Court Opinion

ID: 9927305
Source: CourtListenerOpinion
Date Created: 2024-01-26 19:02:40.112879+00
Date Added: 2024-06-11T09:24:36.416475
License: Public Domain

Filed 1/26/24 The Rushing Co. v. Caydon San Diego Property CA4/1

                    NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                 DIVISION ONE

                                         STATE OF CALIFORNIA

THE RUSHING COMPANY, LLC,                                            D081489

         Plaintiff and Appellant,

         v.                                                          (Super. Ct. No. 37-2022-
                                                                     00030947-CU-BC-CTL)
CAYDON SAN DIEGO PROPERTY,
LLC,

         Defendant and Respondent.

         APPEAL from an order of the Superior Court of San Diego County,
Matthew C. Braner, Judge. Reversed and remanded.
         CGS3, Gregory S. Markow and Salvatore Padula for Plaintiff and
Appellant.
         Glaser Weil Fink Howard Jordan & Shapiro, Elizabeth A. Sperling and
Alaina Bird for Defendant and Respondent.
      Claiming that defendant Caydon San Diego Property, LLC (Caydon)
failed to pay for contracted engineering and design services on a land
development project, plaintiff The Rushing Company, LLC (Rushing) filed a
complaint seeking to foreclose on a previously recorded mechanics lien.
Caydon filed a motion to dismiss or stay the action, arguing that the
agreement attached to Rushing’s complaint included a mandatory forum
selection clause requiring the parties to litigate any dispute in Harris
County, Texas. The trial court agreed, noting that Rushing failed to present
evidence that the Harris County, Texas courts would be unable to fairly
decide the dispute. After ordering a temporary stay to give Rushing an
opportunity to re-file its action in Texas, the trial court dismissed the action.
      The central issue in this appeal is the enforceability of the forum
selection clause. We interpret the forum selection clause as permissive,
which triggers a traditional forum non conveniens analysis. Caydon, as the
moving party, failed to carry its burden to show the suitability of the
alternative forum, and we independently conclude the Texas courts are not a
suitable forum in this case. Texas courts are unable to exercise the requisite
in rem jurisdiction over the property subject to the mechanics lien, and
Rushing’s mechanics lien foreclosure cause of action would be time-barred if
re-filed in Texas.
      Accordingly, we reverse the trial court’s order and remand this matter
to the San Diego Superior Court as the appropriate forum for resolving this
litigation.

              FACTUAL AND PROCEDURAL BACKGROUND

      In May 2022, after Caydon allegedly failed to pay for engineering and
design work performed on the California Theater Project (Project) in

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downtown San Diego, Rushing recorded a mechanics lien on the property in
the amount of $195,638.40. Less than three months later, Rushing filed a
complaint against Caydon asserting causes of action for breach of oral

contract, foreclosure of mechanics lien, and quantum meruit.1 Attached to
the complaint were copies of an unsigned draft agreement (Agreement)
purporting to confirm the terms and conditions of the parties’ oral agreement
and the recorded mechanics lien.
      Caydon demurred to the complaint and concurrently filed a motion to
dismiss, or, in the alternative, stay the action pursuant to Code of Civil

Procedure section 410.30, subdivision (a).2 Caydon’s demurrer was based, in
part, on the argument that Rushing lacked standing to bring any claim based
on the Agreement because neither party to the litigation is a named party to

the contract.3 In its motion to dismiss, Caydon argued that to the extent
Rushing had standing to sue, it was required to initiate its action in a Harris
County, Texas court based on the Agreement’s forum selection clause.

1     The complaint contained in the record on appeal bears an August 4,
2022 file-stamp, but it was initially e-filed on August 2, 2022, and was
subsequently “deemed filed” by the trial court on August 2, 2022.

2     All further statutory references are to the Code of Civil Procedure
unless otherwise indicated. Section 410.30, subdivision (a) 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.”

3     The draft agreement attached to Rushing’s complaint is “by and
between Caydon USA San Diego LLC . . . and Rushing, Inc.” while the parties
in the underlying action are named “The Rushing Company, LLC” and
“Caydon San Diego Property, LLC.”
                                       3
      After taking the matter under submission, the trial court granted the
motion to stay or dismiss and overruled the demurrer as moot. The
December 16, 2022 minute order stated in part: “The court will stay this case
in its entirety once Plaintiff has refiled its case in a state or federal court
sitting in Harris County, Texas. . . . If Plaintiff has not refiled its case by

[January 27, 2023], the court will dismiss the case.”4 Rushing filed an appeal

from the stay order.5 (See § 904.1, subd. (a)(3).)

4     The trial court did not rule on Caydon’s request for judicial notice filed
in support of its demurrer. Caydon seeks to renew part of that request on
appeal, seeking judicial notice of Rushing invoices purportedly relevant to the
demurrer that was overruled as moot. Although an appellate court may
consider matters that are properly the subject of judicial notice (Evid. Code,
§ 459), the invoices and their contents are not judicially noticeable “[f]acts
and propositions that are not reasonably subject to dispute and are capable of
immediate and accurate determination by resort to sources of reasonably
indisputable accuracy.” (Id., § 452, subd. (h); see also Joslin v. H.A.S. Ins.
Brokerage (1986) 184 Cal.App.3d 369, 374-375 [“Taking judicial notice of a
document is not the same as accepting the truth of its contents or accepting a
particular interpretation of its meaning. [Citation.]]”.) We likewise decline
to accept and consider as unnecessary its reply brief in support of judicial
notice.

5     For reasons that are not clear from the record, on January 27, 2023,
several weeks after the notice of appeal was filed, a different judge purported
to stay the case pending appeal and then dismissed it without prejudice.
Suffice it to say, the court had no jurisdiction to dismiss the case while the
appeal was pending. (§ 916, subd. (a); Varian Medical Systems, Inc. v.
Delfino (2005) 35 Cal.4th 180, 189 [“The purpose of the automatic stay
provision of section 916, subdivision (a) ‘is to protect the appellate court’s
jurisdiction by preserving the status quo until the appeal is decided. The
[automatic stay] prevents the trial court from rendering an appeal futile by
altering the appealed judgment or order by conducting other proceedings that
may affect it.’ [Citation.]]”.)
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                                DISCUSSION

      Contracting parties often include choice of law, venue, and forum
selection clauses in their written agreements to predetermine how and where
potential future disputes will be resolved. According to Rushing, the parties
entered into an oral agreement whose terms and conditions were confirmed
by the unsigned draft Agreement. Caydon’s demurrer disputed the existence
of any contract between the parties. But for purposes of its concurrently filed
motion to stay or dismiss, Caydon assumed Rushing’s premise that if the
parties had an oral agreement, the unsigned written Agreement reflected its

terms.6
      The Agreement states in section 13.15:
          Law to Apply/Venue. This Agreement shall be construed
          under and in accordance with the laws of the United States
          and laws of the state where the Project is located.
          Notwithstanding the foregoing, the Parties agree that
          venue for any dispute under this Agreement shall lie in the
          state courts or federal courts sitting in Harris County,
          Texas.

      In this appeal, the parties vigorously dispute the scope and effect of
section 13.15. Caydon asserts that the provision constitutes a mandatory
forum selection clause and was properly enforced by the trial court to
preclude litigating the dispute in San Diego. Rushing makes several contrary
arguments. First, it maintains that the section is limited to venue selection.
Second, it contends the trial court erred by interpreting the language as

6     We limit the substance of our decision to reviewing the December 16
order granting Caydon’s motion to stay or dismiss the action on the basis of
an incorrect forum. Because that same order also overruled Caydon’s
demurrer to the complaint as moot without addressing the merits, we will
reverse the order in its entirety with directions to recalendar the demurrer.

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mandatory. Finally, even if the clause were mandatory, Rushing argues that

it should not be enforced.7

A. Section 13.15 Encompasses Both Venue and Forum Selection

      The parties presented no extrinsic evidence concerning the meaning of
the Agreement, so we independently interpret its language. As the court
explained in Intershop Communications AG v. Superior Court (2002)
104 Cal.App.4th 191, 196 (Intershop), “An appellate court is not bound by the
trial court’s construction of a contract when, as here, the interpretation is
based solely upon the terms of the written instrument without any
assessment of conflicting extrinsic evidence.” (See also Bushansky v. Soon-
Shiong (2018) 23 Cal.App.5th 1000, 1006 (Bushansky) [interpretation of a
forum selection clause is a legal question subject to de novo review]; accord,
Animal Film, LLC v. D.E.J. Productions, Inc. (2011) 193 Cal.App.4th 466,
471 (Animal Film) [“When, as here, no conflicting extrinsic evidence has been
presented, the interpretation of a forum selection clause is a legal question
that we review de novo.”].)
      A venue selection clause is “purely an intrastate issue involving the
selection of a county in which to hold the trial.” (Alexander v. Superior Court

7      When granting Caydon’s motion to dismiss, the trial court apparently
assumed, without deciding, the existence of the Agreement between the
parties. (See Brown v. USA Taekwondo (2021) 11 Cal.5th 204, 209 [at the
demurrer stage, the truth of the allegations in the complaint are assumed];
see also Lu v. Dryclean-U.S.A. of California, Inc. (1992) 11 Cal.App.4th 1490,
1494 [an unsigned agreement does not necessarily render a forum selection
clause unenforceable].) We express no opinion on whether the Agreement is
valid and enforceable, and if so, on what terms. (See Vita Planning &
Landscape Architecture, Inc. v. HKS Architects, Inc. (2015) 240 Cal.App.4th
763, 764 [it is for the trier of fact to determine whether the contract did in
fact exist where “ ‘ “ ‘the evidence is conflicting or admits of more than one
inference’ ” ’ ”].)
                                        6
(2003) 114 Cal.App.4th 723, 727.) A forum selection clause, by contrast,
reflects the parties’ choice of a court from among different states or a place of
jurisdiction. (Ibid.) Under the circumstances of this case, the relevant clause
in the Agreement does both. By referencing solely “the state courts or federal
courts sitting in Harris County, Texas,” the Agreement specifies both a forum

(Texas) and a specific venue (Harris County).8 We therefore reject Rushing’s
contention that it is limited to designating venue.

B. The Forum Selection Clause Is Permissive

      The mere presence of a forum selection clause in an agreement does not
automatically prevent a different court from exercising jurisdiction. (See
M/S Bremen v. Zapata Off-Shore Co. (1972) 407 U.S. 1, 12.) And the extent
to which it does often depends on whether the clause is characterized as
“mandatory” or “permissive.” (Intershop, supra, 104 Cal.App.4th at p. 196.)
If the clause is mandatory, it “will ordinarily be given effect without any
analysis of convenience,” the only question being “whether enforcement of the
clause would be unreasonable.” (Ibid.) “On the other hand, when the clause
merely provides for submission to jurisdiction and does not expressly mandate
litigation exclusively in a particular forum, then the traditional forum non

8      Under different circumstances, a clause might be properly interpreted
as specifying the specific venue within a court’s territorial jurisdiction only if
that court could properly exercise personal jurisdiction over the defendant.
This was the situation in Global Packaging, Inc. v. Superior Court (2011)
196 Cal.App.4th 1623, where the parties’ agreement provided for venue
alternatively in either (a) the California county where the seller was located,
or (b) the location where the product was being used. (Id. at p. 1627.)
Understandably, the court concluded that this language did not reasonably
indicate the buyer was agreeing to jurisdiction in California that was not
otherwise constitutional. (Id. at p. 1634.)
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conveniens analysis applies.” (Ibid., italics added; accord, Verdugo v.
Alliantgroup, L.P. (2015) 237 Cal.App.4th 141, 147, fn. 2 (Verdugo).)
      Here, the trial court interpreted section 13.15 as mandatory. And on
appeal, Caydon relies on three cases to defend that ruling. Caydon’s
imprecise comparisons are unavailing, and we find the forum selection
language in all three cases materially distinguishable.
      In Docksider, Ltd. v. Sea Technology, Ltd. (9th Cir. 1989) 875 F.2d 762,
764, the relevant clause includes language indicating the parties’ intent to
exclusively litigate in Virginia—“ ‘venue of any action brought hereunder
shall be deemed to be in . . . Virginia.’ ” (Italics added.) Similarly, the clause
in CQL Original Products, Inc. v. National Hockey League Players’ Assn.
(1995) 39 Cal.App.4th 1347, 1352, 1358 expressly references the parties’
agreement to defer to one party’s “election” and includes language indicating
its mandatory nature—“ ‘any claims arising hereunder shall, at the
Licensor’s election, be prosecuted in the appropriate court of Ontario.’ ”
(Italics added.) Section 13.15 contains no such similar language. Finally, in
Intershop, the court construed the applicable language—“ ‘[t]o the extent
permitted by the applicable laws the parties elect Hamburg to be the place of
jurisdiction’ ”—as indicating the parties’ agreement that Hamburg, Germany
would be the only forum, and the record in that case contained undisputed
evidence that the forum selection clause would be mandatory under German
law. (Intershop, supra, 104 Cal.App.4th at p. 196, italics added.) Unlike the
clause in Intershop, section 13.15 does not reflect any “election” by these
parties to make the Texas courts in Harris County as the exclusive forum as
long as it is permissible under Texas law.
      Other forum selection clauses construed to be mandatory include some
type of language indicating the exclusivity of a particular forum. (See, e.g.,

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Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 494
[plaintiff agreed to bring all actions arising out of agency agreement only in
Philadelphia]; Bushansky, supra, 23 Cal.App.5th at p. 1011 [“ ‘to the fullest
extent permitted by law, the Court of Chancery of the State of Delaware . . .
shall be the sole and exclusive forum . . . for any derivative action’ ” (original
italics)]; Verdugo, supra, 237 Cal.App.4th at p. 146 [“ ‘The parties agree that
proper subject matter and personal jurisdiction shall be had solely in [the]
State of Texas. The sole venue for disputes arising hereunder shall be in
Harris County, Texas.’ ” (Italics added.)]; Cal-State Business Products &
Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666, 1672, fn. 4 [“ ‘[A]ny
appropriate state or federal district court located in the Borough of
Manhattan, New York City, New York shall have exclusive jurisdiction over
any case of controversy arising under or in connection with this Agreement.’ ”
(Italics added.)].) Unlike the contract language in all these cases, section
13.15 contains no such exclusivity language and more closely resembles
“forum selection clauses that courts have held to be permissive because they
provide for submission to jurisdiction in a particular forum without
mandating it.” (See, e.g., Animal Film, supra, 193 Cal.App.4th at pp. 471-
472; cf. id. at p. 470 [“the parties hereto submit and consent to the
jurisdiction of the courts present in the state of Texas in any action brought
to enforce (or otherwise relating to) this agreement” (boldface &
capitalization omitted)]; Berg v. MTC Electronics Technologies Co. (1998)
61 Cal.App.4th 349, 357 [“ ‘[t]he company [MTC] has expressly submitted to
the jurisdiction of the State of California and United States Federal courts
sitting in the City of Los Angeles, California, for the purpose of any suit,
action or proceedings arising out of this Offering’ ”]; Hunt Wesson Foods, Inc.
v. Supreme Oil Co. (9th Cir. 1987) 817 F.2d 75, 76-77 [“[t]he courts of

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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”].)
      We independently interpret the language—“venue for any dispute . . .
shall lie in the state courts or federal courts sitting in Harris County,

Texas”—as permissive.9 The language reflects the parties’ agreement to
submit to the jurisdiction of the Harris County, Texas courts, but does not
unequivocally require that litigation proceed exclusively in those courts.

C. Texas Courts Are Not a Suitable Alternative Forum

      Having determined the forum selection clause is permissive, we apply a
traditional forum non conveniens analysis. The first step in this analysis is
to determine whether the Texas courts constitute a “suitable” alternative
forum.
      Caydon, as the moving party, bore the burden to show the availability
of a suitable alternative forum. (Stangvik v. Shiley, Inc. (1991) 54 Cal.3d
744, 751 [“On a motion for forum non conveniens, the defendant, as the
moving party, bears the burden of proof.”].) Rather than assume this

9      In light of our conclusion, it is unnecessary for us to decide whether
section 13.15 could be enforced had we determined it was a mandatory forum
selection clause. We note, however, that even with respect to a mandatory
clause, the party seeking to enforce the clause “has the burden to show
enforcement would not diminish unwaivable California statutory rights . . . .”
(Verdugo, supra, 237 Cal.App.4th at pp. 144-145.) Here, California’s
statutory mechanics lien rights are rooted in the California Constitution (art.
XIV, § 3) and cannot be waived absent a written statement reflecting full
payment of the claim. (See Civ. Code, § 8124; accord, Wm. R. Clarke Corp. v.
Safeco Ins. Co. (1997) 15 Cal.4th 882, 889 [“[U]nder our mechanic’s lien law,
waiver and release of [payment bond] rights is permitted only in conjunction
with payment, or a promise of payment, and a conditional release is effective
only if the claimant is actually paid.”].)
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obligation, Caydon attempted to shift the burden to Rushing to show the
Texas courts were unavailable or unable to accomplish substantial justice.
Caydon argued, “Appellant provided no evidence establishing that courts in
Harris County, Texas were unavailable or unable to accomplish substantial
justice in this straightforward breach of contract action.” After concluding
the forum selection clause was mandatory, the trial court bypassed the
traditional forum non conveniens analysis and erroneously placed the burden
on Rushing to establish that enforcement of the forum selection clause was
unreasonable.
      We independently conclude the Texas courts are not a suitable
alternative forum in this case. (See Animal Film, supra, 193 Cal.App.4th at
p. 472 [“The existence of a suitable alternative forum is a legal question that
we review independently.”].) “A forum is suitable if there is jurisdiction and
no statute of limitations bar to hearing the case on the merits. [Citation.]”
(Chong v. Superior Court (1997) 58 Cal.App.4th 1032, 1036-1037.) Texas fails
on both counts.
      First, the Texas courts lack the power to resolve Rushing’s mechanics
lien foreclosure action. (See Haga v. Thomas (Tex.Ct.App. 2013) 409 S.W.3d
731, 737 [“ ‘It is the settled law of this State, as well as the law generally,
that the title to real property is exclusively subject to the government within
whose territory it is situated.’ ”]; Miller v. Miller (Tex.Ct.App. 1986)
715 S.W.2d 786, 788 [“[t]he courts of [Texas] are without power or jurisdiction
to adjudicate title to land in another state.”]; see also Central Bank v.
Superior Court (1973) 30 Cal.App.3d 913, 917 [“An action to foreclose a
mechanics’ lien, like a mortgage foreclosure, is an in rem action and is local in
nature; the plaintiff is resorting primarily to the security for the payment of

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the indebtedness”]; Hardy v. Hardy (1958) 164 Cal.App.2d 77, 79 [“a court of
one state cannot directly affect title to land in another”].)
      Second, if Rushing were to re-file in Texas, its mechanics lien
foreclosure action would be statutorily time-barred. (Civ. Code, § 8460,
subd. (a) [“The claimant shall commence an action to enforce a lien within
90 days after recordation of the claim of lien. If the claimant does not
commence an action to enforce the lien within that time, the claim of lien
expires and is unenforceable.”].) Although Caydon acknowledges the
Agreement calls for the application of California law, it fails to offer any legal
authority or explanation that would allow Rushing’s foreclosure action to
proceed in Texas notwithstanding the strict statutory time limitation.
      Unless a suitable alternative forum is available, an action is not subject
to dismissal. (Judicial Council of Cal., com., reprinted at 14A West’s Ann.
Code Civ. Proc. (2022 ed.) foll. § 410.30, p. 450 [“[T]he suit will be
entertained, no matter how inappropriate the forum may be, if the defendant
cannot be subjected to jurisdiction in other states. The same will be true if
the plaintiff’s cause of action would elsewhere be barred by the statute of
limitations . . . .”].) Our conclusion on this threshold inquiry requires
reversal of the trial court’s order.
      Having determined the Texas courts are not a suitable alternative
forum, we need not proceed with the next step in the traditional forum non
conveniens analysis—balancing the private and public interest factors. (See
Animal Film, supra, 193 Cal.App.4th at p. 472 [“If the court finds that a
suitable alternative forum exists, it must then balance the private interests
of the litigants and the interests of the public in retaining the action in
California.”] (Italics added.).)

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                                 DISPOSITION

      The December 16, 2022 order is reversed, and this matter is remanded
to the trial court to lift the stay, vacate the dismissal, and conduct further
proceedings consistent with this opinion, including recalendaring Caydon’s
demurrer that was previously overruled as moot. Rushing is entitled to
recover its costs on appeal. (See Cal. Rules of Court, rule 8.278(a)(1).)

                                                     DATO, Acting P. J.

WE CONCUR:

DO, J.

CASTILLO, J.

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