OrthoTec v. Surgiview





Filed 12/15/10 OrthoTec v. Surgiview CA2/7








NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS


California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.



IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

ORTHOTEC, LLC, Plaintiff and Appellant, v. SURGIVIEW, S.A.S., et al., Defendants and Respondents.

B216656 (Los Angeles County Super. Ct. No. BC390346)

Appeal from an order of the Superior Court of Los Angeles County, Edward A. Ferns, Judge. Affirmed in part, reversed in part and remanded with directions. Browne Woods George and Peter W. Ross; Michael J. Perry for Plaintiff and Appellant OrthoTec, LLC.
Heller & Edwards and Marc L. Edwards; Berenthal & Associates and James L. Berenthal for Defendants and Respondents Surgiview, S.A.S., Scient’x, S.A. and Olivier Carli.
Covington & Burling, Richard A. Jones, Andrew A. Ruffino and Jonathan L. Marcus for Defendants and Respondents HealthpointCapital, LLC, Healthpoint Capital Partners, L.P., Healthpoint Capital Partners II, L.P., John Foster and Mortimer Berkowitz III.
__________________
OrthoTec LLC, a judgment creditor of Eurosurgical, S.A., sued Surgiview, S.A.S., Scient’x, S.A. and Olivier Carli (collectively the Surgiview defendants), as well as HealthpointCapital, LLC, Healthpoint Capital Partners, L.P., Healthpoint Capital Partners II, L.P., John Foster and Mortimer Berkowitz III (collectively the Healthpoint defendants), alleging each of them had participated in a scheme to fraudulently transfer Eurosurgical’s assets to Surgiview with the intent of preventing OrthoTec from collecting on its judgment against Eurosurgical. The Surgiview defendants, an individual and two corporations based in France and Belgium, and the Healthpoint defendants, individuals and entities based in New York, moved to quash the service of summons, contending none of them had the requisite minimum contacts with California to justify the court’s exercise of personal jurisdiction. After permitting some jurisdictional discovery, the trial court granted each of the motions to quash. We reverse the order granting Surgiview’s motion to quash, finding OrthoTec has established Surgiview’s minimum contacts with California to justify the exercise of personal jurisdiction. In all other respects, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Parties
OrthoTec, formed in 1998 for the specific purpose of manufacturing and distributing medical equipment designed by Eurosurgical, is a Delaware limited liability company with its principal place of business in Beverly Hills, California.
Surgiview is a French company headquartered in Beaurains, France. Eurosurgical allegedly created Surgiview as its subsidiary in 2000, then sold its interests in Surgiview in September 2004, following OrthoTec’s judgment in the California action.
Scient’x, which is in the business of manufacturing surgical spinal implants, is a French company headquartered in France. Scient’x was the parent company (94 percent owner) of Surgiview at the time Surgiview purchased Eurosurgical’s assets in 2006.
Carli, a citizen of France and a resident of Belgium, was the chief executive officer, president and principal owner (of a two-thirds interest) in Scient’x and the sole director of Surgiview at the time Surgiview acquired Eurosurgical’s assets.
HealthpointCapital, a limited liability company, is a private equity management company based in New York. HealthpointCapital, which is in the business of acquiring and selling orthopedic companies, owned a one-third interest in Scient’x at the time Scient’x’s subsidiary, Surgiview, acquired Eurosurgical’s assets.
John Foster and Mortimer Berkowitz, both residents of New York, are the principal owners and managers of HealthpointCapital.
Healthpoint Capital Partners, L.P. and Healthpoint Capital Partners II, L.P. are two limited partnership entities used by HealthpointCapital to hold its investments.^[1]
2. OrthoTec’s Successful Lawsuits Against Eurosurgical
In 2002 OrthoTec sued Eurosurgical in Los Angeles County Superior Court for contract and related tort claims arising out of Eurosurgical’s breach of an assignment agreement giving OrthoTec the exclusive right to distribute specified Eurosurgical medical devices in the United States (the state action). In 2003 OrthoTec also sued Eurosurgical in the United States District Court for the Central District of California alleging related federal trademark and copyright infringement claims. In August 2004 judgment was entered for OrthoTec in the state action after a jury awarded OrthoTec $8,930,000 in damages. We affirmed that judgment on appeal in all material respects. (See OrthoTec, LLC v. Eurosurgical, S.A (June 27, 2007, B179387 et al.) [nonpub. opn.].) On January 11, 2007 OrthoTec obtained a default judgment against Eurosurgical in the federal action in the amount of $30,445,683. Eurosurgical’s appeal from that judgment was dismissed by the United States Court of Appeals for the Ninth Circuit.
3. Eurosurgical’s Lease and Sale of Assets to Surgiview
On July 22, 2004, following the jury verdict in the state action (but prior to entry of judgment), the court in France appointed an ad hoc agent pursuant to Eurosurgical’s request to assist Eurosurgical in negotiating with its creditors.^[2] Pursuant to the recommendation of the appointed agent, on September 28, 2004 (one month after judgment was entered against Eurosurgical in the state action) Eurosurgical and Surgiview entered into a “business lease agreement” in which Eurosurgical agreed to lease “the Eurosurgical business commercial name, clientele and all other related assets,” including the manufacturing equipment, the inventory and all contracts with clients, suppliers and consultants, to Surgiview for a two-year period,^[3] ending September 2006, while Eurosurgical negotiated with its creditors.^[4]
The motivating purpose for the asset lease agreement is reflected in that document’s preamble: “The Company Eurosurgical having encountered difficulties, mostly from the litigation in which it is opposed in the United States to the Company OrthoTec, LLC, has by solicitation requested the designation of a preinsolvency agent. [¶] By court order, dated July 22, 2004, the Commerce Tribunal of Arras named Messr. MEYNET, Judicial Administrator, as ad hoc agent having objective to assist the management of the company Eurosurgical SA in the litigation [against] OrthoTec LLC. [¶] . . . [T]o [e]nsure the continuity of the business and the preservation of the employment, Messr. MEYNET found appropriate to offer for lease the business for the benefit of the Company Surgiview for a period of two years, said Company will have to modify its initial activity, based on software development, and shall separate itself from the Eurosurgical group.”
On May 17, 2006 Eurosurgical entered into a written agreement with Surgiview entitled “Partial Sale Agreement,” which expressly superseded the prior lease agreement. The partial sale agreement provided that Eurosurgical would sell to Surgiview all of the assets listed in the lease agreement. In exchange, Surgiview would deposit $2 million in an escrow account to be used by Eurosurgical to pay its creditors. As explained more fully in the sections below, OrthoTec has alleged the $2 million dollars paid for Eurosurgical’s assets is far less than their $47 million value, an assertion, not surprisingly, vigorously disputed by the defendants.^[5]
4. OrthoTec’s Attempt To Add Surgiview to the State Court Judgment as Eurosurgical’s Successor-in-Interest
Following the asset sale to Surgiview, OrthoTec filed a postjudgment motion in the trial court pursuant to Code of Civil Procedure section 187 to add Surgiview to the state court judgment as Eurosurgical’s successor-in-interest. OrthoTec alleged Eurosurgical created Surgiview for the sole purpose of transferring its assets and defrauding OrthoTec.
Initially, on February 2, 2007, the trial court denied the motion. The court observed that, although the preamble to the asset lease agreement and OrthoTec’s valuation of Eurosurgical’s assets at the time of the asset transfer “certainly raise the question of inadequate consideration [and a fraudulent transfer], Surgiview counters with declarations [and other evidence including the independent appraisal] that, taken together, posit a plausible argument that Eurosurgical did not sell its entire business to Surgiview and that Surgiview paid fair market value for the assets it did purchase. Although OrthoTec argues in its reply that the evidence presented by Surgiview is false or misinterpreted, the proceeding chosen by OrthoTec—a motion rather than an order to show cause hearing or other evidentiary hearing—does not enable the court to assess the credibility of the declarants.” Finding the declarations submitted by both parties “raise more questions than they answer,” the court concluded that OrthoTec “has not met its burden of demonstrating that Surgiview is merely a continuation of Eurosurgical.”
OrthoTec immediately filed an ex parte application for an order to show cause. Believing an evidentiary hearing would be appropriate under the circumstances, on February 13, 2007 the trial court reconsidered its prior denial of Orthotec’s Code of Civil Procedure section 187 motion and ordered Surgiview to show cause, at an evidentiary hearing ultimately set for June 13, 2007, why the judgment in the state action should not be amended to include Surgiview as a judgment debtor.^[6]
5. OrthoTec’s Instant Complaint and the Defendants’ Motions To Quash
The evidentiary hearing identified in the court’s February 13, 2007 order to show cause never took place, nor did the trial court enter any subsequent order on the matter. Apparently, after the order to show cause hearing was scheduled, OrthoTec elected, in its words, “to change its approach.” Rather than pursue Surgiview as a judgment debtor, on May 6, 2008 OrthoTec filed the instant complaint alleging claims for fraudulent

transfer against all the people and entities it claims participated in the transfer of Eurosurgical’s assets.^[7] Eurosurgical, which had initiated bankruptcy proceedings in
France on July 6, 2007, was not named as a party in the complaint.^[8]
On September 15, 2008 the Surgiview and Healthpoint defendants moved to quash service of summons pursuant to Code of Civil Procedure section 418.10, subdivision (a)(1), for lack of personal jurisdiction. The Surgiview and Healthpoint defendants also filed motions to dismiss on the ground of inconvenient forum pursuant to Code of Civil Procedure section 418.10, subdivision (a)(2). Prior to ruling on the motions, the court permitted OrthoTec to conduct discovery on the limited issue of personal jurisdiction.
6. The Trial Court’s Order Granting the Motions To Quash
Following discovery and additional briefing and argument by OrthoTec and the Surgiview and Healthpoint defendants (appearing specially in the action), on April 6, 2009 the court granted each of the motions to quash finding OrthoTec had failed to present sufficient evidence demonstrating any of the defendants was subject to personal jurisdiction in California under any established legal theory. At the same hearing the court denied OrthoTec’s motion to compel each of the defendants to respond to discovery requests directed to the valuations of Eurosurgical and Surgiview before and after the transactions at issue.
DISCUSSION
1. Standard of Review
When a specially-appearing nonresident defendant challenges personal jurisdiction by a motion to quash, the plaintiff has the burden of proving, by a preponderance of the evidence, the factual bases justifying the court’s exercise of jurisdiction. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 449 (Vons); accord, Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 273 (Pavlovich). The plaintiff must provide affidavits and other competent evidence of jurisdictional facts and cannot simply rely on allegations in an unverified complaint. (In re Automobile Antitrust Cases I and II (2005) 135 Cal.App.4th 100, 110.) If the plaintiff meets this burden, “it becomes the defendant’s burden to demonstrate that the exercise of jurisdiction would be unreasonable. [Citation.] When there is conflicting evidence, the trial court’s factual determinations are not disturbed on appeal if supported by substantial evidence. [Citation.] When no conflict in the evidence exists, however, the question of jurisdiction is purely one of law and the reviewing court engages in an independent review of the record.” (Vons, at p. 449.)
2. The Law Governing Personal 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.”’”’” (Snowney v. Harrah’s Entertainment, Inc. (2005) 35 Cal.4th 1054, 1061 (Snowney); accord, Pavlovich, supra, 29 Cal.4th at p. 268; Vons, supra, 14 Cal.4th at p. 464.)
Under the minimum contacts test personal jurisdiction may be either general or specific. (Snowney, supra, 35 Cal.4th at p. 1062; Vons, supra, 14 Cal.4th at p. 445.) General jurisdiction exists when the defendant’s contacts with the forum state are so “substantial” or “continuous and systematic” as to make it consistent with traditional notions of fair play and substantial justice to subject the defendant to the jurisdiction of the forum even when the cause of action is unrelated to the defendant’s contacts with the forum. (Vons, at p. 446.)
Specific jurisdiction, on the other hand, requires some nexus between the cause of action and the defendant’s activities in the forum state. Under well-established case law specific jurisdiction exists when (1) the defendant has “purposefully availed” himself or herself of forum benefits; (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.’” (Pavlovich. supra, 29 Cal.4th at p. 268; accord, Vons, supra, 14 Cal.4th at p. 446; see also Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 472-473 [105 S.Ct. 2174, 85 L.Ed.2d 528].) There are no bright line rules for determining jurisdiction. “‘[R]ather, the facts of each case must be weighed to determine whether the requisite “affiliating circumstances” are present.’” (Pavlovich, at p. 268.)
3. The Trial Court Erred in Granting Surgiview’s Motion To Quash
a. Surgiview purposefully directed its actions to California
The first prong of the minimum contacts analysis for specific jurisdiction, the purposeful availment requirement, focuses on the defendant’s “‘intentionality’” and is satisfied when the defendant “purposefully directs” his or her activities to the forum state such that he or she should expect, by virtue of that purposeful direction, to be subject to the forum state’s jurisdiction. (Pavlovich, supra, 29 Cal.4th at p. 269; see Calder v. Jones (1984) 465 U.S. 783, 785-786 [104 S.Ct. 1482, 79 L.Ed.2d 804] (Calder) [describing an “effects test” for determining purposeful availment].) Purposeful direction requires more than a finding that the defendant knew or should have known his or her acts would cause a “foreseeable effect” in the forum state. (Pavlovich, at p. 271; see Calder, 465 U.S. at pp. 785-786.) Rather, “the intentional conduct must be “expressly aimed at or target[]” the forum state. (Pavlovich, at p. 271 [mere knowledge that harm will likely be suffered in the forum state, without more, is insufficient to justify personal jurisdiction]; accord, Archdiocese of Milwaukee v. Superior Court (2003) 112 Cal.App.4th 423, 437-438.)
Surgiview asserts its purchase of assets located in France, pursuant to an agreement executed in France between two French companies and governed by French law, did not amount to conduct “aimed at or targeting” California, even if, by some measure, the asset transfer had a foreseeable adverse effect on a California resident. Whatever merit that argument may have in the abstract, OrthoTec presented evidence the asset transfer was specifically designed to thwart OrthoTec’s execution of its judgment against Eurosurgical. Indeed, the preamble to the asset lease agreement specifically identifies OrthoTec’s impending success in the state action as the primary reason for the asset transfer. Moreover, the two-year term of the asset lease agreement was designed at the agreement’s inception to coincide with the timing of Eurosurgical’s appeal from the judgment. Far from being merely an incidental, albeit foreseeable, effect, frustration of OrthoTec’s judgment in the state action was the raison d’etre for the asset sale to Surgiview.
Although we have not found a similar fact pattern discussed in a California case, other jurisdictions have found “purposeful direction” in analogous situations. In State Farm Mutual v. Tz’doko V’CHESED of Klausenberg (E.D. Pa. 2008) 543 F.Supp.2d 424, for example, State Farm became a judgment creditor of MFP after it prevailed in an insurance fraud lawsuit against MFP. After judgment was entered, MFP transferred its assets to several out-of-state organizations that did not appear to have any contacts with the forum state. State Farm sued the out-of-state entities alleging they had knowingly participated in MFP’s fraudulent transfer of assets to thwart State Farm’s ability to recover on its creditor claim. The federal district court rejected the defendants’ request to dismiss for lack of personal jurisdiction, concluding the “purposeful direction” prong of the minimum contacts test was satisfied because “the alleged acts—liquidating MFP to avoid paying the Pennsylvania judgment—were ‘expressly aimed’ at the forum state.” (Id. at pp. 430-431.)
Harris Rutsky & Co. Ins. Services, Inc. v. Bell & Clements Ltd. (9th Cir. 2000) 328 F.3d 1122, is also instructive. There, the plaintiff, a California company, sued a foreign corporation headquartered in London, England, alleging it had interfered with existing contracts and plaintiff’s prospective economic advantage by defaming plaintiff and urging other London-based companies not to do business with it. In requesting the federal district court in California to dismiss for lack of personal jurisdiction, the defendant argued all of the alleged conduct had occurred in London; the defendant had no contacts with California; and the foreseeable effect of its conduct on a California corporation was, by itself, insufficient to justify personal jurisdiction. The Ninth Circuit Court of Appeals rejected that argument and upheld the exercise of personal jurisdiction, concluding the alleged interference was intended to target a California resident. (Id. at p. 1131.)
Surgiview, of course, vigorously disputes OrthoTec’s characterization of the asset sale as fraudulent and points to evidence showing its purchase of Eurosurgical’s assets exceeded the valuation of the assets made by an independent appraiser. (See Civ. Code, § 3439.04 [transfer only fraudulent if accomplished with intent to defraud and “[w]ithout receiving reasonably equivalent value in exchange for the transfer or the obligation].) Whether or not OrthoTec ultimately prevails on its fraudulent transfer claim against Surgiview, however, OrthoTec has presented sufficient evidence of “purposeful direction”—express aiming at or targeting OrthoTec—to satisfy the first prong of the minimum contacts analysis.
b. OrthoTec’s claim arises out of Surgiview’s actions directed to California
The second prong of the minimum contacts test for specific jurisdiction is plainly satisfied in this case: OrthoTec’s fraudulent transfer claim “arises out of or relates to” Surgiview’s participation in the asset transfer targeting OrthoTec. (See Pavlovich, supra, 29 Cal.4th at p. 268; Vons, supra, 14 Cal.4th at p. 452 [“as long as the claim bears a substantial connection to the nonresident’s forum contacts, the exercise of specific jurisdiction is appropriate”].)
c. Personal jurisdiction over Surgiview is not unreasonable
The third prong of the minimum contacts test—determining whether the assumption of jurisdiction over Surgiview is unreasonable, offending traditional notions of fair play and substantial justice (see Snowney, supra, 35 Cal.4th at p. 1070; Vons, supra, 14 Cal.4th at p. 476; see also Asahi Metal Industry Co. v. Superior Court (1987) 480 U.S. 102, 113 [107 S.Ct. 1026, 94 L.Ed.2d 92])—requires consideration of “‘“the burden on the defendant, the interests of the forum State, and the plaintiff’s interest in obtaining relief.”’” (Snowney, at p. 1070.) In a case involving an international defendant, the court also “consider[s] the procedural and substantive policies of other nations whose interests are affected by the assertion of jurisdiction by the California court.” (Asahi Metal, at p. 115; accord, F. Hoffman-LaRoche, Ltd. v. Superior Court (2005) 130 Cal.App.4th 782, 805; In re Automobile Antitrust Cases I & II, supra, 135 Cal.App.4th at p. 110.) At this stage a defendant can defeat jurisdiction only by presenting “‘a compelling case that the presence of some other considerations would render jurisdiction unreasonable.’” (Snowney, at p. 1070.)
Surgiview contends California’s exercise of jurisdiction over it in this case would be unreasonable because: (1) All documents and witnesses to the alleged tortious conduct are located in France; (2) OrthoTec is currently proceeding as a claimant in Eurosurgical’s bankruptcy in France and is a defendant in an action in France in which Surgiview seeks a declaratory judgment that it cannot be held liable for the obligations of Eurosurgical; accordingly, there is a “real possibility of conflicting adjudications” should California assert jurisdiction; (3) the challenged actions were commenced in connection with a “preinsolvency” proceeding in France and involve recommendations made by an ad hoc agent appointed by the French court, thus directly implicating French sovereignty; and (4) the asset transfer was accomplished in accordance with a contract entered into in France and governed by French law, making the French forum the more appropriate one to resolve the controversy.
None of Surgiview’s arguments is sufficiently compelling to defeat specific jurisdiction. First, while submitting to jurisdiction in California will likely be inconvenient for Surgiview and more expensive in light of the location of witnesses and relevant documents, there is absolutely no evidence that Surgiview would be at a “‘severe disadvantage’” in comparison to OrthoTec if required to proceed in California. (See Vons, supra, 14 Cal.4th at p. 477 [to defeat jurisdiction, burdens on defendant must be such “‘as to make litigation “so gravely difficult and inconvenient”’that [the defendants] would be at a ‘“severe disadvantage”’ [citation] in comparison to [the plaintiff]”]; see also Asahi Metal Industry Co. v. Superior Court, supra, 480 U.S. at p. 114 [“[w]hen minimum contacts have been established, often the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burdens placed on the alien defendant”].)^[9]
Second, the forum selection clause contained in the asset transfer agreements is irrelevant to our due process analysis. OrthoTec was not a party to the asset sale agreement and is not bound by its provisions.
Third, the California court’s assumption of jurisdiction does little to undermine French sovereignty. Although Eurosurgical participated in preinsolvency proceedings in the French court, the undisputed evidence was that such proceedings involved only the appointment of an ad hoc agent to assist Eurosurgical in negotiating with its creditors. Contrary to Surgiview’s contention, the French court neither approved nor intervened in Eurosurgical’s sale of its assets to Surgiview, which occurred prior to the initiation of bankruptcy proceedings in France.
Finally, there appears little likelihood of conflicting judgments. Although Surgiview has apparently sought declaratory relief in France as to whether it is liable for Eurosurgical’s liabilities as a successor-in-interest, this lawsuit charges Surgiview with engaging in wrongful conduct. Neither Surgiview’s declaratory relief action nor OrthoTec’s creditor application in Eurosurgical’s bankruptcy proceedings undermines California’s interest in adjudicating tortious conduct targeting its residents. (Vons, supra, 14 Cal.4th at p. 477; Bresler v. Stavros (1983) 141 Cal.App.3d 365, 371.)^[10]
4. OrthoTec Has Not Demonstrated the California Courts May Properly Exercise Personal Jurisdiction Over Any Other Defendant
Surgiview’s minimum contacts with California are not imputed to the other defendants by virtue of OrthoTec’s allegations they all participated in the scheme to defraud it. Rather, jurisdictional facts must be established as to each individual defendant. (See Sibley v. Superior Court (1976) 16 Cal.3d 442, 448 [“the purpose of other parties cannot be imputed to petitioner for the purpose of assuming personal jurisdiction over him”]; see also In re Automobile Antitrust Cases I & II, supra, 135 Cal.App.4th at p. 113 [“Allegations of conspiracy do not establish as a matter of law that if one conspirator comes within the personal jurisdiction of our courts, then California may exercise jurisdiction over other nonresident defendants who are alleged to be part of that same conspiracy. Personal jurisdiction must be based on forum-related acts that were personally committed by each nonresident defendant. The purposes and acts of one party—even an alleged coconspirator—cannot be imputed to a third party to establish jurisdiction over the third party defendant.”]; accord, Kaiser Aetna v. Deal (1978) 86 Cal.App.3d 896, 901.)
a. Scient’x and Carli
Scient’x USA, a wholly owned subsidiary of Scient’x, does business in California and is subject to the general jurisdiction of this state’s courts. As a result, OrthoTec contends Scient’x is also subject to California’s general jurisdiction under the representative services doctrine. (See Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 543 (Sonora Diamond).)
Ordinarily, neither ownership nor control of a subsidiary corporation by a foreign corporation is enough to subject the parent to the jurisdiction of the state where the subsidiary does business. (Sonora Diamond, supra, 83 Cal.App.4th at pp. 540-541 [such common characteristics between parent and subsidiary, including interlocking directors and officers, consolidated reporting and shared professional services are to be expected; by themselves, they are not sufficient to subject the parent to general jurisdiction in the state where subsidiary does business]; accord, Dorel Industries, Inc. v. Superior Court (2005) 134 Cal.App.4th 1267, 1276.) However, under the representative services theory, if the subsidiary is merely “a means through which the parent acts” to perform its own business, that is, “nothing more than an incorporated department of the parent, the subsidiary will be deemed to be the agent of the parent in the forum state and [general] jurisdiction will extend to the parent.” (Sonora Diamond, at p. 541; cf. id. at p. 543 [where parent is merely holding company whose business is investing in the subsidiary’s business, representative services theory not applicable]; accord, Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 577.)
OrthoTec argues Scient’x and Scient’x USA are in the identical business of developing, patenting and distributing medical devices. According to OrthoTec, Scient’x sells its patented products in the United States through Scient’x USA. Because Scient’x is using its subsidiary to do what Scient’x “would have otherwise been forced to do itself”—sell its products in California—OrthoTec contends California courts have jurisdiction over Scient’x. However, the trial court found absolutely no evidence Scient’x USA was anything other than a separate corporation performing its own business operations, not those of its parent company; and OrthoTec presents nothing on appeal that would justify disturbing that finding. That Scient’x and Scient’x USA are in the same business of developing and distributing medical devices is not a proper basis to disregard the separate identities of both companies or to conclude Scient’x USA is nothing more than an agent of Scient’x. (See Sonora Diamond, supra, 83 Cal.App.4th at p. 542 [to show an agency relationship between parent and subsidiary sufficient to justify general jurisdiction, “there must be a strong showing beyond simply facts evidencing ‘the broad oversight typically indicated by [the] common ownership and common directorship’ present in a normal parent-subsidiary relationship [citations]; [a]s a practical matter, the parent must be shown to have moved beyond the establishment of general policy and direction for the subsidiary and in effect taken over performance of the subsidiary’s day-to-day operations in carrying out that policy”]; BBA Aviation PLC v. Superior Court (Nov. 23, 2010, B219289) __ Cal.App.4th __ [2010 Cal.App. Lexis 1999]; see also Ziller Electronics Lab GmbH v. Superior Court (1988) 206 Cal.App.3d 1222, 1233 [“[w]hile the two [similar] names, and the disclosed common directors and officers of the two [entities] suggest some relationship, it appears pure speculation to conclude that the companies are identical, alter egos, or have such a control relationship as to subject defendant to personal jurisdiction here”].)
Equally without merit is OrthoTec’s argument that Scient’x and Carli are properly subject to the exercise of specific personal jurisdiction because they participated in Eurosurgical’s and Surgiview’s scheme targeting OrthoTec’s California judgment. Significantly, OrthoTec makes little effort to cite jurisdictional facts relating specifically to Scient’x and Carli, but instead argues generally throughout its appellate briefs that “all defendants” participated in the effort to defraud OrthoTec. As discussed, such general allegations of conspiracy are insufficient to establish jurisdiction. (See Sibley v. Superior Court, supra, 16 Cal.3d at p. 448 [jurisdiction against one actor will not be imputed to another actor simply by virtue of allegations of conspiracy]; In re Automobile Antitrust Cases I& II, supra, 135 Cal.App.4th at p. 113.)
To be sure, as OrthoTec notes, Scient’x owned 94 percent of Surgiview, and Carli was the chief executive officer and principal owner of Scient’x, as well as Surgiview’s sole director, at the time of the asset sale. Thus, the sale targeting OrthoTec’s judgment obviously could not have happened but for their participation and approval. Yet, neither Scient’x nor Carli was a party to the asset lease or asset sale agreements. Absent evidence to justify piercing the separate identities of these organizations or establishing Carli’s and Scient’x’s direct participation in the asset sale, there is no basis to find either of them subject to the court’s specific jurisdiction. (See Ziller Electronics Lab GmbH v. Superior Court, supra, 206 Cal.App.3d at p. 1233.)
b. The Healthpoint defendants
OrthoTec contends the Healthpoint defendants have “substantial,” “continuous and systematic” contacts with California so as to be subject to the California courts’ general jurisdiction. (Vons, supra, 14 Cal.4th at p. 446.) To support this contention, OrthoTec cites evidence the Healthpoint defendants—OrthoTec fails to distinguish among them—are in the business of purchasing companies in the orthopedic device industry, using their management and organizational expertise to increase value, and then selling those businesses to third parties at a profit. Among the businesses the Healthpoint defendants have invested in are three California companies: Alphatec Spine Inc. (Alphatec), Nexa Orthopedics, Inc. (Nexa) and MicroDental Laboratories, Inc (MicroDental).^[11] In addition, OrthoTec contends, the Healthpoint defendants participated to some unspecified degree in the management decisions of the companies they purchase and provided and billed Alphatec for “advisory services” in 2007 in connection with that company’s initial public offering. None of these facts, considered separately or cumulatively, demonstrates the Healthpoint companies’ substantial, systematic and continuous contact with California.^[12]
As discussed, parent companies that hold controlling interests in their subsidiaries are not subject to suit in the state in which the subsidiary does business solely by virtue of their investment in the subsidiary. (See, e.g., Cannon Mfg. Co. v. Cudahy Co. (1925) 267 U.S. 333, 336 [45 S.Ct. 250, 69 L.Ed. 634]; Sonora Diamond, supra, 83 Cal.App.4th at p. 545; see also F. Hoffman-La Roche v. Superior Court, supra, 130 Cal.App.4th at p. 802 [no evidence that Swiss drug company was “anything other than a true passive holding company that globally invests in pharmaceutical subsidiaries”].) OrthoTec provided no evidence that Alphatec, Nexa and MicroDental are agents or alter egos of the Healthpoint defendants or that the Healthpoint defendants were involved in the day-to-day management of those companies. Indeed, the undisputed evidence is that each company is a separate corporate entity with distinct management teams. Although OrthoTec emphasizes the Healthpoint defendants provided managerial advice and consulting services to Alphatec on at least two occasions, thus making them more than simply passive investors in the California company, that is not the kind of substantial, continuous and systematic contact necessary to justify the exercise of general jurisdiction. (See, e.g., Cornelison v. Chaney (1976) 16 Cal.3d 143, 148 [nonresident trucker who made 20 trips to California each year for seven years did not have contacts “so substantial or wide-ranging as to justify general jurisdiction over him to adjudicate all matters regardless of their relevance to the cause of action”]; Luberski, Inc. v. Oleificio F.LLI Amato S.R.L. (2009) 171 Cal.App.4th 409, 414 [where Italian company’s only contacts with California were “its history of shipping olive oil to a small number of customers within the state,” evidence was insufficient to show “substantial, continuous, and systematic contacts such that [Italian company] could be held to answer to any lawsuit (whether related or unrelated to such sales of olive oil) in California”].)
It may well be, as the trial court recognized, that the Healthpoint defendants’ advice to a California company in which they have invested or, more generally, their purchase and sale of California organizations constitutes sufficient purposeful direction to permit the exercise of specific jurisdiction in connection with causes of action arising from or relating to those activities. But the conduct in question here—the lease and sale of Eurosurgical’s assets to Surgiview pursuant to agreements to which the Healthpoint defendants were not parties—does not relate to the managerial advice identified or to the purchase and sale of any of Healthpoint’s California companies.
Finally, OrthoTec contends the Healthpoint defendants are subject to specific jurisdiction in California because they participated in the fraudulent transfer of Eurosurgical’s assets to Surgiview. This argument suffers from the same flaw as the similar argument advanced with respect to Scient’x. Evidence presented in the trial court indicates the Healthpoint defendants owned a one-third interest in Scient’x at the time Eurosurgical’s assets were sold and Scient’x owned 94 percent of Surgiview. Thus, OrthoTec contends, and Berkowitz has acknowledged in his deposition testimony, the asset sale would not have taken place but for the approval of the Healthpoint defendants.^[13] Even if true, absent sufficient evidence to pierce the separate identity of Surgiview or to show the Healthpoint defendants’ own purposeful direction, there is no basis to subject any of them to the court’s specific jurisdiction.
DISPOSITION
The order granting the motions to quash is reversed as to Surgiview, S.A. only. On remand, if Surgiview renews its alternative motion to dismiss on the ground of inconvenient forum, the trial court should consider it since, in light of our holding, it is no longer moot. In all other respects the order granting the motions to quash service of summons on HealthpointCapital, LLC, Healthpoint Capital Partners, L.P., Healthpoint
Capital Partners, II, L.P, John Foster, Mortimer Berkowitz III, Scient’x, S.A. and Olivier Carli is affirmed. The Healthpoint defendants are to recover their costs on appeal. OrthoTec and each of the Surgiview defendants are to bear their own costs on appeal.



PERLUSS, P. J.


We concur:



WOODS, J. ZELON, J.



Publication Courtesy of San Diego County Legal Resource Directory.
Analysis and review provided by El Cajon Property line Lawyers.
San Diego Case Information provided by www.fearnotlaw.com

---