Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-04537/USCOURTS-cand-3_04-cv-04537-1/pdf.json

Parties Involved:
Alpina Insurance Company
Defendant
Radian International, LLC
Plaintiff

Document Text:

United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

RADIAN INTERNATIONAL, LLC,

Plaintiff,

 v.

ALPINA INSURANCE COMPANY,

Defendant. 

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No. C-04-4537 SC

ORDER RE: DEFENDANT'S

MOTION TO DISMISS

COMPLAINT FOR

IMPROPER VENUE, LACK

OF PERSONAL

JURISDICTION, AND

FORUM NON CONVENIENS

Plaintiff Radian International, LLC ("Plaintiff") brought

this action against Defendant Alpina Insurance Company

("Defendant") to obtain declaratory relief and damages for an

alleged breach of contract. The suit stems from a disagreement

over whether or not Defendant had a duty to defend and indemnify

Plaintiff pursuant to an insurance policy. The parties disagree

over whether the policy at issue covers defense costs and damages

resulting from a dispute between Plaintiff and Solidere, a quasigovernmental Lebanese entity which engaged Plaintiff to carry out

environmental remediation work on a landfill in Beirut, Lebanon.

Defendant now specially appears before the Court to move for

dismissal based on improper venue, lack of personal jurisdiction,

or forum non conveniens. Because the Court finds that dismissal

for improper venue is appropriate, the Court does not consider the

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alternative arguments. Nor does the Court consider the underlying

merits of the case. Rather, this Order is concerned solely with

the dispositive question of whether or not venue is proper.

Defendant asserts that venue is improper due to a forum

selection clause contained in the underlying insurance contract. 

Motion at 2. The clause reads as follows:

In the event an Insured and the Company dispute the

meaning, interpretation or operation of any term,

condition, definition or provision of this Policy

resulting in litigation, an Insured and the Company

agree that the laws of the State of Lebanon shall be

governing [sic] this Policy in all disputes,

interpretation or operation of any terms, condition,

definition or provision. Hence any resolution to a

dispute, interpretation or operation of any terms,

condition, definition or provision shall be held in

Beirut, Lebanon.

Amended Complaint, Exhibit A-1 at 10. Essentially, Defendant's

improper venue argument boils down to whether or not this clause

is enforceable. For the following reasons, the Court holds that

it is enforceable.

The main argument put forth by Plaintiff in seeking to defeat

this Motion is that the clause is not a mandatory forum selection

clause. As Plaintiff correctly points out, the Ninth Circuit only

enforces "mandatory" forum selection clauses which "confer

exclusive and mandatory jurisdiction." Hunt Wesson Foods, Inc. v.

Supreme Oil Co., 817 F.2d 75, 78 (9th Cir. 1987). It does not

enforce "permissive" clauses which merely grant jurisdiction to a

particular forum without ruling out concurrent jurisdiction in

other forums. Id. at 77-78.

Therefore, when faced with the question of whether or not to

enforce a forum selection clause, a District Court must look to

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examples of both mandatory and permissive forum selection clauses

to determine into which category the one at issue falls. See,

e.g., Koresko v. RealNetworks, Inc., 291 F. Supp. 2d 1157 (E.D.

Cal. 2003). An example of an enforceable, mandatory clause is:

This agreement shall be deemed to be a contract made

under the laws of the State of Virginia ... Licensee

hereby agrees and consents to jurisdiction of the

courts of the State of Virginia. Venue of any action

brought hereunder shall be deemed to be in Gloucester

County, Virginia.

Docksider, Ltd. v. Sea Tech. Ltd., 875 F.2d 762 (9th Cir. 1989). 

In holding the clause enforceable, the Docksider court focused on

the final sentence's inherent meaning of exclusivity. Id. at 763.

On the other hand, an example of a permissive, unenforceable

clause is:

The courts of California, County of Orange, shall have

jurisdiction over the parties in any action at law

relating to the subject matter or the interpretation of

this contract.

Hunt Wesson Foods, 817 F.2d at 76. In holding this clause to be

unenforceable, the Hunt Wesson court stated, "Although the word

'shall' is a mandatory term, here it mandates nothing more than

that the Orange County courts have jurisdiction." Id. at 77. 

The court continued, "Such consent to jurisdiction, however, does

not mean that the same subject matter cannot be litigated in any

other court." Id. The issue before this Court is thus whether

the forum selection clause at hand is permissive like the Hunt

Wesson clause or mandatory like the Docksider clause.

The Court finds that the clause here is unambiguously a

mandatory clause. In particular, the Court points to the final

sentence, which states that "any resolution to a dispute ... shall

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be held in Beirut, Lebanon." Amended Complaint, Exhibit A-1 at

10. Unlike the phrase "shall have jurisdiction" in Hunt Wesson,

which does not suggest any exclusivity, the phrase "shall be held"

unambiguously mandates exclusivity. Compare N. Cal. Dist. Council

of Laborers v. Pittsburg-Des Moines Steel Co., 69 F.3d 1034 (9th

Cir. 1995) (holding that "shall be enforceable by a petition to

confirm an arbitration award filed in the Superior Court of the

City and County of San Francisco" is a permissive forum selection

clause), with Pelleport Investors, Inc. v. Budco Quality Theatres,

Inc., 741 F.2d 273 (9th Cir. 1984) (holding that "shall be

litigated only in the Superior Court for Los Angeles, California"

is an enforceable forum selection clause). Therefore, the clause

now before the Court is an enforceable, mandatory forum selection

clause.

A second argument put forth by Plaintiff is that Lebanon is

an unreasonable forum. Generally, "[a] forum selection clause is

prima facie valid and should be enforced unless enforcement is

shown by the resisting party to be 'unreasonable' under the

circumstances." Fireman's Fund Ins. Co. v. Cho Yang Shipping Co.,

131 F.3d 1336, 1338 (9th Cir. 1997) (internal citations and

quotations omitted). Plaintiff relies in part on an Eighth

Circuit case which held that a forum selection clause requiring

litigation in Iran was unreasonable. McDonnell Douglas Corp. v.

Islamic Republic of Iran, 758 F.2d 341 (8th Cir. 1985). However,

McDonnell Douglas is easily distinguishable from the instant case. 

In that case, the court noted that Iran was at the time fighting a

war with Iraq, which had an announced aim of shooting down

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commercial airliners over Iran. Id. at 346. The court also noted

that Iran and the United States had no diplomatic relations. Id.

The situation in present-day Lebanon is not at all similar, and

courts in other jurisdictions have enforced forum selection

clauses mandating litigation in Lebanon. See Iskandar v. American

Univ., 98 Civ. 6616, 1999 U.S. Dist. LEXIS 12195, at *10-12

(S.D.N.Y. Aug. 9, 1999).

Plaintiff also contends that the clause at issue is

unreasonable because the United States Department of State has

cautioned against travel to Lebanon and because recent events

there suggest a lack of stability. Opposition at 8-10. However,

this argument does not comport with the Plaintiff's ready

agreement to the clause when the contract was signed. Plaintiff

alleges that the Lebanese security situation has deteriorated

markedly since 1999, when the insurance policy came into effect. 

However, even taking as true all the allegations put forth by

Plaintiff, the Court does not agree that the current situation is

so different that the Court should decline to enforce a clause

which Plaintiff readily agreed to in 1999. For example, Plaintiff

points to the recent bombing assassination of a Lebanese political

leader. Opposition at 9. However, terrorist bombings are not at

all specific to Lebanon as recent events in Madrid and London have

sadly demonstrated. Or, Plaintiff points to a State Department

travel warning for Lebanon, but a travel warning by itself does

not make litigation in a particular country per se unreasonable. 

See Ismail v. Am. Univ. of Beirut, 246 F. Supp. 2d 330 (S.D.N.Y.

2003) (granting dismissal based on forum non conveniens

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1

 Plaintiff also suggests that witnesses in the United States

will be unlikely to travel to Lebanon for dispute resolution

proceedings. However, just as American courts have procedures for

taking out-of-jurisdiction depositions of witnesses, this Court

assumes that Lebanese courts have similar procedures unless

Plaintiff can show otherwise. In terms of travel by legal

professionals to Lebanon, it is unclear to the Court why a large

number of legal professionals would even need to visit Lebanon

given that the clause at issue mandates that Lebanese law controls,

and presumably, local counsel is most knowledgeable about Lebanese

law.

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notwithstanding a travel warning for Lebanon). Therefore, this

Court does not agree that the domestic situation in Lebanon makes

the clause at issue unreasonable.1

Plaintiff has put forth a third argument to prevent

enforcement of the forum selection clause. Plaintiff states,

"Radian's principal claim seeks damages based on Alpina's bad

faith handling of Radian's tender of the Solidere action, an

extra-contractual theory of liability clearly outside the

contemplation of [the forum selection clause.]" Opposition at 7. 

Along the same lines, Plaintiff asserts that its bad faith claim

is outside the scope of the clause because it does not involve a

dispute over the "meaning, interpretation or operation of any

term, condition, definition or provision of this Policy." Id. at

8. Plaintiff cites no case law to support either of these

propositions. In fact, controlling case law conclusively

demonstrates that Plaintiff's bad faith cause of action does fall

within the scope of the forum selection clause. Regardless of

whether the bad faith claim is contractual or tortious in nature,

or "extra-contractual" as Plaintiff alleges, it falls within the

scope of the clause as long as resolution of the claim "relates to

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interpretation of the contract." Manetti-Farrow, Inc. v. Gucci

America, Inc., 858 F.2d 509, 514 (9th Cir. 1988). Based on this

Court's reading of the Amended Complaint, the bad faith claim

clearly relates to interpretation of the contract--the claim

alleges that Defendant "has failed to deal fairly and in good

faith with Radian by unreasonably refusing to pay Radian's defense

costs and damages awarded in the Solidere Action and has

maliciously refused to defend or indemnify Radian ..." Amended

Complaint at 10. This Court finds that it would be impossible to

extricate the issue of whether or not Defendant Alpina reasonably

refused to defend and indemnify Plaintiff from the issue of what

the insurance contract required. Therefore, this Court holds that

the bad faith claim falls within the purview of the forum

selection clause.

"[A] valid forum selection clause is given controlling weight

in all but the most exceptional cases." Manetti-Farrow, Inc., 858

F.2d at 513, citing to Stewart Org., Inc. v. Ricoh Corp., 487 U.S.

22, 33 (1988) (Kennedy, J., concurring). In the case at hand,

Plaintiff has not presented a compelling argument that would

support finding this to be one of those most exceptional cases. 

Therefore, the Court GRANTS Defendant's Motion to Dismiss.

IT IS SO ORDERED.

Dated: July 14 , 2005

 /s/ Samuel Conti 

UNITED STATES DISTRICT JUDGE

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