Adams v.
Filed 8/16/12 Adams v. Newport Crest HOA CA4/3
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA
FOURTH
APPELLATE DISTRICT
DIVISION THREE
KRISTINE L. ADAMS,
Plaintiff and Appellant,
v.
NEWPORT
CREST HOMEOWNERS ASSOCIATION et al.,
Defendants and Respondents.
G045590
(Super. Ct. Nos. 07CC01390,
05CC05516)
O P
I N I O N
Appeal from a judgment
of the Superior Court of
County, Ronald L. Bauer, Judge.
Reversed and remanded.
Kristine L. Adams, in
pro. per., for Plaintiff and Appellant.
Grant, Genovese &
Baratta, James M. Baratta, Christopher S. Dunakin and Aaron J. Mortensen for
Defendants and Respondents.
* * *
We
now reach the fourth appeal. Kristine
Adams (Adams) challenges a judgment of
dismissal after an order sustaining a demurrer in her second lawsuit
against Newport Crest Homeowners Association and certain others (collectively,
Newport Crest). She contends, inter
alia, that her second lawsuit is not completely barred by either issue
preclusion or the litigation privilege. We agree.
We reverse and remand.
I
FACTS
APPELLATE HISTORY:
We
described the history of the various appeals in our last opinion. (Kristine
L. Adams v. Newport Crest Homeowners Association (Mar. 13, 2012, G044230)
[nonpub.opn.]
title="">[1] (
(Adams) has filed two lawsuits against Newport Crest Homeowners Association and
certain others . . . . The trial court
dismissed the first lawsuit as having been settled, even though the parties
continued to squabble. (
Association (Super. Ct. Orange County, 2007, No. 05CC05516) (Case No.
05CC05516).) In our decision in the
first appeal, we affirmed the dismissal.
(Adams v. Newport Crest Homeowners
Association (Sept. 9, 2009, G039956) [nonpub. opn.] [(First Appeal)].)
“Adams
filed a second lawsuit having to do with the settlement agreement in Case No.
05CC05516, as well as certain related matters.
(Adams v. Newport Crest Homeowners
Association (Super. Ct. Orange County, 2008, No. 07CC01390) (Case No.
07CC01390).) In Case No. 07CC01390, the
trial court granted a Code of Civil Procedure section 425.16 anti-SLAPP motion
with respect to three out of the 15 defendants, and dismissed that lawsuit as
against those three defendants. In her
second appeal, Adams challenged the dismissal and we affirmed. (Kristine
L. Adams v. Scott L. Ghormley (Feb. 8, 2011, G040728) [nonpub. opn.] [(
“After
our decision in the first appeal was filed, the defendants in Case No.
05CC05516 returned to the trial court and filed a motion for attorney fees
incurred in connection with the enforcement of the settlement agreement in that
lawsuit. The court granted the motion,
and awarded $58,212 in attorney fees.
The order granting those fees [was] the subject of . . . the third
appeal. . . . We affirm[ed].” (Third
Appeal, supra,
As
noted at the outset, in this the fourth appeal, Adams challenges the judgment
of dismissal after an order sustaining demurrer without leave to amend, filed
in Case No. 07CC01390.
SYNOPSIS OF CASE NO. 05CC05516:
As
we stated in the First Appeal, supra, G039956: “Plaintiff Kristine Adams (Adams) brought
suit against Newport Crest Homeowners Association and certain others
(collectively, Newport Crest), in connection with alleged mold, biological
contamination, water intrusion, structural damage, termite and rat infestation,
and other issues affecting her condominium unit . . . . The parties went to mediation and ultimately
signed a settlement agreement, which entailed the payment to Adams of $500,000
from Newport Crest’s insurance carrier, and a commitment to perform extensive
remediation of her unit within an anticipated 90-day period. The insurance payment was made, but Adams
claimed Newport Crest failed to comply with its nonmonetary performance
obligations.
“Adams
filed a Code of Civil Procedure section 664.6 motion to enforce the terms of
the settlement agreement and to order Newport Crest to perform its obligations
thereunder, and Newport Crest thereafter filed an ex parte application for an
order enforcing the settlement agreement and compelling mediation. Finding that the settlement agreement
required disputes thereunder to be returned to mediation, the court denied
Adams’s motion and granted Newport Crest’s application. However, Adams did not respond to Newport
Crest’s request to schedule a mediation.
The court, on its own motion, set an order to show cause re
dismissal. After a hearing on the order
to show cause, the court ordered Adams’s case dismissed.
“Adams
appeal[ed] from the order denying her motion and granting the application of
Newport Crest, from the order dismissing her case, and from an order imposing
monetary discovery sanctions against her.
In attacking the order denying her motion, she insist[ed] that the
settlement agreement [was] binding and that, for a variety of reasons, the
court erred in failing to convert it to judgment. But when it [came] to challenging the order
granting Newport Crest’s application, Adams paradoxically maintain[ed] that the
settlement agreement [was] completely unenforceable, due to fraud in the
inducement, failure of consideration, a lack of meeting of the minds, and the
invalidity of what she characterize[d] as a ‘binding mediation’ provision. In other words, if the settlement agreement
[was] construed to include the mediation provision that it clearly [did]
contain, then she insist[ed] the settlement agreement [could not] be binding,
but she desperately want[ed] the settlement agreement to be enforced, minus the
mediation provision to which she agreed.”
(First Appeal,
In
our opinion filed September 9, 2009, we held that substantial evidence
supported the implied finding that the settlement agreement was binding and
that the court had properly interpreted the settlement agreement to require
disputes thereunder to be submitted first to the mediator, not the court. We affirmed the order denying Adams’s motion
and granting Newport Crest’s application, the sanctions order, and the
dismissal. (First Appeal, supra,
PROCEDURAL HISTORY OF CASE NO. 07CC01390:
we stated in our decision in the Second
Appeal, supra,
lawsuit, a first amended complaint against 15 parties . . . . The suit primarily arose out of the
settlement agreement in the first lawsuit, but also folded in certain residual
issues concerning continued mold and other problems in connection with her
condominium unit and personal property.
Adams asserted 15 causes of action . . . .
“The first five causes
of action had to do with alleged fraud in the inducement or other
misrepresentation in connection with the settlement agreement in the first
lawsuit. The sixth, seventh, tenth and
eleventh causes of action had to do with alleged breach or frustration of the
settlement agreement. The eighth and
ninth causes of action, for intentional and negligent infliction of emotional
distress, also arose out of the inducement to enter into, or the performance
of, the settlement agreement. The twelfth cause of action, for nuisance,
had to do with, inter alia, the failure to remediate in accordance with the
settlement agreement.” (
The thirteenth cause of action was for unjust enrichment, the fourteenth
was for injunctive relief, and the fifteenth was for rescission of the
settlement agreement.
In January 2008, Newport
Crest filed a demurrer. Newport Crest
argued that Adams’s many causes of action essentially boiled down to two legal
claims—fraudulent inducement to enter into the settlement agreement and breach
of the settlement agreement. The first
set of claims, it argued, was barred by the litigation privilege. The second set of claims, Newport Crest
asserted, had already been fully adjudicated in Case No. 05CC05516.
Although
the court held a hearing on the demurrer in May 2008, it declined to rule
thereon and instead stayed the action pending issuance of our decision in the
In
December 2009, Adams filed a status conference statement in which she requested
an opportunity to file supplemental briefing given our decision in the
required the parties to attend mediation before proceeding with any judicial
action. She stated that she had already
contacted mediator Steven Kruis and arranged mediation dates, but that the
other parties had failed to respond.
Adams attached copies of letters to the mediator and to counsel for
Newport Crest regarding mediation dates.
She also attached her declaration under penalty of perjury stating that
the copies of the letters were true and correct. Furthermore, Adams asked the court whether it
would stay the litigation pending mediation.
In
addition to the foregoing, Adams represented that she had lost her home through
nonjudicial foreclosure in November 2009.
She said she had been unable to obtain a loan modification because of a
lien Newport Crest recorded against the property. Adams stated that the settlement agreement had
obligated Newport Crest to remove the lien, but that Newport Crest had
nonetheless refused to do so. She
further stated that, given this and the resolution of certain issues in the
amendments to her complaint were necessary.
In March 2010, the trial
court ordered that Adams’s two lawsuits be consolidated.
In August 2010, the
trial court ordered the litigation stayed pending the outcome of the
February 2011. The trial court
thereafter reset the hearing on Newport Crest’s demurrer for April 11, 2011.
At the hearing, Adams
represented to the court that she had lost her home and that Newport Crest had
not returned her personal property. She
further represented that after our decision in the First Appeal, supra,
Steven Kruis and paid his fee, but the matter was not resolved. Given the changed facts, Adams argued that
the demurrer was “outdated.”
At the conclusion of the
hearing on April 11, 2011, the court sustained the demurrer without leave to
amend. However, the following day, the
court, sua sponte, vacated its order and took the matter under submission to
further consider the parties’ written and oral arguments. In its minute order, the court stated: “Unless there is a specific request therefor,
there will be no further briefing.”
On April 18, 2011, Adams
filed a request for further briefing. In
her request, she quoted at length from our decision in the First Appeal, supra,
parties were required to submit any disputes under the settlement agreement to
mediation before seeking a judicial remedy.
She again represented to the court that, subsequent to the filing of our
decision in the First Appeal,
the trial court that she was entitled to seek a judicial resolution of what she
characterized as Newport Crest’s noncompliance with the terms of the settlement
agreement.
By minute order of April
20, 2011, the trial court stated: “The
briefing process in this matter is not open-ended and endless. (That is never the case.) The court has not made a request for further
briefing following the April 11, 2011 hearing in this case. Nor has it granted leave for any of the
litigants to submit further material.
Plaintiff will surely recall that the court specifically declined her
request for additional briefing when the pending demurrer was placed back on
calendar after the completion of appellate review earlier this year. The court will therefore not consider the
written argument filed by the plaintiff on April 18, 2011.”
The court thereafter
sustained the demurrer without leave to amend.
It observed that Adams’s 15 causes of action were based on two general
grievances—the negotiation of the settlement agreement and the performance of
the settlement agreement. It held that
the causes of action based on the negotiation of the settlement agreement were
barred by the litigation privilege. It
further held that to permit Adams to proceed with her second lawsuit would be
to reward her for ignoring the settlement agreement provision requiring her to
submit any disputes to mediation before pursuing a judicial resolution. The court quoted the portion of our decision
in the First Appeal,
“‘In other words, the court correctly interpreted the agreement to mean
that there would be no court litigation over whether Newport Crest had breached
its obligations under the settlement agreement, without first giving the
mediator an opportunity to resolve the dispute.’” However, it would appear that the court
interpreted our affirmance of the dismissal of Case No. 05CC05516 to mean that
because Adams previously had failed to mediate the dispute before seeking a
judicial resolution, she could not ever seek a judicial resolution, even if she
ultimately did so after an unsuccessful mediation.
That is not what we
said. Understanding this, Adams filed a
notice of appeal.
II
DISCUSSION
PRELIMINARY MATTERS:
(1) Notice
of Appeal—
On
August 2, 2011, Adams filed a notice of appeal from what she characterized as a
judgment of dismissal after an order sustaining a demurrer, entered on May 27,
2011. Shortly thereafter she filed her
civil case information statement, to which she attached a copy of an order
sustaining a demurrer without leave to amend, filed May 27, 2011. This court then ordered Adams to obtain a
judgment from the trial court and file it with this court. Adams thereafter obtained a judgment of
dismissal following order sustaining demurrer, filed in the trial court on
August 23, 2011, and she filed a copy in this court.
As
a technical matter, an order sustaining a demurrer without leave to amend is
nonappealable. (Desai v. Farmers Ins. Exchange (1996) 47 Cal.App.4th 1110,
1115.) However, California Rules of
Court, rule 8.104(d)(2) provides: “The
reviewing court may treat a notice of appeal filed after the superior court has
announced its intended ruling, but before it has rendered judgment, as filed
immediately after entry of judgment.”
Despite Adams’s repeated failure to follow the rules of appellate
procedure in her various appeals, we exercise our discretion to treat her
notice of appeal as having been filed immediately after entry of the judgment
of dismissal.
Motion to Take Evidence on Appeal or for Judicial Notice—
On
November 23, 2011, Adams filed a motion for this court either to take
documentary evidence pertaining to the parties’ attendance at mediation, or to
take judicial notice of such evidence.
She attached to that motion copies of two documents—a copy of a January
21, 2010 meditation agreement and a copy of a check in the amount of $1,405,
payable to Steven Kruis. Adams says it
is vital for this court to take evidence, because she needs to demonstrate to
the court that the parties did attend mediation before Steven Kruis after we
issued our decision in the First Appeal,
Adams
cites California Rules of Court, rule 8.252(c), which provides:
“(1) A party may move that the
reviewing court take evidence. [¶] (2)
An order granting the motion must: [¶]
(A) State the issues on which evidence will be taken; [¶]
(B) Specify whether the court, a
justice, or a special master or referee will take the evidence; and [¶] (C)
Give notice of the time and place for taking the evidence. [¶]
(3) For documentary evidence, a
party may offer the original, a certified copy, or a photocopy. The court may admit the document in evidence
without a hearing.”
She
requests that this court admit her documents in evidence without a hearing,
pursuant to California Rules of Court, rule 8.252(c)(3). In the alternative, Adams requests that this
court take judicial notice of the documents, pursuant to California Rules of
Court, rule 8.252(a).
By
order of June 6, 2012, we requested the parties to file supplemental letter
briefs addressing a number of issues pertaining to evidence of a
mediation. We asked, inter alia, whether
copies of the documents attached to Adams’s motion were ever presented to the
trial court. As it turns out, they were
not. We do not make a practice of taking
evidence of documents that were not put before the trial court. (Vons
Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn.
3.) Adams has cited no authority that
would make us change that practice in this case. Moreover, she has cited no authority to show
that it would be appropriate for us to take judicial notice of the
documents. (Ibid.; Evid. Code, § 452.) Her motion is denied.
(3) Motion to Augment and to
Take Judicial Notice—
On
June 11, 2012, Adams filed a motion to augment the record on appeal with copies
of 13 documents and to have this court to take judicial notice of two other
documents. Most of the documents subject
to her motion were pleadings or orders filed in either Case No. 07CC01390 or
Case No. 05CC05516. However, one
document was a copy of a computer printout showing a portion of a docket, with
the case number written across the top by hand.
Nine of the documents were already contained in the record on appeal.
Newport
Crest filed objections to the motion. It
stated that Adams was attempting to augment the record with documents that were
never put before the trial court.
Newport Crest also argued that Adams’s motion should be disregarded
because of an inaccurate proof of service.
According
to the proof of service attached to Adams’s motion, a copy was served on
counsel for Newport Crest on June 11, 2012, by delivering the document “to the
USPS, Priority Mail, with postage fully prepaid . . . .” However, according to the declaration of
Attorney Christopher S. Dunakin, the envelope containing the copy of the motion
bore a United States Postal Service postmark of June 13, 2012. A copy of the envelope reflecting the June
13, 2012 postmark was attached to the declaration.
We
are greatly dismayed, to say the least, to see what appears to be an inaccurate
proof of service. While Adams herself is
not the one who signed the proof of service, she is cautioned that she should
ensure the accuracy of the proofs of service attached to her motions.
In
any event, we deny her motion. Most of
the documents, as we have stated, are already contained in the record on appeal
and we do not augment the record to contain duplicates. (Cf. People
v. Tiffith (1970) 12 Cal.App.3d 1129, 1137.) We reject one document because it is an
unauthenticated portion of a computer printout, not something that has been
“filed or lodged in the case in superior court.” (Cal. Rules of Court, rule
8.155(a)(1)(A).) The remaining documents
contain information that is essentially available in other portions of the
record, and they are unnecessary for our determination of the case.
Contemplated Judicial Notice on Court’s Own Motion—
By
order of June 14, 2012, we informed the parties that this court, on its own
motion, intended to take “judicial notice of two documents: (1) appellant’s Summary of Case for Status
Conference, with Procedural Status and Special Circumstances, relating to
Dismissed Case No. 05CC05516, filed in Case Nos. 07CC01390 and 05CC05516 on
April 12, 2010; and (2) the Declaration of Kristine L. Adams in Opposition to Defendants’
Motion and Supplemental Papers of May 24, 2010, filed in Case No. 05CC05516 on
June 8, 2010. (Evid. Code, §§ 452,
subd. (d), 459.)”
Newport
Crest filed objections to the proposed taking of judicial notice. On reflection, we have decided not to take
notice of those documents, since they are unnecessary to the determination of
the matter before us.
Adams’s Request for Judicial Notice—
On
June 15, 2012, Adams filed another request for judicial notice. She requested that we take notice of our
opinion filed in the First Appeal,
on appeal already contains a copy of that opinion. (Cf. People
v. Tiffith, supra, 12 Cal.App.3d at p. 1137.)
DEMURRER:
“We
independently review the ruling on a demurrer and determine de novo whether the
complaint alleges facts sufficient to state a cause of action. [Citation.]
We assume the truth of the properly pleaded factual allegations, facts
that reasonably can be inferred from those expressly pleaded, and matters of
which judicial notice has been taken.
[Citation.] We construe the
pleading in a reasonable manner and read the allegations in context. [Citation.]
We affirm the judgment if it is correct on any ground stated in the
demurrer, regardless of the trial court’s stated reasons. [Citation.]”
(Fremont Indemnity Co. v. Fremont
General Corp. (2007) 148 Cal.App.4th 97, 111.)
In
its demurrer, Newport Crest asserted that Adams’s causes of action were all
based on either breach of the settlement agreement or fraud. We address the causes of action based on
breach of the settlement agreement first.
(2) Nonperformance of Settlement Agreement—
(a) Causes of action
Six
of Adams’s causes of action as framed in her first amended complaint arose out
of, or otherwise related to, the purported nonperformance of the settlement
agreement—the sixth, seventh, tenth, eleventh, fourteenth and fifteenth causes
of action. Six other causes of action
were based in part on presettlement conduct and in part on postsettlement
conduct—the fourth, fifth, eighth, ninth, twelfth and thirteenth.
to her twelfth through fifteenth causes of action, pertaining to nuisance,
unjust enrichment, injunctive relief and declaratory relief. This appears to be due in large part to the
change in circumstances since she filed her first amended complaint. For example, since Adams’s home purportedly
has been lost through foreclosure, there remains no argument over what Newport
Crest must do to remediate it. And,
inasmuch as this court has already ruled that the settlement agreement is
enforceable, Adams will no longer seek to rescind it.
That
leaves the fourth through eleventh causes of action, collectively pertaining to
concealment of the lack of participation of Anthony Salazar in the remediation,
concealment of the participation in Angus Smith in the remediation, breach of
the implied covenant of good faith and fair dealing in connection with the
settlement agreement, conspiracy to frustrate the enjoyment of the benefits of
the settlement agreement, intentional and negligent infliction of emotional
distress due at least in part to nonperformance of the settlement agreement,
and breach of contract—for the failure to remove a lien and the failure to
return personal property, as required by the settlement agreement.
Res judicata
In
its demurrer, as noted previously, Newport Crest asserted that Adams’s claims
concerning breach of the settlement agreement had been fully adjudicated in
Case No. 05CC05516 and, thus, were barred by the doctrine of res judicata. We disagree.
“The
doctrine [of res judicata] is applicable ‘if (1) the decision in the prior
proceeding is final and on the merits; (2) the present proceeding is on the
proceeding; and (3) the parties in the present proceeding . . . were parties to
the prior proceeding.’ [Citation.] ‘[R]es judicata will not be applied “if
injustice would result . . . .”’
[Citation.]” (
189 Cal.App.4th 562, 577.)
As
Newport Crest points out, the doctrine of res judicata may apply when one
lawsuit is resolved by way of settlement and another lawsuit is brought
thereafter. (Villacres v. ABM Industries Inc., supra, 189 Cal.App.4th at pp.
577, 592-593; Eichman v. Fotomat Corp. (1983)
147 Cal.App.3d 1170, 1177.) For example,
in Eichman v. Fotomat Corp.,
franchisor was barred where judgment had been entered upon the parties’
settlement in the first lawsuit and the second lawsuit was based upon acts
which occurred before that judgment was entered. (Id. at
pp. 1173, 1177.)
However,
a judgment upon a settlement agreement in one lawsuit will not bar a second
lawsuit based upon new wrongs committed after the settlement. (Eichman
v. Fotomat Corp., supra,
new wrongs committed after the settlement of the first lawsuit must necessarily
be based on a different cause of action than the one on which the first lawsuit
was based. That is exactly the case
here. Adams’s second lawsuit is based
largely on wrongs committed after the settlement agreement was entered into—wrongs
that cannot have formed the basis of her first lawsuit.
In
its demurrer, however, Newport Crest asserted that when the trial court in Case
No. 05CC05516 denied Adams’s motion to enforce the settlement agreement,
granted Newport Crest’s application to enforce the settlement agreement by
compelling mediation, and ultimately dismissed Adams’s lawsuit as settled, it
had in effect adjudicated her claims concerning breach of the settlement
agreement.
Before
the court ruled on the demurrer, Adams filed her April 18, 2011 request for
further briefing. She attached to her
request a copy of our decision in the First
Appeal, supra,
brief the significance of that opinion on the question raised in the
demurrer—whether the court had already adjudicated her claims that Newport
Crest had breached the settlement agreement.
Adams argued that our opinion made clear her claims had not been
adjudicated, and that we simply stated she would have to take her claims to
mediation before she could take them to a judicial forum.
The
trial court refused to consider the arguments contained in Adams’s April 18,
2011 request.
title="">[3] However, it did nonetheless consider our
opinion. In sustaining the demurrer
without leave to amend, the trial court construed our opinion as meaning that
Adams, having previously refused to mediate, could not bring a second lawsuit
to enforce her rights under the settlement agreement. Although we understand the frustration the
trial courts may have suffered in this drawn-out process, and indeed
acknowledge having expressed some frustration of our own, the trial court took
our decision in the First Appeal,
(c) First Appeal, supra, G039956
In
our decision in the First Appeal,
“Substantial evidence supports the trial court’s implied finding that
the parties entered into a binding settlement agreement. Moreover, the court properly interpreted the
terms of the settlement agreement to require the parties to submit disputes to
the mediator before seeking judicial
relief.” (Ibid., italics added.) We
further stated with reference to paragraph 12 of attachment A to the settlement
agreement: “This makes clear that issues
of nonperformance are to be submitted (first)
to the mediator.” (Ibid., italics added.) In
addition, we said that a judgment on the terms that Adams had requested “would
require a determination of compliance with performance obligations, a matter
the parties specifically agreed was to be submitted first to the mediator.” (
05CC05516, we stated: “In other words,
the court correctly interpreted the agreement to mean that there would be no
court litigation over whether Newport Crest had breached its obligations under
the settlement agreement, without first
giving the mediator an opportunity to resolve the dispute.” (First
Appeal, supra,
We
also said, “if, after the matter is submitted to the mediator, he does
the court has jurisdiction to do so.” (
stated: “Adams insists that if the
matter is ordered to mediation, no relief will ever be available from the trial
court . . . , frustrating the express terms of the settlement agreement. This is not the case. If the mediator renders a final and binding
ruling, it may be reduced to judgment.
If the mediator does not do so, the court has the power to resolve the
disputed issues, and thereafter reduce the matter to judgment.” (Ibid.)
In
our decision in the First Appeal,
procedural posture and the facts then before it, had properly granted Newport
Crest’s application to enforce the settlement agreement by compelling
mediation, had properly denied Adams’s motion to enforce all portions of the
settlement agreement except the mediation provision, and had properly dismissed
the settled case. We did not identify
all the ramifications of the trial court’s orders—that task not being before
us. We did not hold that because the
settled case had been dismissed Adams would never have a method of enforcing
the settlement agreement.
It
would appear that Adams has not always understood this court’s directions to
her. However, this time, her
understanding was “spot on.” We told her
she had no right to litigate the purported nonperformance of the settlement
agreement before submitting the matter to mediation. If, as Adams represents, she has indeed
submitted the matter to mediation, she may now seek her judicial remedy.
No
doubt this holding will cause considerable consternation to Newport Crest. It surely had hoped and desired, when the
settlement agreement was signed, that any performance issues would be resolved
through mediation and no further litigation would ensue. Yet it took the risk that exactly what has
happened would happen. Newport Crest
agreed via the settlement agreement that the court retained jurisdiction to
enforce performance obligations
if mediation did not resolve them. (
At
oral argument in this fourth appeal,
Newport Crest acknowledged that an unsuccessful mediation had taken place after
we issued our decision in the First
Appeal, supra,
also had taken place after Adams
filed her complaint in Case No. 07CC01390.
It argued that to permit Case No. 07CC01390 to proceed would be to
contravene the holding of our decision in the First Appeal, supra,
must mediate before seeking judicial
relief. We conclude it would serve no
purpose to hold that Case No. 07CC01390 must be dismissed because Adams’s
filing was premature. The corollary
would be that the time was ripe for Adams to file a third lawsuit. In the interests of judicial economy, we do
not proceed down that path.
In
conclusion, the court erred in sustaining the demurrer as to the causes of
action based on nonperformance of the settlement agreement. Those causes of action were not adjudicated
in Case No. 05CC05516 and nothing we said in our decision in the
intended to mean that Adams had forever and in all circumstances lost her
ability to seek judicial redress for purported breaches of the settlement
agreement.
(a) Introduction
Code section 47, subdivision (b) states in relevant part: “A privileged publication or broadcast is one
made: [¶] . . . [¶] (b) In any (1)
legislative proceeding, (2) judicial proceeding, (3) in any other official
proceeding authorized by law, or (4) in the initiation or course of any other
proceeding authorized by law . . . .”’
[Citation.] ‘“The principal
purpose of [Civil Code] section [47, subdivision (b)] is to afford litigants
and witnesses [citation] the utmost freedom of access to the courts without
fear of being harassed subsequently by derivative tort actions.” [Citation.]’”
(G.R. v. Intelligator (2010)
185 Cal.App.4th 606, 616-617.)
its demurrer, Newport Crest broadly asserted that all of Adams’s claims were
barred by the litigation privilege. However, it primarily focused its argument on
the claims concerning fraudulent inducement to enter the settlement
agreement. The trial court agreed that
the litigation privilege bars claims arising from the negotiation of the
settlement agreement.
On
appeal, Adams concedes that her first three causes of action are subject to the
litigation privilege. Consequently, she
abandons any argument with respect to those causes of action. Thus, where presettlement conduct is
concerned, only the fourth and fifth causes of action remain at issue.
Allegations of complaint
The fourth cause of
action in Adams’s first amended complaint was based on the lack of
participation of construction expert Salazar as promised in the settlement
agreement.
the purported presettlement concealment of the fact that Salazar had never seen
the settlement agreement, did not know that it contained performance
obligations on his part, and did not agree to undertake such obligations. The remaining paragraphs, notably 8.4 through
8.6, were based on the purported postsettlement concealment of the fact that
Salazar was not participating in the remediation of the property as agreed.
The fifth cause of
action was based on Newport Crest’s purported concealment of the fact that it
had unilaterally substituted Smith to do the work required of Salazar and had
not been pursuing remediation as required under the settlement agreement. Some of the allegations were based on
presettlement concealment and some of the allegations were based on
postsettlement concealment.
In maintaining that
Adams’s causes of action are barred by the litigation privilege, Newport Crest
relies in part on our decision in the Second
Appeal, supra,
of Case No. 07CC01390 as to three defendants, allegedly the attorneys for
Newport Crest in Case No. 05CC05516 (the legal counsel defendants). (Second
Appeal, supra,
a Code of Civil Procedure section 425.16 anti-SLAPP motion. We affirmed on the basis of the litigation
privilege. (Second Appeal, supra,
In our decision in the
observed that in the fourth and fifth causes of action Adams relied on both
presettlement conduct, pertaining to alleged fraud in the inducement, and
postsettlement conduct, pertaining to alleged concealment of the participation
of Smith not Salazar. Claims based on
the presettlement conduct, we observed, were barred by the litigation privilege
of Civil Code section 47, subdivision (b).
As we put it: “Where
presettlement conduct is concerned,
.
. . the litigation privilege of Civil Code section 47, subdivision (b)
applies. Postsettlement conduct is
another thing.” (Second Appeal, supra,
In the context of the
anti-SLAPP motion, we looked at whether Adams had met her burden to show a
probability of prevailing on her fourth and fifth causes of action on the basis
of postsettlement conduct. We examined
the evidence she provided with respect to the legal counsel defendants to make
that determination. (
“In short, Adams did not submit evidence of postsettlement conduct [of
the legal counsel defendants] that would demonstrate a probability of success
on the merits of the cause of action for fraudulent concealment. The trial court did not err in granting the
anti-SLAPP motion with respect to the fourth and fifth causes of action.” (Ibid.)
In this fourth appeal,
we must emphasize three things. First of
all, in our decision in the Second Appeal,
necessarily bar the fourth and fifth causes of action to the extent they were
based on postsettlement activity.
Second, the context of the anti-SLAPP motion required us to address the
probability that Adams would prevail on her claims, whereas that is not
something we do in the analysis of a demurrer.
Third, we examined the evidence Adams offered with respect to the legal
counsel defendants, not with respect to Newport Crest. In sum, nothing we said in our decision in
the Second Appeal,
Crest with respect to postsettlement activity.
We do not mean to imply
that Adams has a probability of prevailing on those causes of action against
Newport Crest. We only mean to say that
our decision in the Second Appeal,
the extent based on the postsettlement conduct of Newport Crest, are
necessarily barred.
In our decision in the
addition to addressing the fourth and fifth causes of action based on fraudulent
concealment, we addressed the causes of action for breach of the implied
covenant of good faith and fair dealing (sixth cause of action), conspiracy
(seventh cause of action), and intentional and negligent infliction of
emotional distress (eighth and ninth causes of action). With respect to the breach of the covenant of
good faith and fair dealing, we stated:
“Any postsettlement activities allegedly undertaken in furtherance of
the fraudulent plan fail because the legal counsel defendants cannot be held
liable for breaching, tortiously or otherwise, a contract to which they are not
parties.” (Ibid.) Newport Crest, of
course, is a party to the settlement agreement, so our analysis in the
to the maintenance of the cause of action against Newport Crest.
With respect to the
conspiracy cause of action, we stated that Adams did not meet her burden to
show a probability of prevailing on her cause of action with respect to
postsettlement conduct because she failed to cite to the record. (Second
Appeal, supra,
and negligent infliction of emotional distress, we held that Adams had waived
any arguments she had for failure to address those causes of action in her
briefing on appeal. Clearly our
analysis, in the Second Appeal,
application of the litigation privilege to postsettlement conduct in the
context of the causes of action for conspiracy and infliction of emotional
distress has no bearing upon the present appeal.
The Second Appeal, supra,
and eleventh causes of action, each for breach of the settlement
agreement. In the tenth cause of action,
Adams alleged that Newport Crest had breached a settlement agreement obligation
to remove a lien it recorded against her property. In the eleventh cause of action, she alleged
that Newport Crest had failed to comply with its settlement agreement
obligations with respect to the remediation of her personal property. Obviously, the alleged conduct is
postsettlement conduct. However, just
because the conduct arises out of a settlement agreement, that does not mean it
is subject to the litigation privilege.
Newport Crest, citing
our decision in the Second Appeal,
action, “intertwined” both presettlement conduct and postsettlement
conduct. In that decision, we stated “‘a
plaintiff cannot frustrate the purposes of the anti-SLAPP statute through a
pleading tactic of combining allegations of protected and nonprotected activity
under the label of one “cause of action.”’
(Footnote omitted.) [Citation.]” (Ibid.) However, the matter before us does not have
to do with an anti-SLAPP motion. It has
to do with a demurrer.
Leave to amend
As
we stated in Kruss v. Booth (2010)
185 Cal.App.4th 699, “‘When any court makes an order sustaining a demurrer
without leave to amend the question as to whether or not such court abused its
discretion in making such an order is open on appeal even though no request to
amend such pleading was made.’” (
where a demurrer has been sustained, in order to show that the trial court
abused its discretion in denying leave to amend.’” (Id. at
p. 712, fn. 13.)
In her
leave to further amend her complaint.
She says she will delete any references to the negotiation of the
settlement agreement and “cleanse the remaining causes of action of any facts
that might trigger the litigation privilege.”
Newport Crest insists
that this language is simply too vague.
It cites People ex rel. Brown v. Powerex Corp. (2007) 153 Cal.App.4th 93,
wherein the court stated, “the vague claim that ‘concerns’ could be
‘address[ed]’ by an amendment . . . does not satisfy an appellant’s duty to
spell out in his brief the specific proposed amendments on appeal. [Citations.]”
(Id. at p. 112.) Newport Crest says Adams has failed to meet
her burden to propose specific amendments.
We disagree, for two
reasons. For one, when the claimed
defect is that the first amended complaint is based upon both presettlement and
postsettlement conduct, the proposal to delete references to presettlement
conduct and base a second amended complaint only on postsettlement conduct is
sufficiently clear. Second, Newport
Crest ignores the fact that Adams has proposed seven pages of specific revisions.
We bristle against the
suggestion of cutting off a litigant’s claims because of inartful or sloppy
pleading. (See, e.g.,
7 Cal.3d 94, 103; MacIsaac v. Pozzo (1945)
26 Cal.2d 809, 815-816.) Rather, we liberally
construe his or her pleading with a view to achieving substantial justice. (Yue v.
City of Auburn (1992) 3 Cal.App.4th 751, 757.) Even if a litigant is inarticulate with
respect to the relief sought, he or she is “nevertheless entitled to any relief
warranted by the facts pleaded, and [the] failure to ask for the proper relief
is not fatal to [his or her] cause.
[Citations.]” (
815.)
“‘If
plaintiff has a good cause of action, which by accident or mistake he has
failed to set out in his complaint, the court . . . should, on his application
so to do, permit him to amend.’” (
815.) “The granting of the motion
without leave to amend would in many cases be an absolute denial of justice,
and is directly opposed to the policy of the law that cases should be tried and
decided on the merits.” (
On
remand, Adams shall be permitted to amend her complaint to frame causes of
action based on postsettlement conduct and the current state of facts.
ATTORNEY FEES:
In
the judgment of dismissal filed August 23, 2011, the court awarded Newport
Crest $37,336 in attorney fees and $8,972 in costs, plus interest thereon. Newport Crest maintains that it was entitled
to this attorney fees award because the settlement agreement provides for an
award of attorney fees to the prevailing party in any dispute concerning the
enforcement of the settlement agreement.
Indeed, Newport Crest reminds us that we have previously upheld an award
of attorney fees under this provision of the settlement agreement, in the
reverse the judgment of dismissal, the award of attorney fees and costs must
fall.
On
a separate note, both parties remind us of the peculiar procedural posture with
respect to the award of attorney fees and costs in this matter. The formal order sustaining the demurrer was
filed on May 27, 2011 and notice of entry of the order was served on June 15,
2011. Newport Crest filed is motion for
attorney fees on July 15, 2011. On
August 2, 2011, Adams filed her notice of appeal from a purported judgment of
dismissal. Eight days later, this court
ordered her to obtain a judgment.
The
trial court held a hearing on the attorney fees motion on August 15, 2011, and
awarded attorney fees at that time. The
formal order awarding attorney fees was filed on August 23, 2011, the same date
as the judgment of dismissal.
Newport
Crest aptly observes that the attorney fees award was not identified in Adams’s
notice of appeal. It also states that
Adams failed to provide a record supporting an appeal of the attorney fees
award and failed to cite legal authority supporting her argument that the award
should be reversed. All in all, Newport
Crest contends that the purported appeal from the attorney fees award should be
dismissed or deemed waived. Newport
Crest has some good points.
Nevertheless, we are not persuaded.
To the extent that
Newport Crest’s argument is construed as a motion to dismiss, it is defective
for failure to comply with California Rules of Court, rule 8.54. (
365, 387; cf. Kinney v. Overton (2007)
153 Cal.App.4th 482, 497, fn. 7.)
Moreover, the actions of this court inadvertently placed Adams in an
awkward procedural situation. This court
ordered Adams to obtain a judgment of dismissal after an order sustaining the
demurrer without leave to amend. The
judgment that was entered thereafter included an attorney fees award, when
Adams had already filed her notice of appeal.
It would be a curious thing to hold that Adams was required to file a
second notice of appeal from the same judgment in order to challenge the portion
thereof containing the attorney fees award.
Newport Crest cites no legal authority for the proposition that Adams’s
challenge to the attorney fees award must be dismissed under the peculiar
procedural posture of this appeal. That
being the case, we decline the invitation to dismiss.
Where
the waiver argument is concerned, the record on appeal is sufficient for our
determination. We need only see the
judgment containing an attorney fees award and our decision in the
we addressed the settlement agreement provision containing the attorney fees
clause. It is axiomatic that if Newport
Crest is not the prevailing party, it is not entitled to attorney fees under
the settlement agreement. Adams need not
cite legal authorities in support of this point.
Inasmuch
as we reverse the judgment in this matter, we also reject Newport Crest’s
request for attorney fees on appeal.
III
DISPOSITION
The
November 23, 2011 motion to take evidence on appeal or to take judicial notice
is denied. The June 11, 2012 motion to
augment and to take judicial notice is denied.
The June 15, 2012 request for judicial notice is denied. The judgment is reversed. The matter is remanded for further
proceedings consistent with this opinion.
Adams shall recover her costs on appeal.
MOORE,
J.
WE
CONCUR:
RYLAARSDAM,
ACTING P. J.
ARONSON,
J.
name="_ftn1" title="">[1] By order of June 7, 2012, this court
notified the parties of its intention to take judicial notice of the opinion
filed in that case and gave them an opportunity to object. No party having objected, we took notice of
that opinion by order filed June 14, 2012.
name="_ftn2" title="">[2] We resist the temptation to comment on
Adams’s tendency to split causes of action.
We leave that discussion for another day.
