Legendz Entertainment LLC v. Cam Specialty Lending 1 LTD

• Court: District Court, C.D. California
• Decided: June 5, 2024
• Docket: 2:23-cv-03097
• Status: Unknown

Opinion

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8 United States District Court 9 Central District of California

11 LEGENDZ ENTERTAINMENT, LLC et Case № 2:23-cv-03097-ODW (MARx) al., 12 ORDER GRANTING MOTION TO Plaintiffs, 13 v. DISMISS [35]

14 CAM SPECIALTY LENDING 1, LTD et al., 15

Defendants. 16 17 I. INTRODUCTION 18 Plaintiffs Legendz Entertainment LLC and Cinematic LLC (collectively, 19 “Legendz”) bring this breach of contract and tort action against Defendants Crescendo 20 Asset Management LLC (“CAM”), CAM Specialty Lending 1, Ltd. (“CSL”), 21 Crescendo Capital S.A., and Brian Weiner. (Second Am. Compl. (“SAC”), ECF 22 No. 14.) Crescendo Capital now moves to dismiss the Second Amended Complaint as 23 against it pursuant to Federal Rules of Civil Procedure (“Rule”) 12(b)(2).1 (Mot. 24 Dismiss (“Mot.” or “Motion”), ECF No. 35.) For the reasons below, the Court 25 GRANTS the Motion.2 26

1 Crescendo Capital nominally states it is also moving pursuant to Rule 12(b)(6); however, its 27 analysis in the Motion focuses entirely on Rule 12(b)(2). Therefore, the Court does the same. 28 2 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 II. BACKGROUND3 2 In August 2022, Legendz committed to promote a World Boxing Council 3 pay-per-view fight between two professional boxers on November 26, 2022. (SAC 4 ¶¶ 12, 20.) Legendz’s “main job” pursuant to this agreement was to “source the 5 marketing and operating capital required to promote the title fight” and “generate 6 sufficient revenue to cover the purses paid to the boxers plus all the other expenses 7 incurred in organizing and staging the event.” (Id. ¶¶ 14, 16.) 8 In October 2022, Legendz came to an oral understanding with “Defendants” 9 regarding the event’s financing. (See id. ¶ 20.) Legendz requested and received 10 funding assurances letters from CAM and Crescendo Capital. (Opp’n Mot. Dismiss 11 (“Opp’n”) 14, ECF No. 41.) On November 21, 2022, Legendz entered into a written 12 contract with CSL, a client of CAM (“Contract”). (See SAC ¶¶ 23, 294; Decl. Dylan 13 Marer ISO Opp’n (“Marer Decl.”) Ex. A, ECF No. 41-2 (Letter of Direction, 14 indicating that Legendz entered into an asset purchase agreement with CSL 15 concerning the event); Decl. Douglas Kalen ISO Mot. (“Kalen Decl.”) ¶ 7, ECF 16 No. 37.) The Contract obligated CSL to provide full funding on the day of the 17 Contract’s execution—November 21, 2022. (SAC ¶ 23.) CSL failed to provide full 18 payment at that time, and instead made late installment payments on November 25, 19 November 30, December 1, and December 2. (Id. ¶ 27.) 20 Brian Weiner, CAM’s Executive Director and Portfolio Manager, executed the 21 Contract on behalf of CAM and CAM’s client, CSL. (Decl. Brian Weiner ISO Reply 22 (“Weiner Decl.”) ¶ 2, ECF No. 43-1.) Crescendo Capital was not a party to the 23 Contract. (Id.) However, Legendz contends that Weiner’s communications 24 concerning the Contract led Legendz to believe that Crescendo Capital was involved 25 3 The background facts derive from Legendz’s well-pleaded allegations. See Ashcroft v. Iqbal, 26 556 U.S. 662, 678 (2009); Lee v. City of Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001). 4 Legendz purports to attach the Contract between Legendz and Defendants to the Second Amended 27 Complaint as Exhibit A. However, Exhibit A does not identify any Defendant and is not executed 28 by any Defendant. (See SAC Ex. A, ECF No. 14-1.) As such, it does not establish a written agreement between Legendz and any Defendant. 1 in funding the event. (See SAC ¶ 24; Opp’n 11–20; Marer Decl. Exs. B–D, F, ECF 2 No. 41-2.) Specifically, Legendz contends that emails and text messages Weiner sent 3 to Legendz’s CEO, Dylan Marer, and a funding assurances letter from Crescendo 4 Capital led Legendz to believe that Weiner “acted as an agent, servant, employee, 5 co-conspirator, alter-ego and/or joint venturer” for not only CAM and CSL, but also 6 Crescendo Capital and the broader “Crescendo Group.” (SAC ¶ 24; Opp’n 7–8, 12.) 7 Legendz relied on the promised funding, and as a result of the lack of timely 8 funding, the boxing event suffered from “diminished marketing, loss of 9 viewership . . . , loss of revenue, [and] delayed payment of the boxers’ purses.” (SAC 10 ¶ 28.) Legendz claims that CAM, CSL, and Crescendo Capital knew or should have 11 known that (1) they would not be able to pay on time, (2) it was fraudulent and/or 12 negligent to continue representing that they would pay on time, and (3) a breach of the 13 Contract would damage Legendz’s “reputation in the event and boxing industries, the 14 ability to hire and pay celebrity talent, performers and produce high budget, broadcast 15 corporate events and concerts.” (Id.) 16 Based on the above allegations, Legendz brings this action asserting six causes 17 of action against CAM, CSL, Weiner, and Crescendo Capital: (1) breach of written 18 contract, (2) promissory estoppel, (3) fraudulent inducement, (4) negligent 19 inducement, (5) negligence, and (6) declaratory relief. (Id. ¶¶ 29–63.) Before 20 Crescendo Capital appeared in the case, Legendz, CSL, CAM, and Weiner stipulated 21 to submit their dispute to voluntary binding arbitration. (Order re: Stip. Arb., ECF 22 No. 24.) The Court approved the stipulation and stayed the case as to Legendz’s 23 claims against CSL, CAM, and Weiner. (Id.) 24 Crescendo Capital has since appeared and moves to dismiss Legendz’s claims 25 against it pursuant to Rule 12(b)(2), for lack of personal jurisdiction. The Motion is 26 fully briefed. (See Opp’n; Reply ISO Mot. (“Reply”), ECF No. 43.) 27 28 1 III. LEGAL STANDARD 2 Federal courts have the power to exercise personal jurisdiction to the extent 3 permitted by the laws of the states in which they sit. Fed. R. Civ. P. 4(k)(1)(A). 4 “California’s long-arm jurisdictional statute is coextensive with federal due-process 5 requirements . . . .” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800–01 6 (9th Cir. 2004); see Cal. Civ. Proc. Code § 410.10. When this is the case, the court 7 inquires whether the defendant “ha[s] certain minimum contacts with [the forum state] 8 such that the maintenance of the suit does not offend ‘traditional notions of fair play 9 and substantial justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) 10 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)); Glencore Grain Rotterdam 11 B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1123 (9th Cir. 2002). 12 When a defendant seeks dismissal under Rule 12(b)(2), the plaintiff bears the 13 burden of demonstrating that personal jurisdiction is proper. Menken v. Emm, 14 503 F.3d 1050, 1056 (9th Cir. 2007). When, as here, a motion to dismiss for lack of 15 personal jurisdiction is based on written materials rather than an evidentiary hearing, 16 “the plaintiff need only make a prima facie showing of jurisdictional facts.” Sher v. 17 Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). However, the plaintiff cannot “simply 18 rest on the bare allegations of its complaint.” Schwarzenegger, 374 F.3d at 800. The 19 court “may not assume the truth of allegations in a pleading which are contradicted by 20 affidavit, but factual conflicts between dueling affidavits must be resolved in the 21 plaintiff’s favor.” Ayla, LLC v. Alya Skin Pty. Ltd., 11 F.4th 972, 978 (9th Cir. 2021) 22 (internal quotation marks and citations omitted). “[B]are bones assertions of 23 minimum contacts with the forum or legal conclusions unsupported by specific factual 24 allegations will not satisfy a plaintiff’s pleading burden.” Swartz v. KPMG LLP, 25 476 F.3d 756, 766 (9th Cir. 2007) (internal quotation marks omitted). Nor will 26 “random,” “fortuitous,” or “attenuated” contacts establish specific personal 27 jurisdiction. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). 28 1 IV. DISCUSSION 2 Crescendo Capital moves to dismiss this action as against it for lack of personal 3 jurisdiction. (See generally Mot.) Courts may exercise general or specific personal 4 jurisdiction over nonresident defendants. Fed. Deposit Ins. Corp. v. British-Am. Ins. 5 Co., 828 F.2d 1439, 1442 (9th Cir. 1987). Legendz concedes that Crescendo Capital 6 is not subject to general jurisdiction and opposes dismissal only as to specific personal 7 jurisdiction. (Opp’n 15.) 8 In light of this concession, the question narrows to whether Crescendo Capital’s 9 contacts with California are sufficient to render the exercise of specific personal 10 jurisdiction reasonable. See Schwarzenegger, 374 F.3d at 802. To answer this 11 question, the Ninth Circuit applies a three-prong test: (1) the nonresident defendant 12 “purposefully direct[s] his activities or consummate[s] some transaction with the 13 forum,” or performs “some act by which he personally avails himself of the privilege 14 of conducting activities in the forum”; (2) the claim “arises out of or relates to the 15 defendant’s forum-related activities”; and (3) the exercise of jurisdiction “comport[s] 16 with fair play and substantial justice,” i.e., it is reasonable. Id. If the plaintiff 17 successfully satisfies the first two prongs, the burden shifts to the defendant to 18 “present a compelling case” that the third prong—reasonableness—has not been 19 satisfied. Id. (quoting Burger King, 471 U.S. at 476–78). 20 As the party asserting jurisdiction, Legendz bears the burden of satisfying the 21 first two prongs of this test. Id. The showing necessary to satisfy the first prong 22 varies slightly depending on whether the case sounds in contract or in tort. Id. 23 Legendz brings both contract and tort-based causes of action. Therefore, with respect 24 to contract claims, Legendz must establish that Crescendo Capital “purposefully 25 availed itself of the privilege of conducting activities in California.” Id. Regarding 26 tort claims, Legendz must establish that Crescendo Capital “purposefully directed its 27 activities toward California.” Id. 28 1 A. Purposeful Availment 2 A showing of purposeful availment “typically consists of evidence of the 3 defendant’s actions in the forum, such as executing or performing a contract there.” 4 Id. (emphasis added). 5 Crescendo Capital asserts, and Legendz does not dispute, that Crescendo 6 Capital was not a signatory to the Contract. (Kalen Decl. ¶ 7; Opp’n 16.) 7 Nevertheless, Legendz argues that Crescendo Capital engaged in actions in California 8 through Weiner, who acted as an “agent, servant, employee, co-conspirator, alter-ego 9 and/or joint venturer” for Crescendo Capital and its owner, the umbrella company 10 Crescendo Group. (Opp’n 7, 14–15.) Legendz contends that Weiner’s intentional 11 acts in the forum may therefore be properly ascribed to Crescendo Capital under a 12 principal-agent relationship. (Opp’n 11–15.) However, Legendz supports its belief 13 about Weiner’s agent-connection to Crescendo Capital with only Marer’s unfounded 14 interpretations of Weiner’s communications: (1) Marer “understood” Weiner’s 15 references to “Geneva” (e.g., Geneva, Switzerland) and “CEO” in text messages to 16 mean Crescendo Capital, and (2) Marer understood that Crescendo Capital’s funding 17 assurances letter, stating that “Crescendo Capital S.A. (and/or other of its suitable 18 affiliates) has the capacity to allocate” funds, to mean that Crescendo Capital funded 19 the event. (Marer Decl. ¶¶ 2–7, 11–12; id. Ex. C (emphasis added); Opp’n 11–15.) 20 In contrast to Legendz’s speculative affidavit, Crescendo Capital submits 21 declaration testimony from its own CEO and from Weiner, both expressly and directly 22 refuting that Weiner had any connection with Crescendo Capital. (See Kalen Decl. 23 ¶ 8 (“Weiner does not work for and is not affiliated with Cresendo Capital . . . . At all 24 times relevant hereto Mr. Weiner was working solely for [CAM] and on behalf of its 25 client, [CSL].”); Weiner Decl. ¶¶ 2–3 (“At no time have I ever worked for or been an 26 agent of Crescendo Capital.”).) Weiner further attests that when he used the terms 27 “Geneva” and “CEO” in text messages with Marer, he “was not referring to 28 1 Crescendo Capital,” but instead to CAM’s client CSL, located in Geneva, and CAM’s 2 CEO. (Weiner Decl. ¶¶ 2–4.2.5) 3 Legendz does not object to or adequately refute Crescendo Capital’s explicit 4 affidavit denials. (See generally Opp’n.) Nor does Legendz respond or request the 5 opportunity to respond with additional support for its agency contentions in the face of 6 those direct denials. Thus, Legendz fails to overcome Crescendo Capital’s evidentiary 7 showing and the Court accepts as true Crescendo Capital’s factual assertions that 8 Weiner’s actions were not taken on Crescendo Capital’s behalf. Accordingly, the 9 Court concludes that Crescendo Capital has not conducted any in-forum activities that 10 warrant a purposeful availment analysis. 11 B. Purposeful Direction 12 The Court next examines whether Crescendo Capital purposefully directed its 13 conduct toward California. Schwarzenegger, 374 F.3d at 802. A showing of 14 purposeful direction “usually consists of evidence of the defendant’s actions outside 15 the forum state that are directed at the forum.” Id. at 803. 16 Purposeful direction is evaluated under a three-part “effects” test. Dole Food 17 Co., Inc. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002) (citing Calder v. Jones, 18 465 U.S. 783 (1984)). The defendant allegedly must have “(1) committed an 19 intentional act, (2) expressly aimed at the forum state, (3) causing harm that the 20 defendant knows is likely to be suffered in the forum state.” Id. However, “a foreign 21 act with foreseeable effects in the forum state” does not “always give[] rise to specific 22 [personal] jurisdiction.” Schwarzenegger, 374 F.3d at 804 (second alteration in 23 original). “The proper question is not where the plaintiff experienced a particular 24 injury or effect but whether the defendant’s conduct connects him to the forum in a 25 meaningful way.” Walden v. Fiore, 571 U.S. 277, 290 (2014). Here, after excluding 26 all alleged conduct by Weiner for the reasons explained above, the evidence of 27

28 5 Weiner identifies two paragraphs in his Declaration with the numeral “4.” The Court cites the first as “4.1” and the second as “4.2.” 1 Crescendo Capital’s potential purposeful direction is limited to the act of mailing a 2 funding assurance letter at Legendz’s request. (See Mot. 1; Kalen Decl. ¶ 7; Opp’n 5.) 3 Thus, the Court considers whether this letter satisfies purposeful direction. 4 The first requirement is an intentional act, i.e. a real-world manifestation of the 5 actor’s will. Schwarzenegger, 374 F.3d at 806. At Legendz’s request, Crescendo 6 Capital prepared a funding assurance letter for Legendz. (Kalen Decl. ¶ 7, Ex. 1.) 7 Preparing a letter constitutes an intentional act. See Bancroft & Masters Inc. v. 8 Augusta Nat’l, Inc., 223 F.3d 1082, 1088 (9th Cir. 2000) (concluding that defendant 9 “acted intentionally when it sent its letter to [plaintiff]”), overruled in part on other 10 grounds by Yahoo! Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 11 1199, 1207 (9th Cir. 2006) (en banc). Therefore, the first requirement is met. 12 The second requirement is that Crescendo Capital “expressly aimed” its 13 intentional act at the forum. Schwarzenegger, 374 F.3d at 806. In general, a 14 defendant expressly aims its act at the forum when it intentionally directs its actions at 15 a forum resident. Id. However, “the plaintiff cannot be the only link between the 16 defendant and the forum.” Walden, 571 U.S. at 285. Rather, the court must evaluate 17 the defendant’s “minimum contacts” with the forum, including “the relationship 18 among the defendant, the forum, and the litigation.” Id. at 284 (quoting Keeton v. 19 Hustler Mag., Inc., 465 U.S. 770, 775 (1984)); see also Schwarzenegger, 374 F.3d 20 at 807 (finding that the possibility the foreign defendant’s act may have “eventually 21 caused harm” to the plaintiff in California, or that the defendant “may have known” 22 the plaintiff was in California did “not confer [personal] jurisdiction” in California 23 over the defendant). 24 Here, Crescendo Capital’s only contact with California was preparing the 25 funding assurances letter for Legendz (a California resident), at Legendz’s request. 26 (Mot. 1; Opp’n 5.) Legendz argues that this letter relates to the Contract because it 27 concerns funding for the California-based boxing event. (Opp’n 5.) However, 28 Legendz mischaracterizes the letter, as “inform[ing] Plaintiffs that Crescendo Capital 1 will be funding and financially supporting the boxing fight that is the subject of this 2 matter.” (Id.) Legendz argues on this basis that Crescendo Capital “intentionally put 3 money into a California operation with the intention of obtaining a return on the 4 investment.” (Id. at 5–6.) Yet, Crescendo Capital was never a party to the Contract, 5 did not fund the boxing event or otherwise “put money into a California operation,” 6 and has no other contacts with the state of California. (Mot. 0, 3; Kalen Decl. ¶ 7.) 7 The funding assurance letter on which Legendz so heavily depends states only that 8 “Crescendo Capital (and/or one of its suitable affiliates) has the capacity to allocate” 9 funds, not that it or its affiliates were committing to do so. (Kalen Decl. ¶ 7, Ex. 1 10 (emphasis added).) On its own, such a one-time interaction with a forum-state 11 resident is usually not enough to establish the minimum contacts necessary for 12 specific personal jurisdiction. See, e.g., Burger King, 471 U.S. at 478 (“[Even] [a]n 13 individual’s contract with an out-of-state party alone [cannot] automatically establish 14 sufficient minimum contacts in the other party’s home forum.”). 15 Moreover, the Ninth Circuit has expressed reluctance to find purposeful 16 direction’s express aiming when the one-time action is mailing a neutral letter, such as 17 the one at issue here stating that funds could be available. See Yahoo!, 433 F.3d 18 at 1208 (“[A] cease and desist letter is not in and of itself sufficient to establish 19 personal jurisdiction over the sender.”); cf. Bancroft, 223 F.3d at 1087–88 (holding 20 that sending a letter intended to trigger dispute resolution procedures or interfere 21 wrongfully with a plaintiff’s rights is sufficient to establish personal jurisdiction). The 22 aversion to premising purposeful availment on a single letter is even stronger where a 23 defendant engages in no other acts in California. See Kransco Mfg., Inc. v. Markwitz, 24 656 F.2d 1376, 1379–80 (9th Cir. 1981) (discussing Chem Lab Prods, Inc. v. Stepanek, 25 554 F.2d 371, 372 (9th Cir. 1977) (“[D]irecting that the letter be mailed to California 26 could not support personal jurisdiction over defendant because he did not commit any 27 personal acts with consequences in California.” (internal quotation marks omitted))). 28 1 Here, the tie between Crescendo Capital and California is particularly weak. 2 This is in part because Legendz requested the letter—Crescendo Capital did not 3 independently “reach out beyond” Switzerland to create a relationship with a 4 California resident. Burger King, 471 U.S. at 473. Rather, Crescendo Capital 5 responded to contact that Legendz initiated. And this single letter is the extent of 6 Crescendo Capital’s connection to California in this case. The single funding 7 assurances letter here, standing alone, is not a contact that justifies the exercise of 8 personal jurisdiction. See Yahoo!, 433 F.3d at 1209 (concluding a “normal” cease and 9 desist letter, that was not “abusive, tortious or otherwise wrongful,” did not justify the 10 exercise of personal jurisdiction when considered alone). 11 As the sole act of mailing a neutral letter upon request does not establish that 12 Crescendo Capital expressly aimed tortious conduct at California, Legendz fails to 13 show purposeful direction. 14 Legendz has not met its burden to show that Crescendo Capital purposefully 15 availed itself of California or otherwise purposefully directed its activities at the state. 16 Therefore, the Court declines to reach the questions of whether Legendz’s claims arise 17 from Crescendo Capital’s forum-related activities or whether Crescendo Capital 18 demonstrates the exercise of personal jurisdiction would be unreasonable. 19 Schwarzenegger, 374 F.3d at 802. 20 V. JURISDICTIONAL DISCOVERY 21 Legendz requests the Court grant jurisdictional discovery on the issue of 22 Crescendo Capital’s relationship to the other Defendants and its contacts with 23 California. (Opp’n 21–22.6) 24 Whether to grant jurisdictional discovery is subject to the Court’s discretion. 25 Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 430 n.24 (9th Cir. 26 1977) (“[R]efusal [to grant discovery] is not an abuse of discretion when it is clear 27 6 The Court declines to consider Legendz’s late-filed supplemental brief. (Suppl., ECF No. 42); 28 C.D. Cal. L.R. 7-12. Even if the Court did consider it, the proffered case opinion is unpersuasive and inapposite. 1 || that further discovery would not demonstrate facts sufficient to constitute a basis for 2 || jurisdiction.”). “Where a plaintiffs claim of personal jurisdiction appears to be both 3 || attenuated and based on bare allegations in the face of specific denials made by 4|| defendants, the Court need not permit even limited discovery.” Terracom v. Valley 5 || Nat’! Bank, 49 F.3d 555, 562 (9th Cir. 1995) (alterations omitted). 6 Here, Crescendo Capital successfully rebuts Legendz’s good-faith but 7 || speculative allegations, and Legendz fails to demonstrate that any amount of 8 | jurisdictional discovery would produce facts sufficient to constitute a basis for personal jurisdiction. Accordingly, the Court denies Legendz’s request for 10 || jurisdictional discovery. 11 VI. LEAVE TO AMEND 12 Where a district court grants a motion to dismiss, it should generally provide 13 || leave to amend unless it is clear the complaint could not be saved by any amendment. 14 || See Fed. R. Civ. P. 15(a); Manzarek v. St. Paul Fire & Marine Ins., 519 F.3d 1025, 15 || 1031 (9th Cir. 2008). Here, it is clear that Legendz can allege no additional “facts 16 || consistent with the [record and] challenged pleading [that] could... possibly cure the 17 || deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 18 | (9th Cir. 1986). In light of the present record, the Court finds amendment “would be 19 | futile.” Carrico v. City & County of San Francisco, 656 F.3d 1002, 1008 (9th Cir. 20 | 2011). 21 VII. CONCLUSION 22 For the reasons discussed above, the Court GRANTS Crescendo Capital’s 23 || Motion. (ECF No. 35.) The action is dismissed as against Crescendo Capital, without 24 || leave to amend. 25 IT IS SO ORDERED. < 26 June 5, 2024 he □□□

28 OTIS D. HT, II UNITED STATES DISTRICT JUDGE