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.