Judge Ralph C. Hofer, Case 22GDCV00336 2023-04-28 Tentative Ruling

Plaintiff Korea Trade Insurance Corporation alleges that it is assignee to Mido Trade Co., Ltd, and brings this action for common counts, alleging that defendant Mix & Match Apparel, Inc. has become indebted to plaintiff in the sum of $152,244.49. The complaint alleges causes of action for open book account, account stated, and reasonable value.

Defendant Mix & Match Apparel, Inc. has filed a cross-complaint against Mido Trade Co., Ltd., alleging that in July and August of 2020, cross-complainant and cross-defendant entered into a written agreement by way of a series of purchase orders and invoices whereby cross-defendant agreed to sell and cross-complainant agreed to purchase certain women’s leggings. The cross-complaint alleges that cross-defendant breached the contract by failing to deliver conforming goods, failing to have the goods manufactured at the main factory of cross-defendant, placing false UPC codes on the goods, failing to inspect the goods in a proper manner, and delivering goods that were “bleeding” and had sewing defects so that the goods failed to pass inspection with an acceptable defect rate. The cross-complaint alleges that as a direct result of cross-defendant’s breach, cross-complainant has been damaged.

It is also alleged that during the negotiations for the sale of the goods, cross-defendant falsely represented the goods would be manufactured at the main factory of cross-defendant, that correct UPC codes would be placed on the goods, and that the goods would be inspected in a proper manner and pass inspection at an acceptable defect rate and that the goods would otherwise conform to the specifications required by cross-complainant. The cross-complaint alleges causes of action for breach of contract, breach of implied warranty of merchantability, breach of implied warranty of fitness for a particular purpose, fraud, negligent misrepresentation, and fraudulent billing.

“A corporation may be sued in the county where the contract was 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.”

“…if an action or proceeding is commenced in a court having jurisdiction of the subject matter thereof, other than the court designated as the proper court for the trial thereof, under this title, the action may, notwithstanding, be tried in the court where commenced, unless the defendant…within the time otherwise allowed to respond to the complaint, files with the clerk, a notice of motion for an order transferring the action or proceeding to the proper court…. Upon the hearing of the motion the court shall, if it appears that the action or proceeding was not commenced in the proper court, order the action or proceeding transferred to the proper court.”

As stated in the statute, a motion for change of venue concedes that this action was commenced in a court having jurisdiction of the subject matter of the action but depends on a showing that this court is not designated, “under this title,” as a proper court for the trial of the action or proceeding. The motion would ordinarily introduce evidence that the action has been brought in an incorrect county, not an entirely improper country.

CCP § 430.40(a) provides, “A person against whom a complaint or cross-complaint has been filed may, within 30 days after service of the complaint or cross-complaint, demur to the complaint or cross-complaint.” Under CCP § 585 judgment by default may be had if “no answer, demurrer,… notice of motion to transfer pursuant to Section 396b…has been filed with the clerk of the court within the time specified in the summons…” (Emphasis added). Here, the summons on the cross-complaint provides, “You have 30 CALENDAR DAYS after this summons and legal papers are served on you to file a written response wat this court and have a copy served on the cross-complainant.” [Summons, filed 08/09/2022].

Thirty days after service on November 16, 2022 would have been December 16, 2022. The motion was served on March 26, 2023, and filed on March 27, 2023, over three months late. The motion accordingly is denied as untimely.

Substantively, cross-defendant argues that it is a corporation organized and existing under the laws of the Republic of Korea, and that cross-complainant cannot allege or contend that the proper venue is in the County of Los Angeles, because the parties have a written contract for their dealings, in which it is specifically agreed upon by the parties that:

The Chung Declaration does not fully comply with the requirements for submitting a declaration as evidence, as it indicates it was executed in Seoul, South Korea, and is signed under penalty of perjury, except as to those matters stated on information, but does not state it is made under the laws of the State of California.

Under CCP § 2015.5, whenever any matter is required to be supported by a sworn “affidavit,” or “declaration,” such matter may be supported or proved by a statement in writing “which recites that it is certified or declared…to be true under penalty of perjury, is subscribed” by the declarant, and “if executed at any place, within or without this state, states the date of execution and that it is so certified or declared under the laws of the State of California.” The declaration and evidence submitted under that declaration may be disregarded on this ground.

In any case, the contract does not appear to defeat venue in Los Angeles County, as it confirms that shipment of the subject goods is to be made “to USA,” and sets forth an address of Mix & Match Apparel, Inc. in Los Angeles, California. [Ex. 1, p. 1, and para. 6].

As noted above, venue is proper as to a corporate cross-defendant “in the county where the contract was made or is to be performed, or where the obligation or liability arises, or the breach occurs….” CCP § 395.5. It appears that Los Angeles County is where the goods were to be delivered in accordance with the alleged agreements concerning their origin and quality, and where the alleged breach occurred.

It is held that plaintiff’s venue choice is ordinarily presumed to be proper, and that it is the burden of the moving party on a motion for change of venue, “to demonstrate that the plaintiff’s venue selection is not proper under any of the statutory grounds.” Fontaine v. Superior Court (2009) 175 Cal.App.4th 830, 836, citations, quotation omitted; see also Karson Industries, Inc. v. Superior Court (1969) 273 Cal.App.2d 7, 8-9.

“must be read in light of the paramount purpose of section 395.5, which is to permit a wider choice of venue against corporations or associations than would be permitted in suits against individuals. (See Mission Imports, supra, 31 Cal.3d at p. 928.).”

Cross-defendant here has failed to submit admissible evidence to meet its burden of showing venue selection is not proper under any ground, let alone any of the various statutory grounds, and the motion will be denied.

Moreover, is it held that a corporate defendant may only move for a transfer to its county of its principal place of business. Beutke v. American Securities Co. (1955) 132 Cal.App.2d 354. It is also held that where a corporate defendant is not registered to do business in this state, defendant is considered a foreign corporation and may be sued in any County of this state. In Easton v. Superior Court (1970) 12 Cal.App.3d 243, the court of appeal issued a peremptory writ of mandate compelling the trial court to vacate an order granting a change of venue, finding that where the status of a defendant is that of a foreign corporation, with no proof the corporation has qualified to do business in California, “it may be sued in any county in the state.” Easton, at 246-247.

Here, cross-defendant relies on the declaration of Jong Gun Chung, who indicates Chung executed the written contract between the parties, and who also states that Mido Trade “has no presence in the United States at all.” [Chung Decl., para. 3]. This statement suggests that the corporation is not qualified to do business in California and can be sued in any county of the state, so that Los Angeles County is accordingly an appropriate venue for this matter. The motion for change of venue accordingly is denied.

Cross-complainant in opposition argues that the motion is improper, as it is not a challenge to venue, in effect, to the county for the trial of the matter, but appears to be a disguised challenge to subject matter jurisdiction, or a motion to compel arbitration of the dispute, without meeting the requirements for obtaining relief with respect to either of those theories.

Cross-complainant argues that this is the wrong motion to achieve the purpose of transferring the court jurisdiction to arbitration in Korea, as a motion for change of venue argues that the county chosen by plaintiff is a wrong county for the lawsuit, and does not challenge the jurisdiction of the court. As argued in the opposition, since jurisdiction is statewide, the venue rules serve to narrow geographically the place for trial within the state, to the proper county within the state for trial of the action. The motion is accordingly not a proper motion for change of venue.

Cross-complainant in opposition further points out that it would appear to be improper for only the cross-complaint to be transferred to another venue, while the complaint would remain in the current venue, as the complaint and cross-complaint are two sides of the same coin, as the defenses asserted to the complaint are the same claims set forth in the cross-complaint.

It should also be noted that plaintiff, cross-defendant’s assignee, the insurer which evidently paid cross-defendant’s insurance claim in connection with the claim asserted in the complaint and obtained an assignment, actually chose this venue as a proper venue for resolution of the dispute between the cross-complainant as defendant and plaintiff, which as assignee stands in the shoes of its assignor Mido Trade.

The opposition also argues, for the sake of argument, that even if the motion were to be treated as a motion challenging jurisdiction or to compel arbitration, cross-defendant has failed to explain any legal basis supporting a motion challenging jurisdiction or supporting the transfer of the case to another jurisdiction, and that the motion fails to explain any legal basis compelling arbitration, so that cross-complainant cannot respond to such motions.

It appears that the court and cross-complainant cannot appropriately evaluate alternative motions which are not brought or noticed according to their legal requirements, or supported by reference to legal authority or specific evidence. The motion is denied in full.

“In its discretion, the court may order the payment to the prevailing party of reasonable expenses and attorney’s fees 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.”

Responding party, cross-complainant Mix & Match Apparel, Inc. will be the prevailing party on this motion. The court has considered whether the motion was made in good faith given the facts and law the party making the motion or selecting the venue knew or should have known. It appears from the papers that prior to the filing of this motion, the parties corresponded concerning arbitrating the matter, although cross-complainant took the position that the contract containing the arbitration provision did not cover all of the transactions giving rise to the cross-complaint, or all the causes of action. [Motion, Kim Decl., para. 3, Ex. 2; Opposition, Park Decl., para. 3]. Cross-complainant also discussed the necessity of arbitrating both the complaint and the cross-complaint if an arbitration was to be conducted. [Id.]. It is not clear why cross-defendant opted to bring a motion to change venue. It is possible that cross-defendant’s counsel saw such a motion as a vehicle to obtain expenses and attorney’s fees. [See Kim Decl., para. 2, Ex. 1].

It appears that counsel for cross-defendant had also been advised that the time to respond to the cross-complaint had expired, as the moving papers include an email from opposing counsel pointing this out, and indicating a default would be pursued. [Kim Decl., Ex. 3].

Under the circumstances, it appears that cross-defendant’s counsel was aware that the posture of the case may have warranted some action to compel arbitration, but brought instead a motion to change the venue of this matter within the counties of this state. This motion to change venue is procedurally defective, and lacking in merit, and misguided with respect to achieving the motion’s stated objective of having this matter transferred to an arbitration forum in Seoul, Korea. The court finds that the motion was not made in good faith given the facts and law the party making the motion knew or should have known.

The opposition seeks expenses and fees in the sum of $2,600, consisting of 5 hours communicating with opposition counsel and preparing opposition and 1.5 hours appearing at the hearing at $400 per hour. These attorneys’ fees are reasonable and are awarded in full as requested. As provided in the statute, the expenses and fees awarded are the personal liability of cross-defendant’s attorney of record only, and not chargeable to the party cross-defendant.

Procedurally, the motion is untimely, as not brought within the time allowed to respond to the cross-complaint, as required by CCP section 396b (a). The motion is accompanied by a declaration which is not attested to under the laws of the State of California, although executed outside this state, and the motion does not appear to seek relief afforded under the statute relied upon, which governs venue within the counties of this State.

Expenses and attorney’s fees sought by cross-complainant Mix & Match Apparel, Inc. are awarded pursuant to CCP section 396b(b). The Court finds that the motion was not made in good faith given the facts and law the party making the motion knew or should have known. The Court finds the reasonable expenses and fees to oppose this motion are $2,600.00 [$2,600 requested], which sum is awarded in favor of cross-complainant Mix & Match Apparel, Inc. and against the attorney of record for cross-defendant Mido Trade Co., Ltd., Jamie Kim of LK Professional Law Group, only, and are not chargeable to the party cross-defendant. CCP section 396b(b).

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