## Facts

- Smith, Valentino & Smith, Inc. (Smith) and Life Assurance Company of Pennsylvania (Life Assurance) entered an agency agreement in March 1973 appointing Smith as managing general agent to solicit group insurance policies in California and other western states.
- The agreement included a reciprocal forum-selection clause requiring Smith to bring “all actions arising out of the agency agreement” only in Philadelphia and requiring Life Assurance to bring such actions only in Los Angeles.
- The agreement also contained a Pennsylvania choice-of-law provision.
- In November 1974, Smith sued Life Assurance in Los Angeles Superior Court for breach of contract and related torts, including intentional interference with advantageous business relationships and unfair competition.
- Life Assurance moved to dismiss based on the forum-selection clause and California Code of Civil Procedure § 410.30(a) (stay or dismissal when substantial justice favors a forum outside California).
- Smith argued the clause should not apply, asserting its witnesses were in California, litigation in Philadelphia would be too costly, and the clause did not reach its tort claims.
- The trial court denied dismissal but stayed the California action, concluding Philadelphia was the proper forum under the agreement.
- Smith sought writ relief, contending the stay improperly enforced the forum-selection clause.

## Issues

1. Whether a California court may enforce a contractual forum-selection clause requiring litigation in another state by staying a California action under Code of Civil Procedure § 410.30(a).
2. Whether the party resisting the clause showed enforcement would be unfair or unreasonable due to cost and witness convenience.
3. Whether tort claims tied to the contractual relationship are within a clause covering “all actions arising out of” the agreement.

## Decision

- The California Supreme Court denied Smith’s requested writ relief and upheld the stay.
- The court held forum-selection clauses are generally enforceable unless the resisting party proves enforcement is unfair, unreasonable, or contrary to public policy.
- The court ruled Smith did not meet its burden; added expense and California-based witnesses did not establish serious inconvenience depriving Smith of a fair chance to litigate.
- The court concluded Smith’s tort claims arose out of the agency agreement and were within the clause’s scope.
- The court held a stay (rather than dismissal) was a proper method to effectuate the clause under § 410.30(a).

## Legal Principles

- Forum-selection clauses in commercial contracts are presumptively valid and are enforced unless the resisting party makes a strong showing that enforcement would be unreasonable, unjust, or against public policy.
- Under Code of Civil Procedure § 410.30(a), a California court may stay or dismiss an action when substantial justice favors a foreign forum; a valid forum-selection clause is a significant factor in that analysis.
- The resisting party bears the burden to show the chosen forum is so seriously inconvenient that it effectively denies a fair opportunity to litigate; ordinary inconvenience or increased expense is insufficient.
- A clause covering “all actions arising out of” an agreement can include related tort causes of action dependent on the contractual relationship.

## Conclusion

California courts may enforce an agreed out-of-state forum for disputes arising from a commercial contract through a stay under § 410.30(a), and the party resisting enforcement must show more than added cost or inconvenience to establish unfairness or unreasonableness.


Smith, Valentino & Smith, Inc. v. Superior Court, 551 P.2d 1206 (Cal. 1976)