Slovakia More Suitable Forum Than California
We’ve blogged before about legal translation services for foreign commercial litigation disputes and the need for certified translators and interpreters. In the case discussed below, Plaintiffs, an Austrian company and a Slovakian company, claimed that a California resident and her adult children who were involved in the business fraudulently over-valued the value of a Slovakian packaging business that the Plaintiffs acquired. The packaging company at issue, located in the Slovak Republic, printed, laminated, and assembled plastic and aluminum foils for food, pharmaceutical and industrial operations.
Plaintiffs File Suit in California State Court.
According to the complaint, the Defendants conspired to inflate the packaging business’ revenue in order to sell the company to the Plaintiffs at an inflated price. In this regard, Plaintiffs alleged that the Defendants made numerous false oral and written statements during meetings with the Plaintiffs in Slovakia, Austria, and Sweden. In 2013, the Plaintiffs and Defendants entered into an agreement whereby the Plaintiffs purchased the Defendants’ packaging based on the Defendants’ alleged misrepresentations at these meetings. After the Plaintiffs purchased the company, the Plaintiffs merged it with their other company. After the merger was completed, the Plaintiffs allegedly discovered, for the first time, that the Defendants had wrongfully and fraudulently inflated the value of the packaging company.
Accordingly, the Plaintiffs filed suit against the Defendants in a California state court alleging fraud and deceit, fraudulent transfer of funds, aiding and abetting fraud, conspiracy to defraud, unfair competition, unjust enrichment, and conversion of money. The Plaintiffs specifically alleged that they were deceived into purchasing the company for an inflated price and claimed that the Defendants then laundered the money through a serious of fraudulent real estate transactions. The Plaintiffs claim the Defendants purchased property in Santa Clara County, California or had property transferred to them there, and that several of the Defendants are residents of Santa Clara County.
Defendants File Motion to Dismiss.
In response to Plaintiffs’ suit, the Defendants filed a motion to stay or dismiss. The Defendants argued that the suit should either be dismissed on the grounds of forum non conveniens or that the matter should be stayed until related litigation pending in Europe had been resolved.
The Defendants further argued that the lawsuit had nothing to do with California and that all of the allegedly wrongful acts transpired in Europe. The Defendants argued that California did not have an interest in resolving the matter. Specifically, the Defendants argued that the suit arose out of the sale of a Slovakian company to European Plaintiffs and that the Plaintiffs were residents of Slovakia, Ukraine, and Malta. The Defendants also claimed that the purchase agreement was executed in Slovakia; therefore, the dispute is governed by Slovakian law.
Witnesses and Documents Located in Europe.
In further support of their forum non conveniens argument, the Defendants argued that both the relevant documents and witnesses were located in Europe and that the documents and deposition transcripts would need to be translated from Slovakian, German, and Swedish into English. The Defendants further argued that the basis for Plaintiffs’ fraudulent transfer of property claim stemmed from events which transpired in Europe, not in California.
Defendants Argue Similar Lawsuit Pending in Europe.
In addition to the fact that key witnesses and documents were located in Europe, the Defendants also argued that the lawsuit should either be dismissed or stayed based on the fact that there were four other legal proceedings concurrently pending in Europe. Specifically, the Defendants argued that there was an arbitration hearing with the International Chamber of Commerce, two lawsuits in Slovakia, and a lawsuit in Denmark all pending alongside the California proceeding. Accordingly, the Defendants argued that Slovakia was a more suitable forum for Plaintiffs to pursue their claims that California.
Plaintiffs Oppose Motion to Dismiss.
In response to the Defendants’ Motion to Stay or Dismiss, the Plaintiffs argued that the Defendants had not established how or why Slovakia would be a more suitable forum, particularly when the Defendants’ own expert testified that a Slovakian court would not exercise jurisdiction over the matter with regard to the Plaintiffs’ real estate claims. In addition, the Plaintiffs argued that although the Plaintiffs were not California residents, the California forum was in fact a convenient one because five of the Defendants were California residents and the property in dispute was also located in California. Plaintiffs further argued that it would be more practical for them to enforce a California judgment than to file a separate lawsuit seeking to enforce a foreign judgment. The Plaintiffs also countered that most of the pertinent documents were written in English and that most witnesses spoke English, not Slovak.
Trial Court Grants Motion to Dismiss.
The trial court agreed with the Defendants that the matter should proceed in Slovakia, not California, and granted the Defendants’ Motion to Stay or Dismiss. The trial court noted that if the Slovakian court found that it did not have subject matter jurisdiction, the Plaintiffs could simply ask the trial court to lift the stay.
Court of Appeal Affirms Motion to Dismiss.
On appeal, the Court of Appeal affirmed the trial court’s order granting the defendant’s forum non conveniens motion. First, the court held that the Defendants had met their burden of establishing that Slovakia was a suitable forum. The court was persuaded to find in the Defendants’ favor on this issue based on the fact that the Defendants had submitted affidavits submitting to the jurisdiction of Slovakia. Second, the court held that California did not have a public interest in deciding the dispute. Although five of the six Defendants were California residents, the court noted that there was evidence that the relevant foreign language documents and witnesses were scattered across Europe. Finally, the court held that the Plaintiffs would likely be able to enforce any foreign judgment obtained in Slovakia.
Specifically, the court reasoned that the 9th Circuit Court of Appeals has held that “California generally enforces foreign judgments, as long as they are issued by impartial tribunals that have afforded the litigants due process.”
The case is Schur v. Peschanskiy, Court No HO44405, decided on July 26, 2019 in the Court of Appeal of the State of California, Sixth Appellate District.
Contact legal translation service All Language Alliance, Inc. to obtain legal document translation services from Slovak, German, Swedish, French, Spanish, Portuguese, Dutch, and other European languages to English.
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