Modification: Casey v. Hill

MATTHEW C. CASEY et al.,

Plaintiffs and Appellants,

v.

PATRICE HILL et al.,

Defendants and Respondents.

No. D079221

(Super. Ct. No. 37-2020-00046332-CU-EN-NC)

California Court of Appeal

Fourth Appellate District

Division One

Filed June 21, 2022

ORDER MODIFYING OPINION AND DENYING REHEARING

NO CHANGE IN JUDGMENT

THE COURT:

It is ordered that the opinion filed on May 23, 2022, be modified as follows:

1. On page 9, in the first sentence of the first paragraph, the phrase "(the Act)" is deleted.

2. On page 10, in the second sentence of the first full paragraph, the word "so-called" is deleted and the word "asserted" is inserted in its place.

3. On page 22, the second sentence of the second full paragraph beginning with "Applying those principals" is deleted and the following sentence is inserted in its place:

We apply de novo review and determine the question of personal jurisdiction as a matter of law, based on the uncontradicted facts.

4. On page 26, in the second sentence of the last paragraph beginning with "It reasoned" that carries over into page 27, the word "parties" is deleted and the word "parties' " is inserted in its place.

5. On page 33, the third sentence of the last paragraph beginning "Section 11 of the agreement" is deleted and the following is inserted in its place:

Section 11 of the agreement provides for arbitration in the County of Riverside, California, in accordance with California law. "An agreement to arbitrate before a specified tribunal is, in effect, a specialized kind of forum-selection clause that posits not only the situs of suit but also the procedure to be used in resolving the dispute." (Scherk v. Alberto-Culver Co. (1974) 417 U.S. 506, 519.)

6. On page 34, the last sentence of the first paragraph beginning "Even so construed" is deleted and the following is inserted in its place:

Even so construed, the existence of a choice-of-law or choice-of-forum provision in the parties' contract is just a factor to be considered. It does not determine whether personal jurisdiction can constitutionally be exercised in another forum.  (See Burger King, supra, 471 U.S. at p. 482; Andra v. Left Gate Prop. Holding, Inc. (Mo. 2015) 453 S.W.3d 216, 221, 231 (Andra) [holding out-of-state defendant had sufficient minimum contacts with Missouri to support the exercise of personal jurisdiction, notwithstanding forum selection clause providing for suit in Texas].) The fact that the parties agreed to resolve their disputes in one state does not answer the question whether the defendant had sufficient minimum contacts with another state to make that state court's exercise of personal jurisdiction over the defendant constitutional. Simply put, forum selection clauses do not " 'oust' a court of jurisdiction[.]" (The Bremen v. Zapata Off-Shore Co. (1972) 407 U.S. 1, 12 (Bremen).)

7. On page 34, the last sentence of the second paragraph beginning with "And as we later explain" is deleted and the following is inserted in its place:

And as we later explain, Defendants fail to establish that they can assert their contractual rights to a choice of forum, or to arbitration, in this proceeding.

8. On page 35, in line 4 of footnote 15, the phrase "through inaction" is to be inserted after the phrase "which is not subject to waiver" so that the sentence reads:

Defendants' argument conflates two concepts: fundamental jurisdiction, which is not subject to waiver through inaction; and the contractual right to arbitrate, which is subject to waiver.

9. On page 44, the fourth sentence of the last paragraph beginning with the phrase "Pursuant to our discussion above" is deleted and the following is inserted in its place:

As we have explained, the Missouri court's exercise of jurisdiction under its long-arm statute comported with the requirements of due process. And "[a]s long as the sister state court had jurisdiction over the subject matter and the parties, a sister state judgment is entitled to full faith and credit 'even as to matters of law or fact erroneously decided.' " (Bank of America, supra, 77 Cal.App.4th at p. 118.)

10. On page 45, the first full paragraph beginning "Accordingly, Defendants are now precluded" and ending "(Chicot).)" is deleted.

11. On page 45, in the first sentence of the second full paragraph, the word "so-called" is deleted and the word "asserted" is inserted in its place.

12. On page 45, in footnote 18, the fourth sentence beginning "However, Defendants contend" is deleted, and the following is inserted in its place:

Where, as here, the contract contains a choice-of-law provision, Missouri courts have in some cases followed the selected state's law (see, e.g., Raydiant Tech., LLC v. Fly-N-Hog Media Group, Inc. (Mo.Ct.App. 2014) 439 S.W.3d 238, 240), and in other cases have followed Missouri law (see, e.g., Reed v. Reilly Co., LLC (Mo. 2017) 534 S.W.3d 809, 812 [applying Missouri law, without explanation]; Thieret Family, LLC v. Delta Plains Services, LLC (Mo.Ct.App. 2021) 637 S.W.3d 595, 605, fn. 6).

13. On page 46, in the first full paragraph, the parenthetical citation beginning "(Smith, supra, 17 Cal.3d at p. 496 [California courts have discretion to decline to enforce choice of forum provisions]" is deleted and the following is inserted in its place:

(Smith, supra, 17 Cal.3d at p. 496 [California courts have discretion to decline to enforce choice of forum provisions]; High Life Sales Co. v. Brown-Forman Corp. (Mo. 1992) 823 S.W.2d 493, 497 & 496, fn. 2 (High Life Sales) [holding that choice of forum clauses are enforceable, but Missouri courts may decline enforcement if they conclude enforcement would be unfair or unreasonable]; see Andra, supra, 453 S.W.3d at p. 231 ["a forum selection clause does not automatically determine a court's personal jurisdiction over a defendant"].)

14. The paragraph commencing at the bottom of page 46 with "Defendants fail to grapple with" and ending at the top of page 47 with "section 11 of the agreement" is deleted and the following paragraphs are inserted in its place:

Defendants fail to grapple with the unavoidable conclusion that they have waived any contractual rights to a choice of forum, or to arbitration, by waiting until this proceeding to assert them. (See Menorah, supra, 72 F.3d at p. 223 [defendant waived arbitration by allowing a default judgment to be entered and waiting until enforcement proceeding to seek arbitration].) They were properly served in the Missouri action and could have raised these issues in that proceeding. Instead, they chose not to appear, the Missouri court entered judgment, and that judgment is now final. However, Defendants contend they can invoke section 11 of the agreement in this proceeding. They argue that a forum selection clause that designates a state other than Missouri deprives a Missouri court of personal jurisdiction, and that a Missouri court, if presented with the parties' agreement to arbitrate their disputes in California, would invalidate the Missouri judgment for lack of personal jurisdiction.

In making this argument, Defendants miss a distinction. They rely on the rule that jurisdiction can be obtained by consent or waiver. (See, e.g., Hope's Windows, Inc. v. McClain (Mo.Ct.App. 2013) 394 S.W.3d 478, 483 (Hope's Windows).) But whether jurisdiction can be obtained by agreement is different from whether jurisdiction can be divested by agreement. As we have explained, forum selection clauses do not " 'oust' a court of jurisdiction[.]" (Bremen, supra, 407 U.S. at p. 12; High Life Sales, supra, 823 S.W.2d at p. 496 [forum selection clause "does not deprive the non-designated state of jurisdiction except to the extent that in its discretion it determines that the enforcement of the clause is neither unfair nor unreasonable"].) In Laser Vision Centers, Inc. v. Laser Vision Centers International (Mo.Ct.App. 1996) 930 S.W.2d 29, 33, a Missouri appellate court disagreed with the proposition advanced by Defendants here and held that a Missouri default judgment was not void for lack of jurisdiction simply because the parties had agreed to resolve their disputes by arbitration in another forum.

Defendants, in arguing the opposite point, rely on a case in which a Missouri court rejected a challenge to the exercise of personal jurisdiction in a forum because the defendant had already consented to jurisdiction by signing an agreement that provided for suit in that forum. (See Hope's Windows, supra, 394 S.W.3d at pp. 483-484.) Hope's Windows is not this case. It involved a post-judgment challenge to the exercise of jurisdiction in the forum designated in the contract. Its holding is the logical result of the rule that when a party agrees to litigate in a particular forum, that party consents to personal jurisdiction in that forum. Hope's Windows did not involve the situation we have here---a post-judgment challenge to the exercise of personal jurisdiction in a non-designated forum. So it does not support the proposition Defendants advance here, namely that a Missouri court would invalidate the Missouri judgment for lack of personal jurisdiction based on section 11 of the agreement.

There is no change in judgment.

Respondents' petition for rehearing is denied.

HALLER, Acting P. J.

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