California Code of Civil Procedure Section 1030
Code of Civil Procedure Section 1030, subdivision (a), provides, "When the plaintiff in an action or special proceeding resides out of the state, or is a foreign corporation, the defendant may at any time apply to the court by noticed motion for an order requiring the plaintiff to file an undertaking to secure an award of costs and attorney's fees which may be awarded in the action or special proceeding."
The plaintiff, however, will not be required to file an undertaking unless "there is a reasonable possibility that the moving defendant will obtain judgment in the action or special proceeding." ( 1030, subd. (b).) If the plaintiff fails to file an undertaking after the court determines the grounds for the motion have been established, the plaintiff's "action or special proceeding shall be dismissed as to the defendant in whose favor the order requiring the undertaking was made." ( 1030, subds. (c) & (d).)
"The purpose of the statute is to enable a California resident sued by an out-of-state resident '"to secure costs in light of the difficulty of enforcing a judgment for costs against a person who is not within the court's jurisdiction."'
The statute therefore acts to prevent out-of-state residents from filing frivolous lawsuits against California residents." (Yao v. Superior Court (2002) 104 Cal.App.4th 327, 331 127 Cal. Rptr. 2d 912.)
Although a previous version of section 1030 was found unconstitutional because it failed to "provide a meaningful pretaking hearing" (Gonzales v. Fox (1977) 68 Cal.App.3d Supp. 16, 18 137 Cal. Rptr. 312), the revised statute, which provides for a hearing, "violates neither federal nor state due process guarantees because the 'statutory hearing procedure is the one usually prescribed for pretrial motions, that is, the opportunity to present declarations and other documentary evidence, the opportunity for both counsel to be present, and the opportunity to be heard.'" (Yao, at p. 331.)
Section 1030, subdivision (c), states, "If the court, after hearing, determines that the grounds for the motion have been established, the court shall order that the plaintiff file the undertaking in an amount specified in the court's order as security for costs and attorney's fees."