Filed 3/11/13 Sukumar v. Air Machine Com SRL

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

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COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

PONANI N. SUKUMAR, et al.,

Plaintiffs and Appellants,

v.

AIR MACHINE COM SRL, et al.,

Defendants and Respondents.

 D060743

 (Super. Ct. No. 37-2007-00052071-

 CU-BC-NC)

APPEAL from orders of the Superior Court of San Diego County, Earl H. Maas, 

III, Judge. Affirmed.

Ponani Sukumar and his physical rehabilitation clinic, Southern California Stroke 

Rehabilitation Associates (together Sukumar), appeal orders dismissing Panatta Sport 

SRL (Panatta) and Air Machine Com SRL (COM) from the action for lack of personal 

jurisdiction. Sukumar contends the trial court erred when it granted the separate motions 

to quash of Panatta and COM after ruling neither was subject to jurisdiction in California 
2

under a successor liability theory, based on the minimum contacts of their alleged 

predecessor defendant Air Machine SRL (SRL). Sukumar also maintains both Panatta 

and COM are subject to specific jurisdiction in California based on each party's own 

activities/contacts (as opposed to those of SRL) in the forum.

Because we affirm an order granting SRL's motion to quash service for lack of 

jurisdiction in a separate opinion,1 we conclude here that Sukumar failed to satisfy his 

burden to establish jurisdiction over Panatta and COM as successors of SRL. In addition, 

we also determine Sukumar did not carry his burden to prove either Panatta or COM is 

subject to specific jurisdiction based on each party's contacts with California. Therefore, 

we affirm the orders.

FACTUAL AND PROCEDURAL BACKGROUND

Sukumar's Complaint Against Panatta and COM

Sukumar's operative complaint asserted causes of action against Panatta for breach 

of express and implied warranties, breach of the implied covenant of good faith and fair 

dealing, violation of Business and Professions Code section 17200 et seq., promissory 

estoppel and intentional interference with contract. 

Against COM, Sukumar alleged causes of action for breach of contract, breach of 

express and implied warranties, breach of the implied covenant of good faith and fair 

dealing, violation of Business and Professions Code section 17200 et seq., promissory 

estoppel and intentional interference with contract. 

 

1 See Sukumar v. Health Tech Resources, Inc., et al (Date, 2013, D054985) 

[nonpub. opn.].
3

Sukumar alleged in his complaint that Panatta and SRL jointly owned and 

controlled COM; SRL transferred all rights to manufacture and market its medical grade 

Air Machine equipment to COM in return for a minority ownership in COM; Panatta's 

subsequent purchase of SRL's interest in COM was without adequate consideration; and 

Panatta and COM then refused to honor any warranty and contractual obligations of SRL 

despite the fact SRL was rendered insolvent and unable to meet its obligations to 

Sukumar. 

All of Sukumar's claims against Panatta and COM derive from Sukumar's contract 

with Health Tech Resources, Inc. dba Impact Fitness Systems (Health Tech) whereby 

Sukumar purchased certain exercise equipment from Health Tech, which was 

manufactured in Italy by SRL. The contract was dated February 26, 2004. Sukumar 

claimed the exercise equipment was defective and informed Health Tech of the defects 

"immediately" upon delivery in January 2005.

Panatta's and COM's Motions to Quash

Panatta and COM each moved to quash service of summons based on lack of 

personal jurisdiction.2 Panatta and COM contended Sukumar failed to satisfy his burden 

to show either party was subject to specific jurisdiction in California.3

 

2 There are separate appeals involving Panatta and COM, on the one hand, and SRL, 

on the other hand, because at the same time the trial court granted SRL's motion to quash 

it denied the separate quash motions of Panatta and COM. In denying the motions of 

Panatta and COM, the court ruled they waived their jurisdictional challenge by jointly 

serving Sukumar with a statutory offer to compromise pursuant to Code of Civil 

Procedure section 998 ("998 offer") while their challenge to jurisdiction was pending. 

(SRL did not participate in the 998 offer.) Panatta and COM sought to overturn that 
4

Panatta contended it is an Italian limited liability company that designs, 

manufactures and repairs sports equipment used in European gyms, sports centers and 

similar entities. It also claimed to manufacture its products in Italy and market them 

exclusively in Europe, Asia, Russia and the Middle East. Panatta has never owned or 

operated any retail stores, manufacturing facilities or warehouses in California; it has 

never advertised, or maintained an office in California; and it has not owned, used or 

possessed any real property in California. Panatta is not licensed or registered to do 

business in California; it has no designated agent for service of process in California; it 

conducted no business in California "up to and including the entire year of 2004, which is 

the time period that [Sukumar's] claims arose," and that from approximately May 2005 

forward, it has conducted limited business in California with two distributors, which 

accounted for less than one percent of its overall sales.

In addition, Panatta contended that it and SRL formed COM in 2006, nearly three 

years after Sukumar entered into its contract with Health Tech, which gave rise to the 

dispute. Because the superior court ruled SRL was not subject to personal jurisdiction in 

California, Panatta further contended that it could not be subject to jurisdiction under a 

successor liability theory.

 

ruling by writ of mandate (Air Machine v. Superior Court (July 2, 2010, D054878)). We 

subsequently granted the writ and remanded the case for the trial court to consider their 

motions on the merits. Meanwhile, Sukumar separately appealed the order granting the 

motion to quash of SRL (D054985). (See fn. 1, ante.) We stayed D054985 pending the 

outcome of the quash motions of COM and Panetta, which are the subject of this opinion.

3 Sukumar does not argue that the activities of COM and/or Panatta in California 

subject either party to general jurisdiction in the forum.
5

COM argued that it was formed and registered in Italy in November 2006; it is a 

foreign limited liability company headquartered in Apiro, Italy; its products are 

manufactured in Italy and are marketed exclusively in Europe; it has never owned or 

operated any retail stores in California; it has no bank accounts, offices or employees in 

California; and it has never advertised, owned, used or possessed real property in 

California. 

Regarding its formation, COM noted it was created in 2006 as a result of a joint 

venture between Panatta and SRL. Initially when it was formed, Panatta owned 51 

percent of COM and SRL owned 49 percent, and the goal of the joint venture was to use 

Panatta's "established European distribution network to better market the 'Air Machine' 

line of products then owned by SRL." In connection with the joint venture, SRL 

transferred its intellectual property rights to COM, and after less than two years, when 

sales of SRL products failed to meet expectations, SRL, in March 2008, withdrew from 

the joint venture and cashed out its stock in COM for €90,000, leaving Panatta as the sole 

remaining shareholder of COM. 

COM further noted in its motion to quash that it "was and still is a wholly separate 

company from S.R.L. S.R.L operates in different city, namely, Cesena, Italy. [Citation.] 

COM operates in Apiro, Italy. [Citation.] COM was always managed and operated 

independently of S.R.L. [Citation.] COM holds its own Board of Directors' meetings 

separate and independent from S.R.L. [Citation.] With the exception of one common 

officer, COM and S.R.L. have completely different officers and directors. [Citation.] 

COM maintains its own bank accounts, corporate books and records separate and apart 
6

from S.R.L. [Citation.] COM markets, distributes, and sells its products through 

Panatta's distribution network . . . which is separate and independent from S.R.L.'s 

distribution network." 

Moreover, like Panatta, COM also contended that it was not subject to personal 

jurisdiction in California under a successor liability theory because the superior court 

ruled SRL did not have sufficient minimum contacts in the forum and because, in any 

event, Sukumar's claims did not arise from or out of its contacts.

Sukumar opposed the motions to quash of Panatta and COM on the ground that 

both parties were successors to SRL and thus subject to specific jurisdiction in California 

based on the minimum contacts of SRL because Panatta did not pay adequate cash 

consideration to SRL for SRL's interest in COM and, after that sale, SRL was effectively 

insolvent and unable to meet its obligations to Sukumar.

The Superior Court's Ruling on the Motions

The court granted Panatta's motion. It found that Sukumar could not prove 

successor liability as to Panatta because the court had already ruled that SRL was not 

subject to specific jurisdiction. It further found Sukumar did not prove that Panatta 

assumed the liabilities of SRL. Finally, the court determined Sukumar had not proved 

specific jurisdiction was proper based on Panatta's contacts with California.

The superior court also rejected jurisdiction over COM based on successor 

liability for the same reasons it granted Panatta's motion to quash.
7

The superior court also ruled on Panatta's, COM's, and Sukumar's objections to 

evidence in connection with the motions to quash, and none of the parties challenge any 

of the rulings. We therefore do not discuss the specific objections.

DISCUSSION

I

SUCCESSOR LIABILITY

Sukumar spends much of his opening brief arguing that the superior court should 

have exercised jurisdiction over Panetta and COM because they are successors to SRL. 

We disagree.

"In a case raising liability issues, a California court will have personal jurisdiction 

over a successor company if (1) the court would have had personal jurisdiction over the 

predecessor, and (2) the successor company effectively assumed the subject liabilities of 

the predecessor." (CenterPoint Energy, Inc. v. Superior Court (2007) 157 Cal.App.4th 

1101, 1120 (CenterPoint) [citing among other cases Ray v. Alad Corporation (1977) 19 

Cal.3d 22, 28, 31].)

In a separate opinion,4 we affirmed the superior court's order granting SRL's 

motion to quash for lack of jurisdiction. Because we determined the superior court did 

not have jurisdiction over Panatta's and COM's alleged predecessor, SRL, Sukumar's 

contention that the superior court could exercise jurisdiction over Panatta and/or COM 

under a successor liability theory necessarily fails. As such, we do not reach the second 

 

4 See footnote 1, ante.
8

prong of the successor liability test: whether the successor effectively assumed the 

subject liabilities of the predecessor.

II

SPECIFIC JURISDICTION BASED ON PANATTA'S AND COM'S 

RESPECTIVE CONTACTS WITH CALIFORNIA

Sukumar next argues that even if we do not determine that Panetta and COM are 

subject to jurisdiction in the superior court because they are successors to SRL, he has 

satisfied his burden of proving they are subject to specific jurisdiction based on their own 

contacts with California. We disagree.

A. Limits of Asserting Jurisdiction

"State courts will assert personal jurisdiction over nonresident defendants which 

have been served with process only if those defendants have such minimum contacts with 

the state to ensure that the assertion of jurisdiction does not violate ' " ' "traditional 

notions of fair play and substantial justice." ' " ' [Citations.] 'It is well-established that 

only " ' "random," "fortuitous," or "attenuated" contacts' " do not support an exercise of 

personal jurisdiction. [Citation.] In analyzing such issues, the courts have rejected any 

use of " 'talismanic jurisdictional formulas.' " [Citation.] Rather, " ' "the facts of each 

case must [always] be weighed" in determining whether personal jurisdiction would 

comport with "fair play and substantial justice." ' [Citation.]" [Citation.]' " 

(CenterPoint, supra, 157 Cal.App.4th at p. 1117.)

"Minimum contacts" may support either general or specific jurisdiction. (Aquila, 

Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 569.) " ' "Specific jurisdiction results 
9

when the defendant's contacts with the forum state, though not enough to subject the 

defendant to the general jurisdiction of the forum, are sufficient to subject the defendant 

to suit in the forum on a cause of action related to or arising out of those contacts. 

[Citations.] Specific jurisdiction exists if: (1) the defendant has purposefully availed 

itself of forum benefits with respect to the matter in controversy; (2) the controversy is 

related to or arises out of the defendant's contacts with the forum; and (3) the assertion of 

jurisdiction would comport with fair play and substantial justice." ' [Citations.]" 

(CenterPoint, supra, 157 Cal.App.4th at p. 1117, italics omitted; Helicopteros Nacionales 

de Columbia v. Hall (1984) U.S. 466 404, 414 [in determining whether specific 

jurisdiction exists, courts generally look to the relationship among the defendant, the 

forum, and the litigation].)

B. Burden of Proof and Standard of Review

"When a nonresident defendant challenges personal jurisdiction, the plaintiff must 

prove, by a preponderance of the evidence, the factual basis justifying the exercise of 

jurisdiction. [Citation.] The plaintiff must do more than merely allege jurisdictional 

facts; the plaintiff must provide affidavits and other authenticated documents 

demonstrating competent evidence of jurisdictional facts. [Citation.] If the plaintiff does 

so, the burden shifts to the defendant to present a compelling case that the exercise of 

jurisdiction would be unreasonable. [Citation.]" (BBA Aviation PLC v. Superior Court 

(2010) 190 Cal.App.4th 421, 428-429.) "In this analysis, the merits of the complaint are 

not implicated." (F. Hoffman-La Roche, Ltd. v. Superior Court (2005) 130 Cal.App.4th 

782, 794.)
10

"Where the evidence of jurisdictional facts is not in conflict, we independently 

review the trial court's decision. [Citation.] To the extent there are conflicts in the 

evidence, we must resolve them in favor of the prevailing party and the trial court's 

order." (Malone v. Equitas Reinsurance Ltd. (2000) 84 Cal.App.4th 1430, 1436.) We 

review the trial court's resolution of factual conflicts under the substantial evidence 

standard. (People v. Mickey, supra, 54 Cal.3d at p. 649; Integral Development Corp. v. 

Weissenbach (2002) 99 Cal.App.4th 576, 585.) Under this standard, "the power of an 

appellate court begins and ends with the determination as to whether there is any 

substantial evidence, contradicted or uncontradicted, which will support the finding of 

fact." (Grainger v. Antoyan (1957) 48 Cal.2d 805, 807, italics omitted.) " '[S]ubstantial 

evidence' is . . . evidence . . . 'of ponderable legal significance, . . . reasonable in nature, 

credible, and of solid value.' [Citations.]" (Bowers v. Bernards (1984) 150 Cal.App.3d 

870, 873, italics omitted.) Such evidence may be in the form of declarations. (Atkins, 

Kroll & Co. v. Broadway Lumber Co. (1963) 222 Cal.App.2d 646, 654.) If supported by 

substantial evidence, the trial court's resolution of conflict will not be disturbed on 

appeal. (Kroopf v. Guffey (1986) 183 Cal.App.3d 1351, 1356.)

C. Analysis

Sukumar contends Panatta's contacts with California consist of its efforts to 

establish a market in California for its products since the late 1990s. Sukumar further 

asserts Panatta's purchase of SRL was part of these efforts.

Sukumar maintains COM's contacts with California consist of COM 

representatives emailing Sukumar directly and inviting Sukumar to contact the new COM 
11

sales manager for SRL products for assistance with his order. In addition, Sukumar also 

points to COM's use of Panatta's distribution network, which included two California 

distributors. COM also apparently took over SRL's website and continues to distribute 

promotional materials to Sukumar.

Sukumar, however, fails to appreciate that his entire case against Panatta and 

COM hinges on his purchase of SRL equipment in 2004, which was delivered in 2005. 

None of Panatta's or COM's contacts with California having anything to do with SRL's 

products occurred prior to 2006. Sukumar sued COM because he believes it is SRL's 

successor. Sukumar sued Panatta because he argues it owns COM and assumed certain 

of SRL's warranty obligations. 

On July 31, 2006, SRL and Panatta entered into a joint venture that resulted in the 

formation of COM as an Italian limited liability company. SRL contributed its 

trademarks and patents to the joint venture, and Panatta contributed its established 

distribution network. Sukumar has cited to no evidence demonstrating that either Panatta 

or COM had any affiliation, involvement, or responsibility relating to SRL's line of 

fitness equipment or business operations prior to July 31, 2006. 

Based on the record before us, it is clear the controversy at issue here (i.e., SRL's 

defective products) does not arise out of Panatta's and/or COM's contacts with California. 

(See CenterPoint, supra, 157 Cal.App.4th at p. 1117.) Panatta's predispute contacts were 

unrelated to SRL's product. COM did not even exist at the time the dispute arose. 

Indeed, Sukumar sued Panatta and COM simply because of their relationship to SRL: 

COM is the successor of SRL and Panatta owns COM. Panatta's and COM's respective 
12

contacts with California prior to and at the time of the dispute are either nonexistent or 

have nothing to do with the dispute regarding SRL's products. 

Citing Bresler v. Stavros (1983) 141 Cal.App.3d 365 (Bresler), Sukumar argues 

we may consider postdispute contacts with California to determine if specific jurisdiction 

exists. Sukumar's reliance on Bresler is misplaced. 

Bresler, supra, 141 Cal.App.3d 365 involved an action for breach of contract and 

other counts arising from the purchase and sale of stock in a medical group organized as a 

California professional corporation. One of the defendant purchasers, George Stavros, 

was an Arizona resident. Although he was licensed to practice medicine in California,

Stavros declared that he did not intend to practice medicine in California or to take part in 

the corporation's management, and that he purchased the stock solely for investment 

purposes. (Id. at p. 367.) A subsequent declaration by his attorney, however, 

acknowledged that Stavros had visited a clinic operated in California by the corporation 

and had worked in the clinic on one occasion. (Ibid.)

The court in Bresler stated that Stavros sought the benefits and protections of 

California securities law by purchasing California securities, he was permitted to 

purchase stock in the corporation only because he was licensed to practice medicine in 

California, and that he was subject to detailed regulations concerning transfer of the 

securities. (Bresler, supra, 141 Cal.App.3d at p. 369.) The court stated the fact that 

Stavros had performed medical services at the clinic in California on one occasion, within 

a week of his signing the contract to purchase stock, also supported the conclusion that he 

had invoked the benefits of California law. (Id. at pp. 369-370.) In addition, the court 
13

noted that the practice of medicine in this state was subject to " 'special regulation' " and a 

defendant's intentional participation in an activity that is subject to special regulation can 

support the exercise of jurisdiction. (Id. at p. 369, quoting Hanson v. Denckla (1958) 357 

U.S. 235, 252.) The court concluded that the purchase and sale of the corporation "was 

intimately related to California," and that Stavros had purposefully availed himself of 

forum benefits. (Id. at pp. 370-371.) The court also determined that the exercise of 

jurisdiction would be fair and reasonable, in part because California "has a strong interest 

in policing the propriety of transactions transferring ownership in medical corporations." 

(Id. at p. 371.) The court therefore held that the granting of the motion to quash service 

of summons was error. (Id. at p. 372.) 

We struggle to find any aspect of Bresler, supra, 141 Cal.App.3d 365 that is even 

tenuously related to the instant matter. In Bresler, Stavros's "post-dispute" contact 

occurred less than a week after he signed the purchase contract. (Id. at p. 367.) In 

contrast, here, Sukumar is trying to establish the requisite contacts, in part, by focusing 

on contacts that occurred months, and in some cases over a year, after the dispute arose. 

Bresler does not create a rule mandating that we consider Panatta's and COM's postdispute contacts.

In addition, Bresler, supra, 141 Cal.App.3d 365 involved facts that are not 

analogous to the instant matter. Stavros was a licensed California physician and was 

purchasing stock in a California medical corporation. (Id. at pp. 366-367.) Moreover, 

Stavros's contacts with California concerned the practice of medicine, which is subject to 
14

"special regulations." (Id. at p. 369.) Panatta's attempts to create a California market for 

its products and COM's postdispute emails to Sukumar are not similar in any way.

In summary, even if we were to accept Sukumar's claim of contacts with 

California by both Panatta and COM as true, the controversy here did not arise out of any 

of these contacts. Therefore, Sukumar has not carried his burden of satisfying the second 

factor of proving specific jurisdiction. The court's orders were not in error. 

DISPOSITION

The orders are affirmed. Panatta and COM are awarded their costs on appeal.

HUFFMAN, J.

I CONCUR:

IRION, J.
1

J. BENKE, dissenting.

I conclude the trial court erred when it granted the separate motions to quash 

service of summons of respondents Panatta Sport SRL (Panatta) and Air Machine Com 

SRL (COM) for lack of personal jurisdiction in the action brought by appellants Ponani 

Sukumar and his physical rehabilitation clinic, Southern California Stroke Rehabilitation 

Associates (collectively Sukumar). Because I conclude Panatta and COM are subject to 

jurisdiction in California under a successor liability theory, based on the minimum 

contacts of defendant Air Machine SRL, an Italian Limited Company (SRL),1 I would 

reverse the order granting the motions to quash of Panatta and COM and direct the court 

to enter a new order denying their respective motions. 

BRIEF OVERVIEW2

Sukumar's operative complaint asserted causes of action against Panatta for breach 

of express and implied warranties, breach of the implied covenant of good faith and fair 

dealing, violation of Business and Professions Code section 17200 et seq., promissory 

estoppel and intentional interference with contract. 

Against COM, Sukumar's operative complaint alleged causes of action for breach 

of contract, breach of express and implied warranties, breach of the implied covenant of 

 

1 Also on this date the majority issued a separate, nonpublished opinion in the 

related appeal D054985, affirming the trial court's order granting SRL's motion to quash 

service of summons, to which I also dissent.

2 I discuss the relevant jurisdictional facts, post, in connection with the issues raised 

in this proceeding.
2

good faith and fair dealing, violation of Business and Professions Code section 17200 et 

seq., promissory estoppel and intentional interference with contract. 

Sukumar alleged in his complaint that Panatta and SRL jointly owned and 

controlled COM; that SRL transferred all rights to manufacture and market its medicalgrade Air Machine equipment to COM in return for a minority ownership in COM; that 

Panatta's subsequent purchase of SRL's interest in COM was without adequate 

consideration; and that Panatta and COM then refused to honor any warranty and 

contractual obligations of SRL, despite the fact SRL was rendered insolvent and unable 

to meet its obligations to Sukumar. 

DISCUSSION

A. Minimum Contacts and Standard of Review

Courts in California will exercise jurisdiction over nonresidents "'on any basis 

consistent with the Constitution of California and the United States.'" (Snowney v. 

Harrah's Entertainment, Inc. (2005) 35 Cal.4th 1054, 1061; Code Civ. Proc., § 410.10 

[long-arm statute].) Accordingly, courts will assert jurisdiction over a nonresident 

defendant "if the defendant has such minimum contacts with the state that the assertion of 

jurisdiction does not '"violate traditional notions of fair play and substantial justice."' 

[Citations.]" (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444 

(Vons).) 

"When a defendant moves to quash service of process on jurisdictional grounds, 

the plaintiff has the initial burden of demonstrating facts justifying the exercise of 

jurisdiction. [Citation.]" (Vons, supra, 14 Cal.4th at p. 449.) A plaintiff must meet this 
3

burden with competent evidence and establish jurisdiction by a preponderance of the 

evidence. (Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 568.) This may 

be done through declarations and other admissible evidence; a plaintiff is not required, 

however, to prove the elements of one or more causes of action to satisfy this burden. 

(Nobel Farms, Inc. v. Pasero (2003) 106 Cal.App.4th 654, 657–658; Aquila, Inc. v. 

Superior Court, supra, at p. 568.)

Once a plaintiff has demonstrated facts establishing minimum contacts with the 

forum state, it becomes the defendant's burden to demonstrate the exercise of jurisdiction 

would be unreasonable. (Vons, supra, 14 Cal.4th at p. 449.)

A trial court's factual determinations are reviewed for substantial evidence. (Vons, 

supra, 14 Cal.4th at p. 449.) But "'"the question of jurisdiction is, in essence, one of law. 

When the facts giving rise to jurisdiction are conflicting, the trial court's factual 

determinations are reviewed for substantial evidence. [Citation.] Even then, we review 

independently the trial court's conclusions as to the legal significance of the facts. 

[Citations.]"'" (CenterPoint Energy, Inc. v. Superior Court (2007) 157 Cal.App.4th 1101, 

1117-1118, italics added (CenterPoint); see also F. Hoffman-LaRoche, Ltd. v. Superior 

Court (2005) 130 Cal.App.4th 782, 794 ["[T]he ultimate question whether jurisdiction is 

fair and reasonable under all the circumstances, based on the undisputed facts and those 

resolved by the court in favor of the prevailing party, is a legal determination warranting 

independent review."].) 
4

Among other theories, Sukumar contends that Panatta and COM are subject to 

jurisdiction in California as a result of the contacts of their predecessor, SRL, under a 

successor theory of liability. 

B. Jurisdiction Premised on Successor Liability

"In a case raising liability issues, a California court will have personal jurisdiction 

over a successor company if (1) the court would have had personal jurisdiction over the 

predecessor, and (2) the successor company effectively assumed the subject liabilities of 

the predecessor." (CenterPoint, supra, 157 Cal.App.4th at p. 1120, citing among other 

cases Ray v. Alad Corp. (1977) 19 Cal.3d 22, 28, 31.) 

As I discuss in my dissent to the separate majority opinion issued this date, from 

my review of the entire record in that case, I independently conclude Sukumar met his 

burden to show that SRL purposefully availed itself of the benefits of doing business in 

California and that the controversy is related to and/or arises out of SRL's contacts in 

California. I also conclude that SRL failed to make a compelling case to show the 

assertion of jurisdiction over it in California would be unfair and unreasonable and that it 

would be unfair to Sukumar and consumers similarly situated if California did not 

exercise specific jurisdiction over SRL. 

As such, unlike the majority, I conclude for purposes of this dissent that Sukumar 

has satisfied "prong one" of the CenterPoint test to establish jurisdiction over Panatta 

and/or COM based on a successor liability theory. 

Under "prong two" as set out in CenterPoint, typically a successor company is 

liable for a predecessor's actions if (1) there is an express or implied agreement of 
5

assumption; or (2) the transaction between the successor and predecessor amounts to a 

consolidation or merger of the two; or (3) the successor is a mere continuation of the 

predecessor; or (4) the transfer of assets to the successor is for the fraudulent purpose of 

escaping liability for the predecessor's debts. (CenterPoint, supra, 157 Cal.App.4th at p. 

1120; see also Ray v. Alad Corp., supra, 19 Cal.3d at p. 28.) 

Sukumar contends Panatta and COM are subject to jurisdiction based on the 

second, third or fourth bases or theories set out in CenterPoint (i.e., merger; continuation; 

and/or fraudulent transfer). 

1. Brief Additional Background

The record shows that like SRL, Panatta manufactured and sold its own line of 

exercise equipment and product. In 2006, Panatta was actively seeking to increase sales 

of its exercise equipment in the United States, including in California.3 Panatta and SRL 

in July 2006 formed a "strategic association," the terms of which were set forth in a 

"private contract" translated from Italian into English. A press release issued on Air 

Machine letterhead noted this alliance was important for the "future" of SRL because the 

company needed a "great ally" after facing "difficult years of large investments" that 

were inhibiting its growth potential. 

Under the private contract, Panatta and SRL agreed to form a joint venture. SRL 

agreed to transfer to the joint venture (then named "newco," later to become COM) the 

 

3 Although the record shows Panatta sold exercise equipment in 2005 and 2006 to 

various distributors located in California, Sukumar does not contend that Panatta's 

contacts in California were sufficient to subject Panatta to general jurisdiction in the 

state. 
6

exclusive rights to its "intangible fixed assets" as set forth in an exhibit (written in Italian) 

attached to the private contract. Panatta in turn agreed to grant the joint venture the 

nonexclusive right to use Panatta's "network of agents, both in Italy and abroad, as well 

as its own service centers," to market and distribute Air Machine equipment and product. 

The private contract also provided that once the joint venture had taken over the Air 

Machine brand, SRL could exercise a "put" option within a certain time period that 

would require Panatta to purchase SRL's interest in the joint venture under a set formula 

based in part on the earnings of the joint venture (before interest and tax). 

As contemplated by the private contract, Panatta transferred to COM the rights to 

access its distribution network and service centers. Those rights were valued at a little 

over €2 million. In return, Panatta received a 51 percent share of COM's stock. SRL, for 

its part, transferred to COM exclusively "its intangible assets (i.e., patents and trademarks 

owned by SRL[)] and allowed COM access to its list of customers and distributors[,]" 

which were valued slightly below the rights transferred by Panatta in order to support

SRL's 49 percent ownership in COM. COM also retained an SRL officer (Riccardo 

Piccioli) and various SRL employees (Sebastiano Zannoli, Giacomo Di Leo and Davide 

Sanson), including its then export manager (Tomas Bilardo). 

In addition, the private contract between Panatta and SRL required SRL to change 

its name to eliminate any reference to the brand name "Air Machine" and precluded SRL 

from performing for five years "any activity" that competed with COM. SRL also agreed 

to transfer its internet address to COM so that COM could use and control the 

"airmachine.it" email domain and URL. COM also adopted SRL's web site as its own. 
7

After COM's formation, SRL's 2006 year-end balance sheet showed that its debts 

substantially outweighed its revenues; that it lost over €1.5 million in production costs in 

2006; that its operating costs alone outweighed its revenue; that it owed banks nearly €3 

million and suppliers over €1.5 million; and that a divestiture of assets (e.g., such as to 

COM) would leave SRL more than €4.5 million in debt with no recourse for its creditors, 

inasmuch as SRL did not transfer any of its liabilities to COM. SRL also reported no 

bank deposits for the year ending in 2006. 

Although in existence less than a year, the record shows that COM in April 2007 

marketed the "Air Machine systems" on Air Machine letterhead as a "leader for 20 years 

in [the] medical and rehabilitation areas," which utilized the "best" technologies and 

equipment "today." In that particular marketing brochure, other than the name and 

address of "Air Machine COM srl" listed in very small font at the top of the page, there 

was no mention that COM was a new entity formed by SRL and Panatta. 

The record also shows that in mid-April 2007, COM notified various existing and 

potential customers about its formation and noted that it would continue and grow Air 

Machine's "outstanding and innovat[ive]" technology, which had a proven track record 

"[f]or more than 20 years" in the fitness, health and rehabilitative products industry. 

Similarly, a three-page "company profile," dated April 2007, stated in all capital 

letters at the top on page 1, "AIR MACHINE: since 1985 . . . UNLIKE ANYTHING 

ELSE," and then went on to discuss the fact that "Air Machine S.r.l. started in December 

1985 in Cesena," Italy as a fitness company and has been "operating for more than 20 

years" in the fitness market. That profile also stated that "[t]oday, Air Machine operates 
8

[in] both [the] fitness and medical market, through its dedicated product lines (both

cardio and isotonic)" and that the "Air System" is the "BEST SOLUTION FOR 

METABOLIC FITNESS." Toward the bottom of page 2 of the company profile, COM 

introduces itself as "THE FUTURE" and describes the "goal of Air Machine" as 

"bringing fitness to a wider range of people." 

The record shows that various disputes arose between SRL and Panatta shortly 

after they formed the joint venture that led to COM. Rather than litigate, Panatta and 

SRL agreed to a settlement (translated from Italian into English) in October 2007, in 

which Panatta paid SRL €90,000 net to complete the buyout of SRL's interest in COM. 

Among other terms of the settlement, SRL (i) guaranteed that it had transferred to COM 

all of its patents and trademarks for Air Machine products and that there existed no other 

patents, assets, commercial agreements or legal relationships "useful or necessary" to 

produce Air Machine equipment; (ii) assigned to Panatta the commercial contracts and 

"whatever else is necessary" for the functioning of the software used in Air Machine 

equipment; and (iii) agreed to sell to Panatta the molds SRL used in the production of the 

Air Machine equipment. 

The record shows that at year-end 2007, COM valued its intangible assets at 

€2.006 million, less depreciation. 

After SRL sold its 49 percent interest in COM, it appears SRL wound up its 

business as evidenced by the fact that its registered operating facility was empty and in an 

"abandoned state," that there was trash collecting outside the building and that a sign on 

the front door of the building read, "for sale" and "for rent" (in Italian). In addition, the 
9

database repository for Italian corporate records and compulsory filings showed no 2007 

balance sheet for SRL. 

2. Governing Law

A corporate acquisition constitutes a consolidation or merger for jurisdictional 

purposes if a plaintiff demonstrates "'(1) no adequate consideration was given for the 

predecessor corporation's assets and made available for meeting the claims of its 

unsecured creditors; [and] (2) one or more persons were officers, directors, or 

stockholders of both corporations. [Citations.]'" (CenterPoint, supra, 157 Cal.App.4th at 

p. 1121.) "However, it is not dispositive that some of the same persons may serve as 

officers or directors of the two corporations. The relevant inquiries are whether the two 

corporations have preserved their separate identities and whether recourse to the debtor 

corporation is available. [Citation.]" (Ibid.) 

"In Marks [v. Minnesota Mining & Manufacturing Co. (1986)] 187 Cal.App.3d [at 

page 1436], the trial court set out a checklist for determining whether a de facto merger 

had taken place that would render the successor company liable for the plaintiff's product 

liability claim: '(1) was the consideration paid for the assets solely stock of the purchaser 

of its parent; (2) did the purchaser continue the same enterprise after the sale; (3) did the 

shareholders of the seller become shareholders of the purchaser; (4) did the seller 

liquidate; and (5) did the buyer assume the liabilities necessary to carry on the business of 

the seller? [Citations.]'" (CenterPoint, supra, 157 Cal.App.4th at p. 1121.) 

Nonetheless, "'[t]he crucial factor in determining whether a corporate acquisition 

constitutes either a de facto merger or a mere continuation is the same: whether adequate 
10

cash consideration was paid for the predecessor corporation's assets.' [Citation.]" 

(CenterPoint, supra, 157 Cal.App.4th at p. 1121, italics added.) This is because "a sale 

for adequate cash consideration ensures that at the time of sale there are adequate means 

to satisfy any claims made against the predecessor corporation." (Franklin v. USX Corp. 

(2001) 87 Cal.App.4th 615, 625, italics added.)

3. Analysis

With regard to Panatta, I believe the primary issue is whether it paid SRL 

"adequate cash consideration" when it purchased SRL's shares in COM for €90,000 a 

little more than a year after SRL agreed to transfer its intangible assets to COM for a 49 

percent ownership in COM. According to Sukumar, the value of the assets transferred by 

SRL to COM was a little more than €2 million, as reflected in COM's balance sheet in 

2007 and in 2008, and thus he contends the €90,000 cash payment comprised less than 5 

percent of the reported value of those assets. 

Panatta claims the €2 million valuation for SRL's transfer of its Air Machine 

patents and trademarks was for purposes of SRL's capital contribution to COM and thus 

was not a true "cash or market valuation" of the SRL contribution. Panatta also claims 

that SRL was advised by its own financial advisors that €90,000 was the fair value of 

SRL's 49 percent ownership stake in COM, as also found by the trial court. Based on this 

evidence, as well as SRL's 2006 year-end balance sheet showing that at the end of 2005, 

SRL set a value of €36,390 for the intangible assets it transferred to COM, Panatta claims 

the record contains substantial evidence to support the court's finding that Sukumar failed 
11

to carry his burden to show that SRL did not receive adequate cash consideration from 

Panatta for the sale of its 49 percent share of COM. 

From my review of the entire record, I independently conclude the trial court erred 

when it found Sukumar did not establish that Panatta paid inadequate cash consideration 

for SRL's 49 percent stake in COM. (See CenterPoint, supra, 157 Cal.App.4th at p. 

1121; see also F. Hoffman-LaRoche, Ltd. v. Superior Court, supra, 130 Cal.App.4th at p. 

794 [noting the "ultimate question whether jurisdiction is fair and reasonable under all the 

circumstances, based on the undisputed facts and those resolved by the court in favor of 

the prevailing party, is a legal determination warranting independent review."].) 

Indeed, the settlement agreement between SRL and Panatta clearly shows there 

were a series of commercial disputes between those two parties regarding COM and its 

operations. Those disputes led to a series of payments and setoffs between SRL and 

Panatta, as contained in their settlement. As a result of those disputes and in return for 

their settlement, Panatta agreed to pay SRL €90,000 net in cash. I conclude that the 

€90,000 sales figure was not the actual cash value of SRL's 49 percent interest in COM. 

I also conclude Panatta's €90,000 net cash payment to SRL was not "adequate 

cash consideration" (see CenterPoint, supra, 157 Cal.App.4th at p. 1121, italics added) to 

ensure there were "adequate means to satisfy any claims made against the predecessor 

corporation" (see Franklin v. USX Corp., supra, 87 Cal.App.4th at p. 625). I base my 

conclusion on the evidence in the record that: (i) SRL had "faced difficult years of large 

investments inside [the] company" and that after SRL sold its interest in COM, it was left 

with little or no cash assets and over €4.5 million in debt; (ii) SRL's registered operating 
12

facility was "for sale" and/or "for rent" and appeared abandoned and empty after the sale; 

and (iii) on the front end of the transaction, Panatta and SRL valued SRL's contribution 

of its intangible assets at about €2 million and that COM itself subsequently adopted a 

similar valuation as well. 

That SRL may have received independent financial advice regarding the net value 

of its 49 percent interest in COM—after taking into consideration the various commercial 

disputes between the parties and the offsets to resolve them—does not change my 

conclusion.4 A corporate acquisition may constitute a de facto merger when the 

successor pays insufficient cash consideration for the predecessor's assets, which I 

conclude is the case here. (See CenterPoint, supra, 157 Cal.App.4th at p. 1121.) 

Other factors also support my conclusion that SRL received insufficient cash 

consideration for its interest in COM, including the fact that SRL was paid solely in stock 

for the transfer of its intangible assets on the front end of the transaction. (See 

CenterPoint, supra, 157 Cal.App.4th at p. 1121 [noting consideration paid only in stock 

supports a finding of a de facto merger between the successor and predecessor].) 

In addition, the record supports the finding that Panatta and COM continued the 

Air Machine enterprise after Panatta purchased SRL's interest in COM, as reflected by, 

among other things: (i) the terms of the parties' agreements (i.e., their private contract and 

 

4 I say may because the evidence in the record is less than compelling that SRL was 

advised by its "own CPA as to the fair value of S.R.L.'s stock in COM" as Panatta and 

COM argue. Rather, the record shows this evidence, which the trial court relied on in 

finding SRL received an "independent financial analysis" regarding the valuation of its 

interest in COM, was taken from the declaration of Angela Maria Tosti, who at the time 

was the managing director of Panatta. 
13

settlement agreement) where SRL transferred to COM exclusively its patents, 

trademarks, manufacturing molds and "know how" in the Air Machine brand and its 

customer/distributor lists; (ii) various press and company releases on Air Machine 

letterhead stating that Air Machine equipment and product would continue to be 

manufactured in Italy as it had been for more than 20 years; (iii) COM's hiring of various 

SRL employees familiar with the Air Machine equipment and product; (iv) COM's 

control of the Air Machine website and its internet and email domains; and (v) SRL's 

agreement to a stringent five-year noncompete clause in connection with the Air Machine 

brand. (See CenterPoint, supra, 157 Cal.App.4th at p. 1121 [noting that the purchaser's 

continuation of the same enterprise of the successor after the sale supports a finding of de 

facto merger].)

Finally, the record shows that SRL for all practical purposes ceased operations and 

became effectively insolvent at or near the time it sold Panatta its interest in COM, as 

evidenced by the "for sale" and/or "for rent" sign on the door of SRL's registered 

operating facility, which was empty and appeared abandoned, and by its substantial debt. 

(See CenterPoint, supra, 157 Cal.App.4th at p. 1121 [liquidation of predecessor is a 

factor supporting a finding of de facto merger].)

With respect to COM, I conclude many of these same factors support a finding of 

successor jurisdiction over it based on the "mere continuation" doctrine, an independent

jurisdictional base. (See McClellan v. Northridge Park Townhome Owners Assn. (2001) 

89 Cal.App.4th 746, 753 [noting this doctrine applies when, among other factors, all the 

assets of one corporation are transferred to another corporation, but the latter "does not 
14

pay all the first corporation's debts[] and continues to carry on the same business" as the 

first corporation].) 

In sum, after reviewing the entire record and taking into account "'the totality of

the unusual circumstances'" (see CenterPoint, supra, 157 Cal.App.4th at p. 1122) and 

considerations of "fairness and equity" (ibid.), I conclude that Panatta and COM are 

subject to jurisdiction in California as successors to SRL.5 As such, I would vacate the 

trial court's order granting their separate motions to quash and direct the court to enter a 

new order denying each party's motion. 

BENKE, Acting P. J.

 

5 Because I conclude Panatta (under the de facto merger doctrine) and COM (under 

the mere continuation doctrine) are subject to jurisdiction in California under a successor 

theory, unlike the majority I deem it unnecessary to reach Sukumar's alternative 

contentions to establish jurisdiction (e.g., that Panatta and/or COM are subject to specific 

jurisdiction based on their own activities/contacts) in the forum state.