Frungillo v Imperia Entertainment

Filing 30

ORDER denying 24 Motion to Dismiss for Lack of Jurisdiction signed by Judge Kimberly J. Mueller on 2/10/15. (Kaminski, H)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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MICHAEL FRUNGILLO,

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Plaintiff,

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No. 2:14–mc–00047–KJM–CKD

v.

ORDER

IMPERIA ENTERTAINMENT, INC.
(now VIRATECH CORP., a Nevada
Corporation), et al.,

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Defendants.

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This matter is before the court on the motion by defendant Viratech Corp.,

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formerly known as Imperia Entertainment, Inc. (defendant) to dismiss the case for lack of

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personal jurisdiction. (ECF No. 24.) Plaintiff Michael Frungillo (plaintiff) opposes the motion.

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(ECF No. 27.) The motion was submitted without argument, and the court now DENIES it.

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I.

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BACKGROUND
In early 2007, defendant Imperia solicited plaintiff to provide a $250,000 loan to

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facilitate financing of defendant’s full-length feature film titled “Never Submit.” (Minguet Decl.

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Ex. A, Pl.’s Second Am. Compl. ¶¶ 15, 19, ECF No. 27-1.) Plaintiff was a resident of New

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Jersey and negotiated the terms of a loan agreement with defendant Imperia’s then-CEO Kenneth

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Eade. (Frungillo Decl. ¶¶ 1–2, ECF No. 28.) The loan agreement was sent to plaintiff in

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New Jersey, where he signed it and wired money from his New Jersey bank account to defendant
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in California. (Id. ¶ 3.) The loan agreement provided that defendant Imperia would repay

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plaintiff the $250,000 loaned, plus $25,000 interest, by May 18, 2007. (Id. Ex. A at 1.) To date,

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defendant has not repaid any of the loan. (Id. ¶ 3.)

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Plaintiff subsequently filed a civil action in the United States District Court for the

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District of New Jersey against defendant, alleging breach of contract and other related claims

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arising out of defendant’s failure to repay the loan. (Pl.’s Second Am. Compl., ECF No. 27-1.)

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Despite being personally served, defendant did not respond, and the New Jersey District Court

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entered a default judgment against defendant in the amount of $381,442.88. (Id. Ex. B.) The

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default judgment included the $250,000 principal on the loan, $25,000 interest pursuant to the

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loan agreement, $63,589.04 in pre-judgment interest, and $42,853.84 in attorneys’ fees and

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expenses. (Id.) The New Jersey District Court amended the judgment in November 2012 to

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include defendant Viratech as a judgment debtor. (Id. Ex. D.) The modification reflected

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defendant Imperia’s name change from Imperia to Viratech in its Articles of Incorporation filed

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with the Nevada Secretary of State. (Id.)

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On April 7, 2014, plaintiff registered his judgment against defendant in this court.

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(ECF No. 1.) By the instant motion, defendant now collaterally attacks the judgment by the

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instant motion. (ECF No. 24.) Plaintiff opposes the motion (ECF No. 27), and defendant has not

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replied.

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II.

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LEGAL STANDARD
Under Federal Rule of Civil Procedure 60(b)(4), the court “may relieve a party or

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its legal representative from a final judgment, order, or proceeding . . . if the judgment is void.”

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As the Supreme Court has stated, “[a] defendant is always free to ignore the judicial proceedings,

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risk a default judgment, and then challenge that judgment on jurisdictional grounds in a collateral

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proceeding.” Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 706,

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(1982). It is settled that a court of registration has jurisdiction to entertain motions challenging

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the underlying judgment. See F.D.I.C. v. Aaronian, 93 F.3d 636, 639 (9th Cir. 1996). Where the

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district court issuing the underlying judgment lacked personal jurisdiction over the defendant, the

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default judgment is void and must be vacated. Walker & Zanger (W. Coast) Ltd. v. Stone Design
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S.A., 4 F. Supp. 2d 931, 934 (C.D. Cal. 1997), aff’d, 142 F.3d 447 (9th Cir. 1998). No time limit

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applies to bringing a motion to vacate a judgment as void. Id.

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III.

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DISCUSSION
The parties dispute whether defendant had sufficient contacts with New Jersey to

allow the New Jersey District Court to exercise jurisdiction over defendant. (ECF Nos. 24 & 27.)
Federal Rule of Civil Procedure 4(k)(1)(A) provides that federal district courts

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have personal jurisdiction over non-resident defendants “who [are] subject to the jurisdiction of a

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court of general jurisdiction in the state where the district court is located.” Federal courts follow

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state law in determining the bounds of their jurisdiction over persons. Daimler AG v. Bauman,

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___ U.S. ___, 134 S. Ct. 746, 753 (2014). Accordingly, the court looks to New Jersey state law

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to determine the jurisdiction of the federal district court in New Jersey. New Jersey Court Rule

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4:4–4 sets out the state’s long-arm statute, and New Jersey courts have held the state’s long-arm

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statue reaches “to the uttermost limits permitted by the United States Constitution.” Charles

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Gendler & Co. v. Telecom Equip. Corp., 102 N.J. 460, 469 (1986). Thus, the question of due

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process under the U.S. Constitution parallels the analysis of personal jurisdiction in New Jersey.

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Federal due process requires some “minimum contacts” between the defendant and

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the relevant forum such that the court’s exercise of personal jurisdiction “does not offend

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traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S.

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310, 316 (1945). The nature of a defendant’s contacts must be such as to provide a defendant

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with fair warning that it could be “haled into court in the forum state.” World-Wide Volkswagen

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Corp. v. Woodson, 444 U.S. 286, 297 (1980). The court may exercise either general or specific

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personal jurisdiction over a non-resident defendant. See Helicopteros Nacionales de Colombia

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S.A. v. Hall, 466 U.S. 408, 414 (1984). In the instant case, the parties agree that general

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jurisdiction is inapplicable because defendant is not a resident of and does not have a principal

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place of business in New Jersey. (See ECF Nos. 24 & 27.)

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Specific jurisdiction is more limited and allows jurisdiction based only on matters

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related to the defendant’s contacts with the forum state. See Menken v. Emm, 503 F.3d 1050,

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1057 (9th Cir. 2007). Specific jurisdiction considers whether “defendant has purposefully
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directed his activities at residents of the forum, and the litigation results from alleged injuries that

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arise out of or relate to those activities.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472

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(1985) (internal quotations and citations omitted). Courts must examine the relationship among

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the defendant, the forum and the cause of action to determine whether the defendant had “fair

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warning” that it could be brought to suit there. Shaffer v. Heitner, 433 U.S. 186, 204 (1977).

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“The defendant need not have entered the forum state when it conducted these activities, but its

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forum-related conduct must form the basis of the alleged injuries and resulting litigation.”

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Osteotech, Inc. v. GenSci Regeneration Sciences, 6 F. Supp. 2d 349, 354 (D.N.J. 1998) (citing

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Helicopteros, 466 U.S. at 408). Plaintiff has the burden of establishing personal jurisdiction but

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need only do so “with reasonable particularity.” Mellon Bank (East) PSFS Nat. Ass’n v. Farino,

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960 F.2d 1217, 1223 (3d Cir. 1992).

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Here, because defendant took affirmative steps to reach out to plaintiff in New

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Jersey and solicit funds from New Jersey, the court finds the New Jersey District Court properly

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exercised personal jurisdiction over defendant. Specifically, plaintiff’s complaint details how

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defendant reached out to plaintiff in New Jersey and solicited money from plaintiff to finance a

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film. (Pl.’s Second Am. Compl. ¶ 15, ECF No. 27-1.) Plaintiff, a New Jersey resident, signed a

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contract with defendant to loan defendant money for defendant’s film and personally visited his

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bank in New Jersey to transfer the money to defendant. (Id. ¶¶ 17, 24.) When the initial wire

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transfer was unsuccessful, plaintiff received further instructions from defendant and wired the

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money telephonically from his New Jersey bank account. (Id. ¶¶ 25–28.) These actions

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collectively demonstrate that defendant “purposefully directed” its activities to plaintiff in

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New Jersey. See Burger King Corp., 471 U.S. at 472. The underlying lawsuit relates to the

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contract and funds solicited by defendant from plaintiff in New Jersey. Therefore, defendant had

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the requisite “fair warning” that it could be brought before a court in New Jersey in a lawsuit

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related to the agreement. Exercising jurisdiction over defendant “does not offend traditional

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notions of fair play and substantial justice.” Int’l Shoe, 326 U.S. at 316.

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Kevin Buckman, Viratech’s current CEO, asserts he is not aware of Viratech’s
having conducted any business in New Jersey. (Buckman Decl. ¶¶ 4–15, ECF No. 24-2.) But his
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knowledge is inconsequential here. Viratech’s predecessor in interest, Imperia, through its

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agents, reached out to New Jersey and signed a financing contract with a New Jersey resident to

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acquire money from a New Jersey bank. Buckman’s lack of knowledge of this activity in 2007,

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while Viratech was named Imperia, does not alter the court’s analysis.

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In addition, the court is unpersuaded by defendant’s citation to the recent Supreme

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Court decision in Walden v. Fiore, ___ U.S. ___, 134 S. Ct. 1115 (2014). In Walden, the

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plaintiffs were residents of Nevada and sought to have Nevada exercise personal jurisdiction over

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a police officer that had searched plaintiffs’ luggage at an airport in Georgia. Id. at 1119. The

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officer searched the luggage in Georgia and forwarded an affidavit to a United States Attorney’s

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Office in Georgia. Id. at 1119–20. Even though the officer may have directed his conduct at

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individuals he knew had Nevada connections and seized cash that originated and was later

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returned to Nevada, the officer never purposefully availed himself of that jurisdiction. Id. at

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1124–26. Walden stands for the proposition that mere injury in the forum state is not a sufficient

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connection to establish minimum contacts. Id. at 1125.

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In contrast, here, as explained above, there is more than mere injury to a

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New Jersey resident: Defendant Imperia affirmatively reached out to New Jersey to acquire

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money and negotiated a contract with plaintiff while plaintiff was in New Jersey.

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Plaintiff’s comparison to a New Jersey case, Halak v. Scovil, 296 N.J. Super. 363,

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370 (App. Div. 1997), is much more apt. In Halak, the New Jersey plaintiff entered into a

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contract with a Maryland charter boat company. Id. at 366. The Maryland company negotiated

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the contract over the phone with a New Jersey resident, sent the contract to New Jersey where the

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plaintiff signed it, and the money was transferred from a New Jersey bank. Id. at 369. There

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were also additional contacts where the charter boat company obtained an arrest warrant against

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plaintiff and informed other boat companies in Maryland about the warrant. Id. The court held

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that because defendant’s purposeful conduct arose out of a business relationship and not the

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unilateral activities of the plaintiff, the defendant “should reasonably anticipate being sued in

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New Jersey.” Id. at 370 (citing World–Wide Volkswagen, 444 U.S. at 297–98).

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Here, plaintiff’s case for minimum contacts is even stronger than the plaintiff’s in

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Halak because not only is there a business relationship with a New Jersey resident, but defendant

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actually visited plaintiff in New Jersey to negotiate the terms of the loan. Plaintiff’s complaint

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explicitly states that defendant made misrepresentations to plaintiff about the loan agreement “in

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the State [of] New Jersey.” (Pl.’s Second Am. Compl. ¶ 91, ECF No. 27-1.) As a result,

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defendant’s minimum contacts are significant enough for defendant to have reasonably

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anticipated defending a lawsuit over the contract in New Jersey.

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IV.

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CONCLUSION
For the foregoing reasons, defendant’s motion to dismiss is DENIED.
IT IS SO ORDERED.

DATED: February 10, 2015.

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UNITED STATES DISTRICT JUDGE

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