Loomis Basin Equine Medical Center, Inc. v. Saniflame, Inc.

Opinion

LOOMIS BASIN EQUINE MEDICAL No. 2:21-cv-01404-JAM-KJN CENTER, INC. a corporation, Plaintiff, ORDER DENYING DEFENDANTS’ v. MOTION TO DISMISS SANIFLAME, INC., a corporation; JULES JARC, an individual; ROB FABER, an individual; and DOES 1 through 10, inclusive, Defendants. Loomis Basin Equine Medical Center, Inc. (“Plaintiff” or “Loomis Basin”), a California corporation, sued Defendants Jules Jarc (“Jarc”), Rob Faber (“Faber”) and SaniFlame, Inc. (“SaniFlame”), a Canadian corporation, alleging ten claims involving a breach of contract. See First Amended Complaint (“FAC”), ECF No. 14. Defendants move to dismiss all claims for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). See Mot. to Dismiss (“Mot.”), ECF No. 17. Plaintiff opposes the motion. See Opp’n, ECF No. 18. Defendants replied. See Reply, ECF No. 19. For the reasons set forth below, the Court DENIES Defendants’ motion to dismiss.1 Loomis Basin is a full-service hospital and surgery center for horses located in Loomis, California. FAC ¶¶ 13,17. In 2018, Defendants allegedly solicited Plaintiff to purchase an animal cremation device manufactured by SaniFlame that is known as the SaniFlame 1000 (“the Unit”). Id. ¶¶ 12, 14. The Unit consists of a primary cremation chamber and a secondary chamber to burn the emissions released during the cremation process. Id. ¶ 14. Defendant Faber, one of SaniFlame’s agents, allegedly made various representations to Loomis Basin about the quality and ease of use of the Unit, including its suitability for use in California. Id. ¶¶ 12, 17. Loomis Basin alleges that, on May 6, 2019, Faber came to Loomis Basin’s property in Loomis, California to further discuss the Unit’s specifications and suitability. Id. ¶ 17. Following this meeting, on June 16, 2019, Loomis Basin entered into a sales agreement (“Agreement”) with SaniFlame to purchase the Unit for $419,000 (Canadian dollars). Id. ¶ 19. Loomis Basin paid a 40% deposit and then made several subsequent payments, which now total $377,100.00 (Canadian dollars) or $292,188.56 (US dollars), about 90 percent of the contract price. Id. ¶ 19. Plaintiff made modifications to its premises to accommodate

1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for March 15, 2022. the Unit in anticipation of delivery. Id. ¶ 16. Relying on Defendants’ representations about the Unit, Plaintiff applied for a permit from Placer County. Id. ¶ 14. Defendants allegedly assisted in the permitting process by providing the County information about the Unit. Id. ¶¶ 14-15. Loomis Basin received a preliminary permit and began making modifications at its own expense. Id. ¶ 16. These accommodations include building infrastructure to support the Unit, modifying a structure to house the Unit, and installing fuel and electrical lines. Id. ¶ 23. Work was allegedly performed “as directed by Defendants.” Id. The Unit was delivered on December 24, 2019, later than the promised delivery window, which the Agreement specified as 14-16 weeks from signing or September 23, 2019 to October 7, 2019. Id. ¶¶ 21, 24. The Unit allegedly arrived with “numerous visible defects inconsistent with the specifications Defendants promised,” including peeling paint, a defective right metal door that fell off when opened, faulty hinges on the left door, burners different from the ones Defendants specified, and “metal support legs . . . too short to allow the car holding a carcass to go into the Unit.” Id. ¶¶ 24, 25. Because of these and other problems, the Unit was “nonoperational.” Id. ¶ 26. At Loomis Basin’s requests, Defendants allegedly made multiple attempts to repair the Unit but without success. Id. ¶ 28. Defendants allegedly stopped responding to Loomis Basin’s requests in June 2020, but resumed on November 23, 2020, after being contacted by Loomis Basin’s counsel. Id. ¶ 32. Loomis Basin alleges that Defendants further attempted to repair the Unit on eight occasions between December 2020 and April 2021, also without success. Id. ¶ 35. The Unit remains nonoperational to this day. Id. ¶ 36. Loomis Basin brought suit on August 6, 2021. See Compl., ECF No. 1. A. Judicial Notice As a preliminary matter, Plaintiff asks the Court to take judicial notice of Plaintiff’s FAC, filed January 12, 2022, at ECF No. 14. See Pl.’s Req. for Judicial Notice at 1, ECF No. 18-2. While the Court may take judicial notice of matters in the public record, the Court need not take judicial notice of Plaintiff’s FAC, because it is the operative pleading in this case. See Nanavati v. Adecco, 99 F. Supp. 3d 1072, 1075 (N.D. Cal. 2015) (“The Court need not take judicial notice of Exhibit A, which is the operative pleading in this action”). Accordingly, the Court denies Plaintiff’s request for judicial notice as moot. B. Personal Jurisdiction Defendants move to dismiss Plaintiff’s complaint for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). Mot. at 1. 1. Legal Standard A party may move to dismiss a suit for lack of personal jurisdiction under Rule 12(b)(2). To defeat a Rule 12(b)(2) motion, the plaintiff must make a prima facie showing of jurisdictional facts sufficient to establish that jurisdiction is proper. Mavrix Photo, Inc. v. Brand Tech., Inc. 647 F.3d 1218, 1223 (9th Cir. 2011). Here, where there is no applicable federal statute governing personal jurisdiction, the Court applies the law of California. Id. Because California’s long- arm statute is coextensive with federal due process requirements, the jurisdictional analysis under state law and federal due process are the same. Id. (citing Cal. Civ. Proc. Code § 410.10). For this Court to exercise personal jurisdiction consistent with due process, the defendant must have “minimum contacts” with this forum “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal citations omitted). A court may exercise either general or specific jurisdiction over a defendant. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919-20 (2011). When parties offer conflicting factual allegations, the matter may be determined by reference to the burden of proof on each party. Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). The party seeking to invoke the jurisdiction of the federal court has the burden of establishing that jurisdiction exists. KVOS, Inc. v. Associated Press, 299 U.S. 269, 278 (1936). The quantum of proof required to meet that burden varies depending on how the trial court decides to resolve a motion for dismissal. Data Disc, Inc., 557 F.2d at 1285. If, as here, the court decides to resolve the matter based on written materials and affidavits rather than an evidentiary hearing, “a plaintiff must make only a prima facie showing of jurisdictional facts through the submitted materials in order to avoid a defendant’s motion to dismiss.” Martinez v. Aero Caribbean, 764 F.3d 1062, 1066 (9th Cir. 2014). In determining whether a plaintiff met its burden, the Court must take uncontroverted allegations in the complaint as true and “[c]onflicts between parties over statements contained in the affidavits must be resolved in the plaintiff’s favor.” Dole Food Co. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002). Plaintiff’s argument must rest on more than “bare bones’ assertions of minimum contacts with the forum or legal conclusions unsupported by specific factual allegations.” Swartz v. KPMG LLP, 476 F.3d 756, 766 (9th Cir. 2007). 2. General Jurisdiction Analysis A court has general jurisdiction over a party whose “continuous operations within a state [are] so substantial and of such a nature as to justify a suit against it on causes of action arising from dealings entirely distinct from those activities.” Int’l Shoe Co., 326 U.S. at 318. This is an exacting standard that requires Defendants’ activities in California be “so continuous and systematic as to render [it] essentially at home” in the state. Goodyear Dunlop Tires, 564 U.S. at 919. Generally, a corporate defendant is “at home” in California in three situations: (1) It is incorporated in the state; (2) it has its principal place of business in the state; or (3) it has “continuous and systematic contacts” with the state. Daimler AG v. Bauman, 571 U.S. 117, 137 (2014). Defendants argue that they are not subject to general jurisdiction in California. Mot. at 3. Defendant SaniFlame is neither incorporated nor does it have its principal place of business in California. Mot. at 4; see also Decl. of Jules Jarc (“Jarc”) ¶ 5, ECF No. 17-3. Further, the remaining individual Defendants Jarc and Faber are both domiciled in Canada. Mot. at 4.; FAC ¶¶ 6-7. Plaintiff does not respond to Defendants’ general jurisdiction argument in its opposition, choosing instead to cabin its response to specific jurisdiction arguments. Opp’n at 8, 12. Because Plaintiff does not oppose Defendants’ argument that the Court lacks general jurisdiction, Plaintiff waives this argument. See Resnick v. Hyundai Motor America, Inc., No. CV 16-00593-BRO (PJWx), 2017 WL 1531192 at *22, (C.D. Cal. Apr. 13, 2017) (“Failure to oppose an argument raised in a motion to dismiss constitutes waiver of that argument”). Accordingly, the Court does not find general jurisdiction exists over Defendants. 3. Specific Jurisdiction Analysis Specific jurisdiction “depends on an affiliation between the forum and the underlying controversy, principally, activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.” Goodyear Dunlop Tires, 564 U.S. at 919. For specific jurisdiction to attach, the relationship between the defendant and the forum “must arise out of contacts that the ‘defendant himself’ creates with the forum State.” Walden v. Fiore, 134 S. Ct. 1115, 1122 (2014) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)). The Court’s analysis “looks to the defendant’s contacts with the forum State itself, not the defendant’s contacts with persons who reside there.” Walden, 134 S. Ct. at 1122. The Ninth Circuit prescribes a three-prong test for analyzing claims of specific jurisdiction: (1) The nonresident defendant must purposefully direct its activities or consummate some transaction with the forum or resident thereof; or perform some act by which it purposefully avails itself 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; (3) the exercise of jurisdiction must comport with fair play and substantial justice such that it is reasonable. See Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). The plaintiff bears the burden of satisfying the first two prongs of the test. Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). If the plaintiff makes a sufficient showing on the first two prongs, the burden shifts to the defendant to prove that jurisdiction would be unreasonable in light of traditional consideration of fair play and substantial justice. Dole Food Co., 303 F.3d at 1114. a. Specific Personal Jurisdiction Over Defendant SaniFlame, Inc. Under the first prong of the specific-jurisdiction inquiry, the Plaintiff must make a prima facie showing that Defendant SaniFlame purposely availed or directed its activities at the forum. Schwarzenegger, 374 F.3d at 802. Purposeful availment and direction represent “two distinct concepts,” with availment analysis used for suits sounding in contract and direction analysis for suits sounding in torts. Id. Here, where a party alleges both tort and contract claims, and the tort claims are based on the parties' purported contractual relationship, it is appropriate to utilize the jurisdictional test applied in contract cases. See Boschetto v. Hansing, 539 F.3d 1011, 1016 (9th Cir. 2008) (the purposeful availment test was properly used where plaintiff's claims for violation of the California Consumer Protection Act, breach of contract, misrepresentation, and fraud "sound[ed] primarily in contract"). The purposeful availment contract analysis is “a highly realistic approach that recognizes that a contract is ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences, which themselves are the real object of the business transaction.” Burger King, 471 U.S. at 488. The Supreme Court directs courts to examine four factors: (1) prior negotiations; (2) contemplated future consequences; (3) terms of the contract; and (4) the parties’ actual course of dealing. Id. at 479. The Ninth Circuit has emphasized “that courts must evaluate the parties’ entire course of dealing, not solely the particular contract or tortious conduct giving rise to the claim, when assessing whether a defendant has minimum contacts with a forum.” Global Commodities Trading Grp., Inc. v. Beneficio de Arroz Choloma, S.A., 972 F.3d 1101, 1108 (9th Cir. 2020). Taking uncontroverted allegations in Plaintiff’s complaint as true, the Court finds that Plaintiff has made a prima facie showing that Defendant SaniFlame “reach[ed] out beyond [Canada] to create continuing relationships and obligations with citizens of [California].” Burger King, 471 U.S. at 473. For one, negotiations began only after SaniFlame sent unsolicited emails to Plaintiff’s agents about its cremation unit on July 27, 2018. FAC ¶¶ 12, 14; see Decl. of Dr. Christopher Langdon Fielding (“Fielding”) ¶ 2, ECF No. 18-1. Negotiations began on July 30, 2018. Id. ¶ 7. During negotiations, on May 6, 2019, SaniFlame’s agent, Defendant Faber, travelled to Loomis, California “to tour the proposed site where the cremation unit was to be housed,” and “discussed the design, specifications, and infrastructure for the proposed cremation unit.” Decl. of Fielding ¶ 11. Defendant Faber also “spoke with a representative from the Placer County California building permit office regarding the cremation unit’s specifications to ensure its compliance with California and Placer County laws and regulations.” Id. ¶ 13. These facts demonstrate an understanding that the Unit would be delivered to California and installed there according to California regulations. Defendants’ visit and efforts culminated in a sales Agreement on June 16, 2019. Id. ¶ 15. The terms of the Agreement included a warranty. Mot. at 6. Although Defendants insist that a warranty “can be processed remotely from out of state,” the uncontroverted allegations show that warranty repairs have all been made in-person at Plaintiff’s Loomis facility. Mot. at 6; Decl. of Fielding ¶¶ 25, 27 (listing at least nine occasions when a technician came out to service the Unit on behalf of SaniFlame.). Defendants make much of the fact it “has only ever sold a single incinerator to a resident of California.” Mot. at 3. Defendants refer repeatedly to its transaction as a “single contract.” Mot. at 1, 4, 6, 8-9. However, as Plaintiff points out, a finding of specific jurisdiction requires a qualitative evaluation of Defendants’ contact with the forum state, not a quantitative evaluation. See Boschetto, 539 F.3d at 1017 (emphasis added). Qualitatively, Plaintiff’s uncontested allegations establish that Defendants marketed their product specifically to a California corporation located in California, engaged in extensive negotiations over suitability, specifications, and compliance with California regulations, and were responsible for repairs in California when defects were discovered that rendered the Unit nonoperational. Opp’n at 10. These facts together demonstrate that “the center of gravity” of the business relationship between Plaintiff and Defendants rested squarely in California. Global Commodities Trading Grp., Inc., 972 F.3d at 1108. Taking into consideration the entire course of dealings between the parties, the Court finds that Defendant SaniFlame purposefully availed itself of the privileges of conducting activities in the forum. Regarding the second prong of the specific-jurisdiction inquiry, the parties do not contest that the claims arise from Defendants’ forum-related activities. See Mot. at 4 (“[T]his entire case arises out of a contract for sale of a good between SaniFlame and Plaintiff”); Opp’n at 5 (“Plaintiff’s claims arise from Defendants’ sale, design, and (non)operation of the cremation unit”). As such, the Court finds this element is satisfied. Since Plaintiff has made a prima facie showing sufficient to establish the first two prongs, the burden shifts to Defendants to present “a compelling case that the exercise of jurisdiction would not be reasonable.” Burger King, 471 U.S. at 478. The Court considers the following seven factors: “(1) the extent of purposeful interjection; (2) the burden on the defendant to defend the suit in the chosen forum; (3) the extent of conflict with the sovereignty of the defendant’s state; (4) the forum state’s interest in the dispute; (5) the most efficient forum for judicial resolution of the dispute; (6) the importance of the chosen forum to the plaintiff’s interest in convenient and effective relief; and (7) the existence of an alternative forum.” Gray & Co. v. Firstenberg Mach. Co., 913 F.2d 758, 761 (9th Cir. 1990). Defendants argue that personal jurisdiction would be unreasonable based on these factors. Mot. at 9-10. The Court disagrees. As to the first factor, the Court finds unpersuasive Defendants’ argument that their “purposeful injection into California is extremely minimal.” Mot at 9. Although Defendants “sold a single product to a single consumer,” they also purposefully sought out their customer through unsolicited emails, and they purposefully tailored their product to fit California specifications. Id. Neither of these actions support characterizing their injection into California as “extremely minimal.” Id. As to the second factor, the Court acknowledges the burden placed on foreign nationals to defend a suit abroad. Litigating abroad imposes significant inconveniences upon the party appearing in a foreign country. See Olsen By Sheldon v. Mexico, 729 F.2d 641, 650 (9th Cir. 1984). However, “[m]odern advances in communications and transportation have significantly reduced the burden of litigating in another country.” Sinatra v. Nat'l Enquirer, Inc., 854 F.2d 1191, 1199 (9th Cir. 1988). This factor weighs in Defendants’ favor but does not carry the day. As to the third factor, the Court must consider the seriousness of the potential affront to the sovereignty of the Defendants’ state. “A foreign nation presents a higher sovereignty barrier than that between two states within our union.” Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1333 (9th Cir. 1984). Canada has a clear interest in resolving disputes involving its citizens, however, this factor by itself is not dispositive, for, if “given controlling weight, [the sovereignty factor] would always prevent suit against a foreign national in a United States court"). Id. As to the remaining four factors, Defendants have not shown a compelling reason that Canada would be a more interested, effective, or efficient forum for dispute when compared to California, though it is one possible alternative. Mot at 10 (weighing factors four through six as “equal.”). When the Court considers all of these factors, only two factors weigh compellingly in favor of Defendants. The Court concludes that the exercise of personal jurisdiction sufficiently comports with substantial justice and fair play. Accordingly, the Court finds specific jurisdiction appropriate as to Defendant SaniFlame. b. Specific Personal Jurisdiction Over Individual Defendants Jules Jarc and Rob Faber The Court next considers whether it may exercise jurisdiction over individual Defendants Jarc and Faber based on their contacts with the forum on behalf of a corporation. The Supreme Court allows the exercise of specific jurisdiction over employees based on actions they took on behalf of a corporation. See Calder v. Jones, 465 U.S. 783, 790 (1984) (“[T]heir status as employees does not somehow insulate them from jurisdiction”). Personal jurisdiction over an individual who acts as an agent of a third party must be assessed on the individual’s actions alone. Sher, 911 F.2d at 1366; see also Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n.13 (1984) ("[J]urisdiction over an employee does not automatically follow from jurisdiction over the corporation which employs him."). Plaintiff’s uncontested factual allegations show that Defendants Jarc and Faber’s were an integral part of the negotiation and follow-up on the contract that gives rise to this suit, enough to establish minimum contacts sufficient for personal jurisdiction to attach. The relevant allegations are as follows. Defendant Faber sent multiple unsolicited emails advertising SaniFlame’s cremation product. Decl. of Jarc ¶ 6; Decl. of Fielding ¶¶ 4,10. He visited Plaintiff in California to discuss the suitability of the Unit for use at Plaintiff’s California location. Decl. of Fielding ¶ 11. He made multiple representations that worked to secure the sale, including the assertion that he was “100% positive [their] unit will surpass all California Air [sic] regulations.” Id. ¶ 8. He also worked with the local planning department so Plaintiff could obtain a conditional permit to modify its premises to accommodate the Unit. Id. ¶¶ 13,17-18. He continued to be a point of contact after the Agreement was signed to discuss “delivery dates, installation of the unit, power requirements, gas requirements, and additional work needed to be completed prior to delivery of the cremation unit.” Id. ¶ 17. When the Unit was delivered, he visited Loomis, California on two separate occasions to assist with installation. Id. ¶ 21. Defendant Jarc, though not as involved as Faber, also participated in the negotiation and follow through of the Agreement. He was in e-mail contact with the Plaintiff for months leading up to the Agreement “regarding the sale, operation, design, construction, operation, and manufacturing of the cremation unit.” Id. ¶ 9. Critically, Plaintiff’s uncontroverted declaration specifies that “I was advised on multiple occasions by Jules Jarc that he specifically designed the SaniFlame, Inc., [sic] cremation unit for Loomis Basin to comply with California’s regulations. These specifications and modifications were required to meet the unique needs of Loomis Basin located in California. Accordingly, I, on behalf of Loomis Basin, entered into a sales agreement with SaniFlame, Inc., on June 16, 2019.” Id. ¶¶ 14-15 (emphasis added). Jarc then continued to be a point of contact for Plaintiff and visited Loomis, California to assist with installation on two separate occasions. Id. ¶¶ 17,21. At this stage in the proceedings, when deciding whether personal jurisdiction applies, the Court must accept Plaintiff’s uncontroverted allegations as true. Dole Food Co., 303 F.3d at 1108. Although Defendants submitted declarations by Jarc and Faber, their allegations do not contradict the allegations, referenced above, set forth in Plaintiff’s declaration. Based nee nme een nn nnn nn on nn nnn nn EE SEI IED

on Plaintiff’s allegations, therefore, Defendants Jarc and Faber made representations to Plaintiff about the specifications of the Unit and its suitability for California use. They also made representations about the accommodations that would be needed to install the Unit, in reliance upon which Plaintiff made changes to its premises at its own expense. They both visited Plaintiff’s premises on at least two occasions to assist with installing the Unit. They both remained in contact with Plaintiff after the Unit was installed to coordinate repair efforts, unsuccessful though they were. Decl. of Fielding GI 24-25. As such, the Court finds that Jarce and Faber’s individual actions were integral to the controversy at issue and sufficient for them to have “reasonably foreseen” that they would be subject to jurisdiction in California’s courts if their actions caused harm here. Davis v. Metro Productions, Inc., 885 F.2d 515, 523 (9th Cir. 1989). Accordingly, the Court concludes it may exercise personal jurisdiction over individual Defendants Jare and Faber. Til. ORDER For the reasons set forth above, the Court DENIES Defendants’ Motion to Dismiss. Dated: May 13, 2022 Me Benlek, sunk 16