CIRCUS CIRCUS HOTELS INC v. HAYNIE (1981)

OPINION

The plaintiffs, a husband and wife and their 21-year old son, all residents of Orange County, California, along with two other sons, minors, took a recreational trip to Nevada in the early winter of 1980. After visiting the Mt. Charleston ski area, the family “by majority vote” decided to spend a night in Las Vegas. The parents in turn decided that the Circus Circus Hotel would be a good place to stay because “two of our three sons were underage and (that hotel) offered attractions and games for minors...”

The family did stay at the Circus Circus Hotel and during the first night there their room was burglarized. As a result, the plaintiffs claimed to have lost cash and personal property, including jewelry and a mink coat, of an aggregate value of $7,100.

After returning to Orange County, the plaintiffs filed suit there against the hotel, alleging negligence of the hotel as the reason for the theft or mysterious disappearance of their property. The complaint sought recovery of the $7,100 noted plus $10,000 in exemplary damages. Yet otherwise, plaintiffs alleged “because of the matter complained of herein, and the anguish visited the plaintiffs and because of the losses they sustained, plaintiffs cut short their excursion at a cost to plaintiffs Jas. B. and Henrietta Haynie of at least $1,500, all to these plaintiffs' additional damages in this sum ($1,500 total).”

After the complaint was filed, the defendant Circus Circus Hotels, Inc., appeared specially for the purpose of moving to quash service of summons upon it. Such motion was based both upon a lack of in personam jurisdiction and an inconvenient forum. The trial court denied the motion, and defendant petitioned us for a writ of mandate to redress the claimed error of the trial court in denying the motion. We issued the alternative writ, and the case is now before us for disposition.

SUMMARY OF FILINGS IN SUPPORT OF THE MOTION

In support of its motion, the defendant filed the affidavit of Carl E. Lovell, Jr.,¹ the secretary-treasurer of the defendant corporation. According to Lovell's affidavit, defendant Circus Circus Hotels, Inc., is a Nevada corporation with its principal place of business in Las Vegas. Its business is the operation of hotels and casinos in Las Vegas and Reno, Nevada, and it does not own or operate any hotels or casinos in California or in any other state besides Nevada.

Further, according to the Lovell affidavit, the defendant has never filed its articles of incorporation with the Secretary of State of the State of California; neither has it designated any person residing in California upon whom process may be served. Likewise, it never has filed with the Secretary of State of the State of California its irrevocable consent to such service or to service of process upon it by the Secretary of State.

The Lovell affidavit further shows that the alleged tortious conduct complained of by the plaintiffs occurred at 2880 Las Vegas Boulevard South, Las Vegas, Nevada. It also shows that defendant, at the time of the incidents referred to in the complaint, did not own any real or personal property in California, nor did it lease or maintain any office, residence or place of business in California. It likewise has no agents in California.

From the Lovell affidavit it also appears that the defendant at no time ever had any bank accounts in California; neither did it ever own stock of any kind in California. He also stated that it has never paid any income taxes or any real property taxes in the State of California. The affidavit concluded with the statement that defendant has never conducted any business in California.

SUMMARY OF FILINGS IN OPPOSITION TO THE MOTION

In opposition to the motion, the plaintiffs filed the declaration of plaintiff Jas. B. Haynie, Jr., a Californian by birth and by his own assertion a “natural US citizen.”

The declaration contains much interesting detail about the Haynies' trip to Las Vegas,² about its unfortunate consequences, and about why they concluded that it was the defendant's fault that their room was burglarized. It also explains that his “present atty. has been my attorney and my family's atty. for about 15 years and we definitely do not want to go to the trouble of locating and hiring a Las Vegas attorney and paying more attorney's fees, court costs and sheriff expenses. In fact, neither I nor Mrs. Haynie know a Las Vegas or Nevada attorney and our own lawyer tells me that the only one he knew died about 2 or 3 years ago (John McNamee).” The declaration concludes in righteous indignation by stating that “(d)uring my stay at this hotel or upon checking out I paid $103.05 (three nights) for the room but under protest, also with money I had earned in California.”

With reference to factual circumstances arguably relevant to the constitutional question of the trial court's in personam jurisdiction, the declaration points to the extensive advertising done by the defendant in the Los Angeles Times. Copies of a representative sampling of such advertisements are attached as exhibits to the declaration. Mr. Haynie also declares, “my lawyer tells me that defendant has admitted advertising in California and maintaining an 800 telephone $ available at no charge to California residents.”

After referring to particular kinds of ads which appeared in the Los Angeles Times on specific dates, the declaration states, “On 11/24/80³ I placed a telephone call to Phyllis Shannon of (the) L.A. Times, Orange County office, 957-2000. I was informed that a like ad printed in the funnies would cost $2,332 per Sunday and the square ad, $816.20. The ads appearing in the funnies are in color (black, white, blue, yellow and red.)”⁴

DISCUSSION

The law to be applied in resolving the issue of jurisdiction over defendant is governed by statute in California. Section 410.10 of the Code of Civil Procedure states: “A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States.” As a consequence, any effort by a California court to exercise in personam jurisdiction over a non-resident, as here, is a matter controlled by the due process clause of the Fourteenth Amendment to the United States Constitution.

A recent California Supreme Court pronouncement which interprets the scope of this statutory authority is found in Sibley v. Superior Court, 16 Cal.3d 442, 128 Cal.Rptr. 34, 546 P.2d 322. There Justice Richardson said, “Under Code of Civil Procedure section 410.10, a California court may exercise jurisdiction over nonresidents on any basis not inconsistent with the United States or California Constitutions. This section manifests an intent to exercise the broadest possible jurisdiction, limited only by constitutional considerations. (Citations.) As a general constitutional principle, a court may exercise personal jurisdiction over a nonresident individual so long as he has such minimal contacts with the state that ‘ the maintenance of the suit does not offend ”traditional notions of fair play and substantial justice. “ ‘ (Citations.) (P) One of the recognized bases for jurisdiction in California arises when the defendant has caused an ‘effect’ in the state by an act or omission which occurs elsewhere. (Citations.) This ground for assertion of jurisdiction is discussed by the Judicial Council in its comment to section 410.10 of the Code of Civil Procedure reprinted in West's Annotated California Codes, page 472, in the following language: ‘A state has power to exercise judicial jurisdiction over an individual who causes effects in the state by an omission or act done elsewhere with respect to causes of action arising from these effects, unless the nature of the effects and of the individual's relationship to the state make the exercise of such jurisdiction unreasonable. (Citations.) When jurisdiction over an individual is based solely upon such act or omission, only a claim for relief arising from such act or omission may be asserted against the individual. (Citation.)’ (Italics added.)” (Id. at pp. 445-446, 128 Cal.Rptr. 34, 546 P.2d 322.)

Sibley followed by one month the California Supreme Court case of Cornelison v. Chaney, 16 Cal.3d 143, 127 Cal.Rptr. 352, 545 P.2d 264, on the same subject. The recent case of Lundgren v. Superior Court, 111 Cal.App.3d 477, 168 Cal.Rptr. 717, relied upon Cornelison in issuing a peremptory writ of mandate directing the trial court to vacate its order denying a motion to quash service of summons. In Lundgren, Justice Files quotes Cornelison as the law to be applied in such cases as follows, “ ‘ The general rule is that the forum state may not exercise jurisdiction over a nonresident unless his relationship to the state is such as to make the exercise of such jurisdiction reasonable. (Citations.)

“ ‘If a nonresident defendant's activities may be described as ” extensive or wide-ranging“ (citation) or ”substantial continuous and systematic “ (citation), there is a constitutionally sufficient relationship to warrant jurisdiction for all causes of action asserted against him. In such circumstances, it is not necessary that the specific cause of action alleged be connected with the defendant's business relationship to the forum.

“ ‘If, however, the defendant's activities in the forum are not so pervasive as to justify the exercise of general jurisdiction over him, then jurisdiction depends upon the quality and nature of his activity in the forum in relation to the particular cause of action. In such a situation, the cause of action must arise out of an act done or transaction consummated in the forum, or defendant must perform some other 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. Thus, as the relationship of the defendant with the state seeking to exercise jurisdiction over him grows more tenuous, the scope of jurisdiction also retracts, and fairness is assured by limiting the circumstances under which the plaintiff can compel him to appear and defend. (Fn. omitted.) The crucial inquiry concerns the character of defendant's activity in the forum, whether the cause of action arises out of or has a substantial connection with that activity, and upon the balancing of the convenience of the parties and the interests of the state in assuming jurisdiction. (Citations.)’ ” (Lundgren v. Superior Court, supra, 111 Cal.App.3d 477, 483, 168 Cal.Rptr. 717.)

From these general guidelines there have evolved two particular kinds of circumstances for applying the rule, depending upon the locus of the events out of which the controversy arose. If the plaintiff's claim derives from defendant's activities or events occurring within the forum, or having a causal effect within the forum, the plaintiff need establish only that the claim arose from “minimum contacts” with the forum state by the defendant in order for the forum state to exercise in personam jurisdiction. (Buckeye Boiler Co. v. Superior Court, 71 Cal.2d 893, 80 Cal.Rptr. 113, 458 P.2d 57, relying on Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283.) As stated in Buckeye Boiler, “ unless the defendant's forum-related activity reaches such extensive or wide-ranging proportions as to make the defendant sufficiently ‘present’ in the forum state to support jurisdiction over its concerning causes of action which are unrelated to that activity (citation), the particular cause of action must arise out of or be connected with the defendant's forum-related activity. (Citations.)” (Id. 71 Cal.2d at pp. 898-899, 80 Cal.Rptr. 113, 458 P.2d 57.)

The other situation involves cases where the plaintiff's claim does not arise from the defendant's activities occurring within the forum state, i. e., the litigation provoking transaction occurred elsewhere. However, because of the extent of the defendant's activities otherwise within the forum state, the defendant is deemed “present” there for purposes of in personam jurisdiction. Such cases include, as representative, Koninklijke L. M. v. Superior Court, 107 Cal.App.2d 495, 237 P.2d 297. In that case, the five decedents were either passengers or crew members of a private airplane owned by Superior Oil Company which crashed while taking off from an airfield in London. In the subsequent wrongful death actions filed in Los Angeles County it was alleged that KLM was negligent in performing certain maintenance functions on the crashed aircraft. KLM moved to quash service of summons, and, upon denial of such motion, it sought relief by petitioning for a prerogative writ. Relief was denied, and California jurisdiction was confirmed based on a showing that KLM maintained two offices in California, one for the solicitation of business and the other, a technical one, to facilitate its purchases in California of approximately 1 million dollars worth of aircraft each year. KLM also maintained a checking account at a California bank to service its California payroll. All this added up to sufficient presence in the state to make reasonable the exercise of jurisdiction over KLM. As the court stated, “Since this is a transitory action, the court has jurisdiction hereof and since petitioner is doing business in the state it is immaterial that the subject matter is wholly unrelated to any of the business conducted by the petitioner in this state.” (Id. at p. 501, 237 P.2d 297.)

Absent either of the two sets of circumstances above described, there is no in personam jurisdiction in the forum state.

With these principles in mind, we turn to the facts underlying the defendant's motion to quash. Only a casual scrutiny of such facts persuades us that this is not even a close case. Defendant is a Nevada corporation which owns and operates hotels and casinos exclusively in Nevada. It has made none of the official overtures to the State of California which would qualify it to do business here or to appoint an agent for acceptance of service of process. It owns no property here, has no office here, and maintains no bank accounts or agents here. It has never paid any taxes here.

Otherwise, the defendant has committed no act or omission which evoked any effect in California having a causal connection with the plaintiffs' burglary loss suffered in Nevada. The burden in the trial court was on the plaintiffs by a preponderance of the evidence to establish a factual basis for that court's exercising in personam jurisdiction over the defendant (Lisoni v. Dave Cole Pontiac, Inc., 52 Cal.App.3d 445, 449, 125 Cal.Rptr. 120; Arnesen v. Raymond Lee Organization Inc., 31 Cal.App.3d 991, 995, 107 Cal.Rptr. 744), and the plaintiffs offered only two items of evidence to show: (1) either that defendant was doing business in this state; or (2) that it had caused an effect here by some act of omission elsewhere sufficient to make the exercise of jurisdiction reasonable. These items were that defendant had advertised in California media and had maintained a so-called 800 telephone number. As a matter of law, these items of evidence failed to carry the burden noted.

In our view, the result here is controlled by Fisher Governor Co. v. Superior Court, 53 Cal.2d 222, 1 Cal.Rptr. 1, 347 P.2d 1. There the California Supreme Court said, “Although a foreign corporation may have sufficient contacts with a state to justify an assumption of jurisdiction over it to enforce causes of action having no relation to its activities in that state (citations), more contacts are required for the assumption of such extensive jurisdiction than sales and sales promotion within the state by independent nonexclusive sales representatives. (Citations.)” (Id. at p. 225, 1 Cal.Rptr. 1, 347 P.2d 1.)

This exact quote can be traced forward to Archibald v. Cinerama Hotels, 15 Cal.3d 853, 864, 126 Cal.Rptr. 811, 544 P.2d 947, which credited it to Vibration Isolation Products, Inc. v. American Nat. Rubber Co., 23 Cal.App.3d 480, 483-484, 100 Cal.Rptr. 269, where an order quashing service of summons was affirmed. In writing for the latter court, Justice Kingsley stated the Fisher rationale, “ ‘To hold otherwise would subject any corporation that promotes the sales of its goods on a nationwide basis to suit anywhere in the United States without regard to other considerations bearing on ”the fair and orderly administration of the laws which it was the purpose of the due process clause to insure.“ (International Shoe Co. v. Washington, supra, 326 U.S. 310, 319 (66 S.Ct. 154, 159, 90 L.Ed. 95) ‘ ” (Id. at p. 484, 100 Cal.Rptr. 269.)

In Archibald, the plaintiff, a California resident who had booked reservations in a Hawaiian hotel through an American Express office in Sacramento, undertook to sue the hotel in California for alleged discriminatory rates charged to visitors from the mainland. A motion to quash by the hotel was granted by the trial court, and, although the supporting affidavits were determined on appeal to be inadequate to establish the predicate for such order, the proposition above quoted was nevertheless recognized to be the law applicable.

The Archibald court went on to say “An analogy occurs in Kenny v. Alaska Airlines, (D.C.) 132 F.Supp. 838. There a federal court held that the defendant airline was not ‘doing business' in California by selling tickets through ticket agencies or connecting carriers. The court suggested that subjection to jurisdiction through ticket sales by local carriers or independent contractors ‘would present a policy problem of such magnitude that we believe the California courts would hold that such ticket sale activities did not constitute doing business.’ (132 F.Supp. at p. 852.) In Miller v. Surf Properties, 4 N.Y.2d 475 (176 N.Y.S.2d 318, 151 N.E.2d 874), the New York Court of Appeals held that the activities of an independent New York travel agency, which solicited business and received reservations for many hotels, including a Florida hotel, did not make the Florida hotel amenable to New York process.” (Id. 15 Cal.3d at pp. 864-865, 126 Cal.Rptr. 811, 544 P.2d 947.)

To summarize, it is an obvious corollary to authorities extant that sales promotion activities within a state, either by visits of live individuals or by advertising, do not, without more, operate to confer in personam jurisdiction in that state over a defendant engaging in such activities, where the plaintiffs, as here, seek to recover for a grievance occurring in the course of recreational activities wholly outside the forum state. What happened here falls well within the rule noted, and so the trial court erred in refusing to grant the motion to quash service of summons on the defendant corporation.

DISPOSITION

Let a peremptory writ of mandate issue to the Superior Court of Orange County in Civil No. 34-22-80 directing it to vacate its order denying defendant's motion heard December 18, 1980, and to enter a new and different order granting the motion of defendant Circus Circus Hotels, Inc., to quash service of summons upon it herein. The alternative writ is discharged.

FOOTNOTES

1.  At oral argument counsel for plaintiffs, with considerable emotion, declared that Mr. Lovell had lied when he averred in his affidavit that defendant did not do business in California. To support the accusation he held up for the court to see a newspaper ad for the Circus Circus Hotel appearing in a current issue of the Los Angeles Times. Counsel emphasized that the ad was in color and that such advertising, regularly appeared in the Los Angeles Times, represented expenditures for such advertising of thousands of dollars. When asked if the hotel might not have contracted with a Nevada agency to place this advertising, counsel stated that he didn't know, but even if so, that that fact would make no difference.

2.  “We arrived on the premises of Circus Circus late that same afternoon (Friday, the 11th) and I engaged room 1319 together with a roll-away bed (the room had two beds in it already).“My cash funds upon departing Orange County were from $700 to $900 and my wife had about $150 to $200. The three boys had their own spending money although both I and my wife expected to be called upon for their financial assistance.“All of us had dinner as a group that evening, in Circus Circus and we then split up since I and my wife wanted to try out (sic) luck in the casino. However, our luck proved not too good; I believe I lost from $300 to $400 and Mrs. Haynie about $100 or $150. She went to room 1319 at about midnight and I at about 2 a.m. on Sat., the 12th of January (1980). Since I was the last to enter I made sure the door to our room was locked.“Quite early that morning our children planned to take the motorhome and go skiing and wanted money for ski-lift tickets. It was then that we discovered our losses, which were reported both to the hotel and the Las Vegas Metropolitan Police Department.“The money stolen was earned by me in California; all personal property missing was acquired by myself, my wife and my son James in California and paid for with monies earned in California. My wife and I also had missing about $40 in Circus Circus gambling chips which were either purchased or won with money acquired the same way.”

3.  The alleged tortious conduct occurred on January 11-12, 1980.

4.  This comports with plaintiffs' counsel's colorful presentation at oral argument.

McDANIEL, Associate Justice.

GARDNER, P. J., and TAMURA, J., concur.