Judge Ashfaq G. Chowdhury, Case Number: 23GDCV02072, Date: 2024-01-05 Tentative Ruling

Judge: Ashfaq G. Chowdhury, Case: 23GDCV02072, Date: 2024-01-05 Tentative Ruling

Case Number: 23GDCV02072 Hearing Date: January 5, 2024 Dept: E

Hearing Date:¿01/05/2024 – 8:30am
Case No. 23GDCV02072
Trial Date: UNSET
Case Name: NORTH AMERICAN TEXTILE CO., LLC, a California Limited Liability Company v. HMS MFG CO., a Michigan corporation; and DOES 1 through 25, inclusive

TENTATIVE RULING ON DEFENDANT’S MOTION TO QUASH SERVICE AND STAY OR DISMISS FOR LACK OF JURISDICTION OR, ALTERNATIVELY, INCONVENIENT FORUM

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Moving Party:¿ Specially Appearing Defendant, HMS Mfg. Co.
Responding Party: Plaintiff, North American Textile Co., LLC

RELIEF REQUESTED¿¿¿
Specially Appearing Defendant, HMS Mfg. Co. moves this Court for an order quashing the summons issued in this case on the grounds that this Court is not the proper jurisdiction for this action because the purchase orders that are the basis of the contract between the parties provide that Michigan courts and Michigan law are the proper forum for the litigation of any issues that arise between the parties regarding the sale of Plaintiff’s products, and on the grounds of inconvenient forum, in that Defendant will rely on witnesses that live and reside in States other than California to defend itself in this matter, while Plaintiff both contracted with a Michigan corporation, and also has offices in multiple States in this Country, as well as facilities in other countries.

This Motion is filed pursuant to Code of Civil Procedure Section 418.10. The Motion will be based on this Notice of Motion, and on the Memorandum of Points and Authorities and the Declaration of Janet Sofy filed herewith, together with such evidence as presented therein, upon all of the papers and records on file in this action, and upon such other and further oral and documentary evidence as may be presented at the hearing. And as may be raised in the Reply to any Opposition to this Motion.

Procedural

16/21 Day Lapse (CCP §12c and §1005(b): Ok
Proof of Service Timely Filed (CRC, Rule 3.1300): Ok
Correct Address (CCP §1013, §1013a): Ok

Moving Papers: Notice; Memo; Sofy Declaration;

Opposition Papers: Opposition; Arslanian Declaration;

Reply: Substitution of Attorney; Reply; Notice of Order to be admitted pro hac vice

BACKGROUND
Plaintiff, North American Textile Co., LLC, filed a Complaint on 09/29/2023 alleging four causes of action for: (1) Breach of Contract, (2) Account Stated, (3)Open Book Account, and (4) Quantum Meruit.

Plaintiff alleges this action arises from Defendant entering into written and oral agreements with Plaintiff, wherein Defendant agreed to purchase RFID stickers from Plaintiff. (Compl. ¶5.) Plaintiff alleges that per the agreement, Defendant would place orders with Plaintiff after which Plaintiff would design, manufacture, and deliver the final products to Defendant. (Id.) Plaintiff alleges that Defendant failed and refused to perform in accordance with the terms and conditions of the agreements and that there is presently due and owing from Defendant to Plaintiff the sum of $290,835.00 plus interest. (Compl ¶12.)

ANALYSIS

Timeliness

CCP § 418.10(a)(1) provides: “A defendant, on or before the last day of his or her time to plead or within any further time that the court may for good cause allow, may serve and file a notice of motion . . . [t]o quash service of summons on the ground of lack of jurisdiction of the court over him or her.” (Code Civ. Proc., § 418.10(a)(1).)

Defendant states that the instant Complaint was mailed to Defendant on October 6, 2023 from California and that because the service was made by mail to an out-of-state entity, pursuant to CCP §415.40, the filing of this motion is made before the last day of its time to plead.

The Court notes that Defendant’s explanation as to how the instant motion is timely is unclear because Defendant doesn’t explicitly state or explain how the instant motion is timely.

CCP §415.40 states, “A summons may be served on a person outside this state in any manner provided by this article or by sending a copy of the summons and of the complaint to the person to be served by first-class mail, postage prepaid, requiring a return receipt. Service of a summons by this form of mail is deemed complete on the 10th day after such mailing.”

Since Defendant was served by mail at an address outside California, presumably Defendant is arguing that service of Defendant was deemed complete on October 16, 2023.

“ Except as otherwise required by statute, a summons shall be directed to the defendant, signed by the clerk and issued under the seal of the court in which the action is pending, and it shall contain: (3) A direction that the defendant file with the court a written pleading in response to the complaint within 30 days after summons is served on him or her.” (CCP §412.20(a)(3).)

The instant motion appears to have been served on November 13, 2023, therefore, to this Court this motion appears untimely because it was not filed until November 17, 2023. It appears that if service is deemed complete on October 16, 2023, then the 30^th day to respond would be November 14, 2023, and 412.20(a)(3) mentions the date of filing, not the date of serving.

However, since the Opposition does not assert any arguments that this motion is untimely, the Court finds the instant motion timely.

Forum Selection Clause
“The procedure for enforcing a forum selection clause is a motion to stay or dismiss for forum non conveniens.” (Olinick v. BMG Entertainment (2006) 138 Cal.App.4th 1286, 1294 citing Berg v. MTC Electronic Technologies (1998) 61 Cal.App.4th 349, 358.)

Defendant argues that quashing the summons in this case is appropriate on the grounds that this Court is not the proper jurisdiction for this action because the Purchase Orders that are the basis of the contract between the parties provide that Michigan courts and Michigan law are the proper forum for the litigation of any issues that arise between the parties regarding the sale of Plaintiff’s products, and on the grounds of inconvenient forum, in that Defendant will rely on witnesses that live and reside in States other than California to defend itself in this matter, while Plaintiff both contracted with a Michigan corporation, and also has offices in multiple States in this Country, as well as facilities in other countries.

As explained below, the Court does not find Defendant’s argument convincing.

Defendant cites Paragraph 15 of its Purchase Orders which provides that resultant litigation would take place in Michigan and not in California. Defendant argues that the Purchase Orders attached as Exhibit A in the Sofy Declaration are the Purchase Orders that are the contracts between the parties to this action. Further, Defendant cites Olnick v. BMG Entertainment (2006) 138 Cal.App.4th 1286, Berg v. MTC Electronic Technologies (1998) 61 Cal.App.4th 349, and Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459 to argue that forum-selection clauses are enforceable, and that since the parties plainly and in clear language chose Michigan as the proper forum for adjudication of the disputes arising from the contract, the instant forum selection clause if enforceable.

The Opposition points out that the Purchase Orders that Defendant attached in moving Exhibit A of the Sofy Declaration are not signed by Plaintiff.

Further, in Opposition, Plaintiff argues that it is not the Purchase Orders that form the contract(s) in which this lawsuit it based, but it is the Pro Forma Invoices/Order Acknowledgements which were the operative agreements in the instant lawsuit.

In Opposition, in Exhibit A of the Arslanaian Declaration, Plaintiff attaches documents that have the typed words “Proforma Invoice” crossed out with a blue pen and “Order Acknowledgement,” written by pen in blue above the typed words “Proforma Invoice.” [Hereinafter referred to as Order Acknowledgements.]

In the Arslanian Declaration, Plaintiff argues that HMS acknowledged the orders and by its authorized agents signature, it expressly agreed to the terms and conditions of NATCO. (Arslanaian Decl. ¶6.)

Plaintiff argues that by Defendant signing the Order Acknowledgments, Defendant expressly accepted the terms and conditions of Plaintiff’s agreements which provide for a mandatory forum selection clause in California, thus Plaintiff argues that Defendant expressly agreed to the jurisdiction of California courts.

Here, the Court finds Plaintiff’s argument convincing, but it also finds it necessary to further clarify a few issues.

The Court notes that in Plaintiff’s Complaint in ¶5, Plaintiff alleges that it entered into written and oral agreements with Defendant. While ¶5 of the Complaint refers to Plaintiff’s invoices, Plaintiff does not make it entirely clear in its Complaint what the written contract(s) or oral contract(s) are that provide a basis for its breach of contract claims. It appears that Plaintiff is basing the breach of contract claims on the invoices that are attached to its Complaint; however, it is unclear. As Defendant did not demur, these issues are not before the Court at the moment.

The reason the Court makes this clarification is because in Opposition, Plaintiff appears to be arguing that the Order Acknowledgements are the basis for its breach-of-contract claims. The Order Acknowledgements in Opposition appear to be similar to the Invoices in the Complaint, except the Order Acknowledgments appear to have signatures. Further, the Court notes that it is not stating what is or is not the contract(s) in this lawsuit. The Court is noting this because the basis for its ruling to deny this motion is that the Plaintiff at the very least attached signed Order Acknowledgements, and Defendant in Reply did not argue that it did not sign the signed Order Acknowledgements that Plaintiff submitted.

Beneath the signatures by the Defendant in the Order Acknowledgements, the following language can be found:

Purchaser is responsible for inspecting the goods within ten (10) calendar days of delivery to assure that specifications have been met prior to utilizing and/or incorporating NATCO products for its own purposes “Delivery” shall be satisfied in accordance with Paragraph 8 of the complete terms and conditions of this agreement. If NATCO products fail to meet specifications, Purchaser may return the non-conforming products for replacement or credit within 10 calendar days of delivery, only with written approval by an officer of NATCO. In no event will NATCO be responsible for incidental, consequential, or other damages, including but not limited to, lost profits, goodwill, additional freight or any other compensatory damages and attorney’s fees other than credit or replacement.

DISCLAIMER: THERE ARE NO WARRANTIES THAT EXTEND BEYOND THE DESCRIPTION OF THE GOODS PROVIDED ON THE FACE OF THIS CONTRACT. SELLER DISCLAIMS ANY WARRANTY OF ANY OTHER KIND, INCLUDING ANY WARRANTY THAT THE GOODS ARE MERCHANTIBLE OR FIT FOR A PARTICULAR PURPOSE. Replacement of the defective goods constitutes NATCO’s sole liability and the exclusive remedy for any claim relating to the goods. NATCO will not be liable for incidental or consequential damages even if NATCO’s attempt to repair the defect fails but In such a case the Purchaser will be entitled to a refund of monies paid to NATCO under this contract.

In no event shall NATCO’s total liability with respect to any contract exceed the purchase price of the products upon which liability is based. To view the Limited Liability clause of this agreement in its entirety refer to Paragraph 15 of the complete terms and conditions. To view the Limited Warranty clause of this agreement in its entirety, refer to Paragraph 20 of the complete terms and conditions.

To view the complete terms and conditions of this agreement visit www.natcoglobal.com/legal.

(Arslanian Decl. Ex. A.)

While the signed Order Acknowledgements do not have the forum selection clauses on the signed Order Acknowledgments themselves, the Order Acknowledgments cite to the website that allegedly has the complete terms and conditions of the agreement.

Plaintiff points to ¶1 of NATCO Terms and Conditions that can be found on the website which states:

1. PURCHASER's Acceptance of Agreement. PURCHASER has read and understands the terms of this sales agreement (the "Agreement") and, by ordering goods from North American Textile Company, LLC, a California limited liability company (hereinafter referred to as "NATCO"), PURCHASER accepts all of the terms and conditions of this Agreement, which shall apply to all purchases of goods by PURCHASER from NATCO. Any additional terms not contained herein shall not be considered as part of this Agreement, unless expressly assented to in writing by an officer of NATCO or set forth on the ProForma Invoice or an official document prepared by NATCO.

(Arslanian Decl. Ex. B, ¶1.)

Further, Plaintiff points to ¶18 of NATCO Terms and Conditions that can be found on the website which states:

18. Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of California (including without limitation Division 2 of the California Uniform Commercial Code), without regard to its conflicts of law principles. In the event of any dispute, claim or controversy arising out of or otherwise relating to this Agreement or regarding the interpretation or enforcement hereof, the matter shall be resolved exclusively by the State Courts of the State of California in Los Angeles County, California, or the U.S. District Courts for the Central District of California. PURCHASER hereby consents to the jurisdiction of the State of California with respect to all claims, disputes, contracts, interpretations, or remedies of every kind and actions arising out of or relating to this Agreement.

(Id.)

Further, Plaintiff refers to a portion of ¶19 which states in relevant part, “the terms of this agreement shall control regardless of whether or when PURCHASER has submitted its own offer, counteroffer, contract, confirmation, acknowledgment or other writing.” (Id.)

As stated in Olinick:

“Although not even a ‘mandatory’ forum selection clause can completely eliminate a court's discretion to make appropriate rulings regarding choice of forum, the modern trend is to enforce mandatory forum selection clauses unless they are unfair or unreasonable. [Citations.] ... [¶] If there is no mandatory forum selection clause, a forum non conveniens motion ‘requires the weighing of a gamut of factors of public and private convenience....’ [Citation.] However if there is a mandatory forum selection clause, the test is simply whether application of the clause is unfair or unreasonable, and the clause is usually given effect. Claims that the previously chosen forum is unfair or inconvenient are generally rejected. [Citation.] A court will usually honor a mandatory forum selection clause without extensive analysis of factors relating to convenience. [Citation.] ‘ “Mere inconvenience or additional expense is not the test of unreasonableness ...” ’ of a mandatory forum selection clause. [Citation.]''

(Olnick v. BMG Entertainment (2006) 138 Cal.App.4th 1286, 1294.)

Here, the Court plans to DENY Defendant’s motion.

Plaintiff appears to point to mandatory forum-selection clauses that Defendant agreed to by signing the Order Acknowledgments. While Defendant argues that the Purchase Orders contained the mandatory forum-selection clauses, Defendant’s Purchase Orders were not signed. Therefore, the Court is not saying what is or is not the contract(s) at issue in the case, but at the very least, the Court can tell that Defendant’s Purchase Orders with forum-selection clauses are not signed, whereas the Order Acknowledgments submitted by Plaintiff are signed by Defendant.

In Reply, Defendant argues that Plaintiff’s forum-selection clause says nothing about California or jurisdiction of disputes; however, that is incorrect as Plaintiff pointed the Court to ¶18 of Plaintiff’s Terms and Conditions.

Further, although the Reply attempts to argue that the forum-selection clause was hidden because it was not on the actual signed document and instead was instead found on a website that was cited on the signed document, the Court does not find this argument persuasive. First, the Defendant cites no appropriate authority that this cannot be done by Plaintiff. In Reply, Defendant cites Szetela v. Discover Bank (2002) 97 Cal.App.4th 1094 and appears to be arguing that the forum-selection clause was hidden, unreferenced, and in contradiction to the Purchase Orders. However, this argument is unavailing because the Purchase Orders are not signed and the citation to Szetela is inapposite. Szetela pertains to an arbitration clause, not a forum-selection clause. Further, even if Szetela was on point, Defendant did not address both substantive and procedural unconscionability.

Inconvenient Forum

Although moving and reply papers also argue that California is a legally inconvenient forum for a myriad of reasons, the Court does not find these arguments availing.

“However if there is a mandatory forum selection clause, the test is simply whether application of the clause is unfair or unreasonable, and the clause is usually given effect. Claims that the previously chosen forum is unfair or inconvenient are generally rejected. [Citation.] A court will usually honor a mandatory forum selection clause without extensive analysis of factors relating to convenience. [Citation.] ‘ “Mere inconvenience or additional expense is not the test of unreasonableness ...” ’ of a mandatory forum selection clause. [Citation.]''” (Olnick v. BMG Entertainment (2006) 138 Cal.App.4th 1286, 1294.)

Since Defendant agreed to a mandatory forum selection clause, and since the Court does not find it unfair or unreasonable, Defendant’s motion is DENIED.

TENTATIVE RULING
Defendant’s motion to quash service of summons on the grounds that jurisdiction is not proper in California but instead proper in Michigan because of Defendant’s forum selection clause is DENIED.

The agreements submitted by Defendant were not signed. Plaintiff submitted signed Order Acknowledgements that were signed by Defendant that contained a forum-selection clause. Although the forum-selection clause was not directly on the signed document, the signed document referred to the website where the complete terms and conditions of the agreement could be found, which contained a forum-selection clause.

Further, Defendant cited not authority which stated that Plaintiff’s forum-selection clauses were legally inappropriate. Further, the Reply did not argue that Defendant did not sign Plaintiff’s Order Acknowledgments. The Court is not commenting on what is or is not the contract(s) that form the basis of Plaintiff’s Complaint. The Court is simply stating that based on the evidence before it, Plaintiff, and not Defendant, appeared to have the valid forum-selection clause.