Immobiliaria Buenaventuras v. Kor Hotel
Group
Filed 12/7/12 Immobiliaria Buenaventuras v. Kor Hotel Group
CA2/5
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND
APPELLATE DISTRICT
DIVISION
FIVE
IMMOBILIARIA BUENAVENTURAS, S.A. de C.V.,
Plaintiff and
Appellant,
v.
KOR HOTEL GROUP et al.,
Defendants and Respondents.
B239883
(Los Angeles
County
Super. Ct.
No. BC465591)
APPEAL from
an order of the Superior Court
of
County, Elizabeth Allen White, Judge. Affirmed.
The
Berglund Group and Keith W. Berglund for Plaintiff and Appellant.
Iaffaldano
Shaw & Young LLP and James K. Kawahito for Defendants and Respondents.
I. INTRODUCTION
This appeal
is from an order staying an action arising from a
Mexico. The purchase agreement was between two
Mexican corporations, plaintiff, Immobiliaria Buena-Venturas, S.A. De C.V. and
defendant, K.R. Playa III, S.DeR.L.De C.V.
The purchase agreement contained a forum selection clause waiving the
right to any jurisdiction except Mexican courts. We affirm the order staying this action on
forum non conveniens grounds because the trial court did not abuse its
discretion in enforcing the forum selection clause.
II. BACKGROUND
The
complaint, which was filed on July 21,
2011, alleges plaintiff conducts significant business in Los
Angeles County. Plaintiff is a Mexican corporation. The Cancun property
was owned by K.R. Playa III, S.DeR.L.De C.V. which is a subsidiary of
co-defendant, Kor Hotel Group, LLC, a California
corporation. Co-defendant, Jeffrey Lynn
Smith, is president of acquisitions with Kor Hotel Group in Los
Angeles, California. Mr. Smith worked in conjunction with
several individuals and entities including Kor Hotel Group and KR Playa
III De R.L. De C.V. The complaint
collectively refers to KR Playa III, S.DeR.L.De C.V., Mr. Smith and
the Kor Hotel Group as the Kor Group.
The
complaint further alleges the “Kor Group†induced plaintiff to deposit
$2 million with the co-defendant, Chicago Title Insurance, in escrow in Los
Angeles. The
total purchase price was $20 million for the Mexican property. The “Kor Group†insisted that Chicago Title
Company act as both escrow agent and title insurer. Chicago Title Company is not licensed to provide
the type of title insurance required under Mexican law. The “Kor Group†represented to plaintiff that
certain documentation would be provided including title insurance within a
specified time. Because no title
insurance was provided, plaintiff was prevented from closing escrow despite
having secured a funding commitment. The
“Kor Group†instructed Chicago Title Company to transfer the $2 million
escrow deposit into a bank account. The
account, according to the complaint, was controlled by the “Kor Group†in Los
Angeles. The
“Kor Group†subsequently sold the property to a third party for
$17 million. Plaintiff sued on
various theories of fraud, contract and fiduciary duty breach, common counts
and for other equitable forms of relief.
Attached to
the complaint as exhibit C is the purchase agreement. The purchase agreement was executed on behalf
of plaintiff, K.R. Playa III, S.DeR.L.DeC.V. and Chicago Title Company. The Fourteenth Clause of the purchase
agreement contains the following forum selection clause: “Competent Courts and Jurisdiction [¶] The Parties submit, expressly and
irrevocably, to the jurisdiction and competency of the Courts of the City of
Cancun and/or Playa del Carmen, Quintana Roo, Mexico, and hereby they expressly
and irrevocably waive any other forum, court or jurisdiction they could be
entitled to by virtue of their present of future domiciles, the location of
their assets, or by any other cause.â€
On October 19, 2011, the Kor Hotel
Group, KR Playa III, S.De.R.L.De C.V. and Mr. Smith moved to dismiss
or alternatively to stay the action on forum non conveniens grounds. (Code Civ. Proc §§ 410.30, 418.10, subd.
(a).) The moving defendants argued: the lawsuit should be heard in a Mexican
court based on the forum selection clause; Chicago Title Company was subject to
the forum selection clause because it was a signatory to the purchase
agreement; the forum selection clause is mandatory; and the trial court’s
inquiry was limited as to whether it was unreasonable to enforce the forum
selection clause. Defendant asserted it
was reasonable to enforce the clause because:
the selected forum was available to plaintiff; both parties to the
purchase agreement are sophisticated Mexican corporations; and plaintiff is not
registered to conduct business in the State of California. In addition, in December 2009, plaintiff
filed an action in the civil courts of Cancun,
based on similar claims of contract breach and fraud. And, the parties had been litigating the
Mexican action for almost two years when plaintiff filed the current
lawsuit.
Plaintiff
opposed the motion arguing: defendants
failed to meet their burden of showing that all defendants were amenable to
service and jurisdiction only in California; Chicago Title Company was not
amenable to service in Mexico and had answered the Los Angeles Superior Court
complaint; the escrow agreement did not contain a forum selection clause; and
the forum selection clause was permissive rather than mandatory. Plaintiff relied on the declaration of Sofia
Adelia Velazquez Gutierrez, an attorney licensed to practice in Mexico. According to Ms. Gutierrez, the forum
selection clause is “a common standard domestic jurisdiction clause†for
Mexican legal documents. The clause
confirms that jurisdiction is proper in Mexico
but does not exclude other forums.
Plaintiff asserted: it might be
deprived of a proper judicial relief; there was a third party litigation concerning
the property in a different case, California
NRUS Properties, LLC v. Kor Hotel Group, LLC, (Super. Ct. L.A. County No.
BC435005); KR Playa III, S.De.R.L.De C.V. is insolvent in Mexico because,
upon receipt of sale from a third party, proceeds were conveyed to a different
entity; and discovery and financial institutional record rules were different
in Mexico.
The trial
court ruled: the forum selection clause
was mandatory; Chicago Title Company was subject to the clause because it
executed the purchase agreement; the only inquiry was whether it was
unreasonable to enforce the clause; and plaintiff failed to establish it was
unreasonable or unfair to enforce the clause.
The trial court then stayed the present action pending resolution of the
Mexican case. Plaintiff filed a timely
notice of appeal.
III. DISCUSSION
Defendants
requested the trial court to dismiss or stay the action on the ground of forum
non conveniens. (§§ 410.30,
418.10.) Section 410.30, subdivision (a)
provides, “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
outside this state, the court shall stay or dismiss the action in whole or in
part on any conditions that may be just.â€
Plaintiff asserts the trial court’s ruling was incorrect because: the
language in the forum selection clause was permissive rather than mandatory;
Chicago Title Company was not a party to the purchase agreement and waived the
right to the Mexican forum by answering the complaint; it is unreasonable to
enforce the forum selection clause when all defendants are not subject to
Mexican jurisdiction; and defendants failed to produce any credible evidence
that dismissal on the ground of forum non conveniens was appropriate.
In
744, 751 (Stangvik,
traditional forum non conveniens as follows:
“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.
[Citations].†(See
(2011) 195 Cal.App.4th 1519, 1528.) An
exercise of that discretion requires a determination that the alternate forum
is a suitable place for trial. (
Cal.App.4th at p. 1528.) If it is, then
the trial court considers the private interests of the litigants and the
public’s concerns in retaining California jurisdiction. (Stangvik,
supra, 54 Cal.3d at p. 751;
Schmidt, supra, 195 Cal.App.4th at p. 1528.) Our Supreme Court explained the private and
public interests factors as follows: “The private interest factors are those
that make trial and the enforceability of the ensuing judgment expeditious and
relatively inexpensive, such as the ease of access to sources of proof, the
cost of obtaining attendance of witnesses, and the availability of compulsory
process for attendance of unwilling witnesses.
The public interest factors include avoidance of overburdening local
courts with congested calendars, protecting the interests of potential jurors
so that they are not called upon to decide cases in which the local community
has little concern, and weighing the competing interests of California and the
alternate jurisdiction in the litigation.
[Citations.]†(
The moving party on a dismissal or stay motion on forum non conveniens
grounds has the burden of proof. (
v. AGFA Corp. (2006) 144 Cal.App.4th 1452, 1463.) The trial court’s ruling on the motion is
discretionary and entitled to substantial deference on review. (Stangvik,
supra, 54 Cal.3d at p. 754;
172 Cal.App.4th 689, 696.)
But, the
analysis for a forum non conveniens motion differs when there is a forum
selection clause. In such cases, there
is a threshold issue of whether the clause is permissive or mandatory, which is
decided de novo on appeal. (
(2011) 193 Cal.App.4th 466, 471; Intershop
Communications AG v. Superior Court (2002) 104 Cal.App.4th 191, 196.) If the clause is permissive, the general
forum non conveniens analysis applies. (
358-359.)
However,
when the foreign selection clause is mandatory, the traditional forum non
conveniens analysis does not apply. (
Court, supra, 104 Cal.App.4th at
p. 196; Berg v. MTC Electronic
Technologies Co., supra, 61
Cal.App.4th at pp. 358-359.) Rather, the
only inquiry is whether enforcement of the clause would be unreasonable. (Lee v.
Southern California University for Professional Studies (2007) 148
Cal.App.4th 782, 787-788; Cal-State
Business Products & Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666,
1680.) A mandatory forum selection
clause is presumed to be valid and is enforced unless to do so would be
unreasonable under the circumstances. (
Superior Court (1976) 17 Cal.3d 491, 495-496; Berg v. MTC Electronic Technologies Co., supra, 61 Cal.App.4th at pp. 358-360.) When there is a mandatory clause, the
plaintiff bears the burden of showing that enforcement would be
unreasonable. (Smith, Valentino & Smith, Inc. v. Superior Court,
Professional Studies, supra, 148 Cal.App.4th at p. 788.) Our Supreme Court has explained a plaintiff
opposing enforcement of a forum selection clause must establish that the
selected forum is “unavailable or unable to accomplish†substantial
justice. (Smith, Valentino & Smith, Inc. v. Superior Court,
Court, supra, 104 Cal.App.4th at
p. 196.)
As noted,
the forum selection clause provides: “Competent Courts and Jurisdiction
[¶] The Parties submit, expressly and
irrevocably, to the jurisdiction and competency of the Courts of the City of
Cancun and/or Playa del Carmen, Quintana Roo, Mexico, and hereby they expressly
and irrevocably waive any other forum, court or jurisdiction they could be
entitled to by virtue of their present of future domiciles, the location of
their assets, or by any other cause.â€
This language expressly reflects an agreement that Mexico was the
selected forum to the exclusion of other places. The forum selection clause was
mandatory. (See Animal Film, LLC v. D.E.J. Productions, Inc., supra, 193
Cal.App.4th at p. 472; Intershop
Communications AG v. Superior Court, supra,
104 Cal.App.4th at p. 196 [clause stating “‘To
the extent permitted by the applicable laws the parties elect Hamburg to be the
place of jurisdiction’†was mandatory].)
Because the
clause is mandatory, the pertinent inquiry then is whether the trial court
abused its discretion in determining it would not be unreasonable to enforce
the clause. Unreasonableness may be
established by showing: the other
jurisdiction’s court is unavailable; the absence of a rational basis for the
selected forum; and enforcement is contrary to California public policy. (Guimei
v. General Electric Co., supra, 172 Cal.App.4th at p. 696;
Court, supra, 104 Cal.App.4th at
p. 199.) Plaintiff did not produce any
evidence of these factors. First, there
was no evidence that the Mexican court was not available. Rather, the evidence showed the
contrary. By the time this action was
filed in July 2011, the parties had been litigating the issues arising out of
the purchase agreement in a Mexican court since December 2009. Second, there is a rational basis for
selecting Mexico as the forum. The
purchase agreement was between two Mexican corporations for real property
located in that nation. Furthermore, the
parties, including plaintiff, selected Mexico as the forum to the exclusion of
other forums and laws. Third, there is
no evidence that any California public policies are at stake. And, there is no evidence that substantial
justice could not be achieved in a Mexican court. Thus, plaintiff failed to establish it was
unreasonable to enforce the forum selection clause in Mexico in the trial
court.
On appeal,
plaintiff insists that enforcement is unreasonable because: defendants engaged
in fraudulent conduct; it is “seriously inconvenient†given that plaintiff sued
parties, who are not signatories to the purchase agreement; and there was no
showing all parties are amenable to Mexican jurisdiction. But, the mere inconvenience of suing in
Mexico is insufficient to meet plaintiff’s burden of showing unreasonableness. (Smith,
Valentino & Smith, Inc. v. Superior Court, supra, 17 Cal.3d at p. 494; Berg
v. MTC Electronic Technologies, Co., supra,
61 Cal.App.4th at pp. 358-359.)
Furthermore, it is of no consequence that there are nonparties to the
purchase agreement named in California action.
California law allows for a nonparty to rely on the forum selection
clause if the litigant is closely related to the contractual relationship. (Bugna
v. Fike (2000) 80 Cal.App.4th 229, 233; Lu
v. Dryclean-U.S.A. of California, Inc. (1992) 11 Cal.App.4th 1490,
1494.)
In sum, the
forum selection clause was mandatory.
And, plaintiff failed to establish enforcement was unreasonable. Accordingly, the trial court did not abuse
its discretion in staying the California litigation pending completion of the
existing Mexican lawsuit.
IV. DISPOSITION
The order
granting the motion to stay the action pending completion of the action in
Mexico is affirmed. Defendants, Kor
Hotel Group, K.R. Playa III, S.DeR.L.De C.V., and Jeffrey Lynn Smith are
awarded their costs on appeal from plaintiff, Immobiliaria Bueneventuras, S.A.
de C.V.
NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS
TURNER,
P. J.
We concur:
ARMSTRONG,
J.
KRIEGLER,
J.
