Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_14-cv-02059/USCOURTS-casd-3_14-cv-02059-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

OCEAN SW, INC., et al., 

Plaintiffs,

Case No. 14-cv-2059-BAS(KSC)

ORDER GRANTING

DEFENDANT’S MOTION TO

TRANSFER OR DISMISS FOR

LACK OF PERSONAL

JURISDICTION

[ECF No. 2]

v.

CANAM PET TREATS, INC.

Defendant.

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.

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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.

I. BACKGROUND1

CanAmis 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 inBritishColumbia, 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 eventsleading 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

 Ocean and USPN filed evidentiary objections to portions of and documents attached to the 1

Connolly Declaration. The Court notes the objections, but OVERRULES them for the purposes of

this order. 

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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).)

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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.) CanAmpurportedly “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.2

(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. (RelatedCaseNotice 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.

It is not entirely clear if the agreement allegedly breached by CanAm with respect to USPN 2

is the distribution agreement, sublease agreement, employee-sharing arrangement, or some other

agreement or collection of agreements. At the very least, it appears that the relevant USPN-CanAm

agreements required CanAm to repay a certain sum of money to USPN, which allegedly remains

unpaid. 

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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 (9thCir. 2006). 

Both the California and federal long-arm statutesrequire 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

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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 defendant whose

forum-related activities gave rise to the action before the court. See Bancroft &

Masters, Inc. v. August Nat’l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). 

III. DISCUSSION

CanAm contends this Court has neither general nor specific jurisdiction over it. 

(Def.’s Mot. 7:16–26.) Ocean and USPN respond that CanAm’s contacts with

California are sufficient to confer both general and specific jurisdiction. (Pls.’ Opp’n

2:23–24, 7:18–27.)

Both parties submit additional materials to support their positions. CanAm

submits the Connolly Declaration with its various exhibits, which include copies of the

distribution agreement, promissory note, sublease agreement, master lease, and June

2014 repudiation letter. (ECF No. 2-2.) Ocean and USPN submit the Chan Declaration

and variousscreen shots and print outsrelated toCanAm’s purported business dealings

in California. (ECF Nos. 4-2, 4-3.)

A. General Jurisdiction

“A court may assert general jurisdiction over foreign (sister-state or foreigncountry) corporations to hear any and all claims against them when their affiliations

with the State are so ‘continuous and systematic’ as to render them essentially at home

in the forum State.” Goodyear, 131 S. Ct. at 2851 (citing International Shoe Co v.

Washington, 326 U.S. 310, 317 (1945)). “With respect to a corporation, the place of

incorporation and principal place of business are ‘paradig[m] . . . bases for general

jurisdiction.’” Daimler AG, 134 S. Ct. at 760 (quoting Goodyear, 131 S. Ct. at 2853-

54). “These bases afford plaintiffs recourse to at least one clear and certain forum in

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which a corporate defendant may be sued on any and all claims.” Id.

In assessing the substantiality of a defendant’s contacts with a state, courts

examine the “[l]ongevity, continuity, volume, [and] economic impact” of those

contacts, as well as the defendant’s “physical presence . . . and integration into the

state’s regulatory and economic markets.” Mavrix Photo, Inc. v. Brand Techs., Inc.,

647 F.3d 1218, 1224 (9th Cir. 2011). A corporation’s “continuous activity of some

sorts within a state is not enough to support the demand that the corporation be

amenable to suits unrelated to that activity.” International Shoe, 326 U.S. at 318. 

“Although the placement of a product into the stream of commerce ‘may bolster an

affiliation germane to specific jurisdiction,’ [the Supreme Court has] explained, such

contacts ‘do not warrant a determination that, based on those ties, the forum has

general jurisdiction over a defendant.” Daimler AG, 134 S. Ct. at 757 (citing

Goodyear, 131 S. Ct. at 2857). 

In support of their position that the Court may exercise general jurisdiction over

CanAm, Ocean and USPN provide various facts that generally fall into three

categories: (1) the marketing and sales of CanAm’s pet-treat productsin California; (2)

the negotiations and execution of the promissory note; and (3) CanAm’s parentsubsidiary relationship with DHC. None of these facts, individually or in combination,

support exercising general jurisdiction over CanAm.

For the circumstances of this case, Bancroft &Masters, Inc. v. Augusta National

Inc., 223 F.3d 1082 (9th Cir. 2000), and Gator.Com Corp. v. L.L. Bean, Inc., 341 F.3d

1072 (9th Cir. 2003), are instructive. In Bancroft, the Ninth Circuit affirmed the lower

court finding general jurisdiction lacking because the defendant’s “contacts [did] not

qualify as either substantial or continuous and systematic.” Bancroft, 223 F.3d at 1086. 

The court identified numerousfacts thatsupported its determination: the defendant was

not registered or licensed to do business in California; it did not pay taxes or maintain

bank accounts in California; the defendant did not target print, television, or radio

advertising toward California; and its website was “passive,” lacking the capability of

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allowing consumers to purchase products. Id. The Ninth Circuit also recognized that

the defendant’s license agreements with two television networks and a “handful of

California vendors” constituted “doing business with California, but [did] not

constitute doing business in California.” Id. (citing Helicopertos Nacionales de

Columbia, S.A. v. Hall, 466 U.S. 408, 418 (1984)).

In contrast, Gator.Com presented a “close question” with respect to the presence

of general jurisdiction. Though the defendant in Gator.Com lacked the traditional

bases for general jurisdiction, the Ninth Circuit nonetheless found that general

jurisdiction existed in light of the defendant’s “extensive marketing and sales in

California, its extensive contacts with California vendors, and the fact that . . . its

website is clearly and deliberately structured to operate as a sophisticated virtual store

in California.” Gator.Com, 341 F.3d at 1078. Despite the fact that the defendant did

not pay taxes or maintain an agent for the service of process in California, and its

California sales amounted to 6 percent of the company’s revenue, the factors favoring

general jurisdiction included: selling “millions of dollars worth of products” in

California; soliciting California residents directly through email; purchasing products

from “numerous California vendors”; maintaining a “highly interactive” website

through which California consumers made purchases and communicated with sales

representatives; and conducting “national print and broadcasting marketing efforts” that

encompassed California. Id. at 1074, 1078.

CanAm lacks the traditional hallmarks of being “at home” in California. It is

neither incorporated nor registered as a businessin California. Nor does CanAm claim

California as its principal place of business. Furthermore, Ocean and USPN fail to

present facts demonstrating a physical presence in California by CanAm, such as

owning property, paying taxes, or maintaining bank accounts, beyond its affiliation to

DHC. The only possible facts showing a physical presence appear to exist through

third parties, such as distribution agreement with USPN and DHC’s employee-sharing

arrangement with USPN, but this is insufficient to establish CanAm’s presence in

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California. See Dynamic Software Servs. v. Cyberbest Tech., Inc., No. C-13-04217,

2014 WL 3373924, at *5 (N.D. Cal. July 9, 2014). Further departing from the

circumstances of Gator.Com, there are no facts presented that address CanAm’s

business volume or economic impact in California, or any solicitation of businessfrom

California residents beyond a passive website. See Gator.Com, 341 F.3d at 1078. 

A point of emphasis also appears to be centered on CanAm’s purported

“interactive website directed to California customers.” (Arouh Decl. ¶ 6, Ex. E.) 

Ocean and USPN demonstrate that there is some level of interaction between those

accessing the website and the website operators, but the interaction appears to be

limited to subscribing to emails and asking “questions about this list.” (Arouh Decl.

Ex. E.) Upon closer inspection, it appears that neither CanAm nor DHC directly sell

to consumers in California. For example, in order to purchase CanAm’s pet-treat

products online, consumers are directed to Pet Best Inc. (Arouh Decl. Ex. C.) The

screen shot of CanAm’s website provides another example that CanAm does not

directly sell or advertise to California consumers as there are no apparent links on the

website screen shots to product purchases or online “shopping carts.” (See Arouh Decl.

Ex. B.) The evidence presented demonstratesthat consumers must turn to third parties

in order to purchase CanAm’s pet-treat products. 

There is no evidence before this Court of any print, television, or radio

advertising directed at California. See Bancroft, 223 F.3d at 1086. Rather, the only

marketing and selling “into” California appears to be through CanAm’s website,

www.darford.com. But the mere maintenance of an interactive website—which in this

case is more passive than a sophisticated virtual store—is insufficient to support

general jurisdiction over a foreign defendant, even if residents of the forum state visit

the website and make purchases through it. See CollegeSource, Inc. v. AcademyOne,

Inc., 653 F.3d 1066, 1075-76 (9th Cir. 2011) (“If the maintenance of an interactive

website were sufficient to support general jurisdiction in every forum in which users

interacted with the website, ‘the eventual demise of all restrictions on the personal

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jurisdiction of state courts’ would be the inevitable result.”); Gator.Com, 341 F.3d at

1078. 

The negotiations and execution of the promissory note also fails to support

finding general jurisdiction. Though Ocean and USPN mention the facts surrounding

the negotiations and execution to support the argument that general jurisdiction exists,

they fail to provide any explanation linking these facts to the requirements for general

jurisdiction. Needless to say, the general facts related to actions leading up to the

promissory note are neither continuous nor systematic, and they certainly do not render

CanAm as essentially “at home” in California. See Goodyear, 131 S. Ct. at 2851. 

Though not argued, the same applies to the agreements with USPN, where the facts

describing any negotiations are non-existent. See id.

Finally, Ocean and USPN present an agency theory that DHC’s conduct may be

imputed to CanAm. (Pls.’ Opp’n 7:1–16.) In requesting jurisdictional discovery,

Ocean and USPN implicitly concede that this theory is currently inadequate to make

a prima facie showing supporting general jurisdiction. (See id.) “The agency test is

satisfied by a showing that the subsidiary functions as the parent corporation’s

representative in that it performs servicesthat are ‘sufficiently important to the foreign

corporation that if it did not have a representative to perform them, the corporation’s

own officials would undertake to performsubstantially similar services.’” Unocal, 248

F.3d at 928. The Court agrees with that concession that there are no facts presented

satisfying the requirements of the agency theory. It is unclear what DHC activities in

California amount to making it something more than a mere subsidiary of CanAm.

3

In sum, even viewing disputed jurisdictional facts in favor of Ocean and USPN,

It is worth noting that in Daimler AG, the Supreme Court criticized the Ninth Circuit agency 3

theory’s inquiry into “importance” as “stack[ing] the deck” in a manner that “will always yield a projurisdiction answer,” effectively “subject[ing] foreign corporations to general jurisdiction whenever

they have an in-state subsidiary or affiliate[.] Daimler AG, 134 S. Ct. at 759-60. The Supreme Court

expressed concern that the outcome of this theory “would sweep beyond even the ‘sprawling view of

general jurisdiction’ . . . rejected in Goodyear.” Id. (citing Goodyear, 131 S. Ct. at 2856). 

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the Court findsthat they fail to establish a prima facie showing that general jurisdiction

over CanAm exists. The circumstances simply do not suggest that CanAm is

“essentially at home” in California. See Goodyear, 131 S. Ct. at 2851.

B. Specific Jurisdiction

The NinthCircuit employs a three-part test to determine whether the defendant’s

contacts with the forum state are sufficient to subject it to specific jurisdiction. Ballard

v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). Under the three-part inquiry, specific

jurisdiction exists only if: (1) the out-of-state defendant purposefully availed itself of

the privilege of conducting activities in the forum, thereby invoking the benefits and

protections of the forum’s laws; (2) the cause of action arose out of the defendant’s

forum-related activities; and (3) the exercise of jurisdiction is reasonable. Myers v.

Bennett Law Offices, 238 F.3d 1068, 1072 (9th Cir. 2001). 

The plaintiff bears the burden of satisfying the first two prongs of this specificjurisdiction test. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th

Cir. 2004). “If the plaintiff succeeds in satisfying both of the first two prongs, the

burden then shifts to the defendant to ‘present a compelling case’ that the exercise of

jurisdiction would not be reasonable.” Id. “If any of the three requirements is not

satisfied, jurisdiction in the forum would deprive the defendant of due process of law.” 

Pebble Beach, 453 F.3d at 1155.

Furthermore, “[s]pecific personal jurisdiction requires a showing of forumrelated activities of the defendant that are related to the claim asserted.” Carpenter v.

Sikorsky Aircraft Corp., — F. Supp. 3d —, 2015 WL 1893146, at *6 (C.D. Cal. 2015)

(citing Rano v. Sipa Press, Inc., 987 F.2d 580, 588 (9th Cir. 1993)). It is “confined to

adjudication of issues deriving from, or connected with, the very controversy that

establishes jurisdiction.” Goodyear, 131 S. Ct. at 2851 (internal quotation marks

omitted). 

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“An out-of-state party does not purposefully avail itself of a forum merely by

entering into a contract with a forum resident.” HK China Grp., Inc. v. Beijing United

Auto & Motorcycle Mfg. Corp., 417 F. App’x 664, 665 (9th Cir. 2011) (citing Burger

King Corp. v. Rudzewicz, 471 U.S. 462, 478 (1985)); see also Roth v. Garcia Marquez,

942 F.2d 617, 621 (9th Cir. 1991) (“[T]he existence of a contract with a resident of the

forum state is insufficient by itself to create personal jurisdiction over the

nonresident.”). “Rather, there must be actions by the defendant himself that create a

‘substantial connection’ with the forum State.” Picot v. Weston, 780 F.3d 1206, 1212

(9th Cir. 2015) (internal quotation marks and emphasis omitted). Merely “random,

fortuitous, or attenuated” contacts are not sufficient. Burger King, 471 U.S. at 475

(internal quotation marks omitted). 

When the exercise of personal jurisdiction over a defendant is based on the

execution or performance of a contract, the court must “use a highly realistic approach

that recognizes that a contract is ordinarily but an intermediate step serving to tip up

prior business negotiations with future consequences which themselves are the real

object of the business transaction.” Burger King, 471 U.S. at 479 (internal quotation

marks and citation omitted); see also Schwarzenegger, 374 F.3d at 802 (“The

appropriate analysis for a suit ‘sounding in contract’ focuses on the presence of

‘purposeful availment.’”). Accordingly, to determine whether a party to a contract has

purposefully established the requisiteminimumcontacts with the forum, a court should

look at four factors: (1) prior negotiations; (2) contemplated future consequences; (3)

the terms of the contract; and (4) the parties’ actual course of dealings. Burger King,

471 U.S. at 479. More specifically, “[t]o have purposefully availed itself of the

privilege of doing business in the forum, a defendant must have ‘performed some type

of affirmative conduct which allows or promotesthe transaction of business within the

forum state.’” Boschetto v. Hansing, 539 F.3d 1011, 1016 (9th Cir. 2008); see also

Sinatra v. Nat’l Enquirer, Inc., 854 F.2d 1191, 1195 (9th Cir. 1988).

//

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Ocean and USPN identify eleven facts, some relevant and many not, that they

contend support the proposition that CanAm purposefully availed itself to California. 

(Pls.’ Opp’n 9:2–22.) The relevant facts identified include the parties to the

agreements at issue, the purpose of the promissory note, and the correspondences

between the parties prior to entering into the relevant agreements. But to keep

perspective, it is important to emphasize that the claims asserted in this action relate to

the breach of contractual agreements to repay debts. The debts allegedly owed to

Ocean arise out of the promissory note; and the debts allegedly owed to USPN arise out

of “verbal and written agreements,” the terms of these agreements having not been

disclosed in any detail to the Court. (Compl. ¶¶ 18, 28.) Consequently, the exercise

ofspecific jurisdiction must derive fromor connect with the breach ofthese agreements

to repay debts. See Goodyear, 131 S. Ct. at 2851 (“[S]pecific jurisdiction is confined

to adjudication of ‘issues deriving from, or connected with, the very controversy that

establishes jurisdiction.’”)

Ocean and USPN repeatedly mention the marketing and sales of CanAm’s pettreat products in California and other incidental agreements as considerations that

contribute to the specific-jurisdiction analysis. (Pls.’ Opp’n 9:2–22, 10:9–11:23.) 

However, the causes of action in this case do not derive from or connect with the

marketing and sales of CanAm’s pet-treat products or the other incidental agreements. 

The controversy in this case is CanAm’s alleged failure to repay debts owed to Ocean

through the promissory note and USPN through unspecified “written and verbal

agreements.” Neither party presentsfacts suggesting that CanAm’s pet-treat products,

which are apparently manufactured and distributed by the non-party subsidiary DHC,

relate to the debts allegedly owed. In short, the marketing and sales of CanAm’s pettreat products in California and the other incidental agreements —individually or 4

For example, the distribution, sublease, and lease agreements submitted with the Connolly 4

Declaration. (See Connolly Decl. Exs. 1, 3, 4.)

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through DHC—are not relevant to the specific-jurisdiction analysis within the

boundaries of the causes of action asserted in this case to recover allegedly outstanding

debts. See Goodyear, 131 S. Ct. at 2851; see also Holland, 485 F.3d at 459 (“The 5

placement of a product into the stream of commerce, without more, is not an act

purposefully directed toward a forum state.”); Brainerd v. Governors of the Univ. of

Alberta, 873 F.2d 1257, 1259 (9thCir. 1989) (rejecting exercise ofspecific jurisdiction

in instances where defendant’s contacts are “attenuated” or are “based upon the

unilateral activities of . . . third parties”).

Turning to the relevant facts provided to the Court, it warrants repeating that the

causes of action asserted are for the repayment of debts. (Compl. ¶ 10 (“CanAmagreed

to repay Ocean the amount of USD $1,050,00[.]”); Compl. ¶ 14 (“CanAm also agreed

to repay debts owed to USPN . . . including but not limited to $519,516.86,

$129,165.86[.]”).) A copy of the promissory note between Ocean and CanAm was

provided (Connolly Decl. Ex. 2), but the terms of the agreements between USPN and

CanAmbeyond the repayment of debts have not been provided (Chan Decl. ¶ 3). There

is no evidence asto who reached out to whomto initiate these contractual relationships. 

There is also no evidence where the contracts were signed or otherwise executed,

though the promissory note does contain a choice-of-law provision requiring the

application of British of Columbia and Canadian laws. (Connolly Decl. Ex. 2; Compl

¶ 10.)

Addressing the agreements between USPN and CanAm first, no facts are

provided describing the prior negotiations, including where negotiations took place,

leading to the formation ofthe “repeated verbal and written agreements, assurances and

affirmations” or the parties’ actual course of dealings. (See Chan Decl. ¶ 3.) The only

Ocean and USPN may be asserting a “stream of commerce” theory to establish specific 5

jurisdiction, but that theory applies to the “purposeful direction” test for claims sounding in tort. See

Picot, 780 F.3d at 1212; Holland, 485 F.3d at 459. Because there are no claims sounding in tort

asserted here, the Court rejects the stream-of-commerce theory insofar as Ocean and USPN assert it. 

See id.

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term of the agreements known is that CanAm was allegedly obligated to repay debts

in the amount of “$519,165.86, $129,165.86, plus other debts and expenses, plus

interest.” (See Compl. ¶ 14.) In fact, there is no evidence describing what

consideration USPN received fromCanAmin exchange for its promise to repay certain

debts. Without knowing the terms of the agreements, it is difficult to determine what

the contemplated future consequences were beyond the expectation that CanAm repay

any debts allegedly owed. With respect to USPN, that only leaves the allegations

CanAm entered into contracts with a California company, USPN, to repay certain

debts. 

The parties provide more information related to the promissory note, including

a copy of the agreement itself. Prior negotiations between Ocean and CanAm included

“telephone calls, computer meetings and/or emails.” (Chan Decl. ¶ 2.) Though Ocean

and USPN contend that these negotiations “occurred, at least, in part in California,”

that is not clear from the facts presented in the complaint and the supporting evidence

submitted by the parties. (See id.) There is evidence, however, that the $1,050,000

loaned to CanAm was used to “acquire all or substantially all of the assets of Darford

International, Inc. (“Darford International”), including the Darford brand name” (Chan

Decl. ¶ 2), Darford having been “a company existing and organized under the laws of

British Columbia, Canada” (Connolly Decl. ¶ 4). The promissory note itself does not

contain a forum-selection clause, but it does contain a choice-of-law provision stating

that the terms “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.) To summarize, after negotiating over long distance,

Ocean and CanAm entered into the promissory note so that CanAm could acquire

assets of a Canadian company, Darford. The only continued contact with Ocean

appears to have been the expectation that CanAm transmit the sum of money owed by

the “maturity date.” (Connolly Decl. Ex. 2.) 

//

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Ocean and USPN give the impression—whether intentionally or not—that there

was an active, ongoing relationship with CanAm under the promissory note whereby

CanAm transmitted payments to Ocean throughout the duration of 36 months. (Pls.’

Opp’n 9:3–4.) But reading the complaint more closely, 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. ¶ 18 (emphasis added).) That allegation is

consistent with the language in the promissory note, which states that “the Debtor

[CanAm] shall repay the Principal Sum [of $1,050,000] and any accrued and unpaid

interest before 2:00 p.m., pacific daylight time, on the Maturity Date.” (Connolly Decl.

Ex. 2; see also Compl. ¶ 10 (“CanAm agreed to pay Ocean . . . by the maturity date set

forth in the promissory note.”).) The maturity date was a single date specified by the

parties set in October 2015. (Connolly Decl. Ex. 2; see also Compl. ¶ 10 (“The

maturity date in the note is the date which is ‘36 months from the date of this Term

Promissory Note.’”).) CanAm was given the option to submit prepayments towards

repaying the principal under the terms of the promissory note, but it apparently never

exercised that right. (Connolly Decl. Ex. 2; Compl. ¶¶ 10, 18.) Based on the

information before the Court, the only additional transaction under the promissory note

was the expected transmission of the single payment from CanAm to Ocean by the

maturity date. (See Connolly Decl. Ex. 2; Compl. ¶¶ 10, 18.)

The contracts at issue in this case—particularly, the promissory note—were

“discrete encounters” without any ongoing obligations in California beyond repaying

the debts allegedly owed. See Azzarello v. Navagility, No. C-08-2371, 2008 WL

4614667, at *3 (N.D. Cal. Oct. 16, 2008); see also Boschetto, 539 F.3d at 1017. With

respect to the agreements with USPN, merely entering into contracts with a California

company and awaiting a payment on the debts owed are insufficient to establish

specific jurisdiction. See Boschetto, 539 F.3d at 1017 (“[A] contract alone does not

automatically establish minimum contacts in the plaintiff’s home forum.”); see also

Burger King, 471 U.S. at 478 (finding that an individual’s contact with an out-of-state

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party alone cannot automatically establish sufficient minimum contacts in the other

party’s home forum). It is important to highlight that no other facts, either through the

complaint or supporting evidence, are provided regarding the agreements with USPN.

The promissory note with Ocean presents circumstances strikingly similar to

those in Azzarello. In Azzarello, the court found that the defendant had not

purposefully availed itself of conducting businessin California, though it had received

a $300,000 bridge loan from the plaintiff, a California resident, in response to an email

solicitation. 2008 WL 4614667, at *1, *5. The loan was to be repaid in a “single

balloon payment” equivalent to two times the principal investment. Azzarello, 2008

WL 4614667, at *1. The defendant had procured the loan to fund business operations

in New York. Id. at *3. While the court found that the defendant’s solicitation of the

loan weighed in favor of finding purposeful availment, it reasoned that this fact alone

was not sufficient to establish it. Id. The court likewise found that neither the

defendant’s knowledge that the plaintiff was based in California nor the fact that the

defendant communicated via email with the plaintiff were sufficient to establish

purposeful availment. Id. Instead, the court rested its holding on the fact that the

transaction was a “discrete encounter,” contemplating no further action by either party. 

Id. The court further reasoned that the contract would not have any effect in the forum

state, given that the loan was intended to fund operations in New York, another fact

that weighed against a finding of purposeful availment. Id.

Like Azzarello, CanAm entered into the promissory note with Ocean to procure

capital to facilitate its acquisition of a Canadian company, Darford. Other similarities

to Azzarello include the expected single payment to repay the debt as well as various

long-distance communications prior to executing the loan agreement. The significant

difference though isthe defendant in Azzarello reached out and solicited the contractual

relationship with the plaintiff, but there are no facts before this Court that CanAm

initiated the contractual relationship with Ocean. See Azzarello, 2008 WL 4614667,

at *1, *5. Furthermore, there are no facts suggesting the promissory note will have any

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effect in California. See id. Comparing the Azzarello defendant to CanAm, the latter

has fewer factors weighing in favor of finding purposeful availment. Consequently,

applying much of the same reasoning from Azzarello to the circumstances of this case,

CanAm did not purposefully avail itself of conducting business in California through

the promissory note. See id.; see also Fed. Deposit Ins. Corp. v. British-American Ins.

Co., Ltd., 828 F.2d 1439, 1443 (9th Cir. 1987) (“This circuit has recognized that the

receipt of payment alone for services rendered outside the forum state is not sufficient

to support personal jurisdiction.”).

Each of the minimum-contacts factors either weigh against finding specific

jurisdiction over CanAm, or Ocean and USPN fail to provide detailed facts to find

otherwise. See Burger King, 471 U.S. at 479. Details regarding prior negotiations

were not provided; stating there were “telephone calls, computer meetings and/or

emails regarding the promissory note” isinsufficient (see Chan Decl. ¶ 2). Beyond the

expectation that CanAm would repay the debts allegedly owed, there are no details

describing any other contemplated future consequencesinside or outside of California. 

The terms ofthe promissory note exclusively establish a debtor-lender relationship, but

include a choice-of-law provision indicating thatBritish ofColumbia and Canadian law

apply to the contract; the terms of the agreements with USPN were not disclosed. 

Lastly, neither plaintiffs present details describing their course of dealings with CanAm

that are relevant to the causes of action asserted in this case. 

Accordingly, Ocean and USPN fail to establish a prima facie showing

demonstrating that CanAm purposefully availed itself of the privilege of conducting

activities in California and invoking the benefits and protections of California law. See

Schwarzenegger, 374 F.3d at 802; Myers, 238 F.3d at 1072; see also Burger King, 471

U.S. at 479; Boschetto, 539 F.3d at 1016 (“[I]f the plaintiff fails at the first step [of the

specific-jurisdiction analysis], the jurisdictional inquiry ends and the case must be

dismissed.”). 

//

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 C. Venue

“A district court has authority to transfer a case over which it lacks jurisdiction.” 

Carpenter, 2015 WL 1893146, at *6 (citing 28 U.S.C. §§ 1404(a), 1406(a), 1631). 

Transfer is permitted “however wrong the plaintiff may have been in filing his case as

to venue, whether the court in which it was filed had personal jurisdiction over the

defendants or not.” Goldawr, Inc. v. Heiman, 369 U.S. 463, 466 (1962). A district

court may transfer a case if: “(1) the transferee court would have been able to exercise

its jurisdiction on the date the action was misfiled; (2) the transferor court lacks

jurisdiction; and (3) the transfer serves the interest of justice.” Garcia de Rincon v.

Dep’t of Homeland Sec., 539 F.3d 1133, 1140 (9th Cir. 2008); see also 28 U.S.C. §

1631 (“Transfer to cure want of jurisdiction”). “Thus, one requirement in approving

transfer is a showing that the transferee court has jurisdiction over the action to be

transferred.” Carpenter, 2015 WL 1893146, at *6 (citing Garcia de Rincon, 539 F.3d

at 1140).

Presuming thisCourt lacks jurisdiction, CanAmrequests this case be transferred

to the Western District of Missouri, where the parallel Missouri Action is currently

pending. CanAm argues that it satisfies each requirement for the Court to properly

transfer this case. (Def.’s Mot. 8:4–9:2.) Ocean and USPN respond that “there has

been no showing that this action could have been brought in Missouri originally,”

focusing on the jurisdictional requirements of the venue-transfer analysis under 28

U.S.C. § 1631. (Pls.’ Opp’n 17:17–18:26.) They do not address whether transfer

would serve the interest of justice, effectively conceding that point. (See id.)

Based on the analysis above, this Court lacks personal jurisdiction over CanAm. 

And there is ample evidence before the Court that the Western District of Missouri

would have been able to exercise its jurisdiction at the time this action was filed,

particularly the fact that CanAm has a manufacturing facility in Milan, Missouri that

also houses its corporate offices (Connolly Decl. ¶ 2) and the Western District of

Missouri has already exercised jurisdiction in the parallel action brought by CanAm

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against Ocean (ECF No. 9). The only remaining unresolved issue would have been

whether transfer servesthe interest ofjustice, but Ocean and USPN effectively concede

that point. Therefore, the Court finds that transfer to the Western District of Missouri

is appropriate. See 28 U.S.C. § 1631; Garcia de Rincon, 539 F.3d at 1140.

IV. CONCLUSION & ORDER

In light of the foregoing, the Court GRANTS CanAm’s motion to dismiss for

lack of personal jurisdiction, and in lieu of dismissal, the Court ORDERS the Clerk of

the Court to transfer this action to the Western District of Missouri to cure want of

jurisdiction under 28 U.S.C. § 1631. (ECF No. 2.) 

In exercising its discretion, the Court also DENIES Ocean and USPN’s request

for leave to conduct jurisdictional discovery primarily because they rely on speculation

based mostly on what “Canam curiously has failed to allege.” See Boschetto, 539 F.3d

at 1020 (holding that district court did not abuse its discretion in denying request for

discovery that was based on “little more than a hunch that it might yield jurisdictionally

relevant facts”); Butcher’s Union Local No. 498, United Food &Commercial Workers

v. SDC Inv., Inc., 788 F.2d 535, 540 (9th Cir. 1986) (holding that district court did not

abuse its discretion by refusing jurisdictional discovery where the plaintiffs “state only

that they ‘believe’ that discovery will enable them to demonstrate sufficient California

business contacts to establish the court’s personal jurisdiction”).

IT IS SO ORDERED.

DATED: May 7, 2015

Hon. Cynthia Bashant

United States District Judge

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