdiction under CCP § 418.10(a)(1). “[W]here a defendant properly moves to quash service of summons the burden is on the plaintiff to prove facts requisite to the effective service.” (Sheard v. Super. Ct. (1974) 40 Cal.App.3d 207, 211.) “[T]he burden of proof is upon the plaintiff to establish the facts of jurisdiction by a preponderance of the evidence.” (Evangelize China Fellowship, Inc. v. Evangelize China Fellowship, Hong Kong (1983) 146 Cal.App.3d 440, 444.) The plaintiff must provide affidavits and other authenticated documents in order to demonstrate competent evidence of specific evidentiary facts permitting a court to form an independent conclusion on the issue of jurisdiction. (In re Automobile Antitrust Cases I & II (2005) 135 Cal.App.4th 100, 113.) Allegations in an unverified complaint are insufficient to satisfy this burden of proof. (Id.) Jurisdictional facts must be proved by competent evidence at the hearing on the motion to quash. Hearsay declarations are not competent proof of facts alleged.

“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. The plaintiff must present facts ‘‘demonstrating that the conduct of defendants related to the pleaded causes of action is such as to constitute constitutionally cognizable ‘minimum contacts.’’’ Evidence of the jurisdictional facts or their absence may be in the form of declarations. Where there is a conflict in the declarations, resolution of conflict by the trial court will not be disturbed on appeal of the determination is supported by substantial evidence. However, where the evidence of jurisdictional facts is not conflicting, the question of whether a defendant is subject to personal jurisdiction is one of law.” (Elkman v. National States Ins. Co. (2009) 173 Cal.App.4th 1305, 1312-1313, emphasis in original, internal citations omitted but citing Evangelize China, supra, at 444 among others. See also Greenwell v. Auto-Owners Ins. Company (2015) 233 Cal.App.4th 783, 789, citing Elkman.)

The relevant time period during which “minimum contacts” must have existed is when the cause of action arose rather than when the complaint was filed or served. (Cadle Co. II, Inc. v. Fiscus (2008) 163 Cal.App.4th 1232, 1239.) Each defendant’s “contacts” with the forum state must be assessed individually. (Calder v. Jones (1984) 465 U.S. 783, 790.)

Under the minimum contacts test, personal jurisdiction may be either general or specific. (Snowney v. Harrah’s Entertainment, Inc. (2005) 35 Cal.4th 1054, 1062.) It is undisputed that moving Defendants are not subject to general personal jurisdiction. A nonresident defendant may be subject to California’s specific personal jurisdiction if a three-prong test is met. First the defendant must have purposefully availed himself/herself of the state’s benefits. Second, the controversy must be related to or arise out of the defendant’s contacts with the state. Third, considering the defendant’s contacts with the state and other factors, California’s exercise of jurisdiction over the defendant must comport with fair play and substantial justice. The Plaintiff bears the burden of establishing the first two requirements. If he/she does so, the burden shifts to the defendant to show that California’s exercise of jurisdiction would be unreasonable. (See Greenwell v. Auto-Owners Ins. Company, supra, 233 Cal.App.4th at 792.)

Purposeful availment occurs where a nonresident defendant purposefully directs activities at residents of the forum; purposefully derives benefits from its activities in the forum; creates a substantial connection with the forum; deliberately has engaged itself in significant activities within the forum; or has created continuing obligations between itself and resident of the forum. (Snowney, supra, at 1062-1063. See also Moncrief v. Clark (2015) 238 Cal.App.4th 1000, 1006 (6th Dist.).) California uses a “substantial connection” test in determining if a controversy is related to a defendant’s purported contacts with California which is satisfied if there is a substantial nexus or connection between the defendant’s forum activities and the plaintiff’s claim. The more significant the forum contacts are, the less related to the cause of action they need to be. (See Moncrief, supra, at 1007, citing Snowney.)
Defendants’ Motion to Quash is GRANTED as to both moving Defendants.

Plaintiffs have failed to meet their burden to establish jurisdictional facts relating to the moving Defendants through competent evidence. They have not shown that either moving Defendant purposefully availed themselves of California’s benefits or that that there is a substantial nexus between Plaintiffs’ claims and these Defendants’ purported activities in or directed at California.

Plaintiffs’ Complaint is unverified and does not allege that these Defendants solicited Plaintiffs’ business in California or created the Washington State trust (the Blue Mountain Trust) intended to hold Plaintiffs’ investments. Instead the Complaint expressly alleges that these acts were performed by Decedent Carter Deshler. It also expressly alleges that Decedent Deshler was the individual who carried out the alleged theft of Plaintiffs’ funds. (See Complaint at 17-26.) The only allegations that the moving Defendants were involved in Deshler’s alleged activities are made “on information and belief,” thereby conceding that Plaintiffs have no personal knowledge of such facts. (See Complaint at 15, 20 and 27.) “Information and belief is a common legal term used to indicate that the allegation is not based on firsthand knowledge of the person making the allegations, but that person nevertheless, in good faith, believes the allegation to be true.” (Magnolia Square Homeowners Assn. v. Safeco Ins. Co. (1990) 221 Cal.App.3d 1049, 1057, internal quotations omitted.) “It is improper to plead on information and belief when the pleader has actual or presumed knowledge of the facts.” (4 Witkin, Cal. Procedure (5th Ed., 2008) Pleading §399.)

The only generally admissible evidence submitted by Plaintiffs, their declarations in opposition to the motion, also fail to establish jurisdictional facts against either moving Defendant. Both declarations repeat the allegations of the Complaint, expressly stating that it was decedent Deshler who solicited their business in California, created the trust for Plaintiffs and stole their funds. (See Declaration of Jay Gabor at 3-12 and Declaration of John Gabor at 3-12.) The only statements in either declaration purporting to describe acts of the moving Defendants are again made on “information and belief,” thereby admitting declarants’ lack of personal knowledge. (See Declaration of Jay Gabor at 7 and 15 and Declaration of John Gabor at 7 and 14.)

The exhibits to the declaration of Plaintiff John Gabor, to the extent they are properly authenticated, also do not establish the necessary jurisdictional facts as to the moving Defendants. They only clearly show contacts between decedent Carter Deshler and Plaintiffs. For example, Exhibit A to the John Gabor declaration, a February 20, 2008 letter from decedent Deshler, only contains hearsay statements as to moving Defendants’ knowledge or involvement in Deshler’s business arrangements with Plaintiffs.

Even if the defects in Plaintiffs’ evidence could be overlooked and the Court were in the position of weighing competent evidence submitted by both sides, Defendants’ declarations are more detailed and more persuasive. Rather than make vague statements on information and belief, both Defendants expressly deny that they had any involvement with the solicitation of Plaintiffs’ business or with the creation of their trust. They both also state that they did not become significantly involved with Decedent Deshler’s interactions with her clients (including Plaintiffs) until after Deshler suffered a debilitating stroke in March of 2010.