Dunlap v. Starz Home Entertainment CA2/7 ( 2013 )

Filed 6/10/13 Dunlap v. Starz Home Entertainment CA2/7
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
LINDSAY DUNLAP, B230069
Defendant and Appellant, (Los Angeles County
Super. Ct. No. BC373707)
v.
STARZ HOME ENTERTAINMENT,
LLC,
Plaintiff and Respondent.
APPEAL from a judgment of the Superior Court of Los Angeles County,
Jane Johnson, Judge. Affirmed in part and reversed in part.
Lindsay Dunlap, in pro per, for Defendant and Appellant.
Romero Law and Alan J. Romero for Plaintiff and Respondent.
______________________________________
Lindsay Dunlap appeals from the judgment entered upon a jury verdict in favor of
Starz Home Entertainment, LLC (Starz) on its complaint against Dunlap alleging causes
of action for breach of contract, fraud and negligent and intentional misrepresentation
arising out of Dunlap‘s sale of a license to certain rights she claimed to own to the ―The
Man from U.N.C.L.E‖ and ―The Girl From U.N.C.L.E.‖ (the UNCLE television series).
Dunlap asserts several errors on appeal. Specifically she claims that the trial court erred
in failing to dismiss or stay the action based on the forum selection clause in the parties‘
contract that designated New York as the proper forum for any dispute between the
parties. In addition, Dunlap argues that the special verdict the jury used in this case
cannot support the judgment because questions in the verdict omitted certain elements of
the claims and/or were biased, ambiguous and confusing. Finally she argues that the
punitive damage award must be reversed because Starz failed to present sufficient
evidence of her ability to pay the award.
As we shall explain, only Dunlap‘s argument on the punitive damage award has
merit. Accordingly, we reverse the award of punitive damages and affirm in all other
respects.
FACTUAL AND PROCEDURAL BACKGROUND1
1. The Parties
Dunlap was the chairperson and president of an entity known as Ember
Entertainment, Inc. (Ember) when the events giving rise to this case occurred.2 Ember is
a California corporation, with its principal place of business in Los Angeles; and Dunlap
is a California resident. Starz is an entertainment company that supplies television
programming in the United States. It is also the successor in interest of Anchor Bay
Entertainment, Inc. (Anchor Bay) which was renamed and reformed as Starz in 2007.
1
The Factual and Procedural Background describes only those facts and
circumstances that are relevant to the issues on appeal.
2
During the trial in August 2010 Dunlap testified that she was no longer affiliated
with or employed at Ember and had left the company about two years before.
2
Starz is a Delaware corporation with the principal place of business in Burbank,
California. Anchor Bay was a Delaware corporation with its principal place of business
in Michigan.
2. Sale of Rights to the UNCLE television series
In 2004, Ember contacted Anchor Bay to solicit interest in the sale of exclusive
license for the video and commercial rights (the ―rights‖) to the UNCLE television series.
Ember represented that it owned the rights3 to the UNCLE television series and that it had
the exclusive authority and legal capacity to sell those rights to Anchor Bay.
Thereafter in October 2005, Anchor Bay and Ember entered into a written
agreement for the sale of the ―exclusive and irrevocable right and license to advertise or
otherwise exploit‖ the rights to Anchor Bay for a term of seven years. At the time it
entered the contract with Ember, Anchor Bay was unaware that any other entity claimed
ownership to or rights in the UNCLE television series. Between November 2005 through
February 2006, Anchor Bay paid a total of $500,000 to Ember under the agreement for
106 episodes of ―Man from U.N.C.L.E‖ and 29 episodes of ―Girl from U.N.C.L.E.‖
Anchor Bay also paid Ember an additional $125,000 for additional ―value added‖
materials.4
In April 2006, Anchor Bay learned that Warner Bros. also claimed to own the
exclusive distribution rights to the UNCLE television series and intended to release
DVDs of the series. By December 2006, Anchor Bay also had expended (in addition to
the payments made to Ember under the agreement) $85,921 in post-production costs. It
3
Ember claimed that it had received the rights to the UNCLE television series by
quitclaim from the production company which created the series in the 1960s. However,
the production company held ownership to the rights as a tenant in common with MGM
(MGM subsequently sold its rights to various media property including the UNCLE
television series to Turner Broadcasting, which ultimately sold its rights to Warner
Bros.). The quitclaim to Ember acknowledged that Warner Bros. retained an interest in
the rights to the UNCLE television series.
4
The ―value-added‖ materials consisted of 12 hours of recorded interviews, behind
the scenes documentaries and 300 still photographs.
3
also claimed that it lost profits of $768,925 in connection with the deal. In December
2006, Anchor Bay sought a refund from Ember for the monies it had paid under the
contract. When those efforts proved unsuccessful, in July of 2007, Starz (as Anchor
Bay‘s successor in interest), filed the instant action against Ember and Dunlap.
3. The Litigation
Starz‘ complaint against Ember and Dunlap alleged causes of action for, among
various claims, breach of contract, fraud, intentional and negligent misrepresentation.
Starz also alleged that Ember operated as the alter ego of Dunlap. Dunlap and Ember
failed to respond to the complaint and default was entered against them. Thereafter, the
parties litigated issues related to the default and service.
In September 2008, Dunlap and Ember filed a motion to stay or dismiss the case
based on a forum selection clause in the agreement between Ember and Anchor Bay
which designated New York as the jurisdiction for any disputes between the parties. The
court denied the motion.
In August 2010 the case proceeded to a jury trial against Dunlap.5 During the trial,
Dunlap acted as her own legal counsel. At the end of the presentation of evidence the
court ruled that Dunlap was Ember‘s alter ego. The court instructed the jury as to the
relevant law governing the claims and the jury was provided with special verdict, jointly
prepared by the parties containing 25 questions on the causes of action for breach of
contract, negligent and intentional misrepresentation, and fraud. The special verdict
required the jury to determine the amount of compensatory damages Starz sustained. In
connection with the intentional misrepresentation and fraud claims it further asked the
jury to determine the amount of punitive damages to be awarded to Starz.
The jury returned the verdict in favor of Starz and awarded a total of $1,479,846 in
compensatory damages for ―out of pocket expenses,‖ ―post production expenses‖ and
5
In 2009, Ember filed a cross-complaint against Starz and another party not subject
of this appeal, Crest Laboratories. In July 2010 shortly before trial, the court struck
Ember‘s answer and dismissed the cross-complaint because it was an unrepresented
corporation.
4
―lost profits.‖ The jury also awarded Starz $1.4 million in punitive damages.
Dunlap filed a motion for a new trial making various arguments about the conduct
of the trial, the behavior of the trial judge, and jury deliberations. The notice stated the
basis of the motion as insufficient evidence to support the court‘s ruling on the alter ego
claim. The trial court denied the motion.
Dunlap appeals.
DISCUSSION
On appeal, Dunlap asserts that the trial court committed several reversible errors.
She claims that: (1) the court erred in failing to stay or dismiss the action based on the
mandatory forum selection clause in the parties‘ agreement; (2) the special verdict
contained errors and defects that are fatal to the judgment; and (3) sufficient evidence did
not support the award of punitive damages. We address these claims in turn.
I. The Court Did Not Err in Denying Dunlap’s Motion to Dismiss or Stay Based
on the Forum Selection Clause.
Dunlap argues that the court erred when it failed to grant her motion to dismiss or
stay the case based on the mandatory forum selection clause in the agreement between
Ember and Anchor Bay. As we shall explain, we disagree.
A. Background
Anchor Bay drafted the license agreement between Ember and Anchor Bay. It
contained the following provision: ―This Agreement shall be binding upon the parties
hereto and shall inure to the benefit of their successors, heirs, and assigns, and this
Agreement and any and all disputes arising hereunder or related hereto shall be construed
under the laws of the State of New York applicable to agreements to be wholly
performed therein. Licensor and Licensee consent to the exclusive jurisdiction of the
state and federal courts sitting in the State of New York over any and all matters arising
under or related to this Agreement.‖
The parties litigated various matters relating to service and default, filed numerous
motions and other documents, and had a number of conferences and court appearances
between July 2007 and September of 2008, before Dunlap filed the motion to dismiss or
5
stay based on the forum selection clause. Starz opposed the motion pointing out that
none of the parties, witnesses nor evidence relating to the case had any connection to
New York.
During the hearing on the motion in December 2008, the court expressed a
concern that the Starz‘s predecessor Anchor Bay had drafted the contract which included
the forum selection clause and yet, Starz opposed its enforcement. When questioned
about the clause during the hearing, Starz explained that the forum selection clause had
been included in the contract by accident. Starz stated that the contract between Ember
and Anchor Bay had been drafted using a template from another contract, and that the
forum selection clause at issue had been unintentionally left in the final version of the
agreement.
The court denied the motion. The court‘s ruling acknowledged that ordinarily a
mandatory forum selection clause entered into knowingly and voluntarily by the parties
would be given effect. However, the court also ruled, in pertinent part:
Here, there seems to be no reasonable contacts with New
York, the chosen forum. Because of that, the Court would
ordinarily not be inclined to enforce the forum selection
agreement, particularly in view of the long history of this case
in California (having been filed in July 2007). However, this
is an unusual case, one in which Plaintiff, the drafter of the
agreement, seeks to avoid the effect of the forum selection
clause. . . . [¶] [I]t is clear that New York lacks a relationship
to the dispute. In this case, there is clearly no relationship
between the parties or the transaction. Plaintiff is a Delaware
LLC. Plaintiff is suing as the successor-in-interest to Anchor
Bay Entertainment, Inc., which is a Michigan corporation.
Defendant Ember is a California corporation. Defendant
Dunlap is a California resident. Neither party suggests that
the transaction had anything to do with New York. [¶]
Plaintiff cites cases holding that the Court should decline to
enforce a forum selection clause when the chosen state is not
affordable or when all parties and witnesses are California
residents. Here, it appears that all witnesses are in California.
[¶] This case has a history. The Court is concerned about the
amount of time it has taken to get this case from filing to ‗at
6
issue‘ status. Defendants have been evading service, and this
motion to dismiss may be read as one more ‗delaying tactic.‘
[¶] Because of the foregoing, and in particular, the lack of
any contacts with New York, the Court is inclined to deny the
motion.
B. Law Governing the Enforceability of a Forum Selection Clause
A motion to dismiss or stay based upon forum non conveniens can be brought on
two grounds: a contractual forum selection clause, or the traditional ground, i.e., that the
forum in which the action was filed is an inconvenient forum. (Intershop
Communications AG v. Superior Court (2002) 104 Cal.App.4th 191, 198.) Code of Civil
Procedure section 410.30 is the exclusive means for staying or dismissing a case under
the forum non conveniens doctrine. (See In re Marriage of Taschen (2005) 134
Cal.App.4th 681, 687 [―in California forum non conveniens motions are governed by
statute, not by policies embedded in case law predating the statute‘s enactment‖]; Britton
v. Dallas Airmotive, Inc. (2007) 153 Cal.App.4th 127, 132-134.)
The defendant, as the moving party, bears the burden of proof on a motion based
on forum non conveniens. (Animal Films, LLC v. D.E.J. Productions, Inc. (2011) 193
Cal.App.4th 466, 472.) When the motion is brought on the traditional ground, the
defendant bears the burden to show that the forum selected by the plaintiff ―is a seriously
inconvenient forum.‖ (Ford Motor Co.v. Insurance Company of North America (1995)
35 Cal.App.4th 604, 611.) When the motion is brought on the ground that there is a
mandatory6 forum selection clause, the burden is on the plaintiff to show that
enforcement of the clause would be unreasonable under the circumstances of the case.
(See Berg v. MTC Electronics Technologies Co. (1998) 61 Cal.App.4th 349, 358.)
California courts presume the validity of forum selection clauses and consistently
enforce them because they provide a degree of certainty for both businesses and their
customers that contractual disputes will be resolved in a particular forum. California
courts routinely enforce forum selection clauses even when the plaintiff lives far from the
6
Here there is no dispute that the forum selection clause at issue is mandatory.
7
chosen forum. (See Intershop Communications AG v. Superior Court, supra, 104
Cal.App.4th at pp. 196-202 [Hamburg, Germany forum].) Moreover, a forum selection
clause may be enforced against non-signatories who are closely related to the contractual
relationship. (Net2Phone, Inc. v. Superior Court (2003) 109 Cal.App.4th 583, 587-588.)
―Although California has a public policy in favor of access to its courts by resident
plaintiffs, this is not thwarted by allowing residents to surrender this right voluntarily in
the course of negotiations; ―‗[i]n so holding we are in accord with the modern trend
which favors [enforcement] of such forum selection clauses.‘‖ (Cal-State Business
Products & Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666, 1678.) Thus, when a
forum selection clause has been ―entered into freely and voluntarily by parties who have
negotiated at arms‘ length,‖ the clause will be ―given effect, in the court‘s discretion and
in the absence of a showing that enforcement of such a clause would be unreasonable.‖
(Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 496.)
Consequently, a distinction has been drawn between a mandatory and a permissive
forum selection clause for purposes of analyzing whether the clause should be enforced.
A mandatory clause will ordinarily be given effect without any analysis of convenience;
the only question is whether enforcement of the clause would be unreasonable. As the
Supreme Court noted in Smith ―[m]ere inconvenience or additional expense is not the test
of unreasonableness since it may be assumed that the plaintiff received under the contract
consideration for these things.‖ (Smith, Valentino & Smith, Inc. v. Superior Court, supra,
17 Cal.3d at p. 496.) On the other hand, when the clause merely provides for submission
to jurisdiction and does not expressly mandate litigation exclusively in a particular forum,
then the traditional forum non conveniens analysis applies. (Berg v. MTC Electronics
Technologies Co., supra, 61 Cal.App.4th at pp. 358-360.)
The party seeking to avoid application of a mandatory forum selection clause -- in
this case, Starz -- bears a burden to prove unreasonableness. (Net2Phone, Inc. v.
Superior Court, supra, 109 Cal.App.4th at p. 588; see Cal-State Business Products &
Services, Inc. v. Ricoh, supra, 12 Cal.App.4th at p. 1680 [the burden of proof falls on the
party challenging the validity of the forum selection clause].)
8
―Unreasonable‖ in the context of mandatory forum selection clauses has been
defined as meaning that the forum selected would be unavailable, unable to accomplish
substantial justice or that choice of forum lacks a rational basis in light of the facts
underlying the transaction. (Cal-State Business Products & Services, Inc. v. Ricoh,
supra, 12 Cal.App.4th at p. 1679.)
With these legal concepts in mind, we turn to the merits.7
Here Dunlap asserts that because the clause was mandatory and did not undermine
California public policy, the court should have given it full effect. She argues that the
court erroneously applied the traditional forum non conveniens test. She asserts that New
York was the appropriate forum for the case because it had a substantial connection to the
parties and the transaction and because New York is an entertainment capital. She also
points out that the parent company of Anchor Bay was located near New York—in New
Jersey and that the checks that were issued from Anchor Bay to Ember were sent from
Newark, New Jersey.
In our view, the trial court did not base its holding on an inaccurate application of
the law or improper view of the evidence.
Contrary to Dunlap‘s contention, the trial court did not apply the traditional forum
non conveniens test to decide the motion. Although the court made reference to the
location of evidence and witnesses, that was not the emphasis of the court‘s analysis.
Instead, the court‘s chief rationale as reflected in the court‘s comments at the hearing and
7
A split of authority exists as to the appropriate standard of review for a motion to
enforce a forum selection clause. In Schlessinger v. Holland America (2004) 120
Cal.App.4th 552, 557, this division followed America Online, Inc. v. Superior Court
(2001) 90 Cal.App.4th 1, 9 and held that a trial court‘s decision to enforce or decline to
enforce a forum selection clause is reviewed for an abuse of discretion. However, in
CQL Original Products, Inc. v. National Hockey League Players’ Assn. (1995) 39
Cal.App.4th 1347, 1354, Division One of the Fourth District held that the trial court‘s
order denying a motion to stay or dismiss based on a contractual forum selection clause
should be reviewed for substantial evidence. This split is not outcome determinative
here, however, because under either of these deferential standards, this court would
uphold the trial court‘s conclusion with respect to the forum selection clause at issue.
9
in the written ruling centered on whether it was reasonable to enforce the clause in light
of the circumstances of the case. Specifically, the court cited the forum‘s lack of
connection to the case. The court found New York had no rational connection to the
transaction—a finding borne out by the record—which is an appropriate consideration
under the prevailing law. Furthermore, under the reasonableness test the court was not
precluded from considering where the parties were domiciled, where the contract was
negotiated and consummated, and where the claims arose. (See Furda v. Superior Court
(1984) 161 Cal.App.3d 418, 426 [considering the location where one of the parties was
domiciled, where the contract was negotiated and performed and torts occurred in making
the reasonableness determination].) The court also properly considered Dunlap‘s delay in
seeking to raise the issue of the forum selection clause. (Trident Labs, Inc. v. Merrill
Lynch Commercial Finance Corp. (2011) 200 Cal.App.4th 147, 155-156 [finding that
under the circumstances of the case a delay of more than 19 months in bringing the
motion to enforce a mandatory forum selection clause made the enforcement of the
clause unreasonable].) The evidence in the record supports the court‘s conclusion that
New York was an unreasonable forum, and none of the arguments made by Dunlap
below or before this court undermine that conclusion.
Finally, in contrast to other cases involving mandatory forum selection clauses in
which enforcement is justified because the parties negotiated the selection of the forum or
the plaintiff received consideration in exchange for agreeing to litigate in a distant forum,
here the designation of New York as the forum for any disputes was an unintentional
drafting error. Selection of New York as the chosen forum was not the result of an arm‘s
length, bargained for exchange between the parties or even a knowing and voluntary
surrender of choice by either side. It was selected through inadvertence. Consequently,
the primary rationale for enforcing mandatory forum selection clauses is not served in
this case.
In sum, we conclude that Starz satisfied its burden to prove it would be
unreasonable to enforce the forum selection clause. In view of the deferential standard of
review and considering all of the evidence, the trial court did not commit reversible error
10
in denying the motion to dismiss or stay the case based on the forum selection clause in
the agreement.
II. Any Omissions, Ambiguities or Errors in the Special Verdict Were Harmless.
A. Background
The special verdict used in this case, prepared jointly by the parties contained 25
questions. Question Nos. 1-6 pertained to the claim for breach of contract; question Nos.
7-11 centered on the negligent misrepresentation cause of action; the claim for intentional
misrepresentation was addressed in question Nos. 12-16; questions numbered 17-24
related to the fraud claim and question No. 25 asked the jury to determine the amount of
punitive damages. The amount of compensatory damages the jury found for each cause
of action was identical – for each of the four causes of action the jury found in favor of
Starz and imposed liability against Dunlap in the amount of $625,000 for lost profits,
$85,921 for post production expenses and $768,925 for lost profits, for a total
compensatory damage award of $1,479,846. The court subsequently entered a judgment
for the compensatory damages for Starz in the amount of $1,479,846.
B. Governing Law
―[A] special verdict is that by which the jury finds the facts only, leaving the
judgment to the Court. The special verdict must present the conclusions of fact as
established by the evidence, and not the evidence to prove them; and those conclusions of
fact must be so presented as that nothing shall remain to the Court but to draw from them
conclusions of law.‖ (Code Civ. Proc., § 624.)
―‗Unlike a general verdict (which merely implies findings on all issues in favor of
the plaintiff or defendant), a special verdict presents to the jury each ultimate fact in the
case. The jury must resolve all of the ultimate facts presented to it in the special verdict,
so that ―nothing shall remain to the court but to draw from them conclusions of law.‖
[Citation.] [¶] The requirement that the jury must resolve every controverted issue is one
of the recognized pitfalls of special verdicts. ―The possibility of a defective or
incomplete special verdict, or possibly no verdict at all, is much greater than with a
general verdict that is tested by special findings . . . .‖ [Citation.]‘ [Citation.]‖ (Myers
11
Building Industries, Ltd. v. Interface Technology, Inc. (1993) 13 Cal.App.4th 949, 959-
960, original italics.)
Potentially defective special verdicts are subject to ―a multilayered approach.‖
(Zagami, Inc. v. James A. Crone, Inc. (2008) 160 Cal.App.4th 1083, 1091.) Prior to the
jury‘s discharge, the trial court is obliged upon request to ask the jury to correct or clarify
a potentially ambiguous or inconsistent verdict. (Ibid.) If the verdict is merely
ambiguous, a party‘s failure to seek clarification of the verdict before the jury is
discharged may work a forfeiture of the purported defect on appeal. (Id. at p. 1092, fn.
5.) However, absent forfeiture, courts may properly interpret a ―merely ambiguous‖
verdict in light of the pleadings, evidence, and instructions. (Ibid.) In contrast, if the
special verdicts are ―hopelessly ambiguous‖ or inconsistent, failure to seek clarification
from the jury does not create a forfeiture, and the proper remedy is ordinarily a retrial on
the issues underlying the defective verdict. (Id. at p. 1092.)
―A special verdict is ‗fatally defective‘ if it does not allow the jury to resolve
every controverted issue.‖ (Saxena v. Goffney (2008) 159 Cal.App.4th 316, 325
(Saxena).) ―If a fact necessary to support a cause of action is not included in such a
special verdict, judgment on that cause of action cannot stand.‖ (Behr v. Redmond (2011)
193 Cal.App.4th 517, 531 (Behr) [reversing the judgment on the misrepresentation claim
because the verdict did not include an essential element on that claim, specifically, that
the defendant made a misrepresentation]; Saxena, supra, 159 Cal.App.4th at pp. 325-326
[verdict form failed to ask the jury to determine whether the plaintiff failed to provide
any consent at all to medical procedure, and thus the verdict failed to include an essential
element to support a judgment for the plaintiffs on the battery claim]; see also Myers
Building Industries, Ltd. v. Interface Technology, Inc., supra, 13 Cal.App.4th at pp. 959-
962 [striking a punitive damage award because the special verdict asked the jury to make
findings on a breach of contract claim only, not on any tort claims]; Fuller-Austin
Insulation Co. v. Highlands Ins. Co. (2006) 135 Cal.App.4th 958, 1004-1006 [liability
finding reversed because special verdict failed to make a reasonableness finding essential
to liability].) ―When a special verdict is used and there is no general verdict, we will not
12
imply findings in favor of the prevailing party.‖ (Behr v. Redmond, supra, 193
Cal.App.4th at p. 531.)
Finally, ―we analyze the special verdict form de novo.‖ (Saxena v. Goffney, supra,
159 Cal.App.4th at p. 325; see also City of San Diego v. D.R. Horton San Diego Holding
Co., Inc. (2005) 126 Cal.App.4th 668, 678 [―‗[A] special verdict‘s correctness must be
analyzed as a matter of law‘‖].)
C. Dunlap’s Claims
Dunlap challenges the jury‘s special verdict in several respects. Specifically, she
claims that certain questions in the verdict form were biased, conclusory, confusing
and/or ambiguous. She also asserts the special verdict failed to include all findings
required to support a judgment in Starz‘ favor on the causes of action for breach of
contract, negligent misrepresentation and intentional misrepresentation.
1. Challenges to Question Nos. 23 and 24 in the Special Verdict
Relating to Damages Based on Confusion, Ambiguity or Bias.
Dunlap complains that question No. 238 in the special verdict is confusing and
ambiguous because it allowed the jury to treat Dunlap and Ember as separate entities for
the purpose of punitive damages while elsewhere in the verdict form the other questions
assumed that liability could be found for both Dunlap and Ember based on the acts of
either (e.g., Question No. 5: ―Did Ember Entertainment or Lindsay Dunlap fail to do
something that the written agreement required either one to do?‖).
Dunlap‘s complaint is not well taken. Because the court found that Ember was the
alter ego of Dunlap – a finding which Dunlap does not challenge on appeal – it does not
matter whether Dunlap and Ember were listed separately in questions or assumed to be
responsible for each other‘s acts. Under either construction of questions, Dunlap was
8
Question 23 provides: ―Did Anchor Bay Entertainment prove, by clear and
convincing evidence that any of the Defendants acted with malice, oppression or fraud?
Answer (check ‗Yes‘ or ‗No‘) following the name of each Defendant: Lindsay Dunlap[;]
Ember Entertainment, Inc.‖
13
ultimately responsible for her individual acts and the acts of her alter ego, Ember. Thus
any ambiguity or confusion in question 23 or the other questions where Ember and
Dunlap‘s actions are posed with the conjunctive ―or‖ is harmless. It is not reasonably
likely that absent the purported ambiguity in these questions Dunlap would have obtained
a better result in the trial. (See Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 801-
802 [harmless error standard of People v. Watson (1956) 46 Cal.2d 818 applies to civil
cases].)
Dunlap further complains that question No. 249 in the special verdict is biased and
conclusory because ―it presumes that there are damages and does not present the
possibility that there are no damages.‖ However, Dunlap did not object to the question in
the trial court. This is exactly the type of error that could have been remedied at the
drafting stage or clarified after the jury returned the verdict. Any bias or presumption in
the question could have been corrected by including the additional language Dunlap
proposes in her opening brief: ―What are the damages, if any . . . .‖ Because the special
verdict was jointly prepared by the parties,10 and because defect could have been cured
below, we will not consider Dunlap‘s complaint on appeal. (See Mardirossian &
Associates, Inc. v. Ersoff (2007) 153 Cal.App.4th 257, 276-277 [refusing to consider a
complaint that the questions in the special verdict omitted information when the
complaint was not first raised in the trial court]; Thompson Pacific Construction, Inc. v.
City of Sunnyvale (2007) 155 Cal.App.4th 525, 550 [finding that cross-defendant waived
any complaint that jury was not asked to determine an element of one of the claims when
no objection on that basis was made in the trial court]; see Jones v. Wagner (2001) 90
9
Question 24 provides: ―What are Anchor Bay Entertainment, Inc.‘s damages
attributable to Lindsay Dunlap or Ember Entertainment, Inc.‘s fraud? Money paid out of
pocket $________[;] Lost Profits $________[;] Post Production Costs $_______.‖
10
We recognize that Dunlap chose to act as her own legal counsel during the trial.
However, her status as a self-represented litigant does not excuse her from asserting
proper arguments or making appropriate and timely objections. ―Pro. per. litigants are
held to the same standards as attorneys.‖ (Kobayashi v. Superior Court (2009) 175
Cal.App.4th 536, 543.)
14
Cal.App.4th 466, 481 [―‗[A]s a general rule issues not raised in the trial court cannot be
raised for the first time on appeal.‘‖]; see also Lynch v. Birdwell (1955) 44 Cal.2d 839,
851 [where defendants did not object at trial to error in verdict form, ―it appears to be the
settled rule that they have waived their right to complain as to its form‖]; Jensen v. BMW
of North America, Inc. (1995) 35 Cal.App.4th 112, 131 [―BMW waived any objection to
the special verdict form by failing to object before the court discharged the jury‖].)
In any event, as written the instruction is neither inconsistent with other
instructions nor hopelessly ambiguous, and thus we interpret it in light of the pleadings,
evidence, and instructions. In the jury instructions the jury was informed that Starz had
to prove damages as an affirmative element of the fraud claim. Starz presented evidence
of damages – out of pocket expenses, production costs and lost profits – it sustained as a
result of Dunlap‘s fraud. The jury was also told that it was to follow the instructions on
the law to answer the questions in the special verdict. We assume that the jury followed
those instructions and therefore must have found that Starz proved its fraud damages
otherwise the jury would have entered a zero for each of the categories of damages listed
in question 24.
2. Challenges to Question Nos. 1-16 in the Special Verdict
Relating to the Causes of Action for breach of contract,
Negligent misrepresentation and intentional misrepresentation.
Dunlap argues that the questions in the special verdict relating to the breach of
contract claims are defective because they omit the element of causation. She asserts that
the questions relating to negligent misrepresentation claims cannot support the judgment
because the verdict failed to require the jury to determine whether Starz‘ reliance on
Dunlap‘s representations was justified or reasonable. Finally, with respect to the
intentional misrepresentation claims, Dunlap complains that the questions assumed the
element of reliance and also failed to require a determination on the issue of whether the
reliance was justified. She also complains that some of the questions relating to these
three causes of action were confusing, out of logical sequence and/or assumed that Starz
had suffered damage.
15
We do not reach the merits of any of Dunlap‘s arguments relating to questions
1-16 in the special verdict pertaining to the causes of action for breach of contract,
negligent misrepresentation and intentional misrepresentation. Even were we to assume
that she preserved these claims for appeal and that they are meritorious, any errors
asserted are harmless. Other than her complaint relating to the issue of fraud damages in
question 24 which we have rejected elsewhere, infra, at this point Dunlap does not argue
that questions pertaining to the fraud cause of action omit elements of the claim.
Consequently, because the amount of compensatory damages awarded on all four causes
is the same, the findings on fraud are sufficient standing alone to support the judgment
for compensatory damages without reference to the other causes of action. Thus, it is not
reasonably probable that in the absence of any errors in questions 1-16 in the special
verdict, a different result would have been reached in the trial court.
In view of all of the foregoing, we conclude that Dunlap‘s complaints concerning
the special verdict do not warrant reversal.
III. Sufficient Evidence Does Not Support the Award of Punitive Damages.
Dunlap contends the evidence presented during the trial was insufficient to support
the jury‘s award of $1.4 million in punitive damages against her.11 As we shall explain,
we agree.
A. Governing Law
―In a civil case not arising from the breach of a contractual obligation, the jury
may award punitive damages ‗where it is proven by clear and convincing evidence that
11
Starz suggests that Dunlap waived her arguments regarding the punitive award by
failing to move for a new trial in the trial court. We reject this argument. (See Adams v.
Murakami (1991) 54 Cal.3d 105, 115, fn. 5 [court has discretion to decide punitive
damages issue because the public interest in the award cannot ―be thwarted by a
defendant‘s oversight or trial tactics‖]; Tomaselli v. Transamerica Ins. Co. (1994) 25
Cal.App.4th 1269, 1282 [evidence of a defendant‘s financial condition ―is a requirement
imposed as a matter of public policy and hence not subject to waiver by the failure of an
inattentive defendant to object or otherwise call attention to the inadequacy of plaintiff‘s
proof‖].)
16
the defendant has been guilty of oppression, fraud, or malice.‘ (Civ.Code, § 3294, subd.
(a).)‖ (Roby v. McKesson Corp. (2009) 47 Cal.4th 686, 712.) In reviewing a challenge to
an award of punitive damages, courts traditionally ―determine whether the award is
excessive as a matter of law or raises a presumption that it is the product of passion or
prejudice.‖ (Adams v. Murakami, supra, 54 Cal.3d at pp. 109-110.) To make this
determination, courts consider three factors: (1) the degree of reprehensibility of the
defendant‘s conduct; (2) the amount of compensatory damages awarded; and (3) the
defendant‘s financial condition or wealth. (Neal v. Farmers Ins. Exchange (1978) 21
Cal.3d 910, 928; Bullock v. Philip Morris USA, Inc. (2008) 159 Cal.App.4th 655, 690, fn.
18.)
Dunlap does not raise any issue on appeal with respect to the evidence of her
conduct or the relationship between the compensatory damages and the award of punitive
damages. She challenges only the evidentiary showing regarding their financial
condition.
―We review the trial court‘s award of punitive damages for substantial evidence.‖
(Baxter v. Peterson (2007) 150 Cal.App.4th 673, 679.) A punitive damages award cannot
be sustained absent meaningful evidence of the defendant‘s financial condition. (Adams
v. Murakami, supra, 54 Cal.3d at p. 109; Baxter v. Peterson (2007) 150 Cal.App.4th 673,
680.) Indeed, ―[b]ecause the important question is whether the punitive damages will
have the deterrent effect without being excessive, an award that is reasonable in light of
the first two factors, reprehensibility of the defendant‘s conduct and injury to the victims,
may nevertheless ‗be so disproportionate to the defendant‘s ability to pay that the award
is excessive‘ for that reason alone. [Citation.]‖ (Rufo v. Simpson (2001) 86 Cal.App.4th
573, 620.) The plaintiff has the burden of presenting evidence and the burden of proof
regarding the defendant‘s financial condition. (Adams v. Murakami, supra, 54 Cal.3d at
p. 123; Bankhead v. ArvinMeritor, Inc. (2012) 205 Cal.App.4th 68, 83, fn. 9.)
The evaluation of a defendant‘s financial condition must be considered in light of
the purposes of punitive damages: to punish the defendant and deter the commission of
wrongful acts. (Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d at p. 928, fn. 13.) These
17
policies are not served if the defendant‘s wealth allows him to absorb the award with
little or no discomfort. (Id. at p. 928.) The ―‗wealthier the wrongdoing defendant, the
larger the award of exemplary damages need be in order to accomplish the statutory
objective.‘ [Citation.]‖ (Adams v. Murakami, supra, 54 Cal.3d at p. 110.) Conversely,
―‗the function of punitive damages is not served by an award which, in light of the
defendant‘s wealth and the gravity of the particular act, exceeds the level necessary to
properly punish and deter.‘‖ (Ibid.; see also Rufo v. Simpson, supra, 86 Cal.App.4th at p.
620.) Indeed, ―[t]he purpose is to deter, not to destroy.‖ (Adams v. Murakami, supra, 54
Cal.3d at p. 112.)
There is no established method or standard for determining a defendant‘s financial
condition when evaluating an award of punitive damages. (Bankhead v. ArvinMeritor,
Inc., supra, 205 Cal.App.4th at p. 79.) Although the defendant‘s net worth is commonly
used in assessing punitive damages, it is not the exclusive measure. (Rufo v. Simpson,
supra, 86 Cal.App.4th at p. 621.) Standing alone, neither net worth, nor assets, nor
income is sufficient to support punitive damages. (See Zaxis Wireless Communications,
Inc. v. Motor Sound Corp. (2001) 89 Cal.App.4th 577, 582 [net worth too easily
manipulated to be the sole standard for ability to pay]; Lara v. Cadag (1993) 13
Cal.App.4th 1061, 1065 [evidence of earnings is not by itself sufficient].) Moreover,
absent other measures of ability to pay, evidence of profits wrongfully obtained by the
defendant is also inadequate. (Robert L. Cloud & Associates, Inc. v. Mikesell (1999) 69
Cal.App.4th 1141, 1152.) To obtain a meaningful understanding of the defendant‘s
wealth, evidence of liabilities should normally ―accompany evidence of assets, and
evidence of expenses should accompany evidence of income.‖ (Baxter v. Peterson,
supra, 150 Cal.App.4th at p. 680; see also Kenly v. Ukegawa (1993) 16 Cal.App.4th 49,
57.) Ultimately, ―‗[w]hat is required is evidence of the defendant‘s ability to pay the
damage award.‘‖ (Baxter v. Peterson, supra, 150 Cal.App.4th at p. 680; see also Adams
v. Murakami, supra, 54 Cal.3d at p. 112.) In addition, the defendant‘s wealth is to be
measured as of the time of the trial on punitive damages. (Washington v. Farlice (1991)
18
1 Cal.App.4th 766, 777; Zhadan v. Downtown Los Angeles Motor Distributors, Inc.
(1979) 100 Cal.App.3d 821, 839.)
B. Analysis of Punitive Damages Award Against Dunlap
On appeal Starz argues that it presented sufficient evidence to support the award
of punitive damages. Starz points out that it had paid Dunlap/Ember $625,000 under the
contract between November 2005 and February 2006. It also cites evidence that Dunlap
purchased a home in Malibu in 2004 for $3 million and owned another home in Pacific
Palisades which she purchased for over $1 million.12 At some point in the mid-2000s,
Dunlap took out a home equity line of credit on the Malibu home for two increments of
$1.3 million each, and she lent those funds to Ember. Dunlap testified that Ember still
owed her about $1.3 million. Starz presented evidence that between 2007 and 2010 an
investor lent Dunlap about $300,000 for the UNCLE television series project. Other
evidence was presented that Dunlap signed checks on Ember accounts for expenses
related to her house, including payments on the home equity loans, housekeeping,
utilities, groceries, personal entertainment and credit cards. Dunlap testified that she
drove a 2003 jaguar with 80,000 miles on the odometer. In addition, when Dunlap was
the president of Ember she had received cashier‘s checks from Ember in the amount
$25,000 and $26,099.70. Starz also presented evidence that during trial Dunlap had in
her possession a check (written on an Ember account) for $20,000 in her possession,
which Dunlap said was to be used to pay attorney fees.
During closing argument, Starz‘ counsel asked the jury to award $2 million in
punitive damages against Dunlap because ―she has a multimillion dollar house in Malibu.
She‘s owed millions of dollars. She drives a Jaguar. She‘s indicated that she ‗hobnobs‘
with Steven Spielberg and James Cameron.‖
12
The record does not disclose the date Dunlap purchased the home in Pacific
Palisades, its exact purchase price or whether she owned it at the time of trial.
19
In our view, Starz did not carry its burden to prove Dunlap‘s financial condition
during the trial. The evidence in the record is insufficient to demonstrate Dunlap‘s
overall ability to pay the punitive damage award. Although the substantial evidence
standard is deferential to the fact finder, ―this does not mean we must blindly seize any
evidence in support of the respondent in order to affirm the judgment. . . . ‗[I]f the word
―substantial‖ [is to mean] anything at all, it clearly implies that such evidence must be of
ponderable legal significance. Obviously the word cannot be deemed synonymous with
―any‖ evidence. It must be reasonable . . . , credible, and of solid value . . . .‘ [Citation.]‖
(Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.)
There are several problems with Starz‘ evidence of Dunlap‘s financial condition.
Preliminarily, the evidence was superficial and of limited relevance to the punitive
damage determination. The evidence Starz cites on appeal to prove Dunlap‘s financial
ability to pay a punitive damage award was presented during the trial in the context of
proving that Ember was Dunlap‘s alter ego—that over the years Dunlap used Ember (and
its accounts) as her personal bank account to pay her expenses and finance her lifestyle.
For example, Starz presented evidence that Dunlap borrowed money from the equity in
her home and placed it in Ember‘s account and wrote checks to herself on Ember‘s
account. Starz also presented evidence that Dunlap wrote checks on Ember‘s accounts
for such items as remodeling projects at her home in Malibu, housekeeping and her
entertainment expenses. While this evidence clearly showed that Dunlap directed the
transfer of money out of Ember‘s accounts, it has minimal probative value to the issue of
Dunlap‘s overall financial condition.
In addition, the evidence elicited at trial provided only a limited picture of
Dunlap‘s assets, and revealed almost nothing about her liabilities. The evidence Starz
cites does not show Dunlap‘s current financial condition as of the time of trial. The trial
took place in March 2010. Most of the evidence Starz presented concerning Dunlap‘s
financial condition was several years old, dating to the 2003-2007 time period (i.e., at
some point in the mid-2000s she represented in a loan application that she was earning
$100,000 a month). According to Dunlap she was no longer employed by Ember, having
20
left the company in 2008. Dunlap testified that she had no money of her own at the time
of trial. There was no evidence presented concerning Dunlap‘s current income. Also
there was no evidence of the current value of her homes, car, or her other current assets
or expenses. Starz did not present evidence of any other current liabilities or any
indebtedness (or current equity) attached to either of Dunlap‘s homes. (Kelly v. Haag
(2006) 145 Cal.App.4th 916, 917 [even if defendant currently owned properties, absence
of evidence of encumbrances or other liabilities on them defeats punitive damages
award].) Moreover, other than Dunlap‘s claim that Ember still owed her $1.3 million,
there was no evidence as to whether she could or would ever collect those funds from
Ember. The record is also unclear as to the status of the funds that had been lent to
Dunlap by the investor for the UNCLE television project between 2007 and 2010.
We note that Starz presented evidence that it had given Dunlap $625,000 under the
contract at issue in the case, but those funds (assuming that they were still available to
Dunlap in 2010) standing alone cannot support the jury‘s punitive damage award. (See
Kenly v. Ukegawa, supra, 16 Cal.App.4th 49, 56, [holding that a punitive damages award
could not be made ―solely on the basis of proof of the profit reaped by a defendant as the
result of the fraud‖].)
In short, even viewing the record in the light most favorable to the judgment,
there was insufficient evidence from which the trier of fact—or this court on appeal—
could determine whether Dunlap would be able to pay the award of $1.4 million in
punitive damages at the time of trial. (See, e.g., Baxter v. Peterson, supra, 150
Cal.App.4th 673, 681 [―In sum, although the record shows that [defendant] owns
substantial assets, it is silent with respect to her liabilities. The record is thus insufficient
for a reviewing court to evaluate [defendant‘s] ability to pay $75,000 in punitive
damages.‖]; Kelly v. Haag, supra, 145 Cal.App.4th at p. 917 [―[W]ithout any evidence
[defendant] still held the assets, or of the amounts of his liabilities, the $75,000 award is
unsupported by substantial evidence and excessive.‖].) ―Without such evidence, a
reviewing court can only speculate as to whether the award is appropriate or excessive.‖
(Adams v. Murakami, supra, 54 Cal.3d at p. 112.)
21
Finally, because our reversal is based solely on insufficiency of the evidence, we
conclude that we must strike the punitive damages award from the judgment, and that no
retrial of the punitive damages issue is warranted. ‗―When the plaintiff has had full and
fair opportunity to present the case, and the evidence is insufficient as a matter of law to
support plaintiff‘s cause of action, a judgment for defendant is required and no new trial
is ordinarily allowed, save for newly discovered evidence. . . . Certainly, where the
plaintiff's evidence is insufficient as a matter of law to support a judgment for plaintiff, a
reversal with directions to enter judgment for the defendant is proper. . . . [¶] . . . [A]
reversal of a judgment for the plaintiff based on insufficiency of the evidence should
place the parties, at most, in the position they were in after all the evidence was in and
both sides had rested.‘ (McCoy v. Hearst Corp. (1991) 227 Cal.App.3d 1657, 1661;
accord, Bank of America v. Superior Court (1990) 220 Cal.App.3d 613, 626-627.) In
another context, our Supreme Court explained in Silberg v. Anderson (1990) 50 Cal.3d
205, 214, that ‗[f]or our justice system to function, it is necessary that litigants assume
responsibility for the complete litigation of their cause during the proceedings.‘‖ (Kelly
v. Haag, supra, 145 Cal.App.4th at p. 919.)
Here, as in Baxter v. Peterson, supra, 150 Cal.App.4th at page 681, Starz had ―‗a
full and fair opportunity to present [its] case for punitive damages, and [Starz] does not
contend otherwise.‘ (Kelly v. Haag, supra, 145 Cal.App.4th at p. 919.) When a punitive
damage award is reversed based on the insufficiency of the evidence, no retrial of the
issue is required.‖ Likewise in Robert L. Cloud & Associates, Inc. v. Mikesell, supra, 69
Cal.App.4th at page 1154, the court reversed a punitive damages award because there
was no evidence of the defendant‘s financial condition, and it did not remand for retrial.
In view of this case law, we reverse the punitive damages from the judgment without
ordering retrial.
22
DISPOSITION
The judgment is reversed insofar as the punitive damages award is concerned. In
all other respects, the judgment is affirmed. Each party is to bear its own costs on appeal.
WOODS, Acting P. J.
I concur:
JACKSON, J.
23
ZELON, J., Dissenting:
I respectfully dissent.
In this case, plaintiff Starz drafted and presented to defendant Ember an integrated
license agreement. That agreement, entered by Starz and Ember, through Dunlap, was
not limited to California, but covered a broad territory which included the United States,
Canada, and US military installations around the world. The language put forward by
Starz, and accepted by Ember, expressly provided: ―any and all disputes arising
hereunder or related hereto shall be construed under the laws of the State of New York
applicable to agreements to be wholly performed therein. Licensor and Licensee consent
to exclusive jurisdiction of the state and federal courts sitting in the State of New York
over any and all matters arising under or related to this Agreement.‖
Although months of proceedings in this case involving service of process and the
entry of, and relief from, defaults preceded the motion to enforce this mandatory forum
selection clause, Ember had not been served until shortly before the motion was filed; the
motion was its first responsive pleading. Starz opposed the motion, claiming, among
other grounds, that Ember was in default at the time of filing and did not have the
capacity to seek the relief; that Dunlap was not a party to the agreement and thus could
not enforce it; and that enforcement would be unfair, unreasonable, and unconscionable.
Included in its opposition was a footnote which read ―Starz suspects that ―New York‖
was inadvertently inserted via a form contract template.‖ No evidence was cited in
support of that posited suspicion, nor did any of the declarations or documents attached to
the opposition provide any evidence of the suspected inadvertence. There was no
indication that Starz had ever informed Dunlap or Ember, prior to this dispute, that it
believed this provision of the contract was inserted in error. Starz, as a result, failed to
provide the defendants any opportunity to assert their intent in accepting this provision of
the agreement.
At the hearing on December 8, 2008, the trial court expressed concern that Starz,
as the contract‘s drafter, was opposing the enforcement of the very provisions it had
drafted. In response, counsel for Starz argued that the footnote ―set forth that it was a
mistake that it was put in. It was a holdover from another contract.‖ This statement,
presumably inadvertent, mischaracterized the footnote; in any event, it was made without
any evidentiary basis. The court nonetheless appeared to accept this explanation. The
remainder of the hearing addressed the reasonableness of enforcing the clause in light of
the location of the parties and witnesses. The court stated that it was denying the motion
on reasonableness grounds.
California Law Favors Enforcement of Forum Selection Clauses
―Both the United States Supreme Court and the California Supreme Court have
recognized that ‗[f]orum selection clauses play an important role in both national and
interstate commerce.‘‖ (Net2Phone, Inc. v. Superior Court (2003) 109 Cal.App.4th 583,
587-588 (Net2Phone); citing M/S Bremen v. Zapata Off-Shore Co. (1972) 407 U.S. 1, 10
[92 S.Ct. 1907, 32 L.Ed.2d 513]; Smith, Valentino & Smith, Inc. v. Superior Court (1976)
17 Cal.3d 491, 496.) ―Such clauses provide a degree of certainty, both for businesses and
their customers, that contractual disputes will be resolved in a particular forum.
[Citation.] California courts routinely enforce forum selection clauses even where the
chosen forum is far from the plaintiff‘s residence. (See, e.g., Intershop Communications
AG v. Superior Court (2002) 104 Cal.App.4th 191, 196-202 [Hamburg, Germany,
forum]; CQL Original Products, Inc. v. National Hockey League Players’ Assn. (1995)
39 Cal.App.4th 1347, 1355-1356 [Ontario, Canada, forum].)‖ (Net2Phone, at pp. 587-
588; see Schlessinger v. Holland America (2004) 120 Cal.App.4th 552, 558 [―[b]oth
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‖].) When a forum
selection clause has been ―entered into freely and voluntarily by parties who have
negotiated at arm‘s length,‖ the clause will be enforced ―in the absence of a showing that
enforcement of such a clause would be unreasonable.‖ (Smith, Valentino & Smith, Inc. v.
2
Superior Court, supra, 17 Cal.3d at p. 496.) In those circumstances, the party seeking to
avoid application of the forum selection clause bears a ―substantial burden‖ to prove
unreasonableness. (CQL Original Products, Inc. v. National Hockey League Players’
Assn., supra, 39 Cal.App.4th at p. 1354; Net2Phone, supra, 109 Cal.App.4th at p. 588.)1
The trial court‘s determination whether enforcement of a forum selection clause is
reasonable is generally reviewed for abuse of discretion. (Net2Phone, supra, 109
Cal.App.4th at p. 588; America Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1,
pp. 7-9; but see Cal-State Business Products & Services, Inc. v. Ricoh (1993) 12
Cal.App.4th 1666, 1680 [applying substantial evidence standard of review].)
The Record Does Not Provide a Basis For the Ruling
This record is silent as to any legal or evidentiary basis for the trial court‘s
exercise of discretion. The substantial burden on Starz, as the party seeking to avoid
enforcement of the forum selection it had made, was to provide evidence ―to demonstrate
that the contractually selected forum would be unavailable or unable to accomplish
substantial justice or that no rational basis exists for the choice of forum.‖ (Intershop
Communications AG v. Superior Court (2002) 104 Cal.App.4th 191, 199.)
Starz provided neither evidence, nor argument, that New York is not available as a
forum. Starz also failed to provide any evidence that the courts in New York would be
unable to accomplish substantial justice. Instead Starz only asserted, but did not
demonstrate, that the clause was a mistake, and argued that its enforcement would be
unreasonable, in that the disputed payment was made in California, the witnesses are
located in California, and that none of the parties do business in New York. The court
1
As the parties agreed that New York law was to be applied, I note that New York
appears to follow the same rule: that a forum selection clause will be given effect absent a
showing that it is unfair or unreasonable, and thus no different standard need be
considered in this case. See Cal-State Business Products & Services, Inc. v. Ricoh,
supra, 12 Cal.App.4th at p. 1678, fn. 11.
3
relied on the fact that the parties had no New York connection, and that it believed
Dunlap‘s health would make proceeding in New York difficult.2
As to the first factor, Starz made no showing that the asserted lack of current
contacts to New York made the choice of a New York court to apply New York law to
the dispute unreasonable. No party has asserted that the choice of law should not, or
cannot, be enforced. Nor was any evidence presented to overcome Dunlap and Ember‘s
presumed intent, in entering the agreement requiring the application of New York law, to
obtain the benefits of the enforcement of New York law in any disputes between the
parties. Accordingly, that connection to New York is undisputed.
The second factor also cannot support the ruling. This is purely a matter of
inconvenience to the defendants in the case. However, ―neither inconvenience nor
additional expense in litigating in the selected forum is part of the test of
unreasonability.‖ (Cal-State Business Products & Services, Inc. v. Ricoh (1993) 12
Cal.App.4th 1666, 1679.) In any event, the parties who would be inconvenienced most
are the parties seeking to enforce the clause, who were presumably able to weigh that
factor against the benefit of the agreed to forum.
In sum, I do not believe that Starz met its burden of establishing a basis for the
trial court to ignore the mutually agreed to contractual provision mandating that this
dispute be resolved by a New York court applying New York law. I would reverse.
ZELON, J.
2
The court did not rule that the choice of law provision, mandating the application
of New York law to the controversy, was unenforceable. Hence these proceedings will
be governed by New York law.
4