Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-01376/USCOURTS-caed-2_06-cv-01376-1/pdf.json

Parties Involved:
Richard Andrew Malott
Plaintiff
Ridgewood Associates, Inc
Plaintiff
Michael Trumpower
Defendant

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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

RIDGEWOOD ASSOCIATES, INC.,a

Nevada corporation; RIDGEWOOD

ASSOCIATES, INC., a California

corporation; and RICHARD ANDREW

MALOTT, an individual,

NO. CIV.S-06-1376 LKK/GGH

Plaintiffs,

v.

O R D E R

MICHAEL TRUMPOWER, an individual;

DOES 1 through 10, inclusive;

and ROE CORPORATIONS 1 through 10,

inclusive,

Defendants.

 /

Plaintiffs Ridgewood Associates, Inc. (“Ridgewood

California”), Ridgewood Associates, Inc. (“Ridgewood Nevada”) and

Richard Malott originally filed this action against defendant

Michael Trumpower alleging breach of contract in the United States

District Court for the District of Nevada. In response to

defendant’s motion to dismiss for improper venue and in the

alternative a motion to transfer, the Nevada court transferred the

case to the Eastern District of California. Currently pending

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before the court is defendant’s motion to dismiss for lack of

personal jurisdiction and improper venue and in the alternative

motion to transfer. For the reasons set forth below, the court

denies defendant’s motions. 

I. Background

A. Facts as Alleged in the Complaint

Plaintiffs and defendant met and became business associates

in 1996. Some of the meetings that ensued took place in Nevada.

As a result of these meetings, three business ventures were formed

that are at issue here. In the first venture, plaintiff Ridgewood

Associates, Inc. (“Ridgewood California”) allegedly advanced

$150,000 to defendant. Pursuant to a written agreement, defendant

was then to raise $15,000,000 for the purchase of real property

located in California within a specified amount of time. If

defendant failed to raise this sum of money, he was to return

plaintiff’s $150,000 advance. In the second agreement, plaintiff

Ridgewood Associates, Inc. (“Ridgewood Nevada”) and Richard Malott

allegedly provided defendant with an advance of $225,000 for the

purchase of paintings valued at $985,000. Finally, plaintiffs

Malott and Ridgewood Nevada allegedly advanced $610,000 to

defendant for the acquisition of gold in the Philippines. Again,

if defendant failed to acquire these assets, he was to return

plaintiffs’ advances.

Combined, plaintiffs have allegedly advanced $985,000 to

defendant. Defendant has allegedly failed to perform on any of the

three business agreements and has refused to return plaintiffs’

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advances.

B. Procedural History

In 2005, this breach of contract suit was brought in the

United States District Court for the District of Nevada based upon

diversity jurisdiction. Plaintiff Ridgewood Nevada is a Nevada

corporation and plaintiff Ridgewood California is a California

corporation. Plaintiff Malott is a California resident, and

defendant is, apparently, an Arizona resident. A substantial part

of the events giving rise to the claims is alleged to have occurred

in the District of Nevada.

Defendant moved to dismiss for improper venue pursuant to 28

U.S.C. § 1391(a) and in the alternative moved to transfer venue

under 28 U.S.C. § 1406. After holding an evidentiary hearing, the

Nevada court found that Nevada was not a proper venue for the

action. Although defendant had requested that the case be

transferred to Arizona, it was unclear to the court that he still

resided in that state. Instead, noting that the real property

which was the subject of one of the business agreements was located

in California and that a number of business meetings had taken

place in California, the Nevada court found it in the interest of

justice to transfer the matter to the Eastern District of

California.

II. Standard

A. Motion to Dismiss for Lack of Personal Jurisdiction

When a defendant challenges the sufficiency of personal

jurisdiction, the plaintiff bears the burden of establishing that

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the exercise of jurisdiction is proper. Sinatra v. National

Enquirer, Inc., 854 F.2d 1191, 1194 (9th Cir. 1988). 

Analysis of the appropriateness of the court's personal

jurisdiction over a defendant in a case in which the court

exercises diversity jurisdiction begins with California's long arm

statute. Aanestad v. Beech Aircraft Corp., 521 F.2d 1298, 1300

(9th Cir. 1974). California's long arm statute authorizes the

court to exercise personal jurisdiction on any basis consistent

with the due process clause of the United States Constitution.

Cal. Code Civ. Proc. § 410.10; Rocke v. Canadian Auto Sport Club,

660 F.2d 395, 398 (9th Cir. 1981).

Consistent with the due process clause, the court may exercise

personal jurisdiction over a defendant when the defendant has

certain minimum contacts with the forum state such that the

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). If the defendant is domiciled in the forum

state, or if the defendant's activities there are "substantial,

continuous and systematic," a federal court can exercise general

personal jurisdiction as to any cause of action involving the

defendant, even if unrelated to the defendant's activities within

the state. Perkins v. Benguet Consolidated Mining Co., 342 U.S.

437 (1952); Data Disc, Inc. v. Systems Technology Assoc., Inc., 557

F.2d 1280, 1287 (9th Cir. 1977).

If a non-resident defendant's contacts with California are not

sufficiently continuous or systematic to give rise to general

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personal jurisdiction, the defendant may still be subject to

specific personal jurisdiction on claims arising out of defendant's

contacts with the forum state. Burger King Corp. v. Rudzewicz, 471

U.S. 462, 477-78 (1985); Haisten v. Grass Valley Medical

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

The court employs a three-part test to determine whether the

exercise of specific jurisdiction comports with constitutional

principles of due process. See Schwarzenegger v. Fred Martin Motor

Co., 374 F.3d 797, 802 (9th Cir. 2004). First, specific

jurisdiction requires a showing that the out-of-state defendant

purposefully directed its activities toward residents of the forum

state or purposefully availed itself of the privilege of conducting

activities in the forum state, thus invoking the benefits and

protections of its laws. Burger King, 471 U.S. at 474-75. Second,

the controversy must be related to or arise out of defendant's

contact with the forum. Ziegler v. Indian River County, 64 F.3d

470, 473 (9th Cir. 1995). Third, the exercise of jurisdiction must

comport with fair play and substantial justice, i.e., it must be

reasonable. Haisten, 784 F.2d at 1397. 

B. Motion to Dismiss for Improper Venue

Venue is proper in any district “in which a substantial part

of the events or omissions giving rise to the claim occurred.” 28

U.S.C. § 1391(a). Section 1391 does not require that a majority

of the events have occurred in the district where suit is filed,

nor does it require that the events in that district predominate.

Rodriguez v. California Highway Patrol, 89 F. Supp. 2d 1131, 1136

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(N.D. Cal. 2000). All that plaintiff needs to show is that a

substantial part of the events giving rise to his claim occurred

in the Eastern District of California. See id. 

If venue is improper in this district, then the court may

transfer the case to any district or division in which it could

have been brought if it is in the interests of justice. 28 U.S.C.

§ 1406(a). Similarly, for the convenience of parties and

witnesses, a district court may transfer any civil action to any

other district or division where it might have been brought if it

is in the interests of justice. 28 U.S.C. § 1404(a). However,

defendants must make a strong showing of inconvenience to warrant

upsetting plaintiff's choice of forum. Decker Coal Co. v.

Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986).

IV. Analysis

A. Personal Jurisdiction

Defendant has moved to dismiss for lack of personal

jurisdiction. Plaintiffs argue that defendant has waived his

ability to make this motion under Rule 12 and that the exercise of

jurisdiction is proper. As set forth below, the court may

appropriately exercise specific jurisdiction in the case at bar.

1. Waiver of the Defense

Plaintiffs first argue that defendant has waived its ability

to dispute personal jurisdiction. The defense of lack of personal

jurisdiction must be brought in the first defensive action. Fed.

R. Civ. P. 12(h)(1). If it is not raised therein, it is deemed

waived by defendant. An exception to this rule has been recognized

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in situations where the defense that was not timely raised was not

“then available.” Glater v. Eli Lilly & Co., 712 F.2d 735, 738

(1st Cir. 1983) (“[D]efendants do not waive the defense of personal

jurisdiction if it was not available at the time they made their

first defensive move.”); see also Holzsager v. Valley Hospital, 646

F.2d 792, 796 (2d Cir. 1981) (“[A] party cannot be deemed to have

waived objections or defenses which were not known to be available

at the time they could first have been made.”). 

Defendant in the present case failed to raise the defense of

lack of personal jurisdiction in his first defensive action in the

Nevada court. Therefore, this defense was waived with respect to

personal jurisdiction within the District of Nevada. The case has

since been transferred to the Eastern District of California, where

the defense has been brought in defendant’s first action. Although

defendant waived this jurisdictional defense in the Nevada court,

it was not a defense that was available to him with respect to the

Eastern District of California during the Nevada proceedings. The

defense of lack of personal jurisdiction now before the court was

unavailable to defendant at the time of his first defensive action,

and shall be treated by the court as properly filed here.

2. General Jurisdiction

The exercise of general jurisdiction would be inappropriate

in the present case. No facts are alleged in the complaint to

support a finding that defendant’s contacts with California are

continuous and systematic. Although the Trumpower’s supplemental

declaration concedes a series of trips made and meetings held

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within the forum state in connection with the business ventures,

they fall short of “approximating physical presence.” Bancroft &

Masters, Inc., 223 F.3d at 1086, citing Brand v. Menlove Dodge, 796

F.2d 1070, 1073 (9th Cir. 1986) (“The standard for establishing

general jurisdiction is fairly high and requires that the

defendant's contacts be of the sort that approximate physical

presence.”). Accordingly, defendant is not subject to general

jurisdiction.

3. Specific Jurisdiction

The court may appropriately exercise specific jurisdiction in

this case. As set forth below, defendant has purposefully availed

himself of the privileges of conducting business in California,

plaintiff’s claims arise from these contacts with California, and

the exercise of specific jurisdiction is reasonable.

Schwarzenegger, 374 F.3d at 802. 

It is well-established that a court may consider affidavits

and other materials in deciding upon a motion to dismiss for lack

of personal jurisdiction. Doe v. Unocal Corp., 248 F.3d 915, 922

(9th Cir. 2001); Amba Mktg. Sys. Inc. v. Jobar Int’l. Inc., 551

F.2d 784, 787 (9th Cir. 2001). 

Upon consideration, defendant's motion must fail. First,

defendant has purposefully availed himself of the privileges of

conducting business in California. Both Ridgewood California and

Malott are California residents. Trumpower’s supplemental

declaration states that “all meetings relative to the [business

ventures] referred to in the Complaint took place in or near Nevada

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City, California.” Trumpower Supp. Decl. 2:13-15. When attending

meetings regarding the business ventures, defendant would, for

reasons of his own convenience, travel to Sacramento. Id. at 2:25-

3:2. By defendant’s own statement, he has demonstrated affirmative

conduct to promote the transaction of business within California.

Accordingly, he has purposefully availed himself of the laws of

California.

Second, the proper exercise of specific jurisdiction over a

non-resident defendant also requires that the “contacts

constituting purposeful availment must be the ones that give rise

to the current suit.” Bancroft & Masters v. August National, 223

F.3d 1082, 1088 (9th Cir. 2000). Here, defendant’s forum-related

contacts consist of a series of trips and meetings held in

California. Trumpower Supp. Decl. 3:14-15 (stating that the gold

venture “was negotiated and planned from California”). These

contacts are directly related to the claims now before the court.

Although plaintiffs allege in the complaint that some of the

negotiations occurred in Nevada, Compl. ¶ 15, defendant has stated

that all meetings regarding the business ventures were held in

California. Trumpower Supp. Decl. 2:13-15. His forum contacts

were unquestionably related to plaintiffs’ claims.

Lastly, the exercise of specific jurisdiction must be

reasonable. After plaintiff has established purposeful availment

by defendant and sufficient relation of those contacts to the

claims at bar, defendant bears the burden of showing that the

exercise of jurisdiction is unreasonable. Burger King, 471 U.S.

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at 477. Defendant readily conceded that he repeatedly traveled to

California to conduct business, and the present dispute arises from

those business agreements. Defendant has failed to establish that

any substantial burden would be imposed upon him by defending the

suit in California. Accordingly, the court finds that the exercise

of specific jurisdiction is proper.

B. Venue

For diversity actions, venue is proper the judicial district

in which a substantial part of the events or omissions giving rise

to the claim occurred. 28 U.S.C. § 1391(a). While a substantial

part of the events giving rise to that claims must have occurred

in the judicial district where the claims are brought, there is no

requirement that the majority of such events occur in the district,

or that the events in that district predominate. Rodriquez, 89

F. Supp. 2d at 1136 (finding venue to be proper in more than one

district).

As set forth above, defendant repeatedly traveled to

California to negotiate the agreements giving rise to this suit,

and the place of performance of the real property venture was

California. These acts are sufficient to establish that a

substantial part of the events leading to the suit occurred in

California. In a similar motion to dismiss for improper venue, the

federal district court in Hawaii determined that venue was proper

in Hawaii where vendors from Oregon and Washington had traveled to

Hawaii to negotiate business with Hawaii residents and had

allegedly made misrepresentations there. Resnick v. Rowe, 283 F.

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Supp. 2d 1128 (D. Hawaii 2003). These contacts were deemed a

substantial part of the events giving rise to the claim. Id. at

1144. For analogous reasons, venue in the case at bar is proper

in the Eastern District of California.

In the alternative, defendant seeks transfer of venue to

Arizona under 28 U.S.C. § 1406(a). This provision provides that

transfer is proper if the case is in the “wrong division or

district” and if it is “in the interest of justice.” A transfer

of venue may also be appropriate in light of convenience to the

parties and witnesses and in the interest of justice. 28 U.S.C.

§ 1404(a). As set forth above, venue is proper in this district.

Furthermore, defendant has failed to allege facts demonstrating

that it is in the interest of justice to transfer the matter once

again. See Resnick, 283 F. Supp. at 1144 (finding that the

defendant vendors’ inconvenience and additional costs of litigating

in Hawaii were not sufficient to support transfer of venue in the

interests of justice); Decker, 805 F.2d at 843 (“The defendant must

make a strong showing of inconvenience to warrant upsetting the

plaintiff’s choice of forum.”). Accordingly, transfer of venue

under either 28 U.S.C. § 1406(a) or § 1404(a) would be

inappropriate.

V. Conclusion

Defendants motion to dismiss for lack of personal 

////

////

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jurisdiction, motion to dismiss for improper venue, and motion 

to transfer venue are hereby DENIED.

IT IS SO ORDERED.

DATED: October 30, 2006.

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