Opinion
H043784
12-18-2019
KAY GABOR et al., Plaintiffs and Appellants, v. REBECCA A. HARRIS et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Clara County Super. Ct. No. CV291117)
Plaintiffs Kay Gabor and John Gabor filed a complaint for damages in which they alleged fraudulent mismanagement of trusts by several defendants. Defendants Kristin Humphrey and Rebecca Harris, Washington residents, brought a motion to quash service of summons. The trial court granted the motion and dismissed the complaint without leave to amend. On appeal, plaintiffs contend that Humphrey and Harris have engaged in the minimal contacts necessary for the trial court to exercise jurisdiction. We affirm the order.
I. Factual and Procedural Background
In February 2016, plaintiffs filed their complaint, which primarily alleged fraud and breach of fiduciary duty in the creation and management of trusts located in the State of Washington. The complaint alleged: Carter Deshler was a principal in a company called Lord & Carter; Humphrey was Deshler's daughter; Harris was Humphrey's domestic partner; Humphrey and Harris were Deshler's business partners at Lord & Carter when Deshler created the Blue Mountain Trust for plaintiffs; plaintiffs transferred $1.5 million to this trust between 2000 and 2010; Deshler set up the trust in a manner that allowed her to use plaintiffs' funds without their knowledge; in February 2010, Deshler, Humphrey, and Harris stole $1,319,126 from the trust account; and plaintiffs' funds were used to purchase properties in the names of other trusts that Humphrey, Harris, and Deshler had created and operated.
In April 2016, Humphrey and Harris filed a motion to quash service of summons on the ground that the trial court lacked personal jurisdiction over them. In support of their motion, Humphrey and Harris submitted declarations.
Humphrey's declaration stated that Deshler suffered a stroke in March 2010. Though Deshler was physically affected by the stroke, she maintained her mental acuity and ability to operate her business until she passed away on September 30, 2012. After Deshler's stroke, she gave Humphrey her cell phone to answer calls and told her to let callers know that she would be in touch with them. John Gabor called this phone many times and tried to discuss his financial concerns. Humphrey told him that Deshler would eventually return his call and that she knew nothing about her mother's business dealings. Humphrey never sent an e-mail or a letter to plaintiffs. She received three demand letters from plaintiffs on October 2 and December 5, 2012, and March 15, 2013. She never telephoned plaintiffs with the possible exception of returning one or more of their calls.
Humphrey stated that she was not involved in the creation or management of the trusts referenced in the complaint. She never did anything related to the funds received from plaintiffs. She was never a "principal" of Lord & Carter. She was never her mother's employee, contractor, business partner or agent, though she created amortization schedules for her in 2011 for a "one-time contract payment." She knew the schedules were for properties and rents, but had no other knowledge regarding the properties and rents.
Humphrey agreed in August 2011 to become a successor trustee for the trusts referenced in the complaint to provide support for her mother after her stroke. She did not take any action as a successor trustee. She and Harris never purchased property in their own names using funds that plaintiffs placed in trusts created by her mother. Humphrey stated that it would be a severe hardship for her to travel to California for court proceedings due to her family obligations.
Harris's declaration stated that she never corresponded with plaintiffs by e-mail or letter except in connection with a June 2012 meeting. Plaintiffs phoned her many times. She never phoned plaintiffs, but she might have returned one or more of their calls. It would be a severe hardship for her to travel to California and to defend against plaintiffs' allegations due to her family obligations.
Harris's personal knowledge of Deshler's dealings with plaintiffs was based on her personal relationship with Humphrey and her review of Deshler's documents after her death in September 2012 when she helped Humphrey manage Deshler's estate. This assistance included contacting Deshler's clients by sending letters which offered a copy of Deshler's death certificate. Harris also organized and reviewed documents related to the trusts that Deshler created and operated with plaintiffs. Harris was not involved in creating the trusts referenced in the complaint, did not purchase any property or make any loans that formed the corpus of these trusts, and did not solicit the transfer of funds from plaintiffs that became the corpus of these trusts.
Harris did not work for Deshler or have any involvement in her business until mid-2010. At that time, Harris assisted Deshler with filing and running errands in her capacity as an independent contractor. When Harris was later added as a bank agent for some of the trust bank accounts, she paid bills, created and sent invoices to clients, and maintained spreadsheets as an independent contractor.
Deshler created most of the trusts referenced in the complaint between 2000 and 2005 before Harris began any work for Deshler. Deshler created the Buckeye, Chelan, and Home Sanctuary Trusts in mid-2011. Given Deshler's poor health at that time, Harris and Humphrey agreed to be appointed successor trustees. Harris "oversee[s] the property, rental advertising, invoices, repairs, paying taxes, insurance, etc" for the Nebraska Hotel Historical, Buckeye Property, Black Bear Storage, Home Sanctuary, and Chelan Trusts. She is a signer on the Wells Fargo account for the Paul Revere and Crystal Gallery Trusts.
The trusts referenced in the complaint are domiciled in Washington and governed by Washington law. These trusts purchased, operated and/or generated revenue in connection with real estate located almost exclusively in Washington. One of the real properties is located in Arizona. The complaint also lists real property located in Long Beach, California and refers to the Home Sanctuary Trust. However, the corpus of this trust was a loan to people who purchased the Long Beach property. This property was not owned by the trust.
All of Harris's activities relating to the trusts referenced in the complaint concerned real estate and bank accounts located in Washington and she performed all of these duties while in Washington with the exception of one meeting in California. As part of those duties, and only during August through December 2012, she sent several checks to plaintiffs in response to their demand letters. Harris has never "done business as" Lord & Carter. She has never been an employee nor a principal of Lord & Carter. She has never been a business partner of Deshler.
Harris first had contact with plaintiffs at a meeting in San Jose, California on June 22, 2012. Deshler had arranged this meeting for the existing clients of Lord & Carter. Deshler created the invitations to the meeting and gave Harris a list of e-mail addresses to send the invitations. At the meeting, Deshler presented a potential new business model involving rental properties in Washington in which existing clients could invest. Nothing was discussed regarding any aspects of the trusts referenced in the complaint. Harris had no role in obtaining clients, including plaintiffs, for this meeting. Harris's role was to assist Deshler with walking, driving, carrying luggage, and acting as Deshler's chaperone and " 'gofer.' " Deshler asked Harris toward the end of the meeting to summarize what she had said and to close the meeting, because she had become weaker and her voice had become more difficult to hear. Harris did not speak with John Gabor at the meeting.
In response to defendants' motion, plaintiffs submitted their declarations. In her declaration, Kay Gabor states that Deshler set up the Blue Mountain Trust for plaintiffs. Plaintiffs signed the trust documents in California and transferred over $1.5 million into the trust between 2000 and 2010. Deshler sent a letter in 2008 in which she acknowledged that she owed $198,000 to the trust, and that Humphrey and Harris "would make certain that the money would be repaid." (Italics omitted.) The letter states that Humphrey and Harris "have guaranteed to me that they will follow my instructions in this matter." In February 2010, Deshler stole $1,319,126 from the trust account, which was all of the money that plaintiffs had deposited at Deshler's advice. On information and belief, Kay Gabor states that Humphrey and Harris were business partners of Deshler at Lord & Carter when Deshler created the trust and that Humphrey and Harris "created and managed those trusts in order to steal [their] money."
Humphrey called Kay Gabor five to seven times in 2010 to let her know that Deshler was in the office. Humphrey told her that plaintiffs' money was safe and that if she had any questions, she could contact her to get more information. Plaintiffs received a call in California in April 2010 from Humphrey informing them that Deshler had suffered a stroke. Humphrey made numerous calls over the next two years assuring them that their money was safe. Humphrey knew when she made these statements that their money had been misappropriated by Deshler, herself, and others and that she and others were using their money for their own benefit.
On June 12, 2012, Deshler wrote a letter to plaintiffs indicating that Harris was her assistant. On June 22, 2012, Deshler and Harris met with plaintiffs in California and gave them a book of photographs of houses and hotels which they claimed had been purchased with plaintiffs' money. Plaintiffs learned at this meeting that defendants had taken their money from the trust account and used it to purchase properties without their knowledge or consent. When plaintiffs asked Deshler and Harris to explain who owned the properties, they told them that they did not need to know this information and that their money was safe. Plaintiffs demanded at this meeting that Harris and Deshler return their money.
Plaintiffs later learned that many of the properties had been purchased in the names of Harris, Humphrey, Deshler, and their relatives. None of the properties were purchased in the names of plaintiffs or the Blue Mountain Trust. In September 2012, plaintiffs were told that Deshler had died. On September 25, 2012, Harris sent a check in the amount of $4,000 from the Paul Revere Financial Trust Group signed by Harris as trustee. In October 2012, Harris sent a letter on Lord & Carter letterhead stating that Deshler had died. Harris signed the letter as trustee of Lord & Carter.
Kay Gabor, who was then 78 years old, stated that it would be very difficult for plaintiffs to pursue this action in Washington since they were elderly and suffered from many ailments.
John Gabor's declaration repeats the statements in Kay Gabor's declaration with the following exceptions: in July or August 2012, he met with Deshler and Harris in Washington. Though he begged them to return plaintiffs' money, Harris and Deshler refused to do so. They also refused to provide him with information about the owners of the properties that had been purchased with plaintiffs' money. John Gabor, who was then 86 years old, also stated that pursuing litigation in Washington would be an insurmountable hardship due to his age, failing health, and the cost of traveling.
Humphrey and Harris filed evidentiary objections to plaintiffs' declarations and a reply to plaintiffs' response. They argued that plaintiffs had failed to submit competent evidence of their minimum contacts to California.
Plaintiffs did not appear at the hearing on the motion. The trial court granted the motion. The trial court found that plaintiffs failed to carry their burden to show that either Humphrey or Harris purposefully availed themselves of California's benefits or that there was a substantial nexus between plaintiffs' claims and Humphrey's and Harris's purported activities in or directed at California. The trial court noted that the complaint alleged that Deshler solicited plaintiffs' business in California, created the trust to hold plaintiffs' investments, and alleged that Deshler carried out the alleged theft of plaintiffs' funds. The trial court further noted that plaintiffs' allegations that Humphrey and Harris were involved in Deshler's alleged activities were made "on information and belief," and thus they conceded that they had no personal knowledge of these facts. The trial court also noted that plaintiffs' declarations and the attached exhibits did not establish the necessary jurisdictional facts. The trial court cited as one example the letter from Deshler, which contained only hearsay statements as to Humphrey's and Harris's knowledge or involvement in Deshler's business arrangements with plaintiffs. The trial court concluded that even if it overlooked the defects in plaintiffs' evidence and weighed evidence submitted by the parties, the evidence submitted by Humphrey and Harris was "more detailed and more persuasive."
Humphrey and Harris request that this court take judicial notice of two orders issued in Gabor v. Deshler, No. 17-CV-01524-LHK, 2018 U.S. Dist. LEXIS 96307 (N.D. Cal. June 7, 2018) and two notices of default issued in August 2017 and March 2018 in the present case. They submit that these court records provide important procedural context for the instant appeal. We deny the request since these records are not relevant to the issue of whether the trial court properly declined to exercise jurisdiction over Humphrey and Harris.
II. Discussion
A. Jurisdiction
Plaintiffs contend that Humphrey and Harris have engaged in sufficient minimum contacts with California to require them to conduct their defense here.
1. Legal Principles
California courts "may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States." (Code Civ. Proc., § 410.10.) As the California Supreme Court has explained, "[a] state court's assertion of personal jurisdiction over a nonresident defendant who has not been served with process within the state comports with the requirements of the due process clause of the federal Constitution 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." ' " (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444-445 (Vons), quoting International Shoe Co. v. Washington (1945) 326 U.S. 310, 316.)
"[T]he minimum contacts test asks 'whether the "quality and nature" of the defendant's activity is such that it is "reasonable" and "fair" to require him to conduct his defense in that State.' [Citations.] The test 'is not susceptible of mechanical application; rather, the facts of each case must be weighed to determine whether the requisite "affiliating circumstances" are present.' [Citation.]" (Snowney v. Harrah's Entertainment, Inc. (2005) 35 Cal.4th 1054, 1061 (Snowney).)
There are two types of jurisdiction under the minimum contacts test: general and specific. (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 268-269.) Since plaintiffs do not claim general jurisdiction, the only issue in the present case is whether the trial court properly declined to exercise specific jurisdiction over Humphrey and Harris.
" '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] defendants contacts with the forum' " [citations]; and (3) " 'the assertion of personal jurisdiction would comport with "fair play and substantial justice" ' " [citation].' [Citation.]" (Snowney, supra, 35 Cal.4th at p. 1062.)
"[P]urposeful availment occurs where a nonresident defendant ' "purposefully direct[s]" [its] activities at residents of the forum' [citation], ' "purposefully derive[s] benefit" from' its activities in the forum [citation], 'create[s] a "substantial connection" with the forum' [citation], ' "deliberately" has engaged in significant activities within' the forum [citation], or 'has created "continuing obligations" between [itself] and residents of the forum' [citation]. By limiting the scope of a forum's jurisdiction in this manner, the ' "purposeful availment" requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of "random," "fortuitous," or "attenuated" contacts . . . .' [Citation.]" (Snowney, supra, 35 Cal.4th at p. 1063.)
When a nonresident defendant challenges jurisdiction, it is the plaintiff's burden to establish facts that would "justify[] the exercise of jurisdiction." (Vons, supra, 14 Cal.4th at p. 449.) "The plaintiff must do more than merely allege jurisdictional facts. It must present evidence sufficient to justify a finding that California may properly exercise jurisdiction over the defendant. [Citation.] The plaintiff must provide affidavits and other authenticated documents in order to demonstrate competent evidence of jurisdictional facts. Allegations in an unverified complaint are insufficient to satisfy this burden of proof. Declarations cannot be mere vague assertions of ultimate facts, but must offer specific evidentiary facts permitting a court to form an independent conclusion on the issue of jurisdiction. [Citations.]" (In re Automobile Antitrust Cases I & II (2005) 135 Cal.App.4th 100, 110.) After the plaintiff has made an initial showing of the first two requirements, the burden shifts to the defendant to show that the exercise of jurisdiction would be unreasonable. (Vons, supra, 14 Cal.4th at p. 449.)
On appeal, this court defers to the trial court's factual findings that are supported by substantial evidence (Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 568 (Aquila)), but we use our independent judgment to determine the legal significance of those facts and to decide the ultimate question of whether the defendant is subject to personal jurisdiction. (Ibid.)
2. Analysis
Here, Humphrey, a Washington resident, neither solicited plaintiffs' business in California nor created the Blue Mountain Trust or any trust referenced in the complaint. She never did anything related to the funds received from plaintiffs. Humphrey was not a "principal" of Lord & Carter. She was never an employee, contractor, business partner, or agent of Deshler or any of her business enterprises. Though Humphrey created amortization schedules for Deshler in 2011 for a "one-time contract payment," she only knew the schedules were for properties or rents. Humphrey's other activities on behalf of Deshler included: answering Deshler's phone after her stroke; telling Deshler's clients that Deshler would return their calls; telling John Gabor that she knew nothing about Deshler's business dealings; and receiving three demand letters from plaintiffs in 2012 and 2013. Humphrey also agreed to provide support for Deshler after her stroke by becoming a successor trustee for the trusts referenced in the complaint, but she did not take any actions as a successor trustee. This record establishes that Humphrey did not " ' "purposefully direct" ' " her activities at California residents, create a " ' "substantial connection" ' " with California, " ' "deliberately engage in significant activities within" ' " California or create " ' "continuing obligations" ' " between herself and California residents. (Snowney, supra, 35 Cal.4th at p. 1063.) Thus, there was substantial evidence to support the trial court's finding that plaintiffs failed to establish that Humphrey purposefully availed herself of California benefits. We conclude the trial court properly declined to exercise specific jurisdiction over Humphrey.
Plaintiffs argue that the commission of a tort that is directed at a California resident is a minimal contact that allows the court to exercise jurisdiction over a nonresident. Plaintiffs claim that their declarations established that Humphrey committed the torts of misrepresentation and conversion by telling them that their money was safe and that she was overseeing it, making numerous calls to them, and never explaining to them where their money was. But plaintiffs have overlooked that the trial court specifically found Humphrey's declaration was more credible, and we must defer to the trial court's factual findings. (Aquila, supra, 148 Cal.App.4th at p. 568.) Humphrey stated that she told plaintiffs that Deshler would return their calls, returned some of their calls, and told John Gabor that she had no knowledge of Deshler's business activities. None of this evidence supports a finding that the first prong of the minimum contacts test was met.
Plaintiffs also point out that Deshler wrote them a letter in 2008 in which she stated that Humphrey and Harris would ensure that the money Deshler owed them would be repaid. Deshler's letter stated that Humphrey and Harris had "guaranteed to [Deshler] that they would follow [her] instructions in this matter." As the trial court stated, this letter only contained "hearsay statements as to moving Defendants' knowledge or involvement in Deshler's business arrangements with Plaintiffs." Thus, this letter does not support plaintiffs' position.
As to Harris, she also did not purposefully avail herself of the benefits of California. Harris did not create any of the trusts referenced in the complaint, make any loans that formed the corpus of these trusts, solicit the transfer of funds from plaintiffs that became the trusts' corpus, or use money from any of these trusts to purchase property. Harris was not a "principal" of Lord & Carter. She has never "done business as" Lord & Carter, never been an employee or a principal of Lord & Carter, and never been a business partner of Deshler or any of Deshler's business entities and trusts. Though plaintiffs phoned her many times, she only phoned them to return their calls. Harris never corresponded with plaintiffs except in connection with the June 2012 meeting. She did no work for Deshler and had no involvement with Deshler's business or trusts until mid-2010 when she assisted Deshler with various administrative tasks as an independent contractor. When Deshler's health deteriorated further in mid-2011, Harris agreed to become a successor trustee for some of the trusts and oversaw the property included in these trusts. As part of her duties, she sent checks to plaintiffs in response to their demand letters. All of Harris's activities relating to the trusts concerned bank accounts and real estate located in Washington, with two exceptions which are not relevant here. Harris engaged exclusively in these activities while in Washington. Harris's involvement in the June 2012 meeting in California was also very limited. She did not arrange the meeting, had no role in obtaining clients, and sent the e-mail invitations only as directed by Deshler. Nothing was discussed at this meeting regarding any aspects of the trusts referenced in the complaint. Harris's only role was to provide physical assistance to Deshler at the meeting. This record establishes that Harris did not " ' "purposefully direct" ' " her activities at California residents, create a " ' "substantial connection" ' " with California, " ' "deliberately engage in significant activities within" ' " California or create " ' "continuing obligations" ' " between herself and California residents. (Snowney, supra, 35 Cal.4th at p. 1063.) Thus, the trial court's finding that plaintiffs failed to establish that Harris purposefully availed herself of California benefits was supported by substantial evidence. We conclude the trial court properly declined to exercise specific jurisdiction over Harris.
One of the properties was located in Arizona and another was located in Long Beach, California. However, the corpus of the Home Sanctuary Trust was a loan to the purchasers of the Long Beach property and the property was not owned by this trust. Thus, neither property can be considered in determining Harris's connection to California. --------
Plaintiffs contend, however, that there was substantial evidence that Harris has had the requisite minimum contacts with California. They first point out that Deshler sent them a letter on June 12, 2012, in which she indicated that Harris was her assistant and that Harris participated in the June 22, 2012 meeting in which Harris made misrepresentations. We must defer to the trial court's finding that Harris's declaration was more credible. (Aquila, supra, 148 Cal.App.4th at p. 568.) As previously noted, Harris's role was limited to sending e-mails to clients at Deshler's direction and providing physical assistance to Deshler at the meeting.
Plaintiffs next assert that John Gabor met with Deshler and Harris in Washington after the June 2012 meeting. But this conduct by Harris does not establish that Harris purposefully availed herself of the benefits of California.
Plaintiffs also refer to an exhibit indicating that Harris signed a check written by the Paul Financial Group Trust and mailed it to plaintiffs in September 2012. Plaintiffs further note that Harris sent them a letter, which was written on Lord & Carter letterhead, identified Harris as trustee, and informed them that Deshler had died. This evidence is insufficient to establish specific jurisdiction over a nonresident. Moreover, assuming that the evidence satisfies the first prong of the minimal contacts test, plaintiffs have failed to meet their burden to show that the "controversy is related to or arises out of [the] defendant's contacts with California." (Snowey, supra, 35 Cal.4th at p. 1067.) This requirement is determined under the " 'substantial connection' test," which "is satisfied if 'there is a substantial nexus or connection between the defendant's forum activities and the plaintiff's claim.' [Citation.]" (Id. at p. 1068.) Harris's interactions with plaintiffs in and after September 2012 occurred long after Deshler is alleged in the complaint to have misappropriated plaintiffs' money, and after plaintiffs demanded its return. Thus, there is not a substantial connection between Harris's activities in mailing a check to plaintiffs and informing them that Deshler had died.
In sum, the trial court properly granted the motion to quash service of summons as to both Humphrey and Harris.
B. Forum Non Conveniens
Plaintiffs contend that the argument by Humphrey and Harris that California was an inconvenient forum conceded the issue of jurisdiction. Plaintiffs fail to cite to the record where this argument was made before the trial court. "If a party fails to support an argument with the necessary citations to the record, that portion of the brief may be stricken and the argument deemed to have been waived. [Citation.]" (Duarte v. Chino Community Hospital (1999) 72 Cal.App.4th 849, 856.) Accordingly, this contention has been waived.
III. Disposition
The order is affirmed. Costs are awarded to Humphrey and Harris.
/s/_________
Mihara, J. WE CONCUR: /s/_________
Elia, Acting P. J. /s/_________
Bamattre-Manoukian, J.