United States District Court, S.D. California
ORDER GRANTING DEFENDANT'S MOTION TO TRANSFER OR DISMISS FOR LACK OF PERSONAL JURISDICTION [ECF No. 2]
CYNTHIA BASHANT, District Judge.
On July 16, 2014, Plaintiffs Ocean SW, Inc. ("Ocean") and U.S. Pet Nutrition, LLC ("USPN") commenced this action in the San Diego Superior Court, asserting claims for breach of contract and unjust enrichment against Defendant CanAm Pet Treats, Inc. ("CanAm"). Thereafter, CanAm removed this action to federal court on the basis of diversity. CanAm now moves to dismiss under Federal Rule of Civil Procedure 12(b)(2) or alternatively, to transfer to the Western District of Missouri. Ocean and USPN oppose.
The Court finds this motion suitable for determination on the papers submitted and without oral argument. See Civ. L.R. 7.1(d)(1). For the following reasons, the Court GRANTS CanAm's motion to dismiss for lack of personal jurisdiction and transfer venue.
CanAm is a Canadian company that "manufactures and distributes pet treats that are sold throughout Canada and the United States." (Connolly Decl. ¶ 2.) Its principal place of business and corporate offices are located in British Columbia, Canada, though it has a manufacturing facility that houses its United States corporate offices in Milan, Missouri. (Id. ) According to Brian Connolly-CanAm's Chief Executive Officer-CanAm does not have any offices, facilities, or employees in California. (Id. ¶¶ 1, 3.) Ocean is a California corporation and USPN is a California limited liability company, each with their respective principal places of business in San Diego, California. (Compl. ¶¶ 3-4.)
The chain of events leading to this action began when Darford International, Inc. ("Darford" or "Darford International") went into receivership sometime in 2012. ( See Chan Decl. ¶ 4; Connolly Decl. ¶ 4.) Darford was a Canadian company "in the business of manufacturing and distributing pet treats throughout North America." (Connolly Decl. ¶ 4.) Both Ocean and USPN were investors in Darford, and USPN was also a distributor for Darford in the United States. (Id.; Chan Decl. ¶ 4.)
However, Darford began "experiencing financial difficulties and went into receivership." (Connolly Decl. ¶ 5.) The receivership "occurred in British Columbia and was governed by the laws of British Columbia, with the receiver located in Vancouver, B.C." (Id. ) Enter CanAm, a company that was "created to, and ultimately did, purchase certain of the assets of Darford as a part of a liquidation plan approved by the court in British Columbia." (Id. ) As a part of the receivership and in connection with its purchase of Darford assets, CanAm-directly and through its wholly-owned subsidiary, Darford Holding Company, Inc. ("DHC" or "Darford Holding")-entered into several agreements with Ocean and USPN, including a distribution agreement with USPN, a sub-lease with USPN, and a promissory note with Ocean. (Connolly Decl. ¶ 6, Exs. 1-3.) These agreements were purportedly "all part of an overall agreement between CanAm (as the Darford asset purchaser) and USPN/Ocean SW (as the former distributor for and investors in Darford)." (Connolly Decl. ¶ 6.)
CanAm describes the distribution agreement as "stat[ing] that the parties were entering into the agreement in part because CanAm agreed to recognize prior indebtedness owed to Ocean SW by Darford[, ]" and that they "agreed and understood that CanAm would be voluntary [sic] undertaking to repay a debt to Ocean SW that CanAm was not obligated to pay." (Connolly Decl. ¶ 7.) With that understanding, in October 2012, CanAm and Ocean entered into a promissory note requiring CanAm to repay Ocean in the amount of $1, 050, 000 plus interest by the maturity date. (Id.; Compl. ¶ 10; see also Connolly Decl. Ex. 2.) The promissory note states that it "shall be construed and enforceable under and in accordance with the laws of British Columbia and the laws of Canada applicable therein." (Connolly Decl. Ex. 2; see also Compl. ¶ 10.) CanAm used the proceeds from the note to "acquire all or substantially all of the assets of Darford... including the Darford brand name." (Chan Decl. ¶ 2.) Ocean and USPN allege that CanAm repudiated the note in June 2014, which was "accepted" in accordance with British of Columbia and Canadian laws. (Compl. ¶¶ 12-13.) Ocean and USPN allege that "[t]o date... CanAm has not repaid any principal or interest to Ocean on the USD $1, 050, 000 promissory note." (Compl. ¶¶ 11, 18 (emphasis added).)
CanAm also allegedly "agreed to repay debts owed to USPN... including those invoiced to or incurred by an entity called Darford, in exchange for good and valuable consideration." (Compl. ¶ 14.) CanAm purportedly "made repeated verbal and written agreements, assurances and affirmations to USPN in California that Canam would repay debts, including debts of both Darford International and Darford Holding, owed to USPN[.]" (Chan Decl. ¶ 3.) The debts owed to USPN allegedly include $519, 165.86, $129, 165.86, other debts and expenses, and interest." (Compl. ¶ 14.) Shue Wing Chan-a director for USPN and president of Ocean-adds that "John Phelps, an officer of USPN at the time, hosted conference calls with Canam regarding such repayments" and that Mr. Phelps "was acting in his official capacity as an officer for USPN" even though he was also a director for CanAm. (Chan Decl. ¶ 3.) Ocean and USPN allege that CanAm has not paid the outstanding debt owed to USPN. (Compl. ¶¶ 16, 30.)
On July 16, 2014, Ocean and USPN commenced this action against CanAm in the San Diego Superior Court, asserting two claims for breach of contract and one for unjust enrichment. Because the complaint was not served on CanAm until August 5, 2014, CanAm removed this action to federal court on September 2, 2014. (Removal Notice ¶ 2.)
On October 6, 2014, CanAm commenced an action in the Western District of Missouri ("Missouri Action") against Ocean and USPN. (Related Case Notice 1:4-18.) The Missouri Action complaint indicates that CanAm is asserting breach-of-contract claims related to the "overall agreement" and distribution agreement previously mentioned. (Related Case Notice Ex. A.)
CanAm now moves to dismiss for lack of personal jurisdiction or alternatively, transfer venue to the Western District of Missouri. Ocean and USPN oppose.
II. LEGAL STANDARD
When the parties dispute whether personal jurisdiction over a foreign defendant is proper, "the plaintiff bears the burden of establishing that jurisdiction exists." Rios Props. Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002). In ruling on the motion, the "court may consider evidence presented in affidavits to assist in its determination and may order discovery on the jurisdictional issues." Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001). Where the motion is based on written materials rather than an evidentiary hearing, the plaintiff need only make "a prima facie showing of jurisdictional facts to withstand the motion to dismiss." Bryton Purcell LLP v. Recordon & Recordon, 575 F.3d 981, 985 (9th Cir. 2009). "In determining whether the plaintiff has met this burden, the Court must take the allegations in the plaintiff's complaint as true and resolve the disputed jurisdictional facts in the plaintiff's favor." Nissan Motor Co., Ltd. v. Nissan Computer Corp., 89 F.Supp.2d 1154, 1158 (C.D. Cal. 2000) (citing Ziegler v. Indian River Cnty., 64 F.3d 470, 473 (9th Cir. 1995)). A prima facie showing means that "the plaintiff need only demonstrate facts that if true would support jurisdiction over the defendant." Unocal, 248 F.3d at 922.
"The general rule is that personal jurisdiction over a defendant is proper if it is permitted by a long-arm statute and if the exercise of that jurisdiction does not violate federal due process." Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). Both the California and federal long-arm statutes require compliance with due-process requirements. Daimler AG v. Bauman, ___ U.S. ___, 135 S.Ct. 746, 753 (2014); see also Fed.R.Civ.P. 4(k)(2); Holland Am. Line Inc. v. Wärtsilä N. Am., Inc., 485 F.3d 150, 161 (9th Cir. 2007); Pebble Beach, 453 F.3d at 1155.
There are two types of personal jurisdiction: general and specific. See Daimler AG, 135 S.Ct. at 754-55. "Since International Shoe, specific jurisdiction has become the centerpiece of modern jurisdiction theory, while general jurisdiction [has played] a reduced role.'" Daimler AG, 134 S.Ct. at 755 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, ___ U.S. ___, 131 S.Ct. 2846, 2854 (2011)). General jurisdiction "enables a court to hear cases unrelated to the defendant's forum activities[.]" Fields v. Sedgewick Assoc. Risks, Ltd., 796 F.2d 299, 301 (9th Cir. 1986). Specific jurisdiction allows the court to exercise jurisdiction over a ...