Motion-Secondary: U S MERCHANTS FINANCIAL GROUP INC vs. LOUIS MARTIN, Jr.

On December 08, 2010 a Motion-Secondary was filed involving a dispute between U S Merchants Financial Group Inc, and Martin, Colleen, Martin, Louis, Jr., for CNTR CNSMR COM DEBT in the District Court of Dallas County.

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DUNN|SHEEHAN::

March 19, 2013

The Honorable Dale Tillery
134th District Court

George L. Allen, Sr. Courts Bldg.
600 Commerce St., Suite 650
Dallas, Texas 75202

Re: Cause No. 10-15757, U.S. Merchants Financial Group, Inc. v. Louis Martin, Jr., In the
134" District Court, Dallas County, Texas.

Dear Judge Tillery:
Enclosed please find the following documents:

© Supplemental brief regarding issues raised at March 15 hearing on Defendant’s motion
for reconsideration.
¢ Motion to Strike Defendant’s First Supplemental Answer.

These documents are dated yesterday, March 18, consistent with the agreed filing deadline for
the supplemental brief. We attempted to e-file the documents shortly before (and after) close of
business yesterday afternoon and the electronic filing system was down. Accordingly, we are
filing these documents by hand delivery this morning. Opposing counsel was served yesterday
afternoon via fax and email. I apologize for any inconvenience.

Sincerely,
Te eS
William D. Dunn

ce: LaKeisha Forte (w/o enclosures)

3400 Carlisle Street | Suite 200 | Dallas, Texas 75204
phone 214.855.0077 | fax 214.866.0070 | www.dunnsheehan.comThe Honorable Dale Tillery
March 18, 2013
Page 2

Cal.App.4th 100, 111, 37 Cal.Rptr.3d 258. Where there is a conflict in the evidence, resolution
of the conflict by the trial court will not be disturbed on appeal if the determination of that court
is supported by substantial evidence. Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556,
568 568, 55 Cal.Rptr.3d 803. Importantly, “the merits of the complaint are not yet at issue” in
the jurisdictional inquiry. Aquila, 148 Cal.App.4th at 568, 55 Cal.Rptr.3d 803.

IL. California courts reject the use of alter ego to assert personal jurisdiction.

Two California courts recently considered the question posed by the Court. Those courts held
that theories of vicarious liability, such as Plaintiff's alter ego claim, address the merits of the
litigation and are fundamentally different than the constitutional question of personal jurisdiction
over a defendant. See HealthMarkets, Inc. v. Superior Court (2009) 171 Cal-App.4th 1160,
1169; Anglo Irish Bank Corp., PLC v. Superior Court (2008) 165 Cal.App.4th 969. In those
cases, the courts concluded that reliance on state law of agency and alter ego to determine the
constitutional limits of specific personal jurisdiction was “an imprecise substitute for the
appropriate jurisdictional question,” which “was whether the defendant has purposefully directed
its activities of the forum state by causing a separate person or entity to engage in forum
contacts.” HealthMarkets, 171 Cal.App.4th at p. 1170; Anglo Irish, 165 Cal.App.4" at 983.

In HealthMarkets, the trial court denied a non-resident parent company’s motion to quash service
for lack of personal jurisdiction, finding that the subsidiary’s contacts with the State of California
should be imputed to the parent for jurisdictional purposes. The appeals court reversed,
concluding that specific personal jurisdiction over the parent company based on the activities of
its subsidiary is appropriate only if the plaintiff that the parent purposefully directed those
activities at the State of California:

Citing these authorities and some of the scholarly commentary regarding ‘the
inexact fit between rules of law designed to establish liability for the acts of
another and an assessment of the defendant’s contacts with the forum for purposes
of establishing general or specific personal jurisdiction,’ we concluded in Anglo
Irish (that) ‘reliance on state substantive law of agency and alter ego to determine
the constitutional limits of specific personal jurisdiction is unnecessary and is an
imprecise substitute for the appropriate jurisdictional question. The proper
jurisdictional question is not whether the defendant can be liable for the acts of
another person or entity under state substantive law, but whether the defendant
has purposefully directed its activities at the forum state by causing a separate
person or entity to engage in forum contacts.’ We reaffirm that conclusion here
and conclude that purposeful availment by a parent company through the acts of
its subsidiary must be evaluated under the (jurisdictional) rule that we have stated.The Honorable Dale Tillery
March 18, 2013
Page 3

HealthMarkets, 171 Cal.App.4th at p. 1169-70 (rejecting prior decisions suggesting that
principles of alter ego can justify the exercise of general or specific personal jurisdiction over a
nonresident defendant); see also Hoffman, The Case Against Vicarious Jurisdiction (2004) 152
U. Pa. L.Rev. 1023, 1085 (“[R]eliance on jurisdictional veil-piercing is constitutionally infirm to
the extent that it validates an otherwise excessive exercise of state power under existing due
process limits.”).

In Anglo Irish, 165 Cal.App.4th at 983-984, two individual defendants, one a managing director
of the trust company defendant and later a director of the bank defendant, and the other an
employee of the trust company who was also a director of the bank, challenged the trial court’s
denial of their motions to quash service for lack of personal jurisdiction. The appeals court
likewise rejected the argument that jurisdiction over the individuals could be founded on the
basis of state substantive law of alter ego. Instead, the Court applied the jurisdictional standard,
finding that the individuals had “visited California for the purpose of engaging in economic
activity with California residents,” and thus had purposefully availed themselves of its benefits.
Id.; see also Somo v. Larson, 2009 WL 3288508 (Cal.App. 4 Dist., 2009) (concurring with Anglo
Irish and Healthmarkets, corporate officers are not automatically subject to jurisdiction merely
because their corporation is subject to jurisdiction; rather, the court must examine the individual
officer’s personal conduct with respect to the forum to determine whether he or she developed
sufficient minimum contacts for personal jurisdiction).

Tl. Analysis.

It is undisputed that Mr. Martin must prove each of the five distinct essential elements of
collateral estoppel for the defense to apply. Notably, the issue sought to be precluded from
relitigation must be identical to that decided in the former proceeding, the issue must have been
actually litigated in the former proceeding, and the decision of that identical issue in the former
proceeding must be final and on the merits. See Gikas v. Zolin, 6 Cal.4th 841,848 (1993);
Ferraro v. Camarlinghi, 161 Cal.App.4th 509, 530-531 (2008). In addition, Plaintiff must have
had “a full and fair opportunity to litigate the issue” sought to be precluded. Roos v. Red, 130
Cal.App.4th 870, 880 (2005); Rodgers v. Sargent Controls & Aerospace, 136 Cal.App.4th 82, 90
(2006).

The issue that was actually litigated and decided by the California court was whether Mr. Martin
purposefully directed his activities at the State of California by causing Synergy to engage in
forum contacts such that it was fair to subject him to California jurisdiction. “Purposeful
availment” — which is precisely what Mr. Martin argued in opposing California jurisdiction (see
Ex. A-2 at pp. 4-5) — exists only when the defendant purposefully and voluntarily directs his
activities toward the forum so that he should expect, by virtue of the benefit he receives, to be
subject to the court's jurisdiction based on his contacts with the forum. Anglo Irish, 165
Cal.App.4th at 978 (citations omitted). It is a question of due process, relationship and fairness.The Honorable Dale Tillery
March 18, 2013
Page 4

In contrast, the issue litigated and decided by the California court was not whether Mr. Martin
can be liable for Synergy’s acts or obligations under state substantive alter ego law. To the
extent that the California judge based her jurisdictional decision on Plaintiff's “failure to prove
alter ego for jurisdictional purposes,” she applied the wrong standard.

IV. Conclusion.

Proof of state law alter ego liability by a preponderance of the evidence does not impose personal
jurisdiction because alter ego is a fundamentally different question than personal jurisdiction.
The issues are not identical, and a finding of alter ego does not substitute for the requisite
jurisdictional finding — whether Mr. Martin had minimum contacts with the State of California to
ensure that the assertion of jurisdiction would not violate traditional notions of fair play and
substantial justice. Aquila, 148 Cal.App.4th at 568, 55 Cal.Rptr.3d 803. The latter is the only
question that was actually litigated and finally determined by the California court, and the only
issue that Plaintiff had the opportunity to litigate to final decision. The California court’s
determination of that threshold jurisdictional question does not bar Plaintiff’s right to a full and
fair opportunity to litigate the merits of the alter ego claim in this Court — a Texas court with
jurisdictional power to adjudicate the claim.

Copies of the Healthmarkets and Anglo Irish opinions are attached for your review.
Thank you for your consideration.

Sincerely,

William D. Dunn

enclosuresWestlaw.

Page 1

165 Cal.App.4th 969, 81 Cal.Rptr.3d 535, 08 Cal. Daily Op. Serv. 10,190, 2008 Daily Journal D.A.R. 12,214

(Cite as: 165 Cal.App.4th 969, 81 Cal.Rptr.3d 535)

Court of Appeal, Second District, Division 3, Cali-
fornia.
ANGLO IRISH BANK CORPORATION, PLC, et al.,
Petitioners,

ve
The SUPERIOR COURT of Los Angeles County,
Respondent;
Kal Brar et al., Real Parties in Interest.
Stewart Davies et al., Petitioners,

ve
The Superior Court of Los Angeles County, Re-
spondent;
Kal Brar et al., Real Parties in Interest.

Nos. B206714, B206715.
‘Aug. 4, 2008.

Background: California investors brought action
against Isle of Man bank, Isle of Man trust company,
their officers, and their Irish parent bank for inten-
tional misrepresentation, fraudulent concealment,
securities fraud, breach of fiduciary duty, negligent
misrepresentation, and an accounting. Defendants
moved to quash service of summons based on lack of
personal jurisdiction. The Superior Court, Los Ange-
les County, No. BC334233,Richard L. Fruin, J., de-
nied motion. Defendants petitioned for writ of man-
date.

Holdings: The Court of Appeal, Croskey, Acting P.J.,
held that:

' (1) activities undertaken for a defendant may be at-
tributed to the defendant for purposes of personal
jurisdiction;

(2) Isle of Man bank, Isle of Man trust company, and
their officers purposefully availed themselves of Cal-
ifornia forum benefits;

(3) Irish parent bank purposefully availed itself of
California forum benefits;

(4) defendants’ California activities were substantially
connected to dispute; and

(5) exercise of personal jurisdiction would be fair and
reasonable.

Petitions denied.

West Headnotes
[1] Banks and Banking 52 €315(2)

52 Banks and Banking
52VI Loan, Trust, and Investment Companies
52k315 Functions and Dealings
52k315(2) k. Representation by officers and
agents. Most Cited Cases

Courts 106 €=32.5(1)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k31 Jurisdiction to Be Shown by Record
106k32.5 Jurisdiction of the Person
106k32.5(1) k. In general. Most Cited
Cases
(Formerly 106k32)

Trial court's finding that director of Isle of Man
trust company solicited business for company during
visit to California, in denying motion to quash service
of summons on company, director, and banks for lack
of personal jurisdiction, was supported by substantial
evidence, including witness declaration describing
witness's meeting with director and others to discuss
potential leveraged investments, and a memorandum
by director describing the meeting.

[2] Constitutional Law 92 ©3964

92 Constitutional Law
92XXVII Due Process
92XXVII(E) Civil Actions and Proceedings
92k3961 Jurisdiction and Venue
92k3964 k. Non-residents in general.

Most Cited Cases

The exercise of personal jurisdiction is constitu-
tionally permissible under due process clause only if
the defendant has sufficient minimum contacts with
the state so that the exercise of jurisdiction does not

EXHIBIT

tabbles*Page 2

165 Cal.App.4th 969, 81 Cal.Rptr.3d 535, 08 Cal. Daily Op. Serv. 10,190, 2008 Daily Journal D.A.R. 12,214

(Cite as: 165 Cal.App.4th 969, 81 Cal.Rptr.3d 535)

offend traditional notions of fair play and substantial
justice, or, in other words, if the defendant's contacts
with the forum state are such that the defendant had
fair warning that its activities might subject it to per-
sonal jurisdiction in the state. U.S.C.A. Const.Amend.
14; West's Ann.Cal.C.C.P. § 410.10.

[3] Courts 106 <13.3(6)

106 Courts
106] Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.3 Factors Considered in General
106k13.3(5) Connection with Litiga-
tion
106k13.3(6) k. In general. Most
Cited Cases

(Formerly 106k12(2.5))

In judging whether a defendant has sufficient
minimum contacts with the state to support personal
jurisdiction, a court properly focuses on the relation-
ship among the defendant, the forum and the litigation.
U.S.C.A. Const.Amend. 14; West's Ann.Cal.C.C.P. §
410.10.

[4] Courts 106 © 13.6(1)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
1061(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.6 Agents, Representatives, and
Other Third Parties, Contacts and Activities of as
Basis for Jurisdiction
106k13.6(1) k. In general. Most Cited
Cases
(Formerly 106k12(2.5))

In judging whether defendants have sufficient
minimum contacts with the state to support personal
jurisdiction, each defendant's contacts with the forum
state must be assessed individually. U.S.C.A.

Const.Amend. 14; West's Ann.Cal.C.C.P. § 410.10.
[5] Courts 106 13.301)

106 Courts
106I Nature, Extent, and Exercise of Jurisdiction
in General
1061(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.3 Factors Considered in General
106k13.3(1) k. In general. Most Cited
Cases
(Formerly 106k12(2.1))

Great care and reserve should be exercised when
extending state notions of personal jurisdiction into
the international field.

[6] Courts 106 <13.3(7)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
06I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.3 Factors Considered in General
106k13.3(5) Connection with Litiga-
tion
106k13.3(7) k. Unrelated contacts
and activities; general jurisdiction. Most Cited Cases
(Formerly 106k12(2.5))

A defendant that has substantial, continuous, and
systematic contacts with the forum state is subject to
“general jurisdiction” in the state, meaning jurisdic-
tion on any cause of action.

{7] Courts 106 ©=713.3(8)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
1061(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion

165 Cal.App.4th 969, 81 Cal.Rptr.3d 535, 08 Cal. Daily Op. Serv. 10,190, 2008 Daily Journal D.A.R. 12,214

(Cite as: 165 Cal.App.4th 969, 81 Cal.Rptr.3d 535)

106k13.3 Factors Considered in General
106k13.3(5) Connection with Litiga-
tion
106k13.3(8) k. Related contacts
and activities; specific jurisdiction. Most Cited Cases
(Formerly 106k12(2.10))

“Specific jurisdiction” over a defendant is juris-
diction in an action arising out of or related to the
defendant's contacts with the forum state.

[8] Courts 106 €=13.3(8)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.3 Factors Considered in General
106k13.3(5) Connection with Litiga-
tion
106k13.3(8) k. Related contacts
and activities; specific jurisdiction. Most Cited Cases
(Formerly 106k12(2.10))

Specific jurisdiction over a defendant depends on
the quality and nature of the defendant's forum con-
tacts in relation to the particular cause of action al-
leged.

[9] Constitutional Law 92 €3964

92 Constitutional Law
92XXVII Due Process
92XXVII(E) Civil Actions and Proceedings
92k3961 Jurisdiction and Venue
92k3964 k. Non-residents in general.

Most Cited Cases
Courts 106 €13.3(8)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion

106k13.3 Factors Considered in General
106k13.3(5) Connection with Litiga-
tion
106k13.3(8) k. Related contacts
and activities; specific jurisdiction. Most Cited Cases
(Formerly 106k12(2.10))

A court may exercise specific jurisdiction over a
nonresident defendant only if: (1) the defendant has
purposefully availed himself or herself of forum ben-
efits; (2) the controversy is related to or arises out of
the defendant's contacts with the forum; and (3) the
assertion of personal jurisdiction would comport with
fair play and substantial justice.

[10] Courts 106 €="13.3(8)

A defendant's “purposeful availment” of forum
benefits, as required for specific jurisdiction over the
defendant in the forum state, exists only when the
defendant purposefully and voluntarily directs his
activities toward the forum so that he should expect,
by virtue of the benefit he receives, to be subject to the
court's jurisdiction based on his contacts with the
forum.

[11] Courts 106 £13.38)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction

in General

1061(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion

106k13.3 Factors Considered in General

165 Cal.App.4th 969, 81 Cal.Rptr.3d 535, 08 Cal. Daily Op. Serv. 10,190, 2008 Daily Journal D.A.R. 12,214

(Cite as: 165 Cal.App.4th 969, 81 Cal.Rptr.3d 535)

106k13.3(5) Connection with Litiga-
tion
106k13.3(8) k. Related contacts
and activities; specific jurisdiction. Most Cited Cases
(Formerly 106k12(2.10))

“Purposeful availment” of forum benefits by a
nonresident defendant, as required for specific juris-
diction over the defendant in the forum state, exists
where the defendant purposefully directs its activities
at residents of the forum, purposefully derives benefit
from its activities in the forum, creates a substantial
connection with the forum, deliberately engages in
significant activities within the forum, or creates con-
tinuing obligations between itself and residents of the
forum.

[12] Courts 106 €13.3(10)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
1061(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.3 Factors Considered in General
106k13.3(9) Commercial Contacts
and Activities; Contracts and Transactions
106k13.3(10) k. In general. Most
Cited Cases
(Formerly 106k12(2.1))

A nonresident defendant will only be subject to
personal jurisdiction in a state 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
tisks are too great, severing its connection with the
state.

[13] Courts 106 €13.3(8)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
1061(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion

106k13.3 Factors Considered in General
106k13.3(5) Connection with Litiga-
tion
106k13.3(8) k. Related contacts
and activities; specific jurisdiction. Most Cited Cases
(Formerly 106k12(2.10))

A controversy is related to or arises out of the
defendant's forum contacts, as required for the exer-
cise of specific personal jurisdiction over the de-
fendant, if there is a substantial connection between
the forum contacts and the plaintiff's claim.

[14] Courts 106 €713.3(8)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
1061(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.3 Factors Considered in General
106k13.3(5) Connection with Litiga-
tion
106k13.3(8) k. Related contacts
and activities; specific jurisdiction. Most Cited Cases
(Formerly 106k12(2.10))

A defendant's forum contacts need not be the
proximate cause or “but for” cause of the alleged
injuries to support the exercise of specific personal
jurisdiction over the defendant in the forum state.

[15] Courts 106 13.3(8)

165 Cal.App.4th 969, 81 Cal.Rptr.3d 535, 08 Cal. Daily Op. Serv. 10,190, 2008 Daily Journal D.A.R. 12,214

(Cite as: 165 Cal.App.4th 969, 81 Cal.Rptr.3d 535)

A defendant's forum contacts need not be “sub-
stantively relevant” to the cause of action to support
the exercise of specific personal jurisdiction over the
defendant in the forum state, meaning those contacts
need not establish or support an element of the cause
of action.

{16] Courts 106 = 13,3(8)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction

in General

1061(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion

106k13.3 Factors Considered in General
06k13.3(5) Connection with Litiga-

06k13.3(8) k. Related contacts
and activities; specific jurisdiction. Most Cited Cases
(Formerly 106k12(2.10))

tion

In evaluating the quality and nature of a defend-
ant's forum contacts, in determining whether the con-
troversy is related to or arises out of the defendant's
forum contacts, as required for the exercise of specific
personal jurisdiction over the defendant, courts con-
sider not only the conduct directly affecting the
plaintiff but also the broader course of conduct of
which it is a part.

[17] Courts 106 © 13.3(8)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction

in General

106I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion

106k13.3 Factors Considered in General
106k13.3(5) Connection with Litiga-

106k13.3(8) k. Related contacts

and activities; specific jurisdiction. Most Cited Cases
(Formerly 106k12(2.10))

tion

In determining whether the exercise of jurisdic-
tion would be fair and reasonable, as required for the

exercise of specific personal jurisdiction, a court must
consider (1) the burden on the defendant of defending
an action in the forum, (2) the forum state's interest in
adjudicating the dispute, (3) the plaintiff's interest in
obtaining relief, (4) the interstate or international
judicial system's interest in obtaining the most effi-
cient resolution of controversies, and (5) the states' or
nations' shared interest in furthering fundamental
substantive social policies.

[18] Courts 106 €713.3(8)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
1061(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.3 Factors Considered in General
106k13.3(5) Connection with Litiga-
tion
106k13.3(8) k. Related contacts
and activities; specific jurisdiction. Most Cited Cases
(Formerly 106k12(2.10))

Considerations as to whether the exercise of ju-
risdiction would be fair and reasonable sometimes
serve to establish the reasonableness of specific per-
sonal jurisdiction over the defendant upon a lesser
showing of minimum contacts with the forum state
than would otherwise be required.

[19] Courts 106 €="13.3(8)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
1061(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.3 Factors Considered in General
106k13.3(5) Connection with Litiga-
tion
106k13.3(8) k. Related contacts
and activities; specific jurisdiction. Most Cited Cases
(Formerly 106k12(2.10))

Where a defendant who purposefully has directedPage 6

165 Cal.App.4th 969, 81 Cal.Rptr.3d 535, 08 Cal. Daily Op. Serv. 10,190, 2008 Daily Journal D.A.R. 12,214

(Cite as: 165 Cal.App.4th 969, 81 Cal.Rptr.3d 535)

his activities at forum residents seeks to defeat specific
personal jurisdiction over him in the forum state, he
must present a compelling case that the presence of
some other considerations would render jurisdiction
unreasonable.

{20] Courts 106 €>13.5(4)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.5 Particular Contexts and
Causes of Action
106k13.5(4) k. Torts in general. Most
Cited Cases
(Formerly 106k12(2.25))

The commission of a tortious act within the forum
state ordinarily justifies the exercise of specific per-
sonal jurisdiction in an action arising from the tortious
act.

[21] Courts 106 €=35

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k34 Presumptions and Burden of Proof
as to Jurisdiction
106k35 k. In general. Most Cited Cases

A plaintiff opposing a motion to quash service of
process for lack of personal jurisdiction has the initial
burden to prove, by a preponderance of the evidence,
facts establishing the defendant's purposeful avail-
ment of forum benefits and a substantial connection
between the defendant's forum contacts and the
plaintiff's claim.

[22] Courts 106 35

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
1061(A) In General

106k34 Presumptions and Burden of Proof
as to Jurisdiction
106k35 k. In general. Most Cited Cases

If the plaintiff opposing a motion to quash service
of process for lack of personal jurisdiction satisfies its
burden to show the defendant's purposeful availment
of forum benefits and a substantial connection be-
tween the defendant's forum contacts and the plain-
tiffs claim, the burden shifts to the defendant to show
that the exercise of jurisdiction would be unreasona-
ble, that is, that it would not comport with fair play and
substantial justice.

[23] Appeal and Error 30 €=893(1)

30 Appeal and Error
30XVI Review
30XVI(F) Trial De Novo
30k892 Trial De Novo
30k893 Cases Triable in Appellate
Court
30k893(1) k. In general. Most Cited

Cases

If there is no conflict in the evidence, the question
of whether a defendant's contacts with California are
sufficient to justify the exercise of personal jurisdic-
tion in the state is a question of law reviewed de novo.

[24] Corporations and Business Organizations 101
€2302

101 Corporations and Business Organizations
1011X Corporate Powers and Liabilities
101TX(B) Representation of Corporation by
Corporate Principals
101k2301 Application of Principle of
Agency to Corporations
101k2302 k. In general. Most Cited
Cases
(Formerly 101k397)

Courts 106 €=13.6(1)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k13.1 Actions by or Against Nonresi-

165 Cal.App.4th 969, 81 Cal.Rptr.3d 535, 08 Cal. Daily Op. Serv. 10,190, 2008 Daily Journal D.A.R. 12,214

(Cite as: 165 Cal.App.4th 969, 81 Cal.Rptr.3d 535)

dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion

106k13.6 Agents, Representatives, and
Other Third Parties, Contacts and Activities of as
Basis for Jurisdiction

106k13.6(1) k. In general. Most Cited
Cases
(Formerly 101k665(1))

A corporation or other business entity acts
through authorized individuals, and the activities of its
employees are attributed to the business entity for
purposes of personal jurisdiction.

[25] Courts 106 €=13.6(4)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion

106k13.6 Agents, Representatives, and
Other Third Parties, Contacts and Activities of as
Basis for Jurisdiction
106k13.6(3) Jurisdiction of Agents,
Representatives, or Other Third Parties Themselves
106k13.6(4) k. In general. Most
Cited Cases
(Formerly 106k12(2.20))

An individual's status as an employee acting on
behalf of his or her employer does not insulate the
individual from personal jurisdiction based on his or
her forum contacts.

126] Courts 106 €=713.6(1)

Cases
(Formerly 106k12(2.20))

Apart from an employment relationship, activities
that are undertaken on behalf of a defendant may be
attributed to that defendant for purposes of personal
jurisdiction if the defendant purposefully directed
those activities toward the forum state.

127] Courts 106 €=13,6(9)

106 Courts
106 Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.6 Agents, Representatives, and
Other Third Parties, Contacts and Activities of as
Basis for Jurisdiction
106k13.6(9) k. Related or affiliated
entities; parent and subsidiary. Most Cited Cases
(Formerly 101k665(1))

A parent corporation's purposefully causing its
subsidiary to engage in forum contacts may constitute
purposeful availment of forum benefits by the parent,
supporting specific personal jurisdiction over the
parent, even if the separateness of the corporations is
maintained and alter ego is not established.

[28] Courts 106 = 13.6(9)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.6 Agents, Representatives, and
Other Third Parties, Contacts and Activities of as
Basis for Jurisdiction
106k13.6(9) k. Related or affiliated
entities; parent and subsidiary. Most Cited Cases
(Formerly 101k665(1))

“Manipulation” of a subsidiary by a parent cor-
poration is only one example of a circumstance inPage 8

165 Cal.App.4th 969, 81 Cal.Rptr.3d 535, 08 Cal. Daily Op. Serv. 10,190, 2008 Daily Journal D.A.R. 12,214

(Cite as: 165 Cal.App.4th 969, 81 Cal.Rptr.3d 535)

which the parent corporation's purposeful directing of
the activities of its subsidiary in the forum state can
constitute purposeful availment of forum benefits,
supporting specific personal jurisdiction over the
parent corporation in the forum state.

[29] Courts 106 €=713.6(1)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.6 Agents, Representatives, and
Other Third Parties, Contacts and Activities of as
Basis for Jurisdiction
106k13.6(1) k. In general. Most Cited
Cases
(Formerly 106k12(2.10))

Activities that are undertaken on behalf of a de-
fendant may be attributed to the defendant for pur-
poses of personal jurisdiction if the defendant pur-
posefully directed those activities at the forum state,
regardless of whether the defendant can be liable for
those activities under the specific requirements of alter
ego or agency under state substantive law.

[30] Banks and Banking 52 <315(2)

52 Banks and Banking
52VI Loan, Trust, and Investment Companies
52k315 Functions and Dealings
52k315(2) k. Representation by officers and

agents. Most Cited Cases
Courts 106 €13.6(2)

106k13.6(2) k. Particular cases. Most
Cited Cases
(Formerly 106k12(2.10))

Courts 106 €13.6(4)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.6 Agents, Representatives, and
Other Third Parties, Contacts and Activities of as
Basis for Jurisdiction
106k13.6(3) Jurisdiction of Agents,
Representatives, or Other Third Parties Themselves
106k13.6(4) k. In general. Most
Cited Cases
(Formerly 106k12(2.10))

Isle of Man bank, Isle of Man trust company, and
their officers purposefully availed themselves of Cal-
ifornia forum benefits, as required for specific per-
sonal jurisdiction over them in California, even if
officers' visit to potential California investors was
required to satisfy Isle of Man “know your customer”
requirements, where officers discussed leveraging
“with profit bonds” with the potential investors, and
officers succeeded in garnering millions of dollars in
investments from California residents for bank and
trust company.

[31] Banks and Banking 52 €=315(2)

52 Banks and Banking
52VI Loan, Trust, and Investment Companies
52k315 Functions and Dealings
52k315(2) k. Representation by officers and

agents. Most Cited Cases
Courts 106 13.5(13)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-

165 Cal.App.4th 969, 81 Cal.Rptr.3d 535, 08 Cal. Daily Op. Serv. 10,190, 2008 Daily Journal D.A.R. 12,214

(Cite as: 165 Cal.App.4th 969, 81 Cal.Rptr.3d 535)

tion
06k13.5 Particular Contexts and
Causes of Action
106k13.5(13) k. Banks and banking.
Most Cited Cases
(Formerly 52k218)

Courts 106 13.6(9)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
1061(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.6 Agents, Representatives, and
Other Third Parties, Contacts and Activities of as
Basis for Jurisdiction
106k13.6(9) k. Related or affiliated
entities; parent and subsidiary. Most Cited Cases
(Formerly 106k12(2.10))

Irish bank purposefully availed itself of Califor-
nia forum benefits through a visit to potential investors
in California by officers of its subsidiaries, an Isle of
Man bank and an Isle of Man trust company, as re-
quired for Irish bank to be subject to specific personal
jurisdiction in California, where Irish bank would
review and approve potential investors' applications
for credit, trust company officer visited the potential
investors at Irish bank's request, trust company officer
handed out business cards that identified him as “Head
of Offshore Trust Operations” for Irish bank, and Irish
bank relied on trust company officer's experience and
expertise in evaluating prospective California clients
and in answering any questions regarding the invest-
ments.

See Weil & Brown, Cal. Practice Guide: Civil Pro-
cedure Before Trial (The Rutter Group 2007) ¥ 3:226
et seq. (CACIVP Ch. 3-B); 2 Witkin, Cal. Procedure
(4th ed. 1997) Jurisdiction, § 158; Cal. Jur. 3d,
Courts, § 130; Cal. Civil Practice (Thomson/West
2007) Procedure, § 4:2; Annot., In personam juris-
dicti ler long-arm statute of nonresident bankin;

institution (1981) 9 A.L.R.4th 661; Annot., Validity, as
a matter of due process, of state statutes or rules o
court conferring in personam jurisdiction over non-
residents or foreign corporations on the basis of iso-
lated business transaction within state (1968) 20
A.L.R.3d 1201.

[32] Courts 106 €=13.6(4)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
1061(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.6 Agents, Representatives, and
Other Third Parties, Contacts and Activities of as
Basis for Jurisdiction
106k13.6(3) Jurisdiction of Agents,
Representatives, or Other Third Parties Themselves
106k13.6(4) k. In general. Most
Cited Cases
(Formerly 106k12(2.20))

As a single defendant, a trust company either is
subject to specific personal jurisdiction both individ-
ually and in its capacity as trustee, or is not subject to
specific personal jurisdiction in either capacity.

[33] Banks and Banking 52 €315(1)

52 Banks and Banking
52VI Loan, Trust, and Investment Companies
52k315 Functions and Dealings
52k315(1) k. In general. Most Cited Cases

Banks and Banking 52 €-9315(2)

52 Banks and Banking
52VI Loan, Trust, and Investment Companies
52k315 Functions and Dealings
52k315(2) k. Representation by officers and
agents. Most Cited Cases

Courts 106 €13.5(13)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
JO6I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.5 Particular Contexts and
Causes of Action
106k13.5(13) k. Banks and banking.

165 Cal.App.4th 969, 81 Cal.Rptr.3d 535, 08 Cal. Daily Op. Serv. 10,190, 2008 Daily Journal D.A.R. 12,214

(Cite as: 165 Cal.App.4th 969, 81 Cal.Rptr.3d 535)

Most Cited Cases
(Formerly 52k218)

Courts 106 €=13.6(6)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.6 Agents, Representatives, and
Other Third Parties, Contacts and Activities of as
Basis for Jurisdiction
106k13.6(3) Jurisdiction of Agents,
Representatives, or Other Third Parties Themselves
106k13.6(6) k. Tortious or inten-
tional conduct; fraud and breach of fiduciary duties.
Most Cited Cases
(Formerly 106k12(2.25))

The California activities of Irish bank, Isle of Man
bank, Isle of Man trust company, and their officers in
visiting potential investors in California were sub-
stantially connected to their dispute with investors, as
required for specific personal jurisdiction over them in
California, where California investors’ six counts for
intentional misrepresentation, fraudulent conceal-
ment, securities fraud, breach of fiduciary duty, neg-
ligent misrepresentation, and an accounting all were
based on alleged misrepresentations in or omissions
from statements made to them in California by officers
and others, in soliciting business from them.

[34] Banks and Banking 52 €=315(1)

52 Banks and Banking
52VI Loan, Trust, and Investment Companies
52k315 Functions and Dealings
52k315(1) k. In general. Most Cited Cases

Banks and Banking 52 €*7315(2)

52 Banks and Banking
52VI Loan, Trust, and Investment Companies
§2k315 Functions and Dealings
52k315(2) k. Representation by officers and
agents. Most Cited Cases

Courts 106 €13.5(13)

106 Courts
106] Nature, Extent, and Exercise of Jurisdiction
in General
Q6I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.5 Particular Contexts and
Causes of Action
106k13.5(13) k. Banks and banking.
Most Cited Cases
(Formerly 52k218)

Courts 106 €13.6(6)

106 Courts
1061 Nature, Extent, and Exercise of Jurisdiction
in General
106I(A) In General
106k13.1 Actions by or Against Nonresi-
dents, Personal Jurisdiction In; “Long-Arm” Jurisdic-
tion
106k13.6 Agents, Representatives, and
Other Third Parties, Contacts and Activities of as
Basis for Jurisdiction
106k13.6(3) Jurisdiction of Agents,
Representatives, or Other Third Parties Themselves
106k13.6(6) k. Tortious or inten-
tional conduct; fraud and breach of fiduciary duties.
Most Cited Cases
(Formerly 106k12(2.25))

The exercise of personal jurisdiction over Irish
bank, Isle of Man bank, Isle of Man trust company,
and their officers would be fair and reasonable in
California investors' action for intentional misrepre-
sentation, fraudulent concealment, securities fraud,
breach of fiduciary duty, negligent misrepresentation,
and an accounting, as required for specific personal
jurisdiction over defendants in California, even if
investors created offshore trusts to remove assets from
jurisdiction of California courts, where action was
based on defendants’ alleged material misrepresenta-
tions and omissions in California in connection with
the investments.

**540 Holland & Knight, Richard T. Williams and D.
Casey Flaherty, Los Angeles, for Petitioners.

165 Cal.App.4th 969, 81 Cal.Rptr.3d 535, 08 Cal. Daily Op. Serv. 10,190, 2008 Daily Journal D.A.R. 12,214

(Cite as: 165 Cal.App.4th 969, 81 Cal.Rptr.3d 535)

No appearance for Respondent.

Goldfarb, Sturman & Averbach, Steven L. Feldman
and Steven L. Crane, Encino, for Real Parties in In-
terest.

CROSKEY, Acting P.J.

*974 In these consolidated writ proceedings,
several nonresident defendants challenge the denial of
their motions to quash service of summons based on
lack of personal jurisdiction! They contend their
contacts with the State of California are insufficient to
justify the exercise of personal jurisdiction in this
state. They also contend the trial court applied an
improper standard of proof and erred in finding that
two individual defendants made false representations
to the plaintiffs at a meeting in California. We reject
these arguments.

EN1. The petitioners are Anglo Irish Bank
Corporation, ple (the Irish bank), Anglo Irish
Bank Corporation (I.0.M.) P.L.C. (the Isle of
Man bank), Anglo Irish Trust Company
Limited (the trust company), Stewart Davies,
and Enda Connolly (collectively Petitioners).

We conclude that by soliciting investors in Cali-
fornia through the personal visits of their employees
and others, Petitioners established sufficient contacts
with California to justify the exercise of specific per-
sonal jurisdiction in this state. We further conclude
that activities that are undertaken on behalf of a de-
fendant may be attributed to the defendant for pur-
poses of personal jurisdiction if the defendant pur-
posefully directed those activities at the forum state,
regardless of the specific requirements of alter ego or
agency, and that state law of alter ego and agency does
not determine the constitutional limits to the exercise
of specific personal jurisdiction. The denial of the
motions to quash was proper.

FACTUAL AND PROCEDURAL BACKGROUND
1. Factual Background ™*

FN2. The material facts are undisputed, ex-
cept as noted.

The Irish bank is incorporated in and has its
principal place of business in Ireland. The Isle of Man

bank and the trust company are incorporated in and
have their principal places of business in Isle of Man,
and are subsidiaries of the Irish bank. Davies is a
citizen and resident of the United Kingdom. Davies
became managing director of the trust company in
December 1999 and became a director of the Isle of
Man bank in October 2000. Connolly is a citizen
and resident of Ireland.**541 Connolly preceded
Davies as managing director of the trust company and
was a director of the trust company from December
1999 to October 2000. Connolly was a director of the
Isle of Man bank from January 1999, or earlier, to
December 2000 and was a senior manager for the Irish
bank from October 2000 to June 2001.

EN3. A managing director is the equivalent
of a chief executive officer.

*975 The Irish bank, the Isle of Man bank, and
the trust company sought investors who would borrow
funds from the Isle of Man bank to purchase invest-
ments known as “with profit bonds” to be held in trust
by the trust company. The Irish bank would review
and approve the investors’ applications for credit.
Davies visited California to meet with individuals who
might be interested in such a leveraged investment. At
the request of the Irish bank, Connolly accompanied
Davies on the visit. The primary purpose of their
meetings with potential investors was to determine
whether the potential investors were suitable inves-
tors. Part of their responsibility in that connection was
to satisfy Isle of Man's “know your customer” an-
ti-money laundering requirements by determining that
the funds were from legitimate sources.

Davies and Connolly jointly met with 10 or 11
potential clients in California in March 2000, 9 or 10
of whom decided to invest through the trust company.
Their business cards handed out at the meetings bore a
logo for “Anglo Irish Bank.” Davies's card identified
him as managing director of the trust company.
Connolly's card identified him as “Head of Offshore
Trust Operations” for the Irish bank ™ Mike McGee,
who was then managing director of the Isle of Man
bank, also met with several potential investors in
California a few months later.

FN4. Connolly testified in his deposition that
he used that title to distinguish himself from
Davies, with whom he was working closely
while Davies learned his new job as manag-

165 Cal.App.4th 969, 81 Cal.Rptr.3d 535, 08 Cal. Daily Op. Serv. 10,190, 2008 Daily Journal D.A.R. 12,214

(Cite as: 165 Cal.App.4th 969, 81 Cal.Rptr.3d 535)

ing director of the trust company. Connolly
testified that he did not “have any title” with
the Irish bank at the time and that he did not
understand why the card stated that he did.
He acknowledged, however, that he visited
California to meet with potential investors at
the specific request of the Irish bank.

Kal Brar and Imelda Brar are California residents.
They are cotrustees of the Satnam Trust. They met
with investment advisors in late 1999 who encouraged
them to invest abroad in “with profit bonds” and to
leverage their investments. The Brars caused more
than $4 million from the Satnam Trust to be trans-
ferred to the Kivrar Trust, a trust organized under the
laws of Isle of Man, for the purpose of investing
abroad in “with profit bonds.” More than $3.3 million
of the funds held by the Kivrar Trust were so invested
as of early 2000. The investment advisors then ar-
ranged for a meeting to take place at the Brars' home in
California to discuss the potential leveraging of their
investments.

Accordingly, the Brars met with Davies and
Connolly at the Brars' home in California in March
2000. The Brars' attorney, Robert Klueger, and two
investment advisors, Stanley Chesed of PrimeGlobal
and Andrew Peat, also *976 were present at the
meeting. The meeting included discussions of the
Brars' background, the source of their wealth, and
leveraging “with profit bonds.” After the meeting, the
leveraging was approved and put in motion. The trust
company was appointed trustee of the Kivrar Trust in
June 2000, a new trust called Kivrar Trust II was cre-
ated, and Kivrar Trust II borrowed funds in order to
purchase additional “with profit bonds.”

[1] Davies visited California again in November
2000 to attend conferences in Los Angeles and San
Francisco on the **542 subject of asset protection.
The conferences were sponsored by PrimeGlobal and
included presentations on leveraging “with profit
bonds.” Davies visited California again in May 2001
to meet with investment advisors and at least one
potential investor regarding leveraged “with profit
bonds.” FS

ENS. Davies declared that he met with only
investment advisors and representatives of
trust companies during his visit to California
in May 2001 and solicited no business for the

trust company on that visit. The Brars,
however, presented a declaration by Francis
Good describing his meeting with Davies and
others in California in May 2001 to discuss
potential leveraged investments in “with
profit bonds,” and a memorandum by Davies
describing the meeting. The trial court re-
solved the conflict in the evidence by finding
that the meeting had occurred. Substantial
evidence supports that finding.

The Brars' investments eventually suffered sub-
stantial losses. The Brars estimated that as of De-
cember 2007 they had lost approximately $2 million
of their initial investment.

2. Trial Court Proceedings

The Brars individually and Imelda Brar as a
trustee of the Satnam Trust filed a complaint against
Petitioners and others in May 2005. Their first
amended complaint filed in July 2005 alleges that
based on the advice of their investment advisors, the
Brars caused over $4 million held by Satnam Trust to
be invested abroad in “with profit bonds.” They allege
that the investments were made through Kivrar Trust
and other intermediaries. They allege that their in-
vestment advisors represented that the investments
were unique and that their principal w

Case Info

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TILLERY, DALE Track Judge’s New Case

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Document Filed Date

March 19, 2013

Case Filing Date

December 08, 2010

County

Parties

COALE, DAVID S Attorney for the Defendant
DUNN, WILLIAM DAVID Attorney for the Plaintiff
GANNON, GRACE ANN Attorney for the Plaintiff
MARTIN, COLLEEN Defendant
MARTIN, LOUIS, Jr. Defendant
U S MERCHANTS FINANCIAL GROUP INC Plaintiff
John Blakley Attorneys for Plaintiffs
Connor Sheehan Attorneys for Plaintiffs
Caleb Wood Attorneys for Defendants
Eric Haas Attorneys for Plaintiffs
Cari LaSala Attorneys for Plaintiffs
LaKeisha Forte Attorneys for Defendants
David Starr Attorneys for Defendants

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Motion-Secondary: U S MERCHANTS FINANCIAL GROUP INC vs. LOUIS MARTIN, Jr.

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