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CAUSE NO. DC-11-13100 1D)
KAYE/BASSMAN INTERNATIONAL g (2 JUN TS i He @ISTRICT COURT
CORP., ,
Plaintiff,
T
v. ICIAL DISTRICT
§
§
MARC ALBIN, INDIVIDUALLY, §
ALBIN ENGINEERING SERVICE, INC. §
AND ALBIN ENGINEERING GROUP, §
§
Defendants. § DALLAS COUNTY, TEXAS
DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’
MOTION TO DISMISS OR MOTION TO STAY
TO THE HONORABLE JUDGE OF SAID COURT:
COME NOW Marc Albin, Individually, Albin Engineering Service, Inc., and Albin
Engineering Group (“Albin Defendants”) and file this brief in support of Defendants’ Motion to
Dismiss or Motion to Stay (“Albin Defendants’ Motion”), and in support of same would show
the Court as follows:
A. Introduction.
At the hearing on Albin Defendants’ Motion held on May 25, 2012, the Court requested
further briefing on (1) utilizing the “common-sense” approach for determining whether the
forum-selection clauses at issue govern the claims in this case (“Texas Action”); (2) whether
first-to-file and comity should apply in cases where a party is relying on a mandatory forum-
selection clause; and (3) whether binding authority exists on whether a Texas court can “second-
guess” a decision of another state when necessary to protect its own sovereignty. This brief
addresses those issues.
Based on the arguments and authorities in Albin Defendants’ Motion, their Reply and
DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’
MOTION TO DISMISS OR MOTION TO STAY Page ISupplemental Reply to Plaintiff Kaye/Bassman Intemational Corp.’s (“Plaintiff or
“Kaye/Bassman”) response to the Motion, and this brief) this Court should find that: (1) the
forum-selection clauses at issue do not govern the claims in the Texas Action; and (2) even
though a Texas court can second-guess a decision of another state when necessary to protect its
own sovereignty, the sovereignty of the Texas courts will not be threatened in this situation by
recognizing the California lawsuit (“California Action”) as first-filed and applying the principles
of comity in dismissing or staying the Texas Action in deference to the California Action. Based
on those findings, the Court should grant Albin Defendants’ Motion and dismiss or stay the
Texas Action.
B. The “common-sense” approach is appropriate for determining whether the forum-
selection clauses at issue govern the claims, and that approach establishes that the
forum-selection clauses at issue do not govern the claims in the Texas Action.
In determining whether claims are within the scope of a forum-selection clause, the Texas
Supreme Court has “held that a reviewing court should engage in a ‘common-sense examination
of the claims and the forum-selection clause to determine if the clause covers the claims.’” Jn re
Lisa Laser USA, Inc., 310 8.W.3d 880, 884 (Tex. 2010) (quoting int’! Profit Assocs., Inc., 274
S.W.3d 672, 677 (Tex. 2009)); see also RSR Corp. v. Siegmund, 309 S.W.3d 686, 700 (Tex.
App.—Dallas 2010, no pet.); Rouse v. Tex. Capital Bank, N.A., No. 05-11-0422-CV, 2011 WL
5975235, at *2 (Tex. App.—Dallas Nov. 30, 2011, no pet.). Because forum-selection clauses are
contractual, the reviewing court, in making this examination, should apply principles of contract
interpretation, with the goal of ascertaining the true intent of the parties as written in the
agreement. See RSR Corp., 309 S.W.3d at 700.
" Albin Defendants reurge and incorporate in this brief the arguments and authorities contained in Albin Defendants’
Motion; in Defendants Marc Albin, Individually, Albin Engineering Service, Inc. and Albin Engineering Group’s
Reply to Plaintiffs Response to Defendants’ Motion to Dismiss or Motion to Stay (“Reply”); and in Defendants’
Supplemental Reply to Plaintiff's Response to Defendants’ Motion to Dismiss or Motion to Stay (“Supplemental
Reply”), previously filed in this cause.
DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’
MOTION TO DISMISS OR MOTION TO STAY Page 2The forum-selection clauses at issue are identical, are contained only in the Promissory
Notes between Plaintiff and Stephen Norred and between Plaintiff and Mark Whalls,
respectively, and provide as follows:
12. GOVERNINGLAW. THIS NOTE IS MADE, ENTERED
INTO AND PERFORMABLE IN DALLAS COUNTY, TEXAS AND ALL
PAYMENTS ARE DUE IN DALLAS COUNTY, TEXAS. CONSEQUENTLY,
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND ANY
LITIGATION OR OTHER PROCEEDING AS BETWEEN MAKER AND
PAYEE THAT MAY BE BROUGHT, OR ARISE OUT OF, IN CONNECTION
WITH OR BY REASON OF THIS NOTE SHALL BE BROUGHT IN THE
APPLICABLE FEDERAL OR STATE COURT IN AND FOR DALLAS
COUNTY, TEXAS WHICH COURTS SHALL BE THE EXCLUSIVE COURTS
OF JURISDICTION AND VENUE.
Promissory Notes, § 12 (emphasis added).
At its core, Plaintiff is attempting to bootstrap into the Purchase Agreement the forum-
selection clauses contained only in the promissory notes. See Plaintiff's Resp. Likewise, in the
California Action, Plaintiff's motion to stay or dismiss was based on that single premise.
The California trial court rejected Plaintiff's argument:
As for staying this action in favor of the later-filed Texas action between
these parties, as [Albin Defendants] are not signatories to the Promissory Notes
there can be no reasonable argument that they are bound by the forum-selection
clauses contained in those notes (which by their own terms apply only to disputes
between “maker” and “payee,” specially defined in the Notes as either non-party
Stephen Norred or non-party Mark Whalls on the one hand [as “makers”] and
{Kaye/Bassman] on the other [“payee” on both Notes]) such that any stay would
be mandatory.
See Order re: Motion to Stay/Dismiss; Motion to Quash, attached hereto, at 2.
Following that order, Kaye/Bassman filed in the California court of appeal its Petition for
Writ of Mandate, Prohibition, or Other Appropriate Relief, copy of which is attached. That court
denied the Petition for Writ of Mandate and the request for a stay of the California Action. See
Order Denying Petition for Writ of Mandate or Other Appropriate Relief and Request for Stay,
DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’
MOTION TO DISMISS OR MOTION TO STAY Page3attached hereto.
The forum-selection clause in each promissory note expressly states that the clause
de
applies to disputes only between Plaintiff and each note’s “maker,” which is expressly defined as
Norred in one note and Whalls in the other. See Promissory Notes, § 12. Despite those express
provisions, Plaintiff has tried to bring the Purchase Agreement within the purview of the forum-
selection clauses, but there is simply no basis for doing so.
“Contract terms are given their plain, ordinary, and generally accepted meanings, and
contracts are to be construed as a whole in an effort to harmonize and give effect to all provisions
of the contract.” Rouse, 2011 WL 5975235 at *2. In considering a forum-selection clause, this
instruction fits within the “common-sense” examination prescribed by the Texas Supreme Court.
See In re Lisa Laser USA, Inc., 310 S.W.3d at 884. And in construing the Purchase Agreement as
part of a common-sense examination, the only reasonable conclusion is that there is no forum-
selection clause. Likewise, a common-sense construction of the promissory notes establishes that
Albin Defendants are not “makers” and thus not subject to the forum-selection clauses in the
notes.
Based on the foregoing “common-sense” examination of the forum-selection clauses at
issue and the claims, Albin Defendants have established that the forum-selection clauses at issue
do not govern the claims.
Cc Even though a Texas court can second-guess a decision of another state when
necessary to protect its own sovereignty, the sovereignty of the Texas courts will not
be threatened by applying the principles of comity in this situation.
Texas law has long recognized that, “as a matter of comity, it is the custom for the court
in which a later action is instituted [in this instance, this Court] to stay proceedings therein until
the prior action [in this instance, the California Action] is determined or, at least, for a reasonable
DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’
MOTION TO DISMISS OR MOTION TO STAY Page 4time, and the custom has practically grown into a general rule which strongly urges a duty upon
the court in which the subsequent action is instituted to do so. See, e.g., Mills v. Howard, 228
S.W.2d 906, 908 (Tex. Civ. App—Amarillo 1950, no writ) (emphasis added). The Texas
Supreme Court holds that “[w]hen a matter is first filed in another state, the general rule is that
Texas courts stay the later-filed proceeding pending adjudication of the first suit.” Jn re
AutoNation, Inc., 228 S.W.3d 663, 670 (Tex. 2007). “It is generally appropriate for courts to
apply principles of comity where another court has exercised jurisdiction over the matter and
where the states agree about the public policy at issue.” Jn re BP Oil Supply Co., 317 8.W.3d
915, 919 (Tex. App.—Houston [14th Dist.] 2010, orig. proceeding).
In determining whether a stay should be granted, it is generally necessary that the two
suits: (1) involve the same cause of action; (2) concern the same subject matter; (3) involve the
same issues; and (4) seek the same relief. Jn re: State Farm Auto. Ins. Co., 192 S.W.3d 897, 900
(Tex. App.—Tyler 2006, orig. proceeding). Additional factors which can be considered are: (1)
which action was filed first; (2) whether the parties are the same in both actions; and (3) the
effect of a judgment in the later action on any order or judgment entered in the prior action. /d.
Here it is indisputable that both lawsuits concern the same subject matter, involve the
same issues and the same causes of action, and seek the same relief. In fact, in its Motion to Stay
in the California Action, Kaye/Bassman references the Texas Action and affirmatively asserts
that an available alternative forum exists (this Court) that is prepared and is manifestly qualified
to apply Texas law to the subject dispute amongst the parties. In the same Motion,
Kaye/Bassman further asserts that if the California Action is stayed or dismissed, Albin
Defendants would not be without a forum to have their complaints addressed and would have a
fair opportunity to be heard in this Court. In essence, by its own pleading in the California
DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’
MOTION TO DISMISS OR MOTION TO STAY Page 5Action, Kaye/Bassman admits that the Texas Action meets the necessary requirements for this
Court to dismiss or stay the Texas Action. Therefore, based on applicable case law and facts of
this case, it is clear the Texas Action must be dismissed or stayed during the pendency of the
California Action.
In further support of this position, Albin Defendants would direct the Court to /n re:
Vinyl Technologies, Inc., a recent opinion issued by the San Antonio Court of Appeals. See 352
S.W.3d 810 (Tex. App—San Antonio 2011, orig. proceeding). In that case, an action was first
filed in Massachusetts and a subsequent lawsuit was filed in Texas. fd After reviewing the
factors identified in paragraph 8 above, the court of appeals determined that, because both suits
were based on the same original contract and involved the same transaction and the same parties,
the trial court abused its discretion in failing to apply the principal of comity and stay the Texas
suit until the conclusion of the suit in Massachusetts. /d. at 815. Consequently, it is clear that the
proper course of action is for the Texas Action to be dismissed or stayed during the pendency of
the California Action.
Plaintiff argues that the Court should deny Albin Defendants’ Motion based on the
holding in Rowse v. Tex. Capital Bank, N.A., No. 05-11-0422-CV, 2011 WL 5975235 (Tex.
App.—Dallas Nov. 30, 2011, no pet.), Rouse, however, actually supports Albin Defendants’
Motion. In Rouse, the Guaranty on which the claims were based specifically contained a forum-
selection clause providing for exclusive jurisdiction in Texas; in the instant case, the Purchase
Agreement does not contain a forum-selection clause. In Rouse, the Texas case was filed first
and the Oklahoma case was filed after; in the instant case, the California Action was filed first
and the Texas Action was filed after. According to the Rouse court, “when parallel suits are filed
in sister states, it is custom, as a matter of comity, for lhe second court in which an action is filed
DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’
MOTION TO DISMISS OR MOTION TO STAY Page 6to stay its proceeding until the first suit has been determined, or at least for a reasonable amount
of time.” Rouse at *5.
Despite Plaintiff's argument to the contrary, in the instant case Texas stands in the shoes
that Oklahoma wears in Rouse, while California in the instant case stands in Texas’s Rouse
shoes, And a further factor in favor of Albin Defendants is that the court in Rouse determined
that the second-filed Oklahoma case was vexatious and harassing, a factor that does not exist in
the instant case.
In sum, because the California Action was first-filed and can include all of the issues
raised in the Texas Action, Albin Defendants request that the Court dismiss or stay this lawsuit
based on comity and to avoid the potential for duplicative litigation, potentially inconsistent
results, and a waste of judicial resources, until the California Action is determined. Even though
this Court has the authority to “second-guess” the decision of the California courts, the
sovereignty of this Court will not be threatened by recognizing the California lawsuit
(“California Action”) as first-filed and applying the principles of comity in dismissing or staying
the Texas Action in deference to the California Action.
Wherefore, Defendants Mare Albin, Individually, Albin Engineering Service, Inc., and
Albin Engineering Group respectfully request that Defendants’ Motion to Dismiss or Motion to
Stay be granted, that the Court dismiss this cause, and that the Court grant Defendants all other
relief to which they are entitled.
DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’
MOTION TO DISMISS OR MOTION TO STAY Page 7Respectfully submitted,
BROWN & HOFMEISTER, L.L.P.
Robert Bfagkwell
State Bar No. 24001744
740 E. Campbell Road, Suite 800
Richardson, Texas 75081
Telephone: 214-747-6100
Facsimile: 214-747-6111
ATTORNEYS FOR DEFENDANTS
CERTIFICATE OF SERVICE
A
I hereby certify that on this /{_ day of June, 2012, a true and correct copy of the
foregoing instrument was served on all counsel of record in compliance with the Texas Rules of
Civil Procedure.
Michael K. Hurst Via Facsimile: 214-855-6808
Diana Cochrane
Gruber Hurst Johnassen Hail Shank, LLP
1445 Ross Avenue, Suite 2500
Dallas, Texas 75202
DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’
MOTION TO DISMISS OR MOTION TO STAY Page 8Ropers Majeski Kohn & Bentley
A Professional Corporation
San Jose
&
ou em IN ND
Al
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Sonia-M. Agee (SBN 164560)
Gregory M. Genitile (142424)
ROPERS, MAJESKI, KOHN & BENTLEY
50 W, San Fernando St, Suite 1400
San Jose, CA 95113
Telephone: (408) 287-6262
Facsimile: (408) 918-4501
Email: sagee@mmkb.com
ggentile@mmkb.com
Attorneys for Plaintiffs
ALBIN ENGINEERING SERVICES, INC. and
ALBIN ENGINEERING GROUP, INC.
SUPERIOR COURT OF THE STATE OF CALIFORNIA.
FOR THE COUNTY OF SANTA CLARA
UNLIMITED JURISDICTION
ALBIN ENGINEERING SERVICES, INC. CASE NO, 1-11-CV-210307
and ALBIN ENGINEERING GROUP,
INC,
Plaintiffs, . NOTICE OF ENTRY OF ORDER RE
/ MOTION TO STAY/DISMISS; MOTION
v. TO QUASH
KAYE/BASSMAN INTERNATIONAL.
CORPORATION; JEFF KAYE and DOES
1 through 20, inclusive,
Defendants.
TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
PLEASE TAKE NOTICE that the attached Order Re: Motion to Stay/Dismiss; Motion to
Quash was signed by the Court on February 8, 2012 and entered on February 9, 2012.
SKI,
Dated: February 15, 2012 , ROPERS, IN & BENTLEY
. wf
By;
SONIA M. AGEE
GREGORY M. GENTILE
Attorneys for Plaintiffs
ALBIN ENGINEERING SERVICES, INC.
and ALBIN ENGINEERING GROUP, INC.
RC1/6330900.1/BL1 282 NOTICE OF ENTRY OF ORDERer
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KA YE/BASSMAN INTERNATIONAL CORP,;
(ENDORSED) :
PL
” FEB 09 2012
DAVDHVAMAgaKi
By, Seeutor ‘County cf fenia Stara
wi Wi
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA |
ALBIN ENGINEERING SERVICES, INC; CaseNo, —-1-11-CV-210307
ALBIN ENGINEERING GROUP, INC., .
: . ORDER RE: MOTION TO
_ Plaintiffs, STAY/DISMISS; MOTION TO QUASH
‘VS.
JEFF KAYE, and DOES | through 20, inclusive,
Defendants.
The Motion to Stay/Dismiss by Defendants Kaye/Bassman, International Corp. (*KBIC”)
and Jeff Kaye (collectively “Defendants”) and Defendants’ Motion to Quash Service on
individual Defendant Jeff Kaye only both came on for hearing before the Honorable Kevin E.
McKenney oi February 7, 2012, at 9:00 am. in Department 20, The matters having been
submitted, the Court finds and orders as follows:
Defendants’ motion to stay/dismiss this action pursuant to CCP §410.30(a) is DENIED.
283
i.
ORDER RE: MOTION TO STAY/DISMISS; MOTION TO QUASHoe YH BR WN
‘eon Ne ee at met
BRR RE SSE S SES RAE
California’s interest in providing a forum for litigation by its residents precludes
dismissal of such actions on forum non conveniens grounds. “Except in extraordinary cases a
trial court has no discretion to dismiss an action brought by a California resident’on grounds of
forum non conveniens.” * Archibald v. Cinerama Hotels (3976) 15 Cal. 3d 853, 858.
AS fo staying this action in favor of the later-filed Texas action between these parties, as
Plaintiffs are, not signatories to the Promissory Notes there can be no reasonable argument that
they are bound by ‘the forum-selection clauses contained in those notes (which by their own
terms apply only to disputes between “maker” and payee,” specially defined in the Notes as *
either non-party Stephen Norred or noa-party Mark Whalls on the one hand {as “makers” and
KBIC on the other rpayee” on both Notes}) such that any stay would be mandatory. The Court
has reviewed the decision in Net2Phone, Inc. v. Superior Court (2003) 109 Cal App 4 583,
cited by Defendants at the hearing on the motions (but not in their moving papers), and finds it
factually distinguishable from this matter and otherwise unpersuasive on this issue.
Regarding a permissive stay, while it can be assumed for purposes of argument that
Texas is a suitable alternative forum in which a valid judgment could be obtained against these
Defendants, Defendants have not met their burden to show that the balance of private and public
factors makes it “just” that the litigation proceed in the alternative forum. Great weight is »
required to-be given to the Plaintifis’ choice of forum and there ‘is no reason to believe that the
California courts cannot accommodate any legitimate concems Defendants may have (if
necessary, certain depositions could be ordered to take place in Dallas, Texas, etc.).
Defendants’ motion to quash service of summons for lack of personal jurisdiction over
individual defendant Jeff Kaye only is GRANTED.
284
2
ORDER RE: MOTION TO STAY/DISMISS; MOTION TO QUASHwo me IN Aw RYH
= 6
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When a defendant moves to quash service on jurisdictional grounds, the plaintiff bas the
initial burden of demonstrating facts justifying the exercise of jurisdiction. Serafini v. Superior
‘Court (1998) 68 Cal.App.4" 70, 77. ‘The plaintiff must provide affidavits and other
authenticated documents in order to demonstrate competent evidence of specific evidentiary
facts permitting a court to form an independent conclusion on the issue of jurisdiction. Jn re
Automobile Antitrust Cases I & IE(2005) 135 Cal:App.4® 100,-113. Allegations in‘an unverified
complaint are insufficient to satisfy this burden of proof. Id. Also, hearsay. declarations are not
competent proof of facts alleged. Floveyor Int'l Ltd. v. Sup Ct. (1997) 59 Cal App 4th 789, 796
(declaration by plaintiff’ s attorney stating what discovery had revealed was “nothing more than
inadmissible hearsay.”’)
Plaintiffs’ opposition to this motion fails to present.evidentiary facts to support a finding
of, jurisdiction specific to Defendant Jeff Kaye.
X
Daed P+ Fe ee
. Kevin E. MéKenney , .
Judge of the Superior Court
285
3
ORDER RE: MOTION TO STA Y/DISMISS; MOTION TO QUASHRopers Majeski Kohn & Bentley
A Professional Corporation
* San Jose
-
Do end A WR WN
yom PN Ww MR NNN Se ee Fe EGP r S
BAR B&B BS = FO MI DH eR YH = SO
CASENAME: ALBIN v KAYE/BASSMAN
ACTION NO.: 1-11-CV-210307
PROOF OF SERVICE
METHOD OF SERVICE
First Class Mail O Facsimile (1 Messenger Service
C1) Overnight Delivery (0 E-Mail/Electronic Delivery
1. At the time of service I was over 18 years of age and nota party to this action.
2. My business address is 50 West San Femando Street, Suite 1400, San Jose, CA 95113-2429,
County of Santa Clara.
3. On February 15, 2012 I served the following documents:
NOTICE OF ENTRY OF ORDER RE MOTION
TO STAY/DISMISS; MOTION TO QUASH
4, [served the documents on the persons at the address below (along with their fax numbers
and/or email addresses if service was by fax or email):
Christopher J Hersey, Esq. T: (408)292-1765
Julie E, Rogers, Esq. “LB: (408)436-8272
MILLER, MORTON, CAILLAT & NEVIS, LLP
25 Metro Drive, 7" Floor
San Jose, CA 95110-1339
5. Lserved the documents by the following means:
a. & By United States mail: I enclosed the documents in a sealed envelope or package
addressed to the persons at the addresses specified in item 4 and placed the envelope for
collection and mailing, following our ordinary business practices: | am readily familiar with this
business's practice for-collecting and processing correspondence for mailing. On the same day
that correspondence is placed for collection and mailing, it is deposited in the ordinary course of
business with the United States Postal Service, in a sealed envelope with postage fully prepaid at
the address listed in Paragraph 2 above.
b. 1 By overnight delivery: I enclosed the documents in an envelope or package
provided by an overnight delivery carrier and addressed to the persons at the addresses in item 4.
] placed the envelope or package for collection and overnight delivery at an office or a regularly
tutilized drop box of the overnight delivery carrier,
c. (1 By messenger: I served the documents by placing them in an envelope or package
addressed to the persons at the addresses listed in item 4 and providing them to a messenger for
service. (Separate declaration of personal service to be provided by the messenger.)
d. O By fax transmission: Based on an agreement between the parties and in
conformance with Rule 2.306, and/or as a courtesy, I faxed the documents to the persons at the
RC16330900, /BLI 286 NOTICE OF ENTRY OF ORDERRopers Majeski Kohn & Bentley
A Professional Corporation
San Jose
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fax numbers listed in item 4. No error was reported by the fax machine that L used. A copy of the
record of the fax transmission is attached.
ec. O Byemail or electronic transmission: Based on an agreement between the parties
and/or as a courtesy, J sent the documents to the persons at the email addresses Jisted in item 4. 1
did not receive, within a reasonable time after the transmission,
indication that the transmission was unsuccessful. .
any electronic message or other
I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct. _
Date: February 15, 2012
Bonnie Langston
hace Te (again ___
Type Name : Signature
287
RC1/6330900.1/BL1
NOTICE OK ENTRY OF ORDERCOPY
IN THE COURT OF APPEAL OF THE STATE OF CAL guth Ann On
SIXTH APPELLATE DISTRICT mee ae re
a Ha shu
APR 17 2012
KAYE/BASSMAN INTERNATIONAL CORPORATION, MICHAEI.J. FERLY, Clark
Petitioner, By
v. CEPUTY
THE SUPERIOR COURT OF SANTA CLARA COUNTY,
Respondent;
ALBIN ENGINEERING SERVICES, INC. et al.,
Real Parties in Interest.
038031
Santa Clara County No. CV210307
BY THE COURT:
The petition for writ of mandate or other appropriate relief and request for stay are
denied.
lia, Acting P.J., Mihara, J., and Duffy, J.* participated in this decision.)
P
APR17 2012
Dated. Acting PJ.
*Retired Associate Justice of the Court of Appeal, Sixth Appellate District, assigned by the Chief
Justice pursuant to article VI, section 6 of the California Constitution.Sonia Maria Agee
Ropers Majeski Kohn & Bentley
50 W San Femando St Ste 1400
San Jose, CA 95113
Party Role Code:
rpi
H038031
IRECVD SJO RMKB
Matter #
APR 19 2012
Core ad MEO
OTHER
—
Preview
@ shout CAUSE NO. DC-11-13100 1D) KAYE/BASSMAN INTERNATIONAL g (2 JUN TS i He @ISTRICT COURT CORP., , Plaintiff, T v. ICIAL DISTRICT § § MARC ALBIN, INDIVIDUALLY, § ALBIN ENGINEERING SERVICE, INC. § AND ALBIN ENGINEERING GROUP, § § Defendants. § DALLAS COUNTY, TEXAS DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS OR MOTION TO STAY TO THE HONORABLE JUDGE OF SAID COURT: COME NOW Marc Albin, Individually, Albin Engineering Service, Inc., and Albin Engineering Group (“Albin Defendants”) and file this brief in support of Defendants’ Motion to Dismiss or Motion to Stay (“Albin Defendants’ Motion”), and in support of same would show the Court as follows: A. Introduction. At the hearing on Albin Defendants’ Motion held on May 25, 2012, the Court requested further briefing on (1) utilizing the “common-sense” approach for determining whether the forum-selection clauses at issue govern the claims in this case (“Texas Action”); (2) whether first-to-file and comity should apply in cases where a party is relying on a mandatory forum- selection clause; and (3) whether binding authority exists on whether a Texas court can “second- guess” a decision of another state when necessary to protect its own sovereignty. This brief addresses those issues. Based on the arguments and authorities in Albin Defendants’ Motion, their Reply and DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS OR MOTION TO STAY Page ISupplemental Reply to Plaintiff Kaye/Bassman Intemational Corp.’s (“Plaintiff or “Kaye/Bassman”) response to the Motion, and this brief) this Court should find that: (1) the forum-selection clauses at issue do not govern the claims in the Texas Action; and (2) even though a Texas court can second-guess a decision of another state when necessary to protect its own sovereignty, the sovereignty of the Texas courts will not be threatened in this situation by recognizing the California lawsuit (“California Action”) as first-filed and applying the principles of comity in dismissing or staying the Texas Action in deference to the California Action. Based on those findings, the Court should grant Albin Defendants’ Motion and dismiss or stay the Texas Action. B. The “common-sense” approach is appropriate for determining whether the forum- selection clauses at issue govern the claims, and that approach establishes that the forum-selection clauses at issue do not govern the claims in the Texas Action. In determining whether claims are within the scope of a forum-selection clause, the Texas Supreme Court has “held that a reviewing court should engage in a ‘common-sense examination of the claims and the forum-selection clause to determine if the clause covers the claims.’” Jn re Lisa Laser USA, Inc., 310 8.W.3d 880, 884 (Tex. 2010) (quoting int’! Profit Assocs., Inc., 274 S.W.3d 672, 677 (Tex. 2009)); see also RSR Corp. v. Siegmund, 309 S.W.3d 686, 700 (Tex. App.—Dallas 2010, no pet.); Rouse v. Tex. Capital Bank, N.A., No. 05-11-0422-CV, 2011 WL 5975235, at *2 (Tex. App.—Dallas Nov. 30, 2011, no pet.). Because forum-selection clauses are contractual, the reviewing court, in making this examination, should apply principles of contract interpretation, with the goal of ascertaining the true intent of the parties as written in the agreement. See RSR Corp., 309 S.W.3d at 700. " Albin Defendants reurge and incorporate in this brief the arguments and authorities contained in Albin Defendants’ Motion; in Defendants Marc Albin, Individually, Albin Engineering Service, Inc. and Albin Engineering Group’s Reply to Plaintiffs Response to Defendants’ Motion to Dismiss or Motion to Stay (“Reply”); and in Defendants’ Supplemental Reply to Plaintiff's Response to Defendants’ Motion to Dismiss or Motion to Stay (“Supplemental Reply”), previously filed in this cause. DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS OR MOTION TO STAY Page 2The forum-selection clauses at issue are identical, are contained only in the Promissory Notes between Plaintiff and Stephen Norred and between Plaintiff and Mark Whalls, respectively, and provide as follows: 12. GOVERNINGLAW. THIS NOTE IS MADE, ENTERED INTO AND PERFORMABLE IN DALLAS COUNTY, TEXAS AND ALL PAYMENTS ARE DUE IN DALLAS COUNTY, TEXAS. CONSEQUENTLY, THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND ANY LITIGATION OR OTHER PROCEEDING AS BETWEEN MAKER AND PAYEE THAT MAY BE BROUGHT, OR ARISE OUT OF, IN CONNECTION WITH OR BY REASON OF THIS NOTE SHALL BE BROUGHT IN THE APPLICABLE FEDERAL OR STATE COURT IN AND FOR DALLAS COUNTY, TEXAS WHICH COURTS SHALL BE THE EXCLUSIVE COURTS OF JURISDICTION AND VENUE. Promissory Notes, § 12 (emphasis added). At its core, Plaintiff is attempting to bootstrap into the Purchase Agreement the forum- selection clauses contained only in the promissory notes. See Plaintiff's Resp. Likewise, in the California Action, Plaintiff's motion to stay or dismiss was based on that single premise. The California trial court rejected Plaintiff's argument: As for staying this action in favor of the later-filed Texas action between these parties, as [Albin Defendants] are not signatories to the Promissory Notes there can be no reasonable argument that they are bound by the forum-selection clauses contained in those notes (which by their own terms apply only to disputes between “maker” and “payee,” specially defined in the Notes as either non-party Stephen Norred or non-party Mark Whalls on the one hand [as “makers”] and {Kaye/Bassman] on the other [“payee” on both Notes]) such that any stay would be mandatory. See Order re: Motion to Stay/Dismiss; Motion to Quash, attached hereto, at 2. Following that order, Kaye/Bassman filed in the California court of appeal its Petition for Writ of Mandate, Prohibition, or Other Appropriate Relief, copy of which is attached. That court denied the Petition for Writ of Mandate and the request for a stay of the California Action. See Order Denying Petition for Writ of Mandate or Other Appropriate Relief and Request for Stay, DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS OR MOTION TO STAY Page3attached hereto. The forum-selection clause in each promissory note expressly states that the clause de applies to disputes only between Plaintiff and each note’s “maker,” which is expressly defined as Norred in one note and Whalls in the other. See Promissory Notes, § 12. Despite those express provisions, Plaintiff has tried to bring the Purchase Agreement within the purview of the forum- selection clauses, but there is simply no basis for doing so. “Contract terms are given their plain, ordinary, and generally accepted meanings, and contracts are to be construed as a whole in an effort to harmonize and give effect to all provisions of the contract.” Rouse, 2011 WL 5975235 at *2. In considering a forum-selection clause, this instruction fits within the “common-sense” examination prescribed by the Texas Supreme Court. See In re Lisa Laser USA, Inc., 310 S.W.3d at 884. And in construing the Purchase Agreement as part of a common-sense examination, the only reasonable conclusion is that there is no forum- selection clause. Likewise, a common-sense construction of the promissory notes establishes that Albin Defendants are not “makers” and thus not subject to the forum-selection clauses in the notes. Based on the foregoing “common-sense” examination of the forum-selection clauses at issue and the claims, Albin Defendants have established that the forum-selection clauses at issue do not govern the claims. Cc Even though a Texas court can second-guess a decision of another state when necessary to protect its own sovereignty, the sovereignty of the Texas courts will not be threatened by applying the principles of comity in this situation. Texas law has long recognized that, “as a matter of comity, it is the custom for the court in which a later action is instituted [in this instance, this Court] to stay proceedings therein until the prior action [in this instance, the California Action] is determined or, at least, for a reasonable DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS OR MOTION TO STAY Page 4time, and the custom has practically grown into a general rule which strongly urges a duty upon the court in which the subsequent action is instituted to do so. See, e.g., Mills v. Howard, 228 S.W.2d 906, 908 (Tex. Civ. App—Amarillo 1950, no writ) (emphasis added). The Texas Supreme Court holds that “[w]hen a matter is first filed in another state, the general rule is that Texas courts stay the later-filed proceeding pending adjudication of the first suit.” Jn re AutoNation, Inc., 228 S.W.3d 663, 670 (Tex. 2007). “It is generally appropriate for courts to apply principles of comity where another court has exercised jurisdiction over the matter and where the states agree about the public policy at issue.” Jn re BP Oil Supply Co., 317 8.W.3d 915, 919 (Tex. App.—Houston [14th Dist.] 2010, orig. proceeding). In determining whether a stay should be granted, it is generally necessary that the two suits: (1) involve the same cause of action; (2) concern the same subject matter; (3) involve the same issues; and (4) seek the same relief. Jn re: State Farm Auto. Ins. Co., 192 S.W.3d 897, 900 (Tex. App.—Tyler 2006, orig. proceeding). Additional factors which can be considered are: (1) which action was filed first; (2) whether the parties are the same in both actions; and (3) the effect of a judgment in the later action on any order or judgment entered in the prior action. /d. Here it is indisputable that both lawsuits concern the same subject matter, involve the same issues and the same causes of action, and seek the same relief. In fact, in its Motion to Stay in the California Action, Kaye/Bassman references the Texas Action and affirmatively asserts that an available alternative forum exists (this Court) that is prepared and is manifestly qualified to apply Texas law to the subject dispute amongst the parties. In the same Motion, Kaye/Bassman further asserts that if the California Action is stayed or dismissed, Albin Defendants would not be without a forum to have their complaints addressed and would have a fair opportunity to be heard in this Court. In essence, by its own pleading in the California DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS OR MOTION TO STAY Page 5Action, Kaye/Bassman admits that the Texas Action meets the necessary requirements for this Court to dismiss or stay the Texas Action. Therefore, based on applicable case law and facts of this case, it is clear the Texas Action must be dismissed or stayed during the pendency of the California Action. In further support of this position, Albin Defendants would direct the Court to /n re: Vinyl Technologies, Inc., a recent opinion issued by the San Antonio Court of Appeals. See 352 S.W.3d 810 (Tex. App—San Antonio 2011, orig. proceeding). In that case, an action was first filed in Massachusetts and a subsequent lawsuit was filed in Texas. fd After reviewing the factors identified in paragraph 8 above, the court of appeals determined that, because both suits were based on the same original contract and involved the same transaction and the same parties, the trial court abused its discretion in failing to apply the principal of comity and stay the Texas suit until the conclusion of the suit in Massachusetts. /d. at 815. Consequently, it is clear that the proper course of action is for the Texas Action to be dismissed or stayed during the pendency of the California Action. Plaintiff argues that the Court should deny Albin Defendants’ Motion based on the holding in Rowse v. Tex. Capital Bank, N.A., No. 05-11-0422-CV, 2011 WL 5975235 (Tex. App.—Dallas Nov. 30, 2011, no pet.), Rouse, however, actually supports Albin Defendants’ Motion. In Rouse, the Guaranty on which the claims were based specifically contained a forum- selection clause providing for exclusive jurisdiction in Texas; in the instant case, the Purchase Agreement does not contain a forum-selection clause. In Rouse, the Texas case was filed first and the Oklahoma case was filed after; in the instant case, the California Action was filed first and the Texas Action was filed after. According to the Rouse court, “when parallel suits are filed in sister states, it is custom, as a matter of comity, for lhe second court in which an action is filed DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS OR MOTION TO STAY Page 6to stay its proceeding until the first suit has been determined, or at least for a reasonable amount of time.” Rouse at *5. Despite Plaintiff's argument to the contrary, in the instant case Texas stands in the shoes that Oklahoma wears in Rouse, while California in the instant case stands in Texas’s Rouse shoes, And a further factor in favor of Albin Defendants is that the court in Rouse determined that the second-filed Oklahoma case was vexatious and harassing, a factor that does not exist in the instant case. In sum, because the California Action was first-filed and can include all of the issues raised in the Texas Action, Albin Defendants request that the Court dismiss or stay this lawsuit based on comity and to avoid the potential for duplicative litigation, potentially inconsistent results, and a waste of judicial resources, until the California Action is determined. Even though this Court has the authority to “second-guess” the decision of the California courts, the sovereignty of this Court will not be threatened by recognizing the California lawsuit (“California Action”) as first-filed and applying the principles of comity in dismissing or staying the Texas Action in deference to the California Action. Wherefore, Defendants Mare Albin, Individually, Albin Engineering Service, Inc., and Albin Engineering Group respectfully request that Defendants’ Motion to Dismiss or Motion to Stay be granted, that the Court dismiss this cause, and that the Court grant Defendants all other relief to which they are entitled. DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS OR MOTION TO STAY Page 7Respectfully submitted, BROWN & HOFMEISTER, L.L.P. Robert Bfagkwell State Bar No. 24001744 740 E. Campbell Road, Suite 800 Richardson, Texas 75081 Telephone: 214-747-6100 Facsimile: 214-747-6111 ATTORNEYS FOR DEFENDANTS CERTIFICATE OF SERVICE A I hereby certify that on this /{_ day of June, 2012, a true and correct copy of the foregoing instrument was served on all counsel of record in compliance with the Texas Rules of Civil Procedure. Michael K. Hurst Via Facsimile: 214-855-6808 Diana Cochrane Gruber Hurst Johnassen Hail Shank, LLP 1445 Ross Avenue, Suite 2500 Dallas, Texas 75202 DEFENDANTS’ BRIEF IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS OR MOTION TO STAY Page 8Ropers Majeski Kohn & Bentley A Professional Corporation San Jose & ou em IN ND Al 12 13 15 16 "7 18 19 20 2 22 23 24 25 26 27 28 Sonia-M. Agee (SBN 164560) Gregory M. Genitile (142424) ROPERS, MAJESKI, KOHN & BENTLEY 50 W, San Fernando St, Suite 1400 San Jose, CA 95113 Telephone: (408) 287-6262 Facsimile: (408) 918-4501 Email: sagee@mmkb.com ggentile@mmkb.com Attorneys for Plaintiffs ALBIN ENGINEERING SERVICES, INC. and ALBIN ENGINEERING GROUP, INC. SUPERIOR COURT OF THE STATE OF CALIFORNIA. FOR THE COUNTY OF SANTA CLARA UNLIMITED JURISDICTION ALBIN ENGINEERING SERVICES, INC. CASE NO, 1-11-CV-210307 and ALBIN ENGINEERING GROUP, INC, Plaintiffs, . NOTICE OF ENTRY OF ORDER RE / MOTION TO STAY/DISMISS; MOTION v. TO QUASH KAYE/BASSMAN INTERNATIONAL. CORPORATION; JEFF KAYE and DOES 1 through 20, inclusive, Defendants. TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that the attached Order Re: Motion to Stay/Dismiss; Motion to Quash was signed by the Court on February 8, 2012 and entered on February 9, 2012. SKI, Dated: February 15, 2012 , ROPERS, IN & BENTLEY . wf By; SONIA M. AGEE GREGORY M. GENTILE Attorneys for Plaintiffs ALBIN ENGINEERING SERVICES, INC. and ALBIN ENGINEERING GROUP, INC. RC1/6330900.1/BL1 282 NOTICE OF ENTRY OF ORDERer a 12 43 14 15 16 W7 18 _ 19 20 21 22 24 * 25 26 27 "28 KA YE/BASSMAN INTERNATIONAL CORP,; (ENDORSED) : PL ” FEB 09 2012 DAVDHVAMAgaKi By, Seeutor ‘County cf fenia Stara wi Wi SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA | ALBIN ENGINEERING SERVICES, INC; CaseNo, —-1-11-CV-210307 ALBIN ENGINEERING GROUP, INC., . : . ORDER RE: MOTION TO _ Plaintiffs, STAY/DISMISS; MOTION TO QUASH ‘VS. JEFF KAYE, and DOES | through 20, inclusive, Defendants. The Motion to Stay/Dismiss by Defendants Kaye/Bassman, International Corp. (*KBIC”) and Jeff Kaye (collectively “Defendants”) and Defendants’ Motion to Quash Service on individual Defendant Jeff Kaye only both came on for hearing before the Honorable Kevin E. McKenney oi February 7, 2012, at 9:00 am. in Department 20, The matters having been submitted, the Court finds and orders as follows: Defendants’ motion to stay/dismiss this action pursuant to CCP §410.30(a) is DENIED. 283 i. ORDER RE: MOTION TO STAY/DISMISS; MOTION TO QUASHoe YH BR WN ‘eon Ne ee at met BRR RE SSE S SES RAE California’s interest in providing a forum for litigation by its residents precludes dismissal of such actions on forum non conveniens grounds. “Except in extraordinary cases a trial court has no discretion to dismiss an action brought by a California resident’on grounds of forum non conveniens.” * Archibald v. Cinerama Hotels (3976) 15 Cal. 3d 853, 858. AS fo staying this action in favor of the later-filed Texas action between these parties, as Plaintiffs are, not signatories to the Promissory Notes there can be no reasonable argument that they are bound by ‘the forum-selection clauses contained in those notes (which by their own terms apply only to disputes between “maker” and payee,” specially defined in the Notes as * either non-party Stephen Norred or noa-party Mark Whalls on the one hand {as “makers” and KBIC on the other rpayee” on both Notes}) such that any stay would be mandatory. The Court has reviewed the decision in Net2Phone, Inc. v. Superior Court (2003) 109 Cal App 4 583, cited by Defendants at the hearing on the motions (but not in their moving papers), and finds it factually distinguishable from this matter and otherwise unpersuasive on this issue. Regarding a permissive stay, while it can be assumed for purposes of argument that Texas is a suitable alternative forum in which a valid judgment could be obtained against these Defendants, Defendants have not met their burden to show that the balance of private and public factors makes it “just” that the litigation proceed in the alternative forum. Great weight is » required to-be given to the Plaintifis’ choice of forum and there ‘is no reason to believe that the California courts cannot accommodate any legitimate concems Defendants may have (if necessary, certain depositions could be ordered to take place in Dallas, Texas, etc.). Defendants’ motion to quash service of summons for lack of personal jurisdiction over individual defendant Jeff Kaye only is GRANTED. 284 2 ORDER RE: MOTION TO STAY/DISMISS; MOTION TO QUASHwo me IN Aw RYH = 6 12 When a defendant moves to quash service on jurisdictional grounds, the plaintiff bas the initial burden of demonstrating facts justifying the exercise of jurisdiction. Serafini v. Superior ‘Court (1998) 68 Cal.App.4" 70, 77. ‘The plaintiff must provide affidavits and other authenticated documents in order to demonstrate competent evidence of specific evidentiary facts permitting a court to form an independent conclusion on the issue of jurisdiction. Jn re Automobile Antitrust Cases I & IE(2005) 135 Cal:App.4® 100,-113. Allegations in‘an unverified complaint are insufficient to satisfy this burden of proof. Id. Also, hearsay. declarations are not competent proof of facts alleged. Floveyor Int'l Ltd. v. Sup Ct. (1997) 59 Cal App 4th 789, 796 (declaration by plaintiff’ s attorney stating what discovery had revealed was “nothing more than inadmissible hearsay.”’) Plaintiffs’ opposition to this motion fails to present.evidentiary facts to support a finding of, jurisdiction specific to Defendant Jeff Kaye. X Daed P+ Fe ee . Kevin E. MéKenney , . Judge of the Superior Court 285 3 ORDER RE: MOTION TO STA Y/DISMISS; MOTION TO QUASHRopers Majeski Kohn & Bentley A Professional Corporation * San Jose - Do end A WR WN yom PN Ww MR NNN Se ee Fe EGP r S BAR B&B BS = FO MI DH eR YH = SO CASENAME: ALBIN v KAYE/BASSMAN ACTION NO.: 1-11-CV-210307 PROOF OF SERVICE METHOD OF SERVICE First Class Mail O Facsimile (1 Messenger Service C1) Overnight Delivery (0 E-Mail/Electronic Delivery 1. At the time of service I was over 18 years of age and nota party to this action. 2. My business address is 50 West San Femando Street, Suite 1400, San Jose, CA 95113-2429, County of Santa Clara. 3. On February 15, 2012 I served the following documents: NOTICE OF ENTRY OF ORDER RE MOTION TO STAY/DISMISS; MOTION TO QUASH 4, [served the documents on the persons at the address below (along with their fax numbers and/or email addresses if service was by fax or email): Christopher J Hersey, Esq. T: (408)292-1765 Julie E, Rogers, Esq. “LB: (408)436-8272 MILLER, MORTON, CAILLAT & NEVIS, LLP 25 Metro Drive, 7" Floor San Jose, CA 95110-1339 5. Lserved the documents by the following means: a. & By United States mail: I enclosed the documents in a sealed envelope or package addressed to the persons at the addresses specified in item 4 and placed the envelope for collection and mailing, following our ordinary business practices: | am readily familiar with this business's practice for-collecting and processing correspondence for mailing. On the same day that correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service, in a sealed envelope with postage fully prepaid at the address listed in Paragraph 2 above. b. 1 By overnight delivery: I enclosed the documents in an envelope or package provided by an overnight delivery carrier and addressed to the persons at the addresses in item 4. ] placed the envelope or package for collection and overnight delivery at an office or a regularly tutilized drop box of the overnight delivery carrier, c. (1 By messenger: I served the documents by placing them in an envelope or package addressed to the persons at the addresses listed in item 4 and providing them to a messenger for service. (Separate declaration of personal service to be provided by the messenger.) d. O By fax transmission: Based on an agreement between the parties and in conformance with Rule 2.306, and/or as a courtesy, I faxed the documents to the persons at the RC16330900, /BLI 286 NOTICE OF ENTRY OF ORDERRopers Majeski Kohn & Bentley A Professional Corporation San Jose a ow ny an YW 10 ul 12 13 14 15 16 7 18 19 20 21 2 2 24 25 26 27 28 fax numbers listed in item 4. No error was reported by the fax machine that L used. A copy of the record of the fax transmission is attached. ec. O Byemail or electronic transmission: Based on an agreement between the parties and/or as a courtesy, J sent the documents to the persons at the email addresses Jisted in item 4. 1 did not receive, within a reasonable time after the transmission, indication that the transmission was unsuccessful. . any electronic message or other I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. _ Date: February 15, 2012 Bonnie Langston hace Te (again ___ Type Name : Signature 287 RC1/6330900.1/BL1 NOTICE OK ENTRY OF ORDERCOPY IN THE COURT OF APPEAL OF THE STATE OF CAL guth Ann On SIXTH APPELLATE DISTRICT mee ae re a Ha shu APR 17 2012 KAYE/BASSMAN INTERNATIONAL CORPORATION, MICHAEI.J. FERLY, Clark Petitioner, By v. CEPUTY THE SUPERIOR COURT OF SANTA CLARA COUNTY, Respondent; ALBIN ENGINEERING SERVICES, INC. et al., Real Parties in Interest. 038031 Santa Clara County No. CV210307 BY THE COURT: The petition for writ of mandate or other appropriate relief and request for stay are denied. lia, Acting P.J., Mihara, J., and Duffy, J.* participated in this decision.) P APR17 2012 Dated. Acting PJ. *Retired Associate Justice of the Court of Appeal, Sixth Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.Sonia Maria Agee Ropers Majeski Kohn & Bentley 50 W San Femando St Ste 1400 San Jose, CA 95113 Party Role Code: rpi H038031 IRECVD SJO RMKB Matter # APR 19 2012 Core ad MEO OTHER —