Case Number: EC062963    Hearing Date: October 31, 2014    Dept: B

Motion to Dismiss or Stay

This case arises from the Plaintiff’s claim that the Defendant breached an advertising agreement by failing to pay the Plaintiff for advertising that the Plaintiff had provided to the Defendant.

This hearing concerns the Defendant’s motion to dismiss or stay the action on the ground that the parties agreed to a forum selection provision that requires the action to be brought in Chicago, Illinois.

An initial issue is that the Plaintiff argues that the Defendant did not comply with CCP section 1005(b) because the motion was served by mail on October 6, 2014. In order to serve a motion by mail for a hearing on October 31, 2014, a party would be required to mail the motion no later than October 4, 2014, which was a Saturday. Under CCP section 12a, if the last day for an action falls on a holiday, then the action is may be completed on the first day which is not a holiday. Holiday includes Saturdays and Sundays. Since October 4, 2014 was a holiday, the Defendant was required to file the motion on October 3, the Friday before the holiday ( For a court filing deadline that requires a certain number of days’ notice before the hearing, when the date falls on a holiday, the last date before the required filing date controls. See CCP §12c)

However, under California law, the Court may treat an opposition on the merits as a waiver of a defect in notice. Alliance Bank v. Murray (1984) 161 Cal. App. 3d 1, 7. Here, the Plaintiff’s opposition papers include arguments directed at the merits of the Defendant’s motion to dismiss. Since the Plaintiff’s opposition papers include arguments on the merits, the Court considers the Plaintiff to have waived any defect in the notice and issue a ruling on the merits.

The Defendant seeks relief under CCP section 410.30(a), which 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.”

Contractual forum-selection clauses are usually enforced in California regardless of the inherent additional expense and inconvenience of litigating claims in a distant forum, unless the party challenging enforcement of the clause can show it is unreasonable. Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 495–496. In cases with a contractual forum-selection clause, the burden of proof is on the party resisting the forum. Galen v. Redfin Corp. (2014) 227 Cal. App. 4th 1525, 1544. The party’s burden is to demonstrate that the contractually selected forum would be unavailable or unable to accomplish substantial justice or that no rational basis exists for the choice of forum. Id. Neither inconvenience nor the additional expense of litigating in the selected forum is a factor to be considered. Id. However, a forum selection clause will not be enforced if to do so would bring about a result contrary to the public policy of this state. Id.

Both parties correctly recite California law on the enforceability of choice of law provisions. Such provisions will be enforces unless either 1) the chosen state has no substantial relationship to the parties or the transaction, or 2) the law of the chosen state is contrary to the fundamental public policy of the state with a greater interest than the chosen state. 1-800-Got Junk LLC v. Superior Court (2010) 189 Cal App 4th 500. In short, this Court is determining whether to enforce the forum selection clause in a California forum, i.e., whether the contractually chosen forum is unavailable or unable to accomplish substantial justice or that no rational basis exists for the choice of forum.

This case involves a dispute arising over a contract. The Plaintiff claims that the Defendant breached its obligation to pay the Plaintiff for advertising services. A copy of the contract is attached as exhibit A to the Complaint.

On page 15, in section 21 “GOVERNING LAW & SEVERABILITY”, the parties agreed that the agreement would be governed and construed in accordance with the laws of Illinois. Further, the parties agreed that the federal or state courts in Chicago, Illinois would have exclusive jurisdiction to hear any dispute under the agreement.

Section 21 indicates that the parties agreed that the forum for any dispute arising from the agreement would be in a state or federal court located in Chicago, Illinois. Since the Plaintiff’s case is a dispute arising from the contract, the parties agreed that the case would be heard in a state or federal court located in Chicago, Illinois.

Under the case law, the Plaintiff has the burden of proof to challenge the forum selection clause with evidence that the contractually selected forum would be unavailable or unable to accomplish substantial justice or that no rational basis exists for the choice of forum.

The Plaintiff attempts to meet this burden by asserting that the chosen state has no relationship to the parties or transactions and is otherwise not a reasonable choice. action arising from a breach of contract claim. In support of its argument Plaintiff points to the following allegations and evidence: Plaintiff has its principal place of business in California; all communications that Plaintiff had with Defendants were with representatives in India and it had no contact with anyone in Illinois during the parties’ transactions; Defendant’s witnesses, i.e. the personnel involved in the transaction, reside in India and Seoul Korea, that the claimed principal place of business of the Defendant at 20 N. Wacker Drive, Chicago Illinois is leased to another unrelated company and contains no employees or presence of the Defendant but is instead a drop location; that the Vice Chairman and Executive Director of Affinity Global is located in Seoul South Korea; and all of Plaintiff’s witnesses are located in Burbank,CA; and Plaintiff signed the contract in Burbank, CA.

A review of the contract in exhibit A to the Complaint reveals that it was between Hostway Corp., and the Plaintiff, Plexious, LLC. The Plaintiff alleges in paragraph 8 of its Complaint that the agreement was then transferred to the Defendant, Affinity Global, Inc.

The address for Hostway Corp. is 100 N. Riverside Plaza, Chicago, Illinois. This indicates that when the parties entered into the contract, a party to the contract, Hostway Corp., had its address in Chicago, Illinois. Since its address was in Chicago, Illinois, a rational basis existed for the parties draft a contract that chose to use a forum in Chicago, Illinois to resolve a claim arising from the contract. But there is insufficient evidence that Chicago Illinois is the principle place of business of Defendant, which seeks to enforce the forum selection. Although the Defendant offered the declaration of John Lee, who is its Vice Chairman and Executive Director, the statement in his declaration that “Affinity is a Delaware corporation with its principal place of business in the United States at 20 N. Wacker Drive, 12th Floor, Chicago Illinois, is a legal conclusion with no evidentiary support for that conclusion. Further, Plaintiff’s evidence sufficiently attacks Mr. Lee’s conclusion.

The Plaintiff has tendered sufficient evidence in the Declaration Sergey Denisoff and the attachments thereto to raise issues as to the Defendant’s principal place of business and whether substantial justice will be accomplished if this action is heard in a forum outside of this state, i.e., in a forum located in Chicago, Illinois as agreed to by the parties in the contract at issue.

Therefore, the Court will continue this motion for 90 days to provide further evidence of the Defendant’s principle place of business in the United States and on the issue of the chosen state’s relationship with the parties or the transactions. During this 90 day period, both parties may conduct discovery on these issues. The parties shall meet and confer in an effort to agree on expediting the discovery.

Motion continued to January 30, 2015 at 8:30 am in this department.