Motion to Stay or Dismiss Due to Inconvenient Forum (Judge Michael E. Whitaker)

Case Number: 25SMCV01738    Hearing Date: August 21, 2025    Dept: 207

TENTATIVE RULING

BACKGROUND

This case arises from a dispute over the financing of a real estate transaction.

The operative First Amended Complaint (“FAC”) brought by Plaintiff Alex Nerush (“Plaintiff”) against Defendants Gregory Proniloff (“Proniloff”) and Sharma, Smith & Gray, P.C. (“SSG”) alleges that Proniloff’s company, WS Communities, LLC (“WS”) entered into an agreement to purchase 1925-1955 Broadway and 1450 20th Street in Santa Monica, California.  (FAC ¶ 6.)

Proniloff, on behalf of WS, entered into discussions with Bryan Gortikov (“Gortikov”) whereby Gortikov would lend WS funds to purchase the properties. (FAC ¶ 7.)   Proniloff, on behalf of WS also approached Plaintiff to become its partner in purchasing the properties.  (FAC ¶ 9.)  In or around late November to early December of 2022, Gortikov, WS, and Nerush executed a term sheet.  (FAC ¶ 11.)

On or about December 16, 2022, WS and Nerush purchased the properties, using Nerush’s money.  (FAC ¶ 12.)  Meanwhile, Gortikov had apparently called capital from his investors, promising them a return on their investment.  (FAC ¶ 17.)  Thus, on or about January 19, 2023, the parties closed on their post-acquisition finance deal with Gortikov, which included a personal guaranty by Plaintiff, guaranteeing repayment of Gortikov’s investment in the properties, plus 19% interest.  (FAC ¶ 18.)

On or about October 18, 2024, Gortikov sued Plaintiff for enforcement of the Guaranty.  (FAC ¶ 19.)

In this action, Plaintiff alleges four causes of action for (1) breach of fiduciary duty; (2) fraudulent concealment; and (3) breach of fiduciary duty; and (4) negligence.

Proniloff now moves to dismiss and/or stay due to forum non conveniens.  Plaintiff opposes the motion and Proniloff replies.

REQUEST FOR JUDICIAL NOTICE

            Plaintiff requests judicial notice of the following documents:

1. Exhibit 1 – the California Secretary of State website’s public entry for Mauser Harmony
2. Exhibit 2 – the Statement of Information Defendant prepared and publicly filed with the California Secretary of State
3. Exhibit 3 – the Michigan Department of Licensing and Regulatory Affairs public entry for Mauser Harmony
4. Exhibit 4 – the Statement and Designation by Foreign Corporation Mauser Harmony prepared and publicly filed with the Michigan Department of Licensing and Regulatory Affairs
5. Exhibit 5 – Mauser Harmony’s 2019 form 990-PF Return of Private Foundation prepared and publicly filed with the Internal Revenue Service
6. Exhibit 6 – a copy of Defendant Heather Cook’s LinkedIn page as of October 30, 2023
7. Exhibit 7 – a copy of Defendant Heather Cook’s online resume/CV

Official notices, statements, and certificates made by an agency, department or board are properly the subject of judicial notice as documents reflecting official acts of an executive department of a state of the United States pursuant to Evidence Code section 452, subdivision (c).  (Friends of Shingle Springs Interchange, Inc. v. County of El Dorado (2011) 200 Cal.App.4th 1470, 1483–1484.)  Similarly, official notices, statements, and certificates made by the IRS are documents reflecting official acts of the executive department of the United States.  However, “materials prepared by private parties and merely on file with the state [or federal] agencies” may not be properly judicially noticed as an official act of a legislative, executive, or judicial department of the United States or any state of the United States.  (People v. Thacker (1985) 175 Cal.App.3d 594, 598.)

Therefore, the Court grants Plaintiff’s request as to Exhibits 1 and 3.  However, because Exhibits 2, 4, and 5 were all prepared and filed by a private party, they are not “official statements” made by the California Secretary of State, Michigan Department of Licensing and Regulatory Affairs, or the federal Internal Revenue Service.  Therefore, the Court denies Plaintiff’s request for judicial notice as to Exhibits 2, 4, and 5.

The Court similarly denies Plaintiff’s request for judicial notice of Exhibits 6 and 7.  It cannot be said that these website printouts are either “of such common knowledge” or “capable of immediate determination by resort to sources of reasonably indisputably accuracy” such that they cannot be reasonably subject to dispute.

ANALYSIS

“A defendant, on or before the last day of his or her time to plead or within any further time that the court may for good cause allow, may serve and file a notice of motion for one or more of the following purposes:  . . .  (2) To stay or dismiss the action on the ground of inconvenient forum.”  (Code Civ. Proc., § 418.10, subd. (a)(2).)  And “[w]hen a court upon motion of a party or its own motion finds that in the interest of substantial justice an action should be heard in a forum outside this state, the court shall stay or dismiss the action in whole or in part on any conditions that may be just.”  (Code Civ. Proc., § 410.30. subd. (a).)

“Forum non conveniens is an equitable doctrine invoking the discretionary power of a court to decline to exercise the jurisdiction it has over a transitory cause of action when it believes that the action may be more appropriately and justly tried elsewhere.  . . .  We describe[] the basis of the doctrine as follows:  There are manifest reasons for preferring residents in access to often overcrowded Courts, both in convenience and in the fact that broadly speaking it is they who pay for maintaining the Courts concerned. The injustices and the burdens on local courts and taxpayers, as well as on those leaving their work and business to serve as jurors, which can follow from an unchecked and unregulated importation of transitory causes of action for trial in this state require that our courts, acting upon the equitable principles, exercise their discretionary power to decline to proceed in those causes of action which they conclude, on satisfactory evidence, may be more appropriately and justly tried elsewhere.”  (Stangvik v. Shiley Inc. (1991) 54 Cal.3d 744, 751 [cleaned up] (hereafter Stangvik).)

“On a motion for forum non conveniens defendant, as the moving party, bears the burden of proof. The granting or denial of such a motion is within the trial court’s discretion, and substantial deference is accorded its determination in this regard.”  (Stangvik, supra, 54 Cal.3d at p. 751.)¹

“In determining whether to grant a motion based on forum non conveniens, a court must first determine whether the alternate forum is a “suitable” place for trial.  If it is, the next step is to consider the private interests of the litigants and the interests of the public in retaining the action for trial in California. The private interest factors are those that make trial and the enforceability of the ensuing judgment expeditious and relatively inexpensive, such as the ease of access to sources of proof, the cost of obtaining attendance of witnesses, and the availability of compulsory process for attendance of unwilling witnesses. The public interest factors include avoidance of overburdening local courts with congested calendars, protecting the interests of potential jurors so that they are not called upon to decide cases in which the local community has little concern, and weighing the competing interests of California and the alternate jurisdiction in the litigation.”  (Stangvik, supra, 54 Cal.3d at p. 751, emphasis added.)

However, “a motion based on a forum selection clause is a special type of forum non conveniens motion. The factors that apply generally to a forum non conveniens motion do not control in a case involving a mandatory forum selection clause.”  (Berg v. MTC Electronics Technologies (1998) 61 Cal.App.4th 349, 358.)  Rather, where there is a mandatory forum selection clause, “the test is simply whether application of the clause is unfair or unreasonable, and the clause is usually given effect.”  (Ibid.)  “A court will usually honor a mandatory forum selection clause without extensive analysis of factors relating to convenience.  Mere inconvenience or additional expense is not the test of unreasonableness.”  (Id. at pp. 358-359.)  But “[i]f, by contrast, 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.  (Id. at p. 359.)

Here, Defendant argues that the parties’ agreement contains a mandatory forum selection clause.  Title to the subject property was taken in the name of 1925 Broadway, LLC.  Section 16.6 of the Amended and Restated Limited Liability Company Agreement for AN SM 1925 Broadway, LLC as between AN SM Broadway Holdings, LLC and CG Broadway, LLC (“Broadway LLC Agreement”) provides:

Section 16.6 Jurisdiction; Choice of Forum. Each Party hereby irrevocably (a) submits to the exclusive jurisdiction of any Delaware State, or Federal Court sitting in the County of New Castle (Delaware), in any action or proceeding arising out of or relating to this Agreement, the relations between the Parties and any matter, action or transaction described in this Agreement, (b) agrees that any such courts shall have exclusive jurisdiction over such actions or proceedings, (c) to the fullest extent permitted by law, waives the defense of inconvenient forum to the maintenance and continuation of such action or proceeding, (d) to the fullest extent permitted by law, consents to the service of any and all process in any such action or proceeding by the mailing of copies (certified mail, return receipt requested and postage prepaid) of such process to them at their addresses specified in Article 15 and (e) agrees that a final and non-appealable judgment rendered by a court of competent jurisdiction in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(Ex. 1 to Proniloff Decl., emphasis added.)  Plaintiff signed the agreement as manager of AN SM 1925 Broadway Holdings, LLC and Bryan Gortikov signed as manager of GC Broadway, LLC.

            Proniloff argues that on September 30, 2024, Plaintiff filed suit in California against Gortikov and GC Broadway, LLC, but the action was ultimately transferred from California to Delaware on the grounds that the dispute fell within the exclusive Delaware forum selection clause in the Broadway LLC Agreement.  Therefore, Proniloff argues that this action should similarly be transferred to Delaware, based on the same mandatory forum selection clause.

            Plaintiff argues in opposition that neither Proniloff nor his company, WS are parties to the Broadway LLC Agreement, and therefore they cannot benefit from the forum selection clause contained therein.  Further, Plaintiff argues that the Tenants in Common Agreement, to which WS is a party, mandates that actions be governed by California law.

The Amended and Restated Tenants in Common Agreement was entered into between 1925 Broadway, LLC and AN SM 1925 Broadway, LLC, with Scott Walter of WSC listed as the contact for 1925 Broadway, LLC and Plaintiff listed as the contact for AN SM 1925 Broadway, LLC defining the parties’ respective interests and otherwise disclaiming that the parties intend to create a joint venture with each other.  (Ex. 2 to Proniloff Decl.)  Section 12.4 of the Tenants in Common Agreement (“TIC Agreement”) provides:

12.4 Governing Law. Except as otherwise set forth in this Agreement, this Agreement shall be governed by and construed under the internal laws of the State of California, except as otherwise provided in this Agreement, without regard to choice of law rules.

(Ex. 2 to Proniloff Decl.)  The TIC Agreement also contains a mandatory arbitration provision.

            Proniloff argues that the TIC Agreement controls and the forum selection clause of the Broadway LLC Agreement can be enforced by him because he is a third party to the Broadway LLC Agreement who is “so closely related to the contractual relationship” between the parties to the agreement.  In support, Proniloff cites to Bancomer, S.A. v. Sup. Ct. (1996) 44 Cal.App.4th 1450, 1459 (hereafter Bancomer.)  Bancomer discusses two other cases.

In the first, Lu v. Dryclean-U.S.A. of California, Inc. (1992) 11 Cal.App.4th 1490, 1493 (hereafter Lu), the Lu plaintiffs entered into an agreement with Dryclean-U.S.A. of California that contained a mandatory forum selection clause that litigations shall be in Dade County, Florida. The Lus argued enforcing the forum selection clause would be unreasonable because two of the defendants did not sign the Agreement with the clause.  The appellate court disagreed, finding that the alleged conduct of the nonsignatories was “closely related” to the contractual relationship because they fraudulently induced the Lus to enter into the Agreement and because they were alleged to be the alter egos of the signatory.

Similarly, in Manetti-Farrow, Inc. v. Gucci America, Inc. (9th Cir. 1988) 858 F.2d 509, 514 (hereafter Gucci), the Plaintiff and Gucci Parfums entered into an agreement with a forum selection clause designating Florence, Italy as the forum in which to resolve controversies.  Gucci America was not a party to that agreement, but subsequently entered into a separate consent and ratification agreement, consenting to the terms of the contract with the forum selection clause.  The 9^th Circuit held that the alleged conduct of the non-parties was so closely related to the contractual relationship that the forum selection clause should apply to all defendants.

Bancomer distinguished both Lu and Gucci and found no such “close relationship” where the nonsignatory was “an independent financial conduit used by the development company for the limited purpose of establishing a trust through which the individual leasehold interests could be purchased.”  (Bancomer, supra, 44 Cal.App.4th at p. 1460.)  Bancomer held that such a close relationship required (1) agreement to be bound by the terms of the agreement containing the forum selection clause; (2) an intent for the nonsignatory to benefit from the terms of the agreement containing the forum selection clause; or (3) evidence of a defined and intertwining business relationship with a contracting party.  (Id. at p. 1461.)

Here, although the parties had intertwining business relationships concerning the financing and purchase of the subject property, Plaintiff argues that this dispute does not concern enforcement or interpretation of the Broadway LLC Agreement.  Indeed, the FAC alleges Defendants breached their fiduciary duties to Plaintiff and committed fraud by failing to disclose the closeness of the personal relationship between Proniloff and Gortikov, that Proniloff’s immediate family members were invested in the fund Gortikov had raised for the deal, and that Proniloff stood to earn a commission on the Gortikov deal.  (FAC ¶¶ 20-34.)

However, the FAC also alleges that Proniloff “acted as Nerush’s agent in connection with the Proniloff deal” by “advis[ing] Nerush on deal terms (e.g., telling Nerush that while Gortikov’s “loan is expensive … [t]here were exactly zero other options that we had”); […] advocat[ing] on behalf of Nerush regarding [the] Gortkov Deal terms (e.g., requesting that Gortkiov drop his demand for a lien on the Broadway Property to preserve Nerush’s “1031 Exchange,” and asking whether Nerush’s special purpose entity could remain a California entity rather than a Delaware entity as Gortkiov requested)”; “work[ing] with WS’s counsel to secure ‘independent’ counsel (i.e., Gotfredson) for Nerush” and “serv[ing] as a liaison between Nerush and Gotfredson (e.g., communicating with Gotfredson on Nerush’s behalf and obtaining Gotfredson’s comments to and/or approval of Gortikov Deal documents and relaying such comments/approval to Nerush).”  (FAC ¶ 22.)

Further, the Broadway LLC Agreement indicates its business:

is solely to, either directly or through one or more Subsidiaries (a) own, hold, manage, maintain, operate, improve, develop, construct, renovate, sell, exchange, lease, refinance, recapitalize and all other activities incidental to, necessary for or in connection with the foregoing and otherwise use the Property for profit, (b) borrow money and issue evidence of indebtedness to finance the activities set forth in clause (a) above, (c) sell or exchange the Property in accordance with the terms of this Agreement, and (d) do any and all other acts or things that may be incidental or necessary to carry on the business of the Company as described in clauses (a), (b) and (c) above. The Company is not authorized to and shall not engage in any business other than as described in this Section 1.5. Notwithstanding the foregoing, the Property will be owned 90% by the Company, as a tenant-in-common, and 10% by Broadway, as a tenant-in-common. The ownership of the Property will be pursuant to the TIC Agreement. It is the intention and desire of the Sponsor Member and Investor Member that the terms and conditions of the TIC Agreement be fully adhered to and complied with.

(Ex. 1 to Proniloff Decl. at Section 1.5.)  Because the LLC was created for the purpose of owning, holding, managing, operating, etc. the properties in question, the property is referenced throughout the Broadway LLC Agreement, as is the TIC Agreement and the members to the TIC Agreement.

            Further, the TIC Agreement pertains to the parties’ respective ownership interests in the underlying properties as tenants in common, whereas the Broadway LLC Agreement pertains to the financing of the transaction and the parties’ relationship to each other, which is what is the subject of this lawsuit.

CONCLUSION AND ORDER

In reviewing the transactions in context, the Court agrees with Proniloff, that the parties’ business arrangement is so intertwined with that of the signatories to the Broadway LLC Agreement with respect to the financing agreements, and Defendants are alleged to have fraudulently induced Plaintiff to agree to the transactions that financed the purchase of the properties, that the forum selection clause of the Broadway LLC Agreement should control here and be enforced even as to Proniloff, as a nonsignatory to that agreement.

Finding that the mandatory forum selection clause of the Broadway LLC Agreement applies to the instant lawsuit, the Court grants Proniloff’s motion and dismisses Plaintiff’s complaint as to Proniloff without prejudice.

Further, the Court will enter the proposed Order lodged on July 22, 2025.

Proniloff shall provide notice of this Court’s ruling/Order, and file the notice with a proof of service forthwith.

DATED:  August 21, 2025                             ____/s/_______________________

                                                                        Michael E. Whitaker

                                                                        Judge of the Superior Court

1. On a motion to stay or dismiss for inconvenient forum, the moving party bears the burden to produce sufficient evidence to enable the court to consider all relevant factors. (See National Football League v. Fireman’s Fund Ins. Co. (2013) 216 Cal.App.4th 902, 926-927.)