Rodillas v. Shurwest CA2/1 ( 2021 )

Filed 5/20/21 Rodillas v. Shurwest CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
GLORIA SALVADOR RODILLAS, B304834
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. 19STCV21497)
v.
SHURWEST, LLC, et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of
Los Angeles County, Maureen Duffy-Lewis, Judge. Reversed
and remanded with directions.
Reif Law Group, Brandon S. Reif, Ohia A. Amadi, and
Lisa M. Foutch for Plaintiff and Appellant.
DLA Piper, Jeanette Barzelay, Evi Schueller, and
Hector E. Corea for Defendants and Respondents.
____________________________
Plaintiff Gloria Salvador Rodillas appeals from an order
granting defendants and respondents Shurwest, LLC and
Shurwest Holding Company, Inc.’s (collectively, Shurwest)
motion to quash service of process for lack of personal
jurisdiction. Plaintiff claimed Shurwest, based in Arizona, was
involved in selling her an improper retirement investment
product that led to significant financial losses. The product
consisted of two parts: a life insurance policy and a separate
investment with Future Income Payments, LLC (FIP) to fund the
premiums on the policy. The trial court concluded that none of
the parties involved in the transaction was Shurwest’s agents,
and thus jurisdiction was not proper. The trial court implicitly
denied plaintiff’s request to conduct jurisdictional discovery.
On appeal, plaintiff argues the trial court abused its
discretion by denying her the opportunity to conduct discovery
prior to ruling on the motion to quash. We agree. Agency is not
the sole basis by which a court may assert jurisdiction over an
out-of-state defendant; a defendant may also be subject to
jurisdiction by virtue of selling a defective product to California
consumers. Although Shurwest submitted evidence below that it
was uninvolved with plaintiff’s FIP investment, it admits on
appeal that it was involved in the sale of the life insurance policy,
which suggests discovery may reveal sufficient California
contacts to assert jurisdiction.
Further, it is not clear that the FIP investment is not also
relevant to jurisdiction. Shurwest’s evidence showed that three
of its employees, purportedly acting without Shurwest’s
knowledge, used Shurwest resources to market the FIP
investment at issue. Although Shurwest claims its ignorance
frees it from any ties to the FIP investment, we conclude plaintiff
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is entitled to conduct jurisdictional discovery on this issue as
well.
Accordingly, we reverse.
FACTUAL BACKGROUND
Except where noted, we take the following facts from
plaintiff’s complaint.
Plaintiff immigrated to the United States from the
Philippines in 1983 at age 32. She is not fluent in English and
struggles to speak and understand it.
Plaintiff began a professional relationship with Gerald
Andrew Ladalardo, Jr., in 2017. Ladalardo worked for CMAM,
Inc. dba Heritage Financial Services (Heritage), a financial
services firm licensed in California to sell life insurance and
annuities.
At the time plaintiff met Ladalardo, she already was
invested in a fixed index annuity contract with Fidelity & Life
Guarantee, which provided a death benefit and a guaranteed
income stream. Ladalardo recommended that plaintiff surrender
her annuity and invest instead in a “Structured Cash Flow”
program, also called an “IRA Reboot” program. The program
involved the purchase of an indexed universal life insurance
(IUL) policy, with the premiums funded by other investments
intended to yield high income.
Plaintiff followed Ladalardo’s recommendation,
surrendering her annuity and transferring proceeds of over
$100,000 to an individual retirement account (IRA) administered
by GoldStar Trust Company. Plaintiff, through Ladalardo, then
purchased from Minnesota Life Insurance Company (Minnesota
Life) an “Eclipse Indexed Universal Life Insurance Policy.” The
policy had annual premiums of $20,000, with a face value of
3
$210,000 and a “level death benefit feature of $210,000.”
Plaintiff used funds from her IRA to pay $12,000 of the initial
$20,000 premium.
To fund the rest of the premiums on the IUL policy,
plaintiff, on Ladalardo’s recommendation and with his
assistance, invested nearly all the remainder of her IRA in what
she believed was the “S&P 500.” In fact, the funds were invested
in a financial product sold by FIP.
FIP collapsed in 2018, taking with it plaintiff’s invested
funds. Though not alleged in the complaint, a grand jury later
indicted FIP for allegedly orchestrating and effectuating a Ponzi
scheme. Plaintiff’s IUL policy was at risk for cancellation
because she was could not afford the premium payments.
PROCEDURAL BACKGROUND
1. Complaint
Plaintiff filed a complaint for professional negligence,
breach of fiduciary duty, elder financial abuse, intentional
deceit/fraud, and declaratory relief against Ladalardo, Heritage,
two Heritage officers, Minnesota Life, and Shurwest (collectively,
defendants).1
By its own description, Shurwest, LLC is an Arizona-based
“independent marketing organization . . . that markets annuities
and insurance products to financial planners and licensed
insurance agents. [It] acts as a third-party intermediary between
1 The complaint also named an attorney, James A. Anton,
as a defendant. The allegations against Anton are not at issue in
this appeal, and our references to “defendants” do not include
him.
4
financial planners and insurance companies by providing product
education, marketing, and distribution services.” Shurwest
Holding Company, Inc. also is headquartered in Arizona.
Plaintiff alleged that “Shurwest, for itself and [Minnesota
Life], processed Ladalardo’s insurance applications for
Plaintiff . . . .” Plaintiff further alleged that Shurwest “marketed,
promoted, trained and facilitated insurance agencies, including
Heritage, and appointed insurance agents, including Ladalardo,
to sell the ‘Structured Cash Flow’ aka ‘IRA Reboot’ program . . . .”
Plaintiff claimed that “Shurwest promoted, endorsed and
sponsored the Structured Cash Flow program utilizing
[Minnesota Life] and FIP in tandem.”
Plaintiff alleged that defendants, including Shurwest,
failed to inform her “that a life insurance policy was not advisable
for her needs” given that “her investment funds were already
qualified in a tax-deferred vehicle . . . and she was elderly and
living on a fixed budget without expendable funds to pay the
premiums.” Defendants knew or should have known plaintiff
“was a poor candidate for life insurance” and “did not need and
could not afford [the IUL] policy.”
Defendants, including Shurwest, also knew or should have
known that plaintiff’s assets would be invested in the FIP
product, which defendants failed to inform plaintiff had not been
approved by regulators. Defendants did not inform plaintiff that
investing in the IUL policy and FIP “were high-risk transactions”
and “that using her tax-deferred IRA to fund the life insurance
policy and FIP [investment] incurred tax obligations and
penalties.” Instead, “Shurwest, Heritage, and [Minnesota Life]
supported and encouraged Ladalardo to induce Plaintiff and to
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exert undue influence and duress over her to sell commission-
generating products.”
Plaintiff alleged that defendants “substantially depleted
Plaintiff’s entire liquid net worth, retirement savings and
financial well-being by placing her into the [Minnesota Life] IUL
policy and FIP.”
Plaintiff alleged jurisdiction was proper over Shurwest
because it was licensed to conduct insurance business in
California, and because “it participated in the professional
services offered and provided to Plaintiff with knowledge that its
acts and services were provided to an elderly California
consumer.”
2. Motion to quash
Shurwest moved to quash service of summons for lack of
personal jurisdiction. Shurwest argued the trial court did not
have general jurisdiction because California was not Shurwest’s
state of incorporation or its principal place of business.
Shurwest further argued the trial court did not have
specific jurisdiction, because plaintiff had not alleged any actions
taken in California by Shurwest, as opposed to Ladalardo or
Heritage. “Indeed, [Shurwest is] not alleged to have engaged in
any direct product sales to Plaintiff or to have interacted with
any investors in California.” Nor had plaintiff adequately
pleaded that Shurwest had directed or controlled Heritage or
Ladalardo such that Heritage and Ladalardo were Shurwest’s
agents.
Shurwest also disclaimed any involvement in the FIP
investment, which Shurwest characterized as the “gravamen of
Plaintiff’s Complaint.” Shurwest provided a declaration from a
former employee, Melanie Schulze-Miller, who served as
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Shurwest, LLC’s national sales director for life insurance.
Schulze-Miller stated that she had proposed to Shurwest’s
management that they establish a relationship with FIP, but
Shurwest’s management rejected the proposal. Schulze-Miller,
without Shurwest’s knowledge, then formed her own limited
liability company, MJSM Financial LLC (MJSM), through which
she could refer FIP to financial and insurance advisors without
involving Shurwest. All commissions paid by FIP went to MJSM,
not Shurwest.
Schulze-Miller stated that she “on occasion directed
Shurwest employees who worked under me to perform clerical
tasks for the benefit of MJSM,” and “did not tell these employees
that Shurwest management had not authorized MJSM doing
business with FIP or that the tasks were being done for MJSM.”
Schulze-Miller also apparently at times used her Shurwest e-mail
account to conduct FIP business, because she declared, “Any use
of my Shurwest email account for FIP-related issues was
inadvertent,” and she “meant to use my MJSM emails for all FIP-
related business and instructed [financial and insurance]
Advisors to use my MJSM email address for FIP-related
business.”
Shurwest also provided declarations from Michael T.
Seabolt and Nicholas P. Johnson, who had worked for Shurwest,
LLC under Schulze-Miller. Both stated they had been recruited
by Schulze-Miller to work for MJSM and refer financial and
insurance advisors to FIP. Shurwest was unaware of Seabolt’s
and Johnson’s involvement with MJSM and FIP. Like Schulze-
Miller, Seabolt and Johnson occasionally asked their Shurwest
subordinates to perform clerical tasks for the benefit of MJSM
without informing the subordinates. Seabolt and Johnson also
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declared that any use of their Shurwest e-mail accounts to
conduct FIP-related business was inadvertent, and they intended
to use their MJSM e-mail accounts for that purpose.
Based on these declarations, Shurwest argued that
Shurwest “did not purposefully direct any activities to the
California forum or purposefully avail [itself] of the benefit of
doing business there.” “All of Ladalardo’s acts in promoting the
FIP product and the so-called “Structured Cash Flow” program
were done without the knowledge, and not at the direction, of
Shurwest.” In its conclusion, Shurwest stated, “Shurwest
was not involved in the FIP fraud that Plaintiff complains about,
and Shurwest certainly was not involved in actions in
furtherance of that fraud in California.”
3. Plaintiff’s opposition
In opposing the motion to quash, plaintiff argued that her
claims arose from Shurwest’s California activities, namely
“Shurwest’s marketing and sale of the IRA Reboot program in
California.” Plaintiff contended Shurwest could not disclaim its
involvement in FIP, because a high-level employee, Shulze-
Miller, promoted FIP and used other Shurwest employees for this
purpose. Plaintiff also disputed Shurwest’s characterization of
her causes of action as limited to the FIP investment, arguing
that Shurwest had authorized Ladalardo to sell life insurance
through Shurwest, and he had sold plaintiff “an unaffordable and
unnecessary IUL policy.”
Plaintiff requested the trial court take judicial notice of,
inter alia, pages from the California Department of Insurance’s
website indicating Shurwest’s and its president’s licenses to
conduct insurance business in California, pages from Shurwest’s
website discussing “Product Philosophy” and how the company
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partners with advisors, and archived pages of Shurwest’s website
containing descriptions of some of Shurwest’s programs,
including the IRA Reboot program, and biography pages for
Schulze-Miller, Seabolt, and Johnson. Plaintiff argued that her
judicially noticeable evidence showed that Shurwest was “the
architect of the IRA Reboot program” which it “marketed
nationwide,” that Shulze-Miller was a managing agent of
Shurwest, and that Shurwest conducted insurance activities in
California.
Plaintiff asked the trial court to deny the motion to quash,
or in the alternative, to allow her to conduct jurisdictional
discovery. Plaintiff contended discovery “is likely to show that
Shurwest’s employees regularly traveled to California or directed
their conduct to California to train, market to, or otherwise do
business with California-based insurance agents such as
[Heritage, its defendant officers, and Ladalardo].”
Shurwest filed a reply again emphasizing the lack of
evidence of Shurwest’s control over other defendants or its
involvement with FIP. Shurwest argued jurisdictional discovery
was unwarranted because “[e]ven if Shurwest had any contacts
with California, these contacts would not be related to Plaintiff’s
complaints that she was deceived and forced to purchase FIP
products.” Shurwest also opposed plaintiff’s request for judicial
notice, arguing the documents proffered by plaintiff were
irrelevant to the issue of personal jurisdiction, and plaintiff had
failed to provide “sufficient, reliable, and trustworthy sources of
information.”
4. Trial court’s ruling
The trial court sustained Shurwest’s objections to plaintiff’s
request for judicial notice. It ruled it did not have general
9
jurisdiction over Shurwest for lack of “substantial, continuous
and systematic contact.” It further ruled that plaintiff “offers
insufficient showing” to support specific jurisdiction. The court
stated, “As [Schulze-]Miller is not an agent of Shurwest, she
does not provide the ‘contact’ requirement. There is insufficient
evidence of any other claimed entity being an agent of Shurwest.
Therefore, Shurwest has no ‘contact’ with California.”
The trial court granted Shurwest’s motion to quash. Its
written order did not address plaintiff’s request for jurisdictional
discovery, implicitly denying it.2 Plaintiff timely appealed.3
DISCUSSION
On appeal, plaintiff does not contend that the trial court
should have denied Shurwest’s motion to quash outright. Rather,
plaintiff argues the trial court abused its discretion by granting
the motion without first allowing plaintiff to conduct
jurisdictional discovery. Plaintiff further argues the trial court
abused its discretion by denying her request for judicial notice,
and asks that we consider the documents the trial court refused
to consider in evaluating whether she made a sufficient showing
to justify jurisdictional discovery.
We conclude that, even if arguendo the trial court properly
denied the request for judicial notice, it nonetheless abused its
discretion by denying plaintiff jurisdictional discovery. We
2 The trial court’s written order indicates the court held a
hearing on Shurwest’s motion to quash, along with various
motions filed by other defendants in the case. The appellate
record does not contain a reporter’s transcript of that hearing.
3
“[A]n order granting a motion to quash service of
summons” is appealable. (Code Civ. Proc., § 904.1, subd. (a)(3).)
10
therefore need not and do not reach plaintiff’s arguments
concerning her request for judicial notice.
A. Governing Law and Standard of Review
“California courts may exercise personal jurisdiction on any
basis consistent with the Constitutions 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.’ ” ’
[Citation.]” (Pavlovich v. Superior Court (2002) 29 Cal.4th 262,
268 (Pavlovich.) “[T]he minimum contacts test asks ‘whether the
“quality and nature” of the defendant’s activity is such that it is
“reasonable” and “fair” to require him to conduct his defense in
that State.’ [Citation.]” (Snowney v. Harrah’s Entertainment,
Inc. (2005) 35 Cal.4th 1054, 1061.)
“ ‘Personal jurisdiction may be either general or specific. A
nonresident defendant may be subject to the general jurisdiction
of the forum if his or her contacts in the forum state are
“substantial . . . continuous and systematic.” [Citations.]’
[Citation.]” (Jayone Foods, Inc. v. Aekyung Industrial Co.
Ltd. (2019) 31 Cal.App.5th 543, 553 (Jayone Foods), last
bracketed insertion added.) “ ‘If the nonresident defendant does
not have substantial and systematic contacts in the forum
sufficient to establish general jurisdiction, he or she still may be
subject to the specific jurisdiction of the forum . . . .’ [Citation.]”
(Ibid.)
“When determining whether specific jurisdiction exists,
courts consider the ‘ “relationship among the defendant, the
forum, and the litigation.” ’ [Citation.] A court may exercise
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specific jurisdiction over a nonresident defendant only if: (1) ‘the
defendant has purposefully availed himself or herself of forum
benefits’ [citation]; (2) ‘the “controversy is related to or ‘arises out
of’ [the] defendant’s contacts with the forum” ’ [citation]; and
(3) ‘ “the assertion of personal jurisdiction would comport with
‘fair play and substantial justice’ ” ’ [citation].” (Pavlovich, supra,
29 Cal.4th at p. 269.)
When a defendant moves to quash service of process for
lack of jurisdiction, “the plaintiff must carry the initial burden of
demonstrating facts by a preponderance of evidence justifying the
exercise of jurisdiction in California.” (In re Automobile Antitrust
Cases I & II (2005) 135 Cal.App.4th 100, 110 (Automobile
Antitrust Cases).) “The plaintiff must do more than merely allege
jurisdictional facts. It must present evidence sufficient to justify
a finding that California may properly exercise jurisdiction over
the defendant.” (Ibid.) “Once the plaintiff satisfies the initial
burden of proof of showing a defendant’s minimum contacts in
California, the burden shifts to the defendant to present a
compelling case demonstrating that the exercise of jurisdiction by
our courts would be unreasonable.” (Id. at pp. 110–111.)
“A plaintiff attempting to assert jurisdiction over a
nonresident defendant is entitled to an opportunity to conduct
discovery of the jurisdictional facts necessary to sustain its
burden of proof. [Citation.] In order to prevail on a motion for a
continuance for jurisdictional discovery, the plaintiff should
demonstrate that discovery is likely to lead to the production of
evidence of facts establishing jurisdiction.” (Automobile Antitrust
Cases, supra, 135 Cal.App.4th at p. 127.) We review a trial
court’s denial of a request for jurisdictional discovery for abuse of
discretion. (Ibid.)
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B. Plaintiff Is Entitled To Conduct Jurisdictional
Discovery
The trial court in its ruling focused on the concept of
agency, finding insufficient evidence that Shulze-Miller or “any
other claimed entity” was “an agent of Shurwest.” On this basis,
the trial court concluded plaintiff had failed to show Shurwest
had contacts with California.
Assuming arguendo the evidence was insufficient to prove
that Shulze-Miller, Ladalardo, or others were Shurwest’s agents,
an issue we do not decide, the activity of agents is not the only
means by which a trial court may assume jurisdiction over an
out-of-state defendant. In other words, a defendant may have
contacts with a forum other than agents acting within that
forum. Notably, sale of a defective product to California
consumers, including through an intermediary, can subject a
foreign defendant to specific jurisdiction in California. (See
Automobile Antitrust Cases, supra, 135 Cal.App.4th at p. 115
[“Even an indirect effort to serve a California market for a
manufacturer’s product may reasonably make that manufacturer
subject to suit in California if its product has caused injury.”].)
Jayone Foods is illustrative. There, California residents
sued Jayone Foods, a California importer and distributor, for
selling an allegedly dangerous cleaning product to a Los Angeles
retail store. (Jayone Foods, supra, 31 Cal.App.5th at p. 548.)
Jayone Foods in turn filed a cross-complaint against Aekyung
Industrial Co. Ltd. (Aekyung), a Korean manufacturer and
distributor that sold the cleaning product to Jayone Foods.
(Ibid.) The trial court granted Aekyung’s motion to quash service
of summons for lack of general or specific jurisdiction. (Id. at
pp. 551–552.)
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Our colleagues in Division Seven reversed the trial court,
concluding that Jayone Foods had made a sufficient showing to
establish specific jurisdiction. (Jayone Foods, supra,
31 Cal.App.5th at p. 565.) The court held that Aekyung
“purposefully availed itself of the benefits of doing business in
California” by “engag[ing] in a number of direct sales
transactions with multiple California distributors of its consumer
products,” including Jayone Foods. (Id. at p. 556.) “Aekyung
did not merely place its products into the stream of commerce
with an awareness that they might end up in California. Rather,
Aekyung purposefully directed its activities toward California
businesses when it repeatedly sold its products to various
California distributors over a seven-year period. Aekyung also
purposefully derived benefits from its activities in California
when it generated almost $2 million in revenue from these
California sales. In so doing, Aekyung purposefully availed itself
of the benefits of doing business in California and reasonably
could expect to be subject to the jurisdiction of California courts.”
(Id. at p. 559.)
The court further concluded that the controversy “related to
or arises out of Aekyung’s contacts with California.” (Jayone
Foods, supra, 31 Cal.App.5th at p. 559.) The undisputed facts
established that, during the time period covering the injuries
alleged by plaintiffs, Jayone Foods had sold bottles of the
allegedly harmful cleaning product it had imported from
Aekyung. (Id. at p. 561.) Finally, the court held that Aekyung
had failed to show the exercise of specific jurisdiction would be
unfair or unreasonable. (Id. at p. 563.)
It follows from Jayone Foods that to the extent Shurwest
was involved in the sale of products to California consumers, and
14
those products caused harm, Shurwest could be subject to specific
jurisdiction in California, depending on the nature and extent of
Shurwest’s involvement. This is so regardless of whether those
sales were through intermediaries, and regardless of whether
those intermediaries were Shurwest’s legal agents.4
A key difference between Jayone Foods and the instant
case, however, is that in Jayone Foods, the party opposing the
motion to quash had a direct business relationship with Aekyung,
and thus had significant knowledge of Aekyung’s business in
California. In the instant case, plaintiff did not deal directly with
Shurwest, and therefore cannot easily obtain information about
Shurwest’s business in California without the benefit of
discovery. (1880 Corp. v. Superior Court of City and County of
San Francisco (1962) 57 Cal.2d 840, 843 [“The facts relating to
whether a corporation has been doing business in this state so as
to make it amenable to suit . . . are ordinarily within the
knowledge of the officers of the corporation, and there is no sound
reason why a plaintiff should be deprived of this source of
information.”].)
It is also evident on the record before us that “discovery
is likely to lead to the production of evidence of facts
establishing jurisdiction.” (Automobile Antitrust Cases, supra,
135 Cal.App.4th at p. 127.) Although Shurwest disclaimed any
involvement in plaintiff’s investment in FIP, in its motion to
quash it did not deny participation in the sale of the IUL policy.
In its brief on appeal, Shurwest makes this implicit concession
4 We do not intend to suggest that Jayone Foods provides
the sole theory or metric by which the trial court may assert
jurisdiction over Shurwest, and this opinion should not be read to
foreclose any future arguments plaintiff may wish to make.
15
explicit, stating it does “not disclaim involvement in [plaintiff’s]
IUL policy because [Shurwest] was involved in facilitating the
sale of that policy to [plaintiff] through her financial advisors.”
(Italics added.) We may construe statements in appellate briefs
as admissions against the party. (Thompson v. Ioane (2017)
11 Cal.App.5th 1180, 1186, fn. 4.) Shurwest having admitted
involvement in the sale of the IUL policy to plaintiff, plaintiff is
entitled to explore the nature of that involvement in her effort to
oppose the motion to quash.
Shurwest’s arguments in support of the trial court’s ruling
center largely on the FIP allegations, and Shurwest contends it
provided evidence, specifically the declarations from its former
employees, fully exculpating it from those allegations. Shurwest
claims further discovery would be “futile because whether
Shurwest marketed or sold other insurance products or had other
business relationships in California is not relevant to whether
Shurwest sold or marketed to [plaintiff] the FIP product that
forms the basis of her claims.” Shurwest argues its facilitation of
the sale of the IUL policy “is irrelevant to the trial court’s specific
jurisdiction analysis,” which “rightly focused on whether
Shurwest had forum-related contacts that gave rise to [plaintiff’s]
claims, which are predicated on the FIP product.”
We disagree that plaintiff’s claims are based solely on the
FIP investment. The complaint alleged that Shurwest was
responsible for a packaged product consisting of the IUL policy
and the FIP investment, but plaintiff also alleged wrongdoing as
to the IUL policy independent of the FIP investment. For
example, plaintiff alleged that defendants convinced her to
purchase the IUL policy although it “was not advisable for her
needs,” particularly given that she was already invested in a
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suitable retirement product. Additionally, she alleged that
Shurwest knew or should have known that she could not afford
the policy. Thus, the controversy at issue arises not only from the
FIP investment, but also from the IUL policy, and the latter
potentially could provide a basis to assert jurisdiction over
Shurwest.
As for the FIP allegations, it is not clear to us that the
former employees’ declarations definitively establish that
Shurwest had no legal involvement, and that the FIP-related
facts cannot also give rise to personal jurisdiction. Accepting the
facts stated in the declarations as true, they establish that a
national sales director for Shurwest, along with at least two other
Shurwest employees, used Shurwest resources, including their
Shurwest subordinates and Shurwest e-mail accounts, to conduct
FIP-related business while simultaneously employed by
Shurwest.
Shurwest’s purported ignorance does not necessarily
absolve it; for example, cases have held that “[a] principal who
puts an agent in a position that enables the agent, while
apparently acting within his authority, to commit a fraud upon
third persons is subject to liability to such third persons for the
fraud. The principal is liable although he is entirely innocent,
although he has received no benefit from the transaction, and
although the agent acts solely for his own purposes. Liability is
based upon the fact that the agent’s position facilitates the
consummation of the fraud, in that, from the point of view of the
third persons, the transaction seems regular on its face and the
agent appears to be acting in the ordinary course of the business
confided to him [citations].” (Reusche v. California Pacific Title
Ins. Co. (1965) 231 Cal.App.2d 731, 736.) Although we express no
17
opinion on the applicability of this principle here, it illustrates
that an innocent principal may under some circumstances be
liable for the acts of a rogue agent. Plaintiff is therefore entitled
to explore through discovery jurisdictional contacts related to the
FIP transactions, as well as the IUL transactions.
In short, plaintiff’s allegations provide an ostensible basis
to assert specific jurisdiction over Shurwest, and the record
supports plaintiff’s position that discovery is likely to lead to
additional facts establishing that jurisdiction, whether related to
the IUL policy, the FIP investment, or both. The trial court
based its ruling to the contrary on a too-narrow view of
jurisdictional contacts, and thus abused its discretion by granting
the motion to quash without first permitting jurisdictional
discovery. (See In re Charlisse C. (2008) 45 Cal.4th 145, 159 [“a
disposition that rests on an error of law constitutes an abuse of
discretion”].) Other than eschewing a fishing expedition, we
express no opinion as to the appropriate scope of or mechanisms
for that discovery. The trial court may determine the scope and
mechanisms on remand, subject to our holding that plaintiff is
entitled to explore Shurwest’s involvement both in the IUL policy
and the FIP investment for purposes of contesting the motion to
quash.
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DISPOSITION
The order granting defendants Shurwest, LLC and
Shurwest Holding Company, Inc.’s motion to quash is reversed.
The matter is remanded for plaintiff Gloria Salvador Rodillas to
conduct jurisdictional discovery. Plaintiff is awarded her costs on
appeal.
NOT TO BE PUBLISHED.
BENDIX, J.
We concur:
ROTHSCHILD, P. J.
CHANEY, J.
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