Source: https://casetext.com/case/appalachian-ins-company-v-superior-court
Timestamp: 2019-04-24 12:19:01+00:00

Document:
Antin, Stern, Litz Grebow, Arthur Grebow, Edward Gartenberg, Dickstein, Shapiro Morin, Sidney Dickstein, Michael E. Nannes and Howard M. Schiffman for Petitioner.
Kelley, Drye Warren, Shigeru Watanabe and Bruce L. Ishimatsu for Real Party in Interest.
The issue in this case is whether a defendant can raise the doctrine of forum non conveniens after having agreed by contract to submit to the jurisdiction of any court of competent jurisdiction which the plaintiff requests. We hold that the contractual provision does not preclude application of the doctrine of forum non conveniens, which is designed to protect both the interests of the litigants and the public.
In May of 1984, plaintiff/real party in interest Union Carbide Corporation (Union Carbide) filed a complaint for declaratory relief in the Los Angeles Superior Court regarding the construction and effect of an insurance policy issued to it by defendant/petitioner Appalachian Insurance Company (Appalachian).
Union Carbide is a New York corporation which has its principal place of business in Connecticut and conducts business in California. Appalachian is a Rhode Island corporation, which has its principal place of business in Rhode Island, and also conducts business in California.
According to the complaint, the parties entered into a special risk policy as of 1972, under which Appalachian agreed to provide Union Carbide with insurance for losses in excess of $500,000 per occurrence. A "Service of Suit" clause in that policy stated: "(a) It is agreed that, in the event of the failure of this Company to pay any amount claimed to be due hereunder, this Company, at the request of the Insured, will submit to the jurisdiction of any court of competent jurisdiction within the United States and will comply with all requirements necessary to give such court jurisdiction and all matters arising hereunder shall be determined in accordance with the law and practice of such court.
"(b) In any suit instituted against it upon this contract, this Company will abide by the final decision of such court or any appellate court in the event of an appeal.
"(c) Service of process in any such suit may be made: (1) upon the Company at its home office in Providence, Rhode Island; or (2) provided the Insured shall first notify this Company of its intention to sue, upon the highest officer having supervision of insurance (normally bearing a title such as Commissioner, Superintendent or Director of Insurance) in any State in the United States. Such officer is hereby authorized and directed to accept service of process on behalf of this Company in any such suit."
The complaint alleged that, in May of 1974, Kevin Haran and his father sued Union Carbide, based on Kevin's injuries when he burst into flames after being sprayed with Union Carbide's 6-12 Plus insect repellent. In April of 1984, about 10 days before the Haran trial, Union Carbide notified Appalachian of the pending claim. Appalachian told Union Carbide that further handling was subject to a complete reservation of its rights and that Union Carbide had breached its obligation by unreasonably failing to attempt to settle. In May of 1984, the Haran jury returned a verdict against Union Carbide for $2.75 million. Union Carbide asserted it was questionable whether Appalachian would fulfill its obligations under the policy in light of its reservation of rights.
In June of 1984, Appalachian filed a notice of motion and motion to dismiss or stay the action on the ground of forum non conveniens. The motion added certain facts omitted from the complaint. Kevin Haran's injuries were sustained at his home in New York. The Haran trial took place in a New York state court. Union Carbide's insurer for the first $500,000 of liability per occurrence was American Motorists Insurance Company (AMI), an Illinois corporation. Union Carbide had refused a settlement offer near the close of trial of $650,000, despite Appalachian's unconditional offer to reimburse for the amount exceeding $500,000. After the verdict the Haran plaintiffs were granted the option to stipulate to a reduced verdict of $1.5 million or proceed to retrial on the damages issue.
Appalachian complained that Union Carbide had "selected this Court situated 2,500 miles from the locus of any act or person involved with the controversy solely to avail itself of a perceived benefit from the application of California law." It had recently filed against Union Carbide and AMI a complaint for declaratory relief in the United States District Court for the Southern District of New York, seeking a determination of coverage obligations for the Haran claim. It requested that the court dismiss Union Carbide's claim on the ground that California had no interest in the resolution of the controversy.
Appalachian filed with its motion the declaration of Arthur S. Barry, its assistant vice president responsible for claims administration of the Union Carbide policy. Mr. Barry detailed the progress of the Haran trial and settlement negotiations, indicating that all the witnesses were located either in New York or Connecticut. In his 18 years of experience, Mr. Barry had "come to understand that that [Service of Suit] clause was voluntarily developed by Lloyd's of London many years ago, as a response to competitor's arguments that Lloyd's was not amenable to process in the United States and that the potential customer should therefore place its business with a domestic company that was subject to service process." He further stated that he did not understand the clause as intended to give an insured the option of suing in a state bearing no relationship to the claim, and Appalachian certainly had not intended that result.
In opposing Appalachian's motion, Union Carbide relied on the service of suit provision and the fact that both parties had substantial business operations in California. A declaration by a Union Carbide employee indicated that the company had over $233 million in assets in this state in 1982 and paid over $1.8 million in franchise and property taxes here in 1983. Appalachian's financial statement showed that in the first quarter of 1984, it had written direct premiums of over $1.38 million and paid direct losses of over $760,000 in California.
The trial court denied Appalachian's motion, finding: "Defendant agreed in the insurance contract that plaintiff could choose the forum. Implicit in the agreement was that absent an unreasonable choice, the selection should be honored. [¶] California may be inconvenient but it is no [ sic] an unreasonable choice."
(1a) Appalachian sought mandate with this court, complaining that the trial court failed to apply the applicable criteria and abused its discretion. We issued the alternative writ.
The petition indicates that AMI has filed its answer in the pending New York case and also has filed a counterclaim against Appalachian and a cross-complaint against Union Carbide.
(3) In California, the doctrine of forum non conveniens is codified in Code of Civil Procedure section 410.30, subdivision (a) which states: "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."
Similarly, in Goodwine v. Superior Court (1965) 63 Cal.2d 481, 485 [ 47 Cal.Rptr. 201, 407 P.2d 1], the Supreme Court said: "In determining the applicability of the doctrine, the court must consider the public interest as well as the private interests of the litigants."
(5a) The applicable criteria for ruling on a motion to dismiss or stay on the ground of forum non conveniens are set forth in Great Northern Ry. Co. v. Superior Court (1970) 12 Cal.App.3d 105 [ 90 Cal.Rptr. 461].
The petitioner in Great Northern was a railway company with its principal place of business in Minnesota and general offices in Washington. It operated a small amount of track in California and maintained "off-line" offices here for solicitation of business. The decedent, a Washington resident, was a railway employee who was killed in Washington while performing his duties. The decedent's widow employed a California law firm to bring the wrongful death action against the railway. The law firm secured the appointment of its employee as the California administratrix of the estate, and filed a California action as her counsel. The trial court refused to dismiss on forum non conveniens grounds even though the decedent had no estate in California other than the cause of action, all the anticipated witnesses came from Washington, the California case would take longer to reach trial than a Washington case would, and it would cost the railway considerably more money.
Those factors are: 1. The amenability of the defendant to personal jurisdiction in the alternative forum.
2. The relative convenience to the parties and witnesses of trial in the alternative forum.
3. The differences in conflict of law rules applicable in this state and in the alternative forum.
4. The principal place of business of the defendant.
5. Whether the situation, transaction or events out of which the action arose exists, occurred in, or had a substantial relationship to this state.
6. Whether any party would be substantially disadvantaged in having to try the action (a) in this state or (b) in the forum in which the moving party asserts it ought to be tried.
7. Whether any judgment entered in the action would be enforceable by process issued or other enforcement proceedings undertaken in this state.
8. Whether witnesses would be inconvenienced if the action were prosecuted (a) in this state or (b) in the forum in which the moving party asserts it ought to be prosecuted.
9. The relative expense to the parties of maintaining the action (a) in this state and (b) in the state in which the moving party asserts the action ought to be prosecuted.
10. Whether a view of premises by the trier of fact will or might be necessary or helpful in deciding the case.
11. Whether prosecution of the action will or may place a burden on the courts of this state which is unfair, inequitable or disproportionate in view of the relationship of the parties or of the cause of action to this state.
12. Whether the parties participating in the action have a relationship to this state which imposes upon them an obligation to participate in judicial proceedings in the courts of this state.
13. The interest, if any, of this state in providing a forum for some or all of the parties to the action.
14. The interest, if any, of this state in regulating the situation or conduct involved.
15. The avoidance of multiplicity of actions and inconsistent adjudications.
16. The relative ease of access to sources of proof.
17. The availability of compulsory process for attendance of witnesses.
18. The relative advantages and obstacles to a fair trial.
19. The public interest in the case.
20. Whether administrative difficulties and other inconveniences from crowded calendars and congested courts are more probable in the jurisdiction chosen by plaintiff.
21. Whether imposition of jury duty is imposed upon a community having no relation to the litigation.
22. The injustice to, and burden on, local courts and taxpayers.
23. The difficulties and inconvenience to defendant, to the court, and to jurors hearing the case, attending presentation of testimony by depositions.
24. Availability of the forum claimed to be more appropriate.
25. The other practical considerations that make trial of a case convenient, expeditious and inexpensive.
(1b) In the case at bench, Union Carbide has never controverted Appalachian's claims that 22 of the 25 Great Northern criteria weigh in favor of dismissal of this action. Union Carbide has emphasized only that both it and Appalachian maintain substantial business operations in this state. That fact does not automatically provide California with an interest in this dispute. (7) As we found in Gould, Inc. v. Health Sciences, Inc. (1976) 54 Cal.App.3d 687, 693 [ 126 Cal.Rptr. 726], the fact that a large national corporation conducts some business in this state does not bring it within the favored position, for forum non conveniens purposes, of a plaintiff residing solely in this state.
A different situation would be presented if the litigants were incorporated in California or had their principal place of business here. ( Holmes v. Syntex Laboratories, Inc. (1984) 156 Cal.App.3d 372, 387 [ 202 Cal.Rptr. 773]; Bechtel Corp. v. Industrial Indem. Co. (1978) 86 Cal.App.3d 45, 51 [ 150 Cal.Rptr. 29]; Brown v. Clorox Co. (1976) 56 Cal.App.3d 306, 311 [ 128 Cal.Rptr. 385].) Moreover, we see no significance to the fact Appalachian utilized the courts of this state in Appalachian Insurance Co. v. Rivcom Corp. (1982) 130 Cal.App.3d 818, 821 [ 182 Cal.Rptr. 11], as that case involved property in Ventura County.
In Outboard Marine Corp. v. Superior Court (1976) 59 Cal.App.3d 434, 442 [ 130 Cal.Rptr. 642], the court held that a California trial court abused its discretion in denying a motion to dismiss on forum non conveniens grounds, where there was no legitimate interest to be served by a California trial, and "[t]he ends of justice and fairness to litigants, courts, and taxpayers require[d] that the action be tried in Wyoming." (1c) Similarly here, if the Great Northern criteria apply, the trial court abused its discretion in failing to grant Appalachian's motion. The issue is whether those criteria apply, given the service of suit clause in the insurance policy.
We find the logic of Plum Tree, Inc. v. Stockment (3rd Cir. 1973) 488 F.2d 754, to be compelling.
In Gould, Inc. v. National Union Fire Insurance Co. (N.D. Ill. Nov. 17, 1983, Dock. No. Civ. 82-C-3154 [Lexis Genfed library — cases file]), the court relied on Plum Tree in granting an insurance company's motion to transfer an action from an Illinois to a Missouri district court. Even though the policy contained a provision that the insurance company would submit at the insured's request to the jurisdiction of any court of competent jurisdiction within the United States, the third party or public interests had to be weighed by the trial court. The service of suit clause meant that the convenience of the parties weighed in favor of suit in the forum chosen by the plaintiff, but transfer could be warranted by the remaining factors.
(8a) We agree with the Plum Tree-Gould reasoning. In California, as in the federal courts, the doctrine of forum non conveniens is designed to serve the interests both of the litigants and the public. ( Price v. Atchison, T. S.F. Ry. Co., supra, 42 Cal.2d at pp. 583-584; Goodwine v. Superior Court, supra, 63 Cal.2d at p. 485; Great Northern Ry. Co. v. Superior Court, supra, 12 Cal.App.3d at pp. 112-115.) Those public interests "cannot be automatically outweighed by the existence of a purely private agreement between the parties." ( Plum Tree, Inc. v. Stockment, supra, 488 F.2d at p. 758.) (1d) The service of suit clause did not absolve the trial court from its duty to consider the effect of the Great Northern criteria on the case at bench.
General Phoenix Corporation v. Maylon (S.D.N.Y. 1949) 88 F. Supp. 502; Euzzino v. London Edinburgh Insurance Company (N.D.N.C. 1969) 228 F. Supp. 431; Perini Corporation v. Orion Insurance Company (E.D. Cal. 1971) 331 F. Supp. 453; Wilson v. Continental Casualty Company (1966) 255 F. Supp. 622; Oil Well Service Company v. Underwriters at Lloyd's London (C.D. Cal. 1969) 302 F. Supp. 384; Capital Bank Trust v. Associated Intern. Ins. (M.D. La. 1984) 576 F. Supp. 1522.
Our conclusion is further strengthened by the declaration of Appalachian's vice president, indicating that the service of suit clause was not intended to give Union Carbide the right to sue in a state bearing no relationship to the claim. (9) Such evidence is admissible to explain a meaning to which the language of a contract is reasonably susceptible. ( Pacific Gas E. Co. v. G.W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33 [ 69 Cal.Rptr. 561, 442 P.2d 641, 40 A.L.R.3d 1373], 37; 2 Jefferson, Cal. Evidence Benchbook (2d ed. 1984) Parole Evidence Rule, § 32.2, pp. 1138-1140.) (8c) Union Carbide submitted no contrary declaration. We decline to give the service of suit clause a meaning which was not intended by the parties.
For similar reasons, this case is different from Smith, Valentino Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491 [ 131 Cal.Rptr. 374, 551 P.2d 1206], which enforced a clause under which each contracting party agreed to bring an action only in the other's home state. The Smith court found that "both [parties] reasonably [could] be held to have contemplated in negotiating their agreement the additional expense and inconvenience attendant on the litigation of their respective claims in a distant forum; such matters are inherent in a reciprocal clause of this type." ( Id., at p. 496.) Such matters are not inherent in the type of forum selection clause involved here.
For the same reason, we reject the application of Pelleport Investors v. Budco Quality Theatres (1984) 741 F.2d 273, 280. Pelleport enforced a clause that disputes were to be litigated in Los Angeles Superior Court, finding that such clauses allowed "parties in routine commercial transactions to eliminate the uncertainties of where litigation will take place." The clause here was fraught with uncertainty. The same distinction applies to Furda v. Superior Court (1984) 161 Cal.App.3d 418 [ 207 Cal.Rptr. 646], in which the contract provided that any disputes were to be litigated in Michigan, one of the parties' home state.
The principle that the doctrine of forum non conveniens protects the public interest as well as that of the litigants is paramount in our determination that the forum selection clause in this contract does not preclude the application of the doctrine of forum non conveniens.
Let the peremptory writ of mandate issue directing dismissal of the action.
Kingsley, J., and Arguelles, J., concurred.

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