Friday, October 1, 2004
C.A. Rejects Contract Waiver of Right to Litigate in Neutral County
By KENNETH OFGANG, Staff Writer/Appellate Courts
A contract provision by which a government contractor purported to waive its right to a neutral venue in any litigation growing out of its agreement with the county is unenforceable, the First District Court of Appeal ruled yesterday.
The court’s Div. Three granted a writ of mandate sought by Arntz Builders, which is seeking to move its suit against Contra Costa County out of Contra Costa Superior Court. Judge Terence Bruiniers denied the motion, reasoning that a contractual venue clause is binding as long as the venue selected is a proper alternative under the general venue statute.
“Permitting a county to extract an advance waiver of the right of a private party to have disputes with the county resolved in a neutral forum would be at odds with the fundamental principle that a party may not waive the benefits of a statute enacted primarily for a public purpose,” Justice Stuart Pollak wrote.
The statute at issue was Code of Civil Procedure Sec. 394(a). It provides that when an action—other than for child support—is brought by a local government entity against a defendant residing in another county, either party is entitled to have the case transferred to another county on motion.
The contract at issue—under which Arntz agreed to build an addition to the county’s juvenile hall for $26.8 million—included a requirement that any litigation involving the “contract or relating to the work shall be brought in Contra Costa County” and that the builder explicitly waived its rights to remove the case under Sec. 394.
The county accused Artnz of breaching the contract, terminated it, and filed suit. Arntz, based in Novato in Marin County, moved for a change of venue under Sec. 394 and Sec. 397, which permits a discretionary change of venue when there is reason to believe the moving party cannot receive a fair trial in the county where the action is filed.
Pollak, writing for the Court of Appeal, cited General Acceptance Corp. v. Robinson (1929) 207 Cal. 285, which held that contractual selection clauses are void.
The court ruled—pursuant to the then-language of the general venue statute—that the case had to be litigated in Alameda County, where the defendant resided, rather than in San Francisco, which the contract designated as the appropriate venue.
Sixth District Case
The Sixth District Court of Appeal reached a similar conclusion in Alexander v. Superior Court (2003) 114 Cal.App.4th 723, saying General Acceptance remains good law and distinguishing an intervening Supreme Court case dealing with forum selection clauses.
Venue selection clauses are different from those which select a particular state or nation as the forum, the Alexander court reasoned, because venue is governed by statute, while forum selection is generally not.
The county’s argument that General Acceptance and Alexander only bar enforcement of venue selection clauses when the venue selected is not a permissible alternative under Sec. 395 has “some logic” to it as to purely private agreements, Pollak said in a footnote.
But the trial court’s ruling, the justice explained, is at odds with the public purpose behind Sec. 394, to protect out-of-town litigants against actual or perceived local bias.
Pollak also rejected the county’s reliance on language in the statute that permits the parties to stipulate to venue. Placed in its proper context, the justice said, it appears to apply only to personal injury actions, and only to stipulations entered into after suit is filed.
The case is Arntz Builders v. Superior Court (County of Contra Costa), A106242.
Copyright 2004, Metropolitan News Company