Bancomer, S. A. v. Superior Court

• Decision Date: 30 April 1996
• Docket Number: No. B089364,B089364
• Citation: 52 Cal.Rptr.2d 435,44 Cal.App.4th 1450
• Court: California Court of Appeals Court of Appeals
• Parties: , 96 Cal. Daily Op. Serv. 3088, 96 Daily Journal D.A.R. 5011 BANCOMER, S.A., Petitioner, v. The SUPERIOR COURT of the State of California, in and for the County of Los Angeles, Respondent. Terry REILLY, et al., Real Parties in Interest.

Page 435

52 Cal.Rptr.2d 435

44 Cal.App.4th 1450, 96 Cal. Daily Op. Serv. 3088,

96 Daily Journal D.A.R. 5011

BANCOMER, S.A., Petitioner, v. The SUPERIOR COURT of the State of California, in and for the County of Los Angeles, Respondent Terry REILLY, et al., Real Parties in Interest.

No. B089364.

Court of Appeal, Second District, Division 3, California.

April 30, 1996.

Pillsbury Madison & Sutro, Charles E. Patterson, Los Angeles, Kevin M. Fong, San Francisco and Robert A. Gutkin, Washington, DC, for Petitioner.

No appearance for Respondent.

Hardy L. Thomas, Los Angeles, for Real Parties in Interest.

KITCHING, Justice.

In this action for mandamus relief, we consider whether a bank, a non-signatory to a purchase agreement between a resort developer and individual purchasers of leasehold interests in the property, is so "closely related to the contractual relationship" between the parties that it can enforce a contractual forum selection clause requiring litigation of disputes in Mexico. We decide it is not.

The forum selection clause appears in an agreement for use and development of land (purchase agreement) at the Baja Beach & Tennis Club (BB & TC) in Mexico, and provides: "Any conflict which may arise regarding the interpretation or fulfillment of this contract, shall be submitted expressly to the courts of the City of Ensenada, B.C."

The action arises out of the purchase of leasehold interests at BB & TC that became invalid after a Mexican court determined that the developer who sold the interests did not have title to the property. ¹ Individual purchasers brought an action in California for fraud against Bancomer, S.A. (Bancomer), the bank designated in the purchase agreement to establish a trust through which the interests would be purchased. Bancomer moved for dismissal on grounds the contractual forum selection clause required "any" conflicts arising out of the agreement to be litigated in Mexico. The motion was denied and the bank seeks a writ of mandate directing the superior court to enforce the clause.

We find Bancomer unable to enforce the forum selection clause because the bank is neither a third-party beneficiary to the purchase agreement, nor so "closely related to the contractual transactional transaction" to claim a benefit from the clause. We further find the claims against Bancomer for fraudulent inducement are beyond the scope of the forum selection clause. The trial court did not abuse its discretion in denying Bancomer's motion to dismiss. The petition is denied.

FACTUAL AND PROCEDURAL BACKGROUND

In or about 1986, Mexican developer Carlos Teran (Teran), Grupo Koster, S.A. de C.V. (Koster), and CETA, Ltd. (CETA), allegedly acquired the rights to develop land and construct a resort in Baja California, Mexico. Koster entered into an agreement with certain Mexican citizens, the Ejido, for use and development of the land for a period of 30 years. ² Koster and CETA then sold individual purchasers 30-year leasehold interests (or participation rights) in the property and/or memberships in the BB & TC.

From 1988 to 1992, the real parties in interest (referred to collectively as "Reilly") The two agreements contained separate forum selection clauses. The membership agreement provided: "If this application is accepted by CETA, all provisions of the agreement formed thereby shall be governed by the laws of the Cayman Islands, and any action arising from or connected with this Application shall be brought in the courts of said jurisdiction at the election of CETA or the courts of the applicable jurisdiction where applicant resides...." The purchase agreement provided: "Any conflict which may arise regarding the interpretation or fulfillment of this contract, shall be submitted expressly to the courts of the City of Ensenada, B.C." (Italics added.) The forum selection clause in the purchase agreement is the subject of this writ petition.

                purchased leasehold interests and/or memberships in the resort.  The terms of the leaseholds were contained in the membership agreement with CETA and the purchase agreement with Koster.  The purchase agreement provided, in relevant part, that the interests would be issued under a trust with Bancomer. 3  Bancomer was not a party to the agreement.  Reilly executed a promissory note in favor of CETA for the balance due on the [44 Cal.App.4th 1455] purchase and membership agreements, and sent payments to an address in California.  The notes were subsequently assigned to Bancomer
                

At the time Reilly purchased the leasehold interest, and unknown to her until 1993, litigation ensued in Mexico between the Ejido and other Mexican citizens over ownership rights to the resort property. This dispute affected the legitimacy of the underlying agreement between Koster and the Ejido, and the validity of the leasehold interests. ⁴ The bank trust was either not established or was ineffective to protect Reilly's investment. Bancomer, however, continued to collect on the notes.

Reilly filed a first amended complaint in Los Angeles County Superior Court against Bancomer alleging causes of action for, inter alia, constructive fraud and intentional and negligent misrepresentation. The gravamen of the action was that Bancomer, with knowledge of the title litigation in Mexico, misrepresented the validity of the leasehold interests and induced Reilly to enter into the purchase agreement. The complaint did not name either Koster or CETA as parties. Bancomer's answer asserted, among other affirmative defenses, that "[p]laintiffs have waived any right to assert such claims against Bancomer in the United States, by agreeing to a forum selection clause that provides that Mexican law governs all disputes and Ensenada, Mexico is the proper place to resolve any such disputes."

Bancomer moved to dismiss the complaint on the basis of the forum selection clause and Code of Civil Procedure section 410.30, subdivision (a), which states: "When a court upon motion of a party or its own motion finds that in the interest of substantial justice an action should be heard in a forum The superior court denied Bancomer's motion to dismiss as to the holders of property interests on the "north side" of the resort. ⁶ The court found the forum selection clause inapplicable to the fraud allegations asserted against Bancomer, and stated the claims "[did] not represent 'a conflict which may arise regarding the interpretation or fulfillment of the contract' by the seller. Plaintiffs seek to hold defendant Bancomer liable for its own conduct, not that of the seller." The court also found that Bancomer, as a non-party to the agreement, was not "closely related to the contractual relationship" between Koster and Reilly so as to come within the scope of the forum selection clause.

                outside this state, the court shall stay or dismiss the action in whole or in part on any conditions that may be just." 5  Bancomer asserted that Reilly's claims against it arose out of the purchase agreement, and were encompassed within the terms of the forum selection clause which provided that Mexican courts were to resolve "any" conflict.  In opposition, Reilly argued that Bancomer, which did not sign the purchase agreement, had no standing to claim the benefit of the forum selection clause.  Reilly also argued that enforcement would be unreasonable and a violation of public policy
                

Bancomer filed a petition for writ of mandate. We issued an alternative writ directing the respondent court either to grant Bancomer's motion to dismiss or to show cause why it should not be ordered to do so. Respondent court did not comply with our alternative writ. After a series of continuances requested by all parties, we heard oral argument.

CONTENTIONS

Bancomer contends the trial court abused its discretion in denying the motion to dismiss because the forum selection clause in the purchase agreement designates Mexico as the proper forum for litigation of claims arising out of the agreement.

DISCUSSION

1. Standard of Review

A forum selection clause is valid in the absence of the resisting party meeting a heavy burden of proving enforcement of the clause would be unreasonable under the circumstances of the case. (Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 496, 131 Cal.Rptr. 374, 551 P.2d 1206; Lu v. Dryclean-U.S.A. of California, Inc. (1992) 11 Cal.App.4th 1490, 1493, 14 Cal.Rptr.2d 906.) "We review a trial court's decision to enforce [or refuse to enforce] a forum selection clause for an abuse of discretion." (11 Cal.App.4th at p. 1493, 14 Cal.Rptr.2d 906; Furda v. Superior Court (1984) 161 Cal.App.3d 418, 424, 207 Cal.Rptr. 646.) "The standard of abuse of discretion applies to a broad range of decisions.... [p].... [T]he standard presumes deference to the trial court. Such deference makes sense where the issue usually involves primarily factual disputes. In its emphasis on deference, the abuse of discretion standard is similar to the substantial evidence rule." (In re Robert L. (1993) 21 Cal.App.4th 1057, 1065, 24 Cal.Rptr.2d 654.) We note "[t]he sufficiency of the evidence standard usually is applied to test evidence supporting a judgment. Rulings other than judgments ordinarily are reviewed for abuse of discretion." (Id. at p. 1066, 24 Cal.Rptr.2d 654.) "In Denham v. Superior Court (1970) 2 Cal.3d 557, 566, 86 Cal.Rptr. 65, 468 P.2d 193 ..., our Supreme Court declared that '... a reviewing court should not disturb the exercise of a trial court's discretion unless it appears that there has been a miscarriage of justice.' " (Ibid.) ⁷

We therefore consider the superior court's ruling in light of Reilly's burden to show that enforcement of the clause would be unreasonable.

2. Enforcement of the Forum Selection Clause Would be Unreasonable Under the Circumstances of This Case

Reilly advances three arguments in opposition to enforcement of the forum selection clause. First, she asserts Bancomer was not a...