Global Fin. Distribs. v. Superior Court

• Decision Date: 16 April 2019
• Docket Number: B291814
• Citation: 247 Cal.Rptr.3d 48,35 Cal.App.5th 179
• Court: California Court of Appeals Court of Appeals
• Parties: GLOBAL FINANCIAL DISTRIBUTORS et al., Petitioners, v. The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; Rosemary Perera, individually and as Trustee, etc., et al., Real Parties in Interest.

35 Cal.App.5th 179

247 Cal.Rptr.3d 48

GLOBAL FINANCIAL DISTRIBUTORS et al., Petitioners,

v. The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent;Rosemary Perera, individually and as Trustee, etc., et al., Real Parties in Interest.

B291814

Court of Appeal, Second District, Division 7, California.

Filed April 16, 2019

Manning & Kass Ellrod, Ramirez, Trester, James E. Gibbons and Steven J. Renick, Los Angeles, for Petitioners.

No appearance for Respondent.

Blakeman Law and Benjamin Blakeman, Los Angeles, for Real Parties in Interest.

SEGAL, J.

INTRODUCTION

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),¹ provides that a defendant may file such a motion "on or before the last day of his or her time to plead," and section 418.10, subdivision (e), provides that a defendant may also file such a motion "simultaneously" with an answer, demurrer, or motion to strike. Subdivision (e)(3) of that statute further provides that "[f]ailure to make a motion under this section at the time of filing a demurrer or motion to strike constitutes a waiver of the issue[ ] of ... inconvenient forum."

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 alleged 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 alleged 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 motion as untimely. The trial court stated that, when Global Financial 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) 54 Cal.3d 744, 751, 1 Cal.Rptr.2d 556, 819 P.2d 14 ; see Bushansky v. Soon-Shiong (2018) 23 Cal.App.5th 1000, 1005, fn. 2, 234 Cal.Rptr.3d 54.) " ‘Where a plaintiff brings suit in California, the potential applicability of a contractual forum selection clause is raised by the defendant through a motion to dismiss on grounds of forum non conveniens.’ [Citation.] ‘A defendant may enforce a forum-selection clause by bringing a motion pursuant to sections 410.30 and 418.10, the statutes governing forum non conveniens motions, because they are the ones which generally authorize a trial court to decline jurisdiction when unreasonably invoked and provide a procedure for the motion.’ " ( Korman v. Princess Cruise Lines, Ltd. (2019) 32 Cal.App.5th 206, 214, 243 Cal.Rptr.3d 668 ; accord, Bushansky , at p. 1005, 234 Cal.Rptr.3d 54 ; Cal-State Business Products & Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666, 1680, 16 Cal.Rptr.2d 417 ; see Global Packaging, Inc. v. Superior Court (2011) 196 Cal.App.4th 1623, 1633, 127 Cal.Rptr.3d 813 ["[e]nforcement of forum-selection clauses is an offshoot of the principle of inconvenient forum"].)

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 party "waive[s]" the issue.² Section 410.30, subdivision (b), however, suggests a party can still make the motion after filing a demurrer or motion to strike, both of which constitute a general appearance (see section 1014; Goodwine v. Superior Court (1965) 63 Cal.2d 481, 484, 47 Cal.Rptr. 201, 407 P.2d 1 ; Borsuk v. Appellate Division of Superior Court (2015) 242 Cal.App.4th 607, 615, 195 Cal.Rptr.3d 581 ), because that statute states that the "provisions of [s]ection 418.10 do not apply to a motion to stay or dismiss the action by a defendant who has made a general appearance." How can a party bring a motion under section 410.30 to stay or dismiss an action on the ground of forum non conveniens after making a general appearance if the moving party waived the...