Judge: Kevin C. Brazile, Case: 23STCV16390, Date: 2023-10-06 Tentative Ruling

Case Number: 23STCV16390    Hearing Date: October 6, 2023    Dept: 20

Tentative Ruling

Judge Kevin C. Brazile

Hearing Date:                         Friday, October 6, 2023

Case Name:                            Bespoke Financial, Inc. v. Treasure Management, Inc., et al.

Case No.:                                23STCV16390

Motion:                                  (1) Motion for Change of Venue

                                                (2) Motion for Change of Venue

                                                (3) Motion for Change of Venue

Moving Party:                         (1)  Defendants Treasure Management Inc., Euphoric Life Inc. and Aiden Rafii

                                                (2)  Defendants Treasure Management Inc., Euphoric Life Inc. and Aiden Rafii

                                                (3)  Defendants Treasure Management Inc., Euphoric Life Inc. and Aiden Rafii

Responding Party:                  Plaintiff Bespoke Financial Inc.

Notice:                                    OK

Ruling:                                    The Motions to Change Venue are DENIED.

Moving party to give notice.

If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.

BACKGROUND

            Plaintiff Bespoke Financial Inc. (“Bespoke”) entered into a Payables Servicing and Security Agreement (“Loan Agreement”) with Defendant Treasure Management, Inc. (“Treasure”) on February 17, 2022.  Concurrently with the Loan Agreement, Plaintiff entered into a Suretyship Indemnification and Security Agreement (“Indemnification Agreement”) with Defendant Aiden Rafii.  Plaintiff entered into a First Amendment of the Loan Agreement with Treasure on November 16, 2022. 

            Plaintiff alleges Treasure and its subsidiary, Euphoric Life, Inc. (“Euphoric”), have failed to repay $70,679 in loans under the Loan Agreement.  Plaintiff alleges Rafii has also failed to repay the loans in breach of the Indemnification Agreement. 

            Plaintiff filed a complaint on July 12, 2023 alleging (1) breach of contract (against Treasure and Euphoric); (2) breach of contract (against Rafii); (3) promissory estoppel (against all Defendants); (4) open book account (against all Defendants); (5) account stated (against all Defendants); (6) quantum meruit (against all Defendants). 

            On August 20, 2023, Defendants Treasure, Euphoric and Rafii jointly filed three separate, identical motions for change of venue pursuant to CCP §395.  On September 20, 2023, Plaintiff filed a consolidated opposition to all three motions.   On September 29, 2023, Defendants filed a consolidated reply to the consolidated opposition.

DISCUSSION

Applicable Law

            “Except as otherwise provided by law and subject to the power of the court to transfer actions or proceedings as provided in this title, the superior court in the county where the defendants or some of them reside at the commencement of the action is the proper court for the trial of the action… Subject to subdivision (b), 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.”  (CCP §395(a).) 

            “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.  “Where a corporation and an individual are properly joined as defendants and the action is commenced in the county where the corporation has its principal place of business the individual defendant may not have the action moved to the county of his residence, if different, for trial.”  (Hale v. Bohannon (1952) 38 Cal.2d 458, 472.) 

            “The general rule is that venue is proper only in the county of the defendant's residence. It 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.”  (Williams v. Superior Court for County of Contra Costa (2021) 71 Cal.App.5th 101, 108 (quoting Brown v. Sup.Ct. (C.C. Myers, Inc.) (1984) 37 Cal.3d 477, 488)(plaintiff’s allegation of physical ailment as a result of harassment claim based on emails did not qualify as “injury to person” under CCP §395(a); defendant therefore entitled to transfer of the action to her county of residence). 

            “Thus, the right of a plaintiff to have an action tried in a county other than that of the defendant's residence is exceptional. If the plaintiff would claim such right he must bring himself within the exception.  Moreover, when the plaintiff contends that the case fits within an exception to the general rule that venue is proper in the county of defendant's residence, any ambiguities in the complaint must be construed against the plaintiff towards the end that the defendant will not be deprived of the right to a trial in the county of his or her residence.”  (Id. at 109.)

Application to Facts

            Defendants Treasure, Euphoric and Rafii jointly filed three separate identical motions.  Defendants argue that (1) venue is improper as to all three defendants because Santa Clara County is their residence principal place of business, not Los Angeles County; (2) the contract was not entered into or breached in Los Angeles County; and (3) none of the exhibits attached to the Complaint establish an agreement executed by Euphoric. 

            In response, Plaintiff argues venue is proper in more than one county.  Although Defendants’ residence or principal places of business are located in Santa Clara County, Plaintiff argues Los Angeles County is the proper venue, because the Loan Agreement and Indemnification Agreement were entered in Los Angeles County and performance was to be made in Los Angeles County.  Plaintiff argues Defendants conducted business in Los Angeles County by applying for Plaintiff’s loan services in Santa Monica.  Plaintiff argues Defendants received money from and made required payments to Plaintiff’s bank account in Los Angeles County.  In addition, Plaintiff argues both the Loan Agreement and Indemnification Agreement contain forum selection clauses under which Los Angeles County is the proper venue. 

            On reply, Defendants argue Euphoric is not a party to either the Loan Agreement or the Indemnification Agreement.  Defendants argue the only proper venue as to Euphoric is Santa Clara County.  Defendants also argue the agreements were signed in Santa Clara County, making Santa Clara County the place where the contract was made.  Defendants argue their decision not to honor further payment was made in its offices in San Jose, CA.  Defendants argue where the payments were made under the Loan Agreement does not determine venue.  Defendants also deny that the agreements contained forum selection clauses identifying Los Angeles County as the selected forum.  Defendant argues venue and forum are also different concepts.  Defendants argue they are entitled to reasonable attorney fees.  Defendants argue that Plaintiff’s RJN of the truth of its complaint allegations must be denied as improper. 

            As moving party, Defendants have the burden of demonstrating that the plaintiff's venue selection is not proper under any of the statutory grounds.  (Fontaine v. Supr. Ct. (2009) 175 Cal.App.4th 830, 836.)  Defendants have the burden of “negating the propriety of venue as laid on all possible grounds,” i.e., it must show that the county selected by plaintiff was not the place of injury or contracting, etc.  (Karson Indus., Inc. v. Sup.Ct. (Triangle Auto Sales, Inc.) (1969) 273 Cal.App.2d 7, 8-9.) 

            Defendants fail to negate proper venue on all possible grounds.  Defendants’ evidence only establishes that Defendant Euphoric’s principal place of business is located in San Bonito County, Treasure’s principal places of business are located in San Jose, CA, Santa Clara County and that Defendant Rafii resides in Los Gatos, CA, Santa Clara County.  (Motion, A. Rafii Dec I, ¶3; A. Rafii Dec. II, ¶¶1, 2.)  Defendants do not present any evidence refuting alternate grounds for venue in Los Angeles County.  In particular, Defendants do not present any evidence establishing that the Agreements were not made in Los Angeles County or that parties intended performance to be in Santa Clara County, not Los Angeles County. 

            In addition, Plaintiff submits evidence that the place of performance was Los Angeles County.  Defendants’ performance was payment of the loan payments.  Place of performance of an agreement is the place where the obligation was entered, unless there is a special writing designating the place of performance.  (CCP §395(a.)  However, in the case of a corporate defendant, such a special writing is not required and the place of performance is a question of fact determined by examining the parties’ conduct.  (CCP §395.5; Anaheim Extrusion Company, Inc. v. Sup. Ct. (1985) 170 Cal.App.3d 1201,1203)

            The Loan Agreement and Indemnification Agreement are silent on the place of performance.  Neither agreement identifies an address where payments are to be sent. However, Plaintiff submits evidence that Defendants’ payments were all made to 730 Arizona Ave., Santa Monica, CA 90401 in Los Angeles County.  (Knecht Dec., ¶7.)  On reply, Defendants do not submit any evidence refuting that loan payments were made to Plaintiff Bespoke in Santa Monica.  Where the parties intended payments to be made is a question of fact.  (Anaheim Extrusion Company, Inc. v. Sup. Ct. (1985) 170 Cal.App.3d 1201,1203.)  The only evidence submitted indicates parties intended payments be made to Bespoke in Santa Monica, CA.  Thus, where the breach occurred—failure to make the loan payment—also occurred in Santa Monica, CA.     

            As to Euphoric, Rafii submits a declaration denying that Euphoric signed any agreements with Plaintiff and denying that it is a dba, parent company, holding company, owner or subsidiary of Treasure.  (Motion, Rafii Dec. I, ¶2.)  However, Plaintiff alleges Rafii completed the original “New Client Application Form” and listed Treasure as the “Company Name” and Euphoric as the d/b/a or name of the licensed entity and submits a copy of the application.  (Knecht Dec., ¶5, Ex. 2.)  Rafii does not address this allegation in his declaration or the application on reply.  In addition, the “Automatic Payment Authorization Form” attached to the Loan Agreement identifies a deposit account under Euphoric’s name for deposit of the loan disbursements.  (Complaint, Ex. A, Exhibit 1.1.2, “Automatic Payment Authorization.”)  

            Finally, as to all Defendants, Plaintiff is alleging that they are all liable on the agreements as alter egos of one another.  (Complaint, ¶14.)  Defendants’ evidence does address Plaintiff’s alter ego allegations.

            Defendants fail to establish that Plaintiff’s joinder of Euphoric is a sham or that it fails as an issue of undisputed fact or law.  “It is enough … that the cause of action purported to be stated against the corporation defendant was apparently pleaded in good faith, and is not, prima facie, so glaringly and vitally defective as to be beyond correction by amendment.”  (Freeman v. Dowling (1933) 219 Cal. 213, 216.) 

            Moreover, Defendants are asking that venue be changed to Santa Clara County.  Euphoric’s principal place of business is located in Bonito County, not Santa Clara County.  (Motion, A. Rafii Dec I, ¶3.)  

            With regard to the forum selection clauses, paragraph 31.1 of the Loan Agreement is an arbitration clause, not a forum selection clause for civil litigation.  (Complaint, Ex. A, ¶31.1.)  However, paragraph 16.1 of the Indemnification Agreement is a venue selection clause that designates “any court sitting in the state in which the Controlling City is located” as the proper place for venue.  “Controlling City” is defined as the location of Plaintiff’s chief executive office.  (Complaint, Ex. B, ¶16.)  “Chief executive office” is not defined in the Indemnification Agreement, but notices to Plaintiff are to be sent under the agreement to 1043 12^th St., #5, Santa Monica, CA 90403.  (Id. at ¶9.)  Plaintiff’s principal place of business is 1043 12^th St., #5, Santa Monica, CA 90403 in Los Angeles County.  (Knecht Dec., ¶3.)  Because Plaintiff and Defendant Rafii agreed that Los Angeles County would be the proper venue for any litigation between them on the Indemnification Agreement, and Los Angeles County is the proper venue for such litigation as the place of performance and breach, venue is proper as to Rafii on both statutory and contractual grounds.  (Battaglia Enterprises, Inc. v. Sup.Ct. (Yard House USA, Inc.) (2013) 215 Cal.App.4th 309, 315 (venue selection clauses valid and enforceable if they select a statutorily permissible county).) 

Request for Judicial Notice

            Plaintiff’s Request for Judicial Notice of the Complaint is granted as to the fact that the complaint was filed and the allegations made.  Judicial notice of the truth of the allegations therein is denied.              

CONCLUSION

            The Motions to Change Venue are DENIED. 

            Moving Party to give notice.

            If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.