Filed 3/29/16 Cottonwood Capital Property Management v. Superior Court CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication

or ordered published for purposes of rule 8.1115. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

COTTONWOOD CAPITAL PROPERTY 

MANAGEMENT II, LLC,

 Petitioner,

v.

THE SUPERIOR COURT OF ORANGE 

COUNTY,

 Respondent;

NNN CENTURY HILLS TIC 01, LLC, 

et al.

 Real Parties in Interest.

 G052620

 (Super. Ct. No. 30-2014-00764027)

 O P I N I O N

Original proceedings; petition for a writ of mandate to challenge an order of 

the Superior Court of Orange County, Peter J. Wilson, Judge. Petition granted.
2

Shumener, Odson & Oh, Betty M. Shumener, Henry H. Oh and Edward O. 

Morales for Petitioner.

No appearance for Respondent.

Engstrom, Lipscomb & Lack, Walter J. Lack and Steven C. Shuman for 

Real Parties in Interest.

* * *

Petitioner Cottonwood Capital Property Management II, LLC 

(Cottonwood) petitions for a writ of mandate directing the trial court to grant 

Cottonwood’s motion to quash service of summons for lack of personal jurisdiction. 

Real parties in interest NNN Century Hills TIC 01, LLC through NNN Century Hills 

TIC 28, LLC (collectively, Owners) are 28 limited liability companies that contracted 

with Daymark Realty Properties, Inc. (Daymark) to manage an apartment complex 

Owners bought in Georgia. A few years later, Daymark entered into a subcontract with 

Cottonwood to have it manage the apartments for Daymark. 

Owners filed this action against Cottonwood and Daymark after Owners’ 

lender foreclosed on the apartments because Cottonwood stopped making payments on 

Owners’ purchase money loan. According to Cottonwood, it stopped making loan

payments because the apartments did not generate sufficient revenue to pay the operating 

expenses and service Owners’ loan, and Owners refused to comply with Cottonwood’s 

“capital call” seeking additional funds to cover the expenses and loan payments. Owners 

alleged claims for breach of the subcontract, breach of the original property management 

agreement, and various torts. Cottonwood moved to quash service, arguing it had not

purposefully availed itself of any California benefits by entering into and performing the 

subcontract, and therefore it lacked sufficient minimum contacts with California to 

constitutionally allow the state’s courts to exercise personal jurisdiction over it.

We agree and grant the petition. Cottonwood is a Utah limited liability 

company with its principal place of business in Utah. It has no offices, employees, 
3

agents, or assets in California and conducts no business in the state. Daymark and 

Cottonwood negotiated and executed the subcontract in Utah, and Cottonwood had no 

direct contractual relationship with Owners. Cottonwood performed the subcontract in 

Georgia where the apartments were located and in Utah where its offices were located. 

Cottonwood did not engage in any activities in California relative to the subcontract.

Cottonwood’s California connections were limited to sending budgets, 

plans, reports, miscellaneous communications, and the capital call to a subset of Owners

that had members living in California. These same connections also existed with the 

12 other states where Owners’ members lived. Cottonwood did not seek out these 

connections with California, which were incidental to Cottonwood’s performance under 

the subcontract in Georgia and Utah. As explained below, we conclude these California 

connections are too attenuated and random to constitute purposeful availment, and 

therefore may not support the exercise of personal jurisdiction over Cottonwood.

I

FACTS AND PROCEDURAL HISTORY

Owners are 28 limited liability companies that purchased a 200-unit 

apartment complex in Augusta, Georgia, and held title to the apartments as tenants in 

common. Owners were formed in Delaware for the sole purpose of purchasing the 

apartments; they conducted no other business and each Owner’s only asset was its 

interest in the apartments. The members of each Owner were individuals, couples, or 

family trusts that lived in 13 states, with the members of 10 Owners living in California.1 

None of Owners’ members are parties to the underlying action. 

 

1

The 13 states where Owners’ members lived are Arizona, California, 

Colorado, Connecticut, Florida, Idaho, Nebraska, New Jersey, North Carolina, 

Tennessee, Virginia, Washington, and Wyoming. 
4

Owners financed the purchase of the apartments with a nearly $16 million 

loan secured by a deed of trust and security agreement. In the loan documents, Owners 

agreed Georgia law would govern any dispute relating to the loan and also agreed to 

submit to personal jurisdiction in Georgia to resolve any dispute. 

Daymark is a California corporation with its principal place of business in 

Orange County, California. In June 2007, Daymark’s predecessor in interest entered into 

the “Property Management Agreement” (Management Agreement) with Owners to 

“manage, lease, operate, and maintain the [apartments].”2 The Management Agreement 

designated Daymark as “the sole and exclusive manager of the [apartments] to act on 

behalf of [Owners]” and required Daymark to “keep the [apartments] clean and in good 

repair, . . . order and supervise the completion of such repairs as may be required and . . . 

generally do and perform, or cause to be done or performed, all things necessary, 

required or desirable for the proper and efficient management, operation, and 

maintenance of the [apartments].” 

Daymark’s responsibilities under the Management Agreement included 

leasing the individual units, collecting rent, paying the mortgage, taxes, and other bills, 

repairing and maintaining the apartments, interacting with the tenants, preparing an 

annual operating budget and plan for Owners’ approval, providing Owners with quarterly 

financial reports, establishing separate bank accounts for each Owner’s share of the 

profits, and maintaining books and records of the income and expenses attributed to each 

Owner’s interest in the apartments at Daymark’s office in California. The Management 

Agreement authorized Daymark, “in its sole discretion, to subcontract some or all of the 

property management functions described herein to local property managers and certain 

other parties.” Finally, the Management Agreement included a choice-of-law provision 

 

2

Triple Net Properties Realty, Inc., was the entity that contracted with 

Owners and later became Daymark through a series of mergers and other transactions. 

Triple Net Properties Realty is not a party to the underlying action. 
5

designating Georgia law, but it required arbitration in Orange County, California, for all 

disputes relating to the Management Agreement. 

Cottonwood is a Delaware limited liability company with its principal place 

of business in Salt Lake City, Utah. In 2012, representatives of Cottonwood attended a 

conference in California where they met Daymark’s representatives. This chance 

encounter led to two separate meetings in California when Cottonwood representatives

were attending other conferences. During these California meetings, Cottonwood 

described its property management services and Daymark shared information about the 

various portfolios of properties it held and managed. The two companies did not discuss 

the terms of any particular deal during these meetings, but rather simply got to know each 

other’s business. 

After the California meetings, Daymark and its attorneys traveled to Utah 

to meet with Cottonwood. The two companies negotiated, drafted, and agreed to an 

arrangement for Cottonwood to purchase the right to manage various properties Daymark 

managed, including the apartments in Georgia. In November 2012, Cottonwood and 

Daymark entered into the “Sub-Property Management Agreement” (Subcontract) for 

Cottonwood to perform Daymark’s property management responsibilities for the 

apartments. 

The Subcontract provides, “[Daymark] hereby hires and retains 

[Cottonwood], and [Cottonwood] agrees to perform all of [Daymark’s] property 

management obligations under the Management Agreement, subject to the exclusions, 

terms and conditions contained in this Subcontract (collectively, the ‘Services’). It is 

expressly understood that the Services are to be provided on a subcontract basis and that 

this Subcontract does not constitute an assignment of the Management Agreement or any 

right, title, or interest thereunder.” In exchange for Cottonwood performing Daymark’s 

property management obligations, Daymark agreed to “assign[] to [Cottonwood] 

[Daymark’s] rights to payment of the Management Fee and the Construction 
6

Management Fee and will instruct [Owners] to pay the Management Fee and the 

Construction Management Fee directly to an account designated by [Cottonwood].”

In the Subcontract, “[Cottonwood] covenants and warrants that it fully 

understands and agrees to be subject to, bound by and fully perform all of [Daymark’s] 

covenants, agreements, terms, provisions and conditions of the Management Agreement 

arising as of the date hereof, except (i) as such terms, covenants, agreements and 

provisions are specifically modified, excluded or limited by this Subcontract . . . .” The 

Subcontract further provides it “is not intended to give or confer any benefits, rights, 

privileges, claims, actions, or remedies to [Owners] or to any person or entity as a third 

party beneficiary or otherwise.” Finally, the Subcontract includes a choice-of-law 

provision designating Delaware law, but it does not include a forum selection or 

arbitration clause. 

After a brief transition period, Cottonwood performed the day-to-day 

management and maintenance services for the apartments through its onsite employees 

and contractors, who were supervised by a regional manager located in Georgia. 

Financial and other information relating to the apartments was compiled in Georgia and 

transmitted to Cottonwood’s corporate offices in Utah, where Cottonwood analyzed the 

information and prepared budgets, plans, reports, and other documents concerning the 

apartments. Cottonwood stored this information in an online database it maintained in 

Utah. It provided Owners with login information to access the database and also mailed 

hard copies of these documents to Owners who requested them. Cottonwood provided 

notice to Owners about the budgets and reports through e-mail and standard mail from its 

offices in Utah. It also conducted regular conference calls to discuss its management, and 

provided Owners with the information necessary to participate in the calls or listen to 

recordings of previous calls. The calls were initiated from Cottonwood’s offices in Utah.

Cottonwood experienced difficulties managing the apartments because they 

did not generate sufficient revenue to pay the operating expenses and service Owners’
7

property loan. Initially, Cottonwood maintained the apartments by obtaining necessary 

services on credit and only paying for those services as they came due, but eventually

payment demands exceeded the available revenue. Cottonwood therefore made a capital 

call on all Owners, seeking the additional funds necessary to pay the outstanding bills 

while continuing to service the debt for the apartments. When Owners refused to comply

with the capital call, Cottonwood lacked the funds necessary to pay the outstanding 

obligations, including the loan on the apartments. After Owners missed several loan 

payments, the lender foreclosed. 

In 2014, Owners brought this action against Cottonwood and Daymark. 

The operative first amended complaint alleged claims against Cottonwood for breach of 

the Subcontract, breach of fiduciary duty, accounting, inducing breach of or intentional 

interference with the loan on the apartments, intentional interference with prospective 

economic relations, and negligent interference with prospective economic relations.3 

Owners alleged Cottonwood mismanaged the apartments and caused the foreclosure by 

paying certain operating expenses before paying the loan on the apartments, failing to 

maintain the debt service coverage ratio required by the loan, failing to timely provide the 

annual operating budget and other financial reports, incurring unauthorized expenses, 

failing to maintain required state and local licenses, failing to make financial and other 

documents available to Owners, and making an unauthorized capital call. 

Owners served the summons and first amended complaint on Cottonwood’s 

agent for service of process in Delaware, and Cottonwood responded by moving to quash 

service. Cottonwood argued it lacked sufficient minimum contacts with California to 

 

3

The first amended complaint also alleged claims against Owners’ lender for 

breach of the implied covenant of good faith and fair dealing, negligence, intentional 

interference with prospective economic relations, negligent interference with prospective 

economic relations, and wrongful foreclosure. The lender is not a party to this writ 

proceeding. 
8

constitutionally subject it to personal jurisdiction in the state because Cottonwood

negotiated and entered into the Subcontract with Daymark in Utah to manage the 

apartments in Georgia and the alleged acts and omissions by Cottonwood occurred in 

either Georgia or Utah. Owners opposed the motion, arguing the totality of the 

circumstances surrounding the Management Agreement and the Subcontract established 

sufficient minimum contacts with California because Daymark is a California 

corporation, Cottonwood assumed Daymark’s obligations under the Management 

Agreement, and the Management Agreement required certain obligations to be performed 

in California, including making financial and certain other documents relating to the 

apartments available to Owners, providing budgets and financial reports to Owners’ 

members, and arbitrating any disputes under the Management Agreement.4 

The trial court agreed with Owners and denied Cottonwood’s motion to 

quash. Cottonwood timely petitioned for writ relief. (Code Civ. Proc., § 418.10, 

subd. (c).) We invited informal opposition, and after reviewing that opposition, we 

issued an order to show cause why a writ of mandate should not issue ordering the court 

to vacate its order denying Cottonwood’s motion to quash and enter a new order granting 

the motion. After further briefing and oral argument, we now address the petition’s 

merits. 

 

4 Owners moved to augment the record with (1) pages from a deposition 

transcript they cited to the trial court, but inadvertently failed to file with the court, and 

(2) pages from a separate deposition transcript they neither cited nor filed with the trial 

court. We deny the motion. “[T]he record cannot be ‘augmented’ with material that was 

not before the trial court.” (In re Marriage of Forrest & Eaddy (2006) 144 Cal.App.4th 

1202, 1209.) Nonetheless, considering those materials would not change our analysis or

conclusions.
9

II

DISCUSSION

A. Personal Jurisdiction Governing Principles

“‘California courts may exercise personal jurisdiction on any basis 

consistent with the Constitution of California and the United States. [Citation.] The 

exercise of jurisdiction over a nonresident defendant comports with these Constitutions 

“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.”’”’” 

(Snowney v. Harrah’s Entertainment, Inc. (2005) 35 Cal.4th 1054, 1061 (Snowney).) 

“‘The concept of minimum contacts . . . requires states to observe certain 

territorial limits on their sovereignty. It “ensure[s] that the States, through their courts, 

do not reach out beyond the limits imposed on them by their status as coequal sovereigns 

in a federal system.”’ [Citations.] To do so, the minimum contacts test asks ‘whether the 

“quality and nature” of the defendant’s activity is such that it is “reasonable” and “fair” to 

require him to conduct his defense in that State.’” (Snowney, supra, 35 Cal.4th at 

p. 1061.)

“Under the minimum contacts test, ‘[p]ersonal jurisdiction may be either 

general or specific.’” (Snowney, supra, 35 Cal.4th at p. 1062.) “A nonresident defendant 

may be subject to the general jurisdiction of the forum if his or her contacts in the forum 

state are ‘substantial . . . continuous and systematic.’ . . . Such a defendant’s contacts 

with the forum are so wide-ranging that they take the place of physical presence in the 

forum as a basis for jurisdiction.” (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 

14 Cal.4th 434, 445-446.) Owners concede there is no basis for general jurisdiction over 

Cottonwood in California, and therefore we focus on specific personal jurisdiction. 

“‘When determining whether specific jurisdiction exists, courts consider 

the “‘relationship among the defendant, the forum, and the litigation.’” [Citations.] A 
10

court may exercise specific jurisdiction over a nonresident defendant only if: (1) “the 

defendant has purposefully availed himself or herself of forum benefits” [citation]; 

(2) “the ‘controversy is related to or “arises out of” [the] defendant’s contacts with the 

forum’” [citations]; and (3) “‘the assertion of personal jurisdiction would comport with 

“fair play and substantial justice.”’”’” (Snowney, supra, 35 Cal.4th at p. 1062.)

“Where a nonresident defendant challenges jurisdiction by way of a motion 

to quash, the plaintiff bears the burden of establishing by a preponderance of the evidence 

that minimum contacts exist between the defendant and the forum state to justify 

imposition of personal jurisdiction. [Citations.] The plaintiff must present facts 

‘“demonstrating that the conduct of defendants related to the pleaded causes [of action] is 

such as to constitute constitutionally cognizable ‘minimum contacts.’”’” (Elkman v. 

National States Ins. Co. (2009) 173 Cal.App.4th 1305, 1312-1313 (Elkman).) “‘If the 

plaintiff meets this initial burden, then the defendant has the burden of demonstrating 

“that the exercise of jurisdiction would be unreasonable.”’” (Snowney, supra, 35 Cal.4th 

at p. 1062; see Greenwell v. Auto-Owners Ins. Co. (2015) 233 Cal.App.4th 783, 792

(Greenwell).)

“‘On review, 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.] When 

the jurisdictional facts are not in dispute, the question of whether the defendant is subject 

to personal jurisdiction is purely a legal question that we review de novo. [Citation.]’ 

[Citations.] The ultimate issue of whether an exercise of jurisdiction is fair and 

reasonable is a legal determination subject to de novo review on appeal.” (Aquila, Inc. v. 

Superior Court (2007) 148 Cal.App.4th 556, 568 (Aquila).)
11

B. California Lacks Specific Personal Jurisdiction Over Cottonwood

1. The Purposeful Availment Requirement

“‘“The purposeful availment inquiry . . . focuses on the defendant’s 

intentionality. [Citation.] This prong is only satisfied when the defendant purposefully 

and voluntarily directs [its] activities toward the forum so that [it] should expect, by 

virtue of the benefit [it] receives, to be subject to the court’s jurisdiction based on” [its] 

contacts with the forum.’” (Snowney, supra, 35 Cal.4th at pp. 1062-1063.) 

“‘“‘Purposeful availment’ requires that the defendant ‘have performed some type of 

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

forum state.’”’” (Stone v. State of Texas (1999) 76 Cal.App.4th 1043, 1048 (Stone).)

“‘Thus, the “‘purposeful availment’ requirement ensures that a defendant 

will not be haled into a jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or 

‘attenuated’ contacts [citations], or of the ‘unilateral activity of another party or a third 

person.’”’” (Elkman, supra, 173 Cal.App.4th at p. 1317, italics omitted.) “Instead, the 

defendant will only be subject to personal jurisdiction if ‘“it has clear notice that it is 

subject to suit there, and can act to alleviate the risk of burdensome litigation by 

procuring insurance, passing the expected costs on to customers, or, if the risks are too 

great, severing its connection with the state.”’” (Snowney, supra, 35 Cal.4th at p. 1063.)

“‘For purposes of the purposeful availment prong, the “. . . United States 

Supreme Court has described the forum contacts necessary to establish specific 

jurisdiction as involving variously a nonresident who has ‘purposefully directed’ his or 

her activities at forum residents [citation], or who has ‘purposefully derived benefit’ from 

forum activities [citation], or ‘“purposefully avail[ed himself or herself] of the privilege 

of conducting activities within the forum State, thus invoking the benefits and protections 

of its laws,”’” or “‘“deliberately” has engaged in significant activities with a State 

[citation] or has created “continuing obligations” between himself and residents of the 

forum [citation].’” [Citation.] This disjunctive language, along with the Supreme 
12

Court’s rejection of mechanical or “‘talismanic’” formulas [citation], suggests that the 

above formulations describe alternative, but not mutually exclusive, tests for purposeful 

availment.’ [Citation.] Courts must make the necessary assessment ‘on a case-by-case 

basis, focusing on the nature and quality of the defendant’s activities in the state or with 

state residents.’” (Greenwell, supra, 233 Cal.App.4th at pp. 792-793.)

Elkman illustrates that simply having contacts with California or receiving 

some benefits from the state is not enough to establish purposeful availment. The 

nonresident defendant must intentionally and voluntarily establish the requisite contacts 

with California. In Elkman, a nonresident insurer issued a long-term care policy to the 

plaintiff when she lived in Florida. Consistent with Florida law, the policy included a 

guaranteed renewal provision for the life of the plaintiff. A few years later, the plaintiff 

moved to California, and from there she renewed the policy and continued to pay the

premiums. While still in California, the plaintiff made a claim under the policy. The 

insurer paid for six months of care, but refused to pay for any further care based on the 

policy’s terms. When the plaintiff sued in California to challenge the insurer’s policy 

interpretation, the insurer moved to quash service for lack of personal jurisdiction. 

(Elkman, supra, 173 Cal.App.4th at pp. 1309-1310.)

The insurer presented evidence showing it was a Missouri corporation that 

had never been licensed or authorized to do business in California, it maintained no office 

or bank account in California, it had no agents licensed to sell its products in California, 

and it never had advertised, applied for approval to issue insurance, or issued insurance in 

California. In opposition, the plaintiff presented evidence showing the insurer had nearly 

400 insureds who lived in California and the insurer received premiums, processed 

claims, and paid claims from those insured. In reply, the insurer presented evidence 

showing these insureds moved to California after obtaining their policies and the insurer 

did not intentionally direct any activity toward California. (Elkman, supra, 

173 Cal.App.4th at pp. 1310-1312.)
13

The trial court granted the motion to quash service and the Elkman court 

affirmed, explaining “we conclude that [the insurer] did not subject itself to specific 

jurisdiction in California merely by accepting premium payments from California and by 

processing and paying claims submitted by its insureds for services rendered in this state. 

[The insurer] did not ‘come here’ voluntarily, no matter how many insureds did. It was 

the unilateral decisions of [the plaintiff] and other insureds to relocate to California which 

caused [the insurer] to accept payments from this state and to process and pay claims for 

services rendered in this state. These circumstances do not support a finding [the insurer]

purposefully availed itself of forum benefits so as to make it subject to specific 

jurisdiction in California.” (Elkman, supra, 173 Cal.App.4th at p. 1321.)

Edmunds v. Superior Court (1994) 24 Cal.App.4th 221 (Edmunds), 

illustrates that a nonresident’s activities in California and directed toward the state do not 

establish purposeful availment if those activities merely are incidental to pursuit of 

interests or performance under a contract in another state. In Edmunds, a California 

limited partnership hired a Hawaii attorney to represent it when the partnership was sued 

in Hawaii over a lease it held on real property located in Hawaii. During the 

representation, the attorney came to California to represent the partnership at its 

deposition, wrote letters and made phone calls from and to California, and received 

payment for his services from California. When the partnership’s limited partners later 

sued the attorney for malpractice and other claims in California, the attorney moved to 

quash service of process for lack of personal jurisdiction. The trial court denied the 

motion and the attorney filed a writ petition challenging the court’s order. (Id. at 

pp. 225-228.)

The Court of Appeal granted the petition and directed the trial court to 

grant the attorney’s motion because “[e]verything [the attorney] did was done in his 

capacity as a Hawaii attorney, and he thus lacks the necessary close relationship to the 

State of California in these matters to justify the assertion of personal jurisdiction over 
14

him.” (Edmunds, supra, 24 Cal.App.4th at p. 236.) As the Edmunds court explained, the 

attorney was licensed to practice law in Hawaii rather than California, and he represented 

the partnership in Hawaii state court litigation over real property located in Hawaii. “The 

mere fact[] that to do so, he came to California, made phone calls and wrote letters to and 

from this state, and accepted payment from a California client, do not establish 

purposeful availment of the benefits and protections of California law” because the 

actions were taken to further the attorney’s financial interests in his Hawaii law practice 

and the partnership’s financial interests in the Hawaii real property. (Id. at pp. 234, 236.)

2. Cottonwood Did Not Purposefully Avail Itself of Any California Benefits 

Cottonwood contends the trial court erred in denying its motion to quash 

service because Cottonwood did not intentionally engage in any conduct in or directed 

toward California that purposefully availed it of any California benefits. We agree.

Cottonwood is a Delaware limited liability company with its principal place 

of business in Utah. It does not have any offices, employees, agents, bank accounts, or 

assets in California. It is not licensed to do business in California, and although it 

manages property in nearly 20 states, it never has managed property in California. 

Cottonwood never has advertised in California or otherwise directed any advertisements 

toward California residents. 

Cottonwood’s only contacts with California derive from the Subcontract it 

entered into with Daymark, which is a California corporation with its principal office in 

California.5 Entering into a contract with a California resident, however, is not enough 

 

5 Owners point out Cottonwood also entered into more than 20 other 

contracts similar to the Subcontract to manage properties for Daymark in numerous other 

states. None of these contracts called for Cottonwood to manage property in California. 

Moreover, in determining whether minimum contacts exist, it is the nature and quality of 

the contacts that is determinative, not the quantity. (As You Sow v. Crawford 

Laboratories, Inc. (1996) 50 Cal.App.4th 1859, 1869 (As You Sow).) We therefore focus 

on the contacts arising from the Subcontract because Owners contend the contacts arising 

from the other contracts are similar in nature and quality. 
15

for a nonresident defendant to purposefully avail itself of California benefits and be 

subject to specific personal jurisdiction here. (Aquila, supra, 148 Cal.App.4th at p. 572; 

Stone, supra, 76 Cal.App.4th at p. 1048; Burger King Corp. v. Rudzewicz (1985) 

471 U.S. 462, 478-479 (Burger King).) To determine whether a nonresident’s contractual 

relationship with a California resident constitutes purposeful availment, a court must 

evaluate the contract’s terms and all the surrounding circumstances, including prior 

negotiations, contemplated future consequences, the parties’ course of dealings, and the 

contract’s choice-of-law provision. (Stone, at p. 1048; Burger King, at pp. 478-479.) 

“Due process requires a ‘substantial connection’ between the contract at issue and the

forum state.” (Stone, at p. 1049.)

For example, in Floyd J. Harkness Co. v. Amezcua (1976) 60 Cal.App.3d 

687 (Harkness), a Mexican farmer did not purposefully avail himself of California 

benefits by entering into a contract with a California corporation because the totality of 

the circumstances surrounding the contract demonstrated there was no substantial 

connection to California. (Id. at p. 692.) The parties negotiated the contract in Arizona 

and Mexico, the corporation drafted and signed it in California, and the farmer signed it 

in Mexico. Under the contract, the farmer agreed to grow vegetables in Mexico and 

deliver them to the corporation in Arizona, and the corporation agreed to advance the cost 

of growing the vegetables. To secure each advance, the farmer signed promissory notes

in Mexico and delivered them to the corporation’s agent in Arizona. The corporation 

sent the advances from California to the farmer’s bank in Arizona, and the notes were 

payable in California. When the farmer defaulted on the notes, the corporation sued in 

California and the farmer moved to quash service. (Id. at pp. 689-690.)

The trial court granted the motion and the Court of Appeal affirmed, 

explaining “The acts of making notes executed elsewhere by a nonresident defendant 

payable to a California resident in California or the acts of making interstate telephone 

calls relative to the performance of a contract executed outside the state and performed 
16

outside the state do not invoke the benefits and protections of our laws.” (Harkness, 

supra, 60 Cal.App.3d at p. 692.) The court further explained the corporation’s activities 

in California were irrelevant to the question whether California had personal jurisdiction 

over the farmer because “it is settled that we are not concerned with the performance of 

the plaintiff in California but exclusively with the nonresident defendant’s activities in 

this state. It is the latter activities which must provide the basis for jurisdiction.” (Id. at 

pp. 691-692.)6

Here, Cottonwood likewise did not purposefully avail itself of any 

California benefits by negotiating, entering into, or performing the Subcontract because 

there is no substantial connection between the Subcontract and California. Cottonwood 

and Daymark negotiated and entered into the Subcontract in Utah. Owners were not part 

 

6 Owners contend Harkness is distinguishable because the Harkness plaintiff 

sought to establish the defendant’s purposeful availment based on the plaintiff’s rather 

than the defendant’s forum activities. Although the plaintiff may have argued purposeful 

availment based on its forum contacts, the Court of Appeal did not find a lack of 

purposeful availment on that ground. Rather, the Court of Appeal properly considered 

the totality of the circumstances surrounding the parties’ contractual relationship to 

determine whether the defendant had purposefully availed himself of forum benefits. 

Owners’ efforts to distinguish Harkness therefore are unpersuasive.

More importantly, Owners support their argument by citing to a California Court 

of Appeal opinion they acknowledge is unpublished (Bell v. Li-Huang (2010) 2010 WL 

4720402). Acknowledging the opinion’s unpublished status does not make citing it 

permissible. California Rules of Court, rule 8.1115 prohibits citation to a California 

Court of Appeal opinion that was not certified for publication even though the opinion is 

publicly available through online databases. (People v. Williams (2009) 176 Cal.App.4th 

1521, 1529.) We caution counsel that citation to unpublished opinions may support an 

award of sanctions, and counsel should refrain from doing so in the future. (See ibid.; 

Alicia T. v. County of Los Angeles (1990) 222 Cal.App.3d 869, 885.) Indeed, “Counsel 

would be well served to heed this advice by a leading treatise writer: ‘Do not, under any 

circumstances, cite to an unpublished or depublished opinion (or any unpublished part of 

a published opinion) . . . unless . . . one of the narrow exceptions to the noncitation rule 

applies.’” (Williams, at p. 1529, italics omitted.)
17

of those negotiations and they are not parties to the Subcontract.7 Under the Subcontract, 

Cottonwood agreed to manage the Georgia apartments for Daymark on a subcontract 

basis. Cottonwood did not assume any of Daymark’s liabilities under the Management 

Agreement or any contractual obligations to Owners. Indeed, the Subcontract expressly 

states it is not an assignment of the Management Agreement, and Owners are not third 

party beneficiaries and are not entitled to “any benefits, rights, privileges, claims, actions, 

or remedies” under the Subcontract. Cottonwood performed the day-to-day management 

activities for the apartments in Georgia, and it performed various periodic administrative 

activities for the apartments at its offices in Utah. It performed no activities relative to 

the Subcontract in California. 

Under the Subcontract, Cottonwood’s contacts with California were limited 

to sending communications about the apartments to a subset of Owners that had members 

who happened to live in California. The Management Agreement required Daymark to 

periodically provide Owners with information regarding the apartments and their 

operations, including an annual budget, an annual operating plan, all information 

necessary for Owners to prepare their taxes, a report concerning any claims or complaints

for damages, and a quarterly financial report. By entering into the Subcontract, 

Cottonwood agreed to compile this information and communicate it to Owners for 

Daymark. 

Cottonwood did so by compiling the information in Georgia, generating 

budgets, reports, and other documents at its Utah offices, granting Owners access to these 

documents via an online database Cottonwood maintained in Utah, and mailing hard 

copies of the documents from Utah to Owners’ members who requested them. 

Cottonwood also initiated monthly conference calls from Utah to discuss the apartments’ 

 

7

Shortly after entering into the Subcontract with Daymark, Cottonwood 

proposed contracting directly with Owners to manage the apartments, but Owners 

declined.
18

operations, and it sent Owners e-mails about those calls and other operational issues. In 

June 2013, Cottonwood sent each Owner a capital call when the revenue from the 

apartments proved insufficient to cover the operating expenses and service Owners’ debt. 

Although Cottonwood’s communications with Owners about the 

apartments reached California, Cottonwood did not purposefully seek or receive any 

California benefits by engaging in those communications. Indeed, much like the 

insurer’s California connections in Elkman were not purposeful because the insureds who 

lived in California moved here after the insurer issued their policies, Cottonwood’s 

California connections were not purposeful because it contracted in Utah to manage the 

Georgia apartments for Daymark and some members of the Delaware limited liability 

companies that owned the apartments happened to live here. (See Elkman, supra, 

173 Cal.App.4th at p. 1321.) 

Owners’ members also happened to live in 12 other states and each of the 

states where Owners’ members lived lacked any direct or substantial connection to the 

subcontract or Cottonwood’s performance under the Subcontract because none of 

Owners’ member lived in either Georgia or Utah. Cottonwood’s connection to each state 

where Owners’ members lived therefore was entirely random and coincidental. 

Cottonwood did not enter into the Subcontract seeking to establish a connection with any 

of these states.

8

(See Elkman, supra, 173 Cal.App.4th at p. 1317 [random, fortuitous, or 

attenuated forum contacts do not establish purposeful availment].) 

Moreover, the contacts established through Cottonwood’s communications 

with the handful of Owners’ members who lived in California were incidental to the 

Subcontract’s purpose. Daymark did not hire Cottonwood to communicate with Owners’ 

 

8

The presence of more Owners and their members in California than any of 

the other 12 states does not change the analysis. As explained above, the determinative 

factor is the quality and nature of the contacts with the forum, not the number. (As You 

Sow, supra, 50 Cal.App.4th at p. 1869.)
19

members who lived in California; it hired Cottonwood to manage the apartments in 

Georgia and keep Owners informed about their upkeep wherever Owners happened to be. 

California contacts that merely are incidental to a nonresident’s performance of a contract 

outside of California do not establish purposeful availment of California benefits. 

(Edmunds, supra, 24 Cal.App.4th at pp. 234-236 [Hawaii attorney who represented 

California client at deposition in California and sent communications to and from 

California did not purposefully avail himself of California benefits because activities 

were incidental to representing client in Hawaii state court litigation over Hawaii real 

property]; Harkness, supra, 60 Cal.App.3d at p. 692 [communications to California 

regarding contract executed and performed outside California did not establish purposeful 

availment]; see R.E. Sanders & Co. v. Lincoln-Richardson (1980) 108 Cal.App.3d 71, 78 

[mail and telephone communications to California plaintiff about out-of-state investment 

did not constitute purposeful availment].)

Finally, the absence of any intent by Cottonwood to purposefully avail 

itself of California benefits is further demonstrated by the Subcontract’s choice-of-law 

provision and its provision declaring Owners are not third party beneficiaries and have no 

rights, claims, or remedies under the Subcontract. As stated above, a contract’s 

choice-of-law provision is an important consideration in the purposeful availment 

analysis because it shows the nonresident intended to purposefully avail itself of the 

benefits and protections of the designated state’s laws. (Burger King, supra, 471 U.S. at 

p. 482.) Cottonwood and Daymark’s agreement to be bound by Delaware law therefore 

suggests they did not intend for the Subcontract to have a significant connection with 

California.9 (See Aquila, supra, 148 Cal.App.4th at p. 572.) Similarly, by disclaiming 

 

9

It is interesting to note that Owners repeatedly have agreed that Georgia 

law should govern disputes about the apartments and they even agreed to submit to 

personal jurisdiction in Georgia. The documents for Owners’ loan on the apartments 

included a Georgia choice-of-law provision and a submission to personal jurisdiction in 

Georgia for any dispute about the loan. Similarly, although the Management Agreement 
20

any intent to create rights under the Subcontract in Owners, Cottonwood and Daymark

further demonstrated they did not intend Owners or their location to have a role in the 

enforcement of the Subcontract.

3. Owners Failed to Point to Any Aspect of the Subcontract or Cottonwood’s 

Performance That Establishes Purposeful Availment

To meet their burden in opposing the motion to quash, Owners point to 

various provisions in both the Subcontract and the Management Agreement to show 

Cottonwood purposefully availed itself of the benefits of conducting activities in 

California by entering into and performing the Subcontract. Owners, however, 

misconstrue the governing standards and the agreements.

First, Owners contend Cottonwood purposefully availed itself of California 

benefits because it created ongoing relationships and assumed continuing obligations 

with California residents—both Daymark and Owners with members who lived in 

California—simply by entering into the Subcontract. This argument fails for the reasons 

already discussed. A nonresident does not purposefully avail itself of California benefits 

simply by contracting with a California resident (Aquila, supra, 148 Cal.App.4th at 

p. 572), and the totality of the circumstances show Cottonwood did not purposefully avail 

itself of California benefits because the Subcontract was entered into and called for 

performance outside of California with only incidental California connections (Edmunds, 

supra, 24 Cal.App.4th at pp. 234-236; Harkness, supra, 60 Cal.App.3d at p. 692). 

Second, Owners contend Cottonwood purposefully availed itself of 

California benefits by entering into the Subcontract because the agreement required 

Cottonwood to perform at least one obligation in California. Owners point to the 

Management Agreement’s provision requiring Daymark to maintain certain records 

 

states any dispute between Owners and Daymark must be arbitrated in California, the 

Management Agreement also designates Georgia law as the governing law for any 

dispute under the agreement. 
21

regarding Owners’ interests in the apartments and to make those records available to 

Owners at Daymark’s office in California. According to Owners, Cottonwood assumed 

this obligation to maintain records in California by entering into the Subcontract and 

agreeing to perform all of Daymark’s obligations under the Management Agreement. 

Not so. 

The Subcontract states Cottonwood agreed to perform Daymark’s 

obligations under the Management Agreement “except . . . as such terms, covenants, 

agreements and provisions are specifically modified, excluded or limited by this 

Subcontract.” Elsewhere, the Subcontract states Daymark “will provide all information, 

books and records for the [apartments] (and for [Owners], to the extent in [Daymark’s] 

possession) to [Cottonwood]. All files [then] shall be kept at the [apartments] or at 

[Cottonwood’s] offices and will be available to [Daymark] and [Owners].” Cottonwood 

therefore never agreed to maintain any records in California and Daymark’s obligation to 

do so does not establish Cottonwood purposefully availed itself of any California 

benefits. 

Next, Owners point to the arbitration provision in the Management 

Agreement as evidence Cottonwood purposefully availed itself of the benefits and 

protections of California law. That provision states Daymark and Owners agreed to 

submit any dispute relating to the Management Agreement to binding arbitration in 

Orange County, California. Based on that provision and the Subcontract’s provision 

stating Cottonwood agreed to be bound by Daymark’s agreements in the Management 

Agreement, Owners argue Cottonwood “agreed to litigate any . . . disputes [regarding the 

Apartment’s management] within Orange County, California, thereby invoking the 

benefits and protections of California law.” In making this argument, Owners do not 

contend the Management Agreement’s arbitration provision is enforceable against 

Cottonwood; rather, they simply argue it is evidence of Cottonwood invoking the benefits 

and protections of California law when read with select provisions of the Subcontract. 
22

We are not persuaded because this contention ignores other provisions defining the 

limited scope of what Cottonwood agreed to do by entering into the Subcontract. 

The Management Agreement authorized Daymark “to subcontract some or 

all of the property management functions described herein.” Consistent with that 

provision, the Subcontract states Cottonwood “agrees to perform all of [Daymark’s] 

property management obligations under the Management Agreement . . . on a subcontract 

basis,” and “this Subcontract does not constitute an assignment of the Management 

Agreement.” Owners are not parties to the Subcontract, and it expressly states they are 

not third party beneficiaries and have no “rights, privileges, claims, actions, or remedies” 

under the Subcontract. The Subcontract does not include an arbitration provision nor 

does it have a forum selection clause designating Orange County or any other forum. 

Accordingly, when the two agreements are read together and in their entirety, they show 

Cottonwood did not agree to litigate any claims in California by entering into the 

Subcontract, even if the Management Agreement required Daymark to do so.

Owners also cite the Subcontract’s indemnity provision as evidence 

Cottonwood purposefully availed itself of California benefits. In the Subcontract, 

Cottonwood agreed to defend and indemnify Daymark from any claims or liabilities 

based on Cottonwood’s breach of the Subcontract, and Daymark agreed to defend and 

indemnify Cottonwood from any claims or liability based on Daymark’s breach of the 

Management Agreement or the Subcontract. According to Owners, any indemnity claims 

against Cottonwood likely would arise out of litigation commenced in California because 

Daymark is a California corporation, several of Owners’ members reside in California, 

and the consultant Owners hired to advise them about the apartments resides in 

California. Similarly, Owners contend any indemnity claim by Cottonwood against 

Daymark likely would be asserted in California because Daymark is a California 

corporation. Owners therefore conclude Cottonwood purposefully availed itself of 
23

California benefits because it is foreseeable any indemnity claims under the Subcontract 

would arise in California. We disagree.

Owners’ speculation about where indemnity claims under the Subcontract 

might arise—or even where they might be filed—does not establish personal jurisdiction 

over Cottonwood. “‘Liability and jurisdiction are independent.’ [Citation.] ‘Liability 

depends on the relationship between the plaintiff and the defendants and between the 

individual defendants; jurisdiction depends only upon each defendant’s relationship with 

the forum.’” (Goehring v. Superior Court (1998) 62 Cal.App.4th 894, 904-905 

(Goehring).) “Personal jurisdiction must be based on forum-related acts that were 

personally committed by each nonresident defendant.” (In re Automobile Antitrust 

Cases I & II (2005) 135 Cal.App.4th 100, 113.) “The purposes and acts of one party . . . 

cannot be imputed to a third party to establish jurisdiction over the third party defendant” 

(ibid.), not even when the parties are partners (Goehring, at pp. 904-905), coconspirators 

(Automobile Antitrust Cases, at p. 113), or parent and wholly owned subsidiary 

corporations (Aquila, supra, 148 Cal.App.4th at p. 571).

As explained above, Cottonwood has not committed any forum-related acts 

that would subject it to personal jurisdiction in California. The Subcontract was 

negotiated and entered into in Utah and called for Cottonwood’s performance in Georgia 

and Utah. Any claims against Daymark based on Cottonwood’s performance therefore 

would be based on Cottonwood’s acts or omissions in Georgia or Utah and would not 

subject Cottonwood to personal jurisdiction in California even if Daymark sought 

indemnity from Cottonwood in California. Similarly, Daymark’s status as a California 

corporation does not mean Cottonwood must seek indemnity from Daymark in 

California, and Daymark’s California connections cannot be attributed to Cottonwood. 

Owners fail to identify any act by Cottonwood relating to the indemnity provision in the 

Subcontract that would subject Cottonwood to personal jurisdiction in California.
24

Next, Owners contend Cottonwood purposefully availed itself of the 

benefits and protections of California law by filing a UCC Financing Statement with the 

California Secretary of State to perfect the security interest the Subcontract granted 

Cottonwood in Daymark’s right to payment under the Management Agreement. Owners 

are mistaken. A nonresident’s use of a California procedure to protect its security interest 

under a contract entered into and requiring performance in another state does not amount 

to purposeful availment of California benefits. Indeed, several courts have rejected this 

same contention because “‘[t]he filing of financing statements is not akin to soliciting 

business in the forum, introducing products into the forum, or signing and performing a 

contract within the forum.’” (Goehring, supra, 62 Cal.App.4th at p. 908.)

Finally, Owners contend that if these California connections individually 

are not sufficient to establish purposeful availment, they are sufficient when they are 

considered collectively. Again, we disagree. None of the individual contacts Owners 

rely on establish any connections with California. It therefore follows logically that no 

California connection is shown when those factors are considered as a whole.

Because we conclude Owners failed to meet their burden to establish 

purpose availment, “it is unnecessary to address the other prerequisites for the exercise of 

specific jurisdiction over a nonresident defendant, i.e., whether the controversy is related 

to or arises out of the defendant’s contacts with the forum, and whether the assertion of 

personal jurisdiction would comport with fair play and substantial justice.” (Elkman, 

supra, 173 Cal.App.4th at p. 1321; see Jewish Defense Organization, Inc. v. Superior 

Court (1999) 72 Cal.App.4th 1045, 1062.)

DISPOSITION

The petition for writ of mandate is granted. Let a peremptory writ of 

mandate issue directing the respondent court to vacate its order denying Cottonwood’s 
25

motion to quash service of process and enter a new order granting the motion. 

Cottonwood shall recover its costs for the proceedings in this court.

ARONSON, J.

WE CONCUR:

O’LEARY, P. J.

THOMPSON, J.