Court Opinion

ID: 9721401
Source: CourtListenerOpinion
Date Created: 2023-08-26 08:58:17.342065+00
Date Added: 2024-06-11T18:24:25.500201
License: Public Domain

WALLIN, J., Concurring.
The only issue before this court is whether a forum selection clause appearing in a contract freely and voluntarily negotiated at arm’s length is enforceable. I would hold the forum selection clause in this case unenforceable but would do so on different grounds than those relied upon by the majority.1
*420I
“Forum-selection clauses have historically not been favored by American courts.” (The Bremen v. Zapata Off-Shore Co. (1972) 407 U.S. 1, 9 [32 L.Ed.2d 513, 520, 92 S.Ct. 1907].) In the past they were held invalid as an attempt to “oust” the jurisdiction of the court by preventing it from hearing a case otherwise within its jurisdiction. (General Acceptance Corp. v. Robinson (1929) 207 Cal. 285, 289 [277 P. 1039]; Beirut Universal Bank v. Superior Court (1969) 268 Cal.App.2d 832, 843 [74 Cal.Rptr. 333]; General Motors Accept. Corp. v. Codiga (1923) 62 Cal.App. 117 [216 P. 383].) But in Smith, Valentino & Smith our Supreme Court had occasion to reconsider the general rule of invalidity in light of “the modern trend which favors enforceability of such forum selection clauses.” (Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 495 [131 Cal.Rptr. 374, 551 P.2d 1206].)
In Smith, Valentino & Smith the plaintiff reiterated the argument forum selection clauses were void per se as violative of California’s declared public policy that parties may not deprive courts of their jurisdiction by private agreement. The court stated: “[I]t is readily apparent that courts possess discretion to decline to exercise jurisdiction in recognition of the parties’ free and voluntary choice of a different forum. Moreover, although we have acknowledged a policy favoring access to California courts by resident plaintiffs [citation], we likewise conclude that the policy is satisfied in those cases where, as here, a plaintiff has freely and voluntarily negotiated away his right to a California forum . . . .” (Smith, Valentino & Smith, supra, 17 Cal.3d at p. 495.)
The court then announced a new rule regarding enforceability of forum selection clauses in this state. “For the foregoing reasons we conclude that forum selection clauses are valid and may be given effect, in the court’s discretion and in the absence of a showing that enforcement of such a clause would be unreasonable.” (Smith, Valentino & Smith, supra, 17 Cal.3d at p. 496.) Thus, the sole touchstone of forum selection clause enforceability under Smith, Valentino & Smith is reasonableness. Reasonableness is to be determined on a case by case basis in light of all of the facts and circumstances.
A close comparison of the facts of Smith, Valentino & Smith with the facts of this case persuades me enforcement here would be unreasonable. Smith, Valentino & Smith involved a California corporation whose principal place of business was in California and a Pennsylvania corporation whose principal place of business was in Pennsylvania. The contract between the parties contained a reciprocal forum selection clause requiring all disputes *421to be litigated in the home forum of the defending party. The California corporation had agreed to bring suit against the Pennsylvania corporation in Pennsylvania and vice versa. Either designated forum was convenient for one party and inconvenient for the other. Pennsylvania was convenient for the Pennsylvania corporation because all of its officers and witnesses were there, and inconvenient for the California corporation because all of its officers and witnesses were in California. On the other hand, a California forum was just as inconvenient for the Pennsylvania corporation. Under these facts inconvenience or additional expense to the plaintiff did not render the clause unenforceable because “such matters are inherent in a reciprocal clause of this type.” (Smith, Valentino & Smith, supra, 17 Cal.3d at p. 496.) Therefore, the court held it was not unreasonable to hold the California plaintiff to its promise to bring suit in Pennsylvania.
In this case the individual plaintiffs are California residents and the corporate plaintiff is a California corporation with its principal place of business in California. The individual defendants are California residents and the corporate defendant, while nominally a Utah corporation (see fn. 1), had its principal place of business in California. In short, all of the relevant parties and witnesses here have the same home forum, California. Furthermore, all material aspects of the transaction from preliminary negotiation to completion took place in California, except that formal execution took place during a brief meeting at the Las Vegas airport. On that occasion plaintiff’s representative flew to Las Vegas from California and never even left the airport before returning to California.
The forum selection clause here is not reciprocal in the Smith, Valentino & Smith sense because the designated forum is not the home forum of any party. Nevada is not a convenient forum for any party. None of the parties or witnesses are there. Under these facts a Nevada forum makes no sense. The only purpose which I can discern from this record for choosing a Nevada forum is an attempt to avoid a California forum and possible application of California law. Therefore, enforcement of the forum selection clause here is unreasonable and constitutes an abuse of discretion. (Smith, Valentino & Smith, supra, 17 Cal.3d 494.)
II
There is no reason to discuss the validity of the choice of law provision or any public policy embodied in California corporate securities law in order to decide the choice of forum issue. Contrary to the majority’s assertion the holding in Smith, Valentino & Smith is not limited to cases where no satisfying reason of public policy is suggested to deny enforcement of a forum selection clause. The full sentence partially quoted by the majority reads: *422“No satisfying reason of public policy has been suggested why enforcement should be denied a forum selection clause appearing in a contract entered into freely and voluntarily by parties who have negotiated at arm’s length.” (Smith, Valentino & Smith, supra, 17 Cal.3d at pp. 495-496.) In other words, there is no public policy which bars enforcement of reasonable forum selection clauses in nonadhesion contracts.
Furthermore, the court in Smith, Valentino & Smith did not specifically advise the result might very well be different in cases which rest upon policy considerations not involved in that case, as the majority here contends. The full sentence partially quoted by the majority reads: “While General Acceptance Corp. v. Robinson, supra, 207 Cal. 285, is factually distinguishable and, accordingly, may be said to rest upon policy considerations not involved in the present action, nevertheless to the extent that the rationale of General Acceptance is inconsistent with our opinion, we decline to follow it.” (Smith, Valentino & Smith, supra, 17 Cal.3d at p. 496.) The court is simply saying to the extent the old rule of General Acceptance is inconsistent with the new rule of Smith, Valentino & Smith, the old rule is disavowed.
Thus, nothing in Smith, Valentino & Smith suggests the enforceability of a forum selection clause turns on public policy related to the substantive claims in the underlying action. Nevertheless, the majority holds the forum selection clause here unenforceable because the underlying action alleges violations of California securities law. They confuse the choice of forum issue with the choice of law issue and conclude the public policy and statute against waiving the protections of California securities law somehow invalidates the choice of forum provision. The result is a per se rule of invalidity in every case involving alleged violations of California securities law. There is no authority for this novel approach and I believe it is unwise.
III
The validity of the choice of law provision is not before us. The parties have not raised, briefed or argued the issue either here or in the trial court.2 Thus, the trial court has not yet considered or ruled on it. Nevertheless, the majority holds the choice of law provision invalid. I believe we should decide only the choice of forum issue at this time and give the trial court a chance to decide the choice of law issue.
A basic tenet of American jurisprudence is appellate courts will not consider or decide questions of law until they are properly presented. Accord*423ingly, although I agree with the result reached by the majority because it would be unreasonable to enforce the choice of forum clause, my concept of judicial restraint precludes me from considering the separate choice of law issue until it is before us.

I agree with the majority’s view on the five causes of action arising out of the 1979 limited partnership agreements.

Defendants did note the existence of the choice of law provision as one reason why the trial court should enforce the choice of forum provision.