Global Fin. Distribs. v. Superior Court
Global Fin. Distribs. v. Superior Court
Opinion of the Court
*183INTRODUCTION
This proceeding arises out of tension between two statutes governing the procedures for making a motion to stay or dismiss an action on the ground of inconvenient forum. Code of Civil Procedure section 418.10, subdivision (a),
Section 410.30, subdivision (a), provides that a defendant may file a motion to stay or dismiss an action if, "in the interest of substantial justice," the action "should be heard" in another state. Subdivision (b) of that statute states: "The provisions of Section 418.10 do not apply to a motion to stay or dismiss the action by a defendant who has made a general appearance."
The defendants in this case, after filing two demurrers, filed a motion to stay or dismiss on the ground of inconvenient forum pursuant to a forum selection clause providing for venue in Georgia. The trial court concluded it was untimely under section 418.10, subdivision (e).
We conclude it was timely under section 410.30. Section 418.10 applies before a defendant has made a general appearance. It allows a defendant filing a motion to dismiss an action for lack of personal jurisdiction to file simultaneously a motion to stay or dismiss the action for inconvenient forum, without having the latter motion constitute a general appearance. Section 410.30 applies after a defendant has made a general appearance. Because the defendants in this case filed their motion to stay or dismiss on the ground of inconvenient forum after they had appeared in the action by filing demurrers, section 410.30 applied, and the motion was not untimely. Therefore, we grant the defendants' petition for writ of mandate challenging the trial court's order denying the motion as untimely under section 418.10, subdivision (e).
FACTUAL AND PROCEDURAL BACKGROUND
On August 16, 2017 a group of clients sued their financial advisors for making *51alleged misrepresentations in the sale of "leveraged planning" life insurance policies. Apparently, the investment was supposed to work something like this: A company would apply for a loan to pay the premiums on a life insurance investment vehicle without having to use the company's assets. The lender would use the proceeds of the loan to pay the life insurance premiums and would receive the interest from policies, while the insured would take a tax deduction for the interest. Over time, the policy would "generate sufficient cash values to pay off the loan and retain significant amounts of cash which could be used to provide income without the payment of any premiums by the policy owner." The clients alleged that in this case the interest turned out to be nondeductible, interest rates rose by almost 2 percent when the credit rating for the insurance company was downgraded, and the policies did not perform well enough to defray other costs, which created a risk the policies would not be able to pay off the loan. The clients *185alleged that, based on the investment's poor performance and financial advisors' fraud, they had to surrender the insurance policies and sustained financial losses.
The loan agreement underlying the transaction included a forum selection clause stating that parties to the agreement submitted to "the exclusive jurisdiction" of the state or federal courts in Georgia. The loan agreement also stated that the parties to the agreement waived "NOW OR HEREAFTER" any objection "TO THE LAYING OF VENUE" in Georgia and the parties' right to argue Georgia was an inconvenient forum.
On October 20, 2017 three of the defendants, Global Financial Distributors, Inc., Allied Marketing Partners, and Alan Harrington (collectively Global Financial), filed a demurrer to the complaint and served written discovery. Before the court could hear the demurrer, however, the clients agreed to amend the complaint, and Global Financial withdrew its discovery requests. On December 15, 2017 the clients filed an amended complaint alleging various causes of action. On January 18, 2018 Global Financial demurred again.
On March 15, 2018 Global Financial filed a motion under section 410.30, subdivision (b), to enforce the forum selection clause in the loan agreement. The clients opposed the motion, arguing, among other things, the motion to enforce the forum selection clause was untimely under section 396b, subdivision (a), which provides that a defendant may file a motion to transfer venue of an action to a proper court in another county "at the time he or she answers, demurs, or moves to strike, or, at his or her option, without answering, demurring, or moving to strike and within the time otherwise allowed to respond to the complaint."
At the May 2, 2018 hearing on the motion to enforce the forum selection clause, the trial court provided the parties with a tentative ruling rejecting the argument the motion was untimely under section 396b because that statute governs transfer of an action to another county under California venue rules, not transfer of an action to another state pursuant to a forum selection clause. The trial court suggested, however, Global Financial waived its right to bring a motion to transfer based on the forum selection clause under section 418.10, subdivision (e)(3), which provides that failure to make a motion to transfer for inconvenient forum at the time of filing a demurrer or a motion to strike "constitutes a waiver of the issue[ ] of ... inconvenient forum ...." The trial court continued the hearing to allow the parties to brief the issue.
At the continued hearing on June 7, 2018, the trial court denied Global Financial's *52motion as untimely. The trial court stated that, when Global *186Financial filed its "demurrer and failed to also make a motion to stay or dismiss on the ground of inconvenient forum under ... section 418.10, subdivision (a)(2)," Global Financial "waived that issue." Although the court acknowledged section 410.30, subdivision (b), allowed a party to file a motion seeking to stay or dismiss an action after making a general appearance, the court ruled that filing a demurrer did not constitute a general appearance and that, where statutes conflict, the more specific statute ( section 418.10, according to the court) controls over the more general statute.
Global Financial filed a petition for writ of mandate seeking to compel the trial court to vacate its order denying the motion as untimely and to consider the motion on the merits. We issued an order to show cause.
DISCUSSION
A. The Doctrine of Forum Non Conveniens
Forum non conveniens "is an equitable doctrine invoking the discretionary power of a court to decline to exercise the jurisdiction it has over a transitory cause of action when it believes that the action may be more appropriately and justly tried elsewhere." ( Stangvik v. Shiley Inc . (1991)
As described, there is a potential conflict in the statutes governing the procedure for bringing a motion to stay or dismiss an action for inconvenient forum. Section 418.10, subdivision (e)(3), suggests that, if a party fails to make the motion "at the time of filing a demurrer or motion to strike," the *187party "waive[s]" the issue.
B. The Two Statutes Are Reconcilable
"When construing the interaction of two potentially conflicting statutes, we strive to effectuate the purpose of each by harmonizing them, if possible, in a way that allows both to be given effect." ( Chavez v. City of Los Angeles (2010)
*188The court in Britton v. Dallas Airmotive, Inc . (2007)
In rejecting this argument, the court stated: "Under subdivision (b) [of section 410.30 ], a defendant who has generally appeared may make a forum non conveniens motion at any time, not only on or before the last day to plead." ( Britton , supra , 153 Cal.App.4th at p. 133,
This interpretation is consistent with the statutory language. Section 418.10, subdivision (e)(3), states that a defendant's failure to make one of three specified motions (to quash service of summons for lack of personal jurisdiction, to stay or dismiss the action for inconvenient forum, or to dismiss for delay in prosecution) "under this section" at the time the defendant files a demurrer or motion to strike waives these "issues." A motion "under this section" is a motion filed and served "on or before the last day of [the defendant's] time to plead ...." ( § 418.10, subd. (a).) For a defendant that has made a general appearance, the "time to plead" has expired, and a motion to stay or dismiss on the ground of inconvenient forum at that point is not "under" section 418.10.
*189Limiting the application of the waiver provision of section 418.10, subdivision (e)(3), to defendants that have not yet made a general appearance is also consistent with another provision of section 418.10. (See Gutierrez v. Carmax Auto Superstores California (2018)
The legislative history of sections 418.10 and 410.30 supports the Britton court's interpretation that the former statute applies before a defendant has appeared and the latter applies after a defendant has appeared. (See Turner v. Association of American Medical Colleges (2011)
The Legislature codified the doctrine of forum non conveniens in 1969 by enacting section 410.30. ( Hahn v. Diaz-Barba (2011)
In 1972 the Legislature amended section 410.30 to add subdivision (b). The Legislature enacted the new subdivision, as part of Senate Bill No. 573,
In 2002 the Legislature amended section 418.10 to add subdivision (e) to make clear that a defendant can file one of the motions listed in subdivision (a)
*191simultaneously with an answer, demurrer, or motion to strike without making a general appearance. (See Legis. Counsel's Dig., Sen. Bill. No. 1325 (2001-2002 Reg. Sess.).) The original version of the amendment limited the waiver provision in subdivision (e)(3) to jurisdictional issues. It stated: "Failure to move to quash service of summons at the time of filing a demurrer or motion to strike constitutes a waiver of the issues of lack of personal jurisdiction, inadequacy of process, or inadequacy of service of process." The Legislature, however, expanded the scope of the waiver provision to include two additional motions, "motions to stay or dismiss an action on the ground of inconvenient forum and motions to dismiss for delay in prosecution," that the Senate Judiciary Committee believed, incorrectly, constituted special appearances. (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 1325 (2001-2002 Reg. Sess.) as introduced Jan. 29, 2002, p. 5; see Air Machine Com SRL v. Superior Court (2010)
Motions to stay or dismiss for inconvenient forum or for delay in prosecution, however, are not jurisdictional challenges and do not constitute special appearances. (See Stangvik v. Shiley Inc. , supra , 54 Cal.3d at p. 751,
The procedural differences between sections 410.30 and 418.10 also support the Britton court's interpretation. Section 410.30, which applies after the defendant has made a general appearance, does not give the defendant the procedural benefits of section 418.10, such as protection against the entry of default and an extension of time in which to plead. But a defendant that has *192appeared and is moving to stay or dismiss based on an inconvenient forum usually does not need those protections. As Witkin's treatise summarizes this difference: "After a defendant has appeared, [ section] 410.30 applies. [ Section] 418.10 provides special procedures *57for preanswer forum non conveniens motions, but such motions are not precluded after a defendant has appeared. [Citation.] Thus, under [ section] 410.30, a defendant who has appeared (a) may make the motion at any time, rather than before the last day to plead ( [§] 418.10[, subd.] (a)); (b) does not have the special protection against a default judgment ( [§] 418.10[, subd.] (d)); and (c) does not have the remedy of mandamus to review an order of denial ( [§] 418.10[, subd.] (c))." ( 2 Witkin, Cal. Procedure (5th ed. 2008) Jurisdiction, § 380, p. 1018.)
Finally, there are sound practical reasons for allowing a defendant to file a motion to stay or dismiss an action based on forum non conveniens after the party has made a general appearance by, for example, filing a demurrer. At the outset of the litigation, the parties may not know the location of the witnesses and evidence. (See Global Packaging, Inc. v. Superior Court, supra , 196 Cal.App.4th at p. 1633,
C. The Trial Court's Contrary Interpretation Is Erroneous
The trial court ruled section 418.10 applied to Global Financial's motion by mistakenly interpreting Britton as implying "that general appearances (for the purposes of applying ... section 410.30, subdivision (b) ) do not include the filing of a demurrer." Filing a demurrer, however, is a general appearance, and the court in Britton did not suggest otherwise. (§ 1014 ["[a] defendant appears in an action when the defendant ... demurs"];
*58Serrano v. Stefan Merli Plastering Co., Inc. (2008)
This is not to say that a party, despite the court's expansive language in Britton , may move to enforce a forum selection clause "at any time" ( Britton , supra , 153 Cal.App.4th at p. 133,
DISPOSITION
Let a peremptory writ of mandate issue directing the trial court to vacate its June 7, 2018 order and to consider Global Financial's motion to enforce the forum selection clause on its merits. Petitioners are to recover their costs in this proceeding.
We concur:
PERLUSS, P. J.
ZELON, J.
Undesignated statutory references are to the Code of Civil Procedure.
"Although the statute phrases the '[f]ailure to make a motion under this section at the time of filing a demurrer' as a 'waiver of the issue[ ] of ... inconvenient forum' (§ 418.10 [, subd.] (e)(3) ...), a true 'waiver' requires more than a mere failure to act, but rather an express relinquishment of a known right. Accordingly, 'the correct term is "forfeiture" rather than "waiver," because the former term refers to a failure to object or to invoke a right, whereas the latter term conveys an express relinquishment of a right or privilege.' " (Laboratory Specialists Internat., Inc. v. Shimadzu Scientific Instruments , Inc. (2017)
We review the trial court's interpretation of the statutes de novo. (California Building Industry Assn. v. State Water Resources Control Bd . (2018)
We grant Global Financial's request to take judicial notice of the legislative history of section 418.10. We also take judicial notice of the legislative history materials concerning section 410.30. (Evid. Code, § 452, subd. (c) ; see City of San Diego v. Shapiro (2014)
"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. 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. These traditional forum non conveniens factors are not considered when a mandatory forum selection clause exists." (Verdugo v. Alliantgroup, L.P. (2015)
Case-law data current through December 31, 2025. Source: CourtListener bulk data.