Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_07-cv-01076/USCOURTS-cand-4_07-cv-01076-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1441 Petition for Removal

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JENNIFER WILSON, as Individual and as

Trustee of the JENNIFER WILSON LIVING

TRUST,

Plaintiff,

 v.

THE WEALTH CONSERVANCY, INC.,

Defendant. /

No. C 07-1076 CW

ORDER DENYING MOTION

TO DISMISS

Defendant The Wealth Conservancy, Inc. moves to dismiss this

action for lack of personal jurisdiction pursuant to Rule 12(b)(2),

Federal Rules of Civil Procedure. Plaintiff Jennifer Wilson

opposes the motion. The matter was heard on April 13, 2007. 

Having considered all of the papers filed by the parties, the

evidence cited therein and oral argument on the motion, the Court

DENIES the motion.

BACKGROUND

Defendant The Wealth Conservancy, Inc. is a Colorado

corporation that provides investment advice for wealthy clients. 

Salzer Dec. ¶¶ 2-3. Myra Salzer is the President, Chief Executive

Officer and Director of The Wealth Conservancy, Inc. Id. at ¶ 1. 

Plaintiff was a client of Defendant and is a trustee of the

Jennifer Wilson Living Trust. During the time Plaintiff was

Defendant's client, her primary residence was in the State of

Washington. Wilson Dec. ¶ 2, Salzer Dec. ¶ 8. Plaintiff currently

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resides in California. Wilson Dec. ¶ 1. The Jennifer Wilson

Living Trust was organized under Washington law. Salzer Dec. ¶ 8.

Salzer recommended that Plaintiff have letters of agreement

signed by any person living in her residences. Wilson Dec. ¶ 3. 

At that time, Plaintiff owned a residence in San Francisco,

California. Id. at ¶ 2. Plaintiff told Salzer that she would

reside at her San Francisco residence for certain times of the

year. Id. Julia Bergman, Plaintiff's cousin, was residing with

Plaintiff in the San Francisco residence. Id. Salzer drafted a

lease agreement dated October 10, 2000 to memorialize the agreement

of the living arrangement between Plaintiff and Bergman. Id. at ¶¶

3 & 6, Exs. A & B. The parties dispute whether Salzer told

Plaintiff that she would act as an attorney on Plaintiff's behalf. 

Wilson Dec. ¶ 4, Salzer Dec. ¶ 7.

In early 2005 Plaintiff wanted to sell her San Francisco

residence and asked Bergman to leave. Wilson Dec. ¶ 7. Bergman

claimed that the written agreement gave her life tenancy in the

residence. Id. Plaintiff sought declaratory relief in state court

to establish her right to evict Bergman and the lawsuit settled. 

Zeff Dec. ¶¶ 3-4, Ex. 2. Plaintiff then filed the present

complaint, alleging breach of fiduciary duty and that Defendant

committed legal malpractice by "drafting and advising Plaintiff to

enter a written agreement memorializing" her promise to Bergman,

without "first diligently researching the impact of local law and

apprising Plaintiff of the same." Complaint for Damages, ¶ 8, in

Notice of Removal of Action Under 28 U.S.C. § 1441(b) (Diversity),

Docket no. 1. 

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Defendant's principal and only place of business is in

Boulder, Colorado. Salzer Dec. ¶ 3. Defendant does not advertise

in publications or on an internet web-site, nor by any other means. 

Id. at ¶ 4. In the past ten years, Defendant has held only one

seminar in California, and it only has one client presently

residing in California. Id. 

LEGAL STANDARD

Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a

defendant may move to dismiss an action for lack of personal

jurisdiction. The plaintiff then bears the burden of demonstrating

that jurisdiction exists. Schwarzenegger v. Fred Martin Motor Co.,

374 F.3d 797, 800 (9th Cir. 2004). The plaintiff "need only

demonstrate facts that if true would support jurisdiction over the

defendant." Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995);

Fields v. Sedgwick Assoc. Risks, Ltd., 796 F.2d 299, 301 (9th Cir.

1986). Uncontroverted allegations in the complaint must be taken

as true. AT&T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588

(9th Cir. 1996). However, the court may not assume the truth of

such allegations if they are contradicted by affidavit. Data Disc,

Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1284

(9th Cir. 1977). Conflicts in the evidence must be resolved in the

plaintiff's favor. AT&T, 94 F.3d at 588. 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.'" Schwarzenegger 374 F.3d at 800 (citation omitted).

There are two independent limitations on a court's power to

exercise personal jurisdiction over a non-resident defendant: the

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applicable state personal jurisdiction rule and constitutional

principles of due process. Sher v. Johnson, 911 F.2d 1357, 1361

(9th Cir. 1990); Data Disc, Inc, 557 F.2d at 1286. California's

jurisdictional statute is co-extensive with federal due process

requirements; therefore, jurisdictional inquiries under state law

and federal due process standards merge into one analysis. Rano v.

Sipa Press, Inc., 987 F.2d 580, 587 (9th Cir. 1993).

The exercise of jurisdiction over a non-resident defendant

violates the protections created by the due process clause unless

the defendant has "minimum contacts" with the forum State so that

the exercise of jurisdiction "does not offend traditional notions

of fair play and substantial justice." International Shoe Co. v.

Washington, 326 U.S. 310, 316 (1945). Personal jurisdiction may be

either general or specific.

General jurisdiction exists when a defendant maintains

"continuous and systematic" contacts with the forum State even if

the cause of action has no relation to those contacts. 

Helicopteros Nacionales de Colombia, S. A. v. Hall, 466 U.S. 408,

414 (1984). Specific jurisdiction exists when a defendant's

contacts with the forum State arise out of or relate to the cause

of action even if those contacts are isolated and sporadic. 

Trintec Indus. v. Pedre Promotional Prods., 395 F.3d 1275, 1279

(Fed. Cir. 2005). 

Specific jurisdiction is analyzed using a three-prong test:

(1) the non-resident defendant must purposefully direct its

activities or consummate some transaction with the forum or a

resident thereof, or perform some act by which it purposefully

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avails itself 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 results from the

defendant's forum-related activities; and (3) the exercise of

jurisdiction must be reasonable. Lake v. Lake, 817 F.2d 1416, 1421

(9th Cir. 1987). Each of these conditions is required for

asserting jurisdiction. Insurance Co. of N. Am. v. Marina Salina

Cruz, 649 F.2d 1266, 1270 (9th Cir. 1981). 

A showing that a defendant "purposefully availed" itself of

the privilege of doing business in a forum State typically consists

of evidence of the defendant's actions in the forum, such as

executing or performing a contract there. Schwarzenegger, 374 F.3d

at 802. A purposeful availment analysis is most often used in

suits sounding in contract. Id. The requirement of purposeful

availment ensures that the defendant should reasonably anticipate

being haled into the forum state court based on its contacts. 

World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). 

The purposeful availment test is met where "the defendant has taken

deliberate action within the forum state or if he has created

continuing obligations to forum residents." Ballard, 65 F.3d at

1498. 

 A showing that a defendant "purposefully directed" its conduct

toward a forum State "usually consists of evidence of the

defendant's actions outside the forum state that are directed at

the forum, such as the distribution in the forum state of goods

originating elsewhere." Schwarzenegger, 374 F.3d at 803. "A

purposeful direction analysis . . . is most often used in suits

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sounding in tort." Id. at 802. Purposeful direction may be

established under the "effects test" where the defendant

(1) committed an intentional act, (2) expressly aimed at the forum

State, (3) causing harm that the defendant knows is likely to be

suffered in the forum State. Dole Food Co. v. Watts, 303 F.3d

1104, 1111 (9th Cir. 2002).

The second prong of the specific jurisdiction test requires

that the claim arise out of or result from the defendant's forumrelated activities. A claim arises out of a defendant's conduct if

the claim would not have arisen "but for" the defendant's forumrelated contacts. Panavision Int'l, L.P. v. Toeppen, 141 F.3d

1316, 1322 (9th Cir. 1998).

Once the plaintiff has satisfied the first two factors, the

defendant bears the burden of overcoming a presumption that

jurisdiction is reasonable by presenting a compelling case that

specific jurisdiction would be unreasonable. Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 472-73 (1985); Haisten v. Grass Valley

Medical Fund, Ltd., 784 F.2d 1392, 1397 (9th Cir. 1986). Seven

factors are considered in assessing whether the exercise of

jurisdiction over a non-resident defendant is reasonable: (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 State and the defendant's home jurisdiction,

(4) the forum State'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. Caruth v. International

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Psychoanalytical Ass'n, 59 F.3d 126, 128 (9th Cir. 1995); Roth v.

Garcia Marquez, 942 F.2d 617, 623 (9th Cir. 1991).

DISCUSSION

Defendant argues that this Court lacks general jurisdiction

over it because it does not have continuous and systematic business

contacts in California and that this Court lacks specific

jurisdiction over it because it did not purposefully avail itself

of the privilege of conducting activities in California and did not

purposefully direct its activities to California. Defendant

further argues that specific jurisdiction in California would be

unreasonable. 

Plaintiff argues that specific jurisdiction exists because

Defendant purposely availed itself of the benefits and protections

of doing business in California. Plaintiff further argues that

Defendant's out-of-state actions had a direct impact in California,

rendering the assertion of specific jurisdiction reasonable.

The parties do not dispute that the claim arises out of or

results from Defendant's forum-related activities.

I. General Jurisdiction

Defendant does not have the continuous and systematic contacts

with California required for general jurisdiction.

II. Specific Jurisdiction

A. Purposefully Avail

Plaintiff argues that Defendant purposefully availed itself of

the privilege of conducting activities in California by giving

advice and writing a contract regarding Plaintiff's real property

in California, acting as her lawyer in so doing.

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Under California law, the practice of law is "the doing and

performing of services in a court of justice in any matter

depending therein throughout its various stages and in conformity

with the adopted rules or procedure." Birbrower v. Superior Court,

17 Cal. 4th 119, 128 (1998) (quoting People v. Merchants Protective

Corp., 189 Cal. 531 (1922)). Merchants included in its definition

of the practice of law "legal advice and legal instrument and

contract preparation." Birbrower 17 Cal. 4th at 128. However, the

practice of law does not encompass all professional legal

activities, and each case must be decided on its individual facts. 

Id. at 129 (citing Baron v. Los Angeles, 2 Cal. 3d 535, 543 (1970).

The "practice of law 'in California' entails sufficient

contact with the California client to render the nature of the

legal service a clear legal representation." Birbrower, 17 Cal.

4th at 128. "The primary inquiry is whether the . . . lawyer

engaged in sufficient activities in the state, or created a

continuing relationship with the California client that included

legal duties and obligations." Id. A person does not have to be

physically present in California to practice law in California. 

Id. at 128-29.

California Business and Professions Code Section 6125

provides, "No person shall practice law in California unless the

person is an active member of the State Bar." Violation of Section

6125 is a misdemeanor. Cal. Bus. & Prof. Code § 6126(a). 

"Business and Professions Code section 6125, prohibiting the

practice of law without being an active member of the State Bar,

does not create any private causes of action." 76 Ops. Cal. Atty.

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Gen. 193, *1 (1993). However, "a violation of section 6125 may

form the basis for a cause of action under some other statute or

legal theory." Id. at *3. "A private cause of action based on a

violation of section 6125 has been recognized where negligent work

by the unlicensed practitioner has caused a private party to suffer

loss." Id. at *3-4. 

Thus, the question is (1) whether Defendant practiced law in

California and (2) whether the practice of law in California is

purposeful availment of the privilege of conducting activities in

California. If so, Defendant purposefully availed itself of the

privilege of conducting activities in California, satisfying the

first prong of specific jurisdiction. 

Plaintiff submits a declaration stating that Defendant gave

her legal advice regarding people living in the residences owned by

Plaintiff and prepared a contract, a lease agreement, related to

her property located in San Francisco, California. Defendant

advised Plaintiff about tenancy relationships in California and

wrote a lease agreement to take effect in California. Defendant

knew that the lease agreement would take effect in California and

would be interpreted under California law. This is sufficient

activity in the State to be considered the practice of law in

California.

The parties dispute whether Plaintiff retained Defendant to

act as an attorney on her behalf. On a motion to dismiss for lack

of personal jurisdiction, conflicts in the evidence must be

resolved in Plaintiff's favor. AT&T, 94 F.3d at 588. Therefore,

the Court assumes that Defendant engaged in the practice of law in

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California, for the purpose of determining whether the Court may

exercise specific personal jurisdictional over Defendant.

Defendant purposefully availed itself of the privilege of

conducting activities in California, thereby invoking the benefits

and protections of California's laws. Plaintiff has established

the first prong for specific jurisdiction.

B. Purposefully Direct

Plaintiff argues that Defendant purposefully directed its

conduct towards California. Purposeful direction may be

established under the effects test. First, Plaintiff must show

that Defendant committed an intentional act. An act is "an

external manifestation of the actor's will and does not include any

of its results, even the most direct, immediate, and intended." 

Schwarzenegger, 374 F.3d at 806 (citation omitted). Intent in the

intentional act test refers "to an intent to perform an actual,

physical act in the real world, rather than an intent to accomplish

a result or consequence of that act." Id. 

Next, Plaintiff must show that Defendant's intentional act was

expressly aimed at California, causing harm that Defendant knew was

likely to be suffered in California. Citing Abbott Power Corp. v.

Overhead Electric Co., 60 Cal. App. 3d 272 (1976), Plaintiff argues

that acts performed outside of California that have effects within

the State must be considered. Plaintiff argues that Defendant

drafting a contract for Plaintiff and Bergman regarding property

located in California, and then mailing letters regarding this

contract to Plaintiff in Washington and Bergman in California,

fulfills the requirement that Defendant's acts performed outside of

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California had an effect within California. Wilson Dec., Ex. A, B,

& D. 

Plaintiff has shown that Defendant committed an intentional

act, drafting a contract. Furthermore, the act was expressly aimed

at the forum State, because the contract governed Plaintiff's

landlord relationship with a tenant living in her real property in

California. And, Plaintiff has shown that Defendant should have

known that harm would be likely to be suffered in California if the

legal advice provided was negligent. 

 Plaintiff has met her burden in showing that Defendant

purposefully directed its conduct towards California, as well as 

by showing purposeful availment.

The parties do not dispute that Plaintiff's claims arose from

Defendant's forum-related activities, the second prong of specific

jurisdiction.

C. Reasonableness

 Because Plaintiff satisfies the first two prongs of specific

jurisdiction, it is Defendant's burden to overcome a presumption

that jurisdiction would be reasonable by presenting a compelling

case that jurisdiction would be unreasonable. Burger King Corp.,

471 U.S. at 472-73. 

Defendant argues that specific jurisdiction over it in

California would not be reasonable. To determine whether the

exercise of jurisdiction would be reasonable, the Court considers

the seven factors provided in Caruth, 59 F.3d at 128, set forth

above. 

Defendant argues that the first factor weighs heavily in its

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favor because it did not interject itself into California. As

discussed above in the purposeful availment analysis, Defendant did

interject itself into California by preparing a lease agreement for

Plaintiff's real property in California. However, the amount of

interjection is slight. Defendant has only one other client

residing in California and does not advertise or hold regular

seminars in California. Contacts sufficient to meet the purposeful

availment test might still be too attenuated to make the exercise

of jurisdiction reasonable. Core-Vent Corp. v. Nobel Indus. AB, 11

F.3d 1482, 1488 (9th Cir. 1993). The Court finds that the first

factor weighs against the reasonableness of the exercise of

jurisdiction.

Defendant argues that California does not have a greater

interest than Colorado in adjudicating a dispute between a Colorado

investment adviser and a Washington trust. The Court finds this

factor to be neutral. Defendant further argues that Colorado would

be an appropriate alternative forum. This factor weighs slightly

against the reasonableness of specific jurisdiction in California.

However, Defendant presents no arguments regarding the second,

third, fifth and sixth factors. Conflicts of law between

California and Colorado favor California because California law

applies to a California real estate contract. The most efficient

resolution of this dispute would be in California because some

witnesses and the property are located in California. Plaintiff

currently resides in California and so has an interest in having

the claim adjudicated in California. 

Defendant does not present a compelling case that the exercise

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of jurisdiction in California would be unreasonable. Therefore,

Defendant has not met its burden of establishing unreasonableness.

CONCLUSION

Plaintiff has submitted evidence that, if true, would support

specific personal jurisdiction in California over Defendant. 

Defendant did not overcome the presumption that jurisdiction is

reasonable by presenting a compelling case that specific

jurisdiction would be unreasonable. For the foregoing reasons, the

Court DENIES Defendant's motion.

Dated: 4/30/07 

CLAUDIA WILKEN

United States District Judge

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