Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. BC311355, Conrad Richard Aragon, Judge. Affirmed in part and reversed in part with directions.
Russell, Mirkovich & Morrow, Joseph N. Mirkovich, Margaret E. Morrow and Anne M. Grignon for Plaintiff and Appellant.
Law Offices of Steven J. Haber and Steven J. Haber for Defendant and Respondent.
MALLANO, Acting P. J.
This action concerns the sale of goods by plaintiff Wollam International Corp. (Wollam) to defendant New Era Decorative Fabrics, Inc. (New Era). The goods were shipped from Hong Kong to the United States on an ocean vessel pursuant to a bill of lading, which constituted the contract of carriage. The trial court dismissed the entire action without prejudice because the bill of lading’s mandatory forum selection clause required that all disputes in connection with the bill of lading be brought before a maritime court in the People’s Republic of China (China). Wollam appeals from the order of dismissal, contending that New Era and two parties involved in the transportation of the goods (TDC International Express Corporation (TDC) and Nolton Freight Logistics, Inc. (Nolton)) were not entitled to the protection of the forum selection clause. We affirm the order of dismissal as to TDC and Nolton but reverse as to New Era because Wollam indicated at oral argument that, if given leave to amend its complaint, it would allege that New Era or its consignee received the goods, thus taking the dispute between Wollam and New Era outside of the reach of the bill of lading.
The facts are taken from the portions of the declarations admitted into evidence by the trial court in support of, or in opposition to, the motions and order to show cause, and from the appellate briefs.
Wollam and New Era are both California corporations. New Era placed a purchase order with Wollam for about $190,000 of women’s pants to be manufactured by Wollam in China and then delivered to New Era’s customer consignee, a Mexican company, at the United States Customs facility in Laredo, Texas. New Era’s purchase orders stated that the terms of the shipping were “CIF,” meaning “‘Cost, Insurance and Freight,’” and which placed the burden on Wollam to contract with the freight carrier, to pay the costs and freight charges to bring the goods to Laredo, and to procure insurance to insure against the risk of loss until delivery in Laredo. According to New Era, Wollam failed to procure insurance.
The chain of entities involved in hiring the ocean carrier for Wollam’s goods is unclear on this record, but it is undisputed that, pursuant to a bill of lading, Wollam’s goods were transported from Hong Kong to Long Beach, California, in a cargo container aboard a vessel owned by COSCO Container Lines Company Limited (COSCO), a foreign corporation based in China. The goods were then transported from Long Beach to Laredo by railroad.
A bill of lading “describes the goods shipped, identifies the shipper (or consignor) and the buyer (consignee) and directs the carrier to deliver the goods to a specified location or person.” (BII Finance Co. v. U-States Forwarding Services Corp. (2002) 95 Cal.App.4th 111, 119 (BII Finance).) It also states the terms of carriage and serves as evidence of the contract for carriage. (Norfolk Southern R. Co. v. James N. Kirby, Pty Ltd. (2004) 543 U.S. 14, 18–19 [125 S.Ct. 385, 160 L.Ed.2d 283] (Kirby).) “Bills of lading have long been used in international sales transactions as one means to protect the interests of sellers, who want assurance of being paid for goods shipped by a carrier, and buyers, who do not want to pay for goods until they arrive. They also are used as a means to facilitate credit arrangements and to reflect title in goods being shipped by a carrier.” (BII Finance, supra, 95 Cal.App.4th at pp. 118–119.) Thus, the bill of lading is “‘the basic transportation contract between the shipper-consignor and the carrier; its terms and conditions bind the shipper and all connecting shippers.’” (APL Co. Pte. Ltd. v. UK Aerosols Ltd., Inc. (N.D.Cal. 2006) 452 F.Supp.2d 939, 943.)
Here it is undisputed that the COSCO bill of lading was the controlling bill of lading for the transportation of the goods from Hong Kong to Laredo and was a “through” bill of lading, “in which cargo owners can contract for transportation across oceans and to inland destinations in a single transaction.” (Kirby, supra, 543 U.S. at pp. 25–26.)
The COSCO bill of lading listed PAC Ocean Lines Limited (PAC) as the shipper and Nolton as both the consignee and the arrival notice agent. According to New Era’s respondent’s brief, and not disputed by Wollam, a company not named as a defendant in this action, Samyoung America, Inc. (Samyoung), undertook for Wollam the carriage of the goods from Hong Kong to Laredo, but because Samyoung did not operate any vessels of its own, it contracted with other carriers to arrange for the ocean transportation. Samyoung allegedly assigned or pledged its obligation to another non-vessel operating common carrier, which then hired PAC, which in turn hired COSCO. PAC also hired Nolton to notify TDC of the arrival of the goods, for which Nolton was paid $20. TDC characterized its role in the transaction as “a document handling and notifying agent.”
Upon arrival of the goods in Laredo, COSCO notified Nolton and Nolton notified TDC. Although the goods reached Laredo, it is unclear what happened to them. According to the declaration of New Era’s president, the goods were never delivered to New Era or its customer consignee, New Era did not pay for the goods and was never in possession of a bill of lading authorizing the release of the goods to it or to its consignee.
Wollam filed a complaint asserting breach of contract, conversion, fraud, and other tort theories against New Era, Nolton, TDC, and COSCO North America, Inc., a Delaware corporation which acted as the United States general agent for COSCO. Wollam alleged that defendants conspired among themselves to “deliver false papers to the warehouse where the Goods were stored, pending inspection and payment by Defendants, in order to obtain possession of [the goods] without paying for [them],” and all defendants “took possession of the Goods without payment to Plaintiff.” Defendants answered and filed cross-complaints against their codefendants and others.
COSCO North America filed a motion to dismiss the complaint and the cross-complaints filed against it on the ground of the forum selection clause of the COSCO bill of lading. In pertinent part, the bill of lading provided that “[a]ll disputes arising under or in connection with this Bill of Lading shall be determined by the laws of the People’s Republic of China and any action against the Carrier shall be brought before the Shanghai Maritime Court or other maritime courts in the People’s Republic of China . . . .” The bill of lading in clause 1 defined “Carrier” as COSCO. Under clause 3 of the bill of lading, COSCO had the right “to sub-contract the whole or any part of the carriage with any Sub-contractor.” Clause 1 defined subcontractor to include “road and rail transport operators and any independent contractor employed by the Carrier in the performance of the carriage and any sub-sub-contractor thereof. The expression Sub-contractor shall include direct and indirect Sub-contractors and their respective servants, agents or Sub-contractors.”
Clause 1 also defined Merchant as including “the consignor, the shipper, the receiver, the consignee, the owner of the Goods, the lawful holder or endorsee of this Bill of Lading, or any other person having any present or future interest in the Goods or this Bill of Lading, or anyone authorized to act on behalf of any of the foregoing.” The front of the bill of lading provided that “[t]he merchants agree to be bound by the terms and conditions of this Bill of Lading as if each had personally signed this Bill of Lading.”
Among other things, clause 3 of the bill of lading obligated the merchant to indemnify COSCO, and further provided that “every such person or vessel, including, but not limited to, the Carrier’s servants, agents, or Sub-contractors as defined in Clause 1 above, shall have the benefit of every exemption, defense, and limitation herein contained applicable to the Carrier, in contract or in tort, as if such provision were expressly contracted for its benefit, and, in entering into this contract, the Carrier, to the extent of such exemptions, defenses, and limitations, does so not only on its own behalf, but also as an agent and trustee for such person or Vessel.”
The pertinent paragraph of clause 3 provides: “(2) The Merchant undertakes that no claim or legal action whatsoever shall be made or brought against any person by whom the carriage is performed or undertaken (including, but not limited to, the Carrier’s servants, agents or Sub-contractors), other than the Carrier, which imposes or attempts to impose upon any such person, or any vessel owned or operated by such person, any liability whatsoever in connection with the Goods or the carriage thereof whether or not arising out of negligence on the part of such person. Should any such claim or legal action nevertheless be made or brought, the Merchant undertakes to indemnify the Carrier against all consequences thereof including legal expenses on a full indemnity basis. Without prejudice to the foregoing, every such person or vessel, including, but not limited to, the Carrier’s servants, agents, or Sub-contractors as defined in Clause 1 above, shall have the benefit of every exemption, defense and limitation herein contained applicable to the Carrier, in contract or in tort, as if such provision were expressly contracted for its benefit, and, in entering into this contract, the Carrier, to the extent of such exemptions, defenses and limitations, does so not only on its behalf, but also as an agent and trustee for such person or Vessel.”
Bill of lading provisions which extend defenses and protections to third parties are known in admiralty law as “Himalaya clauses.” (Certain Underwriters, etc. v. Barber Blue Sea Line (11th Cir. 1982) 675 F.2d 266, 269.) “The term derives from an English case involving the vessel ‘HIMALAYA.’” (Styling Plastics v. Neptune Orient Lines (N.D.Cal. 1987) 666 F.Supp. 1406, 1409, fn. 1.) The rationale for binding a cargo owner to a liability limitation in a bill of lading issued by the carrier to an intermediary, without reference to the owner of the cargo, was expressed by one court as follows: “[W]here a party is aware that another is shipping its packages aboard a vessel and has at least constructive notice that liability limitations might apply, that party is bound by the liability limitations agreed to by the shippers.” (Stolt Tank Containers, Inc. v. Evergeen Marine Corp. (2d Cir. 1992) 962 F.2d 276, 280.)
Nolton, New Era, TDC and Wollam filed opposition to COSCO North America’s motion to dismiss. The trial court’s August 12, 2004 tentative ruling noted two problems with the motion: the bill of lading was not properly authenticated, and it pertained to the Chinese entity COSCO, which was not the moving party on the motion to dismiss. The trial court denied the motion but “explicitly left open the eventuality that [COSCO] might bring the motion and obtain review on the merits.” At a hearing on September 17, 2004, the court was informed that COSCO had recently appeared in the action after it was served as a cross-defendant by Nolton and that both COSCO and COSCO North America intended to file another motion to dismiss.
On September 30, 2004, COSCO and COSCO North America filed their motion to dismiss the entire action pursuant to the forum selection clause of the bill of lading. The second motion was opposed by Wollam and Nolton, but was unopposed by New Era and TDC. After a hearing on November 2, 2004, the court determined that all parties were bound by the mandatory forum selection clause of the bill of lading unless the provision was unfair or unreasonable and that Wollam and Nolton, which had the burden of proof on the issue of unreasonableness, had not met their burden. The court ordered that the entire action be stayed for 90 days to permit Wollam to initiate suit before the Shanghai Maritime Court or other maritime court in China. The court also ruled that “[a]ny party may apply to this court, since the action is stayed, to reinstate the action based on a showing that the party is unable to obtain its rights to litigate against other parties in the selected forum on the grounds that have been discussed in case law.” The court signed a formal stay order on December 10, 2004.
The next activity in the case occurred in August 2005, when the court issued an order to show cause why the case should not be dismissed without prejudice. In response to the order to show cause, Wollam’s attorney declared that Wollam did not intend to file an action against COSCO in China, but wished to continue to pursue the action against New Era, TDC, and Nolton. Wollam informed the court that it had commenced an action in the United States District Court for the Southern District of New York against Samyoung based on Samyoung’s bill of lading, which contained a forum selection clause requiring that suits under that bill of lading be brought in New York. Wollam did not name COSCO as a defendant in the New York action, but COSCO was brought into the case as a third party defendant. Wollam’s New York attorney also stated that Wollam would not oppose the dismissal without prejudice of the COSCO defendants in the California action, but that no grounds existed for dismissal against the other defendants. Wollam also stated that it would not oppose a continued stay of the California action pending the conclusion of the New York action.
New Era and TDC filed papers supporting dismissal of the action. After a hearing on September 12, 2005, the matter was submitted. On September 19, 2005, the court issued an order dismissing the entire action without prejudice. The order stated that “all parties, irrespective of the agreements between them, are bound by the bill of lading forum selection clause.” On November 16, 2005, Wollam filed a notice of appeal from the order of dismissal. In February 2006, Wollam abandoned the appeal as to COSCO and COSCO North America, thus pursuing the appeal only as to New Era, TDC, and Nolton.
At oral argument Wollam’s attorney stated that, if given leave to amend, Wollam would be able to allege in good faith that New Era or its consignee received the goods.
DISCUSSION
A. Wollam’s Failure to Appeal from the December 10, 2004 Order
New Era contends that Wollam cannot challenge the trial court’s ruling on the forum selection clause on its appeal from the September 2005 order of dismissal because Wollam should have, but did not, appeal from the earlier order of December 10, 2004. We disagree.
Although Code of Civil Procedure section 904.1, subdivision (a)(3) (section 904.1(a)(3)) makes appealable an order granting “a motion to stay the action on the ground of inconvenient forum, or from a written order of dismissal under Section 581d following an order granting a motion to dismiss the action on the ground of inconvenient forum,” New Era fails to cite any authority which has interpreted the statutory language “ground of inconvenient forum” to include the entirely separate ground based on a contractual mandatory forum selection clause. A motion to dismiss on the ground of inconvenient forum is governed by different principles than a motion to dismiss on the ground of a mandatory forum selection clause. (Berg v. MTC Electronic Technologies Co. (1998) 61 Cal.App.4th 349, 358–359 [a forum non conveniens motion requires the weighing of a gamut of factors of public and private convenience; on the other hand, a mandatory forum selection clause is given effect unless its application is unfair or unreasonable].) Accordingly, we do not interpret section 904.1(a)(3) to make appealable an order granting a stay on the ground of a mandatory forum selection clause.
Unspecified statutory references are to the Code of Civil Procedure.
Even assuming that section 904.1(a)(3) applies to orders granting a motion to stay based on a mandatory forum selection clause, the December 10, 2004 order was not a final order granting a stay on that ground, but only an interlocutory order. By staying the action for 90 days and permitting Wollam to return to court to seek reinstatement of the action if Wollam was unable to assert its rights in China, the court reserved the issue of the unreasonableness of enforcement of the forum selection clause for another day. That day came on September 19, 2005, when the court determined that the forum selection clause was enforceable and dismissed the action. Thus, the December 10, 2004 order was not appealable and the issue of the applicability of the forum selection clause to New Era, TDC, and Nolton is reviewable on this appeal from the September 2005 order.
B. Lack of a Noticed Motion by New Era, TDC, and Nolton
Wollam maintains that the trial court had no authority, absent a noticed written motion by the foregoing defendants, to dismiss the action against them. We disagree.
“A defendant may enforce a forum-selection clause by bringing a motion pursuant to sections 410.30 and 418.10, the statutes governing forum non conveniens motions, because they are the ones which generally authorize a trial court to decline jurisdiction when unreasonably invoked and provide a procedure for the motion.” (Cal-State Business Products & Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666, 1680.)
Although New Era, TDC, and Nolton did not file their own stay or dismissal motions, the trial court unequivocally informed the parties at the hearing on November 2, 2004, that the court’s ruling was to stay the entire action, which included Wollam’s action against New Era, TDC, and Nolton. Wollam never challenged below the manner in which the trial court, on its own motion, raised the stay and dismissal issues as to New Era, TDC, and Nolton. Wollam never argued below that the procedure employed by the trial court constituted error or a violation of Wollam’s due process rights. Indeed, Wollam argued the merits of the stay or dismissal as to New Era, TDC, and Nolton at the hearings on November 2, 2004, and September 12, 2005.
Even now, Wollam does not establish that it was prejudiced by the trial court raising the issue on its own motion and without a separate written motion by New Era, TDC, and Nolton. In response to the order to show cause, both New Era and TDC filed papers setting out their positions and supporting the dismissal. Accordingly, any procedural irregularity in the lack of a written motion by the parties does not establish reversible error. “Procedural irregularities or erroneous rulings in connection with the relief sought or defenses asserted will not be considered on appeal where a timely objection could have been made but was not made in the court below.” (Grimshaw v. Ford Motor Co. (1981) 119 Cal.App.3d 757, 784; accord, In re Dakota S. (2000) 85 Cal.App.4th 494, 501.)
C. Estoppel
Wollam contends that because New Era, TDC, and Nolton opposed the first motion to dismiss, and Nolton also opposed the second, they are estopped from arguing in favor of enforcement of the forum selection clause. Because Wollam did not raise the estoppel issue below, the issue has not been preserved for appeal. Had the issue been preserved, we would nevertheless reject it on its merits.
Judicial estoppel, sometimes referred to as the doctrine of preclusion of inconsistent positions, applies when (1) the same party has taken two positions; (2) the positions were taken in a judicial or quasi-judicial administrative proceeding; (3) the party was successful in asserting the first position (that is, the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake. (Gottlieb v. Kest (2006) 141 Cal.App.4th 110, 130–131.) The purpose of the doctrine is to protect the integrity of the judicial process. (Id. at p. 131.) The third requirement, that the party be successful in asserting the first position, is based on the rationale that without such success, the party’s later inconsistent position introduces no risk of inconsistent court determinations, and thus poses little threat to judicial integrity. (Id. at p. 139.)
Because defendants were not successful in asserting their first positions, the third requirement for application of judicial estoppel cannot be established. Thus, Wollam’s invocation of the judicial estoppel doctrine is without merit.
In its reply brief, Wollam claims that New Era’s support of the dismissal motion was raised for the first time on appeal and should not be permitted. Not so. In response to the order to show cause, New Era filed papers in support of dismissal, so New Era properly preserved its claims by raising them below.
D. Interpretation of Himalaya Clause
Wollam makes a series of related arguments that the trial court erred as a matter of law in determining that New Era, TDC, and Nolton were covered by the Himalaya clause and thus entitled to the benefits of the bill of lading’s forum selection clause. Wollam contends that its claims against New Era are not based on the bill of lading, but on the purchase orders, and that in any event the terms of the bill of lading do not extend to cover the purchaser of the goods, New Era. Wollam also maintains that even though it acted as the cargo owner and shipper of the goods, Wollam is not bound by the bill of lading because Wollam — by suing non-signatories to the COSCO bill of lading on legal theories that are not premised on the bill of lading — cannot be deemed to have accepted the terms of the bill of lading. We disagree because all of Wollam’s arguments are contrary to the terms of the instant Himalaya clause and general principles governing bills of lading.
Parties to a bill of lading may extend the defenses and limitations of liability provided to the ocean carrier to third parties by including a Himalaya clause in the bill of lading. (Thiti Lert Watana Co., Ltd. v. Minagratex Corp. (N.D. Cal. 2000) 105 F.Supp.2d 1077, 1080.) “Himalaya Clauses must be ‘strictly construed and limited to intended beneficiaries.’ [Citations.]” (Akiyama Corp. of America v. M.V. Hanjin Marseilles (9th Cir. 1998) 162 F.3d 571, 573 (Akiyama).) When a party seeking the benefit of a defense or limitation is not specifically mentioned in the bill of lading, the party should, “at a minimum, be included in a well-defined class of readily identifiable persons” to whom benefits are extended under the terms of the bill of lading. (Ibid; accord, Polo Ralph Lauren v. Tropical Shipping & Const. (11th Cir. 2000) 215 F.3d 1217, 1222.)
Three factors which the courts consider in determining the intent of the contracting parties to extend benefits to third parties are: (1) the clarity of the language used to express such intent; (2) the contractual relation between the party seeking protection and the ocean carrier; and (3) the nature of the services performed compared to the carrier’s responsibilities under the carriage contract. (Akiyama, supra, 162 F.3d at p. 573.)
Some courts also require that before a third party is bound by the terms of a bill of lading, it must demonstrate some form of acceptance. (All Pacific Trading v. Vessel M/V Hanjin Yosu (9th Cir. 1993) 7 F.3d 1427, 1432 [a cargo owner “accepts” a bill of lading to which it is not a signatory by bringing suit on it].)
We conclude that the instant bill of lading includes merchants within those covered by the Himalaya clause. The front of the bill of lading provides that “[t]he merchants agree to be bound by the terms and conditions of this Bill of Lading as if each had personally signed this Bill of Lading.”
The Himalaya clause (clause 3 of the COSCO bill of lading; see fn. 2, ante) extends the benefits of “every exemption, defense and limitation” of the bill of lading to “every such person or vessel, including, but not limited to, the Carrier’s servants, agents, or Sub-contractors as defined in Clause 1.” The only reasonable interpretation of the phrase “including, but not limited to,” is that the Himalaya clause extends to persons in addition to the carrier and its servants, agents, and subcontractors, namely, merchants, as clause 1 of the bill of lading provides a definition of “Carrier,” “Sub-contractor,” and “Merchant.”
The bill of lading defines merchant to include the consignor, the shipper, the consignee, the receiver, the owner of the goods, and “any other person having any present or future interest in the Goods or this Bill of Lading, or anyone authorized to act on behalf of any of the foregoing.”
Nolton, as the consignee and arrival notice agent listed on the COSCO bill of lading, is a named party to the bill of lading and entitled to the benefit of the forum selection clause. Although TDC is not named on the bill of lading, it also was hired by, and acting as an agent of, PAC, listed as the shipper on the bill of lading. Accordingly, TDC, as an agent of PAC, falls within the definition of merchant and is entitled to the benefit of the forum selection provision.
Wollam claims that it has not accepted the terms of the bill of lading because it has not sued upon COSCO’s bill of lading, but on other conduct not involving the bill of lading. But the allegations of the complaint and the facts impliedly determined by the trial court contradict Wollam’s characterization of the action. Wollam’s complaint admits that one of its obligations under New Era’s purchase orders was “shipping the Goods from Hong Kong to Laredo, Texas for inspection and delivery to Defendants . . . .” Wollam sued not only New Era, but entities involved in the shipping of the goods: Nolton, TDC, and COSCO North America. Thus, given the pleadings, the gravamen of Wollam’s case involves the bill of lading.
Wollam is asserting the position that “a plaintiff can defeat a forum-selection clause by its choice of provisions to sue on, of legal theories to press, and of defendants to name in the suit. If this were true, such clauses would be empty. It is not true.” (American Patriot Ins Ag v. Mutual Risk Mgmt (7th Cir. 2004) 364 F.3d 884, 888.) “As for the fact that the defendants are charged with fraud rather than breach of contract, this can get the plaintiff nowhere in its efforts to get out from under the forum-selection clause. [A] dispute over a contract does not cease to be such merely because instead of charging breach of contract the plaintiff charges a fraudulent breach, or fraudulent inducement, or fraudulent performance. [Citations.] [T]he existence of multiple remedies for wrongs arising out of a contractual relationship does not obliterate the contractual setting, does not make the dispute any less than one arising under or out of or concerning the contract, and does not point to a better forum for adjudicating the parties’ dispute than the one they had selected to resolve their contractual disputes.” (Id. at p. 889.)
Our conclusion is consistent with the principles and result reached in Kirby, which set a default rule for certain shipping contracts negotiated by an intermediary on behalf of a cargo owner. There, machinery shipped from Australia to Alabama was damaged in a train derailment in the United States and never reached the ultimate delivery destination. Kirby, an Australian manufacturing company and the owner of the goods, hired a freight forwarding company (ICC), which then hired a German ocean shipping company (Hamburg Sud) to transport the goods. Acting through a subsidiary, Hamburg Sud hired Norfolk Southern Railway Company for the inland leg of the carriage. The Hamburg Sud bill of lading contained a limitation of liability of $500 per package for Hamburg Sud, its agents and independent contractors. Kirby sued Norfolk, which sought the benefit of the liability limitation in the Hamburg Sud bill of lading. The Supreme Court held that Norfolk was entitled to the benefit of the liability limitation because “an intermediary binds a cargo owner to the liability limitations it negotiates with downstream carriers,” and that “intermediaries, entrusted with goods, are ‘agents’ only in their ability to contract for liability limitations with carriers downstream.” (Kirby, supra, 543 U.S. at p. 34.)
“The Kirby Court plainly established a bright line default rule that ‘an intermediary binds a cargo owner to the liability limitations it negotiates with downstream carriers.’ Privity of contract is not required, nor is a traditional agency relationship. The Court’s holding did not depend on any particular definition of the parties in the bills of lading it analyzed.” (Mitsui Marine & Fire v. Hanjin Shipping (Ga.App. 2006) 632 S.E.2d 467, 470–471, fns. omitted.)
The Kirby court also recognized that its decision “does no more than provide a legal backdrop against which future bills of lading will be negotiated. . . . Future parties remain free to adapt their contracts to the rules set forth here, only now with the benefit of greater predictability concerning the rules for which their contracts might compensate.” (Kirby, supra, 543 U.S. at p. 36.)
Here, PAC, an intermediary, negotiated the COSCO bill of lading on behalf of Wollam. Binding Wollam to the limitations in the COSCO bill of lading is therefore consistent with the principles in Kirby.
For all of the foregoing reasons, we conclude that Wollam has not established that TDC and Nolton are not entitled to the benefit of the forum selection clause in the bill of lading.
E. Unreasonableness of Enforcement of Forum Selection Clause
“Both California and federal law presume a contractual forum selection clause is valid and place the burden on the party seeking to overturn the forum selection clause.” (Schlessinger v. Holland America (2004) 120 Cal.App.4th 552, 558.) The party challenging the clause must show that enforcement would be unreasonable and unjust. (Regal-Beloit Corp. v. Kawasaki Kisen Kaisha, Ltd. (C.D.Cal. 2006) 462 F.Supp.2d 1098, 1101.) “A forum selection clause is ‘unreasonable’ if (1) it was incorporated into the contract as a result of fraud, undue influence, or overweening bargaining power, [citation], (2) the selected forum is so ‘gravely difficult and inconvenient’ that the complaining party will ‘for all practical purposes be deprived of its day in court,’ [citation], or (3) enforcement of the clause would contravene a strong public policy of the forum in which the suit is brought.” (Id. at pp. 1101–1102.)
Wollam contends that the trial court failed to exercise its discretion to determine whether enforcement of the forum selection clause would be unreasonable. But it is clear that the trial court was aware of the unreasonableness issue in November 2004 and stayed the case for 90 days in order for Wollam to bring an action in China, and if Wollam was unable to do so, Wollam could apply to the trial court for reinstatement of the action on the ground of unreasonableness. After issuing an order to show cause, the trial court dismissed the action in September 2005, impliedly determining that Wollam had not met its burden of establishing that it would be unreasonable to enforce the forum selection clause. There is nothing in our record to suggest that the trial court failed to exercise its discretion; rather, our record shows that the trial court exercised its discretion, determined that Wollam had not met its burden and concluded that Wollam was not entitled to prevail on the issue. The trial court correctly resolved this issue because Wollam did not proffer evidence addressed to the factors required to establish unreasonableness.
As Wollam has failed to establish that the trial court committed any reversible error as to TDC and Nolton, we must affirm the order of dismissal as to these defendants.
F. Amended Complaint as to New Era
Wollam claimed at oral argument that, if given leave to amend its complaint, it would be able to allege in good faith that New Era or its consignee received the goods. These allegations, if proved to be true, take Wollam’s dispute with New Era outside the reach of the COSCO bill of lading and its forum selection clause. Because Wollam should be given the opportunity to move for leave to file an amended complaint as to New Era, we reverse the order of dismissal as to New Era.
DISPOSITION
The order of dismissal as to TDC International Express Corporation and Nolton Freight Logistics, Inc., is affirmed. The order of dismissal as to respondent New Era Decorative Fabrics, Inc., is reversed and on remand the trial court is directed to afford Wollam International Corp. a reasonable amount of time to file a motion for leave to file an amended complaint as to New Era. The parties are to bear their own costs on appeal.
We concur: ROTHSCHILD, J. JACKSON, J.
Judge of the Los Angeles Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.