Judge Olivia Rosales, Case 19NWCV00524 2022-12-14 Tentative Ruling

Judge: Olivia Rosales, Case: 19NWCV00524, Date: 2022-12-14 Tentative Ruling

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Case Number: 19NWCV00524 Hearing Date: December 14, 2022 Dept: SEC

DIAMOND PEO, LLC v. DEPENDABLE PERSONNEL, INC.

CASE NO.: 19NWCV00524

HEARING: 12/14/22 @ 1:30 PM

JUDGE: OLIVIA ROSALES

TENTATIVE RULING

Specially Appearing Cross-Defendants Bridge HRO, LLC, Hanson, and Haines’s motion to stay and transfer jurisdiction of Diamond Peo, LLC, Diamond ZB Staffing Services, LLC’s cross-complaint is GRANTED. The entire action is STAYED, pending resolution of the Pennsylvania action.

Moving Party to give NOTICE.

Specially Appearing Cross-Defendants Bridge HRO, LLC, and Hanson, and Haines (collectively, “Bridge, et al.”) moves for a stay and transfer of the Cross-Complaint based on the doctrine of forum nonconveniens pursuant to CCP § 410.30.

This action for breach of contract was filed on June 26, 2019. Plaintiff Diamond PEO, LLC alleges that Plaintiff provided human resources services to Defendant Dependable Personnel Inc. (“Dependable”) breached the contract and owes Plaintiff $378,925.21. Based thereon, the Complaint asserts causes of action for:

1. Breach of Contract

2. Account Stated

3. Reasonable Value

Dependable’s Second Amended Cross-Complaint (“SAXC”) alleges the following relevant facts: “While Cross-Defendants [Diamond PEO, LLC and Diamond ZB Staffing Services, LLC, and Veronica Lake] represent to their clients that they have obtained WCI [worker’s compensation insurance] on their behalf, they did not. Rather, they obtained “liability coverage” from “issuers” (as opposed to insurers) which the California Department of Insurance (“DOI”) ordered to refrain from transacting insurance business. A cursory review of the publicly available information reveals that these “issuers” from which Cross-Defendants obtained “liability coverage” were represented in the administrative proceedings before the DOI by Charles Manock, formerly Cross-Defendants’ counsel of record and acting in-house counsel for Cross-Defendants.” (SAXC, ¶ 10.) “Lake represented to Dependable that her companies would provide valid WCI to Dependable. In reliance on those statements, in August 2017, Dependable entered into the Staff Management Agreement with Cross-Defendants (the “2017 Agreement”).” (Id., ¶ 13.) From 2017 to 2019, Cross-Defendants collected funds from Dependable for payment of WCI policy premiums. Had Dependable known Cross-Defendants had not obtained valid WCI coverage for Dependable and that the Certificates presented by Cross-Defendants were false, Dependable would not have paid Cross-Defendants the annual premiums, and further, would not have continued to do business with Cross-Defendants.” (Id., ¶ 23.) Based on the foregoing, the SAXC asserts the following causes of action:

1. Intentional Misrepresentation

2. Negligent Misrepresentation

3. Negligence

4. Restitution under Quasi-Contract

5. Conversion

6. Unfair Bus. Practices

7. Breach of Contract

8. Breach of Contract

9. Accounting

On July 7, 2022, Cross-Complainants Diamond PEO, LLC and Diamond ZB Staffing Services, LLC filed a Cross-Complaint against Bridge HRO for:

1. Intentional Misrepresentation

2. Fraud/Concealment/Deceit

3. Negligent Misrepresentation

4. Breach of Contract

5. Contractual Indemnity

6. Unjust Enrichment

7. Contribution

8. Equitable Indemnity

9. Restitution

CCP § 410.30(a) provides: “When a court upon motion of a party or its own motion finds that in the interest of substantial justice an action should be heard in a forum outside this state, the court shall stay or dismiss the action in whole or in part on any conditions that may be just.” The doctrine of forum non conveniens is an equitable doctrine in which the court has the discretionary power to decline the exercise the of jurisdiction it has over a transitory cause of action when it believes that the action may be more appropriately tried in another forum. (Stangvik v. Shiley, Inc. (1991) 54 Cal.3d 744, 751.) The granting or denial of a motion for forum non conveniens lies within the court's substantial discretion. (Roman v. Liberty University, Inc. (2008) 162 Cal.App.4th 670, 682.)

In opposition, Cross-Complainant Dependable Personnel Inc. (“Dependable”) does not oppose a stay or transfer, but requests that the stay and transfer be “limited to the Diamond Cross-Complainant’s action against the Bridge Cross-Defendants.” (Opposition, 3:4-6.)

Cross-Defendants Diamond Peo, LLC, and Diamond ZB Staffing Services, LLC (collectively, “Diamond Peo”) filed a simultaneous response to both Bridge, et al.’s motion and Dependable’s Opposition. Diamond Peo contends that the issues are intertwined, and discovery cannot be done without Bridge.

Judicial notice is taken of the fact that on November 24, 2021, Diamond PEO, LLC and Diamond ZB Staffing Services, LLC (both Delaware companies) filed a Complaint against Bridge HRO, LLC and Scott Hanson in the Western District of Pennsylvania, alleging identical claims as alleged in their Cross-Complaint filed on July 7, 2022.

Judicial comity favors staying this action until the Pennsylvania matter is resolved.

Moreover, a "mandatory clause ordinarily is 'given effect without any analysis of convenience; the only question is whether enforcement of the clause would be unreasonable.'" (Korman v. Princess Cruise Lines, Ltd. (2019) 32 Cal.App.5th 206, 215.) "To be mandatory, a clause must contain language that clearly designates a forum as the exclusive one." (Ibid.) "Given the significance attached to forum selection clauses, the courts have placed a substantial burden on a plaintiff seeking to defeat such a clause, requiring it to demonstrate enforcement of the clause would be unreasonable under the circumstances of the case." (CQL Original Products, Inc. v. National Hockey League Players' Association (1995) 39 Cal.App.4th 1347, 1354.) "That is, that the forum selected would be unavailable or unable to accomplish substantial justice." (Ibid.)

Judicial Notice is taken of the Affiliate Service Agreement between Bridge HRO and Diamond Staffing Services, attached as Ex. Z to the Diamond Peo Cross-Complaint in this action. That Agreement contains a forum selection clause that unequivocally designates Pennsylvania as the exclusive forum for disputes.

Here, Diamond Peo voluntarily agreed to Pennsylvania as the exclusive forum for disputes. Diamond Peo raises discovery problems that they will face if Bridge does not participate in this action. However, a "mandatory clause ordinarily is 'given effect without any analysis of convenience.'" (Korman v. Princess Cruise Lines, Ltd. (2019) 32 Cal.App.5th 206, 215.)

The court finds that Pennsylvania is a suitable, alternative forum, and Diamond Peo failed to establish that Pennsylvania would be unavailable or unable to accomplish substantial justice.

Based on the foregoing, the motion is GRANTED. Because Bridge and Dependable’s actions are intertwined, this court cannot sever only Diamond PEO’s cross-complaint. Therefore, the entire action is STAYED, pending resolution of the Pennsylvania action.