Cordova vs. Indigo Master Participation, LP

“ ‘When a case involves a mandatory forum selection clause, it will usually be given effect unless it is unfair or unreasonable. [Citation.]’ ‘Both California and federal law presume a contractual forum selection clause is valid and place the burden on the party seeking to overturn the forum selection clause. [Citations.]’ ‘It is well settled that parties may contract in advance to select the forum in which their disputes will be adjudicated. [Citation.]’ ” (Korman, supra, 32 Cal.App.5th at p. 216 [internal citations omitted].)

“ ‘In the context of forum selection clauses, enforcement is considered unreasonable where “the forum selected would be unavailable or unable to accomplish substantial justice” or there is no “rational basis” for the selected forum. [Citation.]’ ” (Korman, supra, 32 Cal.App.5th at p. 216 [internal citations omitted].) “ ‘ “ ‘Mere inconvenience or additional expense is not the test of unreasonableness . . .’ ” for a mandatory forum selection clause. [Citation.]’ [Citation.] A clause is reasonable if it has a logical connection with at least one of the parties or their transaction.” (Verdugo, supra, 237 Cal.App.4th at p. 147.)

Plaintiff alleges that he was fraudulently induced into making investments in Fund 2 and Fund 3. (Compl. ¶¶ 25, 30.) Fund 2 entered into an Amended and Restated Limited Partnership Agreement dated February 25, 2020 (“LPA II”) and Fund 3 entered into a Limited Partnership Agreement dated September 1, 2021 (“LPA III”). (Compl. ¶¶ 26, 35.) Under LPA II and LPA III, Defendants are required to make distributions within 30 days following the end of each fiscal quarter during the term of each fund. (Compl. ¶ 36.) Plaintiff alleges that he is owed overdue distributions from both Fund 2 and Fund 3, as well as unreturned investments. (Compl. ¶¶ 87-88.)

LPA II and LPA III contain identical forum selection clauses, which provide:

11.9 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. In particular, the Partnership is formed pursuant to the Act, and the rights and liabilities of the Partners shall be provided therein, except as herein otherwise expressly provided. If any provision of this Agreement shall be held to be invalid, the remainder of this Agreement shall not be affected thereby. Any action or Proceeding against the parties relating in any way to this Agreement may be brought and enforced in the courts of the State of Delaware located in the United States District of Delaware, to the extent subject matter jurisdiction exists therefor, and the parties irrevocably submit to the non-exclusive jurisdiction of each of those courts in respect of any such action or proceeding; provided, that with regard to any actions brought against the General Partner or its Affiliates and employees, such jurisdiction shall be exclusive unless otherwise expressly agreed by the General Partner.

Plaintiff argues that the forum selection clauses are not mandatory because the language is ambiguous. This argument is unpersuasive. While the forum selection clauses are only permissive as to other actions, they clearly provide that jurisdiction in the State of Delaware is mandatory as to any actions brought against the General Partner or its Affiliates and employees. The General Partners are IGI Partners II PF, LLC and IGI Partners III MPAS, LLC, both of which are named defendants here. Thus, the Court finds that the mandatory provision of the forum selection clauses applies here and must be enforced unless enforcement would be unfair or unreasonable.

All of the named entity defendants are Delaware entities formed under Delaware law. Thus, the forum has a logical connection with multiple parties here. While Plaintiff argues against enforcement by pointing to numerous connections between California and his claims, the relevant question is whether Delaware has a logical connection with at least one party or the transaction underlying this action, not whether it has more connections or a stronger connection than Plaintiff’s selected forum. The Court finds that Delaware has a rational basis to multiple parties here.

Plaintiff argues that the forum selection clauses are adhesive and go beyond his reasonable expectations. The fact that a contract is one of adhesion alone does not render it unenforceable. (See Carmona v. Lincoln Millenium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 84 n.4; Nguyen v. Applied Medical Resources Corp. (2016) 4 Cal.App.5th 232, 248-50.) Further, to demonstrate unenforceability due to unconscionability, Plaintiff must show both that the forum selection clauses are procedurally and substantively unconscionable. (Carmona, 226 Cal.App.4th at p. 85.) Plaintiff does not argue that they are substantively unconscionable. Thus, Plaintiff’s unconscionability argument fails.

Plaintiff argues that the forum selection clause is unenforceable because he alleges that the LPA II and LPA III were entered into through fraudulent inducement. Plaintiff cites to Drulias v. 1st Century Bancshares, Inc. (2018) 30 Cal.App.5th 696 in support of his argument. However, Plaintiff misrepresents the holding of that case, contending that the Drulias court held that a forum selection clause will only be enforced if it was freely or voluntarily negotiated. In fact, the court rejected the plaintiff’s argument that forum selection clauses are enforceable only where they are freely and voluntarily negotiated, noting that the analysis only asks whether the selected forum is unavailable to accomplish substantial justice or has no rational basis to the action. (Id. at p. 707.)

The court went on to note that “neither California nor Delaware law requires forum selection clauses be freely negotiated to be enforceable.” (Ibid.) Thus, Drulias does not support Plaintiff’s fraudulent inducement argument.

Plaintiff contends that Delaware is unable to accomplish substantial justice because California has heightened protections against fraud in connection with the sale of securities under the Corporate Securities Act. However, Plaintiff has not asserted any cause of action under the Act. Therefore, this argument has no weight. (Intershop Communications v. Superior Court (2002) 104 Cal.App.4th 191, 200 [dismissing public policy argument as to California securities laws where the plaintiff had no cause of action based on a violation of those securities laws].)

Lastly, Plaintiff argues that the forum selection clauses do not apply to all Defendants and that discovery is needed to determine the affiliations (or lack thereof) between Defendants.

A forum selection clause may be enforced against a plaintiff who is not a party to the contract in question where the nonsignatory has a closeness to the contractual relationship. (Net2Phone, Inc. v. Superior Court (2003) 109 Cal.App.4th 583, 588.) For instance, in Lu v. Dryclean-U.S.A. of California, Inc. (1992) 11 Cal.App.4th 1490, the plaintiffs had entered into an agreement with the defendant franchisor to operate a franchise in California. The plaintiffs filed suit against the franchisor and its corporate parents, alleging misrepresentation of the advantages of operating a dry-cleaning franchise. (Id. at p. 1492.)

The defendants moved to dismiss based on the forum selection clause in the franchise agreement, which required any disputes arising out of the agreement to be litigated in Florida. (Ibid.) The motion to dismiss was granted. On appeal, the plaintiffs argued that the forum selection clause should not be enforced because the corporate parent defendants had not signed the clause. The appellate court rejected the argument and explained:

Here, the alleged conduct of Dryclean Franchise and Dryclean U.S.A. is closely related to the contractual relationship. They are alleged to have participated in the fraudulent representations which induced plaintiffs to enter into the Agreement. Indeed, plaintiffs go so far as to allege Dryclean Franchise and Dryclean U.S.A. are the “alter ego” of Dryclean California, which did sign the Agreement containing the forum selection clause. Under these circumstances, the fact that Dryclean Franchise and Dryclean U.S.A. did not sign the Agreement does not render the forum selection clause unenforceable. [Citations.] To hold otherwise would be to permit a plaintiff to sidestep a valid forum selection clause simply by naming a closely related party who did not sign the clause as a defendant.

(Id. at p. 1494.)

In Bugna v. Fike (2000) 80 Cal.App.4th 229, the appellate court further explained the rationale behind binding nonsignatories to a forum selection clause:

The key to the closely related test is whether the nonsignatories were close to the contractual relationship, not whether they were close to the third party signator. This makes sense because the forum selection clause is part of the underlying contract, and it is the contractual relationship gone awry that presumably spawns litigation and activates the clause. Giving standing to all closely related entities honors general principles of judicial economy by making all parties closely allied to the contractual relationship accountable in the same forum, thereby abating a proliferation of actions and inconsistent rulings.

(Id. at p. 235.) There, the appellate court affirmed an order staying proceedings as to all parties pursuant to a forum selection clause, including non-signatories of the underlying contract. The court noted that “there is no question but that respondents were closely related to the contractual relationship between SCN and appellants. Indeed, they were key transaction participants—the deal makers who negotiated, evaluated, and otherwise put together the very SCN transactions that appellants now attack. (Ibid.)

Here, all of Plaintiff’s causes of action arise out of the alleged false representations made to induce Plaintiff to invest in Defendants’ funds and Defendants’ failure to pay required distributions under LPA II and LPA III. Plaintiff alleges that all Defendants breached their fiduciary duties to Plaintiff as the managers, administrators, organizers, services, and operators of Fund 2 and Fund 3. (Compl. ¶ 134.) Plaintiff also alleges that the limited liability company defendants and limited partnership defendants were at all relevant times the alter egos of one another and the individual defendants and the individual defendants dominated, influenced, and controlled the entity defendants. (Compl. ¶¶ 6-7.)

Plaintiff has sued all Defendants, regardless of whether they are parties to the contracts or alleged to have actively engaged in the fraudulent misrepresentations, based on Plaintiff’s resulting contractual relationship. Plaintiff cannot attempt to hold these non-contracting Defendants liable while at the same time side-stepping the forum selection clauses.

In light of the above, and based on applicable law, the Motion to Dismiss is GRANTED.

Defendants’ request for attorney’s fees pursuant to Code of Civil Procedure section 396b is DENIED, as section 396b is not applicable here.

Moving party to give notice.

10. 30-2026-01561390 1. Order to Show Cause re: Preliminary Injunction

Cathay Bank vs. Iridium Plaintiff, Cathay Bank (“Plaintiff” or “the Bank”), applies for an order appointing a receiver Property Investments, LLC over a commercial property generating monthly rents in excess of $158,000, commonly known as 2201 Alton Parkway and 16940 Von Karman Avenue, Irvine, California, Assessor’s Parcel Number 435-034-12 (the “Property”).

Plaintiff contends that the Property secures a fully matured loan by the Bank with an outstanding balance in excess of $11,400,000.00 (“Loan”) to Iridium Property Investments, LLC (“Borrower” and/or “Iridium”); that the Borrower defaulted under the terms of the loan documents by failing to pay all sums due on the January 15, 2026 maturity date of the Note; that Defendant Michael J. Rogerson (“Rogerson”) and the Michael J. Rogerson Trust Dated