United States District Court, E.D. California
RONALD F. TRINCHITELLA, Plaintiff,
AMERICAN REALTY PARTNERS, LLC, et al., Defendants.
the course of one month, representatives of American Realty
Partners (ARP) and Performance Realty Management (PRM) called
and emailed Ronald Trinchitella, a California resident, to
solicit his investment in Arizona real estate. During the
solicitations, Mr. Trinchitella was promised an eight percent
annual return on his investment, with an overall projected
return of fifteen to eighteen percent. After Mr. Trinchitella
made an initial investment, ARP and PRM solicited additional
investments for several more months. He declined to make
further investments until he received his first return. After
seeing no returns, and after unfulfilled promises to return
his investment, Mr. Trinchitella filed suit in California
against ARP, PRM, American Housing Income Trust, Inc. (AHIT),
and Sean Zarinegar, AHIT’s CEO, board chairman, and
president, and the manager of ARP and PRM. Defendants move to
dismiss Mr. Trinchitella’s complaint, contending this
court lacks personal jurisdiction, venue is improper, and Mr.
Trinchitella is subject to an arbitration agreement for
claims against ARP.
hearing on this motion, Scott Judson appeared for plaintiff
and Devin Bone appeared for defendants. As described below,
defendants’ motion is GRANTED in part and this case is
STAYED pending completion of arbitration.
September 22, 2015, Mr. Trinchitella filed suit in the
Superior Court for the County of San Joaquin against three
out-of-state corporations and one corporate representative:
ARP and PRM, two limited liability companies organized under
the laws of Arizona with principle places of business in
Arizona, Compl. ¶ 2, ECF No. 1; AHIT, a corporation
organized under the laws of Maryland with a principle place
of business in Arizona, id. ¶ 4; and Sean
Zarinegar, a resident of Arizona, id. ¶ 5. Mr.
Trinchitella also named several unknown fictitious
defendants, but they have not been identified or served.
Id. ¶ 6. The court DISMISSES the Doe
defendants. Fed.R.Civ.P. 4(m) (on its own motion, court may
dismiss defendants not served within ninety days after
complaint is filed); Craig v. United States, 413
F.2d 854, 856 (9th Cir. 1969).
Trinchitella’s operative complaint alleges seven
claims: (1) breach of written contract, (2) breach of oral
contract, (3) promissory fraud, (4) consumer fraud, (5)
intentional misrepresentation, (6) negligent
misrepresentation, and (7) common law fraud. See
generally Compl. Defendants removed the suit to this
court on the basis of diversity jurisdiction, Not. Remov. 2,
ECF No. 1, and now move to dismiss all of Mr.
Trinchitella’s claims. See generally Mot., ECF
No. 4-1. Mr. Trinchitella filed an opposition, Opp’n,
ECF No. 5, and defendants replied, Reply, ECF No. 7.
analyzing a motion to dismiss for lack of jurisdiction, the
court may rely on the plaintiff’s complaint and the
parties’ affidavits. See Ochoa v. J.B. Martin &
Sons Farms, Inc., 287 F.3d 1182, 1187 (9th Cir. 2002)
(where trial court relied on affidavits and discovery
materials to determine personal jurisdiction, dismissal is
appropriate only if the plaintiff has not made a prima facie
showing of personal jurisdiction); Fields v. Sedgwick
Assoc. Risks, Ltd., 796 F.2d 299, 301 (9th Cir. 1986)
(same). As such, the court relies on Mr. Trinchitella’s
complaint and the parties’ declarations in reviewing
the following factual background.
Mr. Trinchitella Invests with ARP
January 2014, Jack Combs, the Managing Partner of ARP, called
Mr. Trinchitella to solicit an investment in Arizona real
estate. Compl. ¶ 9. Mr. Combs informed him a $150, 000
investment would earn an annual return of eight percent or
more, with an overall projected return of fifteen to eighteen
percent. Id. ¶ 10. Within the next month, Mr.
Trinchitella had similar follow-up conversations with Mr.
Combs, and with Mr. Zarinegar and Dan Sheriff, the Senior
Account Manager of ARP. See Id. ¶¶ 9, 11,
14; Trinchitella Decl. Ex. 1 at 1, ECF No. 5-3. After one
such conversation, Mr. Sheriff sent an email thanking Mr.
Trinchitella for the discussion. Trinchitella Decl. Ex. 1 at
1. He sent the email from a PRM address with links to the PRM
website and an introductory video about PRM. Id.
the discussions, Mr. Trinchitella explained he did not want
to invest in stock. Compl. ¶ 12. He was assured his
investment would not include stock, id., he could be
refunded his $150, 000 at any time if he was not happy for
any reason, and he would be able to withdraw any earnings
once a year without compromising the capital contribution,
id. ¶¶ 12-13. While the record does not
make clear who gave Mr. Trinchitella these assurances, his
complaint suggests it was Mr. Zarinegar, Mr. Combs, or Mr.
Sherriff or more than one of them. See id.
February 12, 2014, Mr. Trinchitella accepted the offer to
make an investment, sending a check for $150, 000 to ARP and
signing the Subscription Agreement PRM sent to memorialize
the terms of the investment. Id. ¶ 14; Compl.
Ex. A at 11-17, ECF No, 1. At hearing, the parties did not
dispute Mr. Trinchitella signed and executed the Subscription
Agreement in California.
the next year, Mr. Trinchitella received monthly calls from
Mr. Sheriff soliciting further investments in Arizona real
estate. Compl. ¶ 19. During the same time frame, he also
received a letter from Mr. Zarinegar on PRM letterhead,
soliciting further investments. Trinchitella Decl. Ex. 3. In
discussions with Mr. Sheriff, Mr. Trinchitella declined to
make further investments until he received his first return.
Compl. ¶ 19. In January 2015, Mr. Trinchitella called
Mr. Sheriff to inquire about the status of his investment and
to obtain supporting documentation. Id. Mr. Sheriff
assured Mr. Trinchitella ARP was earning a return somewhere
between eighteen percent and twenty-two percent, but no
documentation verifying these returns was provided.
later, Mr. Zarinegar informed Mr. Trinchitella during a phone
call that his investment was being converted to stock as part
of a restructuring plan. Id. ¶¶ 20-21.
Under this plan, ARP would merge AHIT’s predecessor
company, Affinity Mediaworks Corporation, with AHIT, and have
AHIT survive as the named entity. Id. ¶ 4.
After the merger, ARP unitswould be converted to shares in
AHIT, effectively giving Mr. Trinchitella stock in AHIT.
Id. Mr. Trinchitella reiterated he had no interest
in investing in stock and requested Mr. Zarinegar return his
entire investment in addition to the guaranteed annual return
of eight percent. Id. ¶¶ 4, 21. Mr.
Zarinegar promised to send a check for $150, 000 by March
2015. Id. ¶ 22. The record does not make clear
whether Mr. Zarinegar also promised Mr. Trinchitella a check
in the amount of an eight percent annual return. At the time
this conversation took place, Mr. Zarinegar had already sent
Mr. Trinchitella a copy of the AHIT restructuring plan and a
ballot to approve the asset conversion. Trinchitella Decl. Ex
5 at 1-6. The ballot included instructions to complete and
return to Sean Zarinegar, who signed “[o]n behalf of
Performance Realty Management, LLC.” Id. at 6.
The ballot also stated, “Performance Realty is of the
opinion” that the stock conversion is the best
solution. Id. at 3. The record does not make clear
whether Mr. Trinchitella returned this ballot.
Trinchitella never did receive the $15, 000 check as
promised. Id. ¶ 27. Instead, on April 7, 2015,
Mr. Trinchitella received notice of a $36, 156 loss on his
investment, far below the promised eight percent positive
yearly return. Id. ¶ 26; Trinchitella Decl. Ex.
2 at 1. Mr. Trinchitella had another discussion with Mr.
Zarinegar in May 2015, where Mr. Zarinegar promised to send a
check by June 18, 2015. Compl. ¶ 25. Mr. Trinchitella
never received this check. Id. ¶ 27.
noted, Mr. Trinchitella signed and executed a Subscription
Agreement establishing the terms of his initial investment.
Compl. Ex. A at 11-15. The Subscription Agreement included a
choice-of-law provision, which stated,
This Agreement will be governed by and construed in
accordance with the laws of the State of Arizona, without
giving effect to any choice of law principles that would
dictate the application of another State’s law.
Id. at 14. The Subscription Agreement also included
an arbitration clause, which provided,
Any controversy, claim, or dispute arising out of or related
to this Agreement will be resolved through binding
arbitration. The arbitration will be conducted by a sole
arbitrator mutually selected by the undersigned and the
If the parties cannot agree upon an arbitrator, each party
will select an arbitrator and the two selected arbitrators
will mutually select the sole arbitrator to resolve the
Either party may request and thus initiate arbitration of the
dispute by written notice to the other party (the
“Arbitration Notice”). The Arbitration Notice
will state specifically the dispute that the initiating party
wishes to submit to arbitration.
The arbitration will be conducted in Maricopa County,
Arizona, and in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in effect.
Any judgment upon the award rendered by the arbitrator may be
enforced through appropriate judicial proceedings in any
federal court having jurisdiction.
Prompt disposal of any dispute is important to the parties.
The parties agree that the resolution of any dispute will be
conducted expeditiously. To that end, the final disposition
of the dispute will be accomplished no later than 120 days
after the date of the Arbitration Notice.
Id. The Subscription Agreement does not expressly
identify the contracting parties. The bottom of the
Subscription Agreement, however, shows Mr.
Trinchitella’s signature, Mr. Zarinegar’s
signature next to the statement “American Realty
Partners, LLC, ” and notes the agreement is
“accepted” by PRM. Id. at 15. Defendants
conceded at hearing that PRM acted on ARP’s behalf when
it signed the Subscription Agreement. AHIT is mentioned
nowhere in the Agreement.
argue they are not subject to the jurisdiction of this court,
venue is improper, and in any event, Mr. Trinchitella is
subject to the arbitration clause in the Subscription
Agreement for claims made against ARP. Mot. at 5-20. Mr.
Trinchitella contends this court has personal jurisdiction
over defendants, venue is proper, and the arbitration
agreement at issue is unconscionable and therefore
unenforceable. Opp’n at 9-24. The court proceeds to the
merits of each issue.
argue Mr. Trinchitella’s claims must be dismissed
because this court lacks general and specific personal
jurisdiction. Mot. at 6-7. Mr. Trinchitella responds only to
the specific jurisdiction arguments and contends
“[d]efendants have invoked the benefits and protections
of California’s laws, ” thereby placing this suit
properly in this forum. Opp’n at 10. In the absence of
any argument discussing or supporting general jurisdiction,
the court construes Mr. Trinchitella’s opposition as
disclaiming general jurisdiction and relying solely on
specific jurisdiction; therefore the court proceeds to
address specific jurisdiction only. See Sher v.
Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990) (declining
to determine whether general jurisdiction existed because
plaintiff argued only specific jurisdiction existed).
12(b)(2) of the Federal Rules of Civil Procedure provides
that a party may move to dismiss a complaint for lack of
personal jurisdiction. Although the defendant brings the
motion, it is the plaintiff’s burden to establish the
court’s personal jurisdiction. See Sher, 911
F.2d at 1361. Where, as here, the court makes the
jurisdictional determination without an evidentiary hearing,
“the plaintiff need make only a prima facie showing of
jurisdictional facts to withstand the motion to
dismiss.” Ballard v. Savage, 65 F.3d 1495,
1498 (9th Cir. 1995).
Legal Standards: Specific Personal Jurisdiction
a prima facie showing, the plaintiff “need only
demonstrate facts that if true would support jurisdiction
over the defendant.” Id. In particular, the
plaintiff must convince the court the defendants’
“conduct and connection with the forum State” is
such that the defendants “should reasonably anticipate
being haled into court there.” Sher, 911 F.2d
at 1361 (citing World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297 (1980)).
ruling on defendants’ motion, uncontroverted
allegations in the plaintiff’s complaint must be taken
as true, and conflicts between the facts contained in the
parties’ affidavits must be resolved in the
plaintiff’s favor. Ochoa, 287 F.3d at 1187.
The court is not required, however, to accept
“conclusory claims” or “legal
conclusions” in determining whether the plaintiff has
made a prima facie showing. Elowson v. Jea Senior
Living, No. 14-02559, 2015 WL 2455695, at *3 (E.D. Cal.
May 22, 2015). The court also looks to the personal
jurisdiction rules of the forum state in ruling on
defendants’ motion, provided the exercise of
jurisdiction comports with due process. Scott v.
Breeland, 792 F.2d 925, 927 (9th Cir. 1986). California
imposes no greater restrictions than the United States
Constitution, and as such, “federal courts in
California may exercise jurisdiction to the fullest extent
permitted by due process.” Id.
may exercise specific personal jurisdiction over a
non-resident defendant whose “minimum contacts”
with the forum state are “sufficient” in that
they relate to the claims made in a case. Sher, 911
F.2d at 1361. The minimum contract inquiry focuses “on
the relationship among the defendant, the forum, and the
litigation.” Walden v. Fiore, U.S., 134 S.Ct.
1115, 1118 (2014). The Ninth Circuit has established a
three-prong test for determining whether the plaintiff has
alleged sufficient “minimum contacts”:
(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.
Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015)
(citing Schwarzenegger v. Fred Martin Motor Co., 374
F.3d 797, 802 (9th Cir. 2004)). These prongs are identified
in shorthand fashion as: (1) purposeful availment and
direction; (2) forum-related conduct; and (3) reasonableness.
See Menken v. Emm, 503 F.3d 1050, 1057 (9th Cir.
plaintiff seeks to invoke specific personal jurisdiction, she
must establish jurisdiction for “‘each claim
asserted against a defendant.’” Picot,
780 F.3d at 1211 (quoting Action Embroidery Corp. v. Atl.
Embroidery, Inc., 368 F.3d 1174, 1180 (9th Cir. 2004)).
If personal jurisdiction exists over one claim, but not
others, the district court may exercise pendent personal
jurisdiction over any remaining claims that arise out of the
same “common nucleus of operative facts” as the
claim for which jurisdiction exists. Id.
Purposeful Availment and ...