Case Name:   CSNK Working Capital Finance Group v. Scott Services, LLC, et al.

Case No.:       1-14-CV-265745

 

This action arises from a January 13, 2013 agreement (the “Factoring Agreement”) whereby plaintiff CSNK Working Capital Finance Corp., dba Bay View Funding (“Bay View”) purchased certain accounts receivable of defendant Scott Services, LLC (“Scott Services”), including the account of defendant River Creek Owners Association (“River Creek”).  (Complaint, ¶ 11.)

 

Currently at issue is River Creek’s motion for an order quashing service of the complaint upon it on the grounds that it lacks adequate contacts with California to justify the Court’s exercise of jurisdiction over it and was not properly served with the summons and complaint.  (Code Civ. Proc., § 418.10, subd. (a)(1).)  In the alternative, River Creek requests that this action be stayed or dismissed on the ground that Santa Clara County is an inconvenient forum.  (Code Civ. Proc., § 418.10, subd. (a)(2).)  Bay View opposes River Creek’s motion on the grounds that it is untimely and constitutes a general appearance, as well as on substantive grounds.

 

Procedural Issues

 

As an initial matter, Bay View contends that River Creek’s motion is untimely.  However, Bay View agreed in writing to extend River Creek’s deadline to answer the complaint until August 1, 2014.  (See Decl. of Michelle Meyers ISO River Creek’s Mot., Ex. A.)  Bay View argues that this extension was to apply only in the event that River Creek elected to file an answer as its first appearance.  To the contrary, however, the deadline to file a motion to quash or to stay or dismiss an action on the grounds of inconvenient forum is “on or before the last day of [the defendant’s] time to plead.”  (Code Civ. Proc., § 418.10, subd. (a).)  Consequently, by extending River Creek’s deadline to answer, Bay View also extended its deadline to file the instant motion.[1]

 

Bay View further argues that River Creek’s motion constitutes a general appearance because it is styled a “motion to dismiss.”  However, this argument lacks merit given that the statute itself provides that “no motion under [Code of Civil Procedure section 418.10] shall be deemed a general appearance by the defendant.”  (Code Civ. Proc., § 418.10, subd. (d).)

 

Consequently, Bay View’s procedural arguments fail, and the Court will address River Creek’s motion on its merits.

 

Evidentiary Issues

 

River Creek’s request for judicial notice is GRANTED given that the complaint is a court record relevant to the scope of this action.  (Evid. Code, § 452, subd. (d); People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2 [only relevant matters are subject to judicial notice].)  To the extent that the request is granted, however, the Court takes judicial notice of the existence of the complaint only, and not of the truth of statements contained therein.  (See Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564 [a court may take judicial notice of the existence and content of each document in a court file, but cannot take judicial notice of the truth of hearsay statements therein].)

 

The Court declines to rule on River Creek’s objections to evidence.  There is no authority for the proposition that the Court must rule on objections to evidence submitted in connection with a motion to quash.

 

Motion to Quash

 

A plaintiff who contends that a defendant is subject to specific personal jurisdiction “has the initial burden to prove, by a preponderance of the evidence, facts establishing [the defendant’s] purposeful availment [of the forum state] and a substantial connection between the defendant’s forum contacts and the plaintiff’s claim.”  (See Anglo Irish Bank Corp., PLC v. Super. Ct. (Brar) 165 Cal.App.4th 969, 980.)  Here, Bay View contends that River Creek intentionally directed activities at California by: (1) receiving the notice of assignment and invoices directing it to pay Bay View; (2) confirming the validity of the invoices at issue, which induced Bay View to purchase them; (3) communicating with Bay View between September 2013 and February 2014; and (4) sending funds to Scott Services after previously complying with the notice of assignment by issuing payment directly to Bay View.

 

Bay View claims that River Creek breached the notice of assignment and thereby violated Uniform Commercial Code section 9406 through these actions.  (See Complaint, Seventh and Eighth Causes of Action.)  However, Bay View’s actions in directing River Creek to send payments to Bay View in California cannot support the exercise of jurisdiction over River Creek.  (See McGlinchy v. Shell Chemical Co. (1988) 845 F.2d 802, 816 [unilateral activity by the plaintiff cannot satisfy the requirement of contact with the forum state].)  To the extent that the notice of assignment could be characterized as a contract between Bay View and River Creek, it cannot be viewed as purposeful availment by River Creek because it was executed through the mails and performance within California was not contemplated.  (See id. at p. 816-817.)  Furthermore, River Creek’s communications with Bay View in California and direction of payment to Bay View in California were mere functions of the fact that Bay View is located in California, and does not support the exercise of jurisdiction over River Creek.  (Id.)  On the other hand, to the extent River Creek contends that it is the agreement with Scott Services that was breached, there is no evidence suggesting that this contract had anything to do with California, and it is noted that Bay View alleges that Scott Services does business in Virginia.  (Complaint, ¶ 3.)  Considering Bay View’s arguments, it is more accurate to conclude that Bay View directed its activities at River Creek outside of California than the converse.

 

Bay View cites a case involving a factoring agreement in which personal jurisdiction was found, New Century Fin., Inc. v. Oledix Techs., LLC (S.D. Tex., June 25, 2013, No. H-13-0391) 2013 U.S. Dist. LEXIS 89350, but that case is distinguishable.  There, the court found personal jurisdiction based on the plaintiff’s allegations that the defendant, who, like River Creek, had received a notice of assignment of its account with another party to the plaintiff, had created fraudulent invoices and sent them to the plaintiff.  (See New Century Fin., Inc. v. Oledix Techs., LLC, supra, 2013 U.S. Dist. LEXIS 89350, *8-9 [“When the actual content of communications with a forum gives rise to intentional tort causes of action, this alone constitutes purposeful availment.”].)  Here, Bay View does not allege that River Creek directed any tortious communications into California.

 

In accordance with the above, the Court finds that Bay View has failed to meet its burden to demonstrate River Creek’s purposeful availment of California related to Bay View’s claims, and the motion to quash is GRANTED.

 

[1] It is noted that Bay View did not even attempt to qualify the extension it agreed to by stating at the time of the agreement that the extension would not apply in the event that River Creek elected to file a motion pursuant to Code of Civil Procedure section 418.10.  (See Meyers Decl., Ex. A.)