17 Cal. App. 5th 755
Cal. Ct. App. 5th2017Background
- LSI sued Shimadzu in California for breach of contract and several tort claims (conversion, interference, breach of implied covenant) arising from Shimadzu's alleged disclosure of confidential pricing to a third party (UBL) that induced breaches and lost rental value.
- The LSI–Shimadzu Sales Agreement contained a forum selection clause designating Howard County, Maryland as the proper forum and provided Maryland law applied.
- Shimadzu filed a demurrer that included a request to dismiss for improper forum under the clause and also demurred on pleadings grounds and choice-of-law.
- The trial court continued the demurrer hearing, directed Shimadzu to file a separate motion to dismiss/stay under CCP § 410.30 (forum non conveniens/forum selection), and later granted the motion, concluding the clause was mandatory and enforceable and that LSI had not shown enforcement would be unreasonable.
- The court dismissed (rather than stayed) the California action; Shimadzu sought fees and filed a proposed judgment; LSI appealed on several grounds including procedural forfeiture, scope of the clause, choice-of-law analysis, and dismissal vs. stay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Shimadzu forfeited its forum challenge by including it in a demurrer instead of a separate §418.10 motion | Shimadzu forfeited the issue because §418.10(e)(3) requires a separate motion at the time of a demurrer or the forum objection is waived | Shimadzu timely raised the forum issue in its demurrer and thus preserved it; court may also consider forum via §410.30 or on its own motion | No forfeiture: court reasonably treated the demurrer as timely raising the forum issue and properly had Shimadzu refile as a §410.30 motion; enforcement affirmed |
| Whether forum selection clause covers LSI's tort claims (scope) | LSI: tort claims did not arise from or “pertain to” the contract, so they fall outside the clause | Shimadzu: clause is broad/mandatory and encompasses all claims related to the contract, including torts alleging misuse of confidential information | Court held clause encompassed the claims (plaintiff failed to show enforcement unreasonable) |
| Whether court should apply discretionary forum non conveniens factors rather than enforce a mandatory clause | LSI: court should perform traditional forum non conveniens analysis (public/private interest factors) | Shimadzu: for a mandatory clause, the usual analysis is replaced by the narrow inquiry whether enforcement would be unreasonable or unjust | Court applied mandatory-clause standard (only inquire whether enforcement is unreasonable) and found enforcement reasonable |
| Whether dismissal (vs. stay) was error | LSI: should have been stayed instead of dismissed | Shimadzu: dismissal is permissible where forum selection clause is enforced; court has discretion | Court did not abuse discretion; LSI failed to preserve stay argument below, so dismissal affirmed |
Key Cases Cited
- Miller-Leigh LLC v. Henson, 152 Cal.App.4th 1143 (Cal. Ct. App.) (forum-selection clauses cannot be enforced by demurrer for lack of subject-matter jurisdiction; court may use §410.30)
- Britton v. Dallas Airmotive, Inc., 153 Cal.App.4th 127 (Cal. Ct. App.) (discusses interplay of §§418.10 and 410.30 and limits on raising forum issues after waiver)
- Stangvik v. Shiley Inc., 54 Cal.3d 744 (Cal.) (trial court discretion in dismissal vs. stay on forum non conveniens grounds)
- America Online, Inc. v. Superior Court, 90 Cal.App.4th 1 (Cal. Ct. App.) (acknowledges trial court discretion on forum matters)
- In re Sheena K., 40 Cal.4th 875 (Cal.) (distinguishing forfeiture from waiver)
- City of Ontario v. Superior Court, 2 Cal.3d 335 (Cal.) (appellate review of trial-court discretion; good-cause standard)
- In re S.C., 138 Cal.App.4th 396 (Cal. Ct. App.) (preservation rule for appellate review)
- People v. Partida, 37 Cal.4th 428 (Cal.) (court not required to rule on arguments not presented below)