SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES – NORTH DISTRICT

U.S. TOPCO ENERGY, INC., a )
California corporation )
) Case Number MC 024321
Plaintiff, )
) ORDER AFTER HEARING
vs. )
) Date of Hearing:
EVER ENERGY CO. LTD., a Taiwanese ) April 10, 2014
corporation; and DOES 1 through 25, ) Dept. A-11
inclusive, ) Judge Randolph A. Rogers
)
Defendants )
____________________________________)

The motion of specially-appearing Defendant Ever Energy Co. Ltd., to quash service of the summons of Plaintiff U.S. Topco Energy, Inc., came on for hearing on April 10, 2014. Plaintiff U.S. Topco Energy, Inc., appeared through its counsel of record, _________________________. Defendant Ever Energy Co. Ltd., appeared its counsel of record _________________________. The Court, having received and reviewed the pleadings of record and evidence submitted and having considered argument of counsel, it is hereby ORDERED:

The motion of Defendant Ever Energy Co. Ltd., to quash the service of the summons of Plaintiff U.S. Topco Energy, Inc., is DENIED.

SO ORDERED this the _____ day of April, 2014.

________________________
RANDOLPH A. ROGERS
JUDGE

SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES – NORTH DISTRICT

U.S. TOPCO ENERGY, INC., a )
California corporation )
) Case Number MC 024321
Plaintiff, )
) ORDER AFTER HEARING
vs. )
) Date of Hearing:
EVER ENERGY CO. LTD., a Taiwanese ) April 10, 2014
corporation; and DOES 1 through 25, ) Dept. A-11
inclusive, ) Judge Randolph A. Rogers
)
Defendants )
____________________________________)

The Court bases the Order After Hearing of this date upon the following Statement of Decision:

1. Plaintiff U.S. Topco Energy Inc., (“Topco”) is a California corporation. Defendant Ever Energy Co. Ltd. (“Ever Energy”) is a Taiwanese corporation. Plaintiff and Defendant engaged in certain business agreements, the details of which the present dispute arises from. On November 18, 2013, the Plaintiff filed a complaint for one count of breach of contract against Defendant.

2. On February 20, 2014, Defendant filed a motion to quash service of summons on the ground that the court lacks jurisdiction and service was improper. Plaintiff filed their opposition on March 27, 2014 contending that the court has jurisdiction by virtue of Defendant having purposely availed itself of an energy project sited in California, and that proper service is not required where notice has been actually received. Defendant filed its reply on April 3, 2014.

3. Motion to Quash Service of Summons – Defendants move to quash service of summons pursuant to CCP § 418.10. Without valid service of summons, the court never acquires jurisdiction over a defendant. Hence, the statutory ground for the motion to quash is that the court lacks jurisdiction over the defendant. CCP § 418.10(a)(1). CCP § 418.10 authorizes a motion to quash service of summons within the time allowed for filing a response to the complaint. If the motion is timely made, “no act” by the party making such motion, “including filing an answer, demurrer or motion to strike,” shall be deemed a general appearance. CCP § 418.10(e)(1).

4. Assertion of Personal Jurisdiction Generally – In this case, Defendants appear to be incorporated under the laws of Taiwan, and have principal place of business in Taipei, Taiwan. “When a nonresident defendant challenges personal jurisdiction, the plaintiff must prove, by a preponderance of the evidence, the factual basis that would justify the exercise of jurisdiction.” Dorel Industries, Inc. v. Superior Court (2005) 134 Cal.App.4th 1267, 1273. If the plaintiff meets this initial burden, the defendant has the burden of demonstrating “the exercise of jurisdiction would be unreasonable.” Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 449.

5. Pursuant to California’s long-arm statute, California courts may exercise jurisdiction on any basis not inconsistent with the California or the United States Constitution. CCP § 410.10; Vons, 14 Cal.4th at 444. “The overarching general rule is that a court may assume jurisdiction over a nonresident defendant where the defendant’s ‘minimum contacts’ with the forum state are sufficient to make the maintenance of the action inoffensive to traditional concepts of fair play and substantial justice.” Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 535.

6. “The concept of minimum contacts embraces two types of jurisdiction – general and specific.” Sonora Diamond, 83 Cal.App.4th at 536. If the nonresident defendant’s contacts with California are not sufficient to confer general jurisdiction, the defendant may still be subject to the specific jurisdiction of California on claims related to its activities in California. Id. at 536; Vons, 14 Cal.4th at 446.

7. General jurisdiction – A nonresident defendant may be subject to general jurisdiction if the contacts in the forum state are “‘substantial . . . continuous and systematic.’” Vons, 14 Cal.4th at 445. In such a situation, a defendant may be sued on any cause of action, even one not related to the in-state contacts. Id. “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.” Id. at 446.

8. Defendant is incorporated under foreign laws, maintains principal place of business outside of California, and performs and maintains all or nearly all of its business functions outside the state of California. Defendant asserts, and Plaintiff does not contest, that Defendant has no such substantial, continuous, and systematic contacts in California such that California state courts have general jurisdiction over the Defendant.

9. Specific jurisdiction – “When determining whether specific jurisdiction exists, courts consider the relationship among the defendant, the forum, and the litigation.” Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 269. A California court may exercise specific jurisdiction over an out-of-state defendant only if: “(1) the defendant has purposefully availed itself of forum benefits with respect to the matter in controversy; (2) the controversy is related to or arises out of the defendant’s contacts with the forum; and (3) the assertion of jurisdiction would comport with fair play and substantial justice.” Sonora Diamond, 83 Cal.App.4th at 536; Pavlovich, 29 Cal.4th at 269.

10. As a preliminary matter, the long list of no contacts that Defendant Ever Energy lists is not determinative of whether or not the Defendant has availed itself of the benefits of conducting business in California. Location of incorporation, principal place of business, and license to do business in California are central to a determination of general jurisdiction. However, specific jurisdiction asks whether or not the conduct of the Defendant in the transaction or occurrence in question is of such as nature as to avail itself to the benefits of conducting business in our State.

11. “The purposeful availment inquiry . . . focuses on the defendant’s intentionality. This prong is only satisfied when the defendant purposefully and voluntarily directs his activities toward the forum so that he should expect, by virtue of the benefit he receives, to be subject to the court’s jurisdiction.” Pavlovich, 29 Cal.4th at 269. Purposeful availment occurs when a nonresident “has purposefully directed his or her activities at forum residents, or who has purposefully derived benefit from forum activities, or purposefully avail[ed himself or herself] of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Vons 14 Cal.4th at 446. There is evidence of each of these in the present case.

12. The contract executed by both parties (reproduced as Exhibit A in the Declaration of Phillip Chen in support of Defendant’s motion to quash) states specifically in the preamble that Plaintiff Topco was “looking for a partner to provide resources to US Topco in the co-development of Lancaster Project.” Article I and II further delves into specific details of how Defendant Ever Energy will share in the project responsibilities with Plaintiff Topco and allocates financing burdens according to their membership rights. Moreover, article III states that Ever Energy “acknowledges and agrees that US Topco has many options in its selection of partners . . . [and therefore] remit to US Topco a payment of $3,000,000 ($0.10/W) to secure exclusive development rights to said project.” In addition, the contract, in article XXII, specifically contemplates it being governed and construed by California law.

13. Defendant deliberately engaged Plaintiff, knowing it was a California corporation for the undertaking of a project, explicitly known to be in California, with the benefits to be realized accruing exclusively from activity in California. Defendant knew it was conducting activity outside of its licensed business area, knew that the contract would have effects in California, and understood that these effects were contemplated and bargained for. Defendant clearly “purposefully directed [its] activity at [a] forum resident,” it “purposefully derived benefit from forum activities,” and it “purposefully avail[ed itself] of the privilege of conducting activities” within California. Under these circumstances, Defendant cannot now claim that it has not purposefully availed itself of California such that it could not reasonably foresee being haled before a California court on account of this contract.

14. The second prong of the specific jurisdiction inquiry focuses on whether or not the controversy is related or arises out of the defendant’s contact with the forum. “The question is whether plaintiff’s cause of action arose out of or had a substantial connection with a relationship the defendant purposefully established with the forum state.” Gilmore Bank v. AsiaTrust New Zealand Ltd. (2014) 223 Cal.App.4th 1558, 1573. Plaintiff Topco’s cause of action arises out of the contract made with Defendant Ever Energy. It is the relationship Defendant purposefully established with the forum state. Therefore, the second prong is clearly satisfied.

15. The final prong of the specific jurisdiction inquiry is whether or not the assertion of jurisdiction comports with traditional notions of fair play and substantial justice. Our Supreme Court has noted that “a [defendant] who purposefully takes advantage of the benefits of doing business in the forum state fairly can be required to answer lawsuits that relate to his or her activities there; such an exercise of jurisdiction does not offend ‘traditional notions of fair play and substantial justice.’ As the high court has admonished: ‘[T]o the extent that a [defendant] exercises the privilege of conducting activities within a state, it enjoys the benefits and protections of the laws of that state. The exercise of that privilege may give rise to obligations, and so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires the [defendant] to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue.’” Vons 14 Cal.4th at 474.

16. Defendant presents several arguments in their reply contending that there are insufficient contacts between the Defendant and California to justify the assertion of specific jurisdiction. First, Defendant points out that the arbitration clause does not mention California, and the contract itself does not state that Ever Energy submits to the authority of California. However, it is indisputable that the contract terms, regardless of what credit Plaintiff attributed or failed to attribute to Defendant, contemplated a substantial project in California and envisioned continuing obligations in California arising out of the contract. Whether Defendant “submitted” itself to the authority of California, and where the arbitration was supposed to take place, is irrelevant, as it had availed itself to the benefits of conducting business within the state.

17. Defendant’s appeal to Carretti v. Italpast (2002) 101 Cal.App.4th 1236, is unavailing. Notwithstanding that the shipment of goods is unnecessary in reaching the question of whether Defendant has sufficient minimum contacts such that California may exercise authority over the Defendant in conformity with due process requirements, Carretti is distinguishable from the current case. In the Carretti case, the court indeed found insufficient contacts, but that was with regards to a defendant dealing with a plaintiff who showed up in Italy and took delivery in Italy, and the only contact with California was that the buyer was a California resident and the defendant knew that the buyer intended to ship the purchased goods to California for use. Id. at 1240. In this respect, Luberski, Inc. v. oleficio F.LLI Amato S.R.L. (2009) 171 Cal.App.4th 409, is more instructive. In that case, the court found jurisdiction over an Italian olive oil company who contracted with a California company for the delivery to California of goods of substantial commercial value. Because the defendant in Luberski contracted with a California company to deliver goods to California, there were sufficient minimum contacts for California to exercise jurisdiction over the foreign defendant.

18. In addition, the formation of Ever CT Solar Farm LLC between Plaintiff and Defendant is also not dispositive of the question of specific jurisdiction. As already noted repeatedly, the contract itself focused on a California based subject matter. Whether or not the parties subsequently formed a joint venture pursuant to the terms of the contract does not change the fact that the contract itself is premised on realizing benefits in California. Even if no joint venture ever took place, Defendants still are subject to specific jurisdiction under the contract because Defendant entered into it expecting to realize benefits derived solely out of California.

19. As such, Defendant purposefully availed itself of the laws of California to conduct business in California, with a California corporation, to receive benefits derived from its activities in California. To respond to a suit brought to enforce its obligations under this contract will not, therefore, offend traditional notions of fair play and substantial justice.

20. Accordingly, Defendant Ever Energy’s motion to quash service of summons for lack of specific jurisdiction is DENIED.

21. Defective Service of Summons – Code of Civil Procedure §415.40 provides, as to parties outside the state, the summons may be served by “any manner provided by this article or by sending a copy of the summons and of the complaint to the person to be served by first-class mail, postage prepaid, requiring a return receipt.” In addition, service is proper “if the court before or after service finds that the service is reasonably calculated to give actual notice, as prescribed by the law of the place where the person is served . . . subject to the provisions of the Convention on the ‘Service Abroad of Judicial and Extrajudicial Documents’ in Civil or Commercial matters (Hague Service Convention).” CCP §413.10(c).

22. As a preliminary matter, the Hague Service Convention does not apply to Taiwan. See Exhibit A of Declaration of John D. Van Loben Sels in Support of Defendant Ever Energy’s Motion to Quash; Standard Microsystems Corp. v. Winbond Electronics Corp. (2009) 179 Cal.App.4th 868, 877. Therefore, the latter portion of CCP §413.10(c) is inapplicable. For residents of countries not part of the Hague Service Convention, “California law permits any person outside the state to be served by certified mail, return receipt requested.” Standard Microsystems 179 Cal.App.4th at 897.

23. Defendant argues that failure to satisfy the statutory requirements, even where there is actual knowledge, still renders the court without jurisdiction over the Defendant. This proposition is supported by some courts including Kappel v. Bartlett (1988) 200 Cal.App.3d 1457, and Ruttenberg v. Ruttenberg (1997) 53 Cal.App.4th 801. See also Honda Motor Co. v. Superior Court (1992) 10 Cal.App.4th 1043, 1048 (“California is a jurisdiction where the original service of process, which confers jurisdiction, must conform to statutory requirements or all that follows is void.”) However, our Supreme Court has noted that the provisions regarding service “should be liberally construed to effectuate service and uphold the jurisdiction of the court if actual notice has been received by the defendant . . . without prejudicing the right of defendants to proper notice of court proceedings.” Pasadena Medi-Center Associates v. Superior Court (1973) 9 Cal.3d 773, 778. Under liberal construction, a service of summons is deemed to be sufficient to establish jurisdiction where there is substantial compliance with the statutory provisions. See Summers v. McClanahan (2006) 140 Cal.App.4th 403, 411 (“it is clear . . . the old rule of strict construction has been rejected and a new rule of liberal construction has been adopted”); Mannesmann Demag, Ltd. v. Superior Court (1985) 172 Cal.App.3d 1118, 1124 (“Notice of the litigation does not confer personal jurisdiction absent substantial compliance with the statutory requirement for service of summons”); County of Riverside v. Superior Court (1997) 54 Cal.App.4th 443, 450 (“It is often stated that the rules governing service of process are to be liberally construed, and that ‘substantial compliance’ with the statutory mandates is sufficient to confer jurisdiction”).

24. In light of this approach, the Court concludes that Plaintiff’s service substantially complied with the statutory requirements. Plaintiff Topco filed a judicial council form summons with the court and mailed it via certified Taiwanese mail to Defendants with return receipt, but failed to specify that a person was being served on behalf of a corporate defendant. Plaintiff also did not check the boxes as to how Defendant was to be served. There is no argument that Defendant received the mailed summons and complaint. There is also no argument that the Defendant knew who was being sued, what the nature of the suit was, or that Defendant was prejudiced in any way as to the proceedings. Under such circumstances, Plaintiff has substantially complied with the statutory requirements for notice, and service is deemed reasonably calculated to effectuate actual notice on the party to be served.

25. In their reply, Defendant repeats their arguments that Plaintiff has failed to meet the specific requirements of the law, reciting a list of how Plaintiff have failed to meet certain specific enumerated provisions of the Code of Civil Procedure. However, Defendant fails to provide any illumination as to how the present case is distinguishable from Cory v. Crocker National Bank (1981) 123 Cal.App.3d 665, cited by Plaintiff in their opposition. Given the factual similarities between Cory and the present case, and authority under Standard Microsystems which allows service on foreign persons as permitted under California law, it remains clear that Plaintiff has substantially complied with the service requirements.

26. Based on the foregoing, the motion of Defendant Ever Energy to quash the service of summons of Plaintiff Topco is DENIED.

SO ORDERED AND ADJUDGED this the ______ day of April, 2014.

______________________________
RANDOLPH A. ROGERS, JUDGE