Ritz Fuente, LLC v. SHS Armin Schafer Jr., No. 3:2021cv01986 - Document 17 (S.D. Cal. 2023)
Court Description: ORDER Granting 13 Motion to Dismiss for Lack of Personal Jurisdiction; and Granting 14 Request for Limited Jurisdictional Discovery. Schafer's motion to dismiss for lack of personal jurisdiction is granted, and the FAC is dismissed with lea ve to amend. Ritz Fuente's request to designate an arbitrator is denied. Ritz Fuente's request for limited jurisdictional discovery is granted. Jurisdictional discovery must be completed no later than 9/15/2023, and a Second Amended Complaint must be filed no later than 9/29/2023. Signed by Judge Larry Alan Burns on 8/17/2023. (rmc)
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Ritz Fuente, LLC v. SHS Armin Schafer Jr. Doc. 17 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 RITZ FUENTE, LLC, a Wyoming limited liability company, 15 16 ORDER: Plaintiff, 13 14 Case No.: 3:21-cv-01986-LAB-JLB v. 1) GRANTING MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION, [Dkt. 13]; and SHS ARMIN SCHAFER JR., an individual residing in Germany, Defendant. 17 2) GRANTING REQUEST FOR LIMITED JURISDICTIONAL DISCOVERY, [Dkt. 14] 18 19 20 Plaintiff Ritz Fuente, LLC brought this action against Plaintiff SHS Armin 21 Schafer, Jr. for breach of contract stemming from the sale of a showjumping 22 horse. Ritz Fuente’s First Amended Complaint (“FAC”) alleges a single claim for 23 breach of contract. (Dkt. 5, FAC). Schafer moved to dismiss the FAC in its entirety 24 for lack of personal jurisdiction. (Dkt. 13). 25 Having considered the parties’ submissions and the relevant law, the Court 26 GRANTS Schafer’s motion to dismiss for lack of personal jurisdiction. The claim 27 against him is DISMISSED WITH LEAVE TO AMEND. Ritz Fuente’s request for 28 limited jurisdictional discovery as to the extent of Schafer’s sales and contacts in 1 3:21-cv-01986-LAB-JLB Dockets.Justia.com 1 California is GRANTED. 2 I. BACKGROUND 3 Plaintiff Ritz Fuente, LLC is a Wyoming limited liability company. (Dkt. 5, 4 FAC ¶ 1). Ritz Fuente has only two members: (1) Joseph Sorge, an individual 5 owning 75% and domiciled in Wyoming; and (2) Hanna Mauritzson, an individual 6 owning 25% and domiciled in San Diego, California. (Id.). Defendant SHS Armin 7 Schafer, Jr. is a citizen and domiciliary of the Federal Republic of Germany, where 8 he lives in the town of Bürstadt. (Id. ¶ 2). 9 In November 2018, Ritz Fuente entered a contract with Schafer to buy an 10 easy high level jumping horse. (Id. ¶ 5. See generally id., Ex. 1 Equine Purchase 11 Agreement (the “Agreement”)). Schafer represented that the horse was “in good 12 health and condition, satisfactory quality and fit for [Ritz Fuente]’s intended 13 purpose of competing at high level showjumping at the 1.50m level.” (Id., Ex. 1 14 § 3(b); id. ¶ 6). Under the terms of the Agreement, Schafer was to make the horse 15 available to a carrier of Ritz Fuente’s choice. (Id., Ex. 1 § 5(a)). Schafer was aware 16 the horse would be boarded in San Diego County and compete there and 17 elsewhere in the United States. (Id. ¶ 5). 18 The horse was delivered to Ritz Fuente in San Diego on or about 19 December 13, 2018. (Id. ¶ 7). Including this sale, Schafer has sold a total of 20 fourteen horses, four of which were sold to residents of California. (Dkt. 14-1, Decl. 21 of Hanna Mauritzen ¶¶ 6–8).1 In the months following the horse’s delivery, Ritz 22 Fuente discovered that it couldn’t compete at the 1.50m level. (FAC ¶ 9). Ritz 23 24 25 26 27 28 1 When considering a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, courts may consider plaintiff’s affidavits and declarations outside the complaint without converting the motion to a Rule 56 motion for summary judgment. See Dole Food Co. v. Watts, Inc., 303 F.3d 1104, 1108 (9th Cir. 2002) (noting that courts deciding Rule 12(b)(2) motions may look to papers outside the complaint, like pleadings or affidavits, to determine if the plaintiff can establish a prima facie case of personal jurisdiction). 2 3:21-cv-01986-LAB-JLB 1 Fuente attempted to initiate arbitration pursuant to the Agreement’s arbitration 2 clause but, following Schafer’s repeated refusal to arbitrate, initiated this action in 3 November 2021. (Id.). 4 In its FAC, Ritz Fuente asserts a single claim for breach of contract against 5 Schafer for failing to deliver a horse of the quality specified in the Agreement. (Id. 6 ¶¶ 10–15). Schafer moves to dismiss the FAC in its entirety, arguing that the Court 7 lacks personal jurisdiction over him. (See Dkt. 13). Ritz Fuente opposes Schafer’s 8 motion and requests the Court either: (1) designate an arbitrator, (Dkt. 14 9 at 16–22); or (2) order limited jurisdictional discovery into Schafer’s sales and 10 contacts in California if the Court finds it lacks personal jurisdiction over Schafer, 11 (id. at 23). 12 II. LEGAL STANDARD 13 Federal Rule of Civil Procedure 12(b)(2) governs motions to dismiss for lack 14 of personal jurisdiction. See Fed. R. Civ. P. 12(b)(2). The plaintiff must establish 15 that the court has personal jurisdiction over the defendant by “mak[ing] only prima 16 facie showing of jurisdictional facts to withstand the motion to dismiss.” Love v. 17 Associated Newspapers, Ltd., 611 F.3d 601, 608 (9th Cir. 2010). “Uncontroverted 18 allegations in the complaint must be taken as true, and conflicts over statements 19 contained in affidavits must be resolved in [the plaintiffs’] favor.” Id. at 608. 20 “Federal courts ordinarily follow state law in determining the bounds of their 21 jurisdiction over persons.” Daimler AG v. Bauman, 571 U.S. 117, 125 (2014) 22 (citing Fed. R. Civ. P. 4(k)(1)(A)). As “California’s long-arm statute allows the 23 exercise of personal jurisdiction to the full extent permissible under the U.S. 24 Constitution,” the inquiry centers on whether exercising jurisdiction over a 25 particular defendant comports with Due Process. Id.; see also Cal. Civ. Pro. Code 26 § 410.10 (“A court of this state may exercise jurisdiction on any basis not 27 inconsistent with the Constitution of this state or of the United States.”). “Due 28 process requires that the defendant ‘have certain minimum contacts’ with the 3 3:21-cv-01986-LAB-JLB 1 forum state ‘such that the maintenance of the suit does not offend traditional 2 notions of fair play and substantial justice.’” Picot v. Weston, 780 F.3d 1206, 1211 3 (9th Cir. 2015) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). 4 Federal courts may exercise either general or specific jurisdiction over 5 non-resident defendants. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 6 U.S. 408, 414 (1984). General jurisdiction exists when a defendant is “essentially 7 at home” in the forum state. Goodyear Dunlop Tires Operations, S.A. v. Brown, 8 564 U.S. 915, 919 (2011). Individuals are “at home” in their state of domicile. See 9 Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024 (2021) (citing 10 Daimler AG, 571 U.S. at 137). 11 “Specific jurisdiction, on the other hand, permits jurisdiction over a 12 defendant ‘less intimately connected’ with a forum state.” Davis v. Cranfield 13 Aerospace Sols., Ltd., 71 F.4th 1154, 1161 (9th Cir. 2023) (quoting Ford Motor 14 Co., 141 S. Ct. at 1024). Courts in the Ninth Circuit apply a three-part test to 15 determine whether a non-resident defendant has sufficient contacts with the forum 16 state to be subject to specific personal jurisdiction: 17 18 19 20 21 22 23 (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and 24 (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable. 25 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004) 26 (quoting Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir.1987)). The plaintiff must 27 prove the first two prongs, then the burden shifts to the defendant to “set forth a 28 ‘compelling case’ that the exercise of jurisdiction would not be reasonable.” See 4 3:21-cv-01986-LAB-JLB 1 CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1076 (9th Cir. 2011) 2 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476–78 (1985)). 3 “For claims sounding in contract, [the Ninth Circuit] generally appl[ies] a 4 ‘purposeful availment’ analysis and ask[s] whether a defendant has ‘purposefully 5 avail[ed] [himself] of the privilege of conducting activities within the forum State, 6 thus invoking the benefits and protections of its laws.’” Picot, 780 F.3d at 1212 7 (fourth and fifth alterations in original) (quoting Schwarzenegger, 374 F.3d at 802). 8 “To have purposefully availed [himself] of the privilege of doing business in the 9 forum, a defendant must have ‘performed some type of affirmative conduct which 10 allows or promotes the transaction of business within the forum state.’” Boschetto 11 v. Hansing, 539 F.3d 1011, 1016 (9th Cir. 2008) (quoting Sher v. Johnson, 911 12 F.2d 1357, 1362 (9th Cir. 1990)). “[A] contract alone does not automatically 13 establish minimum contacts in the plaintiff’s home forum.” Id. at 1017 (citing 14 Burger King, 471 U.S. at 478). Instead, “courts must evaluate the parties’ entire 15 course of dealing, not solely the particular contract . . . giving rise to the claim.” 16 Glob. Commodities Trading Grp., Inc. v. Beneficio de Arroz Choloma, S.A., 972 17 F.3d 1101, 1108 (9th Cir. 2020) (collecting cases). The defendant’s contacts with 18 the forum state must be “‘substantial’ and not merely ‘random, fortuitous, or 19 attenuated.’” Sher, 911 F.2d at 1362 (emphasis in original) (quoting Burger King, 20 471 U.S. at 479, 480); see also Walden v. Fiore, 571 U.S. 277, 285 (2014) 21 (quoting Burger King, 471 U.S. at 480) (discussing prior decisions upholding 22 jurisdiction asserted against defendants who “purposefully ‘reach[ed] out beyond’ 23 their State and into another by, for example, entering a contractual relationship 24 that ‘envisioned continuing and wide-reaching contacts’ in the forum State”). 25 A court may order limited jurisdiction discovery to help determine whether it 26 has personal jurisdiction over a party. Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 27 557 F.2d 1280, 1285 n.1 (9th Cir. 1977). A court may appropriately grant 28 jurisdictional discovery when facts bearing on the question of jurisdiction are 5 3:21-cv-01986-LAB-JLB 1 controverted or a more satisfactory showing of the facts is necessary. Boschetto, 2 539 F.3d at 1020 (citing Data Disc, 557 F.2d at 1285 n.1). 3 III. 4 5 DISCUSSION A. Personal Jurisdiction 1. General Jurisdiction 6 Ritz Fuente argues the Court has general personal jurisdiction over Schafer 7 because of his prior sales to California. (Dkt. 14 at 8). Specifically, it notes that 8 four out of Schafer’s fourteen total horse sales were made to California residents. 9 (Id.). It asserts that such sales constitute “continuous and systematic” contacts 10 with California sufficient to subject Schafer to general jurisdiction here. (Id.). 11 However, individual defendants are subject to general personal jurisdiction 12 in the state of their domicile, see Ford Motor Co., 141 S. Ct. at 1024, and, as 13 Schafer argues, sales history can’t be substituted in for domicile, (see Dkt. 13 14 at 5); Daimler AG, 571 U.S. at 137. Schafer is domiciled in Germany, and there is 15 no indication he intends to live in or move to California. (FAC ¶ 2); see Daimler 16 AG, 571 U.S. at 137. Schafer’s past sales to California residents aren’t sufficient 17 to make him essentially “at home” in the state. See Glencore Grain Rotterdam 18 B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1124–25 (9th Cir. 2002) 19 (stating that doing business with residents of the forum state doesn’t approximate 20 being at home in that forum state). None of the facts alleged by Ritz Fuente show 21 that Schafer is domiciled, or in any way “at home,” in California. See id. at 1125 22 (noting that defendants themselves having a physical presence in the forum state 23 is critical to finding general jurisdiction). Schafer isn’t subject to general personal 24 jurisdiction in California. 25 2. Specific Jurisdiction 26 Ritz Fuente also argues that the Court has specific personal jurisdiction over 27 Schafer because: he has previously sold horses to California residents; he was 28 aware that the horse would be sold to a California resident for use in California; 6 3:21-cv-01986-LAB-JLB 1 and he received $397,355 for the horse from a California bank account. (Dkt. 14 2 at 9–11). It contends that these contacts show that Schafer purposefully directed 3 his activities to California, (id. at 11–12), and that Schafer can’t rebut the 4 presumption of reasonableness in the exercise of jurisdiction, (id. at 13–16). 5 Schafer argues that the Court lacks specific personal jurisdiction over him 6 because the FAC fails to adequately allege that he purposefully availed himself of 7 the privilege of conducting activities within California, noting that he entered and 8 rendered complete performance under the Agreement in Germany. (See Dkt. 13 9 at 7–8). He also argues Ritz Fuente’s claim doesn’t relate to his contacts with 10 California and that exercising jurisdiction over him would be unreasonable. (Id. 11 at 9–12). 12 Preliminarily, the Court notes that the “effects” test Ritz Fuente advocates 13 for applies only to intentional torts. See Holland Am. Line Inc. v. Wartsila N. Am., 14 Inc., 485 F.3d 450, 460 (9th Cir. 2007). Because the FAC brings a breach of 15 contract claim, the Court instead applies the “purposeful availment” test. See 16 Picot, 780 F.3d at 1212. Under that test, “a defendant must have ‘performed some 17 type of affirmative conduct which allows or promotes the transaction of business 18 within the forum state.’” Boschetto, 539 F.3d at 1016 (quoting Sher, 911 F.2d 19 at 1362). 20 Nothing in Ritz Fuente’s FAC, opposition, or supporting declaration compels 21 the conclusion that Schafer “purposefully avail[ed himself] of the privilege of 22 conducting activities within [California].” Schwarzenegger, 374 F.3d at 802. First, 23 entering a contract with a California resident doesn’t, on its own, demonstrate 24 sufficient contacts with California to establish specific jurisdiction. Boschetto, 539 25 F.3d at 1017. Further, Schafer executed the Agreement in Germany and, to 26 completely perform under the Agreement, Schafer was required to deliver the 27 horse to Ritz Fuente’s preferred carrier in Germany. (FAC, Ex. A § 5(a)). These 28 facts are insufficient for the Court to conclude that Schafer “enter[ed] a contractual 7 3:21-cv-01986-LAB-JLB 1 relationship” with Ritz Fuente “that ‘envisioned continuing and wide-reaching 2 contacts’” in California. Walden, 571 U.S. at 285 (quoting Burger King, 471 U.S. 3 at 479–80). In other words, the Court can’t conclude that the Agreement was 4 centered in California or that Schafer “performed some type of affirmative conduct 5 which allow[ed] or promote[d] the transaction of business within [California].” Sher, 6 911 F.2d at 1362. Compare Boschetto, 539 F.3d 1011 (finding no personal 7 jurisdiction from a single eBay sale to a California resident), Sher, 911 F.2d 1357 8 (finding no personal jurisdiction from representation of California resident in 9 Florida criminal case when defendant accepted payment from a California bank 10 account and made phone calls and sent messages to California), and Thomas P. 11 Gonzalez Corp. v. Consejo Nacional De Produccion De Costa Rica, 614 F.2d 12 1247 (9th Cir. 1980) (finding no personal jurisdiction in California from a contract 13 resulting from public bidding in Costa Rica), with Glob. Commodities Trading Grp., 14 972 F.3d 1101 (finding personal jurisdiction when the defendant sustained a 15 relationship with a California company over several years and hundreds of 16 contracts). 17 Second, contrary to Ritz Fuente’s contentions, it isn’t enough that Schafer 18 knew he sold the horse to a California resident for use in California or that he was 19 paid from a California bank account because “‘foreseeability’ alone has never 20 been a sufficient benchmark for personal jurisdiction under the Due Process 21 Clause.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295 (1980). 22 Instead, Ritz Fuente must show that Schafer “deliberately ‘reached out beyond’ 23 [his] home—by, for example, ‘exploi[ting] a market’ in the forum State or entering 24 a contractual relationship centered there.” Ford Motor Co., 141 S. Ct. at 1025 25 (second alternation in original) (quoting Walden, 571 U.S. at 285). Ritz Fuente 26 hasn’t shown Schafer took such deliberate action. For example, the FAC doesn’t 27 allege Schafer targeted California residents (as opposed to residents of other 28 states) with advertisements or, as discussed above, entered contracts centered 8 3:21-cv-01986-LAB-JLB 1 in California. Instead, the record reflects that the Agreement minimized Schafer’s 2 contacts outside of Germany, even when he contracted with Ritz Fuente—a 3 Wyoming LLC with a 25% owner domiciled in California. (FAC ¶ 1); cf. Bristol- 4 Myers Squibb Co. v. Super. Ct. of Cal., S.F. Cnty., 582 U.S. 255, 268 (2017) 5 (rejecting argument that the defendant’s “decision to contract with a California 6 company” provided a sufficient basis for personal jurisdiction in California). 7 Ritz Fuente hasn’t alleged sufficient facts to show Schafer purposefully 8 availed himself of the privilege of conducting activities within California. Picot, 780 9 F.3d at 1212. Because Ritz Fuente hasn’t met its burden under the first prong, the 10 Court declines to consider the second and third prongs of the specific personal 11 jurisdiction analysis. 12 13 * * * For all these reasons, Ritz Fuente has failed to make a prima facia showing 14 of jurisdictional facts. See Love, 611 F.3d at 608. Schafer’s motion to dismiss for 15 lack of personal jurisdiction is GRANTED. (Dkt. 13). 16 B. 17 Ritz Fuente requests that, if the Court finds Schafer isn’t subject to personal 18 jurisdiction, it order limited jurisdictional discovery because available public 19 information suggests that jurisdictional discovery will yield relevant evidence. 20 (Dkt. 14 at 23). Schafer argues the request should be denied because it is based 21 on “little more than a hunch that [discovery] might yield jurisdictionally relevant 22 facts.” (Dkt. 15 at 8 (quoting Boschetto, 539 F.3d at 1020)). Jurisdictional Discovery 23 Jurisdictional discovery “may be appropriately granted where pertinent facts 24 bearing on the question of jurisdiction are controverted or where a more 25 satisfactory showing of the facts is necessary.” Boschetto, 539 F.3d at 1020 26 (quoting Data Disc, 557 F.2d at 1285 n.1). The Court finds that standard is 27 satisfied here and GRANTS Ritz Fuente’s request for limited jurisdictional 28 discovery. The parties are ORDERED to conduct limited jurisdictional discovery 9 3:21-cv-01986-LAB-JLB 1 only as to the extent of Schafer’s sales and contacts in California. 2 C. 3 Ritz Fuente also requests the Court exercise its authority under the Federal 4 Arbitration Act, 9 U.S.C. §§ 1 et seq., and designate an arbitrator. (Dkt. 14 5 at 16–22). However, the Court can’t issue any order related to the merits or 6 arbitration because it lacks personal jurisdiction over Schafer. See, e.g., 7 Nationwide Argibusiness Ins. Co. v. Buhler Barth GmbH, No. 15-cv-582-JAM- 8 EPG, 2015 WL 6689572, at *2 (E.D. Cal. Oct. 30, 2015). Ritz Fuente’s request is 9 DENIED. 10 IV. Designation of Arbitrator CONCLUSION 11 Schafer’s motion to dismiss for lack of personal jurisdiction is GRANTED, 12 and the FAC is DISMISSED WITH LEAVE TO AMEND. Ritz Fuente’s request to 13 designate an arbitrator is DENIED. Ritz Fuente’s request for limited jurisdictional 14 discovery is GRANTED. Jurisdictional discovery must be completed no later than 15 September 15, 2023, and a Second Amended Complaint must be filed no later 16 than September 29, 2023. 17 IT IS SO ORDERED. 18 19 20 Dated: August 17, 2023 Hon. Larry Alan Burns United States District Judge 21 22 23 24 25 26 27 28 10 3:21-cv-01986-LAB-JLB
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