Battaglia Enterprises, Inc. v. Superior Court (2013) · DecisionDepot
Battaglia Enterprises, Inc. v. Superior Court
California Court of Appeal Apr 29, 2013 No. D063076MPublished
Before: Aaron
Filed 4/29/13 CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
BATTAGLIA ENTERPRISES, INC., D063076
Petitioner,
v. (Super. Ct. No. 37-2012-00090552-CU-BC-CTL) SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN DIEGO, ORDER MODIFYING OPINION Respondent, [CHANGE IN JUDGMENT] YARD HOUSE USA, INC., et al.,
Real Parties in Interest.
THE COURT:
It is ordered that the opinion filed herein on April 11, 2013, be modified as
follows:
On page 13, the last sentence of the opinion, under part IV., Disposition, is deleted
in its entirety, and replaced with the following:
Parties are to bear their own costs on appeal.
This modification changes the judgment as to the award of costs only. In all other
respects, the Disposition remains the same.
HUFFMAN, Acting P. J.
2
Filed 4/11/13 (unmodified version) CERTIFIED FOR PUBLICATION
v. (Super. Ct. No. 37-2012-00090552-CU-BC-CTL) SUPERIOR COURT OF SAN DIEGO COUNTY,
Respondent,
YARD HOUSE USA, INC., et al.,
Real Parties in Interest.
Petition for writ of mandate from an order of the Superior Court of San Diego
County, William S. Dato, Judge. Petition denied.
Tatro and Zamoyski and Peter A. Zamoyski for Petitioner.
Jones Day, John Alexander Vogt and Edward San Chang for Real Parties in
Interest.
I.
INTRODUCTION
Petitioner and plaintiff in the underlying action, Battaglia Enterprises, Inc.
(Battaglia) filed suit against defendants Yard House USA, Inc., Yard House USA, LLC,
and Yard House Restaurants, LLC (jointly "Yard House") in the Superior Court of San
Diego County for breach of contract. Yard House moved to transfer the action to Orange
County, citing a venue selection clause to which the parties had agreed in the contract
giving rise to the suit. The trial court granted the motion.
Battaglia filed a petition for writ of mandate seeking relief from the trial court's
order transferring the underlying action from the Superior Court of San Diego County to
the Superior Court of Orange County. In its petition, Battaglia argues that the trial court
erroneously gave effect to the parties' agreement concerning the place of venue for any
action between them arising from their contract. Battaglia maintains that venue selection
clauses are void, per se, under long-standing California Supreme Court precedent as set
forth in General Acceptance Corp. v. Robinson (1929) 207 Cal. 285 (General
Acceptance). We disagree with Battaglia's broad reading of General Acceptance, and
conclude that the trial court properly granted Yard House's motion to transfer venue to
Orange County.
2
II.
FACTUAL AND PROCEDURAL BACKGROUND
A. Factual background
Battaglia is a wholesale food distributor with its principal place of business in San
Diego, California. In 2006, Yard House contracted with Battaglia for Battaglia to supply
food products to some of Yard House's restaurants. In 2010, Battaglia and Yard House
entered into a new "Master Foodservice Distribution Agreement" (the "2010 MFDA").
Under the 2010 MFDA, Yard House agreed to a minimum purchase volume of
$15 million annually from Battaglia.
The 2010 MFDA contained a venue selection clause that provided in relevant part,
that "any litigation related to or arising from this Agreement may be brought only in a
state or federal court located within Orange County, CA and the parties consent to the
jurisdiction of such court."
In mid-February 2011, Yard House sought to change some of the terms of the
parties' agreement, including the guaranteed purchasing volume provision. Apparently
Yard House had been unhappy with Battaglia's performance under the 2010 MFDA. On
February 18, 2011, Yard House emailed a letter to Battaglia seeking to unilaterally
terminate the 2010 MFDA more than a year before its scheduled March 31, 2012
termination date.
In mid-April 2011, Battaglia sent Yard House an invoice in the amount of
$2,169,041.10. According to Battaglia, "[t]he invoice amount represented the minimum
3
that Battaglia Enterprises would have been entitled to, based on the minimum $15 million
purchase volume that Yard House was contractually obligated to pay to Battaglia
Enterprises for the period through March 31, 2012, the scheduled termination date of the
contract." Yard House apparently did not pay the invoice.
B. Procedural background
Battaglia filed a complaint against Yard House in San Diego County Superior
Court on January 11, 2012, seeking damages for breach of contract.
Approximately three months later, Yard House filed a motion to transfer the venue
to Orange County pursuant to the venue selection clause contained in the 2010 MFDA.
After the parties had fully briefed the matter, the trial court issued a tentative
ruling in which it proposed to grant Yard House's motion. The court then held a hearing
on November 16, 2012. At the conclusion of the hearing, the court affirmed its tentative
ruling enforcing the venue selection clause, and ordered the case transferred from San
Diego County to Orange County.
Battaglia filed a petition for a writ of mandate and request for stay with this court
on December 10, 2012, challenging the trial court's order transferring the case to Orange
County.1
1 Shortly before the date on which this case was scheduled for oral argument, the parties notified the court that they had settled their dispute, thus rendering the appeal moot as to the parties. However, since this case raises issues " 'of continuing public importance,' we have elected to retain jurisdiction" in order to decide the issue presented. (Los Angeles County Metropolitan Transportation Authority v. Alameda Produce Market, 4
III.
DISCUSSION
Battaglia argues that the trial court erred in giving effect to the parties' venue
selection clause in the 2010 MFDA. According to Battaglia, the Supreme Court's opinion
in General Acceptance, supra, 207 Cal. at page 288 has rendered all contractual venue
selection clauses void as contrary to public policy in California.
The parties apparently agree that the sole question at issue in this writ petition is a
question of law, and that our review of the issue is therefore de novo. (Alexander v.
Superior Court (2003) 114 Cal.App.4th 723, 726 (Alexander).)
The proper place for trial is fixed by statutory scheme. The defendant in this
action is a corporation, and, as a result, Code of Civil Procedure2 section 395.5 applies
and supplies multiple possible venue options: "A corporation or association may be sued
in the county where the contract is made or is to be performed, or where the obligation or
liability arises, or the breach occurs; or in the county where the principal place of
business of such corporation is situated . . . ." (Ibid.) Thus, under the legislative scheme,
venue may be proper in more than one county, depending on the particular facts of a case.
Generally, when venue is proper in more than one county, a plaintiff has the
choice of where to file the action from among the available options. (See Sea World, Inc.
LLC (2011) 52 Cal.4th 1100, 1106, quoting Lundquist v. Reusser (1994) 7 Cal.4th 1193, 1202, fn. 8.) 2 Further statutory references are to the Code of Civil Procedure unless otherwise specified. 5
v. Superior Court (1970) 13 Cal.App.3d 100, 103 [discussing disjunctive nature of former
constitutional provision, now enacted as statute in § 395.5, giving plaintiff a choice of
bringing an action in any county that will satisfy one of the available venue options].)
There is a presumption that the county in which the plaintiff chose to file the action is the
proper county. (Bechtel Corp. v. Superior Court (1951) 33 Cal.App.3d 405, 407, fn. 1,
citing Hearne v. De Young (1896) 111 Cal. 373 and 2 Witkin, Cal. Procedure (2d. ed.
1970) Actions, § 522, p. 1342.) The burden rests on the party seeking a change of venue
to defeat the plaintiff's presumptively correct choice of court. (Buran Equip. Co. v.
Superior Court (1987) 190 Cal.App.3d 1662, 1666.)
The trial court found that San Diego County, where the plaintiff elected to sue
Yard House, is one of the proper venues available for this lawsuit under section 395.5
because the contract was made in San Diego County. However, the trial court found that
venue is also proper in Orange County under section 395.5 because Yard House's
principal place of business is located there.
Under the general rules regarding where a case is to be tried when multiple venues
are proper pursuant to the legislature's determination, the plaintiff's choice of venue in
filing the lawsuit would prevail. In this case, however, the parties agreed in the 2010
MFDA that "any litigation related to or arising from this Agreement may be brought only
in a state or federal court located within Orange County, CA." This provision, Yard
House contends, should be enforced, and Battaglia's choice of venue in San Diego
6
County must give way to venue in Orange County, as provided in the parties' negotiated
agreement.
Battaglia argues that venue selection clauses in contracts are "unenforceable and
void as against public policy," based on the California Supreme Court's 1929 opinion in
General Acceptance, supra, 207 Cal. at pages 288-289. General Acceptance involved a
lawsuit in which the plaintiff brought the action in San Francisco County, and the
defendant, an individual who was a resident of Alameda County, sought a transfer of
venue to Alameda County. (Id. at p. 286.) The lawsuit arose out of a contract that
included the following clause: " '[T]hat should suit be brought upon the contract or this
assignment, that the trial of said action be in the City and County of San Francisco, State
of California.' " (Ibid.) The trial court granted the defendant's motion to transfer the case
to Alameda County. (Id. at p. 287.) The plaintiff appealed, arguing that the contractual
venue selection clause required that the action be heard in San Francisco County. (Ibid.)
The Supreme Court rejected this argument and affirmed the order transferring the case to
Alameda County. (Id. at p. 289.)
Under the version of section 3953 in effect in 1929, when General Acceptance
was decided, there was only one proper county in which the lawsuit could have been
filed, and that was the county of the defendant's residence. (See Alexander, supra, 114
3 Although not significant for purposes of our discussion, both at the time of General Acceptance and presently, section 395 sets forth the general venue rules applicable when the defendant is an individual, as opposed to when the defendant is a corporation. In the latter case, section 395.5 applies. 7
Cal.App.4th at p. 728.) In assessing the validity of the venue selection clause before it,
the Supreme Court adopted the reasoning of the Massachusetts Supreme Court, as
follows: " 'The rules to determine in what courts and counties actions may be brought are
fixed upon consideration of general convenience and expediency by general law; to allow
them to be changed by the agreement of the parties would disturb the symmetry of the
law, and interfere with such convenience. Such contracts might be induced by
considerations tending to bring the administration of justice into disrepute.' " (General
Acceptance, supra, 207 Cal. at p. 289, quoting Nute v. Hamilton Ins. Co. (1856) 72 Mass.
174, 184.) The court also noted with approval "the general statement that 'jurisdiction of
the court is beyond the agreement of the parties.' [Citation.]" (General Acceptance,
supra, 207 Cal. at p. 289.)
It is clear that the venue selection agreement at issue in General Acceptance
attempted to set venue in a county that was impermissible under the statutory venue
scheme. Contrary to Battaglia's insistence that General Acceptance stands for the broad
proposition that all venue selection clauses are invalid in California, we conclude that the
General Acceptance court's holding is that a venue selection clause that attempts to vest
venue in a county that is not proper under the legislative scheme may not be given
effect.4 We reject Battaglia's interpretation of General Acceptance as making a broad
4 Indeed, the holding in General Acceptance is that "the agreement between the parties to the contract upon which this action was brought was void." (General Acceptance, supra, 207 Cal. at p. 289, italics added.) There is no broader pronouncement of a generalized rule in General Acceptance. 8
pronouncement regarding the validity of venue selection clauses generally; rather, the
contract in that case, which attempted to set trial in a county that was improper under the
legislative scheme, was void.
For 74 years, no California court relied on General Acceptance to invalidate a
venue selection clause. It also appears, however, that no California court upheld a venue
selection clause during this intervening time, either. (See Alexander, supra, 114
Cal.App.4th 723.)
In 2003, the court in Alexander relied on General Acceptance in granting the
defendants' motion for a writ of mandate seeking to vacate a trial court's orders denying
their requests to transfer venue to their county of residence, Fresno County. (Alexander,
supra, 114 Cal.App.4th at pp. 726, 732.)5 The plaintiff had filed the actions for breach of
contract in Santa Clara County pursuant to a contractual venue selection clause that
identified Santa Clara County as the place of proper venue under the contract. (Id. at p.
726.) Based solely on the venue selection clause in the contracts between the parties, the
trial court had concluded that venue was proper in Santa Clara County, and denied the
defendants' motions to change venue. (Ibid.)
The Alexander court explained that section 395 governed venue in those actions
(as opposed to § 395.5, which applies here), and that the statute provides, with respect to
actions based on a contract: " 'Subject to subdivision (b) [specifying venue in actions
5 The Alexander opinion dealt with two underlying cases, filed by the same plaintiff, against different defendants, pertaining to the same contract. (Alexander, supra, 114 Cal.App.4th at p. 725.) 9
involving sales to consumers], if a defendant has contracted to perform an obligation in a
particular county, the superior court in the county where the obligation is to be
performed, where the contract in fact was entered into, or where the defendant or any
defendant resides at the commencement of the action is a proper court for the trial of an
action founded on that obligation, and the county where the obligation is incurred is the
county where it is to be performed, unless there is a special contract in writing to the
contrary.' [Citation.]" (Alexander, supra, 114 Cal.App.4th at pp. 727.) In Alexander, the
contracts had been entered into, and the obligations incurred, in Santa Clara County, and
the contracts designated the place of performance as Santa Clara County. Thus, Santa
Clara County was one of the possible venues for the case under the legislative scheme set
forth in section 395.
The Alexander court considered the rationale underlying General Acceptance, and
whether the Supreme Court's decision in Smith, Valentino & Smith, Inc. v. Superior Court
of Los Angeles County (1976) 17 Cal.3d 491 (Smith), which held that forum selection
clauses are not per se invalid, expressly rejected the holding in General Acceptance.
Upon concluding that Smith merely distinguished General Acceptance and discredited its
policy reasoning on points related to the distinction between forum selection clauses and
venue selection clauses, the Alexander court determined that General Acceptance
remains good law and that it was bound to follow its holding. (Alexander, supra, 114
Cal.App.4th at pp. 727-732.) The Alexander court described the holding in General
Acceptance as follows: "To summarize, General Acceptance held that to the extent a
10
venue selection clause disrupts statutory venue provisions it is void as against the
legislatively declared public policy fixing the place for trial." (Alexander, supra, at pp.
731-732, italics added.)
Despite having stated the holding of General Acceptance in these precise terms,
and despite the fact that Santa Clara County was a proper venue under the statute, the
Alexander court proceeded to conclude that "the trial court erred in determining that the
contractual venue selection provision was dispositive of the question of venue" in the
cases before it. (Alexander, supra, 114 Cal.App.4th at p. 732.) The court remanded the
cases to the trial court for that court to "reconsider the motions to determine in each case
whether under section 395 venue is proper in Santa Clara County." (Alexander, supra, at
p. 732.)
We agree with the Alexander court to the extent that it expressed the holding of
General Acceptance as standing for the proposition that a venue selection clause is void
only insofar as it "disrupts statutory venue provisions." (Alexander, supra, 114
Cal.App.4th at p. 731.) As the Alexander court recognized, the policy considerations
underlying the decision in General Acceptance involved a concern that "parties will
disrupt the statutory scheme and bring the administration of justice into disrepute in order
to have their cause heard where they believe it will be received most sympathetically."
(Ibid.) The Alexander court went on to reason, "Since the venue statutes themselves
declare the public policy of this state with respect to the proper court for an action,
11
agreements fixing venue in some location other than that allowed by statute are a
violation of that policy." (Ibid.)6
In this case, the parties' venue selection clause selects one of the statutorily
permissible counties under section 395.5. The venue selection clause at issue here does
not fix venue in a location other than that allowed by statute, and thus cannot reasonably
be deemed to disrupt the statutory venue scheme. The rationale underlying the General
Acceptance court's refusal to enforce the venue selection clause in that case does not
apply where there are multiple statutorily permissible counties in which a trial may be
had, and the parties have mutually agreed to bring an action in one of those statutorily
permissible counties. In such a circumstance, the parties have not agreed to confer
6 In Alexander, it appears that the parties selected a proper county for venue, under the legislative scheme. Yet the Alexander court did not suggest that the parties' agreed- upon choice should be given effect. To the extent that Alexander can be read to conclude that a court may never rely on a contractual venue selection clause to determine the proper venue for a particular action, we decline to follow it. We note, however, that the situation in Alexander did not require that court to definitively settle the question raised in this case, as acknowledged in footnote 5 in Arntz Builders v. Superior Court (2004) 122 Cal.App.4th 1195, 1202 (Arntz Builders). The Arntz Builders court recognized that the question whether parties should be able to contractually agree to fix venue in one of multiple statutorily permissible counties is a question that no court had yet addressed. The Arntz Builders court explained, "This contention was not raised directly in Alexander because the action was filed in the county specified in the contractual provision; under the remand from the Court of Appeal, the motion to change venue presumably will be denied if that county is a proper county under section 395. The issue will require definitive resolution when an action is brought in a county that is a permissible place for trial under section 395 but is not the county specified in the contract and the opposing party moves to change venue to the county specified in the contract which is also a statutorily permissible county for trial under section 395." (Arntz Builders, supra, at p. 1202, fn. 5.) The Arntz Builders court also expressed the following sentiment, with which we agree: "[T]here is some logic to the contention that the parties should be able to agree among statutorily permissible counties." (Ibid.) 12
jurisdiction on a court that the legislature has deemed improper under the statutory venue
scheme. Rather, the parties have agreed to venue in a location that the Legislature has
specifically stated is a permissible one, pursuant to the terms of section 395.5. Battaglia
has not suggested any other persuasive public policy argument as to why we should not
enforce a venue selection clause in a contract entered into freely and voluntarily by
parties who have negotiated at arm's length, where the venue that the parties have
selected is a permissible venue under the statutory scheme.
We conclude that where, as here, two sophisticated parties agree, pursuant to arm's
length negotiations, to litigate an action in one of multiple statutorily permissible venues,
they should be held to their agreement. The venue selection clause in the 2010 MFDA is
thus valid and enforceable. The trial court's decision to transfer this case to the
contractually agreed-upon (and statutorily satisfactory) venue was therefore proper.
IV.
DISPOSITION
The petition is denied. The stay issued on December 18, 2012 is vacated. Real
parties in interest are entitled to costs in this proceeding.
13
AARON, J.
WE CONCUR:
HUFFMAN, Acting P. J.
O'ROURKE, J.
14
AI Brief
AI-generated · verify before citing
Holding. A contractual venue selection clause is valid and enforceable when it designates one of multiple statutorily permissible venues for an action. Such a clause does not violate public policy because it does not disrupt the legislative venue scheme.
Issues
Whether a contractual venue selection clause is void per se under California law.
Whether a venue selection clause is enforceable when it designates a county that is a statutorily permissible venue under Code of Civil Procedure section 395.5.
Disposition. denied
Quotations verified verbatim against the opinion
“the General Acceptance court's holding is that a venue selection clause that attempts to vest venue in a county that is not proper under the legislative scheme may not be given effect.”
“The venue selection clause at issue here does not fix venue in a location other than that allowed by statute, and thus cannot reasonably be deemed to disrupt the statutory venue scheme.”
“we conclude that where, as here, two sophisticated parties agree, pursuant to arm's length negotiations, to litigate an action in one of multiple statutorily permissible venues, they should be held to their agreement.”