BEDSWORTH, ACTING P. J.
Beverly Rice, the former president of defendant United Families International (UFI), an Arizona corporation, appeals from an order quashing service of her complaint on UFI. Rice's suit sought damages based on theories of breach of contract and promissory estoppel, alleging that UFI had breached a promise to reimburse her for expenses incurred during her tenure as its president. UFI responded by asserting that it lacked sufficient contacts with California to support the assertion of jurisdiction against it, either generally or in connection with this specific dispute.
Although the trial court ultimately agreed with UFI, we cannot. Even assuming, as we must, that all disputed factual issues were resolved in favor of UFI, the remaining facts, including those asserted by UFI itself, demonstrate that during the period in which Rice's cause of action arose, it: (1) operated, controlled and wholly funded a California chapter, which by UFI's own description, was not a separate entity, but instead merely an appendage to a greater whole; (2) it conducted limited activities in California in support of its narrow agenda in California; (3) it appointed Rice, a southern Californian, to act as its president, knowing that she intended to remain in California during her tenure and carry out her duties from here; and (4) moved its financial operations to California.
Moreover, none of the actions Rice took to establish UFI operations in California — including both opening bank accounts and obtaining a P.O. box for UFI in California — qualified as her unilateral acts, in the sense that they were done without UFI's concurrence. Instead, they must be viewed as the acts of UFI itself. Taken together with UFI's operation of a chapter within California, these actions constituted a sufficient basis for the assertion of California jurisdiction over it during this period.
But even if there were not a sufficient basis for determining that California could exercise general jurisdiction over UFI for the period in which Rice's cause of action arose, we would have no trouble concluding that its exercise of specific jurisdiction over this particular claim is appropriate. Specific jurisdiction is appropriate in cases where the defendant has purposefully availed itself of forum benefits, as UFI did by naming a California resident to act as its president and allowing her to fulfill that role while remaining in California; the controversy is related to or arises out of UFI's contacts with the forum; and the assertion of personal jurisdiction would comply with fair play and substantial justice. In this case, Rice herself was arguably UFI's most significant "contact" with California, this claim indisputably arises out of or relates to her rights and responsibilities as UFI's president, and it is no more "unfair" for UFI to litigate the claim in California than it would be to require Rice to litigate it in Arizona. To the contrary, since UFI explicitly agreed to move some of its operations to California to accommodate Rice's intention to fulfill her presidential duties from here, it seems reasonable to expect that any disputes concerning the manner in which she fulfilled those duties would be resolved here as well.
The order is reversed.
Rice filed suit against UFI in January of 2010, alleging she is a resident of Irvine California, and had been appointed in November of 2008 to serve as president of UFI, a non-profit corporation formed under Arizona law. Rice alleged UFI was headquartered in Arizona, but has organized chapters in various other states, including California. Rice had served as president of the California chapter of UFI during 2008.
Rice alleged that although she was to serve as president of UFI without salary, its board members promised her, both expressly and impliedly, that she would be reimbursed for expenses incurred in relation to her work furthering the mission of UFI. With the authorization of the UFI board members, she opened bank accounts for UFI in Irvine, California, and applied for a credit card in the name of the corporation. Rice signed a personal guarantee for UFI's liability in connection with the credit card.
In March of 2009, Rice used the UFI credit card to pay for travel, for both herself and UFI staff members, to a conference in Washington D.C., and to hearings being held at the United Nations in New York. Rice alleged the travel was sanctioned by UFI board members.
After Rice resigned from her position as president of UFI, in April of 2009, UFI allegedly refused to pay the charges placed on the UFI credit card, totaling in excess of $31,000, and also refused to reimburse Rice for an additional $3,700 in expenses she otherwise incurred on its behalf.
Based upon those allegations, Rice asserted causes of action for promissory estoppel and breach of contract against UFI.
UFI moved to quash service of the summons on it, claiming it has no offices or property in California, maintains no corporate records in California and is not licensed to do business in California. UFI acknowledged it had a California chapter, but asserted, in conclusory fashion, that chapter was not its agent, did not "conduct business" on its behalf, and did not have the authority to legally bind it. UFI also maintained that its "very limited activities in California are confined to promoting its narrow agenda in California," but neither explained what those activities were nor defined its "narrow [California] agenda."
Rice opposed the motion to quash. She offered evidence, in the form of her own declaration plus the declaration of a former chairman of the UFI board of directors, supporting the exercise of California jurisdiction over UFI. Specifically, Rice asserted she has been a resident of Irvine, California since 1986. During 2008, she had served as the president of the California chapter of UFI, which is organized as a dependent chapter. According to Rice, being a "dependent" chapter meant the California chapter did not do its own fundraising or money management, but instead submitted annual goals and budgets to UFI headquarters in Arizona for approval. UFI would then allocate funds to the California chapter "based on those goals and budgets." Rice explained that the California chapter was also dependent upon UFI for "media and programming."
In support of her description of the California chapter, Rice offered the UFI "Board Report" for February 7, 2009, which contains, among other things, a "Chapter Development Report." That report reflects that UFI has rewritten its "Chapter by-laws," to clarify that "[a]ll the positions on [each] chapter board are referred to as `directors' emphasizing the perspective that these leaders are `directing' the family strengthening activities of UFI within their states/countries. These chapters are not entities unto themselves, but appendages to a greater whole." (Italics added.) The document also clarifies "the financial relationship" between UFI and its chapters, explaining that "UFI will fund each chapter as directed by the chapter's goals and budgets which are submitted annually." The document also reflects that "[o]ngoing leadership development for all State Directors is a task that is dealt with daily. Monthly conference calls with State Directors are held . . . [and] [n]ew forms and processes have been put into place to streamline the financial reporting and requests from the states." Finally, the document reflects that the state directors of both California and Utah have decided to resign, and that "we" (meaning UFI) "are currently looking for new leadership to fill these voids."
Rice also explained that during 2008, UFI focused its attention on California's Proposition 8, the gay marriage initiative. Specifically, it provided educational tools and speakers within the State of California to help secure the passage of Proposition 8. Rice claimed that in November of 2008, UFI then made the decision to move UFI's headquarters to California, and that consistent with that decision, Rice was elected by UFI's board of directors to act as its president on November 7, 2008. Rice states that pursuant to the authorization of the UFI board of directors, she opened bank accounts for UFI in Irvine, California, and applied for a credit account. When the bank approved the credit account, it issued credit cards in her name as well as in the names of two UFI staff members. With the cooperation of UFI's immediate past president, Carol Soelberg, and pursuant to the board's authorization, Rice closed UFI's bank accounts in Arizona.
In support of these claims, Rice attached several documents to her declaration, including one entitled "Board Reports November 2008," which reflects, among other things, a decision to open "an additional PO Box in Irvine California to assist in the transition of financials to CA." Rice also provided what appears to be a print-out of a web page containing the text of a November 10, 2008 letter, to UFI supporters from Soelberg. Just below the closing portion of the letter, the web page invites readers to "take note" of its "new address and phone number" in Irvine, California.
Additionally, Rice attached a copy of the UFI board report minutes for November 8, 2008, which reflect the board's decision that "for the time being there would just be one signer on the bank accounts. That signer would be Beverly Rice, President." Those minutes also reflected that "A resolution was made . . . and seconded... that Wells Fargo would be used as the bank in California," and that "a decision needs to be made as to whether or not a California corporation is the right way to go. An Attorney with expertise in Non-profit law would need to be approached to find out California regulations." And finally, Rice provided a document identified as UFI's "President's Report," dated February 7, 2009, which lists among other recent "accomplishments" that UFI has "[m]oved finances to California."
The former UFI board chairman, Stephen Studdert, corroborated Rice's claims, declaring that in November of 2008, the UFI board of directors "made the decision to move UFI's headquarters to California. Consistent with that decision, we elected [Rice], a resident of California to the office of President of UFI." Studdert also declared that UFI expressly authorized Rice to open bank accounts in Irvine, California.
In its reply, UFI disputed several of Rice's factual claims. Specifically, it provided declarations from three persons, denying UFI had ever authorized Rice to open a credit card account for UFI. One of UFI's declarants, Phil Marriott, denied that UFI had ever authorized Rice to close its bank accounts in Arizona, noting that it "still intended to operate out of Arizona at this time."
However, much of what Rice claimed was not disputed by UFI. Specifically, UFI admitted it has a California chapter, and did not dispute Rice's characterization of that "chapter" as a "dependent" organization which relies entirely upon UFI for its funding, media and programming. It did not challenge the content of the "Chapter Development Report" provided by Rice.
UFI also did not dispute it had focused "much of its attention" in California during 2008, playing an "important role as an integral component of the Protect Marriage coalition in California" when Proposition 8 was on the ballot here.
Moreover, none of the UFI declarants claim the board of directors was unaware that Rice lived in Southern California at the time they elected her president, or that she intended to carry out her duties from California during her tenure. To the contrary, Soelberg states in her declaration that Rice "intended to be an absentee president from the corporate offices in Arizona," and the UFI declarants otherwise admit that Rice was authorized to open bank accounts and establish an address for UFI in California — albeit "for her own convenience" — specifically because she would be handling her duties as president from California.
After considering the parties' papers and hearing argument, the court granted the motion to quash. The court explained that Rice had not met her burden of establishing jurisdiction because she failed to supply sufficient evidence that UFI "set her up as a branch here in California." The court noted that the dispute at issue in this case "has to do with her being president of a national organization. It doesn't deal with her being essentially the California outpost for United Families International." The court reasoned that merely establishing a bank account and credit account in California was not sufficient to establish either "systematic contact" with California for purposes of general jurisdiction, nor "personal availment" for purposes of specific jurisdiction. "It's just their national president happens to live here and maybe needs a bank account, a credit card, to run the show for them. Seems like her beef is vis-à-vis an Arizona outfit. The motion to quash service of the summons and complaint is granted."
Where, as here, a nonresident defendant has challenged personal jurisdiction, the burden is on the plaintiff to "prove, by a preponderance of the evidence, the factual basis that would justify the exercise of jurisdiction. [Citations.] If the plaintiff meets this burden, it is then up to the defendant to show that the exercise of jurisdiction would be unreasonable." (F. Hoffman-La Roche, Ltd. v. Superior Court (2005) 130 Cal.App.4th 782, 794.)
"`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. [Citation.]" (Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 568.)
We begin with the basic concepts governing the exercise of California's jurisdiction: "`California courts may exercise personal jurisdiction on any basis consistent with the Constitution of California and the United States. (Code Civ. Proc., § 410.10.) 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."'" ([Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434,] 444, quoting Internat. Shoe Co. v. Washington (1945) 326 U.S. 310, 316 (Internat. Shoe).)' (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 268 (Pavlovich).) [¶] . . . [T]he 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.' (Kulko v. California Superior Court (1978) 436 U.S. 84, 92, quoting Internat. Shoe, supra, 326 U.S. at pp. 316-317.) The test `is not susceptible of mechanical application; rather, the facts of each case must be weighed to determine whether the requisite "affiliating circumstances" are present.' (Kulko v. California Superior Court, supra, 436 U.S. at p. 92.)" (Snowney v. Harrah's Entertainment, Inc. (2005) 35 Cal.4th 1054, 1061.)
Significantly, we accept UFI's assertion, made in its respondent's brief, that the relevant period during which minimum contacts must have existed is when the cause of action arose (citing Boaz v. Boyle & Co. (1995) 40 Cal.App.4th 700, 717.) Thus, our analysis of the facts supporting jurisdiction will focus on the period of late 2008 and early 2009, when UFI allegedly made — and broke — its promise to reimburse Rice for the expenses incurred in relation to her presidency.
Jurisdiction can be either general or specific to the case at issue. (Vons Companies, Inc. v. Seabest Foods, Inc., supra, 14 Cal.4th at p. 445.) "General jurisdiction exists when a defendant is domiciled in the forum state or his activities there are substantial, continuous, and systematic. [Citations.] Factors leading to the conclusion that a defendant's contacts in the forum are continuous and systematic... include maintenance of an office, presence of employees, use of bank accounts, and the marketing or selling of products in the forum state." (F. Hoffman-LaRoche, Ltd. v. Superior Court, supra, 130 Cal.App.4th at p. 796.)
Of course, general jurisdiction over a foreign corporation can also be based upon the activities of an entity which acts as its local agent or alter-ego. "Encompassed within the purview of general jurisdiction are the theories of alter ego and agency . . . . [Citation.] Under these theories, the jurisdictional analysis bypasses the foreign defendant's direct `minimum contacts' with California as the contacts of that company are imputed via the presence of the local agent, through whom the foreign principal acts." (F. Hoffman-LaRoche, Ltd. v. Superior Court, supra, 130 Cal.App.4th at p. 796.)
In this case, UFI acknowledges that it has maintained a chapter in California, although it denies that chapter is its agent, that it conducts any business on behalf of UFI in the state, or that it has the authority to bind UFI. While those denials are wholly conclusory, we accept them at face value, because they are entirely consistent with the other evidence in the record. And what that evidence establishes is that UFI's California chapter is not an independent or technically separate entity from UFI itself — which an alleged agent or alter ego would presumably be — but is instead (as described in UFI's own document in February of 2009) a mere "appendage" of UFI itself. The undisputed evidence in our record supports that characterization, demonstrating that — at least during the relevant period for establishing jurisdiction in this case — UFI's California chapter was not a separate "entity," and was entirely dependent upon UFI for operating funds. Further, as UFI's own documents disclose, it kept a very tight leash on its chapters, choosing their leadership, approving their goals and budgets, and closely monitoring their activities via monthly conference calls.
Based upon that undisputed evidence, we conclude UFI's operation of its California chapter represents its own continuous and systematic activity within this state. In other words, this chapter simply constitutes a part of UFI. Moreover, UFI has operated its California chapter since at least early 2008, when Rice was the chapter's president, and has continued to do so at least as late as March of 2010, when Soelberg filed her initial declaration in support of the motion to quash, acknowledging as much. Soelberg also acknowledged that, as of 2010, UFI continues to promote a specific, albeit unidentified agenda in California.
Moreover, in connection with its efforts in California during the relevant period, UFI selected Rice, a California resident, to be its president at the end of 2008, with the express understanding she would (in the words of the trial court) "run the show" from California. And while UFI did not actually move its entire base of operations to California, it did give Rice authority to act as sole signatory on its financial accounts, and elected to move its financial operations here as an aspect of her presidency.
In our view, these undisputed facts are sufficient to warrant California's assertion of general jurisdiction over UFI for causes of action arising during the period of late 2008 — early 2009. Although there is no evidence that UFI has ever maintained a dedicated "office" in California, in the sense of a space leased or purchased for that specific purpose, it's clear that UFI has maintained a constant physical presence in the state, not only through the longer term efforts of those who staff its California chapter, but also through the presence of Rice herself, it's so-called "absentee president." The fact that all of these people are presumably unpaid, and thus not technically employees, of UFI is of no moment, as they serve essentially the same function — pursuing UFI's own approved goals within this state. UFI also maintained bank accounts within California during this period, and has clearly marketed its product, — meaning the promotion of its self-described social agenda — within this state. As this evidence shows, UFI displays all of the factors which tend to support the assertion of general jurisdiction over it during the relevant period. (F. Hoffman-LaRoche, Ltd. v. Superior Court, supra, 130 Cal.App.4th at p. 796.)
Of course, UFI claims any actions taken by Rice herself, such as her own presence in California, the establishment of a California address for UFI, and the opening of its bank accounts in this state, cannot be relied upon to establish jurisdiction, because they qualify as "plaintiff's unilateral action." The assertion is incorrect. Rice, the duly elected president of UFI, was specifically authorized by its board of directors to do these things. She was authorized to reside in California during her tenure, and to carry out her duties as president from here.
But even if we did not believe UFI's contacts with California warranted the exercise of general jurisdiction over it, we would conclude it would be appropriate for California to exercise specific jurisdiction over the claims asserted by Rice in this case.
"`Specific jurisdiction results 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.'" (Dorel Industries, Inc. v. Superior Court (2005) 134 Cal.App.4th 1267, 1274, quoting Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 536.) "`When determining whether specific jurisdiction exists, courts consider the "`relationship among the defendant, the forum, and the litigation.'" (Helicopteros Nacionales de Colombia v. Hall (1984) 466 U.S. 408, 414, quoting Shaffer v. Heitner (1977) 433 U.S. 186, 204.) A court may exercise specific jurisdiction over a nonresident defendant only if: (1) "the defendant has purposefully availed himself or herself of forum benefits" (Vons [Companies, Inc. v. Seabest Foods, Inc.], supra, 14 Cal.4th at p. 446); (2) "the `controversy is related to or "arises out of" [the] defendant's contacts with the forum'" (ibid., quoting Helicopteros [, Nacionales de Colombia v. Hall], supra, 466 U.S. at p. 414); and (3) "`the assertion of personal jurisdiction would comport with "fair play and substantial justice"'" (Vons [Companies, Inc. v. Seabest Foods, Inc.], supra, 14 Cal.4th at p. 447, quoting Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 472-473 [(Burger King)].)' (Pavlovich [v. Superior Court], supra, 29 Cal.4th [262,] 269.)" (Snowney v. Harrah's Entertainment, Inc., supra, 35 Cal.4th at p. 1062.)
Here, UFI purposely availed itself of California's benefits when it decided to install Rice as its president in California, with the express understanding she would remain in California during her tenure and fulfill her responsibilities from here. Further, UFI expressly authorized Rice, in her capacity as president, to open bank accounts for it in California, and gave her sole signatory power over its financial accounts.
And despite UFI's effort to suggest a very exclusive standard,
The claims asserted by Rice certainly meet this standard. Although UFI could claim the expenses incurred by Rice do not "arise out of" her presidency, since it claims its officers, in general, were not authorized to incur expenses on its behalf, it cannot effectively claim those expenses do not at least "relate to" her tenure as president. It is undisputed that Rice incurred the expenses in connection with her work furthering the mission of UFI during her tenure as president, and that at least a portion of the expenses correlated to the attendance of UFI staffers at certain events.
The final factor to be considered is whether the assertion of jurisdiction would comport with fair play and substantial justice. We conclude it does. When UFI elected Rice to act as its president, it not only understood, but expressly agreed, that she could "run the show" (in the trial court's words) from California. In other words, it was UFI, and not Rice, which agreed to expand operations into a different state to facilitate their working relationship. Having agreed to expand its operations to California to accommodate its relationship with Rice, UFI cannot persuasively complain it should not have to answer for its actions relating to that relationship in California.
The order quashing service of the summons on UFI is reversed, and the matter is remanded to the trial court for further proceedings. Rice is to recover her costs on appeal.
ARONSON, J. and FYBEL, J., concurs.
