Opinion
E071912
02-04-2021
In re the Marriage of NICOLETTE and JOHN H. STULL. NICOLETTE L. STULL, Respondent, v. JOHN H. STULL, Appellant.
Procopio, Cory, Hargreaves & Savitch, Kendra J. Hall and James A. Dooley for Appellant. Holstrom, Block & Parke, Dayn A. Holstrom, Ronald B. Funk and Matthew R. Bogosian for Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super.Ct.No. SWD1103001) OPINION APPEAL from the Superior Court of Riverside County. F. Paul Dickerson III, Judge. Affirmed. Procopio, Cory, Hargreaves & Savitch, Kendra J. Hall and James A. Dooley for Appellant. Holstrom, Block & Parke, Dayn A. Holstrom, Ronald B. Funk and Matthew R. Bogosian for Respondent.
I. INTRODUCTION
Appellant, John H. Stull, appeals from the family court's October 30, 2018 postjudgment order declining to enforce the Nevada forum selection and choice of law clause in a nondisclosure and confidentiality agreement (NDA) between John and his former spouse, respondent, Nicolette L. Stull. Nicolette signed the NDA at John's request so that John would provide Nicolette with confidential information concerning John's postjudgment sale of several (formerly community owned) business entities and assets that John managed and controlled (collectively referred to as GTC.)
Intending no disrespect to the parties, we refer to the parties by their first names in order to ease the burden on the reader. (In re Marriage of Smith (1990) 225 Cal.App.3d 469, 475, fn. 1.)
In the October 30, 2018 order that John appeals, the family court denied Nicolette's request for order (RFO) to set aside the entire NDA, finding that the NDA was valid and binding on the parties and that Nicolette did not sign it under duress. But, over John's objection, the family court (1) declined to enforce the NDA's Nevada forum selection and choice of law clause, and (2) limited the NDA to the asset purchase agreement for GTC (the GTC asset purchase agreement).
In separate October 30, 2018 orders that John does not appeal, the family court ruled that Nicolette made a sufficient showing to warrant a trial on her concurrent RFO to set aside the parties' stipulated judgment, which was executed in December 2016, and which required John to make an "additional equalization payment" to Nicolette in the event he sold all or part of GTC for over $13.5 million. On June 1, 2017, John sold part of GTC for $40 million. In her RFO to set aside the judgment, Nicolette is claiming that John breached his continuing fiduciary duty to her under the judgment by failing to disclose material facts concerning the value of GTC—before the parties executed the judgment and agreed to the formula for calculating Nicolette's additional equalization payment.
In this appeal, John claims only that the family court erroneously declined to enforce the NDA's Nevada forum selection and choice of law clause. We affirm the October 30, 2018 postjudgment orders concerning the NDA. We emphasize that no other issues are before us and that we make no other rulings in these ongoing family law proceedings.
II. FACTS AND PROCEDURE
A. Background
The parties married in 1993 and separated in 2010. In 2011, Nicolette petitioned to dissolve the marriage and, effective June 5, 2014, the court entered a status-only judgment, terminating the marriage. Thereafter, the parties entered into a marital settlement agreement (MSA) and, in December 2016, the parties fully executed the stipulated judgment, incorporating the MSA into the judgment. The family court approved and entered the judgment on January 12, 2017.
Pursuant to paragraph 5.01 of the judgment, John was awarded all right, title, and interest in GTC, which was comprised of several business entities and business assets that John managed and controlled during the marriage. A court ordered forensic evaluation of GTC, which was conducted before the parties entered into the MSA, concluded that GTC was worth $8 million. (Evid. Code, § 730.) On February 29, 2016, John signed a "schedule of assets and debts," estimating that GTC was worth $8.2 million. Pursuant to the MSA, John paid Nicolette an "equalization" payment of $4.25 million.
Paragraph 6.02 of the judgment requires John to pay Nicolette an "additional equalization payment" of 4 percent of the "gross sales proceeds" in excess of $13.5 million from John's sale of all or any part of GTC, if such a sale occurs within five years of "the occurrence of the conditional event" defined in the MSA. In paragraph 6.03 of the judgment, the family court reserved jurisdiction to determine the amount of any additional equalization payment owed to Nicolette. Paragraph 6.03 of the judgment further provides that John's fiduciary duties to Nicolette will continue "as to all GTC assets" until the passage of the time specified in paragraph 6.02, or until John pays Nicolette "all sums due." Paragraph 14.04 of the judgment is a severance provision; it states that, if a court of competent jurisdiction holds that any provision of "this Agreement" is "invalid, void, or unenforceable," the remaining provisions "shall nevertheless continue in full force and effect."
Sometime before the parties entered into the MSA, John relocated to Nevada and opened a GTC office in Nevada. On June 1, 2017, John sold part of GTC for $40 million pursuant to the GTC asset purchase agreement. On June 5, John notified Nicolette of the sale by e-mail, and he acknowledged that he owed her an additional equalization payment. In a June 6 e-mail, Nicolette asked John to provide her with "the details" of the sale. Later that same day, John sent the NDA to Nicolette and asked her to sign it as a condition of him sending her "confidential information" concerning the GTC sale, including the sales price and the GTC asset purchase agreement. On June 15, Nicolette signed the NDA and returned it to John. John then gave Nicolette a copy of the GTC asset purchase agreement and advised her that he owed her an additional equalization payment of $1 million, based on the $40 million sales price. John then paid Nicolette the $1 million sum.
The NDA is a two-page letter addressed to John at an address in Nevada and is captioned, "Nondisclosure and Confidentiality Agreement." The NDA's Nevada forum selection and choice of law clause states, "I consent to personal jurisdiction in any action brought in any court, federal or state, within the State of Nevada having subject matter jurisdiction in the matter. This agreement will be governed by and construed in accordance with the laws of the State of Nevada, without giving effect to the principles of conflict of laws thereof." B. Nicolette's June 7, 2018 RFO's
On June 7, 2018, Nicolette filed three RFO's concerning, respectively, the judgment, the NDA, and the sealing of the family court file. The first RFO asked the court to set aside the entire judgment or, alternatively, paragraphs 5.01 and 6.02 of the judgment, on the ground that John committed fraud, breached his continuing fiduciary duty to Nicolette, and failed to discharge his duty of disclosure to her under paragraph 6.03 of the judgment and California law. Nicolette claimed she entered into the MSA and the judgment without "full or complete knowledge" of GTC's value, and she relied on John's representation that GTC was worth $8.2 million, which John had disclosed in his February 29, 2016 schedule of assets and debts.
In her June 7, 2018 RFO to set aside the judgment, Nicolette asked the court to find that John "knew or reasonably should have known" that GTC was worth "well in excess" of $8.2 million, and that John failed to advise Nicolette of "investment opportunities available to him" concerning GTC. She claimed that John misrepresented material facts concerning GTC's value, both in his February 29, 2016 schedule of assets and debts, in which he estimated that GTC was worth $8.2 million, and at a June 16, 2016 trial setting conference, in which he testified that he had received "no offers" to purchase GTC, and there were no "pending" "business opportunities" that would affect GTC's value. Nicolette also claimed that John had never filed a final declaration of disclosure, even though the court ordered him to do so on June 16, 2016.
The record indicates that on June 4, 2016, John received a letter of intent from a potential purchaser of GTC offering to purchase GTC for $54 million, subject to the potential purchaser's conducting due diligence on GTC. Nicolette claims that she and her counsel did not discover the letter of intent until almost two years later. In any event, the letter of intent was not brought to the family court's attention in connection with any of Nicolette's June 7, 2018 RFO's. Moreover, this appeal solely concerns the merits of the family court's October 30, 2018 order declining to enforce the NDA's Nevada forum selection and choice of law clause—an order that the family court made in ruling on Nicolette's June 7, 2018 RFO to set aside the NDA. The merits of Nicolette's unadjudicated RFO to set aside the judgment are not before us.
On June 29, 2016, John filed a declaration regarding service of final declaration of disclosure, stating that he had filed and served his final declaration of disclosure on March 22, 2016. On November 8, 2016, the court denied Nicolette's October 5, 2016 RFO to compel John to serve an additional final declaration of disclosure.
Nicolette's second RFO asked the court to set aside the entire NDA on the grounds she signed it under duress; it was procedurally and substantively unconscionable; and it violated public policy because it purported to preclude her from bringing John's breach of fiduciary duty to the family court's attention. She argued that the family court had "exclusive subject matter jurisdiction" in these marital dissolution proceedings, "including exclusive authority to adjudicate issues of marital property." In sum, she argued, "[a]t issue in this proceeding is whether John complied with his duties of disclosure both under California law and under Section 6.03 of the Stipulated Judgment, and whether he committed fraud by concealing material facts and information he was both obligated and ordered to disclose."
Nicolette's third RFO asked the court to seal the family court file (Cal. Rules of Court, rule 2.551) in order to shield herself from potential liability to third parties, including GTC's purchaser, for disclosing the GTC asset purchase agreement and other confidential information concerning the GTC sale to the family court in violation of the NDA. C. John's Opposition
John opposed Nicolette's RFOs to set aside the judgment and the NDA. He specifically denied misrepresenting or failing to disclose any facts concerning GTC's value. He claimed he had no contact with GTC's purchaser before March 22, 2016, the day he claims the parties "negotiated a fair and equitable division of the family assets and debts" and signed the MSA. He paid Nicolette the $1 million additional equalization payment following the GTC sale and argued that Nicolette was attempting to set aside the judgment and the NDA based on "false allegations" that he failed to disclose material facts concerning GTC's value and his opportunities to sell GTC. He pointed out that he and Nicolette entered into the MSA and the judgment "based upon extensive reciprocal discovery" and the "court ordered 730 Forensic Analysis" of GTC's value. He noted that, before the parties entered into the MSA, Nicolette had "the opportunity to share in the listing of the [GTC] business" but "opted to take a guaranteed non-taxable buyout/equalization instead and now wants to renegotiate [a new equalization payment] after [he] assumed all debt and risk" of operating and selling GTC.
John further argued that there was "no reason" to set aside the NDA because Nicolette already had access to confidential information pursuant to the NDA, including the $40 million GTC sales price, which allowed him to calculate the $1 million additional equalization payment and "fulfill the terms of the MSA." He claimed that the family court did not have "subject matter jurisdiction" to set aside the NDA and that any litigation concerning the NDA was required to take place "in Nevada as the NDA has a provision that confers personal jurisdiction and subject matter jurisdiction to Nevada."
John also claimed that the "California family law court" did not have "jurisdiction to adjudicate" the NDA because he and Nicolette entered into the NDA as "single persons" and the NDA concerned the "confidentiality of a separate property business owned entirely by one party"—himself. He asserted that a lawsuit "will be filed by GTC" against Nicolette and her attorneys for breach of the NDA; that he had already filed a lawsuit against Nicolette in Nevada for breaching the NDA; and that "any action based on the NDA" was therefore "already subject to the Nevada court's jurisdiction and should remain in Nevada." D. The Family Court's Rulings on Nicolette's June 7, 2018 RFO's
At an October 30, 2018 hearing, the court denied Nicolette's RFO to set aside the judgment, or portions of it, but ruled that Nicolette made a sufficient showing to warrant a trial on whether John breached his fiduciary duty to her under paragraph 6.03 of the judgment by failing to disclose material facts concerning GTC's value. The court reserved ruling on whether it would set aside the portions of the judgment adjudicating Nicolette's share of GTC. The court also deferred setting a trial on whether to set aside any part of the judgment, and it instead ordered the parties to meet and confer concerning the matter.
Regarding the NDA, the court expressly found that Nicolette did not sign the NDA under duress; but the court did rule that the NDA was "unconscionable" and set it aside to the extent that it applied to "things other than" the GTC asset purchase agreement. The court said it did not want there to be "any confusion" as to whether the NDA applied to any documents other than the GTC asset purchase agreement. The court thus granted Nicolette's RFO to set aside the NDA, in part, by limiting the NDA to the GTC asset purchase agreement.
Regarding the NDA's Nevada forum selection and choice of law clause, the court ruled: "As far as which laws govern the non-disclosure agreement which is now [limited to] the asset purchase agreement, the court finds California is the better forum." The court pointed out that the parties entered into the MSA and the judgment in California, and that the judgment reserved the family court's jurisdiction to calculate the additional equalization payment. The court ruled that California was "the appropriate jurisdiction" to adjudicate Nicolette's claim that John breached the MSA and his fiduciary duty to her under paragraph 6.03 of the judgment by failing to disclose material facts concerning the GTC's value.
The court acknowledged that John lived in Nevada and sold GTC in Nevada but found that California had a "much more substantial relationship" to the parties' postjudgment dispute than Nevada. The court explained: "The stipulated agreement [the MSA] was entered [into] in California, and it included a provision that required payment to [Nicolette] if the community property business was sold, as well as a stipulated judgment containing a clause that reserved jurisdiction over the calculation of the additional equalization payment. That is provision 6.03. So the Court is choosing not to adopt the [NDA's] choice of law which is Nevada. The Court finds California is the appropriate jurisdiction."
Lastly, the court denied Nicolette's RFO to seal the court file; but, on its own motion, the court struck the GTC asset purchase agreement from the court file in order "to protect the parties" and prevent the public from accessing the document. (Overstock.com, Inc. v. Goldman Sachs Group, Inc. (2014) 231 Cal.App.4th 471, 486.)
III. DISCUSSION
A. Issues on Appeal
John filed a timely notice of appeal from the family court's "October 30, 2018" order, without specifying which of the family court's several October 30, 2018 orders he was appealing. On January 23, 2019, Nicolette moved to dismiss John's appeal. We granted Nicolette's motion in part by limiting John's appeal to the family court's October 30, 2018 orders (1) declining to enforce the NDA's Nevada forum selection and choice of law clause; and (2) limiting the NDA to the GTC asset purchase agreement.
On October 30, 2018, the family court issued five minute orders, each dealing with separate aspects of the court's October 30 orders concerning Nicolette's three July 7, 2018 RFOs. On November 16, 2018, the family court issued an order modifying, nunc pro tunc, its October 30, 2018 minute order regarding the NDA. Among other things, the November 16 minute order states: "For all purposes, California is the appropriate jurisdiction to hear claims arising from the Stipulated Judgment, including issues arising from the [NDA]."
In this appeal, John does not challenge the October 30, 2018 order limiting the NDA to the asset purchase agreement for GTC. Instead, he claims only that the family court erroneously refused to enforce the NDA's Nevada forum selection and choice of law clause. B. Additional Background / The Nevada Action
After he filed his opening brief on appeal, John filed a request for judicial notice, asking this court to take judicial notice of the May 24, 2020 order of the Nevada District Court, case No. A-18-782103-C, denying Nicolette's motion to quash John's complaint against her in that action (the Nevada action) for breaching the nondisclosure terms of the NDA. John says he is making the request "to provide this Court with an accurate record regarding the status of the Nevada proceedings between the parties arising from the NDA." We grant John's request. (Evid. Code, §§ 452, subd. (d); 459, subd. (a); see Palmer v. Truck Ins. Exchange (1999) 21 Cal.4th 1109, 1113, fn. 1 [appellate court may take judicial notice of court records].)
In its May 24, 2020 order, the court in the Nevada action ruled that the NDA was valid under Nevada law. (Tandy Computer Leasing, Div. of Tandy Elecs. v. Terina's Pizza (1989) 105 Nev. 841 .) The record on appeal includes a copy of John's complaint in the Nevada action, which was filed on October 3, 2018, and which names Nicolette and her family court attorneys as defendants. John alleges in the complaint that he has incurred "financial damages" due to Nicolette's having filed a "complete and unredacted copy" of the GTC asset purchase agreement in these family law proceedings. On October 23, 2018, Nicolette filed a notice of related case, advising the family court of the Nevada action. C. The Court Properly Declined To Enforce the NDA's Nevada Forum Selection Clause
John claims the family court erroneously refused to enforce the NDA's Nevada forum selection clause. He argues that the family court erroneously "conflated" the NDA with the MSA, and that the NDA has "nothing to do with" the MSA because the MSA was "satisfied and concluded upon transmutation" of the parties' interests in GTC to John as his separate property; "whereas the NDA is a postjudgment contract between unmarried/single persons acting of their own accord." He further argues that the family court, having found that the NDA was valid, cannot "unilaterally pick and choose" which of the NDA's provisions to enforce, given that the NDA contains no severance clause, and courts "recognize a strong policy in favor of enforcing forum- selection provisions." He asks this court to affirm the family court's ruling that the NDA is valid and binding on the parties, but he requests this court to overrule the family court's ruling that California is the appropriate forum in which to adjudicate any issues arising under the NDA. In his opening brief on appeal, John does not challenge the family court's refusal to enforce the NDA's Nevada choice of law clause. Thus, we focus on the order declining to enforce the NDA's Nevada forum selection clause.
We find no error or abuse of discretion in the family court's refusal to enforce the NDA's Nevada forum selection clause. First, and as Nicolette points out, the Nevada forum selection clause is permissive, not mandatory. "A forum selection clause is either mandatory or permissive. A clause is mandatory if it requires the parties to litigate their disputes exclusively in the designated forum, and it is permissive if it merely requires the parties to submit to jurisdiction in the designated forum." (Verdugo v. Alliantgroup, L.P. (2015) 237 Cal.App.4th 141, 147, fn. 2, italics added (Verdugo).) And when, as here, no conflicting extrinsic evidence has been presented concerning the interpretation of a forum selection clause, the question of whether the clause is mandatory or permissive is a legal question issue that we review de novo. (Animal Film, LLC v. D.E.J. Productions, Inc. (2011) 193 Cal.App.4th 466, 471 (Animal Film).)
The NDA's Nevada forum selection is permissive, not mandatory, because it does not require the parties to submit to the jurisdiction of any court in Nevada. Rather, it states that Nicolette "consent[s] to personal jurisdiction in any action brought in any court, federal or state, within the state of Nevada having subject matter jurisdiction in the matter." Similar forum selection clauses have been held to be permissive, not mandatory. (E.g., Animal Film, supra, 193 Cal.App.4th at pp. 471-472 [forum selection clause stating that parties "submit and consent to the jurisdiction" of courts present in the state of Texas was permissive, not mandatory].)
The next question is whether the family court abused its discretion in declining to enforce the NDA's permissive Nevada forum selection clause. "A permissive forum selection clause is subject to traditional forum non conveniens analysis to determine whether the designated forum is a suitable alternative forum and whether the balancing of various private and public interest factors favors retaining the action in California." (Verdugo, supra, 237 Cal.App.4th at p. 147, fn. 2; see also Global Financial Distributors Inc. v. Superior Court (2019) 35 Cal.App.5th 179, 192, fn. 5.) " ' "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." ' " (National Football League v. Fireman's Fund Ins. Co. (2013) 216 Cal.App.4th 902, 917 (National Football League).) The residences of the parties are also relevant, and " ' "[i]f 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.' " ' " (Ibid.) " ' "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 alternative jurisdiction to the litigation." ' " (Ibid.) The court's balancing of the private and public interest factors is reviewed for an abuse of discretion. (Id. at p. 918.)
Here, the family court was not presented with a traditional motion to dismiss or stay an action based on forum non conveniens. (Code Civ. Proc., § 410.30.) The question of whether to enforce the NDA's Nevada forum selection and choice of law clause arose in the context of Nicolette's RFO to set aside the NDA.
In her RFO to set aside the NDA, Nicolette did not focus on the NDA's forum selection and choice of law clause; instead, she claimed she signed the NDA under duress, and that the NDA was procedurally and substantively unconscionable, and she asked the court to find that the NDA violated public policy because it purported to preclude her from bringing John's breach of fiduciary duty to the family court's attention. She also argued, however, that the family court had "exclusive subject matter jurisdiction" to adjudicate the parties' marital property rights, including whether John breached the MSA and the judgment by failing to disclose material facts concerning GTC's value. She indicated that California was the only appropriate forum in which to adjudicate the parties' current marital property related dispute.
In ruling on Nicolette's RFO to set aside the NDA, the family court effectively considered whether Nevada was an appropriate alternative forum in which to adjudicate the parties' dispute concerning the MSA and the judgment. The family court also effectively considered the private and public interests involved in adjudicating the dispute in California. (National Football League, supra, 216 Cal.App.4th at p. 917.) The court reasonably determined that the California family law court was the appropriate forum in which to adjudicate Nicolette's RFO to set aside the judgment together with any related issues concerning the NDA.
Indeed, the family court recognized that John was currently a resident of Nevada and sold GTC in Nevada. But the family court also recognized that the parties entered into the MSA and the judgment in California and agreed to reserve jurisdiction in the family court to determine any additional equalization payment due to Nicolette pursuant to the MSA and the judgment. The court reasonably concluded that California had stronger ties than Nevada to the parties' overall dispute. The court said: "[I]t appears to this Court that California has a much more substantial relationship to the parties in the transaction," and concluded, "[f]or all purposes, California is the appropriate jurisdiction to hear claims arising from the Stipulated Judgment, including issues arising from the [NDA] . . . ." (Italics added.)
The family court did not, as John argues, "conflate" the NDA with the MSA or the judgment. It appropriately recognized that any disputed issues concerning the NDA, including Nicolette's alleged breach of the NDA, was inextricably related to her RFO to set aside the judgment. (See, generally, Askew v. Askew (1994) 22 Cal.App.4th 942, 961-964 [family law court has exclusive jurisdiction vis-à-vis other superior court departments to determine marital property related issues].)
The family court also appropriately recognized, contrary to John's argument that the NDA has nothing to do with the MSA or the judgment, that the NDA is inextricably related to Nicolette's claims that John breached the MSA and the judgment by failing to disclose material facts concerning the value of GTC. Nicolette signed the NDA at John's request so that John would provide her with confidential information concerning his June 1, 2017 sale of GTC, including the GTC asset purchase agreement, which Nicolette reasonably needed in order to verify the $40 million sales price that John received for the GTC sale. The $40 million GTC sales price is directly relevant to the "additional equalization payment" that is due to Nicolette pursuant paragraph 6.02 of the judgment.
In sum, the family court reasonably concluded that (1) Nevada was not an appropriate forum in which to adjudicate any disputes between the parties concerning the NDA, and (2) the private and public interests involved weighed in favor of adjudicating the parties' overall marital property related dispute, including any disputes concerning the NDA, in the California family law court. (National Football League, supra, 216 Cal.App.4th at p. 917-918.)
Nonetheless, if the court in the Nevada action adjudicates John's claim that Nicolette breached the NDA by filing an unredacted copy the GTC asset purchase agreement in the family court or for any other reason—before the family court adjudicates the same issues or issues—the Nevada court's adjudication or judgment may be res judicata in these proceedings. (See Advanced Bionics Corp. v. Medtronic, Inc. (2002) 29 Cal.4th 697, 706 ["The possibility that one action may lead to a judgment first and then be applied as res judicata in another action 'is a natural consequence of parallel proceedings in courts with concurrent jurisdiction.' "].) We express no opinion, however, concerning the effect in these proceedings of any adjudications in the Nevada action.
Given our conclusion that John's claim fails on its merits, it is unnecessary to address Nicolette's claim that principles of estoppel and waiver preclude John from prevailing on his claim. There is, however, no merit to Nicolette's additional claim that John's appeal must be dismissed as moot because, as she argues, he failed to timely challenge the NDA's Nevada forum selection clause in the family court. A claim is not rendered moot if it is waived or forfeited; it is moot if, despite its merits, the court cannot grant any effective relief on the claim. (People v. Gregerson (2011) 202 Cal.App.4th 306, 321.) --------
IV. DISPOSITION
The October 30, 2018 postjudgment orders are affirmed. Nicolette shall recover her costs on appeal. (Cal. Rules of Court, rule 8.278.)
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
FIELDS
J. We concur: McKINSTER
Acting P. J. SLOUGH
J.