Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-01899/USCOURTS-caed-2_06-cv-01899-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Account Receivable

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IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

NORTHERN CALIFORNIA COLLECTION 

SERVICES, INC. OF SACRAMENTO, a 

Corporation, 

 Plaintiff, 

v. 

CENTRAL SIERRA CONSTRUCTION, 

INC., a Nevada Corporation, 

 Defendant. 

 __________________ ____ /

No. Civ. S-06-01899 DFL DAD 

Memorandum of Opinion

and Order

CENTRAL SIERRA CONSTRUCTION, 

INC., a Nevada Corporation, on 

behalf of itself and all others 

similarly situated, 

 Cross-Claimant/Defendant, 

v. 

PRO GROUP MANAGEMENT, INC., a 

Nevada Corporation; BUILDERS’ 

ASSOCIATION OF WESTERN NEVADA, 

 Cross-Defendant. 

_______________________________/

Case 2:06-cv-01899-JAM-DAD Document 27 Filed 03/26/07 Page 1 of 8
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Third-party defendants Pro Group Management, Inc. (“Pro 

Group”) and Builders’ Association of Western Nevada (“BAWN”) 

bring this motion to dismiss for lack of personal jurisdiction. 

For the reasons discussed below, the motion is DENIED. 

I. Facts and Procedural History

Defendant and third-party complainant Central Sierra 

Construction, Inc. (“Central Sierra”) is a Nevada construction 

company that sometimes performs work in California. BAWN is a 

non-profit trade association of Nevada construction companies. 

BAWN sponsors a worker’s compensation insurance plan called 

BAWNSIG. Third-party defendant Pro Group administers BAWNSIG. 

On December 16, 2002, Central Sierra applied for worker’s 

compensation insurance through BAWNSIG. It received a 

certificate of insurance from Pro Group for the period of 

December 31, 2002 through January 1, 2004. Debbie Bradbury, 

Central Sierra’s office manager, avers that Pro Group told her 

the policy would cover Central Sierra employees who did 

temporary work in California. 

During the insured period, Central Sierra employees 

performed work in California. On March 4, 2004, the California 

State Compensation Insurance Fund (“CSCIF”) wrote to Central 

Sierra questioning whether the company had maintained California 

worker’s compensation coverage, as required by California law, 

in 2002 and 2003. The letter states that CSCIF had contacted 

Pro Group, which was unable to provide proof of coverage. 

On March 5, 2004, Robert Vogel, Pro Group’s vice president 

of operations, wrote a letter to CSCIF stating that “Pro-Group 

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Management, as the plan administrator for [BAWNSIG], has insured 

Central Sierra Construction Inc., [sic] for all temporary work 

in the State of California for their Nevada hired/based 

employees.” Unconvinced that Central Sierra’s coverage through 

BAWNSIG satisfied California law, however, CSCIF demanded that 

Central Sierra pay approximately $280,000 in unpaid insurance 

premiums, plus interest. 

On August 9, 2006, CSCIF’s collection agency filed suit 

against Central Sierra in California Superior Court. On August 

23, 2006, Central Sierra removed the case to this court on the 

basis of diversity. On September 5, 2006, Central Sierra filed 

a third-party complaint against BAWN and Pro Group, alleging 

breach of contract and misrepresentation, and seeking 

indemnification. BAWN and Pro Group responded with this motion 

to dismiss for lack of personal jurisdiction. 

II. Analysis

AA federal court has jurisdiction over a diversity case . . 

. only if a court of the state in which the federal court is 

sitting would have jurisdiction.@ Lakeside Bridge & Steel Co. v. 

Mountain State Constr. Co., Inc., 597 F.2d 596, 598 (9th Cir. 

1979). ABecause California=s long-arm jurisdictional statute is 

coextensive with federal due process requirements, the 

jurisdictional analyses under state law and federal due process 

are the same.@ Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 

797, 800-801 (9th Cir. 2004). Exercising personal jurisdiction 

over a nonresident defendant violates due process unless that 

defendant has Aminimum contacts@ with the forum and the exercise 

of jurisdiction Adoes not offend traditional notions of fair play 

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and substantial justice.@ Int=l Shoe Co. v. Washington, 326 U.S. 

310, 316 (1945). 

Courts may find personal jurisdiction under the doctrines 

of general or specific jurisdiction. Central Sierra argues that 

specific jurisdiction exists over the cross-defendants. 

A>[S]pecific= jurisdiction exists if (1) the defendant has 

performed some act or consummated some transaction within the 

forum or otherwise purposefully availed himself of the 

privileges of conducting activities in the forum, (2) the claim 

arises out of or results from the defendant=s forum-related 

activities, and (3) the exercise of jurisdiction is reasonable.@ 

Bancroft & Masters, 223 F.3d at 1086. The plaintiff carries the 

burden of establishing the first two factors. Schwarzenegger, 

374 F.3d at 802. If the plaintiff succeeds, then the defendant 

has the burden of establishing unreasonableness. Id.

Central Sierra argues that the court has specific 

jurisdiction over BAWN and Pro Group because they promised to 

provide insurance in California and this controversy arises from 

their alleged failure to fulfill that promise. BAWN and Pro 

Group argue that the court lacks specific jurisdiction over them 

because they have no contacts whatsoever with California. They 

assert that the BAWNSIG insurance was “for Nevada only.” 

However, this claim is contradicted by Robert Vogel’s March 5, 

2004 letter to CSCIF, which states that the BAWNSIG insurance 

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covered Central Sierra employees doing temporary work in 

California. 

Providing insurance coverage in a state constitutes 

purposeful availment if an insured event takes place in that 

state. Farmers Ins. Exch. v. Portage La Prairie Mut. Ins. Co., 

907 F.2d 911, 913 (9th Cir. 1990). Here, third-party defendants 

apparently promised to provide coverage in California. And 

although no accident befell any Central Sierra employee working 

in California during the period of coverage, an insured event 

did take place – namely, CSCIF’s charge that Central Sierra 

failed to carry the required insurance.1 Therefore, the 

purposeful availment requirement is met. 

The second requirement for specific personal jurisdiction – 

that the action arise out of contacts with the forum – is also 

met. “An action arises out of contacts with the forum if, but 

for those contacts, the cause would not have arisen.” Id. at 

914 (citation and internal quotation marks omitted). But for 

third-party defendants’ alleged promise to cover Central Sierra 

 

1 A major purpose of a worker’s compensation insurance 

policy is, of course, to provide for injured employees. But 

another purpose is to satisfy laws requiring employers to carry 

such insurance. Accordingly, if an employer that has contracted 

for coverage within a forum is sued for failing to carry the 

required coverage, it has suffered an event that implicates the 

insurance policy every bit as much as if there had been a claim 

upon the policy by an employee. 

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employees working in California, this third-party action would 

have no basis. 

Finally, to determine whether exercising jurisdiction over 

a nonresident defendant is reasonable, courts must balance seven 

factors: “1) the extent of the defendant’s purposeful 

interjection into the forum state’s affairs; 2) the burden on 

the defendant; 3) conflicts of law between the forum and 

defendant’s home jurisdiction; 4) the forum’s interest in 

adjudicating the dispute; 5) the most efficient judicial 

resolution of the dispute; 6) the plaintiff’s interest in 

convenient and effective relief; and 7) the existence of an 

alternative forum.” Roth v. Garcia Marquez, 942 F.2d 617, 623 

(9th Cir. 1991). A number of these factors strongly favor 

exercising jurisdiction. As already discussed, third-party 

defendants intentionally injected themselves into California’s 

affairs by promising to cover Central Sierra employees working 

in California. In addition, Central Sierra’s claims against 

BAWN and Pro Group are closely related to the dispute between 

CSCIF and Central Sierra already pending in this court. 

Therefore, both judicial efficiency and Central Sierra’s 

interest in convenient and effective relief would be furthered 

by exercising jurisdiction. Finally, California has an interest 

in ensuring compliance with its laws by out-of-state insurers 

who purport to cover employees performing work in California. 

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Two of the factors are neutral. The burden on third-party 

defendants of litigating in Sacramento is slight. Indeed, 

according to its website, BAWN is headquartered in Carson City, 

Nevada, which is far closer to Sacramento than many cities and 

towns in this judicial district. And third-party defendants 

have not demonstrated that exercising jurisdiction would 

undermine Nevada’s interests.2 

The only factor that weighs against exercising jurisdiction 

is the existence of an alternate forum in Nevada. But, given 

the efficiencies gained by consolidating these related actions 

in one court, this factor is of little weight. 

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2 Third-party defendants argue that Nevada has a strong 

interest in this litigation because Central Sierra brought its 

third-party complaint as a class action on behalf of all 

similarly situated Nevada construction companies. But at oral 

argument Central Sierra conceded the class component of its 

case. 

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Accordingly, the court finds that exercising specific 

personal jurisdiction over BAWN and Pro Group is reasonable and 

comports with the requirements of due process. Accordingly, 

their motion to dismiss is DENIED. 

IT IS SO ORDERED. 

Dated: March 26, 2007 

 /s/ David F. Levi___________

 DAVID F. LEVI 

United States District Judge 

Case 2:06-cv-01899-JAM-DAD Document 27 Filed 03/26/07 Page 8 of 8