PER CURIAM.
Plaintiff appeals as of right the trial court order granting defendant's motion for summary disposition pursuant to MCR 2.116(C)(7) (agreement to litigate in a different forum) in this case involving an alleged breached of fiduciary duty. Plaintiff is a limited liability company located in Royal Oak, Michigan, and defendant is a corporation located in Bloomfield Hills, Michigan. We reverse and remand for the reasons stated in this opinion.
In 2010, Diamond Heroes of Southeastern Michigan, LLC sought funding to construct a park in Waterford, Michigan. Citywide Lending Group International, a California based entity, offered to provide Diamond Heroes a $12 million construction loan, but required Diamond Heroes to pay $676,000 as a "Collateral Commitment Deposit."
In order to effectuate the transaction, plaintiff, Diamond Heroes, Citywide, and defendant entered into an escrow agreement in which defendant was the escrow agent. According to plaintiff, the escrow agreement provided that plaintiff's funds were not to be disbursed until defendant received the "Stand-By Letter of Credit," and that each party was to indemnify the others for any claims or damages arising out of or in connection with an instrument used in the transaction. The agreement also provided that "[a]ny dispute arising from or related to this Agreement, shall be governed by, and subject to, the laws of the State of California and shall be handled by the appropriate state or federal court located in California."
Defendant received a document purporting to be the letter of credit, but did not approve it because it believed the document to be a copy and not an original. According to plaintiff, the document was never verified and the letter of credit was never approved. Defendant disbursed plaintiff's $700,000 loan to Citywide and another party. Plaintiff brought this action in circuit court alleging defendant breached its fiduciary duty as escrow agent of the loan funds by dispersing the funds without an approved letter of credit.
Defendant moved for summary disposition pursuant to MCR 2.116(C)(8). Defendant argued that dismissal was appropriate because plaintiff failed to join Citywide as an essential party. Defendant also argued that the parties agreed to unambiguous choice-of-law and forum-selection clauses that the court should enforce. Plaintiff responded that while defendant sought to enforce the forum-selection clause, it failed to address the choice-of-law provision, which requires California law govern any disputes. Plaintiff argued that pursuant to the choice-of-law provision, California law governs the validity of the forum-selection clause, and California law requires that this case be brought in Michigan.
The trial court concluded that plaintiff's claim was actually one for breach of contract and that MCR 2.116(C)(7) was the controlling rule when seeking summary disposition based on "an agreement to . . . litigate in a different forum." In rejecting plaintiff's argument that defendant did not agree to submit to California jurisdiction, the court concluded that California "has a long history of enforcing contractual forum-selection clauses." The court also concluded that the exceptions set forth in MCL 600.745(3) did not apply, and declined to invoke the doctrine of forum non conveniens. Finally, the court noted that plaintiff failed to "include" Citywide, a California entity, as a party to this suit and that as a result, "it is disingenuous for Plaintiff to characterize this dispute as having no connection to California."
"This Court reviews de novo a trial court's grant of summary disposition, as well as a trial court's jurisdictional rulings." Turcheck v Amerifund Fin, 272 Mich.App. 341, 344-345; 725 N.W.2d 684 (2006). "With regard to a motion for summary disposition pursuant to MCR 2.116(C)(7), this Court reviews the affidavits, pleadings, and other documentary evidence presented by the parties and `accept[s] the plaintiff's well-pleaded allegations, except those contradicted by documentary evidence, as true.'" Young v Sellers, 254 Mich.App. 447, 450; 657 N.W.2d 555 (2002), quoting Novak v Nationwide Mut Ins, Co, 235 Mich.App. 675, 681; 599 N.W.2d 546 (1999) (alteration in Young).
The "legal effect of a contractual clause is a question of law that we [also] review de novo." Turcheck, 272 Mich App at 345.
The overarching question in this case is whether the trial court properly enforced the forum-selection clause contained in the parties' escrow agreement. In Michigan, public policy favors the enforcement of such clauses and, absent certain exceptions
The question of which jurisdiction's law applies originates from the choice-of-law provision contained in the escrow agreement. That clause provides that California law governs any dispute arising from or related to the escrow agreement. The parties also designated the state of California in the agreement's forum-selection clause. In Turcheck, this Court considered the issue of whether the enforceability of a forum-selection clause should be determined by using the law of the jurisdiction selected in the choice-of-law provision or whether it should be determined pursuant to Michigan law.
The Supreme Court of California has stated, "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, Inc v Superior Court, 17 Cal.3d 491, 495-496; 131 Cal.Rptr. 374; 551 P.2d 1206 (1976). Thus, in California, "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." Id. at 496. A forum-selection clause is unreasonable if "the forum selected would be unavailable or unable to accomplish substantial justice." CQL Original Prods, Inc v Nat'l Hockey League Players' Ass'n, 39 Cal.App.4th 1347, 1354; 46 Cal.Rptr.2d 412 (1995). To be reasonable, "the choice of forum requirement must have some rational basis in light of the facts underlying the transaction." Id. But inconvenience must not factor into the reasonability determination, because it is assumed that the party considered this factor when it contracted. Smith, 17 Cal 3d at 496. However, "a forum selection clause will not be enforced if to do so will bring about a result contrary to the public policy of the forum." CQL, 39 Cal App 4th at 1354.
When the circumstances are reversed, i.e., when the parties have indicated California as their forum of choice in a forum-selection clause, California has a statute which applies. Cal Code Civ Proc § 410.40 provides, in relevant part, as follows:
Under this provision, a plaintiff is precluded from bringing suit against a defendant who is a foreign corporation unless (1) the action involves an agreement "for which a choice of California law has been made," (2) the agreement relates to a transaction involving at least $1,000,000, and (3) the agreement contains a provision whereby the foreign corporation "agrees to submit to the jurisdiction of the courts of this state."
Here, there is no dispute that defendant is a Michigan corporation, and thus, as it relates to California law, a "foreign corporation." The cause of action here also involves an agreement "for which a choice of California law has been made." Specifically, the escrow agreement provided that "[a]ny dispute arising from or related to this Agreement, shall be governed by, and subject to, the laws of the State of California . . . ." However, the agreement does not relate to a transaction involving at least $1,000,000, because defendant only agreed to hold in escrow $700,000 of plaintiff's funds. Further, this Court cannot conclude that a California court would find that defendant agreed "to submit to the jurisdiction of" the California courts, because, as discussed below, California law is not settled on the subject.
Plaintiff argues that under California law, forum-selection is not the same as a consent to jurisdiction, and cites Global Packaging, Inc v The Superior Court, 196 Cal.App.4th 1623, 1627; 127 Cal.Rptr.3d 813 (2011), in support. In Global, the agreement provided, in relevant part, that "Any controversy or claims arising out of or relat[ ] to this Agreement shall be venued only in the state or federal court in and [ ] (a) Orange County, California." Id. (alteration in Global Packaging). A dispute arose between Global Packaging, located in Pennsylvania, and Epicor Software, a Delaware corporation with its principal place of business in California, regarding the payment of licensed software. Id. Suit was brought in California by Epicor. "Global Packaging moved to quash service of summons," arguing that California had no jurisdiction over it because the forum-selection clause did not constitute a consent to personal jurisdiction, and it did not otherwise submit to jurisdiction. Id. at 1627-1628. The trial court denied the motion and held that the clause "was an enforceable forum-selection clause that, by implication, included a consent to jurisdiction." Id. at 1628. The California Court of Appeal disagreed. The court found that in "the forum-selection-clause context, forum and jurisdiction are distinct concepts with different legal implications." Id. at 1633. The appellate court held: "Given the crucial role played by limits on jurisdiction in the American legal system, and in particular their importance as a preserver of individual liberty, we cannot agree that consenting to a location in and of itself carries with it a consent to personal jurisdiction." Id. at 1632. Thus, it held that an agreement to litigate in a certain forum does not imply an agreement to submit to the jurisdiction of that forum when personal jurisdiction is otherwise absent. Id. at 1632.
In contrast to Global, defendant cites Berard Constr Co v Muni Court, 49 Cal.App.3d 710, 713; 122 Cal.Rptr. 825 (1975). In Berard, there were two agreements. The first agreement with defendant Berard Construction Company provided in relevant part, "[t]his lease is executed in Los Angeles, California, and shall be construed under the laws of the State of California, And the parties hereto agree that any action relating to this lease shall be instituted and prosecuted in the courts in Los Angeles County and each party waives the right to change of venue." Id. at 720-721. The trial court found this clause to be "a venue provision, not a jurisdiction provision." Id. at 721. The California Court of Appeal disagreed, holding that "[t]he provision that `any action relating to this lease shall be instituted and prosecuted in the courts in Los Angeles County' is an unequivocal consent to the jurisdiction of the California courts." Id. The second agreement with defendant Rene J. Berard, president of defendant Berard Construction Company, provided in part, "(t)his guaranty shall be governed by and construed in accordance with the laws of the State of California." Id. at 723. In this second instance, the California court of appeal agreed with the trial court and held "[t]his provision does not constitute a consent to jurisdiction." Id. Defendant argues that the language of the clause in the instant case is similar to the language in the agreement with defendant Berard Construction Company, such that a California court would hold that the instant clause was an agreement to submit to personal jurisdiction in California.
The forum-selection clause in the instant case, the Global case and the Berard case contain similar language. Each clause contains the all-inclusive term "any," Title Ins & Trust Co v Co of Riverside, 48 Cal.3d 84, 94; 767 P.2d 1148 (1989), and the mandatory term "shall," City & Co of San Francisco v Boyd, 22 Cal.2d 685, 704; 140 P.2d 666 (1943). Each clause also employs "arising from or related to" language and references the action, dispute or claim being instituted, handled, prosecuted or venued in a California court system.
The parties have correctly analyzed the effect of their cited case law on the case before this Court. We agree with plaintiff, that under Global, it is reasonable to assume that the instant forum-selection clause would not equate to an agreement to submit to personal jurisdiction. Under Global, the clause would only be an agreement to litigate in a certain forum. Id. at 1632. However, we also agree with defendant, that under Berard, it would be reasonable to assume that the instant clause would be an "unequivocal consent" to the jurisdiction of the California court system. 49 Cal App 3d at 723. Similar to Berard, the clause here provides that any dispute related to the agreement is subject to the laws of California and is to be handled by a California court.
The contradictory holdings in Global and Berard are able to coexist because "there is no horizontal stare decisis in the California Court of Appeal." Sarti v Salt Creek Ltd, 167 Cal.App.4th 1187, 1193; 85 Cal.Rptr.3d 506 (2008). "A decision of a court of appeal is not binding in the courts of appeal. One district or division may refuse to follow a prior decision of a different district or division, for the same reasons that influence the federal Courts of Appeals of the various circuits to make independent decisions. . . ." McCallum v McCallum, 190 Cal.App.3d 308, 315 n 4; 235 Cal.Rptr. 396, 400 (1987) citing 9 Witkin Cal Procedure (3d ed 1985) Appeal, § 772, pp 740-741. Given the state of the law there, we question whether Global would have been decided differently had it been filed in the third division, instead of the fourth, and vice versa with Berard. In California, appellate cases may hold precedential value, "the only qualifications being that the relevant point in the appellate decision must not have been disapproved by the California Supreme Court and must not be in conflict with another appellate decision." Sarti, 167 Cal App 4th at 1193. Global and Berard however, clearly conflict. The Global court recognized this, noting that Berard existed and held the opposite. Global, 196 Cap App 4th at 1632, n 10. When appellate decisions conflict, "the court exercising inferior jurisdiction can and must make a choice between the conflicting decisions." Auto Equity Sales, Inc v Superior Court of Santa Clara Co, 57 Cal.2d 450, 456; 369 P.2d 937 (1962). Under this case law, we cannot predict how a California trial court would interpret the forum selection clause.
While the question of whether the instant clause here was a consent to personal jurisdiction remains unanswered, there is, in any event, an undisputed jurisdictional amount of one million dollars that has not been met. Accordingly, because the escrow agreement is not "relat[ed] to a transaction involving in the aggregate not less than one million dollars," the parties cannot maintain this action in California. Cal Code Civ Proc § 410.40. Because "the forum selected would be unavailable or unable to accomplish substantial justice," the forum-selection clause would be unreasonable and unenforceable. CQL Original Prods, 39 Cal App 4th at 1354.
Michigan courts favor enforcement of contractual forum selection clauses with few exceptions. "The exceptions to this rule are stated in MCL 600.745(3)(a)-(e), and unless one of the statutory exceptions applies, Michigan courts will enforce a forum-selection clause as written." Turcheck, 272 Mich App at 348.
MCL 600.745(3) provides as follows:
Plaintiff contends that the trial court should not have dismissed the action because the factors outlined in subdivisions (b), (c), (d), and (e) are all present in this case. Both parties argue that § 745(3)(b) applies in their favor. As noted above, plaintiff cannot secure effective relief in California because the parties' action fails to meet the threshold jurisdictional amount required to maintain an action against a foreign corporation in a California court. Further, whether the forum clause here is also an agreement to submit to the jurisdiction of the California courts is debatable, such that this Court cannot hold with certainty that plaintiff would secure effective relief there.
As to § 745(3)(c), plaintiff argues that litigating this case in California would be substantially less convenient than litigating it in a Michigan court, asserting that both parties to the suit, most witnesses, and all evidence are located in Michigan. This Court has held that
Plaintiff makes a cogent argument that California would be a substantially less convenient place for trial than Michigan. However, the reasons cited are all things the parties would have been aware of at the time they entered into the escrow agreement. In other words, nothing happened after the parties entered into the agreement that would render California more inconvenient now than it was when the agreement was made.
As for § 745(3)(d), plaintiff argues that "Citywide was a completely phoney [sic] operation created and designed for the purpose of stealing money" and that the clause should not be enforced because at the time of contracting, the parties believed that all of the transacting entities were legitimate businesses. Plaintiff never argues, or even suggests, that the forum-selection clause itself (or, for that matter, escrow agreement) was entered into by means of fraud. Plaintiff cites no authority for the proposition that the alleged fraudulent nature of Citywide renders the negotiated agreement fraudulent. See Mitcham v Detroit, 355 Mich. 182, 203; 94 N.W.2d 388 (1959) ("It is not enough for an appellant in his brief simply to announce a position or assert an error and then leave it up to this Court to discover and rationalize the basis for his claims. . . .").
We conclude that the escrow agreement's forum-selection clause cannot be enforced because at least one of the statutory exceptions applies in MCL 600.745(3).
Although the question of whether Citywide was an essential party was not dispositive below, we provide the following direction for purposes of remand.
MCR 2.205(A) provides the pertinent law:
"The purpose of the rule is to prevent the splitting of causes of action and to ensure that all parties having a real interest in the litigation are present." Mason Co v Dep't of Community Health, 293 Mich.App. 462, 489; 820 N.W.2d 192 (2011). "[W]here a party's presence in the action is not essential to the court rendering complete relief, factors such as judicial economy or avoidance of multiple litigation are not enough to compel joinder." Hofmann v Auto Club Ins Ass'n, 211 Mich.App. 55, 96; 535 N.W.2d 529 (1995).
Here, defendant contends that it has the right under the escrow agreement to seek indemnification from Citywide should defendant be found liable in this lawsuit. The determination of whether Citywide must indemnify defendant is not the same legal question as is raised in the instant cause of action, which is whether defendant breached its fiduciary duty owed to plaintiff. Citywide's legal status has nothing to do with answering this question. Thus, Citywide's "joinder is not essential to a determination of the rights and obligations between plaintiff[] and [defendant], nor to permit the court to render complete relief." Id. at 96-97.
Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.
BOONSTRA, J. (dissenting).
I respectfully dissent. In my view, the trial court properly enforced the freely-bargained-for forum-selection clause at issue in this case,
The majority begins by acknowledging, as the trial court did, that California generally enforces freely-bargained-for forum-selection clauses. See Smith, Valentino & Smith, Inc v Superior Court, 17 Cal.3d 491, 495-496; 131 Cal.Rptr. 374; 551 P.2d 1206 (1976); CQL Original Prods, Inc v Nat'l Hockey League Players' Ass'n, 39 Cal.App.4th 1347, 1354; 46 Cal.Rptr.2d 412 (1995). Nonetheless, the majority concludes that Cal Code Civ Proc § 410.40 bars the enforcement of the forum-selection clause in the instant case. Cal Code Civ Proc § 410.40 states in relevant part:
Notwithstanding the permissive nature of the statute, the majority converts it into a statute of preclusion, stating its interpretation as follows:
I find no support for this interpretation in California law. While I will discuss the issue of the parties' submission to the personal jurisdiction of California in a later section of this opinion, as the issue of personal jurisdiction is important regardless of the applicability of Cal Code Civ Proc § 410.40, I cannot conclude that the statute itself "precludes" a plaintiff from bringing a suit against a foreign corporate defendant unless its criteria are met.
Although the rule of statutory construction expression unius est exclusio alterius (the expression of one thing is the exclusion of another) arguably could, in a vacuum, be applied to the language of Cal Code Civ Proc § 410.40 to support the conclusion that the majority reaches (i.e., that by providing that a plaintiff may maintain an action against a foreign corporate defendant only if the criteria of Cal Code Civ Proc § 410.40 are met), that rule is merely a tool to be used, where necessary, to ascertain the intent of the legislature, and cannot be employed to contradict or vary a clear expression of legislative intent. See Luttrell v Dep't of Corrections, 421 Mich. 93, 107; 365 N.W.2d 74 (1984); Williams v Los Angeles Metropolitan Transit Auth, 68 Cal.2d 599, 603-604;; 68 Cal.Rptr. 297; 440 P.2d 497 (1968). Put another way, such a rule of statutory construction simply does not apply in the face of a clear indication of legislative intent.
I find that to be the case with respect to Cal Code Civ Proc § 410.40. That is, as stated in Credit Lyonnais Bank Nederland, NV v Manatt, Phelps, Rothenberg & Tunney, 202 Cal.App.3d 1424, 1433; 249 Cal.Rptr. 559 (1988), superseded in part by statute on other grounds as noted in Beckman v Thompson, 4 Cal.App.4th 481; 6 Cal.Rptr.2d 60 (1992), the statute appears designed not to preclude anything, but rather specifically to attract big-ticket litigation to California by expressly allowing parties to maintain actions against foreign corporations under forum-selection clauses if the dollar value and other criteria are met. The Credit Lyonnais court noted that the California Legislature modeled the bill that adopted Cal Code Civ Proc § 410.40 after a similar statute enacted in New York "for the purpose of fostering New York as an international commercial arbitration center." Id. at 1434 (citation omitted), and concluded that Cal Code Civ Proc § 410.40 operated to "limit the exercise of the inconvenient forum doctrine" by explicitly authorizing California as a forum for certain types of "large contract" cases. Id.
Several states have passed similar laws patterned after New York's statute, including, Florida, Delaware, Ohio, and Texas. See Honigsberg et al., State Contract Law and Debt Contracts, 57 J Law & Econ 1031, 1034-1035 and n 6 (2014). These statutes have been described by commentators as "allowing parties to litigate in their state courts providing that the contract exceeds a minimum dollar value (usually $1 million) and that the parties have selected the law of that state," id., or as a "statutory commitment to enforce forum-selection clauses" when a state's law has been chosen and the dispute exceeds a certain dollar value. See Winship, Bargaining for Exclusive State Court Jurisdiction, 1 Stanford J Complex Lit 51, 87-88 (2012). As a result of the passage of these statutes, "parties to substantial commercial contracts can now feel confident that their choice of law will be enforced." Honigsberg, 1035.
Thus, rather than conclude, as the majority does, that Cal Code Civ Proc § 410.40 precludes the enforcement of forum-selection clauses if its conditions are not met, I conclude, consistent with Credit Lyonnaise, 202 Cal App 3d at 1432, that the statute exists to encourage and facilitate the enforcement of these clauses specifically in big-ticket contract cases, and is simply inapplicable to cases that do not meet its criteria.
Indeed, I have found no California case invoking Cal Code Civ Proc § 410.40 in declining to enforce a forum-selection clause. Moreover, if the majority were correct that Cal Code Civ Proc § 410.40 operates to preclude actions against foreign corporations that do not meet its criteria, then no such actions under a million dollars could be maintained in California, regardless of the parties' choice of California law and explicit submission to the personal jurisdiction of California. Yet, I have found no California cases employing such a rationale. I therefore disagree with the majority's reliance on Cal Code Civ Proc § 410.40 to find that the California courts would refuse to allow plaintiff to maintain this action in California.
The majority states that the question of whether California courts would find that plaintiff had consented to personal jurisdiction in California is unanswered. I agree that the question has been answered differently by different panels of the California Court of Appeals, none of which are binding on the other. But I fail to see how the trial court erred by deciding that a California court should answer the question in the first instance; indeed, to me, the unsettled nature of the caselaw in California counsels toward deferring to a California court to determine the enforceability of a California choice of forum clause under California law. Reading (as I do) Cal Code Civ Proc § 410.40 to encourage "big ticket" cases rather than to preclude smaller ones (and therefore not holding plaintiff's case to be barred by a monetary requirement), I would hold that the trial court did not err by enforcing the forum-selection clause at issue. Although the majority acknowledges the lack of horizontal stare decisis within the California Court of Appeals and the resulting non-binding nature of Global Packaging, Inc v The Superior Court, 196 Cal.App.4th 1623, 1627; 127 Cal.Rptr.3d 813 (2011), it does not go so far as to decide (apart from the issue of the supposed monetary requirement of Cal Code Civ Proc § 410.40) whether the trial court was correct in enforcing the forum-selection clause. I would do so, and would conclude that given the uncertainties of California law, plaintiff has failed to carry its burden of showing that the mandatory forum-selection clause is unreasonable. Specifically, plaintiff has failed to show that the selected forum is "unavailable or unable to accomplish" substantial justice, see Smith, Valentino & Smith, Inc, 17 Cal 3d at 495-496. I would therefore hold that the trial court did not err by granting defendant's motion for summary disposition pursuant to MCR 2.116(C)(7).
Plaintiff's argument in essence is that Global Packaging would compel a California court to find that the forum-selection clause at issue here was not an agreement by the parties to submit to the personal jurisdiction of California. I disagree with that assertion in several respects. At the outset, I note that plaintiff argues that Global Packaging is "binding" precedent establishing a "clear rule" that "must be applied" and that "will require a California court to dismiss the present dispute." This, however, is incorrect. As the majority acknowledges, Global Packaging is not binding on future California courts (as are published appellate decisions after 1990 in Michigan; see MCR 7.215(J)), and there is no horizontal stare decisis within the California Courts of Appeal; "[o]ne district or division may refuse to follow a prior decision of a district or division." See, e.g., McCallum v McCallum, 190 Cal.App.3d 308, 315 n 4; 235 Cal.Rptr. 396 (Cal App 1987). Nor is a superior court bound to follow an appellate opinion even from its own district where contrary appellate authority exists. See id.; see also Auto Equity Sales, Inc v Superior Court of Santa Clara Co, 57 Cal.2d 450, 456; 20 Cal.Rptr. 321; 359 P.2d 937 (1962) (wherein the California Supreme Court states that where appellate decisions are in conflict, "the court exercising inferior jurisdiction can and must make a choice between the conflicting decisions.")
I also note that plaintiff's reliance on the reasoning of Global Packaging may be suspect in light not only of California's policy of enforcing freely-bargained-for forum-selection clauses, but the United States Supreme Court's holding in The Bremen v Zapata Off-Shore Co, 407 U.S. 1, 18; 92 S.Ct. 1907, 1913; 32 L Ed 2d 513 (1972). Plaintiff in fact argues that the court in Global Packaging "[r]eject[ed] the reasoning of the holding" in The Bremen, because there "the United States Supreme Court improperly conflated forum selection with jurisdiction." I do not, however, read Global Packaging as "explicitly reject[ing]" the United States Supreme Court's holding in The Bremen," as plaintiff contends (emphasis in original). To the contrary, Global Packaging described The Bremen as "the case that gave the official imprimatur to forum selection clauses as embodying the modern and cosmopolitan approach to commercial disputes." (Footnote omitted).
Global Packaging may indeed, however, have implicitly rejected the United States Supreme Court's holding in The Bremen. While holding that "an agreement to litigate in a certain forum" does not "necessarily imply an additional, separate agreement to submit to the jurisdiction of that forum," Global Packaging, 196 Cal App at 1632, the court did not address the United States Supreme Court's observation that "`it is settled . . . that parties to a contract may agree in advance to submit to the jurisdiction of a given court'" through "arms-length negotiation" for "[t]he choice of that forum."
Further, although Global Packaging concluded that an agreement to litigate disputes in a certain venue or forum does not imply an agreement to submit to personal jurisdiction, the opposite conclusion was reached in Berard Construction Co v Municipal Court, 49 Cal.App.3d 710, 722; 122 Cal.Rptr. 825 (1975), wherein the court held that a clause that provided that a lease was to be construed under the laws of California and that actions under the lease should be brought in Los Angeles County constituted the consent of the parties to California's jurisdiction. Thus, a California trial court or appellate court faced with this issue in the future would have contradictory appellate authorities from which to choose. As an example, in Paul Ryan Associates v Hawaiiana Painting & Maintenance, Inc, unpublished opinion of the California Court of Appeal, First District, Division 5, issued April 30, 2013 (Docket No. A136052), the court faced the issue of whether the defendant had consented to personal jurisdiction when it entered into a subcontract that incorporated a term from another contract stating that disputes would be litigated in San Francisco. Id., unpub op at 1. The court thus considered whether to apply Global Packaging or Berard. Id. at 6 ("The language in Paragraph 24.3.3 of the General Contract does not state that anyone is submitting to personal jurisdiction in California; it merely specifies that arbitration or litigation will take place in San Francisco, California. The question therefore arises whether a forum-selection clause alone is sufficient to confer personal jurisdiction over a defendant. Relevant to this question are two California decisions—Global Packaging, Inc v Superior Court (2011) 196 Cal.App.4th 1623 (Global Packaging) and Berard Construction Co v Municipal Court (1975) 49 Cal.App.3d 710 (Berard)."). Although that particular court ultimately chose to follow Global Packaging, a future court would be not required to do so.
Indeed, several California courts have, post-Global Packaging, enforced forum-selection clauses with language very similar to the clause at issue here, and that lack an explicit reference to submission to a particular jurisdiction apart from a statement that disputes will be resolved in a particular forum. See Karnazes v Expedia, Inc, unpublished opinion of the California Court of Appeal, issued November 26, 2014 (Docket No. B250142); Madick Ins Serv v 3 Mark Fin, Inc, unpublished opinion of the California Court of Appeal, issued March 5, 2014 (Docket No. B249500); Schine v Prop Sols, Int'l, Inc, unpublished opinion of the California Court of Appeal, issued January 27, 2014 (Docket No. B240853); Anosike v Covenant Transp, Inc, unpublished opinion of the California Court of Appeal, issued May 24, 2013 (Docket No. B238684).
Thus, as the majority acknowledges, a California court could decline to adopt the reasoning of Global Packaging in determining whether the parties to the escrow agreement had consented to the jurisdiction of California, just as the Global Packaging court declined to adopt the reasoning of Berard. Global Packaging, Inc, 196 Cal App 4th at 1633 n 10. This conclusion is strengthened by the fact that Berard relied on a California Supreme Court case, Frey & Hogan Corp v Superior Court, 5 Cal.2d 401; 55 P.2d 203 (1936), in holding that agreement to litigate in a particular forum constituted implied consent to the jurisdiction of that forum. Although the Global Packaging court appears to give short shrift to cases such as Frey (albeit without naming Frey), stating in a footnote that "cases pertaining to jurisdiction in arbitrations are inapposite" in light of Cal Civ Proc § 1293,
In Frey, 5 Cal 2d at 402-403, the petitioner sought to have the California Supreme Court overturn the Superior Court's denial of its motion to quash service of process related to an arbitration to take place in California under the laws of California, on the ground that the California Court lacked personal jurisdiction over it to compel the arbitration. The California Supreme Court declined, stating that the contract at issue contained a clause selecting a California forum and California law for arbitration, and that "[t]herefore it was an agreement to submit to the jurisdiction within which the arbitration must operate in order to give it the effect contemplated by the contract and by the law." Id. at 404-405. This holding with regard to arbitrations was later codified in Cal Civ Proc § 1293. See Atkins, Kroll & Co v Broadway Lumber Co, 222 Cal.App.2d 646, 651; 35 Cal.Rptr. 385 (1963). Although there are obvious differences between suits pending in arbitration and in court, here, as in Frey and Berard, the parties to the agreement agreed to a California forum and California law; a California Court could therefore conclude that the parties had necessarily consented to the personal jurisdiction of a California court.
Additionally, I find Global Packaging to be distinguishable from the instant case in several respects. The court in Global Packaging was faced with a much more poorly-drafted clause that, among other things, violated California law concerning the selection of venue. Global Packaging, Inc, 196 Cal App at 1627, 1628. The court's frustration with the poor drafting at issue was evident:
Thus, the court in Global Packaging was faced with a clause that was only a forum-selection clause by implication, and it declined to further rehabilitate the poor drafting so as to imply consent to jurisdiction. Global Packaging, Inc, 196 Cal App 4th at 1633 n 10 (stating that it disagreed that "a consent to venue in one county constitutes a consent to personal jurisdiction in California.") Here, by contrast, we have a clear, unambiguous forum-selection clause of the type that, as I have noted, has been enforced both pre- and post-Global Packaging in California. Further, we have consent, not to a specific venue in a specific county, but to "the appropriate state or federal court located in California." There is no doubt that the clause at issue here refers to the selection of a forum, not a venue. Finally, unlike the clause in Global Packaging, which contained a choice of jurisdictions based on who was suing whom
Because I would find that neither Cal Code Civ Proc § 410.40 nor Global Packaging, together or individually, support finding that a California court necessarily would find that it lacks personal jurisdiction over defendant, I would hold that plaintiff had failed to carry its burden of showing that the selected forum is "unavailable or unable to accomplish" substantial justice, see Smith, Valentino & Smith, Inc, 17 Cal 3d at 495-496, and would affirm the trial court on that basis.
In finding that Michigan law also supports reversal of the trial court, the majority essentially relies on its finding that a California court would not allow plaintiff to maintain this action. Specifically, the majority holds that MCL 600.745(3)(b) (plaintiff cannot secure effective relief) and (e) (unfair or unreasonable to enforce forum-selection clause for some other reason) favor reversal of the trial court because a California court would lack of personal jurisdiction over defendant. As stated above, I disagree with that conclusion. In the absence of that conclusion, I agree with the majority that there is no reason why Michigan law would not favor the enforcement of the forum-selection clause at issue. Michigan courts "generally enforce contractual forum-selection clauses" assuming that certain conditions, enumerated in MCL 600.745(3)(a)-(e), are not present. Turcheck v Amerifund Financial, Inc, 272 Mich.App. 341, 348; 725 N.W.2d 684 (2006). In particular, while I agree with the majority that plaintiff has not demonstrated that MCL 600.745(3)(c) applies to the instant action, I would clarify that the majority does not hold, nor did Turcheck hold, that MCL 600.745(3)(c) can never be applicable in cases involving forum-selection clauses. Rather, as Turcheck states, and as the majority references ("nothing happened after the parties entered into the agreement that would render California more inconvenient now than it was when the agreement was made"), the question becomes whether the inconvenience was "within the contemplation of the parties at the time of contracting." Turcheck, 272 Mich App at 350. Here, plaintiff's claim that the witnesses and evidence in the instant case are located in California is unavailing, because that is the type of inconvenience that was easily contemplatable at the time the parties entered into the escrow agreement; indeed, it is precisely the type of claim of inconvenience this Court found unavailing in Turcheck. Id. at 349-350.
For all of these reasons, I would refrain from attempting to divine what a California court would conclude with respect to its own jurisdiction, and would instead affirm the trial court's enforcement of the parties' contractual forum-selection clause, and its order granting defendant's motion for summary disposition.
