Judge: Anne Richardson, Case: 23STCV00006, Date: 2023-12-18 Tentative Ruling

DEPARTMENT 40 - JUDGE ANNE RICHARDSON - LAW AND MOTION RULINGS
The Court issues tentative rulings on certain motions.The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) email Dept 40 by 8:30 a.m. on the day of the hearing (smcdept40@lacourt.org) with a copy to the other party(ies) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no email is necessary and all parties should appear at the hearing in person or by Court Call. 

Case Number: 23STCV00006    Hearing Date: February 14, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Pleadings

Plaintiff Stephen Newland sues Defendants Tyler Gary Gallagher, Leah Ann Donoso, Christian Howard (collectively, Individual Defendants), Regal Assets, LLC (Regal Assets; with Individual Defendants, Regal Assets Defendants), Doe 1 Brink’s Incorporated (Brink’s Inc.) and Does 2-10 pursuant to a January 8, 2024 Second Amended Complaint (SAC) alleging claims of: (1) Fraud (False Promise), (2) Fraud (Intentional Misrepresentation), (3) Fraud (Concealment), and (6) Breach of Contract against Defendants Regal Assets, Gallagher, Donoso, Howard, and Does 2-10; and (4) Breach of Fiduciary Duty, (5) Conversion, and (7) Breach of Contract (Third-Party Beneficiary) against all Defendants.

The claims arise from allegations that between August 24 and 25, 2018, Plaintiff Newland was enticed to purchase silver and gold coins from Regal Assets—a suspended California LLC that operated as the alter ego of Defendants Gallagher, Donoso, and Howard, alleged as co-conspirators, as well as agents of Regal Assets. Through Defendant Donoso, Regal Assets represented that it would secure Newland’s coins with Brink’s Inc. pursuant to an agreement through which Brink’s Inc. would store precious metals purchased from Regal Assets (the Precious Metal Storage Agreement or PMSA). Plaintiff Newland alleges having purchased the coins based on Howard’s representations as to the coins’ characteristics and based on the alleged agreement with Brink’s Inc. Plaintiff Newland paid $15,007.67 for the coins, which were allegedly stored with Brink’s Inc. Regal Assets persistently failed to turn over account verification reports, which Plaintiff Newland requested on various occasions. Later, Plaintiff Newland requested that the coins be transferred from the possession of Brink’s Inc. to Newland, making his requests directly to Brink’s Inc. and to Regal Assets’ agents Donoso and Howard. In October 2022, Brink’s Inc. finally responded to Plaintiff Newland, asserting that it had transferred the silver and gold coins to “Defendants ‘several months ago.’” The SAC implies that Plaintiff Newland has not received his silver and gold coins from Defendants.

The SAC attached copies of (1) an email from Brink’s Inc. showing it had possession of Newland’s coins on October 22, 2018, (2) an October 22, 2018 report by Brink’s Inc., (3) an October 26, 2018 email from Defendant Donoso, (4) a copy of the PMSA, and (5) a written statement from Brink’s Inc. regarding Regal Assets’ relationship with Brink’s Inc., the secure vault services provided by Brink’s Inc., and the benefits of Regal Assets’ relationship with Brink’s Inc.

Motion for Dismissal or Stay – Forum Non Conveniens

On October 30, 2023, Defendant Brink’s Inc. filed a motion to dismiss or stay this action based on the doctrine of forum non conveniens. The motion seeks dismissal of this action or a stay of this action subject to dismissals upon Plaintiff Newland’s filing of a complaint in Utah.

On January 31, 2024, Plaintiff Newland opposed the motion to dismiss or stay.

On February 6, 2024, Defendant Brink’s Inc. replied to the opposition.

Motion to Compel Further Production

On November 14, 2023, Plaintiff filed a motion to compel further production from Defendant Brink’s Inc. and for sanctions.

On January 31, 2024, Defendant Brink’s Inc. opposed the motion to compel further.

On February 9, 2024, Plaintiff filed an Amended Notice of Motion noting that the hearing had been continued to May 13, 2024 to give the parties time to complete their meet and confer. Accordingly, the Motion to Compel is continued to May 13, 2024 at 8:30 a.m.

Request for Judicial Notice

Per Plaintiff Newland’s request, the Court takes judicial notice of State of California, Secretary of State filings for Defendant Brink’s Inc.. (Forum Non Conveniens (FNC) Opp’n, RJN, Exs. A-B; see Evid. Code, §§ 452, subd. (c), 453, subds. (a)-(b).)

Per Plaintiff Newland’s request, the Court takes judicial notice of the Complaint filed in federal court on September 27, 2023 by the Commodity Futures Trading Commission and the California Department of Financial Protection & Innovation against Defendants Regal Assets, LLC, Tyler Gallagher and Leah Donoso: Commodity Futures Trading Commission and California Department of Financial Protection & Innovation v. Regal Assets LLC, Tyler G. Gallagher, and Leah Donoso (Civil Action No. 2:23-cv-8078). (FNC Opp’n, RJN, Ex. C; Compel Further Mot., RJN, Ex. A; see Evid. Code, §§ 452, subd. (d), 453, subds. (a)-(b).)

Motion to Dismiss or Stay – Forum Non Conveniens

Legal Standard

“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.” (Stangvik v. Shiley Inc. (1991) 54 Cal.3d 744, 751.)

The doctrine of forum non conveniens is codified in Code of Civil Procedure section 410.30. (Animal Film, LLC v. D.E.J. Prods., Inc. (2011) 193 Cal.App.4th 466, 471.) Code of Civil Procedure section 410.30, subdivision (a) provides that “[w]hen 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.” (Code Civ. Proc., § 410.30, subd. (a).) A defendant may move to stay or dismiss an action on grounds of inconvenient forum. (Code Civ. Proc., § 418.10, subd. (a)(2).)

“In applying the traditional forum non conveniens analysis, the trial court must engage in a two-step process, on which the defendant bears the burden of proof. [Citation.] In the first step, the court must determine whether a suitable alternative forum exists. [Citation.] If the court finds that a suitable alternative forum exists, it must then balance the private interests of the litigants and the interests of the public in retaining the action in California. [Citation.]” (Animal Film, supra, 193 Cal.App.4th at p. 472.)

The party seeking a dismissal due to an inconvenient forum bears the burden of proof. (National Football League v. Fireman’s Fund Ins. Co. (2013) 216 Cal.App.4th 902, 926.)

[A]n action brought by a California resident specifically may not be dismissed on grounds of forum non conveniens except in extraordinary circumstances. (Century Indemnity Co. v. Bank of America (1997) 58 Cal.App.4th 408, 411.)

The trial court has more discretion to grant a stay on a forum non conveniens motion because California would retain jurisdiction. (Id. at p. 412.) The decision to grant a forum non conveniens motion is discretionary and is accorded substantial deference on appeal. (Id. at p. 411.)

Order Granting Dismissal or Stay Based on Forum Non Conveniens: DENIED.

Defendant Brink’s Inc. moves for an order dismissing or staying this action subject to dismissal upon Plaintiff Newland filing an action in Utah based on Utah being a suitable alternative forum and the balancing of interests favoring dismissal.

I.

Whether a Suitable Forum Exists Elsewhere

A suitable alternative forum exists when the “… defendants are subject to the court’s jurisdiction and the cause of action is not barred by the statute of limitations.” (Guimei v. General Electric Co. (2009) 172 Cal.App.4th 689, 694.) “‘[A] forum is suitable where an action “can be brought,” although not necessarily won.’ [Citations.]” (Animal Film, supra, 193 Cal.App.4th at p. 472.) The existence of a suitable alternative forum is a legal question. (Ibid.)

In its motion, Brink’s Inc. argues that Utah is a suitable forum for this action. Brink’s Inc. points to the fact that the FAC alleged Plaintiff Newland to be a resident of Ohio and Brink’s Inc. is a Delaware corporation operating out of Utah and that only Regal Assets is a California limited liability company, with the Individual Defendants being California residents. Brink’s Inc. then argues that the relationship underlying this action (the PMSA executed by Brink’s Inc. and Regal Assets) and the alleged events (transfer of the coins from Brink’s Inc. secure vault facility in Utah and communications with Brink’s Inc. employees, who live and work in Utah) all center around Utah. Brink’s Inc. summarizes its position by arguing that Utah is a suitable forum because Brink’s Inc. operates its secure vault facility out of Utah, the coins were stored in Utah, transactions with the Regal Assets Defendants were for the purpose of storing coins in Utah, and Utah law allows civil actions for the alleged causes of action, citing specific Utah Code sections in support. (FNC Mot., pp. 3-6, citing in part FNC Mot., Housley Decl., ¶¶ 3-5, FAC, ¶ 34, and Utah Code, §§ 76-6-401, 70A-3-307, 70A-7a-101, et seq.)

In opposition, Plaintiff argues that Brink’s Inc. has failed to carry its burden addressing whether Brink’s Inc. is subject to jurisdiction in Utah, whether the statute of limitations in Utah will bar Plaintiff’s claims, whether Brink’s Inc. stipulates to tolling of the statute of limitations, or whether the Regal Assets Defendants are subject to jurisdiction in Utah, showing a lack of a suitable alternative forum. (FNC Opp’n, pp. 2-4.)

In reply, Defendant Brink’s Inc. reiterates its arguments from the moving papers as to suitable alternative forum. Brink’s Inc. also responsively adds that Utah has a long-arm statute that would clearly apply to the Regal Assets Defendants, who transacted to store precious metals in Utah through the PMSA and Regal Assets, permitting specific jurisdiction. Last, Brink’s Inc. argues that Utah has an interest in a suit involving individuals who transacted business within its borders and the secure vault at issue is located in Utah and must conform with Utah law. (FNC Reply, pp. 3-5.)

The Court finds in favor of Defendant Brink’s Inc. on this issue.

It is readily evident from the pleadings and Defendant Brink’s Inc. evidence that a substantial number of transactions in this lawsuit occurred in Utah, if only because Brink’s  secure vault and employees operate out of Utah and because the coins were stored there and were released from Utah. (See SAC, ¶¶ 11-34 [series of transactions involving deposit of coins in and release from Brink’s secure vault facility in Utah]; FNC Mot., Housley Decl., ¶¶ 1-5.) Moreover, Defendant Brink’s Inc. cites to Utah statutes permitting long-arm jurisdiction over the Regal Assets Defendants (cited as Utah Code, § 78B-3-205) and permitting the claims advanced in this action (cited as Utah Code, §§ 76-6-401, 70A-3-307, 70A-7a-101, et seq). Brink’s Inc. is essentially arguing that it is subject to jurisdiction in Utah based on its multiple contacts with that State. These facts show a suitable alternative forum because it is another forum where this action may be brought. (See Opp’n, p. 2 [Introduction arguing PMSA contains no forum selection clause]; see also SAC, Ex. D [PMSA]; Animal Film, supra, 193 Cal.App.4th at p. 472.)

II.

Whether Balancing of Interests Favors Dismissal or Stay

The second part of the analysis is the weighing and balancing of private and public factors. (National Football League, supra, 216 Cal.App.4th at p. 918.) “The private interest factors are those that make trial and the enforceability of the ensuring 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 facts include avoidance of overburdening local courts with congested calendars, protecting the interest of potential jurors so that they are not called upon to decide cases in which the local community has little concern, and the weighing of competing interests of California and the alternative jurisdiction in the litigation.” (Morris v. AGFA Corp. (2006) 144 Cal.App.4th 1452, 1463-1464.) Additionally, in determining whether to issue a stay, the court considers whether the rights of the parties can best be determined by the court of the other jurisdiction because of the nature of the subject matter [and] the stage to which the proceedings in the other court have already advanced.” (Century Indemnity Co. v. Bank of America (1997) 58 Cal.App.4th 408, 412.)

In its motion, Defendant Brink’s Inc. argues that the private and public interests support dismissal. Brink’s Inc. points to the coins being stored in Utah, meaning California had little connection to the coins. Brink’s also points out that it stored the coins and always operated out of Utah during the transactions alleged in the SAC, with Brink’s witnesses at trial most likely consisting of the Brink’s Inc. employees that work at the Salt Lake City facility. Brink’s Inc. notes that Plaintiff does not reside in California and last argues that it does not consent to personal jurisdiction in California, particularly where requiring it to defend itself in California courts would be burdensome, prejudicial, and expensive. Brink’s Inc. also argues that dismissal of this action would avoid overburdening California courts (particularly where multiple parties are involved), protect potential jurors from deciding cases in which the community has little concern, and is proper where neither the accident nor most of the parties have any connection to California. Last, Brink’s Inc. cites to Rinauro v. Honda Motor Co. (1995) 31 Cal.App.4th 506, 510 to compare this case to an affirmed dismissal based on inconvenient forum, likening the out-of-state parties, an alleged out-of-state wrongdoing, and burden to California courts, taxpayers, and jurors. (FNC Mot., pp. 7-8.)

In opposition, Plaintiff Newland argues that deference should be shown for the plaintiff’s choice of forum. Plaintiff also argues that while the coins were stored in Utah and some witnesses will be located there, substantial justice can be in essence effected by maintaining the action in California and allowing Brink’s Inc. to be deposed from Utah. Plaintiff adds that California had substantial connections to this action. These connections include: Brink’s Inc. decades-long operations in California; the Regal Assets Defendants’ connection to and activity in Los Angeles County and the probable depositions of Regal Assets’ employees here; the residence in Los Angeles County of Defendant Howard; the existence of a State of California lawsuit against Regal Assets and two of its principals for misappropriating more than $21 million of the funds paid by more than 120 customers; and the fact that many of the events related to this action occurred in Los Angeles, where Defendant Regal Assets was operating and committed fraud on Plaintiff Newland. (FNC Opp’n, pp. 4-6, citing in part FNC Opp’n, RJN, Exs. A-B [State of California, Secretary of State filings for Brink’s Inc. Incorporated], C [complaint in federal action].)

In reply, Defendant Brink’s Inc. repeats the arguments from its moving papers. (Reply, pp. 5-6.)

The Court finds in favor of Plaintiff Newland.

The Court initially notes that Plaintiff’s choice of forum, even as a nonresident, is entitled to great weight. (See Morris v. AGFA Corp. (2006) 144 Cal.App.4th 1452 [“A plaintiff’s choice of forum ‘is entitled to great weight even though the plaintiff is a nonresident[]’ [citations[],] [b]ut a plaintiff’s choice of forum can be disturbed if the balance is strongly in favor of the defendant[] [citations[]]”].)

Next, the Court strongly disagrees with the position that this action does not involve interests concerning California courts and juries. This action involves allegations of fraud perpetrated by California residents through a California limited liability company, through which conduct these California persons and entity allegedly defrauded a nonresident of his money. Indeed, California has sued Defendants Regal Assets, Gallagher, and Denoso for allegedly misappropriating more than $21 million of funds provided by 120 customers in a scheme like the one alleged by Plaintiff Newland. (See FNC Mot., RJN, Ex. C; Julian Volunteer Fire Co. Assn. v. Julian-Cuyamaca Fire Protection Dist. (2021) 62 Cal.App.5th 583, 600 [judicial notice may be taken as to existence of document and legal effects deriving therefrom].)

Moreover, the Court notes that especially in the post-COVID-19 pandemic world, discovery rules in California can accommodate depositions of out-of-state parties, whether in person or remote. Brink’s Inc. can submit to deposition in Utah or remotely, and so present its employees for deposition. Brink’s Inc. can also direct its employees to collect any evidence that its counsel may need to produce in this action. This undercuts some of the prejudice that Brink’s Inc. would sustain in relation to defending this action in California.

Last, the Court notes that while Utah undoubtedly has an interest in this action (see Discussion at § I supra), so does California. To the extent that Brink’s Inc. contests jurisdiction based on insufficient contacts with California, a motion to quash is the proper procedural vehicle for dismissal pursuant to that theory of relief.

III. Forum Non Conveniens Conclusion

Because the balancing of interests disfavors dismissal or stay, Defendant Brink’s Inc. motion is DENIED.

Conclusion

I.

Defendant Brink’s Incorporated’s Motion to Dismiss or Stay Action on Ground of Inconvenient Forum is DENIED.

II.

Plaintiff Stephen Newland’s Motion to Compel Defendant Brink’s Incorporated to Serve Further Responses to Plaintiff’s Request for Production (Set No. 1) Without Boilerplate Objections, to Serve a Privilege Log and to Produce All Responsive Writings and ESI and Provisional Request for $4,200.00 in Monetary Sanctions is CONTINUED to May 13, 2024 at 8:30 a.m. at the moving party’s request.