Bray v. Kendall et al, No. 3:2008cv00535 - Document 45 (N.D. Cal. 2010)
Court Description: ORDER GRANTING MOTION TO DISMISS. Signed by Judge Samuel Conti on 1/5/10. (sclc1, COURT STAFF) (Filed on 1/5/2010)
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Bray v. Kendall et al Doc. 45 1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE NORTHERN DISTRICT OF CALIFORNIA 6 7 LELAND BRAY, 8 Plaintiff, 9 v. For the Northern District of California United States District Court 10 11 12 MESSMORE KENDALL, HONEY TAYLOR, MESSMORE KENDALL III, ALEXANDER KENDALL, and DOES 1 through 100, inclusive, 13 Defendants. 14 ) Case No. 08-0535 SC ) ) ORDER GRANTING DEFENDANT'S ) MOTION TO DISMISS ) ) ) ) ) ) ) ) ) 15 16 17 I. INTRODUCTION Now before the Court is the Motion to Dismiss the First 18 Amended Complaint for Lack of Personal Jurisdiction and Improper 19 Venue ("Motion"), and Memorandum of Support ("Kendall Mem.") filed 20 by Defendant Messmore Kendall ("Kendall"), Docket No. 16. 21 Plaintiff Leland Bray ("Bray") filed an Opposition ("Opp'n"). 22 Docket No. 37. 23 parties were asked to submit additional briefing regarding the 24 service and venue provisions of the Racketeer Influenced and 25 Corrupt Organizations Act ("RICO"), as well as the jurisdictional 26 consequences thereof. 27 Kendall has submitted a Supplemental Brief and Bray has submitted a 28 Supplemental Opposition. In this Court's Order of September 23, 2009, the Docket No. 39. In response to that Order, Docket No. 42 ("Kendall Supplemental Dockets.Justia.com 1 Br."), 44 ("Supplemental Opp'n"). Having considered all of the 2 papers submitted by both parties, the Court hereby GRANTS Kendall's 3 Motion, for the reasons stated below. 4 5 II. Bray is a citizen of the United States, with his primary 6 United States District Court For the Northern District of California BAKCGROUND 7 residence in the State of California. First Am. Compl. ("FAC"), 8 Docket No. 13, ¶ 1. 9 originated, Bray was residing with his wife in Baja California. At the end of 2003, the time that this dispute 10 Bray Decl.1 ¶ 7. 11 Bray has acknowledged that Kendall and all other Defendants are not 12 residents of California. Kendall resides in Florida. Kendall Decl.2 ¶ 2. FAC ¶ 2. Kendall was the owner of a house in Puerto Vallarta, Mexico. 13 14 Id. ¶ 7. He owned it pursuant to a bank trust with Bital Bank, 15 which was later purchased by HSBC Bank. 16 Taylor, Messmore Kendall III, and Alexander Kendall (collectively 17 with Kendall, "Defendants") were subsequent beneficiaries of that 18 trust. 19 a company that represents itself as being experienced in 20 transferring property in Mexico to American citizens. 21 PV Real Estate operates its business from Puerto Vallarta. 22 Bray Decl. Ex. A. 23 of PV Real Estate, Bray and his wife met with its agents and agreed 24 to purchase Kendall's house. 25 First American Title Company ("First American") in Sunrise, Id. Id. Defendants Honey Kendall listed the house for sale with PV Real Estate, Id. ¶¶ 8-9. See In December of 2003, after viewing the website FAC ¶¶ 9-10. An escrow was opened at 26 27 28 1 Bray submitted a declaration in support of the Opposition. Docket No. 36. 2 Kendall submitted a declaration in support of the Motion. Docket No. 18. 2 1 Florida.3 Bray claims that the contract and escrow instructions "omitted 2 3 any mention of capital gains and fixed a specific date for closing 4 of the sale without making any provision for extending the time for 5 closing of the escrow in the event such was necessary." 6 Bray claims that he was unaware of this problem, and after signing 7 the documents, he wired $44,000 as a 10% guaranteed deposit, and a 8 $500 escrow fee, from his bank in California to First American. 9 Id. ¶¶ 13,14. United States District Court Id. ¶ 12. Bray claims that although Kendall signed a cesion of rights 10 For the Northern District of California Id. ¶ 11. 11 with respect to the property and delivered it to HSBC, the bank 12 refused to accept the cesion of rights because it should have been 13 signed by Kendall's attorney in fact, rather than by Kendall 14 himself. 15 concealed this fact from him. 16 transfer was underway, he authorized Kendall and PV Real Estate to 17 immediately receive any money sent to the escrow account. 18 ¶ 18-19. 19 bank in California transferred the remaining $400,000 in purchase 20 money to First American, and this money was distributed before 21 Kendall turned over the property to Bray. 22 suggests that someone at PV Real Estate and/or Kendall "faxed 23 forged documents purportedly signed by the Brays to First 24 American." Bray contends that PV Real Estate Id. ¶ 17. Because Bray believed the Id. Bray claims that sometime before February 13, 2004, his Id. ¶ 19. Bray also Id. Although Bray and his wife eventually moved into the house, 25 26 Id. ¶¶ 16-17. Bray never received legal title. Bray Decl. ¶¶ 16-18. The parties 27 28 3 Bray also refers to this as First American Title Insurance Company. FAC ¶ 14. 3 1 attempted to resolve the dispute over the title for many years, 2 however they have apparently been unable to resolve the question of 3 who should be responsible for the capital gains tax. 4 January of 2008, Bray filed suit against Defendants in the Northern 5 District of California. 6 action, ranging from fraud and negligent misrepresentation to 7 violation of RICO. Id. ¶ 21. In Bray asserts a total of ten causes of 8 United States District Court For the Northern District of California 9 III. LEGAL STANDARDS 10 Rule 12(b)(2) of the Federal Rules of Civil Procedure permits 11 a court to dismiss a suit for lack of personal jurisdiction over a 12 defendant. 13 jurisdiction is appropriate, but in the absence of an evidentiary 14 hearing, the plaintiff need only make a prima facie showing of 15 jurisdictional facts." 16 Cir. 1990). 17 affidavits to assist in its determination and may order discovery 18 on the jurisdictional issues." 19 922 (9th Cir. 2001). 20 "The burden of proof is on the plaintiff to show that Sher v. Johnson, 911 F.2d 1357, 1361 (9th The "court may consider evidence presented in Doe v. Unocal Corp., 248 F.3d 915, Generally, jurisdiction must comport with both the long-arm 21 statute of the state in which the district court sits, as well as 22 the constitutional requirements of due process. 23 Greiner & Hausser GmbH, 354 F.3d 857, 863 (9th Cir. 2003). 24 Ninth Circuit has recognized that the California long-arm statute, 25 Cal. Code Civ. Proc. § 410.10, allows Courts to exercise 26 jurisdiction consistent with the limits of the Due Process Clause 27 of the Constitution, "so a federal court may exercise personal 28 jurisdiction if doing so comports with federal constitutional due 4 Mattel, Inc., v. The 1 process." 2 2009). Boschetto v. Hansing, 539 F.3d 1011, 1015-16 (9th Cir. 3 4 United States District Court For the Northern District of California 5 IV. DISCUSSION A defendant may be subject to personal jurisdiction within a 6 particular judicial district pursuant to theories of either general 7 or specific jurisdiction. 8 either case, the "defendant must have at least 'minimum contacts' 9 with the relevant forum such that the exercise of jurisdiction See Boschetto, 539 F.3d at 1015-16. In 10 'does not offend traditional notions of fair play and substantial 11 justice.'" 12 jurisdiction "permits a defendant to be haled into court in the 13 forum state to answer for any of its activities anywhere in the 14 world," and requires that the defendant be engaged in "continuous 15 and systematic general business contacts" that "approximate 16 physical presence" in the forum. 17 801 (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 18 U.S. 408, 416 (1984); Bancroft & Masters, Inc. v. Augusta Nat'l, 19 Inc., 223 F.3d 1082, 1086 (9th Cir. 2000)). 20 Id. (quoting Schwarzenegger, 374 F.3d at 801). General See Schwarzenegger, 374 F.3d at Alternatively, "a court may exercise specific jurisdiction 21 over a foreign defendant if his or her less substantial contacts 22 with the forum give rise to the cause of action before the court." 23 Unocal Corp., 248 F.3d at 923. 24 three-pronged test to determine whether specific jurisdiction over 25 a non-resident defendant is appropriate: 26 27 28 The Ninth Circuit has developed a (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 5 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 (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable. 1 2 3 4 5 6 Boschetto, 539 F.3d at 1016 (quoting Schwarzenegger, 374 F.3d at 7 801). 8 A. Whether Bray's RICO Claim Permits Personal Jurisdiction Before This Court Based on "National" Contacts 9 United States District Court For the Northern District of California 10 The Court must first determine which forum is relevant for 11 measuring minimum contacts and determining personal jurisdiction: 12 California, or the United States. 13 their jurisdiction over defendants from the proper service of 14 process as to those defendants, and their jurisdiction is therefore 15 bounded by the statutes that authorize service. 16 Embroidery Corp. v. Atl. Embroidery, Inc., 368 F.3d 1174, 1177 (9th 17 Cir. 2004). 18 authorize nationwide service of process, any federal district court 19 has jurisdiction over a properly served defendant that has minimum 20 contacts with the United States. 21 this regard -- where Congress establishes nationwide service of 22 process, such service may establish personal jurisdiction over a 23 defendant. 24 "the relevant forum with which a defendant must have 'minimum 25 contacts' in a suit brought under Section 12 of the Clayton Act is 26 the United States," rather than the particular state in which the 27 district court sits. 28 similarly authorizes nationwide service of process. District courts generally derive See Action Bray argues that under certain federal statutes that Opp'n at 8. Bray is correct in In Action Embroidery, the Ninth Circuit recounted that 368 F.3d at 1180. 6 Bray argues that RICO Opp'n at 8. 1 Under this reasoning, Kendall's contacts with California are 2 irrelevant to personal jurisdiction, so long as he has minimum 3 contacts with the United States. 4 addressed the service provisions of the Clayton Act, and did not 5 hold that RICO includes a national service provision. 6 before this Court is therefore whether RICO in fact authorizes 7 national service of process under Ninth Circuit law. 8 United States District Court For the Northern District of California 9 However, Action Embroidery, The question Bray does not identify which RICO provision he is relying on to authorize national service of process. RICO has two provisions 10 that circuit courts have identified as relevant to service of 11 process: Sections 1965(b) and 1965(d) of title 18 of the United 12 States Code. Section 1965(b) states: [A]ny district court of the United States in which it is shown that the ends of justice require that other parties residing in any other district be brought before the court, the court may cause such parties to be summoned, and process for that purpose may be served in any judicial district of the United States by the marshal thereof. 13 14 15 16 17 18 18 U.S.C. § 1965(b). 19 process in any action or proceeding under this chapter may be 20 served on any person in any judicial district in which such person 21 resides, is found, has an agent, or transacts his affairs." 22 § 1965(d). 23 should be read. 25 issue. 27 28 Id. A circuit split has developed regarding how these provisions 24 26 Subsection (d) states that "[a]ll other The Ninth Circuit was the first to address this It relied exclusively on subsection (b) to conclude that: the right to nationwide service in RICO suits is not unlimited. For nationwide service to be imposed under section 1965(b), the court must have personal jurisdiction over at least one of the participants in the alleged multidistrict 7 conspiracy and the plaintiff must show that there is no other district in which a court will have personal jurisdiction over all of the alleged coconspirators. 1 2 United States District Court For the Northern District of California 3 4 Butcher's Union Local No. 498 v. SDC Invest., Inc., 788 F.2d 535, 5 538 (9th Cir. 1986) (citations omitted). 6 Circuit has held that a plaintiff may utilize subsection (b) to 7 establish personal jurisdiction over codefendants only if there is 8 personal jurisdiction -- using traditional state-based minimum 9 contact analysis -- over at least one defendant. In other words, the Ninth This would 10 require Bray to establish minimum contacts between at least one 11 Defendant and California. 12 the significance of subsection (d). 13 However, Butcher's Union did not address Bray cites two decisions issued by the Fourth and Eleventh 14 Circuits, both of which were authored roughly eleven years after 15 Butcher's Union, and both of which rely on subsection (d) to 16 conclude that RICO generally does authorize nationwide service of 17 process. 18 119 F.3d 935, 942 (11th Cir. 1997); ESAB Group, Inc. v. Centricut, 19 Inc., 126 F.3d 617, 626 (4th Cir. 1997). 20 the circuit courts found that RICO authorizes nationwide service of 21 process, and that district courts may therefore establish personal 22 jurisdiction based upon a defendant's minimum contacts with the 23 United States where the plaintiff brings a RICO claim. 24 Bray cites Panama and ESAB Group to support his arguments, this 25 Court assumes that Bray is not basing his assertion of nationwide 26 service of process on this subsection. 27 28 Republic of Panama v. BCCI Holdings (Luxembourg) S.A., In both of these cases, Because Kendall argues that this Court should not adopt the reading of subsection (d) that is found in Panama and ESAB Group. 8 Although United States District Court For the Northern District of California 1 the Ninth Circuit has not revisited the question of nationwide 2 service under RICO since Butcher's Union, Kendall argues that the 3 position of the Fourth and Eleventh Circuits has not spread to 4 other circuits, and is effectively precluded by Butcher's Union. 5 Kendall Supplemental Br. at 3-4. 6 Circuit thoroughly addressed the progression of case law 7 surrounding RICO's service provisions in Cory v. Aztec Steel Bldg., 8 Inc., 468 F.3d 1226, 1229-33 (10th Cir. 2006). 9 that the Seventh and Second Circuits had already taken positions This Court agrees. The Tenth It first observed 10 similar to that taken by the Ninth Circuit in Butcher's Union, by 11 looking exclusively to subsection (b) to permit conditional 12 nationwide service. 13 Cork & Seal Co., 138 F.3d 65 (2nd Cir. 1998); Lisak v. Mercantile 14 Bancorp, Inc., 834 F.2d 668, 671 (7th Cir. 1987)). 15 the Second Circuit had analyzed the entirety of 18 U.S.C. § 1695 to 16 conclude that jurisdiction must rest on § 1965(b) alone, and 17 explicitly rejected using subsection (d) to authorize nationwide 18 service of summons, finding that its reference to "other process" 19 referred only to process other than summons or government 20 subpoenas. 21 Circuit adopted this position as well, id. at 1231, as did the D.C. 22 Circuit two years later, FC Inv. Group LC v. IFX Mkts., Ltd, 529 23 F.3d 1087, 1099 (D.C. Cir. 2008). 24 Id. at 1230 (citing PT United Can Co. v. Crown Id. (citing PT United, 138 F.3d at 72). It noted that The Tenth Although this Court requested additional briefing on the issue 25 of nationwide service of process after Bray raised the argument in 26 his Opposition, Bray did not address this issue in his Supplemental 27 Opposition, and has not suggested that the Ninth Circuit's position 28 has shifted since Butcher's Union. 9 Given the Ninth Circuit's United States District Court For the Northern District of California 1 decision with respect to subsection (b), its silence with respect 2 to subsection (d), and other circuit courts' rejection of 3 nationwide service under subsection (d), this Court will not allow 4 Plaintiff to rely on subsection (d) alone to establish 5 jurisdiction. 6 district court where personal jurisdiction can be established over 7 at least one defendant, summonses can be served nationwide on other 8 defendants if required by the ends of justice." 9 1131. "When a civil RICO action is brought in a Cory, 468 F.3d at Consequently, Bray needs to establish that this Court has 10 personal jurisdiction over at least one defendant, based on minimum 11 contacts with California, before he may rely on RICO's nationwide 12 service of process provision to establish jurisdiction over the 13 codefendants. 14 B. 15 Bray has not suggested that Defendants are subject to general Butcher's Union, 788 F.2d at 538. Minimum Contacts with California 16 jurisdiction in California. 17 purposefully entered into the transaction to sell the Property to 18 Bray knowing that Bray was an American citizen and that the money 19 for the purchase price was coming from California." 20 Rather, Bray asserts that "Kendall Opp'n at 6. Although Bray apparently held a California residence at the 21 time that he dealt with PV Real Estate, he claims to have been 22 residing outside of the United States at the time, within Baja 23 California. 24 office. 25 performed by Defendants or their agents was ever "directed" at 26 California. 27 was directed to California. 28 negotiating with a California resident can suffice to establish Bray Decl. ¶ 7. FAC. ¶ 9. Bray met with PV Real Estate in their Bray has failed to explain how any act Nor has Bray identified a single communication that This Court is not persuaded that 10 1 personal jurisdiction, where there is no basis to conclude that any 2 of the negotiations took place in California. United States District Court For the Northern District of California 3 Bray informed PV Real Estate that he would be paying for the 4 property with funds that were located in California, and that 5 Defendants "caused" him to wire these funds from California into 6 the escrow account in Florida. 7 drawing funds from a California bank account is not sufficient to 8 establish jurisdiction in California. 9 is drawn is generally of little consequence to the payee and is a Bray Decl. ¶¶ 8, 11. However, "[T]he bank on which a check 10 matter left to the discretion of the drawer. 11 activity of another party or a third person is not an appropriate 12 consideration when determining whether a defendant has sufficient 13 contacts with a forum State to justify an assertion of 14 jurisdiction." 15 Inc. v. Manama Textile Mills, W.L.L., No. 06-4129, 2008 U.S. Dist. 16 LEXIS 12791, *26 (Feb. 20, 2008 D.N.J.) ("[I]t is improper to 17 sustain specific jurisdiction on the basis of the location of a 18 resident party's bank."); Int'l Beauty Prods., LLC v. Beveridge, 19 402 F. Supp. 2d 1261, 1275 (D. Col. 2005) ("[T]he fact that checks 20 are drawn on a Colorado bank account is not sufficient to show harm 21 in Colorado when, as here, the checks are cashed in another 22 state."). 23 Such unilateral Helicopteros, 466 U.S. at 416-17; see also Synergy, Bray offers a number of other sundry connections between the 24 Defendants and California, but none of these are sufficient to 25 establish minimum contacts. 26 to California, he has not come since 1981. 27 fact that Kendall's "friend and agent" at PV Real Estate frequently 28 comes to California or advertises in California is insufficient. Although Kendall admits to having been 11 Kendall Decl. ¶ 3. The United States District Court For the Northern District of California 1 See Bray Decl. ¶ 27. This connection is far too tenuous to support 2 asserting personal jurisdiction over Kendall or the other 3 Defendants. 4 facie showing of minimum contacts between Kendall, or any other 5 Defendant, and the State of California.4 The Court concludes that Bray has not made a prima 6 C. Transfer 7 Bray has requested that this suit be transferred to Florida in 8 the event that personal jurisdiction is found lacking. Opp'n at 8. 9 28 U.S.C. § 1406(a) states that "[t]he district court of a district 10 in which is filed a case laying venue in the wrong division or 11 district shall dismiss, or if it be in the interests of justice, 12 transfer such case to any district in or division in which it could 13 have been brought." 14 therefore whether justice requires transfer of this suit to 15 Florida, rather than dismissal. 28 U.S.C. § 1406(a). The question is The only affirmative reason that Bray provides for transfer is 16 17 that "Kendall admits he resides in Florida." Id. at 9. 18 never explains why the interests of justice require transfer. 19 does not explain why he would be prejudiced by a failure to 20 transfer. 21 run that would prevent him from refiling in a more proper forum. 22 The Court may decline to transfer based solely upon this failure. Bray He He does not suggest that a statute of limitations has What Bray does provide is several pages of briefing to explain 23 24 why the forum-selection provision of the offer document that he 25 signed is inoperative (in fact, this is the only topic that is 26 substantially addressed by Bray's supplemental brief). 27 28 4 Opp'n at Because of the Court's finding with respect to personal jurisdiction, it need not reach Kendall's claim that venue is improper. 12 United States District Court For the Northern District of California 1 9-11; Supplemental Opp'n at 1-4. The Court is unpersuaded. Bray 2 has not met his burden of establishing that the forum-selection 3 provision is unenforceable, and this provision weighs against 4 transferring this case to Florida in the interest of justice. 5 Although this suit does involve two United States citizens, it is 6 not a local dispute, and the parties have unambiguously selected a 7 Mexican forum to resolve it. 8 would submit to the jurisdiction of the Court and Tribunals of the 9 City of Puerto Vallarta for "interpretation and execution of the The contract stated that the parties 10 present Offer . . . waiving to those [jurisdictions] that may 11 correspond them by virtue of their present and future domiciles." 12 Bray Decl. Ex. B ("Bray Offer") at 5. 13 than designate a Mexican forum as a possible forum -- it 14 unambiguously waives access to the jurisdictions of the parties' 15 home fora. 16 chosen forum is inadequate, or even inconvenient, except by 17 stating in a conclusory manner that a Mexican forum will not be 18 "expeditious and fair" and will be "unpredictable and corrupt." 19 Opp'n at 11. 20 transfer to Florida is in the interest of justice. This language does more Bray has not stated any compelling reason why the Bray has not presented any compelling reason why 21 22 23 24 25 V. CONCLUSION The First Amended Complaint is hereby DISMISSED for lack of personal jurisdiction over Defendants. IT IS SO ORDERED. 26 27 28 Dated: January 5, 2010 UNITED STATES DISTRICT JUDGE 13
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