Waziri v. Waziri

Filing 24

ORDER by Magistrate Judge Jacqueline Scott Corley granting 11 Motion to Dismiss (ahm, COURT STAFF) (Filed on 1/22/2016)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 SULTAN WAZIRI, Plaintiff, 8 9 10 United States District Court Northern District of California 11 Case No. 15-cv-04822-JSC ORDER GRANTING DEFENDANT'S MOTION TO DISMISS v. FARID WAZIRI, Re: Dkt. No. 11 Defendant. 12 13 In this civil action, Plaintiff alleges that Defendant knowingly misrepresented information 14 regarding a purchase agreement of a restaurant located in Canada. Now pending before the Court 15 is Defendant’s Motion to Dismiss under Rule 12(b)(2) for lack of personal jurisdiction. (Dkt. No. 16 11.) Plaintiff opposes the motion arguing that Defendant waived his right to challenge the Court’s 17 exercise of personal jurisdiction by filing a Motion to Determine Whether Cases Should be Joined. 18 (Dkt. No. 17.) After carefully considering the papers filed by the parties, the Court concludes that 19 oral argument is unnecessary, see N.D. Civ. L.R. 7-1(b), and GRANTS Defendant’s Motion to 20 Dismiss for lack of personal jurisdiction. Plaintiff’s waiver argument is unavailing, and he has 21 otherwise wholly failed to establish personal jurisdiction over Defendant. 22 BACKGROUND 23 Plaintiff Sultan Waziri (“Plaintiff”) is a United States citizen residing in the state of 24 California. (Complaint ¶ 1.) Defendant Farid Waziri (“Defendant”) is a citizen of Toronto, 25 Ontario, Canada. (Complaint ¶ 2.) In January 2004, Plaintiff visited Defendant in Canada. 26 (Complaint ¶ 5.) During the visit, Plaintiff and Defendant entered into a purchase agreement and 27 purchased a restaurant located in Canada. (Complaint ¶¶ 7-13.) Plaintiff borrowed capital to 28 purchase the restaurant, and he understood the purchase agreement to entitle him to a fifty percent 1 share of the restaurant. (Complaint ¶¶ 10-13.) For six months, Plaintiff remained in Canada and 2 assisted Defendant in establishing the restaurant’s operation. (Complaint ¶ 14.) Plaintiff alleges 3 that since he left the restaurant in 2004, he has demanded payments from the restaurant’s proceeds 4 and copies of business records, but has received neither. (Complaint ¶ 16.) Plaintiff further 5 alleges that Defendant knowingly misrepresented information to Plaintiff regarding establishing a 6 trust as the ownership vehicle of the restaurant, with Plaintiff and Defendant as equal co-trustees 7 and beneficiaries of the trust, which was a decoy that would ultimately allow Defendant to 8 exclusively own the restaurant. (Complaint ¶ 18.) Plaintiff filed this diversity action for breach of contract, conversion, and unjust 10 enrichment in this Court. (Complaint ¶¶ 21-34.) A month earlier, Plaintiff had filed a separate 11 United States District Court Northern District of California 9 action against Laila Waziri, Defendant’s wife, for breach of contract, securities fraud, and unjust 12 enrichment, also in the Northern District of California. (Waziri v. Waziri, No. 4:15-cv-04369- 13 KAW, Dkt. No.1.) The allegations in this other action stem from the same period of time as this 14 action, but are based on a different transaction involving real property. (Id. at ¶¶ 5-10.) A week 15 after this action was filed, Defendant in this action and his wife (the defendant in the other action) 16 filed an administrative motion to consider whether the two cases should be related. (Id. at Dkt. 17 No. 6.) The court in 15-04369, the lower-numbered case, denied the motion to relate. (Id. at Dkt. 18 No. 19.) Defendant subsequently filed the underlying motion to dismiss for lack of personal 19 20 jurisdiction on November 27, 2015.1 (Dkt. No. 11.) LEGAL STANDARD 21 Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a defendant may move to 22 23 dismiss a claim for lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). The plaintiff bears the 24 burden of demonstrating that the court has jurisdiction over the defendant. Schwarzenegger v. 25 Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). “Where, as here, a motion to dismiss 26 27 28 1 There is also a motion to dismiss for lack of personal jurisdiction pending in Judge Westmore’s case which is set for argument February 4, 2016. See Waziri v. Waziri, No. 4:15-cv-04369-KAW, Dkt. No. 16. 2 1 is based on written materials rather than an evidentiary hearing, the plaintiff need only make a 2 prima facie showing of jurisdictional facts.” Love v. Associated Newspapers, Ltd., 611 F.3d 601, 3 608 (9th Cir. 2010). To make a prima facie showing, “the plaintiff need only demonstrate facts 4 that if true would support jurisdiction over the defendant.” Ballard v. Savage, 65 F.3d 1495, 1498 5 (9th Cir. 1995). “Uncontroverted allegations in the complaint must be taken as true, and conflicts 6 over statements contained in affidavits must be resolved in [plaintiff’s] favor.” Love, 611 F.3d at 7 608. 8 DISCUSSION 9 Defendant contends first, that he has no presence nor dealings in California; second, that he did not direct any activity toward California; and third, that he has insufficient contacts with the 11 United States District Court Northern District of California 10 state to support the Court’s exercise of personal jurisdiction. In opposition, Plaintiff only argues 12 that Defendant waived his right to challenge the Court’s exercise of personal jurisdiction by filing 13 a Motion to Determine Whether Cases Should be Joined. 14 15 A. Waiver Under Rule 12(h)(1) of the Federal Rules of Civil Procedure, a defendant waives any 16 personal jurisdiction objection by not raising it in a responsive pleading or in a motion to dismiss 17 that precedes the pleading. See Fed. R. Civ. P. 12(h)(1) (“A party waives any defense listed in 18 Rule 12(b)(2)-(5) by: (A) omitting it from a motion in the circumstances described in Rule 19 12(g)(2); or (B) failing to either: (i) make it by motion under this rule; or (ii) include it in a 20 responsive pleading or in an amendment allowed by Rule 15(a)(1) as a matter of course.”). Rule 21 12(h)(1), however, “specifies [only] the minimum steps that a party must take in order to preserve 22 a defense.” See Peterson v. Highland Music, Inc., 140 F.3d 1313, 1318 (9th Cir. 1998). Thus, “a 23 party’s failure to satisfy those minimum steps does not constitute the only circumstance under 24 which the party will be deemed to have waived” a personal jurisdiction defense. Id. For example, 25 a defendant waives a personal jurisdiction defense by engaging in “sandbagging,” e.g., raising a 26 personal jurisdiction defense “on a motion to dismiss, deliberately refraining from pursuing it any 27 further when [the] motion is denied in the hopes of receiving a favorable disposition on the merits, 28 and then raising the issue again on appeal only if [defendant] were unhappy with the district 3 1 2 court’s ultimate decision.” Id. As an initial matter, Plaintiff mischaracterizes Defendant’s motion. Defendant filed an 3 Administrative Motion to Consider Whether Cases Should be Related, not a Motion to Determine 4 Whether Cases Should be Joined. Under Rule 3-12(b) of the Civil Local Rules, “[w]henever a 5 party knows or learns that an action” in this District is related to another “action which is or was 6 pending in this District . . . the party must promptly file . . . an Administrative Motion to Consider 7 Whether the Cases Should be Related.” See N.D. Civ. L.R. 3-12(b) (emphasis added). Defendant 8 and his wife, the defendant in the other action, contended that the two cases pending against them 9 concerned the same parties, events, and property, and that failing to relate the cases would result in unduly burdensome duplication of labor and expenses for the Court. (See Waziri v. Waziri, No. 11 United States District Court Northern District of California 10 4:15-cv-04369-KAW, Dkt. No. 6 at 2.) Such a motion is not a waiver under Rule 12(h)(1) 12 because it was not a responsive pleading. See Morrison v. Mahoney, 399 F.3d 1042, 1046 (9th 13 Cir. 2005) (defining “pleadings” pursuant to the Federal Rules of Civil Procedure as “a complaint 14 and answer; a reply to a counterclaim; an answer to a cross-claim; and a third party complaint and 15 answer” and noting that “[a]nything else is a motion or paper”); see also Freeney v. Bank of Am. 16 Corp., 2015 WL 4366439, at *20 (C.D. Cal. July 16, 2015) (rejecting a similar waiver argument 17 concluding that “filing a notice of related case . . . was required under the Local Rules . . . and 18 does not evidence an effort to secure affirmative relief from the court”); Benny v. Pipes, 799 F.2d 19 489, 493 (9th Cir. 1986) (defendant did not waive personal jurisdiction challenge by filing three 20 stipulations to extend time); Coe v. Philips Oral Healthcare Inc., No. C13–518–MJP, 2014 WL 21 585858, *2 (W.D. Wash. Feb. 14, 2014) (holding that defendant’s entry of a notice of appearance 22 before filing a motion to dismiss did not constitute a waiver of personal jurisdiction objections); 23 Martin v. United States, No. CV 13–03130, 2014 WL 3493233, *3 (C.D. Ill. July 14, 2014) (filing 24 a notice of appearance and motion for extension of time to answer did not constitute a waiver if 25 the defense was preserved in the first responsive pleading or pre-pleading motion). Moreover, 26 because Defendant has not filed any pleadings in this action, this Motion to Dismiss precedes all 27 of Defendant’s pleadings. Thus, Defendant’s administrative motion does not constitute a waiver 28 under Rule 12(h)(1). 4 1 Further, Plaintiff does not and cannot argue that Defendant engaged in “sandbagging” or 2 any other conduct that amounts to a waiver of Defendant’s objection to personal jurisdiction. 3 Instead, Defendant merely filed the administrative motion to comply with his mandatory 4 obligation under the Civil Local Rules. Therefore, Defendant did not waive his right to challenge 5 personal jurisdiction. B. Personal Jurisdiction 6 7 Personal jurisdiction over a nonresident defendant is proper when the state’s long-arm 8 statute permits it, and if the exercise of personal jurisdiction does not violate federal due process. 9 Fireman’s Fund Ins. Co. v. Nat’l Bank of Cooperatives, 103 F.3d 888, 893 (9th Cir. 1996). California’s long-arm jurisdictional statute is coextensive with federal due process requirements; 11 United States District Court Northern District of California 10 accordingly, “the jurisdictional analyses under state law and federal due process are the same.” 12 Schwarzenegger, 374 F.3d at 800-01. To satisfy due process, a defendant must have sufficient 13 “minimum contacts” with the forum state that “maintenance of the suit does not offend traditional 14 notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 15 (1945). The two recognized bases for exercising personal jurisdiction over a nonresident 16 defendant are “general jurisdiction” and “specific jurisdiction.” Doe v. Am. Nat. Red Cross, 112 17 F.3d 1048, 1050 (9th Cir. 1997). 18 Plaintiff bears the burden of demonstrating that the court has jurisdiction over the 19 defendant; here, however, Plaintiff has made no attempt to establish personal jurisdiction because 20 his opposition was predicated entirely on his waiver argument. Given that it is Plaintiff’s burden 21 to establish jurisdiction, Plaintiff’s failure to address the issue means Plaintiff has not met his 22 burden and the motion to dismiss must be granted. The Court’s review of record, in any event, 23 confirms that personal jurisdiction is lacking. 24 1. General Jurisdiction 25 General jurisdiction over a nonresident defendant exists when the defendant engages in 26 “continuous and systematic general business contacts” that “approximate physical presence in the 27 forum state.” Schwarzenegger, 374 F.3d at 801 (internal citations and quotation marks omitted). 28 Here, nowhere does the Plaintiff allege that Defendant has had any contact with the state of 5 1 California, let alone “continuous and systematic general business contacts.” According to the 2 Complaint, the restaurant at issue is located in Canada, the parties entered into the alleged 3 breached contract in Canada, and Defendant is a Canadian citizen. (Complaint ¶¶ 2, 7, 10.) There 4 is no allegation that Defendant had any contact whatsoever with California prior to this suit. 5 Therefore, the Court does not have general jurisdiction over Defendant. 6 2. Specific Jurisdiction 7 Specific jurisdiction exists if three prongs are satisfied: “(1) [t]he non-resident defendant 8 must purposefully direct his activities or consummate some transaction with the forum or resident 9 thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) 11 United States District Court Northern District of California 10 the claim must be one which arises out of or relates to the defendant’s forum-related activities; and 12 (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be 13 reasonable.” Schwarzenegger, 374 F.3d at 802. The plaintiff has the burden of proving the first 14 two prongs. Id. If plaintiff does so, the defendant must demonstrate that the court’s exercise of 15 personal jurisdiction would be unreasonable. Id. 16 a) Purposeful Availment 17 Under this prong, the court engages in “purposeful availment” analysis for contract cases 18 and “purposeful direction” analysis for tort cases. Id. In purposeful availment, a “showing that a 19 defendant purposefully availed himself of the privilege of doing business in a forum state typically 20 consists of evidence of the defendant’s actions in the forum, such as executing or performing a 21 contract there.” Id. (internal citations and quotation marks omitted). By doing so, “a defendant 22 purposefully avails itself of the privilege of conducting activities within the forum State, thus 23 invoking the benefits and protections of its laws. In return for these benefits and protections, a 24 defendant must—as a quid pro quo—submit to the burdens of litigation in that forum.” Id. 25 (internal citations and quotation marks omitted). 26 As this is an action for breach of contract, the purposeful availment test applies. Plaintiff 27 has not satisfied this test because he fails to allege that Defendant availed himself of the privileges 28 of conducting activities within California. The alleged breached contract was executed in Canada, 6 1 not in California, and the Plaintiff fails to otherwise demonstrate that Defendant invoked any 2 benefits or protections of California laws. Plaintiff has thus failed to meet the first prong of 3 specific jurisdiction. 4 b) Claim Arises out of or Relates to Defendant’s Forum-Related Activities 5 This prong is essentially a “but-for” test that requires the “contacts constituting purposeful 6 availment . . . be the ones that give rise to the current suit.” Bancroft & Masters, Inc. v. Augusta 7 Nat. Inc., 223 F.3d 1082, 1088 (9th Cir. 2000). As discussed in the first prong of specific 8 jurisdiction, Plaintiff fails to allege that Defendant has had any contacts with the state of 9 California, and thus Defendant has had no forum-related activities. Therefore, Plaintiff fails to 10 meet the second prong of specific jurisdiction. United States District Court Northern District of California 11 c) Reasonableness 12 Because Plaintiff fails to meet the first two prongs of specific jurisdiction, the Court need 13 not determine whether the exercise of personal jurisdiction over Defendant would be reasonable. 14 See Schwarzenegger, 374 F.3d at 802 (“If the plaintiff fails to satisfy either of [the first two] 15 prongs, personal jurisdiction is not established in the forum state.”). 16 In sum, Plaintiff has failed to make a prima facie showing that the Court has personal 17 jurisdiction over Defendant predicated on either general or specific jurisdiction. Nowhere does 18 Plaintiff allege that Defendant has had any contact with the state of California. The Court thus 19 lacks personal jurisdiction over Defendant, and Defendant did not waive his objection to personal 20 jurisdiction by filing the related case motion. CONCLUSION 21 22 23 24 25 For the reasons stated above, the Court GRANTS Defendant’s Motion to Dismiss for lack of personal jurisdiction. IT IS SO ORDERED. Dated: January 22, 2016 26 27 JACQUELINE SCOTT CORLEY United States Magistrate Judge 28 7

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