Opinion
A150979
02-26-2018
1115 SOLAR DEVELOPMENT, LLC, Plaintiff and Appellant, v. CLEAN ENERGY COLLECTIVE, LLC, Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. RG16815301)
Plaintiff 1115 Solar Development, LLC (1115 Solar) appeals from a trial court order granting defendant Clean Energy Collective, LLC's (CEC) motion to quash for lack of personal jurisdiction. 1115 Solar contends CEC waived its objections to personal jurisdiction by (1) failing to bring its motion to quash at the same time it moved to dismiss based on inconvenient forum, (2) making a general appearance prior to filing its motion to quash, and (3) failing to file its motion to quash within the requisite time period. 1115 Solar further asserts the trial court erred in finding California lacked personal jurisdiction over CEC. We disagree and affirm the trial court's order.
I. FACTUAL AND PROCEDURAL BACKGROUND
1115 Solar is a Delaware limited liability company with its principal place of business in California. CEC is a Colorado limited liability company with its principal place of business in Colorado. CEC and 1115 Solar entered into an asset purchase agreement (APA) for CEC to purchase various solar photovoltaic projects from 1115 Solar, which would be built in Massachusetts. The APA was primarily negotiated by phone and e-mail between CEC and 1115 Solar. One in-person meeting occurred at 1115 Solar's parent entity, Borrego Solar Systems, Inc.'s (Borrego), office in Massachusetts between Massachusetts-based employees of Borrego and CEC. No in-person meetings occurred in California. Pursuant to the APA, CEC was required to pay the purchase price for the projects in three installments, the first of which was payable upon execution of the APA. CEC made several payments in connection with the APA to an account at Bank of the West in Los Angeles, California.
Shortly after executing the APA, CEC sent two letters to 1115 Solar at its California address terminating all of CEC's projects and one of 1115 Solar's projects. CEC also corresponded with 1115 Solar at its California address to propose four replacement projects. A dispute arose between the parties regarding the termination of the original projects and the adequacy of these replacement projects.
1115 Solar subsequently filed a lawsuit against CEC in California relating to the APA. Around the same time, CEC filed a similar lawsuit in Colorado. In the California action, CEC filed a motion to stay or dismiss the lawsuit on the ground of inconvenient forum under Code of Civil Procedure section 418.10, subdivision (a)(2). The notice of motion also stated it was brought under sections 410.30 and 430.10, subdivision (c). CEC argued dismissal was appropriate due to the pending action in Colorado, which involved the same parties and issues. The trial court continued the hearing on CEC's motion to allow for supplemental briefing on the status of the Colorado action. The parties then stipulated to another continuance while the Colorado court considered 1115 Solar's motion to dismiss.
All statutory references are to the Code of Civil Procedure.
Section 410.30 provides: "(a) When a court upon motion of a party . . . finds that in the interest of substantial justice an action should be heard in a forum outside this state, the court shall stay or dismiss the action in whole or in part . . . . [¶] (b) The provisions of Section 418.10 do not apply to a motion to stay or dismiss the action by a defendant who has made a general appearance." Section 430.10 provides, in relevant part: "The party against whom a complaint or cross-complaint has been filed may object, by demurrer or answer as provided in Section 430.30, to the pleading on any one or more of the following grounds: [¶] . . . [¶] (c) There is another action pending between the same parties on the same cause of action."
While the motion to dismiss remained pending, CEC filed a motion to quash for lack of personal jurisdiction pursuant to section 418.10. The trial court heard CEC's motion to dismiss and motion to quash on the same day.
The court subsequently granted CEC's motion to quash. The court concluded good cause existed to allow the untimely filing of CEC's motion. On the merits, the court held CEC did not waive its jurisdictional challenge by bringing its motion to quash after filing its motion to dismiss based on inconvenient forum. The court also found 1115 Solar failed to meet its burden of proof to establish sufficient contacts to justify imposition of personal jurisdiction. Finally, the court "dropped" CEC's motion to dismiss as moot in light of its ruling on the motion to quash. 1115 Solar timely appealed.
II. DISCUSSION
A. Personal Jurisdiction
"[A] party waives any objection to the court's exercise of personal jurisdiction when the party makes a general appearance in the action." (Roy v. Superior Court (2005) 127 Cal.App.4th 337, 341 (Roy).) "A general appearance is one in which the defendant participates in the action in a manner which recognizes the court's jurisdiction. [Citation.] If the defendant raises an issue for resolution or seeks relief available only if the court has jurisdiction over the defendant, then the appearance is a general one." (Factor Health Management v. Superior Court (2005) 132 Cal.App.4th 246, 250 (Factor Health).)
1115 Solar contends CEC waived any objection to personal jurisdiction. Specifically, 1115 Solar argues CEC failed to concurrently file its motion to quash with its motion to dismiss as required by section 418.10, subdivision (a) (hereafter section 418.10(a)). 1115 Solar next alleges CEC's motion to dismiss constituted a general appearance, either as a motion to dismiss under section 410.30 or as a demurrer under section 430.10. Finally, 1115 Solar argues CEC waived any jurisdictional argument by failing to file its motion to quash within the requisite time period provided in section 418.10.
Prior to filing its motion to quash, CEC stated in connection with its motion to dismiss based on inconvenient forum that it "has not challenged the court's personal jurisdiction." 1115 Solar also asserts CEC waived any objection to personal jurisdiction by making this statement. But 1115 Solar fails to explain why CEC's statement should constitute a waiver or to provide any citations to authorities in support of its argument. We thus consider 1115 Solar's argument waived. (See Gilkyson v. Disney Enterprises, Inc. (2016) 244 Cal.App.4th 1336, 1347 [" '[w]hen an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived' "].)
1. Section 418.10(a)
Section 418.10(a) provides: "A defendant, on or before the last day of his or her time to plead or within any further time that the court may for good cause allow, may serve and file a notice of motion for one or more of the following purposes: [¶] (1) To quash service of summons on the ground of lack of jurisdiction of the court over him or her. [¶] (2) To stay or dismiss the action on the ground of inconvenient forum. [¶] (3) To dismiss the action pursuant to the applicable provisions of Chapter 1.5 . . . of Title 8."
No case has addressed whether the various grounds listed in section 418.10, subdivision (a)(1), (2), and (3) must be brought concurrently or whether they can be raised in sequential motions. 1115 Solar argues the statutory reference to "a notice of motion" indicates section 418.10(a) only authorizes a single motion. 1115 Solar contends this language required CEC to have filed its motion to quash simultaneously with its challenge to inconvenient forum.
"Our fundamental task in interpreting a statute is to determine the Legislature's intent so as to effectuate the law's purpose." (Coalition of Concerned Communities, Inc. v. City of Los Angeles (2004) 34 Cal.4th 733, 737.) We begin by examining the statutory language, giving the words their usual, ordinary meanings and giving each word and phrase significance. (Curle v. Superior Court (2001) 24 Cal.4th 1057, 1063.) "If there is no ambiguity in the language, we presume the Legislature meant what it said, and the plain meaning of the statute governs." (Ibid.) Only "[i]f the statutory language permits more than one reasonable interpretation" do we "consider other aids, such as the statute's purpose, legislative history, and public policy." (Coalition of Concerned Communities, at p. 737.) Statutory construction is a question of law we decide de novo. (People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 432.)
We disagree with 1115 Solar's contention that the phrase "a notice of motion" in section 418.10(a) mandates a single motion. 1115 Solar offers no authority that interprets "a notice of motion" as "one notice of motion." Nor are we aware of any. While "[t]he meaning of a statute may not be determined from a single word or sentence" (Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735), we note that use of the phrase "a notice of motion" in other statutory provisions is not generally interpreted as 1115 Solar suggests. (Compare, e.g., § 435, subd. (b)(1) ["Any party . . . may serve and file a notice of motion to strike the whole or any part thereof"] with Lewis v. Fletcher Jones Motor Cars, Inc. (2012) 205 Cal.App.4th 436, 446 [discussing the litigation of multiple motions to strike].) Nor does the surrounding statutory language clarify its meaning. (§ 418.10, subd. (a).) Section 418.10 states a motion may be brought "for one or more . . . purposes," but is silent as to whether those purposes must be combined into a single motion.
As a result, we find the statutory language of section 418.10(a) susceptible to more than one reasonable interpretation. We thus look to the legislative history and background to guide our interpretation. (Goodman v. Lozano (2010) 47 Cal.4th 1327, 1332 ["To determine the most reasonable interpretation of a statute, we look to its legislative history and background."]; see Granberry v. Islay Investments (1995) 9 Cal.4th 738, 744 [" 'When the language is susceptible of more than one reasonable interpretation, . . . we look to a variety of extrinsic aids, including the ostensible objects to be achieved, the evils to be remedied, the legislative history, public policy, . . . and the statutory scheme of which the statute is a part.' "].)
a. Legislative History
Section 418.10 was introduced by Senate Bill No. 503 in 1969. (Sen. Bill No. 503 (1969 Reg. Sess.).) Prior to its enactment, existing law allowed defendants to specially appear to challenge the jurisdiction of the court. (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 503 (1969 Reg. Sess.) p. 2.) The Senate Judiciary Committee analysis of Senate Bill No. 503 noted section 418.10 would "extend[] this procedure to include a motion to stay or dismiss an action on the ground of inconvenient forum." (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 503, supra, p. 3.) However, the legislative history of Senate Bill No. 503 is silent as to whether defendants would be required to raise those challenges in a single motion.
In 1993, section 418.10(a) was amended to provide a third basis under which such motions could be brought: dismissal for delay in prosecution. (§ 418.10, subd. (a)(3).) In so amending, the Legislative Counsel's Digest of Assembly Bill No. 58 noted, "Existing law provides for specified motions by a defendant prior to pleading." (Legis. Counsel's Dig., Assem. Bill No. 58 (1993-1994 Reg. Sess.), 5 Stats. 1993, Summary Dig., p. 172, italics added; see Kielma, Civil Procedure; Motions by Defendant—Pleadings, Judgments, Dismissals (1994) 25 Pac. L.J. 466 & fn. 1 [noting "[e]xisting law provides that a defendant may object to jurisdiction, prior to pleading, by filing specified motions," and citing section 418.10(a) as "authorizing the motion to quash . . . and the motion to dismiss on the ground of inconvenient forum"].) The Legislative Counsel's reference to "specified motions" suggests subdivision (a) authorized defendants to bring multiple motions under section 418.10. This reference is in accord with an earlier Judicial Council report, which commented "[n]o particular form is required" to make a special appearance, and courts, while a motion for inconvenient forum is pending, "may . . . take any further action in the proceeding as the interests of justice require." (Judicial Council of Cal., 1969 Judicial Council Report to the Governor and the Legislature (Jan. 6, 1969) pp. 76, 96.)
Section 418.10 was again amended in 2002 to add subdivision (e). (Sen. Bill No. 1325 (2001-2002 Reg. Sess.).) Subdivision (e) provides: "A defendant or cross-defendant may make a motion under this section and simultaneously answer, demur, or move to strike the complaint or cross-complaint." The Legislative Counsel's Digest noted Senate Bill No. 1325 "would permit a defendant or cross-defendant to move to quash service of summons, move to stay or dismiss the action on the grounds of inconvenient forum, or move to dismiss for delay in prosecution, and simultaneously answer, demur, or move to strike the complaint or cross complaint." (Sen. Bill. No. 1325 (2001-2002 Reg. Sess.) as amended Apr. 9, 2002.) Prior to this amendment, a defendant who answered, demurred, or filed a motion to strike entered a general appearance and thereby waived any objection to the court's exercise of personal jurisdiction. (Roy, supra, 127 Cal.App.4th at p. 340; Factor Health, supra, 132 Cal.App.4th at p. 250.)
Senate Bill No. 1325 (2001-2002 Reg. Sess.) also added subdivision (e)(1), (2) and (3) to section 418.10. However, those provisions are not relevant to this discussion.
The Enrolled Bill Memorandum to the Governor noted one "reason" for the proposed bill was that "federal procedure on which [the bill] is based is 'simpler and more expeditious and involves fewer pitfalls for the unwary than current state provisions.' " (Enrolled Bill Memorandum to Governor on Sen. Bill No. 1325 (2001-2002 Reg. Sess.) June 13, 2002.) The result is "a multiplicity of motions and appearances, as well as the risks of inadvertent waivers of objections to personal jurisdiction." (Ibid.) Senate Bill No. 1325 thus sought in part to "conform" California procedure to federal procedure. (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 1325 (2001-2002 Reg. Sess.) as introduced Jan. 29, 2002, p. 3.)
b. Analysis
1115 Solar focuses on the 2002 amendment and the Legislature's expressed intent to conform California procedure to that under rule 12(b) of the Federal Rules of Civil Procedure (28 U.S.C.). Because rule 12(b) requires all objections, such as to personal jurisdiction, venue, and service, be included in the initial responsive pleading, 1115 Solar asserts any preliminary challenge under section 418.10(a) also must be encompassed in one motion or else waived.
We conclude 1115 Solar's interpretation of section 418.10(a) is erroneous. While the legislative history evidences a desire to conform California practice to rule 12(b) of the Rules of Federal Procedure (28 U.S.C.), the 2002 amendment by no means sought to mimic federal requirements. (See Sen. Com. on Judiciary, analysis of Sen. Bill No. 1325 (2001-2002 Reg. Sess.) as introduced Jan. 29, 2002, p. 3.) Instead, the Legislature's intent was twofold: first, to minimize "a multiplicity of motions and appearances"; and, second, to reduce "the risk of inadvertent waivers of objections to personal jurisdiction." (Enrolled Bill Memorandum to Governor on Sen. Bill No. 1325 (2001-2002 Reg. Sess.) June 13, 2002.) We recognize 1115 Solar's interpretation of section 418.10(a) would certainly further the legislative goal of minimizing a multiplicity of motions and avoiding the expense, burden, and delay of successive filings. However, we cannot espouse such an interpretation when the Legislature declined to mandate concurrent filings in connection with subdivision (e) of section 418.10. (See Assem. Com. on Judiciary, Proposed Consent on Sen. Bill No. 1325 (2001-2002 Reg. Sess.) as amended Apr. 9, 2002, p. 4 ["Concurrent filing is discretionary under the bill, not mandatory"].)
Federal law abolished the distinctions between special and general appearances in 1937 and, consequently, requires all preliminary objections in the initial pleading. (Sen. Com. on Judiciary, com. on Sen. Bill No. 1325 as introduced (2001-2002 Reg. Sess.) Apr. 2, 2002, p. 4.) California has not adopted such an approach.
Nor is 1115 Solar's interpretation in accord with the Legislature's second express concern: the potential for inadvertent waivers of jurisdictional objections. "According to the State Bar Conference of Delegates, sponsor of [Senate Bill No. 1325], current California law on special and general appearances 'is a quagmire filled with traps for the unwary.' The basic, common law doctrine—that a special appearance must be strictly limited to objecting to personal jurisdiction . . . —is 'riddled with exceptions.' For example, motions to stay or dismiss on grounds of inconvenient forum, to dismiss for delay in prosecution, or to oppose a request for ex parte relief, also may be made without constituting a general appearance. [Citations.] [¶] Yet while a party may take these substantive steps without waiving a challenge to personal jurisdiction, some cases hold that merely requesting the continuance of a proceeding initiated by the plaintiff constitutes a general appearance . . . ." (Sen. Com. on Judiciary, com. on Sen. Bill No. 1325 as introduced (2001-2002 Reg. Sess.) Apr. 2, 2002, p. 3, italics added; see Assem. Com. on Judiciary, Proposed Consent on Sen. Bill No. 1325 (2001-2002 Reg. Sess.) as amended Apr. 9, 2002, p. 3.) 1115 Solar's position would heighten the risk of such inadvertent waivers because parties could waive their jurisdictional challenge without even making a general appearance—an outcome unsupported by any current authority.
Roy, supra, 127 Cal.App.4th 337, the primary case relied on by 1115 Solar, does not compel a contrary conclusion. In Roy, the nonresident defendants did not seek to specially appear or file a motion under section 418.10(a). Instead, they answered the complaint and engaged in litigation for a protracted period of time, including conducting discovery, filing numerous motions to compel, requesting continuances, and seeking summary judgment. (Roy, at p. 340.) The defendants only raised their objection to personal jurisdiction prior to a hearing on summary judgment. (Ibid.) The court described the defendants' strategy as a " 'poster case' " against a scheme "permit[ting] a defendant to withhold his jurisdictional challenge essentially until trial." (Id. at p. 343.) The court concluded the defendants' delay "creat[ed] the very real possibility that much or even all of the previous activity would have been wasted." (Ibid.) Allowing such an approach would run counter to "the cause of judicial economy." (Id. at p. 344.)
Roy is distinguishable from the present dispute. First, unlike the defendants in Roy, CEC's initial filing was a motion under section 418.10(a). By filing a motion to dismiss for inconvenient forum, CEC never made a general appearance. (§ 418.10, subd. (a)(2); see part II.A.2., post.) Prior to that motion being heard, CEC then filed its motion to quash. While not filed simultaneously, both grounds for relief were pursued within the same window of time prior to any general appearance and, ultimately, were argued at the same hearing. None of the duplicity found in Roy is present here.
Second, the Roy court was not concerned with inadvertent waiver. There, the court rejected the defendants' "point that the Legislature specifically intended to preserve the jurisdictional objection for later determination." (Roy, supra, 127 Cal.App.4th at p. 345.) The court emphasized "[n]othing could be clearer: a defendant may move [under section 418.10(a)] coupled with any other action without being deemed to have submitted to the court's jurisdiction." (Ibid.) However, the motion under section 418.10 "remains essential." (Roy, at p. 345.) Here, CEC raised its section 418.10 challenges at the outset. Requiring CEC to bring those challenges in a specified manner not articulated in the statute would give rise to the type of inadvertent waiver the Legislature specifically sought to avoid. While it may be desirable to require parties to raise all section 418.10(a) objections in a single motion, we decline to impose new restrictions on a defendant who had no reason to doubt that it could raise its personal jurisdiction objection at any time prior to a general appearance.
Nor does Air Machine Com SRL v. Superior Court (2010) 186 Cal.App.4th 414 (Air Machine), the other case relied upon by 1115 Solar, support its position. In Air Machine, the defendants argued service of a statutory offer of settlement under section 998 did not constitute a general appearance while their motion to quash was pending. (Air Machine, at p. 416.) The Court of Appeal agreed, concluding section 418.10, subdivision (e)(1) should be interpreted broadly. (Air Machine, at p. 427.) Because the defendants filed a motion under section 418.10(a), they were not deemed to have " 'generally appeared.' " (Air Machine, at p. 428.) In the instant matter, CEC filed its motion under section 418.10(a) challenging inconvenient forum. By relying on this section, they too did not "generally appear," thus preserving any other objections, such as to personal jurisdiction, that may otherwise be waived by a general appearance.
2. Impact of Concurrent Motions Under Sections 410 .30 and 430 .10
1115 Solar argues CEC's motion to dismiss was based on the doctrine of inconvenient forum as codified in section 410.30 or, alternatively, was a demurrer under section 430.10. A motion under either statute, 1115 Solar argues, would constitute a general appearance because CEC did not move to quash until four months after the motion to dismiss based on inconvenient forum was filed.
Section 418.10, subdivision (e)(1) provides "no act by a party who makes a motion under this section, including filing an answer, demurrer, or motion to strike constitutes an appearance, unless the court denies the motion made under this section . . . ." Only if the defendant fails to simultaneously "make a motion under this section" will its "demurrer or motion to strike constitute[] a waiver of the issues of lack of personal jurisdiction, inadequacy of process, inadequacy of service of process, inconvenient forum, and delay in prosecution." (§ 418.10, subd. (e)(3).)
Here, CEC "ma[de] a motion under" section 418.10(a), which allows a defendant to specially appear by asserting any of three grounds, including "[t]o stay or dismiss the action on the ground of inconvenient forum." (§ 418.10, subd. (a)(2).) CEC filed such a motion. The statute does not require CEC to file a motion to quash in order to specially appear. (§ 418.10, subds. (a), (e)(1).)
1115 Solar argues it "was entitled to rely upon CEC's notice of motion to identify the statutory bases for the motion." We agree, and find it reasonable to rely on CEC's notice of motion as evidence that a motion to dismiss was brought under section 418.10, subdivision (a)(2).
Once CEC made a motion under section 418.10, CEC's decision to simultaneously move to dismiss pursuant to sections 430.10 and 410.30 would not constitute a general appearance. (§ 418.10, subd. (e)(1) ["no act" will constitute a general appearance until the § 418.10 motion is denied]; see Air Machine, supra, 186 Cal.App.4th at pp. 417, 426-428 ["we conclude the Legislature meant the word 'act' in section 418.10, subdivision (e)(1) to apply broadly"].) Nor would such motions constitute a waiver of CEC's personal jurisdiction objections. (§ 418.10, subd. (e)(3) [precluding a waiver of personal jurisdiction when a motion to dismiss or demurrer is filed simultaneously with a § 418.10 motion].)
While the statutory language is clear and unambiguous on this point, 1115 Solar's underlying assumption that section 418.10, subdivision (e) only applies to a motion to quash is also belied by the legislative history. The original text of Senate Bill No. 1325 stated the proposed bill "amend[s]" section 418.10 to permit a party to object while "simultaneously" moving to quash service without being "deemed to have made a general appearance." (Sen. Bill No. 1325 (2001-2002 Reg. Sess.) as introduced Jan. 29, 2002.) However, "[t]o reduce confusion, the Senate Judiciary Committee recommended expanding Senate Bill No. 1325 to include other 'traditional' types of 'special appearances' that are set forth in subdivision (a) of section 418.10, including motions to stay or dismiss an action on the ground of inconvenient forum and motions to dismiss for delay in prosecution." (Air Machine, supra, 186 Cal.App.4th at p. 424, citing Sen. Com. on Judiciary, analysis of Sen. Bill. No. 1325 (2001-2002 Reg. Sess.) as introduced Jan. 29, 2002, p. 5.) This recommendation was adopted and incorporated into the final version of the statute. (See § 418.10, subd. (e).)
3. Timeliness of Motion to Quash
Any motion brought under section 418.10 must be filed "on or before the last day of his or her time to plead or within any further time that the court may for good cause allow." (§ 418.10, subd. (a).) The trial court found good cause to allow CEC's motion to quash because CEC had not generally appeared and the court had not yet ruled on CEC's motion to dismiss based on inconvenient forum. On appeal, 1115 Solar argues the trial court erred in concluding CEC had not generally appeared. 1115 Solar also asserts the court had, in fact, entered an order regarding CEC's motion to dismiss.
"Determinations of good cause are generally matters within the trial court's discretion, and are reversed only for an abuse of that discretion." (Laraway v. Sutro & Co. (2002) 96 Cal.App.4th 266, 273.) Here, we find no such abuse.
First, we agree with the trial court that CEC had not waived its jurisdictional objection by making a general appearance. (See parts II.A.1., II.A.2., ante.) Second, substantial evidence supports the trial court's conclusion that it had not yet ruled on CEC's motion to dismiss. The only relevant orders issued by the trial court prior to CEC filing its motion to quash were those continuing the hearing. To the extent the court provided any substantive analysis of the motion to dismiss, it did so to facilitate supplemental briefing. In this context, the court's instruction was not an "initial ruling," as 1115 Solar argues, but rather guidance to assist the parties in focusing the content of their supplemental briefing. And the trial court indisputably ruled on the motion to dismiss at the same time it did so on the motion to quash. As such, the court did not abuse its discretion in allowing CEC to file its motion to quash. B. California Lacks Personal Jurisdiction
California's long-arm statute, section 410.10, permits courts to "exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States." The statute "manifests an intent to exercise the broadest possible jurisdiction, limited only by constitutional considerations." (Sibley v. Superior Court (1976) 16 Cal.3d 442, 445.) "The exercise of jurisdiction over a nonresident defendant comports with [the state and federal] Constitutions 'if the defendant has such minimum contacts with the state that the assertion of jurisdiction does not violate " 'traditional notions of fair play and substantial justice.' " ' " (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 268 (Pavlovich).)
Pursuant to section 410.10, California courts may exercise general or specific personal jurisdiction over nonresidents. (Pavlovich, supra, 29 Cal.4th at pp. 268-269.) "A nonresident defendant may be subject to the general jurisdiction of the forum if his or her contacts in the forum state are 'substantial . . . continuous and systematic.' [Citations.] In such a case, 'it is not necessary that the specific cause of action alleged be connected with the defendant's business relationship to the forum.' [Citations.] 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." (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445-446 (Vons).)
"If the nonresident defendant does not have substantial and systematic contacts in the forum sufficient to establish general jurisdiction, he or she still may be subject to the specific jurisdiction of the forum, if the defendant has purposefully availed himself or herself of forum benefits [citation], and the 'controversy is related to or "arises out of" a defendant's contacts with the forum.' " (Vons, supra, 14 Cal.4th at p. 446.) A controversy relates to or arises out of such contacts if there is a substantial connection between the forum contacts and the plaintiff's claim. (Id. at p. 452.)
"When a defendant moves to quash service of process on jurisdictional grounds, the plaintiff has the initial burden of demonstrating facts justifying the exercise of jurisdiction. [Citation.] Once facts showing minimum contacts with the forum state are established, however, it becomes the defendant's burden to demonstrate that the exercise of jurisdiction would be unreasonable. [Citation.] When there is conflicting evidence, the trial court's factual determinations are not disturbed on appeal if supported by substantial evidence. [Citation.] When no conflict in the evidence exists, however, the question of jurisdiction is purely one of law and the reviewing court engages in an independent review of the record." (Vons, supra, 14 Cal.4th at p. 449.)
Here, there is no conflict in the evidence. Accordingly, we review the matter de novo.
1. General Jurisdiction
1115 Solar does not contend California has general jurisdiction over CEC. Nor do we find any evidence to support jurisdiction on such grounds. The evidence shows CEC had no offices, assets, or employees in California. Nor does it pay taxes in California. 1115 Solar does not contest this evidence and fails to identify any continuous contacts between CEC and California. Thus, California lacks general jurisdiction over CEC. (See Vons, supra, 14 Cal.4th at pp. 445-446.)
2. Specific Jurisdiction
"When determining whether specific jurisdiction exists, courts consider the ' "relationship among the defendant, the forum, and the litigation." ' [Citation.] A court may exercise specific jurisdiction over a nonresident defendant only if: (1) 'the defendant has purposefully availed himself or herself of forum benefits' [citation]; (2) 'the "controversy is related to or 'arises out of' [the] defendant's contacts with the forum" ' [citation]; and (3) ' "the assertion of personal jurisdiction would comport with 'fair play and substantial justice' " ' " (Pavlovich, supra, 29 Cal.4th at p. 269.)
1115 Solar argues CEC purposefully directed activities at California by communicating with a California resident (1115 Solar), contracting with two California residents (1115 Solar and Borrego), and sending several payments to California.
Courts have generally held a contract with an out-of-state party does not, by itself, automatically confer jurisdiction on the other party's home forum. (Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 478 (Burger King); accord Goehring v. Superior Court (1998) 62 Cal.App.4th 894, 907 (Goehring) [finding no purposeful availment based solely on the defendants' execution of "sales, security and escrow agreements" with a forum resident].) Rather than focus on " 'theories of the place of contracting or of performance,' " the Burger King court emphasized the need for a " 'highly realistic' approach that recognizes that a 'contract' is 'ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction.' " (Id. at pp. 478-479.) Thus, in considering whether a contract can constitute a sufficient minimum contact for purposes of personal jurisdiction, courts should consider factors such as "prior negotiations, contemplated future consequences, the parties' course of dealings, and the contract's choice-of-law provision." (Goehring, at p. 907, citing Burger King, at pp. 478-482.)
In this case, consideration of these factors leaves little doubt that California lacks specific jurisdiction over CEC. The parties negotiated and executed the APA from their respective states, California and Colorado. CEC never travelled to California during the course of the negotiations. Nor has 1115 Solar identified any precontractual connection between CEC and California apart from CEC's communications with 1115 Solar. While 1115 Solar is correct that electronic communication may form the basis for California's exercise of personal jurisdiction, such is true only if they are part of an ongoing relationship between the nonresident and the state. (West Corp. v. Superior Court (2004) 116 Cal.App.4th 1167, 1174 [" 'While, in isolation, telephone and mail communications may not establish a substantial connection between a nonresident and a forum, when these communications form an integral part of an ongoing business relationship, such contacts are relevant in assessing the nature and extent of defendant's conduct within a forum.' "]; cf. Hall v. LaRonde (1997) 56 Cal.App.4th 1342, 1347 ["The speed and ease of such communications have increased the number of transactions that are consummated without either party leaving the office. There is no reason why the requisite minimum contacts cannot be electronic."].)
Here, the parties' electronic and telephonic negotiations are insufficient. If mere contract negotiations could justify the exercise of specific jurisdiction, then any contracting party could automatically be subject to the other party's jurisdiction. Such a result would run counter to the Supreme Court's direction that a contract, by itself, does not automatically confer jurisdiction, and courts must instead look at a range of factors including contemplated future consequences and the parties' course of dealings. (See Burger King, supra, 471 U.S. at pp. 478-479; Goehring, supra, 62 Cal.App.4th at p. 907.) Instead, 1115 Solar must demonstrate CEC "reached out to the [plaintiff's] home forum" (Newsome v. Gallacher (10th Cir. 2013) 722 F.3d 1257, 1281) in some manner beyond merely negotiating and executing a contract with a California resident. It failed to do so.
Nor does the contemplated future consequences of the APA or the parties' course of dealings support the exercise of personal jurisdiction. Gilmore Bank v. AsiaTrust New Zealand Ltd. (2014) 223 Cal.App.4th 1558 (Gilmore Bank), a case cited by 1115 Solar, supports this conclusion. In Gilmore Bank, the nonresident defendant not only negotiated and executed a contract, but also conducted due diligence on a California resident, sent promotional materials to a California resident, invoiced a California resident, and transferred funds to and from a California resident. (Id. at p. 1572.) The future consequence of these contacts was to create an ongoing "scheme" that would benefit the nonresident defendant for the duration of the California resident's lifetime. (Ibid.) Based on all these factors, the court found the nonresident defendant subject to the court's jurisdiction based on a " 'veritable "latticework" of contacts.' " (Id. at p. 1573.)
Here, in contrast, CEC's contacts with California—negotiating and executing the APA with a California resident, transferring funds to California, and communicating to terminate projects under the APA—are nowhere near those in Gilmore Bank. As discussed above, the negotiation and execution of a contract is insufficient to confer jurisdiction. While the present matter and Gilmore Bank both involved the transfer of funds, Gilmore Bank involved numerous other contacts not present here, such as conducting due diligence in California, sending promotional materials to California, and establishing a long-term arrangement with a California resident. (See Gilmore Bank, supra, 223 Cal.App.4th at p. 1572.) Gilmore Bank also did not involve an asset purchase. Generally, California has declined to find jurisdiction for standard purchase agreements "except in rare instances where extensive business was done here." (Futuresat Industries, Inc. v. Superior Court (1992) 3 Cal.App.4th 155, 159.) For example, in Belmont Industries, Inc. v. Superior Court (1973) 31 Cal.App.3d 281, 285, the court held an "out-of-state purchaser of services from a California resident by way of a contract negotiated through interstate communications, consummated outside of California, is [not] subject to the judicial jurisdiction of California in a suit to enforce payment for the services." In this matter, CEC agreed to purchase certain assets, partial payment for which was due at the time the parties executed the APA. However, neither CEC's initial payment nor the fact that it would complete payment in two additional installments constituted "extensive business" or created a long-term "continuing obligation." (See Futuresat Industries, Inc., at p. 159; Burger King, supra, 471 U.S. at p. 476.)
Ultimately, the question is whether CEC's business activities, as a whole, constituted a " 'substantial connection' " with California, as opposed to "only an 'attenuated' affiliation with the forum." (Burger King, supra, 471 U.S. at p. 475, fn. 18.) The minimal contacts discussed above do not suggest the APA was so integrally connected to California that jurisdiction may be found here. Even in the context of a liquidated damages claim, the court would be required to evaluate the substantive aspects of the APA—namely, the original projects and the adequacy of the replacement projects proposed by CEC, all of which are based in Massachusetts. We thus cannot conclude CEC intentionally involved itself in business in California or otherwise "invok[ed] the benefits and protections" of California's laws; nor did CEC " 'deliberately' . . . engage[] in significant activities within [California]" or "create[] 'continuing obligations' between [it]self and residents of the forum." (Burger King, supra, 471 U.S. at pp. 475-476.) The trial court properly granted CEC's motion to quash.
Because 1115 Solar has not carried its burden of establishing CEC purposefully availed itself of California's benefits, we need not address the remaining requirements for specific jurisdiction. --------
III. DISPOSITION
The trial court's order granting CEC's motion to quash is affirmed. Defendant CEC may recover its costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)
/s/_________
Margulies, J. We concur: /s/_________
Humes, P.J. /s/_________
Banke, J.