Opinion
D074862
03-25-2020
ORION COMMUNICATIONS, INC., et al., Plaintiffs and Appellants, v. DISPATCH & TRACKING SOLUTIONS, LLC et al., Defendants and Respondents.
Fitzgerald Knaier, Kenneth M. Fitzgerald and Joseph L. McGeady for Plaintiffs and Appellants. ONE LLP, Peter Afrasiabi and Oscar M. Orozco-Botello; ClintonBailey, Mark C. Bailey; Law Office of Kathryn M. Davis and Kathryn M. Davis for 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2018-00016273-CU-MC-CTL) APPEAL from an order of the Superior Court of San Diego County, Eddie C. Sturgeon, Judge. Reversed with directions. Fitzgerald Knaier, Kenneth M. Fitzgerald and Joseph L. McGeady for Plaintiffs and Appellants. ONE LLP, Peter Afrasiabi and Oscar M. Orozco-Botello; ClintonBailey, Mark C. Bailey; Law Office of Kathryn M. Davis and Kathryn M. Davis for Defendants and Respondents.
Plaintiffs Orion Communications, Inc. (Orion), and Leslie DeLatte filed the instant action for malicious prosecution against defendants Dispatch & Tracking Solutions, LLC (DTS); Sameis Holdings, LLC (Sameis); J. Victor Samuels; and Morgan Hill. Defendants filed a motion to quash service of summons for lack of personal jurisdiction or, in the alternative, to dismiss the complaint on the ground of inconvenient forum. The trial court granted the motion to quash as to Hill, a Texas resident, on the ground plaintiffs failed to meet their burden of showing Hill had sufficient contacts with California for the state to exercise personal jurisdiction over him. The court denied the motion to quash and alternative motion to dismiss for inconvenient forum as to the other defendants.
Plaintiffs contend the court should have denied the motion to quash as to Hill because they presented sufficient evidence to show that he consented to jurisdiction in California and that his contacts with California were sufficient to give rise to specific personal jurisdiction. We agree with those contentions. Accordingly, we reverse the order granting the motion to quash as to Hill with directions to enter an order denying the motion to quash and the alternative motion to dismiss on the ground of inconvenient forum as to him.
FACTUAL AND PROCEDURAL BACKGROUND
The underlying action
The underlying action arose out of the decision of the City of San Diego (the City) to award to TEGSCO, LLC, doing business as San Francisco AutoReturn (AutoReturn), a competitively bid contract to provide the City with a computerized system for dispatching tow trucks. AutoReturn's bid proposal to the City referenced its intended use of tow dispatching communications software provided by DTS known as Law Enforcement Towing System (LETS) and Towing Management System (TMS). A competing bidder, Authorized City Towing (ACT), had been providing computerized tow dispatch services to the City using the LETS/TMS software before the City awarded the contract to AutoReturn. Because ACT claimed it held an exclusive license to use DTS's LETS/TMS software in San Diego County, AutoReturn decided to replace that software with similar software provided by Orion. However, Orion decided not to work with AutoReturn because of the underlying litigation, and AutoReturn developed its own tow management software to replace DTS's LETS/TMS software.
The underlying litigation began when ACT filed a lawsuit against the City, AutoReturn, DTS, Orion, and related parties on various theories arising out of its alleged exclusive license agreement with DTS and the City's award of the towing contract to AutoReturn. DTS filed a second amended cross-complaint that included a cause of action under the California Uniform Trade Secrets Act (Civ. Code, § 3426 et seq.) against AutoReturn, the City, Orion, and Orion's chief executive officer, DeLatte, for misappropriation of trade secrets.
The trial court entered judgment against DTS and in favor of Orion and DeLatte on DTS's second amended cross-complaint after granting their motion for summary judgment. The court later granted a motion by Orion and DeLatte for attorney fees and costs against DTS under Civil Code section 3426.4 based on the court's finding that DTS prosecuted its misappropriation of trade secrets claim against those defendants in bad faith.
The present action
In April 2018, plaintiffs (Orion and DeLatte) filed their complaint for malicious prosecution against defendants (DTS, Sameis, J. Victor Samuels, and Morgan Hill) and defendants' counsel. In May 2018, the trial court granted plaintiffs' request to dismiss the attorney defendants without prejudice.
Defendants filed a motion to quash service of summons for lack of personal jurisdiction or, in the alternative, to dismiss the complaint on the ground of inconvenient forum. In their motion to quash service, defendants represented that at the time DTS sued Orion and DeLatte, DTS was owned by Compiled Logic and controlled by Larry Estes, who is not a party to the malicious prosecution action. In 2010, Samuels purchased the assets of Compiled Logic, including DTS, from a Texas bank (Encore Bank) and took the assets through Sameis, a Texas limited liability company. Defendants stated that Sameis hired Hill in 2010 "to operate Sameis Holdings, LLC [doing business as] Dispatch & Tracking Solutions. The rights to the DTS name were obtained in the asset purchase from Encore Bank. Hill is a resident of Texas and has his office in Houston."
In the motion to quash service, defendants argued the court lacked jurisdiction over Sameis and DTS, but they did not specifically address jurisdiction as to Hill. However, the motion included a declaration from Hill in which he stated that he was the manager of Sameis, which at all relevant times had maintained its principal place of business in Texas, and that when DTS sued plaintiffs, it was owned by Compiled Logic and controlled by Estes. Defendants requested judicial notice of various pleadings filed in the underlying action and the judgment on DTS's second amended cross-complaint.
In opposition to the motion to quash service, plaintiffs argued that "[d]efendants all purposely availed themselves of this state's laws and invoked its jurisdiction, in this particular forum, by choosing to maliciously prosecute the underlying case here." Plaintiffs noted this court had affirmed the finding that Sameis was DTS's alter ego and successor in interest. They argued that Hill and Samuels were defendants in the malicious prosecution action because they were instrumental in prosecuting the underlying case in San Diego. Plaintiffs requested judicial notice of various trial court orders and two appellate opinions that were issued in the underlying case.
The minute order on defendants' motion to quash service states: "The court takes judicial notice as requested."
In their reply to plaintiffs' opposition to the motion, defendants contended the DTS entity that filed the underlying action against plaintiffs was a different entity from DTS named in the malicious prosecution action. According to defendants, the party that filed the cross-complaint against plaintiffs was "DTS Newport, under authority of Lawrence Estes." Moreover, defendants asserted that Hill did not "commence litigation" against plaintiffs. In his reply declaration, Hill stated he was the manager of Sameis and was never a party to the San Diego litigation or to DTS's cross-complaint.
DTS has an office in Newport Beach, California and operated from there when the underlying litigation was initiated in 2009.
The trial court denied defendants' motion to quash service as to DTS, Sameis, and Samuels, but granted the motion as to Hill. In its written order, the court stated, "Although Morgan Hill was hired to run DTS, . . . there is no evidence he has any ownership interest in any of the entities. [Hill is] a Texas resident, who worked at a Texas location. Thus, plaintiffs have not met their burden to show sufficient minimum contacts with Hill in California."
DISCUSSION
I. Personal Jurisdiction
Plaintiffs contend California has personal jurisdiction over Hill because: (1) Hill consented to California jurisdiction by authorizing and ordering that the underlying action be brought against Orion and DeLatte in San Diego; and (2) Hill's contacts with California are sufficient to give rise to specific jurisdiction.
"California's long-arm statute authorizes California courts to exercise jurisdiction on any basis not inconsistent with the Constitution of the United States or the Constitution of California. (Code Civ. Proc., § 410.10.)" (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444 (Vons).)
"Personal jurisdiction may be either general or specific. 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.' " (Vons, supra, 14 Cal.4th at p. 445.) However, "[i]f 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.' " (Id. at p. 446.) "[I]n analyzing the exercise of specific jurisdiction, '[o]nce it has been decided that a defendant purposefully established minimum contacts within the forum State, these contacts may be considered in light of other factors to determine whether the assertion of personal jurisdiction would comport with "fair play and substantial justice." ' [Citations.] Courts may evaluate the burden on the defendant of appearing in the forum, the forum state's interest in adjudicating the claim, the plaintiff's interest in convenient and effective relief within the forum, judicial economy, and 'the "shared interest of the several States in furthering fundamental substantive social policies." ' " (Id. at pp. 447-448.)
Another traditional basis for the exercise of personal jurisdiction over a nonresident defendant is consent. (Sea Foods Co., Ltd. v. O.M. Foods Co., Ltd. (2007) 150 Cal.App.4th 769, 786 (Sea Foods).) "[W]hen a party has availed itself of the courts of California, that party is held to have impliedly consented to jurisdiction in any action related to the action it brought. '[E]ven at common law if the nonresident initiated a judicial action in California, and was involved in a subsequent action directly relating to the first, jurisdiction was proper.' [Citation.] 'The United States Supreme Court has . . . long recognized that when a nonresident plaintiff commences an action, he submits to the court's personal jurisdiction on any cross-complaint filed against him by the defendant. [Citation.] By choosing a particular forum, [the] plaintiff is considered to have voluntarily submitted to the court's jurisdiction "for all purposes for which justice to the defendant requires his presence." [Citations.]. . . This "is the price which the state may exact as the condition of opening its courts to the plaintiff." ' [Citations.] Similarly, a nonresident plaintiff who has filed a suit in California against particular parties 'has consented to jurisdiction in California when these same parties later sue him in a related action.' " (Ibid.)
"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.)
Analysis
We conclude uncontroverted evidence establishes that Hill, acting as the manager of DTS, consented to jurisdiction in California and purposefully availed himself of the benefits and protections of California's laws and judicial system by making the decision to sue plaintiffs in the underlying action and directing the initiation of that action. In a declaration submitted in the underlying action, Hill stated he was an officer of DTS and that he authorized and instructed that suit be brought against Orion. He averred: "The fact that it was likely Orion, AutoReturn and the City were misappropriating [DTS's proprietary] information formed a basis for my authorizing and instructing that suit be brought against Orion and AutoReturn." (Italics added.) Similarly, in related litigation in Texas, Samuels testified that he owned DTS but was not its manager; Hill managed DTS and made the decisions regarding how it was run. Hill testified that when DTS sued Orion, Sameis was effectively running the California litigation and that he and Samuels co-managed Sameis and DTS. In responses to requests for admission, Sameis admitted that Hill managed "DTS's actions in the California Lawsuit" and managed Sameis.
Defendants contend there is a factual dispute as to whether Hill made the decision to sue plaintiffs and assert that discovery responses from Hill and Samuels call into doubt Hill's authority. However, none of defendants' citations to the record in support of that assertion call into question Hill's authority to initiate DTS's lawsuit against plaintiffs in the underlying action. To the contrary, a number of defendants' citations show that Hill was a manager of Sameis and DTS and that he managed DTS's actions in the California lawsuit. Hill's authority to initiate the underlying action and fact that he did so are undisputed facts. The court's only articulated factual basis for its ruling that Hill was not subject to personal jurisdiction in California was the fact (also undisputed) that Hill did not have an ownership interest in DTS. However, that fact is irrelevant to our jurisdictional analysis.
Defendants also argue that Hill did not himself assert a claim against plaintiffs and did not stand to personally benefit from the DTS lawsuit. Thus, defendants argue, Hill did not seek the benefits and protections of California. Although Hill was not himself a party to the underlying action, it is well-settled that "[a] person who is injured by groundless litigation may seek compensation from any person who procures or is actively instrumental in putting the litigation in motion or participates after the institution of the action." (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal. 3d 1118, 1131, fn. 11; Centers v. Dollar Markets (1950) 99 Cal.App.2d 534, 544-545 ["[T]he test of liability in an action for malicious prosecution is whether the defendant was actively instrumental or was the proximate and efficient cause of maliciously putting the law in motion."]; Lujan v. Gordon (1977) 70 Cal.App.3d 260, 264 ["There does not appear to be any good reason not to impose liability upon a person who inflicts harm by aiding or abetting a malicious prosecution which someone else has instituted."].)
Moreover, an officer of a corporation may be held jointly liable in tort with the corporation if he or she personally directed or participated in the tortious conduct. (Seagate Technology v. A. J. Kogyo Co. (1990) 219 Cal.App.3d 696, 701-702 (Seagate).) "[S]ome acts taken by a corporate officer are not only the acts of the corporation, but the acts of the individual. Where an act of this type creates contact with the forum state, that contact may be the contact of the individual as well as the contact of the corporation and, therefore, should be considered in determining if the forum state has personal jurisdiction over the individual." (Id. at p. 702.) "[I]f a corporate officer may be held personally responsible for causing the corporation to act, that act may be imputed to the officer for purposes of establishing personal jurisdiction over him." (Id. at p. 703.)
Accordingly, because Hill could be held personally liable in the instant malicious prosecution action for causing DTS to sue plaintiffs in the underlying action, DTS's prosecution of the underlying action against plaintiffs in California may be imputed to Hill for purposes of establishing personal jurisdiction over him.
Further, as we noted above, a nonresident plaintiff who has filed a lawsuit in California against particular parties " 'has consented to jurisdiction in California when these same parties later sue him in a related action.' " (Sea Foods, supra, 150 Cal.App.4th at p. 786, quoting Nobel Farms, Inc. v. Pasero (2003) 106 Cal.App.4th 654, 659.) In Nobel Farms, this court recognized "the principle that '[a] state has power to exercise judicial jurisdiction over an individual who brings an action in the state with respect to a claim that arose out of the transaction which is the subject of the action . . . .' " (Nobel Farms, at p. 659.) The Nobel Farms court concluded that because a nonresident attorney had availed himself of the benefits of a California court in his earlier action against his former clients for attorney fees, he had submitted himself to personal jurisdiction in California in the former clients' later action against him for legal malpractice arising from the same transaction (the parties' agreement for legal services). (Id. at pp. 659-660.) The court reasoned that " '[a] contrary conclusion would senselessly diminish the jurisdictional weight ordinarily accorded to so direct an invocation of the state's benefits and protections.' " (Id. at p. 660.)
Nobel Farms illustrates that a party's consent to jurisdiction in a forum by filing an action there is a direct invocation and purposeful availment of the benefits and protections of the forum's judicial system, which subjects the party to personal jurisdiction in the forum in a later related action. Accordingly, personal jurisdiction over Hill is appropriate in the present action because in directing that DTS's underlying lawsuit against plaintiffs be filed in California, Hill consented to jurisdiction in California in plaintiffs' related malicious prosecution action, and he is subject to specific jurisdiction because he purposefully availed himself of the benefits and protections of California law. The trial court erred in granting defendants' motion to quash service of summons and complaint as to Hill.
II. Reasonableness of Jurisdiction in California
Defendants argued that even if plaintiffs met their burden of showing that California constitutionally may assert personal jurisdiction over Hill, the exercise of such jurisdiction is unreasonable. We disagree.
As noted, once facts showing minimum contacts with the forum state are established, it is the defendant's burden to show that the exercise of personal jurisdiction would be unreasonable. (Vons, supra, 14 Cal.4th at pp. 449, 475-476.) "An otherwise valid exercise of personal jurisdiction 'is presumed to be reasonable.' [Citation.] Therefore, defendant 'must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable. Most such considerations usually may be accommodated through means short of finding jurisdiction unconstitutional.' [Citations.] Our review of the reasonableness determination is de novo [when] there are no evidentiary disputes.
"A determination of reasonableness rests upon a balancing of interests: the relative inconvenience to defendant of having to defend an action in a foreign state, the interest of plaintiff in suing locally, and the interrelated interest the state has in assuming jurisdiction. [Citation.] The factors involved in the balancing process include the following: 'the relative availability of evidence and the burden of defense and prosecution in one place rather than another; the interest of a state in providing a forum for its residents or regulating the business involved; the ease of access to an alternative forum; the avoidance of a multiplicity of suits and conflicting adjudications; and the extent to which the cause of action arose out of defendant's local activities.' " (Integral Development Corp. v. Weissenbach (2002) 99 Cal.App.4th 576, 591 (Integral).)
Defendants have not presented a compelling case to rebut the presumption that personal jurisdiction over Hill is reasonable. In California, "the plaintiff's choice of forum is entitled to great weight even though the plaintiff is a nonresident. '[U]nless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed.' " (Ford Motor Co. v. Insurance Co. of North America (1995) 35 Cal.App.4th 604, 610-611; Morris v. AGFA Corp. (2006) 144 Cal.App.4th 1452, 1465 (Morris); Hansen v. Owens-Corning Fiberglas Corp. (1996) 51 Cal.App.4th 753, 760.)
The Morris court noted "some slight confusion in the law" regarding the weight to which a nonresident plaintiff's forum choice is entitled. (Morris, supra, 144 Cal.App.4th at p. 1465, fn. 6.) Morris observed that although dictum in Stangvik v. Shiley Inc. (1991) 54 Cal.3d 744 suggests that only a resident's choice of forum is entitled to great weight, "the actual holding of Stangvik involved a nonresident who was a resident of a foreign country, not a resident of another state of the United States." (Morris, supra, 144 Cal.App.4th at p. 1465, fn. 6.)
The factors of the relative inconvenience to Hill of having to defend this action in California, the availability of evidence, and the avoidance of multiple suits favor jurisdiction in California. Because the present action will be prosecuted in California as to the other defendants, prosecuting it against Hill in the same forum will avoid two separate lawsuits involving the same issues, evidence, and witnesses with the risk of conflicting adjudications. In denying the other defendants' alternative motion to stay or dismiss the action on the ground of inconvenient forum, the trial court noted, "Though the defendants are Texas residents, as well as the plaintiffs, the witnesses, including both sets of attorneys in the underlying case . . . are in San Diego, California. The parties have been previously able to litigate their claims in this jurisdiction without undue hardship."
Any inconvenience to Hill of having to defend the malicious prosecution action in California is outweighed by other factors, including the inconvenience of the parties' having to present the testimony of California witnesses and other evidence from the underlying California action a second time in a Texas court. " '[U]nless the "inconvenience [to defendant] is so great as to constitute a deprivation of due process, it will not overcome clear justifications for the exercise of jurisdiction." ' [Citation.] . . . ' " '[I]n this era of fax machines and discount air travel,' requiring [defendant] to litigate in California is not constitutionally unreasonable." [Citations.]' [Citation.] . . . '[T]he same technological progress in communication and transportation that has increased the flow of commerce between the states and the need for jurisdiction over nonresidents, has simultaneously decreased the burdens inherent in defending a lawsuit in a foreign tribunal.' " (Integral, supra, 99 Cal.App.4th at p. 592.) The inconvenience to Hill of having to defend the present action in California does not amount to a deprivation of his due process rights.
The exercise of specific personal jurisdiction over Hill in this case is further supported by California's interest in assuming jurisdiction and the extent to which plaintiffs' malicious prosecution cause of action arose out of Hill's local activities. "A state has a special interest in exercising jurisdiction over those who commit tortious acts within its territory. Therefore, it is reasonable that a state should exercise jurisdiction over those who commit or cause to be committed in the state what is claimed to be a tortious act." (Kaiser Aetna v. Deal (1978) 86 Cal.App.3d 896, 901.) Because Hill allegedly participated in the commission of a malicious prosecution against plaintiffs in California, the state unquestionably has an interest in adjudicating plaintiffs' malicious prosecution action and exercising jurisdiction over Hill in doing so. We find nothing in the record to support defendants' contention that the exercise of personal jurisdiction over Hill in this case would be unreasonable.
" 'This rule has its most obvious application to torts which involve acts or omissions that are dangerous to life or to tangible things, such as shooting a gun or driving an automobile within the state. . . . But it is not essential that the act or omission should actually constitute a tort or a dangerous act, or that the injury be to persons or tangible things; it is enough that the complaint states a cause of action in tort based upon such act or omission, and the action may be based on injury to intangible interests . . . .' " (Abbott Power Corp. v. Overhead Electric Co. (1976) 60 Cal.App.3d 272, 278-279.)
DISPOSITION
The order of September 17, 2018, granting defendants' motion to quash service of summons as to defendant Morgan Hill is reversed. The trial court is directed to enter an order denying defendants' motion to quash service of summons for lack of personal jurisdiction or, in the alternative to stay or dismiss on the ground of inconvenient forum as to defendant Hill. Costs on appeal are awarded to appellants.
IRION, J. WE CONCUR: BENKE, Acting P. J. DATO, J.