Capital Asset Exchange & Trading LLC vs. World Tech Co. LTD

California law permits service of process on a foreign corporation by delivery of the summons and complaint to the foreign corporation’s “general manager in this state.” (See Corp. Code, § 2110; Code Civ. Proc., §416.10, subd. (d).) An American subsidiary of a foreign corporation is its “general manager in this state” for purposes of service of process. (See Yamaha Motor Co., Ltd. v. Superior Court (2009) 174 Cal.App.4th 264, 268, 274 (Yamaha).) In addition, a representative in “ample regular contact” with the corporation is a general manager in California where it is reasonably certain that the representative will inform the corporation that it was served. (See id. at p. 273, citing Cosper v. Smith & Wesson Arms Co. (1959) 53 Cal.2d 77, 83 (Cosper).)

The evidence submitted by Capital Asset is insufficient in this court’s opinion to establish that World Tech USA is a “general manager in this state” such that service on World Tech USA constitutes valid service on World Tech Japan. First, the court is not persuaded by Capital Asset’s use of Yamaha. (Opposition, p. 6:8-20.) Capital Asset does not provide evidence to the court indicating that World Tech USA is a subsidiary of World Tech Japan or that World Tech Japan owns, or even has an ownership interest in, World Tech USA. (See Yamaha, supra, 174 24 Cal.App.4th at p. 271 [“[W]e now turn to whether California law . . . provides for proper service of ‘process on a foreign corporation by serving its domestic subsidiary which, under state law, is the foreign corporation’s involuntary agent for service of process.’ [Citation.]”].)

It is therefore unclear to the court that Yamaha applies to the circumstances at hand. In fact, as the court has discussed, World Tech Japan has submitted evidence in support of its motion that World Tech Japan is a Japanese corporation, World Tech USA is a separate entity incorporated in Florida, and neither World Tech USA nor World Tech Japan have ownership interests in one another. (Naseer Declaration, ¶¶ 2-12.)

Second, Capital Asset argues that an entity does not need to be a subsidiary to be a “general manager” of a foreign corporation under California Corporations Code section 2110. (Opposition, pp. 6:21-7:12, citing Cosper, supra, 53 Cal.2d at pp. 79-84.) Cosper is distinguishable from the facts at hand. In Cosper, a plaintiff in California attempted to serve the defendant, a Massachusetts corporation, by serving the defendant’s “manufacturer’s representative,” a party that promoted the defendant’s business in California and distributed “general advertising matter furnished” by the defendant. (Cosper, supra, 53 Cal.2d at pp. 79- 81.)

The Court of Appeal considered whether the manufacturer’s representative was the “general manager” in California for the defendant, holding that because the “manufacturer’s representative actively engaged in promoting the sales of [the defendant] and earning commissions through such sales” it “would have ample regular contact with [the defendant] . . . the essential factor is that [the manufacturer’s representative] in his selling and advertising activities was performing services for [the defendant] and providing it with the opportunity for regular contact with its customers and a channel for a continuous flow of business into the state.” (Id. at pp. 83-84, emphasis added, internal citations and quotation marks omitted.)

These facts are not present here. The evidence submitted by Capital Asset does not establish that World Tech USA had “regular contact” with World Tech Japan customers in California or provided World Tech Japan a “channel for a continuous flow of business” into California. (See 25 Caper, supra, 53 Cal.2d at p. 84 [“In short, the arrangement of [the defendant] with [the manufacturer’s representative] appears, in the light of the president’s affidavit, to have given [the defendant] substantially the business advantages that it would have enjoyed if it conducted its business through its own offices or paid agents in the state . . . and such arrangement was sufficient to constitute [the manufacturer’s representative] the general manager in this State . . .”], internal quotation marks and citations omitted, emphasis added.)

Instead, it shows that Capital Asset purchased a product from World Tech Japan, Capital Asset communicated with David Naseer regarding this purchase, and World Tech Japan issued an invoice stating that the beneficiary of a wire transfer from Capital Assets would be “World Technology U.S.A. LLC” (a Florida corporation with “its principal place of business in St. Petersburg, Florida”). (Declaration of Ryan Jacob in Support of Capital Asset’s Opposition, ¶¶ 1-19; see also Complaint, ¶ 8.) Nor, for that matter, does the court finds that the evidence submitted by Capital Asset indicates “ample, regular” contact between World Tech Japan and World Tech USA. (See Cosper, supra, 53 Cal.2d at p. 83.)

The court GRANTS World Tech Japan’s motion to quash. Capital Asset argues that it validly served World Tech USA as World Tech Japan’s “general manager” under Code of Civil Procedure section 416.10 and Corporations Code section 2110. The court, for reasons discussed above, disagrees and finds that Capital Asset has not met its burden “to prove facts requisite to the effective service.” (Sheard, supra, 40 Cal.App.3d at p. 211.) Given this, the court need not address the parties’ arguments under the Hague Convention.