FOR PUBLICATION

     UNITED STATES COURT OF APPEALS
          FOR THE NINTH CIRCUIT


 FIRST INTERCONTINENTAL BANK, a                         No. 13-56097
 Georgia State Chartered Federally
 Insured Bank,                                         D.C. No. CV11-
                  Plaintiff-Appellant,                  08764-RGK

                        v.
                                                           OPINION
 CHRISTINA AHN,
                       Defendant-Appellee.


         Appeal from the United States District Court
            for the Central District of California
              R. Gary Klausner, District Judge

                     Argued and Submitted
               June 5, 2015—Pasadena, California

                        Filed August 18, 2015

  Before: Milan D. Smith, Jr. and N. Randy Smith, Circuit
    Judges, and Joan H. Lefkow,* Senior District Judge.

              Opinion by Judge Milan D. Smith, Jr.



 *
   The Honorable Joan Humphrey Lefkow, Senior District Judge for the
United States District Court for the Northern District of Illinois, sitting by
designation.
2          FIRST INTERCONTINENTAL BANK V. AHN

                           SUMMARY**


                          Choice-of-Law

    The panel affirmed the district court’s decision awarding
attorney’s fees to defendant-appellee in a diversity breach of
contract action between a bank and defendant-appellee.

    The parties’ agreement specified that Georgia law applied
to any dispute. The defendant-appellee filed a motion for
attorney’s fees and costs pursuant to California Civil Code
§ 1717(a), which makes reciprocal otherwise unilateral
attorney’s fees clauses in contract.

    The panel held that California’s choice-of-law rules
governed the question of whether Georgia or California law
applied to the attorney’s fees issue, where the diversity action
for breach of contract was brought in California. The panel
held that California applies the approach set out in the
Restatement (Second) of Conflict of Laws § 187 to determine
the law that applies to a contract with a choice-of-law clause.

    Applying California choice-of-law principles, the panel
held that the district court correctly concluded that California
law, including California Civil Code § 1717(a), governed the
outcome of the case, and awarded attorney’s fees to
defendant-appellee.




  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
          FIRST INTERCONTINENTAL BANK V. AHN                3

                        COUNSEL

S. Young Lim (argued), Park & Lim, Los Angeles,
California, for Plaintiff-Appellant.

Natalie Ikhlassi (argued) and Helen B. Kim, Thompson
Coburn LLP, Los Angeles, California, for Defendants-
Appellees.


                         OPINION

M. SMITH, Circuit Judge:

    In this appeal, we apply California choice-of-law rules to
determine whether California law or Georgia law governs an
attorney’s fees dispute between Plaintiff-Appellant First
Intercontinental Bank (Bank) and Defendant-Appellee
Christina Ahn (Christina). We conclude that California law,
specifically California Civil Code § 1717(a), governs the
attorney’s fees dispute, and we affirm the district court’s
decision awarding attorney’s fees to Christina.

  FACTUAL AND PROCEDURAL BACKGROUND

I. Factual Background

    In March of 2009, First Intercontinental Bank, a bank
chartered in Georgia, with its principal place of business in
Doraville, Georgia, made a purchase money loan of
$1,939,907.72 to AEHCC and Christina in connection with
their purchase of a hotel. Christina’s parents, Edward Ahn
and Helen Ahn, guaranteed the loan. Christina, Edward Ahn,
and Helen Ahn are residents of California. AEHCC is a
4         FIRST INTERCONTINENTAL BANK V. AHN

Colorado limited liability company with its principal place of
business in California.

    The promissory note included in the loan agreement
documentation specified: “This Note is intended as a contract
under and shall be construed and enforceable in accordance
with the laws of the State of Georgia.” The note also
contained a non-reciprocal attorney’s fees clause, providing:
“In the event this Note, or any part hereof, is collected by or
through an attorney at law, Borrower agrees to pay all costs
of collection, including but not limited to reasonable
attorney’s fees actually incurred.”

    In December of 2009, the Bank released Christina from
her obligations under the loan, and Christina executed a
quitclaim deed that transferred her interest in the hotel to
AEHCC. On March 9, 2010, the Bank’s Board of Directors
voted to remove Christina as a borrower on the loan.
Christina’s parents, Edward Ahn and Helen Ahn, remained as
guarantors of the loan.

    In June of 2011, AEHCC ceased making payments on the
loan, and in September of 2011, the Bank sent a letter to
Christina’s parents demanding that they honor their
guarantees.

II. Prior Proceedings

    When Edward Ahn and Helen Ahn failed to respond to
the Bank’s demands for payment on their guarantees, the
Bank filed an action in the Central District of California
against Edward Ahn, Helen Ahn, Christina, and AEHCC for
breach of contract and breach of guaranty. The district court
granted summary judgment to the Bank on all claims against
          FIRST INTERCONTINENTAL BANK V. AHN                   5

AEHCC, Edward Ahn, and Helen Ahn. However, the district
court also granted summary judgment to Christina, holding
that the Bank had released her in December of 2009 from any
obligations under the loan. None of the parties appealed
these decisions.

    On February 22, 2013, Christina filed a Motion for
Attorney’s Fees and Costs pursuant to California Civil Code
§ 1717(a), which makes reciprocal otherwise unilateral
attorney’s fees clauses in contracts. The Bank contended that
California Civil Code § 1717(a) was inapposite, and that
Georgia law should govern the attorney’s fees dispute. The
district court held that California law applied to the attorney’s
fees dispute, and awarded attorney’s fees to Christina
pursuant to California Civil Code § 1717(a).

    This timely appeal followed.

   JURISDICTION AND STANDARD OF REVIEW

    The district court had subject matter jurisdiction over the
attorney’s fees dispute pursuant to 28 U.S.C. § 1332. We
have appellate jurisdiction pursuant to 28 U.S.C. § 1291.

    We review de novo the district court’s legal conclusions,
including its decision that California law applies to the
attorney’s fees dispute. See Pokorny v. Quixtar, Inc.,

, 994 (9th Cir. 2010).

                        DISCUSSION

   The central issue in this case is whether Georgia law or
California law applies to the parties’ attorney’s fees dispute.
6         FIRST INTERCONTINENTAL BANK V. AHN

I. Legal Standard

    We begin by determining whether Georgia’s or
California’s choice-of-law rules apply in this case. In
diversity jurisdiction cases, such as this one, we “apply the
substantive law of the forum in which the court is located,
including the forum’s choice of law rules.” Ins. Co. of North
Am. v. Fed. Express Corp., 

, 919 (9th Cir. 1999).
The Bank brought its action for breach of contract in the
Central District of California. The district court thus
correctly determined that California’s choice-of-law rules
govern the question of whether Georgia or California law
applies to the attorney’s fees issue.

      California follows the approach set out in the Restatement
(Second) of Conflict of Laws § 187 to determine the law that
applies to a contract with a choice-of-law clause. See
Nedlloyd Lines B.V. v. Superior Court, 

, 1153
(Cal. 1992). Under § 187, a California court begins its
analysis by determining “whether the chosen state has a
substantial relationship to the parties or their transaction, or
. . . whether there is any other reasonable basis for the parties’
choice of law.” Washington Mut. Bank, FA v. Superior
Court, 

, 1078 (Cal. 2001) (quoting Nedloyd
Lines 

). If this is the case, the court
then determines whether California would “be the state of the
applicable law in the absence of an effective choice of law by
the parties.” Restatement (Second) of Conflict of Laws,
§ 187(2). If the chosen forum has a substantial relationship
to the parties or their transaction but California law would
apply in the absence of a choice-of-law provision, the court
then determines whether the relevant portion of the chosen
state’s law is contrary to a fundamental policy in California
law. If there is such a conflict, the court finally determines
          FIRST INTERCONTINENTAL BANK V. AHN                     7

whether California has a “‘materially greater interest than the
chosen state in the determination of the particular issue . . . .’”
Washington Mut. Bank, 

(quoting Nedloyd
Lines 

). If all of these criteria are met,
the court applies California law. Otherwise, the court applies
the law of the forum selected in the contract.

II. Application of California Choice-of-Law Principles

    A. Georgia Has a Substantial Relationship to the
       Parties in the Transaction

    The loan agreement between Christina and the Bank
specifies that Georgia law applies to any dispute.
Additionally, the Bank is chartered in Georgia, its principal
place of business is in Georgia, and it drafted the contract and
related documents in Georgia. Accordingly, there is a
reasonable basis for the choice-of-law provision contained in
the loan agreement documents.

    B. The Application of California Law in the Absence
       of the Choice-of-Law Provision

     We next assess whether California would apply its own
law to the dispute in the absence of the choice-of-law
provision selecting Georgia law. In addressing this issue,
Restatement (Second) of Conflict of Laws § 188 directs us to
consider: “(a) the place of contracting, (b) the place of
negotiation of the contract, (c) the place of performance,
(d) the location of the subject matter of the contract, and
(e) the domicil, residence, nationality, place of incorporation
and place of business of the parties.”
8         FIRST INTERCONTINENTAL BANK V. AHN

       1. Place of Contracting

    When adjudicating the underlying breach of contract
claim in this case, the district court concluded that the Bank
and Christina negotiated and executed the contract in both
California and Georgia, and that Christina signed the contract
in California. These facts do not favor the application of
either California or Georgia law.

    On appeal, the Bank contends that it is unclear where the
parties executed the loan agreement because Christina may
not have even signed the loan documents, or been present
when she signed the agreements by proxy. According to the
Bank, because the place of execution is unclear, the balance
tips in favor of applying Georgia law. The Bank’s argument
is unavailing for two reasons.

    First, its contentions, at best, only establish that it is
unclear where the parties executed the agreements, which
brings us no closer to resolving the question of which state’s
law would apply to the present dispute. Second, the doctrine
of judicial estoppel prevents the Bank from asserting that
Christina did not sign the loan agreements in California.
“[J]udicial estoppel, ‘generally prevents a party from
prevailing in one phase of a case on an argument and then
relying on a contradictory argument to prevail in another
phase.’” New Hampshire v. Maine, 

, 749 (2001)
(quoting Pegram v. Herdrich, 

, 227 n.8 (2000)).
In her motion for summary judgment in the breach of contract
action, Christina argued that she did not sign and execute the
contract at issue. In response, the Bank acknowledged that
“Christina Ahn made, executed and delivered [the contract]
to Plaintiff.” The Bank also submitted documents into
evidence that indicated Christina had executed the
          FIRST INTERCONTINENTAL BANK V. AHN                  9

agreements in California, and that bore Christina’s signature.
After reviewing the evidence, the district court concluded that
Christina had signed the agreements in California. Judicial
estoppel prevents the Bank from contradicting this finding,
and asserting that Christina did not sign the loan documents
in California. We see no reason to disturb the district court’s
factual findings that the contract was executed in both
Georgia and California.

        2. Place of Negotiation of the Contract

    Based on the record, it is undisputed that the contract was
negotiated in both California and Georgia, which again does
not favor the selection of the law of either forum.

        3. Place of Performance

   The record is unclear as to the place of performance of the
contract. The note states that payments from Christina to the
Bank were due in Georgia, but it is unclear where Christina
made payments on the note.

        4. Location of the Subject Matter of the Contract

   The contract was for the purpose of refurbishing a hotel
in Louisiana, a forum unrelated to either California or
Georgia.

        5. Citizenship of the Parties

    Finally, the domicile or citizenship of the parties does not
compel the application of Georgia or California law. As

, Christina is a citizen of California, while the
Bank is a citizen of Georgia.
10        FIRST INTERCONTINENTAL BANK V. AHN

    Applying the factors in Restatement § 188 does not lead
us to a clear conclusion as to whether California or Georgia
law would apply in the absence of the choice-of-law clause.
Accordingly, we adopt the approach of the California District
Court of Appeals, which has determined that California law
would apply in circumstances analogous to those we analyze
here.

        6. Grove Properties

    In ABF Capital Corporation v. Grove Properties
Company, a case involving a conflict between New York and
California law concerning attorney’s fees, the California
District Court of Appeals confronted a situation similar to the
one we consider here. 

(Ct. App. 2005).
In that case, which involved a California defendant
contracting with a New York plaintiff to purchase oil and gas
interests in Oklahoma and Texas, the parties had selected
New York law to govern the contract. As in this case, the
analysis of which state’s law would have applied in the
absence of the forum-selection clause was unclear based on
§ 188 of the Restatement. The California District Court of
Appeals ultimately decided that California law would have
applied primarily because California has a fundamental
policy interest in protecting its citizens “from unfair litigation
tactics or procedures,” including non-reciprocal attorney’s
fees clauses. 

See also Section II.C, infra.

    We are persuaded by the reasoning in Grove Properties
because the same policy interest is at issue here. Christina, a
California citizen, would be on the losing end of a non-
reciprocal attorney’s fees clause when litigating in a
California court. We therefore conclude that, in the absence
of the choice-of-law provision in the contract, a California
          FIRST INTERCONTINENTAL BANK V. AHN                11

court would apply California law to the attorney’s fees
dispute between Christina and the Bank.

    The Bank urges us to reject the Grove Properties
approach and instead adopt the holding of the California
District Court of Appeals in ABF Capital Corp. v. Berglass,

(Ct. App. 2005). Although the facts in
Grove Properties and Berglass are substantially similar, the
Berglass court applied New York law, rather than California
law, in part because it concluded that New York’s law would
have applied in the absence of a New York choice-of-law
clause. 

We believe that Berglass is inapposite
here for two reasons.

    First, the Berglass court distinguished that case from
Grove Properties on the ground that it did “not know where
[the] defendant executed the contract or the parties negotiated
the contract.” 

By contrast, there was evidence in
Grove Properties “that the contract was negotiated in both
California and New York and was made in California.” 

before us is more like Grove Properties because the
district court clearly found that the contract was negotiated
and executed in both California and Georgia.

     Second, Berglass did not give sufficient weight to one of
the primary purposes of California Civil Code § 1717(a),
which seeks to ensure that California citizens do not fall
victim to non-reciprocal attorney’s fees clauses when
litigating in California courts. See Section II.C, infra. The
Berglass court only recognized that the policy underlying
§ 1717 was to enhance “free and equal access to the courts
. . . by preventing the oppressive use of one-sided fee

, and held that New York
effectuated the same policy “by enforcing strictly the parties’
12        FIRST INTERCONTINENTAL BANK V. AHN

intentions.” 

Properties, on the other hand, the
Court of Appeals concluded that California had a stronger
interest in “enforcing the equitable rules governing access to
its courts—including the reciprocal attorney fees rule—than
New York has in assuring the enforcement of New York law
concerning attorney fees.” Grove Props. Co., 

at 813 (emphasis added). Grove Properties thus
recognizes that one of the fundamental purposes of § 1717 is
to ensure that California citizens in a disadvantageous
bargaining position are protected against non-reciprocal
attorney’s fees clauses when litigating in California courts.
We apply the law from Grove Properties, and conclude that
California law would have applied to the contract at issue
here in the absence of the choice-of-law provision selecting
Georgia.

        C. California’s Fundamental Policy Against Non-
           Reciprocal Attorney’s Fees Clauses

    We next consider whether Georgia law permitting non-
reciprocal attorney’s fees clauses is contrary to a fundamental
public policy in California law. To determine the public
policy of a state, “the Constitution, laws, and judicial
decisions of that state, and as well the applicable principles of
the common law, are to be considered.” Twin City Pipe Line
Co. v. Harding Glass Co., 

, 357 (1931). Based
on our review of existing legal authorities, we conclude that
California has a fundamental policy disfavoring non-
reciprocal attorney’s fees clauses in litigation in its state
courts.

   California generally enforces parties’ freely-negotiated
choice-of-law clauses. See Washington Mut. Bank, 

–79. As the California Supreme Court held:
          FIRST INTERCONTINENTAL BANK V. AHN                13

           It is to the interest of the public generally
       that the right to make contracts should not be
       unduly restricted, and no agreement will be
       pronounced void, as being against public
       policy unless it clearly contravenes that which
       has been declared by statutory enactment or
       by judicial decisions to be public policy, or
       unless the agreement manifestly tends in some
       way to injure the public.

Jensen v. Traders & Gen. Ins. 

, 6 (Cal. 1959)
(quoting Spangenberg v. Spangenberg, 

, 382 (Cal.
Ct. App. 1912)).

   However, the California legislature has prohibited the use
of non-reciprocal attorney’s fees through California Civil
Code § 1717(a), which provides:

       In any action on a contract, where the contract
       specifically provides that attorney’s fees and
       costs, which are incurred to enforce that
       contract, shall be awarded either to one of the
       parties or to the prevailing party, then the
       party who is determined to be the party
       prevailing on the contract, whether he or she
       is the party specified in the contract or not,
       shall be entitled to reasonable attorney’s fees
       in addition to other costs.

Section 1717’s “effect is to make an otherwise unilateral right
to attorney fees reciprocally binding upon all parties to
actions to enforce the contract.” Xuereb v. Marcus &
Millichap, Inc., 

, 157 (Ct. App. 1992).
14        FIRST INTERCONTINENTAL BANK V. AHN

    The California Supreme Court has yet to rule on whether
§ 1717 embodies a fundamental policy of the state, although
it has recognized that one of the primary purposes of § 1717
is “to prevent oppressive use of one-sided attorney’s fees
provisions.” Reynolds Metals Co. v. Alperson, 

,
85 (Cal. 1979). “When the state’s highest court has not
squarely addressed an issue, we must ‘predict how the highest
state court would decide the issue using intermediate
appellate court decisions, decisions from other jurisdictions,
statutes, treaties and restatements for guidance.’” Glendale
Assocs., Ltd. v. Nat’l Labor Relations Bd., 

,
1154 (9th Cir. 2003) (quoting Nat’l Labor Relations Bd. v.
Calkins, 

, 1089 (9th Cir. 1999)).

    The California District Court of Appeals has held that
“California does have a fundamental policy concerning the
reciprocity of attorney fee provisions in contracts.” Grove
Props. Co., 

at 810. Soon after the legislature
passed § 1717, the Court of Appeals also concluded that the
statute “is part of an overall legislative policy designed to
enable consumers and others who may be in a
disadvantageous contractual bargaining position to protect
their rights through the judicial process by permitting
recovery of attorney’s fees incurred in litigation in the event
they prevail.” Coast Bank v. Holmes, 

, 39 n.3
(Ct. App. 1971). See also Milman v. Shukhat, 

526, 529 (Ct. App. 1994) (“Section 1717 was enacted in
1968. It is one of several similarly worded statutes which are
recognized as being part of an overall legislative policy
designed to enable consumers and others who may be in a
disadvantageous contractual bargaining position to protect
their rights through the judicial process by permitting
recovery of attorney’s fees in the litigation in the event they
prevail.” (citations omitted)).
          FIRST INTERCONTINENTAL BANK V. AHN                15

    Federal courts have also concluded that California has a
fundamental policy against non-reciprocal attorney’s fees
clauses. Our circuit has yet to address this issue in a
published decision, but in an unpublished decision, we
concluded that “California law requiring mutuality of
attorneys’ fees provisions reflects a strong public policy,
overriding another strong public policy of freedom of
contract.” See Daniel Indus., Inc. v. Barber-Colman Co.,

(9th Cir. 1993) (table) (citing Harbor View Hills
Community Ass’n. v. Torley, 

, 99-100 (Ct.
App. 1992)). Additionally, in Ribbens International, S.A. de
C.V. v. Transportation International Pool, Inc., a district
court in the Central District of California held that § 1717 is
“mandatory, unavoidable and emphatic. Section 1717(a) is
no default provision or gapfiller, subject to override by the
parties. Rather, it represents a basic and fundamental policy
choice by the state of California that nonreciprocal attorney’s
fees contractual provisions create reciprocal rights to such
fees.” 

, 1122 (C.D. Cal. 1999).

    Having considered these authorities, we are persuaded
that if the issue were presented to the California Supreme
Court, it would conclude that Civil Code § 1717 reflects a
fundamental policy of the state of California, and we hold
that it is.

   D. California Has a Materially-Greater Interest than
      Georgia in this Dispute

    In addressing whether California had a materially-greater
interest than New York in an attorney’s fees dispute
analogous to the one we face here, the California District
Court of Appeals focused on: (1) whether the parties chose
to bring litigation in a California state court, and (2) the
16        FIRST INTERCONTINENTAL BANK V. AHN

citizenship of the parties. Grove Props. 

–13. Applying these two factors here, we conclude that
California has a materially-greater interest in the attorney’s
fees dispute than does Georgia.

        1. Choice To Bring Litigation in California Court

     We first examine whether “the party choosing the
litigation availed itself of California courts. Fair access to
California courts is a significant part of the policy underlying
Civil Code section 1717.” 

In this case, the Bank
filed a federal diversity suit in the Central District of
California, even though we have no reason to believe it could
not have filed the same action in a federal district court in
Georgia. Although this case differs from Grove Properties in
that the Bank brought suit in a California federal court, rather
than a state court, “a federal court adjudicating a state-created
right solely because of the diversity of citizenship of the
parties is for that purpose, in effect, only another court of the
State.” Guar. Trust Co. of N.Y. v. York, 

, 108
(1945). Accordingly, the Bank’s choice to bring its lawsuit
in a federal district court in California, rather than another
federal district court, satisfies the first prong of the Grove
Properties court’s analysis.

        2. Residency of Litigants

    The Grove Properties court also considered whether
either of the litigating parties was a California resident: “The
interest of California in seeing its residents receive fair play
with respect to attorney fees, when resort is made to the
California courts, is a fundamental equitable policy of this
state.” Grove Props. 

.
          FIRST INTERCONTINENTAL BANK V. AHN                   17

    Christina is a resident of California. The Bank is
incorporated in Georgia, with its principal place of business
in Georgia. Because Christina is a California citizen and
would be on the losing end of a non-reciprocal attorney’s fees
provision, the state of California has a substantial interest in
applying its law to the attorney’s fees dispute in this case.
See Milman, 

. at 529–31.

   Given that both prongs of the Grove Properties analysis
have been satisfied, we conclude that California has a
materially-greater interest in seeing its fundamental policy
applied in this case than Georgia has in applying its own law.
The district court did not err in applying California law and
awarding attorney’s fees to Christina.

    E. Telco Leasing

     Finally, the Bank calls our attention to Telco Leasing, Inc.
v. Transwestern Title Co., in support of the proposition that
Georgia law must be applied in this dispute. 

(9th Cir. 1980). In Telco Leasing, whose facts bear some
resemblance to those in the present case, we concluded that
Illinois law, not California law, applied to an attorney’s fees
dispute. We noted therein that the contract in Telco Leasing
had selected Illinois law to govern any disputes concerning
the agreements in that case. 

    However, Telco Leasing is easily distinguishable from
this case because the litigants in that case originally filed suit
in Illinois before transferring the case to California. As a
result, we concluded that Illinois law applied, emphasizing
that “the applicable state law is that which would have been
applied by the transferor court.” 

Moreover, we
engaged in no choice-of-law analysis in Telco Leasing, which
18        FIRST INTERCONTINENTAL BANK V. AHN

predated the California Supreme Court’s adoption of § 187 of
the Restatement (Second) of Conflict of Laws. Here, by
contrast, no venue transfer occurred, and California choice-
of-law rules clearly apply.

III.     Conclusion

    Applying the relevant authorities to the facts in this case,
we hold that the district court correctly concluded that
California law, including California Civil Code § 1717(a),
governs the outcome of this case, and awarded attorney’s fees
to Christina. We affirm the district court.

       AFFIRMED.