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Poetry Corporation v. Conway Stores, Inc.

United States District Court, C.D. California

August 21, 2014

Poetry Corporation, Plaintiff,
v.
Conway Stores, Inc.; CW Operating, LLC; Metro Buying Group, LLC; and Does 1-10 inclusive, Defendants.

ORDER RE: DEFENDANTS' MOTION TO DISMISS COMPLAINT PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(b)(2) [61]

RONALD S.W. LEW, Senior District Judge.

Currently before the Court is Defendants Conway Stores Inc. ("Conway"), CW Operating, LLC ("CWO"), and Metro Buying Group, LLC's ("Metro") (collectively, "Defendants") Motion to Dismiss Complaint Pursuant to Fed.R.Civ.P. 12(b)(2) [61]. The Court, having reviewed all papers submitted pertaining to this Motion, NOW FINDS AND RULES AS FOLLOWS: The Court DENIES Defendants' Motion.

I. BACKGROUND

A. Factual Background

Plaintiff Poetry Corporation ("Plaintiff") is a California corporation in the business of selling wholesale garments, with its principal place of business in the County of Los Angeles, California. Compl. ¶ 1. Defendant Conway is a New York corporation with its principal place of business in the state of New York. Id. at ¶ 2. Defendant CWO is a New York limited liability company with its principal place of business in New York. Id. at ¶ 3. Defendant CWO did business under the fictitious business name, "CW Price, LLC" in California. Id . Defendant Metro is a New York limited liability company with its principal place of business in the state of New York. Id. at ¶ 4. Defendants CWO and Metro are affiliated and/or have a parent-subsidiary relationship. Id. at ¶ 5. Defendants CWO and Metro are affiliates and/or subsidiaries of Defendant Conway. Id.

Plaintiff alleges that on or about July 1, 2013, Plaintiff entered into a series of contracts with Defendants to sell and deliver garments to Defendants. Id. at ¶ 16. Plaintiff alleges that, while it performed all conditions, covenants, obligations, and promises under the contracts, it has not been paid for the sum owed. Id. at ¶¶ 17-18. As a result of Defendants' breach, Plaintiff asserts four causes of action against Defendants: (1) breach of contract, (2) open book account, (3) account stated, and (4) unjust enrichment - constructive trust. Plaintiff asserts that it is entitled to recover the principal sum of $336, 656.40, plus interest. Id. at ¶¶ 19-28. Plaintiff also requests an order from the Court declaring that all unpaid goods remaining in the possession, custody, and control of Defendants are held by the Defendants in constructive trust for the benefit of Plaintiff. Id. at ¶ 28. Plaintiff also requests an order that Defendants reconvey said goods to Plaintiff. Id.

B. Procedural Background

Plaintiff filed its Complaint on March 11, 2014 [1]. On April 26, 2014, Plaintiff filed a Request for Clerk to Enter Default against Defendants [24, 25, 26]. The Court entered default as to all Defendants on May 5, 2014 [29]. On May 20, 2014, Defendants filed a Motion to Dismiss for Lack of Jurisdiction [34], which the Court struck because default had already been entered against Defendants [35].

On June 3, 2014, Defendants filed a Motion to Vacate Entry of Default [39], which the Court granted [57]. Defendants filed the instant Motion to Dismiss Complaint Pursuant to Fed.R.Civ.P. 12(b)(2) on July 18, 2014 [61]. Plaintiff filed an Opposition on July 29, 2014 [65] and Defendants filed their Reply on August 4, 2014 [67]. This matter was set for hearing on August 19, 2014 and was taken under submission on August 15, 2014 [68].

II. LEGAL STANDARD

A. Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(2)

Pursuant to Federal Rule of Civil Procedure 12(b)(2), a district court cannot proceed against a defendant over which it lacks personal jurisdiction unless that defendant has waived the requirement. See Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee , 456 U.S. 694, 702-03 (1982). Because no applicable federal statute governs jurisdiction in this case, California personal jurisdiction law applies. See Panavision Int'l, L.P. v. Toeppen , 141 F.3d 1316, 1320 (9th Cir. 1998). The exercise of personal jurisdiction over a nonresident defendant requires the presence of two factors: (1) California's laws must provide a basis for exercising personal jurisdiction, and (2) the assertion of personal jurisdiction must comport with due process. Hirsch v. Blue Cross, Blue Shield of Kansas City , 800 F.2d 1474, 1477 (9th Cir. 1986). California's long arm statute permits the exercise of personal jurisdiction to the fullest extent permitted by due process. See Cal. Civ. Proc. Code § 410.10; Panavision , 141 F.3d at 1320. "Because California's long-arm jurisdictional statute is coextensive with federal due process requirements, the jurisdictional analyses under state law and federal due process are the same." Schwarzenegger v. Fred Martin Motor Co. , 374 F.3d 797, 800-01 (9th Cir. 2004). Thus, only a due process analysis is required here.

Due process requires that a defendant have "certain minimum contacts with [the forum state] 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 quotation marks omitted). The plaintiff bears the burden of proving that each defendant has sufficient minimum contacts with the forum state that warrant the court's exercise of personal jurisdiction. Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd. , 328 F.3d 1122, 1130 (9th Cir. 2003) ("Personal jurisdiction over each defendant must be analyzed separately."); Rio Props., Inc. v. Rio Int'l Interlink , 284 F.3d 1007, 1019 (9th Cir. 2002). Depending on the nature and scope of the defendant's contacts with the forum, jurisdiction may be general or specific to a cause of action. Roth v. Garcia Marquez , 942 F.2d 617, 620 (9th Cir. 1991).

When a defendant's contacts with the forum state are "substantial" or "continuous and systematic, " general jurisdiction may be exercised over that defendant for any cause of action, even if it is unrelated to the defendant's activities within the forum state. Schwarzenegger , 374 F.3d at 801-02; Data Disc, Inc. v. Sys. Tech. Assocs. , 557 F.2d 1280, 1287 (9th Cir. 1977). In cases where a defendant's contacts are insufficient to support an exercise of general jurisdiction, more limited specific jurisdiction may be found where a cause of action arises out of or is related to the defendant's activities in the forum state. Burger King Corp. v. Rudzewicz , 471 U.S. 462, 472-73 (1985); Ballard v. Savage , 65 F.3d 1495, 1498 (9th Cir. 1995). "Specific jurisdiction may be exercised with a lesser showing of minimum contacts than is required for the exercise of general jurisdiction." ACORN v. Household Int'l, Inc. , 211 F.Supp.2d 1160, 1164 (C.D. Cal. 2002). The Ninth Circuit uses a three-part test to determine whether there is specific jurisdiction over a defendant: (1) the defendant either purposefully directed its activities at the forum or purposefully availed itself of the privilege of conducting activities in the forum; (2) the plaintiff's claim arises out of or results from the defendant's forum-related activities; and (3) the court's exercise of personal jurisdiction over the defendant is reasonable. Boschetto v. Hansing , 539 F.3d 1011, 1016 (9th Cir. 2008).

As to the first prong, the Ninth Circuit generally uses a purposeful direction analysis when an action sounds in tort, whereas it uses a purposeful availment analysis when an action sounds in contract. Wash. Shoe Co. v. A-Z ...


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