Opinion
No. 36829-3-II.
January 13, 2009.
Appeal from a judgment of the Superior Court for Pierce County, No. 07-2-06691-3, Rosanne Buckner, J., entered September 14, 2007.
Reversed by unpublished opinion per Armstrong, J., concurred in by Houghton and Bridgewater, JJ.
UNPUBLISHED OPINION
Continuant, Inc. appeals the trial court's orders dismissing its breach of contract action under the doctrine of forum non conveniens and awarding attorney fees to Buck Institute for Age Research. We reverse the forum non conveniens dismissal as well as the award of attorney fees.
FACTS
Continuant, Inc. is a telecommunications maintenance company based in Fife. Together with Telecom Labs, Inc., its Fife-based sister company, it employs about 100 people in Washington. Buck is a nonprofit corporation located in Marin County, California.
In August 2006, Buck contacted Continuant about maintaining its communications equipment. Continuant sales representative Gabe Grossman, who works in Continuant's Portland office, negotiated with Buck. On September 18, 2006, Buck and Continuant entered into a two-year maintenance contract. Buck's chief information officer, Alan Lees, and Doug Graham, Continuant's president, signed the contract.
The contract expressly provides that it applies to the Nortel Meridian telephone equipment and voicemail. The contract also requires Buck to provide 30 days' notice of any default by Continuant and the opportunity to cure the default.
Soon after entering into the maintenance contract, Buck asked Continuant to repair its Avotus call-accounting equipment. Continuant sent a California subcontractor to Buck, but this technician could not fix the problem. Continuant employee Bryan Miles then worked on the issue remotely from his Fife office. His October 9 invoice states that after three hours of work with Avotus personnel, he ran the system for a couple of days and it tested "all clear." Clerk's Papers (CP) at 17.
On September 27, Lees sent Continuant an e-mail terminating the contract based on Continuant's nonperformance. Kitty Riddle, Continuant's contract manager, replied by e-mail that Buck could cancel the agreement without penalty if Continuant received written notice of its default and provided no cure within 30 days.
On October 3, Lees answered with an e-mail that served "as formal written notification that we regard Continuant to be in non-performance of the contract." CP at 21. Lees complained that the first Continuant subcontractor was unable to repair its system and that the second Continuant technician merely worked with Avotus, thereby leading Buck to conclude that Continuant did not have the in-house expertise claimed. Lees further wrote,
You will understand that we do not feel that there is a proper basis of trust, nor of technical expertise on Continuant's part, for us to go forward in any way with this contract. We feel entirely within our rights therefore to cancel the contract without penalty of any kind on the basis that false representation was made to us prior to signature and this false representation was highly material to our decision to sign the contract. . . . We have conferred with counsel in order to arrive at this position and we will defend this position, if necessary, to the fullest degree in a court of law.
CP at 21 (emphasis added). Also on October 3, employees from Packet Fusion, a California company, apparently worked on Buck's phone system.
Although Buck claims that Packet Fusion repaired the Avotus system, the notations on Packet Fusion's invoice do not make clear the nature or scope of repair.
After Buck failed to pay invoices from Continuant for past due payments, Continuant filed suit in Pierce County Superior Court to collect the $13,372.62 early termination charge. Buck responded by moving to dismiss on forum non conveniens grounds. The trial court granted Buck's motion, dismissing Continuant's claims without prejudice. The court explained its decision:
I believe the defendant has sustained its burden to prove that trial in this jurisdiction would not be as easy or expeditious as trial in California because of the location of the equipment there and the fact that the defendant company was located entirely there, and it appears that we will have witnesses, as well, from California, more from California than we will have in Washington. For those reasons, I will grant the motion.
Report of Proceedings (RP) at 12. After initially denying Buck's request for attorney fees, the trial court granted Buck's motion for reconsideration and awarded Buck $7,392 in fees as the prevailing party.
ANALYSIS I. Forum Non Conveniens Dismissal
We review a trial court's dismissal on forum non conveniens grounds for an abuse of discretion, reversing only if the trial court's decision is manifestly unfair, unreasonable, or untenable. J.H. Baxter Co. v. Cent. Nat'l Ins. Co. of Omaha, 105 Wn. App. 657, 661, (2001). A trial court abuses its discretion if it erroneously interprets the law. Sales v. Weyerhaeuser Co., 163 Wn.2d 14, 19, 177 P.3d 1122 20 P.3d 967 (2008).
A plaintiff has the original choice to file his or her complaint in any court of competent jurisdiction. Sales, 163 Wn.2d at 19. Courts generally do not interfere with this choice where jurisdiction is properly asserted. Sales, 163 Wn.2d at 19. The doctrine of forum non conveniens grants a court the discretionary power to decline a proper assertion of its jurisdiction, however, when the convenience of the parties and the ends of justice would be better served if the action were brought and tried in another forum. Johnson v. Spider Staging Corp., 87 Wn.2d 577, 579, 555 P.2d 997 (1976).
The trial court should begin with the principle that a plaintiff's choice of forum is rarely disturbed. J.H. Baxter, 105 Wn. App. at 661; see also 20 Am. Jur. 2d, Courts, § 116 at 496 (2nd ed. 2005) (dismissal of action on forum non conveniens grounds is drastic remedy to be exercised with caution and restraint). This presumption enables lawsuits to get underway "without immediately floundering in argument about whether some other location would be preferable." J.H. Baxter, 105 Wn. App. at 661.
In deciding whether to decline its own jurisdiction in favor of another forum, the court must balance certain private and public factors. Sales, 163 Wn.2d at 20. The private factors require the court to consider the convenience of litigation in the alternative forum, including
the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive.
Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 S. Ct. 839, 91 L. Ed. 1055 (1947).
The public factors also focus on litigation, including
[a]dministrative difficulties . . . for courts when litigation is piled up in congested centers instead of being handled at its origin. Jury duty . . . imposed upon the people of a community which has no relation to the litigation. . . . There is a local interest in having localized controversies decided at home. There is an appropriateness, too, in having the trial of a diversity case in a forum that is at home with the state law that must govern the case.
Gulf Oil Corp., 330 U.S. at 508-09.
The balancing analysis presumes the existence of an adequate alternative forum. Sales, 163 Wn.2d at 20. "An alternative forum is adequate as long as a plaintiff can litigate the essential subject matter in that forum and recover if successful." Sales v. Weyerhaueser Co., 138 Wn. App. 222, 229, 156 P.3d 303 (2007), aff'd, 163 Wn.2d 14 (2008).
Unless the balance of the Gulf Oil factors strongly favors the defendant, the plaintiff's choice of forum should prevail. Myers v. Boeing Co., 115 Wn.2d 123, 128-29, 794 P.2d 1272 (1990) (quoting Gulf Oil Corp., 330 U.S. at 508). Each case turns on its facts, with the trial court generally becoming entangled in the merits of the underlying dispute. Van Cauwenberghe v. Biard, 486 U.S. 517, 528, 108 S. Ct. 1945, 100 L. Ed. 2d 517, 56 U.S.L.W. 4545 (1988); J.H. Baxter, 105 Wn. App. at 662. To examine "`the relative ease of access to sources of proof'" and the availability of witnesses, the court must examine the substance of the dispute to evaluate what proof is required, and determine whether the pieces of evidence the parties cite are critical, or even relevant, to the cause of action and any potential defense. Van Cauwenberghe, 486 U.S. at 528 (quoting Gulf Oil, 330 U.S. at 509). In examining the public interest factors, the court must consider the locus of the alleged culpable conduct and the connection of that conduct to the plaintiff's chosen forum. Van Cauwenberghe, 486 U.S. at 528.
A. Private Factors
Continuant does not contest Buck's assertion that California is an adequate alternative forum, so we do not address this issue before turning to the Gulf Oil factors.
1. Access to Proof and Availability of Witnesses
One reason the trial court gave for its dismissal was that there would be more California than Washington witnesses. Continuant disagrees with this assessment and also argues that when determining whether a particular venue is more convenient to witnesses, courts do not limit their investigation to reviewing which party can produce the longest witness list. Aquatic Amusement Assocs., Ltd. v. Walt Disney World Co., 734 F. Supp. 54, 57 (N.D.N.Y. 1990). Rather, courts should look to the nature and quality of the witnesses' testimony with respect to the issues in the case. Aquatic Amusement, 734 F. Supp. at 57.
In its original motion to dismiss, Buck maintained that no Continuant officers or employees needed to testify. Buck asserted that the case depended on the testimony of the unidentified subcontractor from California who could not repair its system. "Without the testimony of the technician who inspected Buck's phone system and the only individual who performed any services on behalf of Continuant, adjudication on the merits is impossible." CP at 32. Continuant responded that there was no need to call this subcontractor, as it did not dispute that his efforts failed. Continuant contended that former employee Bryan Miles had fixed the system from Fife and could not be compelled to testify in California. Buck then acknowledged Miles's work but said that he did not solve the problem and that it needed to hire Packet Fusion, a California company, to repair the system after Continuant could not.
Continuant argues that each side thus will need the testimony of one third-party witness who cannot be compelled to leave his home forum to testify. See Myers, 115 Wn.2d at 129 (Washington courts have no power to compel the attendance of witnesses from other jurisdictions). In addition to Miles, Continuant's witnesses will include Graham and Riddle, its president and contract manager in Fife, and Grossman, its Portland sales representative. Miles will testify about Buck's claim of nonperformance, Graham and Grossman will testify about the maintenance contract, and Riddle will testify about its termination.
Because Washington law applies to this contract dispute, the same principles regarding the compulsion of witnesses apply to both parties.
Buck responds that it will need the testimony of Lees, its chief information officer, and Kevin Kennedy, a technician with its office, to testify about its phone system. Packet Fusion will need to testify about its repairs, and the unidentified subcontractor may also need to testify. Continuant acknowledges that Buck will need the testimony of Lees, who negotiated the contract and terminated it, but asserts that he can be compelled to testify in Washington. See Campbell v. A.H. Robins Co., 32 Wn. App. 98, 107, 645 P.2d 1138 (1982) (under CR 43(f)(1), nonresident parties and their managing agents may be compelled to attend trial in Washington). Continuant disputes the need to call Kennedy to testify about Buck's phone system, pointing out that Lees's supplemental affidavit contains the same information about the phone system as Kennedy's affidavit. Although Buck asserts that Kennedy accompanied the unidentified subcontractor as he attempted to fix the system, neither Kennedy's nor Lees's affidavits support that assertion. Continuant continues to maintain that the unidentified subcontractor from California will not need to testify.
Therefore, with regard to the availability of each party's proposed witnesses, Miles is a former Continuant employee and Washington resident who cannot be compelled to testify in Page 9 California. Whether Grossman and Riddle are managing agents at Continuant who can be compelled to testify in California is unclear. See Johanson v. United Truck Lines, 62 Wn.2d 437, 440-41, 383 P.2d 512 (1963) (managing agent is one who has substantial part in managing affairs of particular department, district, or locality of corporation). Although Continuant contends that Buck needs only Lees's testimony, Buck argues that it also needs testimony from Kennedy, Packet Fusion, and possibly the unidentified subcontractor. The latter three witnesses cannot be compelled to testify in Washington. It appears that the number of witnesses on each side is roughly equivalent and that there will be difficulty in requiring some of each party's witnesses to leave their home forums to testify.
2. View of Premises
Continuant argues that the trial court abused its discretion in holding that a viewing of Buck's phone equipment in California would be necessary. (The trial court referred to the location of the equipment in California as a reason for granting Buck's motion.) Continuant argues that the main issue is whether Buck properly terminated the contract by affording Continuant notice and an opportunity to cure, and that there is no need to view Buck's equipment to resolve this issue. Continuant asserts that a backup issue is whether the maintenance contract included the Avotus equipment that needed repair. There is no express reference to this equipment in the contract, but Buck contends that the Avotus equipment was one component of the Nortel Meridian system that the contract covered. Even if this is the case, Continuant asserts that having experts view the equipment is not relevant to determining whether the parties intended to include Avotus under the maintenance contract. It contends further that Lees and Kennedy are qualified to offer testimony about Buck's phone system. Buck replies that based on the testimony of Lees and Kennedy regarding the complexity of that system, it was reasonable for the trial court to infer that a view of the premises will be necessary.
If, as Continuant asserts, the key issue is whether Buck properly terminated the contract by offering notice and an opportunity to cure, viewing its phone system will be unnecessary. We address this issue more fully below.
3. Pierce County as Expeditious and Inexpensive
Continuant argues that the trial court abused its discretion by failing to assess which forum would be most expeditious and least expensive, and it asks us to take judicial notice that trial in Pierce County would be less expensive and more expeditious than trial in Marin County. Continuant points out that this case was eligible for mandatory arbitration in Pierce County. It argues that small companies that choose to make their home in Pierce County should be able to take advantage of efficient and less expensive procedures such as mandatory arbitration of small disputes where arbitrators are paid with local tax dollars and discovery is limited to keep costs down. Buck contends only that Continuant may not introduce facts on appeal regarding the expense of living and litigating in California that it did not introduce to the trial court. We find that this factor favors keeping this case in Washington.
4. Prima Facie Defense
Continuant also argues that the trial court erred in failing to require Buck to show a prima facie defense to this lawsuit. Although this is not one of the factors explicitly set forth in Gulf Oil, the Supreme Court later observed that some investigation into the merits of the case as well as potential defenses is required when assessing a forum non conveniens motion. Van Cauwenberghe, 486 U.S. at 528; see also Leasecomm Corp. v. Rivera, 1994 Mass. App. Div. 115, 116 (1994) (implicit requirement for the successful assertion of forum non conveniens defense is the necessity of a trial in a more appropriate forum because of the existence of an actionable claim and a meritorious defense thereto). And, as stated, an underlying question is whether the "ends of justice" would be served by transferring the case to another forum. See Spider Staging Corp., 87 Wn.2d at 579.
Continuant contends that there are three possible issues in this case: the opportunity to cure, contract coverage, and repair issues. It argues that the first issue is the most significant, as Continuant's primary argument is that Buck breached the termination provision in the contract when it cancelled the contract on September 27 and October 3. Buck responds that Washington law does not require it to present a defense to this claim, but it adds that its October 3 e-mail could act as notice under the contract and that Continuant made no attempt to cure after that date. Buck argued below that after it gave Continuant notice on October 3, Continuant failed to make any attempt to repair the system, thus forcing Buck to hire Packet Fusion to make the necessary repairs. Kennedy stated that after Continuant failed to fix the problem, Packet Fusion made the repairs on October 16. Lees added that "[u]pon cancellation of the contract with Continuant, we hired Packet Fusion." CP at 75.
The facts do not support Buck's claim that its October 3 e-mail provided Continuant with notice of a default that could be cured. The date of Miles's work on Buck's system is unknown, but his October 9 invoice states that he tested the system afterward and that it ran "all clear." CP at 17. On October 3, Lees sent Continuant an e-mail stating that it did not intend to "go forward in any way with this contract." CP at 21. Packet Fusion performed its repairs that day, and not afterward on October 16. Therefore, the October 3 e-mail did not give Continuant any opportunity to cure because the system was repaired that day by another company. If Buck is correct in stating that Packet Fusion solved the problem, there was nothing left to cure, even if Continuant overlooked the wording of the October 3 e-mail and thought that cure remained a possibility. The facts simply do not support the contention that this e-mail constituted notice and an opportunity to cure, in compliance with the contract's termination provisions. Thus, on the record before us, this defense to Continuant's breach of contract claim likely fails. See Gray v. Gregory, 36 Wn.2d 416, 418-19, 218 P.2d 307 (1950) (summary notice of termination of lease did not satisfy requirement of giving notice of default and opportunity to cure); Filmline (Cross-Country) Prods., Inc. v. United Artists Corp., 865 F.2d 513, 518 (2nd Cir. 1989) (notice of termination that included no provision to cure in compliance with explicit terms of contract constituted breach of contract).
As stated, Packet Fusion's invoice makes the scope of its work unclear, but Buck asserts that Packet Fusion repaired the Avotus equipment when Continuant could not.
Buck also contends that Continuant's abandonment of the contract excused its allegedly defective notice and there were no damages even if it failed to comply with the notice requirement. See Lazelle v. Empire State Sur. Co., 58 Wn. 589, 592, 109 P. 195 (1910) (surety to contract cannot complain when it can show no damage from failure to receive notice of breach). But Continuant has demonstrated damages because the termination deprived it of its contractual right to fix the alleged default and continue the benefits of its two-year maintenance contract.
A backup issue to the opportunity to cure issue is whether the maintenance contract covered the Avotus equipment. The contract does not mention the Avotus equipment, and Miles had to contact Avotus representatives to work on the problem Buck identified. Buck contends that Packet Fusion repaired the system when Miles did not, but there is no reference to Avotus in the Packet Fusion invoice. It is unclear whether Buck has a viable defense to this issue.
With regard to the repair issue, Miles's invoice supports Continuant's claim that Miles fixed the problem. Furthermore, Buck's October 3 e-mail seemed more concerned with Miles's need to work with Avotus personnel than with any failure to fix the system. Whether Packet Fusion addressed the same problem and fixed it cannot be determined by its invoice. Thus, Buck's defense to this issue is also unclear. At this preliminary stage, the merits of the case favor Continuant.
B. Public Interest Factors
The trial court did not address these factors, and the only one of potential significance is the importance of having this suit resolved under Washington law. The contract's choice of law provision states that Washington law governs. Such a provision informs but does not govern a forum non conveniens decision. See Hill v. Jawanda Transp. Ltd, 96 Wn. App. 537, 546, 983 P.2d 666 (1999). Although California courts would have little difficulty in applying Washington law, this factor slightly favors keeping this contract action in Pierce County. See Lynch v. Pack, 68 Wn. App. 626, 634, 846 P.2d 542 (1993) (affirming forum non conveniens dismissal in part because agreement required application of Montana law with which Montana courts were more familiar).
C. Significant Cases
Buck argues that this case is similar to J.H. Baxter, in which Division One affirmed a forum non conveniens dismissal. In the underlying insurance coverage lawsuit, the coverage demanded was for environmental liabilities incurred at wood treatment facilities in Washington, Oregon, Wyoming, and California. J.H. Baxter, 105 Wn. App. at 659. The greatest exposure for the insurers was from the California facility, and the insured had its headquarters in California. J.H. Baxter, 105 Wn. App. at 659. In view of the factors making California "the center of gravity" for this insurance coverage dispute, Division One concluded that the trial court did not abuse its discretion in dismissing the action on the basis that California was a more convenient forum than Washington. J.H. Baxter, 105 Wn. App. at 665.
Buck also contends that Spider Staging Corporation., which reversed a forum non conveniens dismissal, is distinguishable. The court there concluded that the Gulf Oil factors did not "strongly favor" the Kansas forum so as to justify rejecting the Kansas plaintiff's decision to sue in Washington:
[A]ll of the evidence which pertains to the manufacturing and marketing of the scaffold is in Washington State. Respondents are Washington corporations, and all of their principal officers reside in King County. Both of the engineers who designed the scaffold live in King County. The two principal witnesses from Kansas stated in affidavits that they willingly would appear in Washington. Also, appellant will bring the scaffold to Washington and give respondents an opportunity to examine it. The trial court therefore should not have disturbed appellant's choice of forum.
Spider Staging Corp., 87 Wn.2d at 580.
Contract negotiations in this case took place in Washington, Oregon, and California. One party is domiciled in Washington, and the other in California. Whether the system was repaired from Washington or on-site in California is disputed, but the timing of the repairs vis-a-vis the language and date of the contract termination strongly suggests that Buck did not afford Continuant an opportunity to cure. The number of witnesses from California and Washington is roughly equivalent, and it is not evident that viewing Buck's phone system will be necessary.
Unlike J.H. Baxter, therefore, the center of gravity in this case is not California. And, as in Spider Staging Corporation, the trial court gave little weight to the plaintiff's choice of forum. "Where a transfer would merely shift the inconvenience from one party to the other, the plaintiff's choice of forum should not be disturbed." 20 Am.Jur. 2d, § 120, at 501; see also SME Racks, Inc. v. Sistemas Mecanicos Para Electronica, 382 F.3d 1097, 1103 (11th Cir. 2004) (trial court abused its discretion in failing to consider strong presumption in favor of plaintiff's choice of forum when weighing private interest factors). We conclude that the Gulf Oil factors do not strongly favor the defendant and, thus, the trial court abused its discretion in granting the motion to dismiss.
II. Attorney Fees
Given our reversal of the trial court's dismissal order, we must reverse its award of attorney fees to Buck. Continuant does not request fees on appeal but asks us to require the trial court to award Continuant the fees incurred in this appeal if Continuant prevails at trial. We leave the matter to the trial court if Continuant prevails on the merits below.
We reverse the trial court's orders dismissing Continuant's action and awarding attorney fees to Buck.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
HOUGHTON, PJ. and BRIDGEWATER, J., concur.