Judge: Michael P. Linfield, Case: 23STCV02215, Date: 2023-09-15 Tentative Ruling
Case Number: 23STCV02215 Hearing Date: September 15, 2023 Dept: 34
SUBJECT: Motion to
Transfer Action and for Sanctions
Moving Party: Defendants
Todd Hedley and Kelley Swartz
Resp. Party: Plaintiff Ourian Investment Corporation
The Motion is DENIED.
Attorney’s
fees and costs are AWARDED in favor of Plaintiff and against Defense Counsel in
the amount of $2,700.00.
BACKGROUND:
On February
1, 2023, Plaintiff Ourian Investment Corporation filed its Complaint against
Defendant Todd Hedley on two causes of action for breach of contract.
On May 31,
2023, Plaintiff filed its First Amended Complaint (FAC) against Defendants Todd
Hedley and Kelly Swartz (“Defendants”) on two causes of action for breach of
contract and four causes of action for fraudulent transfers.
On August 21,
2023, Defendants filed their Motion to Transfer Action and for Sanctions
(“Motion”). In support of their Motion, Defendants concurrently filed: (1)
Declaration of Todd Hedley; (2) Declaration of Kelly Swartz; (3) Declaration of
Matt Putterman; and (4) Proposed Order.
On September
1, 2023, Plaintiff filed its Opposition. In support of its Opposition,
Plaintiff concurrently filed Declaration of Jacob H. Zadeh. The Opposition
includes a Request for Sanctions.
On September
8, 2023, Defendants filed their Reply.
ANALYSIS:
I.
Legal
Standard
“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. If
none of the defendants reside in the state or if they reside in the state and
the county where they reside is unknown to the plaintiff, the action may be
tried in the superior court in any county that the plaintiff may designate in
his or her complaint, and, if the defendant is about to depart from the state,
the action may be tried in the superior court in any county where either of the
parties reside or service is made. If any person is improperly joined as a
defendant or has been made a defendant solely for the purpose of having the
action tried in the superior court in the county where he or she resides, his
or her residence shall not be considered in determining the proper place for
the trial of the action.” (Code Civ. Proc., § 395, subd. (a).)
“For venue purposes, actions are
classified as local or transitory. To determine whether an action is local or
transitory, the court looks to the ‘main relief’ sought. Where the main relief
sought is personal, the action is transitory. Where the main relief relates to
rights in real property, the action is local.” (Brown
v. Super. Ct. (1984) 37 Cal.3d 477, 482, fn. 5.)
“The orthodox rules for
analysis of local-transitory venue issues are (1) that whether a cause of
action is local or transitory is to be determined on the basis of the relief
sought, (2) that where both local and transitory relief are sought on the basis
of a single cause of action the cause of action will be characterized on the
basis of the relief primarily sought
(the ‘main relief rule’), (3) that where there is more than one cause of action
and both local and transitory causes have been identified, choice of venue will
be made on the basis of various ‘mixed action’ rules, and (4) that for these
purposes causes of action are to be identified and distinguished, and relief
characterized, from the complaint as it stands at the time of the motion for
change of venue. The
burden of showing facts to
justify a change of venue is on the moving defendant. But once the defendant
has shown, in support of his motion, that he lives in another county, the
policy of the law favors the right of trial at the defendant's residence. Accordingly it is said that the complaint will be strictly construed
against the plaintiff who seeks to lay the venue in a place other than the
defendant's residence.” (Massae v. Super. Ct. (1981) 118 Cal.App.3d 527,
530–31 [cleaned up].)
“One who is merely stopping
over at a place in a hotel, motel, rooming house, or who is vacationing is not
a resident. A
residence is established by personal presence in a fixed and permanent abode,
with the intent of remaining there. The
fundamental elements necessary to create a residence in a particular place are
actual bodily presence in the place combined
with a freely exercised intention of remaining there permanently or for an
indefinite time.” (Enter v. Crutcher (1958)
159 Cal.App.2d Supp. 841, 845, citations omitted.)
“In a mixed action, a
plaintiff alleges two or more causes of action each of which is governed by a
different venue statute. Or, two or more defendants are named who are subject
to different venue standards. The identifying characteristic of mixed actions
is that two or more inconsistent venue provisions appear to be concurrently
applicable in the same case. In cases with mixed causes of action, a motion for change of venue
must be granted on the entire complaint if the defendant is entitled to a
change of venue on any one cause of action.” (Brown, supra, 37
Cal.3d at p. 488 [cleaned up].)
II. Discussion
A. Venue
1. The Parties’ Arguments
Defendants
move the Court to transfer this action to the Superior Court of California,
County of Orange. Defendants argue that this action must be transferred to
Orange county because: (1) all six causes of action are transitory, not local;
(2) transitory actions are subject to the general venue rule, which gives
deference to Defendants' right to have actions brought against them in the
county where they reside; (3) neither of the two Defendants has lived in Los
Angeles County in the last five years, while Defendant Hedley resides in the
Commonwealth of Australia and Defendant Swartz lives in Orange County; and (4)
the first two causes of action for breach of contract cannot be the basis for
venue in Los Angeles County against Defendant Swartz because she is not a party
to the contracts. (Motion, pp. 2:7–12, 3:3–12, 4:2–13.)
Plaintiff
opposes the Motion, arguing: (1) that Defendants have not met their burden of
proof required to justify a transfer of jurisdiction; (2) that venue is proper
in Los Angeles County because that is where the contracts were entered into;
and (3) that Defendants should not be allowed to bring in new admissible
evidence in their Reply. (Opposition, pp. 2:8, 3:20, 4:17–18.)
In
their Reply, Defendants argue: (1) that sufficient evidence is before the Court
to support a finding that Defendant Swartz resides outside of Los Angeles
County; and (2) that the mixed action rule mandates that this action be tried
in Orange County. (Reply, pp. 2:16–17, 3:14–15.)
2. Discussion
The evidence
before the Court indicates: (1) that Defendant Hedley’s residence is in the
Commonwealth of Australia, not Los Angeles County; and (2) that Defendant
Swartz’s residence is in Orange County, not Los Angeles County. (Decl. Hedley,
¶ 3–4; Decl. Swartz, ¶¶ 3–5.) These are the locations in which the Defendants
respectively declare that they reside and indefinitely intend to reside. (See, Enter, supra,
159 Cal.App.2d Supp. at p. 845.)
The original
Complaint has two causes of action, both against Defendant Hedley. (Complaint,
pp. 3:1–2, 4:1–2.) If this were the only pleading, venue would certainly be
proper in Los Angeles County because Defendant Hedley does not reside in the
State of California. (Code Civ. Proc., § 395, subd. (a) [“If none of the defendants reside in
the state . . . the action may be tried in the superior court in any county
that the plaintiff may designate in his or her complaint . . . .”].) But this is not the operative pleading.
Code
of Civil Procedure section 395, subdivision (a) discusses “the superior court
in the county where the defendants or some of them reside at the commencement
of the action.” But case law states that
“the courts generally look to the main relief
sought, as determined from the complaint as it stands at the time of the motion
for change of venue.” (Massae, supra, 118 Cal.App.3d at p. 530;
see also Brown, supra, 37 Cal.3d at p. 482 [“Venue is determined
based on the complaint on file at the time the motion to change venue is
made.”]; K.R.L. P’ship v. Super.
Ct. (2004) 120 Cal.App.4th
490, 496–97.)
The
FAC has six causes of action, all of which are against both the named
Defendants and the Doe Defendants. (FAC, pp. 3:19–21, 4:16–18, 5:13–16, 6:8–11,
7:8–11, 8:11–13.) Notably, all six of these causes of action (which involve
breach of contract or fraudulent transfers) are transitory causes of action —
not local causes of action — because they do not involve real property or
interests therein. (Brown, supra,
37 Cal.3d at p. 482, fn. 5.) The transitory nature of these causes of action mean that
“[e]xcept as otherwise provide by law . . . 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. . . .” (Code Civ. Proc., §
395, subd. (a).)
The
exception is in a following clause: “. . . 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.” (Code Civ. Proc., § 395, subd. (a).)
Here,
a defendant — Defendant Hedley — entered into two contracts in Beverly Hills,
which is in Los Angeles County. (FAC, Exh. 1 [Exh. A, p.1] and Exh 2. [Exh. A,
p. 1].) Both are electronically signed by Defendant Hedley. Further, the
location for performance of the obligation — i.e., repayment of the loan amount
— is listed in both contracts as Beverly Hills. (Id. [“The place of
payment shall be 444 N. Camden Dr., Beverly Hills, California, 90210 or at such
other place as the holder of this Note may from time to time require.”].) Both
contracts are relatively simple documents, and neither includes clauses for
mandatory or permissive selection of other fora or venues. They only include
clauses that state they are “governed by the laws of the State of California.”
(Id.)
Based
on (1) the location of where the contract was entered, (2) the location where
the obligation is to be performed, and (3) the lack of a specific venue or
forum selection clause, Los Angeles County is a proper venue for this action.
Defendants
argue: (1) that the first two causes of action for breach of contract cannot be
the basis for venue in Los Angeles County against Defendant Swartz because she
is not a party to the contracts; and (2) that the mixed action rule mandates
that this action be tried in Orange County. (Motion, p. 4:2–13; Reply, p.
3:14–15.)
The
Court disagrees with these arguments.
First,
Defendant Swartz’s status as a party or non-party to the contracts is
irrelevant to whether Los Angeles County is a proper venue for this action.
Because Defendant Hedley entered into the contracts and is obligated to perform
on them in Los Angeles County, Los Angeles County is a proper venue. This
reasoning is based on the explicit language of the statute, which only refers
to “a defendant”, not “all defendants”, regarding which county’s court can
serve as a proper venue.
Second, the
mixed action rule does not apply here because all of the causes of action are
transitory in nature and there are not multiple different standards that apply
to the causes of action. (Brown, supra, 37
Cal.3d at p. 488; Massae, supra, 118 Cal.App.3d at
pp. 530–31.) The Court notes that, unlike other causes of action, the
fraudulent transfer causes of action do not have different venue standards than
the breach of contract causes of action. (See Civ. Code, §§ 3439.04, subds.
(a)(1), (a)(2) and 3439.05; accord Brown, supra, 37 Cal.3d at pp.
485, 488, considering Gov. Code, § 12965, subd. (b) [part of the Fair
Employment and Housing Act] and holding that its more specific provisions
control over the more general venue statutes].)
The
Court DENIES the Motion.
B. Attorney’s Fees and Reasonable Expenses
1. Legal Standard
“In 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. As between
the party and his or her attorney, those expenses and fees shall be the personal
liability of the attorney not chargeable to the party. Sanctions shall not be
imposed pursuant to this subdivision except on notice contained in a party’s
papers, or on the court’s own noticed motion, and after opportunity to be
heard.” (Code Civ. Proc., § 396, subd. (b).)
2. Discussion
Both
Plaintiff and Defendants have requested monetary sanctions in connection with
the Motion. The Parties have been on notice of these requests and have had an
opportunity to be heard. (Code Civ. Proc., § 396, subd. (b).)
Plaintiff is
the prevailing party here. Thus, it is not appropriate to award monetary
sanction in favor of Defendants.
The Court
considers the statutory factors in determined whether it is appropriate to
order Defense Counsel — and only Defense Counsel, pursuant to statute — to pay
Plaintiff’s reasonable expenses and attorney’s fees. (Code Civ. Proc., § 396,
subd. (b) [“As between the party and his or her attorney, those expenses and
fees shall be the personal liability of the attorney not chargeable to the
party.]; see also Metzger v. Silverman (1976) 62 Cal.App.3d Supp. 30,
38–40.)
Here,
it appears that Defense Counsel did make an offer to Plaintiff’s Counsel
regarding stipulation to change of venue. It is noteworthy that Defense Counsel
wrote in an email to Plaintiff’s Counsel that “neither of the alleged contracts
at issue were entered into in Los Angeles County”; however, this contradicts
the language of the contracts themselves which indicate that the contracts were
both entered into and obligated to be performed in Los Angeles. (Decl.
Putterman, Exh. A, p. 1; Decl. Zadeh, Exhs. 1, 2.) The language used by Defense
Counsel in this email suggests that the offer for a stipulation was not made in
good faith given the facts and law Defense Counsel knew or should have known.
Further,
unlike the situation in Cacciaguidi v. Superior Court (1990) 226
Cal.App.3d 181, 187, this is not a situation where the arguments by the losing
party were “inventive” and “compelling”; a few hours of legal research would
have shown that the mixed action rule did not apply here.
An
award of Plaintiff’s reasonable expenses and attorney’s fees against Defense
Counsel is warranted here.
It is not uncommon for courts to compare
opposing counsel’s fees to help determine whether the moving party’s fees are
reasonable. That is because a “comparative analysis of each side’s respective
litigation costs may be a useful check on the reasonableness of any fee
request.”¿¿(Mountjoy v. Bank of Am., N.A.¿(2016) 245 Cal.App.4th 266,
273, 281, quoting Donahue v. Donahue¿(2010) 182 Cal.App.4th 259, 272.)¿
“[T]here is one particularly good indicator of how much time is
necessary [for the purpose of determining reasonableness of attorneys’ fees] .
. . and that is how much time the other side’s lawyers spent. . . . [S]uch a
comparison is a useful guide in evaluating the appropriateness of time claimed.
If the time claimed by the prevailing party is of a substantially greater
magnitude than what the other side spent, that often indicates that too much
time is claimed. Litigation has something of the tennis game, something of war,
to it; if one side hits the ball, or shoots heavy artillery, the other side
necessarily spends time hitting the ball or shooting heavy artillery back.” (Democratic
Party of Washington State v. Reed (9th¿Cir. 2004) 388 F.3d 1281, 1287.)
Here,
Plaintiff’s Counsel requested $2,700.00 in attorney’s fees and expenses for
this Motion, based on nine hours of work at $300.00 per hour. (Opposition, p.
6:12–15; Decl. Zadeh, ¶¶ 8–9.) In contrast, Defense Counsel requested $4,960.00
in attorney’s fees and expenses for this Motion, based on 14 hours of work at
$350.00 per hour, plus $60.00 in costs. (Motion, p. 5:12–16; Decl. Putterman,
¶¶ 7–9.) While the Court might believe that even $2,700.00 is excessive for the
filings in this Motion, Defense Counsel appears to believe that almost $5,000
would be an appropriate amount.
The
Court AWARDS $2,700.00 in attorney’s fees and costs in favor of Plaintiff and
against Defense Counsel in the amount of $2,700.00.
III. Conclusion
The Motion is DENIED.
Attorney’s
fees and costs are AWARDED in favor of Plaintiff and against Defense Counsel in
the amount of $2,700.00.