Last week, California’s Court of Appeal affirmed a trial court’s
finding of forum non conveniens, but
reversed the order to dismiss and remand with directions to vacate the
dismissal and enter an order staying the matter.*
Forum
non conveniens
is an equitable doctrine invoking the discretionary power of a court to decline
to exercise the jurisdiction it has over a transitory cause of action when it
believes that the action may be more appropriately and justly tried elsewhere.
As a general rule, an action will be dismissed or stayed if a suitable
alternative forum exists and the balance of private and public interests weigh
in favor of allowing the litigation to proceed in the alternative forum.
The appellants (the “Appellants”)
executed real property purchase agreements with respondent (“Respondent”)
for the purchase of lots in Baja California, Mexico. They made installment
payments on the property, but eventually stopped the payments because the
promised development of the project had not occurred. Appellants filed suit
against Respondents alleging that they had been victims of a fraudulent scheme
perpetrated under the guise of a real property transaction.
The trial court granted the
motion to change the forum to Mexico after concluding that individual and
public interests favored a trial in Mexico because, among other things, (a) the
case involved adjudicating the right to real property located in Mexico; (b) Appellants'
claims included breach of contract and fraud; (c) Respondent claimed that
Appellants have unclean hands and have not complied with the required payments
and other conditions for purchasing the property; (d) the nature of the claims required
the testimonies of both percipient and expert Mexican witnesses and other
Mexican evidence regarding real property development in Mexico; (e) the contracts
were negotiated and signed in Mexico; (f) the contracts Appellants executed
contained a provision whereby Appellants agreed to be subject to the courts and
laws of Mexico and waived any other jurisdiction and (g) Mexico has a strong –
and California has little - interest in adjudicating a dispute involving real
property located in Mexico.
Nonetheless, the Court concluded
that California has an interest in providing a forum to California residents
who allege that another California resident breached a contract to sell
property even if that property is located outside the state. Thus, the trial
court erred in dismissing the action on the basis of forum non conveniens.
Even if this case is not to be published
in Official Reports, parties involved in a Mexico real property dispute where everything
– except for their residency - is “Mexican” should take it into consideration
before filing in Mexico or alleging that California is not a convenient forum.
*Filed 11/19/12 Stewart v.
Lopez-Gamez CA4/1. NOTE: THIS CASE IS NOT TO BE PUBLISHED IN OFFICIAL
REPORTS. CALIFORNIA RULES OF COURT, RULE 8.1115(a), PROHIBITS COURTS AND
PARTIES FROM CITING OR RELYING ON OPINIONS NOT CERTIFIED FOR PUBLICATION OR
ORDERED PUBLISHED, EXCEPT AS SPECIFIED BY RULE 8.1115(b). THIS OPINION
HAS NOT BEEN CERTIFIED FOR PUBLICATION OR ORDERED PUBLISHED FOR THE PURPOSES OF
RULE 8.1115.
Mauricio
Leon de la Barra is an international law attorney licensed to practice law in
Mexico and California, and has more than 15 years of experience representing
clients in cross-border business and real estate transactions and litigation
involving international, U.S. and Mexican laws.