Opinion
NOT TO BE PUBLISHED
Appeal from an order the Superior Court of Orange County No. 07CC07629, William M. Monroe, Judge.
Turner Green Afrasiahi & Arledge LLP, and Todd A. Green for Plaintiff and Appellant.
Law Offices of Richard B. Rudolph, Richard B. Rudolph and Shannon C. Williams for Defendant and Respondent.
OPINION
O'LEARY, JUDGE
RSI Home Products Sales (RSI) appeals from an order granting a motion to quash for lack of personal jurisdiction. It maintains the trial court erred in finding it lacked personal jurisdiction over Maggos & Associates, Inc. (M & A). We agree and accordingly reverse the order.
I
RSI and M & A executed a contract for purchase of home cabinetry from RSI. The cabinets are sold in various Home Depot stores nationwide. M & A agreed to purchase all excess inventory RSI wished to sell, up to $8 million in wholesale costs, and M & A was not required to purchase any inventory located in Alaska or Hawaii. RSI agreed to provide dates and locations for M & A’s pick ups, and M & A agreed to purchase excess cabinetry inventory from RSI “‘as-is, where-is[.]’” The contract provided it was to be governed and construed in accordance with California law. RSI filed a breach of contract action against M & A, claiming M & A owed it money.
M & A filed a motion to quash service of summons on the ground the California trial court did not have personal jurisdiction over M & A. The motion was supported by a declaration written by its vice-president Denny Maggos (Maggos). M & A also filed a motion to stay or dismiss on the ground of forum non conveniens.
Maggos asserted M & A is an Illinois corporation, its principal place of business is in Illinois, and it does not hold a California business license. Maggos attested M & A does not direct advertising to California, it does not employ California residents, and it does not own property in California. In addition, Maggos claimed M & A does not have a telephone number, address, or bank account in California.
Maggos explained the parties entered into the contract in April 2006. He testified some of the negotiations took place in Indiana, and Maggos executed the contract in Illinois. Neither Maggos nor other M & A employees visited California during the transaction. Maggos opened a line of credit with an Illinois financial institution in conjunction with the transaction. No products currently remain in California. The cabinets were shipped from various states, including California.
In its opposition, RSI offered the declaration of its senior vice-president of finance, Paul Van Slyke. He testified RSI is a Delaware corporation, with its headquarters in Newport Beach, California. He said he negotiated the agreement by telephone primarily from his office in Anaheim. He signed the agreement in Anaheim.
Van Slyke declared RSI performed its obligations under the contract from its office in Anaheim. He submitted a list of all of M & A’s purchases within California pursuant to the agreement. M & A purchased inventory from approximately 120 Home Depot locations within California on 15 days. The inventory purchased totaled $315,079.80. Each invoice contained the delivery term “F.O.B. Origin,” which means M & A took ownership of the goods in California.
RSI also requested leave to conduct discovery as to M & A’s contacts with California. It renewed this request at oral argument, and sought a continuance. The court denied the request for a continuance and granted the motion to quash “without prejudice. So if [RSI is] able to dream up something else [it] can come back in, [and the court will] listen to what [it has] to say . . . .” The court deemed “moot” M & A’s concurrently filed motion to stay or dismiss.
M & A filed an action in Illinois for declaratory relief regarding the same contract in dispute. While RSI’s appeal was pending in California, the Illinois court denied RSI’s motion to dismiss that action and ordered RSI to file its answer. RSI filed a counterclaim against M & A in Illinois.
II
“California courts may exercise jurisdiction on any basis not inconsistent with the Constitutions of the United States and California. (Code Civ. Proc., § 410.10.) Federal constitutional due process requirements dictate that a foreign defendant must have ‘minimum contacts’ with the forum state such that maintenance of suit against the foreign defendant in the forum state would not offend ‘“traditional notions of fair play and substantial justice.” [Citations.]’ [Citation.] If a defendant has sufficient contacts with the forum state, it may be subject to suit there on all claims, wherever they arose (general jurisdiction). If the defendant’s contacts with the forum state are not sufficient to support general jurisdiction, the defendant may nonetheless be subject to special jurisdiction, which depends on an assessment of the ‘“relationship among the defendant, the forum, and the litigation.”’ [Citations.]” (Roman v. Liberty University, Inc. (2008) 162 Cal.App.4th 670, 677-678 (Roman).) “When the evidence is not in conflict, whether jurisdiction exists is a question of law which this court reviews de novo. [Citation.]” (Id. at p. 677.) In the instant case, there is no conflict in the evidence. We therefore review the question of personal jurisdiction de novo.
“A nonresident defendant may be subject to the general jurisdiction of the forum if his or her contacts in the forum state are ‘substantial . . . continuous and systematic.’ [Citations.]” (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445 (Vons).) RSI did not put forth any evidence to establish M & A’s contacts with California were of the “‘continuous and systematic’” nature required for general jurisdiction. Instead, RSI relies on special jurisdiction.
“When a defendant moves to quash service of summons for lack of specific jurisdiction, the plaintiff bears the initial burden of demonstrating, by a preponderance of the evidence, facts justifying the exercise of jurisdiction. Once the plaintiff meets this initial burden, the burden shifts to the defendant to show that the exercise of jurisdiction would be unreasonable.” (Roman, supra, 162 Cal.App.4th at p. 677.) To find specific jurisdiction, California courts must find: (1) the defendant purposefully established contacts with the forum state; (2) the cause of action relates to or arises out of the defendant’s contacts with the forum; and (3) the exercise of personal jurisdiction comports with fair play and substantial justice. (Vons, supra, 14 Cal.4th at p. 446.)
Regular buying or selling in the forum state alone can be sufficient to establish purposeful contact with the forum state. (Rocklin de Mexico, S.A. v. Superior Court (1984) 157 Cal.App.3d 91, 95 (Rocklin).) Other factors, such as taking title within the forum state and shipping directions, have established specific jurisdiction over nonresident defendants. (Henry R. Jahn & Son v. Superior Court (1958) 49 Cal.2d 855, 861 (Jahn).) Here, M & A picked up inventory it purchased from RSI at approximately 120 Home Depot locations within California over a period of 15 days. The value of the inventory from California was not trivial ($315,079.80). In addition, M & A took title to the goods in California, and relied on RSI to provide the information of where and when to pick up the inventory. Based on the contract, M & A expected to take title of the inventory in multiple states where RSI’s products were sold. We find these factors sufficient to meet the “minimum” contacts requirement for purposeful availment found in Jahn. (Id. at pp. 860-861.)
M & A claims its contract with RSI is a single transaction, and was therefore not substantial enough to fall under California jurisdiction. (See Futuresat Industries, Inc. v. Superior Court (1992) 3 Cal.App.4th 155, 162 (Futuresat) [singularity of business determinative in denying jurisdiction].) In Futuresat, a Texas company purchased a movie library from a California company, and the California court found it did not have jurisdiction over defendant. (Id. at pp. 157-158.) M & A asserts its contacts with California are the same as defendant in Futuresat. Not so. In Futuresat, there was only one shipment of goods, with multiple payments, and defendant never entered California because it took possession of the inventory in Texas, not California. (Id. at pp. 160-161.) In the instant case, M & A made multiple inventory pick ups in California, took possession of inventory in California, and shipped inventory from California. The facts of Futuresat are not analogous to those in the case before us.
We instead find the facts more similar to those in Rocklin, supra, 157 Cal.App.3d 91. In Rocklin, personal jurisdiction was proper where defendant purchased lumber from California over the telephone, took title of the goods in California, and then shipped the goods to Mexico. (Id. at p. 98.) M & A distinguishes Rocklin because defendant initiated contact and the Rocklin agreement was for “purchases” whereas M & A claims its contract was for “removal.” (Ibid.) We are not convinced by this semantic argument. We find the quality of M & A’s contact with California sufficient because the agreement requiring performance within the forum state can establish contacts sufficient for specific jurisdiction. (Id. at p. 97, fn. 7.) The parties’ agreement caused action by RSI, as well as M & A, in California. M & A’s action was therefore directed at California with the goal of deriving benefit from California. This is enough to find M & A purposefully established contacts with California.
The standard for relatedness of the action and contacts with the forum state is the “substantial connection” test, and “[o]nly when the operative facts of the controversy are not related to the defendant’s contact with the state can it be said that the cause of action does not arise from that [contact]. [Citations.]” (Snowney v. Harrah’s Entertainment, Inc. (2005) 35 Cal.4th 1054, 1068, internal quotation marks omitted.) Here, the controversy is over payment and quality of the goods contracted for. A significant quantity came from California, and M & A owned these goods while in California (per the F.O.B. Origin clause of the contract). The controversy is therefore related to M & A’s contact within California.
Since RSI met its burden of demonstrating M & A had sufficient contacts with California, the burden of proving unfairness rested on M & A. However, M & A did not meet its burden. It did not present evidence or declarations showing California was an unfair jurisdiction, and instead only presented arguments of inconvenience. Inconvenience is not unfairness.
We conclude subjecting M & A to California jurisdiction based on the minimum contacts analysis accords with the principles of fairness because its in-forum activities notified M & A it was subject to litigation in that forum. (Vons, supra, 14 Cal.4th at pp. 446-447.) M & A should have anticipated the possibility of being haled into a California court because its purposeful contacts availed M & A to the benefits of doing business in California. While we recognize California may not be the only appropriate location for this case, M & A presents no compelling reason rendering jurisdiction unreasonable. (See Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 477.)
III
At trial, RSI requested a continuance, positing they required discovery to establish general jurisdiction. After denying the request for a continuance, the trial court granted M & A’s motion to quash without prejudice, explaining to RSI, “So if you are able to dream up something else to come back in, I’ll listen to what you have to say[.]” RSI’s counsel replied, “I’m confused.” We agree it was confusing. However, the court later clarified that its tentative ruling granting the motion to quash was the final ruling and the action was dismissed. The court’s use of the phrase “dream up something” indicates it did not believe discovery would reveal anything new.
Because we have reversed the court’s order granting the motion to quash, we need not address whether a continuance was appropriate. Nevertheless, we wish to briefly comment on this ruling. Conducting formal discovery without an action pending would be virtually impossible. (See Code Civ. Proc., § 2035.010, et seq.) We caution the trial court to refrain from making such rulings in the future. A continuance should not be denied “without prejudice” in this context.
IV
M & A claims the issue of personal jurisdiction is moot, as RSI has already submitted to jurisdiction in Illinois, and requests this court take judicial notice of the pending Illinois case. We grant judicial notice. We are not convinced by the mootness argument, and we remand this action to the California trial court.
We deny M & A’s request for monetary sanctions against RSI for filing a frivolous opposition to the motion requesting judicial notice.
M & A argues even if California has jurisdiction, we must stay or dismiss the action due to the pending Illinois action. It is wrong because the Illinois court erred in asserting jurisdiction over this action. The parties’ contract specified it was to be governed by California law, and under Code of Civil Procedure section 1049, “An action is deemed to be pending from the time of its commencement until its final determination upon appeal, or until the time for appeal has passed, unless the judgment is sooner satisfied.” When the trial court quashed the service of summons, the action was still active in California because the matter was appealable, and the time for appeal had yet to pass. The Illinois court’s assertion of jurisdiction over the matter was therefore erroneous while the action was still pending. (See In re Marriage of Steiner (1979) Cal.App.3d 363, 371 [Colorado jurisdiction appropriate because time for appeal passed on appealable matter].)
“The first-filed rule in California means that when two courts of the same sovereignty have concurrent jurisdiction, the first to assume jurisdiction over a particular subject matter of a particular controversy takes it exclusively, and the second court should not thereafter assert control over that subject matter.” (Advanced Bionics Corp. v. Medtronic, Inc. (2002) 29 Cal.4th 697, 707.) Here, the two cases cover the same issues. California had not yet abandoned jurisdiction because the action was still pending on appeal. The Illinois court should not have asserted control over the matter.
We understand the practical effect of this ruling results in concurrent trials in two different jurisdictions, and runs the risk of conflicting judgments. However, two wrongs do not make a right, and certainly three wrongs do not. RSI properly brought this action in a California court and deserves to have its day in the appropriate jurisdiction of its choice.
V
Finally, we note this opinion does not address the motion to stay for forum non conveniens. This issue was not before this court, and this opinion should not be read as a de facto ruling on the issue. The parties may bring this issue before the trial court to be decided in the first instance.
VI
We reverse the order, and remand the action to proceed in accordance with the views expressed in this opinion. Appellant shall recover its costs on this appeal.
WE CONCUR: BEDSWORTH, ACTING P. J., ARONSON, J.