Opinion
A129456
11-30-2011
MARSHA F. TILLER, Plaintiff and Appellant, v. FIRST NATIONAL BANK, Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(San Mateo County Super. Ct. No. CIV478243)
Appellant Marsha F. Tiller sued respondent First National Bank (Bank), headquartered in Kansas, over a dispute related to her employment with a subsidiary of Bank located in California. The trial court granted Bank's motion to quash service of the summons and complaint, and appellant appealed. Because we agree with the trial court that the court lacked personal jurisdiction over Bank, we affirm the trial court's order granting Bank's motion to quash. We also modify the trial court's order to omit reference to transferring the action to a Kansas court, an action that the trial court lacked authority to order.
I.
FACTUAL AND PROCEDURAL
BACKGROUND
First National Mortgage Sources, LLC (Mortgage Sources) entered into an employment agreement with appellant dated December 5, 2005, whereby appellant agreed to solicit and promote various types of mortgages for Mortgage Sources. Appellant entered into another employment agreement with Mortgage Sources on April 7, 2006, when she was promoted to branch manager at the Mortgage Sources branch in Redwood City. Respondent Bank was not a party to either agreement. Mortgage Sources notified appellant by letter dated December 31, 2007, that it would terminate her employment effective one month later, because of poor market conditions in the mortgage industry. Mortgage Sources filed for bankruptcy in April 2008 in the United States Bankruptcy Court, District of Kansas, at which point it stopped operating as a subsidiary of Bank.
Appellant sued Bank (but not Mortgage Sources, which is not a party to this appeal) on November 10, 2008, for fraud, negligent misrepresentation, and other causes of action, alleging that she had not been reimbursed for $291,470.52 that she had paid for operating expenses during her employment. Bank filed a motion to quash service of the summons for lack of personal jurisdiction (Code Civ. Proc., § 418.10, subd. (a)(1)). Bank sought, in the alternative, dismissal of the action on the ground of inconvenient forum (§ 418.10, subd. (a)(2)), or "transfer of venue in the case pursuant to Code of Civil Procedure section 410.30," based on the fact that appellant's employment agreements with Mortgage Sources expressly required that any claims be resolved in Kansas. The parties conducted discovery on the jurisdictional issue.
Appellant holds an unsecured nonpriority claim in the Mortgage Sources bankruptcy proceeding for $309,000 in "[s]ettlement of CA Labor Code violations."
All statutory references are to the Code of Civil Procedure unless otherwise indicated.
Bank submitted evidence to the trial court that it conducted business exclusively in Kansas (where it maintained three offices, two in Hays and one in Plainville). Bank never operated a branch in California and maintains no offices in this state. Bank has no employees in California, has not entered into any contracts in the state, does not direct any advertising toward the state, does not solicit business in California, and does not directly derive any income from or in the state. All of Bank's employees are in Kansas. According to the president of Bank, Bank did not participate in the day-to-day operations or decisions of Mortgage Sources, it never employed appellant, and it did not make any representations to her. The president of Bank also stated that Bank "did not deal with or do business with any of the branches of" Mortgage Sources.
Mortgage Sources was a limited liability company in Overland Park, Kansas, that was formed in April 2003, and began operating the following month. The company was formed as a subsidiary of Bank, and was regulated by the Office of the Comptroller of the Currency (OCC), just as Bank was. Its purpose, as stated in its articles of organization, was "the organization [sic, presumably, origination] of residential mortgage loans with resale to investors in the secondary market." The former manager of Mortgage Sources testified that he and his business partner had an idea to form Mortgage Sources, and they presented it to Bank. He testified that "the idea initially was to have First National Bank as part of Mortgage Sources and find a way to make it one company, where we could do loans in 50 states, and to do that, we formed First National Mortgage Sources." Mortgage Sources was to originate mortgage loans, and Bank would fund the loans, which would immediately be sold to investors.
On the same day the manager of Mortgage Sources signed the company's articles of organization, Mortgage Sources entered into an operating agreement with Bank. Bank and Mortgage Sources agreed to each contribute $10,000 to the capital of Mortgage Sources, and each was to receive payment based on a formula attached to the agreement, whereby Bank and Mortgage Sources would evenly divide the proceeds. The operating agreement further provided that the overall management and control of Mortgage Sources were to be vested in the manager of Mortgage Sources, "who shall have the exclusive right, authority, and responsibility to manage and conduct the business and affairs of [Mortgage Sources] and to enter into transactions on behalf of the Company within the scope of the Business." However, Bank was granted the authority to veto any decision of the Mortgage Sources manager that was inconsistent with activities that were part of, or incidental to, the business of banking. The president of Bank served as an unpaid member of the six-member advisory board of Mortgage Sources. The board provided advice to Mortgage Sources that was not binding on its manager. No other officers, stockholders, or directors of Bank ever gave direction to Mortgage Sources, and no Bank directors or officers served on the executive council of Mortgage Sources.
The Kansas-based manager of Mortgage Sources hired a management company to help operate Mortgage Sources. All of the people in the management company lived in Kansas, and none of them had ever worked as an employee, officer, director, or agent of Bank. In mid 2007, Mortgage Sources had about 105 branches nationwide, with 10 branches in California. No Mortgage Sources branch was operated as a branch of Bank. Bank did not pay salaries, expenses, or losses of Mortgage Sources. Different accountants worked for Mortgage Sources and Bank, and the records of Mortgage Sources were kept separately from Bank's records.
Mortgage Source's manager testified that for about a year or two after the company was formed, Bank funded approximately 30 to 40 loans that Mortgage Sources originated each month. Starting around January 2005, Mortgage Sources began brokering loans, without Bank necessarily funding them. The former manager of Mortgage Sources explained, "We thought we could grow the company, and if the company was going to grow to eventually do $3 billion worth of loans in a year, I don't believe that First National Bank had the assets to fund that many loans."
An amendment to the Mortgage Sources operating agreement dated January 1, 2005, changed the profit-distribution formula of the company. Bank's president stated in a declaration that "since some[]time in or around 2005," Mortgage Sources "was owned by FNMS Home Loan, Inc. and FNMS Mortgage Inc. [Bank] held a passive and indirect ownership interest in First National Mortgage Sources, LLC through FNMS Home Loans, Inc. and FNMS Mortgage, Inc." According to Bank's interrogatory responses, the purpose of FNMS Home Loan, Inc. "was to exist between [Mortgage Sources] and [Bank] for tax and other legal purposes. As such, FNMS Home Loan Inc. merely received the distributions of income from [Mortgage Sources] and redistributed to [Bank]." A letter dated May 17, 2005, from Bank to the OCC stated that Mortgage Sources had become a wholly-owned subsidiary of Bank. Mortgage Sources was not a bank, because it did not take deposits.
At some point in 2007, Mortgage Sources began experiencing liquidity problems and approached Bank for a loan. Bank extended a loan to Mortgage Sources, but the loan was not repaid, resulting in a claim by Bank for $390,603.34 against Mortgage Sources.
According to appellant, it was her understanding that Mortgage Sources was "an operating subsidiary" of Bank, and that it was "inseparably part" of Bank. She understood that Mortgage Sources "owed its existence to the [Bank] national charter and, in brokering mortgage loans, was performing a banking function of" Bank. Appellant likewise understood that the branch she managed was one of about 50 branches of Bank located in California, and that she and her staff were employees of both Bank and Mortgage Sources. The operation of appellant's branch was overseen by a Mortgage Sources area manager and a Mortgage Sources regional manager, both of whom resided in California.
Bank objected to appellant's declaration on the ground that appellant's " 'understanding' " about Bank's involvement with Mortgage Sources was not based on her personal knowledge, as required by Evidence Code section 702. It does not appear that the trial court ever ruled on this objection.
Appellant argued that the trial court could exercise jurisdiction over respondent Bank under the representative services doctrine, which permits a court to exercise general jurisdiction over a parent corporation where its local agent "exists only to further the business of the parent, and but for the local agent's existence, the parent would be performing those functions in the forum itself." (BBA Aviation PLC v. Superior Court (2010) 190 Cal.App.4th 421, 430 (BBA Aviation).)
On July 19, 2009 (about eight months after the complaint was filed in this case), Bank filed a petition for declaratory relief in Kansas state court, seeking a determination that appellant had no contract with Bank, that the trial court in this action did not have jurisdiction over Bank, and that appellant's claim must be litigated in the Mortgage Sources bankruptcy proceedings. (First National Bank, N.A. v. Marsha F. Tiller (Dist. Ct. Kan., Ellis County, No. 2009-CV-116).) Appellant filed a motion to dismiss or stay the action, on the ground that the instant action had been filed much earlier, and the issue of whether Bank was subject to California jurisdiction already was pending in this state. Bank filed opposition, requesting that the Kansas court deny the motion and schedule a pretrial conference "so that an ongoing course of this proceeding can be established." The Kansas court denied appellant's motion on February 1, 2010. Instead of setting a pretrial conference, the court also ordered that Bank's petition for declaratory relief was "granted to the extent that Kansas is ordered to be the forum of convenience to determine whether [Mortgage Sources] is an agent; subsidiary; or the alter ego of [Bank]." Bank thereafter argued in these proceedings that the trial court should honor the Kansas court's ruling.
Following a hearing, the trial court granted Bank's motion to quash service of the summons and complaint, stating, "My view is that essentially [Mortgage Sources] was acting as a loan broker. It wasn't acting exclusively for First National Bank here." The court further stated that it was "not going to reach any issues about convenient forum. I think that is within the purview of the court in Kansas so I am not going to use that as an alternate basis even in this ruling on this motion." The court's order following the hearing stated that the representative services doctrine did not provide a basis for jurisdiction in this case, because appellant had not met her burden of showing that Mortgage Sources existed only to further Bank's business. Although the trial court stated at the hearing that it was not ruling on the forum non conveniens issue, the court's order stated that Bank's motion to transfer the action "to Kansas State Court" on forum non conveniens grounds was granted, because the issue had already been decided by a Kansas court and would not be reexamined by the trial court. (Capitalization omitted.) Appellant timely appealed.
II.
DISCUSSION
A. Motion to Quash.
1. Applicable law and standard of review
Appellant argues that the trial court erred when it granted Bank's motion to quash, because she established jurisdiction under either the representative service doctrine or under general principles of agency. "When a nonresident defendant challenges personal jurisdiction, the plaintiff must prove, by a preponderance of the evidence, the factual basis justifying the exercise of jurisdiction. [Citation.] The plaintiff must do more than merely allege jurisdictional facts; the plaintiff must provide affidavits and other authenticated documents demonstrating competent evidence of jurisdictional facts. [Citation.] If the plaintiff does so, the burden shifts to the defendant to present a compelling case that the exercise of jurisdiction would be unreasonable. [Citation.]" (BBA Aviation, supra, 190 Cal.App.4th at pp. 428-429.) "In this analysis, the merits of the complaint are not implicated." (F. Hoffman-La Roche, Ltd. v. Superior Court (2005) 130 Cal.App.4th 782, 794 (Hoffman-La Roche).)
"When the jurisdictional facts are not in dispute, personal jurisdiction is a legal question for de novo review. [Citation.] If the jurisdictional facts are conflicting, we review the lower court's factual determinations for substantial evidence, but still review its legal conclusions de novo. [Citation.]" (BBA Aviation, supra, 190 Cal.App.4th at p. 429.)
"California courts may exercise jurisdiction on any basis that is not inconsistent with the state and federal Constitutions. (Code Civ. Proc., § 410.10; [citation].) A forum state may exercise personal jurisdiction over a nonresident if the defendant has minimum contacts with the state such that asserting jurisdiction does not violate traditional notions of fair play and substantial justice. (Internat. Shoe Co. v. Washington (1945) 326 U.S. 310, 316.) Minimum contacts exist where the defendant's conduct in, or in connection with, the forum state is such that the defendant should reasonably anticipate being subject to suit in that state. (World-Wide Volkswagen Corp. v. Woodson (1980) 444 U.S. 286, 297.) Under the minimum contacts test, '[p]ersonal jurisdiction may be either general or specific.' [Citation.]" (BBA Aviation, supra, 190 Cal.App.4th at p. 429.)
"A nonresident defendant is subject to general jurisdiction if its contacts with California are substantial, continuous, and systematic. [Citation.] When the nonresident defendant is a parent corporation of a subsidiary which does business in California, the minimum contacts may be direct between the parent and the state, or imputed to the parent via its subsidiary. General jurisdiction over a local subsidiary extends to the foreign parent under an alter ego theory, general principles of agency, or under the representative services doctrine, a narrow species of agency. [Citation.]" (BBA Aviation, supra, 190 Cal.App.4th at p. 429.) Because appellant does not claim that Mortgage Sources was an alter ego of Bank, we address only the representative services doctrine and the agency theory.
" 'An agency is proved by evidence that the [entity] for whom the work was performed had the right to control the activities of the alleged agent.' [Citation.] Thus, the hallmark of agency is the exercise of control over the agent by the principal." (Hoffman-La Roche, supra, 130 Cal.App.4th at p. 797.) "But for purposes of jurisdiction, the analysis begins with the 'firm proposition that neither ownership nor control of a subsidiary corporation by a foreign parent corporation, without more, subjects the parent to the jurisdiction of the state where the subsidiary does business.' [Citation.]" (Id. at pp. 797.) "The nature of the control exercised by the parent over the subsidiary necessary to put the subsidiary in an agency relationship with the parent must be over and above that to be expected as an incident of the parent's ownership of the subsidiary and must reflect the parent's purposeful disregard of the subsidiary's independent corporate existence. [Citation.] The parent's general executive control over the subsidiary is not enough; rather there must be a strong showing beyond simply facts evidencing 'the broad oversight typically indicated by [the] common ownership and common directorship' present in a normal parent-subsidiary relationship. [Citations.]" (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 542 (Sonora Diamond).)
"The representative services doctrine is a variant of the agency theory of general jurisdiction. [Citation.]" (Dorel Industries, Inc. v. Superior Court (2005) 134 Cal.App.4th 1267, 1277 (Dorel Industries).)"A foreign corporation is doing business in the forum state under this theory when its representative in the forum state ' "provides services beyond 'mere solicitation' and these services are sufficiently important to the foreign corporation that if it did not have a representative to perform them, the corporation's own officials would undertake to perform substantially similar services." ' [Citation.] It 'supports the exercise of jurisdiction when the local subsidiary performs a function that is compatible with, and assists the parent in the pursuit of the parent's own business, but the doctrine does not support jurisdiction where the parent is merely a holding company whose only business pursuit is the investment in the subsidiary.' [Citation.]" (Ibid., original italics [doctrine applied where subsidiary manufactured car seats, a task parent company otherwise would have done itself].)
" ' "[I]f a parent uses a subsidiary to do what it otherwise would have done itself, it has purposely availed itself of the privilege of doing business in the forum. Jurisdiction over the parent is therefore proper. [Citations.] This contrasts to the case of a holding company. In such a case, the subsidiary is not performing a function that the parent would otherwise have had to perform itself (the holding company could simply hold another type of subsidiary). In such a case, imputing jurisdictional contacts would be improper." ' [Citation.]" (Dorel Industries, supra, 134 Cal.App.4th at p. 1277.) The doctrine applies "when a closely related and supervised company conducts local activities that are not independent from, but are performed solely as an arm of and to assist, its senior, international/parent company in its business. [Citation.] In such a case, the parent company is not considered to be just a holding company that may escape a general jurisdiction finding based on its directed California activities." (Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 578.)
2. Representative services doctrine
Appellant first argues, as she did below, that Bank was subject to the court's jurisdiction under the representative services doctrine. Her one and one-half page legal argument in her opening brief includes no citations to the record (other than a citation to the trial court's order), and includes a single legal citation, to a Supreme Court case regarding banking law that does not analyze (or even mention) personal jurisdiction. (Watters v. Wachovia Bank, N.A. (2007) 550 U.S. 1.)
Appellant argues generally that, as a nationally chartered bank subject to OCC regulations, Bank had the power "to engage nationwide in any banking function, including the brokering of home mortgage loans." The representative services doctrine applies where a parent corporation uses a subsidiary to do what it otherwise would have done itself, in furtherance of its own business. (Dorel Industries, supra, 134 Cal.App.4th at p. 1277.) Appellant apparently contends that the representative services doctrine applies because Mortgage Sources did what Bank otherwise could have done itself, namely, hire its own loan officers and perform the same services that Mortgage Sources did. An analogous argument was raised, and rejected, in Sonora Diamond, supra, 83 Cal.App.4th 523. In Sonora Diamond, the court concluded that a Canadian parent corporation was merely a passive investor in a mining company doing business in California, and engaged in no independent business operations, whether connected to mining or not. (Id. at pp. 529, 544.) The court acknowledged that the Canadian corporation could have dispensed with the formation of the mining company, and instead bought the mine itself and hired its own employees to work the mine and sell what was extracted. (Id. at p. 545.) "However, this is true whenever a foreign holding company elects to invest in a local business operation rather than conduct the operation itself. To find the holding company subject to jurisdiction simply because the holding company chose to invest rather than operate would swallow the distinction, made in the case law . . . , between holding companies and operating companies, as well as implicitly obliterate the federal constitutional principle pronounced by the United States Supreme Court, the authoritative voice on the subject of federal constitutional law, that the parent-subsidiary relationship alone is not a basis for exercising jurisdiction over the parent based upon the activities of the subsidiary. [Citation.] If the fact of investment alone were sufficient to invoke jurisdiction because the holding company/parent was using a 'subsidiary to do what it otherwise would have done itself' [citation], it would never be necessary for any party plaintiff to resort to alter ego, agency, availment or any other theory to secure jurisdiction over a foreign parent, and one would be left to wonder why the courts have found themselves obliged to spend so much paper and print evaluating these bases of jurisdiction." (Ibid. [rejecting application of representative services doctrine].) Likewise here, even though Bank could have hired its own loan officers to originate loans as Mortgage Sources did, Bank did not actually do so, and appellant directs us to no evidence that the Bank would have done so absent the formation of Mortgage Sources.
In her reply brief, appellant argues that this case is analogous to a hypothetical situation set forth in Sonora Diamond, supra, 83 Cal.App.4th at page 545: "Had [the parent company], for example, owned the rights to the gold and used [the subsidiary] as the operating and marketing entity, perhaps general jurisdiction over [the parent] would be proper under the representative services rationale, because [the parent] in that situation could not reap the benefits of its rights unless it or someone else removed and sold the ore." She claims that Bank could not "reap the benefits" of its right under its national banking charter to broker mortgages in multiple states unless Bank "established a multi-state mortgage brokering operation either in-house or through an operating subsidiary." (Italics added.) Again, although it is undisputed that Bank could have opened its own California branches, it did not. And appellant provided insufficient evidence that Mortgage Sources conducted local activities solely as an arm of the Bank to further the Bank's own business, an element of the representative services doctrine. (Aquila, Inc. v. Superior Court, supra, 148 Cal.App.4th at p. 578.) To the contrary, the former manager of Mortgage Sources testified that, as Mortgage Sources grew, Bank would not necessarily fund all its loans, because Bank did not have the assets to do so.
Cases addressing the representative services doctrine focus on whether the parent company is a holding company, whose business is limited to investment in the subsidiary. (E.g., BBA Aviation, supra, 190 Cal.App.4th at p. 431 [holding company formed to control other companies, usually confining role to owning stock and supervising management]; Sonora Diamond, supra, 83 Cal.App.4th at pp. 544-545.) To the extent that appellant focuses on Bank's powers as a national bank, she apparently contends that Bank's business was not merely "investment only." (Cf. Sonora Diamond at p. 545.) However, Bank's relationship with Mortgage Sources was analogous to that of an investor, as opposed to a parent who uses its subsidiary to further its own business. Moreover, even if Bank did not perform the role of a typical holding company, the representative service doctrine "still requires a showing of a high level of control such that the subsidiary is just an instrumentality of the parent's own business." (BBA Aviation at p. 433.) Appellant made no such showing here. We reject appellant's representative services doctrine argument.
3. Agency
Appellant next argues, in her opening brief, that "general principles of agency establish jurisdiction over [Bank,]" because of OCC oversight of both Bank and Mortgage Sources. (Boldface omitted.) She claims that under (unspecified) federal law, Mortgage Sources was "indistinguishable" from Bank, and that Mortgage Sources was an "arm of a national bank." Her sole legal support for this proposition is Watters v. Wachovia Bank, N.A., supra, 550 U.S. 1, which held that a national bank's mortgage business, whether conducted by the bank or through its operating subsidiary, is subject to the OCC's regulatory oversight and not the oversight of the states where subsidiaries may operate. (Id. at p. 7.) The Supreme Court noted that, "[f]or supervisory purposes, OCC treats national banks and their operating subsidiaries as a single economic enterprise." (Id. at p. 17.) The court further stated that "[a] national bank has the power to engage in real estate lending through an operating subsidiary, subject to the same terms and conditions that govern the national bank itself; that power cannot be significantly impaired or impeded by state law. [Citations.]" (Id. at p. 21, fn. omitted.) Appellant claims that, because Mortgage Sources was subject to OCC regulations, this was sufficient to establish that Mortgage Sources was Bank's agent.
Confusingly, appellant contends in her reply brief that, "since completing jurisdictional discovery during proceedings below, [she] has relied exclusively on the representative services doctrine." Although this statement arguably could be construed as an abandonment of her argument regarding general agency principles, she renews in her reply brief the argument that the regulatory oversight of Mortgage Sources somehow conferred jurisdiction over Bank (albeit under the representative services doctrine).
We first note that appellant does not cite any case holding that a national bank is subject to the personal jurisdiction of the courts in a state where one of its subsidiaries does business, simply because both entities are subject to OCC regulation, and we are aware of none. (Cf. Builder Mart of America v. First Union Corporation (S.C.App. 2002) 563 S.E.2d 352, 510 [no general personal jurisdiction over bank holding company because of activities of its wholly owned subsidiary in the state]; see also Hoffman-La Roche, supra, 130 Cal.App.4th at pp. 801-802 [defendants' management of related companies' drug regulatory issues insufficient, standing alone, to establish agency].) Moreover, although Watters v. Wachovia Bank, N.A., supra, 550 U.S. 1 addressed the OCC's regulatory power over banks and their subsidiaries, appellant provides few specifics about how Mortgage Sources was regulated in this particular case, where Bank did not fund all loans brokered by Mortgage Sources. Although it is undisputed that Mortgage Sources was subject to OCC regulation, the president of Bank testified that Mortgage Sources was nonetheless "a distinct entity and, in fact, it wasn't even, in a large period of the time, wasn't even consolidated on the bank's balance sheet." When asked whether he was ultimately responsible for compliance with OCC regulations by either Bank or any of its subsidiaries, the president testified that "they struggled with that. Some of the things they were struggling with it [sic], they regulated them strictly on the subsidiary level or the bank level, or if it was a pass-through. In other words, their regulations are not clear." (Italics added.)
In order to show that a subsidiary is but the agent or instrumentality of the parent, a party must show that the nature and extent of control exercised over the subsidiary is " 'pervasive and continual.' " (Hoffman-La Roche, supra, 130 Cal.App.4th at p. 798.) "General executive control is insufficient. Rather, 'there must be a strong showing beyond simply facts evidencing "the broad oversight typically indicated by [the] common ownership and common directorship" present in the normal parent-subsidiary relationship. [Citations.] As a practical matter, the parent must be shown to have moved beyond the establishment of general policy and direction for the subsidiary and in effect taken over performance of the subsidiary's day-to-day operations in carrying out that policy. [Citations.]' [Citation.]" (Ibid., original italics.) Because there is no evidence that Bank exercised pervasive and continual control over Mortgage Sources, and appellant acknowledges that fact in her reply brief, we reject appellant's argument that Bank was subject to personal jurisdiction in this state based on general agency principles.
B. Kansas Court's Ruling.
1. No deference given to ruling
Appellant argues that the trial court "erred insofar as it gave any deference to the Kansas judgment which is void because rendered in violation of procedural due process." (Capitalization and boldface omitted.) She contends that "if this case is remanded to the court below for further proceedings, the remand should be with the instruction not to give any deference to the Kansas judgment."
The problem with appellant's argument is that it focuses on all the reasons the Kansas court erred in making its ruling, but makes no mention of how the trial court in this case treated the Kansas decision when making its ruling. When appellant's counsel argued at the hearing on Bank's motions about the problems with the Kansas court's ruling, the trial court stated that "we are spending time on an issue that I am not going to address. The Kansas court made a decision on that. If your client is unhappy about it, they have the right to appellate review [in Kansas]. My deciding whether there is jurisdiction here or not isn't dependant on whether California is the convenient forum or Kansas and I am just going to leave that alone." (Italics added.) When the trial granted Bank's motion to quash, it specified that "I am not going to reach any issues about convenient forum. I think that is within the purview of the court in Kansas so I am not going to use that as an alternate basis even in this ruling on this motion." (Italics added.) In light of these statements, it is abundantly clear that the trial court's granting of Bank's motion to quash was not based on the Kansas court's ruling, and thus no "deference" was given to it.
2. "Transfer" to Kansas court
Although neither side raises this issue, we note that the trial court's order following the hearing (which refers to the Kansas ruling) contains an inconsistent pronouncement, and the court specified action it lacked authority to order. By filing a motion to quash pursuant to section 418.10, Bank challenged the trial court's jurisdiction over it, without making a general appearance. (§ 418.10, subd. (e)(1); Roy v. Superior Court (2005) 127 Cal.App.4th 337, 345; Berard Construction Co. v. Municipal Court (1975) 49 Cal.App.3d 710, 713-714.) Consistent with the trial court's comments at the hearing, the court's written order states that it granted Bank's motion to quash service of summons and complaint, and explains why Bank was not subject to personal jurisdiction. In short, the trial court concluded that it lacked jurisdiction over Bank.
Bank also sought, in the alternative, dismissal of the action on the ground of inconvenient forum (§ 418.10, subd. (a)(2)), or transfer of the action to Kansas, purportedly pursuant to section 410.30. "[A] defendant may move to quash coupled with any other action without being deemed to have submitted to the court's jurisdiction." (Roy v. Superior Court, supra, 127 Cal.App.4th at p. 345, original italics.) Where, as here, a party moves to dismiss on the ground of inconvenient forum, the motion to dismiss is "inconsistent with and necessarily phrased in the alternative to a motion to quash service for lack of jurisdiction. An 'inconvenient forum' argument concedes jurisdiction, for it asks the court to decline to exercise the jurisdiction it constitutionally has. [Citations.]" (Berard Construction Co. v. Municipal Court, supra, 49 Cal.App.3d at p. 715.) Bank acknowledged as much in its motion below, which stated that in the event the trial court exercised jurisdiction, it was preferable to have the matter transferred to Kansas.
The trial court's comments, quoted above (pt. II.B.), suggest that although it granted Bank's motion to quash, it would not rule on Bank's motion to dismiss. However, the order following the hearing states that Bank's "motion to transfer action for forum non-conveniens is GRANTED. The issue of forum non-conveniens has been decided by the District Court for Ellis County, Kansas; that Decision has been appealed by Plaintiff; however this Court will not re-examine the issues addressed in the Decision." In other words, although the trial court concluded that it lacked personal jurisdiction over Bank, it also purported to grant a motion that could be granted only if the court concluded it had jurisdiction over Bank. (Berard Construction Co. v. Municipal Court, supra, 49 Cal.App.3d at p. 715.)
After the court's ruling, Bank's counsel, apparently referring to the trial court's tentative ruling (which does not appear in the record), asked whether, in preparing a proposed order, he should "delete the reference to the, to the Kansas proceedings and the inconvenient forum or do you want me to leave that?" The trial court answered, "That can be left in. The court is not going to reach those issues, I said re-examine but everything so the tentative can be carried into the form of order and then including what I have also added here as far as the statement of reasons . . . ."
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Complicating the issue is the fact that the trial court ordered the matter be "transfer[ed]" to "Kansas state court," an action the trial court had no authority to compel, even if it had jurisdiction over Bank. (Rest. 2d, Conflict of Laws, § 84, com. e, p. 253 ["A court lacks power to transfer a case to the courts of another state."].) Section 418.10, subdivision (a)(2), authorizes the trial court to stay or dismiss an action on the ground of inconvenient forum. Section 410.30, subdivision (a) likewise authorizes the trial court to stay or dismiss an action where a court finds that an action should be heard " 'in a forum outside this state.' " (See also Archibald v. Cinerama Hotels (1976) 15 Cal.3d 853, 857.) The trial court did not order a stay or dismissal (actions that would have invoked the trial court's jurisdiction, something the trial court concluded it in fact lacked). Instead, it purported to order a transfer, something the court was not authorized to order, even assuming it had jurisdiction. (Thomson v. Continental Ins. Co. (1967) 66 Cal.2d 738, 745 [distinguishing change of venue procedure in federal court and California's forum non conveniens doctrine, which results in dismissal, not transfer].)
"Where the judgment is, in part, in violation of statute, or in some other way fails to conform to the law, and the legally erroneous portion can be stricken out, a modification is proper." (9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 866, p. 926.) It is abundantly clear, based on the trial court's comments at the hearing and its order following the hearing, that the court concluded it lacked jurisdiction over Bank. Once the trial court reached this conclusion, it followed that it was without jurisdiction to make any further orders, and it lacked the authority to transfer the action to a sister state in any event. The court's comments at the hearing suggest that it intended to rule only on the issue of personal jurisdiction (ante, fn. 5). Under all the circumstances of this case, we conclude that the legally erroneous portion of the court's order (transferring the action to Kansas state court) may therefore be stricken, and modified accordingly. Because striking this portion of the order eliminates any reference to the Kansas court's ruling, we need not further address appellant's argument that the trial court gave undue "deference" to the ruling.
III.
DISPOSITION
The trial court's order quashing service of summons and complaint is affirmed. The order is modified to strike the reference to transferring the action to Kansas state court. Respondent Bank shall recover its costs on appeal.
Sepulveda, J. We concur: Ruvolo, P.J. Reardon, J.