Case Number: 21SMCV00182 Hearing Date: June 5, 2024 Dept: 207
TENTATIVE RULING
| DEPARTMENT | 207 |
| HEARING DATE | June 5, 2024 |
| CASE NUMBER | 21SMCV00182 |
| MOTIONS | Motions to Quash Service of Summons |
| MOVING PARTIES | (1) Defendants Amanda Staveley and Cantervale Ltd.
(2) Defendants David Reuben and Simon Reuben (3) Defendant Koronus Holdings |
| OPPOSING PARTY | Plaintiff Keyway Pride Limited |
BACKGROUND
This case arises from a dispute over the rightful ownership of a Beverly Hills property. On January 25, 2021, Plaintiff Keyway Pride Limited LLC (“Plaintiff” or “Keyway”) filed a verified complaint to cancel deed and quiet title against Defendant 25 Beverly Park Circle Propco LLC (“Propco”).
On November 17, 2023, with leave of the Court, Plaintiff filed the Verified First Amended Complaint (“FAC”) adding Defendants Koronus Holdings Designated Activity Company (“Koronus”); Simon Reuben (“Simon”); David Reuben (“David”) (together, “the Reuben Defendants”); Amanda Staveley (“Staveley”); PCP Capital Partners LLP (“PCP”); Cantervale Limited (“Cantervale”); and Chicago Title Company (“Chicago Title”), alleging six causes of action: (1) cancel deed and quiet title; (2) civil violation of Penal Code section 496; (3) declaratory relief; (4) breach of contract; (5) gross negligence; and (6) unfair competition.
Before the Court are now three Motions to Quash Service of the Summons and FAC (“MTQ”), filed by the Moving Defendants (1) Staveley and Cantervale; (2) David and Simon Reuben; and (3) Koronus.
Plaintiff opposes the motions and the Moving Defendants reply.
REQUESTS FOR JUDICIAL NOTICE
Defendants’ Request for Judicial Notice
Defendant Koronus requests judicial notice of the following:
Exhibit 1: Grant Deed dated May 18, 2017, that was recorded in the Los Angeles County Recorder’s Office as Instrument No. 20170595928 on May 31, 2017.
Exhibit 2: Deed of Trust and Assignment of Rents dated July 23, 2018, recorded in the Los Angeles County Recorder’s Office as Instrument No. 20180746805 on July 26, 2018.
Exhibit 3: First Amendment to Deed of Trust and Assignment of Rents dated July 23, 2019, recorded in the Los Angeles County Recorder’s Office as Instrument No. 2019039509 on September 11, 2019.
Exhibit 4: Grant Deed dated November 17, 2020, that was recorded in the Los Angeles County Recorder’s Office as Instrument No. 20201498615 on November 20, 2020.
Exhibit 5: Substitution of Trustee and Full Reconveyance dated November 18, 2020, recorded in the official records of the Los Angeles County Recorder’s Office as Instrument No. 20201498616 on November 20, 2020.
Exhibit 6: Keyway Pride Limited LLC’s February 23, 2021, Statement of Information filed with the Secretary of State of California.
Similarly, the Reuben Defendants request judicial notice of:
Exhibit 1: Grant Deed dated May 18, 2017, that was recorded in the Los Angeles County Recorder’s Office as Instrument No. 20170595928 on May 31, 2017 [the same as Koronus’s RJN Ex. 1.]
Exhibit 2: Deed of Trust and Assignment of Rents dated July 23, 2018, recorded in the Los Angeles County Recorder’s Office as Instrument No. 20180746805 on July 26, 2018 [the same as Koronus’s RJN Ex. 2.]
Exhibit 3: Grant Deed dated November 17, 2020, that was recorded in the Los Angeles County Recorder’s Office as Instrument No. 20201498615 on November 20, 2020 [the same as Koronus’s RJN Ex. 4.]
Exhibit 4: Keyway Pride Limited LLC’s February 23, 2021, Statement of Information filed with the Secretary of State of California [the same as Koronus’s RJN Ex. 6.]
For ease of reference, the Court refers to these exhibits using Koronus’s Exhibit numbering.
With respect to Exhibits 1-5, courts can take judicial notice of the existence and recordation of real property records, including deeds, if authenticity is not reasonably disputed. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265.) “The official act of recordation and the common use of a notary public in the execution of such documents assure their reliability, and the maintenance of the documents in the recorder’s office makes their existence and text capable of ready confirmation, thereby placing such documents beyond reasonable dispute.” (Ibid.) Moreover, courts can take judicial notice not only of the existence and recordation of recorded documents but also matters that can be deduced from the documents, including the parties, dates, and legal consequences of recorded documents relating to real estate transactions. (Ibid.) Therefore, the Court takes judicial notice of Exhibits 1-5.
With regard to Exhibit 6, Koronus and the Reuben Defendants request judicial notice pursuant to Evidence Code section 452, subdivisions (c) and (h). Subdivision (c) permits courts to take judicial notice of “[o]fficial acts of the legislative, executive, and judicial departments of the United States and of any state of the United States.” Subdivision (h) provides judicial notice may be taken of “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.
Official notices, statements, and certificates made by the Secretary of State and by the Franchise Tax Board are properly the subject of judicial notice as documents reflecting official acts of the state’s executive department, pursuant to Evidence Code section 452, subdivision (c). (Friends of Shingle Springs Interchange, Inc. v. County of El Dorado (2011) 200 Cal.App.4th 1470, 1483–1484.) However, “materials prepared by private parties and merely on file with the state agencies” may not be properly judicially noticed as an official act of a legislative, executive, or judicial department of the United States or any state of the United States. (People v. Thacker (1985) 175 Cal.App.3d 594, 598.)
Moreover, Courts may not take judicial notice of the truth hearsay statements contained in documents filed by the parties. (See, e.g., Lockley v. Law Office of Cantrell, Green, Pekish, Cruz & McCort (2001) 91 Cal.App.4th 875, 882.) Therefore, while the Court could take judicial notice of Exhibit 6 as evidence that Keyway filed the document with the Secretary of State on February 23, 2021, or that it made the statements contained therein, the Court cannot take judicial notice of the truth of those statements. In briefing, Koronus and the Reuben Defendants rely on Exhibit 6 as evidence that Keyway’s manager, G Robinson & Company LLC is located in New Jersey. (See Koronus MTQ at p. 15, Reuben Defendants’ MTQ at p. 15.) Therefore, the Court denies the requests to take judicial notice of Exhibit 6.
Plaintiff’s Request for Judicial Notice
Plaintiff requests judicial notice of the following:
Exhibit 1: Section 1139 entitled “Service of documents on company” of the United Kingdom’s Companies Act 2006.
Exhibit 2: Section 1140 entitled “Service of document on company” of the United Kingdom’s Companies Act 2006.
Evidence Code section 452, subdivision (f) permits courts to take judicial notice of “[t]he law of an organization of nations and of foreign nations and public entities in foreign nations.” Therefore, the Court takes Judicial Notice of Plaintiff’s Exhibits 1-2.
EVIDENTIARY OBJECTIONS
The Court rules as follows with respect to Plaintiff’s evidentiary objections:
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
- Overruled
LEGAL STANDARDS
- SERVICE
For service on persons within California, generally, service of summons and complaint must be done by personal service. (Code Civ. Proc., § 415.10.) However, “[i]f a copy of the summons and complaint cannot with reasonable diligence be personally delivered to the person to be served,” they may be served by leaving a copy of the summons and complaint at the person’s dwelling house, usual place of abode, usual place of business, or usual mailing address with a competent member of the household or person apparently in charge of the office, place of business, or usual mailing address, at least 18 years old, by informing them of the contents, and thereafter mailing a copy to the person at the place where the copy was left. (Code Civ. Proc., § 425.20, subd. (b).)
Under California law, “[a] summons may be served on a business organization, form unknown, by leaving a copy of the summons and complaint during usual office hours with the person who is apparently in charge of the office of that business organization, and by thereafter mailing a copy of the summons and complaint by first-class mail, postage prepaid, to the person to be served at the place where a copy of the summons and complaint was left. Service of a summons in this manner is deemed complete on the 10th day after the mailing.” (Code Civ. Proc., § 415.95.)
Under Code of Civil Procedure section 413.10, subdivision (c), a summons shall be served on a person “[o]utside the United States, as provided in this chapter or as directed by the court in which the action is pending, or, if the court before or after service finds that the service is reasonably calculated to give actual notice, as prescribed by the law of the place where the person is served or as directed by the foreign authority in response to a letter rogatory. These rules are subject to the provisions of the Convention of the ‘Service Abroad of Judicial and Extrajudicial Documents’ in Civil or Commercial Matters (Hague Service Convention).” (Code Civ. Proc., § 413.10, subd. (c).) The methods enumerated in Section 413.10, subdivision (c) for serving defendants abroad all require transmission of documents abroad, and therefore are preempted by the Hague Service Convention as to defendants in signatory countries. (Kott v. Superior Court (1996) 45 Cal.App.4th 1126, 1136.)
“The primary innovation of the Hague Service Convention — set out in Articles 2–7 — is that it requires each state to establish a central authority to receive requests for service of documents from other countries.” (Water Splash, Inc. v. Menon (2017) 581 U.S. 271, 275 [cleaned up].) “Submitting a request to a central authority is not, however, the only method of service approved by the Convention. For example, Article 8 permits service through diplomatic and consular agents; Article 11 provides that any two states can agree to methods of service not otherwise specified in the Convention; and Article 19 clarifies that the Convention does not preempt any internal laws of its signatories that permit service from abroad via methods not otherwise allowed by the Convention.” (Ibid.) Article 10 of the Convention provides:
Provided the State of destination does not object, the present Convention shall not interfere with—
(a) the freedom to send judicial documents, by postal channels, directly to persons abroad,
(b) the freedom of judicial officers, officials or other competent persons of the State of origin to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination,
(c) the freedom of any person interested in a judicial proceeding to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination.”
(Ibid.)
In addition to service through the Hague Service Convention’s Central Authority, the United Kingdom of Great Britain and Northern Ireland (“UK”) also permits “direct” service.[1]
A state may also exercise jurisdiction over an individual who consents to such jurisdiction. (Nobel Farms, Inc. v. Pasero (2003) 106 Cal.App.4th 654, 658.) “Express consent to a court’s jurisdiction will occur by generally appearing in an action or by a valid forum-selection clause designating a particular forum for dispute resolution regardless of residence.” (Ibid. [cleaned up].) “Consent to a court’s jurisdiction may also be implied by conduct.” (Ibid.) For example, a nonresident plaintiff who commences an action thereby submits to that “[c]ourt’s personal jurisdiction on any cross-complaint filed against him by the defendant.” (Ibid.) “Similarly, a nonresident plaintiff who has filed a suit in California against particular parties has consented to jurisdiction in California when these same parties later sue him in a related action.” (Sea Foods Co., Ltd. v. O.M. Foods Co., Ltd. (2007) 150 Cal.App.4th 769, 786.) “By choosing a particular forum, [the] plaintiff is considered to have voluntarily submitted to the court’s jurisdiction ‘for all purposes for which justice to the defendant requires his presence.” (Ibid.)
- PERSONAL JURISDICTION
“A defendant, on or before the last day of his or her time to plead or within any further time that the court may for good cause allow, may serve and file a notice of motion for one or more of the following purposes: (1) To quash service of summons on the ground of lack of jurisdiction of the court over him or her.” (Code Civ. Proc., § 418.10, subd. (a)(1).)
“[W]hen jurisdiction is challenged by a nonresident defendant, the burden of proof is upon the plaintiff to demonstrate that ‘minimum contacts’ exist between the defendant and the forum state to justify imposition of personal jurisdiction.” (Mihlon v. Superior Court (1985) 169 Cal.App.3d 703, 710.) It is thus upon the plaintiff to demonstrate by a preponderance of the evidence that all jurisdictional criteria are met. (Ziller Electronics Lab GmbH v. Superior Court (1988) 206 Cal.App.3d 1222, 1232.)
Moreover, “on a challenge to personal jurisdiction by a motion to quash, the plaintiff has the burden of proving, by a preponderance of the evidence, the factual bases justifying the exercise of jurisdiction.” (ViaView, Inc. v. Retzlaff (2016) 1 Cal.App.5th 198, 209–210 (hereafter ViaView).) “The plaintiff must come forward with affidavits and other competent evidence to carry this burden and cannot simply rely on allegations in an unverified complaint.” (Id. at p. 210.) If plaintiff meets this burden, “it becomes the defendant’s burden to demonstrate that the existence of jurisdiction would be unreasonable.” (Buchanan v. Soto (2015) 241 Cal.App.4th 1353, 1362.)
California’s long-arm statute grants its courts the power to assert personal jurisdiction over out-of-state parties to the maximum extent that the state and federal constitutions allow. (Code Civ. Proc., § 410.10.) Under the due process clause of the Fourteenth Amendment to the United States Constitution, state courts may exercise personal jurisdiction over nonresidents who have “minimum contacts” with the forum state. (International Shoe Co. v. Washington (1945) 326 U.S. 310, 316.) Minimum contacts exist when the relationship between the nonresident and the forum state is such that the exercise of jurisdiction does not offend “traditional notions of fair play and substantial justice.” (Ibid.) The primary focus of the personal jurisdiction inquiry is the relationship of the defendant to the forum state. (Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County (2017) 582 U.S. 255 (hereafter Bristol-Myers).)
“Minimum contacts exist where the defendant’s conduct in the forum state is such that he should reasonably anticipate being subject to suit there, and it is reasonable and fair to force him to do so.” (F. Hoffman-La Roche, Ltd. v. Superior Court (2005) 130 Cal.App.4th 782, 795, citing World–Wide Volkswagen Corp. v. Woodson (1980) 444 U.S. 286, 297; Kulko v. California Superior Court (1978) 436 U.S. 84, 92; Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 269.)
Personal jurisdiction may be either general or specific. General (also called all-purpose) jurisdiction means that a defendant’s contacts with a state are sufficiently extensive that the “defendant is ‘essentially at home,’ ” and the court may exercise jurisdiction over the defendant regardless of whether the claims relate to the forum state. (Ford Motor Company v. Montana Eighth Judicial District Court (2021) 141 S.Ct. 1017, 1024; Goodyear Dunlop Tires Operations, S. A. v. Brown (2011) 564 U.S. 915, 919.)
Specific personal jurisdiction hinges on the “relationship among the defendant, the forum, and the litigation.” (Daimler AG v. Bauman (2014) 571 U.S.117, 133 [cleaned up]; accord Walden v. Fiore (2014) 571 U.S. 277, 284.) Such jurisdiction requires “an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.” (Bristol-Myers, supra, 582 U.S. at p. 262 [cleaned up].) Consistent with the constraints of due process, “the defendant’s suit-related conduct must create a substantial connection with the forum State.” (Walden v. Fiore, supra, 571 U.S. at p. 284.)
Further, “a nonresident defendant may be subject to the court’s specific jurisdiction if three requirements are met: (1) the defendant has purposefully availed itself of forum benefits with respect to the matter in controversy; (2) the controversy is related to or arises out of the defendant’s contacts with the forum; and (3) the exercise of jurisdiction would be reasonable and comports with fair play and substantial justice.” (ViaView, supra, 1 Cal.App.5th at p. 216.)
ANALYSIS
- Cantervale’s Motion to Quash
Cantervale is a private limited liability company formed and headquartered in London, England. (Staveley Decl. ¶ 3.) The Cantervale proof of “personal” service indicates service was effectuated on January 12, 2024 in accordance with the Hague Service Convention by leaving the summons with an occupant at Cantervale’s Registered Office, Mr. Ghodoussi.
UK law provides:
Personal service on a company or other corporation
6.1 Personal service on a registered company or corporation in accordance with rule 6.5(3) is effected by leaving a document with a person holding a senior position.
6.2 Each of the following persons is a person holding a senior position –
(1) in respect of a registered company or corporation, a director, the treasurer, the secretary of the company or corporation, the chief executive, a manager or other officer of the company or corporation; and
(2) in respect of a corporation which is not a registered company, in addition to any of the persons set out in sub-paragraph (1), the mayor, the chairman, the president, a town clerk or similar officer of the corporation.
(See Ex. C to Gilchrest Decl. in support of Motion to Set Aside Defaults of Staveley and Cantervale.)
Amanda Staveley, Cantervale’s principal stated in her March 14, 2024 Declaration (filed on March 20, 2024):
- I am not a citizen of the United States. I am a citizen of England and reside in London. I also maintain a residence in Dubai. I have never resided in the United States. I vacationed in California once, before I got married in 2011. I have never conducted business in California. And I have never owned, leased, or encumbered any property in California.
- I formed Cantervale Limited in London, England, as a private limited liability company on January 2, 2018. Cantervale Limited is headquartered in London. Since its formation, I have been the sole shareholder and director of Cantervale Limited.
- I formed Cantervale Limited for the purpose of acquiring a minority ownership interest in Newcastle United Football Club (“Newcastle United”). Newcastle United is based in Newcastle upon Tyne, England. Newcastle United plays soccer in the English Premier League (“EPL”). Since Cantervale became part-owner of Newcastle United, EPL soccer matches have been played in England only. Newcastle United has not played any soccer matches in California, friendly or otherwise, since Cantervale became a minority owner of the club in 2021.
- Cantervale Limited is not a resident or citizen of the United States, including California.
- Cantervale Limited has never owned, leased, occupied, or encumbered any property (including bank accounts) in the United States, including California.
- Cantervale Limited has never conducted business or had employees in California.
- I was not served with Keyway Pride Limited LLC’s Summons and First Amended Complaint on behalf of Cantervale Limited. Nor have I received copies of them in the mail.
- I have read the “Certificate – Attestation” and Witness Statement of Nigel Roger Walker. Mr. Walker states that the “Service Documents” were given to “Mr. Ghodoussi” to pass on to me. Mr. Ghodoussi is not a director or shareholder in Cantervale Limited. Mr. Ghodoussi is not an employee or agent of Cantervale Limited. Nor is he authorized to accept service of process on behalf of Cantervale Limited.
(Staveley Decl. ¶¶ 2-9.)
Thus, the Staveley declaration establishes that Mr. Ghodoussi does not hold a senior position with Cantervale.
However, UK law also provides a document may be served “by leaving it at, or sending it by post to, the company’s registered address[.]” (Plaintiff’s RJN Ex. 1.) Here, the proof of service establishes that the FAC and summons were left with Mr. Godoussi at Cantervale’s registered service address, and Cantervale does not dispute that the address in question is Cantervale’s registered service address.
Therefore, service on Cantervale was proper.
Cantervale also argues that California has no personal jurisdiction over it because it did not purposefully avail itself of the forum. In support, Cantervale cites several out-of-state nonbinding federal district court cases standing for the proposition that a party does not purposefully avail itself of the forum merely by making telephone calls or sending letters to a resident of the forum.[2]
Cantervale also references Coast Equities, LLC v. Right Buy Properties, LLC (9th Cir. 2017) 791 Fed.Appx.611, an unpublished 9th Circuit Case. Besides the fact that Coast Equities is unpublished and therefore not binding, it is also factually distinguishable. There, the purchaser of a Florida property resided in Oregon, and communications with the purchaser alone were insufficient to confer personal jurisdiction on the nonresident. The Court elaborated that “The contract was a one-time transfer of real estate that had no future consequences tying Right Buy and Mackie to Oregon after closing.” (Id. at p. 613.)
The Coast Equities opinion cites to Peterson v. Kennedy (9th Cir. 1985) 771 F.2d 1244, for the proposition that emails and telephone correspondence are insufficient to confer personal jurisdiction. There, a law student purportedly gave the plaintiff, an NFL player, bad legal advice regarding his contract with Tampa Bay. Prior to playing for Tampa Bay, the plaintiff had played in college in San Diego and had then played for the Los Angeles Rams. The 9th Circuit held that the defendant’s emails and telephone calls to the plaintiff while the plaintiff was at his home in California were insufficient to confer personal jurisdiction. (Id. at p. 1262.)
By contrast, here, Cantervale, and its principal, Staveley, were deeply involved in the Koronus loan, which was secured by a Deed of Trust on the California property. Specifically, in addition to brokering the loan, negotiating the terms of the loan, and finalizing the closing of the loan, Staveley (apparently through Cantervale), embarrassed by the fact that Keyway had missed payments, also advanced several payments on the Koronus loan, which was later reimbursed by a wire for $2,323,497.38 from the proceeds of the sale of the home to Propco. (Supplemental Staveley Decl. ¶¶ 4-8.) Moreover, Staveley continued to be involved in enforcement efforts and even negotiations regarding the instant lawsuit, long after the loan closed. (Supp. Staveley Decl. ¶ 9; Ex. 3 to Simmons Decl.)
Thus, Staveley, (through Cantervale) not only brokered, negotiated, and closed the loan, but also made several payments on the Koronus loan for Keyway, doing business in California, which was secured by a deed of trust against the California property, and then Cantervale received reimbursement for those payments from the proceeds of the sale of that California property to Propco. As such, Cantervale engaged in numerous financial transactions concerning real property in California, and demonstrated a deep personal involvement in the loan and ultimate sale of the property to Propco, that extended long after the loan closed and even into negotiations concerning this lawsuit. These actions demonstrate transactions with the forum that are much more than simply having communications with someone who happens to be in California in a transaction otherwise unrelated to the forum.
Therefore, Cantervale has purposefully availed itself of the forum for the purposes of this litigation, which centers around the Koronus loan and transfer of the property to Propco.
For the same reason, because of the extent of Cantervale’s financial involvement in the transactions, traditional notions of fair play and substantial justice permit exercising personal jurisdiction over Cantervale, notwithstanding that it is inconvenient for an overseas entity to participate in California litigation. Factors to be considered in determining whether the exercise of personal jurisdiction over a nonresident defendant is reasonable include (1) the burden on the nonresident defendant; (2) California’s interest in adjudicating the dispute; (3) Plaintiff’s interest in obtaining convenient and effective relief; (4) judicial economy; and (5) furtherance of social policies. Here, California has a strong interest in adjudicating this dispute, which involves transactions between California companies Propco and Keyway regarding real property in California, Keyway has a strong interest in convenient and effective relief in California, and judicial economy will be best served by adjudicating the dispute against all involved parties in one lawsuit. Thus, the Volkswagen factors favor exercising personal jurisdiction.
As such, the Court denies Cantervale’s Motion to Quash.
- Staveley’s Motion to Quash
Staveley is a citizen of England who resides in London and in Dubai. (Staveley Decl. ¶ 2.) The Staveley proof of “personal” service indicates service was effectuated on February 7, 2024 in accordance with the Hague Service Convention by leaving the summons with “PA Joanne Mills” at Staveley’s residential address pursuant to Section 1140 of UK’s Companies Action 2006.
Section 1140 provides, “A document may be served on a person to whom this section applies by leaving it at, or sending it by post to, the person’s registered address.” (Plaintiff’s RJN Ex. 2.)
Thus, service on Staveley was proper.
Moreover, as discussed above, due to the extent of Staveley’s personal involvement with the Koronus loan, which included brokering the loan, negotiating the terms of the loan, closing the loan, advancing several payments on the loan, receiving and disbursing payments from the sale of the property to Propco, and ongoing negotiations regarding the transaction, the Court finds it has specific personal jurisdiction over Staveley as well and denies Staveley’s Motion to Quash.
- Koronus’ Motion to Quash
Koronus is incorporated and has its principal place of business in Ireland. (Walsh Decl. ¶ 2.) Koronus contends there is no personal jurisdiction over it because it was not involved in the sale of the property to Propco.
However, Koronus concedes it loaned money to Keyway, a California company, secured by a Deed of Trust and Assignment of Rents against the California property. (Koronus MTQ at p. 10; see also Robinson Decl. ¶¶ 3-4 and Exs. B-F.) Moreover, the Koronus loan was paid off in full from the proceeds of the allegedly fraudulent sale of the property to Propco. (Gershman Decl., Ex. 7; RJN Ex. 5.) “[H]olding a deed of trust represents a significant contact with the forum” sufficient to demonstrate purposeful availment where the party also has the right to collect rent under the deed of trust. (See, e.g., Easter v. American West Financial (9th Cir. 2004) 381 F.3d 948, 961; Sher v. Johnson (9th Cir. 1990) 911 F.2d 1357, 1363.)
Moreover, Koronus’s principals, the Reuben Defendants, are also alleged to be principals of Propco. (FAC ¶ 12.) Koronus is alleged to have (1) improperly directed a large portion of the loan funds to a Qatari businessman with whom the Reuben Defendants have a business relationship, for use in renovating a New York property unrelated to Keyway; and (2) profited from the allegedly fraudulent sale of the property to Propco because the sale proceeds were used to pay off the Koronus loan, while Koronus’s principals also benefited from the sale of the property to Propco, by virtue of their alleged control and ownership interest in Propco.
Thus, contrary to Koronus’ contention, there is a close nexus between the Koronus loan secured by a deed of trust and assignment of rents for the California property, and the ultimate, allegedly fraudulent transfer of the property to the Reuben Defendants’ California company, Propco.
Finally, as discussed above, the Volkswagen factors favor the reasonableness of a California court adjudicating the dispute involving the Koronus loan to California company Keyway, which was secured by a deed of trust for the California property, which was ultimately sold to California company Propco to pay off the loan, notwithstanding that it may be inconvenient for Koronus to litigate overseas. (See Ex. G to Schack Decl.)
- Reuben Defendants’ Motion to Quash
The Reuben Defendants are British citizens who currently reside in Monaco. (Ex. H to Schack Decl. at CTC1071; David Decl. ¶ 3; Simon Decl. ¶ 3.) The Reuben Defendants argue that service of the summons and FAC on them was improper, because it was left with a personal assistant at the London office for Motcomb, a company the Reuben Defendants neither own nor work for, and who is not their agent for service of process. (David Decl. ¶¶ 9-11; Simon Decl. ¶¶ 10-12.)
However, service under UK law is proper by leaving the documents at the person’s registered address. The proof of service indicates that on the date of service, the address where the summons and FAC were left was the Reuben Defendants’ registered address, and the Reuben Defendants have introduced no evidence to dispute this.
In Reply, the Reuben Defendants appear to concede that service was proper, arguing instead that Plaintiff unreasonably delayed in producing the proof of service. In any event, the proof of service has now been produced, it demonstrates that service was proper, and the Reuben Defendants have not demonstrated otherwise.
The Reuben Defendants also argue that this Court lacks personal jurisdiction over them. However, Simon authorized the Koronus Loan to California company Keyway, secured by a deed of trust on the real property located in California. Simon also approved the transfer of the property to Propco, a California company in which the Reuben Defendants are principals. Further, the Reuben Defendants’ passports were provided to Defendant Chicago Title in connection with the transfer, and they were listed as “person[s] conducting transaction for another.” (Ex. G to Schack Decl. [PROPCO_00005292; PROPCO_00005898]; Ex. H to Schack Decl. [CTC1071].) In addition, the Reuben Defendants’ agents Eileen Sawyer and Eric Orenstein, purported to act on behalf of both Propco and Koronus in connection with the loan and the sale. (Ex. G to Schack Decl.)
As such, the Reuben Defendants purposefully availed themselves of the laws and protections of the state of California, and those transactions are directly at issue in this lawsuit. Further, as discussed above, in light of the extent of the Reuben Defendants’ involvement in the loan to a California company, Keyway, secured by a deed of trust and assignment of rents related to California real property, at least some of the proceeds of which were used to renovate an unrelated New York property they may be involved with, plus their involvement in the subsequent transfer of the California property to their other company, Propco, the proceeds of which went to pay off the Koronus loan, exercising personal jurisdiction over the Reuben Defendants is reasonable under the circumstances, notwithstanding that it may be inconvenient for them to litigate overseas.
CONCLUSION AND ORDER
Therefore, the Court denies all three Motions to Quash filed by (1) Staveley and Cantervale; (2) Koronus; and (3) the Reuben Defendants. Service on Staveley, Cantervale, and the Reuben Defendants was proper under UK law, and the Court has personal jurisdiction over all moving defendants, as their extensive transactions with California companies Keyway and Propco involving the Koronus loan, the Deed of Trust and Assignment of Rents, and ultimate transfer of California real property at the heart of this dispute demonstrate purposeful availment and that these transactions are directly related to the instant litigation. Moreover, California’s interest in adjudicating the dispute centering around California real property and California companies Keyway and Propco, Plaintiff’s interest in adjudicating the dispute in California, and judicial economy outweigh the moving defendants’ inconvenience in litigating overseas, making the exercise of personal jurisdiction reasonable.
Moving Defendants shall file and serve Answers to the FAC on or before June 26, 2024.
Plaintiff Keyway shall provide notice of the Court’s ruling and file the notice with a proof of service forthwith.
DATED: June 5, 2024 ___________________________
Michael E. Whitaker
Judge of the Superior Court
[1] See Declaration/Reservation/Notification made by the UK, available at https://www.hcch.net/en/instruments/conventions/status-table/notifications/?csid=427&disp=resdn [“our declaration does not preclude any person in another Contracting State who is interested in a judicial proceeding (including his lawyer) from effecting service in the United Kingdom “directly” through a competent person other than a judicial officer or official, e.g., a solicitor.”] [2] “Although [a court] may not rely on unpublished California cases, the California Rules of Court do not prohibit citation to unpublished federal cases, which may properly be cited as persuasive, although not binding, authority.” (Landmark Screens, LLC v. Morgan, Lewis & Bockius, LLP (2010) 183 Cal.App.4th 238, 251, fn. 6, citing in part Cal. Rules of Court, rule 8.1115.)