Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_06-cv-04343/USCOURTS-cand-5_06-cv-04343-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Petition for Removal

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United States District Court

For the Northern District of California

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 At oral argument the parties accepted the court's tentative ruling on the motion, which is

consistent with this order.

ORDER DENYING MOTION TO REMAND—06-04343 RMW

SPT

United States District Court

For the Northern District of California

E-FILED on 10/5/06

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

FIRST FRANKLIN FINANCIAL

CORPORATION, a Delaware Corporation,

Plaintiff,

vs.

MORTGAGE ACADEMY, INC., et al. Defendants.

No. C-06-04343 RMW

ORDER DENYING MOTION TO REMAND

[Re Docket No. 5]

Plaintiff First Franklin Financial Corporation ("FFFC") filed this suit in Santa Clara County

Superior Court. Defendant Mortgage Academy, Inc. ("Mortgage") removed the action to the present

court on the basis of diversity of jurisdiction. FFFC now seeks remand. Mortgage opposes the

motion to remand. The court heard oral argument on the motion on September 22, 2006. The court

has read the moving papers and considered the arguments of counsel. For the reasons set forth

below, the court DENIES plaintiff's motion to remand.1

I. ANALYSIS

The parties do not appear to dispute that diversity of jurisdiction exists—FFFC is a citizen of

California and both named defendants, Mortgage and individual defendant, Tamika Brown, are

Case 5:06-cv-04343-PVT Document 15 Filed 10/05/06 Page 1 of 5
United States District Court

For the Northern District of California

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 Mortgage appears to also state in passing that the contract is one of adhesion, but does not

otherwise proffer any legal argument to support why it should not be enforced. 

ORDER DENYING MOTION TO REMAND—06-04343 RMW

SPT 2

citizens of Michigan. The amount in controversy of this breach of contract cause of action exceeds

$75,000. 

FFFC's motion to remand is premised on the forum selection clause in a mortgage broker

agreement (the "MBA") between the parties which reads as follows:

This Agreement shall be governed by the internal laws and not the laws regarding

conflicts of laws of the state of California. Venue for any judicial proceeding under

the Agreement shall be in Santa Clara County, California.

Compl., Ex. A at ¶ 1.08. FFFC asserts that because California state courts are organized by county

while federal courts are organized by district, this clause establishes that venue shall be only in

Santa Clara County Superior court. In opposition, Mortgage argues that the clause is too ambiguous

to be construed as a waiver of its substantive right to proceeding in federal court. Mortgage also

contends that the ambiguity should be construed against the drafter, FFFC.2

FFFC relies primarily on two cases in support of its position: Docksider, Ltd. v. Sea Techs.,

875 F.2d 762, 764 (9th Cir. 1989) and Hunt Wesson Food, Inc. v. Supreme Oil Co., 817 F.2d 75 (9th

Cir. 1987). In Docksider, the agreement stated "venue of any action brought hereunder shall be

deemed to be in Gloucester County, Virginia." 875 F.2d at 764. The Ninth Circuit found this venue

selection clause to intend that the place of suit lies exclusively within the designated county. Id.

Therefore, "whether or not several states might otherwise have jurisdiction over actions stemming

from the agreement, all actions must be filed and prosecuted in Virginia." Id. (emphasis added). 

Although the court also noted that the agreement mandated jurisdiction with the state courts of

Virginia, it did not rely upon the venue selection clause and its reference to "county" as indication of

consent to state courts. Rather, the Ninth Circuit indicated the parties separately consented to

jurisdiction of the state courts of Virginia. See id. ("Docksider not only consented to jurisdiction of

the state courts of Virginia, but further agreed by mandatory language that the venue for all actions

arising out of the license agreement would be Gloucester County, Virginia."). Therefore, FFFC's

reliance upon Docksider as holding that consent to venue in a particular "county" constitutes consent

only to venue in state court is misplaced. 

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ORDER DENYING MOTION TO REMAND—06-04343 RMW

SPT 3

Hunt is similarly distinguishable. In Hunt, the clause at issue stated the "courts of California,

County of Orange, shall have jurisdiction over the parties in any action at law . . . ." 817 F.2d at 76. 

The court concluded that the "Orange County courts" have jurisdiction. Id. at 77. Thus, the

defendant could not object to litigation in the Orange County Superior Court. Notably, the Ninth

Circuit did not interpret the clause to mean that only the Orange County Superior Court had

jurisdiction—rather, the courts geographically located in Orange County, including the superior

court, had jurisdiction.

In Merrell v. Renier, 2006 WL 1587414, *1 (W.D. Wash. June 6, 2006), the court concluded

that a forum selection clause similar to the one here did not bar defendant's removal of the action to

federal court. In Merrell, the forum selection clause stated "venue . . . will reside in the United

States and in the county of residence of the non-breaching party." The court held that the clause did

not limit venue to the superior court in the plaintiff's county of residence. The court reasoned that

the concept of "venue" refers to location of the events giving rise to the action, not to the location of

a particular court. See 28 U.S.C. § 1391(a)(2) (A plaintiff may lay venue in "a judicial district in

which a substantial part of the events or omissions giving rise to the claim occurred."). In addition,

the court noted that dictionary definitions of "venue" support a conclusion that the federal court is a

proper venue. See Black's Law Dictionary 1591 (8th ed. 2004) (defining "venue" variously as "[t]he

proper or possible place for a lawsuit to proceed," and "[t]he county or other territory over which a

trial court has jurisdiction"). 

The court's reasoning in Merrell is applicable here. The forum selection clause requires

venue to be "in Santa Clara County, California," not in a particular court in Santa Clara County,

California. The court finds that the only sensible reading of the paragraph 1.08 of the MBA supports

venue in any court geographically located in Santa Clara County. Moreover, FFFC has not offered

any case law supporting that a reference to "county" in a forum selection clause is interpreted as

consent to only state court. To the extent the forum selection clause is ambiguous as Mortgage

argues, it must be rejected to the extent it does not clearly designate a particular forum as the

exclusive venue. See Merrell, 2006 WL 1587414, *3 (citing N. Cal. Dist. Council of Laborers v.

Pittsburg-Des Moines Steel Co., 69 F.3d 1034, 1037 (9th Cir. 1995)) (Under Ninth Circuit law, the

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ORDER DENYING MOTION TO REMAND—06-04343 RMW

SPT 4

court is not empowered to interpret an ambiguous forum selection clause, it must reject it to the

extent it does not "clearly designate" a particular forum as the exclusive venue.).

II. ORDER

For the foregoing reasons, the court DENIES plaintiff's motion to remand. 

DATED: 10/5/06

RONALD M. WHYTE

United States District Judge

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United States District Court

For the Northern District of California

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ORDER DENYING MOTION TO REMAND—06-04343 RMW

SPT 5

Notice of this document has been electronically sent to:

Counsel for Plaintiffs:

Brian H. Gunn bhgunn@wolfewyman.com 

Eric M. Schiffer emschiffer@wolfewyman.com 

Counsel for Defendants:

Ronald D. Rosengarten 

Rosengarten & Leven, LLP 

23801 Calabasas Road 

Suite 1015 

Calabasas, CA 91302 

Counsel are responsible for distributing copies of this document to co-counsel that have not

registered for e-filing under the court's CM/ECF program.

Dated: 10/5/06 SPT

Chambers of Judge Whyte

Case 5:06-cv-04343-PVT Document 15 Filed 10/05/06 Page 5 of 5