Filed 7/19/21 Rockefeller Technology etc. v. Changzhou Sinotype etc. CA2/3
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8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
ROCKEFELLER TECHNOLOGY B272170
INVESTMENTS (ASIA) VII,
(Los Angeles County
Plaintiff and Respondent, Super. Ct. No. BS149995)
v.
CHANGZHOU SINOTYPE
TECHNOLOGY CO., LTD.,
Defendant and Appellant.
APPEAL on remand from the California Supreme Court,
from an order of the Superior Court of Los Angeles County,
Randolph Hammock, Judge. Affirmed.
Law Offices of Steve Qi and Associates, Steve Qi and
May T. To; Law Offices of Steven L. Sugars and Steven L. Sugars
for Defendant and Appellant.
Paul Hastings, Thomas P. O’Brien, Katherine F. Murray,
and Nicole D. Lueddeke; Blum Collins LLP, Steven A. Blum, and
Gary Ho for Plaintiff and Respondent.
This appeal concerns an aborted international business
deal between Changzhou SinoType Technology Co., Ltd.
(SinoType), a Chinese company, and Rockefeller Technology
Investments (Asia) VII (Rockefeller Asia), an American
investment partnership. When the relationship between the two
entities soured, Rockefeller Asia pursued contractual arbitration
against SinoType in Los Angeles. SinoType did not appear or
participate in the arbitration proceeding, and the arbitrator
entered a default award in excess of $414 million against it. The
award was confirmed and judgment entered, again at a
proceeding in which SinoType did not participate.
Approximately 15 months later, SinoType moved to set
aside the judgment, asserting that it had never entered into a
binding contract with Rockefeller Asia and had not agreed to
contractual arbitration.1 The trial court denied the motion,
finding, among other things, that SinoType had not acted with
the requisite diligence. SinoType appealed.
We affirm. Pursuant to Code of Civil Procedure2 section
473, a judgment may be set aside more than six months after it
1 SinoType also urged the judgment should be set aside
because SinoType had not been served with the summons and
petition to confirm the arbitration award in the manner required
by the Convention on the Service Abroad of Judicial and
Extrajudicial Documents in Civil or Commercial Matters,
Nov. 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638 (hereafter, Hague
Service Convention). This issue has been resolved by the
California Supreme Court. (See Factual and Procedural
Background, Section (H), post.)
2 All subsequent undesignated statutory references are to
the Code of Civil Procedure.
2
was entered only if it is void—that is, if the trial court acted
without fundamental authority over the subject matter or a
party. In the present case, the trial court had subject matter
jurisdiction pursuant to section 1280 et seq., and it had personal
jurisdiction over SinoType, a nonresident defendant, by virtue of
SinoType’s execution of a memorandum of understanding in
which it specifically “submit[ted] to the jurisdiction of the Federal
and State Courts in California.” Accordingly, the judgment was
not void, and the trial court properly denied the motion to set it
aside.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Parties and the MOU
SinoType is a Chinese company headquartered in
Changzhou, China that develops and licenses Chinese fonts.
Kejian (Curt) Huang (hereafter, Curt)3, a citizen and resident of
China, is SinoType’s chairman and general manager.
Rockefeller Asia is an American investment partnership
headquartered in New York. Faye Huang (hereafter, Faye) is
Rockefeller Asia’s president.
In 2007 and 2008, Curt and Faye met several times in
Los Angeles to discuss forming a new company to market
international fonts. On February 18, 2008, they signed a four-
page Memorandum of Understanding (MOU), which stated that
the parties intended to form a new company, known as World
Wide Type (WWT). SinoType would receive an 87.5 percent
interest in WWT “and shall contribute 100% of its interests in the
3 Because two principals share a last name (although they
are not related to one another), for clarity we refer to them by
their first names.
3
companies comprising Party A, i.e., Changzhou SinoType
Technology.” Rockefeller Asia would receive a 12.5 percent
interest in WWT “and shall contribute 100% of its interests in the
companies comprising Party B, i.e., Rockefeller Technology
Investments (Asia) VII.”
The MOU provided that “[t]he parties shall proceed with all
deliberate speed, within 90 days if possible, to draft and to all
execute long form agreements carrying forth the agreements
made in this Agreement, together with any and all documents in
furtherance of the agreements.” It also provided that “[u]pon
execution by the parties, this Agreement shall be in full force and
effect and shall constitute the full understanding of the Parties
that shall not be modified by any other agreements, oral or
written.”
The MOU contained several provisions governing potential
disputes between the parties, as follows:
“6. The Parties shall provide notice in the English
language to each other at the addresses set forth in the
Agreement via Federal Express or similar courier, with copies via
facsimile or email, and shall be deemed received 3 business days
after deposit with the courier.
“7. The Parties hereby submit to the jurisdiction of the
Federal and State courts in California and consent to service of
process in accord with the notice provisions above.
“8. In the event of any disputes arising between the
Parties to this Agreement, either Party may submit the dispute
to the Judicial Arbitration & Mediation Service in Los Angeles
for exclusive and final resolution pursuant to according to [sic] its
streamlined procedures before a single arbitrator . . . . Disputes
4
shall include failure of the Parties to come to Agreement as
required by this Agreement in a timely fashion.”
B. The 2013 Arbitration
The relationship between the parties soured, and the “long
form agreements” were never finalized. In February 2012,
Rockefeller Asia filed a demand for arbitration with the Judicial
Arbitration & Mediation Service (JAMS) in Los Angeles.
SinoType did not appear at the arbitration, which proceeded in
its absence.
The arbitrator issued a final award on November 6, 2013.
He found as follows:
Rockefeller Asia is a special-purpose entity organized to
provide capital to support technology companies in Asia. Its
partners include Rockefeller Fund Management Co., LLC.
In February 2008, SinoType and Rockefeller Asia entered
into the MOU in which they agreed to form a new company
(WWT). Each party was to contribute its entire interest in its
business to WWT. In return, SinoType was to receive an
87.5 percent interest, and Rockefeller Asia was to receive a
12.5 percent interest, in WWT. In 2008, Rockefeller Asia was
funded with stock worth $9.65 million.
In 2010, the parties sought additional investors to buy a
10 percent interest in WWT. The highest offer, obtained in
May 2010, was for $60 million. After receiving this offer,
SinoType insisted that Rockefeller Asia agree to a reduction of its
interest. When Rockefeller Asia refused, SinoType unilaterally
terminated the MOU.
Written proofs of service in the JAMS file, prepared and
signed by JAMS Case Managers, confirm that SinoType was
given written notice of all filings and hearings in the arbitration
5
proceeding, including submission of the demand for arbitration,
commencement of the arbitration, appointment of the arbitrator,
and notice of the hearing. Notices and copies of all materials
were sent by both email and Federal Express to Curt Huang.
Because SinoType did not appear, the arbitration proceeded
under Article 27 of the JAMS International Rules, which
authorizes an arbitrator to proceed by default where one party
has failed to appear.
Rockefeller Asia’s damages expert opined that
Rockefeller Asia’s damages included three components: loss of its
12.5 percent interest in WWT; loss of its control premium, which
the expert valued at 10 percent of WWT’s total value; and loss of
its anti-dilution rights, which the expert valued at 6.25 percent of
WWT’s total value. Thus, Rockefeller Asia’s damages were equal
to 28.75 percent (12.5% + 10% + 6.25% = 28.75%) of WWT’s value.
The expert opined that WWT’s value at the time SinoType
terminated the MOU was $600 million, and therefore Rockefeller
Asia’s damages at termination were approximately $172 million
($600,000,000 x .2875 = $172,500,000). However, the expert
opined that Rockefeller Asia’s damages should be valued at the
time of the arbitration, not the time of the termination. He
estimated SinoType’s value at the time of arbitration using “the
‘wave’ method . . . which assumes that [the company’s] value has
grown over the same interval at the same rate as other firms
‘riding the same economic wave.’ ” The expert selected Apple
Corporation as the “comparator firm,” and estimated SinoType’s
current value by assuming a 240 percent increase between July
2010 and February 2012—i.e., the same increase that Apple
experienced during a comparable period. The expert thus
estimated Rockefeller Asia’s damages to be $414 million, which
6
was “28.5% of the estimated total value of [SinoType] of
$1.440 billion, using the wave method.”
The Arbitrator “accept[ed] the evidence presented through
[Rockefeller Asia’s expert] concerning the percentage values of
the control premium and the anti-dilution clause,” and also
“adopt[ed] [Rockefeller Asia’s] proposal to set the date of
valuation at February 2012.” Based on the foregoing, the
arbitrator awarded Rockefeller Asia $414,601,200.
C. Order Confirming the Arbitration Award
Rockefeller Asia filed a petition to confirm the arbitration
award. Subsequently, it filed a proof of service of summons,
which declared that it had served SinoType in China by
Federal Express on August 8, 2014, in accordance with the
parties’ agreement.
Following a hearing at which SinoType did not appear, on
October 23, 2014, the trial court confirmed the arbitration award
and entered judgment for Rockefeller Asia in the amount of
$414,601,200, plus interest of 10 percent from November 6, 2013.
D. SinoType’s Motion to Set Aside the Judgment
On January 29, 2016, SinoType filed a motion pursuant to
section 473 to set aside the judgment and to quash service of the
summons. SinoType asserted that the order confirming the
arbitration award and resulting judgment should be set aside
because SinoType had not been validly served with the summons
and petition to confirm the award pursuant to the Hague Service
Convention, SinoType did not intend to waive service by signing
the MOU, and SinoType’s signature on the MOU was obtained by
fraud. In support, SinoType submitted the declaration of Curt
Huang, which stated in relevant part as follows:
7
Curt met Faye in 2007. Faye introduced herself as the
CEO of Rockefeller Pacific Ventures Company and offered to
introduce Curt to Nicholas Rockefeller (Rockefeller), who Faye
said might be interested in investing in a project. Curt met with
Rockefeller in July 2007 and discussed forming a new company
that would develop software with fonts in many different
alphabets and languages. Rockefeller expressed interest in the
project. However, “[t]he name of the Rockefeller entity which
Nicholas Rockefeller proposed to do business with SinoType
changed on several occasions” and Curt “grew increasingly
uncomfortable about the lack of clarity as to which company
Nicholas Rockefeller proposed to do business with SinoType.”
The parties met several more times in 2007 and 2008, but
they did not make significant progress in consummating a deal.
In February 2008, Faye offered to prepare a document referred to
in Chinese as a “bei wang lu.” According to Curt, a “bei wang lu”
is a memorandum of understanding between parties that records
the current state of negotiations; it “does not necessarily reflect
terms to which the parties have agreed” and “is often used where
there has been no real progress in a business meeting to
memorialize the discussion so that the parties can pick up on the
negotiations at a later meeting.” The signing of a “bei wang lu”
“does not create a binding contract.” In contrast, Curt said, there
are three other kinds of Chinese agreements: a “yi xiang shu” is
“a letter of intent and reflects the intentions of the parties to
enter into an agreement before a formal contract exists;” a “xie
yi” is an agreement “which is usually, but not always legally
binding;” and a “he tong” is “a formal contract, which is legally
enforceable.”
8
In February 2008, Faye presented Curt with a draft
“bei wang lu.” Curt said he had only about 10 minutes to review
the document “[b]ecause he had a flight to catch,” but he told
Faye that many of the proposed terms were unacceptable,
including the designation of “Party B” as Rockefeller Asia (an
entity Curt said he had never heard of), the anti-dilution
protections for Rockefeller Asia, and the failure to indicate the
amount of Rockefeller Asia’s proposed contribution to the project.
Curt was reluctant to sign the document, but was convinced to do
so by Faye’s assurances that the terms would be modified in a
long-form agreement (or “xie yi”) that would be drafted within 90
days. Curt ultimately signed the document “because I knew it
was not a binding document and I wanted to see progress on the
deal. I felt the MOU would push Rockefeller to draft the long
form agreement within 90 days.”
When he signed the MOU, Curt “had no intention to waive
SinoType’s right to service of process or [to] agree[] to arbitration.
Because I only had ten minutes to review the MOU, I did not
even know that it contained a statement saying SinoType would
agree to alternate service. I believed that the ‘bei wang lu’ had
no legal implications and all of the terms would be negotiated
and modified later in the actual contract.”
In June 2010, Faye emailed Curt a draft Stock Purchase
Agreement and other ancillary agreements. The draft “was not
something to which [Curt] could or would ever agree.” Curt told
Faye he would not sign the draft documents. Communications
between the parties ended in March 2011.
Curt received a letter at the end of January 2012 that
referenced arbitration. He did not believe he had to respond to
the letter because it was not a court document. He received
9
subsequent FedEx packages and emails from Rockefeller, but he
did not open them.
In March 2015, Curt heard from a client that Rockefeller
Asia was alleging that SinoType owed it money. He then sought
the advice of counsel, who opened the FedEx packages. That was
when Curt learned an arbitrator had awarded Rockefeller Asia
more than $414 million, which Curt said was more than 70 times
SinoType’s total revenue for the entire period from 2009 to 2013.
E. Rockefeller Asia’s Opposition to Motion to Set Aside
the Judgment
Rockefeller Asia opposed SinoType’s motion to set aside the
judgment, urging that the motion was untimely; the 2008 MOU
was valid and enforceable; and the summons and petition to
confirm the arbitration award had been properly served. In
support of its opposition, Rockefeller Asia submitted
Faye Huang’s declaration, which stated in relevant part as
follows:
By the end of 2007, Rockefeller Asia and SinoType had
decided to enter into a formal arrangement. On February 18,
2008, Faye and Curt executed the MOU. “At no point did I
represent to Curt in either the English or the Mandarin Chinese
language that the 2008 Agreement would not be considered an
enforceable agreement . . . . There would be no purpose for Curt
and me to sign the 2008 Agreement if that document was to be
considered a nullity. At no point did Curt state that he disagreed
with a single term in the [MOU] or inform me that the . . .
provisions were not exactly as we had agreed.”
Upon the signing of the MOU, “an Assignment of
Partnership Interests was executed by the Rockefeller Parties
pursuant to which they transferred their partnership interest,
10
which had a value of $9.65 million, to SinoType per the terms of
the [MOU].”
Faye declared that “Curt and I intended the [MOU] to be
effective and binding immediately, as its term provided that it
could be modified only in a writing signed by both parties.
However, we also anticipated that, while the short-form
agreement would suffice for our mutual needs, a long-form
agreement that would satisfy the very strenuous and impersonal
requirements of the international investment community would
be necessary to attract additional institutional investors in the
future. Therefore, the [MOU] called for the parties to try to have
the long-form agreement available ‘with all deliberate speed,’
within 90 days if possible.” However, the 90-day guideline for
preparing the long-form documents “proved impossible.” Due to
the 2008 recession, no third-party financing was on the horizon,
and thus “the parties continued to operate under the binding
2008 Agreement.” Throughout this time, Rockefeller Asia
“continued to perform and to supply tangible and intangible
resources to SinoType.”
According to Faye’s declaration, SinoType survived the
economic downturn in large part because of Rockefeller Asia’s
efforts, and by 2009 SinoType’s internal evaluation showed that
its then-current value approached $500 million and would
increase in five years to almost $2 billion. Ultimately, however,
the relationship between the companies began to deteriorate, and
in July 2010, SinoType informed Rockefeller Asia that it had
abrogated the MOU and Rockefeller Asia no longer owned a
12.5 percent interest in SinoType. Further, Curt told Faye that
as a Chinese company, SinoType was immune to American legal
11
remedies and would refuse to participate in any legal process in
the United States.
F. Order Denying Motion to Set Aside Judgment
On April 15, 2016, the trial court denied the motion to set
aside the judgment. The court found that service by Federal
Express was permitted by the MOU, which the arbitrator had
found to be a binding contract. Further, although the court found
that Rockefeller Asia had not properly served SinoType under the
Hague Service Convention, it concluded that the parties were
permitted to contract around the Convention’s service
requirements. Finally, the court said, “assuming for the sake of
argument that somehow [Rockefeller Asia] was actually required
to serve the Summons and Petition in this action upon [SinoType]
in the manner suggested by [SinoType] (to wit, vis-a-vis the
protocols established by the Chinese government), once
[SinoType] was ‘served’ with the Summons and Petition in the
manner which actually occurred in this case it had an obligation
do something – to do exactly what it is doing now – to specially
appear and to file a motion to quash. This is what is called acting
with ‘diligence.’ . . . [¶] The law is well settled that if a party is
seeking to obtain relief from this court’s equitable powers, it must
act with reasonable diligence. [Citations.] Thus, to the extent
that [SinoType] is also seeking to have this court exercise its
broad equitable powers to grant the requested relief, under the
totality of the circumstances it respectfully declines to grant such
equitable relief due to the lack of reasonable diligence by the
defendant in seeking relief . . . .”
G. Appeal
SinoType timely appealed from the order denying the
motion to set aside the judgment. In an opinion issued June 1,
12
2018, this court found that Sinotype had not been validly served
with process under the Hague Service Convention, and thus the
trial court did not have personal jurisdiction over Sinotype.
We therefore held the judgment against Sinotype was void as
violating fundamental due process. (Rockefeller Technology
Investments (Asia) VII v. Changzhou Sinotype Technology Co.,
Ltd. (2018) 24 Cal.App.5th 115, review granted Sept. 26, 2018,
S249923.)
H. California Supreme Court Decision
The California Supreme Court granted review of our
decision and, on April 2, 2020, reversed it. (Rockefeller
Technology Investments (Asia) VII v. Changzhou Sinotype
Technology Co., Ltd. (2020) 9 Cal.5th 125 (Rockefeller).) The high
court explained that service of process performs two important
functions: It asserts jurisdiction over the person of the
defendant, and it gives notice to the defendant of the proceeding
against it. (Id. at p. 139.) A party may waive both the personal
jurisdiction and notice aspects of service by agreeing in advance
to submit to the jurisdiction of a given court and to permit notice
to be served by the opposing party. (Id. at pp. 139―140.)
The court held that in the present case, the parties waived
both aspects of service by entering into the MOU. It noted with
regard to personal jurisdiction that paragraph 7 of the MOU
“expressly stated ‘[t]he Parties hereby submit to the jurisdiction
of the Federal and State Courts in California,’ ” and in
paragraph 8, “the parties agreed to submit all disputes ‘to the
Judicial Arbitration & Mediation Service in Los Angeles for
exclusive and final resolution . . . pursuant to California
law . . . .’ ” Thus, the court said, because section 1293 gives
California courts personal and subject matter jurisdiction to
13
enforce arbitration agreements formed in California, “[t]he
parties’ agreement to exclusively arbitrate any disputes in
California constituted consent to submit to the jurisdiction of
California courts to enforce that agreement, including ‘by
entering of judgment on an award under the agreement.’
(§ 1293.)” (Rockefeller, supra, 9 Cal.5th at p. 143.)
With respect to notice, the court observed that the MOU
specifically provided for notice to be provided at the addresses set
forth in the MOU via Federal Express or similar courier.
(Rockefeller, supra, 9 Cal.5th at p. 143.) Accordingly, because the
parties agreed to waive formal service of process under California
law in favor of informal notification, “ ‘this case does not present
an occasion to transmit a judicial document for service abroad
within the meaning of Article 1’ of the Hague Service
Convention.” (Id. at p. 145.)
The court concluded: “Our conclusions as to California law
are narrow. When parties agree to California arbitration, they
consent to submit to the personal jurisdiction of California courts
to enforce the agreement and any judgment under section 1293.
When the agreement also specifies the manner in which the
parties ‘shall be served,’ consistent with section 1290.4,
subdivision (a), that agreement supplants statutory service
requirements and constitutes a waiver of formal service in favor
of the agreed-upon method of notification.” (Rockefeller, supra,
9 Cal.5th at pp. 144―145.) The court therefore reversed the
judgment of this court and remanded “for the resolution of
unadjudicated issues.” (Id. at p. 146.)
DISCUSSION
SinoType contends on remand that the trial court erred by
denying the motion to vacate the judgment because (1) the MOU
14
was not, facially, a binding agreement; (2) Faye fraudulently
induced Curt to sign the MOU by representing that it was not a
binding agreement; (3) the MOU was not supported by adequate
consideration; and (4) the waiver of formal service was vague and
was not labeled as a waiver. As we now discuss, SinoType did
not timely raise these objections to the judgment, and thus the
trial court was without power to consider them. The trial court
therefore properly denied SinoType’s motion to vacate the
judgment.
I.
Standard of Review
We review the order denying SinoType’s motion to set aside
the judgment for an abuse of discretion. (J.M. v. G.H. (2014)
228 Cal.App.4th 925, 940; County of San Diego v. Gorham (2010)
186 Cal.App.4th 1215, 1225.) “ ‘ “The abuse of discretion
standard . . . measures whether, given the established evidence,
the act of the lower tribunal falls within the permissible range of
options set by the legal criteria.” ’ [Citation.] The scope of the
trial court’s discretion is limited by law governing the subject of
the action taken. [Citation.] An action that transgresses the
bounds of the applicable legal principles is deemed an abuse of
discretion. [Citation.] In applying the abuse of discretion
standard, we determine whether the trial court’s factual findings
are supported by substantial evidence and independently review
its legal conclusions. [Citation.]” (In re Marriage of Drake (2015)
241 Cal.App.4th 934, 939–940.)
15
II.
The Trial Court Did Not Abuse Its Discretion by
Denying SinoType’s Motion for Relief from Judgment
SinoType sought relief from the judgment pursuant to
section 473. Two provisions of section 473 are relevant to our
analysis. First, section 473, subdivision (b) provides that a court
may relieve a party “from a judgment, dismissal, order, or other
proceeding taken against him or her through his or her mistake,
inadvertence, surprise, or excusable neglect.” An application for
relief under this section must be made “within a reasonable time,
in no case exceeding six months, after the judgment, dismissal,
order, or proceeding was taken.” (§ 473, subd. (b), italics added.)
Second, section 473, subdivision (d) provides that a court may, on
motion of either party after notice to the other party, “set aside
any void judgment or order.” (Italics added.) A void judgment is
vulnerable to direct or collateral attack “ ‘ “at any time.” ’ ”
(Strathvale Holdings v. E.B.H. (2005) 126 Cal.App.4th 1241,
1249, quoting People v. American Contractors Indemnity Co.
(2004) 33 Cal.4th 653, 660.)
In the present case, SinoType filed the motion to vacate the
judgment on January 29, 2016, more than 15 months after the
trial court entered judgment on the arbitration award. Because
the motion thus was not made within six months of entry of
judgment, relief was available, if at all, only under section 473,
subdivision (d)—i.e., if the judgment was void. (See, e.g., Lee v.
An (2008) 168 Cal.App.4th 558, 563 [“ ‘A trial court has no
statutory power under section 473, subdivision (d) to set aside a
judgment that is not void’ ”]; Cruz v. Fagor America, Inc. (2007)
146 Cal.App.4th 488, 495–496.)
16
A judgment is void only if the court acts without
“fundamental authority over the subject matter, question
presented, or party.” (In re Marriage of Goddard (2004)
33 Cal.4th 49, 56 (Goddard); see also People v. Financial
Casualty & Surety, Inc. (2021) 64 Cal.App.5th 405, 414; Calvert v.
Al Binali (2018) 29 Cal.App.5th 954, 961 [same].) In contrast, if
the court has fundamental jurisdiction over the parties and
subject matter, but acts in excess of its jurisdiction, the judgment
is voidable, not void. (Goddard, at p. 56; Vitatech Internat., Inc.
v. Sporn (2017) 16 Cal.App.5th 796, 807.)
SinoType appears to concede that the trial court had
subject matter jurisdiction over the petition to confirm the
arbitration award—a necessary concession in view of California’s
express statutory scheme for confirming arbitration awards. (See
§§ 1280−1294.) SinoType contends, however, that the trial court
lacked personal jurisdiction over it, a non-resident defendant,
because the MOU (which provided that the parties were
submitting to jurisdiction in California) is not, on its face, a
binding agreement, and Faye fraudulently induced Curt to enter
the MOU by representing that it was non-binding.
Whether the trial court had personal jurisdiction over
SinoType is not properly before this court because the Supreme
Court has already resolved the issue in favor of Rockefeller Asia.
In its recent decision, the high court said as follows: “With
respect to personal jurisdiction, paragraph 7 of the MOU
expressly stated ‘[t]he Parties hereby submit to the jurisdiction of
the Federal and State courts in California . . . .’ Further, in
paragraph 8, the parties agreed to submit all disputes ‘to the
Judicial Arbitration & Mediation Service in Los Angeles for
exclusive and final resolution . . . pursuant to California law . . . .’
17
‘Code of Civil Procedure section 1293 . . . gives California courts
personal and subject matter jurisdiction to enforce arbitration
agreements formed in California.’ [Citation.] The parties’
agreement to exclusively arbitrate any disputes in California
constituted consent to submit to the jurisdiction of California
courts to enforce that agreement, including ‘by entering of
judgment on an award under the agreement.’ (§ 1293.)”
(Rockefeller, supra, 9 Cal.5th at p. 143, italics added.)
SinoType urges us to look behind the Supreme Court’s
conclusion concerning personal jurisdiction, contending that
Curt’s signature on the MOU should not be construed as an
agreement to submit to the jurisdiction of the California courts
because the MOU was not, on its face, a binding agreement, and
Faye fraudulently induced Curt to enter into the MOU by
representing that the agreement was non-binding. Because our
Supreme Court has already spoken on this issue, we are without
authority to revisit it. (Auto Equity Sales, Inc. v. Superior Court
(1962) 57 Cal.2d 450, 455.) But even were this issue properly
before us, we necessarily would reject it. In circumstances like
the present one, where a party claims that a contract containing
an arbitration agreement is invalid, courts frequently have had to
consider who—a court or an arbitrator—should decide the issue.
In analyzing this issue, our Supreme Court has held that parties
to an arbitration agreement are presumed to have intended to
have an arbitrator, not a court, decide allegations of fraud in the
“inducement” of an agreement—that is, claims that a party
“ ‘ “knows what he is signing but his consent is induced by
fraud.” ’ ” (Rosenthal v. Great Western Fin. Securities Corp.
(1996) 14 Cal.4th 394, 415, 417 (Rosenthal).) Only if a party
claims fraud in the “execution” of an agreement—that is, that the
18
party “[was] deceived as to the nature of his act, and actually
[did] not know what he [was] signing, or [did] not intend to enter
into a contract at all, [such that] mutual assent is lacking”—may
the dispute be resolved, in some circumstances, by a court. (Id. at
pp. 415, 417.)
Even where a party claims that an agreement containing
an arbitration provision is void for fraud in the execution,
however, the issue will be decided by the arbitrator if the
allegedly defrauded party “had a reasonable opportunity to
discover the real terms of the contract.” (Rosenthal, 14 Cal.4th at
pp. 419−420.) Our Supreme Court has explained: “California
law . . . requires that the plaintiff, in failing to acquaint himself
or herself with the contents of a written agreement before signing
it, not have acted in an objectively unreasonable manner. One
party’s misrepresentations as to the nature or character of the
writing do not negate the other party’s apparent manifestation of
assent, if the second party had ‘reasonable opportunity to know of
the character or essential terms of the proposed contract.’
[Citation.] If a party, with such reasonable opportunity, fails to
learn the nature of the document he or she signs, such
‘negligence’ precludes a finding the contract is void for fraud in
the execution. [Citation.] [¶] It follows that one party’s
unreasonable reliance on the other’s misrepresentations,
resulting in a failure to read a written agreement before signing
it, is an insufficient basis, under the doctrine of fraud in the
execution, for permitting that party to avoid an arbitration
agreement contained in the contract.” (Id. at p. 423.)
In the present case, Curt stated in his declaration that
Faye did not give him sufficient time to read the MOU and
represented that it was not a binding agreement. Even were we
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to credit these statements, however, they would not establish
fraud in the execution of the agreement to arbitrate. Whatever
Faye’s representations about the MOU, the MOU was, on its face,
a binding agreement: It stated that upon execution by the
parties, it “shall be in full force and effect and shall constitute the
full understanding of the Parties that shall not be modified by
any other agreements, oral or written.” Curt’s alleged failure to
acquaint himself with these terms was unreasonable—and thus
these terms are binding on SinoType—absent evidence that Faye
“took some action or said something to hurry or pressure” him.
(Rosenthal, supra, 14 Cal.4th at p. 424, fn. 12.) Curt does not
assert that Faye did so: While he says that he had only
10 minutes to review the MOU, he admits this was because he
had a flight to catch, not because Faye hurried him.
Faye’s statements, therefore, did not deprive Curt of a reasonable
opportunity to discover the “the character and essential terms of
the” MOU. (See id. at p. 424.) As a result, the MOU was not void
under the doctrine of fraud in the execution, and the trial court
therefore did not lack personal jurisdiction over SinoType.
SinoType also asserts the MOU was void because “there
was a complete failure to give . . . consideration.” We do not
agree. A contract is illusory and void when one party assumes no
obligations or provides no legal consideration. (Harris v. TAP
Worldwide, LLC (2016) 248 Cal.App.4th 373, 385.) Consideration
is “[a]ny benefit conferred, or agreed to be conferred, upon the
promisor, by any other person, to which the promisor is not
lawfully entitled . . . .” (Civ. Code, § 1605.) In the present case,
the MOU imposed mutual obligations on the parties: It provided
that SinoType and Rockefeller Asia would each contribute
100 percent of their interests in their own companies to a “new
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company,” in which SinoType would receive an 87.5 percent
interest, and Rockefeller Asia would receive a 12.5 percent
interest. On its face, therefore, the MOU reflects consideration to
be given by both parties. The MOU thus is not illusory or void for
lack of mutuality or consideration.
SinoType asserts, finally, that the MOU is not enforceable
because its language is vague and the waiver of formal service
was not clearly labeled. SinoType cites no authority for the
proposition that this contention, even if meritorious, would have
the effect of voiding the MOU. Thus, the contention is forfeited.
(See Rubio v. CIA Wheel Group (2021) 63 Cal.App.5th 82, 94–95,
104 [plaintiff's failure to develop claim with reasoned legal
argument and supporting authority forfeits the issue]; Benach v.
County of Los Angeles (2007) 149 Cal.App.4th 836, 852 [same].)
In short, even were we to fully credit Curt’s declaration, we
still could not conclude that the MOU was void. As a result,
Rockefeller Asia’s claims were properly submitted to the
arbitrator, and the trial court had jurisdiction to enter judgment
on the arbitration award. The trial court therefore properly
denied the untimely motion to vacate the judgment.
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DISPOSITION
The order denying the motion to set aside the judgment is
affirmed. Respondent is awarded its appellate costs.
NOT TO BE PUBLISHED IN THE OFFICIAL
REPORTS
EDMON, P. J.
We concur:
EGERTON, J. KALRA, J.*
* Judge of the Los Angeles County Superior Court, assigned
by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
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