Asset Protection Concepts and Strategies by Riser Adkisson LLP

Offshore investment case illustrates state long-arm jurisdiction issues

Offshore asset protection can turn on jurisdictional issues. While this case does not arise in the creditor-debtor context, it is instructive on how long-arm jurisdiction can work in a case involving offshore persons.

Anglo Irish Bank Corp. v. Superior Court, ___ Cal.Rptr.3d
____, 2008 WL 2955153 (Cal.App. 2 Dist., Aug. 4, 2008)

Court of Appeal, Second District, Division 3, California.

ANGLO IRISH BANK CORPORATION, PLC, et al., Petitioners,

v.

The SUPERIOR COURT of Los Angeles County, Respondent;

Kal Brar et al., Real Parties in Interest.

Stewart Davies et al., Petitioners,

v.

The Superior Court of Los Angeles County, Respondent;

Kal Brar et al., Real Parties in Interest.

Nos. B206714, B206715.

Aug. 4, 2008.

ORIGINAL PROCEEDINGS in mandate. Richard L. Fruin, Judge.
Petitions denied.

Holland and Knight, Richard T. Williams and D. Casey
Flaherty for Petitioners.

No appearance for Respondent.

Goldfarb, Sturman and Averbach, Steven L. Feldman and
Steven L. Crane for Real Parties in Interest.

CROSKEY, Acting P.J.

*1 In these consolidated writ proceedings, several
nonresident defendants challenge the denial of their motions to quash service of
summons based on lack of personal jurisdiction.FN1 They contend their contacts
with the State of California are insufficient to justify the exercise of
personal jurisdiction in this state. They also contend the trial court applied
an improper standard of proof and erred in finding that two individual
defendants made false representations to the plaintiffs at a meeting in
California. We reject these arguments.

FN1. The petitioners are Anglo Irish Bank Corporation plc
(the Irish bank), Anglo Irish Bank Corporation (I.O.M.) P.L.C. (the Isle of Man
bank), Anglo Irish Trust Company Limited (the trust company), Stewart Davies,
and Enda Connolly (collectively Petitioners).

We conclude that by soliciting investors in California
through the personal visits of their employees and others, Petitioners
established sufficient contacts with California to justify the exercise of
specific personal jurisdiction in this state. We further conclude that
activities that are undertaken on behalf of a defendant may be attributed to the
defendant for purposes of personal jurisdiction if the defendant purposefully
directed those activities at the forum state, regardless of the specific
requirements of alter ego or agency, and that state law of alter ego and agency
does not determine the constitutional limits to the exercise of specific
personal jurisdiction. The denial of the motions to quash was proper.

FACTUAL AND PROCEDURAL BACKGROUND

1. Factual Background FN2

FN2. The material facts are undisputed, except as noted.

The Irish bank is incorporated in and has its principal
place of business in Ireland. The Isle of Man bank and the trust company are
incorporated in and have their principal places of business in Isle of Man, and
are subsidiaries of the Irish bank. Davies is a citizen and resident of the
United Kingdom. Davies became managing director of the trust company in December
1999 and became a director of the Isle of Man bank in October 2000.FN3 Connolly
is a citizen and resident of Ireland. Connolly preceded Davies as managing
director of the trust company and was a director of the trust company from
December 1999 to October 2000. Connolly was a director of the Isle of Man bank
from January 1999, or earlier, to December 2000 and was a senior manager for the
Irish bank from October 2000 to June 2001.

FN3. A managing director is the equivalent of a chief
executive officer.

The Irish bank, the Isle of Man bank, and the trust company
sought investors who would borrow funds from the Isle of Man bank to purchase
investments known as "with profit bonds" to be held in trust by the trust
company. The Irish bank would review and approve the investors' applications for
credit. Davies visited California to meet with individuals who might be
interested in such a leveraged investment. At the request of the Irish bank,
Connolly accompanied Davies on the visit. The primary purpose of their meetings
with potential investors was to determine whether the potential investors were
suitable investors. Part of their responsibility in that connection was to
satisfy Isle of Man's "know your customer" anti-money laundering requirements by
determining that the funds were from legitimate sources.

*2 Davis and Connolly jointly met with 10 or 11 potential
clients in California in March 2000, 9 or 10 of whom decided to invest through
the trust company. Their business cards handed out at the meetings bore a logo
for "Anglo Irish Bank." Davies's card identified him as managing director of the
trust company. Connolly's card identified him as "Head of Offshore Trust
Operations" for the Irish bank.FN4 Mike McGee, who was then managing director of
the Isle of Man bank, also met with several potential investors in California a
few months later.

FN4. Connolly testified in his deposition that he used that
title to distinguish himself from Davies, with whom he was working closely while
Davies learned his new job as managing director of the trust company. Connolly
testified that he did not "have any title" with the Irish bank at the time and
that he did not understand why the card stated that he did. He acknowledged,
however, that he visited California to meet with potential investors at the
specific request of the Irish bank.

Kal Brar and Imelda Brar are California residents. They are
cotrustees of the Satnam Trust. They met with investment advisors in late 1999
who encouraged them to invest abroad in "with profit bonds" and to leverage
their investments. The Brars caused more than $4 million from the Satnam Trust
to be transferred to the Kivrar Trust, a trust organized under the laws of Isle
of Man, for the purpose of investing abroad in "with profit bonds." More than
$3.3 million of the funds held by the Kivrar Trust were so invested as of early
2000. The investment advisors then arranged for a meeting to take place at the
Brars' home in California to discuss the potential leveraging of their
investments.

Accordingly, the Brars met with Davies and Connolly at the
Brars' home in California in March 2000. The Brars' attorney, Robert Klueger,
and two investment advisors, Stanley Chesed of PrimeGlobal and Andrew Peat, also
were present at the meeting. The meeting included discussions of the Brars'
background, the source of their wealth, and leveraging "with profit bonds."
After the meeting, the leveraging was approved and put in motion. The trust
company was appointed trustee of the Kivrar Trust in June 2000, a new trust
called Kivrar Trust II was created, and Kivrar Trust II borrowed funds in order
to purchase additional "with profit bonds."

Davies visited California again in November 2000 to attend
conferences in Los Angeles and San Francisco on the subject of asset protection.
The conferences were sponsored by PrimeGlobal and included presentations on
leveraging "with profit bonds." Davies visited California again in May 2001 to
meet with investment advisors and at least one potential investor regarding
leveraged "with profit bonds." FN5

FN5. Davies declared that he met with only investment
advisors and representatives of trust companies during his visit to California
in May 2001 and solicited no business for the trust company on that visit. The
Brars, however, presented a declaration by Francis Good describing his meeting
with Davies and others in California in May 2001 to discuss potential leveraged
investments in "with profit bonds," and a memorandum by Davies describing the
meeting. The trial court resolved the conflict in the evidence by finding that
the meeting had occurred. Substantial evidence supports that finding.

The Brars' investments eventually suffered substantial
losses. The Brars estimated that as of December 2007 they had lost approximately
$2 million of their initial investment.

2. Trial Court Proceedings

The Brars individually and Imelda Brar as a trustee of the
Satnam Trust filed a complaint against Petitioners and others in May 2005. Their
first amended complaint filed in July 2005 alleges that based on the advice of
their investment advisors, the Brars caused over $4 million held by Satnam Trust
to be invested abroad in "with profit bonds." They allege that the investments
were made through Kivrar Trust and other intermediaries. They allege that their
investment advisors represented that the investments were unique and that their
principal was "absolutely guaranteed" as long as they did not withdraw the money
for five years. They allege that the defendants, including Petitioners,
conspired to deceive and defraud them. The Brars allege counts against all
defendants for (1) intentional misrepresentation, (2) fraudulent concealment,
(3) securities fraud (Corp.Code, sec. 25401), (4) breach of fiduciary duty, (5)
negligent misrepresentation, and (6) an accounting.

*3 Petitioners moved to quash service of summons based on
lack of personal jurisdiction. The trial court determined that Petitioners each
had sufficient contacts with the State of California to be subject to specific
personal jurisdiction and denied the motions. The court stated that the
operations of the Irish bank, the Isle of Man bank, and the trust company were
"integrated" with respect to the leveraged "with profit bonds" investments and
that personal jurisdiction over the Irish bank could be based on "the agency
and/or representative services basis."

The Irish bank, the Isle of Man bank, the trust company,
Davies, and Connolly filed two separate petitions for writ of mandate in this
court, challenging the denial of their motions to quash. We consolidated the two
writ proceedings, stayed the trial court proceedings, and issued an order to
show cause.

CONTENTIONS

Petitioners contend (1) they have insufficient contacts
with California to justify the exercise of personal jurisdiction in this state;
and (2) the trial court applied an improper standard of proof and erred in
finding that Davies and Connolly made false representations to the Brars.

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., sec. 410.10.) The exercise of personal
jurisdiction is constitutionally permissible only if the defendant has
sufficient "minimum contacts" with the 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] ( Internat.Shoe ); accord, Pavlovich v. Superior Court (2002)
29 Cal.4th 262, 268 ( 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] ( Burger King
); accord, World-Wide Volkswagen Corp. v. Woodson (1980) 444 U.S. 286, 297 [62
L.Ed.2d 490].)

"In judging minimum contacts, a court properly focuses on
'the relationship among the defendant, the forum, and the litigation.'
[Citations.]" ( Calder v. Jones (1984) 465 U.S. 783, 788 [79 L.Ed.2d 804].)
"Each defendant's contacts with the forum State must be assessed individually."
( Id. at p. 790.) " 'Great care and reserve should be exercised when extending
our notions of personal jurisdiction into the international field.' " ( Asahi
Metal Industry Co. v. Superior Court (1987) 480 U.S. 102, 115 [94 L.Ed.2d 92] (
Asahi ).)

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]; see Vons Companies, Inc.
v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445 ( Vons ).) The Brars do not
contend Petitioners are subject to general jurisdiction. Instead, they contend
and the court found that Petitioners are 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]; 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.)

*4 "A court may exercise 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.) " 'The purposeful availment inquiry ... focuses on the
defendant's intentionality. [Citation.] This prong is only satisfied when the
defendant purposefully and voluntarily directs his activities toward the forum
so that he should expect, by virtue of the benefit he receives, to be subject to
the court's jurisdiction based on' his contacts with the forum. [Citation.]" (
Ibid.)

"[P]urposeful 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 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, 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 relevant" 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.)

*5 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, supra, 480 U.S. at p. 113; 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." FN6 ( Burger King, supra, 471 U.S. at p. 477.)

FN6. Burger King, supra, 471 U.S. at pages 477-478, stated
further: "For example, the potential clash of the forum's law with the
'fundamental substantive social policies' of another State may be accommodated
through application of the forum's choice-of-law rules. Similarly, a defendant
claiming substantive inconvenience may seek a change of venue. Nevertheless,
minimum requirements inherent in the concept of 'fair play and substantial
justice' may defeat the reasonableness of jurisdiction even if the defendant has
purposefully engaged in forum activities. [Citations.] As we previously have
noted, jurisdictional rules may not be employed in such a way as to make
litigation 'so gravely difficult and inconvenient' that a party unfairly is at a
'severe disadvantage' in comparison to his opponent. [Citations.]"
(Fns.omitted.)

The commission of a tortious act within the forum state
ordinarily justifies the exercise of specific personal jurisdiction in an action
arising from the tortious act. ( Magnecomp Corp. v. Athene Co. (1989) 209
Cal.App.3d 526, 535-536; Kaiser Aetna v. Deal (1978) 86 Cal.App.3d 896, 901; see
Rest.2d Conflict of Laws, sec. 36(1).)

2. Standard of Review

A plaintiff opposing a motion to quash service of process
for lack of personal jurisdiction has the initial burden to prove, by a
preponderance of the evidence, facts establishing purposeful availment and a
substantial connection between the defendant's forum contacts and the
plaintiff's claim. ( Snowney, supra, 35 Cal.4th at p. 1062; DVI, Inc. v.
Superior Court (2002) 104 Cal.App.4th 1080, 1090-1091.) If the plaintiff
satisfies that burden, the burden shifts to the defendant to show that the
exercise of jurisdiction would be unreasonable, that is, would not "comport with
'fair play and substantial justice' " ( Burger King, supra, 471 U.S. at p. 476).
( Snowney, supra, at p. 1062; Vons, supra, 14 Cal.4th at p. 449.) If there is no
conflict in the evidence, the question whether 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. ( Snowney, supra, at p.
1062.) 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.) Although
the parties here dispute their opponents' characterization of the facts, there
is no material conflict in the evidence itself, so our review is de novo.FN7 (
Great-West Life Assurance Co. v. Guarantee Co. of North America (1988) 205
Cal.App.3d 199, 204.)

FN7. The only notable exception is the conflicting evidence
concerning Davies's visit to California in May 2001. (See fn. 5, ante.)

3. Petitioners Purposely Availed Themselves of Forum
Benefits

*6 The Irish bank, the Isle of Man bank, and the trust
company worked closely together in connection with the leveraged investments.
The Irish bank reviewed and approved credit applications on behalf of the Isle
of Man bank, which made the loans, and the trust company served as trustee of
the trusts holding the "with profit bonds" that were purchased using the loan
proceeds. Davies, Connolly, and McGee visited California for the purpose of
meeting with suitable investors who would be willing to invest in leveraged
"with profit bonds" and whose investment funds were from legitimate sources.
Davies was managing director of the trust company at the time of his first visit
to California and was a director of the Isle of Man bank at the time of his
later visits to this state. Connolly was employed by the trust company at the
time of his visit to California and was also a director of the Isle of Man bank
at that time. McGee was managing director of the Isle of Man bank at the time of
his visit to this state. Although Connolly was not an employee of the Irish bank
at the time, he visited California at the request of the Irish bank and in
furtherance of the common interests of the three entities.

The business cards handed out by Davies and Connolly
exemplified the close relationship among the three entities for purposes of the
leveraged investments. Davies's card bore an "Anglo Irish Bank" logo yet
identified him as managing director of the trust company. Connolly's card bore
the same logo and identified him as "Head of Offshore Trust Operations" for the
Irish bank, although he was not formally employed by the Irish bank at the time.

A corporation or other business entity acts through
authorized individuals, and the activities of its employees are attributed to
the business entity for purposes of personal jurisdiction. ( Internat. Shoe,
supra, 326 U.S. at pp. 316-317, 320.) An individual's status as an employee
acting on behalf of his or her employer does not insulate the individual from
personal jurisdiction based on his or her forum contacts. ( Calder v. Jones,
supra, 465 U.S. at p. 790; Taylor-Rush v. Multitech Corp. (1990) 217 Cal.App.3d
103, 115-118 [rejected the "fiduciary shield" doctrine]; but see Mihlon v.
Superior Court (1985) 169 Cal.App.3d 703, 713-716 [dictum].) Apart from an
employment relationship, activities that are undertaken on behalf of a defendant
may be attributed to that defendant for purposes of personal jurisdiction if the
defendant purposefully directed those activities toward the forum state. (See
Burger King, supra, 471 U.S. at p. 479, fn. 22; FN8 Empire Steel Corp. v.
Superior Court (1961) 56 Cal.2d 823, 835 ( Empire Steel ).)

FN8. Burger King stated in dicta: "We have previously noted
that when commercial activities are 'carried on in behalf of' an out-of-state
party those activities may sometimes be ascribed to the party, International
Shoe Co. v. Washington, 326 U.S. 310, 320 (1945), at least where he is a
'primary participan[t]' in the enterprise and has acted purposefully in
directing those activities, Calder v. Jones, 465 U.S., at p. 790." ( Burger
King, supra, 471 U.S. at p. 479, fn. 22.)

Empire Steel held that specific personal jurisdiction over
a foreign parent corporation was established based on the parent's
"manipulation" and control of its California subsidiary to the detriment of the
subsidiary's creditors. ( Empire Steel, supra, 56 Cal.2d at p. 831.) The
plaintiff sought to recover damages caused by the subsidiary's failure to take
delivery of steel purchased from the plaintiff. ( Id. at p. 826.) Empire Steel
concluded that the evidence supported the inference that "Empire knowingly
caused its California subsidiary to make the contracts in suit while [the
subsidiary] was in fact insolvent but had the appearance of financial
responsibility." ( Id. at p. 832.) The California Supreme Court stated that the
court need not decide whether the parent was the alter ego of its subsidiary,
and that " '[t]he essential thing is merely whether the corporations are present
within the state, whether they operate through an independent contract, agent,
employee or in any other manner.' [Citations.]" FN9 ( Id. at p. 835.) Thus, a
parent corporation's purposefully causing its subsidiary to engage in forum
contacts may constitute purposeful availment by the parent even if the
separateness of the corporations is maintained and alter ego is not
established.FN10 ( Ibid.; Northern Natural Gas Co. v. Superior Court (1976) 64
Cal.App.3d 983, 994-995; Rest.2d Conflict of Laws, sec. 52, com. b, p. 180.FN11)

FN9. The exercise of personal jurisdiction formerly
depended on the defendant's "presence" within the forum state. Internat. Shoe
held that a corporation was "present" within the state if its contacts with the
state were sufficient to make the exercise of personal jurisdiction fair and
reasonable, and thus shifted the focus from "presence" to "minimum contacts." (
Internat. Shoe, supra, 326 U.S. at pp. 316-317; see Shaffer v. Heitner (1977)
433 U.S. 186, 203-204 [53 L.Ed.2d 683].)

FN10. We do not regard the use of the word "manipulation"
in Empire Steel, supra, 56 Cal.2d at page 831, as intended to strictly limit the
circumstances in which purposeful availment may be found when a parent
corporation causes its subsidiary to engage in forum contacts on its behalf.
Instead, we believe that "manipulation" of a subsidiary is only one example of a
parent corporation's purposefully directing the activities of its subsidiary in
the forum state.

FN11. The Restatement Second of Conflict of Laws, section
52, comment b, page 180 states, in relevant part: "If the subsidiary corporation
does an act, or causes effects, in the state at the direction of the parent
corporation or in the course of the parent corporation's business, the state has
judicial jurisdiction over the parent to the same extent that it would have had
such jurisdiction if the parent had itself done the act or caused the effects."

*7 In our view, reliance on state substantive law of agency
and alter ego to determine the constitutional limits of specific personal
jurisdiction is unnecessary and is an imprecise substitute for the appropriate
jurisdictional question. The proper jurisdictional question is not whether the
defendant can be liable for the acts of another person or entity under state
substantive law, but whether the defendant has purposefully directed its
activities at the forum state by causing a separate person or entity to engage
in forum contacts. That constitutional question does not turn on the specific
state law requirements of alter ego or agency, although the inquiry may be
similar in some circumstances. FN12 (See Hoffman, The Case Against Vicarious
Jurisdiction (2004) 152 U. Pa. L.Rev. 1023, 1026-1027, 1086-1090; 1097-1098;
Comment, Agency as a Means of Obtaining Jurisdiction in New York Over Foreign
Corporations: A Failed Theory (1993) 20 Brook. J. Int'l L. 169, 196-202;
Jurisdiction Over a Corporation Based on the Contracts of a Related Corporation:
Time for a Rule of Attribution (1988) 92 Dick. L.Rev. 917, 925-944; FN13 cf.
Vons, supra, 14 Cal.4th at pp. 464, 475; FN14 but see VirtualMagic Asia, Inc. v.
Fil-Cartoons, Inc. (2002) 99 Cal.App.4th 228, 244-246 [stated that principles of
alter ego and agency can establish a basis for specific personal jurisdiction
and remanded those issues for the trial court to decide]; Magnecomp Corp. v.
Athene Co., supra, 209 Cal.App.3d at pp. 535-539 [applied state law of agency in
finding specific personal jurisdiction over a foreign corporation]; Northern
Natural Gas Co. v. Superior Court, supra, 64 Cal.App.3d at pp. 992-995 [same];
Vons, supra, 14 Cal.4th at p. 459, fn. 7 [stated in dictum, "corporate veils may
be pierced and agents' activities may be considered in appropriate cases"];
Brilmayer and Paisley, Personal Jurisdiction and Substantive Legal Relations:
Corporations, Conspiracies, and Agency (1986) 74 Cal. L.Rev. 1.)

FN12. Opinions applying principles of "alter ego" and
"agency," including the "representative services" doctrine, to determine the
existence of general, rather than specific, personal jurisdiction are
distinguishable. (See, e.g., In re Automobile Antitrust Cases I and II (2005)
135 Cal.App.4th 100, 119-121; F. Hoffman-La Roche, Ltd. v. Superior Court (2005)
130 Cal.App.4th 782, 796-799; DVI, Inc. v. Superior Court, supra, 104
Cal.App.4th at pp. 1093-1094; Sonora Diamond Corp. v. Superior Court (2000) 83
Cal.App.4th 523, 537-543.)

FN13. The cited articles discuss the inexact fit between
rules of law designed to establish liability for the acts of another and an
assessment of the defendant's contacts with the forum for purposes of
establishing general or specific personal jurisdiction. The articles also
discuss the efforts of some courts applying principles of alter ego and agency
to reformulate the inquiry so to address the appropriate jurisdictional
question.

FN14. Vons, supra, 14 Cal.4th 434, rejected reliance on
tort law causation doctrines to determine whether a controversy is sufficiently
related to the defendant's forum contacts so as to justify the exercise of
specific personal jurisdiction. Vons stated, "one must question the utility of
importing a causation test from tort law to measure a matter that is
fundamentally one of relationship and fairness rather than causation." ( Id. at
p. 475.) Similarly here, we question the utility of relying on principles of
vicarious liability to measure a matter that is fundamentally one of
relationship and fairness rather than vicarious liability.

Davies, Connolly, and McGee visited California for the
purpose of engaging in economic activity with California residents. Contrary to
Petitioners' argument that they only sought to satisfy Isle of Man's "know your
customer" requirements, the purpose of satisfying those requirements was to make
the leveraged investments possible. They discussed leveraging "with profit
bonds" with the Brars and other potential investors during the visit by Davies
and Connolly in March 2000, McGee's visit a few months later, and Davies's visit
in May 2001. Through those visits, they succeeded in garnering millions of
dollars in investments from California residents.

The evidence supports the conclusion that in doing so, the
individuals acted not only on behalf of their employers, the Isle of Man bank
and the trust company, but also on behalf of the Irish bank. Connolly testified
in his deposition that he visited California to meet with potential investors at
the specific request of the Irish bank, which relied on his experience and
expertise both in evaluating the prospective clients and in answering any
questions regarding the leveraged investments. Moreover, Connolly's business
card identifying him as "Head of Offshore Trust Operations" for the Irish bank
and the need to obtain approval from the Irish bank to make the loans are
further evidence that Connolly in particular was acting on behalf of the Irish
bank as well as the other entities.

*8 Accordingly, we conclude that the Irish bank, the Isle
of Man bank, and the trust company purposefully directed their activities at
California residents by and through the individuals who visited California on
their behalf. We conclude further that Petitioners, and each of them,
purposefully derived benefit from their activities in California and
deliberately engaged in significant activities within this state, and that they
therefore purposefully availed themselves of forum benefits.FN15

FN15. Petitioners attempt to distinguish between the trust
company "individually" and the trust company "as trustee," and argue that the
trust company "as trustee" had no contacts with California. The trust company is
a single defendant and either is subject to personal jurisdiction or is not. A
defendant is subject to specific personal jurisdiction in California if the
defendant purposefully availed itself of forum benefits, the controversy is
related to or arises out of the defendant's forum contacts, and the exercise of
jurisdiction would be fair and reasonable, as we have stated. The fact that the
trust company was appointed as trustee of the investment trusts after Davies and
Connolly visited California in March 2000 is irrelevant if the trust company
purposefully directed its activities at this state, as we conclude, and if the
other two requirements for the exercise of specific personal jurisdiction are
satisfied.

4. The Dispute Is Substantially Connected to Petitioners'
California Activities

The second requirement for specific personal jurisdiction
is that there must be a substantial connection between the dispute and the
defendant's forum activities. ( Snowney, supra, 35 Cal.4th at pp. 1062, 1068.)
The plaintiffs' six counts for intentional misrepresentation, fraudulent
concealment, securities fraud, breach of fiduciary duty, negligent
misrepresentation, and an accounting all are based on alleged misrepresentations
in or omissions from statements made to them in California by Davies, Connolly,
and others in an effort to solicit business from California residents. Because
the alleged harm relates directly to Petitioners' activities in California, we
conclude that there is a substantial connection between the dispute and
Petitioners' forum activities. ( Id. at p. 1069.) "By purposefully and
successfully soliciting the business of California residents, defendants could
reasonably anticipate being subject to litigation in California in the event
their solicitations caused an injury to a California resident. (See Burger King,
supra, 471 U.S. at pp. 475-476.)" ( Ibid.)

5. The Exercise of Personal Jurisdiction Would Be Fair and
Reasonable

The third requirement for specific personal jurisdiction is
that the exercise of jurisdiction must be fair and reasonable. ( Snowney, supra,
35 Cal.4th at pp. 1062, 1070.) Petitioners argue that after creating offshore
trusts for the apparent purpose of removing assets from the jurisdiction of
California courts, the plaintiffs should not be allowed to sue foreign
defendants in California courts "just because their investment did not prove as
fruitful as they had hoped." We conclude that by investing in foreign trusts,
the plaintiffs did not waive the right to sue Petitioners in a California court
to seek redress for injuries related to or arising out of Petitioners'
California activities. Moreover, the plaintiffs do not allege only that the
investments were unsuccessful, but that Petitioners made material
misrepresentations and omissions in California in connection with the
investments.

Petitioners also argue that it would be an extreme burden
for them to have to defend this action in California. Contrary to Petitioners'
contention, the denial of the motions to quash was not based on a finding that
Davies and Connolly made false representations at the meeting, and the trial
court made no such finding. Accordingly, Petitioners have shown no error in this
regard.

DISPOSITION

*9 The petitions are denied. The order to show cause is
discharged, and the stay of trial court proceedings previously issued is lifted.
The Brars are entitled to recover their costs in these consolidated appellate
proceedings.

We Concur: KITCHING and ALDRICH, JJ.

Labels: asset protection, for profit bond, isle of man, jurisdiction, long-arm, offshore