Unreported / Non-Citable
Background
EpiRx, L.P., a minority shareholder, sued EpicentRx, Inc. and several officers and employees in San Diego. Its complaint alleged fraudulent concealment, promissory fraud, breach of contract, breach of fiduciary duty, and unfair business practices arising from its $5 million investment and the defendants' alleged solicitation, diversion, and concealment misconduct. The defendants sought dismissal for forum non conveniens under a certificate-of-incorporation clause designating the Delaware Court of Chancery as the exclusive forum for specified stockholder disputes.
The trial court initially refused enforcement because Delaware did not guarantee the same jury-trial right. The California Supreme Court rejected that categorical objection in EpicentRx II, and the case returned for consideration of the clause's adoption. On remand, the trial court upheld the clause, dismissed the fiduciary-duty claim with prejudice at EpiRx's request, and dismissed the contract claim as an internal-affairs matter. It left fraudulent concealment, promissory fraud, and unfair business practices in San Diego, prompting this second mandate petition.
The Court’s Holding
The Court of Appeal granted relief under the parties' agreed abuse-of-discretion standard. EpiRx did not challenge the rulings upholding the clause or applying it to the contract claim, and the court declined to revisit those issues. It also rejected EpiRx's reliance on the stock purchase agreement's San Mateo forum clause: EpiRx filed in San Diego, never moved to transfer, and first addressed that agreement nearly four years after filing. Extensive litigation without invoking a forum clause barred its belated enforcement.
The court gave two independent reasons for dismissing the entire action. First, the clause covers any action asserting an internal-affairs claim; once the contract claim qualified, the action had to proceed intact in Delaware. Splitting related claims would undermine contractual expectations, judicial economy, and policies against piecemeal litigation. Second, every surviving claim concerned EpiRx's shareholder relationship with EpicentRx, including alleged concealment during its investment and devaluation of its stock. Those allegations invoked the internal affairs doctrine even though some misconduct preceded share ownership.
EpiRx identified no vital statewide interest or unwaivable California statutory right defeating enforcement. Its records claim was common-law contract rather than a claim under Corporations Code sections 1600 or 1601, and its unfair-competition claim did not supply such a right. The court therefore directed issuance of mandate requiring the superior court to vacate its April 20, 2026 order denying defendants' motion to dismiss in part and grant dismissal in full, with costs to defendants. It did not decide whether the claims independently sought relief under the Delaware General Corporation Law, or whether EpiRx's refiled contract action belonged in San Mateo.
Key Takeaways
- A mandatory forum clause covering an action with an internal-affairs claim required the entire related action to proceed in Delaware rather than being divided among jurisdictions.
- The shareholder relationship, alleged concealment during the investment period, and claimed stock devaluation brought all surviving claims within the internal affairs doctrine.
- EpiRx could not belatedly invoke the San Mateo clause after years of San Diego litigation without seeking its enforcement.
- Ordinary fraud allegations and the asserted unfair-competition claim did not establish a public-policy exception based on unwaivable California statutory rights.
- The writ directed vacatur of the April 20, 2026 partial denial and entry of an order granting the dismissal motion in full, while leaving the DGCL theory undecided.
Why It Matters
The decision applies EpicentRx II beyond the threshold validity of a Delaware forum clause to the scope and unitary treatment of a shareholder action. It emphasizes that an admitted internal-affairs claim can control the forum for the whole case, and independently examines why the remaining claims themselves qualified.
The ruling also treats prolonged litigation without invoking an alternative contractual forum as a barrier to later enforcement. Its disposition concerns forum and dismissal, not a determination of EpiRx's underlying fraud, fiduciary, contract, or unfair-practices allegations.