United States District Court, N.D. California, San Jose Division
ORDER DENYING DEFENDANT'S MOTION TO QUASH SERVICE
OF PROCESS; GRANTING DEFENDANT'S MOTION TO DISMISS FOR
LACK OF PERSONAL JURISDICTION; AND VACATING HEARING [RE: ECF
LAB SON FREEMAN, United States District Judge
Paul Ponomarenko brings this suit against Defendants Project
Vegas Mansion (“PVM”) and Nathan Shapiro
(collectively, “Defendants”), alleging that
Defendants engaged in fraudulent conduct that induced him to
enter into two separate contracts for personal coaching with
them, and that Defendants subsequently breached those
contracts. See generally Compl., ECF 1. Shapiro
moves to quash service of process for failure to serve in
accordance with the Federal Rules of Civil Procedure, and
moves to dismiss the complaint for lack of personal
jurisdiction over him. See generally Mot., ECF 27.
Pursuant to Civ. L.R. 7-1(b), the Court finds Shapiro's
motion suitable for submission without oral argument and
hereby VACATES the hearing scheduled for June 22, 2017. For
the reasons set forth below, the Court DENIES Defendant's
motion to quash service of process and GRANTS Defendant's
motion to dismiss for lack of personal jurisdiction WITH
LEAVE TO AMEND.
alleges the following facts: Ponomarenko was invited to
attend and did attend Defendants' personal coaching
seminar in San Francisco on February 15-18, 2013, where he
was introduced to Defendants, including Shapiro. Compl.
¶¶ 12-14. Ponomarenko paid $349 to attend the
event. Id. ¶ 13. Plaintiff later attended an
“in-field” coaching session, where Defendants
took him and several other individuals on “training
sessions.” Id. ¶ 14. After this session,
Defendants invited Ponomarenko to join them at a third event
for further demonstration of their personal coaching methods.
Id. ¶ 15. At some point thereafter, Defendants
induced Ponomarenko to consider a long-term business
relationship with them for personal coaching. Id.
subsequent meeting in California, Defendants represented that
as a part of any agreement, Ponomarenko would receive
structured personal coaching with substantial, regular, and
organized feedback. Id. ¶ 17. The services were
to be provided in both California and Nevada, and by PVM
through Shapiro and/or another individual who represented
himself to be working on behalf of PBCM and to be a business
partner of Shapiro. Id. After this meeting,
Ponomarenko flew to Las Vegas, Nevada to finalize the
agreement. Id. ¶ 18.
in Las Vegas, Ponomarenko and Defendants executed an
agreement (“First Agreement”) for PVM to provide
a specific number of hours and sessions of personal
communication and presentation coaching. Id. ¶
19. The First Agreement obligated Ponomarenko to make an
initial down payment of $25, 000. Id. ¶ 20.
Ponomarenko paid Shapiro $5, 000 while he was in Las Vegas,
and paid an additional $15, 000 a few days later.
Id. Ponomarenko also paid $5, 000 to another
individual who was represented to be one of PVM's agents
and Shapiro's business partner. Id. Pursuant to
the First Agreement, Ponomarenko was to make the remainder of
the payments in regular intervals during the course of the
training period. Id.
the time he executed the First Agreement through January
2014, Ponomarenko repeatedly and regularly traveled between
California and Nevada to attend the coaching sessions.
Id. ¶ 22. Occasionally, training sessions were
held in other cities, such as New York and Chicago.
Id. Ponomoarenko claims that the personal coaching
sessions lacked the promised structure and many were
conducted “in a party like setting, ” at his
expense. Id. ¶ 23. Growing frustrated with
this, Ponomarenko reached out to PVM's agent, who
reassured him that they would address the issues.
Id. ¶ 24.
January 2014, PVM's agent proposed a second agreement,
whereby the agent would move to San Francisco so that
Ponomarenko did not have to regularly travel to attend the
training sessions. Id. ¶ 25. Thereafter,
Ponomarenko and PVM's agent entered into second agreement
(“Second Agreement”), whereby Ponomarenko agreed
to pay $99, 000 to enroll in an advanced personal coaching
program. Id. In addition to the enrollment cost,
Ponomarenko was to cover all of the agent's travel
expenses for the duration of the Second Agreement and a
short-term lease on an apartment for PVM's agent in San
Francisco. Id. Shapiro was not involved in the
Second Agreement. Id.
February 20, 2014, Ponomarenko paid PVM's agent $40, 000,
consisting of a $23, 500 payment on the First Agreement and a
$16, 500 down payment for the Second Agreement. Id.
¶ 27. PVM's agent never delivered on the promise to
provide advanced coaching services. Id. ¶ 28.
Plaintiff believes that these payments were used to
“fund a San Francisco/Vegas lifestyle” for
PVM's agent. Id. Nevertheless, in January 2016,
Shapiro contacted Ponomarenko and claimed that Ponomarenko
had not paid the $23, 500 due on the First Agreement.
Id. ¶ 27.
Ponomarenko terminated the Second Agreement in November 2014.
Id. ¶ 29. Upon termination, PVM's agent
demanded that Ponomarenko pay the full amount of the coaching
fee, as well as additional expenses before PVM's agent
agreed to leave the San Francisco apartment Ponomarenko was
paying for. Id. Ponomarenko also paid expenses to
terminate the lease once PVM's agent left the premises.
Id. In all, Ponomarenko expended over $125, 000.
filed this suit in May 2016. See generally Compl. He
asserts six claims against Defendants: (1) breach of
contract; (2) intentional misrepresentation; (3) negligent
misrepresentation; (4) false promise; (5) breach of the
covenant of good faith and fair dealing; and (6) violation of
the California Business and Professions Code § 17200
(“UCL”). See generally Id. Shapiro moves
to quash service of process for failure to serve in
accordance with the Federal Rules of Civil Procedure, and
moves to dismiss the Complaint for lack of personal
jurisdiction over him. See generally Mot.
MOTION TO QUASH SERVICE OF PROCESS
Court lacks jurisdiction over defendants who have not been
properly served. SEC v. Ross, 504 F.3d 1130, 1138-39
(9th Cir. 2007). Accordingly, Federal Rules of Civil
Procedure 12(b)(4) and 12(b)(5) permit a court to dismiss an
action for insufficiency of service of process. Fed.R.Civ.P.
12(b)(4)-(5). Rule 12(b)(4) enables the defendant to
challenge the substance and form of the summons, and 12(b)(5)
allows the defendant to attack the manner in which service
was, or was not, attempted. When the validity of service is
contested, the burden is on the plaintiff to prove that
service was valid under Rule 4. Brockmeyer v. May,
383 F.3d 798, 801 (9th Cir. 2004). If the plaintiff is unable
to satisfy this burden, the Court has the discretion to
either dismiss the action or retain the action and quash the
service of process. Lowenthal v. Quicklegal, Inc.,
No. 16-cv-3237, 2016 WL 5462499, at *14 (N.D. Cal. Sept. 28,
2016). “Dismissals for defects in the form of summons
are generally disfavored.” U.S.A. Nutrasource, Inc.
v. CNA Ins. Co., 140 F.Supp.2d 1049, 1052 (N.D. Cal.