Jay A. Fishman, Ltd. v. Maloney CA4/1 ( 2013 )

Filed 10/25/13 Jay A. Fishman, Ltd. v. Maloney CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
JAY A. FISHMAN, LTD., D061589
Plaintiff and Respondent,
v. (Super. Ct. No. 37-2011-00098994-
CU-EN-CTL)
CATHERINE MALONEY,
Defendant and Appellant.
APPEAL from an order of the Superior Court of San Diego County, Esteban
Hernandez, Judge. Affirmed.
David A. Kay for Defendant and Appellant.
The Guerrini Law Firm, John D. Guerrini; and David Brand for Plaintiff and
Respondent.
Defendant and appellant Catherine Maloney appeals from an order denying her
motion to vacate a Michigan judgment entered by plaintiff and respondent Jay A.
Fishman, Ltd. (Fishman). In making her motion, Maloney argued that the Michigan
court did not have personal jurisdiction over her. We affirm.
The record shows that Fishman provided investment advisory services to Maloney
for almost 10 years from his location in Michigan. The services were provided under the
terms of an agreement between Maloney and Fishman that expressly stated Fishman's
services would be performed in Michigan and that any disputes would be governed by
Michigan law. Given these circumstances, it was consistent with due process for the
Michigan court to exercise personal jurisdiction over Maloney with respect to Fishman's
claim for fees for services he performed in Michigan.
FACTUAL AND PROCEDURAL BACKGROUND
On February 28, 1998, Maloney executed an Investment Advisory Agreement
(agreement) with Fishman, as well as a power of attorney. The agreement and power of
attorney were signed by Maloney in California after Fishman personally solicited
Maloney here in California.
The agreement authorized Fishman to manage Maloney's $16 million securities
portfolio, which was maintained in Illinois. In pertinent part, the agreement provided: (1)
all of Fishman's services would be performed in Michigan; (2) the agreement was not
effective until Fishman agreed to it in writing; (3) Fishman would earn 0.50 percent of
the portfolio's total market value each quarter and be paid in advance for services
rendered; and (4) the agreement would be governed by the law of Michigan.
The agreement became effective on February 28, 1998, when Fishman signed it in
Michigan. Maloney and Fishman maintained this business relationship for almost 10
2
years. According to Fishman, over several years "[my company] managed Ms.
Maloney's portfolio. [My company's] employees, located in Michigan, conducted daily
research as to market conditions and potential investment opportunities, and based on that
research [my company] directed an extensive number of purchase and sale transactions
for Ms. Maloney's portfolio. With each transaction, a confirmation letter was sent from
[my company] to Ms. Maloney, and there were on occasion phone calls with Ms.
Maloney regarding the same."
In October of 2007, without notice to Fishman, Maloney transferred all of the
portfolio's assets from the custodian to whom Fishman was authorized to direct purchases
and sales to another custodian, with whom Fishman had no such authority. The transfer
effectively terminated the parties' agreement, even though Maloney did not provide
Fishman with the 30-day notice required under the terms of their agreement.
According to Fishman, at the time the portfolio's assets were transferred, Maloney
was owed him $131,315 in unpaid fees. Following the transfer, Fishman attempted to
contact Maloney, but she did not return telephone calls or written correspondence from
him.
On February 14, 2011, Fishman filed a complaint in a Michigan circuit court
against Maloney for the unpaid fees.
On July 27, 2011, after Maloney had been properly served with a summons and
the complaint and had failed to respond by answer or otherwise, a default judgment was
entered against her in the Michigan court in the amount of $131,640.
3
On October 5, 2011, Fishman filed an application for entry of the Michigan
judgment in the trial court, and his application was granted on October 6, 2011.
On November 17, 2011, Maloney moved to vacate Fishman's Michigan judgment.
The motion was supported by a memorandum of points and authorities and a declaration
from Maloney.1 She argued that the Michigan court did not have personal jurisdiction
over her.
Fishman opposed the motion and submitted a declaration setting forth the
circumstances under which the agreement came about, was performed and was later
terminated.
The trial court denied Maloney's motion with prejudice.
Maloney filed a timely notice of appeal.
DISCUSSION
I
A. Personal Jurisdiction and Minimum Contacts
State courts may exercise personal jurisdiction over nonresident defendants who
have been served with process only if those defendants have such minimum contacts with
the state to ensure that the assertion of jurisdiction will not violate "'"'traditional notions
of fair play and substantial justice.'"'" (Aquila, Inc. v. Superior Court (2007) 148
Cal. App. 4th 556, 568, citing Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14
1 Although Maloney's designation of record asked that her declaration be made part
of the clerk's transcript, the declaration was not included in the clerk's transcript. We
grant her unopposed motion that the record be augmented with a copy of the declaration.
4
Cal. 4th 434, 444-445, 474-475 (Vons).) "'It is well-established that . . . "'"random,"
"fortuitous," or "attenuated" contacts' do not support an exercise of personal jurisdiction.
[Citation.] In analyzing such issues, the courts have rejected any use of "'talismanic
jurisdictional formulas.'" [Citation.] Rather, "'"the facts of each case must [always] be
weighed" in determining whether personal jurisdiction would comport with "fair play and
substantial justice."' [Citation.]" [Citation.]' [Citation.]" (CenterPoint Energy, Inc. v.
Superior Court (2007) 157 Cal. App. 4th 1101, 1117.)
The due process clause protects an individual's liberty interest in not being subject
to the binding judgments of a forum with which he has established no meaningful
"contacts, ties, or relations." (International Shoe Co. v. Washington (1945) 326 U.S. 310,
319.) By requiring that individuals have "fair warning that a particular activity may
subject [them] to the jurisdiction of a foreign sovereign," (Shaffer v. Heitner (1977) 433
U.S. 186, 218 (conc. opn. of Stevens, J.)), the due process clause "gives a degree of
predictability to the legal system that allows potential defendants to structure their
primary conduct with some minimum assurance as to where that conduct will and will
not render them liable to suit" (World-Wide Volkswagen Corp. v. Woodson (1980) 444
U.S. 286, 297).
B. Specific Jurisdiction
Personal jurisdiction may be either general or specific. (Vons, supra, 14 Cal.4th at
p. 445.) Fishman does not contend Michigan had general jurisdiction over Maloney but
contends that, with respect to her obligations to him, Michigan may exercise specific
5
jurisdiction.
Where, as here, it is asserted a forum has specific jurisdiction over an out-of-state
defendant who has not consented to suit there, the due process clause's fair warning
requirement is satisfied if the defendant has "'purposefully directed'" his activities at
residents of the forum (Keeton v. Hustler Magazine, Inc. (1984) 465 U.S. 770, 774), the
litigation results from alleged injuries that "arise out of or relate to" those activities
(Helicopteros Nacionales de Colombia v. Hall (1984) 466 U.S. 408, 414), and "'the
assertion of personal jurisdiction would comport with "fair play and substantial justice"'"
(Vons, supra, 14 Cal.4th at p. 447).
The requirement that a defendant purposefully direct his or her activities at the
forum, or as it is sometimes articulated, purposefully avails himself or herself of the
benefits and protections of the forum, "'focuses on the defendant's intentionality.'"
(Pavlovich v. Superior Court (2002) 29 Cal. 4th 262, 269.) Courts look to the "nature and
quality of the activity in the forum state" and not to the quantity of a defendant's contacts
when determining whether a defendant is subject to specific jurisdiction in a forum. (As
You Sow v. Crawford Laboratories, Inc. (1996) 50 Cal. App. 4th 1859, 1869; see also
World-Wide Volkswagen Corp. v. Woodson, supra, 444 U.S. at p. 297 [whether a
nonresident defendant purposefully availed himself or herself of the benefits and
protections of the forum state is evaluated by whether "the defendant's conduct and
connection with the forum State are such that he [or she] should reasonably anticipate
being haled into court there"].) Once satisfied, this prong ensures a defendant will not be
6
required to defend himself or herself in a jurisdiction by reason of "'random,' 'fortuitous,'
or 'attenuated contacts'" in that forum. (Burger King Corp. v. Rudzewicz (1985) 471 U.S.
462, 475 (Burger King Corp.).)
C. Commercial and Contractual Activities
"[W]ith respect to interstate contractual obligations, we have emphasized that
parties who 'reach out beyond one state and create continuing relationships and
obligations with citizens of another state' are subject to regulation and sanctions in the
other State for the consequences of their activities." (Burger King Corp., supra, 471 U.S.
at p. 473; see Travelers Health Ass'n v. Virginia (1950) 339 U.S. 643, 647; McGee v.
International Life Insurance Co. (1957) 355 U.S. 220, 222-223.)
On the other hand, "[i]f the question is whether an individual's contract with an
out-of-state party alone can automatically establish sufficient minimum contacts in the
other party's home forum, we believe the answer clearly is that it cannot. The Court long
ago rejected the notion that personal jurisdiction might turn on 'mechanical' tests,
[citation], or on 'conceptualistic . . . theories of the place of contracting or of
performance,' [citation]. Instead, we have 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.' [Citations.] It is these factors—prior negotiations and
contemplated future consequences, along with the terms of the contract and the parties'
actual course of dealing—that must be evaluated in determining whether the defendant
7
purposefully established minimum contacts within the forum." (Burger King Corp.,
supra, 471 U.S. at pp. 478-479.)
D. Burden of Proof and Standard of Review
Although when jurisdiction is challenged the defendant is the moving party, the
plaintiff must carry the initial burden of demonstrating facts by a preponderance of
evidence justifying the exercise of jurisdiction by the forum. (In re Automobile Antitrust
Cases I & II (2005) 135 Cal. App. 4th 100, 110 (Automobile Antitrust Cases).)
Importantly, the plaintiff must do more than merely allege jurisdictional facts. The
plaintiff must present evidence sufficient to justify a finding that the forum may properly
exercise jurisdiction over the defendant. (See Sonora Diamond Corp. v. Superior Court
(2000) 83 Cal. App. 4th 523, 540.) "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.] Once the plaintiff satisfies the initial burden of proof of
showing a defendant's minimum contacts in [the forum], the burden shifts to the
defendant to present a compelling case demonstrating that the exercise of jurisdiction by
[the forum's] courts would be unreasonable. [Citations.]" (Automobile Antitrust Cases,
supra, at pp. 110-111.)
"When the trial court rules after hearing conflicting evidence on a factual issue, we
8
must uphold its factual determinations on appeal if substantial evidence supports them.
When the facts are undisputed, the issue of jurisdiction becomes a pure question of law."
(Automobile Antitrust Cases, supra, 135 Cal.App.4th at p. 111.) The ultimate question of
whether it is fair and reasonable for the forum to exercise jurisdiction is a legal
determination subject to our independent review on appeal. (Ibid.)
III
ANALYSIS
Three facts, which Maloney does not dispute, fully and adequately support
Michigan's jurisdiction over her with respect to Fishman's claim: (1) there is no dispute
that in light of paragraph 9 of the parties' agreement, Maloney knew Fishman would be
performing services for her in Michigan; (2) there is no dispute the parties agreement also
provided that all disputes would be governed by Michigan law; and (3) there is no dispute
that, as set forth in Fishman's declaration, Fishman, as well as his employees, in fact
provided those services to Maloney for almost 10 years in Michigan and that Maloney
was in regular communication with Fishman and his employees during that period while
they were in Michigan. Thus, the record shows not only that Maloney had fair notice that
activities would be taking place on her behalf in Michigan and that any disputes would be
governed by Michigan law, but also that the Michigan activities were substantial and long
enduring. Under the holding in Burger King Corp., supra, these circumstances fully
support the validity of the Michigan judgment.
In Burger King Corp., the defendant was the Michigan franchisee of a Florida
9
corporation whose principal offices were in Miami. When the franchisee fell behind in
making payments to the corporation and refused to vacate the franchise location, the
corporation sued the franchisee in Florida under the terms of the parties' 20-year
franchise agreement, which, among other matters, provided that the corporation's
operations were conducted in Miami and disputes would be governed by Florida law.
The court found that the lengthy relationship contemplated by the franchise agreement,
the agreement's reference to the corporation's Florida operations and Florida law, as well
as the parties' actual course of business, which involved regular communication between
the Michigan franchisee and the corporation's Miami office, made it presumptively
reasonable for a Florida court to resolve the corporation's claims. (Burger King Corp.,
supra, 471 U.S. at pp. 480-483.)
The court relied in particular on the "substantial record evidence indicating that
[the franchisee] most certainly knew that he was affiliating himself with an enterprise
based primarily in Florida" as well the franchisee's agreement to be bound by Florida law.
(Burger King Corp., supra, 471 U.S. at p. 480.) The choice of law provision, while not
sufficient by itself to sustain jurisdiction, when combined with the franchisee's lengthy
relationship with the Florida corporation, reinforced the franchisee's "deliberate
affiliation with the forum State and the reasonable foreseeability of possible litigation
there." (Id. at p. 482.)
The court further found that Florida had a legitimate interest in the dispute and that
any inconvenience the franchisee endured by virtue of litigating the claim was not
10
sufficient to deprive the Florida court of jurisdiction. (Burger King Corp., supra, 471
U.S. at pp. 482-484.)
Here, the record is, in material respects, indistinguishable from Burger King Corp.
Maloney entered into a substantial contract with a Michigan resident knowing his
services and the services of his employees would be provided in Michigan; she agreed
their disputes would be resolved under Michigan law, and she maintained that
relationship for a substantial period of time. These circumstances show that, like the
franchisee in Burger King Corp., Maloney purposely availed herself of the benefits and
protections of Michigan's laws and therefore could reasonably foresee the possibility she
would be compelled to litigate her claims there.
Moreover, Michigan had substantial legitimate interests in holding Maloney
accountable in its courts. The amount in dispute was substantial and implicated not only
Fishman's interests but the interests of his employees.
In sum, the trial court did not err in denying Maloney's motion.
The trial court's order is affirmed. Cost of appeal are awarded to Fishman.
BENKE, Acting P. J.
WE CONCUR:
HUFFMAN, J.
HALLER, J.
11