Case Name: Ronald Cioffi v. Alex Solomon, et al.

Case No.: 1-14-CV-263050

Motion by cross-defendants Al-Sorayai Carpet Factory, Ltd., Hamed Al-Sorayai, and Saleh Al-Sorayai to Quash Service of Summons, or [sic] in the Alternative, to Stay or Dismiss the Cross-Complaint on the ground of forum non conveniens

This is a breach of contract case. Defendant Solomon Technology Solutions, Inc. (“STS”) is “engaged in the business of providing services to the United States Government.” (First Amended Complaint (“FAC”), at p. 2, ¶ 7.) Defendant Alex Solomon is the president of STS and holds 1,000 shares of its common stock. (Id. at ¶ 8.) His wife, defendant Marvalyn Jan Solomon, holds an additional 1,000 shares of STS’s common stock. (Id.) Plaintiff Ronald Cioffi initially performed management, supervisory, and administrative services for STS, and later acted as chairman of STS. (Id. at pp. 2-3, ¶ 9.)

On or about March 1, 2012, Plaintiff entered into a revised option agreement (“ROA”) with Mr. Solomon and Mrs. Solomon to purchase 1,040 shares or 51 percent of STS’s issued and outstanding common stock, in partial consideration for loaning the Company $98,861.05. (FAC, at p. 3, ¶ 10.) The ROA provided that Plaintiff could exercise his option at any time and, upon receipt of written notice that Plaintiff was exercising his option and the purchase price of $10.40, STS was to deliver a certificate of stock to Plaintiff representing the issuance of the shares. (Id.)

In August 2012, Plaintiff entered into a verbal agreement with STS whereby it agreed to distribute to him an amount equal to the shareholder distributions made to Mr. Solomon and Mrs. Solomon (“Distribution Agreement”), in an amount not less than $796,697.25. (FAC, at p. 3, ¶ 11.)

Plaintiff alleges that he attempted to exercise his option to purchase the shares pursuant to the ROA, but STS refused to acknowledge the same. (FAC, at p. 4, ¶¶ 14-15.) Plaintiff alleges that Mr. Solomon, Mrs. Solomon, and STS (collectively “Defendants”) have breached the terms of the ROA by refusing to provide him with a certificate representing the issuance of 1,040 shares of STS’s common stock. (Id. at p. 5, ¶¶ 16, 22, p. 6, ¶ 28.) Plaintiff further alleges that STS breached its obligations under the Distribution Agreement by failing to make any distribution payments to him. (Id. at p. 7, ¶ 4.) Plaintiff also alleges that Mr. Solomon and Mrs. Solomon are mismanaging STS’s business affairs by, among other things, paying Mr. Solomon a monthly distribution of $20,000.00, such that Plaintiff is at grave risk of being deprived of the shares that are owed to him. (Id. at p. 7, ¶¶ 7-9.)

On April 14, 2014, Plaintiff filed the FAC against Defendants, alleging the following causes of action: (1) specific performance (against STS); (2) breach of written contract (against Mr. Solomon and Mrs. Solomon); (3) breach of oral agreement (against STS); (4) injunctive relief (against Defendants); and (5) declaratory relief (against Defendants).

On June 6, 2014, Defendants filed this motion to quash service of summons or [sic] in the alternative, dismiss the FAC based upon forum non conveniens. (See Code Civ. Proc. § 418.10, subdivision (a)(1)-(2).) Plaintiff filed opposition to the motion on June 20, 2014. On June 26, 2014, Defendants filed a reply.

Motion to Quash Service of Summons

California courts may exercise jurisdiction on any basis not inconsistent with the Constitutions of the United States and California. (Code Civ. Proc. § 410.10; see Roman v. Liberty University, Inc. (2008) 162 Cal.App.4th 670, 677.)

Plaintiff argues that Defendants are subject to general jurisdiction. “A defendant that has substantial, continuous, and systematic contacts with the forum state is subject to general jurisdiction in the state, meaning jurisdiction on any cause of action.” (Anglo Irish Bank Corp., PLC v. Sup. Ct. (2008) 165 Cal.App.4th 969, 978.) “Jurisdictional facts must be proved by competent evidence at the hearing on the motion to quash.” (Weil & Brown, supra, at § 3:387; see Evangelize China Fellowship, Inc. v. Evangelize China Fellowship, Hong Kong (“Evangelize”) (1983) 146 Cal.App.3d 440, 444.) Defendant does not offer any competent evidence establishing that Mrs. Solomon had substantial and continuous contacts with the forum state. With respect to Mr. Solomon and STS, Defendant provides some competent evidence which demonstrates that they had minimal contacts with the forum state that were not wide-ranging or extensive such that general jurisdiction is warranted.

Plaintiff also argues that Defendants are subject to specific jurisdiction: that is, jurisdiction arising out of or related to the defendants’ contacts with the forum state. “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.” (Anglo Irish Bank Corp., PLC v. Sup. Ct., supra, 165 Cal.App.4th at p. 978 [internal quotation marks omitted].)

Plaintiff has presented sufficient evidence demonstrating that Defendants have purposefully availed themselves of the benefits and protections of the state of California by engaging in business transactions with Plaintiff. (Cioffi Dec., p. 6, ¶¶ 18-20, Exs, K and L.) (See Anglo Irish Bank, supra, 165 Cal.App.4th at pp. 981, 985 [by purposefully and successfully soliciting the business of California residents, defendants could reasonably anticipate being subject to litigation in California in the event their solicitations caused an injury to a California resident].) The claims alleged in the FAC arise from Defendants’ contacts with the state of California as the ROA and Distribution agreement stemmed from Defendants’ contacts with Plaintiff, a California resident.

Even if these two requirements are met, Defendants argue that the assertion of jurisdiction in California would be unreasonable because they have no contacts with the state, and have never conducted business in California. They also argue that Mr. Solomon’s and Mrs. Solomon’s personal health conditions would cause them extreme hardship were they forced to litigate in California. However, where a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable. (Anglo Irish Bank Corp., PLC v. Sup. Ct., supra, 165 Cal.App.4th at p. 980 [internal citation and quotation marks omitted].) Based on the evidence presented, Defendants have not presented a compelling case, and the assertion of personal jurisdiction is reasonable and consistent with notions of fair play and substantial justice.

Therefore, the motion to quash service of summons by Defendants is DENIED.

Alternative Motion to Dismiss the FAC

In the alternative, Defendants seek an order from the Court to dismiss the FAC because California is an inconvenient forum.

“In determining whether to grant a motion based on forum non conveniens, a court must first determine whether the alternate forum is a ‘suitable’ place for trial. If it is, the next step is to consider the private interests of the litigants and the interests of the public in retaining the action for trial in California. The private interest factors are those that make trial and the enforceability of the ensuing judgment expeditious and relatively inexpensive, such as the ease of access to sources of proof, the cost of obtaining attendance of witnesses, and the availability of compulsory process for attendance of unwilling witnesses. The public interest factors include avoidance of overburdening local courts with congested calendars, protecting the interests of potential jurors so that they are not called upon to decide cases in which the local community has little concern, and weighing the competing interests of California and the alternate jurisdiction in the litigation.” (Ford Motor Co. v. Insurance Co. of North America, (1995) 35 Cal.App.4th 604, 610 [internal citations omitted].)

“The granting or denial of a forum non conveniens motion lies within the court’s sound discretion. A court has exercised its discretion appropriately when the act of the lower tribunal is within the range of options available under governing legal criteria in light of the evidence before the tribunal. In exercising its discretion, however, the court must bear in mind that the moving party bears the burden of proving that California is an inconvenient forum. There thus must be evidence—not merely bald assertions—to support the trial court’s determination.” (Ford Motor Co. v. Insurance Co. of North America, supra, 35 Cal.App.4th at p. 610 [internal citations omitted].)

As a threshold matter, Defendants argue that the forum selection clause in the ROA is mandatory because it grants exclusive jurisdiction to Arizona. (See Animal Film, LLC v. D.E.J. Productions, Inc. (2011) 193 Cal. App. 4th 466, 471 [in a contract dispute in which the parties’ agreement contains a forum selection clause, a threshold issue in a forum non conveniens motion is whether the forum selection clause is mandatory or permissive].) A mandatory clause ordinarily is “given effect without any analysis of convenience; the only question is whether enforcement of the clause would be unreasonable.” (Intershop Communications AG v. Super. Ct. (2002) 104 Cal.App.4th 191.) However, if “the clause merely provides for submission to jurisdiction and does not expressly mandate litigation exclusively in a particular forum, then the traditional forum non conveniens analysis applies.” (Id., citing Berg v. MTC Electronics Technologies Co. (1998) 61 Cal.App.4th 349, 358–360.) The existence of a permissive forum selection clause is one factor considered along with the other forum non conveniens factors in applying the traditional analysis. (Animal Film, LLC v. D.E.J. Productions, Inc., supra, at p. 471.)

Here, the ROA states that “[t]his Agreement shall be governed by and construed in accordance with the laws of the State of Arizona. Suit to enforce any provision of this Agreement or to obtain any remedy with respect hereto may be brought in Superior Court, Maricopa County, Arizona, and each party hereto expressly and irrevocably consents to the jurisdiction of said Court.” (Mem. Ps & As., Ex. 3, p. 4.) This forum selection clause is permissive. (See Animal Film, LLC v. D.E.J. Productions, Inc., supra, at pp. 471-472 [the court held that a similar forum selection clause providing that the parties submitted and consented to the jurisdiction of the courts present in the state of Texas in any action brought to enforce or otherwise relating to the agreement was permissive].) Therefore, the Court applies a traditional forum non conveniens analysis, considering the forum selection clause as one factor in the balancing of the private and public interests.

Here, Defendants argue that California is an inconvenient forum and that Arizona would be a suitable alternate forum. In support, Defendants submit declarations from Mr. Solomon and Mrs. Solomon, establishing that they are residents of Arizona and the Arizona statutes of limitations have not run on Plaintiff’s claims. However, Defendants fail to provide any competent evidence addressing the private and public interest factors. The declarations contain only conclusory statements that litigating in California would cause Defendants extreme hardship due to Mr. Solomon’s and Mrs. Solomon’s health and Defendants have no contacts with California.

Accordingly, the motion to dismiss the FAC for forum non conveniens by Defendants is DENIED.

The Court GRANTS Defendants’ request pursuant to Code of Civil Procedure section 418.10, subdivision (b), for a 35-day extension to time to plead.