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Bushansky v. Soon-Shiong

California Court of Appeals, Fourth District, First Division

May 25, 2018

STEPHEN BUSHANSKY, Plaintiff and Appellant,
v.
PATRICK SOON-SHIONG et al., Defendants and Respondents.

          APPEAL from an order of the Superior Court of San Diego County, No. 37-2016-00030867-CU-SL-CTL Gregory W. Pollack, Judge. Affirmed.

          Weisslaw, Joel E. Elkins, David C. Katz and Joseph H. Weiss for Plaintiff and Appellant.

          Wilson Sonsini Goodrich & Rosati, Boris Feldman, Cynthia A. Dy and Cheryl W. Foung for Defendants and Respondents Patrick Soon-Shiong, Barry J. Simon, Steve Gorlin, Michael D. Blaszyk, Henry Ji, Richard Kusserow, John T. Potts, Jr., Robert Rosen, John C. Thomas, Jr., Richard Gromberg and NantKwest, Inc.

          Hunton & Williams, Philip J. Eskenazi, and Andrew J. Peterson for Defendant and Respondent Mayer Hoffman McCann.

          DATO, J.

         Plaintiff Stephen Bushansky filed a shareholder derivative action in San Diego Superior Court on behalf of nominal defendant NantKwest, Inc. Based on a forum selection provision contained in NantKwest's certificate of incorporation that generally designates Delaware as the forum for shareholder derivative actions, the trial court dismissed Bushansky's suit.

         On appeal, Bushansky argues that the forum selection provision was never triggered since a condition precedent to its operation was never met. That condition requires that Delaware courts have personal jurisdiction over all indispensable parties named as defendants. Since Delaware courts lacked jurisdiction over one of the defendants at the time the action was filed in California, Bushansky urges that the condition was not met and, thus, the forum selection provision was not triggered.

         The provision, however, does not specify that personal jurisdiction must be determined as of the date an action is filed and no later. In fact, it is silent as to when personal jurisdiction in Delaware must exist. Faced with that silence, we-in accord with a well-established principle of contract law-presume that the parties intended a reasonable timeframe for the condition to be fulfilled. As we shall explain, here the condition was satisfied within a reasonable amount of time. Accordingly, dismissal based on the forum selection clause was proper.

         FACTUAL AND PROCEDURAL BACKGROUND

         Bushansky filed a shareholder derivative action in San Diego Superior Court on behalf of nominal defendant NantKwest, a Delaware corporation headquartered in California. The complaint alleged causes of action against NantKwest's directors and officers for breaches of fiduciary duty. It also alleged a malpractice claim and aiding/abetting claim against Mayer Hoffman McCann PC (the Auditor), an accounting firm that served as NantKwest's auditor. The Auditor is a Missouri professional corporation with offices in California.

         NantKwest moved to dismiss the suit based on forum non conveniens, arguing that a forum selection provision in its certificate of incorporation mandated dismissal. (Code Civ. Proc., §§ 410.30, 418.10.) The provision states, in relevant part:

         "Unless the Corporation consents in writing to the selection of an alternative forum and to the fullest extent permitted by law, the Court of Chancery of the State of Delaware (or, if such court lacks jurisdiction, any other state or federal court located within the State of Delaware) shall be the sole and exclusive forum for... any derivative action or proceeding brought on behalf of the Corporation...; in all cases subject to the court's having personal jurisdiction over the indispensable parties named as defendants." (Italics added.)

         The Auditor joined NantKwest's motion to dismiss and demurred. All the other defendants demurred too. The Auditor's demurrer specified that "for this derivative action, [it] consents to venue in the Delaware Court of Chancery."

         In opposition to NantKwest's motion to dismiss, Bushansky argued that the final clause of the forum selection provision-"in all cases subject to the court's having personal jurisdiction over the indispensable parties named as defendants"-was not met. It was (and is) undisputed that there was no personal jurisdiction over the Auditor in Delaware when the suit was filed in California.[1] Bushansky asserted that the Auditor's later consent to personal jurisdiction in the Delaware Court of Chancery was insufficient to satisfy the provision's final clause, which Bushansky characterized as a condition precedent to its operation. Bushansky also argued that the provision was permissive, not mandatory, and that the traditional forum non conveniens factors counseled in favor of hearing the action in California.

         The trial court rejected Bushansky's arguments and granted the motion to dismiss. Characterizing the forum selection clause as mandatory and not permissive, it reasoned that the Auditor's later consent to jurisdiction in Delaware satisfied the provision. The court further concluded that even if the clause was not triggered by the Auditor's postfiling consent, Bushansky could not take advantage of that fact since he "deprived [the Auditor] of the opportunity to consent to jurisdiction at the outset" by failing to "present a litigation demand on [NantKwest's] Board." (See 1 Witkin, Summary of Cal. Law (11th ed.) Contracts § 846, p. 897 ["A person cannot take advantage of his or her own act or omission to escape liability; if the person prevents or ...


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