Opinion
8:01CV554
July 11, 2002
MEMORANDUM AND ORDER
Before me is the plaintiff's motion to dismiss for improper venue and failure to state a claim upon which relief may be granted pursuant to Fed.R.Civ.P. 12(b)(3) and 12(b)(6). Filing No. 17. Plaintiff Ashton Optical Imports, Inc., d/b/a Optical Shop of Aspen ("OSA"), requests that the court dismiss the counterclaim of defendants Richard Nelson ("Nelson") and Richard Mewha ("Mewha") for lack of proper venue and dismiss the counterclaim of defendants Nelson, Mewha and Incite International, Inc. ("Incite") for failure to state a claim. For the reasons set forth herein, I shall grant in part and deny in part the motion to dismiss. Further, I shall order this case stayed until the Ninth Circuit has decided the related case as discussed herein.
Background
The procedural history is somewhat convoluted. OSA has been a distributor of high-end eyewear for a Japanese manufacturer, Matita, Inc. ("Matita"), for several years. OSA contends that it had an exclusive distribution agreement with Matita, and that all defendants intentionally interfered with this exclusive distribution agreement by conspiring and inducing Matita to breach that agreement.
On October 25, 1999, OSA filed an action in state court in California against all three defendants. The case was removed to federal court on December 1, 1999. OSA asserted a number of causes of action against the defendants in the California case. On August 3, 2002, the district court judge issued an order and dismissed all claims against defendant Incite, finding that the court lacked personal jurisdiction over that defendant. The court further stated that it had jurisdiction over defendants Nelson and Mewha on the misappropriation of trade secrets claims, and then chose to retain the other common law causes of action as they all had the same nucleus of facts. While preparing for the final pretrial conference, OSA determined that it would not pursue certain causes of action, including the misappropriation of trade secrets claims. Consequently, on October 16, 2001, the district court dismissed the case for lack of personal jurisdiction. On October 24, 2001, OSA appealed the judgment to the Ninth Circuit. The notice of appeal stated:
Optical Shop of Aspen ("OSA"), plaintiff in the above named case, hereby appeals to the United States Court of Appeals for the Ninth Circuit from the judgment entered in this action on the 16th day of October, 2001, and all orders that gave rise to this judgment, including but not limited to, the order dismissing defendant Incite International, Inc., for lack of personal jurisdiction entered in this action on the 3rd day of August, 2000 and the order dismissing defendants Richard Nelson and Richard Mewha for lack of personal jurisdiction entered in this action on the 16th day of October 2001.
This appeal is pending at the current time.
Also on October 24, 2001, OSA filed an action in Nebraska federal district court against all three defendants. The defendants have filed counterclaims for account stated/breach of contract and for malicious prosecution. On the first counterclaim, defendants allege that OSA owes $20,000.00 for eyewear received and not yet paid for. On the second counterclaim, defendants contend that the trade secrets claims brought in the California case were filed without probable cause. OSA has moved to dismiss the counterclaims.
Discussion Account Stated/Breach of Contract Counterclaim
OSA argues that the Distribution Agreement contains a forum selection clause designating the Tokyo District Court to hear all related disputes. That agreement states: "This Agreement is governed by Japanese law. In the event of any dispute arising from the Agreement, the Tokyo District Court shall be empowered to settle any such disputes." (Distributorship Agreement, Art. 15, Green Aff., Ex. 7.) Matita has evidently assigned its rights to the $20,000.00 to defendants Nelson and Mewha. OSA argues that it has sued Matita in Tokyo District Court for wrongful termination, and that the correspondence between the parties shows an understanding that issues under this contract must be pursued in Japan under Japanese law.
OSA also urges this court to note the equitable considerations. "The doctrine estops a party who has full knowledge of the facts from accepting the benefits of a transaction, contract, or order and subsequently taking an inconsistent position to avoid corresponding obligations." Total Petroleum, Inc. v. Davis., 822 F.2d 734, 737 (8th Cir. 1987). Matita has vehemently contended that all claims under the agreement must be litigated in Tokyo. In fact, OSA has filed its lawsuit against Matita in Japan. See Ex. 8, 10, 11. However, now Matita's assignees want to argue to the contrary, that these clauses are merely permissive. The result as it stands now is that OSA must litigate under the contract in Japan and in the United States.
Forum selection clauses in general are valid and enforceable, unless they are unjust, unreasonable or invalid. M.B. Restaurants, Inc. v. CKE Restaurants, Inc., 183 F.3d 750, 752 (8th Cir. 1999). OSA argues, therefore, that this counterclaim must be dismissed for improper venue. Fed.R.Civ.P. 12(b)(3); 28 U.S.C. § 1406(a).
Defendants contend that the forum clause is permissive, not mandatory, as it does not contain the terms "exclusively" or "only." See Paper Express, Ltd. v. Pfankuch Maschinen GmbH, 972 F.2d 753, 755-57 (7th Cir. 1992) (permissive clause represents consent versus a mandate to appear in a certain court); Vincent Union Ltd. v. Copyright Products, Inc., 874 F. Supp. 880 (N.D.Ill. 1995) (permissive clauses do not require dismissal from another jurisdiction); Utah Pizza Service, Inc. v. Heigel, 784 F. Supp. 835 (D.Utah 1992) (same); Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75 (9th Cir. 1987) (same).
Because I am ordering that this case be stayed, I shall deny the motion at this time. However, following the decision by the Ninth Circuit, the motion may be reasserted.
Malicious Prosecution Counterclaim
OSA argues that this claim must be dismissed as there has been no legal termination in the California court. Gibbs v. Haight, Dickson, Brown Bonesteel, 183 Cal.App.3d 716, 719 n. 3 (1986) (discussion elements of malicious prosecution action, and requiring legal termination of the initial cause of action). OSA's appeal is currently pending in the Ninth Circuit. A malicious prosecution action is premature when the appeal is still pending. Merron v. Title Guarantee Trust Co., 27 Cal.App.2d 119, 122-23 (1938); Friedman v. Stadum, 171 Cal.App.3d 775, 778-79 (1985).
Defendants argue that the trade secrets claims have been terminated in their favor. OSA contends that there is no final termination of the trade secrets claims, and even if those claims are concluded, defendants must await a favorable determination of the entire proceeding before filing a malicious prosecution action. See Jenkins v. Pope, 217 Cal.App.3d 1292, 1298 (1990). OSA's notice of appeal included the trade secrets claims against defendant Incite. OSA also contends that the October 16, 2001, order dismissed all claims against Nelson and Mewha, including the trade secrets claims. OSA argues that it is irrelevant that it decided to not pursue those claims at trial against defendants Mewha and Nelson.
Defendants argue that OSA abandoned the trade secrets claims by the time of the pretrial conference. This, argues the defendants, constitutes a favorable determination on the merits. See McDonald v. Joslyn 275 Cal.App.2d 282 (1969). Further, defendants argue that the pendency of this case on appeal is not a bar to bringing this claim in the present lawsuit. Defendants rely on a case that allowed a malicious prosecution action during an appeal of the remainder of the case where the causes of action were severable. Albertson v. Raboff, 46 Cal.2d 375, 378 (1956). Defendants ask this court to allow their claims to proceed. In the alternative, defendants request that the court not dismiss their claims to avoid any statute of limitations issues. Instead, they ask the court to stay the malicious prosecution action pending determination by the California court.
I think Jenkins is clear that while this action is pending on appeal, the defendants cannot bring a malicious prosecution cause of action. As stated in Jenkins:
Where, as here, the action as a whole is still pending, it is of no consequence where a single cause of action has been determined in appellant's favor, as an action for malicious prosecution must await a favorable termination of the entire proceeding. Similarly, the Supreme Court's holding that a malicious prosecution suit may be maintained where only one of several claims in the prior action lacked probable cause does not alter the rule there. . . . Indeed, even a partial summary judgment cannot support an action for malicious prosecution because the entire proceeding is not legally terminated while the remaining portions of the case remain pending. . . .Jenkins, 217 Cal.App.3d at 1299-1300. These issues in the present malicious prosecution action are in fact linked to the issues still pending before the Ninth Circuit. Further, when a malicious action is premature, it will be dismissed. See Gibbs, 183 Cal.App.3d at 721; Friedman, 171 Cal.App.3d at 778-79. The statute of limitations is tolled during the appellate process. Rare Coin Galleries, Inc. v. A-Mark Coin Co., Inc., 202 Cal.App.3d 330, 335 (1988). The case law is clear. The action for malicious prosecution is premature as the Ninth Circuit case has not been decided. Therefore, I shall grant plaintiff's motion to dismiss this claim.
Stay of the Nebraska Case
Although none of the parties have raised this issue, I am concerned about proceeding this case to trial while the appeal is pending in the Ninth Circuit. The two causes of action alleged in this case are also alleged in the California case. OSA has appealed the findings of no jurisdiction with regard to all defendants. If the Ninth Circuit chooses to reverse the district court, arguably we would have the same causes of action against some or all of the defendants as would be proceeding in the California case. Consequently, I am going to order this case stayed until such time as the Ninth Circuit decides the California case. The parties are ordered to inform the court by letter every 90 days of the status of the appeal and to provide the court a copy of the decision immediately after it is rendered.
IT IS ORDERED:
1. That plaintiff's motion to dismiss, Filing No. 17, is hereby denied as to the motion to dismiss the claim for accounting, subject to reassertion after the decision of the Ninth Circuit, and is hereby granted as to the motion to dismiss the claim for malicious prosecution;
2. That this case is hereby stayed until further notice; and
3. The parties shall submit a written report to the court every ninety (90) days as to the status of the Ninth Circuit case.