Opinion
G056365
01-09-2020
PACIFIC HOSPITALITY GROUP VENTURES, INC., et al., Plaintiffs and Appellants, v. NEWCRESTIMAGE HOLDINGS, LLC et al., Defendants and Respondents.
Patterson Buchanan Fobes & Leitch, Donald F. Austin II, Kevin J. Kay and Kasper Sorensen for Plaintiffs and Appellants. Booth, Mitchel & Strange, Steven M. Mitchel, Craig E. Guenther and Stacie L. Brandt; Haynes and Boone, Matthew E. Costello and Mark D. Erickson 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 30-2017-00929381) OPINION Appeal from an order of the Superior Court of Orange County, Deborah C. Servino, Judge. Affirmed in part and reversed in part with directions. Patterson Buchanan Fobes & Leitch, Donald F. Austin II, Kevin J. Kay and Kasper Sorensen for Plaintiffs and Appellants. Booth, Mitchel & Strange, Steven M. Mitchel, Craig E. Guenther and Stacie L. Brandt; Haynes and Boone, Matthew E. Costello and Mark D. Erickson for Defendants and Respondents.
Plaintiffs Pacific Hospitality Group Ventures, Inc. (Pacific Hospitality) and Cotton Exchange Investment Properties, LLC (Cotton Exchange) appeal the court's order quashing service of the summons and complaint on defendants NewcrestImage Holdings, LLC, NewcrestImage Management, LLC, NewcrestImage, LLC (collectively, the NCI Entities), Mehul Patel, and Daxesh Patel (together with the NCI Entities, the defendants). The underlying action concerns the sale of a Louisiana hotel by Supreme Bright New Orleans, LLC (Supreme Bright), a Louisiana entity, to the California plaintiffs. Instead of suing Supreme Bright, plaintiffs initiated the underlying action against defendants, asserting claims for misrepresentation, negligent misrepresentation, concealment, and avoidance and recovery of fraudulent transfers.
Because Mehul Patel and Daxesh Patel share the same surname, for ease of reference and for purposes of clarity, we refer to them by their first names. No disrespect is intended.
On appeal, plaintiffs contend the court erred by granting defendants' motion to quash for lack of personal jurisdiction. They claim the court had specific jurisdiction over defendants because they reached into California to market the hotel and negotiate the terms of the sale with plaintiffs. They also argue the court erred by sustaining all of defendants' evidentiary objections to plaintiffs' evidence. Because plaintiffs failed to submit sufficient evidence showing Daxesh or the NCI Entities had the required minimum contacts with California, the court did not err by finding it had no personal jurisdiction over those defendants. But plaintiffs did present sufficient evidence to justify the exercise of personal jurisdiction over Mehul. We accordingly reverse the court's order with respect to Mehul and further conclude the court erred by sustaining some of defendants' evidentiary objections.
FACTS
The Sale of the Hotel
In January 2015, Supreme Bright, a Louisiana entity, hired Hodges Ward Elliott (Hodges), a hotel brokerage firm, to represent it in the sale of a hotel located in New Orleans, Louisiana (the Hotel). Pacific Hospitality emerged as a potential buyer, and Supreme Bright hired California attorneys from Akin Gump Strauss Hauer & Feld LLP (Akin Gump) to represent it in negotiations with Pacific Hospitality. Supreme Bright sold the Hotel to Pacific Hospitality in June 2015, and the sale closed in August 2015. Pacific Hospitality then assigned its rights and interest in the purchase and sale agreement to Cotton Exchange. Pacific Hospitality and Cotton Exchange maintain a principal place of business in California.
The Complaint
In June 2017, Pacific Hospitality and Cotton Exchange (plaintiffs) filed a complaint against the NCI Entities, Mehul, and Daxesh. The complaint alleged defendants deceived plaintiffs about the condition of the Hotel and Supreme Bright transferred its assets to defendants leaving Supreme Bright "penniless and unable to satisfy the claims against it." The complaint accordingly asserted causes of action for intentional misrepresentation, negligent misrepresentation, concealment, and avoidance and recovery of fraudulent transfers. Supreme Bright was not a named party.
Defendants' Motion to Quash Service for Lack of Personal Jurisdiction
In February 2018, defendants moved to quash plaintiffs' service of summons and complaint for lack of personal jurisdiction. They argued the court lacked general jurisdiction over them because their activities in California were not continuous and systematic. They noted Mehul and Daxesh resided in Texas and that the NCI Entities were incorporated and maintained their principal places of business outside of California, did not have any employees or business operations in California, and did not have a California registered agent.
Defendants also claimed the court did not have specific jurisdiction over them. Defendants argued they did not purposefully avail themselves of the California forum because they had no contacts with California. Although they acknowledged one of the NCI Entities previously owned a one-third interest in property located in San Bernardino, California, they argued plaintiffs' claims did not arise out of or relate to that contact. With respect to the sale of the Hotel, defendants claimed the Hotel was located in Louisiana, all negotiations took place outside of California, and no relevant conduct or meetings occurred in California. Finally, defendants argued the exercise of personal jurisdiction would violate traditional notions of fair play and substantial justice.
Plaintiffs' Opposition to Defendants' Motion to Quash Service
Plaintiffs filed an opposition conceding the court did not have general jurisdiction over defendants but claiming the court had specific jurisdiction due to defendants' contacts with California. They argued defendants "sent their agent to California to pitch the sale of the Hotel, directed ongoing emails and telephone calls to [Pacific Hospitality], a California corporation, over a period of months to facilitate sale of the Hotel, and hired and retained a California law firm [Akin Gump] to represent them with respect to the [purchase and sale agreement]." According to plaintiffs, e-mails from Mehul to Pacific Hospitality also identified "NewcrestImage" in the signature block. They argued this was sufficient to establish specific jurisdiction over each of the NCI Entities.
In support of their opposition, plaintiffs submitted the declaration of Timothy R. Busch, chief executive officer and president of Pacific Hospitality and Cotton Exchange. Busch testified he attended the annual Americas Lodging Investment Summit (ALIS) in Los Angeles in 2016 through 2018. During those conferences, he claimed to have met with Mehul "who was attending . . . as a representative of Defendants NewcrestImage Holdings, LLC, NewcrestImage Management, LLC, and/or NewcrestImage, LLC . . . ." He testified he and Mehul discussed potential business opportunities involving the NCI Entities and the 2015 sale of the Hotel, including ongoing issues with the property.
Plaintiffs also submitted the declaration of Kory J. Kramer, chief investment officer of Pacific Hospitality. Kramer testified he attended the 2015 ALIS conference in Los Angeles, California where he met with a representative from Hodges "to discuss the possible purchase of the [Hotel] that [Hodges] was marketing on behalf of Supreme Bright . . . which was an affiliate of NewcrestImage LLC and/or its related entities . . . ." He further testified he negotiated the purchase of the Hotel with Mehul "and other representatives of NewcrestImage including Daxesh Patel . . . ." He claimed the negotiations "included repeated phone calls directed to [him] and representatives of [Pacific Hospitality] in California." He further testified he received e-mails and communication from the Akin Gump attorney who was "hired by Mehul . . . and NewcrestImage . . . ."
In addition to the two declarations, plaintiffs submitted marketing materials for the Hotel and the 2015 agenda for the ALIS conference. They also submitted e-mail communications between Mehul and Pacific Hospitality regarding the Hotel. Some of those e-mails appear to have been sent from Mehul's "NewcrestImage" e-mail address and identify Mehul as the "Chairman & Chief Executive Officer" of "NewcrestImage" in the signature block. Finally, plaintiffs submitted e-mail communications with Akin Gump attorneys regarding the purchase and sale agreement.
Defendants' Reply in Support of Their Motion to Quash
In support of their reply brief, defendants filed objections to plaintiffs' evidence. The evidence and corresponding objections are summarized below.
1. Busch Declaration: "I met with Defendant Mehul Patel who was attending the Conferences as a representative of Defendants NewcrestImage Holdings, LLC, NewcrestImage Management LLC, and/or NewcrestImage LLC (collectively the 'Entity Defendants')." Defendants asserted objections due to lack of foundation, lack of personal knowledge, speculation, and relevance. (Objection No. 1.)
2. Kramer Declaration: "Supreme Bright . . . was an affiliate of NewcrestImage LLC and/or its related entities (the other Entity Defendants herein)." Defendants asserted objections due to lack of foundation, lack of personal knowledge, speculation, and relevance. (Objection No. 2.)
3. Kramer Declaration: "These emails were also directed to other PHG employees/representatives including Timothy R. Busch." Defendants asserted objections due to lack of foundation, lack of personal knowledge, and speculation. (Objection No. 3.)
4. Kramer Declaration: "Attached hereto as Exhibit 5 to the Opposition are true and correct copies of emails between myself and Mehul Patel, Daxesh Patel, and other representatives of both NewcrestImage and [Pacific Hospitality] from May 19, 2015, through August 13, 2015." Defendants asserted objections due to lack of foundation, lack of personal knowledge, speculation, failure to authenticate, and secondary evidence rule. (Objection No. 4.)
5. Kramer Declaration: "Negotiations with Mehul Patel and representatives of NewcrestImage also included repeated phone calls directed to me and representatives of [Pacific Hospitality] in California. The purpose of the calls was to continue negotiations and complete the sale of the Hotel." Defendants asserted objections due to lack of foundation, lack of personal knowledge, and speculation. (Objection No. 5.)
6. Kramer Declaration: "Mr. [sic] Baghdasarian and Akin Gump were hired by Mehul Patel and NewcrestImage to work on the [purchase and sale agreement] with the California Corporation [Pacific Hospitality]." Defendants asserted objections due to lack of foundation, lack of personal knowledge, and speculation. (Objection No. 6.)
7. Kramer Declaration: "Attached as Exhibit 6 to the Opposition are emails from and to Mr. [sic] Baghdasarian regarding revisions to the Hotel [purchase and sale agreement]." Defendants asserted objections due to lack of foundation, lack of personal knowledge, speculation, failure to authenticate, and secondary evidence rule. (Objection No. 7.)
The Court's Ruling
The court granted defendants' motion to quash and sustained all of defendants' evidentiary objections. In granting the motion, the court held plaintiffs failed to show that any of the defendants had minimum contacts with California or that the exercise of jurisdiction would comport with fair play and substantial justice. The court explained plaintiffs failed to meet their burden as to each defendant because plaintiffs referred "to the [d]efendants altogether, along with non-party Supreme Bright . . . ." According to the court, the marketing materials provided at the ALIS conference in California "were for [Supreme Bright,]" and Supreme Bright retained the California Akin Gump attorney who negotiated the purchase and sale agreement between Pacific Hospitality and Supreme Bright. The court concluded plaintiffs failed to prove any alter ego theory.
The court also noted plaintiffs "fail[ed] to distinguish between any of the entity [d]efendants" and found Mehul's "post-sale contacts with California [were] irrelevant . . . ." Finally, the court held the e-mails to Pacific Hospitality's representatives did not demonstrate purposeful availment of forum benefits.
DISCUSSION
Plaintiffs contend the court erred by sustaining defendants' evidentiary objections and granting the motion to quash. First, they argue the evidence submitted in the Busch and Kramer declarations was based on firsthand knowledge and the attached e-mails were properly authenticated. Second, they claim the court had specific jurisdiction over all of the defendants because defendants purposefully reached into California to market the Hotel and negotiate the terms of the sale with plaintiffs. We agree the court erred by sustaining some of defendants' evidentiary objections and by finding it had no specific jurisdiction over Mehul. But substantial evidence supports the court's finding that plaintiffs failed to show Daxesh or the NCI Entities had minimum contacts with California.
The Court Erred by Sustaining All of Defendants' Evidentiary Objections
We review the court's evidentiary rulings for abuse of discretion and agree with plaintiffs that the court erred by sustaining some of defendants' evidentiary objections. (People v. Clark (2016) 63 Cal.4th 522, 597.)
Defendants contend plaintiffs waived any challenges to the court's ruling on objections Nos. 3, 4, 6, and 7. While plaintiffs do not separately address every objection in their opening brief, they summarize each one and generally challenge the court's ruling on all of the objections. We accordingly find no waiver.
A. Inadmissible Evidence
Here, the court did not abuse its discretion by sustaining objections Nos. 1, 2, and 6. For ease of reference, we repeat the relevant testimony and explain the shortcomings of each below.
Objection No. 1. Busch Declaration: "I met with Defendant Mehul Patel who was attending the Conferences as a representative of Defendants NewcrestImage Holdings, LLC, NewcrestImage Management LLC, and/or Newcrest Image LLC (collectively the 'Entity Defendants')." While Busch states Mehul attended the ALIS conferences as a representative of one of the NCI Entities, the declaration fails to state how Busch knew Mehul attended on behalf of an NCI Entity rather than Supreme Bright, the actual seller that sold the Hotel to plaintiffs. For example, Busch fails to state that Mehul said he was at the conferences on behalf of an NCI Entity, referenced an NCI Entity, or wore a name tag including the name of an NCI Entity. Busch accordingly did not provide sufficient evidence based on personal knowledge rather than speculation.
Objection No. 2. Kramer Declaration: "Supreme Bright . . . was an affiliate of NewcrestImage LLC and/or its related entities (the other Entity Defendants herein)." Other than conjecture, Kramer fails to provide any context or evidentiary support for his knowledge of Supreme Bright's relationship with the NCI Entities. As the court correctly held, plaintiffs also did not advance any theory that Supreme Bright was an alter ego of the NCI Entities. Kramer accordingly did not provide sufficient evidence based on personal knowledge rather than speculation.
Plaintiffs filed a request for judicial notice requesting we take judicial notice of a motion filed by Supreme Bright in an arbitration before the American Arbitration Association, Cotton Exchange Investment Properties, LLC v. Commercial Renovation Services, Inc., Case No. 01-17-001-3210. Plaintiffs contend the motion shows the NCI Entities are affiliates of Supreme Bright. We deny plaintiffs' request because the document was not before the court at the time of its decision.
Objection No. 6. Kramer declaration: "Mr. [sic] Baghdasarian and Akin Gump were hired by Mehul Patel and NewcrestImage to work on the [purchase and sale agreement] with the California Corporation [Pacific Hospitality]." While Kramer further states he received e-mails and communications from Ms. Baghdasarian, he fails to establish how he knew Akin Gump represented an NCI Entity rather than Supreme Bright. This is particularly important because the purchase and sale agreement was entered into by Supreme Bright (not an NCI Entity) and Pacific Hospitality. Defendants also submitted the declaration of an Akin Gump attorney who testified that the firm represented Supreme Bright in negotiating the purchase and sale agreement. Kramer accordingly did not provide sufficient evidence based on personal knowledge rather than speculation.
B. Admissible Evidence
While the court did not err by sustaining Objections Nos. 1, 2, and 6, the court abused its discretion by sustaining the entirety of Objections Nos. 3, 4, 5, and 7. We again repeat the relevant testimony and explain the adequacy of each below.
Objection No. 3. Kramer Declaration: "These emails were also directed to other PHG employees/representatives including Timothy R. Busch." Immediately before this sentence, Kramer stated negotiations to purchase the Hotel included "repeated emails from Mehul Patel and NewcrestImage representatives sent to my email account in California." Defendants did not object to the earlier sentence and only objected to his statement that the e-mails were directed to other Pacific Hospitality employees and representatives. Because Kramer was included on those e-mails and is the chief investment officer of Pacific Hospitality, he certainly would have personal knowledge of the other Pacific Hospitality employees who were copied on the e-mails. The court accordingly erred by sustaining defendants' objections based on lack of foundation, lack of personal knowledge, and speculation.
Objection No. 4. Kramer declaration: "Attached hereto as Exhibit 5 to the Opposition are true and correct copies of emails between myself and Mehul Patel, Daxesh Patel, and other representatives of both NewcrestImage and [Pacific Hospitality] from May 19, 2015, through August 13, 2015." Defendants contend the court properly sustained their objections to the e-mails for lack of authentication because Kramer did not explain how he knew the e-mails came from NCI Entity representatives. But Kramer's declaration establishes that he was included in the relevant e-mail communications along with other people using "NewcrestImage" e-mail accounts and signature blocks. This provided "evidence sufficient to sustain a finding that it is the writing that the proponent of the evidence claims it is . . . ." (Evid. Code, § 1400.)
Objection No. 5. Kramer declaration: "Negotiations with Mehul Patel and representatives of NewcrestImage also included repeated phone calls directed to me and representatives of [Pacific Hospitality] in California. The purpose of the calls was to continue negotiations and complete the sale of the Hotel." Kramer certainly had personal knowledge and laid the appropriate foundation to testify about Pacific Hospitality's telephonic negotiations with Mehul. The court accordingly erred by excluding that portion of Kramer's declaration. With respect to the remainder of Kramer's testimony, he failed to state how he knew the people on the calls were representatives of NCI Entities rather than Supreme Bright, the entity that actually sold the Hotel. He also generally referred to "NewcrestImage" but failed to identify the specific NCI Entity represented on the calls. The court accordingly did not err by excluding that portion of Kramer's declaration.
Objection No. 7. Kramer declaration: "Attached as Exhibit 6 to the Opposition are emails from and to Mr. [sic] Baghdasarian regarding revisions to the Hotel [purchase and sale agreement]." Defendants contend the court properly sustained their objections to the e-mails for lack of authentication because Kramer failed to state the e-mails were "true and correct" copies. Nonsense. Documents can be authenticated by their contents or by circumstantial evidence. (People v. Skiles (2011) 51 Cal.4th 1178, 1187.) Here, Kramer was on all the e-mails that included Ms. Baghdasarian. Given this circumstantial evidence, the e-mails were properly authenticated.
The Court Correctly Found It Had No Personal Jurisdiction Over Daxesh and the NCI Entities but Erred by Finding It Had No Personal Jurisdiction Over Mehul
"California's long-arm statute authorizes its 'courts to exercise jurisdiction over a foreign corporation to the fullest extent consistent with due process.' [Citations.] Consequently, California has personal jurisdiction over a nonresident defendant who 'has such minimum contacts with the state that the assertion of jurisdiction does not violate "'traditional notions of fair play and substantial justice.'"' [Citation.] The defendant's minimum contacts with the state must reasonably justify haling it into a California court to conduct a defense. [Citation.] Courts apply the minimum contacts test on a case-by-case basis, focusing on the nature and quality of the defendant's activities in the state or with state residents." (Gilmore Bank v. AsiaTrust New Zealand Ltd. (2014) 223 Cal.App.4th 1558, 1567-1568 (Gilmore Bank).)
The concept of minimum contacts includes two types of jurisdiction—general and specific. The parties agree the sole issue here is whether defendants are subject to California's specific jurisdiction. To be subject to a forum's specific jurisdiction, (1) a defendant must have "purposefully availed himself or herself of forum benefits" (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 446 (Vons)); (2) the controversy must be related to or arise out of the defendant's contacts with the forum (ibid.); and (3) the assertion of personal jurisdiction must comport with fair play and substantial justice (id. at p. 447).
"'The purposeful availment inquiry . . . focuses on the defendant's intentionality. [Citation.] This prong is only satisfied when the defendant purposefully and voluntarily directs his activities toward the forum so that he should expect, by virtue of the benefit he receives, to be subject to the court's jurisdiction based on' his contacts with the forum." (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 269, italics added.)
"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." (Vons, supra, 14 Cal.4th at p. 449.) When there is conflicting evidence, the court's "factual determinations are not disturbed on appeal if supported by substantial evidence." (Ibid.) If there is no conflicting evidence, "the question of jurisdiction is purely one of law and the reviewing court engages in an independent review of the record." (Ibid.)
The parties disagree about the applicable standard of review. While plaintiffs contend we should apply a de novo standard of review, defendants argue we should apply a substantial evidence standard. Here, some of the evidence of jurisdictional facts is conflicting. Kramer's declaration states that "NewcrestImage" and Mehul hired a California attorney from Akin Gump, but defendants submitted the declaration of an Akin Gump attorney who testified that the firm represented Supreme Bright. Plaintiffs also contend Mehul and Daxesh communicated on behalf of the NCI Entities in negotiating the sale of the Hotel, but defendants claim they communicated on behalf of Supreme Bright. Given the conflicting evidence, the substantial evidence standard of review applies. But under either standard, the court correctly held there was no specific jurisdiction over Daxesh and the NCI Entities. The court erred, however, by finding there was no specific jurisdiction over Mehul.
A. Purposeful Availment
Plaintiffs contend defendants purposefully availed themselves of the California forum by attending the ALIS conferences in Los Angeles, sending a Hodges representative to the 2015 ALIS conference to market the Hotel, communicating with Pacific Hospitality representatives in California via e-mails and phone calls, and retaining a California attorney to negotiate the purchase and sale agreement. Plaintiffs generally attribute these contacts to all of the defendants and refer to the defendants collectively. Upon closer examination of each alleged contact, it is clear that Mehul purposefully and voluntarily directed his activities toward the California forum by targeting plaintiffs via e-mails and phone calls to facilitate the sale of the Hotel. But there is insufficient evidence that Daxesh and the NCI Entities had the requisite minimum contacts.
1. ALIS Conferences
First, while plaintiffs generally state that defendants attended the ALIS conferences in Los Angeles, the evidence only suggests that Mehul attended the conferences. Busch's declaration states that Mehul attended the 2016, 2017, and 2018 conferences as a representative of one of the NCI Entities where Mehul and Busch discussed business opportunities and the Hotel, including ongoing issues with the property. For the reasons discussed above, the court correctly sustained defendants' objections to Busch's statement that Mehul attended as a representative of one of the NCI Entities. Moreover, the ALIS conferences occurred after the sale of the Hotel in August 2015. As the court held, these post-sale contacts are irrelevant to the determination of minimum contacts.
Plaintiffs nevertheless argue the post-sale contacts are relevant because plaintiffs' claims "are based on the allegation that there were post-sale fraudulent transfers from Supreme Bright . . . ." But there is no evidence that Mehul's attendance at the post-sale conferences was for the purpose of facilitating the alleged post-sale fraudulent transfers. And the complaint contradicts this assertion by alleging plaintiffs' "claims against [d]efendants arose before [Supreme Bright] transferred the Purchase Amount and all other assets to some or all of the [d]efendants." The complaint also focuses on alleged misrepresentations and deceit occurring before the sale of the Hotel that induced plaintiffs to purchase the property. Mehul's attendance at the ALIS conferences has not been shown to have anything to do with Supreme Bright's alleged fraudulent transfers.
2. The Hodges Representative
Second, plaintiffs contend defendants sent "a representative into California to market the Hotel . . . ." The only evidence on this point is Kramer's declaration, which states that he met with a Hodges representative at the 2015 ALIS conference in Los Angeles. But Kramer's declaration admits the Hodges representative was marketing the Hotel "on behalf of Supreme Bright" (not one of the named defendants in this case). Although Kramer's declaration further states that Supreme Bright was an "affiliate" of "NewcrestImage LLC and/or its related entities," the declaration does not identify the specific NCI Entity, nor does it establish personal knowledge of the alleged affiliation. The evidence accordingly is insufficient to establish personal jurisdiction over each NCI Entity. "[I]n determining personal jurisdiction, '[e]ach defendant's contacts with the forum state must be assessed individually.'" (Burdick v. Superior Court (2015) 233 Cal.App.4th 8, 24.) The United States Supreme Court also has "consistently rejected attempts to satisfy the defendant-focused 'minimum contacts' inquiry by demonstrating contacts between [third parties] and the forum State." (Walden v. Fiore (2014) 571 U.S. 277, 284.) Because plaintiffs did not advance any argument below or on appeal that Supreme Bright was an alter ego of the NCI Entities, the contact of a Hodges representative on behalf of Supreme Bright (a third party) cannot establish personal jurisdiction over the NCI Entities.
3. E-mails and Phone Calls
Third, plaintiffs rely on e-mails and phone calls with Pacific Hospitality representatives in California. With respect to communications with Daxesh, plaintiffs only submitted e-mails where Daxesh was copied on the e-mails. As defendants correctly note, this cannot possibly show that Daxesh himself purposefully reached out to California and availed himself of the forum. (Pavlovich v. Superior Court, supra, 29 Cal.4th at p. 269 [the defendant must have "'purposefully and voluntarily direct[ed] his activities toward'" California].) The Busch and Kramer declarations also do not reference any phone calls from Daxesh targeting the California forum.
With respect to communications with Mehul, plaintiffs submitted e-mails regarding the Hotel, including a property condition assessment, a preliminary property improvement plan, and a meeting outside of California. These e-mails included communications with Pacific Hospitality and third parties located in Florida and Maryland. Kramer's declaration also stated Mehul participated in numerous phone calls with Pacific Hospitality representatives in California to negotiate the sale of the Hotel. The question presented here is whether Mehul purposefully availed himself of the benefits of the California forum by participating in these e-mail communications and phone calls with a California plaintiff. We conclude that he did because he targeted a California plaintiff for the purpose of facilitating a sale.
Moncrief v. Clark (2015) 238 Cal.App.4th 1000, which plaintiffs cite, is on point. Moncrief involved the sale of farm equipment from an Arizona seller to a California buyer. (Id. at p. 1003.) An Arizona attorney for the seller called and e-mailed a California attorney for the buyer, misrepresenting that the Arizona seller was the sole owner of the farm equipment. (Id. at pp. 1003-1004.) The court found it had personal jurisdiction over the Arizona attorney. (Id. at p. 1007.) The court explained the Arizona attorney "targeted [the California attorney] with the specific purpose of inducing [his] client to finalize the purchase of farm equipment . . . ." (Ibid.) Like the Arizona attorney in Moncrief, Mehul targeted plaintiffs through various e-mails and phone calls to facilitate the sale of the Hotel.
Defendants claim the instant case is akin to Floyd J. Harkness Co. v. Amezcua (1976) 60 Cal.App.3d 687 (Harkness), Interdyne Co. v. Sys Computer Corp. (1973) 31 Cal.App.3d 508 (Interdyne), and Shisler v. Sanfer Sports Cars, Inc. (2006) 146 Cal.App.4th 1254 (Shisler). All of these cases are factually distinguishable. In Harkness, a California plaintiff attempted to establish personal jurisdiction over the nonresident defendant based on certain acts of the plaintiff, including interstate telephone calls between California and Arizona or Mexico. (Harkness, at p. 691.) Those acts related to performance of a contract executed and performed outside of California. (Id. at pp. 689-690.) In finding the purposeful availment prong was not satisfied, the court emphasized it was "not concerned with the performance of the plaintiff in California but exclusively with the nonresident defendant's activities in this state." (Id. at p. 691.)
Likewise, in Interdyne, a California plaintiff solicited business from an out-of-state buyer. A sales representative for the California plaintiff contacted the defendant in New Jersey. (Interdyne, supra, 31 Cal.App.3d at pp. 509-510.) This eventually resulted in direct communications between the parties, negotiations by letter and telephone, and shipment of goods by the plaintiff to the defendant. (Id. at p. 510.) The court held, "When a California business seeks out purchasers in other states—purchasers who are not 'present' in California for general purposes—deals with them only by out-of-state agents or by interstate mail and telephone, it is not entitled to force the customer to come to California to defend an action on the contract." (Id. at p. 511-512.)
In Shisler, a California buyer purchased a used car from a Florida corporation. (Shisler, supra, 146 Cal.App.4th at pp. 1257-1258.) The Florida seller had never "directly advertised" in California or "intentionally targeted any California resident as a potential buyer or seller of an automobile." (Id. at p. 1257.) The buyer saw a used car on the seller's Web site indicating the seller would ship "'worldwide'" and negotiated the purchase over the phone and through the mail. (Ibid.) In denying specific jurisdiction, the court found a single transaction between a Florida car dealer and a California consumer through the car dealer's Web site was insufficient. (Id. at pp. 1261-1262.) The court emphasized that the Florida dealer operated a passive Web site and did not target California for its sales. (Ibid.)
Here, unlike Harkness, Interdyne, and Shisler, there is evidence of an out-of-state seller (Mehul) targeting California buyers. This includes extensive phone calls and e-mails from Mehul to plaintiffs intended to facilitate the sale of the Hotel. The instant case therefore bears little resemblance to cases where personal jurisdiction was based on the plaintiff's activities, out-of-state customers of California businesses, or passive Web sites. We also note that "[m]uch has happened in the role that electronic communications plays in business transactions since [Harkness,] Interdyne[,] [and Shisler were] decided . . . ." (Hall v. LaRonde (1997) 56 Cal.App.4th 1342, 1347.) "[I]t is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications across state lines, thus obviating the need for physical presence within a State in which business is conducted. So long as a commercial actor's efforts are 'purposefully directed' toward residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there." (Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 476.) "There is no reason why the requisite minimum contacts cannot be electronic." (Hall, at p. 1347.)
While the purposeful availment prong has been satisfied with respect to Mehul, the e-mails do not suggest the same for the NCI Entities. Plaintiffs note that Mehul sent some emails from his "NewcrestImage" e-mail address and his signature block indicated he was the "Chairman & Chief Executive Officer" of "NewcrestImage." Plaintiffs also note a few people from "NewcrestImage" are copied on some of the e-mails, including the general counsel of "NewcrestImage." Although plaintiffs further claim the general counsel of "NewcrestImage" sent relevant documents to Pacific Hospitality's counsel, the record does not contain any evidence of this e-mail. The e-mails are insufficient to establish personal jurisdiction over each of the NCI Entities. Supreme Bright (not the NCI Entities) sold the Hotel to plaintiffs and signed the purchase and sale agreement. Other than some e-mails that Mehul sent from his "NewcrestImage" e-mail address and other e-mails where a few people from "NewcrestImage" are copied, there is no evidence of what role the NCI Entities played in the sale of the Hotel. The e-mails do not identify the specific NCI Entity involved, and plaintiffs never advanced an alter ego theory establishing the NCI Entities were alter egos of one another or of Supreme Bright.
We also note that Kramer's declaration generally states that he negotiated the purchase of the Hotel with Mehul and "other representatives of NewcrestImage including Daxesh . . . ." Kramer generally identifies "NewcrestImage," but he fails to identify the specific NCI Entity involved in negotiations. He also fails to explain how the NCI Entities had any contacts with the California forum as he does not detail if these negotiations were by e-mail, phone, or face to face. His testimony therefore is insufficient to subject the NCI Entities to the jurisdiction of a California court.
4. Akin Gump E-mails and Representation
Finally, plaintiffs point to e-mails with Akin Gump and Kramer's declaration, which states Akin Gump was "hired by Mehul Patel and NewcrestImage to work on the [purchase and sale agreement]." For the reasons discussed above, the court correctly sustained defendants' objections to Kramer's declaration. Regardless, this evidence does not establish that the NCI Entities purposefully availed themselves of the California forum. Defendants submitted the declaration of an Akin Gump attorney who testified the firm represented Supreme Bright. There accordingly was substantial evidence supporting the court's finding that Supreme Bright (not the NCI Entities) retained Akin Gump. Because plaintiffs did not establish that Supreme Bright and the NCI Entities were alter egos, this evidence cannot subject the NCI Entities to the jurisdiction of a California court.
B. Substantial Connection Between Plaintiffs' Claims and Mehul's Contacts
The second requirement for specific jurisdiction is that there must be a substantial connection between the dispute and the defendant's forum activities. (Snowney v. Harrah's Entertainment, Inc. (2005) 35 Cal.4th 1054, 1062, 1068.) We do not address this second prong for Daxesh or the NCI Entities because there was insufficient evidence they purposefully availed themselves of the California forum. With respect to Mehul, plaintiffs' claims for intentional misrepresentation, negligent misrepresentation, and concealment are based on alleged misrepresentations or omissions from statements made by Mehul to plaintiffs in California to facilitate the Hotel sale. It is only fair to allow plaintiffs an opportunity to prove their allegations in the forum where misrepresentations or omissions were made. "By purposefully and successfully soliciting the business of California residents, [Mehul] could reasonably anticipate being subject to litigation in California in the event [his] solicitations caused an injury to a California resident." (Id. at p. 1069; see Anglo Irish Bank Corp., PLC v. Superior Court (2008) 165 Cal.App.4th 969, 985 [finding a substantial connection between the plaintiffs' claims for misrepresentation and concealment and alleged misrepresentations or omissions made to them in California].)
C. Reasonableness of the Exercise of Jurisdiction
Having determined that the requisite minimum contacts have been established for Mehul, we next consider whether the assertion of personal jurisdiction over Mehul would comport with notions of fair play and substantial justice. (Vons, supra, 14 Cal.4th at pp. 475-476.) To do so, "'we consider (1) the burden on [Mehul] of defending in California, (2) California's interests, (3) [plaintiffs'] interest in obtaining relief, (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy, and (5) "'the shared interest of several States in furthering fundamental substantive social policies.'" [Citations.] [Defendants] bear[] the burden of presenting a "compelling case" that jurisdiction would be unreasonable.'" (Gilmore Bank, supra, 223 Cal.App.4th at p. 1574.)
Without any detailed explanation, the court generally stated "the exercise of jurisdiction would [not] comport with fair play and substantial justice." On appeal, defendants contend the exercise of jurisdiction would be unreasonable because the Hotel is located in Louisiana, relevant evidence and witnesses are located in Louisiana, face-to-face negotiations regarding the sale took place outside of California, and Cotton Exchange is pursuing parallel litigation in Louisiana.
While the Hotel is located in Louisiana and some witnesses may be inconvenienced by the commencement of a lawsuit in California, these facts alone do not outweigh the interest of plaintiffs and the California courts in resolving the dispute. Plaintiffs would similarly be inconvenienced if its representatives and witnesses were required to travel to Louisiana, and California has a strong interest in protecting its residents from the tortious acts of others. (Burger King Corp. v. Rudzewicz, supra, 471 U.S. at p. 473 ["A state generally has a 'manifest interest' in providing its residents with a convenient forum for redressing injuries inflicted by out-of-state actors"].) It also is not unreasonable to expect an out-of-state seller who targets a California buyer to litigate the dispute in California. This is particularly true for Mehul, a Texas resident, who has no ties to Louisiana similar to plaintiffs. Although defendants contend relevant evidence is located in Louisiana, they do not identify any specific evidence. Regardless, "'modern advances in communications and transportation have significantly reduced the burden of litigating in another [forum].'" (Gilmore Bank, supra, 223 Cal.App.4th 1558, 1575.)
Finally, the pending litigation in Louisiana does not necessarily mean it would be more convenient for plaintiffs to litigate this action against Mehul in Louisiana. There is no reason to believe the proceedings would be coordinated because the Louisiana cases involve an arbitration before the American Arbitration Association and a case before the United States District Court for the Eastern District of Louisiana. Neither the arbitration nor the federal action involve the same defendants in this case. The federal action also concerns different claims for breach of contract, breach of warranty, and negligence. Given the different procedures, defendants, and claims, it is unlikely that the interests of judicial economy would be better served if this action were litigated in Louisiana. In sum, defendants have not established that the assertion of jurisdiction by a California court is unreasonable.
Plaintiffs filed a request for judicial notice requesting we take judicial notice of documents filed in another case, Sangha v. Patel (Super. Ct. Los Angeles County, No. BC459820). Plaintiffs contend the documents show it would not be "an undue burden" to litigate in California because defendants defended another suit in California. We deny plaintiffs' request because the documents were not before the court at the time of its decision. --------
DISPOSITION
The order granting the motion to quash is affirmed for all defendants except Mehul Patel. The court is directed to enter a new order granting the motion to quash service of the summons and complaint on Daxesh and the NCI Entities but denying the motion to quash service of the summons and complaint on Mehul. The parties shall bear their own costs incurred on appeal.
IKOLA, J. WE CONCUR: ARONSON, ACTING P. J. GOETHALS, J.