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 Post subject: Gilmore Bank - Cook Islands Trust Subject To Jurisdiction
PostPosted: Tue Feb 25, 2014 10:36 am 
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Gilmore v. AsiaTrust New Zealand Ltd., 2014 WL 684377 (Cal.App.Distr. 4, Feb. 21, 2014). http://goo.gl/6bRx3n

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

GILMORE BANK et al., Plaintiffs and Appellants,

v.

ASIATRUST NEW ZEALAND LIMITED as Trustee, etc., Defendant and Respondent.

G048053

Filed February 21, 2014

Appeal from a judgment of the Superior Court of Orange County, William D. Claster, Judge. Reversed. (Super.Ct. No. 30–2011–00452056)

Attorneys and Law Firms

Hallstrom, Klein & Ward and David T. Ward for Plaintiffs and Appellants.

DiMascio & Berardo, Dianne DiMascio and David Berardo for Defendant and Respondent.

Opinion

O P I N I O N

IKOLA, J.

Plaintiffs Gilmore Bank and Jay Cho seek to collect a $3.2 million judgment from judgment debtor, Cindy Dalrymple.1 Toward this end, they have sued Cindy, AsiaTrust New Zealand Limited — a New Zealand company (AsiaTrust), and other defendants for fraudulently transferring and sequestering Cindy's assets.

This appeal concerns the trial court's order granting nonresident defendant AsiaTrust's motion to quash service of summons for lack of personal jurisdiction. The primary issue presented is whether the test for specific jurisdiction in tort cases requires the defendant to have expressly aimed its intentional conduct at the plaintiff. We hold that California's specific jurisdiction test in tort cases is not so narrow or rigid. Accordingly, we reverse the court's order.

FACTS

The Underlying Judgment

In 2008, Cindy sold her manufacturing company to plaintiff Cho. Plaintiff Gilmore Bank financed Cho's purchase. Within six months of the sale, the company's revenues dropped precipitously and it laid off all its workers and closed.

Cho commenced arbitration proceedings against Cindy for misrepresentation and other causes of action.

On the second day of the arbitration hearing (Jan. 12, 2010), Cindy formed the CD Private Retirement Trust (Cindy's Retirement Trust) and appointed her 25–year–old niece, Sonia, as the trustee. The trust provides that the trustee is to pay Cindy $203,000 of trust income or capital every year during Cindy's lifetime.

The three-arbitrator panel awarded Cho approximately $3.2 million from Cindy. The arbitrators found that during the sale negotiations, Cindy made false and misleading statements to plaintiffs and failed to tell them that the company faced a significant loss of business and that its sales volume and profits would plummet.

In May 2010, the court entered a judgment of almost $3.3 million on the arbitration award in plaintiffs' favor against Cindy and her former company.

Plaintiffs' Action Against Cindy for Fraudulently Transferring Her Assets

In February 2011, plaintiffs sued Cindy, Sonia (as trustee of Cindy's Retirement Trust), five corporations, and a law firm for fraudulent transfers and other causes of action. (In this opinion we refer to Cindy, Sonia, and the defendant entities collectively as "the Dalrymple defendants.") Plaintiffs' complaint alleged that, at the start of the arbitration proceeding, Cindy owned assets valued at over $5 million, but during the proceeding, as her liability became clear, she frantically formed trusts and other entities, fraudulently transferred her assets to them in order to hinder plaintiffs from collecting their claims, and appointed Sonia as the trustee or manager of the newly formed trusts and entities. Plaintiffs further alleged that Cindy's Retirement Trust initially held $3 million in stocks and bonds (as well as a significant amount of cash and other assets), but, recently, $1 million of its assets had "disappeared." Plaintiffs further alleged that defendants knew that plaintiffs would satisfy their judgment from Cindy's assets, but defendants nonetheless fraudulently concealed and transferred Cindy's assets to hinder, delay, and defraud plaintiffs.

In June 2012, plaintiffs amended their complaint to name AsiaTrust (as trustee of the CD PRT NZ Trust) as a defendant.

AsiaTrust's Motion to Quash Service for Lack of Personal Jurisdiction

AsiaTrust (represented by the same attorneys who have represented the Dalrymple defendants in this litigation) moved to quash service of summons for lack of personal jurisdiction. The motion was supported by the declaration of Lauren Cherie Willis, a barrister and solicitor who is the general manager of AsiaTrust's parent company, Asiaciti Trust (Asiaciti). Willis declared the following:

Asiaciti and AsiaTrust are New Zealand companies that conduct all their business in New Zealand and have offices only in New Zealand. In June 2011, Willis was "introduced by email" to Sonia, as trustee of Cindy's Retirement Trust, "for the purpose of having AsiaTrust take title to an annuity that was to be issued by a Swiss insurance company."

AsiaTrust agreed to serve as trustee for a trust that would be created to hold the annuity. Willis drafted a deed of settlement for a trust (the New Zealand Trust) between AsiaTrust, as trustee, and Sonia (trustee of Cindy's Retirement Trust) as settlor and beneficiary. Willis e-mailed the deed of settlement to Sonia. Willis and Sonia exchanged fully executed copies of the deed of settlement via e-mail.

"Since approximately October 3, 2011, the [New Zealand Trust] has received annuity payments from the Swiss Insurance Company which have been distributed to [Cindy's] Retirement Trust pursuant to the terms of the Annuity. The distributions have been made via wire transfers from AsiaTrust's [bank account] to [Cindy's] Retirement Trust's bank in the United States."

Willis "did not travel to California to solicit, negotiate or execute the Deed of Settlement," has never met Sonia in person, and is not required to travel and has not traveled to California in connection with conducting business or administering the assets of the New Zealand Trust.

Plaintiffs' Opposition to AsiaTrust's Motion to Quash Service

In plaintiffs' opposition to AsiaTrust's motion, they argued AsiaTrust was subject to personal jurisdiction in California because it had received, managed, and disbursed funds to and from California, and had formed "a contract that it sent to California for execution, pursuant to which it sends regular payment to California, all as part of an on-going effort to sequester funds from Plaintiffs and hinder collection...."

Plaintiffs' counsel's declaration and exhibits thereto evidence the following facts. Cindy, Sonia, David Berardo (counsel for the Dalrymple defendants), and plaintiffs are California residents. Cindy's Retirement Trust and its bank account are located in California. As of November 1, 2009 (two months before the creation of Cindy's Retirement Trust), Cindy's assets had totaled over $5 million and she had no debt.

Berardo was familiar with AsiaTrust. Over the years, he had consulted with AsiaTrust about the formation of various legal entities and had introduced people to AsiaTrust for that purpose.

In a June 2011 e-mail to AsiaTrust, Berardo wrote: "We have a new matter. We need to set up a NZ Trust to be settled by the trustee of a California [private retirement trust]. The form of the transaction is identical to the Elins [New Zealand private retirement trust]."

Berardo asked AsiaTrust to begin its due diligence on Sonia as soon as possible. He provided AsiaTrust with documents on Sonia, as trustee of Cindy's Retirement Trust. Willis and Berardo exchanged e-mails about Sonia's plan to contact Willis as part of Sonia's due diligence on Asiaciti.

In an e-mail, Sonia asked Willis for information concerning "the annuities you offer...." Willis replied by e-mail to Sonia that it "was a pleasure to speak with you the other day." Willis attached "a document which outlines the advantages of [New Zealand] as a trust jurisdiction," and stated that a New Zealand foreign trust is "a great entity" with tax advantages.

Willis also attached a draft trust deed for Sonia's and Berardo's review. In a subsequent e-mail, Willis attached an "updated" trust deed reflecting a change negotiated by Berardo. In an e-mail to Willis, Berardo attached an amendment to the trust deed that had been signed by Sonia and witnessed by Berardo, and asked Willis to have it countersigned.

Under the terms of the trust deed for the New Zealand Trust, the trust is irrevocable. The trust deed entitles AsiaTrust to remuneration for its services and to be indemnified out of the New Zealand Trust's assets against liabilities incurred as trustee. The trust deed empowers Sonia to carry out her fiduciary duties to Cindy (the beneficiary of Cindy's Retirement Trust) and to recommend to AsiaTrust that retirement benefits be paid directly to beneficiaries of Cindy's Retirement Trust.

Asiaciti billed Sonia (as settlor of the New Zealand Trust) $3,750 as an establishment fee and an additional $3,500 as an annual trustee fee. Sonia used funds from Cindy's Retirement Trust to pay $500,000, as well as initial fees, to the New Zealand Trust. The New Zealand Trust put the $500,000 into an interest-bearing client account.

Sonia liquidated over $2 million in stocks and bonds from Cindy's California accounts (held by Cindy's Retirement Trust) and wired the money to the New Zealand Trust. The New Zealand Trust bought a Swiss annuity for $2.5 million.

In an e-mail, Berardo instructed Willis to arrange to meet with the Swiss annuity company while she was in Zurich, Switzerland. Berardo stated the Swiss company had "issued a written binder confirming that it will issue an annuity to AsiaTrust as the owner and beneficiary." Berardo asked Willis to get a copy of the binder, to "confirm that AsiaTrust is the owner and beneficiary," and to circulate the binder at her earliest opportunity.

The Swiss annuity certificate reflects that (1) the New Zealand Trust is the owner and beneficiary of the annuity, (2) the insured person is Cindy Dalrymple, a resident of Tustin, California, (3) the annuity was purchased for $2.5 million, (4) the annuity pays about $67,500 every quarter, and (5) the annuity income is payable so long as Cindy lives. At the time the annuity was issued, Cindy was 55 years old.

In September 2011 e-mails between Sonia and Asiaciti, (1) Sonia instructed AsiaTrust to immediately wire transfer $70,000 to Cindy's Retirement Trust's bank account in California, (2) Willis asked Sonia to print a copy of the e-mail and sign and send it to Willis as soon as possible for Asiaciti's files, and (3) Asiaciti's legal counsel subsequently confirmed that the funds had been transferred.

In depositions, Sonia testified to the following. The September 2011 distribution of $70,000 from the New Zealand Trust went to Cindy. Sonia has e-mailed Willis to ask for money from the New Zealand Trust more than once (possibly two or three times), and the New Zealand Trust has each time wire transferred the money in response to Sonia's requests. The money received from the New Zealand Trust is used exclusively to disburse funds to Cindy or to pay legal fees. The wire transfers from the New Zealand Trust go to the California bank account of Cindy's Retirement Trust. Sonia anticipated she would request the next distribution from the New Zealand Trust sometime in 2013. She made such requests whenever the funds "in the accounts" were insufficient to meet Cindy's requests. All disbursements from the annuity are distributed to Cindy's Retirement Trust through the New Zealand Trust. The flow of money originates from the annuity, moves to the New Zealand Trust, then to Cindy's Retirement Trust, and ultimately to Cindy herself. This enables Sonia to make the retirement payments required of her as trustee. Sonia has spoken to Willis once or twice and has e-mailed Willis a "lot." Asiaciti sent Sonia an invoice (addressed to a California address) for establishing the New Zealand Trust and for its annual trustee fee, and later e-mailed Sonia an invoice for a subsequent annual fee, which fees were paid from the $500,000 in the New Zealand Trust's fund.

Court Rulings

On December 3, 2012, the court granted plaintiffs' motion for a preliminary injunction to freeze the "defendants' assets," to restrain them from transferring any property, and to require them to repatriate to the United States all assets transferred to the New Zealand Trust and the Swiss annuity.

On December 12, 2012, a different judge granted AsiaTrust's motion to quash service of summons for lack of personal jurisdiction.

DISCUSSION

General Legal Principles on Personal Jurisdiction

California's long-arm statute authorizes its "courts to exercise jurisdiction over a foreign corporation to the fullest extent consistent with due process." (Sanders v. CEG Corp. (1979) 95 Cal.App.3d 779, 783; see Code Civ. Proc., sec. 410.10.) Consequently, California has personal jurisdiction over a nonresident defendant who "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. (1996) 14 Cal.4th 434, 444 (Vons ).) The defendant's minimum contacts with the state must reasonably justify haling it into a California court to conduct a defense. (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 268 (Pavlovich ).) Courts apply the minimum contacts test on a case by case basis, focusing on the nature and quality of the defendant's activities in the state or with state residents. (Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 474–475 (Burger King ).)

Personal jurisdiction may be general or specific. If the defendant's contacts are substantial, continuous, and systematic, the defendant may be subject to California's general jurisdiction. (Vons, supra, 14 Cal.4th at p. 445.)

If general jurisdiction is not established, a nonresident defendant may still be subject to California's specific jurisdiction if a three-prong test is met. (Vons, supra, 14 Cal.4th at p. 446.) First, the defendant must have purposefully availed itself of the state's benefits. Second, the controversy must be related to or arise out of the defendant's contacts with the state. (Ibid.) Third, considering the defendant's contacts with the state and other factors, California's exercise of jurisdiction over the defendant must comport with fair play and substantial justice. (Id. at p. 447.)

The parties agree the sole issue here is whether AsiaTrust is subject to California's specific jurisdiction. Plaintiffs bear the burden of establishing that the first two requirements for specific jurisdiction have been met. (Pavlovich, supra, 29 Cal.4th at p. 273.) If plaintiffs do so, the burden shifts to AsiaTrust to show that California's exercise of jurisdiction would be unreasonable. Because the facts are undisputed, we decide the question of jurisdiction de novo. (Ibid.)

Prong One of the Specific Jurisdiction Test: AsiaTrust Purposefully Availed Itself of Forum Benefits

For purposes of the purposeful availment prong, the "United States Supreme Court has described the forum contacts necessary to establish specific jurisdiction as involving variously a nonresident who has 'purposefully directed' his or her activities at forum residents [citation], or who has 'purposefully derived benefit' from forum activities [citation], or ' "purposefully avail[ed himself or herself] of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws," ' " or " ' "deliberately" has engaged in significant activities with a State [citation] or has created "continuing obligations" between himself and residents of the forum [citation].' " (Vons, supra, 14 Cal.4th at p. 446, italics added.) This disjunctive language, along with the Supreme Court's rejection of mechanical or " 'talismanic' " formulas (id. at pp. 450, 460), suggests that the above formulations describe alternative, but not mutually exclusive, tests for purposeful availment.

AsiaTrust, however, argues that in tort cases, the purposeful availment issue is determined exclusively by applying the "effects" test (also known as the "purposeful direction" test). Furthermore, AsiaTrust interprets the effects test to require the defendant to have expressly aimed its intentional act at a plaintiff whom the defendant knows to be a resident of the forum state.2 To support these contentions, AsiaTrust relies primarily on federal district court rulings and a Ninth Circuit opinion — decisions that lack precedential value. (Raven v. Deukmejian (1990) 52 Cal.3d 336, 352 ["Decisions of the lower federal courts interpreting federal law, though persuasive, are not binding on state courts"].) For the reasons discussed below, we are unpersuaded by AsiaTrust's effort to read into purposeful availment law an inflexible dichotomy between tort and contract cases.

1. The effects test

The effects test was established by the United States Supreme Court in Calder v. Jones (1984) 465 U.S. 783 (Calder ). (Pavlovich, supra, 29 Cal.4th at pp. 269–270.) In Calder, Shirley Jones, "an entertainer whose television career was centered in California" (Calder, at p. 788), sued, among others, a reporter and an editor (who were both Florida residents) for libel in California in connection with a National Enquirer article (id. at pp. 785–786). The Florida defendants moved to quash service of process for lack of personal jurisdiction. (Id. at pp. 784–785.) The Calder court found California was "the focal point both of the story and of the harm suffered" and consequently held that jurisdiction over the Florida residents was proper "based on the 'effects' of their Florida conduct in California." (Id. at p. 789.)

In Pavlovich, a trade secrets misappropriation case, our Supreme Court held that the "Calder effects test requires intentional conduct expressly aimed at or targeting the forum state in addition to the defendant's knowledge that his intentional conduct would cause harm in the forum." (Pavlovich, supra, 29 Cal.4th at p. 271, original italics omitted, first and second set of italics added.) Pavlovich applied the effects test to conclude that, under the particular facts presented, California lacked personal jurisdiction over the defendant, a Texas resident who had posted on his Web site the plaintiff's confidential proprietary information. (Id. at pp. 266, 267, 273.) The plaintiff's principal place of business was California. (Id. at p. 266.) Its proprietary information enabled users to decrypt and copy DVD's containing motion pictures. (Id. at p. 267.) The court examined broadly whether the defendant's internet posting met the effects test (id. at p. 273), but ultimately concluded no evidence in the record suggested that the defendant's Web site targeted California, that any California resident ever visited the defendant's Web site, that the defendant knew the plaintiff's identity or that the plaintiff's primary place of business was California, or that the defendant expressly aimed his conduct to harm the motion picture industry in California or licensees of the plaintiff's proprietary information in California (id. at pp. 274–277).

Thus, contrary to AsiaTrust's insistence to the contrary, the effects test requires express aiming at the forum (not necessarily at the plaintiff). (Vons, supra, 14 Cal.4th at pp. 455, 458; see Archdiocese of Milwaukee v. Superior Court (2003) 112 Cal.App.4th 423, 440 (Archdiocese of Milwaukee ) [effects test does not require defendant to know identities of future victims].) The issue raised by AsiaTrust — i.e., whether the defendant's conduct affected the plaintiff — is relevant to the second prong of the specific jurisdiction test, i.e., whether the controversy is related to or arises out of the defendant's forum contacts. Yet, even as to this second prong, our Supreme Court has clarified that the " 'forum contacts need not be directed at the plaintiff in order to warrant the exercise of specific jurisdiction.' " (Snowney v. Harrah's Entertainment, Inc. (2005) 35 Cal.4th 1054, 1068.)

Furthermore, the effects test is not the sole purposeful availment test used in tort cases.

2. Purposeful availment tests in tort cases

In Vons, a tort case, our Supreme Court applied the forum benefits test for purposeful availment, not the effects test. (Vons, supra, 14 Cal.4th 434.) There, Vons Companies, Inc. (Vons), the California cross-complainant, alleged negligence and other tort causes of action against a franchisor whose principal place of business was California (Jack–in–the–Box)3 and several of Jack–in–the–Box's Washington-based franchisees. (Id. at pp. 440–442.) Our Supreme Court held that California had specific jurisdiction over the Washington franchisees because they had "purposefully availed themselves of benefits in the forum by reaching out to forum residents to create an ongoing franchise relationship." (Id. at p. 449.) The Washington franchisees had "purposefully availed themselves of the benefits of doing business with [Jack–in–the–Box]. They formed a substantial economic connection with this state. To require them to answer [Vons'] claim, as well, is not to allow a third party unilaterally to draw them into a connection with the state; rather, it was [the Washington franchisees] who established the connection." (Id. at p. 451.) Our Supreme Court recognized that Vons "was not a party to the franchise contract, and thus the claim is not on the contract.... This distinction, however, does not render the exercise of specific jurisdiction improper." (Id. at p. 452.) "The due process clause is concerned with protecting nonresident defendants from being brought unfairly into court in the forum, on the basis of random contacts. That constitutional provision, however, does not provide defendants with a shield against jurisdiction when the defendant purposefully has availed himself or herself of benefits in the forum." (Ibid.)

Thus, the test for purposeful availment does not hinge mechanically on whether the plaintiff's claim sounds in tort or contract. Rather, a court must apply " 'a "highly realistic" approach' " on a case by case basis and select the most appropriate test for purposeful availment based on the particular facts presented. (Vons, supra, 14 Cal.4th at p. 450; see Pavlovich, supra, 29 Cal.4th at p. 268.) Indeed, because California's long-arm statute " 'manifests an intent to exercise the broadest possible jurisdiction' " (Magnecomp Corp. v. Athene Co. (1989) 209 Cal.App.3d 526, 535), its courts may apply the purposeful availment test most conducive to establishing specific jurisdiction over a defendant in a particular case, consistent with due process.

AsiaTrust relies on Schwarzenegger v. Fred Martin Motor Co. (9th Cir.2004) 374 F.3d 797 (Schwarzenegger ) for the proposition that courts must apply the effects test in tort cases. There, the defendant, an Ohio car dealership, ran advertisements in a local Ohio newsletter that included a photograph of the plaintiff, Arnold Schwarzenegger, a California resident. (Id. at p. 799.) Schwarzenegger sued the dealership for infringing his right of publicity. (Ibid.) As in Vons and Pavlovich, the defendant's sole contact with California was a publication created in another state. The Ninth Circuit applied a "purposeful direction analysis" (id. at p. 802) to conclude that the dealership's advertisement "was not expressly aimed at California" (id. at p. 807). The Ninth Circuit stated that the purposeful direction test "is most often used in suits sounding in tort" (Schwarzenegger, at p. 802), but did not state that the purposeful direction test is the only one used in tort cases.

In Calder, Pavlovich, and Schwarzenegger, the respective defendants' only direct contact with California was the effect in California of a nationally or internationally disseminated publication created by the defendants in another state. Consequently, the only purposeful availment test which could potentially apply to establish California's specific jurisdiction was the effects test. The effects test was not meant to restrict a court's jurisdictional reach, but rather to serve as an additional tool for a forum to exercise constitutional jurisdiction.

3. AsiaTrust's conduct satisfies several purposeful availment tests

Here, as in Vons, AsiaTrust has a contractual relationship with its codefendants, who are California residents. Also as in Vons, AsiaTrust's contacts with its codefendants need not have been wrongful. "In any personal jurisdiction case we must evaluate all of a defendant's contacts with the forum state, whether or not those contacts involve wrongful activity by the defendant." (Yahoo! Inc. v. La Ligue Contre Le Racisme (9th Cir.2006) 433 F.3d 1199, 1207.) Furthermore, AsiaTrust's alleged liability as a transferee of a fraudulent conveyance is "based not upon tort but upon quasi-contract." (United States v. Neidorf (9th Cir.1975) 522 F.2d 916, 918.) " 'A quasi contractual obligation is created by the law for reasons of justice, without any expression of assent....' " (Ibid.)

We conclude it is unnecessary to apply the effects test here. Instead, we apply several other purposeful availment formulas, any one of which is sufficient to meet the first requirement for specific jurisdiction. The undisputed facts show Asiatrust (1) created continuing obligations between itself and California residents, (2) purposefully directed (and continues to direct) its activities towards California residents, and (3) purposefully derived (and continues to derive) benefits from its activities in California. AsiaTrust conducted due diligence on California resident Sonia, the trustee of Cindy's Retirement Trust. AsiaTrust sent promotional materials to Sonia and otherwise marketed to her the advantages of forming a New Zealand trust. AsiaTrust drafted the trust contract, negotiated the contractual terms with California residents Sonia and Berardo, and amended the contract. Sonia signed the amended contract, witnessed by Berardo, in California. AsiaTrust communicated by e-mail and telephone with Sonia and Berardo in California. AsiaTrust has invoiced Sonia in California for fees owed to AsiaTrust. AsiaTrust has received funds from Cindy's Retirement Trust in California and from a Swiss annuity that insures California resident Cindy. AsiaTrust has followed Berardo's instructions concerning the ownership of the Swiss annuity. AsiaTrust has wire transferred funds to Cindy's Retirement Trust's bank account in California in accordance with Sonia's instructions. Essentially, AsiaTrust has received compensation for accepting, investing, managing, disbursing, and shielding the assets of Cindy, a California judgment debtor, in a scheme that contemplates an ongoing contractual relationship for Cindy's lifetime.

AsiaTrust stresses that Willis never visited California. But "in this age of telecommunications, fax machines, and rapid mail services it is possible to [solicit and negotiate investments] without face-to-face meetings in any jurisdiction." (Checker Motors Corp. v. Superior Court (1993) 13 Cal.App.4th 1007, 1017.) It "is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications across state lines, thus obviating the need for physical presence within a State in which business is conducted." (Burger King, supra, 471 U.S. at p. 476.) "While any single telephone call or piece of correspondence might not be enough to satisfy the 'minimum contacts' requirement, there is much more in this case. Here there was a veritable 'latticework' of contacts linking [AsiaTrust] and the State of California: not one but many calls and other communications to California during the negotiations. The execution in California of the legal documents which formed the arrangement.... A continuing stream of payments from [AsiaTrust] to California." (Id. at p. 1018.) A continuing receipt by AsiaTrust of compensation from the California trustee of a California trust. AsiaTrust's acceptance from the California trust of money which AsiaTrust invested as directed by the California trustee and a California lawyer.

Finally, the underlying rationale of all the purposeful availment tests is that "it is fair to subject defendants to specific jurisdiction, because their forum activities should put them on notice that they will be subject to litigation in the forum." (Vons, supra, 14 Cal.4th at p. 446.) Here, the indemnity and lien clause in the trust deed for the New Zealand Trust evidences AsiaTrust's awareness of the inherent litigation risks of its contacts with California residents Cindy, Sonia, and Berardo.

Plaintiffs have met their burden to demonstrate that AsiaTrust's contacts meet the purposeful availment prong of the specific jurisdiction test.

Prong Two of the Specific Jurisdiction Test: A Substantial Connection Exists Between Plaintiffs' Claims and AsiaTrust's Forum Contacts

The second prong of the specific jurisdiction test requires that the controversy relate to or arise out of the defendant's contacts with the forum. The question is whether the plaintiff's causes of action arose out of or had a substantial connection with a relationship the defendant purposefully established with the forum state. (Vons, supra, 14 Cal.4th at p. 448.) "[T]he cause of action must arise out of an act done or transaction consummated in the forum...." (Ibid.) Stated another way, there must "be a substantial nexus or connection between the plaintiff's cause of action and the defendant's forum contacts...." (Id. at p. 453.) "[T]he 'arising out of or relating to' standard is in the disjunctive, and is intended as a relaxed, flexible standard...." (Id. at p. 455.)

In Vons, our Supreme Court concluded Vons' counterclaims against the Washington franchisees bore a substantial relationship to the franchisees' contacts with California, in part because Vons' counterclaims arose out of the franchisees' contractual relationship with Jack–in–the–Box. (Vons, supra, 14 Cal.4th at p. 457.) Our Supreme Court emphasized that the lack of a relationship between Vons and the franchisees was not "critical in determining whether the claim was sufficiently related to the forum contacts to permit the exercise of specific jurisdiction in California" because "the defendant's forum activities need not be directed at the plaintiff in order to give rise to specific jurisdiction." (Ibid.) "The United States Supreme Court has stated more than once that the nexus required to establish specific jurisdiction is between the defendant, the forum, and the litigation [citations] — not between the plaintiff and the defendant." (Id. at p. 458.) Nor is it necessary that the defendant's forum contacts have proximately caused the injury to the plaintiff. "The United States Supreme Court long ago rejected the notion that personal jurisdiction might turn upon mechanical tests such as a proximate cause test." (Id. at p. 463.) Instead, the high court "has spoken of a relationship between the cause of action and the contacts in the forum, and has used relatively broad terms to describe the necessary relationship." (Id. at p. 468.) "[T]he central issue presented by a motion to quash for lack of specific jurisdiction [is] whether the defendant's forum contacts and the plaintiff's claim are related sufficiently so that it is fair to subject the defendant to jurisdiction in the forum." (Id. at p. 469.) Thus, personal jurisdiction is fundamentally a matter of "relationship and fairness," and answers are rarely " ' "written 'in black and white.' " ' " (Id. at p. 475.)

Here, the New Zealand Trust is the instrumentality by which the Dalrymple defendants have transferred Cindy's assets out of plaintiffs' reach and which enables Cindy to continue to enjoy a substantial income from her transferred assets. Although Cindy's assets are central to plaintiffs' lawsuit against her, half of her assets reside in an irrevocable trust or Swiss annuity in AsiaTrust's possession or under its control. This is a sufficient nexus to fairly subject AsiaTrust to California's jurisdiction.

Prong Three of the Specific Jurisdiction Test: California's Exercise of Personal Jurisdiction over AsiaTrust is Fair and Reasonable

"In assessing fairness, we consider (1) the burden on [AsiaTrust] of defending in California, (2) California's interests, (3) [plaintiffs'] interest in obtaining relief, (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy, and (5) ' "the shared interest of several States in furthering fundamental substantive social policies." ' [Citations.] [AsiaTrust] bears the burden of presenting a 'compelling case' that jurisdiction would be unreasonable.' " (Archdiocese of Milwaukee, supra, 112 Cal.App.4th at pp. 442–443 [quoting a U.S. Supreme Ct. opn. & a Cal. Supreme Ct. opn.].)4

To require AsiaTrust to defend itself in California would not impose an unreasonable burden. Although AsiaTrust argues that a more "stringent" reasonableness test applies because it is a foreign national, "modern advances in communications and transportation have significantly reduced the burden of litigating in another country." (Sinatra v. National Enquirer, Inc. (9th Cir.1988) 854 F.2d 1191, 1199.) In fact, Willis traveled to Europe and conducted business in Switzerland on Cindy's behalf. Cost is presumably not a factor for AsiaTrust since it has a first priority lien on the assets of the New Zealand Trust for indemnification purposes. Berardo's law firm in Los Angeles represents AsiaTrust, apparently pursuant to the indemnity and lien clause in the trust deed. The New Zealand Trust in this case is not the first trust AsiaTrust has formed and managed for Berardo's clients. Furthermore, we " 'examine the burden on the defendant in light of the corresponding burden on the plaintiff.' " (Ibid.) "It presents as much of a burden for [plaintiffs] to litigate in [New Zealand] as it does for [AsiaTrust] to litigate in California." (Ibid.) In addition, the "factor of conflict with the sovereignty of the defendant's state 'is not dispositive because, if given controlling weight, it would always prevent suit against a foreign national in a United States court.' " (Ibid.)

As to the other factors, AsiaTrust "concedes that California has an interest in adjudicating the fraudulent transfer dispute between [plaintiffs] and the Dalrymple Defendants," but contends California has "little, if any, interest in adjudicating a dispute between [plaintiffs] and AsiaTrust — an innocent third party that has not directed any activity at [plaintiffs] and has neither sought nor solicited business in California." Irrespective of the accuracy of AsiaTrust's characterization of itself, California has a strong interest in enforcing its judgments.

Plaintiffs have an obvious interest in collecting the $3.3 million judgment entered against Cindy and her former company by a California court over three and one-half years ago. AsiaTrust does not even mention this factor.

Because plaintiffs and the Dalrymple defendants are located in California, a California court can provide the most efficient conflict resolution. AsiaTrust quotes Panavision Intern., L.P. v. Toeppen (9th Cir.1998) 141 F.3d 1316, 1323, for the proposition that this factor is "no longer weighed heavily," but omits Panavision's reasoning that geographical location is no longer critical "given the modern advances in communication and transportation." (Ibid.)

Finally, New Zealand and California share an interest in enforcing judgments, strengthening respect for judicial systems, and promoting cooperation among sovereign nations. AsiaTrust does not mention this factor.

In sum, AsiaTrust has failed to make a compelling case that California's exercise of specific jurisdiction would be unfair and unreasonable. (Indeed, AsiaTrust failed below to argue or even mention this third prong in its initial written motion to quash and instead raised the issue in its reply to plaintiffs' opposition.) Under the particular circumstances of this case and taking into account modern telecommunications and transportation, we conclude California's exercise of personal jurisdiction over AsiaTrust is both fair and reasonable.

DISPOSITION

The order granting the motion to quash is reversed and the court is directed to enter a new order denying the motion. Plaintiffs are entitled to their costs on appeal.

WE CONCUR:

O'LEARY, P.J.

THOMPSON, J

Footnotes

1

For ease of reference and to avoid confusion, we sometimes refer to Cindy Dalrymple and her niece, Sonia Jolene Dalrymple, by their first names. We mean no disrespect.

2

At the hearing on AsiaTrust's motion to quash service of summons, defense counsel argued that specific jurisdiction hinged on whether AsiaTrust purposely directed its activities at plaintiffs. Later, the court stated, "But more than anything else, it looks like, to the extent [AsiaTrust] had any connection with California, it was with one of the [Dalrymple] defendants, and it didn't direct its activities in any way toward the plaintiffs, nor would it have reasonably been able to assume that its activities were in any way directed toward the plaintiffs."

3

Jack–in–the–Box was a division of the franchisor.

4

AsiaTrust relies on the Ninth Circuit's seven-factor reasonableness test set forth in Dole Food Co., Inc. v. Watts (9th Cir.2002) 303 F.3d 1104, 1114, continuing a pattern in its respondents' brief of relying on Ninth Circuit and federal district court opinions.

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 Post subject: Re: Gilmore Bank - Cook Islands Trust & Preliminary Injuncti
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Gilmore Bank v. Dalrymple, 2014 WL 2763658 (Cal.App., Distr. 4, June 18, 2014). http://goo.gl/WsZGFi

Not Officially Published (Cal. Rules of Court, Rules 8.1105 and 8.1110, 8.1115) California Rules of Court, rule 8.1115, restricts citation of unpublished opinions in California courts.

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

GILMORE BANK et al., Plaintiffs and Respondents,

v.

Cindy DALRYMPLE et al, Defendants and Appellants.

G047902

Filed June 18, 2014

Appeal from an order of the Superior Court of Orange County, Frederick P. Horn, Judge. Affirmed. (Super.Ct. No. 30–2011–00452056)

Attorneys and Law Firms

Pacific Business Law Group, APC and James M. Jimenez for Defendants and Appellants.

Hallstrom, Klein & Ward and David T. Ward for Plaintiffs and Respondents.

Opinion

IKOLA, J.

*1 Plaintiffs Gilmore Bank and Jay Cho seek to collect a $3.2 million judgment from judgment debtor, Cindy Dalrymple.1 Toward this end, they have sued Cindy and other defendants for fraudulently transferring and sequestering her assets.

This appeal concerns the trial court's order granting plaintiffs' motion for a preliminary injunction requiring defendants to repatriate to the United States all assets they transferred to a New Zealand trust and into a Swiss annuity.2 Defendants contend the court abused its discretion by granting the injunction. They argue insufficient evidence supports the court's underlying factual findings. Defendants, however, have waived this issue by disregarding their obligation to provide a summary of the significant facts in their opening brief. (Cal. Rules of Court, rule 8.204(a)(2)(C).) And, in any event, abundant substantial evidence supports the court's findings. Accordingly, we affirm the court's order.

FACTS3

The Underlying Judgment and Cindy's Initial Transfers of Her Assets

In 1992, Cindy and her partner formed a company named Alliance Technology, Inc. (ATI), to make electrical components for Aviza. Thus, Aviza was always ATI's primary customer. In 2000, Cindy became the sole owner of ATI.

In a December 2006 meeting with Cindy, several high-ranking officials of Aviza told her that Aviza planned to outsource much of its business to another supplier. Although the timing of the switch was uncertain, Cindy realized that her company, ATI, faced a big drop in volume and profitability.

Cindy quickly engaged a broker to try to sell ATI. In August 2007, she began negotiations to sell ATI to plaintiff Cho in a transaction financed by plaintiff Gilmore Bank. During the negotiations, Cindy did not tell plaintiffs, or even her own broker, of ATI's impending loss of much of Aviza's business. Instead, she said ATI's relationship with Aviza had survived for 16 years and was likely to continue indefinitely, and that there had been no change in the relationship. Cindy blocked plaintiffs from directly questioning Aviza during the due diligence period, saying she "did not want them to impact her relationship with" Aviza before the sale closed.

*2 In December 2007, Cindy sold ATI to Cho for $2.2 million. Gilmore Bank financed Cho's purchase. Within six months of the sale, ATI's revenues dropped precipitously and it laid off all its workers and closed.

Cho commenced arbitration proceedings against Cindy for misrepresentation and other causes of action.

In October 2009, Cindy retained attorney William Norman for the alleged purpose of preparing her estate and retirement plan. Norman knew that a claim for over $1 million had been lodged against Cindy for misrepresentations and nondisclosure in the sale of her business.

In December 2009, Cindy owned over $5 million in assets, including over $3.5 million in cash and securities and over $1 million worth of real estate. That month, she formed a Wyoming limited liability company (LLC) named Enchantment Management, LLC (Enchantment), of which she was the president, a manager, and a member with a 99 percent interest. The next month, she transferred $3 million in cash and securities into the newly formed account of another LLC set up by Norman, this one called the CD Investment Series LLC (CDIS), of which Enchantment was the manager and initially its sole member.

On January 12, 2010, the second day of the arbitration hearing, Cindy formed a trust — the CD Private Retirement Trust (Cindy's Retirement Trust) — and appointed her 25–year–old niece, Sonia, as the trustee. At its inception, Cindy's Retirement Trust owned 99 percent of CDIS (which held two real properties and over $3.5 million in cash and securities). Cindy's Retirement Trust provides that the trustee is to pay Cindy $203,000 of trust income or capital every year during Cindy's lifetime.

On January 19, 2010, the three-arbitrator panel in the arbitration proceeding issued an interim award in Cho's favor. The arbitrators found that, during the sale negotiations, Cindy made false and misleading statements to plaintiffs and failed to tell them that ATI faced a significant loss of business and that its sales volume and profits would plummet. The award ordered Cindy to pay Cho over $3 million in damages, as well as attorney fees and costs.

In mid-January of 2010, attorney Norman learned of the arbitration award against Cindy. Norman realized that a reserve had to be built into Cindy's retirement plan to cover the claim. He believed that a reserve of $1.4 million would be sufficient. (In an October 2012 deposition, he testified the reserve was in the form of Cindy's real properties, collectibles, automobile, and a Roth individual retirement account (IRA).) But in reality, no such reserve was set aside.

The final arbitration award, dated March 25, 2010, awarded Cho approximately $3.2 million.

In June 2010, the court entered a judgment of almost $3.3 million on the arbitration award in plaintiffs' favor against Cindy and ATI.

Cindy resigned as manager of Enchantment in April 2010. But she retained possession of a checkbook until 2012 and continuously served as Sonia's "advisor" with respect to the trust.

Plaintiffs' Action Against Cindy for Fraudulently Transferring Her Assets

In February 2011, plaintiffs sued Cindy, Sonia (as trustee of Cindy's Retirement Trust), Enchantment, other LLCs, Norman's law firm, and other defendants for fraudulent transfers and other causes of action. (In this opinion we refer to Cindy, Sonia, and the defendant entities collectively as "the Dalrymple defendants.") Plaintiffs' complaint alleged that, at the start of the arbitration proceeding, Cindy owned assets valued at over $5 million, but during the proceeding, as her liability became clear, she frantically formed trusts and other entities, fraudulently transferred her assets to them in order to hinder plaintiffs from collecting their claims, and appointed Sonia as the trustee or manager of the newly formed trusts and entities. Plaintiffs further alleged that Cindy's Retirement Trust initially held $3 million in stocks and bonds (as well as a significant amount of cash and other assets), but, recently, $1 million of its assets had "disappeared." Plaintiffs further alleged that defendants knew that plaintiffs would satisfy their judgment from Cindy's assets, but defendants nonetheless fraudulently concealed and transferred Cindy's assets to hinder, delay, and defraud plaintiffs.

Cindy's Transfer of Her Assets Overseas

*3 In December 2010, at the recommendation of her attorney, Sonia formed an irrevocable trust ("the New Zealand Trust"), of which AsiaTrust New Zealand Limited was the trustee, and Sonia (trustee of Cindy's Retirement Trust) was the settlor. The beneficiaries of the New Zealand Trust are the trustee and beneficiaries of Cindy's Retirement Trust, including Cindy. The trust deed empowers Sonia to carry out her fiduciary duties to Cindy (the beneficiary of Cindy's Retirement Trust) and to recommend to AsiaTrust that retirement benefits be paid directly to beneficiaries of Cindy's Retirement Trust.

In June 2011, Cindy transferred $2.5 million to SwissGuard International, Gmbh (SwissGuard), as well as $500,000 to "Checking Legal." Pursuant to her attorney's directions, Sonia sent the $500,000 to the New Zealand Trust.

In September 2011, SwissGuard issued a Swiss annuity certificate reflecting that (1) the New Zealand Trust is the owner and beneficiary of the annuity, (2) the insured person is Cindy, (3) the annuity was purchased for $2.5 million, (4) the annuity pays about $67,500 every quarter, and (5) the annuity income is payable so long as Cindy lives. At the time the annuity was issued, Cindy was 55 years old. Three months earlier, in June 2011, SwissGuard had advised Cindy that it would be "[v]ery easy" to cash in the annuity and that the process would normally take from 30 to 45 days.

In September 2011, Sonia authorized the distribution of $70,000 from the New Zealand Trust to Cindy's Retirement Trust. Sonia's understanding was that the Swiss annuity makes payments to the New Zealand Trust, which holds the money until Sonia requests it. The annuity makes payments of around $67,000 every quarter, which equals about $250,000 per year.

In a June 2012 deposition, Sonia testified, as to the $500,000 she sent to the New Zealand Trust, she had no idea where in New Zealand or in what form the funds are held, or who is a signatory to the account or otherwise has access to the money, or whether she can retrieve the money. She did not know whether the $500,000 constituted a fee, or an investment, or how it should be characterized. Similarly, as to the quarterly payments from the Swiss annuity to the New Zealand Trust's account, Sonia had no idea where in New Zealand the account was maintained.

In June 2012, plaintiffs amended their complaint to name AsiaTrust (as trustee of the New Zealand Trust) as a defendant. In February 2014, we held that the trial court had personal jurisdiction over AsiaTrust. (Gilmore Bank v. AsiaTrust New Zealand LTD. (2014) 223 Cal.App.4th 1558.)

Preliminary Injunction

On July 10, 2012, plaintiffs moved for a preliminary injunction, alleging that, in around September 2011, defendants had "moved and sequestered [Cindy's] assets ... to an off-shore trust and annuity in a blatant attempt to move them beyond the jurisdiction of the Court and out of reach of collection on the Judgment." Plaintiffs sought a preliminary injunction, asking the court to, inter alia, "order that the off-shore assets be repatriated to the United States to restore the status quo."

In a supporting declaration, plaintiffs' attorney described his recent discovery of defendants' offshore trust. He declared he had filed 20 motions to compel production of documents, before defendants finally responded and produced over 10,000 documents on April 30 or May 1 of 2012. Based on those documents, the attorney's firm deciphered that $2.5 million had been transferred offshore through a New Zealand trust into a Swiss annuity. Plaintiffs' attorney asked defense counsel for the trust document, which was not produced by defendants until June 2012. Plaintiffs' counsel then learned that $3 million of Cindy's assets — i.e., all her liquid assets — were held by the New Zealand Trust. The documents produced by defendants further revealed that in September 2011, CDIS had sold one of her real properties. Additionally, between 2011 and 2012, defendants had transferred at least $500,000 to their counsel, James Jimenez of the Pacific Business Law Group.

*4 In another supporting declaration, an estate and tax planning attorney declared that Cindy's trust, LLCs, and retirement plan include Cindy as the creator, beneficiary, and person with ultimate control and therefore afford her no estate tax savings (a typical goal of a retirement plan), nor does her offshore trust or annuity generate any estate tax savings. In order to be exempt from collection of money judgments, the retirement plan must have been established for retirement purposes only. Because Cindy and the other persons who created her retirement plan knew of the claims and liabilities asserted against her at the time they established her retirement plan, the plan did not meet the requirement of being established for retirement purposes only. The attorney opined "the plan was created solely for the purpose of avoiding a known and existing creditor's claim" and that withdrawals from the plan were "not being used primarily for 'retirement purposes.' "

Defendants' opposition to plaintiffs' preliminary injunction motion was supported by the declarations of Cindy, Sonia, Norman, and their counsel, Jimenez.

On December 3, 2012, the court granted plaintiffs' motion for a preliminary injunction requiring defendants to, inter alia, repatriate to the United States all assets they transferred to the New Zealand Trust and the Swiss Annuity.

DISCUSSION

Defendants contend the court abused its discretion by granting plaintiffs' motion for a preliminary injunction. They argue the court could not have properly concluded that (1) plaintiffs were likely to prevail on the merits at trial, or (2) plaintiffs were likely to suffer irreparable harm absent a preliminary injunction.

"[T]he decision to grant a preliminary injunction rests in the sound discretion of the trial court." (IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69.) "[T]rial courts should evaluate two interrelated factors when deciding whether or not to issue a preliminary injunction. The first is the likelihood that the plaintiff will prevail on the merits at trial. The second is the interim harm that the plaintiff is likely to sustain if the injunction were denied as compared to the harm that the defendant is likely to suffer if the preliminary injunction were issued." (Id. at pp. 69–70.)

"An appeal from an order granting a preliminary injunction involves a limited review of these two factors — likelihood of success on the merits and interim harm. If the trial court abused its discretion on either factor, we must reverse." (Shoemaker v. County of Los Angeles (1995) 37 Cal.App.4th 618, 625 (Shoemaker ).)

In conducting this limited review, we do "not 'resolve conflicts in the evidence, reweigh the evidence, or assess the credibility of witnesses.' " (ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006, 1016.) Instead, we view the evidence in the light most favorable to the prevailing party, draw inferences in favor of upholding the court's order (Schwartzman v. Wilshinsky (1996) 50 Cal.App.4th 619, 626), and imply all findings necessary to support the order (In re Marriage of Cohn (1998) 65 Cal.App.4th 923, 928). Our "task is to ensure that the trial court's factual determinations, whether express or implied, are supported by substantial evidence." (Shoemaker, supra, 37 Cal.App.4th at p. 625.)4 A trial court's order "must be upheld if it is supported by substantial evidence, no matter how slight it may be." (Schwartzman, at p. 626.) Defendants bear the burden " 'to make a clear showing of an abuse of discretion.' " (Shoemaker, at p. 624.)

*5 The usual purpose of a preliminary injunction is to preserve "the status quo until a final determination of the merits of the action." (Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528.) " 'Where, as here, the preliminary injunction mandates an affirmative act that changes the status quo, [i.e., in the case of a mandatory injunction,] we scrutinize it even more closely for abuse of discretion.' " (Shoemaker, supra, 37 Cal.App.4th at p. 625.) It has been said that a " ' "preliminary mandatory injunction is rarely granted, and is subject to stricter review on appeal." ' " (Id. at p. 626.) Yet, the " 'principles upon which mandatory and prohibitory injunctions are granted do not materially differ. The courts are perhaps more reluctant to interpose the mandatory writ, but in a proper case it is never denied.' " (6 Witkin, Cal. Procedure (5th ed. 2008) Provisional Remedies, sec. 280, p. 222.)

In "a clear case of prospective injury," a court may properly grant a mandatory preliminary injunction. (Alvarez v. Eden Township Hospital Dist. (1961) 191 Cal.App.2d 309, 312) Indeed, in such a case, an injunction may be necessary to prevent an irreparable altering of the status quo. In F.T.C. v. Affordable Media, LLC (9th Cir.1999) 179 F.3d 1228, the lower court issued a mandatory preliminary injunction against two defendants, requiring them "to repatriate any assets held for their benefit outside of the United States." (Id. at p. 1232.) The two defendants, along with AsiaCiti Trust Limited,5 were cotrustees of an irrevocable trust formed under the laws of the Cook Islands. (Ibid.) The Ninth Circuit held "the district court did not abuse its discretion in issuing the preliminary injunction." (Id. at p. 1238) F.T.C. describes at length the use of " '[s]o-called asset protection trusts ... to shield wealth by moving it to a foreign jurisdiction that does not recognize U.S. judgments or other legal processes, such as asset freezes' " in order "to frustrate and impede the United States courts by moving their assets beyond those courts' jurisdictions." (Id. at p. 1240.)

As noted, plaintiffs' motion for a preliminary injunction sought to restore the status quo back to the playing field that existed when they filed their fraudulent transfer lawsuit (before defendants sequestered assets overseas).

The Court Did Not Abuse Its Discretion by Finding Plaintiffs Were Likely to Prevail on the Merits

Defendants argue "that the transfers of assets into the [New Zealand] Trust and the Swiss Annuity were made in connection with [Cindy's] establishment of a private retirement plan, rendering these assets exempt from procedures to enforce money judgments" under the exemption established by section 704.115. Plaintiffs contend that defendants made the transfers with an intent to defraud their creditors and not for Cindy's retirement purposes.

"A fraudulent conveyance is a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim. However, a conveyance will not be considered fraudulent if the debtor merely transfers property which is otherwise exempt from liability for debts. That is, because the theory of the law is that it is fraudulent for a judgment debtor to divest himself of assets against which the creditor could execute, if execution by the creditor would be barred while the property is in the possession of the debtor, then the debtor's conveyance of that exempt property to a third person is not fraudulent." (Yaesu Electronics Corp. v. Tamura (1994) 28 Cal.App.4th 8, 13 (Yaesu ).)

*6 Section 703.010 et seq. governs property statutorily exempted from a judgment creditor's enforcement of a money judgment. Defendants rely on the exemption established by section 704.115 for "[p]rivate retirement plans, including, but not limited to, union retirement plans." (sec. 704.115, sub. (a)(1).) The purpose of the section 704.115 "exemption is to safeguard a source of income for retirees at the expense of creditors." (Yaesu, supra, 28 Cal.App.4th at p. 13.) Stated another way, the exemption's purpose "is to permit a judgment debtor to place funds beyond the reach of creditors, so long as they qualify for the exemption under the law, and there was no evidence the debtor used the account to hide assets." (8 Witkin, Cal. Procedure (5th ed. 2008) Enforcement of Judgment, sec. 204, pp. 235–236.)

"However, neither the debtor's mere compliance with the pertinent IRS rules in creating the private retirement plan nor the debtor's designation of the asset as a private retirement plan translates to an automatic exemption from execution." (Yaesu, supra, 28 Cal.App.4th at p. 13.) Rather, the fundamental inquiry is, considering all relevant factors, Was "the plan ... designed and used for a retirement" purpose? (Id. at p. 14.) This is a factual inquiry, and a trial court's finding on the question is "insulated from attack on appeal" if supported by substantial evidence. (Ibid; see also Schwartzman v. Wilshinsky, supra, 50 Cal.App.4th at p. 626 [whether IRA was necessary to support judgment debtor and his dependents upon retirement "presented a factual issue to the trial court, upon which [judgment debtor] had the burden of proof"]; compare id. at pp. 622, 628, 629, fn. 7 [where facts were undisputed, it was a question of law whether 401K profit-sharing plan (established by judgment debtor's employer and administered by other employees) was exempt under section 704.115].)

Here, we need not belabor our review of the court's implied finding that Cindy did not design and use her plan (and the various trusts, LLCs, and property transfers thereunder) for retirement purposes. Because defendants' opening brief included only evidence favorable to their cause, rather than all "significant facts" as required under California Rules of Court, rule 8.204(a)(2)(C) (see also Filip v. Bucurenciu (2005) 129 Cal.App.4th 825, 833 (Filip ) ["defendants present a skewed view of the facts"] ), they have waived their contention that insufficient evidence supports the court's finding (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881; Schmidlin v. City of Palo Alto (2007) 157 Cal.App.4th 728, 737–738).6

*7 Furthermore, abundant substantial evidence supports the court's finding. This evidence includes the timing of defendants' creation of the "retirement plan" relative to the arbitration and court proceedings and rulings (Yaesu, supra, 28 Cal.App.4th at p. 14); the absence of tax benefits afforded by the plan; the appointment of Cindy's young niece as trustee and manager of the entities; Cindy's retention of control over the assets after transferring them; the movement of all of Cindy's liquid assets overseas; Norman's recognition of a need for a liability reserve but failure to provide for one; Cindy's abandonment of her prior retirement goal of buying a condo on a cruise ship; and the use of substantial funds to pay legal fees (In re Phillips (Bankr.N.D.Cal.1997) 206 B.R. 196, 203 [expenditure of funds for legal defense of judgment debtors was inconsistent with utilization for retirement purposes] ).

In sum, substantial evidence supports the court's implied finding Cindy's "retirement plan" does not qualify for the section 704.115 exemption. Consequently, the assets in the New Zealand Trust and the Swiss Annuity are not exempt from plaintiffs' enforcement of their judgment against defendants.

We must still consider whether the court abused its discretion by impliedly finding that plaintiffs are likely to prevail at trial on their fraudulent transfer claim against defendants. "The Uniform Fraudulent Transfer Act ..., codified in Civil Code section 3439 et seq., 'permits defrauded creditors to reach property in the hands of a transferee.' " (Filip, supra, 129 Cal.App.4th at p. 829.) Under Civil Code section 3439.04, subdivision (a)(1), a transfer made by a debtor is fraudulent as to a creditor, if the debtor made the transfer with "actual intent to hinder, delay, or defraud any creditor of the debtor." "Whether a conveyance was made with fraudulent intent is a question of fact, and proof often consists of inferences from the circumstances surrounding the transfer." (Filip, at p. 834.) Civil Code section 3439.04, subdivision (b), contains a non-exclusive list of factors which may be considered in discerning a debtor's actual intent. These factors, known as "the 'badges of fraud' " (Filip, at p. 834), include "(1) Whether the transfer ... was to an insider. [para.] (2) Whether the debtor retained possession or control of the property transferred after the transfer. [para.] (3) Whether the transfer ... was disclosed or concealed. [para.] (4) Whether before the transfer was made ..., the debtor had been sued or threatened with suit. [para.] (5) Whether the transfer was of substantially all the debtor's assets." (Civ.Code, sec. 3439.04, subd. (b)). "There is no minimum number of factors that must be present before the scales tip in favor of finding of actual intent to defraud." (Filip, at p. 834.) The "confluence of several [badges of fraud] can constitute conclusive evidence of actual intent to defraud, absent 'significantly clear' evidence of a legitimate supervening purpose." (In re Acequia, Inc. (9th Cir.1994) 34 F.3d 800, 806.)

We need not belabor our review of the court's implied finding that defendants intended to defraud plaintiffs. Defendants have waived their challenge to the sufficiency of the evidence to support this finding by failing to summarize all significant facts in their opening brief.7 Furthermore, the same evidence that supports the court's finding that Cindy's "retirement plan" was not designed or used for retirement purposes anchors the court's conclusion that defendants transferred assets with an intent to defraud plaintiffs.

The Court Did Not Abuse Its Discretion by Finding that Plaintiffs Bore the Greater Risk of Suffering Interim Harm

*8 The court did not abuse its discretion by impliedly finding that plaintiffs were likely to sustain greater interim harm if the injunction were denied, than the harm defendants were likely to suffer if the injunction issued.8 "[T]he more likely it is that plaintiffs will ultimately prevail, the less severe must be the harm that they allege will occur if the injunction does not issue." (King v. Meese (1987) 43 Cal.3d 1217, 1227.)

Defendants bear the burden of clearly showing an abuse of discretion. Yet, for purposes of comparing the parties' respective risks of suffering interim harm, defendants fail to articulate what harm they will suffer if forced to return the overseas assets to the United States.

In contrast, plaintiffs argue that defendants' confinement overseas of $3 million — i.e., all of Cindy's and her entities' liquid assets — "further sequester[s] assets beyond the jurisdiction of the Court, thereby leaving [plaintiffs] with an 'empty judgment' that cannot be collected." As stated by plaintiffs, "based on [defendants'] actions since the arbitration proceeding was first instituted, it is clear that they go to any lengths to keep [Cindy's] assets beyond [plaintiffs'] reach...." In a recently published opinion, we held that the trial court had personal jurisdiction over AsiaTrust, the trustee of the New Zealand Trust, which had moved to quash service of summons for lack of personal jurisdiction. (Gilmore Bank v. AsiaTrust New Zealand LTD., supra, 223 Cal.App.4th at p. 1576.) Obviously, plaintiffs would suffer severe interim harm if defendants or their instrumentalities were to further transfer and conceal the overseas assets in order to evade California's jurisdiction and plaintiffs' reach.

The court did not abuse its discretion by granting the preliminary injunction requiring defendants to repatriate the assets in question, which include the $2.2 million plaintiffs paid Cindy for her now defunct company.

DISPOSITION

We affirm the court's order granting plaintiffs' motion for a preliminary injunction. Plaintiffs are entitled to their costs on appeal.

WE CONCUR:

O'LEARY, P. J.

THOMPSON, J.

Footnotes

1

For ease of reference and to avoid confusion, we sometimes refer to Cindy Dalrymple and her niece, Sonia Jolene Dalrymple, by their first names. We intend no disrespect.

2

The court's order also froze defendants' assets (except for scheduled disbursements for Cindy's living expenses), and restrained defendants from transferring any real or personal property held or controlled by them or their agents or trustees. Defendants do not challenge these parts of the order.

The court's order is appealable under Code of Civil Procedure section 904.1, subdivision (a)(6). All further statutory references are to the Code of Civil Procedure unless otherwise stated.

3

We take the facts from the declarations and exhibits that were before the court when it ruled on plaintiffs' motion for a preliminary injunction. Defendants' opening brief contains virtually none of the facts recited in this opinion.

4

At the hearing on plaintiffs' motion for a preliminary injunction, the court stated that its tentative ruling would "be the ruling." The court's minute order granting plaintiffs' motion, however, does not expressly incorporate or adopt the court's tentative ruling. Defendants, relying on Silverado Modjeska Recreation & Park Dist. v. County of Orange (2011) 197 Cal.App.4th 282, 300, contend we are "limited to review of the minute order ... and must disregard the tentative ruling...." We need not address their contention, as we can easily discern the court's implied findings without resort to its tentative ruling. "Implicit in the court's order granting the preliminary injunction is the fact that the trial judge resolved ... conflicts in favor of the plaintiffs." (Wind v. Herbert (1960) 186 Cal.App.2d 276, 284.)

5

AsiaCiti Trust Limited is, coincidentally, the parent company of AsiaTrust, the trustee of the New Zealand Trust here. (Gilmore Bank v. AsiaTrust New Zealand LTD., supra, 223 Cal.App.4th at p. 1564.)

6

Defendants support the factual recitation in their opening brief almost exclusively with declarations by Cindy, Sonia, and Norman in the record. As an example of defendants' biased briefing, their version of the arbitration proceeding is, essentially, as follows: "Before the arbitration commenced, Ms. Dalrymple reasonably believed that she would prevail in the arbitration because: (1) she had provided Mr. Cho with all available information concerning [ATI]; (2) Mr. Cho had conducted a thorough and diligent investigation of all relevant factors prior to acquiring [ATI]; and (3) [Cindy] knew the allegations in the arbitration demand to be utterly false." "At the conclusion of the arbitration, Ms. Dalrymple remained confident that she would prevail in the arbitration, believing that Mr. Cho's credibility had been totally destroyed." Yet, the interim arbitration award noted that Cindy's testimony at the hearing had conflicted significantly with the testimony of other witnesses and even with her own deposition testimony.

In their factual recitation, defendants make much of the court's denial of plaintiffs' April 7, 2011 application for a writ of attachment against defendants. But the court's order stated that, "upon further showing, [the court] may also consider a [temporary restraining order] regarding the assets in question." In May and June of 2012, plaintiffs discovered the new evidence that defendants had moved all of Cindy's liquid assets offshore. Thus, the court's prior denial of plaintiffs' writ application is entirely consistent with its later granting of a preliminary injunction.

7

Instead of discussing the badges of fraud in their appellate briefs, defendants stress that any fraudulent intent is irrelevant if Cindy's retirement plan is exempt under section 704.115.

8

A related question is whether "failure to provide interim relief will cause irreparable harm." (Barajas v. City of Anaheim (1993) 15 Cal.App.4th 1808, 1813.) The term " 'irreparable injury' " "means that species of damages, whether great or small, that ought not to be submitted to on the one hand or inflicted on the other." (Anderson v. Souza (1952) 38 Cal.2d 825, 834.) Such injury can consist of the dissipation of assets, the making of disbursements which cannot be adequately traced (Wind v. Herbert, supra, 186 Cal.App.2d at p. 285), or the disposal of property which "would render the final judgment ineffectual" (Heckmann v. Ahmanson (1985) 168 Cal.App.3d 119, 136.)

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