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Inv. Equtity Life Holding Co. v. Schmidt, No. G048284 (D4d3 Feb. 4, 2015)

Several years ago, this case was stayed on forum non conveniens grounds. The court of appeal affirmed. The substance of the action involves the unwinding of a Hawaiian insurance company. The gist of the ruling was that the courts of Hawaii were a suitable alternative forum and that the balance of public and private interests favored staying this case in favor of litigation there.

On remand—and following some progress in the Hawaiian litigation—defendants moved to fully dismiss the case on FNC grounds. They asserted that certain factual statements in the prior opinion constituted law of the case and that, based on these facts, the circumstances had changed such that outright dismissal was warranted. The trial court agreed.

The court of appeal does not. First, it takes issue with the reliance on law of the case. The law of the case doctrine generally says that if an interlocutory appellate ruling lays down rules, those rules govern the subsequent case on remand or a later appeal. But the doctrine applies only to principles of law that are actually decided. The stuff offered by the defendants—recitations of defendants’ willingness to stipulate to Hawaiian jurisdiction, a statement regarding the residence of the plaintiff, and a remark that the Hawaiian statute of limitations appeared similar to California’s did not meet that standard. The first two points are essentially factual, and the latter was not decided in the prior appeal.

On the merits, a key element of the FNC analysis is that the alternative forum is “suitable.” California courts generally read that to mean that the defendants would be subject to jurisdiction and that the claims would not be barred by other jurisdiction’s the statute of limitations. It follows that a defendant can improve its lie on an FNC motion by, for instance, promising to stipulate to jurisdiction and to toll the statute of limitations. Defendant in this case did just that. But what that can lead to are circumstances where the suitability of the foreign court might turn on contingencies such as the parties’ actions or the foreign court’s interpretation of its own law. To account for these contingencies, California law permits to stay a case on FNC grounds, retaining jurisdiction to reopen the case if the contingencies don’t come to light and the alternative forum proves to be unsuitable. When a trial court stays a case on FNC grounds instead of dismissing it outright, its decision is afforded particularly broad discretion.

Those considerations drove the prior affirmance. But they wouldn’t justify an outright dismissal. While a dismissal might be warranted if the contingencies inherent in the suitability analysis were fulfilled, defendants did not offer any information about the status of the Hawaiian proceedings.  There were thus no circumstances meriting a dismissal, as opposed to a say, in favor of potential litigation in Hawaii.

Reversed.