Gordon v. Cool Springs Financial Group CA4/1 ( 2024 )

Filed 10/28/24 Gordon v. Cool Springs Financial Group 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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
MATTHEW GORDON, D082117
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2022-
00023508-CU-BT-CTL)
COOL SPRINGS FINANCIAL GROUP,
LLC,
Defendant and Respondent.
APPEAL from an order of the Superior Court of San Diego County,
Carolyn Caietti, Judge. Affirmed.
Metsch & Mason, Michael J. Mason and Paul S. Metsch; Finch,
Thornton & Baird and Michael J. Mason, for Plaintiff and Appellant.
Locke Lord and Daniel A. Solitro, for Defendant and Respondent.
INTRODUCTION
Matthew Gordon appeals an order granting a motion to quash service
of summons for lack of personal jurisdiction. The trial court determined it
did not have personal jurisdiction over Cool Springs Financial Group, LLC, a
limited liability company registered in Delaware and headquartered in
Tennessee. We agree with the trial court. Therefore, we affirm the order.
FACTUAL AND PROCEDURAL BACKGROUND
Cool Springs is a limited liability company organized in Delaware. Its
principal place of business is in Tennessee. Cool Springs is not licensed to do
business in California. It has no offices in California. It owns no property in
California. Cool Springs has one employee who resides in California, but that
individual works remotely. Cool Springs’ only alleged California connection
is through a purported relationship with defendant Richard Wira, who lives
in California.
Since 2013, Wira has acted as Gordon’s life insurance agent. In
late 2016, Wira recommended to Gordon an alternative method of purchasing
an Accordia life insurance policy through the Cool Springs’ Premium Finance
strategy that involved financing by Wintrust Life Finance. Thus, Cool
Springs would be the plan administrator, not the lender. Wira met with
Gordon and presented him with a letter and brochure detailing the Cool
Springs finance strategy. The letter, however, was not signed, written,
reviewed, or authorized by Cool Springs. Cool Springs did not see the letter
until 2022 after the dispute in the pending lawsuit arose. The “Introduction”
in the brochure was cut and pasted from a 2002 Cool Springs brochure. Cool
Springs did not authorize Wira, or anyone else, to use information from the
2002 brochure.
In 2017, at the request of Wira, Cool Springs prepared a “Cool Springs
Financial Strategy” chart.1 To finalize Gordon’s purchase of the Accordia
1 Cool Springs contends Wira has never been one of its employees.
Nonetheless, in a 2017 e-mail, Wira is referred to as an agent of Cool Springs.
In February 2018, Wira became a director at Cool Springs. That position,
however, is as an independent contractor of Cool Springs and not an
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Life policy, John F. McCarthy, one of Gordon’s life insurance agents, working
with Wira, signed the chart. Cool Springs was unaware that the chart was
signed by McCarthy, who was never an employee of Cool Springs.
Additionally, Cool Springs was unaware that the financial strategy chart
would be used as a purported agreement between Wira and Gordon. Gordon
alleges that at some point later, Wira prepared a fraudulent chart, removing
McCarthy’s signature and adding his own. Gordon argues that the letter and
brochure Wira provided misrepresented the Cool Springs financial strategy.
The primary alleged misrepresentations being: (1) real property could be
used as the collateral; (2) each year the past collateral would be returned,
and “new” collateral would be posted; and (3) other than minimal interest
payments in year two, Gordon would never write a check to pay out of pocket.
Gordon claims these representations convinced him to purchase the Accordia
life insurance policy in September of 2017. However, all the alleged
misrepresentations to Gordon in the Complaint—both before and after his
acquisition of the Accordia life insurance policy—were made by either Wira or
McCarthy, both of whom Gordon acknowledges were his life insurance
agents.
In 2021, Wira urged Gordon to forfeit the Accordia life insurance policy
and buy a new Penn life insurance policy. Gordon ultimately forfeited the
Accordia life insurance policy after deciding not to post the required collateral
for the premium payments.
In 2022, Gordon filed an unverified complaint alleging claims for:
(1) breach of fiduciary duty (against only defendant Richard Wira);
(2) promissory fraud; (3) intentional misrepresentation; (4) fraudulent
employee. Additionally, there is no evidence in the record that Wira acted as
Cool Springs representative or was instructed by Cool Springs to do so.
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concealment; (5) negligent misrepresentation; (6) negligence; and
(7) accounting. Then, Cool Springs filed its motion to quash service of
summons. After the initial hearing on the motion, the trial court issued a
minute order, continuing the hearing for the limited purpose of conducting
jurisdictional discovery of the issue of specific personal jurisdiction over Cool
Springs. The court also ordered supplemental briefing on the motion to
quash.
The parties conducted jurisdictional discovery pursuant to the court’s
order. Cool Springs filed its supplemental memorandum of points and
authorities in support of motion to quash service of summons along with the
supplemental declaration from its Chief Operating Officer, Kevin Wang.
Gordon filed his supplemental opposition supported by a declaration from his
counsel of record, Michael J. Mason. Finally, Cool Springs filed its reply.
After entertaining oral argument, the court entered judgment in favor
of Cool Springs. Gordon timely filed a notice of appeal.
DISCUSSION
A. Relevant Legal Principles
California’s long-arm statute authorizes California courts to exercise
jurisdiction over nonresidents on any basis that is consistent with the
Federal or State Constitution. (Code Civ. Proc., § 410.10.) A state court’s
assertion of personal jurisdiction must comport with the federal due process
clause. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434,
444–445.) Thus, to meet the requirements of the due process clause, state
courts can only assert personal jurisdiction over a nonresident defendant, a
defendant who has not been served with process within the state, if two
factors are satisfied. First, the nonresident defendant must have certain
minimum contacts with the state. Second, the California court asserting
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jurisdiction over the nonresident defendant would not violate “ ‘ “traditional
notions of fair play and substantial justice.” ’ ” (Id. at p. 444, quoting
International Shoe Co. v. Washington (1945) 326 U.S. 310, 316.)
When deciding if a nonresident defendant meets the minimum contacts
standard, the court considers whether the quality and nature of the
defendant’s activity is such that it would be reasonable and fair to require the
defendant to defend themself against a lawsuit in that state. (Pavlovich v.
Superior Court (2002) 29 Cal.4th 262, 268 (Pavlovich).) Minimum contacts
determinations are fact specific. (Ibid.)
For purposes of the minimum contacts analysis, there are two types of
personal jurisdiction: general jurisdiction and specific jurisdiction.
(Snowney v. Harrah's Entertainment, Inc. (2005) 35 Cal.4th 1054, 1062.)
A California court has general jurisdiction over an individual defendant if the
individual defendant is domiciled in that state. (Bristol-Meyers Squibb Co. v.
Superior Court (2017) 582 U.S. 255, 262 (Bristol-Meyers).) Therefore, a court
has general jurisdiction over a corporation if the corporate defendant is
considered “at home” in that state. (Ibid.) If general jurisdiction exists, the
court may hear any claim against that defendant even if the activities that
gave rise to the claim occurred in a different state. (Ibid.) However, Gordon
does not claim the superior court had general jurisdiction over Cool Springs.
Accordingly, we focus on whether the exercise of specific jurisdiction over
Cool Springs would comport with due process.
For a state court to have specific jurisdiction, the suit must arise out of
or relate to the defendant’s contacts with the forum state. (Bristol-Meyers,
supra, 582 U.S. at p. 262.) To meet this standard, the defendant must
purposefully avail themselves to the forum state meaning that there must be
a connection between the forum state and the underlying controversy,
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principally, an activity or occurrence that takes place in the forum state and
is therefore subject to the state’s regulation. (Ibid.) Thus, specific
jurisdiction is limited to adjudicating issues that are derived from or relate to
the controversy that establishes jurisdiction. (Ibid.)
Courts may exercise specific jurisdiction over a nonresident defendant
who has not been served with process within the forum state when three
requirements are met. “First, the defendant must have purposefully availed
himself of the privilege of conducting activities in this state, thereby invoking
the benefits and protections of California’s laws. Second, the claim or
controversy must relate to or arise out of the defendant’s forum-related
contacts. Third, the exercise of jurisdiction must be fair and reasonable and
should not offend notions of fair play and substantial justice.” (Rivelli v.
Hemm (2021) 67 Cal.App.5th 380, 392.)
When an out-of-state defendant moves to quash service for lack of
personal jurisdiction, it is the plaintiff’s burden to establish the first two
elements by a preponderance of the evidence. (Jacqueline B. v. Rawls Law
Group, P.C. (2021) 68 Cal.App.5th 243, 253 (Jacqueline B.).) If the plaintiff
meets its burden for the first two elements, then the burden shifts to the out-
of-state defendant to convince the court that asserting personal jurisdiction
would not comport with fair play and substantial justice. (Ibid.) To prove its
burden, the plaintiff must do more than merely allege jurisdictional facts.
(In re Automobile Cases I & II (2005) 135 Cal.App.4th 100, 110 (In re
Automobile Cases I & II ).) The plaintiff must provide affidavits and other
authenticated documents with specific evidentiary facts that are sufficient to
permit the court to form an independent conclusion and find that the forum
state can exercise jurisdiction over the defendant. (Ibid.)
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In reviewing a trial court’s dismissal for lack of personal jurisdiction,
we independently review the court’s legal rulings and its application of the
law to its factual findings but review those factual findings only for
substantial evidence. (Jacqueline B., supra, 68 Cal.App.5th at p. 251.)
B. Gordon Failed to Establish Purposeful Availment
Gordon argues that Cool Springs purposefully availed itself to
California’s benefits due to two contacts that Cool Springs had with Wira,
a San Diego based insurance agent.2 According to Gordon, the purposeful
availment element was satisfied because of e-mail correspondence between
Wira and Cool Springs employees as well as the financial strategy chart that
Cool Springs created, which Gordon alleges show “a pattern of Cool Springs
working directly with and through Wira for its clients . . . in San Diego.” It is
not disputed that these contacts between Wira and Cool Spring occurred.
However, as we explain post, they fall short of establishing that Cool Springs
purposefully availed itself of the privilege of conducting activities in
California.
With respect to Gordon’s first argument about e-mails between Cool
Springs and Wira, Gordon relies on a single e-mail chain from 2017,
2 Gordon’s opening and reply briefs rely almost entirely on
unauthenticated evidence that cannot form the basis for finding personal
jurisdiction. (In re Automobile Cases I & II, supra, 135 Cal.App.4th at
p. 110.) Gordon’s complaint as well as exhibits 3-7 of the Gordon declaration
and the entirety of the Mason declaration are unverified. Cool Springs
challenged the admissibility of the exhibits attached to the Gordon and
Mason declarations in its reply, supplemental brief in support of its motion to
quash service of summons, and supplemental reply. The evidentiary
challenge was also raised during the hearing on the motion. We acknowledge
Cool Spring’s objection to the evidence but ultimately conclude that Gordon’s
reliance on unauthenticated documents is of no consequence as the evidence
provided in the record is not sufficient to permit the trial court to exercise
personal jurisdiction over Cool Springs.
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containing two e-mails dated August 21, 2017, and September 5, 2017,
between Nicole Watson of Cool Springs and Wira. In this e-mail exchange,
Wira was asking Cool Springs if he could use concepts from the Cool Springs
website to “build out a website” for his own, independent company, Equote.
In response to Wira’s inquiry, Watson responded that Wira may use the
website “as inspiration” but she “can’t grant access to it.” These two e-mails
do not provide evidence that Cool Springs has purposefully availed itself to
the forum. The e-mail exchange demonstrates Wira reaching out to and
soliciting information from Cool Springs in Tennessee. We read nothing in
this e-mail that even hints as Cool Springs seeking Wira’s help to generate
business in California. Moreover, the e-mail does not discuss whatsoever the
Accordia life insurance policy purchased by Gordon. This standalone
correspondence is not relevant to the allegations in the complaint and
certainly does not demonstrate a connection between Cool Springs and
California.
Gordon also relies on dozens of e-mails between Cool Springs, Wira,
and Gordon, all of which are dated from the year 2020 or later.3 These
e-mails were written at least three years after the alleged fraud in 2017 that
Gordon claims to have relied on to purchase the Accordia life insurance
policy. Even if these e-mails were sufficient to prove purposeful availment in
2020, they cannot support Gordon’s claim here that Cool Springs purposely
availed itself of the privilege of conducting activities in California in 2017. In
other words, these e-mails sent three years after the alleged
3 Gordon fails to cite to specific e-mails that are dated from 2020 or later
that show purposeful availment. Rather Gordon references generally “the
dozens of e-mails attached to the Supplemental Mason Declaration and
discussed in the accompanying Supplemental Opposition Memorandum of
Points and Authorities.”
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misrepresentations occurred are insufficient to satisfy the purposeful
availment element. Indeed, these 2020 communications related to Cool
Springs’ performance of routine renewal services for the benefit of its
industry partner Wintrust and other independent parties unaffiliated with
Cool Springs. That is, Cool Springs was acting as a vendor on behalf of its
industry partners relating to the renewal process, not on behalf or for the
benefit of Gordon or Wira who reside in California. Therefore, the 2020
e-mails do not show that Cool Springs was purposefully availing itself of
California’s benefits.
With respect to Gordon’s second argument regarding the financial
strategy chart that Cool Springs provided to Wira, the financial strategy
chart also does not prove that Cool Springs purposefully availed itself of the
privilege of conducting activities in California. The financial strategy chart
was solicited from Cool Springs by Wira without any indication that it would
be used as a purported agreement between Wira and Gordon. Cool Springs
did not solicit anything from Wira in California, and Cool Springs never
entered into any contract with either Wira or Gordon relating to the Accordia
life insurance policy. Moreover, Cool Springs was not aware that the chart
was purportedly signed by Jack McCarthy—a colleague of Wira’s and an
agent for Gordon, not an employee of Cool Springs. Additionally, there is no
evidence in the record that Cool Springs knew Wira intended to have Gordon
sign the chart. Therefore, the financial strategy chart does not support
Gordon’s argument that he satisfied his burden in establishing the
purposeful availment element.
Additionally, Gordon claims that Wira is an ostensible agent of Cool
Springs and such agency proves Cool Springs purposefully availed itself to
California. An agent is a person who represents a principal in dealings with
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third parties. (Rogers v. Roseville SH, LLC (2022) 75 Cal.App.5th 1065,
1074.) There are two types of agency relationships: actual and ostensible.
(Ibid.) A relationship of actual agency arises when the principal indicates
that the agent is to act for them then the agent must agree to act on the
principal’s behalf and be subject to the principal’s control. (Franklin v. Santa
Barbara Cottage Hospital (2022) 82 Cal.App5th 395, 403.) Wira has never
been an employee of Cool Springs and was not authorized to act on behalf of
Cool Springs or otherwise act as its representative in any way. Thus, Wira
was not an actual agent of Cool Springs. An ostensible agency arises when
the third party reasonably believes that the agent has the authority to act on
the principal’s behalf based on the principal’s conduct. (Rogers, at p. 1074.)
Ostensible agency requires the principal to intentionally communicate the
agency relationship to the third party or to negligently cause the third party
to believe that there is an agency relationship. (Howell v. Courtesy
Chevrolet, Inc. (1971) 16 Cal.App.3d 391, 401.) However, there is no evidence
that Cool Springs, intentionally or negligently, informed Gordon that Wira
acted as its agent in relation to Wira’s underlying wrongful conduct alleged in
the Complaint.
To prove ostensible agency, Gordon relies on a 2017 e-mail exchange in
which Natalie Watson, an employee of Cool Springs, refers to Wira as an
agent. This standalone correspondence between Wira and Cool Springs does
not prove that Wira was an agent. The subject of the e-mail exchange is
about Cool Spring’s website, not the Accordia life insurance policy or the
allegations that gave rise to the underlying Complaint. Additionally, because
Gordon was not a recipient of this e-mail, there is no indication in the record
that Cool Springs intended the e-mail as a representation to Gordon, based
on which he might conclude Wira was Cool Springs’ agent in 2017.
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Gordon also argues that Wira becoming a director at Cool Springs
in 2018 and Cool Springs posting Wira’s photo on its website in 2021 further
proves that Wira was an agent of Cool Springs. Gordon claims that “by
naming Wira as one of its ‘Directors,’ Cool Springs is leading the world,
including [Gordon] to believe . . . that Wira is an agent of Cool Springs.”
However, Wira was made a director in 2018 and his photo was posted on
their website in 2021 which happened, respectively, one and four years after
Gordon had purchased the Accordia life insurance policy in 2017. As a
director, Wira was an independent contractor and was not authorized to act
on behalf of Cool Springs or otherwise act as its representative in any way.
Even if Wira being named “Director” and having his photograph posted on
Cool Spring’s website would lead one to believe that Wira was an agent of
Cool Springs, there is no evidence in the record that supports the conclusion
that Wira was an agent of Cool Springs at the time the alleged
misrepresentations were made. Simply put, we find no evidence that Wira
acted as an agent of Cool Springs in California at the time the alleged
misrepresentations and fraud occurred. Therefore, the trial court was correct
to conclude, “Wira did not act on behalf of Cool Springs at any time.”
Based on the record, there is no evidence that Cool Springs
“deliberately engage[d] in any significant activities within California”
necessary to find it purposefully availed itself of the forum for specific
jurisdiction. (See Bombardier Recreational Products, Inc. v. Dow Chemical
Canada ULC (2013) 216 Cal.App.4th 591, 604.) Cool Springs’ minimal and
insignificant contacts with California only occurred because Wira, a third
party residing in California, solicited Cool Springs’ help, which is not
sufficient for minimum contacts because the relationship with the forum
state must arise out of contacts that the defendant itself created with the
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forum state. (Walden v. Fiore (2014) 571 U.S. 277, 284.) Cool Springs,
therefore, cannot be hauled into a California court based on these contacts
that resulted from unilateral decisions made by a third party. (See Pavlovich,
supra, 29 Cal.4th at p. 269; Bombardier, at p. 604.) Because Gordon failed to
satisfy his burden and make a prima facie showing of purposeful availment
for the purposes of satisfying specific jurisdiction, we need not consider any of
the other elements of specific personal jurisdiction.
DISPOSITION
The order is affirmed. Cool Springs is entitled to its costs on appeal.
HUFFMAN, Acting P. J.
WE CONCUR:
DO, J.
BUCHANAN, J.
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