Filed 10/9/23 Default Recoveries v. Shen CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
DEFAULT RECOVERIES LLC, B316051
Plaintiff and Respondent, Los Angeles County
v. Super. Ct. No. SC129805
JINRONG SHEN,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Elaine W. Mandel, Judge. Affirmed.
John L. Dodd and Associates, John L. Dodd, Benjamin
Ekenes; Law Offices of Fei Pang and Bruce A. Fields for
Defendant and Appellant.
Michelman & Robinson, Sanford L. Michelman, Todd H.
Stitt, Reuben A. Ginsburg, Samantha Drysdale and Tabitha F.
Flood for Plaintiff and Respondent.
__________________________
INTRODUCTION
In 2015, defendant and appellant Jinrong Shen signed a
promissory note in favor of Sheldon Liu, a California resident, in
which appellant agreed to pay Liu 30 million Chinese yuan
within three months. Liu later assigned the note to plaintiff and
respondent Default Recoveries, LLP, a California corporation.
The note, which was signed in the People’s Republic of China,
contains a forum-selection clause stating that California courts
have exclusive jurisdiction over any dispute arising from or
related to the note. When appellant failed to pay, respondent
sued him for breach of the note and related causes of action.
Although respondent attempted to locate appellant first in China
and then in California to serve him with process, respondent
ultimately effected service on appellant by publication in
California. After the trial court denied appellant’s motion to
quash service and his motion to stay or dismiss for forum non
conveniens, appellant defaulted, resulting in a default judgment.
On appeal, appellant challenges the court’s denial of the two
motions. We affirm.
BACKGROUND
1. The Promissory Note
On June 11, 2015, appellant executed a promissory note in
favor of Sheldon Liu. Appellant agreed to pay Liu ¥30 million as
compensation for appellant’s “fail[ure] to ensure [Liu’s]
shareholder rights and investment benefits.” Under the terms of
the note, full payment was due in September 2015.
The note included a choice-of-law and forum-selection
clause:
“I hereby agree that this note shall be governed by
the laws of the State of California, U.S.A., and any
2
dispute arising from or relating to this note shall be
submitted to the exclusive jurisdiction of the courts
of the State of California, U.S.A.”
Appellant failed to pay any amount due on the note, and
Liu sold the note to respondent.
2. The Complaint
On September 7, 2018, respondent filed a complaint
against appellant, alleging causes of action for (1) breach of
contract; (2) breach of the implied covenant of good faith and fair
dealing; (3) fraud; (4) negligent misrepresentation; (5) unfair
competition (Bus. & Prof. Code, § 17200 et seq.); and
(6) declaratory relief.
3. Service of Process
Beginning in the fall of 2018, respondent attempted to
locate and serve appellant in both China and California. Among
other attempts, respondent sent a service packet through the
Ministry of Justice of China, the Central Authority designated
under the Hague Convention, to attorneys Yalin Zhang and
Limeng Yang of R&P China Lawyers.1
In response, Zhang and Yang sent Chinese authorities a
letter of objection to service, arguing that service on them did not
comply with the Hague Convention. As relevant here, the
lawyers wrote:
“The Plaintiff specifically describes the identity and
address of the Defendant SHEN in the 6th
1 Convention on the Service Abroad of Judicial and
Extrajudicial Documents in Civil or Commercial Matters,
Nov. 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638 (hereafter Hague
Convention).
3
paragraph of the 2nd page of the Complaint, which
states, ‘Defendant SHEN is an individual who is
believed to be a citizen and resident of Hong Kong,
China (ID No. HK ***), and is also believed to
reside in California.’ Therefore, the Plaintiff and
the Petitioner are fully aware and sure that
defendant SHEN is a Hong Kong citizen residing in
the State of California, USA. The Plaintiff and the
Petitioner are supposed to have provided the court
with the residence of the defendant SHEN in the
State of California, USA or Hong Kong, and service
should not have been addressed to Mainland
China.”
Respondent then hired an investigator to search for
appellant in California, to no avail.
In November 2019, respondent sought from the trial court
an order for service by publication, supported by declarations by
attorney Samantha Gavin and the private investigator. The
court issued the order as requested, and the Los Angeles Daily
News published the notice for four consecutive weeks in
December.
4. Motion to Quash
Ten days later, appellant filed a motion to quash service of
summons. He argued the service was invalid because he had
insufficient contacts with California to establish personal
jurisdiction in the State. He also argued service by publication
was improper because he was not a California resident.
In support of his motion, appellant filed his own declaration
and declarations by attorneys Zhang and Yang. Appellant
declared that he resided in Shanghai, China, had never lived in
4
California, never conducted business in California, was never
served with the summons and complaint, and did not authorize
R&P China Lawyers to accept service of process on his behalf.
Zhang and Yang also declared that appellant had never
authorized R&P China Lawyers to accept service of process on his
behalf and that they had prepared a letter of objection to service
stating that service on them did not comply with the Hague
Convention.
Respondent opposed the motion, and appellant replied.
The trial court issued a tentative ruling in which it stated
that appellant had consented to personal jurisdiction in
California by agreeing to the forum-selection clause.
Nevertheless, the court intended to grant the motion based on its
view that respondent had not established that it had exercised
reasonable diligence to ascertain appellant’s address in China as
required by the Hague Convention. The court requested
supplemental briefing on the question of reasonable diligence.
Following supplemental briefing, the court denied the
motion to quash, finding that respondent had complied with the
Hague Convention by exercising reasonable diligence in
attempting to locate appellant in China and California before
resorting to service by publication.
5. Writ Petition on Motion to Quash
On August 3, 2020, appellant filed a petition for writ of
mandate in this court challenging the denial of his motion to
quash. We denied the petition without explanation.
6. Inconvenient-Forum Motion
Next, appellant filed a motion to dismiss or stay the action
on grounds of inconvenient forum under Code of Civil Procedure
section 418.10, supported by the declarations of appellant, Qiao
5
Peng, Jerry Jin, and Xin Ning.2 Appellant argued that
California is an inconvenient forum because the parties,
witnesses, and evidence are all located in China; that the Covid-
19 travel restrictions would make it difficult and inconvenient for
parties and witnesses to travel from China to California; that the
pandemic created a serious health risk for appellant and others
having to travel to California; and that the State of California
has no interest in this dispute.
Appellant acknowledged the forum-selection clause only
briefly, arguing, “Even though the Courts generally honor the
parties’ right to choose the forum per agreement, a forum clause
may be unreasonable if the forum is so gravely difficult and
inconvenient that the party will for all practical purposes be
deprived of his day in court.”
Appellant declared that he is “a Hong Kong citizen,
currently staying in China.” He stated that he signed the note in
Shanghai, China in June 2015, and, based on information and
belief, the note “serves as a conditional guarantee that is related
to a series of complicated business transactions with the plaintiff
dated back from 2008.” Appellant wrote that the transactions
related to the note were the subject of “extremely complex”
litigation in China involving several different cases and entities
and thousands of pages of documents and court transcripts.
Respondent opposed the motion, and appellant replied.
On November 18, 2020, the court issued a written tentative
ruling concluding that the forum-selection clause should not be
enforced because it would be prejudicial to require appellant to
2 All undesignated statutory references are to the Code of
Civil Procedure.
6
travel to California during the Covid-19 pandemic. Thus, it
intended to grant the motion on the condition that appellant
stipulate not to assert the statute of limitations defense to a
lawsuit in China. After a hearing, the court granted respondent’s
request to file a sur-reply limited to addressing new evidence and
argument asserted in appellant’s reply. Following that briefing,
the court reversed course and denied the motion, holding that the
forum-selection clause “is enforceable under U.S. and Chinese
law, regardless of whether California is an inconvenient forum.”
7. Default and Default Judgment
After appellant failed to file a responsive pleading, the
court entered first his default and then a default judgment on the
breach of contract cause of action, for a total of $7,663,915.23 in
damages, prejudgment interest, and costs. Appellant filed a
timely notice of appeal.
DISCUSSION
Appellant challenges the trial court’s order denying his
motion to quash service of summons and its subsequent order
denying his inconvenient-forum motion. As to jurisdiction over
him, appellant contends the forum-selection clause in the
promissory note designating California as the required forum did
not operate as consent to personal jurisdiction in California; there
is no other constitutional basis for personal jurisdiction over him;
and any implied consent extended only to the contract claims. He
also contends respondent violated the Hague Convention by
failing to exercise reasonable diligence to locate him in China.
As for the order denying his forum non conveniens motion,
appellant argues China was a proper forum for the suit, and the
court failed to appreciate or properly exercise its discretion to
7
stay or dismiss the California litigation pending proceedings in
China.
1. California has personal jurisdiction over appellant in
this matter.
Appellant contends the court erred by denying his motion
to quash for lack of personal jurisdiction. Specifically, he asserts:
(1) the court erred by concluding he had consented to personal
jurisdiction in California; (2) there is no alternative basis for
personal jurisdiction; and (3) any consent to jurisdiction extended
only to the breach of contract claim.
Respondent argues, and we agree, that appellant at least
implicitly consented to personal jurisdiction by agreeing to the
mandatory forum-selection clause in the promissory note, and the
consent extended to all causes of action.
1.1. Standard of Review
Where there is no conflicting evidence, we review the trial
court’s ruling on personal jurisdiction de novo. (Pavlovich v.
Superior Court (2002) 29 Cal.4th 262, 273.) If the evidence
conflicts, we accept the trial court’s express or implied factual
findings supported by substantial evidence, draw all reasonable
inferences in support of the court’s order, and independently
review the court’s jurisdictional determination. (Burdick v.
Superior Court (2015) 233 Cal.App.4th 8, 17.)
1.2. Appellant consented to personal jurisdiction by
agreeing to the forum-selection clause.
A court cannot adjudicate a personal obligation or claim
unless it has jurisdiction over the person of the defendant.
(Rockefeller Technology Investments (Asia) VII v. Changzhou
Sinotype Technology Co., Ltd. (2020) 9 Cal.5th 125, 139
(Rockefeller).) Under California law, state courts “may exercise
8
personal jurisdiction over a nonresident defendant to the extent
allowed under the state and federal Constitutions.” (§ 410.10.)
Section 410.10 “ ‘manifests an intent to exercise the broadest
possible jurisdiction, limited only by constitutional
considerations.’ ” (Szynalski v. Superior Court (2009)
172 Cal.App.4th 1, 6–7 (Szynalski).)
The United States Constitution, in turn, allows a state to
exercise jurisdiction over a nonresident defendant if the
defendant has sufficient “minimum contacts” with the forum such
that “maintenance of the suit does not offend ‘traditional notions
of fair play and substantial justice.’ ” (Internat. Shoe Co. v.
Washington (1945) 326 U.S. 310, 316.) Personal jurisdiction can
also be based on a defendant’s express or implied consent.
(Rockefeller, supra, 9 Cal.5th at pp. 138–140.) If the defendant
consents to personal jurisdiction, minimum contacts are not
required. (Ibid.)3
“Agreeing to resolve a particular dispute in a specific
jurisdiction . . . is one means of expressing consent to personal
jurisdiction of courts in the forum state for purposes of that
dispute.” (Szynalski, supra, 172 Cal.App.4th at p. 7.) That is
because an agreement to resolve a dispute in a particular forum
necessarily implies consent to personal jurisdiction in that forum.
(Ibid.; see also Rockefeller, supra, 9 Cal.5th at p. 140.)
For example, in Rockefeller, our Supreme Court held that
by agreeing to arbitrate in California, the parties had impliedly
consented to personal jurisdiction in California courts to enforce
3 Because we conclude appellant consented to personal
jurisdiction, we need not reach his alternative contention that he
lacks sufficient minimum contacts with California.
9
the arbitration agreement and enter judgment on an arbitration
award. (Rockefeller, supra, 9 Cal.5th at pp. 143–144.) Those
implied agreements were necessary to effectuate the express
agreement. (Id. at p. 142.) In the same way, a forum-selection
clause constitutes consent to personal jurisdiction in the selected
forum. (Id. at p. 140.)
Appellant argues Rockefeller did not consider the limits of a
party’s contractual consent to personal jurisdiction. Relying on
Global Packaging, Inc. v. Superior Court (2011) 196 Cal.App.4th
1623 (Global Packaging), he contends that “the mere signing of a
forum-selection clause does not itself amount to a consent to
personal jurisdiction; to comport with the Due Process Clause,
agreement to submit to personal jurisdiction must be express and
unambiguous.” We do not read Global Packaging so broadly, and
remain guided, as we must, by the principles laid out in our
Supreme Court in Rockefeller.
Global Packaging held that a venue-selection clause did not
imply agreement to submit to personal jurisdiction in the selected
venue. (Global Packaging, supra, 196 Cal.App.4th at p. 1632.)
The court explained that because the parties in that case could
have expressly consented to personal jurisdiction—yet did not—
the courts should not supply the missing term. (Id. at p. 1634.)
We find Global Packaging inapt for a fundamental
reason—it does not involve a forum-selection clause of the type
presented here. Global Packaging was a Pennsylvania company
that produced packaging for consumer products. It licensed
software from Epicor Software Corporation, a Delaware
corporation with its principal place of business in Orange County.
When a dispute arose between the companies, Epicor sued Global
Packaging in Orange County. (Global Packaging, supra, 196
10
Cal.App.4th at p. 1627.) The question on appeal was whether a
clause in the license that referred only to venue constituted a
forum-selection clause under which Global Packaging impliedly
consented to submit to personal jurisdiction in California courts.
(Id. at pp. 1627–1628.)
Our colleagues in the Fourth District found a venue-
selection clause could not be transformed into consent to personal
jurisdiction in California: “The trial court took a clause referring
to ‘venue,’ translated ‘venue’ into ‘forum,’ and then extended
‘forum’ to include personal jurisdiction. This stretches [the
parties’ agreement] beyond what its actual words can bear and
pulls Epicor out of a pit of its own digging. Global Packaging
cannot be haled into a California court on that basis.” (Global
Packaging, supra, 196 Cal.App.4th at p. 1635.)
As the Global Packaging court recognized, the clause was
nearly incomprehensible.4 It provided in pertinent part: “ ‘Any
controversy or claims arising out of or relat [ ] to this Agreement
shall be venued only in the state or federal court in and [ ]
(a) Orange County, California or (b) the jurisdiction in which the
Software is located; without regard to their conflict of laws and
principle [sic]. Such venue shall be determined by the choice of
the plaintiff bringing the action.” (Id. at p. 1627, brackets
original.)
The Court of Appeal found the trial court had created
jurisdiction out of venue; yet, the latter was a geographical
designation determined largely by statute and the former
4 “A court should not be called upon to function as a backstop
for sloppy contract drafting.” (Global Packaging, supra,
196 Cal.App.4th at p. 1634.)
11
founded in the authority of the State and limited by the Due
Process Clause. The case before us does not require such a
stretch. The clause at issue is the second paragraph of a two-
paragraph agreement in which appellant promised to pay Liu
¥30 million within three months. It is unambiguous: “I hereby
agree that this note shall be governed by the laws of the State of
California, U.S.A., and any dispute arising from or relating to
this note shall be submitted to the exclusive jurisdiction of the
courts in the State of California, U.S.A.” As the clause mandates,
“the exclusive jurisdiction of the courts [is] in the State of
California.” Appellant cannot declare that jurisdiction over this
note shall be in a California court while at the same time assert
that California has no personal jurisdiction over him.
In short, when presented with a word salad of a clause
buried in an end-user license agreement, the court in Global
Packaging declined to hold the defendant had consented to
personal jurisdiction in California courts. At most, the court held
that choice-of-venue clauses do not automatically confer personal
jurisdiction. We agree but conclude, for the reasons stated, the
promissory note here did convey personal jurisdiction over
appellant.5
We find the other case on which appellant relies, Hunt v.
Superior Court (2000) 81 Cal.App.4th 901, also distinguishable
but for a different reason. There, a guaranty of a lease contained
5 To the extent Global Packaging can be read to require the
granting of the forum non conveniens motion, we respectfully decline
to follow the opinion. (See Sarti v. Salt Creek Ltd. (2008)
167 Cal.App.4th 1187, 1193–1194 [“there is no horizontal stare decisis
in the California Court of Appeal,” and one panel of the court is not
bound another court of appeal’s opinion].)
12
a forum selection clause designated as the “applicable
jurisdiction.” (Id. at p. 907.) The guaranty did not define
“applicable jurisdiction,” so the court of appeal turned to the
underlying lease, the relevant provision of which is set out in the
margin.6 That clause, in turn, addressed choice of law, not forum
selection, and did not constitute plaintiff’s consent to jurisdiction
in California. (Id. at p. 909.)
1.3. Personal jurisdiction extended to all causes of
action.
Appellant next contends that even if he consented to
personal jurisdiction by agreeing to the forum-selection clause,
his consent was limited to an action to enforce the promissory
note. We disagree, but it really doesn’t matter.
In Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th
459 (Nedlloyd Lines), the Supreme Court considered the effect of
a choice-of-law clause in a contract between commercial entities
to finance and operate an international shipping business. The
Supreme Court was asked to determine whether the clause,
which stated the contract would be “ ‘governed by’ ” the law of
6 “18. GOVERNING LAW. As used in this paragraph 18,
‘Applicable Jurisdiction’ means the state, as the same may
change from time to time, where the holder of the Lessor's
interest in this Lease maintains its principal office responsible
for administering this Lease. This Lease and any guaranty
hereof shall be interpreted and construed in accordance with, and
governed by, the laws of the Applicable Jurisdiction applicable to
lease and guaranty agreements respectively, made and to be fully
performed in the Applicable Jurisdiction.”
13
Hong Kong, applied to the plaintiff’s claim for breach of fiduciary
duty. (Id. at p. 462.) The plaintiff contended its fiduciary duty
claim was independent of the contract and, therefore, outside the
intended scope of the provision, entitling plaintiff to the
application of California law on that claim. (Id. at p. 468.)
The Supreme Court disagreed: “When two sophisticated,
commercial entities agree to a choice-of-law clause like the one in
this case, the most reasonable interpretation of their actions is
that they intended for the clause to apply to all causes of action
arising from or related to their contract.” (Nedlloyd Lines, supra,
3 Cal.4th at p. 468.) The contract between the parties said it was
to be “governed by” Hong Kong law; it did not provide for any
exceptions. (Id. at pp. 468–469.) The Court concluded that
language meant Hong Kong law applied not only to claims
involving contract interpretation but also to any cause of action
based on the relationship created by the contract. (Id. at p. 469.)
“We seriously doubt that any rational businessperson,
attempting to provide by contract for an efficient and business-
like resolution of possible future disputes, would intend that the
laws of multiple jurisdictions would apply to a single controversy
having its origin in a single, contract-based relationship.”
(Nedlloyd Lines, supra, 3 Cal.4th at p. 469.) The Court held, “a
valid choice-of-law clause, which provides that a specified body of
law ‘governs’ the ‘agreement’ between the parties, encompasses
all causes of action arising from or relating to that agreement,
regardless of how they are characterized, including tortious
breaches of duties emanating from the agreement or the legal
relationships it creates.” (Ibid., italics added.)
The contract here precisely tracked the Nedlloyd Lines
language. It provided: “this note shall be governed by the laws of
14
the State of California, U.S.A., and any dispute arising from or
relating to this note shall be submitted to the exclusive
jurisdiction of the courts in the State of California, U.S.A.”
(Italics added.) We see no reason to treat the expansive language
in this choice-of-forum clause differently than the similarly-
expansive choice-of-law provision in Nedlloyd Lines. (See Cal-
State Business Products & Services, Inc. v. Ricoh (1993) 12
Cal.App.4th 1666, 1676–1677 (Cal-State) [applying Nedlloyd
Lines to forum-selection clause that stated: “any case or
controversy arising under or in connection with the Agreement”
shall be heard in a New York court].)
This California Supreme Court authority aside, appellant
cites Bancomer S.A. v. Superior Court (1996) 44 Cal.App.4th 1450
(Bancomer) for the proposition that a forum-selection clause can
apply to tort claims only if resolution of those claims requires
interpretation of the contract. The forum-selection clause in
Bancomer stated: “ ‘Any conflict which may arise regarding the
interpretation or fulfillment of this contract, shall be submitted
expressly to the courts of the City of Ensenada, B.C.’ ” (Id. at
p. 1453, italics omitted.) The Court of Appeal explained that in
general, “ ‘forum selection clauses can be equally applicable to
contractual and tort causes of action. [Citations.] Whether a
forum selection clause applies to tort claims depends on whether
resolution of the claims relates to interpretation of the contract.
[Citations.]’ ” (Id. at p. 1461.) Under the language of the
contract, the forum-selection clause did not encompass tort
claims for fraudulent inducement because those claims “[did] not
relate to ‘any conflicts’ ‘regarding the interpretation or
fulfillment’ of the agreement.” (Id. at p. 1462.)
15
Bancomer is easily distinguishable. The contract there
expressly limited the forum selection clause to those claims
“regarding the interpretation or fulfillment of this contract.” No
such limitation appears in the note here. To the contrary, the
note broadly states, “any dispute arising from or relating to this
note shall be submitted to the exclusive jurisdiction of the courts
in the State of California, U.S.A.” Each cause of action in the
complaint (with the possible exception of the declaratory relief
claim) expressly relates to the note.
In any event, the record does not disclose that the trial
court judgment entered here covered every cause of action or that
even if it did include non-contractual claims, the result would be
any different. Neither the judgment nor the notice of entry
delineates the various causes of action. Nor does appellant even
argue that the total judgment includes amounts attributable
solely to tort claims. Thus, any error of this sort is harmless.
2. Service was proper.
Appellant contends respondent violated the Hague
Convention by failing to exercise reasonable diligence to locate
him in China. As such, the subsequent service by publication
was invalid, and the trial court should have granted his motion to
quash. We conclude that once appellant’s lawyers in China
represented that appellant was living in California, respondent
was not required to undertake further efforts to locate him
abroad. Taken as a whole, the evidence was sufficient to support
the trial court’s finding that respondent was reasonably diligent
in attempting to locate appellant. Accordingly, the Hague
Convention did not apply, and service by publication was proper.
16
2.1. Legal Principles
The Hague Convention is a multilateral treaty that governs
procedures for service of process to defendants living in foreign
jurisdictions. (Rockefeller, supra, 9 Cal.5th at p. 135.) The
United States was an original signatory to the Convention, and
China adopted it in 1992. (Ibid.)
The Convention applies “ ‘in civil or commercial matters,
where there is occasion to transmit a judicial or extrajudicial
document for service abroad.’ ” (Rockefeller, supra, 9 Cal.5th at
p. 135.) The Convention states it “ ‘shall not apply where the
address of the person to be served with the document is not
known.’ ” (Kott v. Superior Court (1996) 45 Cal.App.4th 1126,
1133 (Kott).) That is, “the Convention does not apply to
situations in which the whereabouts of the defendant cannot be
ascertained despite reasonable diligence.” (People v. Parcel No.
056–500–09 (1997) 58 Cal.App.4th 120, 124–125.)
Even when the Hague Convention does not apply, state law
may nonetheless require transmittal abroad as a necessary part
of service. (Rockefeller, supra, 9 Cal.5th at p. 145.) In California,
section 413.10 governs service of summons, and the statute
explicitly requires plaintiffs to serve any defendant outside the
United States in accordance with the Hague Convention.7 Thus,
7 “Except as otherwise provided by statute, a summons shall
be served on a person: . . . Outside the United States, as
provided in this chapter or as directed by the court in which the
action is pending, or, if the court before or after service finds that
the service is reasonably calculated to give actual notice, as
prescribed by the law of the place where the person is served or
as directed by the foreign authority in response to a letter
rogatory. These rules are subject to the provisions of the
17
when the Convention applies to a California proceeding, failure
“ ‘to comply with the Hague Service Convention procedures voids
the service even though it was [otherwise] made in compliance
with California law. [Citation.] This is true even in cases where
the defendant had actual notice of the lawsuit.’ ” (Rockefeller, at
p 138.)
The “only method of service under California law which
does not require the transmission of documents abroad, and
consequently does not implicate the Hague Service Convention, is
service of summons by publication where the party’s address
remains unknown during the publication period despite the
exercise of reasonable diligence.” (Kott, supra, 45 Cal.App.4th at
p. 1136.) Section 415.50, subdivision (a), authorizes service by
publication when, despite reasonable diligence, the defendant
cannot be located and served another way.8 Reasonable diligence
is the same for purposes of both the Hague Convention and
service by publication. (Knott, at pp. 1136–1137.)
Reasonable diligence “ ‘denotes a thorough, systematic
investigation and inquiry conducted in good faith by the party or
his agent or attorney. [Citations.] A number of honest attempts
to learn defendant’s whereabouts or his address . . . are generally
Convention on the ‘Service Abroad of Judicial and Extrajudicial
Documents’ in Civil or Commercial Matters (Hague Service
Convention).” (§ 413.10, subd. (c), italics added.)
8 “A summons may be served by publication if upon affidavit
it appears to the satisfaction of the court in which the action is
pending that the party to be served cannot with reasonable
diligence be served in another manner specified in this
article . . . .” (§ 415.50, subd. (a).)
18
sufficient. . . . However, the showing of diligence in a given case
must rest on its own facts and ‘[n]o single formula nor mode of
search can be said to constitute due diligence in every case.’ ”
(Kott, supra, 45 Cal.App4th at pp. 1137–1138.) “The question is
whether the plaintiff took the steps a reasonable person who
truly desired to give notice of the action would have taken under
the circumstances.” (Rios v. Singh (2021) 65 Cal.App.5th 871,
880.)
Where, as here, “an issue is resolved by way of declarations
or affidavits, ‘ “the rule on appeal is that those affidavits favoring
the contention of the prevailing party establish not only the facts
stated therein but also all facts which reasonably may be inferred
therefrom, and where there is a substantial conflict in the facts
stated, a determination of the controverted facts by the trial court
will not be disturbed.” [Citation.] But we “independently review
[the trial court’s] statutory interpretations and legal conclusions
[citations].” ’ ” (Lebel v. Mai (2012) 210 Cal.App.4th 1154, 1159.)
“We review a trial court’s finding that the defendant could not
with reasonable diligence be served by a means superior to
publication for substantial evidence.” (Rios v. Singh, supra,
65 Cal.App.5th at pp. 880–881.)
2.2. Efforts to Serve Appellant
The trial court concluded that respondent’s efforts to locate
appellant in China, his lawyers’ representations that appellant
was in California, and respondent’s efforts to locate him in this
State together constituted reasonable diligence. Substantial
evidence supports that conclusion.
Service at Howard Johnson’s Hotel in Shanghai.
Shanghai attorney Peiming Yang declared that in China,
an individual’s address and telephone number are treated as
19
confidential information, and there was no legal basis for a
formal search of registered data for real estate in this case. The
court found Yang’s declaration credible.
With no basis for a records search, respondent started with
the best lead it had: information that appellant had been living
at the Howard Johnson Hotel in Shanghai. Appellant was the
registered legal representative of Shanghai Ping’an Xinlun
Property Development Co., Ltd., which owned the commercial
development at 1 Fenyang Road in Shanghai, where the Howard
Johnson Hotel was located. Appellant told Sheldon Liu (the
beneficiary of the note) and Sheldon’s wife that when in China,
he lived and worked at the Howard Johnson Hotel located at
1 Fenyang Road in Shanghai. Starting in 2008 or 2009, the Lius
visited appellant at the hotel many times; they noted he appeared
to be living and working there. They also sent documents to and
received documents from appellant at the same hotel address.
Finally, in 2015, appellant signed the ¥30 million promissory
note at the hotel.
Based on this information, respondent attempted to serve
appellant at the Howard Johnson Hotel under the Hague
Convention. Counsel mailed service packets to the Ministry of
Justice of China in September 2018 and again in March 2019,
requesting service on appellant at the hotel.
Appellant later submitted a declaration in support of his
motion to quash that stated: “Howard Johnson Hotel located at
l Fenyang Rd, Huai Hai Lu Xi Duan, Xuhui District, Shanghai,
China, 200031 was never my registered residence or permanent
residence in Shanghai, China. On occasion, I did conduct
business meetings at the Hotel only relative to business entities
that I have been involved with and have stayed there as a guest
20
at times when doing so [ ]. I never maintained any office or
residence at the Hotel and never authorized the Hotel to accept
service of legal process documents.”
Service on Counsel in China. In November 2018 and
March 2019, respondent’s counsel also mailed service packets to
the Ministry of Justice of China requesting service on appellant’s
attorneys in China, Yalin Zhang and Limeng Yang. Service on
the attorneys was completed on June 17, 2019. Respondent’s
counsel subsequently received a certificate of service to that
effect.
Objection Letter. On July 8, 2019, Zhang and Lang,
appellant’s lawyers in China, sent a letter to Chinese authorities
objecting to service. The lawyers stated that they were not
authorized to accept service of process on appellant’s behalf.
They also asserted that appellant had been served at the wrong
address:
“The Complaint shows that the Defendant of the
Case No. SCl29805 is Jinrong SHEN. The Plaintiff
specifically describes the identity and address of the
Defendant SHEN in the 6th paragraph of the 2nd
page of the Complaint, which states ‘Defendant
SHEN is an individual who is believed to be a
citizen and resident of Hong Kong, China (ID No.
HK P667203191), and is also believed to reside in
California.’ Therefore, the Plaintiff and the
Petitioner are fully aware and sure that the
Defendant SHEN is a Hong Kong citizen residing in
the State of California, USA. The Plaintiff and the
Petitioner are supposed to have provided the court
with the residence of the Defendant SHEN in the
21
State of California, USA or Hong Kong, and service
should not have been addressed to Mainland
China.”
Several pages later, the letter made a similar, more explicit
claim about appellant’s whereabouts: “As mentioned above, the
Plaintiff and the Petitioner are fully aware that the Defendant
SHEN is a Hong Kong citizen residing in the State of California,
U.S.A, rather than Mainland China.”
Efforts to Locate Appellant in California. “Based on the
objection served by Shen’s attorneys,” counsel for respondent
“immediately started searching for him in California.” The court
found counsel’s claims credible.
Counsel hired a private investigator to conduct the
California search. The investigator searched comprehensive
database records for appellant, the Shen Family Living Trust, Jia
Liu (believed to be appellant’s partner and the mother of his
three young children), and Wen Fei Shen (appellant’s adult
daughter). The investigator found no property associated with
appellant but did find property associated with the trust, Jia Liu,
and Wen Fei Shen.
The investigator conducted all-day stakeouts of the five
identified properties, which were located in Arcadia and Irvine.
Although he did not see appellant or Jia Liu at those locations,
the investigator observed someone he believed to be Wen Fei
Shen leaving a residence in Arcadia. He tried and failed to speak
with her. Then, he contacted neighbors to confirm her identity,
but the neighbors did not know the resident.
Next, the investigator found a phone number associated
with Jia Liu, called the number, and left a message; Liu did not
return the call.
22
The investigator asked the United States Postal Service to
determine whether appellant received mail at any of the five
target properties. USPS responded that appellant received mail
at 20 E. Foothill Boulevard, #108 in Arcadia, California.
That address turned out to be a commercial building where
four companies conducted business: Irvine Home Property, LLC;
Mingzhu Development Corporation; Mingzhu Investment, LLC;
and Zhanshou, LLC. All four companies were associated with
appellant’s adult daughter, Wen Fei Shen, who was listed as the
manager of each one; Zhanshou, LLC was also associated with
appellant’s partner, Jia Liu, who had formerly been listed as its
agent for service of process. The investigator surveilled the
building for two days in July 2019, but found no one at the suite.
Neighbors informed him that traffic in and out of the suite was
“very light.”
In October 2019, counsel tried to serve appellant at the
Arcadia property located on Foothill Boulevard, but the process
server reported the business had moved without leaving a
forwarding address or updating its information on the California
Secretary of State website. Counsel nevertheless sent appellant
a copy of the summons and complaint at the same location, but
the envelope was returned as undeliverable.
Counsel ultimately filed an application for service by
publication in November 2019.
2.3. Substantial evidence supports the court’s
conclusion that respondent exercised reasonable
diligence.
The court below concluded that respondent had acted with
reasonable diligence. Respondent had provided “sufficient
evidence that it exercised reasonable diligence by attempting to
23
serve Shen at the hotel and contacting Shen’s attorneys
regarding service. Plaintiff made substantial efforts to serve
Shen in China before resorting to service by publication. The
court finds plaintiff complied with the requirements of the Hague
Service Convention, and service by publication was valid.”
We conclude substantial evidence supports the court’s
conclusion. To be sure, appellant points to additional efforts
counsel could have made to locate him in China. In particular, he
argues counsel should have: attempted to verify that he still
lived at the Howard Johnson Hotel by contacting the friends he
shared with Sheldon Liu, the note’s beneficiary; asked his
Chinese lawyers for his current address; and sought address
information from the WeChat app. Certainly, respondent’s
counsel could have done more to determine whether appellant
lived at the hotel. But the possibility that undertaking further
inquiry would have proved successful does not mean as a matter
of law that the efforts actually made were not reasonably
diligent.
Once appellant’s lawyers represented that appellant lived
in California, the trial court reasonably found respondent was not
required to keep trying to find him in China. And although
appellant has argued that his attorneys’ letter merely repeated
the allegations of the complaint, the trial court was not required
to credit that interpretation. The court held that respondent
“made multiple attempts to determine Shen’s address from his
attorneys, who stated attempting service in China would be futile
because Shen resided in California.” Based on the record before
us, these are reasonable inferences, and we will not disturb them
on appeal.
24
Likewise, the court credited respondent’s evidence that the
address information in China is confidential. By contrast, it was
not persuaded that “a Shanghai resident’s address can be
obtained through ‘the use of WeChat App on cell phones by
adding the official account of Shanghai Public Safety and
Population Management and registering as an attorney.’ . . .
Finding an address via a chat app does not appear to the court to
be a reliable method of finding a party’s address.”
Appellant presented little evidence about the reliability of
WeChat. At the hearing on the motion, for example, appellant’s
attorney argued:
“They now know that there is a custom and practice
as of January 2019 for attorneys to use the WeChat
app to locate residences. They used an attorney in
Shanghai to assist them. Anyone that is aware of
this procedure would have known that that was an
avenue for them to explore. They have evidence
that they have submitted that one of their witnesses
communicated with Mr. Shen on WeChat. So they
knew that he utilized WeChat as a means of
communication, which would have a record of—or I
assume to sign up for WeChat, you have to provide
a residence address. I mean, I don’t know, but it
would seem that that is the custom and practice in
China.”
On appeal, appellant insists substantial evidence does not
support the court’s WeChat skepticism because “WeChat is not
some obscure app; one article reported WeChat is one of the main
ways people communicate in China, and, even when doing
business, people prefer WeChat to email.” In support of that
25
claim, he cites to a CNBC article from 2019.9 Appellant’s
argument notwithstanding, we are not prepared to hold that a
WeChat address search is a prerequisite for service by
publication in California. The trial court found respondent acted
with reasonable diligence without it, and, under our standard of
review, there is no reason for us overturn that finding.
Nor was the evidence appellant submitted to the trial court
any more compelling. Appellant’s attorney could not describe
how the asserted address-search function worked, appearing to
speculate when she suggested: “I assume to sign up for WeChat,
you have to provide a residence address” and “I mean, I don’t
know, but it would seem that that is the custom and practice in
China.”
The court noted in response: “Despite the statements that
the custom and practice from January of ’19 is that the attorneys
use WeChat, the court does not find that that is a necessarily
sanctioned way of locating people.”
Taken as a whole, substantial evidence supports the court’s
conclusion that respondent made reasonably diligent efforts to
find appellant in China, appellant’s lawyers in China represented
appellant was living in California, and respondent was
reasonably diligent in attempting to locate him here.
Accordingly, service was proper.
3. The court properly denied appellant’s inconvenient-
forum motion.
Appellant argues the court erred by denying his motion to
dismiss or stay the action based on inconvenient forum. First, he
9 As the article is neither part of the record on appeal nor a
proper subject of judicial notice, we do not address it.
26
contends the court misapplied Chinese law when it concluded
China was not a suitable alternative forum for this dispute.
Then, he argues the court did not understand that it had
discretion not to enforce the promissory note’s mandatory forum-
selection clause. We conclude the court properly understood and
exercised its discretion and reasonably chose to enforce the
provision. Accordingly, we need not—and do not—opine on either
the Chinese rules of civil procedure or whether China constituted
a suitable alternative forum.
3.1. Legal Principles
Forum non conveniens is an equitable doctrine, codified in
section 410.30, that grants trial courts discretion to stay or
dismiss any action that may be more appropriately and justly
tried elsewhere. (Stangvik v. Shiley Inc. (1991) 54 Cal.3d 744,
751 (Stangvik); § 410.30, subd. (a) [court must determine whether
“in the interest of substantial justice an action should be heard in
a forum outside this state”].) The scope of the court’s discretion
depends on the type of case before it.
When assessing an inconvenient-forum motion in “a
contract dispute in which the . . . agreement contains a forum
selection clause, a threshold issue . . . is whether the forum
selection clause is mandatory or permissive.” (Animal Film, LLC
v. D.E.J. Productions, Inc. (2011) 193 Cal.App.4th 466, 471.) A
mandatory forum-selection clause requires parties to litigate in
the forum designated in the contract; under a permissive forum-
selection clause, the parties need only submit to jurisdiction in
the designated forum. (Berg v. MTC Electronics Technologies
(1998) 61 Cal.App.4th 349, 357–359 (Berg).) Here, the parties
agree that the promissory note contained a mandatory forum-
27
selection clause under which appellant agreed to litigate disputes
in California.
Whether a forum-selection clause is mandatory or
discretionary matters because California law favors enforcement
of mandatory forum-selection clauses. (Quanta Computer Inc. v.
Japan Communications Inc. (2018) 21 Cal.App.5th 438, 444
(Quanta).) Since, without such a clause, “neither party possesses
a right to any particular forum,” a court’s “selection of one
[forum] over the other requires the weighing of a gamut of factors
of public and private convenience, not to mention the strong
interest of a plaintiff’s domicile in providing the plaintiff access to
its courts.” (Cal-State Business Products & Services, Inc. v. Ricoh
(1993) 12 Cal.App.4th 1666, 1683 (Cal-State); see Berg, supra, 61
Cal.App.4th at p. 359 [where “a clause merely provides for
submission to jurisdiction, and does not expressly mandate
litigation exclusively in a particular forum, the normal forum non
conveniens analysis applies”].)
A mandatory forum-selection clause, by contrast, obviates
these concerns and does not require consideration of all the
typical non conveniens forum factors.10 (Quanta, supra,
21 Cal.App.5th at pp. 444–445.) We may infer that “a party
10 The typical forum non conveniens analysis involves a 25-
factor test balancing the private interests of the litigants and the
public interests of the forum state. (Great Northern Ry. Co. v.
Superior Court (1970) 12 Cal.App.3d 105, 113–115.) The most
important factors are whether the plaintiff is a resident of the
forum state and the availability of a suitable alternative forum.
(Cal-State, supra, 12 Cal.App.4th at p. 1675.)
28
which has contracted away its right to choose its home forum (as
well as all the concomitant conveniences of a home forum) has
presumably done so because the value it receives from the
negotiated deal is worth the chance the party may be required to
litigate disputes elsewhere. To apply the general factors in this
context would in essence be rewriting the bargain struck between
the parties, which might not have been consummated in the
absence of the forum-selection clause.” (Cal-State, supra,
12 Cal.App.4th at p. 1683.)11
To be sure, a court may decline to enforce even a
mandatory forum-selection clause if it concludes the chosen
forum is unfair or unreasonable under the circumstances of the
case. (Quanta, supra, 21 Cal.App.5th at p. 445.) Typically,
however, a “ ‘court will . . . honor a mandatory forum selection
clause without extensive analysis of factors relating to
convenience. [Citation.]’ ” (Ibid.)
11 Although appellant insists that courts must weigh the
gamut of public and private concerns even in the face of a
mandatory forum-selection clause, the case he cites in support of
that proposition involved a permissive forum-selection clause, not
a mandatory one. (Appalachian Ins. Co. v. Superior Court (1984)
162 Cal.App.3d 427, 431 [defendant agreed to “submit to the
jurisdiction of any court of competent jurisdiction within the
United States”], 439 [“the Service of Suit clause involved here . . .
did not specify a particular forum], 439–440 & fn. 5
[distinguishing cases involving mandatory forum-selection
clauses because policy concerns in such cases “are not inherent in
the type of forum selection clause involved here”]; see also Berg,
supra, 61 Cal.App.4th at p. 359 [concluding forum-selection
clause in Appalachian Ins. Co. was permissive].)
29
We review the court’s decision to deny appellant’s
inconvenient-forum motion and enforce the mandatory forum-
selection clause for abuse of discretion. (Quanta, supra,
21 Cal.App.5th at pp. 446–447.) “The granting or denial of such a
motion is within the trial court’s discretion only and substantial
deference is accorded its determination in this regard.”
(Stangvik, supra, 54 Cal.3d at p. 751.) A court may abuse its
discretion by failing to exercise the discretion required by law.
(Austin v. Valverde (2012) 211 Cal.App.4th 546, 550 [failure to
exercise discretion is itself an abuse of discretion].)
3.2. Proceedings Below
After reviewing appellant’s inconvenient-forum motion and the
subsequent briefing, the court below issued a tentative ruling in
which it concluded:
“The court finds the note’s forum selection clause
should not be enforced here. Given Mr. Shen’s
advanced age, requiring him to travel to California
during the COVID-19 pandemic would be
prejudicial. Plaintiff has not identified a
substantial public interest that would be served by
requiring this matter to be heard in California to
offset this private interest, as well as the fact that
all other witnesses and evidence are in China. Per
Stangyik, however, the court will require defendant
to stipulate he will not raise the statute of
limitations defense in the Chinese action.
GRANTED, with the court staying this action
pending commencement of the action in China and
defendant’s stipulation that he will not raise the
statute of limitations as a defense there.”
30
The court then granted respondent’s request to file
additional briefing and heard argument at a subsequent 20-
minute remote hearing. At the hearing, appellant’s attorney
stressed “there are a lot of factors that the court did not bring out
in the tentative last time, which I think are material to the
court’s decision today.” She went on to discuss those factors at
length.
Respondent’s attorney, in turn, emphasized “that when
parties have contracted in advance to litigat[e] disputes in a
particular forum, courts should not unnecessarily disrupt the
parties’ settled expectation.” When counsel quoted the
promissory note—“any dispute arising from or relating to this
note shall be submitted to the exclusive jurisdiction of the courts
in the State of California”—the court interjected: “That’s pretty
clear, isn’t it, counsel?”
Appellant’s attorney responded: “this note was originally
signed in 2015, okay? . . . So here it is, 2021. The parties when
signing the note could not have anticipate[d] this pandemic that
has virtually brought a standstill to the State of California and
elsewhere.” After additional arguments from both sides about
the extent to which the court could consider inconvenience,
appellant’s attorney urged: “Under the circumstances, Mr. Shen
will suffer irrevocable, irrefutable prejudice and harm if forced to
proceed with the litigation right now.” The court then took the
matter under submission, assuring the parties that it would look
again at the evidence and the briefing.
After considering the matter further, the court issued a
written final order, which states:
“Plaintiff’s sur-reply provides Chinese authority that
a forum selection clause in a contract mandates
31
litigation in the selected forum. [Citation.] Plaintiff
cites Resoc Int’l. Trading Limited v. China Civil
Engineering Construction Corporation Beijing High
Court, 2019, BJ-Civil-Final No.62, June 28, 2020,
wherein the Beijing High Court held where the
parties have ‘agreed to choose the jurisdiction of the
dispute[,]’ the agreement is enforceable even if a
more convenient forum exists.
“Additionally, in Atlantic Marine Const. Co., Inc. v.
U.S. Dist. Court for Western District of Texas (2013)
571 U.S. 49, the Supreme Court determined ‘[w]hen
parties agree to a forum selection clause, they waive
the right to challenge the preselected forum as
inconvenient[.]’
“Neither party disputes there is a forum selection
clause identifying California as the chosen forum.
The clause is enforceable under U.S. and Chinese
law, regardless of whether California is an
inconvenient forum. MOTION DENIED.” (Brackets
original.)
3.3. The court exercised and did not abuse its
discretion.
Appellant infers from the changes to the tentative ruling
that the court denied his motion because it misunderstood the
law and failed to exercise its discretion. We disagree.
First, any legal error occurred in the tentative ruling, not
the final order. “On a motion for forum non conveniens, the
defendant, as the moving party, bears the burden of proof.”
(Stangvik, supra, 54 Cal.3d at p. 751.) In its tentative, the court
identified the following governing standard: “In determining
32
whether to grant a motion under § 410.30, a court weighs the
private interest of the litigants against the public interest in
retaining the action in California. [Citation.] Private interests to
be considered include ease of access to evidence, enforceability of
the judgment, cost of obtaining witnesses and the residence of the
parties/witnesses.”
But that was the wrong standard. As we have explained,
the public/private balancing test only applies when the dispute is
not governed by a mandatory forum-selection clause. It does not
apply in cases like this one, in which the parties have agreed in
advance that disputes must be heard in California. (Quanta,
supra, 21 Cal.App.5th at pp. 444–445.) Under those
circumstances, the defendant faces a higher hurdle: He must
establish that the previously-chosen forum is unfair or
unreasonable under the circumstances of the case. (Ibid.) In the
tentative ruling, the court did not note that distinction. As such,
it held appellant to a lower burden of proof than it should have.
In its final order, by contrast, the court appears to have
applied the correct standard, noting that the forum-selection
clause was enforceable under California law, and appellant had
waived his right to challenge the preselected forum as
inconvenient. The differences between the tentative and final
rulings, therefore, are not evidence the court misunderstood its
discretion. They demonstrate only that when the court applied
the correct standard of review, the court also changed its
conclusion. Although defendant may have satisfied the lesser
(incorrect) burden of proof, he did not meet the higher (correct)
one.
Second, the reporter’s transcript of the hearing on this
motion indicates that the court engaged carefully with appellant’s
33
concerns and understood its discretion. Yet appellant mentions
the hearing only in passing. For example, in support of his
contention that the court misunderstood the scope of its
discretionary authority, appellant emphasizes the court’s
statement that the forum-selection clause “is enforceable under
U.S. and Chinese law, regardless of whether California is an
inconvenient forum.” Appellant acknowledges this was a correct
statement of the law—at least insofar as “mere inconvenience
and additional expense” do not render a bargained-for forum
unfair or unreasonable—but argues the court did not consider the
unforeseeability of his pandemic-related challenges. Appellant
made this very argument to the trial court. The court understood
his position; it just didn’t agree with him.
In any event, the pandemic was but one factor for the court
to consider when exercising its discretion. Our courts accord
great weight to California plaintiffs’ choice of California as a
forum. (Stangvik, supra, 54 Cal.3d at pp. 754–755.) Here, both
the note’s beneficiary (Liu) and his assignee (respondent) are in
California. Appellant expressly agreed to litigate the dispute in
California courts. It is not self-evident that the pandemic was so
uniquely challenging for appellant that California residents
should be denied access to California courts and forced to litigate
abroad.
Finally, the parties argue at length about whether China
would be a suitable alternate forum for their dispute. The
question is academic. Although the availability of an alternate
forum is necessary to establish forum non conveniens, it does not
end the analysis. That is, even if a case could be tried in different
forum, it does not follow that it must be tried there. (See
Stangvik, supra, 54 Cal.3d at p. 752, fn.3 [suitability of
34
alternative forum depends on whether action may be “commenced
in the alternative jurisdiction and a valid judgment obtained
there against the defendant”].) The question before us is whether
the court abused its discretion by opting to enforce the parties’
agreement to try the case in California. To the extent the court
misinterpreted Chinese law as requiring rather than allowing
enforcement of forum-selection clauses—a question we do not
reach—it was not dispositive.
DISPOSITION
The judgment is affirmed. Default Recoveries shall recover
its costs on appeal.
RUBIN, P. J.
I CONCUR:
MOOR, J.
35
Default Recoveries LLC v. Jinrong Shen
B316051
BAKER, J., Concurring
Although I do not subscribe to the opinion for the court’s
analysis in all its particulars, I agree the opinion reaches the
correct result. The majority’s opinion correctly holds defendant
and appellant consented to personal jurisdiction in California
(Rockefeller Technology Investments (Asia) VII v. Changzhou
SinoType Technology Co., Ltd. (2020) 9 Cal.5th 125, 140);
language in an earlier-decided Court of Appeal case that points to
a contrary conclusion (Global Packaging, Inc. v. Superior Court
(2011) 196 Cal.App.4th 1623, 1632) is unpersuasive and should
not be followed. Service of the summons and complaint was
proper under the circumstances. And denial of defendant and
appellant’s forum non conveniens motion was not an abuse of
discretion. (Stangvik v. Shiley Inc. (1991) 54 Cal.3d 744, 751.)
BAKER, J.