United States District Court, C.D. California
Jehan Mir, Pro Se Attorneys Present for Plaintiffs.
Steven Wang, Randall Miller, Thomas Robins, III, Timothy Coates, Attorneys Present for Defendants.
CIVIL MINUTES - GENERAL
CHRISTINA A. SNYDER, District Judge.
Proceedings: DEFENDANT WESTPORT INSURANCE CORPORATION'S MOTION TO DISMISS THE FAC (Dkt. No. 57, filed November 10, 2014)
DEFENDANT JAY BROWN'S MOTION TO DISMISS THE FAC (Dkt. No. 59, filed November 10, 2014)
DEFENDANT WESTPORT INSURANCE CORPORATION'S MOTION FOR RULE 11 SANCTIONS (Dkt. No. 70, filed December 15, 2014)
DEFENDANT JAY BROWN'S MOTION FOR RULE 11 SANCTIONS (Dkt. No. 71, filed December 15, 2014)
Plaintiff Jehan Zeb Mir, MD filed this lawsuit on May 29, 2014, Dkt. No. 1, and the operative First Amended Complaint ("FAC") on October 27, 2014, Dkt. No. 55. The FAC names as defendants (1) Greines, Martin, Stein & Richland LLP as well as that law firm's current or former attorneys Irving H. Geines, Alan Martin, Martin Stein, Kent L. Richland, Marc J. Poster, Jens B. Koepke, Peter O. Israel, Melissa Laffin, Sandra J. Smith, Peggy Levenstein, and Jordan Rafael; (2) Frandzel Robins Bloom & Csato, L.C. and that law firm's current or former attorneys Peter Csato, Bob Benji, and Eleane Pang; (3) Iungerich & Spackman, A Professional Law Corporation, and individuals Russell Iungerich and Paul Spackman; (4) Westport Insurance Corporation ("Westport"), and (5) individual Jay Brown ("Brown"). The FAC asserts claims under federal civil rights statutes, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), and California law.
Presently before the Court are motions to dismiss the FAC filed by two defendants. On November 10, 2014, Westport filed a motion to dismiss for failure to state a claim and for failure to meet pre-filing requirements for a vexatious litigant. Dkt. No. 57. On that same date, Brown filed a motion to quash summons or dismiss for lack of personal jurisdiction. Dkt. No. 59. On December 30, 2014, plaintiff filed oppositions to the aforementioned motions, as well as requests for judicial notice. Dkt Nos. Dkt. Nos. 78-80. On January 8, 2015, Wesport and Brown filed replies in support of their respective motions to dismiss. Dkt. Nos. 82, 83. On January 12, 2015, the Court heard oral argument on these motions. After considering the parties' arguments, the Court finds and concludes as follows.
II. FACTUAL BACKGROUND
The FAC alleges the following facts. In 1985, plaintiff, a physician, was terminated from Charter Suburban Hospital in Paramount, California (the "hospital") for alleged misconduct. FAC ¶ 44. Plaintiff succeeded in overturning these disciplinary charges through several rounds of review. Id. ¶¶ 45-48. I&S successfully represented plaintiff on a fee-for-service basis in writ proceedings connected to the charges. Id. ¶ 50.
In December 1992, plaintiff retained law firm I&S to represent him on a fee-for-service basis in an action against the hospital and related defendants to recover income plaintiff allegedly lost as a result of the disciplinary proceedings. Id. ¶¶ 51-52. Plaintiff alleges that I&S wanted to represent plaintiff on a contingency fee basis, and retaliated against plaintiff's insistence on a fee-for-service arrangement by first overcharging plaintiff, and then sabotaging his case. Id. ¶¶ 53-59. A California state court dismissed plaintiff's claim for interference with prospective economic advantage, which dismissal plaintiff contends was due to I&S's failure to properly amend a complaint. Id. ¶ 59. Plaintiff alleges that I&S then "filed frivolous writs" with California appellate courts challenging that dismissal, while continuing to overcharge plaintiff. Id. ¶¶ 60-65. At trial, plaintiff alleges that Russell Iungerich improperly stipulated to exclude evidence crucial to plaintiff's claims. Id. ¶ 68. The court granted a non-suit for lack of evidence of malice, a required element of plaintiff's malicious prosecution claim. Id. ¶ 69. Plaintiff alleges that I&S overbilled for trial services as well. Id. ¶ 71.
In 2001, plaintiff filed a malpractice suit against I&S and three of its attorneys for their handling of plaintiff's litigation against the hospital, which litigation the Court hereinafter refers to as "Mir v. I&S." Id. ¶ 72. The defendants in Mir v. I&S cross-complained for unpaid legal fees from the hospital litigation in the amount of $58, 000 plus attorneys' fees, costs, and interest. Id. Plaintiff and Russell Iungerich attended a mediation conference on June 28, 2001. Id. ¶ 74. During this conference, an attorney for Westport (which, as discussed below, insured I&S against malpractice lawsuits at the time) prepared a handwritten document entitled "Settlement Terms" that, according to plaintiff, contemplated a payment of $45, 000 to settle plaintiff's malpractice suit, and did not mention the cross-complaint or plaintiff's waiver of any rights with respect to that cross-complaint. Id. ¶ 75. Plaintiff signed the document, but denies that any binding contract was thereby created. Id. ¶¶ 76-83.
On September 19, 2001, the I&S defendants successfully moved to enforce the Settlement Terms. Id. ¶ 84. Plaintiff maintains that the California court that enforced the Settlement Terms did so in error. Id. ¶ 85. On January 27, 2003, the state court held a bench trial solely on the cross-complaint. Id. ¶ 91. On March 1, 2003, the court awarded Russell Iungerich a judgment on the cross-complaint in the amount of $85, 147.06. Id. ¶ 92. On March 19, 2003, the court awarded an additional $15, 750 in attorneys' fees, bringing the total judgment to $100, 897.06. Id. ¶ 93. Russell Iungerich transferred this judgment from his name to the I&S firm. Id. ¶ 94. On June 6, 2003, I&S and FRBC filed a Writ of Execution on this judgment with the Clerk of the Superior Court of California for the County of Los Angeles ("Los Angeles County Superior Court"). Id. ¶ 95. On February 10, 2004, I&S filed a Notice of Lien in the Los Angeles County Superior Court, imposing a lien based on the cross-complaint judgment against the settlement amount due Mir to be paid by Westport. Id. ¶ 98. On April 23, 2004, unspecified defendants filed a memorandum of costs after judgment in the additional amount of $51, 028.99 for attorney fees for conducting debtor examinations. Id. ¶ 99. Defendant asserts that no judgment on this amount was ever requested or entered. Id.
On May 16, 2003, plaintiff appealed the Mir v. I&S judgment. Id. ¶ 96. I&S was represented on appeal by Greines Martin. Id. ¶ 97. The Court of Appeal affirmed the appealed-from judgment and the order enforcing the Settlement Terms Id. ¶¶ 102-06. Plaintiff maintains that Greines Martin's opposition briefing was "substandard" and that Greines Martin must have "improperly influenced" the Court of Appeal justices in an unspecified manner in order to prevail. Id. ¶ 100. On February 23, 2005, I&S and the Greines Martin defendants filed an application for attorneys' fees and costs for the appeal in the Mir v. I&S litigation, which the trial court granted in the amount of $76, 909. Id. ¶¶ 114-16. Plaintiff appealed this award of attorneys' fees, and the Court of Appeal affirmed. Id. ¶ 117. On May 8, 2006, the Greines Martin defendants filed an application for attorneys' fees for appeal of the original attorneys' fee award in Mir v. I&S, in the amount of $30, 160.10.
On November 5, 2004, I&S filed a complaint in the Los Angeles County Superior Court for fraudulent conveyance of a property plaintiff sold in 2001. Id. ¶ 107. The complaint cited as a basis for standing the unpaid judgment against plaintiff. Id. ¶ 108. Plaintiff contends that the sale was proper and the fraudulent conveyance suit baseless. Id. ¶¶ 109-11. I&S filed a lis pendens on the property. Id. ¶ 111. On December 6, 2005, I&S agreed to settle the fraudulent conveyance lawsuit for $35, 000. Id. ¶ 118. Plaintiff wired $35, 000 to the buyer of the property, who then transferred that amount to I&S. Id. ¶ 120.
For some period relevant to the Mir v. I&S litigation, I&S carried a professional liability insurance policy issued by Westport under Policy Number CAS055873. Id. ¶ 124. I&S allegedly filed a claim with Westport for Greines Martin's attorneys' fees in connection with the Mir v. I&S matter, and Westport allegedly paid Greines Martin all of its billed fees in connection with that case. Id. ¶¶ 125, 129. Plaintiff asserts that the I&S and Greines Martin defendants did not disclose to plaintiff or the California courts that Westport had paid the same attorneys' fees that the I&S and Greines Martin defendants attempted to collect from plaintiff, and alleges that the insurance company and two law firms entered into a confidential agreement to conceal said payments. Id. ¶¶ 126-28. Plaintiff also contends that Westport paid I&S $45, 000 for the Settlement Terms judgment against plaintiff. Id. ¶ 131.
On July 17, 2006, I&S, FRBC, and Peter Csato filed a Writ of Execution with the Clerk of the Los Angeles County Superior Court relating to the Mir v. I&S judgment, in the amount of $100, 897.06 plus interest of $33, 944.33 through July 12, 2006, with an additional $28.03 in interest from the date of application. Id. ¶ 134. Plaintiff alleges that the amount of interest was improperly calculated on an amount which already included interest. Id. Plaintiff also protests that the Writ of Execution did not reflect "any credit for" the $45, 000 I&S had received from Westport in connection with the Mir v. I&S settlement, or the $35, 000 I&S had received in connection with the fraudulent conveyance settlement. On March 28, 2007, I&S, FRBC, and Peter Csato filed a similar Writ of Execution, again without giving credit for the $45, 000 and $35, 000 payments, and again without including the appellate attorneys' fees. Id. ¶¶ 138-39. The same defendants filed another Writ of Execution on May 14, 2010, in the same base amount of $100, 897.06 and without crediting the $45, 000 or $35, 000 payments, but this time claiming accrued interest of $72, 205.28 plus $28.03 per day from the date of application. Id. ¶ 141. The amounts asserted in the 2006, 2007, and 2010 Writs of Execution did not include appellate attorney fees awarded to I&S against plaintiff. Id. ¶¶ 135, 139, 142.
On March 15, 2013, the I&S and FRBC defendants filed an Amended Application for Renewal of Judgment in a total amount of $438, 594.16. Id. ¶ 143. On March 18, 2013, I&S and FRBC recorded a Notice of Involuntary Lien and Amended Application for Renewal of judgment in that same amount. Id. ¶ 144.
On March 21, 2013, plaintiff moved to set aside and vacate the renewal of judgment on the grounds that I&S and FRBC (1) improperly failed to credit the $35, 000 settlement received in the fraudulent conveyance action; (2) compounded interest upon interest; (3) unlawfully applied the $45, 000 malpractice settlement payment to accrued interest instead of principal; (4) improperly included costs for which they had previously filed a memorandum of costs, but not obtained a judgment; and (5) improperly included in the judgment attorneys' fees in the amount of $76, 909 and $30, 160 that had already been paid by Westport, thus engaging in "double dipping" and "unjust enrichment." Id. ¶ 147. In a reply brief on the motion to set aside and vacate the renewal of judgment, plaintiff also argued that the attorneys' fee judgments were subject to collateral attack because the I&S, FRBC, and Greines Martin defendants had fraudulently concealed payments of the same from Westport, breached fiduciary duties to plaintiff, and misled the courts. Id. ¶¶ 151-58.
On May 31, 2013, the state court found that I&S had incorrectly applied $45, 000 first to accrued interest instead of to principal. Id. ¶ 162. According to plaintiff, the court "did not mention in its Ruling or rule on" plaintiff s other contentions of error. Id. ¶¶ 163-167. The state court amended the amount of judgment to $408, 610.60 and ordered entry of renewal of judgment of this amount nunc pro tunc to February 14, 2013. Id. ¶ 168. In June 2013, plaintiff objected to the renewed judgment on the ground that the court had no jurisdiction to enter judgment nunc pro tunc . Id. ¶ 170. On June 13, 2013, I&S and FRBC filed a Second Amended Application for Renewal of Judgment. Id. ¶ 173. Plaintiff alleges that I&S and FRBC fraudulently altered a form in order to induce the court to enter this amended judgment nunc pro tunc . Id. ¶¶ 173-76. On June 17, 2013, plaintiff filed Amended Objections to Judgment, arguing that the judgment was not timely renewed and that the court had failed to consider plaintiff's other objections to the amount of judgment described above. Id. ¶ 177. On June 20, 2013, the state court ordered that the Second Amended Application for Renewal of Judgment could be entered nunc pro tunc to February 24, 2013. Id. ¶ 178. Plaintiff attempted through another motion to have that application stricken, but the court rejected that motion as well. Id. ¶¶ 179-90.
III. DEFENDANT JAY BROWN'S MOTION TO QUASH SERVICE OF SUMMONS OR DISMISS FOR LACK OF PERSONAL JURISDICTION
Defendant Jay Brown ("Brown"), a Kansas resident, argues that this Court lacks personal jurisdiction over him, and that all claims against him must therefore be dismissed. For the reasons that follow, the Court agrees.
A. Legal Standard
When a defendant moves to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of demonstrating that the court may properly exercise personal jurisdiction over the defendant. Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir.2006). Where, as here, a court decides such a motion without an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts to withstand the motion to dismiss. Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995); Doe v. Unocal Corp., 27 F.Supp.2d 1174, 1181 (C.D. Cal. 1998), aff'd, 248 F.3d 915 (9th Cir. 2001). Plaintiff's version of the facts is taken as true for purposes of the motion if not directly controverted, and conflicts between the parties' affidavits must be resolved in plaintiff's favor for purposes of deciding whether a prima facie case for personal jurisdiction exists. AT & T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996); Unocal, 27 F.Supp.2d at 1181. If the defendant adduces evidence controverting the allegations, however, the plaintiff may not rely on his pleadings, but must "come forward with facts, by affidavit or otherwise, supporting personal jurisdiction." Scott v. Breeland, 792 F.2d 925, 927 (9th Cir.1986) (quoting Amba Mktg. Servs., Inc. v. Jobar Int'l, Inc., 551 F.2d 784, 787 (9th Cir.1977)).
Generally, personal jurisdiction exists if (1) it is permitted by the forum state's long-arm statute and (2) the "exercise of that jurisdiction does not violate federal due process." Pebble Beach, 453 F.3d at 1154-55 (citing Fireman's Fund Ins. Co. v. Nat'l Bank of Coops., 103 F.3d 888, 893 (9th Cir. 1996). California's long-arm jurisdictional statute is coextensive with federal due process requirements, so that the jurisdictional analysis under state law and federal due process are the same. Cal. Civ. Proc. Code § 410.10; Roth v. Garcia Marquez, 942 F.2d 617, 620 (9th Cir. 1991). The Fourteenth Amendment's Due Process Clause requires that a defendant have "minimum contacts" with the forum state so that the exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Depending on the nature of the contacts between the defendant and the forum state, personal jurisdiction is characterized as either general or specific.
A court has general jurisdiction over a nonresident defendant when that defendant's activities within the forum state are "substantial" or "continuous and systematic, " even if the cause of action is "unrelated to the defendant's forum activities." Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 446-47 (1952); Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1287 (9th Cir. 1977). The standard for establishing general jurisdiction is "fairly high" and requires that the defendant's contacts be substantial enough to approximate physical presence. Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). "Factors to be taken into consideration are whether the defendant makes sales, solicits or engages in business in the state, serves the state's markets, designates an agent for service of process, holds a license, or is incorporated there." Id. (finding no general jurisdiction when the corporation was not registered or licensed to do business in California, paid no taxes, maintained no bank accounts, and targeted no advertising toward California).
A court may assert specific jurisdiction over a claim for relief that arises out of a defendant's forum-related activities. Rano v. Sipa Press, Inc., 987 F.2d 580, 588 (9th Cir. 1993). The test for specific personal jurisdiction has three parts:
(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004) (citing Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76 (1985). The plaintiff bears the burden of satisfying the first two prongs, and if either of these prongs is not satisfied, personal jurisdiction is not established. Schwarzenegger, 374 F.3d at 802.
If the plaintiff establishes the first two prongs, then it is the defendant's burden to "present a compelling case" that the third prong, reasonableness, has not been satisfied. Schwarzenegger, 374 F.3d at 802 (quoting Burger King, 471 U.S. at 477). The third prong requires the Court to balance seven factors: (1) the "extent of the defendant's purposeful injection into the forum"; (2) the burdens on defendant from litigating in the forum state; (3) the "extent of conflict with the sovereignty of the defendant's state, " (4) the forum state's "interest in adjudicating the dispute"; (5) the "most efficient judicial resolution of the controversy"; (6) the "importance of the forum to the plaintiff's interest in convenient and effective relief"; and (7) the existence of an alternative forum. Ziegler v. Indian River County, 64 F.3d 470, 475 (9th Cir. 1995).
B. Jurisdictional Facts
Brown submits a declaration under penalty of perjury attesting to the following facts. Brown is a resident of Kansas, and has never lived in California. Brown Decl. ¶¶ 2, 9. He is a Senior Vice President and Senior Legal Counsel for Swiss Re America Holding Corporation, and in that capacity provides legal services for defendant Westport. Id. ¶ 1. Westport is a Missouri corporation with its principal administrative office in Kansas. Id.
Brown is an attorney licensed in the state of Kansas. Id. He is not, nor has he ever been, a member of the California State Bar, nor has he ever engaged in the practice of law in California or appeared before a California court. Id. ¶¶ 6-7. He has not advertised in California. Id. ¶ 8. He has not owned real estate or maintained any bank account, address, or telephone number in California. Id. ¶ 9-10.
Since 2009, Brown has traveled to California for three vacations, the longest of which lasted one week. Id. ¶ 11. During that same time, in his capacity as counsel for Westport, Brown has traveled to California on four separate occasions to attend mediations, with each visit lasting two days or less. Id. None of these trips involved the plaintiff or any party to this case aside from Westport. Id.
Brown declares that his only involvement in the events giving rise to this lawsuit involved a subopoena duces tecum served on Westport's Kansas offices in May 2013. Id. ¶ 12. Brown worked out of his Kansas office in responding to and drafting objections to the subpoena. Id. On May 29, 2013, plaintiff called Brown at his office in Kansas to inquire about Westport's response to the subpoena. Id. ¶ 13. During this telephone conversation, Brown informed plaintiff that Westport was not planning on producing documents in response to the subpoena and was preparing objections to the subpoena, including that the subpoena was not properly served. Id. Brown also asserted that it was unreasonable to demand productions of eight-to-ten-year-old documents on less than two business days' notice, and that the requests included privileged information. Id. Brown declares that, during the telephone conversation, plaintiff alleged that Westport was committing fraud by refusing to produce the documents, and that plaintiff would file a federal lawsuit if the documents were not produced. Id. Brown also had a single phone call with defendant Russell Iungerich, prepared Westport's objections to the subpoena from his Kansas office, and then faxed the objections to California. Id. ¶ 14.
The FAC includes an account of the subpoena and telephone call that is essentially consistent with Brown's declaration. Plaintiff alleges that on May 24, 2013, he caused to be served a subpoena on Westport. FAC ¶ 159. Plaintiff later spoke to Brown, an in-house attorney for Westport, who stated that he would not be releasing documents in response to the subpoena because "he did not have enough time" and because of "claimed confidentiality" and "unspecified attorney-client privilege." Id. ¶ 160. The FAC alleges several times that Brown was part of a confidential agreement and/or conspiracy not to disclose information. See, e.g., FAC ¶¶ 326, 332, 346, ...