United States District Court, S.D. California
ORDER GRANTING MOTION TO DISMISS
Roger T. Benitez United States District Judge.
before the Court is a motion to dismiss brought by Defendants
Timothy Roberts, Panama Real Estate Ventures, Inc., and
Panama Real Estate Fund No. 2, LLC. (Mot., ECF No. 10.)
Plaintiff opposed. (Opp'n, ECF No. 13.) For the reasons
stated below, the Court GRANTS the motion to dismiss.
Elaine Gallagher (“Plaintiff” or “Elaine
Gallagher”) and her former husband, Michael Gallagher,
both real estate sales people. (Compl. ¶¶ 12-13.)
In 2008, when the Gallaghers were still married, Michael
O'Riordan introduced them to Defendant Timothy Roberts.
(Id. ¶ 14.) The Gallaghers understood
O'Riordan to be a wealthy, successful man, who described
Roberts as a “smart investor” and his “best
friend.” (Id.) At some point, Roberts met with
the Gallaghers and advised them about a real estate
investment in Panama. (Id. ¶ 16.) Roberts
intended to form an entity that would purchase a large parcel
of seaside property in the Republic of Panama (the
“Panama Property”). (Id.) Roberts
offered the Gallaghers a 25% interest in the entity for cash
consideration of $250, 000. (Id.) He explained that
after escrow closed in three to six months, the Gallaghers
would receive a return of 100% of their initial investment
and own a 25% interest in the entity. (Id.; see
also ¶ 21.) Roberts did not provide the Gallaghers
with a business plan or any documentation on the nature,
risks, or projected figures of the investment. (Id.
2009, the Gallaghers agreed to make the investment and
entrusted $250, 000 to Roberts. (Id. ¶ 18.)
Elaine Gallagher and Michael Gallagher each have a 50%
interest in the investment and its proceeds. (Id.
¶ 19.) The Gallaghers never received any indicia of
ownership in the entity, but Roberts represented that their
ownership was in Defendant Panama Real Estate Fund No. 2, LLC
(“Fund No. 2”). (Id. ¶ 20.) Roberts
formed Fund No. 2 in January 25, 2011, more than a year after
he received the Gallaghers' money. (Id.)
the Gallaghers did not receive the return of their initial
investment after six months, they began to inquire of
Roberts. (Id. ¶ 21.) Roberts assured the
Gallaghers that the property purchase would close and blamed
title problems, legal issues, and difficult sellers for the
delay. (Id.) Beginning in 2010 and continuing to
2016, Roberts provided the Gallaghers with engineering
drawings of the proposed development of the land, elevation
drawings, and lists of the amenities that would be added to
the development. (Id.) In addition to the 25%
interest in the Panama Property, Roberts offered the
Gallaghers an additional $200, 000 payment over and above the
return of the original $250, 000, a 33% interest in a second
property, and an oceanfront lot on the second property.
(Id.) Almost five years after the Gallaghers'
investment, Fund No. 2 executed a contract to purchase the
Panama Property on August 7, 2015. (Id. ¶ 22.)
has repeatedly demanded the return of the $250, 000, but her
demands have been refused. She now brings suit, alleging four
claims for relief. Her first claim for relief alleges a
violation of the Securities Act of 1933 against all
Defendants. Her second claim for relief seeks an accounting
against all Defendants. The third claim for relief seeks
rescission of the purchase under California securities law
against all Defendants. The fourth claim for relief alleges
fraud against Defendant Roberts. Defendants Roberts, Panama
Real Estate Ventures, Inc., and Panama Real Estate Fund No.
2, LLC move to dismiss for lack personal jurisdiction
pursuant to Federal Rule of Civil Procedure 12(b)(2), for
failure to state a claim pursuant to Federal Rule of Civil
Procedure 12(b)(6), and for failing to plead fraud with
particularity pursuant to Federal Rule of Civil Procedure
move to dismiss Defendant Panama Real Estate Ventures, Inc.
for lack of personal jurisdiction pursuant to Federal Rule of
Civil Procedure 12(b)(2). Plaintiff alleges that Panama Real
Estate Ventures, Inc. is a corporation organized and existing
under the laws of the Republic of Panama, but that its
principal place of business is the State of California.
(Compl. ¶ 3.) Defendants counter that the company is
organized and has its principal place of business in Panama,
and that it does not have sufficient contacts with the State
of California. (Opp'n at 5.)
federal court may only exercise personal jurisdiction where
such jurisdiction satisfies both the forum state's
long-arm statute and constitutional principles of due
process. Lee v. City of Los Angeles, 250 F.3d 668,
692 (9th Cir. 2001). Because California's long-arm
statute permits the exercise of jurisdiction to the fullest
extent permitted by the U.S. Constitution, the only question
the Court must answer is whether the exercise of jurisdiction
over Defendant Panama Real Estate Ventures, Inc. would be
consistent with due process. See Cal. Civ. Proc.
Code § 410.10 (“[A] court of this state may
exercise jurisdiction on any basis not inconsistent with the
Constitution of this state or of the United States.”).
The traditional bases of personal jurisdiction that comport
with due process are service while physically present in the
forum, domicile, or consent. Absent the traditional bases, a
defendant must have such “minimum contacts” with
the forum state that “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).
Federal Rule of Civil Procedure 12(b)(2) motion to dismiss,
the plaintiff bears the burden of establishing that personal
jurisdiction exists. Mavrix Photo, Inc. v. Brand Techs.,
Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). Where, as
here, the court considers the motion without holding an
evidentiary hearing, the plaintiff need only make a prima
facie showing of jurisdictional facts to withstand the motion
to dismiss. Id. A “prima facie” showing
means that the plaintiff need only demonstrate facts that, if
true, would support jurisdiction over the defendant.
Lindora, LLC v. Isagenix Int'l, LLC, 198
F.Supp.3d 1127, 1135 (S.D. Cal. 2016). The plaintiff cannot
simply rest on the bare allegations of her complaint, but
uncontroverted allegations in the complaint must be taken as
true. Id. at 1136. The Court may not assume the
truth of allegations which are contradicted by affidavit, but
it resolves factual disputes in plaintiff's favor.
Traditional Bases of Jurisdiction
parties dispute whether Panama Real Estate Ventures,
Inc.'s principal place of business is California. This
disagreement concerns the corporation's domicile. A
corporation will be deemed “domiciled” in its
state of incorporation and where it has its principal place
of business. See Goodyear Dunlop Tires Operations, S.A.
v. Brown, 564 U.S. 915, 924 (2011); Daimler AG v.
Bauman, 134 S.Ct. 746, 760 (2014) (“With respect
to a corporation, the place of incorporation and principal
place of business are ‘paradigm . . . bases for general
jurisdiction.'”). If Plaintiff ...