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Cantu v. SAC International Steel

September 2, 2010


The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge


Presently before the Court is Defendant SAC International Steel, Inc.'s motion to dismiss the complaint in the above-captioned matter. (Doc. No. 4.) Also before the Court is Plaintiff's opposition and Defendant's reply. (Doc. Nos. 9, 11.) For the reasons stated below, the Court HEREBY GRANTS IN PART and DENIES IN PART Defendant's motion to dismiss.


Plaintiff initiated this action on March 15, 2010 by filing a complaint in this Court on the basis of diversity jurisdiction. (Doc. No. 1 ("Compl.").) The action arises out of a contract entered into by International Steel Company ("International Steel"), a Mexican corporation, and SAC International Steel, Inc. ("SAC"), a corporate resident of California. (Id. ¶¶ 2, 3.) Plaintiff Carlos Guerra Cantu is the purported founder of International Steel Company. (Id. ¶ 1.) International Steel allegedly ordered coiled galvanized steel and Galvalum from SAC which Plaintiff contends was not of suitable quality or quantity, was not delivered in a merchantable condition, and was not delivered in a timely manner. (Id. ¶¶ 5-7.) The Complaint alleges seven causes of action: (1) breach of contract; (2) breach of express warranty; (3) breach of implied warranty of merchantability; (4) breach of the implied warranty of fitness for a particular purpose; (5) negligence; (6) negligent misrepresentation; (7) fraud.

Defendant filed a motion to dismiss the complaint on April 13, 2010. (Doc. No. 4.) Plaintiff filed an opposition to the motion on June 3, 2010 and Defendant filed a reply on June 10, 2010. (Doc. No. 10.) The matter was thereafter taken under submission without oral argument.


In its motion to dismiss, Defendant asserts several grounds for dismissing the complaint:

(1) improper venue; (2) Plaintiff's lack of capacity or standing to sue; and (3) failure to state a claim upon which relief can be granted as to Plaintiff's sixth and seventh causes of action for negligent misrepresentation and fraud;(See Doc. No. 4.) Defendant also asserts that certain prayers for relief should be stricken. (Id.) The Court will discuss each.

I. Improper Venue

Plaintiff's complaint alleges that venue in the Southern District of California is proper because "Defendant . . . is a corporate resident of California, organized under laws of the State of California and doing business in this judicial district." (Compl. ¶ 2.) Defendant brings a motion to dismiss for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3).

The present action is before this Court solely based on diversity jurisdiction. (See Compl. ¶ 1.) As such, venue is proper pursuant to 28 U.S.C. § 1391, in pertinent part, in "a judicial district where any defendant resides, if all defendants reside in the same State . . ." 28 U.S.C. § 1391(a)(1). The only Defendant in this action resides in the state of California. As such, venue is proper in the district where Defendant "resides." "For purposes of venue . . . a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." 26 U.S.C. § 1391(c). As such, the Court must determine whether Defendant's contacts in the Southern District of California would subject it to personal jurisdiction as if this "district were a separate State." See id. "It is Plaintiff's burden to establish that Defendant 'resides' (i.e., is subject to personal jurisdiction) in this district or in this state." Abrams Shell v. Shell Oil Co., 165 F. Supp. 2d 1096, 1109 (C.D. Cal. 2001); see also Ziegler v. Indian River County, 64 F.3d 470, 473 (9th Cir. 1995).

For purposes of personal jurisdiction, "a defendant, if not present in the forum, must have 'minimum contacts' with the forum state such that the assertion of jurisdiction 'does not offend traditional notions of fair play and substantial justice.'" Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1155 (9th Cir. 2006) (citing Int'l Shoe Co., 326 U.S. at 315). To determine "whether a party's 'minimum contacts' meet the Supreme Court's directive[,]" the Ninth Circuit has developed a three-part test: "(1) the defendant has performed some act or consummated some transaction within the forum or otherwise purposefully availed himself of the privileges of conducting activities in the forum, (2) the claim arises out of or results from the defendant's forum-related activities, and (3) the exercise of jurisdiction is reasonable." Id. (citation omitted).

Plaintiff alleges in his complaint that Defendant does business in this district as well as the factual allegation that some of the shipment ordered pursuant to the contract at issue was delivered to a warehouse in Calexico, CA, which is located in this district.*fn1 (See Compl. ¶¶ 2, 7; see also Cantu Decl. ¶ 7.) These allegations, taken as true, are sufficient to establish a prima facie showing of minimum contacts within this district sufficient to subject Defendant to personal jurisdiction. See Pebble Beach Co., 453 F.3d at 1155; see also Cedars-Sinai Med. Ctr. v. Nat'l League of Postmasters of the U.S., 497 F.3d 972, 975 (9th Cir. 2007) ("We accept all allegations of material fact in the complaint as true and construe them in the light most favorable to the non-moving party" unless contradicted by documents referred to in the complaint."). Further, while it is undisputed that Defendant's principal place of ...

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