HOLDINGS: [1]-In a case arising from investors’ investments in oil, gas, and mineral royalty and leasehold interests, the investors adequately alleged that they invested money, there was a common enterprise, and they had no control over the operations on the subject properties, so they adequately alleged the existence of a security for federal and state law purposes; [2]-The individual could be liable under Rule 10b-5 for alleged misrepresentations regarding price and acreage in four emails he altered before forwarding to the investors, so the investors adequately pled material misstatements and scienter as to those emails, but he did not “make” the alleged misrepresentations contained in other, unaltered emails so those claims failed; [3]-The investors’ state claims for assisting securities fraud, breach of fiduciary duty, contract, all failed.

Outcome

The individual’s request to dismiss the investors’ complaint was granted in part and denied in part. An EEOC attorney represented respondent.

Procedural Posture

Plaintiff mortgagor sued defendants, bank and appraisers, and alleged claims for breach of contract/agency, breach of fiduciary duty, constructive fraud, negligent misrepresentation, unfair business practices in violation of Cal. Bus. & Prof. Code § 17200, et seq., and quasi-contract/unjust enrichment. Two of the appraisers moved to dismiss for lack of personal jurisdiction and improper venue. The receiver for the bank filed a motion to stay.

Overview

The court found that the mortgagor failed to make a prima facie showing that the court had general jurisdiction over two of the appraisers because even if the appraisers did have other California customers after the mortgagor, it was clear those contacts would not have been sufficient to establish continuous and systematic general business contacts that approximated physical presence in California. Neither of the appraisers had ever owned property in California, they did not have employees or agents in California, they did not have an office in California, they had never visited the mortgagor in California in relation to the appraisals at issue, and they had never solicited customers in California. Under those circumstances, it was clear that the mortgagor had not satisfied the high burden for establishing general jurisdiction, and that jurisdictional discovery would have been pointless. Further, the mortgagor had not shown that the appraisers’ contacts were substantial enough for the court to have specific personal jurisdiction over them since the appraisers did not deliberately create a substantial connection with California.

Outcome

The court granted the motion to dismiss for lack of personal jurisdiction filed two of the appraisers. The motion to quash filed one of the appraisers, which the court construed as a motion to dismiss, was granted. The court granted the receiver’s motion to stay and stayed the case as to the remaining parties until the earlier of the date on which the receiver granted or denied the mortgagor’s administrative claim, or August 31, 2009.