Goehring v. Superior Court (Bernier)

• Decision Date: 30 March 1998
• Docket Number: No. D029568,D029568
• Parties: , 98 Cal. Daily Op. Serv. 2362, 98 Daily Journal D.A.R. 3211 Dennis H. GOEHRING et al., Petitioners, v. The SUPERIOR COURT of San Diego County, Respondent; Judith E. BERNIER et al., Real Parties in Interest.
• Court: California Court of Appeals Court of Appeals

Page 105

73 Cal.Rptr.2d 105

62 Cal.App.4th 894, 98 Cal. Daily Op. Serv. 2362,

98 Daily Journal D.A.R. 3211

Dennis H. GOEHRING et al., Petitioners, v. The SUPERIOR COURT of San Diego County, Respondent;

Judith E. BERNIER et al., Real Parties in Interest.

No. D029568.

Court of Appeal, Fourth District, Division 1, California.

March 30, 1998.

Sheppard, Mullin, Richter & Hampton, Victor A. Vilaplana, Karin Dougan Vogel, Linda D. Fox and Lei K. Udell, San Diego, for Petitioners.

No appearance for Respondent.

Milberg, Weiss, Bershad, Hynes & Lerach, William S. Lerach, Patrick J. Coughlin, Anita Meley Laing, William S. Dato, Sheri Pym, Finkelstein & Associates, Howard D. Finkelstein, San Diego, Mark L. Knutson, Much, Shelist, Freed, Denenberg, Ament, Bell & Rubenstein, Morrie Much, Michael B. Hyman, Calhoun, Benzin, Kademenos & Heichel, William D. Heichel, Mansfield, OH, James L. Childress, Columbus, OH, Cohen HALLER, Associate Justice.

Milstein, Hausfeld & Toll, Herbert E. Milstein, Washington, DC, Lisa M. Mezzetti, Chevy Chase, MD, Kaplan, Kilsheimer & Fox, and Richard J. Kilsheimer, New York City, for Real Parties in Interest.

Judith Bernier and others (plaintiffs) purchased pay telephone units as investments from Amtel Communications, Inc. (Amtel), a California corporation. After Amtel filed for bankruptcy, plaintiffs filed a class action alleging the investment scheme was fraudulent and violated several California statutes. Plaintiffs named numerous defendants, including Texas residents Dennis H. Goehring and Pete William Catalena, general partners of a Texas partnership that sold pay-telephone units to Amtel. Goehring and Catalena (sometimes petitioners) petitioned for writ of mandate, challenging the trial court's order denying their motion to dismiss for lack of personal jurisdiction. We grant the writ of mandate, and order the trial court to vacate its denial of the dismissal motion. We order the court to rule on plaintiffs' discovery request and, based on that ruling, to enter a new order on petitioners' dismissal motion consistent with this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Complaint

As is relevant here, plaintiffs' complaint alleges the following.

Each plaintiff purchased a pay-telephone unit from Amtel under a "sale-leaseback" investment program. Under this program, Amtel sold a pay-telephone unit and a leased site location to the investor, who immediately leased the unit back to Amtel. Amtel guaranteed it would repurchase the telephone unit after five years for the same price paid by the investor. Amtel promised monthly payments reflecting a 17% to 19% annual return. Plaintiffs allege Amtel misrepresented the nature and safety of the investment and that the investment program was a "Ponzi" scheme in which funds obtained from later investors provided cash to pay the amounts promised to earlier investors.

Beginning in 1990, Amtel purchased pay telephones and related component parts from two Florida manufacturers. However, by late 1993, Amtel had sold more units than its inventory. In response, Amtel approached defendants Goehring and Catalena, "who were then conducting business as Texas Coinphone, a Texas general partnership." Texas Coinphone owned and operated "hundreds of pay telephone units installed throughout Texas and other parts of the southwestern United States." In August 1994, Texas Coinphone and Amtel entered into an agreement whereby Coinphone agreed to sell 521 of its Texas-based telephone units to Amtel for $1,321,000. Amtel paid $271,000 in cash and executed six secured promissory notes for the balance of the purchase price.

Before the sale, Goehring and Catalena investigated Amtel's business and financial operation and, based on this investigation, "knew that title to [the] [telephone] units was being intentionally misrepresented by Amtel ... [and] Coinphone knew, recklessly disregarded, or reasonably should have known that Amtel's sale-leaseback program was a classic Ponzi scheme and that funds invested by later investors were used to pay the lease payments to earlier investors in the sale-leaseback program." "[A]rmed with this knowledge not available to the investing public," these defendants "took steps to protect themselves at the expense of the investing public by requiring Amtel to provide them an asserted security interest in the telephone equipment sold to Amtel and further protected themselves by obtaining an assignment of Amtel's rights under the separate contracts between Amtel and the lessors of the investors' pay telephone site locations." Texas Coinphone "acquired [the] purported security interests and assignment of leasehold rights despite [its] knowledge that Amtel represented that the pay telephone units would be free and clear of all liens.... Goehring and Catalena learned of Amtel's scheme and voluntarily participated in and/or aided and abetted the other defendants' continuation of the [scheme] for Coinphone's profit at the expense and to the damage of plaintiffs and other class members."

As against Texas Coinphone and its individual partners, the complaint alleged (1) fraud; (2) conspiracy to defraud; (3) unlawful, fraudulent, and unfair business practices (Bus. and Prof.Code, § 17200); (4) false and misleading advertising (Bus. and Prof.Code, §§ 17200, 17500); (5) negligence and negligent misrepresentation; and (6) state securities law violations (Corp.Code, §§ 25110, 25400).

B. Petitioners' Motion and Evidentiary Showing

Texas Coinphone appeared and answered the complaint.

Petitioners specially appeared and moved to dismiss the complaint against them as individuals for lack of personal jurisdiction. In support of their motion, Goehring and Catalena submitted declarations establishing they are Texas residents, were served with the complaint in Texas, and have not had any contact with California other than as general partners of Texas Coinphone. ¹ Petitioners argued that under Texas and California law, a partnership is an entity legally distinct from its partners and therefore any actions they "may have taken in California in their capacity as partners of Texas Coinphone or the activities of Texas Coinphone in California should not be considered by the Court in determining whether [they] are individually subject to the jurisdiction of California."

Petitioners also presented evidence describing Texas Coinphone's contacts with Amtel, which consisted of a single sales transaction on August 16, 1994. Petitioners proffered four sets of documents relating to that sale: (1) the written sales agreement; (2) the related promissory notes and collection and escrow agreement; (3) a security agreement; and (4) a California UCC-1 financing statement. Because these documents formed the basis for the trial court's jurisdiction finding, we describe the documents in some detail below.

First, in the August 1994 written agreement, Texas Coinphone agreed to sell Texas-based pay-telephone units to Amtel. The contract states the transaction is governed by Texas law. Petitioners executed the agreement in Texas as general partners of Texas Coinphone. Amtel agreed to pay $1,371,000, consisting of a $271,000 cash payment and six promissory notes payable to Texas Coinphone. The agreement states "[p]ayment of the Notes shall be secured by a Security Agreement ... covering and describing the Subject Properties ... and a financing statement(s) ... [and] other documents ... to evidence and perfect [Texas Coinphone's] security interest in the [secured property]."

Second, petitioners submitted Amtel's six promissory notes referred to in the sales agreement. Texas Coinphone is the payee on each of the notes. The notes state the Third, petitioners proffered the August 1994 security agreement wherein Amtel granted Texas Coinphone a security interest in Amtel's equipment and inventory, including the pay-telephone units and related contracts. Goehring signed the security agreement as a general partner of Texas Coinphone. The agreement states it is governed by Texas law and prohibits Amtel from removing any of the telephone units from Texas. The agreement further states that any action by Amtel against Texas Coinphone must be brought in a state court in Brazos County, Texas or in a federal court in Texas's Southern District.

applicable interest rate is governed by Texas law. The related collection and escrow agreement requires Amtel to make specified payments to a Texas bank and/or to Texas Coinphone in its Texas offices.

Fourth, petitioners submitted a California UCC-1 financing statement, creating a priority interest on Amtel's equipment and inventory, including the pay-telephone units and related contracts. The statement was filed with the California Secretary of State's office in Sacramento, California and identifies the secured party as "Texas Coinphone, a Texas General Partnership." Goehring signed the statement as a general partner of Texas Coinphone. Goehring's declaration states he "did not execute the financing statement in [his] individual capacity."

In addition to submitting these four sets of documents, each petitioner stated in his declaration: "I have not done or caused to be done any act in California with respect to any of Plaintiffs' causes of action. [p] I have not caused tortuous injury to any Plaintiff by any act or omission in California."

C. Plaintiffs' Response

In opposing petitioners' motion, plaintiffs did not submit any additional evidence and instead relied on petitioners' submitted documents. Plaintiffs argued the documents demonstrated sufficient contacts with California to support personal jurisdiction over the individual partners, maintaining that because the partners were jointly and severally liable with the partnership, the court's jurisdiction over Texas Coinphone means "it has equal jurisdiction of its two general partners." Plaintiffs alternatively requested the court provide them with the opportunity to conduct...