Judge Elaine Lu, Case Number: 23STCV18491, Date: 2023-10-25 Tentative Ruling

On August 3, 2023, Plaintiff Christina Development Corporation (“CDC”) filed the instant negligence action against Defendant CreditLink Corporation (“CreditLink”). The complaint asserts two causes of action for (1) Negligence, and (2) Negligent Misrepresentation.

On September 11, 2023, the instant action was deemed related to the lead action entitled Christina Development Corporation v. Steven Raymond Short, et al., Los Angeles Superior Court, Case No. 22STCV28564 (“Lead Action”). (Minute Order 9/11/23.)

On September 18, 2023, Defendant CreditLink filed the instant motion to transfer venue. On October 12, 2023, Plaintiff CDC filed an opposition. On October 18, 2023, Defendant CreditLink filed a reply.

In opposition, Plaintiff CDC objects to portions of the declaration of Stephen C. Grebing in support of the instant motion. The Court rules as follows:

1. Sustained – Lack of Foundation, Lack of Personal Knowledge, Lack of Authentication, Incomplete

Plaintiff’s choice of venue is presumptively correct, and Defendant bears the burden of demonstrating that venue is not proper there. (Battaglia Enterprises, Inc. v. Superior Court of San Diego County (2013) 215 Cal.App.4th 309, 313-14.) “It is the moving defendant's burden to demonstrate that the plaintiff's venue selection is not proper under any of the statutory grounds.” (Mitchell v. Superior Court (1986) 186 Cal.App.3d 1040, 1046.) In opposing the motion to change venue, “[t]he plaintiff may bolster his or her choice of venue with counter affidavits consistent with the complaint’s theory of the type of action but amplifying the allegations relied upon for venue.” (Lebastchi v. Superior Court (1995) 33 Cal.App.4th 1465, 1469, 39 Cal.Rptr.2d 787)

“Venue is determined based on the complaint on file at the time the motion to change venue is made.” (Brown v. Superior Court of Alameda County (1984) 37 Cal.3d 477, 482.) As a general rule, “[i]t is well established that a defendant is entitled to have an action tried in the county of his or her residence unless the action falls within some exception to the general venue rule.” (Id. at p.483.)

Pursuant to Code of Civil Procedure section 395(a), “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.” Although the section appears to be addressing actions sounding in contract, it has long been settled that it governs actions sounding in tort as well. (See Mission Imports v. Superior Court of San Francisco (1982) 31 Cal.3d 921, 927-928.) Per Code of Civil Procedure section 396b, on timely motion, the court must order a transfer of an action “whenever the court designated in the Complaint is not the proper Court.” (Id.)

If the transfer is ordered on the ground that the plaintiff filed in the “wrong court,” the plaintiff is responsible for paying the costs and fees of transferring the action to whichever county the court orders, within 30 days after service of notice of the transfer order. If the plaintiff fails to do so within 5 days after service of notice of the court, any other interested party, whether named in the complaint or not, may pay such costs and fees in order to expedite the transfer. If the fees and costs are not paid within 30 days, the action is subject to dismissal. (See CCP § 399).

Defendant CreditLink asserts that venue in Los Angeles County is improper, and the instant action must be transferred to San Diego County.

“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, subject to the power of the court to change the place of trial as in other cases.” (CCP § 395.5.) “Section 395.5 permits tort claims against a corporation to be tried in any county in which the ‘liability arises’ as well as in the county where the corporation's principal place of business is located.” (Mission Imports, Inc. v. Superior Court (1982) 31 Cal.3d 921, 928–929.) “In tort, ‘liability arises where the injury occurs ....’ [Citation.]” (Id. at p.929.)
“Venue is determined based on the complaint on file at the time the motion to change venue is made.” (Brown v. Superior Court of Alameda County (1984) 37 Cal.3d 477, 482.)

As the complaint concedes, and as Defendant CreditLink’s Counsel notes, CreditLink is a corporation with a principal place of business in San Diego County. (Complaint ¶ 16; Grebing Decl. ¶ 8.) Thus, San Diego County is a proper venue location. (CCP § 395.5.) However, the liability in the complaint arises in Los Angeles County.

Here, the complaint asserts two tort causes of action for negligence and negligent misrepresentation. Plaintiff CDC manages rental properties in Los Angeles County. (Complaint ¶¶ 1, 20-21.) Plaintiff CDC hired Defendant CreditLink to conduct a background check on a now former employee – Steven Raymond Short (“Short”)– when he was applying to be the Vice President of Property Operations for Plaintiff CDC in 2017. (Complaint ¶¶ 23-25.) Plaintiff CDC gave CreditLink the required information to conduct a background check on Short, and CreditLink provided a background report indicating no criminal history. (Id. ¶¶ 26-28, Exh. B.) Relying on this background report by CreditLink, Plaintiff CDC hired Short. (Id. ¶ 29.) However, contrary to the representations in the background check, Short was a convicted sex offender with a violent criminal history and a history of frivolous lawsuits in various jurisdictions. (Id. ¶¶ 30-32.)

In early 2022, Short sexually harassed a tenant who informed CDC that she had looked up Short and believed that he was a registered sex offender. (Id. ¶ 34.) In response, CDC launched an investigation and uncovered that Short had lied in his application and had a lengthy criminal history that had not been reported in the background check by CreditLink. (Id. ¶ 35.) Plaintiff CDC then fired Short who then tried to extort CDC, stole confidential tenant files, and sent threats and defamatory comments regarding CDC to tenants. (Id. ¶¶ 36-43.) This has resulted in the Lead Action and the action by Short which was consolidated in with the Lead Action, causing Plaintiff CDC to incur significant costs and fees. (Id. ¶¶ 44-49.)

All of these alleged injuries occurred in Los Angeles County. (Mission Imports, Inc., supra, 31 Cal.3d at p.929, [“In tort, ‘liability arises where the injury occurs ....’ [Citation.]”].) The legal fees caused by CreditLink’s alleged failure to properly conduct a background check are occurring in this very Court. (Complaint ¶¶ 44-49.) Similarly, the harm caused by Short harassing tenants, stealing confidential tenant files, and sending threats and defamatory comments regarding CDC to tenants has all occurred in Los Angeles County as the tenants are all located in Los Angeles County. (Complaint ¶¶ 1, 20-21, 36-43.)

As noted above, “Section 395.5 permits tort claims against a corporation to be tried in any county in which the ‘liability arises’ as well as in the county where the corporation's principal place of business is located.” (Mission Imports, Inc., supra, 31 Cal.3d at pp.928–929.) Thus, by statute both Los Angeles County and San Diego County are proper venues.

However, Defendant CreditLink contends that a choice of venue clause in an agreement between the parties applies and requires that the instant action occur in San Diego County.

“[A] venue selection clause is void only insofar as it ‘disrupts statutory venue provisions.’ [Citation.]” (Battaglia Enterprises, Inc. v. Superior Court (2013) 215 Cal.App.4th 309, 317.) Thus, where “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.” (Id. at p.318.)

Here, as reflected in the sustained evidentiary objections, Defendant CreditLink does not submit admissible evidence that Plaintiff CDC and CreditLink are parties to a venue selection clause. Rather, Defendant CreditLink relies on an exhibit attached to a declaration of Defense Counsel – who does not set forth any basis for personal knowledge of the claimed fact or knowledge – who claims that “[p]rior to CreditLink performing services on behalf of Plaintiff, both parties signed a Service Agreement which contained a venue selection clause, setting San Diego County as the venue for any causes of action which might arise from services performed. Attached hereto as Exhibit 4 is a true and correct copy of the Service Agreement signed by both CreditLink and Plaintiff.” (Grebing Decl. ¶ 11.) However, the attached exhibit is clearly not a Service Agreement signed by both CreditLink and Plaintiff CDC.

The so called “Service Agreement” consists of an application to open an account with CreditLink on February 15, 1996 randomly spread throughout, telecopier correspondence between CDC and CreditLink from February 1996, a signed and what appears to be a complete service agreement between CDC and CreditLink from February 15, 1996 that does not contain any venue selection clause, improperly unredacted tenant applications from 1996[1], a portion of an unsigned and undated service agreement, correspondence between CDC and CreditLink from 2007, and account statements and bills from 2007/2008. (Grebing Decl., Exh. 4.) The single page that contains the venue selection clause at page 88 of the exhibits is undated, has no reference to CDC, and is clearly missing the surrounding pages. It has no connection to any other portion of a service agreement contained in the so called “Service Agreement”.

There is no indication based on this evidence that Plaintiff CDC agreed to a choice of venue clause as claimed. Accordingly, in light of the absence of any admissible evidence of an applicable choice of venue clause, both Los Angeles County and San Diego County are proper venues by statutes – as discussed above. “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.” (Battaglia Enterprises, Inc., supra, 215 Cal.App.4th at p.313.) Thus, Plaintiff CDC’s choice of venue in Los Angeles County is proper.

Plaintiff CDC requests sanctions of $15,605.00 to reimburse Plaintiff CDC for reasonable expenses and attorney’s fees in bringing the instant motion.

Pursuant to Code of Civil Procedure section 396b, “[i]n its discretion, the court may order the payment to the prevailing party of reasonable expenses and attorney's fees incurred in making or resisting the motion to transfer whether or not that party is otherwise entitled to recover his or her costs of action. In determining whether that order for expenses and fees shall be made, the court shall take into consideration (1) whether an offer to stipulate to change of venue was reasonably made and rejected, and (2) whether the motion or selection of venue was made in good faith given the facts and law the party making the motion or selecting the venue knew or should have known.” (CCP § 396b.)

Here, the Court in its discretion declines to award sanctions. The Court finds that Defendant CreditLink did not unreasonably or in bad faith bring the instant motion and did not in bath faith attempt to stipulate to a change of venue. Accordingly, the Court declines to award sanctions against Defendant CreditLink.

Based on the forgoing, Defendant CreditLink Corporation’s motion to transfer venue is DENIED.

Defendant CreditLink Corporation is ordered to file a responsive pleading within 10 days. The Court hereby sets an OSC re entry of Defendant CreditLink Corporation’s default for November 22, 2023 at 8:30 am. The case management conference is continued to November 22, 2023 at 8:30 am.

[1] Defendant CreditLinks failure to properly redact personal identifying information is improper. The California Rules of Court specify and require that parties and their attorney’s must redact Social Security Numbers. (Cal. Rules of Court, Rule 1.201(a)(1), [“To protect personal privacy and other legitimate interests, parties and their attorneys must not include, or must redact where inclusion is necessary, the following identifiers from all pleadings and other papers filed in the court's public file, whether filed in paper or electronic form, unless otherwise provided by law or ordered by the court: [¶] (1) Social security numbers [¶] If an individual's social security number is required in a pleading or other paper filed in the public file, only the last four digits of that number may be used.”].)

County of Los Angeles

Department 26