Filed 4/16/13 Darley International v. SDRC CA2/3
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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publication or ordered published for purposes of rule 8.1115.


              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                 DIVISION THREE



DARLEY INTERNATIONAL, LLC,                                                 B240707

         Plaintiff and Appellant,                                          (Los Angeles County
                                                                           Super. Ct. No. BS121441)
         v.

SDRC INC.,

         Defendant and Respondent.




         APPEAL from an order of the Superior Court of Los Angeles County,

Abraham Khan, Judge. Affirmed.

         Blecher & Collins, Maxwell M. Blecher, Jennifer S. Elkayam and Majed Dakak

for Plaintiff and Appellant.

         Law Office of Scott M. Schutz, Scott M. Schutz; Siegel, Barnett & Schutz and

Julie Dvorak for Defendant and Respondent.



                            _______________________________________
       Darley International, LLC (Darley) filed a petition to compel SDRC Inc.,

a nonresident corporation, to arbitrate in California. The trial court granted SDRC

Inc.‟s motion to quash service of summons based on lack of personal jurisdiction and

denied the petition to compel arbitration. Darley appeals challenging both rulings.

       Darley contends (1) SDRC Inc. has sufficient contacts with California to justify

the exercise of personal jurisdiction in this state; (2) SDRC Inc. is subject to personal

jurisdiction in California as a successor to the South Dakota International Business

Institute (SDIBI) or based on agency principles or the representative services doctrine;

and (3) SDRC Inc. is bound by an arbitration clause in a written agreement despite

being a nonsignatory to the agreement. We conclude that Darley has shown no error

and will affirm the order.

                  FACTUAL AND PROCEDURAL BACKGROUND

       1.      Factual Background

       SDIBI was created by the South Dakota Board of Regents in 1994 as an

administrative unit of Northern State University in Aberdeen, South Dakota. SDIBI

promoted export activities and foreign investment in South Dakota. SDRC Inc. was

incorporated in South Dakota in January 2008 by Joop Bollen, who was then SDIBI‟s

director.

       Darley provides international business services to clients worldwide. Darley‟s

principal place of business is in Orinda, California. Hanul Professional Law

Corporation (Hanul) is a law firm with offices in Los Angeles, California and Seoul,

South Korea.

                                             2
          The federal government, in April 2004, designated the SDIBI‟s Dairy Economic

Benefit Region as a regional center for purposes of a program offering permanent

residency to foreign nationals who invest in businesses and create jobs in South Dakota.

SDIBI later requested permission from the federal government to change the name of

the regional center to South Dakota Regional Center.

          Hanul assisted SDIBI by contracting with Darley to provide services for the

benefit of SDIBI. Hanul and Darley entered into a written Overseas Recruitment and

Service Agreement (Agreement) in October 2007 in which Darley agreed to engage in

marketing efforts to find foreign investors for certain projects in South Dakota in

connection with the immigration program. The Agreement included an arbitration

clause.

          Darley made efforts to find investors in China for a fish farming project in South

Dakota. SDIBI later canceled the project in December 2007. SDRC Inc. was

established in January 2008, as stated. SDIBI and SDRC Inc. entered into

a Memorandum of Understanding in January 2008 providing for SDRC Inc. to engage

in marketing efforts to find foreign investors for projects in South Dakota in connection

with the immigration program.

          Darley served a demand for arbitration on both Hanul and SDIBI in March 2008

stating that the dispute concerned a breach of the Agreement. Hanul agreed to arbitrate,

but SDIBI as a nonsignatory to the Agreement refused.




                                               3
       2.      Federal Court Proceedings

       Darley filed a petition in the United States District Court for the Central District

of California in July 2008 to compel SDIBI to arbitrate the dispute. The federal court

granted the petition in October 2008. SDIBI filed a motion to vacate the order in

March 2008 on the grounds that SDIBI was immune from suit in federal court under the

Eleventh Amendment. Darley voluntarily dismissed its petition without prejudice in

June 2009.

       3.      Trial Court Proceedings

       Darley filed a petition in the Los Angeles Superior Court July 2009 to compel

SDIBI to participate in the arbitration. South Dakota Board of Regents, as the legal

entity operating SDIBI, opposed the petition. After a hearing on the petition, the trial

court granted the petition in June 2010. The court concluded that Hanul had acted as

SDIBI‟s ostensible agent in entering into the Agreement and that SDIBI or the Board of

Regents had ratified the Agreement and therefore was bound by the arbitration clause.

       Darley filed another petition in the same proceeding in September 2011 to

compel SDRC Inc. to participate in the arbitration. Darley alleges that it conducted

seminars in China in an effort to attract investors in the fish farming project, and that

SDIBI failed to support those efforts and later canceled the project. It alleges that

SDRC Inc. was created to exploit the progress made by Darley and to avoid paying

Darley any fees. It alleges that SDIBI induced Hanul to breach the Agreement and that

this is the dispute subject to arbitration.



                                              4
       Darley further alleges that SDRC Inc., rather than SDIBI, now operates the

regional center and that SDIBI is inactive. Darley alleges that Bollen, SDIBI‟s former

director, is president of SDRC Inc. and that SDRC Inc. is, in practical effect, the

successor in interest to SDIBI. Darley filed a memorandum of points and authorities,

a declaration by its counsel and exhibits in support of the petition.

       SDRC Inc. filed a motion to quash service of summons based on lack of personal

jurisdiction (Code Civ. Proc., § 418.10, subd. (a)(1)). It also opposed the petition,

arguing that SDIBI still exists, that SDRC Inc. is not its successor in interest and that

there is no basis to compel SDRC Inc. as a nonsignatory to the Agreement to arbitrate.

SDRC Inc. also filed an objection to the entire petition as evidence on the grounds of

hearsay, lack of personal knowledge and speculation.

       The trial court granted the motion to quash and denied the petition to compel

arbitration in a minute order filed on April 6, 2012, stating, “The Court finds that

Respondent lacks minimum contacts with California, and is an entity separate from the

signatory without an alter-ego, agency or successor relationship.” The court also

sustained SDRC Inc.‟s evidentiary objection. Darley timely appealed the order.1

                                     CONTENTIONS

       Darley contends (1) SDRC Inc. has sufficient contacts with California to justify

the exercise of personal jurisdiction in this state; (2) SDRC Inc. is subject to personal


1
       An order granting a motion to quash service of summons is appealable, as is an
order denying a petition to compel arbitration. (Code Civ. Proc., §§ 904.1, subd. (a)(3),
1294.)


                                             5
jurisdiction in California as a successor to SDIBI or based on agency principles or the

representative services doctrine; and (3) SDRC Inc. is bound by the arbitration clause in

the Agreement despite being a nonsignatory.2

                                      DISCUSSION

       1.     Constitutional Limits on the Exercise of Personal Jurisdiction

       “A California court may exercise personal jurisdiction over a nonresident

defendant to the extent allowed under the state and federal Constitutions. (Code Civ.

Proc., § 410.10.) The exercise of personal jurisdiction is constitutionally permissible

only if the defendant has sufficient „minimum contacts‟ with the forum state so that the

exercise of jurisdiction „does not offend “traditional notions of fair play and substantial

justice.” [Citations.]‟ (Internat. Shoe Co. v. Washington (1945) 326 U.S. 310, 316

[90 L.Ed. 95, 66 S.Ct. 154]; accord, Pavlovich v. Superior Court (2002) 29 Cal.4th 262,

268, [127 Cal.Rptr.2d 329, 58 P.3d 2] (Pavlovich).) In other words, the defendant‟s

contacts with the forum state must be such that the defendant had „ “fair warning” ‟ that

its activities might subject it to personal jurisdiction in the state. (Burger King Corp. v.

Rudzewicz (1985) 471 U.S. 462, 472 [85 L.Ed.2d 528, 105 S.Ct. 2174] (Burger King);

accord, World–Wide Volkswagen Corp. v. Woodson (1980) 444 U.S. 286, 297

[62 L.Ed.2d 490, 100 S.Ct. 559].) „In judging minimum contacts, a court properly

focuses on “the relationship among the defendant, the forum, and the litigation.”


2
       Darley does not challenge on appeal the sustaining of SDRC Inc.‟s evidentiary
objection. We therefore will not consider as evidence the factual allegations in the
petition.


                                              6
[Citations.]‟ (Calder v. Jones (1984) 465 U.S. 783, 788 [79 L.Ed.2d 804, 104 S.Ct.

1482].) „Each defendant‟s contacts with the forum State must be assessed individually.‟

(Id. at p. 790.)

       “A defendant that has substantial, continuous, and systematic contacts with the

forum state is subject to general jurisdiction in the state, meaning jurisdiction on any

cause of action. (Perkins v. Benguet Mining Co. (1952) 342 U.S. 437, 445–446

[96 L.Ed. 485, 72 S.Ct. 413]; see Vons Companies, Inc. v. Seabest Foods, Inc. (1996)

14 Cal.4th 434, 445 [58 Cal.Rptr.2d 899, 926 P.2d 1085] (Vons).) Absent such

extensive contacts, a defendant may be subject to specific jurisdiction, meaning

jurisdiction in an action arising out of or related to the defendant‟s contacts with the

forum state. (Helicopteros Nacionales de Columbia v. Hall (1984) 466 U.S. 408, 414,

fn. 8 [80 L.Ed.2d 404, 104 S.Ct. 1868]; Vons, supra, 14 Cal.4th at p. 446.) Specific

jurisdiction depends on the quality and nature of the defendant‟s forum contacts in

relation to the particular cause of action alleged. (Cornelison v. Chaney (1976)

16 Cal.3d 143, 147–148 [127 Cal.Rptr. 352, 545 P.2d 264].)

       “A nonresident defendant is subject to specific personal jurisdiction only if

(1) the defendant purposefully availed itself of the benefits of conducting activities in

the forum state; (2) the controversy arises out of or is related to the defendant‟s forum

contacts; and (3) the exercise of jurisdiction would be fair and reasonable. (Burger

King, supra, 471 U.S. at pp. 472, 475–478; Pavlovich, supra, 29 Cal.4th at p. 269.)

„These guidelines are not susceptible of mechanical application, and the jurisdictional

rules are not clear-cut. Rather, a court must weigh the facts in each case to determine

                                             7
whether the defendant‟s contacts with the forum state are sufficient. (Burger King,

[supra, 471 U.S.] at pp. 478–479, 486, fn. 29 [105 S.Ct. at pp. 2185–2186, 2189–2190];

Kulko v. California Superior Court (1978) 436 U.S. 84, 89, 92 [56 L.Ed.2d 132,

98 S.Ct. 1690, 1695, 1696–1697]; Vons[, supra, 14 Cal.4th] at p. 450.)‟ (Bridgestone

Corp. v. Superior Court (2002) 99 Cal.App.4th 767, 774 [121 Cal.Rptr.2d 673].)”

(HealthMarkets, Inc. v. Superior Court (2009) 171 Cal.App.4th 1160, 1166-1167

(HealthMarkets).)

       “ „ “The purposeful availment inquiry . . . focuses on the defendant‟s

intentionality. [Citation.] This prong is only satisfied when the defendant purposefully

and voluntarily directs [its] activities toward the forum so that [it] should expect, by

virtue of the benefit [it] receives, to be subject to the court‟s jurisdiction based on” [its]

contacts with the forum.‟ (Pavlovich, supra, 29 Cal.4th at p. 269, quoting U.S. v. Swiss

American Bank, Ltd. (1st Cir.2001) 274 F.3d 610, 623–624.) Thus, purposeful

availment occurs where a nonresident defendant „ “purposefully direct[s]” [its] activities

at residents of the forum‟ (Burger King, supra, 471 U.S. at p. 472), „ “purposefully

derive[s] benefit” from‟ its activities in the forum (id. at p. 473), „create[s] a “substantial

connection” with the forum‟ (id. at p. 475), „ “deliberately” has engaged in significant

activities within‟ the forum (id. at pp. 475–476), or „has created “continuing

obligations” between [itself] and residents of the forum‟ (id. at p. 476). By limiting the

scope of a forum‟s jurisdiction in this manner, the „ “purposeful availment” requirement

ensures that a defendant will not be haled into a jurisdiction solely as a result of

“random,” “fortuitous,” or “attenuated” contacts . . . . ‟ (Id. at p. 475.) Instead, the

                                               8
defendant will only be subject to personal jurisdiction 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 risks are too

great, severing its connection with the state.” ‟ (Pavlovich, at p. 269, quoting

World-Wide Volkswagen, supra, 444 U.S. at p. 297.)” (Snowney v. Harrah’s

Entertainment, Inc. (2005) 35 Cal.4th 1054, 1062-1063 (Snowney).)

       “A controversy is related to or arises out of the defendant‟s forum contacts, so as

to satisfy the second requirement for the exercise of specific personal jurisdiction, if

there is „a substantial connection between the forum contacts and the plaintiff‟s claim.‟

(Vons, supra, 14 Cal.4th at p. 452.) The forum contacts need not be the proximate

cause or „but for‟ cause of the alleged injuries. (Id. at pp. 462–467.) The forum

contacts also need not be „substantively related‟ to the cause of action, meaning those

contacts need not establish or support an element of the cause of action. (Id. at

pp. 469-475.) „A claim need not arise directly from the defendant‟s forum contacts in

order to be sufficiently related to the contact to warrant the exercise of specific

jurisdiction. Rather, as long as the claim bears a substantial connection to the

nonresident‟s forum contacts, the exercise of specific jurisdiction is appropriate.‟ (Id. at

p. 452.) Accordingly, in evaluating the quality and nature of the defendant‟s forum

contacts, we consider not only the conduct directly affecting the plaintiff, but also the

broader course of conduct of which it is a part. (Cornelison v. Chaney, supra, 16 Cal.3d

at p. 149.)



                                               9
       “In determining whether the exercise of jurisdiction would be fair and

reasonable, so as to satisfy the third requirement 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 efficient resolution of controversies,” ‟ and

(5) the states‟ or nations‟ shared interest „ “in furthering fundamental substantive social

policies.” ‟ (Asahi [Metal Industry Co. v. Superior Court (1987)] 480 U.S. [102,] 113

[94 L.Ed.2d 92, 107 S.Ct. 1026]; see id. at p. 115.) „These considerations sometimes

serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum

contacts than would otherwise be required. [Citations.] On the other hand, where

a defendant who purposefully has directed his activities at forum residents seeks to

defeat jurisdiction, he must present a compelling case that the presence of some other

considerations would render jurisdiction unreasonable.‟ (Burger King, supra, 471 U.S.

at p. 477.)” (Anglo Irish Bank Corp., PLC v. Superior Court (2008) 165 Cal.App.4th

969, 979-980, fn. omitted (Anglo Irish).)

       2.      Standard of Review

       “A plaintiff opposing a motion to quash service of process for lack of personal

jurisdiction has the initial burden to demonstrate facts establishing a basis for personal

jurisdiction. (Snowney[, supra, 35 Cal.4th at p.] 1062[].) If the plaintiff satisfies that

burden, the burden shifts to the defendant to show that the exercise of jurisdiction would

be unreasonable. (Ibid.) If there is no conflict in the evidence, the question whether

                                               10
a defendant‟s contacts with California are sufficient to justify the exercise of personal

jurisdiction in this state is a question of law that we review de novo. (Ibid.) If there is

a conflict in the evidence underlying that determination, we review the trial court‟s

express or implied factual findings under the substantial evidence standard. (Vons,

supra, 14 Cal.4th at p. 449.)” (HealthMarkets, supra, 171 Cal.App.4th at

pp. 1167-1168.)

       3.     Darley Failed to Establish a Basis for Personal Jurisdiction in California

              a.     Specific Personal Jurisdiction

       Darley contends SDRC Inc. purposefully availed itself of the benefits of

conducting activities in California by maintaining a business relationship with Hanul,

a California resident. Hanul purportedly continued to perform legal services in

connection with the foreign investment program after SDRC Inc. replaced SDIBI as the

program operator. Darley also cites evidence that Hanul controlled SDRC Inc. and that

SDRC Inc. designated a partner in Hanul, James Park, a California resident, as its

registered agent for a time. Park also purportedly was a director of SDRC Inc. and

signed the Memorandum of Understanding on its behalf.

       We conclude that Darley failed to present evidence sufficient to establish

purposeful availment. Darley presented little evidence of Hanul‟s actual role in the

foreign investment program and its relationship with SDRC Inc. Darley presented no

evidence that SDRC Inc. purposefully directed its activities toward California or

California residents through its relationship with Hanul. Although Darley argues that

Hanul plays an essential role in SDRC Inc.‟s operation of the regional center and its

                                             11
marketing efforts, it presented no evidence of any contractual relationship or any

continuing obligation between SDRC Inc. and Hanul or any California resident. The

evidence of Park‟s involvement in both SRDC Inc. and Hanul fails to show that SDRC

Inc. purposefully directed its activities toward California in any manner. In short,

Darley failed to show that SDRC Inc. purposefully directed its activities toward

California so as to justify the exercise of specific personal jurisdiction in this state.

       Darley also contends SDRC Inc. is subject to personal jurisdiction in California

as SDIBI‟s successor. Sanders v. CEG Corp. (1979) 95 Cal.App.3d 779, 786-787, held

that a nonresident corporation was subject to specific personal jurisdiction in California

in a products liability action as the corporate successor to the manufacturer through

a merger where the manufacturer would have been subject to specific personal

jurisdiction in this state. (See also CenterPoint Energy, Inc. v. Superior Court (2007)

157 Cal.App.4th 1101, 1120.) Here, in contrast, Darley has not shown that SDRC Inc.

is SDIBI‟s successor. The trial court expressly found that SDRC Inc. is not SDIBI‟s

successor, and substantial evidence supports that finding.3 We therefore conclude that

SDRC Inc. is not subject to specific personal jurisdiction as SDIBI‟s successor.4


3
        Whether SDRC Inc. is SDIBI‟s successor is a question of fact. We review the
trial court‟s finding under the substantial evidence standard. (Mealy v. B-Mobile, Inc.
(2011) 195 Cal.App.4th 1218, 1222.) Darley does not acknowledge the standard of
review, fails to discuss the evidence supporting the order and explain why it is
insufficient and therefore has shown no error. (Bell v. H.F. Cox, Inc. (2012)
209 Cal.App.4th 62, 80; Provost v. Regents of University of California (2011)
201 Cal.App.4th 1289, 1304-1305.)
4
       Darley cites Saunders, supra, 95 Cal.App.3d 779, in support of its contention
that SDRC Inc. is subject to general personal jurisdiction as SDIBI‟s successor.

                                              12
              b.      General Personal Jurisdiction

       Our conclusion that Darley failed to show purposeful availment for purposes of

specific personal jurisdiction also compels the conclusion that it failed to show such

extensive and wide-ranging or substantial, continuous and systematic contacts with

California as to establish a basis for general personal jurisdiction in this state.

       Some California courts have stated that general personal jurisdiction over

a nonresident defendant is established under an agency theory if the defendant exercises

“pervasive and continual” control over a subsidiary doing business in California.

(BBA Aviation PLC v. Superior Court (2010) 190 Cal.App.4th 421, 429-430;

F. Hoffman-La Roche, Ltd. v. Superior Court (2005) 130 Cal.App.4th 782, 797-798;

Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 541; but see

Anglo Irish, supra, 165 Cal.App.4th at p. 983 [declined to apply state substantive law of

agency and alter ego to determine the constitutional limits of specific personal

jurisdiction]; HealthMarkets, supra, 171 Cal.App.4th at pp. 1169-1170 [same].)

Similarly, some courts have stated that general personal jurisdiction over a nonresident

defendant is established under the representative services doctrine, a species of agency,

if a local subsidiary exists only to further the business of its parent and performs acts in

California that the parent otherwise would have to perform itself as part of its business




Because Saunders involved specific rather than general personal jurisdiction, we will
address the point with respect to specific personal jurisdiction. Our conclusion with
respect to general personal jurisdiction based on a successor relationship is the same.


                                              13
operations. (BBA, supra, 190 Cal.App.4th at p. 430; F. Hoffman-La Roche, supra,

130 Cal.App.4th at p. 798; Sonora, supra, 83 Cal.App.4th at pp. 542-543.)

       The trial court here expressly found that there is no agency relationship, and

substantial evidence supports that finding.5 We therefore conclude that Darley failed to

establish the existence of general personal jurisdiction based on agency or the

representative services doctrine and need not decide whether those theories could

establish a basis for general personal jurisdiction in other circumstances.

              4.     Conclusion

       In summary, we conclude that Darley failed to establish a basis for either specific

or general personal jurisdiction in California. In light of our conclusion, SDRC Inc.

cannot be compelled to arbitrate in California, so we need not review the merits of the

denial of Darley‟s petition to compel arbitration.




5
        The existence of an agency relationship is a question of fact. (Garlock Sealing
Technologies, LLC v. NAK Sealing Technologies Corp. (2007) 148 Cal.App.4th 937,
965.) We review the trial court‟s finding under the substantial evidence standard.
(Ibid.) Darley does not acknowledge the standard of review, fails to discuss the
evidence supporting the order and explain why it is insufficient and therefore has shown
no error. (Bell v. H.F. Cox, Inc., supra, 209 Cal.App.4th at p. 80; Provost v. Regents of
University of California, supra, 201 Cal.App.4th at pp. 1304-1305.)


                                            14
                                     DISPOSITION

       The order granting the motion to quash service of summons and denying the

petition to compel arbitration is affirmed. SDRC Inc. is entitled to recover its costs on

appeal.



       NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS




                                                                       CROSKEY, J.

WE CONCUR:




       KLEIN, P. J.




       KITCHING, J.




                                            15
