Voyager Assocs. v. Superior Court CA4/1

• Court: California Court of Appeal
• Decided: January 24, 2014
• Docket: D063731
• Status: Unpublished

Opinion

Filed 1/24/14 Voyager Assocs. v. Superior Court CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

VOYAGER ASSOCIATES, INC., D063731

Petitioner, (San Diego County Super. Ct. No. v. 37-2011-0059852-CU-NP-NH)

THE SUPERIOR COURT OF SAN DIEGO COUNTY,

Respondent;

TYCO FIRE PRODUCTS, L.P.,

Real Party in Interest.

PROCEEDINGS in mandate after the superior court denied motion to quash.

Timothy M. Casserly, Judge. Petition granted.

Pyka Lenhardt Schnaider Zell and David P. Lenhardt, Daniel J. Kolcz for

Petitioner.

Shook, Hardy & Bacon, Darth K. Vaughn for Real Party in Interest. In this writ proceeding, petitioner Voyager Associates, Inc. (Voyager), a successor

company to Thompson Plastics, Inc. (TPI), an Alabama corporation, challenges the

denial of its motion to quash the service of summons and cross-complaint of real party in

interest Tyco Fire Products, L.P. (Tyco) on grounds California lacked jurisdiction over

petitioner and its CEO, Bernard Thompson, also an Alabama resident. (Code Civ. Proc.,

§ 418.10.) In denying the motion to quash, the court relied exclusively on an insurance

and indemnification clause in the parties' contract, which it interpreted as permitting

jurisdiction in California.

We issued an order to show cause on June 5, 2013, and now grant the writ petition

because the indemnity clause provides an insufficient basis to permit a California court to

exercise jurisdiction in this matter. The service of summons and cross-complaint should

have been quashed for lack of personal jurisdiction in California.

FACTUAL AND PROCEDURAL BACKGROUND

This case stems from a subrogation lawsuit filed after State Farm General

Insurance (State Farm) sued Tyco for $284,211.00 in water damage that a burst fire

sprinkler caused to Ted Vincent's California property in December 2008.

TPI was sold in 2005 and changed its name to Voyager. In August 2011, Voyager

was dissolved under Alabama law. Tyco is the successor company of Central Sprinkler

Company (CSC) (Tyco/CSC) and is the distributor, designer, installer or supplier of the

allegedly defective fire sprinkler. Tyco/CSC does business in California, but it is unclear

from the court filings where Tyco is incorporated or has its headquarters. Under the

parties' 1992 manufacturing and distribution agreement (contract), Tyco/CSC required

2 Voyager to manufacture Chlorinated Polyvinyl Chloride (CPVC) piping and fittings in

Alabama.

The trial court relied on the following evidence for its ruling on the motion to

quash: the contract and declarations by Bernard Thompson and Kirk Thompson,

Voyager's president. Tyco did not include any declaration in its opposition papers.

Bernard Thompson and Kirk Thompson stated in declarations that they never lived

in California or owned property in this state, and they believed the same applied to other

Voyager shareholders. They each added, "I do not personally conduct business in

California and have no business contacts with the state of California." Both men declared

Voyager was not registered to do business in California and had no employees here and it

never advertised with any billboards or in any newspapers or magazines in California.

Although it had a Web site, it never selectively advertised to California residents or

offered special promotions specifically to California residents.

The contract's indemnity clause states: "TPI shall be solely responsible for the

quality of manufacture of the Product for CSC, shall assume all liability in the event that

the Product should fail prior to or during field service, and shall indemnify, defend, and

hold harmless CSC, its officers, employees and agents from any claims, liabilities or

expenses. CSC shall be named as an additional insured and loss payee on TPI's general

and product liability insurance policies and shall act as an intermediary in subrogating all

. . . material, labor and damage claims with TPI's insurance carrier. Certificates of

general and product liability insurance shall be provided by TPI to CSC."

3 The contract obligated Voyager to ship the finished piping to Tyco/CSC's

customers and distribution centers: "TPI shall be responsible for loading and shipping

the Product from its [Alabama] facility to CSC's customers and distribution centers. TPI

shall utilize freight carriers recommended and procured by CSC to transport the Product

unless CSC requests TPI to make the carrier selection based on better service and/or

better freight rates that can be obtained. All freight costs shall be the responsibility of

CSC."

Bernard Thompson confirmed in his declaration that he did not ship piping that

Voyager manufactured specifically for Tyco/CSC to any entity in California except

Tyco/CSC: "I cannot recall a shipment of CSC brand CPVC pipe ever going directly to a

CSC customer in California. . . . [] . . . [Voyager] did not sell or put into the stream of

commerce, [Tyco/CSC] brand name piping to anyone, it just took [Tyco/CSC's] raw

product and by using [Tyco/CSC] machinery and molds, made the [Tyco/CSC] finished

product and shipped the product to various [Tyco/CSC] distribution centers throughout

the United States."

State Farm's subrogation lawsuit alleged causes of action for negligence, strict

liability and breach of warranty. State Farm claimed Tyco/CSC had designed,

manufactured, sold, distributed and supplied the fire sprinkler, which "had defects that

included the [fire sprinkler] forming cracks because of improper processing of [the fire

sprinkler's] material at the manufacturing level, which would ultimately cause the subject

line to burst during normal, foreseeable use."

4 Tyco/CSC filed an unverified cross-complaint against Voyager and Bernard

Thompson, alleging causes of action for equitable and contractual indemnity, bad faith

and declaratory relief. Tyco/CSC sought as damages, among other things, complete

indemnity for any judgments rendered against it.

Voyager specially appeared in the superior court to move to quash the service of

summons and cross-complaint. In opposing general jurisdiction in California, it argued

that since about December 2004, it had ceased shipping pipes to this state and no longer

had substantial, continuous or systematic contacts here. In opposing specific jurisdiction,

it argued it had not availed itself of the benefits of doing business in California; rather, it

had simply extruded the raw material using Tyco/CSC's equipment to create finished

piping that it sent to Tyco/CSC distribution facilities throughout the United States.

Voyager reasoned, "Such circumstances show [it] was not a manufacturer in the sense

that court's [sic] have discussed the issue concerning personal jurisdiction, but rather was

more along the lines of a contractor who performed a very specific job for [Tyco/CSC] in

Alabama." Voyager added, "Moreover, even if [it] was considered a manufacturer, it was

merely a component part supplier of a certain type of piping that CSC used in the

production of other products such [as] sprinkler systems. As such, California does not

have specific jurisdiction over [it]."

Voyager also noted it had had only limited contacts with California: "The only

contact [it] had with California was when it shipped [Tyco/CSC's] brand name CPVC

piping to [Tyco/CSC] distribution centers. This is not a case where [petitioner] sold [its

own] product to a California customer. The contract with [Tyco/CSC] was prepared and

5 signed outside of California. The contract not only states that the final product, but the

raw material used to make the product, is the property of [Tyco/CSC]." Petitioner

pointed out that in manufacturing the piping, it was required to use Tyco/CSC's machines

and molds.

Voyager argued the indemnification clause did not suffice to create jurisdiction in

California: "Nowhere in the contract does [Voyager] agree to submit to California's

jurisdiction. If it had planned to do so, it would have included a forum selection clause in

the contract." On the issue of the reasonableness of jurisdiction in California, [Voyager]

argued, "It is unfair to drag [it], a dissolved Alabama corporation . . . into a California

court for damages when [its] only contact . . . was sending [Tyco/CSC] its own product

that it owned in raw form in Alabama. [Voyager] was not selling the CPVC piping to

California. It was already the property of [Tyco/CSC]. As such, the contact with

California was [Tyco/CSC], not [Voyager] or Bernard Thompson."

Voyager contended jurisdiction was more appropriate elsewhere: "Huntsville,

Alabama, was the principle [sic] place of business for TPI. Moreover, anyone who

worked on the machines extruding the pipes are most likely still situated in Alabama.

The underlying claim by the homeowner in California is settled. Therefore, this case

comes down to a company suing a small family owned company located in Alabama and

its principal, who lives in Alabama. The pipe was made in Alabama and [Voyager] had

no contacts with California. Given these facts, it is not reasonable for Voyager to defend

the case in California, instead of in Alabama, where the parties and factory were located."

6 Tyco/CSC opposed the motion to quash, arguing that in June 1995, Voyager had

manufactured the pipe used in the fire sprinkler; therefore, under the indemnity clause,

petitioner was liable: "By agreeing to manufacture and distribute the pipe and accepting

liability for any alleged product defects, [Voyager] effectively availed itself to those

forums where end users made claims, including California. In other words, [Voyager]

verified its purposeful intent to submit to California court jurisdiction by prospectively

agreeing to defend against product liability claims through the manufacturing and

distribution agreement. The insurance and indemnification provision contains no limiting

language or any qualification regarding applicable jurisdictions." (Some capitalization

omitted.) Tyco/CSC noted that the contract required petitioner to add Tyco/CSC as an

additional insured under both its general and product liability policies.

The court granted the motion to quash as to Bernard Thompson. However, it

denied the motion as to Voyager, finding that the indemnification clause supported

specific jurisdiction in California. The court ruled: "[Voyager] contractually consented

to the jurisdiction of those forums where parties brought claims involving alleged product

failures, as has occurred in the underlying case. Here, by agreeing to manufacture and

distribute the pipe and accepting liability for any alleged product defects, [Voyager]

arguably availed itself to forums where end users made claims, which includes

California."

7 DISCUSSION

I. Standard of Review

"When a nonresident defendant challenges personal jurisdiction, the plaintiff must

prove, by a preponderance of the evidence, the factual basis justifying the exercise of

jurisdiction. [Citation.] The plaintiff must do more than merely allege jurisdictional

facts; the plaintiff must provide affidavits and other authenticated documents

demonstrating competent evidence of jurisdictional facts. [Citation.] If the plaintiff does

so, the burden shifts to the defendant to present a compelling case that the exercise of

jurisdiction would be unreasonable." (BBA Aviation PLC v. Superior Court (2010) 190

Cal.App.4th 421, 428-429.) "In this analysis, the merits of the complaint are not

implicated." (F. Hoffman-La Roche, Ltd. v. Superior Court (2005) 130 Cal.App.4th 782,

794.) "Where the evidence of jurisdictional facts is not in conflict, we independently

review the trial court's decision." (Malone v. Equitas Reinsurance (2000) 84 Cal.App.4th

1430, 1436.)

II. Law Regarding Jurisdiction

"State courts will assert personal jurisdiction over nonresident defendants which

have been served with process only if those defendants have such minimum contacts with

the state to ensure that the assertion of jurisdiction does not violate ' " ' "traditional

notions of fair play and substantial justice" ' " ' [Citations.] 'It is well-established that

only " ' "random," "fortuitous," or "attenuated" contacts' " do not support an exercise of

personal jurisdiction. [Citation.] In analyzing such issues, the courts have rejected any

use of " 'talismanic jurisdictional formulas.' " [Citation.] Rather, " ' "the facts of each

8 case must [always] be weighed" in determining whether personal jurisdiction would

comport with "fair play and substantial justice." ' " ' " (CenterPoint Energy, Inc. v.

Superior Court (2007) 157 Cal.App.4th 1101, 1117.)

"Minimum contacts" may support either general or specific jurisdiction. (Aquila,

Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 569.) " ' "Specific jurisdiction results

when the defendant's contacts with the forum state, though not enough to subject the

defendant to the general jurisdiction of the forum, are sufficient to subject the defendant

to suit in the forum on a cause of action related to or arising out of those contacts.

[Citations.] Specific jurisdiction exists if: (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 assertion of

jurisdiction would comport with fair play and substantial justice." ' " (CenterPoint

Energy, Inc. v. Superior Court, supra, 157 Cal.App.4th at p. 1117, italics omitted;

Helicopteros Nacionales de Columbia v. Hall (1984) 466 U.S. 408, 414-415 [in

determining whether specific jurisdiction exists, courts generally look to the relationship

among the defendant, the forum, and the litigation].)

The purposeful availment inquiry focuses on the defendant's intentionality. This

prong is only satisfied when the defendant purposefully and voluntarily directs its

activities toward the forum so that it should expect, by virtue of the benefit it receives, to

be subject to the court's jurisdiction based on its contacts with the forum. (Helicopteros

Nacionales de Columbia v. Hall, supra, 466 U.S. at pp. 414-415.)

9 A controversy is related to or arises out of the defendant's forum contacts so as to

satisfy the second requirement for the exercise of specific personal jurisdiction, if there is

"a substantial connection between the forum contacts and the plaintiff's claim." (Vons

Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 452.)

In determining whether the exercise of jurisdiction would be fair and reasonable so

as to satisfy the third requirement for the exercise of specific personal jurisdiction, a court

must consider (1) the burden on the defendant of defending an action in the forum, (2) the

forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining

relief, (4) the interstate [or international] judicial system's interest in obtaining the most

efficient resolution of controversies, and (5) the states' or nations' shared interest in

furthering fundamental substantive social policies. (See Anglo Irish Bank Corp., PLC v.

Superior Court (2008) 165 Cal.App.4th 969, 979.)

III. Analysis

We conclude that on this record there was insufficient evidence to support the

claim that California was entitled to exercise jurisdiction over petitioner. There is no

basis for general jurisdiction because Voyager did not have substantial, continuous and

systematic contacts with California. Tyco/CSC submitted no evidence supporting

specific jurisdiction. Further, the declarations submitted by Voyager show it does not

conduct business in California besides shipping to Tyco/CSC the manufactured piping

that Tyco/CSC had contracted for.

Tyco/CSC's reliance on the indemnification clause is misplaced because that

standard clause does not create jurisdiction. We interpret the indemnity clause de novo

10 because there is no material conflict in the evidence and, further, the court did not rely on

any extrinsic evidence to interpret it. (Parsons v. Bristol Development Co. (1965) 62

Cal.2d 861, 865; Great-West Life Assurance Co. v. Guarantee Co. of North America

(1988) 205 Cal.App.3d 199, 204.) We rely on the particular language of the clause using

ordinary rules that govern the interpretation of contracts. (Carr Business Enterprises,

Inc. v. City of Chowchilla (2008) 166 Cal.App.4th 14, 20.) This means we interpret the

clause as a whole and in context of the entire contract. (Civ. Code, § 1641; Campbell v.

Scripps Bank (2000) 78 Cal.App.4th 1328, 1337.)

The indemnification clause, as is typical of such clauses, relates exclusively to the

requirement that Voyager assume all liability for any product failure, and indemnify

Tyco/CSC from any liabilities or expenses. It also requires Voyager to name Tyco/CSC

as an additional insured on its insurance policy. There is no reference in the indemnity

clause to "jurisdiction," "forum," "venue," "California;" or any other term that would

indicate where the parties intended to litigate any claims or disputes arising out of their

agreement. Accordingly, the indemnity clause may not be reasonably interpreted as

requiring jurisdiction in California. Tyco/CSC does not cite any case permitting a state to

exercise jurisdiction solely based on an indemnification clause, and we found none. We

further note that the contract does not include a forum selection clause, which is

ordinarily where the parties would specify their intentions regarding the appropriate

forum for resolving their disputes. In light of the lack of evidence to support jurisdiction

in California, the trial court erred in denying Voyager's motion to quash.

11 DISPOSITION

Let a writ issue directing the superior court to vacate its order of February 22,

2013, and enter an order granting the motion of Voyager Associates, Inc. to quash the

service of summons and cross-complaint. Voyager Associates, Inc. is entitled to recover

costs. (Cal. Rules of Court, rule 8.493(a)(1)(A).) The opinion will be final as to this

court on February 6, 2014. (Cal. Rules of Court, rule 8.490(b)(2)(A).)

O'ROURKE, J.

WE CONCUR:

McINTYRE, Acting P. J.

IRION, J.