K/S Shadow Mountain v. parsons Behle & Latimer

Filed 4/4/07 K/S Shadow Mountain v. parsons Behle & Latimer CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

APPEAL from an order of the Superior Court of Los Angeles County.

William G. Willett, Judge. Reversed.

Martensen Wright and Edward J. Wright, Jr., for Plaintiffs and Appellants.

Blue & Schoor and John A. Blue for Defendants and Respondents.

_________________________

The appellants[1]are Thomas Olesen, a Danish national, and Danish limited liability partnerships (collectively the Partnerships). The Partnerships sued respondents Parsons Behle & Latimer (Parsons), a Utah professional law corporation, and Mark Rinehart (Rinehart) for fraud and negligence. Parsons and Rinehart successfully moved to quash service of the summons and complaint based on lack of personal jurisdiction. On appeal the Partnerships contend that the motion should have been denied because Parsonss and Rineharts contacts with California are sufficient for specific or general jurisdiction. This argument is meritorious.

We reverse.

FACTS

The complaint

Through a series of transactions, nine wind turbine generators in Riverside County were supposed to be transferred to the Partnerships. Whitewater Development Corporation (Whitewater) and William W. Adams (Adams) proposed to sell the wind turbine generators to Alfred Jorgensen (Jorgensen) doing business as Shadow Mountain Development Partners, LLC (Shadow Mountain), who then proposed to turn around and sell them to the Partnerships.

Whitewater and Adams sold the wind turbine generators to Shadow Mountain pursuant to sale agreements (intermediate sale agreements) but permitted Adams to retain all gross revenues generated by their operation. Certain side agreementssuch as a lease agreement and operating agreement with Shadow Mountainalso allowed Adams to retain all gross revenues. In the event Shadow Mountain failed to pay Adams under the intermediate sale agreements, Adams was permitted to recover the wind turbine generators as security.

The Partnerships entered into sale agreements to buy the wind turbine generators (WTG sale agreements) from Shadow Mountain, made a $1.6 million down payment, and executed related promissory notes (WTG promissory notes) and security agreements (WTG security agreements). They also entered into ancillary agreements necessary to the operation of the wind turbine generators, such as lease agreements, a management agreement and a maintenance agreement. The Partnerships relied on an opinion letter prepared by Parsons and Rinehart stating that the WTG sale agreements were effective to transfer good title.

In fact, the WTG agreements did not transfer good title. None of the gross revenue generated by the operation of the wind turbine generators was ever paid to the Partnerships. Instead, it was retained by Adams or other entities owned or controlled by him. Between 1998 and 2002, the gross revenue exceeded $4,747,000. Then, in 2002, Adams foreclosed on the wind turbine generators, claiming that Shadow Mountain defaulted on its obligations under the intermediate sale agreements and that the Partnerships defaulted on the WTG promissory notes.

As to Parsons and Rinehart, it was alleged that they knew or should have known: The opinion letter did not accurately reflect the true facts of the transaction. The documents incorrectly reflected that the transaction was viable and the Partnerships would profit from it. The wind turbine generators were not being transferred to the Partnerships free of security interests, liens, encumbrances, or claims as represented in the various transaction documents. The Partnerships would not receive any of the revenue from the wind turbine generators. Last, it was alleged that Parsons and Rinehart failed to disclose the true facts, or they negligently or intentionally misrepresented the truth.

The motion to quash

In their motion to quash, Parsons and Rinehart argued that they were not subject to personal jurisdiction because the work performed by Rinehart for the sale of the wind turbine generators was performed in Utah on behalf of Shadow Mountain, a Delaware limited liability corporation.

Rinehart declared that he is not a member of the bar of the State of California. He explained that from October 1, 1996, to May 15, 2000, he was a shareholder of Parsons in Salt Lake City, Utah and is now a shareholder in Rinehart & Fetzer, P.C. in Salt Lake City, Utah. Rinehart went on to declare: He provided Shadow Mountain with an opinion letter regarding its ability to acquire and convey good title to the nine wind turbine generators. An opinion on the economic benefits of the transaction was expressly disclaimed. All work related to the Shadow Mountain engagement was performed in Utah. Rinehart never offered advice about the structure of the transaction other than that title to personal property had to be conveyed by bill of sale. He was not involved in soliciting investors for the transactions. The only entity he represented was Shadow Mountain. The bills for the work were all sent to Shadow Mountain. Rinehart never traveled to California in the course of rendering his opinion. His only contacts with California were either telephone calls or faxes to Jorgensen or the sellers attorney, James Lanier (Lanier).

The opinion letter was attached to Rineharts declaration and stated Parsons has acted as counsel to [Shadow Mountain] in connection with the acquisition by Shadow Mountain and sale to [the Partnerships] of certain [wind turbine generators] located in Riverside County, California. The opinion letter avowed that Rinehart reviewed the WTG agreements, the WTG security agreements, and the WTG bills of sale. It represented, among other things, that Parsons assumed and relied upon, without independent investigation, the accuracy of all statements contained in the reviewed documents, and all representations and warranties in other documents, records, financial statements, conclusions and papers obtained by Parsons or presented to Parsons by Shadow Mountain. The opinion letter stated, in part, that no opinion was offered regarding: (1) compliance with or the absence of any violation of any federal or state tax or securities law; (2) (a) bankruptcy, insolvency, reorganization, moratorium or other laws or equitable principles of general application to or affecting the enforcement of creditors rights, (b) the effects of California Civil Code section 3440.1 et seq. and related sections, or (c) statutes, rules, procedures or applicable case law limiting the availability of or prescribing the procedural requirements for the exercise of creditors remedies; (3) the affect of California law relating to unconscionable contracts; and (4) issues involving or relating to economic benefits involved in any of the transactions contemplated by the opinion letter.

Parsons submitted a declaration from its president and chairman of its board of directors, Raymond J. Etcheverry (Etcheverry). He declared: Parsons does not have an agent for service of process in California, nor does it have a business license there. It does not have property, offices or banks accounts in California. Parsons does not maintain a mailing address or telephone number in California, and it has never had a marketing campaign targeted at California residents or businesses. Its offices are in Salt Lake City, Utah, Las Vegas, Nevada, and Reno, Nevada. All of its officers live and work in Utah. Parsons employs 112 attorneys, all but 12 of whom live in Utah and work in Salt Lake City. Two attorneys in the Las Vegas office are licensed to practice law in California, as are two attorneys in the Salt Lake City office. From time to time, Parsonss attorneys perform legal work in California, but such work accounts for less than 2 percent of Parsonss revenues.

Opposition to the motion to quash

According to the Partnerships, Parsons and Rinehart had such continuous and systematic contacts with California that it had general jurisdiction over them. The Partnerships relied on the fact that Parsons has four attorneys licensed to practice in California, and it makes 2 percent of its revenue there. In the alternative, the opposition argued for specific jurisdiction, stating: Parsons and Rinehart purposefully availed themselves of the privilege of conducting activities in California because the opinion letter involved agreements executed by Shadow Mountain, which was doing business in California, and pertained to wind turbine generators located in California. Parsons and Rinehart exchanged correspondence and telephone calls with Jorgensen in California, and the controversy arose out of Parsonss and Rineharts contacts with California. Exercise of personal jurisdiction would comport with traditional notions of fair play and substantial justice.

The trial courts ruling

Via minute order, the trial court granted Parsons and Rineharts motion. The trial court explained: a) This [trial court] finds [that the Partnerships] failed to show that [Parsonss and Rineharts] [2 percent] revenues were derived from a substantial, continuous and systematic business relationship with California sufficient to support the contention that [Parsons and Rinehart] are doing business in California, and b) [the Partnerships] failed to show that the claims asserted in this complaint against [Parsons and Rinehart] arose from [their] contact with California given that [Rinehart] states that he was . . . working for [Shadow Mountain] and that he relied on California counsel retained by defendant [Shadow Mountain] to provide him with California law.

This timely appeal followed.

STANDARD OF REVIEW

After a nonresident defendant in a civil action moves to quash service of the summons and complaint and argues that the forum lacks sufficient minimum contacts to establish personal jurisdiction, the plaintiff is obligated to defeat that argument by a preponderance of the evidence. (Paneno v. Centres For Academic Programmes Abroad Ltd. (2004) 118 Cal.App.4th 1447, 1454 (Paneno).)[2] To satisfy this obligation, the plaintiff must present competent evidence. Declarations consisting primarily of vague assertions of ultimate fact rather than specific evidentiary facts are not sufficient. [Citation.] If the plaintiff is able to successfully meet its obligation, then the nonresident defendant has the task of proving that the exercise of jurisdiction would be unreasonable. (Ibid.)

As we noted in Paneno, the trial courts function when assessing the merits of a motion to quash is essentially an evidentiary one and the applicable standard of appellate review is the familiar substantial evidence rule. (Paneno, supra, 118 Cal.App.4th at p. 1454.) The hallmark of the substantial evidence rule is that we must resolve all conflicts in the evidence in favor of upholding the trial court. But [i]f there is no conflict in the relevant evidence, the question is one of law as to which we exercise our independent judgment. (Ibid.)

Here, there is no conflict in the relevant evidence. We are bound, then, to analyze the motion to quash from a blank slate.

DISCUSSION

The Partnerships contend that it would not transgress constitutional principles for California to exercise either general or specific jurisdiction over Parsons and Rinehart. We agree.

1. The applicable law.

The California Legislature gave our courts all the power permitted under the United States Constitution to reach beyond our borders and exercise personal jurisdiction over nonresidents. (Code Civ. Proc., 410.10.)

Under the due process clause of the Fourteenth Amendment, there are two categories of personal jurisdiction: general and specific. (Helicopteros Nacionales de Colombia v. Hall (1984) 466 U.S. 408, 414; Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445 (Vons).) General jurisdiction means that a nonresident defendant can be sued in the forum state on any cause of action, even if it arises from a tort committed half way around the world. This type of jurisdiction exists when a nonresidents contacts with the forum state are substantial, continuous and systemic. The idea is that the nonresident is presumed present in the forum state and that presence supports personal jurisdiction. (Vons, supra, at pp. 445446.)

Specific jurisdiction, as the label suggests, is limited to specific, qualifying causes of action. In the absence of general jurisdiction, a nonresident defendant still might have to answer in the forum court if he or she purposefully availed himself or herself of forum benefits [citation] and the controversy is related to or arises out of a defendants contacts with the forum. [Citations.] (Vons, supra, 14 Cal.4th at p. 446.) Once it has been decided that a defendant purposefully established minimum contacts within the forum State, these contacts may be considered in light of other factors to determine whether the assertion of personal jurisdiction would comport with fair play and substantial justice. [Citations.] Courts may evaluate the burden on the defendant of appearing in the forum, the forum states interest in adjudicating the claim, the plaintiffs interest in convenient and effective relief within the forum, judicial economy, and the shared interest of the several States in furthering fundamental substantive social policies. [Citation.] (Id. at pp. 447448.)

Despite the preceding, case law rejects a precise formula for determining if specific jurisdiction exists; the facts of each case must be weighed in light of the relevant factors. (Simons v. Steverson (2001) 88 Cal.App.4th 693, 711 (Simons).) Also, the necessary nexus is between the defendant, the forum and the litigation, not between the defendant and the plaintiff. (Id. at p. 710.) [T]he defendants forum activities [thus] need not be directed at the plaintiff in order to give rise to specific jurisdiction. [Citation.] (Ibid.)

If an out of state attorney directs activities at a forum state, that attorney may well be subject to personal jurisdiction. For example, in Schur v. Porter (S.D.N.Y. 1989) 712 F.Supp. 1140, a Maryland attorney was constitutionally amenable to suit in a legal malpractice action filed in New York after the attorney represented two New York clients. Applying the law to the facts, the court stated: By letters and telephone calls into New York, [the attorney] represented the plaintiffs in the negotiation and drafting of [two] partnership agreements. Both partnerships were formed in New York to own and operate New York properties, and were governed by New York law. Thus, [the attorney] agreed to and did supply services in New York for a New York business transaction. It is fair and reasonable for [the attorney] to have expected to defend these services in a New York court. (Id. at p. 1145.)

Because we conclude that California can exercise specific jurisdiction over Parsons and Rinehart, general jurisdiction is moot.

2. Specific Jurisdiction.

The Partnerships argue that California has specific jurisdiction because the opinion letter was sent to Shadow Mountain in Orange, California, and its business was buying and selling personal propertyin particular, wind turbine generators located in Riverside County, California. They point out that Parsons and Rinehart telephoned and faxed Shadow Mountain and Lanier, and they contend that Rinehart drafted most of the transactional documents for the multiple sales.[3] In the view of the Partnerships, Parsons and Rinehart were practicing law in California and they therefore cannot avoid being haled into court here. Parsons and Rinehart disagree. In their view, they did not purposefully avail themselves of the privilege of conducting activities in California, nor did they invoke the benefits and protections of its laws. They argue that the controversy did not arise out of their forum contacts. Finally, they dispute that it would be fair for them to be sued here.

Upon review, we conclude that specific jurisdiction is present.

a. Purposeful availment.

Purposeful availment can occur in a variety of ways. As listed in Vons, a court must be alert for the following: nonresidents who purposefully direct their activities at forum residents, purposefully derived benefit from forum activities, or purposefully availed themselves of the privilege of conducting activities in the forum. (Vons, supra, 14 Cal.4th at p. 446.) Purposeful availment also occurs when a nonresident deliberately engaged in significant activities with a state or has created continuing obligations with forum residents. (Ibid.) In Edmunds, a case involving an attorney sued in California based on his legal services in Hawaii, the court opined that the proper inquiry was whether the attorney either intended to conduct business in this state or gain directly or indirectly from dealings in this state.

It has been held that an attorney is subject to specific jurisdiction when the controversy arises out of their practice of law in California. (Simons, supra, 88 Cal.App.4th at p. 713 [a New York attorney licensed to practice law only in California was subject to specific jurisdiction because he provided legal services under California law to California resident plaintiffs].) Nonresident attorneys have been haled into a California court for causing damage to Californians by allowing the statute of limitations to run on their clients cause of action in another state. (Brown v. Watson (1989) 207 Cal.App.3d 1306 (Brown) [Texas attorneys were subject to specific jurisdiction after they were engaged by California attorneys in a fee-splitting arrangement, represented California residents pursuant to that arrangement, had access to information only in California, corresponded and telephoned the California attorneys and residents over four years, and allowed the statute of limitations to run in Texas].)

With these authorities uppermost in our consciousness, we move to an assessment of Parsonss and Rineharts contacts.

Our inquiry is whether, as the Partnerships charge, Parsons and Rinehart practiced law in California and purposefully availed themselves of our states benefits and protections in that manner.

The tools for our analysis are handed down in Birbrower, Montalbano, Condon & Frank v. Superior Court (1998) 17 Cal.4th 119 (Birbrower). As provided in Business and Professions Code section 6125, no one may practice law in California without a license. (Birbrower, supra, at p. 127.) Practicing law includes legal advice and the preparation of legal instruments or contracts by which legal rights are secured. (Ibid.; Estate of Condon (1998) 65 Cal.App.4th 1138, 1142 (Condon); People v. Sipper (1943) 61 Cal.App.2d Supp. 844, 846 [overruled on other grounds in Murgia v. Municipal Court (1975) 15 Cal.3d 286, 301, fn. 11.)

To be in California, the practice of law requires sufficient contact with the California client to render the nature of the legal service a clear legal representation. (Birbrower, supra, 17 Cal.4th at p. 128.) If a lawyers contacts with this state are attenuated or merely fortuitous, then the lawyer has not practiced law in California. (Ibid.) The primary inquiry is whether the unlicensed lawyer engaged in sufficient activities in the state, or created a continuing relationship with the California client that included legal duties and obligations. (Ibid.)

A lawyer does not have to be present in California in order to practice law here. The Birbrower court explained: Physical presence here is one factor we may consider in deciding whether the unlicensed lawyer has violated [Business and Professions Code] section 6125, but it is by no means exclusive. For example, one may practice law in the state in violation of [Business and Professions Code] section 6125 although not physically present here by advising a California client on California law in connection with a California legal dispute by telephone, fax, computer, or other modern technological means. (Birbrower, supra, 17 Cal.4th at pp. 128129.) Each case must be decided on its individual facts. (Id. at p. 129.)

Parsons and Rinehart do not dispute that they prepared or drafted most of the documents for the underlying transactions. They dispute, however, that they practiced law in California. They make much of the fact that Shadow Mountain was incorporated in Delaware and entered into agreements with Danish nationals. But Shadow Mountain was located in Orange, California and doing business in California by purchasing and selling wind turbine generators located in Riverside County. Though it sold the wind turbine generators to Danish nationals, Shadow Mountain acquired the wind turbine generators from a California entity. These facts demonstrate that Shadow Mountains principle place of business is in California, which makes it a California client. (Condon, supra, 65 Cal.App.4th at p. 1145 [interpreting Birbrower, the Condon court stated that a California client is one that either resides in or has its principal place of business in California].)

Parsonss and Rineharts contacts with California were not merely attenuated or fortuitous, as they suggest. The opinion letter stated that Parsons acted as counsel to Shadow Mountain in connection with its acquisition and sale of the wind turbine generators. Each WTG agreement provided: This Agreement shall be interpreted and construed under the laws of the State of California, and venue for any legal proceedings available to the parties hereunder shall lie in the appropriate courts of Los Angeles County, California. Various promissory notes created for the transactions provided: The laws of the State of California shall govern the validity, construction, performance and effect of this Note.

The WTG security agreements contained clauses providing, in part, that the Partnerships will execute one or more UCC financing statements and fixture filings pursuant to the California Uniform Commercial Code. The beneficiary of the WTG security agreements was granted the right to foreclose in any manner permitted by law, with the rights of a secured party under the laws of the State of California, including, without limitation, the rights of a secured party under the Uniform Commercial Code of the State of California. California law was specified in a choice of law clause.

Other documents that were part of the overall transaction were also governed by California law, including: (1) the Partnerships lease agreements with Dillon Property Managements, Inc., management agreement with Energy Research Consultants Limited, and maintenance agreement with Energy Services and Supply Corporation; (2) the agreement by which Shadow Mountain leased property from Adams for the operation of the wind turbine generators; (3) San Gorgonios wind turbine generator operating agreement with Shadow Mountain; and (4) the intermediate sale agreements.

During their representation, Parsons and Rinehart assumed continuing duties and obligations to Shadow Mountain to ensure that the transaction documents complied with California law. The opinion letter specifically stated that [o]pinions expressed herein are limited to the laws of the State of California and, to the extent applicable, federal law and the corporate laws of the State of Delaware. Regardless of the statement in the opinion letter that Parsons and Rinehart consulted a California attorney retained by Shadow Mountain [a]s to matters of local law, they were the ones who provided the opinions in the letter. They analyzed California documents and law for a California client. At one point the opinion letter even expressed the legal opinion that the execution and delivery of the documents did not, under California law, require the consent or approval of, or any filing with, any governmental body, agency or authority. Also, Parsons and Rinehart telephoned and faxed Jorgensen and Lanier, the sellers attorney, in California. By force of inference, those communications related to the representation.

Under Birbrower, if there were sufficient contacts with a California client to render the nature of an attorneys legal service a clear legal representation, then that attorney is practicing law in our state. The complicated double transfers of the nine wind turbine generators, all affixed to California land, required a plethora of legal documents. The extent of the work performed by Parsons and Rinehart rendered their legal service a clear legal representation. It was not necessary that they were present in California, or even that they visited California.

Based on Parsonss and Rineharts contacts with, and practice of law in, California, we find purposeful availment.

This case is a far cry from Crea v. Busby (1996) 48 Cal.App.4th 509, 515 (Crea) and Edmunds, cases in which nonresident attorneys did not have sufficient California contacts for personal jurisdiction to attach, generally or specifically. As summarized by the Crea court, the facts in that case were these: The only contact respondent has had with California is the maintenance of his California law license. He has not practiced law in California in 14 years. He does not maintain an office, solicit clients, advertise, own property, or have obligations in California. Furthermore, Oregon residents contacted him in Oregon to file suit in Oregon on behalf of an Oregon corporation regarding a licensing agreement breached in Oregon. (Crea, supra, at p. 515.) In Edmunds, the nonresident attorneys contact with California was limited to traveling to our state to defend a deposition in connection with litigation filed and litigated in Hawaii. He did not purposefully direct his activities to our state; the deposition notice was sent by the opposing party. Here, in contrast, Parsons and Rinehart agreed to represent a California client and interpret California law.

This case is more analogous to Simons than Crea or Edmunds. In Simons, a New York attorney licensed to practice law in California agreed to provide legal services under California law to California residents. The attorney, though located in New York, was not licensed to practice law there. With respect to personal jurisdiction, the court held that the crucial inquiry simply is whether [the attorney], as a California licensed lawyer, performed legal services for California residents. (Simons, supra, 88 Cal.App.4th at p. 713.)

By parity of reasoning, our inquiry is whether Parsons and Rinehart performed legal services in California. Steverson, the attorney in Simons, reviewed, negotiated and completed a contract which was to be governed by California law and authorized a colleague to form Allerton, a California limited liability company. The attorney negotiated a financing agreement, which was to be governed by California law, between Allerton and another entity. In finding personal jurisdiction, the court stated: [T]he crucial fact is that defendant . . . [the] New York law firm[] employed Steverson . . . to represent plaintiffs, each of whom are California residents, concerning contracts to be governed by California law and involving other California residents . . . .  In so doing, [the New York law firm] clearly sought to obtain benefits and exercise privileges which are peculiarly specific to California. (Simons, supra, 88 Cal.App.4th at pp. 713714.) No less can be said of Parsons and Rinehart. They provided advice and prepared multiple legal documents regarding the double sale and purchase of nine wind turbine generators located in California. Their legal services were either coextensive or more extensive than the legal services provided in Simons. All of the parties to the transactions, except for the Partnerships, were located in California. Last, California law governed the transactions. We would be hard pressed to conclude that these contacts did not demonstrate purposeful availment.

b. Relatedness of the contacts to the controversy.

The law is that a claim need not arise directly from the defendants forum contacts in order to be sufficiently related to the contact to warrant the exercise of specific jurisdiction. Rather, as long as the claim bears a substantial connection to the nonresidents forum contacts, the exercise of specific jurisdiction is appropriate. (Simons, supra, 88 Cal.App.4th at p. 710.)

Parsonss and Rineharts contacts with Californiathe preparation and drafting of most of the underlying transactional documents, acting as counsel for Shadow Mountain, and the issuance of an opinion letterall relate to the transfer of the nine wind turbine generators to the Partnerships and their claims that the transfers were a sham. We easily conclude that there is a substantial connection between their claims and Parsonss and Rineharts forum contacts.

c. Fairness.

We perceive little burden to Parsons and Rinehart if they are forced to litigate in California. Because modern transportation and communications have made it much less burdensome for a party sued to defend himself in a [state] where he engages in economic activity, it usually will not be unfair to subject him to the burdens of litigating in another forum for disputes relating to such activity. (Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 474 (Burger King).) As to Parsons, we note that it is no stranger to California. It has four attorneys who are licensed to practice here, and on occasion it performs legal services in, and derives revenue from, California.

Though the Partnerships are not California residents, they sought to invest in the production of alternative energy sources here. Such production and investment should be encouraged. California has an interest in presiding over cases alleging fraudulent schemes involving the sale, purchase and management of alternative energy sources within its borders. Schemes such as these could discourage investment or cloud title to equipment that is important for achieving a cleaner environment. As a corollary, California has an interest in exercising jurisdiction over nonresidents who joined residents in carrying out these schemes.

Finally, exercising personal jurisdiction over Parsons and Rinehart would promote judicial economy. If the Partnerships have to sue Parsons and Rinehart in Utah, then two courts will be required to adjudicate identical issues, which could lead to conflicting results. Of the two statesCalifornia and UtahCalifornia has the greater interest in the controversy. Most of the defendants are located here, and so are the nine wind turbine generators.

d. The exercise of specific jurisdiction is permissible.

After assessing Parsonss and Rineharts California activities, we conclude that California can exercise personal jurisdiction.

Parsons and Rinehart argue that the effects test is not satisfied, and therefore personal jurisdiction is not permissible. This test was described by the United States Supreme Court as a way of finding purposeful availment in a defamation action. (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 269270 (Pavlovich), citing Calder v. Jones (1984) 465 U.S. 783 (Calder) for the effects test.) To satisfy the effects test, a plaintiff must demonstrate that it suffered harm, the defendant knew the harm was likely to be suffered in the forum state, and it committed an intentional act aimed at the forum state. (Pavlovich, supra, at p. 271.) The effects test was later utilized in connection with other intentional torts. (Id. at p. 270.)

Implicit in Parsons and Rineharts argument is that the effects test must be satisfied for California to exercise personal jurisdiction because there are no other tests which are applicable. But they did not cite any case law which narrows the law in the way they do. Contrary to their notion, the law of personal jurisdiction is not so rigid that it is confined to one test, i.e., the effects test. Rather, [t]he [minimum contacts] test is far from precise: the criteria by which we mark the boundary line between those activities which justify the subjection of a [defendant] to suit, and those which do not, cannot be simply mechanical or quantitative. [Citation.] Each case requires an individualized weighing of the material facts. [Citations.] In constructing such a weighbeam, the measuring points will rarely be written in gleaming black or glistening white. The greys are dominant and even among them the shades are innumerable. [Citation.] (United Elec. Workers v. 163 Pleasant Street Corp. (1st Cir. 1992) 960 F.2d 1080, 10871088.)[4]

As explained in World-Wide Volkswagen (1980) 444 U.S. 286 (World-Wide), what matters is that a defendants conduct and connection with the forum [state] are such that he should reasonably anticipate being haled into court there. (Id. at p. 297 [putting a product into the stream of commerce is not enough, by itself, for a defendant to reasonably anticipate being subject to suit in every state where the product ends up].) The due process clause ensures the orderly administration of the laws, thereby giving the legal system a certain level of predictability that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit. (Ibid.) A defendant that purposefully avails itself of the privilege of conducting activities within a state has notice that it is at risk of being sued there. Due to that foreseeable possibility, it can act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to customers, or, if the risks are too great, severing its connection with the [state]. (Ibid.) People have a right to be protected from personal jurisdiction only when it is based on random, fortuitous or attenuated contacts, or on the unilateral activity of another party or a third person. (Burger King, supra, 471 U.S. at p. 475.)

Undoubtedly, a lawyer practicing law in a state should reasonably anticipate being haled into court there in connection with legal activities in the forum.[5] When lawyers practice law in, and derive an economic benefit from, a foreign state, their contacts are directed at the foreign state in a knowing and voluntary manner, the polar opposite of the random, fortuitous or attenuated contacts that cannot support personal jurisdiction. Nor are the contacts based on the unilateral activity of the client or a third person if the client is clearly a forum based client; a lawyer made a conscious decision to enter into the representation and cannot avoid that decision. As pointedly noted in Burger King, the Due Process Clause may not readily be wielded as a territorial shield to avoid interstate obligations that have been voluntarily assumed. (Burger King, supra, 471 U.S. at p. 474.) Here, in particular, the exercise of jurisdiction is all the more reasonable and foreseeable because the practice of law is regulated. (Quattrone v. Superior Court (1975) 44 Cal.App.3d 296, 306 [where the forum state has manifested a special interest in controlling the effects [of a particular business or activity] by enacting special legislation with respect thereto, the exercise of jurisdiction based upon such effects is justified].) Certainly a lawyer can procure insurance to cover the risk, pass the cost on to clients, or cease practicing law in the particular state. Thus, it comports with traditional notions of fair play and substantial justice (Internat. Shoe Co. v. Washington(1945) 326 U.S. 310, 316) for a state to exercise personal jurisdiction over lawyers, or even nonlawyers, who practice law within its boundaries.

The effects test aside, this record establishes that personal jurisdiction is proper. By practicing law in California, Parsons and Rinehart effectively did business in California, which is a basis for jurisdiction. Also, they caused acts to be done in California; i.e., they prepared the legal documents that facilitated the intermediate sale agreements and WTG agreements, and they created the instruments that permitted foreclosure of the wind turbine generators. In fact, foreclosure was ostensibly guaranteed because the transaction documents ensured that the revenue created by the wind turbine generators would flow to Adams instead of the Partnerships and make it hard for them to pay off the WTG promissory notes. Adams committed the act foreseeable from the transaction documentshe foreclosed.

Even if the effects test were the sole test for determining personal jurisdiction, we would find that that test is satisfied. Based on the evidence presented, it can be inferred that Parsons and Rinehart knew that the transaction documents they prepared allowed Adams, Whitewater and Shadow Mountain to swindle the Partnerships out of their interests in wind turbine generators located in California. As a result, the record demonstrates the following salient facts: The Partnerships lost California property, it is inferable that Parsons and Rinehart knew that that harm was likely to be suffered in California, and they drew up the transaction documents, an act that was intentionally directed at California.

DISPOSITION

The order granting the motion to quash is reversed. The Partnerships shall recover their costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

______________________________, J.

ASHMANN-GERST

We concur:

__________________________, P. J.

BOREN

__________________________, J.

DOI TODD

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[1] K/S Shadow Mountain Partners I, K/S Shadow Mountain Partners II, K/S Shadow Mountain Partners III, K/S Shadow Mountain Partners IV, K/S Shadow Mountain Partners XVI and Thomas Olesen.

[2] While a plaintiff need not prove the truth of the allegations constituting the causes of action in order to justify an exercise of jurisdiction over nonresident parties, . . . the plaintiff must present facts demonstrating that the conduct of defendants related to the pleaded causes is such as to constitute constitutionally cognizable minimum contacts. [Citation.] [Citation.] (Edmunds v. Superior Court (1994) 24 Cal.App.4th 221, 228 (Edmunds).)

[3] Part B of the statement of facts in the Partnerships opening brief states, in part, that [i]t is apparent from the record that [Parsons and Rinehart] prepared or drafted most of the documents that underlie the transactions that serve as the basis for the Complaint. Parsons and Rinehart, in the respondents brief, state that they do not seriously quarrel with part B of the statement of facts in the opening brief and accept that statement.

[4] When discussing the effects test, the Calder court relied, in part, on the Restatement Second of Conflict of Laws, section 37. Section 37 sets forth an effects test, but it is not trumpeted as an exclusive test. Sections 35, 36 and 39 respectively contemplate personal jurisdiction based on doing business in a state, doing an act in a state with respect to any claim in tort arising from the act, and any other situation where the individual has such a relationship to the state that it is reasonable for the state to exercise jurisdiction. (Rest.2d., Conf. of Laws, 39.)

[5] Practicing law is not the only basis for exercising personal jurisdiction over an out-of-state attorney. In Haddad v. Taylor (1992) 588 N.E.2d 1375, a New York attorney was subject to suit in Massachusetts because he negotiated the sale of real property located there. The negotiations with the buyer and buyers attorney were accomplished by mail and over the telephone. They were located in Massachusetts. The New York attorney was held subject to personal jurisdiction in Massachusetts because he conducted business in that state, as defined under Massachusetts statute and interpreted by apposite case law. (Id. at pp. 13761378.)