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Shepard Johnson v. Chester Mitchell

May 4, 2012


The opinion of the court was delivered by: Gregory G. Hollows United States Magistrate Judge


Plaintiff initiated this diversity action for malicious prosecution and civil conspiracy to commit malicious prosecution against various defendants on July 23, 2010 and is currently proceeding with the third amended complaint filed on November 6, 2011. (See Dkt. No. 119.)

Presently pending before the court are defendant Ford Hermansen's motion to dismiss for lack of personal jurisdiction (dkt. no. 151) and defendants Michael Mode and Lynn Yarrington's motion to dismiss for lack of personal jurisdiction (dkt. no. 179). Plaintiff filed opposition briefs to both motions (dkt. nos. 185, 186), and defendants Mode and Yarrington filed a reply brief (dkt. no. 188). Subsequently, the motions were submitted on the record without oral argument. After considering the papers in support of and in opposition to the motions, the court's record in this matter, and the applicable law, the court FINDS AS FOLLOWS:


The facts and procedural history of this case were previously described in detail in the court's March 2, 2012 order and findings and recommendations related to other motions filed in this matter. (See Dkt. No. 169.) As such, the court only sets forth some limited background facts here.

Plaintiff is a real estate developer who claims that the defendants purchased lots for a planned unit development on an island in Panama. (See Third Amended Complaint, Dkt. No. 119 ["TAC"] at 2-3.) Plaintiff alleges that defendants did not want to be subject to the Conditions, Covenants, and Restrictions ("CC&Rs") for the development, and so rather than settling the matter by way of a contract dispute resolution, defendants "banded together and launched a barrage of deliberate falsehoods, and engaged in wrongful conduct...aimed at upsetting and intimidating him, destroying his reputation and business, disrupting relations with other lot owners, and discouraging prospective purchasers. (TAC at 3-4.) Defendants also allegedly initiated criminal proceedings against him in the Panama courts which were purportedly later dismissed, and which are the subject of plaintiff's malicious prosecution and conspiracy claims in this litigation. (TAC at 4-6.) Plaintiff alleges that he was forced to file for bankruptcy on July 3, 2007 "due in significant part to the false criminal complaints filed by Defendants." (TAC at 5.)

The instant motions to dismiss for lack of personal jurisdiction followed, each of which will be addressed separately below.


Defendants' Mode and Yarrington's Motion to Dismiss for Lack of Personal Jurisdiction Defendants Mode and Yarrington move to dismiss plaintiff's claims against them pursuant to Fed. R. Civ. P. 12(b)(2), contending that they do not have the requisite minimum contacts with the forum state of California to allow the court to exercise personal jurisdiction over them.

Whether Personal Jurisdiction Exists Over Defendants Mode and Yarrington

The plaintiff generally bears the burden of establishing the district court's personal jurisdiction over the defendant. Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1128-29 (9th Cir. 2003). "A non-resident defendant may be subject to the personal jurisdiction of the court where the defendant has either a continuous and systematic presence in the state (general jurisdiction), or minimum contacts with the forum state such that the exercise of jurisdiction 'does not offend traditional notions of fair play and substantial justice' (specific jurisdiction)." Martinez v. Manheim Central California, 2011 WL 1466684, at *1 (E.D. Cal. Apr. 18, 2011) (citing Int'l Shoe Co. v. Washington, 325 U.S. 310, 316 (1945)). "Where there is no federal statute applicable to determine personal jurisdiction, a district court should apply the law of the state where the court is located." Id. (citing Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004)). "California law requires only that the exercise of personal jurisdiction comply with federal due process requirements." Id. (citing Cal. Civ. Proc. Code § 410.10 and Fred Martin Motor Co., 374 F.3d at 800-01).

Defendants Mode and Yarrington submitted declarations indicating that they are residents of Vermont, have never resided in California, and do not regularly conduct business or travel to California. They have also never owned property in California; paid taxes on their own behalf in California; maintained a bank account in California; registered to vote in California; been employed in California; held a telephone listing, address listing, or postal listing in California; or made a court appearance in California. (See Dkt. Nos. 179-2, 179-3.)

Defendant Mode stated that, as a wood artist with his only studio in Vermont, he attended craft shows in California on two occasions approximately ten years ago, and that his work was carried and sold intermittently by two galleries in California between 1993 and 2011.

His only personal contact with plaintiff was when he signed the purchase contract in Panama. In 2004, at plaintiff's direction, he also sent two checks to plaintiff's business in California to cover homeowners association dues and other fees. He recalls posting two or three messages on a website maintained by plaintiff for the property owners to communicate with each other, but cannot recall the content of the messages. (Dkt. No. 179-3.) Although the operative complaint recites various allegedly defamatory or malicious messages posted by some of the other defendants, plaintiff does not cite to any such messages posted by defendant Mode.

Defendant Yarrington stated that, as a weaver and fabric designer with her only studio in Vermont, she participated in one craft show each year in California between 1985 and 2009 to sell artwork. Her artwork is currently sold in one gallery in California, and has been sold intermittently at five other California galleries over the last twenty years. She also remits taxes to the State of California on behalf of customers who purchase artwork from her at the craft shows she occasionally attends in California. Her only personal contact with plaintiff was when she signed the purchase contract in Panama. Defendant Yarrington never posted any messages to the above-mentioned website maintained by plaintiff. (Dkt. No. 179-2.)

Furthermore, defendants Mode and Yarrington argue that they had taken no action in California with respect to plaintiff's allegations -- the underlying property dispute occurred in Panama over property located in Panama, the negotiation and agreement for purchase and sale of the property occurred in Panama, and the criminal actions described in plaintiff's complaint were filed against plaintiff in Panama.

In his opposition, plaintiff does not dispute these defendants' contention that they lack the requisite minimum contacts with California. Instead, however, plaintiff argues that these defendants consented to this court exercising personal jurisdiction over them by virtue of the following clause in the Purchase Contract defendants entered into with one of plaintiff's corporations, Grupo Islas Tropicales:

The violation of these dispositions will be sanctioned with the annulment of this contract, the down payment, as well as the monthly installments already paid by THE BUYER will remain in favor of THE SELLER as indemnification. Disputes will be resolved by mediation in Sacramento, California. (Dkt. No. 186-1 at 6 (emphasis added).) Plaintiff contends that this is a forum selection clause and ...

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