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Air Machine Com SRL v. Superior Court of San Diego County

July 2, 2010

AIR MACHINE COM SRL ET AL., PETITIONERS,
v.
THE SUPERIOR COURT OF SAN DIEGO COUNTY, RESPONDENT;
PONANI SUKUMAR ET AL., REAL PARTIES IN INTEREST.



Proceedings in mandate after superior court denied motion to quash service of summons. Michael B. Orfield, Judge. Petition granted. (San Diego County Super. Ct. No. 37-2007-00052071-CU-BC-NC).

The opinion of the court was delivered by: Benke, Acting P. J.

CERTIFIED FOR PUBLICATION

Air Machine Com SRL, an Italian limited company (COM), and Panatta Sport SRL, an Italian limited company (Panatta), (together, petitioners) seek to overturn in this writ of mandate proceeding the trial court's ruling that they generally appeared (and thus forfeited their objection to personal jurisdiction) when they jointly served a statutory offer of settlement under Code of Civil Procedure*fn1 section 998 (998 offer) on real parties in interest Ponani Sukumar and Southern California Stroke Rehabilitation Associates (together, Sukumar) while their motions to quash service of summons for lack of jurisdiction were pending.

Petitioners contend the trial court erred in treating their 998 offer as a general appearance because their "act" of serving the 998 offer fell within the purview of section 418.10, subdivision (e)(1), which they contend "clear[ly]" applies to prevent a defendant's involuntarily submission to jurisdiction when a defendant moves to quash service of summons and engages in "any other action" during the pendency of the motion to quash.

As we explain, we conclude section 418.10, subdivision (e)(1), applies to petitioners' service of the 998 offer on Sukumar.*fn2 Because petitioners filed their motion to quash under subdivision (a) of section 418.10 before*fn3 they served their 998 offer on Sukumar, and because, as we discuss post, we interpret subdivision (e)(1) of section 418.10 broadly to include any "act," we conclude petitioners were not deemed to have generally appeared in the action.

We thus grant the petition, vacate the trial court's order denying petitioners' motions to quash service of summons for lack of personal jurisdiction and remand the matter to the trial court with directions to consider anew their motions to quash without regard to whether petitioners waived their jurisdictional challenge by serving Sukumar with the 998 offer.

BACKGROUND

The facts are not in dispute. In April 2007 Sukumar filed a complaint in the Superior Court of San Diego County against defendants Air Machine, an Italian corporation (Air Machine), on the one hand, and Health Tech Resources, Inc., dba Impact Fitness Systems and Thomas R. Eggers (together, Eggers), on the other hand, for breach of contract and various other causes of action. Sukumar alleged in his complaint that Eggers owned Impact Fitness Systems and acted as the United States sales agent of Air Machine, which Sukumar alleged manufactured exercise equipment for sale in the United States, including in California.

Sukumar further alleged that he entered into a contract with defendants to purchase multiple pieces of Air Machine equipment that he intended to use in a rehabilitation center he planned to open and operate. However, when the exercise equipment arrived, Sukumar alleged it had multiple defects that Eggers did not remedy, despite his promises otherwise.

In July 2007 Sukumar served petitioner COM (who claimed it had been erroneously sued as Air Machine) under the Hague Convention. COM and Sukumar subsequently stipulated to allow Sukumar to conduct expedited jurisdictional discovery in the event COM moved to quash service of summons based on lack of jurisdiction. COM filed its motion to quash in mid-October 2007. However, before that motion could be heard, Sukumar filed a first amended complaint, added Panatta as a defendant and separately named COM and Air Machine as defendants. Sukumar served Panetta in April 2008 under the Hague Convention.

In mid-May 2008 petitioners each moved to quash service of summons of the first amended complaint on grounds California lacked personal jurisdiction over them. COM and Panetta each argued they did not have minimum contacts in California sufficient for the exercise of personal jurisdiction.*fn4

Shortly after they filed their motions to quash, petitioners served Sukumar with their 998 offer. It provides: "Pursuant to Code of Civil Procedure section 998, Defendants [COM] and [Panatta] (collectively 'Defendants') offer to compromise and pay Plaintiff[] [Sukumar] the total sum of Twenty Five Thousand Dollars ($25,000.00) in full satisfaction of [Sukumar's] claims against Defendants in this action. [¶] This offer is expressly contingent on Plaintiffs dismissing, with prejudice, the above-referenced action against Defendants. [¶] Plaintiffs shall indicate their acceptance by signing and dating below within thirty (30) days after this offer is made, or it will be deemed withdrawn. [¶] This offer is subject to all provisions of Code of Civil Procedure section 998, and shall be deemed to have been made on May 28, 2008."

The 998 offer was signed by counsel of COM and Panatta, and below counsel's signature there were signature lines for Sukumar (and his company) to accept the 998 offer. Sukumar obviously did not sign the 998 offer.

Sukumar opposed the quash motions, arguing that COM and Panatta were subject to personal jurisdiction in California based on their contacts and/or those of Air Machine, a related company, and that, in any event, they waived jurisdiction when they served their 998 offer on him.

During argument on their quash motions, the trial court noted that "one of the significant purposes of a 998 is to take advantage of the laws of the State of California which will get you significant sums of money by way of costs, expert costs, other costs in the event that . . . your offer is not accepted" and plaintiff fails to obtain a more favorable judgment or award. In the court's view, the 998 offer amounted to petitioners "availing [themselves] of the laws of the State of California to get . . . a significant benefit at the end of this trial."

Counsel for COM and Panatta argued the 998 offer should not be considered an appearance because they were "not asking the court to do anything," they were "not asking for any relief," and the offer itself was written so as to not mention "anything about entering judgment." Counsel for COM and Panatta also argued the 998 offer was a "backup plan" if petitioners were unable to get out of the case on their motions to quash.

The trial court denied the motions to quash of COM and Panatta, but granted the motion of Air Machine. As to COM and Panatta, the court ruled they submitted to the jurisdiction of the court when they served the 998 offer on Sukumar in late May 2008. The court therefore did not address whether petitioners had ...


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