1997 WL 33562788 (Cal.App. 2 Dist.)

For opinion see 1997 WL 1114662

Briefs and Other Related Documents

Court of Appeal, Second District, California.

David WEST, Deborah West and Susan West, Appellants and Plaintiffs, v.

LLOYD'S, also known as the Society of Lloyd's, also known as Lloyd's of London,

a corporation, also known as the Corporation of Lloyd's, also known as the

Society and Council of Lloyd's; Ernst & Young, a partnership and an

unincorporated association, Respondents and Defendants.

No. B095440.

April 2, 1997.

(Los Angeles Superior Court Case No. BC 111 313)

APPEAL FROM THE SUPERIOR COURT OF LOS ANGELES COUNTY THE HON. DZINTRA JANAVS, PRESIDING

Reply Brief of Appellants David West, Deborah West and Susan West

De Castro, West & Chodorow, Inc., David T. Stowell (S.B. # 101420), Richard S. Zeilenga (S.B. # 131491), 10960 Wilshire Blvd., 18th Floor, Los Angeles, CA 90024-3804, Attorneys for Plaintiffs and Appellants

*i TABLE OF CONTENTS

I. SUMMARY OF APPELLANTS' REPLY ... 1

II. SUMMARY OF UNDISPUTED AND DISPUTED FACTS ... 3

A. UNDISPUTED FACTS AND EVIDENCE ... 3

B. DISPUTED FACTS IN RESPONDENTS' OPPOSITION ... 4

III. RESPONDENTS DO NOT CONTEST THE PROCEDURAL HISTORY OF THIS APPEAL, WHICH COMPELS REVERSAL OF THE TRIAL COURT'S ORDER OF DISMISSAL ... 6

IV. THE TRIAL COURT'S REFUSAL TO ENFORCE CALIFORNIA'S ANTI-WAIVER STATUTES, CORP. CODE § 25701AND CIVIL CODE § 1751, IS REVIEWED DE NOVO ... 7

V. APPELLANTS' UNDISPUTED EVIDENCE TRIGGERS APPLICATION OF CALIFORNIA'S ANTI-WAIVER STATUTES, AND SHIFTS THE BURDEN OF PROOF TO RESPONDENTS TO PROVE THAT LITIGATION IN ENGLAND WILL NOT DIMINISH ANY OF APPELLANTS' RIGHTS UNDER APPLICABLE CALIFORNIA LAW ... 10

VI. CALIFORNIA'S FUNDAMENTAL PUBLIC POLICY, AS STATED IN THE CALIFORNIA ANTI- WAIVER STATUTES HERE AT ISSUE, PROHIBITS ENFORCEMENT OF LLOYD'S CHOICE CLAUSES ... 15

A. RESPONDENTS' OPPOSITION FAILS TO CONTEST THE FUNDAMENTAL NATURE OF THE PUBLIC POLICY EXPRESSED IN CALIFORNIA'S CORPORATE SECURITIES LAWS, ... 17

B. RESPONDENTS' INTERNATIONAL COMMERCE EXCEPTION TO CALIFORNIA'S ANTI-WAIVER STATUTES HAS NO BASIS IN CALIFORNIA CASE LAW OR CALIFORNIA STATUTES. ... 17

C. RESPONDENTS' RELIANCE UPON THE DECISIONS OF SEVERAL FEDERAL APPELLATE COURTS, WITH RESPECT TO THE ENFORCEABILITY OF LLOYD'S CHOICE CLAUSES, *ii IS MISPLACED, IN THAT CALIFORNIA COURTS EMPLOY A DIFFERENT PROCEDURAL TEST ... 23

D. THE COURT OF APPEALS' DECISIONS IN HALL AND WIMSATT REQUIRE THAT LLOYD'S CHOICE CLAUSES BE DEEMED VOID AND UNENFORCEABLE. ... 28

VII. RESPONDENTS' OPPOSITION DOES NOT CONTEST THAT LLOYD'S CHOICE CLAUSES WAIVE APPELLANTS' RIGHTS UNDER THE CALIFORNIA CONSUMER LEGAL REMEDIES ACT, AND THAT THE ANTI-WAIVER PROVISION IN CIVIL CODE § 1751 BARS THAT RESULT ... 36

VIII. LLOYD'S CHOICE CLAUSES WERE OBTAINED BY FRAUD AND OVERREACHING AND THEREFORE SHOULD NOT BE ENFORCED ... 36

IX. LLOYD'S CHOICE CLAUSES SHOULD NOT BE ENFORCED BECAUSE THEY ARE A CONTRACT OF ADHESION NOT WITHIN APPELLANTS' REASONABLE EXPECTATIONS ... 41

X. APPELLANTS' CALIFORNIA ACTION MAY NOT BE DISMISSED BASED UPON FORUM NON-CONVENIENS ... 45

A. C.C.P. § 410.30 DOES NOT PERMIT DISMISSAL OF CALIFORNIA ACTIONS BROUGHT BY CALIFORNIA RESIDENTS ... 45

B. CALIFORNIA'S FUNDAMENTAL PUBLIC POLICY, AS EXPRESSED IN THE ANTI-WAIVER STATUTES APPLICABLE TO THIS CASE, PROHIBIT DISMISSAL OF THIS ACTION BASED UPON FORUM NON-CONVENIENS ... 46

CONCLUSION ... 50

*iii TABLE OF AUTHORITIES

Cases

Allan v. Snow Summit, Inc. (4th Dist. 1996) 51 Cal.App.4th 1358, 59 Cal.Rptr. 2d 813 ... 43

Allen v. Lloyd's of London (4th Cir. 1996) 94 F.3d 923 ... 23, 24, 26, 29

Bancomer S.A. v. Superior Court (2d Dist. 1996) 44 Cal.App.4th 1450, 52 Cal.Rptr. 2d 435 ... 7, 8, 12

Beckman v. Thompson (2d Dist. 1992) 4 Cal.App.4th 481, 6 Cal.Rptr. 2d 60 ... 45

Benefit Assn. International (1996) 46 Cal.App.4th 827, 54 Cal.Rptr. 2d 165 ... 18-20

Boaz v. Boyle & Co. (2d Dist. 1995) 40 Cal.App.4th 700, 46 Cal.Rptr. 2d 888 ... 45, 47

Bonny v. Society of Lloyd's (7th Cir. 1993) 3 F.3d 156, cert. denied, 510 U.S. 1113, 127 L.Ed. 2d 378, 114 S.Ct. 1057 (1994) ... 23, 24, 26

C.O.L. Original Products, Inc. v. National Hockey League Players Assn. (4th Dist. 1995) 39 Cal.App.4th 1347, 46 Cal.Rptr. 2d 412 ... 7, 16

Cabrera v. Plager (1987) 195 Cal.App.3d 606, 241 Cal.Rptr. 731 ... 11, 12, 23

Cal-State Business Products and Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666, 16 Cal.Rptr. 2d 417 ... 10, 19, 44

Crown Homes, Inc. v. Landes (2d Dist. 1994) 22 Cal.App.4th 1273, 27 Cal.Rptr. 2d 827 ... 21

Ford Motor Co. v. Insurance Co. of North America (2d Dist. 1995) 35 Cal.App.4th 604, 41 Cal.Rptr. 2d 342 ... 7, 9, 13, 45, 46, 48

Furda v. Superior Court (1984) 161 Cal.App.3d 418, 207 Cal.Rptr. 646 ... 18

Gaskin v. Handel (S.D.N.Y. 1975) 390 F.Supp. 361 ... 39

Gau Shan Co. v. Bankers Trust Co. (6th Cir. 1992) 956 F.2d 1349 ... 27, 28

*iv General Signal Corp. v. MCI Telecommunications Corp. (9th Cir. 1995) 66 F.3d 1500, 1506, cert. denied, 134 L.Ed 2d 97, 116 S.Ct. 1017 (1996) ... 34

Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 171 Cal.Rptr. 604, 623 P.2d 165 ... 41, 43, 45

Haisten v. Grass Valley Med. Reimbursement (9th Cir. 1986) 784 F.2d 1392 ... 16, 18, 31

Hall v. Superior Court (1983) 150 Cal.App.3d 411, 197 Cal.Rptr. 757 ... 3, 9, 13, 15, 16, 17, 27-31, 33, 35

Hambrecht & Quist Venture Partners vs. American Medical International, Inc. (2d Dist. 1995) 38 Cal.App.4th 1532, 46 Cal.Rptr. 2d 33 ... 34

Hugel v. The Corporation of Lloyd's (7th Cir. 1993) 999 F.2d 206 ... 23, 24, 26

Interamerican Trade Corp. v. Companhia Fabricadora de Pecas (6th Cir. 1992) 973 F.2d 487 ... 28

International Engine Parts, Inc. v. Fedderson & Co. (1995) 9 Cal.4th 606, 38 Cal.Rptr. 2d 150, 888 P.2d 1279 ... 9

Keating v. Superior Court (1982) 31 Cal.3d 584, 183 Cal.Rptr. 360, 645 P.2d 1192, rev'd in part, Southland Corporation v. Keating (1984) 465 U.S. 1, 79 L.Ed. 2d 1, 104 S.Ct. 852 ... 21, 31, 41

Lu v. Dryclean-U.S.A. of California, Inc. (1992) 11 Cal.App.4th 1490, 14 Cal.Rptr. 2d 906 ... 19, 20

M/S The Bremen v. Zapata Off-Shore Co. (1972) 407 U.S. 14, 32 L.Ed. 2d 513, 92 S.Ct. 1907 ... 19, 20, 24, 32, 33

Mayflower Insurance Co. v. Pellegrino (1989) 212 Cal.App.3d 1326, 261 Cal.Rptr. 224 ... 9

Merrill Lynch, Pierce, Fenner & Smith v. Ware (1973) 414 U.S. 117, 38 L.Ed. 2d 348, 94 S.Ct. 383 ... 18

Mitsubishi Motors v. Soler Chrysler Plymouth (1985) 473 U.S. 614, 87 L.Ed. 2d 444, 105 S.Ct. 3346 ... 21, 22

*v Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459, 11 Cal.Rptr. 2d 330, 834 P.2d 1148 ... 18, 19, 27, 33

North Coast Business Park v. Nielsen Construction Co. (1993) 17 Cal.App.4th 22, 21 Cal.Rptr. 2d 104 ... 12

Olsen v. Breeze, Inc. (1996) 48 Cal.App.4th 608, 55 Cal.Rptr. 2d 818 ... 44

Richards v. Lloyd's of London (9th Cir. March 6, 1997) 97 Daily Journal D.A.R. 3209; 1997 U.S. App. Lexis 3889 ... 1, 2, 10, 14, 15-23, 25-28, 30, 33, 46-48

Riley v. Kingsley Agencies, Ltd. (10th Cir. 1992) 969 F.2d 953, cert. denied, 506 U.S. 1021, 121 L.Ed. 2d 584, 113 S.Ct. 658 (1992) ... 24, 26, 27

Roby v. Corporation of Lloyd's (2d Cir. 1993) 996 F.2d 1353, cert. denied, 510 U.S. 945, 126 L.Ed. 2d 333, 114 S.Ct. 385 (1993) ... 24, 26, 33

Rodriguez de Ouijas v. Shearson/American Express, Inc. (1989) 490 U.S. 477, 104 L.Ed. 2d 526, 109 S.Ct. 1917 ... 16, 17

Rosenthal v. Great Western Fin. Sec. Corp. (1996) 14 Cal.4th 394, 58 Cal.Rptr. 2d 875, 926 P.2d 1061 ... 38, 39

Rudd v. California Casualty General Insurance Co. (1990) 219 Cal.App.3d 948, 268 Cal.Rptr. 624 ... 9

San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 Cal.App.3d 438, 216 Cal.Rptr. 462 ... 44

Sarlot-Kantarjian v. First Pennsylvania Mortgage Trust (9th Cir. 1979) 599 F.2d 915 ... 34

Scherk v. Alberto-Culver Co. (1974) 417 U.S. 506, 41 L.Ed. 2d 270, 94 S.Ct. 2449 ... 20

Security-First National Bank v. Earp (1942) 19 Cal.2d 774, 122 P.2d 900 ... 39

Shearson/American Exp., Inc. v. McMahon (1987) 482 U.S. 220, 96 L.Ed. 2d 185, 107 S.Ct. 2332 ... 16-17, 34

Shell v. R.W. Sturge, Ltd. (S.D. Ohio 1993) 850 F.Supp. 620, aff'd. 55 F.3d 1227 ... 23, 26-28

*vi Sierra Club v. State Board of Forestry (1994) 7 Cal.4th 1215, 32 Cal.Rptr. 2d 19, 876 P.2d 505 ... 14

Society of Lloyd's v. Clementson, LRLR 3070 (Nov. 10, 1994) ... 35

Stangvik v. Shiley, Inc. (1991) 54 Cal.3d 744, 1 Cal.Rptr. 2d 556, 819 P.2d 14 ... 45, 47-49

Weaver v. Jordan (1966) 64 Cal.2d 235, 49 Cal.Rptr. 537, 411 P.2d 289, cert. denied, Jordan v. Weaver (1966) 385 U.S. 844 ... 13, 15

Wilco v. Swan (1953) 346 U.S. 427, 98 L.Ed. 168, 74 S.Ct. 182 ... 15, 16

Wimsatt v. Beverly Hills Weight Etc. International, Inc. (1995) 32 Cal.App.4th 1511, 38 Cal.Rptr. 2d 612 ... 3, 10-13, 15-17, 20, 24, 28-32, 35

Wong v. Tenneco, Inc. (1985) 39 Cal.3d 126, 216 Cal.Rptr. 412, 702 P.2d 570 ... 27, 28, 34

*vii Statutes

15 U.S.C., 77n, § 14 ... 1

15 U.S.C., 78cc(a), § 29(a) ... 1

California Civil Code § 1751 ... 1, 7, 8, 11, 13, 27, 36, 44

California Civil Code § 1760 ... 36

California Civil Code §§ 1750-1784 ... 36

California Code of Civil Procedure § 410.30 ... 45

California Corporations Code § 25000, et seq. ... 37

California Corporations Code § 25100(b) ... 14

California Corporations Code § 25105 ... 14, 15

California Corporations Code § 25110 ... 17

California Corporations Code § 25120 ... 17, 37, 43, 44

California Corporations Code § 25130 ... 17

California Corporations Code § 25163 ... 14

California Corporations Code § 25701 ... 1, 6, 7, 8, 9, 11, 13, 16, 19, 21, 23, 27, 33-35, 43, 44

Texts

A. Corbin, Corbin on Contracts, § 607 (1952) ... 39

*1 I.

SUMMARY OF APPELLANTS' REPLY

Respondents urge this Court to carve out an exemption to California's Anti-Waiver Statutes (Corporations Code § 25701 and Civil Code § 1751), whenever the parties' transaction has an international flavor to it. No such exemption exists in the applicable statutes, nor is such an exemption even remotely implied.

Respondents cite no California case, or legislative history for California's Anti-Waiver Statutes, which supports the judicial creation of an "international transaction exemption" for foreign businesses that solicit California investors in violation of California's regulatory statutes. This Court should decline Respondents' invitation to ignore an express statutory command of the California Legislature, and should similarly decline Respondents' invitation to sit as a super-legislature, weighing the importance of political and economic factors that may be present in international commerce.

Subsequent to the filing of Respondents' Brief, the United States Ninth Circuit Court of Appeals issued its long awaited decision in Richards v. Lloyd's of London, a case involving 574 United States Names (many of whom are Californians), that challenged Lloyd's Choice Clauses based upon the parallel anti-waiver provisions in the U.S. Securities Laws. (See, Richards v. Lloyd's of London [No. 95-55747, No. 95-56467] 97 Daily Journal D.A.R. 3209; 1997 U.S. App. Lexis 3889 [9th Cir. March 6, 1997].) [FN1] The U.S. Ninth Circuit Court of Appeals reversed the District Court's decision, relied upon by Respondents throughout their Opposition Brief, holding that the District Court for the Southern District of California had erred in enforcing Lloyd's Choice Clauses in the face of the parallel *2 anti-waiver statutes in the U.S. Securities Laws. The Ninth Circuit considered precisely the same arguments raised here in Respondents' Opposition Brief; in particular, that state and federal courts should judicially amend the anti-waiver statutes in the U.S. Securities Laws to permit the enforcement of private choice clauses, whenever the transaction at issue involves international commerce. (See. Richards v. Lloyd's of London, supra, 1997 U.S. App. Lexis 3889, *22.) The Ninth Circuit specifically rejected the position Respondents now urge upon this Court, to wit', that the express legislative command in the federal anti-waiver statutes may be set aside by the courts, where they determine that the underlying policies of the securities statutes are, in the opinion of the court, "not in conflict with the laws of a foreign nation." (Id., *22.) Noting that the Congress clearly recognized the existence of international securities transactions in various statutes, the Ninth Circuit emphasized that Congress had, nevertheless, chosen not to create any statutory exemption from the anti-waiver statutes for international securities transactions, and that accordingly no U.S. court should take it upon itself to craft such an exemption. (Id., * 22.)

FN1. The parallel Anti-Waiver Statutes in the federal securities laws are 15 U.S.C., 77n, § 14; and 15 U.S.C., 78cc(a), § 29(a).

Thus, Respondents' heavy reliance upon the Richards v. Lloyd's of London case, described by Respondents as involving the same California Securities Law claims raised by Appellants here [FN2], has proved unavailing. The purported unanimity of the Federal Courts in enforcing Lloyd's Choice Clauses is no more.

FN2. See, Respondents' Opposition ("Opp."), p. 21.

Five hundred seventy-four U.S. Names who invested in Lloyd's, many of whom are Californians, are now free to proceed with their securities law claims against Lloyd's in the U.S. District Court for the Southern District of California. The violations alleged by those 574 investors, are identical to and/or parallel with, the allegations of the Wests in this case under California's Corporate Securities Laws. The West Family should likewise be *3 permitted to proceed with their claims against Lloyd's for violation of California's Securities Laws. [FN3]

FN3. This recent reversal of the authority relied upon by Respondents now makes the Ninth Circuit's view of the anti-waiver statutes in the federal securities laws consistent with the view previously adopted by the California Courts of Appeal in Hall v. Superior Court (1983) 150 Cal.App.3d 411, and Wimsatt v. Beverly Hills Weight Etc. International. Inc. (1995) 32 Cal.App.4th 1511. These California cases recognized that California courts have no discretion to supplant the Legislature's conclusions about the rights of private parties to contract away the remedies and restrictions of certain regulatory regimes, here the California Corporate Securities Law of 1968.

II.

SUMMARY OF UNDISPUTED AND DISPUTED FACTS

A. UNDISPUTED FACTS AND EVIDENCE.

Respondents do not dispute many of the determinative facts set forth in Appellants' Opening Brief, including the following:

1) That this is the first case where Lloyd's seeks to retroactively apply the Choice Clauses to claims which arose prior to January 1, 1987, when Lloyd's Choice Clauses were first inserted into the Wests' pre-existing General Undertaking agreement with Lloyd's (Appellants' Opening Brief ["A.O.B."], pp. 4-5);

2) That Lloyd's interactions with the Wests in California occurred over a 20 year period; through the mails, through telephone calls and through face-to-face meetings in Southern California. (A.O.B., p. 30);

3) That Lloyd's never obtained qualification from the California Department of Corporations for the sale of its securities in California (A.O.B., p. 30, fn. 45);

4) That Lloyd's and its agents made material misrepresentations in connection with the offer and sale of securities to the Wests, in that Lloyd's concealed *4 a massive asbestos claims crisis that would devastate the Wests' investments in Lloyd's syndicates (A.O.B., p. 30); and

5) That after concealing this asbestos claims crisis, Lloyd's obtained a broad grant of immunity from the English Parliament in 1982, thereby removing any possibility that California Names could assert their claims for violations of California's Securities Laws in any English court (A.O.B. at 31).

B. DISPUTED FACTS IN RESPONDENTS' OPPOSITION.

Respondents' Opposition contains several representations which are irreconcilable with the evidence in the Appellate Record.

First, Respondents incorrectly assert that "all of Appellants' underwriting activity occurred in London, England," and that any activity in California was de minimis. (Opp., p. 3.) In fact, the undisputed evidence demonstrates that almost all of the Wests' transactions with respect to their joining Lloyd's, and annual renewal of their investment in Lloyd's syndicates, occurred at their homes in Southern California, not in England. (See. A.O.B., p. 5; and David West Decl., A.A., Vol. XXVII, p. 6380, 13; and p. 6383, 17.) The Appellate Record contains unrefuted declarations from the Wests explaining the process whereby they annually renewed and expanded their investments in Lloyd's over a 20-year period, the dominant feature of which was Lloyd's annual transmission of investment materials to California. (See. David West Decl., A.A., Vol. XXVII, p. 6383, 17.) Indeed, as passive investors the Wests were prohibited from directly underwriting any business in Lloyd's syndicates in London. (A.A., Vol. XXVII, p. 6385, 18.) Thus, Respondents' assertion that all of the Wests' underwriting occurred in London is wrong. [FN4]

FN4. Lloyd's emphasis on the Wests' interview by Lloyd's ROTA Committee, in London, is much ado about nothing. (Opp., p. 4). The unrefuted evidence shows that Appellants' ROTA Committee interview was a mere formality, involving a 5 to 10 minute meeting. (See. David West Decl., Vol. XXVII, p. 6379; Deborah West Decl., Vol. XXVIII, pp. 6485-6489, ¶¶ 6-13; and Susan West Decl., Vol. XXVIII, pp. 6649-6651, t1 6-8.)

*5 Second, Respondents contend that although earlier versions of Lloyd's General Undertaking (which David West signed in 1973, and Deborah and Susan West signed in 1983) did not contain choice clauses; they did contain an arbitration clause governing disputes between Names and "other participants in the Lloyd's Market". (Opp., p. 5.) To the extent that Respondents suggest that the Wests were required to arbitrate any disputes between themselves and the Corporation of Lloyd's, the Council of Lloyd's and/or the Society of Lloyd's (i.e., the Respondents in this appeal) in England, Respondents are attempting to confuse this Court. None of the Wests' claims against Lloyd's arising prior to January 1, 1987, when Lloyd's General Undertaking containing the Choice Clauses first became effective, were subject to any choice of forum, choice of law, or arbitration clause, in any agreement between the Wests and these Respondents. (See. A.O.B., p. 7, ¶2.)

Third, Respondents stretch the facts by asserting that the Choice Clauses were "in large type" and that their terms were "easy to understand" (Opp., p. 5). Although the document is short (2 pages long), the Choice Clauses are not in any larger type than the remainder of the document, and it is not at all easy to understand the meaning Lloyd's now attributes to the Choice Clauses. It would certainly not have been easy to understand in June 1986, when the Wests signed the new General Undertaking, that Lloyd's would later seek to apply the Choice Clauses retroactively to claims arising out of the Wests' twelve year prior investment relationship with Lloyd's. [FN5]

FN5. Respondents also falsely contend that Appellants never raised this retroactivity argument below, and therefore, it is a new issue on appeal. A review of the record demonstrates that Appellants informed the Trial Court that the Choice Clauses were not contained in the Wests' prior General Undertakings with Lloyd's, and that the Wests' claims arose prior to signing the new General Undertaking containing the Choice Clauses. (See, e.g., A.A., Vol. XXXV, p. 8558 [Time Line of Lloyd's Fraud].)

*6 Finally, Respondents contend that Appellants omitted a page of an exhibit in the Administrative Record, showing that Dave West was a plaintiff in litigation in England against Ernst & Young and the Merrett Members Agency. (Opp., p. 7.) Appellants have reviewed the original exhibits served upon Appellants by Respondents, and determined that the purportedly omitted page is not in the document. Even if considered, the evidence has no relevance to the claims presented against Respondents, in that none of these Respondents were defendants in that English litigation. [FN6]

FN6. Respondents have utterly failed to present this Court with one example of a pending lawsuit in England, against these Respondents, i.e., Lloyd's, the Society of Lloyd's, the Corporation of Lloyd's and/or the Council of Lloyd's. It is telling that after almost a decade of litigation by Names, there is no evidence that any Name has ever been able to bring any of these Respondents to trial in an English court, despite the purported cornucopia of "adequate remedies" provided to them under English law in the English courts.

III

RESPONDENTS DO NOT CONTEST THE PROCEDURAL HISTORY OF THIS APPEAL. WHICH COMPELS REVERSAL OF THE TRIAL COURT'S ORDER OF DISMISSAL.

Strikingly, Respondents do not contest any aspect of the procedural history of this case, set forth in § I(D), pp. 12-16 of Appellants' Opening Brief. By their silence, Respondents concede that the Trial Court refused to even consider Appellants' main issue in this appeal, to wit: that enforcement of Lloyd's Choice Clauses is prohibited by the Legislature's express statement of its fundamental public policy in Corp. Code § 25701. (A.O.B., pp. 14-15.) Respondents do not dispute that the Trial Court failed to make any findings on whether Appellants' unrefuted evidence of Lloyd's statutory violations triggered application of Corp. Code § 25701. Similarly, Respondents did not dispute that the Trial Court made no findings with respect to Lloyd's violation of the California Consumer Legal *7 Remedies Act ("CLRA"), and its anti-waiver provision (Civ. Code § 1751), which also prohibits private parties from waiving the rights, remedies and restrictions of the CLRA. Rather, the Trial Court said that it declined to first "hold a criminal trial" to resolve these public policy issues. (A.O.B., pp. 14-15.)

Given the California Supreme Court's express command that California courts carefully consider whether choice clauses violate any fundamental public policy of this state, [FN7] the Trial Court's failure to consider the unrefuted evidence presented by the Wests' was an abuse of discretion. (See. Ford Motor Co. v. Insurance Co. of North America [2d Dist. 1995] 35 Cal.App.4th 604, 610.)

FN7. See. A.O.B., p. 14, fn. 31.

IV.

THE TRIAL COURT'S REFUSAL TO ENFORCE CALIFORNIA'S ANTI-WAIVER STATUTES. CORP. CODE § 25701 AND CIVIL CODE § 1751. IS REVIEWED DE NOVO

Respondents correctly note that the Second District Court of Appeal has recently adopted an abuse of discretion standard review, with respect to the validity of choice clauses. (Compare. Bancomer S.A. v. Superior Court [2d Dist. 1996] 44 Cal.App.4th 1450 [abuse of discretion standard]; with C.Q.L. Original Products. Inc. v. National Hockey League Players Assn. [4th Dist. 1995] 39 Cal.App.4th 1347 [adopting a substantial evidence standard].)

Respondents' Opposition begins and ends there, with no guidance of any kind to assist this Court with the standard of review to be applied here, where the California Legislature has adopted a specific statute barring enforcement of private choice clauses that waive certain regulatory statutes. Although Bancomer, S.A. v. Superior Court, supra, 44 Cal.App.4th 1450, may express the Second District's general standard of review on the enforceability of *8 private choice clauses, it does not address the enforcement of such choice clauses where unrefuted evidence shows that the clauses violate an express anti-waiver statute, here Corp. Code § 25701 and Civ. Code § 1751.

Thus, Respondents do not contest any of the controlling authorities cited in Appellants' Opening Brief, which hold that: 1) the application of state statutes to undisputed facts is reviewed by this Court de novo; and 2) the interpretation of the scope of state statutes, here Corp. Code § 25701 and Civ. Code § 1751, is also reviewed de novo. (See, A.O.B., p. 18.) Accordingly, this Court reviews the evidence triggering the application of the anti-waiver statutes de novo, exercising its independent judgment, and without deference to the Trial Court's consideration of the undisputed evidence, and without deference to the Trial Court's interpretation of the scope and meaning of California's anti-waiver statutes. (See. A.O.B., p. 18, fns. 35 and 36.)

Finally, Respondents argue that Appellants cannot urge a de novo standard of review on appeal, because Appellants informed the Trial Court that a "substantial evidence" standard of review would be applied by a future Court of Appeal. (Opp., p. 8, fn. 4.) The standard of appellate review is a pure issue of law. As such, it is appropriately considered on appeal. (See, Cabrera v. Plager [1987] 195 Cal.App.3d 606, 611.) Obviously, this Court applies the correct legal standard at the time of its appellate review, regardless of what Appellants believed the standard might be in the Spring of 1995, before the Second District had even issued its April 1996 Opinion in Bancorner, S.A. v. Superior Court, supra, 44 Cal.App.4th 1450, adopting an abuse of discretion standard of review. In addition, now that the Appellate Record is fixed, and Appellants' evidence concerning Lloyd's statutory violations is shown to be undisputed, this Court is free to apply a de novo standard of review to the *9 undisputed evidence. [FN8]

FN8. See. International Engine Parts, Inc. v. Fedderson & Co. (1995) 9 Cal.4th 606, 611- 612; Rudd v. California Casualty General Insurance Co. (1990) 219 Cal.App.3d 948, 951- 952; and Mayflower Insurance Co. v. Pellegrino (1989) 212 Cal.App.3d 1326, at 1331-32, all holding that the application of state statutes to undisputed facts is subject to the Court of Appeal's de novo review.

Here, an abuse of discretion standard of review also requires reversal, in that the Trial Court did not exercise its discretion "within the range of options available under governing legal criteria in light of the evidence before the tribunal." (See. Ford Motor Co., supra. 35 Cal.App.4th at 610.) In Hall v. Superior Court, supra, 150 Cal.App,3d at 418, the court applied an abuse of discretion standard to the trial court's decision to enforce the Nevada choice clauses there at issue. Finding an abuse of discretion, the Hall court stated:

"California's policy to protect securities investors, without more, would probably justify denial of enforcement of the choice of forum provision, although a failure to do so might not constitute an abuse of discretion; but [Corp. Code] § 25701, which renders void any provision purporting to.waive or evade the Corporate Securities Law, removes that discretion and compels denial of enforcement." (Id-, p. 418.)

Here, enforcement of Lloyd's Choice Clauses, despite the prohibition in § 25701, is not "within the range of options available under governing legal criteria", and thereby constitutes an abuse of discretion. (See. Ford Motor Co., supra, 35 Cal.App.4th at 610.)

*10 V.

APPELLANTS' UNDISPUTED EVIDENCE TRIGGERS APPLICATION OF CALIFORNIA'S ANTI-WAIVER STATUTES, AND SHIFTS THE BURDEN OF PROOF TO RESPONDENTS TO PROVE THAT LITIGATION IN ENGLAND WILL NOT DIMINISH ANY OF APPELLANTS' RIGHTS UNDER

APPLICABLE CALIFORNIA LAW.

Respondent's Opposition sets forth the general rule that the party seeking to set aside the enforcement of choice clauses carries the burden of proof to show that they are unreasonable, and thus unenforceable. (See. Opp., pp. 8-9.) Appellants do not contest that the burden of proof was initially upon them in seeking to oppose enforcement of Lloyd's Choice Clauses. (See. A.A., Vol. XIX, p. 4477.) However, once the Wests filed their complaint alleging violation of California's Corporate Securities Laws and the California Consumer Legal Remedies Act, and presented unrefuted evidence demonstrating application of those regulatory statutes, a threshold was met by the Wests' triggering the anti-waiver statutes. (See. A.O.B., p. 30, fn. 43.) Under those circumstances, the logic of California's anti-waiver statutes necessarily shifts the burden of proof to Respondents to prove that Lloyd's Choice Clauses do not have the effect of "diminishing any of the plaintiffs' rights under California law." (See. Wimsatt v. Beverly Hills Weight Etc. International. Inc., supra. 32 Cal.App.4th at 1524; and Richards v. Lloyd's of London, supra. 1997 U.S. App. Lexis 3889, **24-26, expressly finding that the purported "English remedies" are not adequate substitutes for U.S. Securities Laws.) [FN9]

FN9. Respondents complain that Appellants said the burden of proof was on them, and not Respondents, before the Trial Court. (Opp., p. 9.) When Appellants' informed the Trial Court that "plaintiffs have the burden of proof", it was a reference to the general standard placing the initial burden of proof on plaintiffs to overcome the Choice Clauses, citing to Gal-State Business Products and Services (1993) 12 Cal.App.4th 1666, 1680. (See. A.A. Vol. XIX, p. 4477, Is. 13-17.) Cal-State, supra, does not involve an anti-waiver statute. Appellants' subsequent citation of Wimsatt, supra, 32 Cal.App.4th at 1524, to the Trial Court, raised the issue of that initial burden of proof shifting to the Respondents, based upon the presence of an anti-waiver statute. (See. A.A., Vol. XIX, p. 4478, 1. 4 and p. 4490.)

*11 Respondents concede by their silence that they cannot prove that an English court will apply and enforce California's Corporate Securities Laws. That is not surprising because English conflict of law rules, and the English Parliament's 1982 Lloyd's Act, bar any English court from doing so. (See, A.O.B., p. 31.) Thus, Respondents cannot possibly satisfy their burden of proof to show that litigation by the Wests in England "will not diminish any of the Wests' rights" under the California Corporate Securities Law or the California Consumer Legal Remedies Act. (See. Wimsatt, supra, 32 Cal.App.4th at 1524.) That being the case, there is no purpose in remanding this matter to the Trial Court for further development on this issue, since Respondents cannot possibly satisfy the applicable burden of proof that is imposed upon them by Corp. Code § 25701 and Civ. Code § 1751.

Facing this insurmountable hurdle, Respondents assert that this Court should disregard the legal standard shifting the burden of proof to them, on the grounds that this issue is a new argument on appeal. (Opp., at 9.) Respondents'contention is specious.

First, this Court applies the correct legal test to the parties' burdens on appeal. The case cited by Respondents, Cabrera v. Plager (1987) 195 Cal.App.3d at 611, clearly recognizes that this Court may consider "pure issues of law" not raised in the Trial Court. (Id. at 611.)

Second, Appellants did in fact bring the issue of differing burdens of proof to the attention of the Trial Court. Appellants specifically quoted that section of the Wimsatt opinion discussing the different burdens of proof that apply in California Courts, where an anti-waiver statute is present. (See. A.A., Vol. XIX, p. 4478.) The pages cited from the *12 Wimsatt case in plaintiffs' Opposition, and attached for the Trial Court's review, contain a detailed discussion of California's different procedural rules, which shift the burden of proof to the party seeking to enforce choice clauses in any instance where an anti-waiver statute is shown to be applicable to the facts of the case. (See. A.A., Vol. XIX, p. 4504, last ¶; and p. 4505, throughout.) Thus, the cases cited by Respondents, i.e., Cabrera v. Plager, supra, 195 CaLApp.3d at 611; and North Coast Business Park v. Nielsen Construction Co. (1993) 17 Cal.App.4th 22, 29, are entirely inapposite to this appellate record.

Respondents also urge this Court not to follow the burden shifting rule in the Wimsatt case to the extent that it conflicts with the abuse of discretion standard of review adopted by the Second District in Bancomer, S.A. v. Superior Court, supra, 44 Cal.App.4th 1450. (See. Opp., p. 10.) Respondents offer no explanation of any potential conflict between the abuse of discretion standard adopted in Bancomer, supra, and the burden shifting rule adopted by the court in Wimsatt, supra, 32 Cal.App.4th at 1524. Respondents leave it to this Court to imagine how such a potential conflict might occur. (See. Opp., p. 10.) There is no conflict here. The Bancomer case does not address a situation, as in this Appeal and in the Wimsatt case, where the undisputed evidence showed that the Choice Clauses violate an express anti-waiver statute adopted by the California Legislature. Even if the Bancomer case did involve an anti-waiver statute, there is no inherent conflict between an abuse of discretion standard of review and a rule which shifts the burden of proof to one party or another, depending upon the applicable regulatory statutes. If an anti-waiver statute is shown to be applicable to the pleadings and evidence before a trial court, as here, and that trial court refuses to shift the burden of proof to the party seeking to enforce the choice clauses, then that trial court has failed to follow the controlling legal standard and has abused its *13 discretion. [FN10]

FN10. See. Ford Motor Co., supra. 35 Cal.App.4th at 610. See, also. Hail v. Superior Court, supra. 150 Cal.App.3d at 418 ("Corp. Code § 25701 removes the trial court's discretion and compels denial of enforcement.").

Respondents seek to distinguish Wimsatt v. Beverly Hills Weight Etc. International. Inc., supra. 32 Cal.App.4th 1514, on the grounds that it did not involve an international business transaction. (Opp., p. 10.) There is no statutory basis or California case law, supporting the creation of an "international commerce exemption" to California's Anti- Waiver Statutes. Contrary to Respondents' argument, the Wimsatt Court expressly recognized the importance of choice clauses in fostering "international commerce". (Id. at 1523.) Despite recognizing the important role choice clauses play in fostering international commerce, nevertheless, the Wimsatt court did not even remotely imply that the presence of international commerce somehow excuses a California Court from enforcing the Legislature's prohibitions in California's Anti-Waiver Statutes. (Id.)

How much international flavor must a transaction have for a court to hold that the California Legislature's unambiguous Anti-Waiver Statutes, Corp. Code § 25701 and Civ. Code § 1751, may be disregarded? Respondents do not say. Thus, it is Respondents that ask this Court to adopt a "bright line" test, exempting all international transactions from important regulatory statutes, and their anti-waiver prohibitions. (Opp., pp. 11-16.)

Granting Respondents' request would constitute a gross usurpation of legislative authority by the courts of this state, and violate any reasonable conception of the separation of powers. (See. Weaver v. Jordan [1966] 64 Cal.2d 235, 263, cert. denied, Jordan v. Weaver (1966) 385 U.S. 844, stating: "[D]irect policy-making is not our province. How best to reconcile competing interests is the business of legislatures and the balance they strike is a judgment not to be displaced by ours ....".) That is precisely why the U.S. Ninth *14 Circuit Court of Appeals recently rejected the same argument by Lloyd's in Richards v. Lloyd's of London, supra, 1997 U.S. App. Lexis 3889, **22-23, holding that the federal courts may not disregard the public policy determinations of the Congress. The California Legislature deserves no less deference.

The rationale of the Ninth Circuit Court of Appeals in Richards v. Lloyd's applies with equal force here. When the California Legislature intended to exempt foreign issued securities it expressly set forth such an exemption. (See, e.g., Corp. Code § 25100(b), exempting "foreign government securities".) "[U]nder the maxim of statutory construction, expressio unius est exclusio alterius, et al, if exemptions are specified in a statute, we [the court] may not imply additional exemptions unless there is a clear legislative intent to the contrary." Sierra Club v. State Board of Forestry (1994) 7 Cal.4th 1215, 1230. Since the Legislature did not exempt private foreign entities, such as Lloyd's, from California's Securities Laws, this Court must enforce applicable California law against Lloyd's. [FN11]

FN11. Corp. Code § 25163 states that the burden of proving any exemption to the applicable California Corporate Securities Laws is placed upon the party claiming the exemption. This Appellate Record is devoid of any evidence satisfying Respondents' burden of proving that there is a "foreign entity exemption" to California's Corporate Securities Law of 1968.

Lloyd's asks this Court to believe that international commerce will come to a screeching halt if this Court actually applies California's Anti-Waiver statutes to international securities transactions. Lloyd's dire warnings are exaggerated. The California Corporate Securities Law of 1968 expressly provides for mechanisms that Lloyd's could have employed to obtain an exemption, if it believed that one was vital to its operations. [FN12]

FN12. Corp., Code § 25105 authorizes the Corporations Commissioner to "exempt by rule any transaction not being comprehended within the purposes of the California Corporate Securities Law, or which he finds the qualification of which is not necessary or appropriate in the public interest or for the protection of investors". There is no evidence in this Appellate Record that Lloyd's ever sought any exemption from the Corporations Commissioner.

*15 The public policy arguments that Lloyd's now makes in its Opposition Brief, asking this Court to weigh the importance of international commerce against the express commands of the California Legislature, are more properly made to the Legislature and/or to the Corporations Commissioner, to whom the Legislature has expressly delegated authority to make such exemptions. (Corp. Code § 25105.)

VI.

CALIFORNIA'S FUNDAMENTAL PUBLIC POLICY. AS STATED IN THE CALIFORNIA ANTI-WAIVER STATUTES HERE AT ISSUE, PROHIBITS ENFORCEMENT OF LLOYD'S CHOICE CLAUSES

Any private choice clauses which have the effect of waiving California's regulatory statutes containing anti-waiver prohibitions, are void and unenforceable as violative of the Legislature's express determination of California's fundamental public policy. (A.O.B, at 22.) As the U.S. Ninth Circuit Court of Appeals recently explained in Richards v. Lloyd's of London, supra, 1997 U.S. App. Lexis 3889, once the legislature has enacted an anti- waiver statute, there are no competing interests for the courts to weigh with respect to choice clauses. Where Congress, or here the California Legislature, has adopted an anti-waiver statute, the legislature has already engaged in the weighing of competing interests, and struck the balance it desires as a matter of public policy. (See. Richards v. Lloyd's of London, supra, 1997 U.S. App. Lexis 3889, **11-16; and Weaver v. Jordan, supra, 64 Cal.2d at 263.)

Respondents do not contend that Appellants have misstated the holdings or legal standards set forth in Hall v. Superior Court, supra, 150 Cal.App.3d 411, or Wimsatt v. Beverly Hills, supra, 32 Cal.App.4th, 1511. Rather, Respondents contend that the Hall and Wimsatt cases are based on an overruled U.S. Supreme Court case (*16 Wilco v. Swan [1953] 346 U.S. 427), and thus should be disregarded. (Opp., p. 11.)

Not one California Court of Appeal has followed Respondents' line of reasoning concerning a purported defect in Hall v. Superior Court, supra, since that case was decided in 1983. To the contrary, the Hall case, which has been recently cited with approval by both the California Courts of Appeal and the U.S. Ninth Circuit Court of Appeal, is well- established precedent in this state. (See. C.O.L. Original Products. Inc. vs. National Hockey League Plavers Assn., supra. 39 Cal.App.4th at 1357; Wimsatt. supra. 32 Cal.App.4th at 1521; and Haisten v. Grass Valley Med. Reimbursement [9th Cir. 1986] 784 F.2d 1392.) [FN13]

FN13. Both the decisions in Wimsatt, supra, 32 Cal.App.4th 1511; and the decision in C.O.L. Original Products, supra, 39 Cal.App.4th at 1347, were entered after the Wilco case was overruled by the U.S. Supreme Court in Rodriguez de Quijas v. Shearson/American Express. Inc. (1989) 490 U.S. 477, 484. Nevertheless, these courts did not even intimate that the Hall case was somehow suspect, or bad law.

The purpose of the Hall Court's citation of Wilco v. Swan, supra, 346 U.S. 427, was as supportive authority, and not as the exclusive basis for its decision. Rather, the Hall court relied upon the express command of the California legislature in Corp. Code § 25701, which remains in full force and effect.

In addition, both Wilco v. Swan, supra, 346 U.S. 427, and the case that subsequently overruled it, Rodriguez de Quijas v. Shearson/American Express, Inc., supra. 490 U.S. 477, 109 S.Ct. 1917, were arbitration clause cases, involving the validity of the parties' pre- investment decision to arbitrate disputes. That distinction is critical. There is no reason to suppose that an arbitrator would not apply the applicable U.S. Securities Laws. (See. Shearson/American Exp., Inc. v. McMahon [1987] 482 U.S. 220, 230-238 [arbitration does not waive "statutory duties" or "substantive rights" under the U.S. Securities Laws].) The Ninth Circuit recently made that very point of distinction in Richards v. Lloyd's, supra, 1997 *17 U.S. App. Lexis 3889, **16-17 (distinguishing Rodriguez. supra. 490 U.S. 477, because U.S. arbitrators will apply and enforce U.S. Securities Laws, whereas English Courts will not). [FN14]

FN14. In Rodriquez, supra, 490 U.S. at 480, the U.S. Supreme Court again emphasized - as it did in McMahon, supra, 482 U.S. at 230-238, that arbitration does not waive any "substantive rights", under U.S. Securities Laws. Here, Lloyd's Choice Clauses do waive the Wests' "substantive rights", and Lloyd's "statutory duties" to qualify its securities, pursuant to Corp. Code §§ 25110, 25120 and 25130.

Since Hall is good authority, there is no reason to disregard the Wimsatt case because it cites the Hall case. The Wimsatt case stands on its own merit. In addition, the U.S. Ninth Circuit Court of Appeals' recent decision in Richards v. Lloyd's of London, supra, 1997 U.S. App. Lexis 3889, adopts the same rationale as the California Courts of Appeal in Hall, supra, 150 Cal.App.3d at 418; and Wimsatt, supra, 32 Cal.App.4th at 1521-24. All three cases stand for the proposition that legislative determinations in applicable anti-waiver statutes should be respected and enforced. (Id.)

A. RESPONDENTS' OPPOSITION FAILS TO CONTEST THE FUNDAMENTAL NATURE OF THE PUBLIC POLICY EXPRESSED IN CALIFORNIA'S CORPORATE SECURITIES LAWS.

Appellants' Opening Brief cites those aspects of the California Corporate Securities Law of 1968 which demonstrate its fundamental character. (See. A.O.B., pp. 22-24, criminal penalties may apply for violation of the Act.) Respondents do not contest the point.

B. RESPONDENTS' INTERNATIONAL COMMERCE EXCEPTION TO CALIFORNIA'S ANTI-WAIVER STATUTES HAS NO BASIS IN CALIFORNIA CASE LAW OR CALIFORNIA STATUTES.

The Opposition states that California's policy supporting enforcement of forum agreements is "stronger" where it is part of "an international business transaction." (Opp., *18 p. 10.) No California statute or case citation is offered to support that assertion. Appellants are unaware of any California authority holding that an applicable anti-waiver statute is not to be enforced by a California court, because the choice clauses at issue are part of an "international business transaction".

Appellants are aware, however, of recent cases which have held private choice clauses involving international commerce void and unenforceable, where they violate California's fundamental public policy or the fundamental public policy of the United States. (See. Richards v. Lloyd's of London, supra, 1997 U.S. App. Lexis 3889 [rejecting international commerce exemption to Federal Anti-Waiver Statutes, and holding Lloyd's Choice Clauses void and unenforceable].) [FN15]

FN15. See also. Haisten v. Grass Valley, supra. 784 F.2d 1392 (applying California's fundamental public policy to void Cayman Islands' choice of law clause); and Merrill Lynch. Pierce. Fenner & Smith v. Ware (1973) 414 U.S. 117 (holding choice of law agreement invalid where it violated California's strong public policy).

Respondents cite Benefit Assn. International (1996) 46 Cal.App.4th 827; and Furda v. Superior Court (1984) 161 Cal.App.3d 418, 425-426, for the proposition that "a knowing and voluntary agreement to litigate disputes in a particular country .... must be given effect." (Opp., p. 11.) Neither Benefit Assn. Internatl., supra, nor Furda v. Superior Court, supra, involve the presence of any anti-waiver statute, nor did either case involve any international commerce, or any forum selection clause selecting "a particular country". Furda, supra, involved a Michigan choice clause. (Id. at 422, fn. 1.) Benefit Assn. Internatl., supra. 46 CaI.App.4th 827, involved a Mississippi choice clause.

Respondents cite Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459, for the proposition that contractual choice provisions should be upheld absent a fundamental violation of public policy. (Opp., p. 12.) Although the Nedlloyd court analyzed the general *19 test to be applied to the enforceability of choice clauses, it did not have occasion to address an express anti-waiver statute, as in this case. However, Nedlloyd is helpful on one point. Even though there was no express anti-waiver statute present in Nedlloyd. the California Supreme Court, nevertheless, examined the appellate record to determine whether any fundamental public policy was present, before agreeing to enforce a Hong Kong choice of law clause. (See. Nedlloyd Lines B.V., supra, 3 Cal.4th at 466 fn. 6 and p. 468.) If the California Supreme Court was potentially willing to condemn a Hong Kong choice of law clause if it worked against a fundamental public policy of California, even though there was no express anti-waiver statute present in that case, a fortiori the California Supreme Court would necessarily condemn international choice clauses which directly contravene the Legislature's express prohibition in Corp. Code § 25701. [FN16]

FN16. See. Richards v. Lloyd's of London, supra. 1997 U.S. App. Lexis 3889, **15-16, reaching the same conclusion about the U.S. Supreme Court's view.

Respondents heavily rely upon the United States Supreme Court's decision in M/S The Bremen v. Zapata Off-Shore Co. (1972) 407 U.S. 14, to support their contention that any transaction involving international commerce must necessarily outweigh the fundamental public policy of any country, or state, whose laws are set aside as part of the parties' international transaction. (See Opp.T p. 12.) Respondents argue that California courts have repeatedly applied the analysis in The Bremen, supra, citing to Benefit Assn. Internatl., supra. 46 Cal.App.4th 835; Lu v. Drvclean-U.S.A. of California. Inc. (1992) 11 Cal.App.4th 1490; and Cal-State Business Products and Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666.

Neither The Bremen, nor any of the California cases cited by Respondents that followed The Bremen test, involved an anti-waiver statute. Thus the issue presented here, *20 the presence of an express legislative command that the Choice Clauses not be enforced, is not addressed in The Bremen: in Benefit Assn. Internatl., supra: in Lu, supra: or in Cal. State, supra. [FN17]

FN17. Indeed, in Wimsatt v. Beverly Hills Weight Etc. International, Inc., supra, 32 Cal.App.4th at 1522-23, the court expressly distinguished Ly v. Dryclean-U.S.A. of California. Inc., supra. 11 Cal.App.4th 1490, and The Bremen, because they did not involve an anti-waiver statute.

Respondents contend that the rationale of the United States Supreme Court in The Bremen was subsequently expanded in Scherk v. Alberto-Culver Co. (1974) 417 U.S. 506, to encompass claims by American investors for violation of American Securities Laws. In responding to this same argument, the Ninth Circuit in Richards v. Lloyd' s of London, supra 1997 U.S. App. Lexis 3889, **12-15, observed that:. "Lloyd's overlooks both the facts and the reasoning of this precedent [Scherk v. Alberto-Culver Co.]." (Id., *12.) The Richards Court explained: "As is apparent from the Supreme Court's reasoning, the Court in Scherk had to decide which one of two federal statutes to apply. It chose to apply the Arbitration Act. It did not weigh reasonableness or pit amorphous policy against a command of Congress." (Id., *14.) Turning to Lloyd's Choice Clauses, the Ninth Circuit asked:

"Is there a significant difference between a policy objection to enforcement of the antiwaiver bars and a statutory obstacle to such enforcement? We believe there is. Where a statute exists, a policy has been given form and focus and precise force. A statute represents a decision by the elected representatives of the people as to what particular policy should prevail, and how. A policy objection represents judicial reasoning in the area where the federal statutes, if they are to the contrary, must rule. A statutory obstacle represents a legislative determination that is of at least equal weight with another statute. *21 Consequently, what was decided when the Arbitration Act stood in the way of the antiwaiver bars [as in Scherk v. Alberto-Culver] is not helpful when no statute stands in the way of their enforcement."

(See. Richards v. Lloyd's of London, supra, 1997 U.S. App. Lexis 3889, ** 14-15.)

Respondents contend that the California Supreme Court has accepted that California's fundamental public policy must give way whenever there is an international aspect to a business transaction, citing Keating v. Superior Court (1982) 31 Cal.3d 584, 597, fn. 7, rev'd in part, Southland Corporation v. Keating (1984) 465 U.S. 1. The cases cited by Respondents do not stand for the proposition asserted. In Keating v. Superior Court, supra, 31 Cal.3d at 597, the California Supreme Court did not adopt any "international commerce exemption" to an express anti-waiver statute adopted by the California Legislature. In addition, Keating v. Superior Court involved the application of an arbitration clause, not a choice of law clause barring enforcement of an entire regulatory regime adopted by the California Legislature. (Keating. supra. 31 Cal.3d at 597.) [FN18] See, supra, at pp. 16-17, discussion distinguishing arbitration clause cases.

FN18. Respondents also cite Crown Homes. Inc. v. Landes (2d Dist. 1994) 22 Cal.App.4th 1273, 1277, to support an "international commerce" exemption to California's Anti-Waiver Statutes. Crown Homes is not helpful to Respondents. The court in Crown Homes stated that: "There is nothing in the arbitration statutes or the Cartwright Act that indicates that an anti-trust claim is not arbitrable". (Id., p. 1280.) Here, there is an express statute which prohibits enforcement of private choice clauses purporting to waive application of California's Corporate Securities Laws. (See. Corp. Code § 25701.)

Finally, Respondents contend that the United States Supreme Court's decision in Mitsubishi Motors v. Soler Chrysler Plymouth (1985) 473 U.S. 614, 637, fn. 15, somehow supports their contention that the High Court would exempt all international securities transactions from the U.S. Securities Laws, and in particular the Anti-Waiver Statutes in the U.S. Securities Laws. (See. Opp., p. 15.) Recently rejecting this contention, the Ninth *22 Circuit in Richards v. Lloyd's of London found Mitsubishi Motors to be authority supporting its decision to deny enforcement of Lloyd's Choice Clauses, explaining that:

"The Supreme Court in Mitsubishi Motors v. Soler Chrysler Plymouth. 473 U.S. 614, 637, 15, 105 S.Ct. 3346, 87 L.Ed. 2d 444 (1985) has already declared in dicta in an anti-trust case what it thinks of contract clauses operating in an international transaction, as the choice clauses do here, contrary to the statutes of the United States: 'We merely note that in the event that choice-of-forum and choice-of-law clauses operated in tandem as a prospective waiver of a party's right to pursue statutory remedies and anti-trust violations, we would have little hesitation in condemning the agreement as against public policy.' There is no question that the choice clauses [referring to Lloyd's choice clauses] operate in tandem as a prospective waiver of the plaintiffs' remedies under the 1933 and 1934 acts. If the Supreme Court would condemn such clauses where they work against a public policy embodied in statutes even though the statutes themselves do not void the clauses, a fortiori the Supreme Court would condemn similar clauses when they run in the teeth of two precise statutory provisions making them void." (Richards, supra. 1997 U.S. App. Lexis 3889, at **15-16.)

In attempting to distinguish that language in Mitsubishi Motors Corp., supra. Respondents state that in Mitsubishi: "There was no dispute in that case that the United States anti-trust laws applied" but "here, by contrast, there is a dispute whether United States Securities Laws apply to the relations between Lloyd's and the United States Names." (See. Opp., p. 16, fn. 9, 1. 8-14.) Respondents may have disputed the application of the U.S. Securities Laws to the Lloyd's investment in other cases, but Respondents did not dispute the *23 application of California's Securities Laws before the Trial Court below. Appellants' evidence demonstrating that Lloyd's had engaged in conduct triggering application of the qualification requirements of California's Corporate Securities Laws, and engaged in conduct constituting misrepresentation and fraud under California's Corporate Securities Laws, and Appellants' evidence demonstrating that Lloyd's had made no effort to qualify its securities for sale over the course of 20 years, went unrefuted by Respondents before the Trial Court. (See. A.O.B. pp. 29-32.) Those are evidentiary points in the appellate record. To the extent that Respondents now seek to contest the undisputed evidence presented below, and thus the application of Corp. Code § 25701, Respondents are engaged in new argument on appeal, which should be disregarded by this Court. (See, Cabrera v. Plager, supra, 195 Cal.App.3d at 606.)

C. RESPONDENTS' RELIANCE UPON THE DECISIONS OF SEVERAL FEDERAL APPELLATE COURTS. WITH RESPECT TO THE ENFORCE- ABILITY OF LLOYD'S CHOICE CLAUSES. IS MISPLACED. IN THAT CALIFORNIA COURTS EMPLOY A DIFFERENT PROCEDURAL TEST.

Respondents' Opposition makes much of the fact that there is no dissent amongst the Federal Courts of Appeal with respect to the enforceability of Lloyd's Choice Clauses. (See. Opp., p. 17.) Of course, as of March 6, 1997, that statement is no longer true. (See, Richard's v. Lloyd's, supra, 1997 U.S. App. Lexis 3889.)

As explained in Appellants' Opening Brief, the California standard of review for private choice clauses subject to California's Anti-Waiver Statutes is entirely different from the federal standard adopted in the cases cited by Respondents. [FN19] In each of those cases, *24 the federal courts applied an "adequate remedy test" to determine whether the plaintiffs had some form of remedy in England. That is not the test employed by the California courts, where the California Legislature has enacted a statute expressly prohibiting enforcement of the choice clauses at issue. (See. Wimsatt v. Beverly Hills Weight Loss Etc., supra. 32 Cal.App.4th at 1519-1525: "California law employs a different set of burdens arising out of a different set of considerations" than the federal courts, and expressly distinguishing the test employed by the U.S. Supreme Court in M/S The Bremen v. Zapata Off-ShoreJTcv. supra. 407 U.S. 14.) All of the federal cases cited by Lloyd's, i.e., Alien, Bonny, Hugel, Roby, and Riley, employed The Bremen test, and therefore are distinguishable from this California case, involving purely California law claims.

FN19. Respondents rely upon Alien v. Lloyd's of London (4th Cir. 1996) 94 F.3d 923, Shell v. R.W. Sturge, Ltd. (S.D. Ohio 1993) 850 F.Supp. 620, aff'd. 55 F.3d 1227; Bonny v. Society of Lloyd's (7th Cir. 1993), cert. denied, 510 U.S. 1113 (1994); Hueel v. The Corporation of Lloyd's (7th Cir. 1993) 999 F.2d 206; Roby v. Corporation of Lloyd's (2d Cir. 1993) 996 F.2d 1353, cert. denied, 510 U.S. 945 (1993); and Riley v. Kingsley Agencies. Ltd. (10th Cir. 1992) 969 F.2d 953, cert. denied. 506 U.S. 1021 (1992).

In Richards v. Lloyd's of London, supra, Lloyd's urged the United States Court of Appeal to follow the precedent of the other circuits which upheld Lloyd's Choice Clauses. In rejecting the persuasiveness of these prior precedents, the Ninth Circuit explained:

"Lloyd's urges not as controlling but persuasive precedent the decision of other circuits in cases pursued by certain Names against Lloyd's ....

"We recognize that our holding creates a conflict with the interpretation of the Lloyd's Choice Clauses in other cases (citations omitted). Although we do not lightly deviate from the conclusions of our fellow circuits, we are convinced that those cases improperly disregard the statutory antiwaiver provisions of the Securities Acts. A comprehensive review of these cases has recently come to the same critical conclusion. Note, *25 No Way Out: An Argument Against Permitting Parties To Opt Out Of U.S. Securities Law In International Transactions, 97 Colum. L. Rev., 57, 74-78 (1997)." (Id., *18.)

In addressing the rationale of the other Federal Circuit Courts of Appeal which upheld Lloyd's Choice Clauses, the Ninth Circuit noted that these other circuits had adopted a "reasonableness test" to evaluate the enforceability of Lloyd's Choice Clauses, and had found those choice clauses reasonable so long as the remedies available under English law were adequate to effectuate the anti-fraud purposes of the U.S. Securities Laws. (See, Richards v. Lloyd's of London, supra. 1997 U.S. App. Lexis 3889, **17-19.) Rejecting that approach, the Ninth Circuit explained that:

"In our view, however, the reasonableness of the Choice Clauses is not determinative of their enforceability. The Securities Acts antiwaiver provisions themselves render the Choice Clauses void, making it unnecessary to examine whether enforcement of the clauses would be reasonable under the test set forth in The Bremen and Carnival [referring to Carnival Cruise Lines. Inc. v. Shute (1991) 499 U.S. 585, 595]. Notably, The Bremen did not involve the application of a statutory anti-waiver provision like that contained in the Securities Acts." (Id., **20-21.)

In specifically rejecting Respondents' argument that there should be an "international commerce exemption" to the anti-waiver provisions in the Federal Securities Laws, the Ninth Circuit pointedly noted that:

"Congress was not ignorant of the potential international character of securities transactions. Congress specifically modified the 1933 act to cover transactions in foreign commerce. S.Rep. No. 47, 73rd Cong., 1st Sess. (1933) (accompanying S. 875). The court should not apply the reasonableness test or say whether the clauses offended any policy of the United States when *26 Congress has expressly made that determination. We do not believe that we should turn the clock back to 1929 or introduce caveat emptor as the result governing the solicitation in the United States of investments in securities by residents of the United States." (Id., **22-23.)

Unlike the prior U.S. Court of Appeal decisions cited by Respondents, i.e., Alien, supra, 94 F.3d 923; Shell, supra, 55 F.3d 1227; Bonny, supra, 3 F.3d 156; Hugel, supra, 999 F.2d 206; Roby. supra. 996 F.2d 1353; and Riley, supra, 969 F.2d 953, the U.S. Ninth Circuit Court of Appeals in Richards v. Lloyd's had the benefit of the United States Securities and Exchange Commission's ("SEC") amicus curiae brief, explaining the serious deficiencies that exist in the remedies provided to Lloyd's American investors under English law, (See. 1997 U.S. App. Lexis 3889, at **24-25.) Even if it applied the same "reasonableness" test employed by the other U.S. Circuit Courts of Appeal, the Ninth Circuit explained that it would still reject enforcement of Lloyd's Choice Clauses:

"Even undertaking the analysis that the other circuits undertook, we cannot agree with their evaluation of the remedies available. In this not easy task, we are aided by the SEC, which has entered this case on appeal as a friend of the court ... we do draw on the SEC's expertise when it points to the deficiencies in the remedies provided the plaintiffs by English law ....Major gaps exist in the English substantive law of securities fraud. The available English remedies are not adequate substitutes for the firm shields and finely honed swords provided by American securities laws." (Id., **24-25.)

Appellants cite three other federal cases where Lloyd's Choice Clauses were upheld in the face of State Securities Law claims filed under Ohio and New Jersey statutes. (See, Respondents' Opp., pp. 20-21, citing Shell, supra, 55 F.3d at 1231; *27 Bonny, supra. 3 F.3d at 162; and Riley, supra, at 969 F.2d 953.) These cases do not confront the issue presented in this appeal. In Shell, supra, 55 F.3d at 1231, the court did not address the application of a state anti-waiver statute to Lloyd's Choice Clauses. Similarly, neither the Bonny or Riley courts addressed whether the combined effect of Lloyd's Choice Clauses impermissibly waive the application of state securities laws to the plaintiffs' claims. [FN20]

FN20. In addition, Respondents concede that the anti-waiver provisions present in the Colorado securities laws and the New Jersey securities laws were "comparable", but not the same as, "the federal and California provisions". (See. Opp., p. 20.)

Citing Gau Shan Co. v. Bankers Trust Co. (6th Cir. 1992) 956 F.2d 1349, 1358, Respondents assert that "the public policies of the state deserve less weight than the public policies of the nation." (Opp., p. 22.) Of course, Richards v. Lloyd's. supra. 1997 U.S. App. Lexis 3889, now holds that enforcement of Lloyd's Choice Clauses does in fact offend the fundamental public policy of the nation. In addition, Gau Shan Co., supra, did not involve any state anti-waiver statute. Indeed, Gau Shan Co. is not even a forum selection or choice of law case, but rather addresses the issuance of an anti-suit injunction against a foreign forum. (See. Gau Shan Co., Ltd, v. Bankers Trust Co., supra, 956 F.2d at 1358.)

In seeking to again support its "international commerce exemption" to the enforcement of California's anti-waiver statutes in Corp. Code § 25701 and Civ. Code § 1751, Respondents cite Nedlloyd Lines B.V., supra. 3 Cal.4th at 487; Wong v. Tenneco, Inc. (1985) 39 Cal.3d 126, 136-137; and Shell v. R.W. Sturge, Ltd., supra, 850 F.Supp. at 630. (See, Opp., p. 22.)

Nedlloyd did not involve a state anti-waiver statute. (See, supra, at pp. 18-19.) Accordingly, the general pronouncements of the Nedlloyd Court concerning the importance of international commerce do not address the precise issue squarely confronted by those cases involving an anti-waiver statute, i.e., Hall v. Superior Court, supra, 150 Cal.App.3d 411; *28 Wimsatt v. Beverly Hills Weight International Etc., supra. 32 Cal.App.4th 1511; and Richards v. Lloyd's of London, supra, 1997 U.S. App. Lexis 3889.

Similarly, Respondents' citation of Wong v. Tenneco, Inc., supra, 39 Cal.3d 126, 136-137 is also unavailing, in that no anti-waiver statute was present in that case. Accordingly, the Court had no choice but to engage in a weighing of public policy issues against international business interests. (Id.)

Finally, Respondents cite Shell v. R.W. Sturge. Ltd., supra. 850 F.Supp. at 630. The section of the Shell opinion cited by Respondents is not the actual opinion, but rather is the recommendation of the U.S. magistrate in that case. In his recommendation, the magistrate states that the public policy interests behind many state statutes, even statutes which contain anti-waiver provisions, must yield to the countervailing interests in the enforceability of international agreements. (Id.) The magistrate's comments in that regard are dicta at best, in that there is no discussion anywhere in the opinion of the application of an anti-waiver statute to the choice clauses there at issue. In addition, the magistrate cited Interamerican Trade Corp. v. Companhia Fabricadora de Pecas (6th Cir. 1992) 973 F.2d 487; and Gau Shan, supra, 956 F.2d 1349. Those two cases do not offer any support for the proposition stated. Interamerican Trade did not involve any anti-waiver statute, nor was there any issue of public policy. Similarly, Gau Shan, supra, 956 F.2d 1349, did not involve any state anti-waiver statute, and did not even involve choice clauses. (Id.)

D. THE COURT OF APPEALS' DECISIONS IN HALL AND WIMSATTREQUIRE THAT LLOYD'S CHOICE CLAUSES BE DEEMED VOID AND UNENFORCEABLE.

Respondents contend that even if Hall and Wimsatt are controlling authority, they do not require reversal of the Trial Court's decision to enforce Lloyd's Choice Clauses. (See. *29 Opp., p. 22, sub. c.) Respondents argue that had there been no choice clauses in those cases, it was clear that California law would have applied. (Opp., p. 22.) Conveniently, Respondents do not cite any statement from either Court of Appeal supporting that conclusion. Respondents are wrong in any event. In Wimsatt it was not at all obvious that California law would have applied in the absence of the choice clauses. (See, Wimsatt. supra. 32 Cal.App.4th at 1513, fn. 1 ["At the time the franchise agreement was signed, the defendant was based in Fredericksburg, Virginia ..."].)

Respondents urge this Court to believe that the Court of Appeals in Hall and Wimsatt were really assessing the "reasonableness" of the choice clauses in those cases. (Opp., p. 23.) Based on its theory that "California law would have clearly applied absent the party's choice clauses", Respondents argue that the clauses were "unreasonable". (See. Opp., p. 23.) In contrast, Respondents contend that here all relevant transactions occurred in England, and therefore the courts in Hall and Wimsatt would enforce Lloyd's Choice Clauses.

Respondents' argument is unfounded. There is nothing in the Hall or Wimsatt cases which suggest that those courts did not squarely confront the legal issue present in this appeal, i.e., the Legislature's mandate that certain choice clauses not be enforced as violative of the state's anti-waiver statutes. Respondents' citation of Alien, supra, 94 F.3d at 929, for the proposition that the solicitation of investors by Lloyd's in California is merely "incidental" to all of the important activities which occur in London, is not reconcilable with the unrefuted evidence in this Appellate Record, establishing Lloyd's active solicitation of Appellants in California over the course of 20 years. (See, e.g., David West Decl., Vol. XXVII, p. 6383, 17; and Deborah West Decl. Vol. XXVIII, p. 6485, 15, and pp. 6489- 6493.) Here, the unrefuted evidence demonstrates that Lloyd's interaction with the Wests in *30 California was far more than "incidental" to the investment process in Lloyd's. Indeed, as passive investors in Lloyd's, almost all transactions between the Wests and Lloyd's occurred in California, at the Wests' homes or businesses. (See. A.A., Vol. XXVII, pp. 6380-6385. See also, Richards v. Lloyd's of London, supra, 1997 U.S. App. Lexis 3889, **4-8.)

In attempting to limit the application of Hall to this appeal, Respondents argue that the transactions at issue in Hall were indisputably securities transactions where, in contrast: "Lloyd's strenuously disputes the application of the State of California Securities Laws to the transactions at issue". (Opp., p. 24.) Respondents' "strenuous objection" to the application of California's Securities Laws is a brand new argument on appeal. Respondents' Opposition does not cite to any argument or evidence in the record below, showing their "strenuous dispute" of the application of California Securities Laws before the Trial Court. (See. Opp., pp. 23-24.)

Respondents also suggest that Hall is distinguishable because the clear application of California Securities Laws in Hall, "stands in stark contrast to plaintiffs' argument that even the bare allegation that California Securities Laws apply invalidates the forum selection clause". (Opp., p. 24). That straw man won't stand. Appellants have done far more than make "the bare allegation" that California's Securities Laws apply. (See. A.O.B., p. 28, fn. 42 and pp. 29-34, outlining Appellants' unrefuted evidence of Lloyd's annual solicitation of Appellants' investment, and Lloyd's violation of California's statutory qualification requirements.) This is not a case where Appellants have merely engaged in some artful pleading, and stand on that alone in order to trigger application of California's Securities Laws and Anti-Waiver Statutes.

Respondents' efforts to distinguish Wirnsatt. supra. 32 CaI.App.4th, 1511, on the grounds that its holding is limited to cases arising under California's Franchise Investment *31 Act, is rebutted in Appellants' Opening Brief. (See. A.O.B., p. 26.) Respondents' own Opposition notes that the court in Wimsatt relied upon the analysis in Hall v. Superior Court, supra. 150 Cal.App.3d 411, in interpreting the anti-waiver statute in the California Franchise Investment Law (Opp., p. 24). Respondents do not offer this Court any logical explanation of why, under those circumstances, the Wimsatt Court's analysis is not persuasive with respect to the Anti-Waiver Statute in California's Corporate Securities Law.

In addition, one of the cases cited by Respondents, Keating v. Superior Court, 31 Cal.3d 584, at 597-598, expressly states that cases interpreting California's Franchise Investment Law, are persuasive in interpreting parallel provisions in the securities laws. (Id. at 597-98.) Thus, although the Wimsatt Court limited its holding to the California Franchise Investment Law, there is no logical reason to ignore its guidance on the application of the parallel anti-waiver statute in California's Corporate Securities Law,

Finally, Respondents again urge this court to distinguish Hall and Wimsatt on the grounds that neither case involved international commerce. As Appellants note in their Opening Brief, subsequent courts have had no hesitation in citing Hall where the transaction at issue involved a choice clause selecting a foreign nation. (See. Haisten v. Grass Valley, supra. 794 F.2d 1392 [U.S. Dist. Court applying California's fundamental policy exception to bar enforcement of Cayman Islands choice of law clause].) Although Respondents note some unique facts in Haisten, Respondents do not dispute that the Haisten Court specifically relied upon the holding in Hall v. Superior Court, supra, 150 Cal.App.3d 411, in declining to enforce a foreign choice of law clause. [FN21]

FN21. In Haisten, the defendant Fund has been formed in the Cayman Islands where it contained its sole office. The Fund held its directors meetings in the Cayman Islands and all transactions and communications were conducted in the Cayman Islands. In addition, the defendant Fund did not solicit business or advertise in California. Despite these extensive contacts with a foreign jurisdiction, nevertheless, the court in Haisten, applied California's "strong public policy exception" to the international transaction in that case. (Id., pp. 1402- 1403.)

*32 Respondents urge this Court to disregard Respondents' violations of applicable securities laws, on the grounds that California insureds may somehow be adversely affected. (Opp., p. 25.) Respondents cite no evidence in the record to support their inflammatory claim. The unrefuted evidence demonstrates that if Respondents are deemed to be an insurer in this state, then they have failed to comply with the applicable requirements of the California Insurance Code governing qualification of insurance securities. (See. A.O.B., p. 14, ¶1.) Lloyd's role as an insurer does not give it a free pass to enter the State of California over the course of 20 years and violate every applicable regulatory statute enacted by the California Legislature to protect California's citizens, on the mere assertion that it does good deeds for its insureds. All entities doing business in the State of California -- including insurance companies -- must abide by the regulatory statutes enacted by the California Legislature, no matter how noble their business pursuits may be.

Respondents' Opposition again resurrects The Bremen case in attempting to undercut the California Court of Appeals' holding in Wimsatt, supra, arguing that the Court of Appeal in Wimsatt mistakenly distinguished The Bremen case. (See, Opp., pp. 25-26.) There was no mistake. The U.S. Supreme Court's decision in The Bremen did not involve application of any express anti-waiver statute. (See. M/S Bremen, supra, 407 U.S. 14.) Respondents' claim, that the Wimsatt Court mistakenly overlooked the choice of law issue in The Bremen. is erroneous. The sentence from the Wimsatt case quoted by Respondents, at page 25 of their Opposition, is taken out of context and misconstrued. When the Wimsatt court referred to the absence of any "special protections afforded oil exploration companies in ultimately requiring the case to be tried in the United Kingdom" (*33 Wimsatt, supra. 32 Cal.App.4th at 1522-1523), it was referring to the absence of any special anti-waiver statute applicable to the plaintiffs in The Bremen - not that there were no differences in the laws of England.

Thus, given the fact that the U.S. Supreme Court's decision in The Bremen did not involve the presence of any anti-waiver statute, the Court of Appeal in Wimsatt correctly distinguished The Bremgn case. Likewise, The Bremen is not controlling authority here.

Citing to the California Supreme Court's decision in Nedlloyd Lines B.V., supra, 3 Cal.4th at 459, Respondents urge this court to apply the balancing test in Section 187of the Restatement Second of Conflict of Laws. (See. Opp., p. 26.) The analysis in Nedlloyd is generally applicable to the enforcement of choice clauses. (See, supra, at pp. 18-19.) There is no discussion in that case of an anti-waiver statute, where the Legislature has already struck the policy balance it desires. (See. Richards v. Lloyd's, supra, 1997 U.S. App. Lexis 3889; and Hall, supra, 150 Cal.App.3d at 418.)

Respondents also lament that the "bright line of prohibition" in Corp. Code § 25701 is at odds with the balancing test adopted by the California Supreme Court in Nedlloyd Lines B.V., supra. 3 Cal.4th at 459. Since Nedlloyd did not involve an anti-waiver statute, there is no conflict. Nedlloyd should be construed as the general rule to be applied to the enforcement of choice clauses where, in the absence of any express anti-waiver statute, a court must determine whether a fundamental public policy of California is implicated, and only then determine if "California has a materially greater interest than the chosen state". (See. Opp., pp. 26-27.)

The critical point in assessing the purported remedy provided in the English forum is that no aspect of California's Corporate Securities Laws will be applied by an English court. Respondents have not contested that fact, and the federal case they rely upon (Roby. supra, 996 F.2d at 1362) concedes the point. (See. A.O.B., p. 31.) Thus, this case is not merely *34 one of different procedural rules being applied in the foreign forum (for example, the right to a jury trial, the right to take depositions), or that the foreign forum will not enforce certain limited parts of California's regulatory regime (for example, a civil treble damages provision). Rather, here, Lloyd's Choice Clauses operate in tandem to completely and totally bar application and enforcement of California's entire regulatory regime, governing Respondents repeated solicitation and sale of securities in the State of California. (Compare and contrast. Shearson/American Exp., Inc. v. McMahon, supra, 482 U.S. at 230-234, where the U.S. Supreme Court upheld arbitration clauses, explaining that arbitration does not waive any "substantive rights" or "statutory duties" under U.S. Securities Laws.)

Respondents cite Wong, supra, 39 Cal.3d at 135-36 for the proposition that the laws of other nations are accorded comity unless they are "so offensive to our public policy as to be prejudicial to recognized standards of morality and to the general interests of those citizens." (Opp., p. 28.) Wong did not involve an express legislative prohibition against waiving a California regulatory statute (Corp. Code § 25701), as is the case here. Thus, Wong is distinguishable.

Respondents also urge this Court to follow a line of cases enforcing choice of law provisions that permitted rates of interest in excess of California's rates, provided for different statutes of limitation, or different evidentiary standards for proving fraud. [FN22] None of these cases involved an anti-waiver statute, expressly prohibiting the substitution of California's regulatory statutes with the laws of another state or foreign nation. Nor do Respondents point to any language from any of those cases wherein the courts described the *35 differing rate of interest, the differing statute of limitations, or the different evidentiary standard of proof, as constituting "a fundamental public policy of the State of California." The California Legislature's regulatory interest is palpably greater here than in the cases cited by Respondents. [FN23]

FN22. See. Opp., p. 28, citing: Sarlot-Kantarjian v. First Pennsylvania Mortgage Trust (9th Cir. 1979) 599 F.2d 915, 916-17; Hambrecht & Quist Venture Partners vs. American Medical International. Inc. (2d Dist. 1995) 38 Cal.App.4th 1532, 1548-49; and General Signal Corp. v. MCI Telecommunications Corp. (9th Cir. 1995) 66 F.3d 1500, 1506, cert. denied. 116 S.Ct. 1017 (1996).

FN23. Page 28 of Respondents' Opposition, fn. 15, emphasizes that English law on fraud prevention differs from California law because the English standard of proof is "high," and because allegations of fraud "must be specifically pleaded and particularized" in England. That admission is not helpful to Respondents, in that Respondents bear the burden of proof to demonstrate that: "Litigation in the contract forum will not diminish any of the plaintiffs rights under California law" (Wimsatt, supra, 32 Cal.App.4th at 1524); and to prove that the "concomitant nuances" of California's Corporate Securities Law will be enforced in England. (See. Hall, supra. 150 Cal.App.3d at 418 [Corp. Code § 25701 entitles a buyer of securities in California to have California law and its "concomitant nuances" apply].)

Although not relevant to this appeal, which involves an express anti-waiver statute, Respondents argue that this Court should enforce Lloyd's Choice Clauses because England has a "materially greater interest" than does California. (See. Opp., pp. 26-27.) In support of this proposition, Respondents quote from an English case, Society of Lloyd's v. Clementson, LRLR 3070 (Nov. 10, 1994), stating that the purpose of the 1986 General Undertaking was to "ensure that upon the Name becoming a Name, the Name became subject to the regulatory regime of Lloyd's, the clauses governing choice of law and choice of venue were ancillary to that object." (Emphasis supplied.) (See. Opp., p. 30.) The quotation from the Clementson case does not support Respondents' argument that England's interest is "materially greater than California's." To the contrary, it defeats it. If the Choice Clauses in Lloyd's 1986 General Undertaking "were ancillary to [its] object," then presumably there is no materially significant English interest to weigh against California's substantial regulatory interest in controlling its securities markets, and punishing securities fraud. If the true purpose of the 1986 General Undertaking was merely to ensure a Name became subject to the internal regulatory regime at Lloyd's, that purpose is unaffected by a *36 decision not to enforce Lloyd's Choice Clauses, in that Lloyd's Choice Clauses do not require that Names' disputes be resolved within Lloyd's internal regulatory regime.

VII.

RESPONDENTS' OPPOSITION DOES NOT CONTEST THAT LLOYD'S CHOICE CLAUSES WAIVE APPELLANTS' RIGHTS UNDER THE CALIFORNIA CONSUMER LEGAL REMEDIES ACT. AND THAT THE ANTI-WAIVER PROVISION IN CIVIL CODE § 1751 BARS THAT RESULT

Respondents' Opposition focuses almost exclusively on the Wests' claims under the California Corporate Securities Law of 1968, and ignores that part of Appellants' Opening Brief addressing the Wests' rights and remedies under the CLRA, Civ. Code §§ 1750-1784. There is no evidence in this record that the Wests' rights and remedies for Lloyd's "deceptive sale of services" will be enforced in an English court. (See, A.O.B., pp. 34-35.)

The California Legislature has expressly commanded that the provisions of the CLRA be "liberally construed to protect consumers and to provide efficient and economical procedures to secure such protection." (See. Civ. Code § 1760.) To the extent that Respondents urge this Court to read an "international commerce exemption" into the CLRA's Anti-Waiver provision (Civ. Code § 1751), Civ. Code § 1760 bars such an exemption. The express command of the California legislature in Civ Code § 1751 should be enforced, and Lloyd's Choice Clauses found void and unenforceable with respect to the Wests' claims under the CLRA.

VIII.

LLOYD'S CHOICE CLAUSES WERE OBTAINED BY FRAUD AND OVERREACHING AND THEREFORE SHOULD NOT BE ENFORCED

Respondents' Opposition does not contest that Respondents failed to present the Trial *37 Court with any "substantial evidence" to rebut the evidence of misrepresentation presented by the Wests. The Opposition also does not contest that this case is different from all of the previous federal cases upholding Lloyd's Choice Clauses, in that for the first time Lloyd's seeks to retroactively apply its Choice Clauses to claims that arise out of the Wests' 12 year prior investment relationship with Lloyd's. (See, A.O.B., p. 35, sub. c; and Appellants' Statement of Facts, pp. 4 and 7.)

Respondents complain this issue is new on appeal. (See. Opp., p. 9, fn. 5.) Respondents' contention is erroneous. Below, the Wests argued that they were members of Lloyd's prior to signing the 1986 General Undertaking containing Lloyd's Choice Clauses; that their earlier agreements with Lloyd's had contained no such choice clauses; and that Lloyd's' fraudulent concealment began in the early 1980's, before the Wests signed the Choice Clauses. (See, e.g., A.A., Vol. XIX, p. 4480, Is. 21-24.) [FN24]

FN24. The Wests' First Amended Complaint specifically alleges that Lloyd's offer and sale of unregistered securities in California, and its unilateral insertion of the Choice Clauses into those illegal securities contracts, violated California Corp. Code § 25000, et seq., which includes Corp. Code § 25120. (See. First Amended Complaint ["F.A.C."], A.A., Vol. XII, pp. 2639-2640.) Section 25120bars alterations in the rights, preferences and privileges of outstanding securities, without first obtaining qualification from the California Dept. of Corporations.

Respondents focus their opposition on whether Lloyd's had a fiduciary obligation to Appellants to disclose its intended insertion of the Choice Clauses into the party's pre- existing contract. (Opp., pp. 30-32.) Contrary to Respondents' assertions, the Wests did present evidence of the elements necessary to establish that a fiduciary relationship existed between the Wests and Lloyd's, [FN25] giving rise to an affirmative duty on the part of the fiduciary (Lloyd's) to inform its principal (the Wests) of the insertion of choice clauses into *38 the party's pre-existing agreement. (See, A.A., Vol. XIX, p, 4478, Is. 21-22; and p. 4479, Is, 1-15.) [FN26]

FN25. See, David West Decl., A.A., Vol. XXVII, pp. 6380-85, 514, 7, 8; Deborah West Decl., A.A., Vol. XXVIII, pp. 6492-93, ¶17; and Zeilenga Decl., Vol. XXII, pp. 4877- 4881, 110.

FN26. Respondents argue that Appellants' own expert opined that under English law Lloyd's "does not have any duty to disclose to Names", citing A.A., Vol. XXVIII at 6733, ¶ C. (See. Opp., p. 31.) Appellants' expert offered that opinion to establish the absence of any adequate remedy against Lloyd's in the English courts. The fact that Lloyd's may not owe its investors a duty of disclosure under English law, does not establish that Lloyd's is not, in fact, a fiduciary under California law. (See. A.A., Vol. XII, p. 2596, 112; and Vol. XIX, p. 4478, Is. 21-22; and p. 4479, Is. 1-15.)

Respondents argue that the declarations of the Wests do not establish facts sufficient to find the existence of a fiduciary relationship, in that the various representations made by Lloyd's members' agents should not, in fact, be attributable to Lloyd's. (Opp. pp. 31-32.) Respondents claim to have presented undisputed evidence in the Trial Court establishing that members' agents are not agents of Lloyd's. The evidence presented by Respondents was the declaration of their own legal counsel, Dean Hansell. Mr. Hansell's opinions are not competent evidence to rebut the allegations in the complaint, nor the evidence presented, to wit: that Lloyd's so controlled the actions of its members' agents, that those agents were, in fact, agents of Lloyd's, (See. F.A.C., A.A., Vol. XII, pp. 2596-97, 11 11 to 14; and see. evidence re: Lloyd's control of members' agents in the West Declarations, A.A., Vol. XXVII, pp. 6380-85, 11 4, 7, 8 and XXVIII, pp. 6492-93, 117.)

Respondents make much of the California Supreme Court's recent decision in Rosenthal v. Great Western Fin. Sec. Corp. (1996) 14 Cal.4th 394. (Opp., pp. 32-33.) Respondents excessively overstate the holding in Rosenthal. Rosenthal continues to recognize the long-established rule that fraudulent misrepresentations about "the content" of an agreement, inducing a party to execute the agreement without reading it, may permit the defrauded party to void the contract by rescinding it. (See. Rosenthal, supra, 14 Cal.4th *39 421-422, fn. 11.) [FN27]

FN27. See. A.O.B., p. 40, citing Security-First National Bank v. Earp (1942) 19 Cal.2d 774; Gaskin v. Handel (S.D.N.Y. 1975) 390 F.Supp. 361- 365-366; and A. Corbin, Corbin on Contracts. § 607 (1952), applying the same rules with respect to a forum selection clause, and specifically rejecting the incorrect statement that the party failing to read the agreement must be illiterate or unsophisticated.

If a fiduciary relationship exists between the Wests and Lloyd's, the discussion in Rosenthal, supra, 14 Cal.4th at 419-423, barring a finding of fraud in the execution where a party fails to read an agreement, is not applicable. The court in Rosenthal repeatedly distinguishes its holding from a case involving a fiduciary relationship. (See. RQsenthal, supra, 14 Cal.4th at 419-422.)

Appellants' Opening Brief explains that even if Lloyd's is not deemed to be a fiduciary towards the Wests, nevertheless, once Lloyd's chose to speak about the content and effect of the 1986 General Undertaking, California law required Lloyd's to speak the whole truth, as opposed to half-truths. (See. A.O.B., pp. 41-42.) Lloyd's Opposition does not contest these authorities, which place an affirmative duty on Lloyd's to disclose that it intended the Choice Clauses to have retroactive application to any pre-existing claims that the Wests might have against Lloyd's.

Appellants' Opening Brief explains that Lloyd's misrepresented that the 1986 General Undertaking would merely be "a simple agreement to abide by Lloyd's by-laws and regulations." (See. A.O.B., pp. 7-8, 14.) Respondents seize on the word "simple", and say that the agreement was only two pages long, and thus "simple". [FN28] Respondents conveniently ignore the rest of Lloyd's misrepresentation, i.e., that the new General Undertaking would merely be "an agreement to abide by Lloyd's by-laws and regulations". That representation was false, or at the very least a half truth, in that the agreement *40 subsequently sent to the Wests also contained Lloyd's Choice Clauses which were not part of Lloyd's existing by-laws or regulations, and had not been part of any previous General Undertaking between Lloyd's and the Wests. (See. A.O.B., pp. 7-9, ¶¶4-6.) The undisputed evidence below also showed that at the same time Lloyd's made that misrepresentation, it knew that it intended to include the Choice Clauses in the General Undertaking, but did not say so. (See. A.O.B., p. 7, ¶3.) [FN29]

FN28. "Simple" does not merely mean "short". See. A.O.B., p. 7, fn. 12.

FN29. Respondents' Opposition incorrectly states that there is no evidence that Appellant David West received the October 1983 letter containing the misrepresentation about the content of the new General Undertaking. (Opp., p. 35, fn. 18.) That is incorrect. The October 1983 letter sent to Deborah and Susan West is in care of David West, and was received and read by him at his home in California. (See. David West Decl., A.A., Vol. XXVII, pp. 6386-6387, 110.)

This misrepresentation about the content of the 1986 General Undertaking is specific to the Choice Clauses, because it misrepresents whether or not those Choice Clauses would in fact be in the agreement that the Wests were asked to sign. Thus, the authorities cited by Respondents, holding that misrepresentations must be specific to the Choice Clauses (see. Opp., p. 34), are satisfied here.

Respondents argue that the various other misrepresentations made to the Wests should not be attributed to Lloyd's, but rather were made by Lloyd's members' agents who were not acting on behalf of Lloyd's. (See. Opp., pp. 34-35.) Respondents' arguments in that regard are new on appeal. Respondents did not contest the allegation in the Wests' First Amended Complaint that Lloyd's members' agents are totally controlled by Lloyd's pursuant to Lloyd's Acts and by-laws and, therefore, under California law, were in fact agents of Lloyd's in their dealings with the Wests. Respondents also did not contest the evidence presented by Appellants which established these facts. (See. F.A.C., A.A., Vol. XII, pp. 2596-2597, ¶¶11 and 14; and Zeilenga Decl., A.A., Vol. XXII, pp. 4877- 4880, and Exhs. 51-55.)

*41 Respondents argue that to the extent that there were misrepresentations about the content of the new 1986 General Undertaking, those misrepresentations were corrected in Lloyd's 1985 Annual Report. Respondents claim that Lloyd's disclosed that "a forum agreement" "would be included within the new General Undertaking", thus satisfying whatever disclosure obligation Lloyd's owed to the West family. (Opp., p. 36.) Respondents' representation of the evidence is erroneous. In fact, the undisputed evidence shows that Lloyd's never publicly linked this new "Forum Agreement" to the "new 1986 General Undertaking" in any of its communications with the Wests. (See. A.O.B., pp. 9-10, ¶8, and fn. 20.)

IX.

LLOYD'S CHOICE CLAUSES SHOULD NOT BE ENFORCED BECAUSE THEY ARE A CONTRACT OF ADHESION NOT WITHIN APPELLANTS' REASONABLE EXPECTATIONS

Respondents' Opposition does not contest the two-part test for determining this issue. (See. A.O.B., pp. 42-43.) This Court determines whether a contract meets the definition of adhesion, and if so, inquires whether the contract is unenforceable because it either does not meet the plaintiffs' "reasonable expectations" or is unconscionable because it is coercive, unfair, or the product of duress. (See. Graham v. Scissor-Tail, Inc. [1981] 28 Cal.3d 807, 820; and Keating v. Superior Court, supra, 31 Cal.3d at 594.) Respondents have not disputed that the second prong of the test is disjunctive, and thus, that Appellants need not prove coercion or duress to establish that the Choice Clauses are an unenforceable contract of adhesion. (Compare. A.O.B., pp. 42-43, with Respondents' Opp., p. 40.) Respondents' Opposition does not contest the first element of the test, i.e., that Lloyd's 1986 General Undertaking is a contract of adhesion. (See. A.O.B., pp. 43-44.)

*42 Respondents only contest the second element of the test, i.e., whether Lloyd's Choice Clauses were within the "reasonable expectations" of the Wests. With respect to this issue, Respondents argue that notice is a significant factor with respect to "reasonable expectations", and if the Wests had read the agreement they would have had notice of the Choice Clauses. (Opp., pp. 40-41.)

First. Lloyd's does not dispute the fact that the Wests had a 12 year prior investment history with Lloyd's before Lloyd's elected to unilaterally insert the Choice Clauses into their pre-existing agreement. Prior to inserting the Choice Clauses, Lloyd's had operated without such choice clauses for 300 years. These facts necessarily go to the Wests' "reasonable expectations" as to whether they should expect to find such choice clauses in agreements between themselves and Lloyd's. (See. A.O.B., p. 45.)

Not one of the cases cited by Respondents, concerning the "reasonable expectations" of the weaker adhering party, contain any evidence that the party seeking to enforce the contract made any misleading statements concerning the content of the adhesion contract. There is such evidence present here. Thus, this case is distinguishable from those cases where the party seeking to avoid the contract offered no justification for failing to read the agreement. (Compare. A.O.B., pp. 4-11, with the cases cited by Respondents' Opposition, pp. 40-42.)

In addition, even if these the Wests had thoroughly read the Choice Clauses, it was certainly not within their "reasonable expectations" that those Choice Clauses would retroactively apply to any pre-existing claims the Wests might then have, arising out of their prior 12 year investment relationship with Lloyd's. As indicated in Appellants' Opening Brief, the vast majority of the Wests' claims against Lloyd's arise out of conduct and actions that occurred several years prior to the Wests signing the 1986 General Undertaking *43 containing the Choice Clauses. None of the cases cited by Respondents (involving liability releases in ski lesson contracts) involve the retroactive application of a release. (Opp., pp. 40-43.)

Second. Respondents completely ignore the "public interest" factor in assessing the "reasonable expectations" prong of the test, which the California Supreme Court describes as a potentially "profound and decisive" factor concerning the weaker party's "reasonable expectations". (A.O.B., p. 45 citing to Graham, supra, 28 Cal.3d at 820, fn. 18.) Respondents' citation of Allan v. Snow Summit, Inc. (4th Dist. 1996) 51 Cal.App.4th 1358, 1374, is actually helpful to Appellants. The Allan court states: "Among the factors which strongly affect the assessment whether the contract was within the reasonable expectation of the 'adhering' party are notice, and the extent to which the contract affects the public interest" (emphasis supplied). Distinguishing itself from cases where the contract of adhesion affects the public interest, the Allan Court stated: "Moreover, the contract does not affect the public interest ... skiing, like other athletic or recreational pursuits, however, beneficial, is not an essential activity." (Id., p. 1376.)

Here, in contrast, the Wests presented unrefuted evidence of Lloyd's violation of California's regulatory statutes. California Corp. Code § 25120 specifically prohibits changes in the rights, preferences or privileges of an existing security without the qualification of the California Department of Corporations. Here, the unrefuted evidence demonstrated that Lloyd's did just that, by unilaterally inserting the Choice Clauses into the party's pre-existing investment contract, and thereby also violated the express anti-waiver provision in Corp. Code § 25701. Thus here, the "public interest" factor strongly supports a finding that Lloyd's Choice Clauses were not within the Wests' "reasonable expectations", because they violate California statutes, and are thus void and unenforceable.

*44 Respondents cite Olsen v. Breeze, Inc. (1996) 48 Cal.App.4th 608, 622. (Opp., p. 41.) Olsen is not a contract-of-adhesion case. Olsen does not address any of the contract-of- adhesion factors. In particular, Olsen does not assess the "reasonable expectations factor" of the weaker, adhering party, and does not address an adhesion contract affecting the "public interest". (id.)

Respondents' citation of San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 Cal.App.3d 438, 443, is equally inapposite. There was no public interest factor present in San Francisco Newspaper, supra, affecting the "reasonable expectations" analysis. Here, the offending clause in the contract of adhesion directly contravenes the California Corporate Securities Law of 1968, in particular Corp. Code § 25120; Corp. Code § 25701; and Civ. Code § 1751. In addition, unlike this case, the court in San Francisco Newspaper explained that the challenged clause was "clear and unambiguous", and therefore was within the "reasonable expectations" of the weaker party. (Id.) Here, Lloyd's Choice Clauses do not clearly state that Lloyd's intends to retroactively apply the Choice Clauses to the Wests' 12-year prior investment relationship with Lloyd's.

Finally, Respondents rely on Cal-State Business Products & Services. Inc. v. Ricoh. supra. 12 Cal.App.4th at 1681, where the court enforced a choice of forum clause in a standardized form contract. Again, Cal-State is readily distinguishable on the grounds that there is no "public interest" factor present. [FN30]

FN30. Despite Respondents' assertions to the contrary, at Opp., p. 42, fn. 25, the evidence in Cal-State was overwhelming that the plaintiff was very familiar with the forum clause in the contract, in that he had previously negotiated and drafted the contracts containing the forum clause. Indeed, his argument that he was unaware of the clause was so specious under the circumstances that he dropped it on appeal. (Id., p. 674, fn. 7.)

Respondents have conceded that the Choice Clauses here at issue are a contract of adhesion. The public interest being so strongly implicated in this case, this Court should *45 hold that Lloyd's Choice Clauses, which violate express prohibitions in California statutes, were not within the "reasonable expectations" of the Wests, and that accordingly, they constitute an unenforceable contract of adhesion under the California Supreme Court's test in Graham v. Scissor-Tail, Inc., supra, 28 Cal.3d at 820, fn. 18.

X.

APPELLANTS' CALIFORNIA ACTION MAY NOT BE DISMISSED BASED UPON FORUM NON-CONVENIENS.

A. C.C.P. § 410.30 DOES NOT PERMIT DISMISSAL OF CALIFORNIA ACTIONS BROUGHT BY CALIFORNIA RESIDENTS.

It is not permissible to dismiss the action of these California residents under the governing California statute, C.C.P. § 410.30. [FN31] The case principally relied upon Respondents, Stangvik v. Shiley, Inc. (1991) 54 Cal.3d 744, involved Norwegian plaintiffs and was decided prior to the January 1, 1992 amendment to C.C.P. § 410.30. Thus, it is not an apt precedent.

FN31. See. West Family Declarations establishing California residency (A.A., Vol. XXVII, pp. 6377-6378, 11; and Vol. XXVIII, pp. 6483-6484, 11; and pp. 6647-6648, 11); and see, Beckman v. Thompson (2d Dist. 1992) 4 Cal.App.4th 481, 487 (holding that the 1986 amendment to C.C.P. § 410.30 permitting dismissal of California residents expired on January 1, 1992); Ford Motor Co. v. Insurance Co. of North America, supra, 35 Cal.App.4th at 611 ("the only pertinent holding in Stangvik is that a foreign, non-citizen plaintiff's choice of forum is entitled to less deference"); and Boaz v. Boyle & Co. (2d Dist. 1995) 40 Cal.App.4th 700, 704 (affirming dismissal where the trial court did not dismiss the one California resident plaintiff).

Since all of the Wests were California residents at all material times, and are thus not subject to dismissal based on forum non-conveniens grounds, there is no need for this Court to take part in the laborious weighing of the public and private interest factors typically considered by California Courts in a forum non-conveniens case, involving non-resident *46 plaintiffs. (See, Ford Motor Co., supra, 35 Cal.App,4th 611, addressing the public and private interest factors for non-resident California plaintiffs.)

To the extent that this Court chooses to consider the public and private interest factors, California's fundamental public interest in the regulation of Lloyd's unlawful conduct in California over the course of many years, predominates in any balancing analysis, and is materially greater than any interest England may have in Lloyd's unlawful conduct outside of English borders. Simply put, England has no material interest in the enforcement of California's statutes for the offer and sale of securities in California, and will refuse to enforce any such California statutes in an English court. In contrast, California is vitally concerned with the application of its regulatory statutes to unlawful conduct that occurred in California over the course of 20 years, and a California court must and will apply those laws in an action brought before it.

B. CALIFORNIA'S FUNDAMENTAL PUBLIC POLICY, AS EXPRESSED IN THE ANTI-WAIVER STATUTES APPLICABLE TO THIS CASE. PROHIBIT DISMISSAL OF THIS ACTION BASED UPON FORUM NON-CONVENIENS.

Respondents made the same forum non-conveniens argument before the U.S. Ninth Circuit Court of Appeals in Richards v. Lloyd's of London, 1997 U.S. App. Lexis 3998, **26-27, arguing that even if the Choice Clauses were not enforced, the action, nevertheless, should still be dismissed based upon forum non-conveniens. Having found that Lloyd's Choice Clauses violate the express command of the United States Congress that Federal Securities Laws not be waived by private agreement, the court declined Respondents' request. (Id., ** 26-27.) Since the record here establishes that no English court will enforce California's Corporate Securities Laws, it is nonsensical to suggest that the English Courts are a more convenient forum for consideration of the Wests' California claims, which those *47 courts will refuse to even consider. (See. Richards v. Lloyd's of London, supra. 1997 U.S. App. Lexis 3889, **26- 27.)

Respondents' discussion of the "suitability" of the English forum is misleading. The California Supreme Court in Stangvik v. Shiley, Inc., supra, 54 Cal.3d at 752, fn. 3, does not state that the determination of "suitability" is limited solely to whether the alternate forum has jurisdiction, and whether the statute of limitations in the alternate forum would bar the plaintiffs' causes of action. Stangvik mentions those factors, but does not state that they are the only factors. (Id.) Here, plaintiffs' securities laws claims are barred in the English courts by the Lloyd's Act of 1982, granting Lloyd's immunity from such claims. Thus, Appellants' securities law claims are barred just as surely as if there were a statute of limitations which barred Appellants from bringing their claims in the English courts. Such a procedural bar to any California Securities Law claims makes the English Courts unsuitable for this action. (See. Boaz v. Boyle & Co., supra, 40 Cal.App.4th at 711 ["suitability" depends upon finding "no procedural bar" .... "to reach the issues raised on their merits".].) [FN32]

FN32. In Stangvik, supra, 54 Cal.3d at 752, the defendants stipulated to the tolling of the statute of limitations permitting the Court to find that Norway and Sweden were suitable forums. Here, it is not possible for Respondents to stipulate to the enforcement of California's Corporate Securities Laws in an English court because a statute of Parliament bars that result. (See. Richards v. Lloyd's of London, supra, 1997 U.S. App. Lexis 3889, **25-26.)

With respect to the public interest factors assessed in the forum non- conveniens decision, this record contains unrefuted evidence of California's fundamental public policy interest in seeing its regulatory statutes applied and enforced by California courts. The fact that Respondents entered California over the course of a 20 year period, and offered and sold their securities without once complying with any of the applicable regulatory statutes under *48 the California Corporate Securities Law of 1968, or, if applicable, the California Insurance Code governing insurance securities, provides a strong basis for a California court to apply and enforce California law. (See. A.O.B., p. 30, fn. 43.) Respondents have not presented any evidence demonstrating why England would be "more materially interested" in Lloyd's unlawful conduct in California, than California. Thus, Respondents have not met their burden of proof. (See. Ford Motor Co., supra, 35 Cal.App.4th at 610 ["The moving party bears the burden of proof on a forum non-conveniens motion, and "there must be evidence - not merely bald assertions - to support the trial court's determination".].)

With respect to the private interest factors, Respondents' contention that virtually every witness and document of importance is located in England is specious. The witnesses and documents pertaining to Respondents' unlawful acts in California, i.e., Lloyd's annual solicitation of Appellants' investment, are all located in California. The evidence of Lloyd's failure to comply with the qualification requirements of California's Corporate Securities Laws is also located in California. (See. A.O.B., p. 14, fn. 30.) As a result of the U.S. Ninth Circuit Court of Appeals decision in Richards v. Lloyd's of London, supra. 1997 U.S. App. Lexis 3889, Five Hundred Seventy-Four U.S. Names, many of whom are Californians, will be proceeding with their U.S. and California Securities Laws claims in the United States District Court for the Southern District of California. The Wests have every reason to believe that they will have access to the documents produced in that action, and also to the transcripts of depositions. At the very least, any relevant documents from England will have already been shipped to California for the Richards v. Lloyd's trial.

To the extent that Respondents are required to travel to the California forum and produce documents in California, Stangvik, supra, 54 Cal.3d at 761-762, recognizes that in the modern world of high speed transportation, this inconvenience may be afforded less *49 weight than the public interest factors. (See. Stangvik, supra, 54 Cal.3d at 761-762.) Given the parallel action in the U.S. District Court for the Southern District of California, in Richards v. Lloyd's of London, supra, 1997 U.S. App. Lexis 3889, the inconvenience of bringing documents and witnesses to California is a moot issue, in that it is going to happen in any event.

Finally, Respondents argue that a California court exercising jurisdiction in this case will suffer from being uninitiated in the English laws governing Lloyd's. (Opp., pp. 46-47.) To the contrary, a California court hearing this action will be applying California's Corporate Securities Laws, and California's Consumer Legal Remedies Act, to the conduct of Lloyd's in California. The California court will not need to become expert in the English laws governing Lloyd's to make determinations which must be made with respect to the Wests' California Securities Laws claims. Accordingly, the dire picture painted by Respondents of a California court overwhelmed by the complexities of English law, although colorful, is wrong. To the extent that there are any relevant points of English law which require explanation, those points can be explained by the retention of a consultant for the Trial Court. [FN33]

FN33. The parties have already evidenced their ability to obtain conflicting declarations on points of English law and present them to the Trial Court. See, e.g., the conflicting declarations of Lloyd's solicitor John Powell, A. A., Vol. X, p. 2294; and the counter declaration of the Wests' solicitor Charles Hicks at A.A., Vol. XXVIII, p. 6731, with respect to the adequacy of remedies against Lloyd's under English law.

*50 CONCLUSION.

The Trial Court's decision contravenes an express prohibition of the California Legislature, and is therefore an abuse of discretion. Appellants respectfully request that this Court reverse the Trial Court's minute orders and judgment, and remand the Wests' case with instructions that trial of the Wests' claims against Lloyd's is to proceed in the Los Angeles County Superior Court.

David WEST, Deborah West and Susan West, Appellants and Plaintiffs, v. LLOYD'S, also known as the Society of Lloyd's, also known as Lloyd's of London, a corporation, also known as the Corporation of Lloyd's, also known as the Society and Council of Lloyd's; Ernst & Young, a partnership and an unincorporated association, Respondents and Defendants.

Briefs and Other Related Documents

1997 WL 33560315 (Appellate Brief) Respondents' Brief (Jan. 15, 1997)Original Image of this Document (PDF) View and print document in