Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_06-cv-01030/USCOURTS-caed-1_06-cv-01030-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

SRINI KRISH, an individual,

 Plaintiff,

 v. 

G.R. BALASUBRAMANIAM, 

 Defendant.

1:06-CV-01030 OWW TAG

MEMORANDUM DECISION AND

ORDER RE: DEFENDANT’S MOTION

TO DISMISS (DOC. 10)

I. INTRODUCTION

Before the court for decision is Defendant G.R.

Balasubramaniam’s motion to dismiss this action, which concerns

payments made pursuant to a contract for the sale of real

property located in Coimbatore, India. Defendant’s motion

formally invokes both Federal Rules of Civil Procedure 12(b)(3)

(improper venue) and 12(b)(6) (failure to state a claim), but

Defendant explains the grounds for his motion as follows:

The grounds for this Motion are that the terms of the

underlying contract provide that Plaintiffs sole

remedy, in this situation, is an action under an Indian

law to complete the sale, which must necessarily be

heard in a court with in rem jurisdiction over the real

property in Coimbatore, India. Further, defendant

moves the court to dismiss the Complaint because it

fails to state a claim upon which relief can be

granted, in that Plaintiff’s sole remedy, pursuant to

the contract, is an action to complete the sale under

Indian law. 

(Doc. 10 at 1.) Although this appears to be an attempt to attack

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the complaint both on venue grounds and on the sufficiency of the

pleadings, Defendant is essentially arguing for dismissal based

on the existence of a forum selection clause. 

Defendant attaches to his motion to dismiss the declaration

of Srinivasan Dorairaj, an attorney licensed to practice law in

India, which provides certain information related to the

underlying real property agreement and its enforceability under

the Specific Relief Act, a body of Indian law. (Doc. 12, filed

Aug. 30, 2006.) Plaintiff, Srini Krish, opposes dismissal. 

(Doc. 13-1, filed Sept. 15, 2006.) Plaintiff also objects to the

court’s consideration of the Dorairaj declaration, arguing that

it consists of “legal opinion on the merits of Plaintiff’s case.” 

(Doc. 13-2.) Defendant filed a reply (Doc. 14, filed Sept. 22,

2006), along with opposition to Plaintiff’s evidentiary

objections (Doc. 15, filed Sept. 22, 2006). 

Plaintiff filed a sur-reply, asserting that Defendant raised

new arguments it his reply brief. (Doc. 16, filed Sept. 26,

2006.) Defendant filed an objection to the sur-reply. (Doc. 17,

filed Sept. 29, 2006.) 

II. BACKGROUND. 

This case concerns a contract for the sale of real property

located in the Coimbatore, India. (Doc. 1, Compl. at ¶7.) 

Defendant, an Indian citizen who currently resides in

Bakersfield, California, has owned the property since 1988. (Id.

at ¶¶ 4, 10.) Plaintiff claims to currently be a resident of

Carrollton, Texas (id. at ¶3), although Defendant asserts that

Plaintiff is a resident of India. (Doc. 14 at 1 n.1.) 

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On or about November 1, 2005, the parties entered into an

oral agreement to sell the property. (Id. at ¶7.) This oral

agreement was reduced to a written deed of sale agreement (the

“Sales Agreement”) in India and was signed by both parties. The

critical language from the Sales Agreement for purposes of the

instant motion states:

Whereas if [Plaintiff] is ready and willing to complete

the sale within stipulated period and incase [sic] if

the [Defendant] fails or delay [sic] the completion of

the sale, [Plaintiff] is at liberty to proceed in court

of law to complete the sale under Specific Relief Act

holding [Defendant] liable for the same. 

(Compl. Ex. A at 4 (hereinafter referred to as the “at liberty

clause”).) 

Pursuant to the Sales Agreement, Plaintiff was to pay

Defendant approximately U.S. $356,000. (Id. at ¶12.) 

Approximately $4,600 was paid as an advance, with the total

amount due on the closing date of June 13, 2006. (Id. at ¶13.) 

Plaintiff alleges that he paid Defendant an additional $139,534

toward the purchase price by wire transfer on January 11, 2006,

pursuant to an oral agreement. (Id. at ¶14.) The wire transfer

was made from Plaintiff’s account in Texas to Defendant’s account

in California. (Id. at ¶14 & Ex. D.) 

Plaintiff alleges that on May 9, 2006, Defendant breached

and repudiated the Sales Agreement by advising Plaintiff in

writing that he refused to convey the Property to Plaintiff. 

(Id. at ¶15.) Plaintiff also alleges that Defendant has refused

to return the $139,534 paid to him for the purchase of the

property. (Id.) It is further alleged that Defendant never

intended to fulfill his obligations to Plaintiff under the Sales

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Agreement and oral agreement to sell and convey the real

property. (Id. at ¶34.) 

On August 7, 2006, Plaintiff filed this action based on

diversity of citizenship, alleging: (1) breach of oral and

written contract; (2) assumpsit; (3) constructive trust; (4) and

intentional misrepresentation.

III. DISCUSSION

Defendant moves to dismiss the complaint under Federal Rule

of Civil Procedure 12(b)(3) for improper venue and for failure to

state a claim under Rule 12(b)(6).

A. Evidentiary Objections. 

As a threshold matter, Plaintiff raises some evidentiary

objections to the declaration of Srinivasan Dorairaj, who

purports to be an attorney licensed to practice law in India. 

(Doc. 12, filed Aug. 30, 2006.) The declaration contains some

factual information pertaining to the procedural history of the

underlying property dispute. Specifically, Mr. Doriaraj asserts

that Plaintiff took various steps in India in an attempt to

enforce the Sales Agreement. (Doc. 12 at ¶3-4.) In addition,

Mr. Doriaraj opined that 

Under Section 16 of the Specific Relief Act, the party

who seeks the relief of specific performance should

prove, from the date of agreement to till date, he was

and is ready and willing with funds to purchase the

properties. The readiness and willingness to perform

his part of the obligations under the agreement should

be strictly proved. The Specific Performance of

agreement is an equitable relief in India. Under

section 20 of the Act, it is made clear that the relief

of Specific Performance is a discretionary relief. 

Under [the] Specific Relief Act time is not the essence

of the agreement relating to sale of immovable

properties. It is not known why the Plaintiff herein

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had not initiated legal proceedings in India to enforce

the agreement through he had issued a pre-suit notice. 

In a suit for Specific Performance the Plaintiff herein

can also ask for a decree to get a refund of the

advance amount paid by him together with interest as

alternative relief. In India there is also scope to

claim damages n such suit. The costs of proceedings

also can be adjusted toward [the] sale price. The

Defendant herein took all possible efforts to pay back

the amount paid by the Plaintiff and it is the

Plaintiff who had not only refused to accept the refund

but also threatened to initiate legal action. Even

now, the Plaintiff can file a suit for specific

performance and alternatively seek the relief to get a

refund of the advance amount together with interest and

damages. Apprehending certain defects in title in the

property and, due to certain omissions and commissions

the Plaintiff herein appears to have failed to file a

suit in India to enforce the agreement. The Plaintiff

for his own reasons failed to file the suit for

Specific Performance. Without revoking the agreement

in writing, he cannot seek refund of the advance amount

in India. I took all possible steps to amicably

resolve the disputes and I could not. succeed. 

(Id. at ¶5.) Plaintiff objects to the court’s consideration of

the Dorairaj declaration, arguing that it consists of “legal

opinion on the merits of Plaintiff’s case.” (Doc. 13-2.) It is

true that the above-quoted passage, which concludes that the

Specific Relief Act applies to the Sales Agreement and that the

Act also provides Plaintiff an opportunity to seek a refund as

alternative relief, is of the nature of a legal opinion. Under

certain circumstances, materials concerning foreign law that are

not otherwise admissible may be considered by a district court. 

But, such materials may only be relied upon after the party who

intends to raise an issue concerning the law of a foreign country

has given appropriate notice to the other side. Fed. R. Civ. P.

44.1. Arguably, by raising the issue of foreign law in its

motion to dismiss, Defendant has satisfied the requirements of

Rule 44.1. See Advisory Committee Notes to the 1966 Amendment. 

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However, evidence from foreign law experts submitted pursuant to

Rule 44.1 is admissible only to aid a court’s understanding of

foreign law; foreign law experts may not opine as to the ultimate

application of the foreign law to the facts of the case. 

Plaintiff’s objection is sustained as to any such impermissible

legal opinions. 

Defendant also argues that there are portions of the

Declaration that relate facts, not opinion. Specifically,

Defendant wishes to rely on the Doriaraj’s statement that the

Specific Relief Act is the proper name of a particular body of

Indian law. (Doc. 15 at 1.) It is proper to consider the

declaration for this purpose.

B. Choice of Law Issues.

In a diversity action, choice of law is governed by the law

of the forum state. Field v. Legacy Health System, 413 F.3d 943,

950 (9th Cir. 2005). “In the absence of an effective choice of

law by the parties, rights and obligations are to be determined

by the law of the state that, with respect to the particular

issue, has the most significant relationship to the transaction

and the parties.” (1 Witkin, Summary California Law, Contracts §

61 (2005).) Defendant asserts that the proper law to be applied

here is the law of India:

California law requires the application of Indian

law in the instant case because there was an effective

choice of law by the parties, and also because India is

the state that, with respect to the Sale Agreement, has

the most significant relationship to the transaction

and the parties. 

The Sale Agreement was negotiated in India,

entered into in India, and recorded in India; it

pertains to the sale of real estate in India, with

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consideration to be paid in Indian currency. The Sales

Agreement has no connection whatsoever with the United

States. Therefore, applying California law to

determine the choice of law, it is clear that the Sales

Agreement must be construed in accordance with Indian

law, and enforced by Indian Courts. 

(Doc. 10 at 4.) 

In addition, Defendant asserts that the declaration is

evidence of how difficult it may be for the district court to

interpret a sales agreement drafted in India, arguing that:

[T]he language and reasoning underlying the Declaration

indicate a great difference between the US and India,

both in terms of law and language. The Declaration,

much like the Sales Agreement, is extremely difficult

for Americans to read. Even when writing in English,

Indian attorneys utilize a different mode of thinking,

which is reflected in such writings. The Declaration

is further evidence of the extreme difficulty this

court will have in applying Indian law to interpret the

Sales Agreement.

(Doc. 15 at 2.) 

Whether there is truly a difference between the usage of

English by Americans and the usage of the English language by

Indian attorneys is an issue that has not yet been properly

vetted by the parties. More importantly, Defendant’s assertion

that the need to apply Indian law should preclude venue is

misplaced. Federal courts routinely apply the law of other

countries; the determination that another country’s law controls

does not automatically render improper venue in a United States

courtOctober 3, 2006. Rivendell Forest Prods., Ltd. v. Canadian

Pac. Ltd., 2 F.3d 990, 994 (10th Cir. 1993)(choice of law issue

is not dispositive of venue analysis). The need to apply

unfamiliar foreign law is just one factor that may be considered

in determining whether to dismiss a case for forum non

conveniens. See Piper Aircraft Co. v. Reyno, 454 U.S. 235, 260

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Here, Defendant is essentially arguing that venue is 1

not proper in the Eastern District of California because of the

forum selection clause. Alternatively, a party opposing an

otherwise proper venue chosen by plaintiff’s may petition for

dismissal on forum non conveniens grounds. See generally Lueck

v. Sundstrand Corp., 236 F.3d 1137 (9th Cir. 2001). 

8

(1981). However, Defendant has not moved for dismissal on forum

non conveniens grounds. 

C. Improper Venue.

The general rule regarding the propriety of a particular

venue in a diversity action is set forth in 28 U.S.C. § 1391,

which provides: 

A civil action wherein jurisdiction is founded only on

diversity of citizenship may, except as otherwise

provided by law, be brought only in (1) a judicial

district where any defendant resides, if all defendants

reside in the same State, (2) a judicial district in

which a substantial part of the events or omissions

giving rise to the claim occurred, or a substantial

part of property that is the subject of the action is

situated, or (3) a judicial district in which any

defendant is subject to personal jurisdiction at the

time the action is commenced, if there is no district

in which the action may otherwise be brought.

A district court has authority to dismiss a case filed in the

wrong venue pursuant to 28 U.S.C. § 1406(a):1

The district court of a district in which is filed a

case laying venue in the wrong division or district

shall dismiss, or if it be in the interest of justice,

transfer such case to any district or division in which

it could have been brought. 

Defendant’s central argument is that the “at liberty” clause

in the Sales Agreement operates as a “de facto forum selection

clause” because the language “requires that any legal action must

occur in a court which can exercise specific equitable

jurisdiction over the property at issue” under the Specific

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Relief Act. 

The Specific Relief Act is a body of Indian Law....

Therefore, the Sales Agreement clearly designates

indian law as governing. This is also a de facto

choice of forum clause, since only Indian courts can

complete the sale of real property in India. The Sales

Agreement must be interpreted in accordance with Indian

law, and enforced by Indian Courts. 

(Doc. 10 at 4.)

Parties may by contract designate the forum in which any

litigation is to take place, and litigation commenced elsewhere

may be subject to dismissal for improper venue. See, e.g.,

Spradlin v. Lear Siegler Mgt. Services, 926 F.2d 865, 866 (9th

Cir. 1991); TAAG Linhas Aereas de Angola v. Transamerica

Airlines, 915 F.2d 1351 (9th Cir. 1990). 

But, a forum selection clause will be enforced only where

venue is specified with mandatory language. Docksider, Ltd. v.

Sea Technology, Ltd., 875 F.2d 762, 764 (9th Cir. 1989). If the

language of the forum selection clause is non-mandatory, the

forum selection clause will not preclude suit elsewhere. Hunt

Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75, 77 (9th Cir.

1987). To be a mandatory forum selection clause, the clause must

contain language that clearly designates a forum as the exclusive

one. Northern California Dist. Council of Laborers v.

Pittsburg-Des Moines Steel Co., 69 F.3d 1034, 1037 (9th Cir.

1995). “When only jurisdiction is specified, the clause will

generally not be enforced without some further language

indicating the parties' intent to make jurisdiction exclusive." 

Docksider, 875 F.2d at 764 (emphasis added). A forum selection

clause needs to contain additional language mandating that venue

be in a particular place or mandatory language requiring a case

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be litigated in only one forum. Council of Laborers, 69 F.3d at

1037. For example, in Pelleport Investors, Inc. v. Budco Quality

Theatres, Inc., 741 F.2d 273, 275 (9th Cir. 1984), the forum

selection clause expressly mandated a particular forum:

Exhibitor [Budco] expressly agrees that any and all

disputes arising out of or in connection with this

Agreement shall be litigated only in the Superior Court

for Los Angeles, California (and in no other), and

Exhibitor hereby consents to the jurisdiction of said

court.

Id. at 275. On the other hand, in Hunt Wesson Foods, 817 F.2d

75, the clause at issue contained the following language: 

Buyer and Seller expressly agree that the laws of the

State of California shall govern the validity,

construction, interpretation and effect of this

contract. The courts of California, County of Orange,

shall have jurisdiction over the parties in any action

at law relating to the subject matter of the

interpretation of this contract.

Id. at 76. The Ninth Circuit held that the clause was permissive

because “in cases in which forum selection clauses have been held

to require litigation in a particular court, the language of the

clauses clearly required exclusive jurisdiction.” Id. at 77.

In Council of Laborers, 69 F.3d at 1036, the forum selection

clause read:

[A] decision of the Board of Adjustment...or the

decision of a permanent arbitrator shall be enforceable

by a petition to confirm an arbitration award filed in

the Superior Court of the City and County of San

Francisco, State of California.

The Ninth Circuit found this language was not mandatory because

the phrase “shall be enforceable” is as permissive as language

providing a given forum “shall have jurisdiction,” which is not

mandatory. Id. at 1037. 

Here, the language of the Sales Agreement is even less

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Defendant suggests that Indian attorneys may utilize 2

the English language differently from Americans, making it

difficult for a court of the United States to interpret the Sales

Agreement. To the extent that Defendant is impliedly arguing

that the phrase “at liberty” would be interpreted as “must” by an

Indian attorney, he has provided absolutely no evidence to

support such an assertion. 

11

mandatory than that in Pittsburg-Des Moines or Council of

Laborers providing:

Whereas if [Plaintiff] is ready and willing to complete

the sale within stipulated period and incase [sic] if

the [Defendant] fails or delay [sic] the completion of

the sale, [Plaintiff] is at liberty to proceed in court

of law to complete the sale under Specific Relief Act

holding [Defendant] liable for the same. 

(Compl. Ex. A at 4.) This is permissive language. To the extent

that this is a forum selection clause, it does not mandate

dismissal.2

Defendant suggests that the entire body of law discussed

above is inapplicable here because the contract must be

interpreted under Indian law. Defendant misunderstands the

nature of the venue inquiry. Venue is a procedural issue that,

in a diversity case, is governed by federal (United States) law

to select the proper place for trial. See Manetti-Farrow, Inc.

v. Gucci America, Inc., 858 F.2d 509, 512-13 (9th Cir.

1988)(applying federal law, rather than California law, to

interpretation of forum selection clause); Jones v. Weibrecht,

901 F.2d 17, 19 (2d Cir. 2009)(same with respect to New York

law). The federal rule that forum selection clauses must contain

mandatory language to be enforceable applies with equal force to

cases involving the law of a foreign jurisdiction. See K&V

Scientific Co., Inc., v. Bayerische Motoren Werke

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Aktiengesellshaft (“BMW”), 314 F.3d 494, 198 (10th Cir.

2002)(applying federal permissive/mandatory analysis where

contract unambiguously provided for “jurisdiction in Munich[,

Germany]”); see also, John Boutari and Son, Wines and Spirits,

S.A. v. Attiki Importers and Distrib. Inc., 22 F.3d 51, 52-53 (2d

Cir. 1994)(contract providing that “[a]ny dispute arising between

the parties hereunder shall come within the jurisdiction of the

competent Greek Courts, specifically of the Thessaloniki Courts,”

was permissive, rather than mandatory, under Docksider, and did

not strip federal court of jurisdiction); Caldas & Sons, Inc. v.

Willingham, 17 F.3d 123, 127 (5th Cir. 1994)(same result where

contract provided “[t]he laws and courts of Zurich are

applicable”); Citro Florida, Inc. v. Citrovale, S.A., 760 F.2d

1231, 1231-32 (same result where contract provided “Place of

jurisdiction is Sao Paulo/Brazil”).

Defendant also suggests that venue is improper in the

Eastern District of California because “only Indian courts can

complete the sale of real property in India.” (Doc. 10 at 4.) 

But, Plaintiff does not seek specific enforcement of the

agreement. 

D. Failure to State a Claim.

Although Defendant’s motion most directly challenges venue,

he also argues that the Complaint should be dismissed because “if

fails to state a claim upon which relief can be granted, in that

Plaintiff’s sole remedy, pursuant to the contract, is an action

to complete the sale under Indian law.” (Doc. 10 at 1.) This

argument has no merit. The “at liberty” clause is permissive,

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rather than mandatory. As a result, the Sales Agreement does not

render Specific Performance Plaintiff’s sole remedy in this case. 

Moreover, although Defendant repeatedly asserts that relief under

the Specific Performance Act is the sole remedy available to

Plaintiff, no such assertion is made in Mr. Dorairaj’s

declaration. Mr. Dorairaj makes it clear that relief (both

specific performance and damages) may have been available to

Plaintiff under the Specific Relief Act, but nowhere states that

such remedies are the only ones available. 

IV. CONCLUSION

The motion to dismiss for improper venue is DENIED. To the

extent that the motion can be interpreted as a motion to dismiss

for failure to state a claim, any such motion is also DENIED. 

SO ORDERED

Dated: October 10, 2006 /s/ OLIVER W. WANGER

OLIVER W. WANGER

United States District Judge

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