Opinion
B231077
09-19-2011
CAPSTONE S.G. INC., Plaintiff and Appellant, v. UNITED STATES SECRET SERVICE UNIFORMED DIVISION BENEFIT FUND et al., Defendants and Respondents.
Coleman Frost, Daniel L. Alexander for Plaintiff and Appellant. Peterson & Brynan, Jeffrey Brynan for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC440781)
APPEAL from an order of the Superior Court of the County of Los Angeles, Richard L. Fruin, Judge. Reversed.
Coleman Frost, Daniel L. Alexander for Plaintiff and Appellant.
Peterson & Brynan, Jeffrey Brynan for Defendants and Respondents.
INTRODUCTION
In one of two contracts, there is a term in the choice-of-law clause that "the parties hereto submit and consent to the jurisdiction of the courts of Washington, D.C." In the second contract, there is an identical provision, except that it refers to the courts of the State of California. The trial court, under Code of Civil Procedure section 410.30,without the normal forum non conveniens analysis, dismissed the action without prejudice because, according to the trial court, the first contract provided for "exclusive jurisdiction/venue in Washington, D.C." We hold that the forum selection clauses are permissive and, therefore, in the absence of an adequate forum non conveniens analysis, the matter should not have been dismissed.
All further statutory references are to the Code of Civil Procedure.
BACKGROUND
Plaintiff and appellant Capstone S.G. Inc. (Capstone), alleged to be a California corporation, and defendant and respondent The United States Secret Service Uniformed Division Benefit Fund (the Fund), a corporation domiciled in Washington, D.C., entered into one licensing agreement that granted Capstone the worldwide exclusive rights to sell watches and other products featuring the Great Seal of the United States, and the seals of the President, the Vice President, the White House, and Air Force One (the Seals) for four years, and a second licensing agreement that granted Capstone the worldwide exclusive rights to sell other products with the same seals, also for four years. The agreements—at least one of them—were negotiated in Los Angeles, with defendant and respondent The Licensing Group, Ltd., a California corporation located in Los Angeles acting as agent for the Fund.
The agreements were on the Fund standard form agreements. The first agreement provided, "f. GOVERNING LAW: This Agreement shall be construed and interpreted pursuant to the laws of the Washington D.C. and the federal laws of the United States (including, without limitation, the Uniform Commercial Code), and the parties hereto submit and consent to the jurisdiction of the courts of Washington D.C., including Federal Courts located therein, should Federal jurisdiction requirements exist, in any action brought to enforce (or otherwise relating to) this contract. [¶] g. MEDIATION: Any and all controversies, disputes or claims of whatsoever kind or nature arising out of or relating to the Agreement, or breach thereof, shall be referred to mediation under the Commercial Mediation Rules of the American Arbitration Association. Such mediation will be pursuant to Washington D.C. law before a retired judge of the applicable Superior Court or the United States District Court, which judge shall be mutually agreed to by and between the parties. The parties agree that the Mediation locale shall be in Washington, D.C."
The second agreement provided, "f. GOVERNING LAW: This Agreement shall be construed and interpreted pursuant to the laws of the State of California, Los Angeles County and the federal laws of the United States (including, without limitation, the Uniform Commercial Code), and the parties hereto submit and consent to the jurisdiction of the courts of the State of California, including Federal Courts located therein, should Federal jurisdiction requirements exist, in any action brought to enforce (or otherwise relating to) this contract. [¶] g. MEDIATION: Any and all controversies, disputes or claims of whatsoever kind or nature arising out of or relating to the Agreement, or breach thereof, shall be referred to mediation under the Commercial Mediation Rules of the American Arbitration Association. Such mediation will be pursuant to California law before a retired judge of the Los Angeles Superior Court or the United States District Court, which judge shall be mutually agreed to by and between the parties. The parties agree that the Mediation locale shall be in Los Angeles, California. The parties agree tha the results of any such action between the Parties shall be subject to a confidentiality agreement."
The Licensing Group, Ltd. wrote Capstone a "cease and desist" letter informing Capstone that The Fund did not actually have the power to license the seals to Capstone and that Capstone "must cease and desist from further use of the Presidential Seal, Vice Presidential Seal and Official White House Seal as the basis for use on product, packaging, advertising, or marketing of goods . . . until further notice."
Capstone filed the Complaint against the Fund and its agent The Licensing Group, Ltd. alleging causes of action for (1) breach of contract, (2) breach of the duty of good faith and fair dealing, (3) intentional misrepresentation, (4) negligent misrepresentation, (5) breach of warranty, and (6) violation of the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) arising out of agreements and representations made by both defendants to induce Capstone into entering into those agreements. Defendants filed a petition to stay the action pending the outcome of the parties' mediation in Washington, D.C. The trial court granted defendants' petition to stay the action, and did not lift that stay until several months later.
Defendants then filed a motion to dismiss the case under section 410.30 (forum non conveniens) and section 418.10, subdivision (a)(2) (motions to quash service of summons or to stay or dismiss action for inconvenient forum). In support of the motion, defendants submitted the declaration of the head of The Licensing Group, Ltd. who pointed to the forum selection clause in the first agreement and said that the California forum selection clause in the second agreement was a clerical mistake—it should have referred to Washington, D.C. instead of California. He said that the Fund was located in Washington, D.C. and it has no place of business in California "or other contact with the State of California." Plaintiff in opposing the motion filed no evidence.
The trial court granted the motion. Although acknowledging that "none of the forum non-convenience analysis was done nor facts stated," the trial court stated in its order as follows: "that in its discretion and in the interests of substantial justice, the instant case, in its entirety, should properly be dismissed pursuant to the provisions of California Code of Civil Procedure section 410.30 and without prejudice so as to allow Plaintiff to again initiate the action, if at all, in the jurisdiction/venue of Washington D.C.
To this end, the Court found that the parties have entered into two agreements, which are the subject matter of the instant litigation, the earlier of which calls for Washington D.C. to be the exclusive jurisdiction/venue for the litigation/adjudication of any disputes under said contracts and that the parties have, to date, performed under said contracts consistent with Washington D.C. being the proper and exclusive jurisdiction/venue." At oral argument, the trial court said, "I have accepted the view that the second agreement contains a clerical error specifying Los Angeles rather than Washington, D.C."
The trial court dismissed the action without prejudice. Capstone timely filed its notice of appeal. (Cal. Rules of Court, rule 8.104(a), (e).) Thereafter, the parties filed requests for judicial notice of an action filed by plaintiff against defendants in Washington, D.C., in which defendants moved to dismiss because of the District's statute of limitation.
We deny the requests because there are not exceptional circumstances permitting judicial notice of material not before the trial court. (Innovative Business Partnerships, Inc. v. Inland Counties Regional Center, Inc. (2011) 194 Cal.App.4th 623, 627.)
DISCUSSION
A. Standard of Review
"When, as here, no conflicting extrinsic evidence has been presented, the interpretation of a forum selection clause is a legal question that [the Court] review[s] de novo." (Animal Film, LLC v. D.E.J. Productions, Inc. (2011) 193 Cal.App.4th 466, 471 (Animal Film); Intershop Communications AG v. Superior Court (2002) 104 Cal.App.4th 191, 196 (Intershop).)Review of a forum non conveniens motion under section 410.30 generally is based on the abuse of discretion standard of review. (Animal Film, supra, 193 Cal.App.4th at p. 473; Ford Motor Co. v. Insurance Co. of North America (1995) 35 Cal.App.4th 604, 610 (Ford Motor Co.); see also American Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1, 9 [abuse of discretion standard of review applies to all rulings on forum non conveniens motions]; but see Cal-State Business Products & Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666, 1680-1681 [the court applied the substantial evidence standard of review when the motion was based on a forum selection clause].) A mandatory forum selection clause will be enforced unless a plaintiff can show that such enforcement would be unreasonable. (Intershop, supra, 104 Cal.App.4th at p. 198.) But whether the forum selection clause is mandatory or permissive is a question of law reviewed de novo. (Id. at p. 199.)
B. Applicable Principles
A motion to dismiss or stay based upon forum non conveniens can be brought on two grounds: a contractual forum selection clause, or the traditional ground, i.e., that the forum in which the action was filed is an inconvenient forum. (Intershop, supra, 104 Cal.App.4th at p. 198.) When the motion is brought on traditional forum non conveniens grounds, the appropriate factors for balancing the issues are as follows: "In determining whether to grant a motion based on forum non conveniens, a court must first determine whether the alternate forum is a 'suitable' place for trial. If it is, the next step is to consider the private interests of the litigants and the interests of the public in retaining the action for trial in California." (Stangvik v. Shiley Inc. (1991) 54 Cal.3d 744, 751 (Stangvik).)"'The private interest factors are those that make trial and the enforceability of the ensuing judgment expeditious and relatively inexpensive, such as the ease of access to sources of proof, the cost of obtaining attendance of witnesses, and the availability of compulsory process for attendance of unwilling witnesses.' (Stangvik, supra, 54 Cal.3d at p. 751.) The residences of the plaintiff and the defendant are relevant, and a corporate defendant's principal place of business is presumptively a convenient forum. (Id. at pp. 754-755.) If the plaintiff is a California resident, the 'plaintiff's choice of a forum should rarely be disturbed unless the balance is strongly in favor of the defendant. [Citations.]' (Id. at p. 754; see Bechtel Corp. v. Industrial Indem. Co. (1978) 86 Cal.App.3d 45, 51-53 .) The public interest factors include avoidance of overburdening California courts, protecting potential jurors who should not be called on to decide cases in which the local community has little concern, and weighing the competing ties of California and the alternate jurisdiction to the litigation. (Stangvik, at p. 751.)'" (Animal Films, supra, 193 Cal.App.4th at p. 473.)
The defendant, as the moving party, bears the burden of proof on a motion based on forum non conveniens. (Animal Films, supra, 193 Cal.App.4th at p. 472.) When the motion is brought on the traditional ground, the defendant bears the burden to show that the forum selected by the plaintiff "is a seriously inconvenient forum." (Ford Motor Co., supra, 35 Cal.App.4th at p. 611.) When the motion is brought on the ground that there is a mandatory forum selection clause, the burden is on the plaintiff to show that enforcement of the clause would be unreasonable under the circumstances of the case. (Ford Motor Co, supra, 35 Cal.App.4th at p. 611; see also Berg v. MTC Electronics Technologies Co. (1998) 61 Cal.App.4th 349, 358 (Berg))When the forum selection clause is permissive, rather than mandatory, the traditional analysis applies and defendant bears the burden of proof. (Berg, supra, 61 Cal.App.4th at pp. 358-359.)
"Clauses that grant jurisdiction to a particular forum without expressly making that forum the mandatory situs for resolution of disputes are considered permissive only. [Citations.]" (Id. at p. 359.) Merely affording a court jurisdiction without clearly making that jurisdiction exclusive amounts to a permissive provision, rather than a mandatory one: "'Additional language giving exclusive jurisdiction to the forum is required. Clauses which merely grant jurisdiction to a designated forum do not prohibit litigation in other appropriate fora. [Citations.] [¶] . . . [¶] A mandatory clause contains clear language showing that jurisdiction is appropriate in the designated forum and none other. [Citations.]'" (Id. at p. 360.)
A court has stated, "Forum selection clauses can either be 'permissive' or 'mandatory.' A permissive forum selection clause, which is perhaps more appropriately referred to as a 'consent to jurisdiction' clause: "merely specifies a court empowered to hear the litigation, in effect waiving any objection to personal jurisdiction in a venue. Such a clause might provide: 'The parties submit to the jurisdiction of the courts of New York.' Such a cause is 'permissive' since it allows the parties to air any dispute in that court without requiring them to do so." [Citations omitted.] [¶] In contrast, a mandatory forum selection clause identifies a particular state or court as having exclusive jurisdiction over disputes arising out of the parties' contract and their contractual relationship. [Citation omitted.] A common mandatory forum selection clause may provide: '"Both parties agree that only New York courts shall have jurisdiction over this contract and any controversies arising out of this contract."' [Citation omitted.]" (S&D Coffee, Inc. v. GEI Autowrappers (M.D.N.C. 1997) 995 F.Supp. 607, 609; see Berg, supra, 61 Cal.App.4th at pp. 357-361; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2011) ¶ 3:444.5, p. 3-107; see also Docksider, Ltd. v. Sea Technology, Ltd. (9th Cir. 1989) 875 F.2d 762, 764; Northern Cal. Dist. Council of Laborers v. Pittsburg-Des Moines Steel Co. (9th Cir. 1995) 69 F.3d 1034, 1037 [a clause must contain language that clearly designates a forum as the exclusive one]; Hunt Wesson Foods, Inc. v. Supreme Oil Co. (9th Cir. 1987) 817 F.2d 75, 77; Bisceglia, Location, Location, Location (2010) 33 Los Angeles Lawyer.)
Code of Civil Procedure section 418.10, subdivision (a)(2) provides for when a motion for forum non conveniens may be made. (In re Marriage of Taschen (2005) 134 Cal.App.4th 681, 687-688; see Britton v. Dallas Airmotive, Inc. (2007) 153 Cal.App.4th 127, 132-134; Olinick v. BMG Entertainment (2006) 138 Cal.App.4th 1286, 1294-1295.) The provision for dismissing or staying an action under the forum non conveniens doctrine, includes the requirement for a finding of "interest of substantial justice." A motion under section 410.30 is the exclusive means for staying or dismissing a case under the forum non conveniens doctrine. (See In re Marriage of Taschen, supra, 134 Cal.App.4th at p. 687 ["in California forum non conveniens motions are governed by statute, not by policies embedded in case law predating the statute's enactment]; Stangvik, supra, 54 Cal.3d at pp. 749-754; Britton v. Dallas Airmotive, Inc., supra, 153 Cal.App.4th at pp. 132-134.) Here, the court said in its order that it found that the case should be dismissed "in the interests of substantial justice . . . pursuant to the provisions of the California Code of Civil Procedure section 401.30 . . . ."
C. Forum Selection Clause is Permissive
The trial court appeared to rely on the assumption that the clauses in question were mandatory forum selection clauses. Notwithstanding some other comments, the trial court said, "I rely upon the first contract which provides for venue in Washington, D.C. and I accept the declaration that the venue provision in the second clause is a clerical error." And in its order, the trial court said, "the parties have entered into two agreements, which are the subject matter of the instant litigation, the earliest of which calls for Washington, D.C. to be the exclusive jurisdiction/venue for the litigation/adjudication of any disputes under said contracts. . . ." The clause provides that the "parties hereto submit and consent to the jurisdiction of the courts of Washington, D.C." Merely submitting and consenting to the jurisdiction of a forum is not sufficient language "to make a [forum selection] clause mandatory. Additional language giving exclusive jurisdiction to the forum is required." (Berg, supra, 61 Cal.App.4th at p. 360; see also Animal Film, supra, 193 Cal.App.4th at pp. 471-472.) The word "shall" to which defendants refer, only modifies the choice of law provision and not the consent to jurisdiction provision.
Accordingly, because the clauses in question are permissive forum selection clauses, defendants must sustain their burden under traditional forum non conveniens principles, with the forum selection clauses as one factor in the balancing test. (Animal Film, supra, 193 Cal.App.4th at p. 472.) "[P]rivate and public interest factors must be applied flexibly, without giving undue emphasis to any one element." (Stangvik, supra, 54 Cal.3d at p. 753.) The doctrine of forum non conveniens may not be based "on identification of a single factor rather than the balancing of several. [Citation.]" (Ibid., fn. omitted,); Berg, supra, 61 Cal.App.4th at p. 362.)
D. Insufficient Evidence to Support Forum Non Conveniens
A plaintiff's choice of forum "is entitled to great weight." (Ford Motor Co., supra, 35 Cal.App.4th at p. 610; accord Hansen v. Owens-Corning Fiberglas Corp. (1996) 51 Cal.App.4th 753, 760 (Hansen).)But a plaintiff's choice of forum can be disturbed if the balance is strongly in favor of the defendant. (Stangvik, supra, 54 Cal.3d at p. 754; Animal Film, supra, 193 Cal.App.4th at p. 473; Hansen, supra, at p. 760; Ford Motor Co., supra, 35 Cal.App.4th at pp. 610-611.)
The trial court stated in its order that it did not make a forum non conveniens analysis. Absent such an analysis, the trial court could not determine that the case should be dismissed because of forum non conveniens. The moving parties, here defendants, have the burden of proof. (See Roulier v. Cannondale (2002) 101 Cal.App.4th 1180, 1186.) Without sufficient evidence or a proper analysis, defendants have not met their burden of proof.
Parenthetically, there are facts militating in favor of a California forum: Capstone and the Fund agent, The Licensing Group, Ltd., also a defendant, are located in California; the agent negotiated the contracts on behalf of the Fund in California; at least one of the agreements contained a California choice of forum clause; the damages, if any, would be suffered by Capstone in California; the alleged wrongs took place in California; at least some of the principal witnesses—Capstone and The Licensing Group, Ltd.—are located in California; Capstone filed the action in California; and California has an interest in protecting its companies. There may be countervailing factors, but nevertheless, without the proper analysis, the trial court could not have dismissed the case and prejudicially erred in doing so.
The finding that a California forum selection clause was a clerical error and should be read to be a Washington D.C. forum selection clause, when it was in the Fund's standard form contract, is questionable. But, if it was a "mistake," the remedies are rescission, reformation, or cancellation. (1 Miller & Starr, Cal. Real Estate (3d ed.) § 1.123.) None of those remedies has been invoked.
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DISPOSITION
The Order of Dismissal is reversed. Capstone is to recover its costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
MOSK, J. We concur:
TURNER, P. J.
ARMSTRONG, J.