Monday, December 22, 2003
Clause in Contract Cannot Determine Appropriate Venue, C.A. Rules
By DAVID WATSON, Staff Writer
A clause in a contract cannot override statutory provisions determining where venue is appropriate, the Sixth District Court of Appeal ruled Friday.
Justice Eugene M. Premo, writing for the court, said Santa Clara Superior Court Judges Kevin E. McKenney and William F. Martin erred in giving effect to a venue selection clause in agreements between The Brix Group, Inc., doing business as American Wireless, and two of its agents.
The contracts included a provision, headed “Choice of Law,” stating that California law would govern its construction, interpretation, and performance and that “each party specifically stipulates to venue in Santa Clara County, California.”
When Brix sued the agents for breach of contract, they moved for a change of venue to Fresno.
The trial judges should have based their rulings on Code of Civil Procedure Sec. 395, which specifies where venue is proper, and not on the contract language, Premo said. The justice rejected the argument advanced by Brix that under Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, venue selection clauses may be enforced.
Smith held that forum selection clauses are not per se invalid, but did not overrule the Supreme Court’s 1929 holding in General Acceptance Corp. v. Robinson, 207 Cal. 285, that venue selection clauses are void, Premo said.
He conceded that “[t]he cases sometimes do not distinguish between the two types of clauses, perhaps because they both relate in some way to the geographical location in which trial will be held.” But he said the terms “have different meanings,” with forum referring to a court or judicial body and venue to the county or territory where the case will be heard and from which a jury will be selected.
Smith “distinguished General Acceptance, but it did not affect its holding that venue selection clauses are invalid,” Premo said.
He acknowledged that the high court in Smith disparaged the “old rule,” recited in General Acceptance, that “the parties may not, by private agreement, ‘oust’ the jurisdiction of the courts.” But, he explained, “Smith did not overrule General Acceptance.”
The justice declared:
“The court distinguished General Acceptance by noting that General Acceptance held that a venue selection clause was void because ‘it would contravene general statutory provisions which designate the proper counties in which actions may be tried.’...In contrast, the court said, forum selection clauses ‘violate no such carefully conceived statutory patterns.’”
Premo went on to observe:
“The concern with selecting venue is 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. But it is not for the parties or the courts to set venue. That is the role of the legislature.”
Under Sec. 395, venue in contract cases is proper where the obligation is to be performed, where the contract was entered into, or where any defendant resides, Premo noted. He said McKenney and Martin should have relied on those provisions in ruling on the change of venue motions and should do so on remand.
Justices Patricia Bamattre-Manoukian and William M. Wunderlich concurred.
The case is Alexander v. Superior Court (The Brix Group, Inc.), H025443.
Copyright 2003, Metropolitan News Company