Lead Opinion
Opinion
In this writ proceeding we consider the validity of a contractual venue selection clause that purports to waive a party’s right to transfer to a neutral county an action brought by a county against a resident of another county. A construction contract between petitioner Arntz Builders (Arntz) and real party in interest County of Contra Costa (County) provides that any action arising out of the contract would be brought in Contra Costa County, and expressly waives Arntz’s right to remove the action to a neutral venue under section 394 of the Code of Civil Procedure.
Factual and Procedural Background
Arntz entered into a $26.8 million contract with County to construct an addition to its juvenile hall. The contract contains a venue selection clause providing that any litigation involving the “contract or relating to the work shall be brought in Contra Costa County.” In addition, Arntz expressly “waive[d] the removal provisions of Code of Civil Procedure Section 394.” County subsequently terminated the contract and filed an action for its breach against Arntz in Contra Costa County Superior Court.
Arntz filed a timely motion to change venue under sections 394 and 397. Arntz, a general partnership with its principal place of business in Marin County, asserted that section 394 requires the court, upon motion by either party, to transfer the action to a neutral county.
The trial court denied the motion, reasoning that contractual venue selection clauses are valid except to the extent they purport to fix venue in a location other than that allowed by section 395, the general venue provision for civil actions. The court concluded that General Acceptance Corp. v. Robinson (1929)
Arntz filed a timely petition for a writ of mandate in this court, challenging the trial
Discussion
The issue before us is whether to give effect to a contractual provision waiving the right of a party to transfer to a neutral county an action by a city, county, or local public agency against a nonresident defendant. Because the issue involves a pure question of law, our review is de novo. (Kennedy/Jenks Consultants, Inc. v. Superior Court (2000)
Over 70 years ago, in General Acceptance, our Supreme Court held that contractual venue selection clauses are void. (General Acceptance, supra,
After General Acceptance, the validity of venue selection clauses does not appear to have been addressed in a reported California decision until the Court of Appeal for the Sixth Appellate District confronted the issue last year in Alexander. Alexander involved a contractual dispute between private parties, in which the governing contract contained an express stipulation that venue would be in Santa Clara County, where the plaintiff’s headquarters were located. (Alexander, supra, 114 Cal.App.4th at pp. 725-726.) Plaintiff filed suit in Santa Clara County and, in opposing the defendants’ motion for a change of venue, relied in part on the contractual provision setting venue in that county. (Id. at p. 726.) The plaintiff argued that intervening case law had effectively overruled General Acceptance—specifically, that the Supreme Court had expressly rejected its holding in Smith, Valentino & Smith, Inc. v. Superior Court (1976)
The court in Alexander distinguished between forum selection clauses and venue selection clauses. Forum is a place of jurisdiction, in contrast to venue, which is the place where the case will be heard and “from which the jury will be selected.”
Here, County does not challenge the holding in Alexander or ask that we reconsider the continuing validity of General Acceptance. Instead, County seeks to limit the holdings in those cases, arguing that General Acceptance and Alexander establish only that a venue selection clause is void if it fixes venue in a county other than one in which venue is proper under the general venue statute (§ 395). According to County, nothing in General Acceptance or Alexander suggests that parties may not stipulate in advance as to which of several statutorily permissible venues will be the place for any subsequent litigation. Alexander assertedly made this clear when it concluded that “[s]ince the venue statutes themselves declare the public policy of this state with respect to the proper court for an action, agreements fixing venue in some location other than that allowed by statute are a violation of that policy.” (Alexander, supra, 114 Cal.App.4th at p. 731.) Because Contra Costa County is one of several counties in which an action founded upon its contract with Arntz may be brought,
We need not decide whether this qualification of General Acceptance has any validity with respect to an action between private parties in which proper venue is governed solely by section 395.
The purpose of this provision “is to guard against local bias that may exist in favor of litigants within a county as against those from without the county, and to ensure that both parties have a trial on neutral territory.” (Kennedy/Jenks Consultants, Inc., supra, 80 Cal.App.4th at pp. 953-954.) There is no need for a party seeking transfer to demonstrate actual prejudice because the statute “is designed to obviate the appearance of prejudice as well as actual prejudice or bias.” (City of Alameda v. Superior Court (1974)
Section 394 has been described as an exception to the general venue rules of section 395. (County of Orange v. Superior Court (1999)
Whether section 394 is characterized as an exception to general venue rules or as a removal statute, it is plainly part of the “statutory venue scheme.” (See Alexander, supra,
County argues that section 394 may be waived, citing several cases in which the removal right granted by section 394 was held to have been waived by failing to seek a timely transfer after the action had been filed. (See Newman v. County of Sonoma (1961)
Citing federal case law, County points out that the right to remove a case from state court to federal court may be waived by express agreement. (See Pelleport Investors v. Budco Quality Theatres (9th Cir. 1984)
County argues that another sentence deep within subdivision (a) of section 394 contemplates that the parties may stipulate in writing to the place of trial. That sentence reads: “In that action or proceeding, the parties thereto may, by stipulation in writing, or made in open court, and entered in the minutes, agree upon any county, or city and county, for the place of trial thereof.” (Ibid.) In context, this provision of section 394 appears to relate solely to the immediately preceding sentence, which establishes proper venue for personal injury actions against local agencies for injuries occurring within the county. Moreover, even if the sentence were interpreted to apply to all actions described in section 394, it would not validate the clause in County’s contract. The sentence merely permits the parties to enter a written stipulation “[i]n that action.” It does not authorize contractual venue selection clauses entered before an action has been filed.
To support its conclusion that the benefits of section 394 may be waived contractually, the trial court relied in part on subdivision (c) of section 395, which provides explicitly that a contract waiving the venue requirements of section 395, subdivision (b), is void and unenforceable. There is no similar explicit provision in section 394, so that under the maxim expressio unius est exclusio alterius—the expression of one thing is the exclusion of another
Permitting a county to extract
This principle has been invoked in several cases invalidating contractual provisions relating to the arbitration of disputes that contravened statutory rights. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000)
The public importance of ensuring the complete impartiality, and public confidence in the impartiality, of the courts is hardly less compelling than is true for the system of arbitration. “The protective purpose of section 394 relates to the prejudice an ‘outsider’ might suffer because [county] taxpayers may fear their monetary interests are linked to the city, county, or city agency.” (Nguyen v. Superior Court (1996)
Because we conclude that the provision in the construction contract between Arntz and County purportedly waiving the benefits of section 394 is void, and because section 394 affords Arntz the right to transfer the action to a neutral county, we need not address whether transfer was required by section 397.
Disposition
Let a peremptory writ of mandate issue directing respondent court to vacate its order denying Arntz’s motion for change of venue and to enter a new and different order granting Arntz’s motion and directing transfer of the action to a neutral county pursuant to Code of Civil Procedure section 394. The stay previously issued by this court shall be dissolved upon the issuance of the remittitur. Petitioner shall recover its costs in this writ proceeding.
McGuiness, P. J., concurred.
Notes
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
Section 394, subdivision (a) provides in relevant part as follows: “Except for [certain actions initiated by a local child support agency under the Family Code], any action or proceeding brought by a county, city and county, city, or local agency within a certain county, or city and county, against a resident of another county, city and county, or city, or a corporation doing business in the latter, shall be, on motion of either party, transferred for trial to a county, or city and county, other than the plaintiff, if the plaintiff is a county, or city and county, and other than that in which the plaintiff is situated, if the plaintiff is a city, or a local agency, and other than that in which the defendant resides, or is doing business, or is situated.” The subdivision goes on to provide, inter alia, “When the action or proceeding is one in which a jury is not of right, or in case a jury is waived, then in lieu of transferring the cause, the court in the original county may request the chairperson of the Judicial Council to assign a disinterested judge from a neutral county to hear that cause and all proceedings in connection therewith.”
Other jurisdictions in which agreements fixing venue are void for public policy reasons have taken the same approach as the Alexander court in distinguishing between forum selection clauses and venue selection clauses. (See Regency Mall Associates v. G.W.’s Restaurant, Inc. (1994)
In an action arising out of a contract, section 395, subdivision (a) provides: “Except as otherwise provided by law and subject to the power of the court to transfer actions or proceedings as provided in this title,” venue is proper in (1) the county where the contract is to be performed; (2) the county where the parties entered into the contract; or (3) the county where any defendant resides at the commencement of the action. There is no disagreement that Contra Costa County is the county in which this contract was to be performed and thus was a proper county in which to file this action.
The contention that venue selection clauses are valid if they designate a county authorized by section 395 would seem to be at odds with the decision in Alexander, since the Court of Appeal determined that the contractual venue selection provision in that case was void without determining whether Santa Clara County, where the action was filed, was a proper county for the action under section 395. (Alexander, supra,
Alternatively, in cases in which there is no right to a jury or a jury is waived, the trial court may request that the chairperson of Judicial Council assign a disinterested judge from a neutral county to hear the cause. (§ 394, subd. (a).)
See Black’s Law Dictionary (7th ed. 1999) page 602, column 1.
Arntz contends that its construction contract with County is a contract of adhesion. We need not and do not address that contention. Nonetheless, it is undoubtedly safe to assume that if the waiver provision in this case were held valid, similar provisions would be inserted in many other county and local agency contracts.
Concurrence Opinion
I concur. I write separately only to briefly note that the trial court’s attempt to uphold the parties’ freedom of contract was not unreasonable. Ordinarily, voluntary contractual waivers should be enforced by the courts. However, in this case the public policy underlying Code of Civil Procedure section 394—to avoid even the appearance of prejudice in the venue for litigation initiated by a local government—must take precedence over the parties’ right to negotiate a convenient and efficient venue for litigating their contract disputes. Setting trial in a county which is itself a plaintiff, and from which the jury and the trial judge will be selected, is a scenario that might “bring the administration of justice into disrepute.” This was the concern that led our Supreme Court to hold contractual venue selection clauses void. (General Acceptance Corp. v. Robinson (1929)
