OppositionOppositionCal. Super. - 4th Dist.October 23, 2018~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ELECTROMICALLY FILED Superior Court of Califarnia, County of Orange 03/12/2019 at 10:29:00 PM Jeffrey A. Feasby, State Bar No. 208759 Clerk of the Superior Court PEREZ VAUGHN & FEASBY INC. By Olga Lopez. Deputy Clerk 600 B Street, Suite 2100 San Diego, California 92101 Telephone No.: 619.741.0242 Fax No.: 619.460.0437 E-Mail: feasby @pvflaw.com Attorneys for Plaintiffs SoCal Medical Transportation, Inc. and Mehrdad Tabrizi SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF ORANGE SOCAL MEDICAL TRANSPORTATION, Case No. 30-2018-01027436-CU-NP-CXC INC., a California corporation; and MEHRDAD TABRIZI, an individual, Hon. Ronald L. Bauer Plaintiffs, PLAINTIFFS’ OPPOSITION TO v. DEFENDANT YELLOWSTONE CAPITAL WEST, LLC’S MOTION TO TRANSFER YELLOWSTONE CAPITAL WEST, LLC; VENUE OF ACTION INFLUX CAPITAL, LLC; COMPLETE BUSINESS SOLUTIONS GROUP, INC. D/B/A PAR FUNDING, D/B/A, Date: March 25, 2019 BROADWAY ADVANCE FUNDING; Time: 9:00 a.m. QUEEN FUNDING, LLC; and DOES 1 Dept: CX103 rough 25, Ielusive, Complaint Filed: October 23, 2018 Defendants. I. INTRODUCTION AND FACTUAL BACKGROUND This action arises out of loans given to plaintiffs by the defendants that were in most cases illegal, and in all cases were both procedurally and substantively unconscionable. (Complaint, q 1.) Plaintiffs have asserted claims for Fraud, Violation of California’s Usury Laws, Violation of California’s Unfair Competition Law, and Declaratory Relief challenging the legality of these loans, including the security interests purportedly granted by the loan documentation as well as the defendants’ use of unconstitutional and unenforceable New York confessions of judgment. (See, e.g., Complaint, {q 3, 4, 17, 19(d)-(f), 67(a), (g).) 1" 1 PLAINTIFFS’ OPPOSITION TO DEFENDANT YELLOWSTONE CAPITAL WEST, LLC'S MOTION TO TRANSFER VENUE OF ACTION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendant West Coast Business Capital LLC, f/k/a Yellowstone Capital West, LLC (“Yellowstone”) brings this motion asking the Court to transfer venue of this action to the Supreme Court of New York, County of Erie based upon a forum selection clause in the parties’ contract. However, California courts will not enforce forum selection clauses where, as here, doing so would be unreasonable or would substantially diminish the rights of California residents in a way that violates California public policy. In particular, Yellowstone has already used the Supreme Court of New York, County of Erie to obtain a judgment against plaintiffs SoCal Medical Transportation, Inc. and Mehrdad Tabrizi (“Plaintiffs”) based on a confession of judgment that violated Plaintiffs’ due process rights as established by the Supreme Court of California in Isbell v. County of Sonoma (1978) 21 Cal.3d 61. Requiring Plaintiffs to go to the New York court in which judgment has already been entered against Plaintiffs in violation of their due process rights would be unreasonable and unfair. In addition, the parties’ contract contains a jury waiver, which - although enforceable in New York - violates fundamental California public policy. Further, requiring Plaintiffs to bring their claims in New York would violate California’s fundamental public policy of protecting consumers in small business financing. Finally, the statute upon which Yellowstone relies in requesting its attorneys’ fees does not apply to its motion. Rather, Code of Civil Procedure section 396b only applies to transfers of venue within California. It does not apply to motions to transfer venue outside of California based upon a forum selection clause. Thus, there is no basis for an award of sanctions and/or attorneys’ fees For these reasons, and as set forth more fully below, Yellowstone’s motion should be denied in its entirety. II. LEGAL ANALYSIS California courts will enforce mandatory forum selection clauses such as the one in this case unless enforcement of the clause would be unreasonable or unfair.! (Verdugo v. Alliantgroup, L.P. (2015) 237 Cal.App.4th 141, 147.) However, California courts will refuse to defer to the selected forum if to do so would substantially diminish the rights of California residents in a way that violates ! Yellowstone improperly relies on federal case law in support of its motion. 2 PLAINTIFFS’ OPPOSITION TO DEFENDANT YELLOWSTONE CAPITAL WEST, LLC'S MOTION TO TRANSFER VENUE OF ACTION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 our state’s public policy.” (Id. quoting American Online, Inc. v. Superior Court (2001) 90 Cal. App.4th 1, 12.) Here, the Court should refuse to enforce the forum selection clause because to do so would be unreasonable and unfair for at least three reasons. First, it would be unfair to require Plaintiffs to pursue their claims in the New York court that has already entered judgment against Plaintiffs in violation of their due process rights as established by the Supreme Court of California in Isbell v. County of Sonoma (1978) 21 Cal.3d 61. In that case, the Supreme Court addressed the constitutionality of California’s confession of judgment statute at that time. Like the current confession of judgment procedure for New York, the statute in California at the time required the clerk to enter judgment for the confessed sum. (See id. at 67; NY CPLR § 3218(b)%.) At the outset, the Supreme Court stated that “[u]nder the due process clause of the federal Constitution, a court may enter judgment against a defendant only if the record shows that either (a) the defendant has received notice and an opportunity to be heard, or (b) the defendant has voluntarily, knowingly and intelligently waived his constitutional rights.” (Id. at 64.) The Supreme Court also noted the extreme nature of the confession of judgment procedure: “The striking feature of the confession of judgment at common law lies in its authorization for entry of final judgment against a debtor without notice, hearing, or opportunity to defend.” (Id. at 66.) The Supreme Court went on to state that “historical experience shows that confessions of judgment are most frequently employed against those who are unaware of the significance of the procedure.” (Id. at 70.) “Many courts and commentators have observed that persons who sign confessions of judgment often do not realize that they are not only waiving their rights to notice and hearing, but as well the opportunity of presenting any defense to the claim.” (/d.) As aresult, the Supreme Court concluded that “the debtor’s signature on the confession of judgment creates no inference that the debtor knowingly and intelligently waived 2 The New York statute provides: (b) Entry of judgment. At any time within three years after the affidavit is executed, it may be filed with the clerk of the county where he defendant stated in his affidavit that he resided when it was executed or, if the defendant was then a non-resident, with the clerk of the county designated in the affidavit. Thereupon the clerk shall enter a judgment in the supreme court for the sum confessed. 3 PLAINTIFFS’ OPPOSITION TO DEFENDANT YELLOWSTONE CAPITAL WEST, LLC'S MOTION TO TRANSFER VENUE OF ACTION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 his due process rights.” (Id.) Therefore, the Supreme Court held that confession of judgment statutes - like New York's statute - are constitutionally defective where they “do not permit a prejudgment judicial determination of the validity of the debtor’s waiver, but require the clerk to enter judgment upon a document which is ordinarily insufficient to demonstrate a valid waiver.” (Id. at 71.) Here, Plaintiffs were presented with the confession of judgment on a take-it-or-leave-it basis as a part of all of the documentation that was required for approval of the loan. (Declaration of Mehrdad Tabrizi [“Tabrizi Decl.”], {[7.) Yellowstone did not explain the confession of judgment procedure to Plaintiffs and did not disclose the potential due process implications of the procedure. (Tabrizi Decl., 99.) Specifically, Yellowstone never explained that by signing the confession of judgment Plaintiffs would be waiving their rights to notice that an action had been commenced against them, that they were waiving their right to a jury trial, that they were waiving their right to have Yellowstone's claims adjudicated on the merits, or that they would not be able to defend against Yellowstone’s claims for payment in that action. (Id.) Plaintiffs had no experience with confessions of judgment and had not even heard the term until the document was presented to them for signature. (Tabrizi Decl., | 10.) It was not until Plaintiffs consulted with counsel that they realized the implication of the confession of judgment. (/d.) In short, Plaintiffs did not knowingly, voluntarily, and intelligently waive their due process rights to notice and an opportunity to be heard. Nevertheless, the clerk of the Supreme Court of New York, County of Erie entered judgment against Plaintiffs based on the unconstitutional confession of judgment. (See Exhibit 4 to Yellowstone’s motion.) Now, Yellowstone seeks to compel Plaintiffs to bring their claims in this same court. Such a result is clearly unreasonable and unfair, especially in light of the fact that court has already violated Plaintiffs” due process. Second, requiring Plaintiffs to bring their claims in New York state court would deprive Plaintiffs of their right to a jury trial, which violates California public policy. Particularly, Section 4.10 of the parties’ contract provides: 4.10 JURY TRIAL WAIVER. THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO THE TRANSACTIONS OF WHICH THIS AGREEMENT IS A PART OR THE ENFORCEMENT HEREOF. THE PARTIES HERETO 4 PLAINTIFFS’ OPPOSITION TO DEFENDANT YELLOWSTONE CAPITAL WEST, LLC'S MOTION TO TRANSFER VENUE OF ACTION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ACKNOWLEDGE THAT EACH MAKES THIS WAIVER KNOWINGLY, WILLINGLY AND VOLUNTARILY AND WITHOUT DURESS, AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH THEIR ATTORNEYS. (Yellowstone’s Exhibit 1 [emphasis in original].) These types of contractual jury trial waivers are generally enforceable in New York. (See Rincon EV Realty LLC v. CP III Rincon Towers, Inc. (2017) 8 Cal.App.5th 1, 11 citing Barclays Bank of New York, N.A. v. Heady Electric Co., Inc. (1991) 174 A.D.2d 963, 964.) But in California, such waivers violate fundamental public policy. (See Rincon EV Realty, 8 Cal.App.5th at 11-14 [concluding that “application of New York law to permit enforcement of the predispute contractual jury waivers at issue in this case (i.e., permitting waiver by method not expressly authorized by the Legislature) would be contrary to fundamental California policy.”].) Accordingly, the Court should refuse to compel Plaintiffs to litigate their claims in New York. If the Court were to rule otherwise, it would diminish Plaintiffs’ rights as California residents and violate California’s fundamental public policy that prohibits contractual waiver of jury trials. Third, requiring Plaintiffs to litigate their claims in New York would violate the additional fundamental California public policy codified in the California’s Finance Lenders Law. As established by the Legislature, California’s Finance Lenders Law “shall be liberally construed and applied to promote its underlying purposes and policies,” which including, among other things, “[t]o protect borrowers against unfair practices by some lenders, having due regard for the interests of legitimate and scrupulous lenders.” (Fin. Code § 22001.) As alleged in the Complaint, Yellowstone is a licensed lender in the State of California.’ (Complaint, 22.) As a licensed lender, the Finance Code prohibits Yellowstone from “[making] a materially false or misleading statement or representation to a borrower about the terms or conditions of that borrower's loan, when making or brokering the loan,” or “[c]Jommit an act that constitutes fraud or dishonest dealings.” (Fin. Code § 22161(a)(1), (7).) Plaintiffs have alleged that Yellowstone 3 Yellowstone was licensed in California as a Finance Lender at the time it entered into it contracts with Plaintiffs. (See Plaintiff’s Exhibit 1, p. 1, top right corner identifying California Finance Lenders License No. 603-K239.) That license number is not associated with Yellowstone's new name, West Coast Business Capital, LLC. (See Exhibit A hereto - Plaintiffs request that the Court take judicial notice of this fact pursuant to Evidence Code section 452(c), (h).) 5 PLAINTIFFS’ OPPOSITION TO DEFENDANT YELLOWSTONE CAPITAL WEST, LLC'S MOTION TO TRANSFER VENUE OF ACTION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 engaged in fraud as well as unlawful, unfair, and fraudulent business practices by, among other things, “misrepresent[ing] to Plaintiffs the actual interest charged on the loans to Plaintiffs by including a “Specified Percentage” that was significantly less than the amount of interest that was actually charged” and “[m]isrepresenting the actual rate of interest to be charged on their loans to Plaintiffs.” (Complaint, |]147, 67(f).) Yellowstone now seeks to avoid this potential liability by having this case transferred to New York for application of New York law. However, the Fourth District Court of Appeal has held that “the Finance Lenders Law is a matter of significant importance to the state and ... 1s fundamental and may not be waived.” (Brack v. Omni Loan Co., Ltd. (2008) 164 Cal.App.4th 1312, 1327.) Therefore, granting Yellowstone’s motion and requiring Plaintiffs to pursue their claims in New York would violate California’s additional fundamental public policy as codified in the Finance Lenders law. As a result, Yellowstone’s motion must be denied. Finally, even if the Court grants the motion, which it should not, Yellowstone is not entitled to an award of attorneys’ fees. Yellowstone relies on Code of Civil Procedure section 396b(b) as the basis for its request for fees. However, that statute applies to motions to transfer from a venue that is improper “under this title.” (Code of Civ. Proc. § 396b(a).) That “title” is Title 4 of Part 2 of the Code of Civil Procedure, and is entitled “Of the Place of Trial, Reclassification, and Coordination of Actions.” The “of the place of trial” portion of Title 4 deals with selection of venue within California and transfers of venue within the state. (See Code of Civ. Proc. §§ 392-395.) Thus, the statute does not apply to Yellowstone's motion to transfer venue based on the forum selection clause. Moreover, even if that statute applied, which it does not, an award of sanctions is not warranted because Plaintiffs’ selection of this venue was made in good faith given the facts that the law set forth above. Therefore, Yellowstone's request for sanctions should be denied. nn nn nn nn nn 1 6 PLAINTIFFS’ OPPOSITION TO DEFENDANT YELLOWSTONE CAPITAL WEST, LLC'S MOTION TO TRANSFER VENUE OF ACTION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. CONCLUSION For all of the forgoing reasons, Yellowstone’s motion should be denied in its entirety. DATED: March 12, 2019 PEREZ VAUGHN & FEASBY INC. By: /s/ Jeffrey A. Feasby Jeffrey A. Feasby Attorneys for SoCal Medical Transportation, Inc. and Mehrdad Tabrizi 7 PLAINTIFFS’ OPPOSITION TO DEFENDANT YELLOWSTONE CAPITAL WEST, LLC'S MOTION TO TRANSFER VENUE OF ACTION EXHIBIT A Home (/) / License Search (/licensesearch/) License Details License Number: 603K239 License Status: Active Status Effective Date: 05/21/2013 Licensee Name: WEST COAST BUSINESS CAPITAL, LLC Organization DBA: Originally Licensed Date: 05/21/2013 License Type: California Finance Lender (Main) [Lender and Broker] Address: One Evertrust Plaza, Suite 1401 Jersey City, New Jersey 07302 Number of Actions Taken: 0 No documents found View our Privacy Policy (http://www.dbo.ca.gov/privacy.asp)
