Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC399767 William F. Highberger, Judge.
Law Offices of Abraham R. Wagner and Abraham R. Wagner; Weiss & Hunt, Thomas J. Weiss and Hyrum K. Hunt for Plaintiffs and Appellants.
Astor & Phillips and Ronald N. Sarian for Defendants and Respondents.
WOODS, J.
Appellants Cameo FJ Entertainment Inc., Keith Pettle, Lee Pettle and Arinifi Anstalt appeal from a judgment upon an order granting the motion to quash and subsequent dismissal of respondents Michael Kunath, Freddy Braidy, The Aurora Group LLC, The Seattle Funding Group, Aurora Capital Partners LLC, Kunath, Karren Rinne & Atkins, Dale Nasaman, Clark Swanson, Eugenio D. Leo, Jr., Sandro Fenyo and Quiller Management International, Ltd. Appellants ask this court to reexamine whether respondents’ activities involving California meet the minimum contact requirements for personal jurisdiction in this state. In view of California’s policy of finding jurisdiction where practical, we conclude that there are minimally sufficient grounds to hold that a California court can exercise specific jurisdiction over respondents. Accordingly, we reverse the judgment and remand.
FACTUAL AND PROCEDURAL BACKGROUND
I. The Parties
Appellant Cameo FJ Entertainment is a California Corporation with a principal place of business in Los Angeles, California. Its co-owners include appellants Keith and Lee Pettle and respondent Freddy Braidy. At all times during this litigation the Pettle brothers were residents of Texas and Braidy was a resident of California.
Appellant Arinfi Anstalt is a business organized under the laws of Lichtenstein. Anstalt’s only role in the case involves a foreign bank account where the financing was to have occurred. Arinfi, Cameo FJ Entertainment and the Pettle brother’s will be collectively referred to as “Cameo, ” unless context requires otherwise.
Respondent Michael Kunath at all times during the events of this case was a resident of Washington. Kunath is owner in part or in full of respondents Kunath, Karren, Rinne & Atkin, Inc., The Aurora Group, LLC, The Seattle Funding Group, and Aurora Capital Partners, LLC (collectively “Kunath”). Other respondents include Dale D. Nasman of Washington, Clark L. Swanson of California, Eugenio Leo (“Leo”) of Illinois, Sandro Fenyö of Switzerland (“Fenyö”), and Quiller Management International, Ltd., a Lichtenstein corporation.
The proposed motion picture project is referred to in the vernacular as the “movie deal” or “deal” unless context requires otherwise.
The litigation arises from allegations of fraud and other misrepresentations involving an effort to secure financing for a proposed motion picture project entitled “Victims.”
The film was never made.
In 2004, respondent Michael Kunath, and representatives of Carousel Pictures met with appellants Keith and Lee Pettle co-owners of Cameo FJ Entertainment at the Chateau Marmont in Los Angeles, California. This two-hour meeting concerned an effort to obtain financing for the film “Victims.” At the time, respondents had been attempting to sell the “Victims” film project to various film production entities in Hollywood.
Neither Carousel nor its representatives are parties to the present action.
The Corporation was created in March 2004 (after the meeting at issue in this case) as a successor to Cameo Entertainment and FJ Studios, Inc. Cameo FJ Entertainment was not a contracting party.
In 2003, respondents met with an allegedly unrelated company discussing the same film. This meeting is not disputed, although there is a dispute over whether or not it was related to the deal in question.
The eight months following the Los Angeles meeting consisted of e-mails and phone negotiations between the Kunath and Carousel representatives. The e-mails involved multiple parties, across multiple jurisdictions with “CC” copies sent to one of the co-owners of Cameo FJ Entertainment, Freddy Braidy. During this period appellants allegedly were induced to execute powers of attorney to respondents Leo and Fenyö resulting in monetary transfers totaling approximately $1,350,000, including an undisclosed €325, 000 payment to Kunath via his Aurora Group.
In 2009, Keith and Lee Pettle filed a complaint in California stemming from financial losses associated with the movie financing deal.
During the litigation that followed respondents filed a motion to quash service of summons on the grounds of lack of personal jurisdiction.
The trial court granted the motion to quash and dismissed the case concluding it could not find a “constitutionally acceptable basis” for exercising in personam jurisdiction over respondents. This timely appeal followed.
DISCUSSION
Appellants contend that the trial court erred in granting the motion to quash because the California interactions of the parties, coupled with the subsequent phone and electronic communications, were enough to satisfy due process concerns. We agree.
A. Standard of Review
This court will not disturb the lower court’s factual findings except where there is not substantial evidence to support them. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 449 (Vons)). When there is no conflict in the evidence, the question of personal jurisdiction is purely a matter of law and is subject to independent review on appeal. (Snowney v. Harrah's Entertainment, Inc. (2005) 35 Cal.4th 1054, 1062 (Snowney); Vons, supra, 14 Cal.4th at p. 449.)
The operative facts in determining whether California jurisdiction is proper, involve the nature of the business meeting in California, and the degree to which there was future communication between the parties related to the financing deal. Here, the parties concur regarding the nature of these communications and events; they agree that a meeting occurred in California and there was on-going communication between the parties afterwards. The parties disagree, however, as to the implication of these facts under the governing legal principles. It appears that the dispute as to personal jurisdiction centers on whether the negotiations involved were sufficient to support a finding of specific jurisdiction over the parties – an issue, in our view, which is subject to independent review on appeal.
B. California Courts May Exercise Personal Jurisdiction on any Basis Consistent with Federal Due Process
California’s long arm statute authorizes courts to exercise jurisdiction on any basis consistent with the Constitution of the United States or the Constitution of California. (Code Civ. Proc., § 410.10.) A California court may properly assert jurisdiction over a nonresident defendant where the defendant has sufficient “minimum contacts” with the state to not violate “traditional notions of fair play and substantial justice.” (Int’l Shoe Co. v. Washington (1945) 326 U.S. 310, 316 (Int’l Shoe).)
Personal jurisdiction may be either general or specific. Here, however, there is no dispute pertaining to general jurisdiction. This appeal concerns only the requirements for specific jurisdiction. (Vons, supra, 14 Cal.4th at p. 445.) In responding to a motion to quash service of process for lack of specific jurisdiction, the plaintiff has the burden of proof to present evidence justifying an exercise of jurisdiction. (Snowney, supra, 35 Cal.4th at p. 1062.) Once the plaintiff has met this burden, the defendant may demonstrate that exercising jurisdiction would be unreasonable. (Ibid.)
1. Specific Jurisdiction
Demonstrating that a state is justified in exercising jurisdiction over a non-resident defendant requires satisfying a three prong test: (1) that the defendant purposefully avails itself of the forum state; (2) the plaintiff’s action arises out of or is related to the defendant’s action involving the forum state; and (3) the exercise of jurisdiction comports with “fair play and substantial justice.” (Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 477-478; Vons, supra, at p. 446.)
a. Purposeful Availment
Purposeful availment ensures that a defendant will not be required to defend itself in a jurisdiction by reason of “random, fortuitous or attenuated contacts.” (World-Wide Volkswagen Corp. v. Woodson (1980) 444 U.S. 286, 297.) The purposeful availment prong has been extensively litigated, with the general results of favoring granting of jurisdiction. (See Helicopteros Nacionales de Colombia, S.A. v. Hall (1984) 466 U.S.408, 417.) In some cases a single act by the defendant is sufficient if it creates a substantial contact with the forum. (McGee v. International Life Ins. Co. (1957) 355 U.S. 220, 223.) The quality, not the quantity, of the contacts is the determinative issue in evaluating purposeful availment. (You Sow v. Crawford Laboratories, Inc. (1996) 50 Cal.App.4th 1859, 1870.) With the proliferation of technology, courts have recognized that use of the mail, telephone, or email alone may satisfy the requirement. (See Hall v. LaRonde (1997) 56 Cal.App.4th 1342, 1344.)
The United States Supreme Court in McGee upheld specific jurisdiction where a defendant assumed the insurance obligations of another insurance company over a California insured. (McGee, supra, 355 U.S. at p. 223.) By accepting payments from the California individual and despite never focusing advertising or intending to do business in California, the insurance company was found to have sufficient minimum contacts as a result of a single mailed interaction with the California insured. (Id. at p. 224.)
In the present case, the trial court correctly noted that the question of whether Kunath “purposefully availed” himself of the benefits of doing business in California was not terribly difficult – the single meeting in California was sufficient to establish it.
At the hearing on the matter, the court stated: “... the financing which has now become the subject of dispute does at least arguably show a purposeful availment of the benefit of doing business in California as to the particulars in this case, though not more generally. Probably the closest question under specific jurisdiction is not purposeful availment or whether the claims arise out of the forum activities.... But, frankly as the last factor which is whether or not the exercise of jurisdiction by California is... reasonable.” (Italics added.) Additionally, after hearing arguments, the court stated: “I frankly don’t see the evidentiary rulings as being the driver of the ultimate ruling. As long as there’s one meeting in Los Angeles, the real crux of what’s reasonable is before the court.”
Respondents counter by relying on the Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 270 and Core-Vent Corp. v. Nobel Industries AB (9th Cir. 1993) 11 F.3d 1482 cases to show that incidental interactions with California are not sufficient to demonstrate purposeful availment. In Pavlovich, a website publishing a source code was found to not be sufficiently directed towards California because a single user accessed it from the state. However, in the present case respondent intentionally came to California to discuss the business arrangement that continued to use California as a communication vector. This is not the sort of “neutral, non-directed” contract considered by Pavlovich. (Pavlovich, supra, 29 Cal.4th at p. 269.)
Additionally, respondents’ reliance on Core-Vent is misplaced. Although respondents characterize Core-Vent as a purposeful availment case, the rationale of the 9th Circuit there centered on the burden on foreign doctors being forced to litigate the case in California rather than the extent and the quality of their contacts.
The burden analysis used in Core-Vent is not appropriate for this case. There the court was concerned with exercising jurisdiction on defendants who had never been to the forum state and only made contacts via third-party published journals. (Core-Vent, supra, 11 F.3d at pp. 1483-1484.) Additionally, in that case, it was “unclear” whether the “brunt of the harms” was really in California. (Id. at p. 1487.)
The trial court recognized that a single meeting could be sufficient to establish purposeful availment. The meeting at the Chateau Marmont is undisputed by either party, and under the California purposeful availment standards that single meeting satisfies the initial availment hurdle sufficiently to fulfill the first prong of the Burger King test.
b. The relationship between the cause of action and the forum state
As long as the plaintiff’s claim bears a “substantial connection” to the defendant’s forum contacts, specific jurisdiction is appropriate. (Vons, supra, 14 Cal.4th at p. 452.) Additionally, Vons clarifies that the specific actions in the forum state do not need to be the actions that create the cause of action, but merely be substantially related to them. (Id. at pp. 460-462.)
Appellants contend the losses that occurred were a result of the initial Los Angeles meeting. The residence of respondent Swanson is without dispute in California. In addition, appellants maintain that respondent Kunath’s e-mails made an intentional injection into California for the purpose of furthering the contract discussed at the Los Angeles meeting. Moreover, certain appellants (the Pettles) were alleged to have been induced to execute California letters of credit to satisfy the financing requirements of respondents.
In contrast, respondents argue that the nature of any alleged losses is a result of the resulting contract that specifically declared that any conflict would be resolved under the laws and in the courts of England. Highlighting this intent, respondents argue that the making of the film was never intended to involve California, as it was to be filmed entirely overseas, so no level of California interaction was required to further the parties’ intention of making the contract. This argument is not persuasive. Assuming respondents intended to fulfill the contract to ultimately produce the movie “Victims, ” they sought producers in California, the heart of the movie industry. Additionally, the trial court noted that the contract is not determinative because in this case the test is whether there is in personam jurisdiction in tort, rather than contract.
Although the parties may have intended that “Victims” be filmed in Europe, the decision to come to California to seek production funding was intentional and a purposeful availment of the benefits of the forum. Here, respondent Kunath purposefully traveled to California to discuss financing the film entitled “Victims.” This meeting provided the groundwork for the contract that later followed, and to establish the confidence required for Cameo FJ Entertainment to execute the power of attorney that led to the alleged losses. While it also appears that there were some negotiations that occurred in Washington State, however, like many modern business negotiations, a significant amount of negotiation occurred via e-mail and telephone. These e-mails also demonstrate knowledge that Cameo FJ Entertainment was a party to the agreement when respondent Kunath sent e-mails to Braidy indicating that he “and his partner” should sign a revised agreement via e-mail.
The fact that respondents sought to have Braidy’s partner sign the agreement leads to an implication that Cameo FJ Entertainment was involved in the deal.
After analyzing the purpose of the Hollywood meeting and the extent of communication between the parties afterwards it is clear that the cause of action stems from an initial meeting in California and the subsequent actions. Any losses as a result of those communications form a relationship between that action and the forum involved –California. Therefore, this prong is satisfied.
c. The exercise of personal jurisdiction must comport with notions of “fair play and substantial justice”
Finally, we turn to the reasonableness of requiring respondents to litigate in California. The trial court properly noted the test for reasonableness is to be found in International Shoe and the “fair play” factors stated therein as follows: (1) the extent to which the suit relates to the defendant’s activities in California, (2) the availability of witnesses, (3) the availability of an alternative forum, (4) the relative costs and burdens of litigating in California as compared to alternative forums, and (5) the state policy of providing a forum to protect its residents or application of its substantive law. (World-Wide Volkswagen Corp., supra, 444 U.S. at p. 292.) Unlike the minimum contacts and purposeful availment analyses, the defendant bears the burden to present a compelling case that jurisdiction is unreasonable. (Burger King, supra, 471 U.S. at p. 477; Integral Development Corp. v. Weissenbach (2002)99 Cal.App.4th 576, 591.).
a. The Extent to Which the Suit relates to the Defendant’s Activities to California
The reasonableness test involves using a sliding scale based on the relationship of the forum activities in California. The greater the intensity of the forum-related contacts, the lesser is the necessary showing of the relationship between those contacts and the plaintiff’s claim. (Vons, supra, 14 Cal.4th at p. 453.)
As discussed elsewhere here, the California meetings, as well as the later e-mail and phone discussions are central to the fraud and misrepresentation claims alleged. Additionally, it appears that respondent Nasman and respondent Swanson put considerable effort into obtaining the California letters of credit that facilitated the alleged losses.
While not all of the events that led to the alleged losses occurred within California, the California components were crucial to the finalization of the contract and resulting torts claims.
ii. The Availability of Evidence and Witnesses, the Availability of an Alternative Forum and the Relative Costs And Burdens Of Litigating In California As Compared To Alternative Forums
The central theme to these three considerations is the burden on the defendant of litigating in the chosen forum as compared with a preferred forum. (Burger King, supra, 471 U.S. at pp. 478-479.) This concept is commonly employed where the rules of the jurisdiction serve to create a forum that is “gravely difficult and inconvenient” to the point that the burdened parties would be at a “severe disadvantage” in comparison to the opponent. (Id. at p. 479.)
Respondents explain that defendants are located in various locations outside of California –Kunath and the Kunath entities are in Washington, and two parties are in Europe. Only Mr. Braidy and respondent Swanson are California residents. Respondents contend that because of this, California has no interest in the litigation. They additionally argue that any other forum would be better than California.
This consideration is not dispositive because this case involves a complex case spanning multiple states and countries. To be sure any forum will be presented with similar difficulties in attempting to bring all parties into the case. Respondents concede that there would be travel burdens imposed if any forum is chosen, as the parties reside in six separate states and countries.
Respondents also contend that the contract mandates that the case be heard in the United Kingdom, and that this fact undercuts purposeful availment of the forum. First, as explained elsewhere, the primary causes of action involved are based in tort, rather than allegations concerning a breach of contract. Second, while a choice of forum is illustrative of the contracting parties’ intent, California does not cede jurisdiction based simply on the existence of a forum selection clause. (Miller-Leigh LLC v. Henson (2007) 152 Cal.App.4th 1143.) Accordingly, the contract provisions are not dispositive.
Additionally, this suit involves multiple parties in addition to Kunath. Forcing the parties to re-file the case in another jurisdiction risks further attacks on jurisdiction. There is no clear showing that any other jurisdiction is superior for all parties involved. As a result, we find no reason to disqualify California as a forum on grounds of fairness.
iii. The state policy of providing a forum to protect its residents or application of its substantive law
While it is conceded that the Pettles are not California residents, a plaintiff need not be a resident of this state for California to have an interest in hearing the case. Additionally, a California Corporation –Cameo FJ Entertainment – is a party to this dispute and California has an interest in protecting wrongs against corporations organized under its laws as well as providing a remedy for wrongs done in California, or committed under California law. (See Keeton v. Hustler Magazine, Inc. (1984) 465 U.S. 770, 780; Epic Communications, Inc. v. Richwave Tech. Inc. (2009) 179 Cal.App.4th 314, 336.)
These factors may be relevant in a case involving the principle of forum non conveniens, however, that issue is not before the court.
While Cameo FJ Entertainment is not a party to the original contract or involved in the California meeting, the subsequent negotiations that took place did involve Cameo FJ Entertainment and its partners. The fact that Cameo FJ Entertainment was not a party to the contract is not controlling as to the tort nature of this claim.
Upon balancing the reasonableness consideration with California’s stated interest in providing a forum, and hearing cases involving events related to this state, we conclude that the fairness balance tilts in favor of California jurisdiction. Accordingly, we hold that the trial court’s order must be reversed.
DISPOSITION
The judgment is reversed and the matter is remanded to the trial court for further proceedings not inconsistent with the views expressed in this opinion. Appellants are awarded costs on appeal.
We concur: PERLUSS, P. J. ZELON, J.