Arntz Builders v. Superior Court

• Citation: 122 Cal.App.4th 1195,19 Cal.Rptr.3d 346
• Decision Date: 30 September 2004
• Docket Number: No. A106242.,A106242.
• Court: California Court of Appeals
• Parties: ARNTZ BUILDERS, Petitioner, v. The SUPERIOR COURT of Contra Costa County, Respondent; County of Contra Costa, Real Party in Interest.

19 Cal.Rptr.3d 346

122 Cal.App.4th 1195

ARNTZ BUILDERS, Petitioner, v. The SUPERIOR COURT of Contra Costa County, Respondent;

County of Contra Costa, Real Party in Interest.

No. A106242.

Court of Appeal, First District, Division 3.

September 30, 2004.

Bell, Rosenberg & Hughes LLP, Roger M. Hughes, Oakland, Kimble R. Cook, Honolulu, HI, and Nancy L. Sandifer, for Petitioner.

No appearance for Respondent.

Farella Braun & Martel LLP, B. Scott Douglass, Anthony D. Giles, and Bridget K. Kaman, San Francisco; Silvano B. Marchesi and David F. Schmidt, County Counsel, Martinez, for Real Party in Interest.

POLLAK, J.

In this writ proceeding we consider the validity of a contractual venue selection clause that purports to waive a party's right to transfer to a neutral county an action brought by a county against a resident of another county. A construction contract between petitioner Arntz Builders (Arntz) and real party in interest County of Contra Costa (County) provides that any action arising out of the contract would be brought in Contra Costa County, and expressly waives Arntz's right to remove the action to a neutral venue under section 394 of the Code of Civil Procedure.¹ Despite authority holding contractual venue selection provisions to be void, County contends, and the superior court held, that the clause is valid because the contractually selected venue is one of several statutorily permissible counties for the filing of such an action. We conclude that the contractual provision purporting to waive Arntz's right to transfer the action to a neutral county is nonetheless invalid. Accordingly, we shall issue a writ of mandate directing the trial court to transfer the action to a neutral county.

FACTUAL AND PROCEDURAL BACKGROUND

Arntz entered into a $26.8 million contract with County to construct an addition to its juvenile hall. The contract contains a venue selection clause providing that any litigation involving the "contract or relating to the work shall be brought in Contra Costa County." In addition, Arntz expressly "waive[d] the removal provisions of Code of Civil Procedure Section 394." County subsequently terminated the contract and filed an action for its breach against Arntz in Contra Costa County Superior Court.

Arntz filed a timely motion to change venue under sections 394 and 397. Arntz, a general partnership with its principal place of business in Marin County, asserted that section 394 requires the court, upon motion by either party, to transfer the action to a neutral county.² Alternatively, Arntz sought relief under section 397, subdivision (b), which gives the trial court discretion to transfer an action when there is reason to believe that an impartial trial cannot be had in the county in which venue is laid.

The trial court denied the motion, reasoning that contractual venue selection clauses are valid except to the extent they purport to fix venue in a location other than that allowed by section 395, the general venue provision for civil actions. The court concluded that General Acceptance Corp. v. Robinson (1929) 207 Cal. 285, 277 P. 1039 (General Acceptance) and Alexander v. Superior Court (2003) 114 Cal.App.4th 723, 8 Cal.Rptr.3d 111 (Alexander), both of which held contractual venue selection provisions to be void, "are not controlling, as those cases hold only that contractual venue selection clauses which purport to fix venue in a location other than that allowed by CCP § 395, [are] void and unenforceable.... [¶] In contrast, the contractual provision in this case, waiving CCP § 394, does not purport to fix venue in a location other than that allowed by the [L]egislature. CCP § 394 is a removal statute and an exception to CCP § 395. [Citation.] There are cases holding that the provisions of CCP § 394 may be waived, albeit in the context of failure to timely assert a right of removal. [Citations.] [¶] ARNTZ has not presented any case law or statutory authority prohibiting voluntary contractual waiver of CCP § 394 venue removal. There is no showing that the contractual provision at issue is either unconscionable, or contrary to public policy." The trial court's order does not address the alternative basis for the change of venue motion, section 397.

Arntz filed a timely petition for a writ of mandate in this court, challenging the trial court's denial of its motion for change of venue. (§ 400.) We stayed all proceedings in the trial court and issued an order to show cause.

DISCUSSION

The issue before us is whether to give effect to a contractual provision waiving the right of a party to transfer to a neutral county an action by a city, county, or local public agency against a nonresident defendant. Because the issue involves a pure question of law, our review is de novo. (Kennedy/Jenks Consultants, Inc. v. Superior Court (2000) 80 Cal.App.4th 948, 959-960, 95 Cal.Rptr.2d 817.)

Over 70 years ago, in General Acceptance, our Supreme Court held that contractual venue selection clauses are void. (General Acceptance, supra, 207 Cal. at p. 289, 277 P. 1039.) The plaintiff in General Acceptance filed a breach of contract action in San Francisco, which was designated in the contract as the venue for any action arising out of the contract. (Id. at p. 286, 277 P. 1039.) The defendant moved to change venue to Alameda County, where the defendant resided. (Ibid.) Under the version of section 395 then in effect, the defendant's residence was the only proper venue. (See Alexander, supra, 114 Cal.App.4th at p. 728, 8 Cal.Rptr.3d 111.) The Supreme Court affirmed an order granting the motion to change venue. (General Acceptance, supra, 207 Cal. at p. 289, 277 P. 1039.) In assessing the validity of venue selection clauses, the Supreme Court adopted the reasoning of the Massachusetts Supreme Judicial Court as follows: "`The rules to determine in what courts and counties actions may be brought are fixed upon consideration of general convenience and expediency by general law; to allow them to be changed by the agreement of the parties would disturb the symmetry of the law, and interfere with such convenience. Such contracts might be induced by considerations tending to bring the administration of justice into disrepute.'" (Ibid.)

After General Acceptance, the validity of venue selection clauses does not appear to have been addressed in a reported California decision until the Court of Appeal for the Sixth Appellate District confronted the issue last year in Alexander, supra. Alexander involved a contractual dispute between private parties, in which the governing contract contained an express stipulation that venue would be in Santa Clara County, where the plaintiff's headquarters were located. (114 Cal.App.4th at pp. 725-726, 8 Cal.Rptr.3d 111.) Plaintiff filed suit in Santa Clara County and, in opposing the defendants' motion for a change of venue, relied in part on the contractual provision setting venue in that county. (Id. at p. 726, 8 Cal.Rptr.3d 111.) The plaintiff argued that intervening case law had effectively overruled General Acceptance — specifically, that the Supreme Court had expressly rejected its holding in Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 131 Cal.Rptr. 374, 551 P.2d 1206 (Smith). In Smith, the court held that forum selection clauses are not per se invalid. (Id. at pp. 495-496, 131 Cal.Rptr. 374, 551 P.2d 1206.) The Alexander court disagreed that Smith overruled General Acceptance, concluding that General Acceptance is still good law, and remanded the action for the trial court to determine whether venue was properly laid in Santa Clara County under section 395. (Alexander, supra, 114 Cal.App.4th at p. 732, 8 Cal.Rptr.3d 111.)

The court in Alexander distinguished between forum selection clauses and venue selection clauses. Forum is a place of jurisdiction, in contrast to venue, which is the place where the case will be heard and "from which the jury will be selected." (Alexander, supra, 114 Cal.App.4th at p. 727, 8 Cal.Rptr.3d 111.) "Under state law therefore a venue selection clause is purely an intrastate issue involving the selection of a county in which to hold the trial. By contrast, a forum selection clause usually chooses a court from among different states or nations." (Ibid., fn. omitted.) The court noted that one of the grounds for the holding in General Acceptance is that "venue selection clauses disrupt the Legislature's statutory venue scheme." (Alexander, supra, at p. 728, 8 Cal.Rptr.3d 111.) By contrast, forum selection clauses, as the court in Smith acknowledged, "`violate no such carefully conceived statutory patterns.'" (Alexander, supra, at p. 731, 8 Cal.Rptr.3d 111, quoting Smith, supra, 17 Cal.3d at p. 495, 131 Cal.Rptr. 374, 551 P.2d 1206.) "The concern with selecting venue is that parties will disrupt the statutory scheme and bring the administration of justice into disrepute in order to have their cause heard where they believe it will be received most sympathetically. But it is not for the parties or the courts to set venue. That is the role of the Legislature." (Alexander, supra, at p. 731, 8 Cal.Rptr.3d 111.) The court concluded that "General Acceptance held that to the extent a venue selection clause disrupts the statutory venue provisions it is void as against the legislatively declared public policy fixing the place for trial. Nothing in Smith affects that holding. We recognize that no case before or after Smith has relied upon General Acceptance to strike down a venue selection clause. By the same token, we are not aware of any case in this state that has held such a clause to be enforceable. General Acceptance has survived this 74-year gap in the law and we are bound to follow it."³ (Alexander, supra, at pp. 731-732, 8 Cal.Rptr.3d 111.)

Here, County does not challenge the holding in Alexander or ask that we reconsider the continuing validity of General Acceptance. Instead, County seeks to limit the...