Court Opinion

ID: 1037323
Source: CourtListenerOpinion
Date Created: 2013-08-12 16:06:09.827269+00
Date Added: 2024-06-11T10:33:59.947513
License: Public Domain

Filed 4/29/13                   CERTIFIED FOR PUBLICATION

                 COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                       DIVISION ONE

                                    STATE OF CALIFORNIA

BATTAGLIA ENTERPRISES, INC.,                        D063076

        Petitioner,

        v.                                          (Super. Ct. No.
                                                     37-2012-00090552-CU-BC-CTL)
SUPERIOR COURT OF THE STATE OF
CALIFORNIA FOR THE COUNTY OF
SAN DIEGO,
                                                    ORDER MODIFYING OPINION
        Respondent,
                                                    [CHANGE IN JUDGMENT]
YARD HOUSE USA, INC., et al.,

        Real Parties in Interest.

THE COURT:

        It is ordered that the opinion filed herein on April 11, 2013, be modified as

follows:

        On page 13, the last sentence of the opinion, under part IV., Disposition, is deleted

in its entirety, and replaced with the following:

                Parties are to bear their own costs on appeal.
      This modification changes the judgment as to the award of costs only. In all other

respects, the Disposition remains the same.

                                                               HUFFMAN, Acting P. J.

                                              2
Filed 4/11/13 (unmodified version)
                                     CERTIFIED FOR PUBLICATION

                  COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                           DIVISION ONE

                                       STATE OF CALIFORNIA

BATTAGLIA ENTERPRISES, INC.,                        D063076

        Petitioner,

        v.                                          (Super. Ct. No.
                                                     37-2012-00090552-CU-BC-CTL)
SUPERIOR COURT OF SAN DIEGO
COUNTY,

        Respondent,

YARD HOUSE USA, INC., et al.,

        Real Parties in Interest.

        Petition for writ of mandate from an order of the Superior Court of San Diego

County, William S. Dato, Judge. Petition denied.

        Tatro and Zamoyski and Peter A. Zamoyski for Petitioner.

        Jones Day, John Alexander Vogt and Edward San Chang for Real Parties in

Interest.
                                              I.

                                     INTRODUCTION

       Petitioner and plaintiff in the underlying action, Battaglia Enterprises, Inc.

(Battaglia) filed suit against defendants Yard House USA, Inc., Yard House USA, LLC,

and Yard House Restaurants, LLC (jointly "Yard House") in the Superior Court of San

Diego County for breach of contract. Yard House moved to transfer the action to Orange

County, citing a venue selection clause to which the parties had agreed in the contract

giving rise to the suit. The trial court granted the motion.

       Battaglia filed a petition for writ of mandate seeking relief from the trial court's

order transferring the underlying action from the Superior Court of San Diego County to

the Superior Court of Orange County. In its petition, Battaglia argues that the trial court

erroneously gave effect to the parties' agreement concerning the place of venue for any

action between them arising from their contract. Battaglia maintains that venue selection

clauses are void, per se, under long-standing California Supreme Court precedent as set

forth in General Acceptance Corp. v. Robinson (1929) 207 Cal. 285 (General

Acceptance). We disagree with Battaglia's broad reading of General Acceptance, and

conclude that the trial court properly granted Yard House's motion to transfer venue to

Orange County.

                                              2
                                             II.

                    FACTUAL AND PROCEDURAL BACKGROUND

A.     Factual background

       Battaglia is a wholesale food distributor with its principal place of business in San

Diego, California. In 2006, Yard House contracted with Battaglia for Battaglia to supply

food products to some of Yard House's restaurants. In 2010, Battaglia and Yard House

entered into a new "Master Foodservice Distribution Agreement" (the "2010 MFDA").

       Under the 2010 MFDA, Yard House agreed to a minimum purchase volume of

$15 million annually from Battaglia.

       The 2010 MFDA contained a venue selection clause that provided in relevant part,

that "any litigation related to or arising from this Agreement may be brought only in a

state or federal court located within Orange County, CA and the parties consent to the

jurisdiction of such court."

       In mid-February 2011, Yard House sought to change some of the terms of the

parties' agreement, including the guaranteed purchasing volume provision. Apparently

Yard House had been unhappy with Battaglia's performance under the 2010 MFDA. On

February 18, 2011, Yard House emailed a letter to Battaglia seeking to unilaterally

terminate the 2010 MFDA more than a year before its scheduled March 31, 2012

termination date.

       In mid-April 2011, Battaglia sent Yard House an invoice in the amount of

$2,169,041.10. According to Battaglia, "[t]he invoice amount represented the minimum

                                             3
that Battaglia Enterprises would have been entitled to, based on the minimum $15 million

purchase volume that Yard House was contractually obligated to pay to Battaglia

Enterprises for the period through March 31, 2012, the scheduled termination date of the

contract." Yard House apparently did not pay the invoice.

B.     Procedural background

       Battaglia filed a complaint against Yard House in San Diego County Superior

Court on January 11, 2012, seeking damages for breach of contract.

       Approximately three months later, Yard House filed a motion to transfer the venue

to Orange County pursuant to the venue selection clause contained in the 2010 MFDA.

       After the parties had fully briefed the matter, the trial court issued a tentative

ruling in which it proposed to grant Yard House's motion. The court then held a hearing

on November 16, 2012. At the conclusion of the hearing, the court affirmed its tentative

ruling enforcing the venue selection clause, and ordered the case transferred from San

Diego County to Orange County.

       Battaglia filed a petition for a writ of mandate and request for stay with this court

on December 10, 2012, challenging the trial court's order transferring the case to Orange

County.1

1      Shortly before the date on which this case was scheduled for oral argument, the
parties notified the court that they had settled their dispute, thus rendering the appeal
moot as to the parties. However, since this case raises issues " 'of continuing public
importance,' we have elected to retain jurisdiction" in order to decide the issue presented.
(Los Angeles County Metropolitan Transportation Authority v. Alameda Produce Market,
                                               4
                                             III.

                                       DISCUSSION

       Battaglia argues that the trial court erred in giving effect to the parties' venue

selection clause in the 2010 MFDA. According to Battaglia, the Supreme Court's opinion

in General Acceptance, supra, 207 Cal. at page 288 has rendered all contractual venue

selection clauses void as contrary to public policy in California.

       The parties apparently agree that the sole question at issue in this writ petition is a

question of law, and that our review of the issue is therefore de novo. (Alexander v.

Superior Court (2003) 114 Cal.App.4th 723, 726 (Alexander).)

       The proper place for trial is fixed by statutory scheme. The defendant in this

action is a corporation, and, as a result, Code of Civil Procedure2 section 395.5 applies

and supplies multiple possible venue options: "A corporation or association may be sued

in the county where the contract is made or is to be performed, or where the obligation or

liability arises, or the breach occurs; or in the county where the principal place of

business of such corporation is situated . . . ." (Ibid.) Thus, under the legislative scheme,

venue may be proper in more than one county, depending on the particular facts of a case.

       Generally, when venue is proper in more than one county, a plaintiff has the

choice of where to file the action from among the available options. (See Sea World, Inc.

LLC (2011) 52 Cal.4th 1100, 1106, quoting Lundquist v. Reusser (1994) 7 Cal.4th 1193,
1202, fn. 8.)
2      Further statutory references are to the Code of Civil Procedure unless otherwise
specified.
                                              5
v. Superior Court (1970) 13 Cal.App.3d 100, 103 [discussing disjunctive nature of former

constitutional provision, now enacted as statute in § 395.5, giving plaintiff a choice of

bringing an action in any county that will satisfy one of the available venue options].)

There is a presumption that the county in which the plaintiff chose to file the action is the

proper county. (Bechtel Corp. v. Superior Court (1951) 33 Cal.App.3d 405, 407, fn. 1,

citing Hearne v. De Young (1896) 111 Cal. 373 and 2 Witkin, Cal. Procedure (2d. ed.

1970) Actions, § 522, p. 1342.) The burden rests on the party seeking a change of venue

to defeat the plaintiff's presumptively correct choice of court. (Buran Equip. Co. v.

Superior Court (1987) 190 Cal.App.3d 1662, 1666.)

       The trial court found that San Diego County, where the plaintiff elected to sue

Yard House, is one of the proper venues available for this lawsuit under section 395.5

because the contract was made in San Diego County. However, the trial court found that

venue is also proper in Orange County under section 395.5 because Yard House's

principal place of business is located there.

       Under the general rules regarding where a case is to be tried when multiple venues

are proper pursuant to the legislature's determination, the plaintiff's choice of venue in

filing the lawsuit would prevail. In this case, however, the parties agreed in the 2010

MFDA that "any litigation related to or arising from this Agreement may be brought only

in a state or federal court located within Orange County, CA." This provision, Yard

House contends, should be enforced, and Battaglia's choice of venue in San Diego

                                                6
County must give way to venue in Orange County, as provided in the parties' negotiated

agreement.

       Battaglia argues that venue selection clauses in contracts are "unenforceable and

void as against public policy," based on the California Supreme Court's 1929 opinion in

General Acceptance, supra, 207 Cal. at pages 288-289. General Acceptance involved a

lawsuit in which the plaintiff brought the action in San Francisco County, and the

defendant, an individual who was a resident of Alameda County, sought a transfer of

venue to Alameda County. (Id. at p. 286.) The lawsuit arose out of a contract that

included the following clause: " '[T]hat should suit be brought upon the contract or this

assignment, that the trial of said action be in the City and County of San Francisco, State

of California.' " (Ibid.) The trial court granted the defendant's motion to transfer the case

to Alameda County. (Id. at p. 287.) The plaintiff appealed, arguing that the contractual

venue selection clause required that the action be heard in San Francisco County. (Ibid.)

The Supreme Court rejected this argument and affirmed the order transferring the case to

Alameda County. (Id. at p. 289.)

       Under the version of section 3953 in effect in 1929, when General Acceptance

was decided, there was only one proper county in which the lawsuit could have been

filed, and that was the county of the defendant's residence. (See Alexander, supra, 114

3      Although not significant for purposes of our discussion, both at the time of
General Acceptance and presently, section 395 sets forth the general venue rules
applicable when the defendant is an individual, as opposed to when the defendant is a
corporation. In the latter case, section 395.5 applies.
                                              7
Cal.App.4th at p. 728.) In assessing the validity of the venue selection clause before it,

the Supreme Court adopted the reasoning of the Massachusetts Supreme Court, as

follows: " 'The rules to determine in what courts and counties actions may be brought are

fixed upon consideration of general convenience and expediency by general law; to allow

them to be changed by the agreement of the parties would disturb the symmetry of the

law, and interfere with such convenience. Such contracts might be induced by

considerations tending to bring the administration of justice into disrepute.' " (General

Acceptance, supra, 207 Cal. at p. 289, quoting Nute v. Hamilton Ins. Co. (1856) 72 Mass.

174, 184.) The court also noted with approval "the general statement that 'jurisdiction of

the court is beyond the agreement of the parties.' [Citation.]" (General Acceptance,

supra, 207 Cal. at p. 289.)

       It is clear that the venue selection agreement at issue in General Acceptance

attempted to set venue in a county that was impermissible under the statutory venue

scheme. Contrary to Battaglia's insistence that General Acceptance stands for the broad

proposition that all venue selection clauses are invalid in California, we conclude that the

General Acceptance court's holding is that a venue selection clause that attempts to vest

venue in a county that is not proper under the legislative scheme may not be given

effect.4 We reject Battaglia's interpretation of General Acceptance as making a broad

4      Indeed, the holding in General Acceptance is that "the agreement between the
parties to the contract upon which this action was brought was void." (General
Acceptance, supra, 207 Cal. at p. 289, italics added.) There is no broader pronouncement
of a generalized rule in General Acceptance.
                                              8
pronouncement regarding the validity of venue selection clauses generally; rather, the

contract in that case, which attempted to set trial in a county that was improper under the

legislative scheme, was void.

       For 74 years, no California court relied on General Acceptance to invalidate a

venue selection clause. It also appears, however, that no California court upheld a venue

selection clause during this intervening time, either. (See Alexander, supra, 114

Cal.App.4th 723.)

       In 2003, the court in Alexander relied on General Acceptance in granting the

defendants' motion for a writ of mandate seeking to vacate a trial court's orders denying

their requests to transfer venue to their county of residence, Fresno County. (Alexander,

supra, 114 Cal.App.4th at pp. 726, 732.)5 The plaintiff had filed the actions for breach of

contract in Santa Clara County pursuant to a contractual venue selection clause that

identified Santa Clara County as the place of proper venue under the contract. (Id. at p.

726.) Based solely on the venue selection clause in the contracts between the parties, the

trial court had concluded that venue was proper in Santa Clara County, and denied the

defendants' motions to change venue. (Ibid.)

       The Alexander court explained that section 395 governed venue in those actions

(as opposed to § 395.5, which applies here), and that the statute provides, with respect to

actions based on a contract: " 'Subject to subdivision (b) [specifying venue in actions

5      The Alexander opinion dealt with two underlying cases, filed by the same plaintiff,
against different defendants, pertaining to the same contract. (Alexander, supra, 114
Cal.App.4th at p. 725.)
                                              9
involving sales to consumers], if a defendant has contracted to perform an obligation in a

particular county, the superior court in the county where the obligation is to be

performed, where the contract in fact was entered into, or where the defendant or any

defendant resides at the commencement of the action is a proper court for the trial of an

action founded on that obligation, and the county where the obligation is incurred is the

county where it is to be performed, unless there is a special contract in writing to the

contrary.' [Citation.]" (Alexander, supra, 114 Cal.App.4th at pp. 727.) In Alexander, the

contracts had been entered into, and the obligations incurred, in Santa Clara County, and

the contracts designated the place of performance as Santa Clara County. Thus, Santa

Clara County was one of the possible venues for the case under the legislative scheme set

forth in section 395.

       The Alexander court considered the rationale underlying General Acceptance, and

whether the Supreme Court's decision in Smith, Valentino & Smith, Inc. v. Superior Court

of Los Angeles County (1976) 17 Cal.3d 491 (Smith), which held that forum selection

clauses are not per se invalid, expressly rejected the holding in General Acceptance.

Upon concluding that Smith merely distinguished General Acceptance and discredited its

policy reasoning on points related to the distinction between forum selection clauses and

venue selection clauses, the Alexander court determined that General Acceptance

remains good law and that it was bound to follow its holding. (Alexander, supra, 114

Cal.App.4th at pp. 727-732.) The Alexander court described the holding in General

Acceptance as follows: "To summarize, General Acceptance held that to the extent a

                                             10
venue selection clause disrupts statutory venue provisions it is void as against the

legislatively declared public policy fixing the place for trial." (Alexander, supra, at pp.

731-732, italics added.)

       Despite having stated the holding of General Acceptance in these precise terms,

and despite the fact that Santa Clara County was a proper venue under the statute, the

Alexander court proceeded to conclude that "the trial court erred in determining that the

contractual venue selection provision was dispositive of the question of venue" in the

cases before it. (Alexander, supra, 114 Cal.App.4th at p. 732.) The court remanded the

cases to the trial court for that court to "reconsider the motions to determine in each case

whether under section 395 venue is proper in Santa Clara County." (Alexander, supra, at

p. 732.)

       We agree with the Alexander court to the extent that it expressed the holding of

General Acceptance as standing for the proposition that a venue selection clause is void

only insofar as it "disrupts statutory venue provisions." (Alexander, supra, 114

Cal.App.4th at p. 731.) As the Alexander court recognized, the policy considerations

underlying the decision in General Acceptance involved a concern that "parties will

disrupt the statutory scheme and bring the administration of justice into disrepute in order

to have their cause heard where they believe it will be received most sympathetically."

(Ibid.) The Alexander court went on to reason, "Since the venue statutes themselves

declare the public policy of this state with respect to the proper court for an action,

                                              11
agreements fixing venue in some location other than that allowed by statute are a

violation of that policy." (Ibid.)6

       In this case, the parties' venue selection clause selects one of the statutorily

permissible counties under section 395.5. The venue selection clause at issue here does

not fix venue in a location other than that allowed by statute, and thus cannot reasonably

be deemed to disrupt the statutory venue scheme. The rationale underlying the General

Acceptance court's refusal to enforce the venue selection clause in that case does not

apply where there are multiple statutorily permissible counties in which a trial may be

had, and the parties have mutually agreed to bring an action in one of those statutorily

permissible counties. In such a circumstance, the parties have not agreed to confer

6       In Alexander, it appears that the parties selected a proper county for venue, under
the legislative scheme. Yet the Alexander court did not suggest that the parties' agreed-
upon choice should be given effect. To the extent that Alexander can be read to conclude
that a court may never rely on a contractual venue selection clause to determine the
proper venue for a particular action, we decline to follow it. We note, however, that the
situation in Alexander did not require that court to definitively settle the question raised
in this case, as acknowledged in footnote 5 in Arntz Builders v. Superior Court (2004)
122 Cal.App.4th 1195, 1202 (Arntz Builders). The Arntz Builders court recognized that
the question whether parties should be able to contractually agree to fix venue in one of
multiple statutorily permissible counties is a question that no court had yet addressed.
The Arntz Builders court explained, "This contention was not raised directly in Alexander
because the action was filed in the county specified in the contractual provision; under
the remand from the Court of Appeal, the motion to change venue presumably will be
denied if that county is a proper county under section 395. The issue will require
definitive resolution when an action is brought in a county that is a permissible place for
trial under section 395 but is not the county specified in the contract and the opposing
party moves to change venue to the county specified in the contract which is also a
statutorily permissible county for trial under section 395." (Arntz Builders, supra, at p.
1202, fn. 5.) The Arntz Builders court also expressed the following sentiment, with
which we agree: "[T]here is some logic to the contention that the parties should be able
to agree among statutorily permissible counties." (Ibid.)
                                               12
jurisdiction on a court that the legislature has deemed improper under the statutory venue

scheme. Rather, the parties have agreed to venue in a location that the Legislature has

specifically stated is a permissible one, pursuant to the terms of section 395.5. Battaglia

has not suggested any other persuasive public policy argument as to why we should not

enforce a venue selection clause in a contract entered into freely and voluntarily by

parties who have negotiated at arm's length, where the venue that the parties have

selected is a permissible venue under the statutory scheme.

       We conclude that where, as here, two sophisticated parties agree, pursuant to arm's

length negotiations, to litigate an action in one of multiple statutorily permissible venues,

they should be held to their agreement. The venue selection clause in the 2010 MFDA is

thus valid and enforceable. The trial court's decision to transfer this case to the

contractually agreed-upon (and statutorily satisfactory) venue was therefore proper.

                                              IV.

                                        DISPOSITION

       The petition is denied. The stay issued on December 18, 2012 is vacated. Real

parties in interest are entitled to costs in this proceeding.

                                               13
                                   AARON, J.

WE CONCUR:

      HUFFMAN, Acting P. J.

              O'ROURKE, J.

                              14