Integral Development Corp. v. Weissenbach

• Decision Date: 20 June 2002
• Docket Number: No. H022909.,H022909.
• Citation: 122 Cal.Rptr.2d 24,99 Cal.App.4th 576
• Court: California Court of Appeals Court of Appeals
• Parties: INTEGRAL DEVELOPMENT CORPORATION, Plaintiff and Appellant, v. Helmut WEISSENBACH, Defendant and Respondent.

122 Cal.Rptr.2d 24

99 Cal.App.4th 576

INTEGRAL DEVELOPMENT CORPORATION, Plaintiff and Appellant, v. Helmut WEISSENBACH, Defendant and Respondent.

No. H022909.

Court of Appeal, Sixth District.

June 20, 2002.

Robert H. Sloss, General Counsel Associates LLP, Mountain View, Attorney for Appellant: Integral Development Corp.

Edward I. Silverman, John C. McCaslin, Procopio, Cory, Hargreaves & Savitch LLP, San Diego, Attorneys for Respondent: Helmut Weissenbach.

BAMATTRE-MANOUKIAN, Acting P.J.

Plaintiff Integral Development Corporation, a California corporation, filed this lawsuit against Helmut Weissenbach, a German citizen hired by plaintiff to manage its German subsidiary. The complaint contained various tort claims centering around allegations of misappropriation of trade secrets and unfair competition. Weissenbach made a special appearance and brought a motion to quash service of summons on grounds that there were not sufficient contacts with California to support the assertion of personal jurisdiction over him. The trial court granted the motion and dismissed the case. For the reasons explained below, we find that the assertion of jurisdiction in the circumstances of this case is fair and reasonable. We therefore reverse the trial court's order.

BACKGROUND

Integral Development Corporation (Integral, or Integral-California) is a California corporation, with its principal place of business in Mountain View, California. In 1996, Integral formed Integral Development Corporation (Europe) Ltd. (Integral-U.K.), to support its European operations. Integral-UK is a wholly owned subsidiary of Integral-California. Defendant Helmut Weissenbach is a German citizen, residing in Schwifting, Germany. In early 1997, officers of Integral-California interviewed Weissenbach to explore the possibility of hiring him to manage a German subsidiary of Integral-California that was yet to be formed. These discussions took place in Germany and in Holland with Harpal Sandhu, the president and CEO of Integral-California, and with Raj Patel, the vice president of Integral-California and managing director of Integral-U.K.

In April of 1997, Weissenbach accepted an employment offer from Integral-California. At Integral's request, Weissenbach traveled to its headquarters in California to sign a letter agreement of employment. The letter agreement, dated April 10, 1997, and signed by Weissenbach on April 12, 1997, provided that Weissenbach would be Integral's general manager in Germany and would become the general manager of Integral's German subsidiary when it was established. He was to be responsible for the "expansion of Integral's business in Germany." Weissenbach would report directly to Integral's vice president, Raj Patel, in California. Weissenbach was to be paid a salary in Deutschmarks, a commission based on revenues generated by the German office, and the opportunity to purchase stock options in Integral. Standard benefits applicable in Germany would be available to him once the German corporation was established. A later amendment to the contract provided that the employment could be terminated by either party by six-months written notice.

On August 1, 1997, an employment contract was signed by Weissenbach and by Patel. It provided that as of that date, Weissenbach was employed as general manager of the German subsidiary of Integral, called Integral Development GmbH (Integral-GmbH or Integral-Germany), even though the company was not formally registered in Germany for another three months. This contract, entitled the "General Manager Contract," set forth Weissenbach's duties, which were to manage and represent Integral-Germany. Integral-Germany would pay his salary. The contract provided that it could be terminated at any time with a notice period of six months. It was signed by both parties in Munich, Germany. Integral-Germany was formally registered in Germany in November of 1997. It is a wholly owned subsidiary of Integral-U.K., which in turn is owned by Integral-California.

Integral provides business-to-business e-commerce solutions for capital markets. Integral's products and services were designed and developed by Integral-California. During the course of his employment, Weissenbach regularly reported to the California office of Integral-California via telephone and e-mail regarding the progress of the business in Germany. He was also in touch with the director of human resources at Integral regarding expense receipts and other details of his compensation package. In November of 1997, Weissenbach traveled to California for a business meeting at Integral-California's offices to discuss the status of the business operations of Integral-Germany.

On March 31, 1998, Patel wrote to Weissenbach informing him that his formal employment with Integral would cease as of the following day, April 1, 1998. Integral would continue to pay Weissenbach his regular salary for three months while Weissenbach pursued a job search, after which the situation would be reviewed. Patel would take over the day-to-day operation of the German office. This letter originated from the office of Integral-U.K.

Weissenbach's attorney responded, asserting that there were two employment contracts, the April 1997 letter agreement with Integral-California and the August 1997 General Manager Contract with Integral-Germany, both of which provided for a six-months notice period. The attorney also pointed out that it was unclear which company was giving notice. On May 14, 1998, Patel, in his capacity as managing director of Integral-U.K., which was the sole shareholder of Integral-Germany, passed a formal resolution removing Weissenbach as managing director. On May 26, 1998, Patel wrote to Weissenbach, clarifying that his employment with Integral-Germany would terminate at the end of October 1998, in accordance with the six-months notice provided in the General Manager Contract. Patel informed Weissenbach that the terms of the letter agreement of April 10, 1997, did not apply because it issued from Integral-California and Weissenbach was formally employed by Integral-Germany. Patel wrote that Integral-California was "not a party of the employment contract between you and the German company." However, for "precaution purposes" Patel also gave notice, in his capacity as vice-president of Integral-California, that the letter agreement of April 10 was terminated.

Weissenbach's attorneys continued to try to negotiate and settle various compensation claims with Integral-California and Integral-Germany. Integral-California in turn claimed that Weissenbach had acquired confidential information regarding Integral's products, customers and employees while employed with Integral and that he was using this information to compete with Integral and to disrupt Integral's business. On August 3, 2000, Integral filed its complaint in this action in Superior Court in Santa Clara County, alleging causes of action for misappropriation of trade secrets, unfair competition, breach of fiduciary duty, intentional interference with economic advantage, conversion and trade libel. According to Weissenbach, his claims for compensation from Integral were also pending "in the appropriate German court."

Weissenbach was served in Germany on October 18, 2000, and he filed a motion to quash service on December 29, 2000, on the basis that there were insufficient contacts between him and California to support jurisdiction. The motion was opposed and argued and the court issued a written order granting the motion and dismissing the complaint on February 21, 2001.

ISSUES

General Principles Governing Personal Jurisdiction

Pursuant to Code of Civil Procedure section 410.10, California's long-arm statute, "[a] court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States." The long-arm statute "manifests an intent to exercise the broadest possible jurisdiction," limited only by constitutional considerations of due process. (Sibley v. Superior Court (1976) 16 Cal.3d 442, 445, 128 Cal.Rptr. 34, 546 P.2d 322; Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, 58 Cal.Rptr.2d 899, 926 P.2d 1085.) The general rule is that a state may exercise personal jurisdiction over a nonresident defendant "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.'" (Vons Companies, Inc. v. Seabest Foods, Inc., supra, 14 Cal.4th at p. 444, 58 Cal.Rptr.2d 899, 926 P.2d 1085, quoting Internat. Shoe Co. v. Washington (1945) 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95.) Stated another way, "the forum state may not exercise jurisdiction over a nonresident unless his [or her] relationship to the state is such as to make the exercise of such jurisdiction reasonable." (Cornelison v. Chaney (1976) 16 Cal.3d 143, 147, 127 Cal.Rptr. 352, 545 P.2d 264.) As these tests suggest, the question of jurisdiction cannot be answered by the application of precise formulas or mechanical rules. Each case must be decided on its own facts. (Id. at p. 150, 127 Cal.Rptr. 352, 545 P.2d 264.)

Personal jurisdiction may be either general or specific. (Helicopteros Nacionales de Columbia, S.A. v. Hall (1984) 466 U.S. 408, 414-415, 104 S.Ct. 1868, 80 L.Ed.2d 404; Vons Companies, Inc. v. Seabest Foods, Inc., supra, 14 Cal.4th at p. 445, 58 Cal.Rptr.2d 899, 926 P.2d 1085.) General jurisdiction may lie for all purposes if a defendant has established a presence in the forum state by virtue of activities in the state which are "extensive or wide-ranging" (Buckeye Boiler Co. v. Superior Court (1969) 71 Cal.2d 893, 898-899, 80 Cal.Rptr. 113, 458 P.2d 57) or "`substantial ... continuous and systematic'" (Cornelison v. Chaney, supra, 16 Cal.3d at p. 147, 127 Cal.Rptr. 352, 545 P.2d 264.) In such a case a defendant's contacts "take the place of...