Ribbens Intern., S.A. v. Transport Intern. Pool
| Decision Date | 07 May 1999 |
| Docket Number | No. EDCV94-0023RT.,EDCV94-0023RT. |
| Citation | 47 F.Supp.2d 1117 |
| Court | U.S. District Court — Central District of California |
| Parties | RIBBENS INTERNATIONAL, S.A. de C.V., a Mexican corporation, Plaintiff. v. TRANSPORT INTERNATIONAL POOL, INC., a Pennsylvania Corporation, dba GE Capital Modular Space, Inc., Defendant. Transport International Pool, Inc., a Pennsylvania Corporation, dba GE Capital Modular Space, Counter-Claimant, v. Ribbens International, S.A. de C.V., a Mexican Corporation, Counter-Defendant. |
James Attridge, Shawn, Mann & Steinfeld, L.L.P., San Francisco, CA, Samuel T. Rees, Daar & Newman, Los Angeles, CA, for plaintiff and counter-defendant.
Barbara A. Reeves, Paul, Hastings, Janofsky & Walker, L.L.P., Los Angeles, CA, James F. Elliott, Irell & Manella, L.L.P., Los Angeles, CA, for defendants and counter-claimant.
PROCEEDINGS: ORDER GRANTING PLAINTIFF RIBBENS INTERNATIONAL, S.A. DE C.V.'S MOTION FOR ATTORNEY'S FEES.
The Court, the Honorable Robert J. Timlin, has read and considered plaintiff and counterdefendant Ribbens International, S.A. de C.V. (Ribbens International)'s motion for attorneys' fees, defendant and counterclaimant Transport International Pool, Inc. (TIP)'s opposition thereto, and Ribbens International's reply. The Court will grant the motion, and award attorney's fees in the amount of $140,400.00 to Ribbens International.
On October 30, 1998, a jury in this Court found TIP liable for breach of contract to plaintiff Ribbens International and awarded Ribbens International net damages of $351,000. On January 12, 1999, the Court entered judgment against TIP in the amount of $477,888.22, which figure includes prejudgment interest.
The two sales contracts between Ribbens International, as buyer, and TIP, as seller, which the jury found TIP had breached (the agreements) contain the following two provisions, relevant to the instant motion:
Paragraph 16: Buyer will reimburse seller for any legal fees and costs that become due as a direct result of Buyer's default on this agreement....
Paragraph 24: This Agreement and Terms and Conditions of Sale shall be construed in accordance with and be governed by the laws of the State of Pennsylvania.
Ribbens International contends that, despite the parties' choice of Pennsylvania law in paragraph 24 of the agreements, the Court should apply California Civil Code section 1717(a) (section 1717(a)) to the non-reciprocal attorney's fees provisions in paragraph 16 of the agreements. Section 1717(a) imposes an obligation of mutuality on such one-way attorney's fees provisions, requiring California courts to award reasonable attorney's fees to any prevailing party in an action involving a contract that specifically provides that only one or the other party could receive attorney's fees in an action relating to that contract. Neither Pennsylvania statutory nor case law imposes a comparable mutuality requirement on such a contractual provision, and, presumably, that state's courts would enforce the one-way attorney's fees clause of paragraph 16 of the agreements as written.1
Although the Court determined in its March 25, 1996 minute order that Pennsylvania law would govern liability and damages issues with respect to the various contract and tort claims at issue in this action, that ruling does not foreclose further consideration of the choice of law issue with respect to the issue of entitlement to attorney's fees. In fact, under California conflict of law principles, the Court is obligated to conduct a separate choice-of-law analysis as to each issue presented for decision. See S.A. Empresa De Viacao Aerea Rio Grandense v. Boeing Co., 641 F.2d 746 (9th Cir.1981) (); Arno v. Club Med Boutique Inc., 134 F.3d 1424 (9th Cir.1998) ().
Under California law, contractual choice of law provisions are upheld unless the transaction falls under either of the exceptions contained in the Restatement (Second) of Conflict of Laws § 187(2) (section 187(2)). Nedlloyd Lines B.V. v. Superior Court (Seawinds Ltd.), 3 Cal.4th 459, 11 Cal.Rptr.2d 330, 834 P.2d 1148 (1992). Section 187(2) provides:
The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either
(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or
(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.
The proper approach in determining whether either of the section 187(2) exceptions apply is for the court to determine whether the chosen state (Pennsylvania) has a substantial relationship to the parties or their transaction or whether there is any other reasonable basis for the parties' choice of law. Nedlloyd Lines, 3 Cal.4th at 465-66, 11 Cal.Rptr.2d at 333-34, 834 P.2d 1148. The chosen law will not be applied if neither of these conditions is met.
Alternatively, the court must determine whether California is the state whose law would be applied to the particular issue under the analysis set forth in Restatement (Second) Conflicts of Laws § 188 (section 188) absent an effective choice of law by the parties, and, if so, whether application of Pennsylvania law is contrary to a fundamental policy of California. Id. If there is a conflict, the court must then determine whether California has a "`materially greater interest than the chosen state in the determination of the particular issue ....'" Id. (quoting section 187(2)). The parties' choice of law will not be enforced if California has a materially greater interest in the relevant issue than the chosen state. Id. See also Guardian Savings and Loan Ass'n v. MD Associates, 64 Cal.App.4th 309, 75 Cal.Rptr.2d 151 (1st Dist.1998) ( section 187(2) analysis).
There can be no dispute that Pennsylvania, the chosen state, has a substantial relationship to the contracts at issue, because TIP is incorporated in Pennsylvania. See Nedlloyd Lines, 3 Cal.4th at 467, 11 Cal.Rptr.2d at 335, 834 P.2d 1148 () (quoting Carlock v. Pillsbury Co., 719 F.Supp. 791, 807 (D.Minn.1989)). Accordingly, the Court need not consider whether there is any other reasonable basis for the parties' choice of law and turns directly to the application of subsection (b) of section 187(2), which provides an alternate exception to recognition of the parties' choice of law.
Section 188 provides:
(1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in [Restatement (Second) Conflict of Laws § 6].
(2) In the absence of an effective choice of law by the parties (see § 187), the contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:
(e) the domicil, residence, nationality, place of incorporation and place of business of the parties.
These contacts are to be evaluated according to their relative importance with respect to the particular issue.
(3) If the place of negotiating the contract and the place of performance are in the same state, the local law of this state will usually be applied, except as otherwise provided ....
Restatement (Second) Conflicts of Laws § 6(2) (section 6(2)) provides in turn that, in the absence of a state statute directing the application of a certain state's law to an issue:
(f) certainty, predictability and uniformity of result, and
(g) ease in the determination and application of the law to be applied.
Considering the factors listed in section 188(2) in light of the general principles expressed in section 6(2), the Court concludes that California law would, in the absence of an effective choice of law by the parties, govern the question of Ribbens International's entitlement to attorney's fees under the agreements. Despite the international flavor of the subject matter of this litigation, and despite the fact that neither party is incorporated in California, the contracts at issue concerned the sale of a substantial amount of property that was located in California at the time of sale and involved parties whose business dealings with each other were entirely concentrated in California. Indeed, TIP, at an earlier point in this litigation, argued as follows: ...
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