Filed 5/23/22
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
MATTHEW C. CASEY et al., D079221
Plaintiffs and Appellants,
v. (Super. Ct. No. 37-2020-
00046332-CU-EN-NC)
PATRICE HILL et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of San Diego County,
Robert P. Dahlquist, Judge. Reversed and remanded with instructions.
Grant & Kessler, Melisa N. McKellar and Alexander Kessler for
Plaintiffs and Appellants.
Law Offices of John M. Siciliano and John M. Siciliano for Defendants
and Respondents.
INTRODUCTION
A husband and wife, both residents of Missouri, filed a lawsuit in
Missouri state court against a California resident and California corporation
for making deceptive and fraudulent representations to the couple in the
course of providing them with adoption facilitation services. Although the
California defendants were properly served with notice of the action, they did
not respond, and a default judgment was entered.
The Missouri couple then applied in San Diego Superior Court for entry
of judgment on the sister state judgment. In response, the California
defendants, now also judgment debtors, moved to vacate entry of judgment.
They asserted the Missouri court’s exercise of personal jurisdiction over them
violated their right to federal due process because they had insufficient
minimum contacts with Missouri. The trial court agreed and granted the
motion to vacate entry of the Missouri judgment.
We reverse. Although the California defendants disagreed that “any
allegation of fraud committed upon a Missouri resident establishes Missouri
jurisdiction,” they did not challenge or refute the Caseys’ claims that they
directed communications claimed to be fraudulent and harmful into Missouri
at Missouri citizens. Indeed, the trial court found the Caseys’ suit “arose out
of allegations that defendants committed a ‘tortious act’ in Missouri (i.e.,
fraud).” (Italics added.) On this record of undisputed facts, we review the
trial court’s order vacating the sister judgment de novo. Doing so, we
conclude Missouri’s exercise of personal jurisdiction over the California
defendants in this case was constitutional. We further conclude the other
defenses raised by the California defendants against recognition of the sister
state judgment lack merit. Accordingly, we remand with instructions to the
trial court to enter a new order denying the motion to vacate entry of the
Missouri judgment.
2
FACTUAL AND PROCEDURAL BACKGROUND
I.
The Missouri Action
A. The Alleged Fraud1
In 2015, Missouri residents Matthew Casey and his wife, Rebecca
Casey,2 were pursuing child adoption. While exploring adoption
opportunities, they were introduced to Patrice Hill, a resident of Murrieta,
California and the sole owner of Unique Adoptions, Inc. (Unique), a
California corporation operating out of Murrieta (together, Defendants).
Unique, which “holds itself out as a ‘Nationwide Adoption Facilitator,’ ”
provides services to couples seeking to adopt a child, including by helping
them navigate the complexities of the adoption process. An agent of Unique
told the Caseys that Unique had a “wonderful, viable adoption opportunity”
through an expectant mother named “Jessica,” who lived in Weldon,
California. The agent said Jessica had been thoroughly vetted by Hill, and
that Jessica wanted to put her baby up for adoption.
Unique’s agent presented the Caseys with a written “Adoption
Facilitation Agreement” (agreement). (Capitalization omitted.) The
agreement stated that in exchange for a fee of $15,500, Unique would provide
the following scope of services for the period of one year or until a successful
adoption, whichever occurred first: “[A]ct as Clients’ advertising service by
advertising Unique’s services, gathering information from prospective
1 Our factual summary is derived from the declarations filed in support
of, and in opposition to, the motion to vacate entry of the Missouri judgment.
2 To avoid confusion in subsequent references, we distinguish between
the Caseys by referring to them using their first names.
3
birthmothers and passing [it] on to Clients, their attorneys and/or licensed
agencies that Clients have chosen to represent their legal interests in the
adoption process. As an adoption facilitator, Unique may advertise for the
purpose of soliciting parties to an adoption or locating children for an
adoption, and may act as an intermediary between parties to an adoption.”
Unique’s agent told the Caseys the agreement was non-negotiable and
if they did not sign it, they would lose the adoption opportunity. On July 13,
2015, Matthew and Rebecca signed the agreement, in Missouri, and Hill
signed on behalf of Unique. The Caseys paid the $15,500 fee by wire transfer
from Missouri to Unique’s California bank account. They also began paying a
monthly $1,255 fee to Unique to cover Jessica’s monthly expenses, which they
were told was customary.
For the next 10 months or so, between July 2015 and May 2016,
Unique communicated with the Caseys regarding its adoption facilitation
services, in dozens of texts, emails, and phone calls. The Caseys were in
Missouri when these communications took place. Unique’s communications
included discussions about payment instructions, Jessica’s willingness to
place her child for adoption, the requirement that the Caseys pay Jessica’s
monthly expenses before her third trimester, Jessica’s health, promises to
obtain Jessica’s medical records, Jessica’s birth plan, and that Unique was in
contact with Jessica’s adoption attorney.
From July until September 2015, the Caseys’ communications with
Unique went through its employees or agents other than Hill. Hill was in the
hospital from July 3 to 12, 2015, and then was recovering from the medical
condition for which she had been hospitalized. Pat Boucher, a Unique
employee, was the Caseys’ main point of contact during this period. Boucher
and the other Unique employees who communicated with the Caseys “always
4
represented that Unique was [Hill’s] company, that [Hill] was in charge, and
that [Hill] was overseeing and directing” all of their work. Boucher told the
Caseys that “everything related to the adoption goes through [Hill].” Boucher
and the other employees, whom the Caseys communicated with during this
initial period, served as “go-betweens” relaying information back and forth
between the Caseys and Hill. Starting in September 2015, Matthew began
communicating directly with Hill.
After months of believing they would be adopting a baby, the Caseys
were devastated to learn “it was all a scam.” Hill had never met with Jessica,
“no proper screening ever took place,” and Jessica would not be placing her
child up for adoption. In fact, Jessica had never been a viable adoption
opportunity, because she was married and under California’s adoption laws
she could not unilaterally place her child up for adoption. The Caseys also
learned it was not, in fact, customary to pay a birthmother’s monthly
expenses prior to the third trimester.
Matthew confronted Hill about the “fraudulent adoption” by phone and
email. Although Hill denied any wrongdoing and claimed Jessica had simply
changed her mind about adoption, in a December 2015 email to Matthew,
Hill offered to refund “$7500.00 of [their] 1 Year agreement.” Matthew and
Hill then had numerous communications to try and settle their dispute, all of
which took place while Matthew was in Missouri.
Ultimately, Matthew agreed in a phone call with Hill that the Caseys
would not pursue legal action and would consider the matter resolved, so long
as Hill immediately refunded them the agreed-upon $7,500. Hill failed to
provide the promised refund. On March 3, 2016, Matthew sent an email to
Hill demanding payment. Hill responded that she would “ ‘send you what we
can.’ ” Matthew told Hill that he and his wife would not accept payment in
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installments. After a number of weeks, Unique sent the Caseys a check for
$2,500. Matthew told Hill the check would be rejected unless she paid the
agreed amount in full. Hill never made the additional payment.
B. The Caseys Sue Defendants in Missouri
On October 7, 2016, the Caseys filed a lawsuit against Defendants (the
Missouri action) in the Judicial Circuit Court of St. Louis County, Missouri
(the Missouri court). In their operative pleading, they stated claims for
violation of the Missouri Merchandising Practices Act (MMPA),3 negligence,
and breach of fiduciary duty.
In connection with their MMPA claim, the Caseys alleged Defendants
had made deceptive, false, and misleading representations to them in the
course of providing them with adoption facilitation services, including that
Unique had met with Jessica and counseled her; had properly screened her;
that Jessica presented a viable adoption opportunity; that Unique would
provide copies of Jessica’s medical records, including drug and alcohol
screenings, on a regular basis; that Unique had an attorney who would
3 The fundamental purpose of the MMPA (Mo. Rev. Stat. § 407.010 et
seq.) is to protect consumers, and “to promote that purpose, [it] prohibits
false, fraudulent or deceptive merchandising practices.” (Huch v. Charter
Communs., Inc. (Mo. 2009) 290 S.W.3d 721, 723, 724.) To establish a
violation of the MMPA, plaintiffs must prove they (1) purchased merchandise
(which includes services) from the defendants (2) for personal, family or
household purposes and (3) suffered an ascertainable loss of money or
property (4) as a result of an act declared unlawful under the MMPA.
(Chochorowski v. Home Depot U.S.A., Inc. (Mo.Ct.App. 2009) 295 S.W.3d 194,
198; Edmonds v. Hough (Mo.Ct.App. 2011) 344 S.W.3d 219, 223.) The fourth
element is satisfied by evidence the defendants used or employed “deception,
fraud, false pretense, false promise, misrepresentation, unfair practice,
concealment, suppression, or omission” in connection with their services.
(Chochorowski, at p. 198.)
6
perform the legal work necessary to finalize the adoption; and that it was
“customary and appropriate” for the Caseys to pay Jessica’s monthly
expenses prior to the third trimester of pregnancy. They alleged Defendants
committed these acts “willfully, intentionally, fraudulently, maliciously, and
knowingly, and with the conscious disregard of [their] rights.” They sought
compensatory and punitive damages.
C. The Missouri Default Judgment
The Caseys filed a motion for default judgment against Defendants in
the Missouri court. On October 10, 2019, following an evidentiary hearing
that included testimony from Matthew and Rebecca, the Missouri court found
that Defendants had each been duly served with a proper summons and
operative pleading by a registered process server on April 8 and September 1,
2018, respectively, and that they were each in default because they had failed
to file an answer within the prescribed time period. 4 Accordingly, the
Missouri court issued a judgment and order granting the Caseys’ motion for
default judgment against Defendants (the Missouri judgment).
The Missouri court found Defendants “were in the business of providing
adoption services to couples seeking to adopt a child for a fee” and “sold their
services and held themselves out for hire to the citizens and residents of
Missouri, including [the Caseys].” For a fee paid, Defendants “sold [the
Caseys] 1) the opportunity to be matched with ‘Jessica’, an expectant mother
wishing to put her child for adoption, and 2) all the concomitant services and
steps necessary to consummate the adoption of Jessica’s unborn child.” The
court found the Caseys “learned late in the process of the adoption that
4 Defendants have not, either in the course of their efforts to vacate entry
of the Missouri judgment nor in this appeal, disputed that they were properly
served with process in the Missouri action.
7
Jessica had no true intention to put her child up for adoption. Rather,
Jessica was perpetrating a scam in order to receive the financial benefits paid
to adoptive mothers prior to the birth of their child.”
The Missouri court further found Defendants made “deceptive, false,
and misleading representations to [the Caseys] through words and actions.”
The specific false statements included: “Unique had met with Jessica, and
counseled her concerning the adoption process; . . . Unique had properly
screened Jessica; that Jessica presented a viable adoption opportunity; that
. . . Unique would provide [the Caseys] with copies of Jessica’s medical
records, including drug and alcohol screenings, on a regular basis; that . . .
Unique had an attorney . . . who would perform the legal work necessary to
finalize the adoption; that it was customary and appropriate for [the Caseys]
to pay Jessica’s monthly expenses prior to her third trimester of pregnancy.”
The court found the representations made by Hill and Boucher were within
the course and scope of their employment, and that Unique was vicariously
liable for their misconduct. “[A]s a direct result of the deceptive, false, and
misleading representations, [the Caseys] were induced to and did in fact
purchase . . . services from the Defendants, in reliance upon Defendants’
representations.”
The Missouri court found the Caseys had been damaged, and that
Defendants’ conduct “was outrageous because of reckless indifference to the
rights of others.” It entered judgment against Defendants, and awarded the
Caseys $31,175.00 in compensatory damages, $15,375.00 in attorney fees as
the prevailing party under the MMPA, $1,410.00 in costs, and $500,000 in
punitive damages, for a total judgment of $547,960.00. Having found
Defendants liable for violation of the MMPA, the court dismissed the
remaining counts for negligence and breach of fiduciary duty.
8
II.
The California Proceedings
A. The Caseys’ Application to Enter Judgment on the Missouri Judgment
On December 17, 2020, the Caseys applied in San Diego Superior Court
for entry of judgment on the Missouri judgment in the amount of $592,171.75
(representing the original Missouri judgment amount of $547,960.00 plus
accrued post-judgment interest at the Missouri statutory rate), pursuant to
California’s Sister State Money Judgments Act (the Act). (Code Civ. Proc.,5
§ 1710.10 et seq.) The same day, the clerk of the superior court granted the
application and entered a judgment against Defendants in the amount of
$592,171.75.
B. Defendants’ Motion to Vacate Entry of the Missouri Judgment
On January 20, 2021, Defendants moved to vacate entry of the
Missouri judgment pursuant to section 1710.40. Section 1710.40 provides
that “[a] judgment entered pursuant to this chapter may be vacated on any
ground which would be a defense to an action in this state on the sister state
judgment, including the ground that the amount of interest accrued on the
sister state judgment and included in the judgment entered pursuant to this
chapter is incorrect.” (§ 1710.40, subd. (a)). They asserted several defenses
to California’s recognition or enforcement of the Missouri judgment.
First, Defendants claimed the Missouri court had violated their right to
federal due process by exercising personal jurisdiction over them. They
argued they had less than the minimum contacts required to support the
constitutional exercise of personal jurisdiction. They asserted the Caseys
were the first to reach out to them, that they did not advertise in Missouri
5 Unspecified statutory references are to the Code of Civil Procedure.
9
and had no other business dealings or contacts with Missouri, and that in
connection with the services they provided to the Caseys, they had
“exclusively performed their services within California by finding a
birthmother located in Weldon, California.” They argued it was unfair and
inconvenient to require them to defend themselves in a suit filed in Missouri,
because they were not licensed to provide adoption facilitation services there
and could not reasonably be expected to understand and comply with that
state’s adoption laws.
Second, they claimed they had a defense to recognition of the Missouri
judgment based on section 11 of the agreement, which they described as “a
binding arbitration clause.” (Boldface omitted.) The so-called “binding
arbitration clause” in section 11 provided:
“ARBITRATION. Any controversy, claim or dispute arising out
of or relating to this Agreement or the breach, termination,
enforcement, interpretation or validity thereof, including the
determination of the scope or applicability of this Agreement to
arbitrate, shall be determined by arbitration in the County of
Riverside, State of California, before a sole arbitrator in
accordance with the laws of the State of California for
agreements made and to be performed in the State of California.
[¶] The arbitration shall be administered by JAMS pursuant to
its streamlined Arbitration Rules. The arbitration shall be
conducted in the County of Riverside, State of California.
Judgment on the award may be entered in any court having
jurisdiction.” (Boldface omitted.)
Defendants asserted that an agreement to binding arbitration “constitutes a
valid defense to an action in this state because the arbitration agreement can
and should be pleaded as an affirmative defense.”
Defendants’ third defense also relied on section 11 of the agreement,
and more specifically on the language stating that disputes arising out of or
relating to the agreement would be determined “ ‘by arbitration in the
County of Riverside, State of California, before a sole arbitrator in accordance
10
with the laws of the State of California for agreements made and to be
performed in the State of California.’ ” (Underscore omitted.) Claiming the
quoted language constituted valid “choice of forum and choice of law
provisions,” they argued the Missouri court was “foreclosed from infringing
upon this valid contract term,” and as a result, the Missouri judgment was
invalid.
As their fourth ground for vacating entry of the judgment, Defendants
asserted what they called a parol evidence defense. They argued they “did
not and simply could not commit the purported fraud alleged by [the Caseys
in the Missouri action] because the alleged fraud was not even within the
scope of [D]efendants’ services[.]” Pointing to a provision in the agreement
stating that Unique made no promises or guarantees about the outcome of
any attempted adoption, they argued that all of their assertedly fraudulent
representations involved such false guarantees. And since the agreement
stated they made no such guarantee, they argued, they “committed no fraud
and have a valid defense based upon the parole [sic] evidence rule.”
In a supporting declaration, Hill acknowledged she had signed the
agreement on behalf of Unique, and that Unique’s scope of services under the
agreement included “ ‘gathering information from prospective birthmothers
and passing [it] on to Clients.’ ” She averred that as part of these agreed
upon services, she or Unique obtained background information from Jessica,
and provided that information to the Caseys. She acknowledged the Caseys
were told “it was customary and appropriate for potential adoptive parents to
pay the birthmother’s monthly living expenses prior to her third trimester of
pregnancy.” She stated, however, that all services provided to the Caseys
“were performed exclusively in California” and she “did not set foot in
Missouri.”
11
The Caseys filed an opposition brief, supported by a declaration from
Matthew, who attested to the false representations that Defendants made to
him and his wife that formed the basis of the claims in the Missouri action.
The Caseys argued Defendants had sufficient contacts with Missouri to make
the Missouri court’s exercise of personal jurisdiction constitutional, including
because Defendants sent their fraudulent communications into Missouri,
purposefully did business with the Caseys knowing they resided in Missouri,
entered into an agreement to perform services for the Caseys “which would
culminate in the adoption of a child who would ultimately reside in Missouri,”
and “took money from Missouri citizens.” Based on this tortious conduct
directed at Missouri, they argued, Defendants could “hardly . . . be surprised”
to be haled into court in Missouri.
In response to Defendants’ contention that the assertion of jurisdiction
in Missouri was unfair due to their lack of familiarity with Missouri adoption
facilitation law, the Caseys argued that not knowing the law of a state is not
a defense to jurisdiction. They also argued Defendants’ ignorance of Missouri
adoption facilitation law had nothing to do with the fairness of exercising
jurisdiction over them in the Missouri action, since the Missouri action did
not involve an alleged violation of, nor an award of damages under, any such
law. As for Defendants’ other defenses, the Caseys argued they were not
recognized defenses to recognition or enforcement of a sister state judgment.
To the extent the defenses relied on section 11 of the agreement, they argued
that any defenses based on arbitration or venue provisions had to be timely
asserted or they were waived.
12
In reply, Defendants disagreed that “any allegation of fraud committed
upon a Missouri resident establishes Missouri jurisdiction.” 6 They argued
their own California contacts and activities prevailed and compelled the
conclusion that they did not have the required minimum contacts with
Missouri. In a supplemental brief, Defendants asserted Unique “did not
perform any services in Missouri,” and that the agreement’s “forum selection
clause” was “prima facie valid” and “acts as a complete waiver of Missouri
jurisdiction.” They further asserted that the Caseys had “evidently
perpetrated a fraud on the Missouri court by concealing both the written
contract and the forum selection clause from the Missouri court while
claiming Missouri had jurisdiction and was the appropriate venue.”
C. The Trial Court’s Ruling Vacating Entry of the Missouri Judgment
After hearing arguments, the trial court ruled the Missouri court’s
exercise of personal jurisdiction over Defendants under Missouri’s long arm
statute violated federal due process and granted the motion to vacate entry of
the sister state judgment in California.
As noted by the trial court, Missouri’s long arm statute provides, in
relevant part:
“Any person or firm, whether or not a citizen or resident of this
state, or any corporation, who in person or through an agent does
any of the acts enumerated in this section, thereby submits such
person, firm, or corporation, and, if an individual, his personal
representative, to the jurisdiction of the courts of this state as to
any cause of action arising from the doing of any of such acts:
(1) The transaction of any business within this state;
6 Notably, and relevant to the standard of review, Defendants did not
submit any evidence or declarations challenging or refuting the Caseys’
claims that Defendants made the assertedly fraudulent representations, and
did so by communications directed into Missouri at Missouri citizens.
13
(2) The making of any contract within this state;
(3) The commission of a tortious act within this state;
(4) The ownership, use, or possession of any real estate
situated in this state;
(5) The contracting to insure any person, property or risk
located within this state at the time of contracting[.]” (Mo. Rev.
Stat. § 506.500 (Supp. 1986).)
The trial court also observed that Missouri’s long arm statute “is
construed ‘to extend the jurisdiction of the courts of [Missouri] over
nonresident defendants to that extent permissible under the Due Process
clause.’ [(State ex rel. Deere & Co. v. Pinnell (Mo. 1970) 454 S.W.2d 889, 892
(Pinnell).)]” Thus, “[i]n order to subject [D]efendants to the jurisdiction of the
Missouri courts under Missouri’s long arm statute, [the Caseys] must meet
two requirements: (1) the suit must arise out of the activities enumerated in
the statute; and (2) the defendants must have contacts with Missouri
sufficient to satisfy due process requirements.”
The trial court found the first requirement satisfied: “[T]he suit arose
out of allegations that [D]efendants committed a ‘tortious act’ in Missouri (i.e.,
fraud).” (Italics added.) But as to the second requirement, the court
concluded Defendants had established that their contacts with Missouri were
“insufficient to satisfy due process requirements . . . [under] controlling
United States Supreme Court precedent.”
Specifically, as to the second requirement, the trial court found
Defendants “did not purposefully avail themselves of Missouri benefits” such
that the Missouri court lacked specific jurisdiction over the nonresident
Defendants.7 In so ruling, the court found Defendants “did not advertise in
7 The Caseys did not contend Missouri had general jurisdiction over
Defendants. Accepting their concession, the trial court found Missouri lacked
14
Missouri, and had no other business dealings or contacts with Missouri”;
“[t]he relationship between these parties commenced when [the Caseys]
contacted [Unique] in California”; and the parties then entered into “a
written agreement indicating that Unique . . . would render services in
California.” The court also found “[t]he agreement contains choice-of-law and
choice-of-forum provisions, indicating that [D]efendants contemplated
rendering their services in California, subject to California law, with any
disputes to be adjudicated in California.”8
general jurisdiction over Defendants because there was no evidence that they
were “so ‘heavily engaged in activity in [the state] as to render it essentially
at home.’ ” There also is no contention in this appeal that Missouri had
general jurisdiction over the Defendants.
8 The trial court also made certain findings that contradicted findings
made by the Missouri court in its judgment. Specifically, the trial court
found: “Hill has no relationship with Missouri and did not provide any
services in Missouri”; “Unique . . . has no relationship with Missouri and did
not provide services in Missouri”; and “[D]efendants did not advertise in
Missouri or purposefully direct services to Missouri residents.” By contrast,
the Missouri court found: “Defendants sold their services and held
themselves out for hire to the citizens and residents of Missouri, including
[the Caseys]”; and “[s]pecifically, Defendants sold [the Caseys] 1) the
opportunity to be matched with ‘Jessica’, an expectant mother wishing to put
her child for adoption, and 2) all the concomitant services and steps necessary
to consummate the adoption of Jessica’s unborn child.” The trial court, in
concluding Defendants “did not provide any services in Missouri” (italics
added), ignored that, as the Missouri court found, the services were provided
to Missouri citizens while in Missouri. As we will discuss, the trial court also
ignored the uncontradicted evidence, including Hill’s own admissions,
establishing that Unique’s services—as laid out in the agreement drafted by
Unique, and as actually performed by Unique—included “ ‘gathering
information from prospective birthmothers and passing [it] on to Clients,’ ”
who in this case were in Missouri. These were, of course, the very
communications that formed the basis of Defendants’ liability for fraudulent
services under the MMPA. Although Hill simultaneously averred that she
15
Next, the trial court determined the assertion of personal jurisdiction
over Defendants in Missouri did not comport with fair play and substantial
justice. It ruled: “It is fundamentally unfair that an individual and her
small business, operating in one state, can enter into a written agreement to
perform $15,500 worth of adoption-related services in that state, with a
forum-selection clause saying any dispute will be brought in that state, and
then be sued in another state half-way across the country and become subject
to a $500,000 default judgment in the other state without ever providing any
services in that other state and without having any other contacts with the
other state.”
The trial court did not address Defendants’ other defenses to
recognition or enforcement of the Missouri judgment. On March 23, 2021,
Defendants filed and served a notice of entry of the trial court’s minute order
granting their motion. The Caseys timely appealed.9
DISCUSSION
The Caseys contend the trial court erred when it ruled the Missouri
court’s exercise of personal jurisdiction over Defendants under Missouri’s
long arm statute violated the federal Constitution. Defendants disagree with
this contention, but in the event we conclude the trial court erred, they ask us
to affirm the court’s order granting their motion to vacate entry of the
Missouri judgment on the basis of the other defenses raised in their motion.
performed her services “exclusively in California,” such a conclusory assertion
does not create an issue of fact. (Brown v. Ransweiler (2009) 171 Cal.App.4th
516, 525 [“ ‘an issue of fact is not raised by “cryptic, broadly phrased, and
conclusory assertions” ’ ”].)
9 A trial court’s order vacating entry of a sister state judgment under
section 1710.40 is an appealable order. (Liebow v. Superior Court (1981) 120
Cal.App.3d 573, 576; Fishman v. Fishman (1981) 117 Cal.App.3d 815, 819.)
16
We agree with the Caseys that the trial court erred in its order vacating
entry of the Missouri judgment, and further conclude that Defendants’ other
defenses to recognition of the Missouri judgment lack merit.
I.
Principles Governing Recognition of a Sister State Judgment
A. Full Faith and Credit Clause
Article IV, section 1 of the United States Constitution states that “[f]ull
Faith and Credit shall be given in each State to the public Acts, Records, and
judicial Proceedings of every other State.” For judgments, “the full faith and
credit obligation is exacting.” (Baker v. GMC (1998) 522 U.S. 222, 233.)
Pursuant to this constitutional mandate, “[a] final judgment in one State, if
rendered by a court with adjudicatory authority over the subject matter and
persons governed by the judgment, qualifies for recognition throughout the
land. For claim and issue preclusion (res judicata) purposes, in other words,
the judgment of the rendering State gains nationwide force.” (Baker v. GMC,
at p. 233.) Thus, “ ‘[i]t has long been the law that “the judgment of a state
court should have the same credit, validity, and effect in every other court in
the United States, which it had in the state where it was pronounced.” ’ ”
(Liquidator of Integrity Ins. Co. v. Hendrix (1997) 54 Cal.App.4th 971, 975
(Liquidator), quoting Thomas v. Washington Gas Light Co. (1980) 448 U.S.
261, 270.)
“Moreover, ‘ “[while] it is established that a court in one State, when
asked to give effect to the judgment of a court in another State, may
constitutionally inquire into the foreign court’s jurisdiction to render that
judgment, the modern decisions of [the Supreme] Court have carefully
delineated the permissible scope of such an inquiry. From these decisions
there emerges the general rule that a judgment is entitled to full faith and
17
credit--even as to questions of jurisdiction--when the second court’s inquiry
discloses that those questions have been fully and fairly litigated and finally
decided in the court which rendered the original judgment.” ’ ” (Bank of
America v. Jennett (1999) 77 Cal.App.4th 104, 113 (Bank of America).)
Accordingly, “[u]pon a claim that a foreign judgment is not entitled to
full faith and credit, inquiry into the legality of proceedings in a court of a
sister state is narrowly circumscribed by case law. The permissible scope of
inquiry upon such a party is limited to whether the court of rendition has
‘fundamental’ jurisdiction [citation]. In other words, a judgment entered by
one state must be recognized by another state if the state of rendition had
jurisdiction over the parties and the subject matter and all interested parties
were given reasonable notice and an opportunity to be heard.” (Thorley v.
Superior Court (1978) 78 Cal.App.3d 900, 907; accord Bank of America,
supra, 77 Cal.App.4th at p. 114; Washoe Dev. Co. v. Irving Sav. Ass’n (1996)
47 Cal.App.4th 1518, 1522–524 (Washoe).)
B. California’s Sister State Money Judgments Act
In 1974, “[p]artially in response to the constitutional mandate of full
faith and credit, the California Legislature enacted the Sister State Money
Judgments Act (the Act).” (Bank of America, supra, 77 Cal.App.4th at p. 114;
Washoe, supra, 47 Cal.App.4th at pp. 1521–1522.) The Act “provide[s]
economical and expeditious registration procedures for enforcing sister state
money judgments in California.” (Bank of America, at p. 114.)
Prior to the Act, the creditor of a money judgment issued by the court of
another state who wanted to pursue recognition and enforcement in
California was required to file an original action for registration of the sister
state judgment. (See Aspen Internat. Capital Corp. v. Marsch (1991) 235
Cal.App.3d 1199, 1203; Tom Thumb Glove Co. v. Han (1978) 78 Cal.App.3d 1,
18
7.) The Act created “ ‘[a] simpler and more efficient method of enforcing
[sister state] judgments than the traditional action on the judgment. The
registration procedure established by the [Act] is designed to allow parties to
avoid the normal trappings of an original action, e.g., the necessity for
pleadings. The optional procedure was intended to offer savings in time and
money to both courts and judgment creditors, yet, at the same time, remain
fair to the judgment debtor by affording him the opportunity to assert any
defense that he could assert under the traditional procedure.’ ” (Aspen, at
p. 1203.) “Upon simple application in conformance with the Act (§§ 1710.15,
1710.20), entry by the clerk of a judgment based upon the application is
mandatory (§ 1710.25), constituting a ministerial act of the clerk and not a
judicial act of the court[.]” (Ibid.) Under the Act, entry of judgment on the
sister state judgment “ ‘is ministerial only, that is, an activity by the clerk of
[the] court.’ ” (Ibid.) The newly entered judgment has the same force and
effect as a judgment originally issued by a California court “and may be
enforced or satisfied in like manner.” (§ 1710.35.)
The judgment debtor then has 30 days to challenge entry of the sister
state judgment by filing a motion to vacate entry of judgment based on “any
ground which would be a defense to an action in this state on the sister state
judgment[.]”10 (§ 1710.40, subds. (a), (b).) Relevant here, Defendants
asserted the Missouri judgment was invalid on the ground that the Missouri
court’s exercise of personal jurisdiction violated due process. This was an
available defense to recognition of the Missouri judgment. (See, e.g., State of
10 We note the defenses that may be asserted in a motion to vacate under
section 1710.40 are not well defined. The Act itself does not specify the
available defenses. We later discuss the scope of defenses under section
1710.40. (See Discussion, section III., post.)
19
Arizona ex rel. Arizona Dept. of Revenue v. Yuen (2009) 179 Cal.App.4th 169,
179, 180 [affirming trial court order vacating entry of judgment on an
Arizona judgment on due process grounds based on the determination the
judgment debtor did not have notice of the proceedings]; Bank of America,
supra, 77 Cal.App.4th at p. 115, fn. 8 [noting that “several California courts
that have examined whether a sister state court lacked jurisdiction over the
parties or over the subject matter have characterized the issue as an inquiry
into whether the judgment was entered in ‘excess of jurisdiction’ ”]; cf.
Conseco Marketing, LLC v. IFA & Ins. Services, Inc. (2013) 221 Cal.App.4th
831, 839 (Conseco) [holding that although the defendant’s challenge to the
foreign court’s exercise of personal jurisdiction was an unlisted defense, it
could nevertheless be asserted under section 1710.40].)
C. Standard of Review
The party moving to vacate entry of judgment has the burden to show
by a preponderance of the evidence that she is entitled to relief. (Tsakos
Shipping & Trading, S.A. v. Juniper Garden Town Homes, Ltd. (1993) 12
Cal.App.4th 74, 88 (Tsakos).) “On appeal of the court’s ruling [vacating entry
of a sister state judgment], we apply settled principles of appellate review.
[Citations.] As this matter involves a review of the trial court’s
determination of in personam jurisdiction, ‘we will not disturb the court’s
factual determinations “if supported by substantial evidence.” [Citation.]
“When no conflict in the evidence exists, however, the question of jurisdiction
is purely one of law and the reviewing court engages in an independent
review of the record.” ’ ” (Wells Fargo Bank, NA v. Baker (2012) 204
Cal.App.4th 1063, 1068 (Wells Fargo), quoting Pavlovich v. Superior Court
(2002) 29 Cal.4th 262, 273 (Pavlovich); see Pavlovich, at p. 273, quoting Vons
Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 449 (Vons).)
20
The parties suggest that we apply a different standard of review. Both
sides cite Conseco, supra, 221 Cal.App.4th at page 841, for the proposition
that a trial court order granting or denying a motion to vacate pursuant to
section 1710.40 is reviewed for an abuse of discretion. The parties are correct
that Conseco states “ ‘[t]he ruling on a motion to set aside a judgment rests in
the sound discretion of the trial court and will not be set aside on appeal
unless a clear abuse of discretion appears.’ ” (Conseco, at p. 841.) However,
we disagree that the standard of review adopted by the Conseco court is the
one that applies here.
For one thing, the standard of review used by the Conseco court
originated in a materially different procedural context. Conseco relied on
Tsakos, supra, 12 Cal.App.4th at pages 88 to 89, which in turn relied on
Zirbes v. Stratton (1986) 187 Cal.App.3d 1407, 1411. But Zirbes involved a
trial court order vacating a judgment under section 473, not section 1710.40.
(Zirbes, at p. 1411.) Section 473 is quite different from section 1710.40. It
“allows a court to relieve a party from a judgment taken against him or her
because of mistake, inadvertence, surprise or excusable neglect. It is settled
‘[the] granting or denial of a motion to set aside an order or judgment under
section 473 rests largely in the discretion of the trial court, and its decision
will not be disturbed on appeal unless there has been a clear abuse of
discretion.’ ” (Zirbes, at p. 1411.) Section 1710.40, by contrast, is part of a
procedural enactment that implements the Full Faith and Credit Clause
(Bank of America, supra, 77 Cal.App.4th at p. 114; Washoe, supra, 47
Cal.App.4th at p. 1521), which is an “exacting” constitutional mandate (Baker
v. GMC, supra, 522 U.S. at p. 233). Given the strictness of the underlying
mandate, we perceive no room for discretion in determining whether a sister
state judgment merits recognition in this state.
21
For another, Conseco did not involve appellate review of a challenge to
the sister state court’s exercise of personal jurisdiction. However, Wells
Fargo did involve such a challenge. Further, Wells Fargo relied on Vons and
Pavlovich, both of which are California Supreme Court decisions addressing
the permissible scope of a court’s exercise of personal jurisdiction under the
Fourteenth Amendment of the United States Constitution. We are required
to follow Vons and Pavlovich. (Auto Equity Sales, Inc. v. Superior Court
(1962) 57 Cal.2d 450, 455.)
Accordingly, we apply the principles of review articulated in Wells
Fargo. Applying those principles to this case, we apply de novo review and
determine the question of personal jurisdiction as a matter of law, based on
the uncontradicted facts. (See Wells Fargo, supra, 204 Cal.App.4th at
p. 1068.)11
II.
The Trial Court Erred in Ruling That the Missouri Court’s Exercise of
Personal Jurisdiction Violated Due Process
On our independent review of the record and the trial court’s ruling, we
conclude the court erred in finding the Missouri court’s exercise of personal
jurisdiction over Defendants was unconstitutional. As the Caseys rightly
contend, it was undisputed that Defendants’ communications with the Caseys
11 Because we conclude the trial court’s ruling resulted from errors of law,
and of application of law to uncontradicted facts, we would find reversible
error even under an abuse of discretion standard. (Williams v. Superior
Court (2017) 3 Cal.5th 531, 540 [“ ‘ “Action that transgresses the confines of
the applicable principles of law is outside the scope of discretion and we call
such action an ‘abuse’ of discretion.” ’ ”]; Haraguchi v. Superior Court (2008)
43 Cal.4th 706, 712, fn. 4 [“ ‘The trial court does not have discretion to depart
from legal standards.’ ”], parenthetically quoting People v. Neely (1999) 70
Cal.App.4th 767, 775–776.)
22
were sent into Missouri and caused harm in Missouri, and that these were
the same communications that contained the alleged fraudulent
misrepresentations at issue in the Missouri action. The trial court erred by
failing to consider these relevant, undisputed jurisdictional facts, which were
dispositive of the minimum contacts issue. The court also erred in
determining the exercise of personal jurisdiction was unfair, because
Defendants failed to meet their burden of presenting a compelling case of
unfairness.
A. Specific Jurisdiction
Missouri’s long-arm statute permits courts in Missouri to exercise
jurisdiction over nonresident defendants “to that extent permissible under
the Due Process clause.” (Pinnell, supra, 454 S.W.2d at p. 892.) The exercise
of personal jurisdiction by courts in Missouri is thus limited primarily by the
Due Process Clause of the United States Constitution. (See Ford Motor Co. v.
Montana Eighth Judicial Dist. Court (2021) 141 S.Ct. 1017, 1024 (Ford
Motor) [“The Fourteenth Amendment’s Due Process Clause limits a state
court’s power to exercise jurisdiction over a defendant.”]; Bristol-Myers
Squibb Co. v. Superior Court (2017) 137 S.Ct. 1773, 1779 (Bristol-Myers) [“It
has long been established that the Fourteenth Amendment limits the
personal jurisdiction of state courts.”].)
“The Due Process Clause [of the United States Constitution] protects
an individual’s liberty interest in not being subject to the binding judgments
of a forum with which he has established no meaningful ‘contacts, ties, or
relations.’ [Citation.] By requiring that individuals have ‘fair warning that a
particular activity may subject [them] to the jurisdiction of a foreign
sovereign,’ [citation], the Due Process Clause ‘gives a degree of predictability
to the legal system that allows potential defendants to structure their
23
primary conduct with some minimum assurance as to where that conduct will
and will not render them liable to suit.’ ” (Burger King Corp. v. Rudzewicz
(1985) 471 U.S. 462, 471–472 (Burger King).) “Although a nonresident’s
physical presence within the territorial jurisdiction of the court is not
required, the nonresident generally must have ‘certain minimum contacts . . .
such that the maintenance of the suit does not offend “traditional notions of
fair play and substantial justice.” ’ ” (Walden v. Fiore (2014) 571 U.S. 277,
283 (Walden).)
There are “two kinds of personal jurisdiction: general (sometimes
called all-purpose) jurisdiction and specific (sometimes called case-linked)
jurisdiction.” (Ford Motor, supra, 141 S.Ct. at p. 1024.) The issue in this
case relates to specific jurisdiction, which is personal jurisdiction that exists
only for a particular case. (Walden, supra, 571 U.S. at pp. 283–284.)
Specific jurisdiction “covers defendants less intimately connected with a
State, but only as to a narrower class of claims. The contacts needed for this
kind of jurisdiction often go by the name ‘purposeful availment.’ [Citation.]
The defendant, . . . must take ‘some act by which [it] purposefully avails itself
of the privilege of conducting activities within the forum State.’ [Citation.]
The contacts must be the defendant’s own choice and not ‘random, isolated, or
fortuitous.’ [Citation.] They must show that the defendant deliberately
‘reached out beyond’ its home⎯by, for example, ‘exploi[ting] a market’ in the
forum State or entering a contractual relationship centered there. [Citation.]
Yet even then⎯because the Defendant is not ‘at home’⎯the forum State may
exercise jurisdiction in only certain cases. The plaintiff’s claims . . . ‘must
arise out of or relate to the defendant’s contacts’ with the forum. [Citations.]
Or put just a bit differently, ‘there must be “an affiliation between the forum
and the underlying controversy, principally, [an] activity or an occurrence
24
that takes place in the forum State and is therefore subject to the State’s
regulation.” ’ ” (Ford Motor, supra, 141 S.Ct. at pp. 1024−1025.)
Moreover, “in analyzing the exercise of specific jurisdiction, ‘[o]nce it
has been decided that a defendant purposefully established minimum
contacts within the forum State, [those] contacts may be considered in light of
other factors to determine whether the assertion of personal jurisdiction
would comport with “fair play and substantial justice.” ’ [Citations.] Courts
may evaluate the burden on the defendant of appearing in the forum, the
forum state’s interest in adjudicating the claim, the plaintiff’s interest in
convenient and effective relief within the forum, judicial economy, and ‘the
“shared interest of the several States in furthering fundamental substantive
social policies.” ’ ” (Vons, supra, 14 Cal.4th at pp. 447−448, citing Burger
King, supra, 471 U.S. at pp. 476−477.) Thus, “even if the defendant has
purposefully engaged in forum activities,” the “minimum requirements
inherent in the concept of ‘fair play and substantial justice’ may defeat the
reasonableness of jurisdiction.” (Burger King, at pp. 477–478; Pavlovich,
supra, 29 Cal.4th at p. 269.)
“The inquiry whether a forum State may assert specific jurisdiction
over a nonresident defendant ‘focuses on “the relationship among the
defendant, the forum, and the litigation.” ’ ” (Walden, supra, 571 U.S. at
pp. 283–284; accord Bristol-Myers, supra, 137 S.Ct. at p. 1782.) Courts
employ a three-part test to determine whether a defendant has had sufficient
minimum contacts with the forum state to be subject to specific jurisdiction.
A court may exercise specific jurisdiction over a nonresident defendant only
if: (1) the defendant has purposefully availed himself of forum benefits or
purposefully directed his activities at the forum state; (2) the controversy is
related to or arises out of the defendant’s contacts with the forum; and (3) the
25
assertion of personal jurisdiction would comport with the principles of fair
play and substantial justice. (Pavlovich, supra, 29 Cal.4th at p. 269; Vons,
supra, 14 Cal.4th at pp. 446–447; Picot v. Weston (9th Cir. 2015) 780 F.3d
1206, 1211 (Picot) [applying California law to determine whether California
could exercise specific jurisdiction over a nonresident defendant].)
As to the first prong, “[t]he exact form of our jurisdictional inquiry
depends on the nature of the claim at issue.” (Picot, supra, 780 F.3d at
p. 1212.) For claims sounding in contract, courts generally apply a
“ ‘purposeful availment’ ” analysis, where the focus is on the “ ‘defendant’s
intentionality.’ ” (Pavlovich, supra, 29 Cal.4th at p. 269; Picot, at p. 1212.)
“ ‘This [inquiry] is only satisfied when the defendant purposefully and
voluntarily directs his activities toward the forum so that he should expect,
by virtue of the benefit he receives, to be subject to the court’s jurisdiction
based on’ his contacts with the forum.” (Pavlovich, at p. 269.) For claims
sounding in tort, courts generally apply a “ ‘purposeful direction’ test and look
to evidence that the defendant has directed his actions at the forum state,
even if those actions took place elsewhere.” (Picot, at p. 1212; accord
Pavlovich, at p. 270.) This test, also known as the “Calder effects test”
derived from Calder v. Jones (1984) 465 U.S. 783 (Calder), “requires
intentional conduct expressly aimed at or targeting the forum state in
addition to the defendant’s knowledge that his intentional conduct would
cause harm in the forum.” (Pavlovich, at p. 271.)
B. Analysis
1. Purposeful Direction
Despite finding the Missouri action “arose out of allegations that
[Defendants] committed a ‘tortious act’ in Missouri (i.e., fraud),” the trial
court found the evidence of purposeful availment lacking. It reasoned that
26
Defendants did not advertise in Missouri, had no business dealings or
contacts in Missouri other than their dealings with the Caseys, and, based on
purported choice-of-law and choice-of-forum provisions in the parties
agreement, Defendants contemplated “rendering their services in California,
subject to California law, with any disputes to be adjudicated in California.”
This analysis was erroneous. The trial court ignored the material
jurisdictional facts, which were undisputed: Defendants sent
communications into Missouri that contained allegedly fraudulent
misrepresentations and caused injury in Missouri, and which were the basis
of the claims asserted against Defendants in the Missouri action. Under
settled principles, these facts were sufficient to satisfy the first prong of the
specific jurisdiction inquiry.
Under Calder, a defendant whose “intentional, and allegedly tortious”
actions were purposefully directed at the forum is subject to the personal
jurisdiction of its courts. (Calder, supra, 465 U.S. at pp. 789–790.) In Calder,
a California actress sued a Florida journalist and editor for libel based on an
article in the National Enquirer. (Id. at pp. 784–786.) The high court held
the Florida residents could be sued in California despite insubstantial
contacts with California, because they had “expressly aimed” their tortious
conduct at California and the “brunt of the harm” was suffered there. (Id. at
p. 789.) “An individual injured in California need not go to Florida to seek
redress from persons who, though remaining in Florida, knowingly cause the
injury in California.” (Id. at p. 790.)
Applying these principles, numerous courts have found the purposeful
direction requirement met where the nonresident defendant purposefully
sent tortious communications into a forum and thereby injured its residents.
(Yue v. Yang (2021) 62 Cal.App.5th 539, 547–548 [purposeful availment
27
requirement met where nonresident defendant allegedly defamed and
threatened the plaintiff, a California resident, in direct correspondence with
the plaintiff in California and in website posts that “were directed to, and
received by, a California audience” and were intended to cause harm in
California]; Moncrief v. Clark (2015) 238 Cal.App.4th 1000, 1006–1007
(Moncrief); [Arizona attorney misrepresented client’s ownership of equipment
that was the subject of a single sales transaction in interstate
communications with California attorney, thereby purposefully availing
himself of California benefits]; West Corp. v. Superior Court (2004) 116
Cal.App.4th 1167, 1174–1176 (West Corp.) [out-of-state telemarketers who
used allegedly unlawful techniques in phone call with California resident
purposefully availed themselves of the privilege of conducting activities in
California]; Neal v. Janssen (6th Cir. 2001) 270 F.3d 328, 332–333
[purposeful availment established based on nonresident’s misrepresentations
in interstate communications with forum resident, where “[t]he alleged
misrepresentations are the elements of the cause of action itself”]; see Bryant
v. Smith Interior Design Group, Inc. (Mo. 2010) 310 S.W.3d 227, 234 (Bryant)
[stating that “[n]umerous cases . . . have held that the sending of fraudulent
documents into a state constitutes a purposeful availment of the privilege of
conducting activities within the forum state and provides the minimum
contacts necessary to support personal jurisdiction in that state when the
claim arises out of those contacts”]; Freestream Aircraft (Berm.) Ltd. v. Aero
Law Grp. (9th Cir. 2018) 905 F.3d 597, 603 [stating the first two prongs of
specific jurisdiction test are met where “a non-Californian defendant [makes
an] allegedly fraudulent demand for payment . . . to a California entity”].)
Moncrief is illustrative. In Moncrief, the parties were an Arizona
attorney, a California attorney, and their respective law firms. (Moncrief,
28
supra, 238 Cal.App.4th at p. 1003.) Moncrief, the California attorney, had
been hired to perform due diligence in connection with his California client’s
purchase of farm equipment from an Arizona company. (Ibid.) While in
California, he called Clark, the Arizona attorney representing the seller, to
discuss the ownership status of the equipment. (Id. at pp. 1003–1004.) In a
phone conversation and subsequent email, Clark represented that his client
was the sole owner of the equipment. (Id. at p. 1004.) When it was later
discovered this was not true, the California client sued Moncrief in a
California state court for legal malpractice, and Moncrief cross-complained
against Clark for equitable indemnity, negligence, intentional and negligent
misrepresentation, and concealment. (Ibid.) The court granted Clark’s
motion to quash, concluding there was no purposeful availment because
Clark did not initiate contact with Moncrief, did not target Moncrief “ ‘or
California,’ ” and there had been only “ ‘a random attenuated and insufficient
contact to establish specific jurisdiction.’ ” (Ibid.)
The Court of Appeal reversed, finding the requirements of due process
were met and that the interactions between the parties did, in fact,
demonstrate purposeful availment. (Moncrief, supra, 238 Cal.App.4th at
pp. 1006–1007.) The court found Clark purposefully availed himself of the
benefits of California “when he communicated via telephone and e-mail with
Moncrief” for “the specific purpose of inducing the completion of the
equipment sale.” (Id. at p. 1006.) Although the communications involved
only a single transaction, “Clark targeted Moncrief with the specific purpose
of inducing Moncrief’s client to finalize the purchase[.]” (Id. at p. 1007.)
Clark’s communications were thus “purposely and voluntarily directed
toward California ‘ “so that he should expect, by virtue of the benefit he
29
receive[d], to be subject to the [California] court’s jurisdiction based on” his
contacts with the forum.’ ” (Ibid.)
The same analysis, applied here, compels the same conclusion: the first
prong of the specific jurisdiction test was satisfied. The Caseys’ evidence
established that Defendants presented them with a proposed agreement to
provide adoption facilitation services in exchange for a $15,500 fee, and that
the Caseys then entered into the agreement from Missouri and paid the
required fee with Missouri funds. This evidence was undisputed. The
agreement, by its own terms, called for Unique to communicate with its
Missouri clients, the Caseys, about the proposed birthmother. Defendants
did not dispute this point. To the contrary, Hill herself averred that “I signed
[the agreement] on behalf of Unique, by which [the Caseys] retained
defendant, Unique’s, adoption facilitation services in California, which
included ‘gathering information from prospective birthmothers and passing
[it] on to Clients[.]”
It was also undisputed that in performing the agreement, Defendants
sent dozens of emails and text messages to the Caseys, and had numerous
phone calls with the Caseys, while the Caseys were in Missouri, and that the
subject of these communications included “payment instructions,
representations concerning Jessica’s health, that Unique was in contact with
Jessica’s adoption attorney, Jessica’s birth plan, that Jessica was willing to
place her unborn child for adoption, that [the Caseys] were required to pay
Jessica’s expenses before her third-trimester, and [Defendants’] promises to
obtain Jessica’s medical records.” In other words, the Caseys’ evidence
established that Defendants’ communications in performance of the
agreement contained the very misrepresentations that were at issue in the
30
Missouri action.12 Defendants did not contradict these assertions, either.
Thus, there was no dispute that Defendants’ numerous communications with
their Missouri clients contained the alleged misrepresentations, and caused
the resulting harm, that was the gravamen of the Caseys’ claims in
Missouri.13 As the Missouri court had found, “as a direct result of the
deceptive, false, and misleading representations, [the Caseys] were induced
to and did in fact purchase . . . services from the Defendants, in reliance upon
Defendants’ representations.” These undisputed facts demonstrated
12 Although Hill did not make all of these communications personally,
Matthew averred that Boucher informed him that Hill was the source of the
information communicated through Boucher, that Hill was “overseeing and
directing all work done by the employees of Unique,” and Boucher was merely
“passing information back and forth between [Hill] and [the Caseys].”
Matthew also provided copies of emails sent to him by Boucher stating that
Boucher “forwarded [Matthew’s] questions to [Hill]” and telling Matthew that
“[Hill] recommends this adoption attorney to represent you in M[issouri].”
Hill did not deny that she oversaw and directed Boucher’s activities or that
she was the source of the information Boucher transmitted to the Caseys.
13 Although Defendants disputed whether they could be held liable for the
alleged misrepresentations, it is sufficient for jurisdictional purposes that
Defendants purposefully and voluntarily sent the communications that
contained the allegedly fraudulent representations. As stated in Yahoo! Inc.
v. La Ligue Contre Le Racisme (9th Cir. 2006) 433 F.3d 1199, 1207: “Many
cases in which the Calder effects test is used will indeed involve wrongful
conduct by the defendant. [Citations.] But we do not read Calder necessarily
to require in purposeful direction cases that all (or even any) jurisdictionally
relevant effects have been caused by wrongful acts. We do not see how we
could do so, for if an allegedly wrongful act were the basis for jurisdiction, a
holding on the merits that the act was not wrongful would deprive the court
of jurisdiction.” In other words, we need not determine whether Defendants
committed intentional wrongdoing, but only whether the communications
that formed the basis of the alleged fraud were themselves purposefully
directed at Missouri, which we conclude they were.
31
resoundingly that, as in Moncrief, Defendants’ communications were
“purposely and voluntarily directed toward” Missouri, so that they “ ‘ “should
expect, by virtue of the benefit [they] receive[d], to be subject to the
[Missouri] court’s jurisdiction based on” [their] contacts with the forum.’ ”
(Moncrief, supra, 238 Cal.App.4th at p. 1007.)
The trial court, in concluding otherwise, entirely ignored Defendants’
case-related conduct, focusing instead on the fact that Defendants did not
advertise in Missouri and “had no other business dealings or contacts with
Missouri.” (Italics added.) This was error. The specific jurisdiction inquiry
must consider “ ‘ “the relationship among the defendant, the forum, and the
litigation.” ’ ” (Walden, supra, 571 U.S. at pp. 283–284.) Indeed, when
specific jurisdiction is based on an alleged tort, “ ‘the defendant’s knowledge
and intent in committing the tortious activity’ ” is “the very focus of the
purposeful availment requirement.” (Pavlovich, supra, 29 Cal.4th at p. 272.)
Yet the trial court, in focusing on Defendants’ non-litigation-related contacts
with Missouri, excluded from its analysis any consideration of the
communications that were at issue in the Missouri litigation. As we have
discussed, Defendants’ allegedly fraudulent representations about aspects of
the desired adoption, all of which were directed at Missouri and quite
predictably caused harm in Missouri when the falsehoods were discovered,
were sufficient to establish purposeful availment. By ignoring Defendants’
allegedly tortious conduct, which under controlling precedent satisfied the
first prong of the constitutional inquiry, and looking elsewhere for minimum
contacts, the trial court erred.
The trial court also relied on the fact that it was the Caseys who
initiated the relationship by reaching out to Defendants. This, too, was error.
“Whether a ‘party solicited the business interface is irrelevant, so long as
32
defendant then directed its activities to the forum residents.’ ” (Kennedy v.
Freeman (10th Cir. 1990) 919 F.2d 126, 129; Lanier v. American Bd. of
Endodontics (6th Cir. 1988) 843 F.2d 901, 910; accord Bryant, supra, 310
S.W.3d at p. 235 [“the fact that someone else initiated the first contact does
not mean that the entire course of conduct is considered unilateral”]; West
Corp., supra, 116 Cal.App.4th at p. 1176 [although residents initiated phone
call to nonresident telemarketers, the telemarketers initiated allegedly
unlawful upsell technique and thus “purposefully availed themselves of the
privileges of conducting activities within the forum state”].) Although the
Caseys may have sought out Defendants’ services originally, it was
Defendants who agreed to provide those services and then made a number of
misrepresentations to the Caseys in the course of their ongoing relationship.
This conduct was no less purposeful, and no less directed at Missouri,
because the Caseys made the initial contact.
The trial court also relied on the parties’ agreement. On appeal, as
they did in the trial court, Defendants refer to section 11 of the agreement14
as an arbitration clause, a choice-of-law provision, and a choice-of-forum
provision. Section 11 of the agreement is, on its face, an arbitration clause; it
14 For ease of reference, we restate the relevant part of section 11 of the
agreement here: “11. ARBITRATION. Any controversy. claim or dispute
arising out of or relating to this Agreement or the breach, termination,
enforcement, interpretation or validity thereof, including the determination
of the scope or applicability of this Agreement to arbitrate, shall be
determined by arbitration in the County of Riverside, State of California,
before a sole arbitrator in accordance with the laws of the State of California
for agreements made and to be performed in the State of California. [¶] The
arbitration shall be administered by JAMS pursuant to its streamlined
Arbitration Rules. The arbitration shall be conducted in the County of
Riverside, State of California. Judgment on the award may be entered in any
court having jurisdiction.” (Boldface omitted.)
33
refers to itself as “this Agreement to arbitrate.” However, accepting
Defendants’ characterization of section 11 of the agreement as containing
“choice-of-law and choice-of-forum provisions,” the trial court found these
provisions “indicat[ed] that [D]efendants contemplated rendering their
services in California, subject to California law, with any disputes to be
adjudicated in California.” Even so construed, that the parties’ contract had
a so-called choice-of-law provision is just a factor to be considered, it does not
determine whether personal jurisdiction can constitutionally be exercised in
another forum. (See Burger King, supra, 471 U.S. at p. 482.)
Moreover, parties to an agreement to arbitrate in California consent to
the jurisdiction of California courts for the limited purpose of enforcing the
arbitration agreement and any resulting award. (§ 1293.) However, “the
right to arbitrate, like any other contract right, can be waived, either
expressly or by implication.” (Thorup v. Dean Witter Reynolds, Inc. (1986)
180 Cal.App.3d 228, 234 (Thorup); see Menorah Ins. Co. v. INX Reinsurance
Corp. (1st Cir. 1995) 72 F.3d 218, 223 (Menorah) [defendant waived
arbitration by allowing a default judgment to be entered and waiting until
enforcement proceeding to seek arbitration].) Section 11 of the agreement
does not select a judicial forum or indicate which state’s courts will serve as
the forum in the event the parties waive arbitration and submit their
disputes to litigation. And as we later explain, Defendants have waived any
contractual rights to a choice of forum, or to arbitration, by waiting until this
proceeding to assert them.15 (See Discussion, Section III., post.)
15 At oral argument, Defendants⎯citing Airlines Reporting Corp. v.
Renda (2009) 177 Cal.App.4th 14, 20⎯repeatedly referred to the principle
that a judgment debtor “ ‘ “is always free to ignore the judicial proceedings,
risk a default judgment, and then challenge that judgment on jurisdictional
34
Further, while focusing on section 11 of the agreement as a basis to
conclude that Defendants contemplated providing their services in California,
the trial court simultaneously ignored other relevant aspects of the
agreement as well as the parties’ actual course of performance, which showed
that Defendants not only contemplated but actually did provide a material
part of their services by communicating with the Caseys in Missouri. (See
Burger King, supra, 471 U.S. at p. 479 [“prior negotiations and contemplated
future consequences, along with the terms of the contract and the parties’
actual course of dealing . . . must be evaluated in determining whether the
defendant purposefully established minimum contacts within the forum”
(italics added)].) The agreement expressly laid out that Unique’s scope of
services included “gathering information from prospective birthmothers and
passing [it] on to Clients,” and “act[ing] as an intermediary between parties
to an adoption.” To provide these services, Unique would obviously have to
communicate with its clients, who were in Missouri. This is, of course, what
actually did occur as the agreement was performed. This aspect of Unique’s
provision of services was material to jurisdiction because it was Defendants’
grounds in a collateral proceeding.” ’ ” (Ibid.) They claimed this means it is
not too late for them to invoke the agreement’s arbitration clause.
Defendants’ argument conflates two concepts: fundamental jurisdiction,
which is not subject to waiver; and the contractual right to arbitrate, which is
subject to waiver. A party that chooses to ignore a judicial proceeding does so
at her own risk, because if it turns out jurisdiction was proper, many of the
challenges that could have been raised, including the option of arbitrating the
dispute, will no longer be available. (See Menorah, supra, 72 F.3d at p. 223
[“The scenario here⎯in which a party knowingly opts out of the arbitration
for which it has contracted . . . , sits on its hands while a default judgment is
entered against it after service, refuses to pay, requires an enforcement
action be filed against it, and only then cries ‘arbitration’⎯undermines both
the certainty and predictability which arbitration agreements are meant to
foster.”].)
35
client communications that ultimately formed the basis of the Caseys’
lawsuit.
On appeal, in support of their contention the trial court erred in finding
no purposeful availment, the Caseys cite a number of decisions (including
Bryant, supra, 310 S.W.3d 227) that stand for the proposition that the
purposeful availment requirement is met when, as here, nonresident
defendants send fraudulent communications across state lines, injuring that
state’s residents. Tellingly, Defendants cite no authority that stands for the
opposite proposition. Instead, they attempt to distinguish the decisions relied
on by the Caseys. For example, they take the position that Bryant is
distinguishable because it involved fraudulent documents rather than
fraudulent oral representations. This is not a material distinction. (See, e.g.,
Good World Deals, LLC v. Gallagher (Mo.Ct.App. 2018) 554 S.W.3d 905, 913
[finding purposeful availment based on fraudulent communications
transmitted verbally and in writing “through emails, text messages, and
phone calls” because what mattered was “the fraudulent content of those
communications” and not whether they were communicated in writing].)
Defendants also try to refute the conclusion that their allegedly false
representations were actionable. They argue Hill stated in her declaration in
support of the motion to vacate that Unique “ ‘did not and could not
guarantee the outcome of a potential adoption attempt’ ” and that the
agreement stated Unique made no representations about “ ‘the truthfulness
of any information provided by birthmother.’ ” However, they do not contend
the communications containing the alleged misrepresentations that formed
the basis of the Caseys’ claims did not occur, or that they were not actually
harmful to the Caseys. The disclaimers could only serve to establish a
possible basis for avoiding liability in the event of a dispute. Despite any
36
disclaimers, the fact remains that Defendants purposely directed allegedly
tortious communications at Missouri that caused harm in Missouri, such that
they could reasonably anticipate that any litigation arising from their
conduct would be filed in Missouri.
In sum, the trial court, in finding Defendants did not purposefully avail
themselves of the benefits of Missouri, failed to consider Defendants’ case-
specific conduct. Taking Defendants’ numerous communications that
contained the alleged misrepresentations into account leads to the conclusion
they purposefully directed their tortious conduct at the Caseys in Missouri,
such that the first prong of the specific jurisdiction test is easily met.
2. Relatedness
The second prong of the specific jurisdiction inquiry looks at whether
the plaintiff’s claims “ ‘arise out of or relate to the defendant’s contacts with
the forum.’ ” (Ford Motor, supra, 141 S.Ct. at p. 1026.) Here, the trial court
specifically found that “the suit arose out of allegations that defendants
committed a ‘tortious act’ in Missouri (i.e., fraud).” Defendants do not dispute
this finding or deny that the relatedness element of the specific jurisdiction
test was satisfied by the allegations in the Missouri action. We agree with
their implicit concession that this requirement is met.
In Ford, the high court clarified that the nonresident defendant’s forum
contacts need not be causally related to the plaintiff’s suit and that “some
relationships will support jurisdiction without a causal showing.” (Ford
Motor, supra, 141 S.Ct. at p. 1026.) “ ‘ “ ‘[O]nly when the operative facts of
the controversy are not related to the defendant’s contact with the state can
it be said that the cause of action does not arise from that [contact].’ ” ’ ”
(Snowney v. Harrah’s Entertainment, Inc. (2005) 35 Cal.4th 1054, 1068.)
Here, Defendants’ contacts with Missouri were causally related to the Caseys’
37
claims, which means they necessarily satisfied this prong of the jurisdictional
test.
3. Fair Play and Substantial Justice
The third prong of the specific jurisdiction test considers whether the
exercise of jurisdiction “would offend ‘ “traditional notions of fair play and
substantial justice.” ’ ” (Asahi Metal Indus. Co. v. Superior Court (1987) 480
U.S. 102, 113.) “Thus courts in ‘appropriate [cases]’ may evaluate ‘the burden
on the defendant,’ ‘the forum State’s interest in adjudicating the dispute,’ ‘the
plaintiff’s interest in obtaining convenient and effective relief,’ ‘the interstate
judicial system’s interest in obtaining the most efficient resolution of
controversies,’ and the ‘shared interest of the several States in furthering
fundamental substantive social policies.’ ” (Burger King, supra, 471 U.S. at
pp. 476–477.)
However, “where a defendant who purposefully has directed his
activities at forum residents seeks to defeat jurisdiction, he must present a
compelling case that the presence of some other considerations would render
jurisdiction unreasonable.” (Burger King, supra, 471 U.S. at p. 477, italics
added.) Because Unique and Hill had the requisite minimum contacts with
California, it was their burden “to ‘present a compelling case that the
presence of some other considerations would render jurisdiction
unreasonable.’ ” (Vons, supra, 14 Cal.4th at p. 476, quoting Burger King, at
p. 477.)
The trial court, in determining the Missouri court’s exercise of
jurisdiction was unconstitutional, found it “fundamentally unfair that an
individual and her small business, operating in one state, can enter into a
written agreement to perform $15,500 worth of adoption-related services in
that state, with a forum-selection clause saying any dispute will be brought
38
in that state, and then be sued in another state half-way across the country
and become subject to a $500,000 default judgment in the other state without
ever providing any services in that other state and without having any other
contacts with the other state.”
This analysis was flawed. To a large extent the trial court simply
repeated the reasoning it used to find there had been no purposeful
availment, which was erroneous for the reasons we have already discussed.
The court also appeared to be influenced by its sense that the result of the
Missouri litigation was unfair. However, the result of the out-of-state action
is not among the factors courts are supposed to consider when undertaking
this constitutional analysis. (See Burger King, supra, 471 U.S. at pp. 476–
477.) The due process inquiry concerns the fairness of the exercise of
personal jurisdiction in a particular case, not the fairness of the outcome of
that case.
And while the trial court found it “fundamentally unfair” for “an
individual and her small business, operating in one state, . . . [to] be sued in
another state half-way across the country,” this finding was made without
any record support. Defendants presented no evidence of any burdens
presented to them by being required to litigate in Missouri. Instead, their
evidence focused on attempting to establish their lack of contacts with
Missouri. Thus, the trial court appears to have simply assumed, by virtue of
the distance involved, that it was unfair for a California individual and small
business to be brought to court in Missouri. This assumption is out of step
with the holdings of numerous courts that have found it fair to require
individual defendants to litigate from distances comparable to the distance
between California and Missouri. (See, e.g., Burger King, supra, 471 U.S. at
p. 487 [not fundamentally unfair for a Michigan resident to be sued in
39
Florida]; Yue v. Yang, supra, 62 Cal.App.5th at p. 550 [Canadian resident
could fairly be required to litigate in California]; Integral Development. Corp.
v. Weissenbach (2002) 99 Cal.App.4th 576, 592 [fair to require German
resident to litigate in California].) The court’s assumption was also at odds
with the Supreme Court’s position, one that has been stated and restated
over the course of many decades, that “because ‘modern transportation and
communications have made it much less burdensome for a party sued to
defend himself in a State where he engages in economic activity,’ it usually
will not be unfair to subject him to the burdens of litigating in another forum
for disputes relating to such activity.” (Burger King, supra, 471 U.S. at
p. 474.)
As we have just noted, Defendants did not present any evidence of
burdens or inconveniences that the prospect of litigating in Missouri
presented to them. The only developed argument they offered in the trial
court on the topic of unfairness was that it would be “difficult and
inconvenient for [them] to memorize and comply with the adoption
facilitation laws of all 50 states.” But as the Caseys pointed out, this was an
irrelevant consideration because the Missouri action did not include any
allegations that Hill or Unique violated Missouri adoption facilitation laws.
On appeal, Defendants contend it was unfair for the litigation to
proceed in Missouri because “a critical witness—the birthmother, Jessica—
was located in California” and “[i]t would have been unreasonable and cost-
prohibitive” for her to “submit to a deposition in Missouri.” However, they
cite no record evidence supporting the conclusion that it would have been
cost-prohibitive for Jessica to be deposed in Missouri. They also fail to
explain why this problem could not be solved by taking her videotaped
deposition in California. (See Mo. R. Civ. P. 57.03(c) [“Depositions may be
40
recorded by the use of videotape or similar methods”]; Patton v. May Dep’t
Stores Co. (Mo. 1988) 762 S.W.2d 38, 41 [“ ‘the rules of civil procedure do not
prohibit the video taping of a deposition, nor do they prohibit the use of a
video tape in trial to present the deposition testimony of the witnesses to the
jury’ ”].)
Defendants also make a number of contentions based on the fact that
Matthew is a licensed Missouri attorney.16 They claim it “would have been
far more convenient for a Missouri attorney to litigate in California” than for
“a non-attorney California resident and her small business” to litigate in
Missouri. We reject this argument because it is made without any record
support. Defendants also contend Matthew was legally sophisticated and
“should not have signed an agreement providing that California would be the
forum for any dispute” if he wanted to file a lawsuit in Missouri. This is just
another version of their argument about the effect of section 11 of the
agreement, which we have already disposed of above. Finally, Defendants
contend that because Matthew is a licensed Missouri attorney, he had a
tactical advantage when litigating in Missouri. However, the fairness inquiry
is focused on geographic burdens and inconveniences faced by defendants, not
with evening out alleged home-state advantages unrelated to geography.
Stated another way, the possibility of eliminating tactical advantages is not
16 In the trial court, Defendants presented a request for judicial notice of
a document establishing Matthew’s membership in the Missouri state bar.
The Caseys did not object. Because the record contains no indication the
request was denied, we presume that it was granted. (See Evid. Code, § 456
[“If the trial court denies a request to take judicial notice of any matter, the
court shall at the earliest practicable time so advise the parties and indicate
for the record that it has denied the request”]; Aaronoff v. Martinez-Senftner
(2006) 136 Cal.App.4th 910, 918–919.)
41
one of the recognized factors that has been held to be relevant to the fairness
analysis. (See Burger King, supra, 471 U.S. at p. 478.)
In sum, Defendants have not presented a compelling case that the
Missouri court’s exercise of personal jurisdiction was unfair or unreasonable.
Because all three prongs of the test for specific jurisdiction are satisfied, it
follows that the Missouri court’s exercise of jurisdiction satisfied the
requirements of due process.
III.
Defendants’ Other Defenses to Recognition of the Missouri Judgment
Lack Merit
In the event we conclude the trial court erred in granting their motion
on the ground that the Missouri court’s exercise of personal jurisdiction
violated Defendants’ due process rights, Defendants ask us to affirm the
court’s order on the basis of the other affirmative defenses they raised in
their motion. They ask us to consider the following three defenses: (1) their
“choice-of-forum” defense based on section 11 of the agreement, (2) their
“parole [sic] evidence” defense, and (3) their defense based on the Caseys’
purported failure to inform the Missouri court of the parties’ written
agreement. Because they all lack merit, we are unable to affirm on the basis
of any of these defenses.
The defenses that may be asserted in a motion to vacate under section
1710.40 are not well defined. The Act itself does not specify the available
defenses. However, the Law Revision Commission’s comment to section
1710.40 lists certain “[c]ommon” defenses. It states: “Common defenses to
enforcement of a sister state judgment include the following: the judgment is
not final and unconditional (where finality means that no further action by
the court rendering the judgment is necessary to resolve the matter litigated);
42
the judgment was obtained by extrinsic fraud; the judgment was rendered in
excess of jurisdiction; the judgment is not enforceable in the state of
rendition; the plaintiff is guilty of misconduct; the judgment has already been
paid; suit on the judgment is barred by the statute of limitations in the state
where enforcement is sought.” (Cal. Law Revision Com. com., 20 West’s Ann.
Code Civ. Proc. (2007 ed.) foll. § 1710.40, p. 385; see Traci & Marx Co. v.
Legal Options, Inc. (2005) 126 Cal.App.4th 155, 158–159 (Traci & Marx).)
At the outset, we note that Defendants’ defenses are not among those
listed in the Law Revision Commission’s comment to section 1710.40.
Defendants contend they can raise them anyhow, because the list of defenses
in the comment is not exclusive. They point to the fact that the comment
states that the available defenses “ ‘ “include” ’ ” those listed in the comment,
suggesting the list is open-ended and other defenses may be available as
well.17 They further contend, although without any legal support, that the
additional defenses that can be asserted include substantive defenses to the
underlying claims.
17 One Court of Appeal has noted in dicta that “by using the word
‘include,’ the [Law Revision Commission] simply intended such defense
references as examples of the types of defenses which fall within section
1710.40.” (Conseco, supra, 221 Cal.App.4th at p. 839.) However, at least one
other Court of Appeal has declined to decide whether the Law Revision
Commission’s list is illustrative rather than exhaustive. (Liquidator, supra,
54 Cal.App.4th at p. 976 [“While we do not express an opinion on whether the
defenses listed by the Law Revision Commission are exclusive, we disagree
with the proposition that section 473 presents a defense applicable to the
entry of sister state judgments through section 1710.40.”].) Here, we
delineate the outer bounds of the defenses available under section 1710.40,
by concluding that the unlisted defenses asserted by Defendants violate the
mandate of the Full Faith and Credit Clause. “[T]he command of full faith
and credit to judicial proceedings is subject to rare exceptions.” (Rest.2d
Conf. of Laws, § 103, com. a.)
43
Defendants misperceive the scope of defenses that a judgment debtor
can raise to combat recognition or enforcement of a final sister state
judgment. “ ‘ “With respect to judgments, ‘the full faith and credit obligation
is exacting.’ ” ’ ” (Blizzard Energy, Inc. v. Schaefers (2020) 44 Cal.App.5th
295, 298 (Blizzard Energy), quoting Hawkins v. SunTrust Bank (2016) 246
Cal.App.4th 1387, 1393–1394.) “ ‘ “A State may not disregard the judgment
of a sister State because it disagrees with the reasoning underlying the
judgment or deems it to be wrong on the merits.” ’ ” (Ibid.)
Consistent with the full faith and credit that courts are constitutionally
obligated to grant the judgment of the courts of sister states, and
notwithstanding the seemingly open-ended nature of the list of defenses in
the Law Revision Commission comment, section 1710.40 does not create an
opportunity to raise defenses to the merits of the underlying claims resolved
in the sister state judgment. “ ‘[T]he law is well established that upon a
claim that a foreign judgment is not entitled to full faith and credit, the
permissible scope of inquiry is limited to a determination of whether the
court of forum had fundamental jurisdiction in the case.’ ” (Washoe, supra, 47
Cal.App.4th at p. 1521.) “A California court, in ruling on a motion to vacate
entry of a sister state judgment, may not retry the case.” (Blizzard Energy,
supra, 44 Cal.App.5th at p. 298, citing Washoe, supra, 47 Cal.App.4th at p.
1523.) To borrow the words of another court, “[t]his is not an appeal of the
[Missouri] judgment.” (Traci & Marx, supra, 126 Cal.App.4th at p. 161.)
Here, Defendants have never claimed the Missouri judgment is not
final or unenforceable in Missouri. Nor have they claimed the Missouri court
lacked subject matter jurisdiction over the underlying action. The Missouri
court found Defendants were each properly served with notice of the action;
Defendants have never disputed this finding. Pursuant to our discussion
44
above, the Missouri court’s exercise of jurisdiction under its long-arm statute
comported with the requirements of due process.
Accordingly, Defendants are now precluded from asserting defenses
they could have, but did not, raise in the underlying action. “As long as the
sister state court had jurisdiction over the subject matter and the parties, a
sister state judgment is entitled to full faith and credit ‘even as to matters of
law or fact erroneously decided.’ ” (Bank of America, supra, 77 Cal.App.4th
at p. 118.) Principles of res judicata apply to matters actually presented in
the earlier proceeding as well as “ ‘any other available matter which might
have been presented to that end.’ ” (Chicot County Drainage Dist. v. Baxter
State Bank (1940) 308 U.S. 371, 378 (Chicot).)
Defendants’ first defense to recognition violates these principles by
attempting to invoke, for the first time, the so-called “choice-of-forum”
provision in section 11 of the agreement. Defendants appear to contend that
section 11 of the agreement raises a jurisdictional defect because it deprived
the Missouri court of jurisdiction. Whether construed as a choice-of-forum
clause or an arbitration clause, this contractual provision could not divest the
Missouri court of its fundamental jurisdiction.18 “[T]he parties may not
deprive courts of their jurisdiction over causes by private agreement.”
18 Determining the effect of section 11 of the agreement presents a choice
of law question. “It is well established that while the courts generally enforce
the substantive rights created by the laws of other jurisdictions, the
procedural matters are governed by the law of the forum.” (World Wide
Imports, Inc. v. Bartel (1983) 145 Cal.App.3d 1006, 1012.) Here, the
pertinent forum is Missouri. However, Defendants contend section 11 creates
a substantive defense rather than a procedural defense, calling into question
whether section 11 should be construed according to California law or
Missouri law. We need not decide this issue, however, because as we explain,
the result is the same under the laws of both states.
45
(Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 495
(Smith), citing Rest.2d Conflict of Laws, § 80, com. a.)
Further, in both California and Missouri, enforcement of arbitration
provisions is not automatic. “[T]he right to arbitrate, like any other contract
right, can be waived, either expressly or by implication.” (Thorup, supra, 180
Cal.App.3d at p. 234; see Lynch v. California Coastal Com. (2017) 3 Cal.5th
470, 475; Boulds v. Dick Dean Econ. Cars, Inc. (Mo.Ct.App. 2010) 300 S.W.3d
614, 619 [“an arbitration agreement may be invalidated through state law
contract defenses such as waiver or repudiation”].) The same goes for choice
of forum provisions: even when they are invoked, enforcement is not
automatic. (Smith, supra, 17 Cal.3d at p. 496 [California courts have
discretion to decline to enforce choice of forum provisions]; High Life Sales
Co. v. Brown-Forman Corp. (Mo. 1992) 823 S.W.2d 493, 497 & 496 fn.2
[holding that choice of forum clauses are enforceable, but Missouri courts
may decline enforcement if they conclude enforcement would be unfair or
unreasonable]; see Andra v. Left Gate Prop. Holding, Inc. (Mo. 2015) 453
S.W.3d 216, 231 [“a forum selection clause does not automatically determine
a court’s personal jurisdiction over a defendant”].)
Defendants fail to grapple with the unavoidable conclusion that they
have waived any contractual rights to a choice of forum, or to arbitration, by
waiting until this proceeding to assert them. (See Menorah, supra, 72 F.3d at
p. 223 [defendant waived arbitration by allowing a default judgment to be
entered and waiting until enforcement proceeding to seek arbitration].) They
were properly served in the Missouri action and could have raised these
issues in that proceeding. Instead, they chose not to appear, the Missouri
court entered judgment, and that judgment is now final. Principles of res
judicata apply to matters actually presented to defeat the claims asserted in
46
the earlier proceeding as well as “ ‘any other available matter which might
have been presented to that end.’ ” (Chicot, supra, 308 U.S. at p. 378.) It is
now too late for Defendants to attempt to invoke section 11 of the agreement.
Defendants’ second defense—their “parole [sic] evidence defense”—
suffers from the same problem. They offer it as a defense to what they
describe as the Caseys’ “promissory fraud allegations.” In other words, they
are trying to raise a defense to the underlying action as a defense to
recognition of the Missouri judgment. They may not do so. “As long as the
sister state court had jurisdiction over the subject matter and the parties, a
sister state judgment is entitled to full faith and credit ‘even as to matters of
law or fact erroneously decided.’ ” (Bank of America, supra, 77 Cal.App.4th
at p. 118.)
Even if it were not too late to assert this defense (and it is), it would
make no difference, because it is a patently frivolous defense. The defense
relies on a rule promulgated in Bank of America etc. Assn. v. Pendergrass
(1935) 4 Cal.2d 258, 263, under which courts rejected “promissory fraud
claims premised on prior or contemporaneous [oral] statements at variance
with the terms of a written integrated agreement.” (Casa Herrera, Inc. v.
Beydoun (2004) 32 Cal.4th 336, 346 [discussing Pendergrass].) However, the
Pendergrass rule no longer exists—it was abrogated almost a decade ago.
(Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn.
(2013) 55 Cal.4th 1169, 1182 [overruling Pendergrass and calling it “an
aberration”].)
The third defense that Defendants ask us to consider is based on their
unsupported allegations that the Caseys committed wrongdoing in the
Missouri action. They contend the Caseys “perpetrated a fraud on the
Missouri court.” Their citation to the record reveals they first raised this
47
defense in their supplemental brief in support of their motion to vacate, in a
single paragraph at the end of their argument about their alleged choice of
forum defense. Since the supplemental brief was filed more than 30 days
after service of the notice of entry of judgment, it is questionable whether this
defense was timely asserted. (§ 1710.40, subd. (b) [motion to vacate raising
defenses must be file no later than 30 days after service of notice of entry of
judgment].)
In any event, the defense lacks merit. Extrinsic fraud⎯which,
according to the Law Revision Commission comment to section 1710.40, is
the species of fraud that can be asserted as a defense to enforcement of a
judgment⎯occurs when “the defrauded party was deprived of the opportunity
to present his or her claim or defense to the court, that is, where he or she
was kept in ignorance or in some other manner, other than from his or her
own conduct, fraudulently prevented from fully participating in the
proceeding.” (Home Ins. Co. v. Zurich Ins. Co. (2002) 96 Cal.App.4th 17, 26–
27.) Examples of extrinsic fraud include “ ‘concealment of the existence of a
community property asset, failure to give notice of the action to the other
party, and convincing the other party not to obtain counsel because the
matter will not proceed (and then it does proceed).’ ” (Navarro v. IHOP
Properties, Inc. (2005) 134 Cal.App.4th 834, 844.) This is not what occurred
here. Defendants do not dispute that they received proper notice of the
Missouri action. They do not contend that their lack of participation resulted
from anything other than their own decision not to appear. Instead, they
essentially claim that in their absence, the Caseys were obligated to raise
issues they would have raised if they had elected to participate. This
contention does not describe extrinsic fraud.
48
We further observe Defendants failed to substantiate their claim that
the Caseys committed fraud on the Missouri court. Defendants’ contention
was based on Hill’s averment that the Caseys “apparently did not inform the
Missouri court that there was a written contract between the parties,”
because their operative pleading did not reference the agreement. However,
the Caseys did not state a claim for breach of contract, making their failure to
reference the agreement within their operative pleading immaterial.
Defendants, who had the burden of proof, failed to present evidence that the
Caseys did not alert the Missouri court to the existence of the agreement at
any other stage of the proceedings.
We further observe a claim of extrinsic fraud is not available unless the
defense the party was prevented from asserting is a meritorious one. (New
York Higher Education Assistance Corp. v. Siegel (1979) 91 Cal.App.3d 684,
688.) Here, Defendants fall short of this requirement. In the trial court, the
harm Defendants identified as resulting from the purported fraud was that
the Missouri court never learned the parties’ agreement contained a forum
selection clause. This assumes a forum selection clause is self-executing,
which, as we have discussed, it is not. On appeal, Defendants argue in a
single sentence in their respondents’ brief that the Caseys’ supposed
concealment of the agreement prevented the Missouri court from accurately
determining whether Defendants did, in fact, represent “that certain acts
would be performed and that a certain outcome would occur.” This assertion
fails because it is far too vague to describe cognizable harm from fraud, and
because of the insufficient evidence there was any such fraud.
49
DISPOSITION
The order is reversed and the matter is remanded to the trial court
with instructions to enter a new order denying Defendant’s motion to vacate
entry of the Missouri judgment. The Caseys are entitled to their costs
on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)
DO, J.
WE CONCUR:
HALLER, Acting P. J.
O'ROURKE, J.
50