Plaintiff brought a shareholder derivative action against a corporation’s executives and auditor in California. The corporation’s by-laws included a forum selection clause choosing Delaware courts but subject to “the court’s having personal jurisdiction over the indispensable parties named as defendants.” The auditor would not normally be subject to suit in Delaware, but after this suit was filed, the auditor filed a formal consent to jurisdiction in Delaware. Held, the trial court correctly dismissed the action on forum non-conveniens grounds, thus enforcing the forum selection clause. The forum selection clause’s quoted qualification does not state when the Delaware courts must have jurisdiction. Plaintiff wrongly assumed it was when he filed his complaint. Instead, the by-law is construed in accordance with standard contract interpretation principles which imply a reasonable time when a contract does not otherwise specify a time for performance. Here, the auditor consented to Delaware jurisdiction within a reasonable time, so the selection of Delaware courts was properly enforced.
California Court of Appeal, Fourth District, Division 1 (Dato, J.); May 25, 2018; 2018 Cal. App. LEXIS 493