Discussion
I agree with the moving parties that the commencement of settlement proceedings raises different issues with respect to Coleman's special appearance than would his participation in a hearing on the merits. The moving parties are surely correct when they state that "the Commission, generally . . . ha[s] expressed a preference for the parties to resolve proceedings such as these by settlement," and that forcing a party to waive objections to personal jurisdiction as the price of participating in settlement discussions held before issuance of a ruling on a motion to quash would lead to perverse results:
"A contrary ruling - that an indispensable party to a particular settlement[4] may not enter into the settlement and assist in marshalling that settlement through the Commission's approval process without waiving his objection to personal jurisdiction (should the settlement not be approved) - simply makes no sense under the unique circumstances presented. Such a ruling would engender significant unnecessary litigation in the matter and necessitate the wasting of assets that might otherwise inure to the benefit of ratepayers." (Joint Motion, pp. 4-5.)
The moving parties are also correct that under Article XII, § 2 of the California Constitution and § 701 of the Pub. Util. Code, "the Commission has broad authority to determine what constitutes a `special appearance' for purposes of its Rules of Practice and Procedure, . . . and further to determine what constitutes a `waiver' of an objection to personal jurisdiction raised before it." (Id. at 5.) Thus, contrary to QAI's view, the Commission is not bound by the "mandate of California statutory and case law" in deciding these questions. In view of the special circumstances of this case - where there is a history of enforcement proceedings in other jurisdictions against one of the respondents, and where further litigation seems likely to result in depletion of the funds available for customer restitution - it is an appropriate exercise of Commission authority to allow a respondent who is indispensable to a settlement (as a practical matter), and who has objected to the Commission's exercise of personal jurisdiction over him, to participate in settlement discussions without thereby waiving his jurisdictional objections.
Moreover, while there is some merit to the argument that "the reported case law concerning `general appearances' and what constitutes a `waiver' of an objection to personal jurisdiction before a court has little relevance to the Commission's construction of its own rules," (id. at 5, n. 3), the moving parties are correct that there is some authority under the CCP supporting relief of the kind they seek here. Because the Commission has previously consulted cases applying the CCP in determining what constitutes a special appearance under Rule 45(c)(2), this authority warrants discussion.
In Ikerd v. Warren T. Merrill & Sons, supra, for example, the Second District Court of Appeal held that a corporate president's limited participation in an arbitration hearing did not give the arbitrator personal jurisdiction over him, even though the legal theory under which the arbitrator held the president liable was a valid one. The party seeking arbitration had served the arbitration demand only upon the corporation; notwithstanding this, the arbitrator held the corporation's president liable on the ground that he had signed the construction contract at issue as agent for an undisclosed principal. The Court of Appeal upheld the Superior Court's conclusion that this theory of liability did not serve to give the arbitrator jurisdiction over the president, despite his participation in the hearing:
"Admittedly, Merrill [the president] attended the arbitration hearing and provided substantial assistance to WTMS' [the corporation's] defense of Ikerd's claims. However, he necessarily did so as the person most knowledgeable about the relevant facts. Such action by corporate officers or controlling shareholders is common and does not constitute a general appearance in the proceeding . . .
"Merrill did not ever file a responsive pleading in the arbitration. During that proceeding, however, the arbitrator requested from the parties legal briefing on the issue of whether Merrill could be held liable to Ikerd as the agent of an undisclosed principal. The submission of this brief, however, although it related to the issue of Merrill's individual liability, (1) was required by the arbitrator, (2) was a submission made by WTMS, and (3) did not constitute the filing of a voluntary pleading by Merrill. We do not regard this act as constituting a general appearance . . .
"As Merrill was never a party to the arbitration proceedings, we must also reject Ikerd's claim that by his acts of participating as a witness or by the filing of the legal brief there was a waiver of his right to object to the imposition of jurisdiction over him. If he was not formally made a party and, as we hold, these acts did not constitute a general appearance, then there is no basis for a waiver." (9 Cal.App.4th at 1843-44; citations and footnote omitted.)
See also, Berard Construction Co. v. Municipal Court, supra, 49 Cal.App.3d at 717-19 (corporate president's coupling of a motion to quash service and to dismiss for inconvenient forum under CCP § 418.10 with a motion for attorneys fees did not constitute a general appearance); Braden Copper Co. v. Industrial Acc. Com. (1956) 147 Cal.App.2d 205, 207-08 (questions at accident hearing by mining company's attorney going to issue of whether mining company's activities in California were sufficient to establish in personam jurisdiction did not constitute a general appearance, even though the questions were also relevant to the Accident Commission's subject matter jurisdiction, where the attorney had previously entered a special appearance and moved to quash service on the mining company.)5
The cases relied upon by QAI do not establish a rigid rule that any participation in settlement discussions after filing a motion to quash service constitutes a waiver of objections to personal jurisdiction. On the contrary, in each of these cases the party found to have waived its jurisdictional objections had done much more to participate in the litigation process than merely engage in settlement discussions. In Estate of Heil, for example, the State of Nevada had originally appeared in a California probate action that, as a result of a settlement, created a trust for the protection of wild horses in Nevada. Later, when an animal protection group brought suit to remove the State of Nevada as a trustee, Nevada challenged personal jurisdiction and filed a motion to quash service. After determining that the will had indeed created a trust and that the probate court had continuing jurisdiction over it, the Court of Appeal ruled that "Nevada answered the petition in the [original] probate proceeding and it actively participated in discovery and settlement of the action. It may not now
object to the court's exercise of [continuing] jurisdiction." (210 Cal.App.3d at 1512.)
Similarly, in Casa de Valley View Owner's Assn. v. Stevenson, dissenting homeowners who had intervened in a condominium association's lawsuit against the developers orally stipulated in the Superior Court to a settlement that called for dismissal of the underlying action. (167 Cal.App.3d at 1189.) Under these circumstances, the Court of Appeal held that even after the dismissal had occurred, the Superior Court could enforce the terms of the stipulation, and that the homeowners "waived any lack of personal jurisdiction when they opposed on the merits the Association's motion under section 664.6 to compel enforcement of the stipulation." (Id. at 1192.)6
The circumstances here are quite different from those in Estate of Heil and Casa de Valley View. Here, as the moving parties note in their reply to QAI, the January 21 settlement discussions were informal and "did not involve the trappings of Commission authority, they did not occur in a noticed Commission hearing, and they did not involve the participation of an Administrative Law Judge, an Assigned Commissioner or any other officer representing the Commission." (Joint Reply, p. 2.) Moreover, because no ruling had yet been issued on this motion, neither Coleman nor his counsel participated in the conference held pursuant to Rule 51.1 on February 1, 2000. Under these circumstances, and in view of the understandings summarized in footnote 3, I agree with the moving parties that (1) it would be unjust to hold that Coleman's carefully limited participation in the settlement process up to now amounts to a waiver of his objections to in personam jurisdiction, and (2) it is neither necessary nor appropriate to rule upon Coleman's motion to quash service unless the Commission rejects the settlement that the moving parties have tentatively agreed upon.
4 The Joint Motion makes clear that Coleman is an "indispensable party" in the sense that, at this stage of the proceeding, there can be no settlement without his participation. The motion states that "the parties to the settlement agreement will be unable to go forward with the settlement without the participation of Coleman," and that "the entire settlement, including that of the corporate parties, will unravel if Coleman is not accorded [the] assurance [that he may continue to object to the Commission's assertion of in personam jurisdiction in the event the settlement is disapproved.]" (Id. at 3-4.) 5 The relief that the moving parties are seeking here can also be considered analogous to the automatic extension of time to plead that is provided for in CCP § 418.10(b) when a motion to quash service is filed. As Professor Witkin notes, this provision was added to the CCP to ameliorate the harsh effects of prior case law, which established that it was discretionary whether the time to plead should be extended while a motion to quash was pending. See, Witkin, II CALIFORNIA PROCEDURE, 4th Ed., "Jurisdiction" § 209, pp. 773-75. 6 Mansour v. Superior Court (1995) 38 Cal.App.4th 1750, another case relied on by QAI, is also distinguishable In Mansour, Arkansas and Arizona residents moved to quash service in an action for "false light" invasion of privacy and defamation. Later, however, their attorneys participated in a case management evaluation procedure that involved setting a schedule for motions and additional discovery on the merits, as well as a mandatory settlement conference. After a joint motion for continuance of the trial date was denied, the attorneys participated fully in the case evaluation hearing. The Court of Appeal noted that the case management evaluation procedure was "premised on the trial court having jurisdiction over the parties participating in it," and so held that the attorneys had effectively made a general appearance. (38 Cal.App.4th at 1756-58.)
