K.R.L. Partnership v. Superior Court

If a case is filed in a county that is not the proper venue under section 395, the defendant may move to transfer the case to a proper venue. Subdivision (a) of section 396b provides: “Except as otherwise provided in Section 396a, if an action or proceeding is commenced in a court having jurisdiction of the subject matter thereof, other than the court designated as the proper court for the trial thereof, under this title, the action may, notwithstanding, be tried in the court where commenced, unless the defendant, at the time he or she answers, demurs, or moves to strike, or, at his or her option, without answering, demurring, or moving to strike and within the time otherwise allowed to respond to the complaint, files with the clerk, a notice of motion for an order transferring the action or proceeding to the proper court, together with proof of service, upon the adverse party, of a copy of those papers. Upon the hearing of the motion the court shall, if it appears that the action or proceeding was not commenced in the proper court, order the action or proceeding transferred to the proper court.”

This case was initially filed in Sacramento County. As authorized by section 396b, however, without answering, demurring, or moving to strike, Pemberton filed a motion to transfer the case to Alpine County because that is where he resides. Although Roland and K.R.L. opposed Pemberton’s motion, the trial court granted the motion and transferred the case to Alpine County. Because Roland and K.R.L. did not seek appellate review of the order transferring the case, we presume the correctness of that order and deem that venue was properly established in Alpine County in August 2003.

The issue this case presents is whether, once proper venue was established in Alpine County based on Roland and KJRJL.’s complaint against Pemberton for legal malpractice and breach of fiduciary duty, the trial court was nonetheless required to transfer the case to Amador County based on the cross-complaint for breach of contract Pemberton filed against Roland and K.R.L. To resolve that issue, we must first determine whether a cross-defendant is entitled to seek a change of venue under section 396b based on the cross-complaint.

Compulsory Versus Permissive Cross-complaints

Initially, it is important to distinguish between compulsory cross-complaints and permissive cross-complaints and explain why Pemberton’s cross-complaint was compulsory rather than permissive.

Subdivision (a) of section 428.10 provides that “[a] party against whom a cause of action has been asserted in a complaint or cross-complaint may file a cross-complaint setting forth . . . [j]] (a) [a]ny cause of action he has against any of the parties who filed the complaint or cross-complaint against him.” Although this statute is permissive in its terms, in some circumstances a party must assert a cause of action in a cross-complaint or lose the right to assert that cause of action altogether. To that end, subdivision (a) of section 426.30 provides: “Except as otherwise provided by statute, if a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded.” For purposes of determining whether a cause of action must be alleged in a cross-complaint, a “related cause of action” is “a cause of action which arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges in his complaint.” (§ 426.10, subd. (c).)

Pemberton contends his cause of action against Roland and K.R.L. for unpaid legal fees is a “related cause of action” to the causes of action for legal malpractice and breach of fiduciary duty they have asserted against him, and therefore his cross-complaint was compulsory. We agree. The causes of action for legal malpractice and breach of fiduciary duty asserted against Pemberton arose out of the attorney-client relationship that existed between the parties because of the retainer agreement they entered into. The

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Change of Venue Under Section 396b Based on a Compulsory Cross-complaint

With the understanding that Pemberton’s cross-complaint was compulsory rather than permissive, we turn to whether a cross-defendant is entitled to seek a change of venue under section 396b based on a compulsory cross-complaint. As we have noted, subdivision (a) of section 396b provides that if an “action or proceeding” is commenced in an improper venue, then “the defendant. . . within the time otherwise allowed to respond to the complaint’ may move to transfer the “action or proceeding” to the proper court. (Italics added.) If, upon such a motion, it appears the “action or proceeding was not commenced in the proper court,” then the court “shall . . . order the action or proceeding transferred to the proper court.” (§ 396b, subd. (a).) The question presented here is whether, under section 396b, a cross-defendant is entitled to have a case transferred based on improper venue as determined by reference to a compulsory cross-complaint.

In answering that question, “[w]e assign the statutory language its plain and commonsense meaning, attempting to effectuate the Legislature’s intent. [Citation.] If the statutory language is not ambiguous, we presume the Legislature meant what it said, and we apply the plain meaning of the statute without resort to extrinsic sources.” (In re Marquez (2003) 30 Cal.4th 14 , 19-20 [ 131 Cal.Rptr.2d 911 , 65 P.3d 403 ].) “If, however, the statutory language lacks clarity, we may resort to extrinsic sources, including the ostensible objects to be achieved and the legislative history. [Citation.] In such situations, we strive to select the construction that comports most closely with the Legislature’s apparent intent, with a view to promoting rather than defeating the statutes’ general purposes.” (People v. Walker (2002) 29 Cal.4th 577 , 581 [ 128 Cal.Rptr.2d 75 , 59 P.3d 150 ].)

The earliest case upon which Roland and K.R.L. rely—Bank of America v. Carr—did not actually involve a venue issue at all. Instead, it involved the requirement that “[a] cross-complaint asking affirmative relief must be served on the parties affected thereby, and if one has not appeared in the action summons must be issued and served as upon the commencement of the original action.” (Bank of America v. Carr, supra, 138 Cal.App.2d at p. 738.) Thus, Bank, of America carries little (if any) weight in determining whether the Legislature intended section 396b to allow a cross-defendant to move for transfer of a case based on improper venue as determined by reference to the cross-complaint.

The second case on which Roland and K.R.L. rely—Eveleth v. American Brass & Iron Foundry—is hardly more persuasive. In Eveleth, one individual (Bemson) sued another (Eveleth) in municipal court. (Eveleth v. American Brass & Iron Foundry, supra, 203 Cal.App.2d at p. 42.) Eveleth then filed a cross-complaint against Bemson and a company (American Brass), which was in excess of the jurisdictional limit of the municipal court. (Id. at pp. 42-43.) “Summons was issued by the municipal court and served on American Brass, which made no appearance, . . . and default was entered by the clerk of the municipal court on April 24, 1961. [f] On May 18th an order was made by the municipal court transferring th[e] action to the superior court because of the excess in the jurisdictional amount.” (Id. at p. 43.) Another default was entered in the superior court, and American Brass subsequently appealed from the order denying its motion to set aside the default. (Ibid.)

On appeal, one of the questions was whether American Brass’s time to appear had already expired when the case was transferred to superior court. (Eveleth v. American Brass & Iron Foundry, supra, 203 Cal.App.2d at p. 45.)

Having determined that this court’s construction of section 394 in a case involving a permissive cross-complaint is not persuasive of how section 396b should be construed in a case involving a compulsory cross-complaint, we are nonetheless still faced with the question of whether the Legislature intended to allow a cross-defendant to move for transfer of a case under section 396b based on improper venue as determined by reference to a compulsory cross-complaint. For the reasons that follow, we conclude the answer to that question is “no.”

We acknowledge that “a complaint and a cross-complaint are, for most purposes, treated as independent actions.” (McLellan v. McLellan (1972) 23 Cal.App.3d 343 , 353 [ 100 Cal.Rptr. 258 ], italics added.) This means that, generally, “Where a cross-complaint is filed there are two simultaneous actions pending between the parties wherein each is at the same time both a plaintiff and a defendant.” (Douglas v. Superior Court (1949) 94 Cal.App.2d 395 , 398 [ 210 P.2d 853 ].) Based on these general principles, it can be argued that because Roland and K.R.L. are simultaneously plaintiffs in their action against Pemberton and defendants in his cross-action against them, they should be entitled as defendants in the cross-action to invoke section 396b and seek a change of venue to Amador County based on Pemberton’s cross-complaint.

However, to the extent Roland and K.R.L. claim the title of “defendant” in this case, they must also acknowledge that Pemberton wears that title as well. It is well established in California law that “[a] defendant is not entitled to have an action removed to the county of his residence unless it appears that none of the other defendants are residents of the county where the action is brought.” (Independent Iron Wks. v. Amer. Pres. Lines (1950) 35 Cal.2d 858 , 860 [ 221 P.2d 939 ].) Here, when Roland and K.R.L. moved, as “defendants,” to change venue from Alpine County to Amador County, there was another defendant in the case whose residence was Alpine County— Pemberton. Under the foregoing rule, Roland and K.R.L. were not entitled to

Our conclusion is further supported by the rule that the right to have a case tried in the proper venue, though “ancient and valuable” (Kaluzok v. Brisson (1946) 27 Cal.2d 760 , 763 [ 167 P.2d 481 ]), may be waived (Henry v. Willett (1922) 60 Cal.App. 244 , 249 [ 212 P. 698 ]). Courts in other jurisdictions have relied on waiver in concluding that a cross-complaint can be tried in a court where venue is proper based on the original complaint. For example, in General Electric Co. v. Marvel Rare Metals Co. (1932) 287 U.S. 430 [ 77 L.Ed. 408 , 53 S.Ct. 202 ], after noting that a defendant may waive the privilege conferred by a venue provision, the United States Supreme Court wrote: “The setting up of a counterclaim against one already in a court of his own choosing is very different, in respect to venue, from hailing him into that court.” (Id. at p. 435.) The court then concluded that a plaintiff “who sues in a federal court of equity to enjoin the infringement of his patent, thereby submits himself to the jurisdiction of the court with respect to all the issues of the case, including those pertaining to a counterclaim praying that he be restrained from infringing a patent of the defendant.” (Ibid.)

Similarly, in Hansbarger v. Cook (1986) 177 W.Va. 152 [ 351 S.E.2d 65 ], the Supreme Court of Appeals of West Virginia observed: “The general rule is that by bringing suit in a particular county or district, the plaintiff submits himself to the jurisdiction of that court for all purposes of that suit, including any counterclaim which the defendant may be required to bring .... [Citations.] Thus, it has often been held that when a plaintiff brings suit in a particular county or district, he may not thereafter object to the venue of any counterclaim arising out of such suit which is brought in that county or district, even though venue would be improper if the counterclaim had been brought as an independent action.” (Id. at p. 158.)

More recently, the Georgia Court of Appeals noted: “Regarding counterclaims, Georgia law has long held that a party that files suit in a Georgia court submits himself to that court’s jurisdiction and venue relating to all matters directly connected with the case that he had originated. [Citation.] ‘One who goes into the court of a county other than that of his residence, to assert a claim or set up an equity, must be content to allow that court to determine any counter-claim growing out of the original suit which the defendant sees fit to set up by a cross-action. . . .’ ” (Kennestone Hosp. v. Hopson (2003) 264 Ga.App. 123 , 124 [ 589 S.E.2d 696 ].)