Mitchell v. Superior Court

• Decision Date: 31 October 1986
• Citation: 186 Cal.App.3d 1040,231 Cal.Rptr. 176
• Court: California Court of Appeals Court of Appeals
• Parties: James F. MITCHELL, Petitioner, v. The SUPERIOR COURT of Los Angeles County, Appellate Department, Respondent, NATIONAL UNION FIRE INSURANCE CO., Real Party in Interest. B020374.

Page 176

231 Cal.Rptr. 176

186 Cal.App.3d 1040

James F. MITCHELL, Petitioner, v. The SUPERIOR COURT of Los Angeles County, Appellate Department, Respondent, NATIONAL UNION FIRE INSURANCE CO., Real Party in Interest.

B020374.

Court of Appeal, Second District, Division 4, California.

Oct. 31, 1986.

Eckhoff, Hoppe, Slick, Mitchell & Anderson, James F. Mitchell, San Francisco, John H. Banister, Alameda, for petitioner.

No appearance for respondent.

W.C. Miller, for real party in interest.

WOODS, Presiding Justice.

This original proceeding in mandate presents a venue question. Petitioner seeks to overcome the general venue rule, in breach of contract actions, that the county in which the contract was made shall be deemed to be the county in which defendant was to perform. The question presented is what contractual provisions constitute "a special contract in writing to the contrary" within the meaning of Code of Civil Procedure section 395, subdivision (a). ¹

The Superior Court Appellate Department held, following two prior reported Appellate Department decisions, that the statutory provision does not require that the county wherein defendant is intended to pay an obligation be specified in the written contract, and that parole evidence may establish a location other than that indicated as the office of plaintiff on the face of the written contract.

We conclude that the municipal court and the appellate department exceeded their jurisdiction by failing to follow a plethora of controlling case law that unequivocally establishes a contrary rule. (See Randone v. Appellate Department (1971) 5 Cal.3d 536, 542-543, 564, 96 Cal.Rptr. 709, 488 P.2d 13.)

The material facts are not disputed and are all contained in the record.

Real party in interest (hereafter referred to as National) filed an unverified two-count complaint in Municipal Court in Los Angeles County against petitioner attorney (Mitchell) and the other members of his Contra Costa County law firm partnership. The action seeks recovery of $5,000 which National, a professional liability insurer, claims is due it for defending the law firm against a prior malpractice claim. National claims entitlement under the insurance contract's provision for reimbursement of the $5,000 "defense costs" deductible. The complaint alleged that the contract was made, and that defendants' payment was to occur in Los Angeles County. Defendants contend that they do not owe the $5,000 because the malpractice claim was covered by the carrier's prior "occurrence" policy that has no deductible for defense costs.

Mitchell moved for change of venue to a municipal court in Contra Costa County. The motion was supported by Mitchell's declaration that he and all his defendant partners are, and were at the commencement of the present action, residents of Contra Costa County. He averred that the subject liability insurance contract was a renewal of prior policies issued by American Home Assurance Company, and that he mailed the renewal application to the offices of American at the New York address shown for American on the renewal application and upon the "Declarations" page of the renewal policy.

Mitchell also states that American accepted the policy application at its offices in New York. He subsequently received by mail from New York City a copy of the fully executed policy.

The authenticated copy of the executed policy attached to the Mitchell declaration contains this recitation in the following style at the left top of the "Declarations" page:

"A MEMBER OF THE AMERICAN INTERNATIONAL GROUP EXECUTIVE OFFICES 102 MAIDEN LANE NEW YORK, N.Y. 10005

COVERAGE IS PROVIDED IN THE COMPANY DESIGNATED A STOCK INSURANCE COMPANY (HEREIN CALLED THE COMPANY)

AMERICAN HOME ASSURANCE COMPANY"

The address is the sole address for American appearing on the policy or the application. The top of the face sheet of the policy recites the same New York address for American and a New York address for National. (Apparently the same pre-printed policy form is used by both American and National with the issuer designated by checking of a box.) No other address is stated for National on the policy.

The policy provision entitled "Reimbursement of the Company" provides that the insureds shall be liable to reimburse "the Company" for all applicable deductibles and "shall pay such amounts to the Company." (Emphasis added.)

Nowhere in the contract of insurance is there any specification of where the insured is to pay this reimbursement of the deductible to "the Company." Nowhere is there any reference by address or otherwise to any California office of "the Company."

The policy provides that insureds shall forward all claims to "the Company." Mitchell mailed his claim to American at the New York City office address designated above. That claim was acknowledged by a letter from American emanating from its New York office.

In addition to contending that under applicable venue rules the insurance contract was made either in San Francisco County or New York, Mitchell's motion also challenged the very status of plaintiff National to claim that it is the issuing carrier referred to as "the Company" in the contract of insurance. Mitchell relied upon the policy itself, which as described above identifies American as the issuer, as well as American's response to Mitchell's notice of claim.

The opposition filed by National consisted of the affidavit of its claims manager executed in New York. It stated that National had but one claims office in California "at the time of this claim." That claims office is located in Los Angeles and handles for both American and National all legal malpractice claims concerning California insureds. Claims are either mailed directly to this Los Angeles office or forwarded by defense carriers. National mailed its demand for payment of the deductible from this Los Angeles office.

On this showing, National contends that the defendants' obligation to reimburse National the $5,000 deductible was contracted to be performed in Los Angeles.

The municipal court denied the motion without a statement of grounds.

Defendant appealed this ruling to the Los Angeles Superior Court Appellate Department, pursuant to section 904.2, subdivision (c).

The Appellate Department affirmed the denial in a written decision. The Department denied Mitchell's petition, filed pursuant to California Rules of Court, rule 62, for certification of the decision for publication or for transfer of the case to the Court of Appeal. As will be discussed in detail, the opinion was based upon prior reported decisions of other appellate departments. (Morthrift Plan v. Fischer (1961) 196 Cal.App.2d Supp. 865, 17 Cal.Rptr. 607; (Inglewood Thrift & Loan v. Colby (1961) 188 Cal.App.2d Supp. 857, 10 Cal.Rptr. 814.)

We issued the alternative writ under section 1086 because the petition made a prima facie showing that the Appellate Department and the municipal court exceeded their respective jurisdictions by failing to follow controlling case authority. (See Randone v. Appellate Department, supra, 5 Cal.3d at pp. 542-543, 564, 96 Cal.Rptr. 709, 488 P.2d 13; Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937.)

The return filed by National argues only the incorrect position that the Appellate Department decision may not be reviewed by this court because section 400 provides only for mandate review of superior court orders granting or denying motions for change of venue. The return urges that the remedy of appeal is available to Mitchell and that because appeal is not an inadequate remedy, extraordinary writ review is improvidently granted. The return also elected to "rely upon the well reasoned opinion of the Appellate Department."

I

The controlling provisions of section 395, subdivision (a), are as follows:

"Subject to the provisions of subdivision (b), when a defendant has contracted to perform an obligation in a particular county, either the county where such obligation is to be performed or in which the contract in fact was entered into or the county in which the defendant or any such defendant resides at the commencement of the action shall be a proper county for the trial of an action founded on such obligation, and the county in which such obligation is incurred shall be deemed to be the county in which it is to be performed unless there is a special contract in writing to the contrary." (Emphasis added.)

Thus, the general rule is that only two proper venues exist: the county where the contract was entered into (obligation incurred) and the county of defendant's residence. A third proper venue will arise only when there is "special contract in writing to the contrary."

Before reaching the determinative issue whether the underlying contract meets the "special contract in writing" requirement, it is necessary to set forth some general rules applicable to motions for change of venue that will focus our analysis.

The place of the making of a contract is where the last act necessary to the validity and binding effect thereof is performed. This "last act" is usually the acceptance of the offer. (Braunstein v. Superior Court (1964) 225 Cal.App.2d 691, 696, 37 Cal.Rptr. 666.) This place of making is the place where the obligation of the defendant arises unless there is a special contract in writing to the contrary. (Armstrong v. Smith (1942) 49 Cal.App.2d 528, 533-534, 122 P.2d 115.)

The performance material under section 395 is the performance of the defendant. (Meyer v. Burdett Oxygen Co. (1959) 170 Cal.App.2d 519, 523, 339 P.2d 243.)

The burden of proof to negate proper venue in the county where the action is commenced is upon the party seeking to change venue. The prima facie presumption that plaintiff has selected the proper venue must be overcome by that moving party. (Ward Mfg. Co. v. Miley (1955) 131 Cal.App.2d 603, 606-607, 281 P.2d 343; Hearne v. De Young (18...