Judge: H. Jay Ford, III, Case: 24SMCV01585, Date: 2024-08-01 Tentative Ruling

Case Number: 24SMCV01585    Hearing Date: August 1, 2024    Dept: O

  Case Name:  Aspiration Partners, Inc. v. Socure Inc., et al.

SUBJECT:                 MOTION TO DISMISS OR STAY FOR INCONVENIENT FORUM UNDER CCP §428.10.

MOVING PARTY:   Defendant Socure, Inc.

RESP. PARTY:         Plaintiff Aspiration Partners, Inc.

TENTATIVE RULING

            Defendant Socure Inc.’s Motion to Dismiss for inconvenient forum is GRANTED as to all causes of action in Plaintiff Aspiration Partners, Inc.’s Complaint.

REASONING

            “In California, the procedure for enforcing a forum selection clause is a motion to stay or dismiss for forum non conveniens pursuant to Code of Civil Procedure sections 410.30 and 418.10, but a motion based on a forum selection clause is a special type of forum non conveniens motion.”  (Berg v. MTC Electronics Technologies (1998) 61 Cal.App.4th 349, 358 [contractual clause wherein defendant “expressly submitted to the jurisdiction of the State of California and United States Federal court sitting in the City of Los Angeles, California” was not a mandatory forum selection clause].)  “The factors that apply generally to a forum non conveniens motion do not control in a case involving a mandatory forum selection clause.  Where 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.  A court will usually honor a mandatory forum selection clause without extensive analysis of factors relating to convenience.”  Quanta Computer Inc. v. Japan Communications Inc. (2018) 21 Cal.App.5th 438, 445 [holding mandatory forum selection clause designating California as forum for Japanese and Taiwanese companies’ contractual dispute was enforceable, but trial court acted within its discretion in granting motion to dismiss based on traditional forum non conveniens grounds because neither company nor the contract in dispute had any nexus or relationship to California].) 

            “[T]he existence of a contractual forum selection clause requires a court to decline jurisdiction under Code of Civil Procedure section 410.30, absent a showing that enforcement would be unfair or unreasonable.” (Furda v. Superior Court (1984) 161 Cal.App.3d 418, 424–425.) “[A] phrase such as “shall be litigated” generally has been construed to indicate that the forum selection clause is mandatory.” (Korman v. Princess Cruise Lines, Ltd. (2019) 32 Cal.App.5th 206, 215–216.) A forum selection clause is reasonable, and, therefore, enforceable, if it: (1) “has a logical connection with at least one of the parties or their transaction,” and (2) the selected forum is not “unavailable to [the plaintiff] or unable to accomplish substantial justice.” (Korman, supra 32 Cal. App. 5th at p. 216.) “[N]either inconvenience nor additional expense in litigating in the selected forum are part of the test of unreasonability.” (Cal-State Business Products & Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666, 1679, as modified (Feb. 4, 1993).)

            The party opposing enforcement of a forum selection clause bears the burden of proving that the clause should not be enforced. (See Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 496.) “That burden, however, is reversed when the claims at issue are based on unwaivable rights created by California statutes. In that situation, the party seeking to enforce the forum selection clause bears the burden to show litigating the claims in the contractually-designated forum “will not diminish in any way the substantive rights afforded ... under California law.” (Emphasis added.) (Verdugo v. Alliantgroup, L.P. (2015) 237 Cal.App.4th 141, 147.)

I.                Existence of an Enforceable Forum Selection Clause

            Defendant Socure, Inc (“Socure”) shows that the parties agreed to a forum selection clause within the 11-15-18 Software License Agreement (“SLA”) which stated:

Any and all actions brought to enforce this Agreement or resolve any dispute arising out of this Agreement must be brought exclusively in the federal or state courts having jurisdiction in New York, New York, and each party hereby consents to and agrees to submit to the exclusive personal jurisdiction and venue of such courts.

(Taketa Deel., Ex. A, SLA § 10.5.)

            Socure shows that the 12-17-21 Amendment No. 1 to the SLA (the “Amendment” or “New SLA”) incorporated the forum selection provision from the SLA. (See Taketa Deel., Ex. C, Amendment § 6.) Plaintiff Aspiration Partners, Inc. (“API”) argues there is an inconsistency or conflict between the SLA and the Amendment and thus by the terms of Amendment, the forum selection clause from the SLA is inoperable, and must be enforced where the Amendment was signed and agreed to—in California. (See Id., Amendment §§ 6, 7.)

            Section 6 and 7 of the Amendment, or New SLA as API calls it, does confirm that the parties intended for the Amendment to incorporate some, but not all, of the terms from the SLA, but only those terms that are in “conflict or inconsistency” between the Amendment and the SLA are thus governed by the Amendment. The Amendment does not contain a forum selection clause, and thus there is no conflict or inconsistency with the original SLA forum selection. If the Amendment discussed forum selection, or stated a different forum, or expressly stated the Amendment does not include a forum selection clause, then there would be conflict or inconsistency between agreements. However, the Amendment and SLA have no conflict regarding the New York forum selection, and were not specifically modified and amended. Section § 6 of the Amendment states “all terms, provisions, requirements, and specifications contained in the [SLA] remain in full force and effect.” This includes the forum clause in Section 10.5. Therefore, the forum selection clause is still applicable.

            Both parties are sophisticated businesses that chose to execute the agreement. Even if API alleged this was a contract of adhesion, which it does not, the forum selection clause will be upheld. (See Intershop Communications v. Superior Court (2002) 104 Cal.App.4th 191, 202 [“Plaintiff had full notice that he was agreeing to Hamburg as the place of trial, even though he may have chosen not to read the four-page contract. We conclude as a matter of law that no basis exists for denying enforcement of the forum selection clause.”].)

            API argues the forum selection clause is not broad enough to cover the tort claims for fraudulent inducement and negligent misrepresentation. API argues their tort claims are related to the signing of the Amendment, not to the SLA, or Amendment, themselves.  Whether a forum selection clause encompasses tort claims is a question of contract interpretation. Cal-State Bus. Prod. & Servs., Inc. v. Ricoh (1993) 12 Cal. App. 4th 1666, 1677 (1993) The Agreement’s forum selection clause broadly provides that “[a]ny and all actions brought to enforce this Agreement or resolve any dispute arising out of this Agreement must be brought exclusively in the federal or state courts having jurisdiction in New York, New York.” Taketa Decl., Ex. A, SLA § 10.5. The Court agrees with Socure that the forum selection clase encompasses all of API’s claims.

II.        The Forum Selection Clause is reasonable and enforceable.

            A forum selection clause is reasonable, and, therefore, enforceable, if it: (1) “has a logical connection with at least one of the parties or their transaction,” and (2) the selected forum is not “unavailable to [the plaintiff] or unable to accomplish substantial justice.” (Korman, supra 32 Cal. App. 5th at p. 216.) “[N]either inconvenience nor additional expense in litigating in the selected forum are part of the test of unreasonability.” (Cal-State Business Products & Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666, 1679, as modified (Feb. 4, 1993).)

            Socure argues the selected forum of New York has a logical connection with Socure because at the time the agreement was signed between the parties Socure’s principle place of business was New York, and Socure declares they continue to conduct significant business in New York. (Taketa Decl., Ex. SLA p.1.) Furthermore, Socure argues the parties selected New York to apply by agreeing to the SLA and the Amendment which incorporated the SLA forum selection clause.

            API argues the clause is unreasonable and unfair because it would require API to simultaneously litigate the breach of contract cause of action from its complaint pursuant to the forum selection clause, and the tort causes of action from the complaint in California because they are not subject to the forum selection clause as analyzed above. Additionally, API argues that if they are forced to litigate the breach of contract and declaratory relief causes of action in New York they will lose their right to reciprocal attorneys’ fees under California Civil Code § 1717.

            The Court agrees with Socure.  This entire action will be dismissed based on finding the forum selection clause covers all of API’s claims.  While Civil Code §1717 does reflect a “fundamental public policy”, that policy is not being diminished by the enforcement of the forum selection clause.  The Court agrees that the indemnity clauses in the agreement are not unilateral attorney’s fee clauses that would be subject to Section 1717.  While the invoice and payment terms clause provide for recovery of collection costs, the application of that clause is not the claim at issue in this case. There is no authority to support the view the court is to consider a potential application of Section 1717 to a dispute to decide whether or not to enforce an otherwise enforceable form selection clause that applies claims unrelated to a hypothetical dispute over the recovery of attorney’s fees. The Court agrees with Socure, that the authority cited by API all arise in the context of applying a choice of law provision, not a forum selection clause, and do not compel a different result.