Newpoint Fin. Corp. v. Berm. Monetary Auth.

680 F.Supp.3d 1151

NEWPOINT FINANCIAL CORP., a Delaware corporation, Plaintiff, v. BERMUDA MONETARY AUTHORITY; Gerald Gakundi, an individual;Susan Davis-Crockwell, an individual; Does 1 Through 10, inclusive, Defendants.

Case No. 2:22-cv-08659-MCS-PVC

United States District Court, C.D. California

Signed July 3, 2023

Peter L. Steinman, Michelman and Robinson LLP, Los Angeles, CA, Allison C. Aguirre, Jane M. Kutepova, Michelman and Robinson LLP, Irvine, CA, for Plaintiff.

Jordan D. Teti, Michael M. Maddigan, Hogan Lovells U.S. LLP, Los Angeles, CA, for Defendant Bermuda Monetary Authority.

Michael M. Maddigan, Hogan Lovells U.S. LLP, Los Angeles, CA, for Defendants Gerald Gakundi, Susan Davis-Crockwell.

ORDER RE: DEFENDANTS' MOTION TO DISMISS (ECF No. 24)

MARK C. SCARSI, UNITED STATES DISTRICT JUDGE

Defendant Bermuda Monetary Authority ("BMA") as well as individual defendants Gerald Gakundi and Susan Davis-Crockwell move to dismiss Plaintiff Newpoint Financial Corp.'s Complaint. (Mot., ECF No. 24.) Plaintiff filed an opposition, (Opp'n 33), and Defendants replied, (Reply, ECF No. 34). The Court heard oral argument on May 15, 2023.

I. BACKGROUND

Plaintiff is a corporation organized under the laws of Delaware with its principal place of business in Beverly Hills, California. (Compl. ¶ 2, ECF No. 1.) BMA is the regulatory authority responsible for reviewing and approving transactions related to Bermudian insurance companies, "including the purchase and sale of controlling shareholder interests in domestic insurance companies." (Id. ¶ 3.) Gerald Gakundi is the Director for the Insurance Supervision Department at the BMA and Susan Davis-Crockwell is the Deputy Director of Enforcement for the Legal Services and Enforcement Department at the BMA. (Id. ¶¶ 4-5.)

"On June 16, 2022, Newpoint applied to the BMA to become a controlling shareholder of a Bermudian insurance company, Citadel Reinsurance Company Limited ('Citadel')." (Id. ¶ 10 (emphasis removed).) Less than two weeks later, on July 26, 2022, the BMA sent a letter to Plaintiff's office in Beverly Hills stating that the BMA "was considering 'objecting' to the transaction, the objection being the functional equivalent of rejecting the transaction." (Id. ¶ 11.) Plaintiff alleges that "[t]he letter falsely and maliciously claimed that Newpoint was not a 'fit and proper person to be the controller of Citadel.' " (Id.) Specifically, Plaintiff alleges the letter falsely claimed the BMA "had received 'information' from regulators in multiple jurisdictions[ ] that 'Newpoint . . . provided information which is not accurate and is misleading as to the status of Newpoint's current ownership of other companies,' " " '[t]hat Newpoint [was] unlikely to comply with directions or other regulatory obligations imposed upon it,' " and "[t]hat Newpoint fail[ed] to meet the 'Eligible Capital Rules.' " (Id.)

"On September 30, 2022, the BMA[ ] transmitted to Newpoint at its Beverly Hills, California office its final 'objection[,]' thereby rejecting Newpoint's application." (Id. ¶ 14.) Plaintiff alleges that in the BMA's final objection, "Defendants doubled down on their malfeasance, again falsely conflating Newpoint with other entities, and vaguely accusing those companies' directors and controllers . . . of vague misconduct that allegedly supported the BMA's bad faith denial of Newpoint's controlling shareholder application." (Id.)

Plaintiff filed the instant case in this Court on November 29, 2022. Plaintiff brings four causes of action: 1) tortious interference with existing and prospective economic advantage, (id. ¶¶ 22-36); 2) negligent interference with existing and prospective economic advantage, (id. ¶¶ 37-46); 3) trade libel, (id. ¶¶ 47-55); and violation of California Business and Professions Code section 17200 et seq., (id. ¶¶ 56-59). Defendants move to dismiss Plaintiff's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) on the grounds that they are immune from suit under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1602 et seq., and the common law. (Mot. 7-14.) Defendants also move to dismiss under Federal Rule of Civil Procedure 12(b)(2) on the grounds that this Court lacks personal jurisdiction over Defendants. (Id. at 14-17.)

II. LEGAL STANDARDS

A. Subject-Matter Jurisdiction

Federal Rule of Civil Procedure 12(b)(1) authorizes a party to seek dismissal of an action for lack of subject-matter jurisdiction. Rule 12(b)(1) jurisdictional challenges can be either facial or factual. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). In a facial attack, the complaint is challenged as failing to establish federal jurisdiction, even assuming all the allegations are true and construing the complaint in the light most favorable to the plaintiff. See id. In a factual challenge, the moving party "disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Id. "When the defendant raises a factual attack, the plaintiff must support her jurisdictional allegations with competent proof under the same evidentiary standard that governs in the summary judgment context." Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014) (citation and quotation marks omitted). In resolving a factual attack, the court need not accept the allegations in the complaint as true. Safe Air for Everyone, 373 F.3d at 1039. In either case, the plaintiff bears the burden of proving subject-matter jurisdiction by a preponderance of the evidence. Leite, 749 F.3d at 1121. "Although sovereign immunity is only quasi-jurisdictional in nature, Rule 12(b)(1) is still a proper vehicle for invoking sovereign immunity from suit." Pistor v. Garcia, 791 F.3d 1104, 1111 (9th Cir. 2015).

B. Personal Jurisdiction

1. BMA

"Under the FSIA, . . . personal jurisdiction over a foreign state exists where subject-matter jurisdiction exists and where proper service has been made." Altmann v. Republic of Austria, 317 F.3d 954, 969 (9th Cir. 2002) (citing 28 U.S.C. § 1330(b)). The assertion of jurisdiction over a foreign sovereign must also comply with the minimum contacts requirement of "the Due Process Clause of the Fifth Amendment," but "[w]here service is made under FSIA section 1608, the relevant area in delineating contacts is in the entire United States, not merely the forum state." Id. at 970 (internal quotation marks omitted).

2. Individual Defendants

The party asserting the existence of jurisdiction bears the burden of establishing it. Mattel, Inc. v. Greiner & Hausser GmbH, 354 F.3d 857, 862 (9th Cir. 2003). Depending on the nature and extent of a defendant's contacts, if any, with a forum state, the appropriate exercise of personal jurisdiction may be either general—that is, the party is subject to any claims in that forum—or specific—that is, the party is subject only to claims arising out of its forum-related activities. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011).

To establish personal jurisdiction over a defendant, a plaintiff must show both that a long-arm statute confers personal jurisdiction over an out-of-state defendant, and that the exercise of jurisdiction is consistent with federal due process requirements. Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154-55 (9th Cir. 2006). "Because California's long-arm jurisdictional statute is coextensive with federal due process requirements, the jurisdictional analyses under state law and federal due process are the same." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800-01 (9th Cir. 2004).

Constitutional due process requires that jurisdiction be exercised over a nonresident party only if that party has "minimum contacts" with the forum, such that the exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotation marks omitted); accord Burger King Corp. v. Rudzewicz, 471 U.S. 462, 464, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). The Ninth Circuit employs a three-prong test to analyze whether a defendant's "minimum contacts" satisfy the due process clause in the context of specific personal jurisdiction:

(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and

(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.

Schwarzenegger, 374 F.3d at 802 (citation omitted).

The plaintiff bears the burden of satisfying the first two prongs of the test. Id. The first prong may be satisfied with facts sufficient to show "either purposeful availment or purposeful direction, which, though often clustered together under a shared umbrella, 'are, in fact, two distinct concepts.' " Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010) (quoting Pebble Beach, 453 F.3d at 1155). Courts in the Ninth Circuit "generally apply the purposeful availment test when the underlying claims arise from a contract, and the purposeful direction test when they arise from alleged tortious conduct." Morrill v. Scott Fin. Corp., 873 F.3d 1136, 1142 (9th Cir. 2017).

"Where allegedly tortious conduct takes place outside the forum and has effects inside the forum," AMA Multimedia, LLC v. Wanat, 970 F.3d 1201, 1208 (9th Cir. 2020), courts apply the "effects test," which requires proof that defendant "(1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state," Axiom Foods, Inc. v. Acerchem Int'l, ...