Pacific Corp. Group Holdings v. Morris CA4/1 (2013) · DecisionDepot
Pacific Corp. Group Holdings v. Morris CA4/1
California Court of Appeal Dec 2, 2013 No. D062384Unpublished
Filed 12/2/13 Pacific Corp. Group Holdings v. Morris CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
PACIFIC CORPORATE GROUP D062384 HOLDINGS, LLC,
Cross-complainant and Appellant, (Super. Ct. No. 37-2010-00084760-CU-BC-CTL) v.
HENRY MORRIS et al.,
Cross-defendants and Respondents.
APPEALS from orders of the Superior Court of San Diego County, Ronald L.
Styn, Judge. Affirmed.
Pettit Kohn Ingrassia & Lutz, Douglas A. Pettit and Jenna H. Leyton-Jones for
Cross-complainant and Appellant.
Procopio, Cory, Hargreaves & Savitch and J. Christopher Jaczko for Cross-
defendant and Respondent Morris.
Jay Willie Henderson; Law Offices of Jay Freedman and Jay Brett Freedman for
Cross-defendant and Respondent Loglisci.
Wingert, Grebing, Brubaker & Juskie, Alan K. Brubaker; Schulte Roth & Zabel,
and Martin L. Perschetz for Cross-defendants and Respondents Hall and The Clinton
Group.
I.
INTRODUCTION
In this case, we consider whether the trial court properly determined that it lacked
personal jurisdiction over four cross-defendants, Henry Morris, George Hall, The Clinton
Group, and David Loglisci (collectively respondents), with respect to several tort claims
brought against them by appellant Pacific Corporate Group Holdings, LLC (PCGH). We
conclude that the trial court properly determined that it lacked personal jurisdiction over
respondents. Accordingly, we affirm the court's orders granting respondents' motions to
quash for lack of personal jurisdiction.
II.
FACTUAL AND PROCEDURAL BACKGROUND
A. PCGH's first amended cross-complaint
PCGH is a limited liability company specializing in advising institutional investors
with respect to private equity investments. After PCGH's former member, Stephen
Moseley, filed a lawsuit against it, PCGH filed a first amended cross-complaint against
Moseley alleging five tort causes of action, including civil violations of the Racketeer
2
Influenced and Corrupt Organizations Act (18 U.S.C. § 1962(c)), breach of fiduciary
duty, fraud, intentional interference with economic relations, and unfair competition.1
All of PCGH's claims are based on Moseley's alleged acts while a member of
PCGH that had the effect of involving PCGH in an "Illegal Kickback Scheme" designed
to defraud the New York State Common Retirement Fund (NYSCRF). According to
PCGH, Moseley engaged in an illegal conspiracy with Morris2 and with Loglisci, the
former chief investment officer of the NYSCRF, among others, without PCGH's
knowledge. PCGH claims that the conspiracy involved providing Morris with a secret
five percent interest in an entity called Strategic Co-Investment Partners, L.P. (SCIP), a
joint venture that PCGH was forming in order to make private equity investments for
NYSCRF, in exchange for providing additional funding from NYSCRF. According to
PCGH, the purpose of the scheme was to enrich certain members of the conspiracy,
including Loglisci and Morris. PCGH alleged that Moseley was told about the plan to
include Morris as a secret participant in the joint venture at a meeting in Napa, California
(Napa Meeting). PCGH further claimed that Moseley concealed his knowledge of the
"Illegal Kickback Scheme" from PCGH. According to PCGH, the New York Attorney
General's office conducted an investigation into the scheme, and, as a result of this
1 PCGH also filed a breach of contract cause of action against Moseley based on his alleged failure to abide by an agreement to attempt to settle certain disputes by mediation or arbitration. The breach of contract cause of action is not relevant to this appeal.
2 Although PCGH does not identify Morris by title in its cross-complaint, in its oppositions to the motions to quash, PCGH asserted that Morris was a political advisor to the New York State Comptroller. 3
investigation, PCGH suffered significant damages, including having to pay $2.1 million
in restitution to the NYSCRF. PCGH later amended its cross-complaint to name
Loglisci, Morris, Hall, and The Clinton Group3 as Roe defendants.4
B. The motions to quash
Respondents filed motions to quash for lack of personal jurisdiction.5 In their
brief in support of their joint motion, Hall and The Clinton Group noted that Hall is a
resident of New York and New Jersey, and is the chief executive officer of The Clinton
Group, a Delaware corporation having its principal place of business in New York.
Hall and The Clinton Group acknowledged that Estes Capital, L.P. (Estes Capital),
an entity established by Hall, and affiliated with The Clinton Group, was a partner in a
joint venture with PCGH, related to SCIP. However, Hall and The Clinton Group
maintained that the SCIP transaction did not provide a sufficient basis for the trial court's
exercise of personal jurisdiction over either of them.6 Hall and The Clinton Group
3 Although not alleged in the amended cross-complaint, it is undisputed that Hall signed two agreements related to the SCIP transaction and that Hall is the chief executive officer of The Clinton Group.
4 It appears to be undisputed that through these amendments, PCGH sought to assert each of the five tort causes of action in the first amended cross-complaint against respondents.
5 Hall and The Clinton Group filed a joint motion to quash. Loglisci and Morris filed additional separate motions to quash.
6 Specifically, Hall and The Clinton Group stated, "Mr. Hall formed an entity known as [Estes Capital] which together with [PCGH] and a third entity known as W. 4
argued, "[A]part from [PCGH's] allegation regarding the Napa [M]eeting, none of the . . .
activity [alleged in the first amended cross-complaint] . . . has anything to do with
California." Hall and The Clinton Group further argued that there were no "allegation[s]
as to what Mr. Hall said, was told, overheard or knew during [the Napa Meeting]."
In their briefs in support of their motions to quash, Morris and Loglisci argued that
they are nonresidents of California. Loglisci filed a brief that "mirror[ed] the . . . filing of
[Hall and The Clinton Group]," in which he argued that the first amended cross-
complaint's allegations related to the SCIP transaction were insufficient to establish
personal jurisdiction over him in California. Loglisci also argued that he had not
attended the Napa Meeting, which he contended was the only allegation from the first
amended cross-complaint that involved California. Morris maintained that he had never
communicated or spoken with Moseley, that he had never communicated with PCGH,
and that "PCGH's allegations of a conspiracy cannot serve as the basis for imputing upon
Morris whatever forum related contacts others may have had."
PCGH filed oppositions to the motions to quash in which it contended that the trial
court had specific personal jurisdiction7 over respondents. PCGH argued that Hall,
Investment, LLC formed a joint venture called Strategic Co-Investment Partners GP, L.P. . . . , which served as the general partner of [Strategic Co-Investment Partners L.P.]."
7 "Specific jurisdiction results when the defendant's contacts with the forum state, though not enough to subject the defendant to the general jurisdiction of the forum, are sufficient to subject the defendant to suit in the forum on a cause of action related to or arising out of those contacts." (Virtualmagic Asia, Inc. v. Fil-Cartoons, Inc. (2002) 99 Cal.App.4th 228, 238 (Virtualmagic Asia, Inc.), italics added.)
5
Moseley, and a person named Barrett Wissman had attended the Napa Meeting, during
which the alleged "Illegal Kickback Scheme" was planned. PCGH contended that
Wissman had acted as Morris's and Loglisci's agent, and that Wissman's actions could
therefore be attributed to Morris and Loglisci for purposes of determining the
jurisdictional issues before the court. PCGH further argued that after the Napa Meeting,
Hall and Wissman engaged in e-mail communications with Moseley negotiating the
terms of the SCIP transaction, and that Hall and Loglisci had later signed agreements
related to the transaction. PCGH maintained that these activities supported the court's
exercise of personal jurisdiction over respondents. In the alternative, PCGH requested
that the trial court continue the hearings on the motions to quash to permit PCGH to
conduct additional discovery concerning the jurisdictional issues in question.8
After receiving reply briefs from Morris as well as from Hall and The Clinton
Group, the trial court issued tentative rulings denying PCGH's request to continue the
hearings and granting the motions to quash. The following day, the trial court held a
hearing on the motions to quash, confirmed its tentative rulings, and entered minute
orders granting the motions.
In its order granting Hall and The Clinton Group's motion, the court reasoned in
part:
8 PCGH supported its oppositions with various documents, including excerpts of Wissman's and Moseley's depositions, e-mails from Moseley and Wissman related to the SCIP transaction, a declaration from PCGH's chief executive officer, and two agreements related to the SCIP transaction. 6
"[T]here is no evidence that Hall was advised of the 5% agreement at the Napa [M]eeting. Even assuming that Hall participated in the alleged Napa [M]eeting and that Hall had knowledge of Morris' involvement, such evidence does not establish that Hall and [The] Clinton Group 'purposefully availed' themselves of forum benefits in California . . . . As pled, and considering the evidence before the court, the alleged 'Illegal Kickback Scheme' was designed to harm the NYSCRF and to benefit Morris. Neither the NYSCRF nor Morris are California residents. In particular[,] the complaint specifically alleges that the purpose of the alleged 'conspiracy' 'was to enrich the Morris Group by requiring some investment managers to make payments to the Morris Group as a condition of doing business with NYSCRF' [citation]. There is no allegation or evidence of any intent to harm California resident PCGH. Under these circumstances, the Court finds the harm allegedly suffered by PCGH by virtue of the fine paid, attorney's fees paid, and alleged loss of business, is too attenuated to confer jurisdiction over Hall and [The] Clinton Group in California."
In its orders granting Loglisci's and Morris's motion to quash, the trial court
employed similar reasoning. The court also expressly found that PCGH failed to
establish that Wissman was acting as either Loglisci's or Morris's agent so as to establish
jurisdiction over Loglisci or Morris based on Wissman's actions in California.
C. PCGH's appeals
PCGH appeals from the trial court's orders granting the motions to quash. PCGH
contends that the trial court erred in granting the motions to quash9 and in denying its
requests for a continuance of the hearings to allow it to conduct additional discovery.
9 As discussed in greater detail in parts III.A.3.a.ii. and III.A.3.b.iii., post, although the trial court made a number of factual findings relevant to its determination of whether it could exercise personal jurisdiction over respondents, PCGH raises no challenges to the court's factual findings in this appeal, including those findings that undermine PCGH's contentions on appeal. 7
III.
DISCUSSION
A. The trial court did not err in granting respondents' motions to quash
1. Burdens of proof and standards of review
"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 Companies, Inc. v. Seabest Foods, Inc. (1996)
14 Cal.4th 434, 449 (Vons).)
2. General principles of personal jurisdiction
"California's courts may exercise personal jurisdiction over a nonresident
defendant on any basis not inconsistent with the Constitution of this state or the United
States. [Citations.] Personal jurisdiction over a nonresident defendant served with
process outside the state satisfies constitutional due process requirements 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." (Doe v. Roman Catholic
Two forms of personal jurisdiction exist—general jurisdiction and specific
jurisdiction. (Doe, supra, 177 Cal.App.4th at p. 217.) Only specific jurisdiction is at
issue in this case. "[A] defendant may be subject to specific jurisdiction, meaning
jurisdiction in an action arising out of or related to the defendant's contacts with the
forum state. [Citations.] Specific jurisdiction depends on the quality and nature of the
defendant's forum contacts in relation to the particular cause of action alleged. [Citation.]
[¶] A nonresident defendant is subject to specific personal jurisdiction only if (1) the
defendant purposefully availed itself of the benefits of conducting activities in the forum
state; (2) the controversy arises out of or is related to the defendant's forum contacts; and
(3) the exercise of jurisdiction would be fair and reasonable. [Citations.] 'These
guidelines are not susceptible of mechanical application, and the jurisdictional rules are
not clear-cut. Rather, a court must weigh the facts in each case to determine whether the
defendant's contacts with the forum state are sufficient. [Citations.]' " (HealthMarkets,
Inc. v. Superior Court (2009) 171 Cal.App.4th 1160, 1167 (HealthMarkets, Inc.).)
3. Application
a. Hall and The Clinton Group
i. The bases on which PCGH contends that the trial court may exercise specific jurisdiction over Hall and The Clinton Group
PCGH contends that the trial court may exercise specific jurisdiction over Hall and
The Clinton Group based on the following facts: Hall was present at the Napa Meeting at
which the SCIP transaction was discussed; Hall was the president, chief executive officer,
and director of The Clinton Group at the time he attended the Napa Meeting; Hall used
9
his e-mail address from The Clinton Group to engage in discussions with Moseley
concerning the SCIP transaction after the Napa Meeting; and Hall signed two agreements
related to the SCIP transaction.10 PCGH also appears to suggest that Hall falsely signed
an "Officer's Certificate," in which Hall stated that there were no undisclosed parties to
the SCIP transaction.
ii. The trial court's findings
In its order granting Hall and The Clinton Group's motion to quash, the trial court
made numerous findings, including the following:
In the past 20 years, Hall has worked continuously in New York and has resided in New York or New Jersey;
The Clinton Group is a Delaware corporation with its principal place of business in New York;
"[T]here is no evidence that Hall was advised of the 5% agreement at the Napa [M]eeting";
"There is no allegation or evidence of any intent to harm California resident PCGH";
"[There is an] absence of any evidence that any matter discussed during such alleged meeting [in California] was designed to cause harm to California resident PCGH";
"PCGH fails to set for[th] any evidence establishing that the 'focal point of the tort and the brunt of the harm' was felt in California";
10 PCGH also suggests in its brief that Hall "solicit[ed] California investment funds." However, PCGH provides no citation to the record to support this assertion. The contention is thus forfeited. (See, e.g., Provost v. Regents of University of California (2011) 201 Cal.App.4th 1289, 1305 ["We are not required to comb the record to locate evidence substantiating plaintiff's recitation. [Citation] His failure to comply with these requirements forfeits this claim"].) 10
"[T]here is no evidence that the Officer's Certificates were false or that Hall and [The] Clinton Group intended that signing of the Officer's Certificates would cause harm to PCGH."
PCGH does not mention any of these findings in its opening brief, and does not
attempt to demonstrate that there is not substantial evidence to support them.11
iii. The trial court properly determined that it lacked personal jurisdiction over Hall and The Clinton Group
We consider first whether PCGH presented evidence "demonstrating facts
justifying the exercise of jurisdiction" over Hall. (Vons, supra, 14 Cal.4th at p. 449.)
Distilled to its essence, PCGH's claim is that Hall's execution of the SCIP
agreements and Hall's preexecution discussions related to those agreements support the
trial court's exercise of specific personal jurisdiction over Hall.12 PCGH's theory is that
by establishing "interstate contractual obligations," Hall established contacts with
California sufficient to support the trial court's exercise of personal jurisdiction over him.
11 In its reply brief, PCGH contends that there is a lack of substantial evidence to support the trial court's finding that there was no evidence that Hall had knowledge of the five percent agreement at the Napa Meeting. Because PCGH offers no reason as to why it failed to raise this contention in its opening brief, the claim is forfeited. (See Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 894, fn. 10 [" ' "points raised in the reply brief for the first time will not be considered, unless good reason is shown for failure to present them before" ' . . . "].)
12 To the extent that PCGH intends to argue that Hall's purported signing of false Officer's Certificates supports the exercise of personal jurisdiction over Hall, that claim fails. Hall submitted evidence that the Officer's Certificates were not false, the trial court made an express factual finding that there was no evidence that the certificates were false, and PCGH fails to raise any challenge to this factual finding on appeal. (See, e.g., Clark v. Superior Court (2011) 196 Cal.App.4th 37, 46-47 [" ' "the trial court's resolution of any factual disputes arising from the evidence is conclusive" ' "].)
11
Even assuming the relevance of case law governing the exercise of personal jurisdiction
in breach of contract cases to PCGH's tort causes of action in this case, we are not
persuaded.13
In Burger King v. Rudzewicz (1985) 471 U.S. 462 (Burger King), in discussing the
application of the purposeful availment prong to specific personal jurisdiction in breach
of contract actions, the United States Supreme Court stated that it had long ago rejected
the notion that "an individual's contract with an out-of-state party alone can automatically
establish sufficient minimum contacts in the other party's home forum." (Id. at p. 478.)
The Burger King court 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.' [Citation.]" (Id. at p. 479.) Thus, in considering whether a
contract can constitute a sufficient minimum contact for purposes of personal jurisdiction,
the Burger King court instructed courts to consider factors such as "prior negotiations and
contemplated future consequences, along with the terms of the contract and the parties'
actual course of dealing . . . ." (Ibid.)
In this case, a consideration of the factors outlined by the Burger King court
supports the conclusion that the trial court lacked specific jurisdiction over Hall. While
13 Hall and The Clinton Group argue that the issue of whether the trial court may exercise personal jurisdiction over PCGH's tort claims against Hall and The Clinton Group should not be governed by "the standard used in breach of contract actions." Hall and The Clinton Group contend, in the alternative, that an application of the factors used to determine personal jurisdiction in the context of a breach of contract does not support the trial court's exercise of personal jurisdiction over them. 12
PCGH presented evidence that some preexecution activities occurred in California, these
activities were limited to Hall's attendance at a single preexecution meeting in California
during which the SCIP transaction was discussed, and Hall's receipt of a few follow-up
e-mails in which the transaction was discussed.14 PCGH presented no evidence that Hall
had engaged in a prior course of dealing with PCGH in California (or elsewhere), nor any
evidence that Hall engaged in any activity related to PCGH in California (or elsewhere)
after executing the agreements. Nor did PCGH present any evidence that the location of
the execution of the SCIP agreements, the place of performance of the SCIP agreements,
or the terms of the SCIP agreements, supported an exercise of jurisdiction over Hall. In
sum, the record supports the trial court's determination that Hall's contacts with California
for purposes of the SCIP transaction were limited in nature, and do not support the
conclusion that the trial court may exercise personal jurisdiction over Hall. (See Burger
King, supra, 471 U.S. at p. 475 [noting that the " 'purposeful availment' requirement
ensures that a defendant will not be hauled into a jurisdiction solely as a result of
'random,' 'fortuitous,' or 'attenuated' contacts"].)
The cases that PCGH cites in its brief with respect to this issue are clearly
distinguishable. For example, in Safe-Lab, Inc. v. Weinberger (1987) 193 Cal.App.3d
1050, this court concluded that California courts had specific jurisdiction over a Nevada
defendant, Weinberger, who entered into a contract to serve as a marketing representative
for a California corporation. The contract was negotiated in California, was to be
14 Hall did not send any of the e-mails. 13
governed by California law, and required that Weinberger come to California on a
monthly basis to provide reports to the corporation. (Id. at p. 1054.) In addition,
approximately five percent of Weinberger's marketing efforts were directed at California
markets. (Id. at p. 1053.) Weinberger's contacts with California were materially different
from Hall's.
Similarly unavailing are other cases that PCGH cites, in which defendants had far
greater contact with California than Hall had in this case. (See, e.g., Anglo Irish Bank
Corp., PLC v. Superior Court (2008) 165 Cal.App.4th 969, 974 (Anglo Irish Bank Corp.,
PLC) ["by soliciting investors in California through the personal visits of their employees
and others, Petitioners established sufficient contacts with California to justify the
exercise of specific personal jurisdiction in this state"]; Virtualmagic Asia, Inc., supra, 99
Cal.App.4th at pp. 242-243 ["the undisputed facts show that [defendant] negotiated and
contracted with [a California based company (CWC)], took directions from and
communicated with CWC within and outside California to perform that contract, held
meetings with CWC in California concerning performance of the contract, delivered the
work in progress and final work to California, and was paid by CWC"]; Checker Motors
Corp. v. Superior Court (1993) 13 Cal.App.4th 1007, 1018 ["there was a veritable
'latticework' of contacts linking [out-of-state partnership] and the State of California"
including "many calls and other communications to California during the negotiations,"
"execution in California of the legal documents," and "[a] continuing stream of payments
from [partnership] to California"].)
14
Further, PCGH's claims against Hall are not breach of contract claims that arise
directly from the SCIP agreements. Rather, PCGH's claims are tort claims that are
ancillary to the SCIP agreements. In considering whether California courts may exercise
specific personal jurisdiction over a defendant with respect to a tort claim, California
courts have examined whether the defendant committed tortious conduct within the state
(see Anglo Irish Bank Corp., PLC, supra, 165 Cal.App.4th at p. 980 ["The commission of
a tortious act within the forum state ordinarily justifies the exercise of specific personal
jurisdiction in an action arising from the tortious act"]), or committed acts outside the
state that have a sufficient "effect" in California when analyzed under the so-called
"effects test." (HealthMarkets, Inc. supra, 171 Cal.App.4th at p. 1173.) "[T]he effects
test requires a showing that the defendant purposefully directed its activities at California
with the knowledge that its conduct would cause harm in this state." (Ibid.) We consider
each of these potential bases for jurisdiction in turn.
With respect to whether there is evidence that Hall committed a tort while
physically present in California, the only act that PCGH alleges Hall performed in
California is attending the Napa Meeting. However, the trial court expressly found,
"[T]here is no evidence that Hall was advised of the 5% agreement at the Napa
[M]eeting."15 Given that the gravamen of all of PCGH's tort claims against Hall is his
purported participation in an alleged "Illegal Kickback Scheme" based upon the alleged
"5% agreement" that PCGH claims was discussed at the Napa Meeting, it is clear that
15 As noted previously, PCGH failed to challenge this factual finding in its opening brief. 15
there is no basis to conclude that the trial court may exercise personal jurisdiction over
Hall based on his alleged commission of a tort in California. With respect to the effects
test, Hall's conduct in relation to the SCIP transaction does not constitute evidence that
Hall "purposefully directed [his] activities at California with the knowledge that [his]
conduct would cause harm in this state." (HealthMarkets, Inc., supra, 171 Cal.App.4th at
p. 1173.)
We also reject PCGH's contention that "California's interest in regulating hedge
funds and investment activities by private equity firms" supports the trial court's exercise
of personal jurisdiction over Hall under the "special regulation" doctrine. (See Mansour
v. Superior Court (1995) 38 Cal.App.4th 1750, 1761-1762 [" '[I]t is reasonable to
exercise jurisdiction on the basis of the defendant intentionally causing "effects in the
state by an omission or act done elsewhere" whenever (a) the effects are of a nature "that
the State treats as exceptional and subjects to special regulation" ' "].) The statutes that
PCGH cites in support of its contention that this doctrine applies, including Corporations
Code section 25000 et seq. (the Corporate Securities Law of 1968) and Business and
Professions Code section 17200 et seq., are designed to prevent fraud in California.
PCGH makes no argument that any such statutes have as their purpose the prevention of
ancillary injuries that stem from alleged fraudulent conduct performed in another state.
In sum, we conclude that the trial court properly determined that Hall did not
purposefully avail himself of California-conferred benefits or protections. "Because
[Hall] has not purposefully availed [himself] of forum benefits, it is unnecessary to
address the other prerequisites for the exercise of specific jurisdiction over [him]."
16
(Elkman v. National States Ins. Co. (2009) 173 Cal.App.4th 1305, 1321.)16 Accordingly,
we conclude that the trial court properly determined that it lacked specific personal
jurisdiction over Hall and properly granted his motion to quash.
The sole basis on which PCGH argues that the trial court could exercise
jurisdiction over The Clinton Group is its contention that Hall was acting on behalf of
The Clinton Group with respect to the SCIP transaction. In light of our conclusion that
PCGH failed to present evidence justifying the exercise of jurisdiction over Hall, the
same conclusion necessarily follows with respect to The Clinton Group.17
16 Although we need not definitively resolve the issue in light of our conclusion that PCGH failed to establish the purposeful availment prong of its specific personal jurisdiction claim, we question whether PCGH's claims bear "a substantial connection to [Hall's] forum contacts." (Vons, supra, 14 Cal.4th at p. 452.) The torts that PCGH alleges are not based primarily on Hall's actions that occurred in California prior to the execution of the SCIP agreements, but rather, on the execution of those agreements and actions taken by the New York Attorney General's office in the wake of their execution. For example, all of the claimed damages that PCGH references in its brief arise from the New York investigation. In addition, as noted above, the trial court expressly found that there was no evidence that Hall was apprised of the five percent agreement at the Napa [M]eeting. Thus, it is questionable whether PCGH can establish that its claims have a "substantial connection to [Hall's] forum contacts." (Ibid., italics added; see also ibid. [noting relationship between purposeful availment and substantial connection prongs of specific jurisdiction analysis and stating, " '[A]s the relationship of the defendant with the state seeking to exercise jurisdiction over him grows more tenuous, the scope of jurisdiction also retracts, and fairness is assured by limiting the circumstances under which the plaintiff can compel him to appear and defend' "].)
17 Although the trial court noted that the parties had presented conflicting evidence as to whether "[The] Clinton Group was involved in the SCIP," the court did not make a finding with respect to this issue. However, even assuming that The Clinton Group was involved in the SCIP deal, any such involvement did not constitute a sufficient basis upon which to exercise personal jurisdiction over The Clinton Group, for the reasons stated in the text. 17
b. Loglisci and Morris
i. The bases on which PCGH contends that the trial court may exercise specific jurisdiction over Loglisci and Morris
PCGH contends that Wissman's act in negotiating the SCIP transaction at the Napa
Meeting and Wissman's acts in engaging in follow-up e-mail communications concerning
the transaction may be attributed to Loglisci and Morris, and that these acts are sufficient
to establish specific personal jurisdiction over both Loglisci and Morris. PCGH further
contends that Loglisci signed one of the SCIP partnership agreements.
ii. The trial court's findings
Although unmentioned in PCGH's brief on appeal, in its order granting Loglisci's
motion to quash, the trial court made the following findings:
"PCGH fails to submit any evidence that Loglisci had direct contact in California related to the alleged 'Illegal Kickback Scheme.' Instead, PCGH argues that Loglisci is subject to jurisdiction based on an agency theory, with Wissman acting as Loglisci's agent. . . . PCGH fails to submit evidence sufficient to establish that Wissman was acting as Loglisci's agent at the Napa [M]eeting and with respect to the alleged 'Illegal Kickback Scheme.' Wissman's testimony does not directly address this issue and fails to meet the applicable 'specific evidentiary fact' requirements in opposing a motion to quash. [Citation.] Similarly, the Declaration of Christopher Bower [PCGH's chief executive officer] as to PCGH's understanding that Wissman appeared at the Napa [M]eeting on his own behalf and on behalf of Morris and Loglisci does not meet the applicable evidentiary standards. PCGH fails to establish that Wissman was acting as Loglisci's agent so as to establish jurisdiction based on Wissman's actions in California."
In its order granting Morris's motion to quash, the trial court made a nearly
identical finding with respect to Morris, stating, "PCGH fails to establish that Wissman
18
was acting as Morris'[s] agent so as to establish jurisdiction based on Wissman's actions
in California."
iii. The trial court's unchallenged factual findings that Wissman did not act as Loglisci's or Morris's agent are fatal to PCGH's personal jurisdiction contentions
"The existence of an agency relationship is a factual question for the trier of fact
whose determination must be affirmed on appeal if supported by substantial evidence."
Cal.App.4th 937, 965.) On appeal, PCGH does not raise any substantial evidence
challenge to the trial court's factual findings that PCGH failed to establish that Wissman
was acting as either Loglisci's or Morris's agent so as to permit the trial court to exercise
personal jurisdiction over Loglisci and Morris based on Wissman's actions.
Rather than challenging these findings, PCGH contends, "The question of whether
Wissman was formally acting as Loglisci and Morris'[s] 'agent' has no bearing on the
question of whether Loglisci and Morris'[s] contact with the forum state was sufficient to
give rise to specific jurisdiction." (Italics added; citing Anglo Irish Bank Corp., PLC.,
supra, 165 Cal.App.4th at p. 974.)18 PCGH's appellate contention is in direct conflict
with the position that it advocated in the trial court. In that court, PCGH argued,
18 The Anglo Irish Bank Corp., PLC court acknowledged that some courts have applied the law of agency in considering whether to exercise specific jurisdiction over nonresident defendants. (Anglo Irish Bank Corp., PLC, supra, 165 Cal.App.4th at p. 983.) However, the Anglo Irish Bank Corp., PLC court stated, "In our view, reliance on state substantive law of agency . . . to determine the constitutional limits of specific personal jurisdiction is unnecessary and is an imprecise substitute for the appropriate jurisdictional question." (Ibid.) 19
"Wissman acted as Loglisci's agent with respect to the illegal kickback scheme and
therefore Wissman's contacts can be attributed to Loglisci." (Italics added.) PCGH made
an identical argument with respect to Wissman acting as Morris's agent in its opposition
to Morris's motion to quash.
It is thus clear that PCGH urged one position in the trial court, received an
unfavorable factual finding from that court, failed to mention or address the trial court's
factual finding in this court, and then attempted to avoid the import of the trial court's
factual finding by urging a theory on appeal that is directly contrary to one it urged the
trial court to apply in that court. Under these circumstances, the "theory of trial" doctrine
prevents PCGH from gaining review of its newly minted theory in this court. (See
Saville v. Sierra College (2005) 133 Cal.App.4th 857, 872-873 [" ' "A party is not
permitted to change his position and adopt a new and different theory on appeal. To
permit him to do so would not only be unfair to the trial court, but manifestly unjust to
the opposing party." [Citation.] The principles of "theory of the trial" apply to motions
[citation] . . . . It would be manifestly unjust to the opposing parties, unfair to the trial
court, and contrary to judicial economy to permit a change of theory on appeal.' "].)
In light of PCGH's failure to properly challenge the trial court's finding that
Wissman's actions may not be attributed to Loglisci or Morris for purposes of
determining whether the trial court may exercise personal jurisdiction over Loglisci or
Morris, it is clear that PCGH's claims with respect to both defendants must fail. The only
evidence of direct action on Loglisci's part that PCGH identifies is his signing of one of
20
the SCIP agreements.19 For the reasons stated in connection with our consideration of
whether the trial court could exercise personal jurisdiction over Hall based on his signing
of the SCIP agreements, this action does not provide a sufficient basis to conclude that
Loglisci purposefully availed himself of California-conferred benefits or protections.
(See pt. III.A.3.a., ante.) As for Morris, PCGH fails to identify any direct action taken by
him on which the trial court could exercise personal jurisdiction.20
We conclude that PCGH failed to present sufficient evidence that either Loglisci
or Morris purposefully availed himself of the benefits of conducting activities in
California, as is required in order to support the trial court's exercise of specific personal
jurisdiction.21 Accordingly, we further conclude the trial court properly determined that
it lacked specific personal jurisdiction over Loglisci and Morris and that the court
properly granted Loglisci's and Morris's motions to quash.
19 It is clear that the trial court may not exercise personal jurisdiction over Loglisci or Morris based on the acts of their alleged coconspirators. "Where conspiracy is alleged, an exercise of personal jurisdiction must be based on forum-related acts that were personally committed by each nonresident defendant, and acts of an 'alleged coconspirator—cannot be imputed to establish jurisdiction over the third party defendant. [Citation.]' " (CenterPoint Energy, Inc. v. Superior Court (2007) 157 Cal.App.4th 1101, 1118.)
20 PCGH tacitly acknowledges that the record contains no evidence of direct action taken by Morris by arguing, "[T]he only way that [Morris's] interest could be negotiated and protected was through the conduct of other individuals." (Italics omitted.)
21 We also reject PCGH's contention that the "special regulation" doctrine may serve as a basis for exercise of personal jurisdiction over Loglisci or Morris, for the reasons stated in the text with respect to Hall. (See pt. III.A.3.a., ante.) 21
B. The trial court did not abuse its discretion in denying PCGH's request to continue the hearing on the motions to quash to permit PCGH to conduct additional discovery
PCGH contends that the trial court erred in denying its request for a continuance to
permit it to conduct additional discovery. We review the trial court's ruling for an abuse
of discretion. (Beckman v. Thompson (1992) 4 Cal.App.4th 481, 487 [stating that
decision whether to grant a continuance to enable a party to conduct discovery in an
attempt to obtain evidence that would support the trial court's exercise of personal
jurisdiction "lies in the discretion of the trial court, whose ruling will not be disturbed in
the absence of manifest abuse"].)
1. Factual and procedural background
In opposing each of respondents' motions to quash, PCGH requested, in the
alternative, a continuance of the hearing on the motions to permit PCGH to conduct
additional discovery pertaining to the personal jurisdiction issues. PCGH presented
identical arguments in each opposition, including contending that the New York Attorney
General's investigation had hampered its discovery efforts and that the granting of a
continuance would permit it to take the depositions of Hall, Morris, Loglisci and the
person most knowledgeable at The Clinton Group.
In each of the trial court's rulings granting respondents' motions to quash, the court
denied PCGH's request for a continuance. In its ruling granting Hall and The Clinton
Group's motion to quash, the trial court stated that PCGH had failed to address why it had
been unable to conduct discovery as to Hall and The Clinton Group. In its rulings
granting Loglisci's and Morris's motions to quash, the trial court did state that PCGH had
22
presented evidence that "it was initially prevented from taking certain depositions and
conducting certain discovery." However, the trial court also stated that, notwithstanding
this initial delay, PCGH "had sufficient time to conduct discovery and take necessary
depositions." In addition, with respect to each ruling, the trial court noted that PCGH
had failed to demonstrate that additional discovery was likely to lead to the production of
evidence establishing that the trial court could exercise personal jurisdiction over
respondents.
2. Application
PCGH fails to address the trial court's reasons for denying its request for a
continuance. Accordingly, we conclude that PCGH has not demonstrated that the trial
court abused its discretion in denying PCGH's request for a continuance of the hearing of
the motions to quash.
IV.
DISPOSITION
The orders granting the motions to quash are affirmed. PCGH is to bear costs on
appeal.
AARON, J.
WE CONCUR:
McCONNELL, P. J.
McDONALD, J.
23
AI Brief
AI-generated · verify before citing
Holding. The court held that the trial court properly determined it lacked personal jurisdiction over the nonresident cross-defendants because they did not purposefully avail themselves of the benefits of conducting activities in California. The court further held that the alleged tortious conduct did not satisfy the "effects test" for specific jurisdiction as there was no evidence of intent to harm a California resident.
Issues
Did the trial court err in granting the motions to quash for lack of personal jurisdiction?
Did the trial court err in denying the request for a continuance to conduct additional jurisdictional discovery?
Disposition. Affirmed.
Quotations verified verbatim against the opinion
“We conclude that the trial court properly determined that it lacked personal jurisdiction over respondents.”
“[T]he effects test requires a showing that the defendant purposefully directed its activities at California with the knowledge that its conduct would cause harm in this state.”