Law Offices of Darius T. Chan, P.C.

“Applicable Law” – part 3

darius — Sat, 17 Dec 2011 01:37:36 +0000

Venue
Venue is even more specific than forum in that “venue” refers to a particular court in which a dispute will be litigated. For example, in California, venue would be a particular California county. Venue, however, is controlled by law, and private parties cannot override the legislature’s determination as to which county should host an action.

As far as venue selection clauses are concerned, there is some “uncertainty” about their enforceability in California. In truth, the California Supreme Court has held that venue selection provisions are void, and the Courts of Appeal have followed that holding. (See General Acceptance Corp. v. Robinson 207 Cal. 285, 289 (1929); Alexander v. Superior Court, 114 Cal.App.4th 723 (2003); and Arntz Builders v. Superior Court, 122 Cal. App. 4th 1195 (2004)). (The concern is that parties will go “forum shopping” and that this will disrupt the administration of justice.) What remains to be decided, however, is what would happen if the parties agreed on one venue that was one of several statutorily permissible venues? Although the Arntz court suggested that there is some logic to allowing this, the Court has yet to decide the question.

So where is venue proper you ask? In California, the California Code of Civil Procedure section 395 states that an action for injury to a person or a person’s personal property shall be filed in the county where a defendant resides or where the injury occurred. According to section 392, actions involving real property must be filed in the county where the land (or some portion thereof) is situation.

But watch out – there are even more rules to follow! (If you haven’t already noticed, lawyers really like rules.) Some counties have multiple judicial districts and their own set of local rules governing where, within that particular county, the action must be filed. For example, the Los Angeles County Superior Court, which has 12 different judicial districts, instructs litigants to file cases regarding bodily injury, wrongful death, or tortuous damage to property in the particular district where the injury or damage occurred.

If you need litigation advice, contact the attorneys at the Law Offices of Darius T. Chan, P.C. We are here to help.

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“Applicable Law” – part 2

darius — Sat, 17 Dec 2011 01:28:27 +0000

Forum Selection
Parties to a contract can also include a forum selection clause identifying one or more courts in which they agree disputes between the parties will be litigated, should they arise at all. In state court practice, a forum would be a particular state.

Forum choice has very practical implications and parties should consider the following, and other factors, when deciding upon a forum:
1. Geographical convenience. If the parties are located in different states, it will invariably be cheaper and more convenient for one party and more expensive and complicated for the other to get to court to settle any disagreement.
2. There can be benefits to litigating in a forum that is well known to a party or attorney, for example familiarity with specific judges, the local rules, or the type of jury that will likely be selected.
3. Other forum idiosyncrasies, such as whether the forum is pro-environment, pro-plaintiff, or pro-business.

Forum selection clauses are generally considered valid and may be given effect in the absence of a showing that enforcement of the clause would be unreasonable/unconscionable/unjust, contrary to public policy, or forbidden by statute. The burden of demonstrating that the forum choice should not be enforced is placed on the party opposing enforcement and, historically, has been difficult to prove. Arguments that it will be more expensive to litigate in the selected forum, that the law of the selected forum may be unfavorable or even hostile to a party’s claims, that a party did not read the clause, or that the contract is an adhesion contracts have all been found insufficient. Courts have stated that enforcement may be unreasonable if the forum selected would be unavailable or unable to accomplish substantial justice.

So what’s the moral of the story? Choose your forum wisely, because you will likely be stuck with it!

If you would like assistance with drafting a contract or need advice regarding a dispute, contact the Law Offices of Darius T. Chan, P.C.

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“Applicable Law” – part 1

darius — Thu, 25 Aug 2011 13:09:47 +0000

If you have ever successfully read an entire contract without falling asleep, you may have noticed a two or three line section near the end of the agreement entitled “Applicable Law”. This provision is found in long, detailed contracts, as well as most (relatively) short, boilerplate agreements. So, what is important about this provision anyway?

This seemingly straight-forward provision can actually affect three related, but distinct issues:
1. Governing law,
2. Forum selection, and
3. Venue.

And, to make matters even more complicated, the legal principles that govern these choices are not the same (at least, not here in California)! Let’s explore this provision in a bit more detail…

Governing Law
These days it is not unusual for disputes to involve parties in two or more different jurisdictions. When that happens, and the parties ends up in court, the judge must determine which law to apply to resolve the situation. Since state laws can vary significantly, the outcome of a case can depend on which state’s laws are applied to the dispute.

If the contract does not have a provision stating which state’s law will apply, a court will use conflicts of law principles to determine which law should be used. These conflicts of law principles vary from one state to another.

To create a greater level of certainty and to avoid additional conflicts, parties can specify in their contract which state’s law they want to govern their contractual relationship. For even further certainty, parties can specify that a given state’s law will apply, regardless of that state’s conflicts of law principles. This eliminates the opportunity for a party to use the selected state’s conflicts of law principles to argue that a different state’s laws should actually apply!

Governing law provisions are presumptively enforceable as long as there is some relationship between the transaction and the jurisdiction selected to govern, or some other reasonable basis for choosing the law from that particular jurisdiction. There are a couple of exceptions to this ability to “choose your own law” to keep in mind however. Public policy reasons against enforcement will trump private choice of law provisions, and also there are also specific statutory choice of law rules that cannot be modified by contract.

The best way to maximize the chances that your Governing Law provision is valid and enforceable is by hiring an experienced and knowledgeable attorney to help you draft your agreement! Contact the Law Offices of Darius T. Chan, P.C. if you have specific legal questions you would like to discuss.

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