Case Number: BC660537 Hearing Date: May 24, 2018 Dept: 39

Viva Concepts, LLC v. Spartanics, Ltd., et al., BC660537

Motion to Quash Service of Summons and Complaint and Dismiss for Lack of Personal Jurisdiction by Specially Appearing Defendant Spartanics, Ltd.: GRANTED.

Background

As alleged in the Complaint, this breach of contract case arises from allegations that Defendant Spartanics, Ltd. (“Spartanics”) breached the terms of a sales agreement with Cause Point, LLC (“Cause Point”). Plaintiff Viva Concepts, LLC (“Viva”) alleges that it is the successor-in-interest to Cause Point. Plaintiff alleges that Cause Point purchased a Card Punch System Machine (the “Machine”) for $210,980.00, with freight charged calculated at $4,430.32. On March 2013, Plaintiff allegedly began having issues with the Machine. Defendant allegedly refused to provide a technician to determine why the Machine was malfunctioning, and Plaintiff alleges that it suffered damages based on its inability to use the Machine as was intended.

The Complaint alleges that Defendant is an Illinois corporation, organized and existing under the laws of California with its principal place of business in Cook County, Illinois. Specially appearing Defendant contends that it is an Illinois corporation, not a California corporation, and Defendant now moves to quash service of the Summons and Complaint and to dismiss for lack of personal jurisdiction. Plaintiff opposes the motion.

Request for Judicial Notice

The court “may take judicial notice of the fact of a document’s recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document’s legally operative language…. From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265, disapproved on other grounds by Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919, 939.)

Here, Defendant requests the court take judicial notice of two exhibits attached to the Declaration of Hannah L. Cannom (“Cannom Declaration”). Exhibit A is allegedly a true and correct copy of a print-out from the California Secretary of State website that Cannom allegedly printed on March 28, 2018. Exhibit B is allegedly a true and correct copy of a Certificate of Good Standing for Spartanics, Ltd. From the Illinois Secretary of State website that Cannom allegedly obtained on March 29, 2018. The existence and legal effect of these two documents are judicially noticeable. (Evid. Code, § 452, subds. (c), (h).)

Defendant’s evidence is sufficient to demonstrate that Spartanics is an Illinois corporation and not a California corporation as Plaintiff alleges in the Complaint.

Discussion

A defendant may move to quash service of summons on the ground the court lacks personal jurisdiction. (Code Civ. Proc., § 418.10, subd. (a)(1).) By statute, the courts of this state may exercise personal jurisdiction over nonresident defendants to the extent permitted by the United States Constitution. (Code Civ. Proc., § 410.10.) Under the Constitution, due process requires that a nonresident defendant have “certain minimum contacts” with a forum such that the court’s exercise of personal jurisdiction does not offend traditional notions of fair play and substantial justice. (Int’l Shoe Co. v. Wash. (1945) 326 U.S. 310, 316.) The extent of the defendant’s contacts with the forum determines whether the court’s jurisdiction is general or specific. (Daimler AG v. Bauman (2014) 571 U.S. __ [134 S.Ct. 746, 754-755].)

I. General Jurisdiction

Defendant Spartanics contends that there is no general jurisdiction because it lacks the requisite contacts with California. (Mot. 3-4.) General jurisdiction exists where the activities of a non-resident defendant are so “extensive or wide-ranging” or “substantial … continuous and systematic” to establish a constitutionally sufficient relationship to warrant jurisdiction for all causes of action asserted against it. (Cornelison v. Chaney (1976) 16 Cal.3d 143, 147.)

Defendant asserts that it does not own any property, have any employees, conduct any advertising, or maintain any offices or bank accounts in California. (Declaration of Tom O’Hara (“O’Hara Decl.”) ¶¶ 7-9.) Defendant further contends that only 3% of its total sales in 2017 were to California companies. (Id. at ¶ 10.)

Plaintiff does not raise any arguments concerning general jurisdiction in its opposition. Accordingly, the court finds that Plaintiff has not demonstrated the existence of general jurisdiction over Spartanics in California.

II. Specific Jurisdiction

“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.” (Elkman v. National States Ins. Co. (2009) 173 Cal.App.4th 1305, 1314, emphasis in original (Elkman).) To determine whether the exercise of specific jurisdiction is proper in a given case, courts consider the relationship among the defendant, the forum, and the litigation. (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 269.) It is the plaintiff’s burden to demonstrate that the defendant’s conduct giving rise to the pleaded causes of action amounts to constitutionally cognizable “minimum contacts.” (Elkman, 173 Cal.App.4th at p. 1313.)

A. Purposeful Availment

“[P]urposeful availment occurs where a nonresident defendant purposefully directs its activities at residents of the forum [citation], purposefully derives benefit from’ its activities in the forum [citation], creates a substantial connection with the forum [citation], deliberately has engaged in significant activities within’ the forum [citation], or has created continuing obligations between itself and residents of the forum.” (Anglo Irish Bank Corp. v. Superior Court (2008) 165 Cal.App.4th 969, 978 (Anglo Irish), internal quotation marks and citations omitted.)

Defendant contends that it did not purposefully avail itself of the California forum. According to Defendant, there is no evidence that Spartanics directed its activities to California or that it solicited Viva to purchase the machine, but that it was Viva that reached out to Spartanics and visited Spartanics in Illinois to inspect Spartanics’ machines. (O’Hara Decl. ¶ 4.) Defendant further contends that the contract was negotiated in Illinois and that Defendant did not deliver the Machine to Viva in California but that it delivered the Machine FOB in Rolling Meadows, Illinois. (Id. at ¶¶ 5-6.) According to Defendant, the only allegations about Spartanics’ interactions with California are that it entered into a contract with a California company and that it sent an employee to Viva’s offices for installment and training after the contract was signed and the Machine was delivered. (Mot. 5.) Defendant cites cased including Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 572 for the proposition that a nonresident defendant cannot become subject to specific jurisdiction in California simply by entered into a contract with a California resident. (Mot. 5.)

Plaintiff cites Bristol-Myers Squibb Co. v. Sup. Ct. (2016) 1 Cal.5th 783, 813 (Bristol-Myers) for the proposition that a foreign corporation satisfies the purposeful availment prong where it markets and sells products in California and has employees service the products in this state. (Opp. 5.) Plaintiff’s argument fails for a number of reasons.

First, Bristol-Myers was overturned by the United States Supreme Court in Bristol-Myers Squibb Co. v. Superior Court (2017) 137 S.Ct. 1773 on the grounds that the connection between the nonresident plaintiffs’ claims in that case and the forum were insufficient to establish personal jurisdiction. (Id. at pp. 1781-1782.)

Second, Plaintiff does not present any evidence that Defendant marketed its products in California as it contends. A plaintiff bears the burden to demonstrate that the defendant’s conduct giving rise to the pleaded causes of action amounts to constitutionally cognizable “minimum contacts.” (Elkman, 173 Cal.App.4th at p. 1313.) As stated above, Defendant’s President attests that Plaintiff’s predecessor-in-interest reached out to Defendant and subsequently visited Spartanics in Illinois to inspect Defendant’s products and to negotiate the contract. (See O’Hara Decl. ¶¶ 2-5.) O’Hara further attests that Defendant does not direct any advertising to California. (Id. at ¶ 9.)

In its opposition, Plaintiff does not present any evidence of Defendant’s advertisements or marketing in California or cite applicable legal authority to demonstrate that Defendant’s contacts with the forum are sufficient to establish its “purposeful availment” of the forum. Accordingly, Plaintiff does not meet its burden in opposing the subject motion to establish the first prong of the test.

The court therefore GRANTS the motion to quash the Summons and Complaint and dismisses the matter. Having granted the motion on this basis, the court need not address the parties’ arguments regarding the remaining two prongs of the test.