On February 23, 2009, in Luberski, Inc. v. Oleificio F.LLI Amato S.r.L., the Fourth Appellate District of the California Court of Appeal reversed an order of the Orange County Superior Court granting defendant's motion to quash service of the summons for lack of personal jurisdiction and held that the court has specific jurisdiction over defendant because the subject of the dispute is defendant's alleged non-delivery of olive oil to plaintiff in California.
Plaintiff is an entity operating in California that ordered 12,000 cases of olive oil from defendant, an entity operating in Italy. Plaintiff paid $406,000 to defendant, which was supposed to ship the olive oil to plaintiff by way of Long Beach, California, but the shipment never arrived.
After plaintiff filed suit, defendant contested personal jurisdiction. Defendant asserted that it was formed under the laws of Italy, is located in Partanna, Italy, and has no direct presence in the state of California. Defendant further contended that it has sold only a small amount of olive oil to a few California customers, that it provides no services in California, and that it has no employees, banks, assets or offices in California.
The trial court granted defendant's motion to quash service of the summons because it found that defendant's contacts with California were not substantial, continuous, and systematic, and because defendant did not purposefully and voluntarily direct its activities toward California in order to obtain benefit from the state.
After reviewing the pertinent state and federal authorities, the Court of Appeal agreed with the trial court that defendant was not subject to the general jurisdiction of the court because defendant's contacts with California were not substantial, continuous and systematic.
The Court of Appeal noted, however, that, even if a nonresident defendant does not have substantial and systematic contacts with California to establish general jurisdiction, the defendant still may be subject to the specific jurisdiction of the court. A court may exercise specific jurisdiction over a nonresident defendant only if: (1) the defendant has purposefully availed itself of the benefits of the forum; (2) the controversy is related to or arises out of the defendant's contacts with the forum; and (3) the assertion of personal jurisdiction over the defendant would comport with fair play and substantial justice.
The Court of Appeal noted that the controversy clearly arises out of defendant's contacts with California because the lawsuit concerns defendant's alleged failure to deliver olive oil to plaintiff in California. In concluding that defendant purposefully availed itself of the benefits of the state of California, the Court of Appeal relied upon defendant's agreements to maintain responsibility for the olive oil until it reached California and to deliver the olive oil to plaintiff in California. Thus, defendant had the expectation that the goods it was placing in interstate commerce would be utilized in California. The Court of Appeal also found that California courts have a strong interest in enforcing contracts providing for performance within the state. Accordingly, the Court of Appeal reversed the order granting the motion to quash service of the summons and required defendant to defend against plaintiff's allegations.
Jack V. Valinoti Esq. is the author of this post and may be contacted at jvalinoti@lpslaw.com Mr. Valinoti is a business litigator and has successfully represented a variety of domestic and foreign clients, including Italian companies, in commercial disputes in California.
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