Affair
With Plants and Flowers v. Trussnet
Filed 2/10/12 An Affair With Plants and Flowers v. Trussnet
USA CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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 TWO
AN
AFFAIR WITH PLANTS AND FLOWERS, INC.,
Plaintiff and Appellant,
v.
TRUSSNET
USA INC. et al.,
Defendants and Respondents.
E052884
(Super.Ct.No. INC10000241)
O P I N I O N
APPEAL from the Superior Court of
County. Harold W. Hopp,
Judge. Affirmed with directions.
Scott Harlow for Plaintiff and
Appellant.
Law Offices of Mark C. Fields and Mark
C. Fields for Defendants and Respondents.
I. INTRODUCTION
Plaintiff and
appellant, An Affair With Plants and Flowers, Inc. (An Affair), filed the
present action against eight named defendants,
judgment on the pleadings on the ground the complaint failed to state a cause
of action. (Code Civ. Proc., § 438,
subd. (c)(1)(B)(ii).) The trial court
granted the motion, and An Affair appeals.
We
affirm. The complaint against the Truss
defendants is barred by the doctrine of res judicata or claim preclusion, and
was properly dismissed. But the order
granting the Truss defendants’ motion for judgment on the pleadings dismissed
the complaint against all of the defendants, including five named defendants
who were not parties to the Truss defendants’ motion. This appears to have been inadvertent. We therefore affirm the order granting the
motion with directions to vacate the dismissal of the complaint against all
defendants other than the three Truss defendants.
II. FACTS AND PROCEDURAL BACKGROUND
A. The
Settlement Agreement and Judgment in the Prior Action
In their
the Truss defendants claimed the present complaint against them was barred by
the doctrine of collateral estoppel because An Affair had already obtained a
judgment for $100,000 against three other parties based on the same underlying
claims asserted in its present complaint.
The judicially noticed records in a prior action, namely, Riverside
County Superior Court case No. INC066099, shows the judgment was obtained
against California Cove Communities, Inc. (CCC), California Cove at LaQuinta,
Inc. (CC LaQuinta), and Las Ventanas at LaQuinta, LLC (collectively the
original judgment debtors).
In the prior
action, An Affair alleged that CCC breached oral and written contracts to pay
it approximately $280,000 for landscaping and irrigation materials and services
that An Affair provided to CCC on a development project known as Las Ventanas
in LaQuinta during 2005 and 2006. CCC
disputed the quality of the materials and services provided.
In September
2007, An Affair entered into a settlement
agreement with CCC and the two other original judgment debtors. CCC agreed to pay An Affair $120,000 and paid
an initial installment of $20,000, but failed to pay the $100,000 balance when
due on December 31,
2007.
An Affair
enforced the settlement agreement by obtaining a judgment in the prior action
against the original judgment debtors in the principal sum of $100,000. (Code Civ. Proc., § 664.6.) In March 2008, An Affair assigned the
judgment to its chief financial officer, Michael Petersen, who had negotiated
the settlement agreement with the
original judgment debtors. Petersen
conducted postjudgment discovery.
B. Petersen’s
Postjudgment Motion in the Prior Action
to Add Judgment Debtors
In September
2008, Petersen filed a postjudgment motion in the prior action to amend the
judgment to add nine additional judgment debtors. Petersen claimed the nine additional proposed
judgment debtors were alter egos of CCC and CC LaQuinta, and as such were
liable for the judgment amount. (Code
Civ. Proc., § 187; Hall, Goodhue,
Haisley & Barker, Inc. v. Marconi Conf. Center Bd. (1996) 41
Cal.App.4th 1551, 1554-1555.) “Amendment
of a judgment to add an alter ego ‘is an equitable procedure based on the
theory that the court is not amending the judgment to add a new defendant but
is merely inserting the correct name of the real defendant.’†(Carr
v. Barnabey’s Hotel Corp. (1994) 23 Cal.App.4th 14, 21-22.)
The trial
court denied Petersen’s motion on the ground he failed to establish by a
preponderance of admissible evidence
that any of the alleged alter egos controlled the litigation against the
original judgment debtors. Petersen
appealed, and in a nonpublished opinion this court affirmed the order denying
his motion. (Petersen v. California Cove Communities, Inc. (Feb. 25, 2010, E047497) [nonpub. opn.].)
C. This
Court’s Opinion in the Prior Action
In our opinion
in the prior action, we indicated that much of the evidence Petersen adduced to
establish that the proposed additional judgment debtors were the alter egos of
CCC or CC La Quinta, and had manipulated its assets to their personal benefit
was, as the defendants claimed, “a world-class collection of hearsay, double
hearsay, and documents lacking either foundation, authentication and/or
relevance.†Petersen claimed, among
other things, that insufficient evidence supported the order denying his
motion. He also claimed the court
prejudicially erred in failing to rule on defendants’ hearsay and other
evidentiary objections to the declarations he filed in support of the
motion.
We rejected
Petersen’s claims and concluded that substantial evidence supported the court’s
determination that Peterson failed to meet his burden of showing that any of
the proposed judgment debtors, including the Truss defendants, were virtually
represented in the litigation against CCC as though their own liability were at
stake. We explained that even if
Petersen had established—with competent, admissible evidence—that any of the
proposed judgment debtors were the alter egos of CCC and manipulated CCC’s
assets to the detriment of its creditors, he adduced no evidence that any of the proposed judgment debtors, including
the Truss defendants, were “virtually represented†in the litigation or
controlled the litigation as though their own liability were at stake. (NEC
Electronics Inc. v. Hurt (1989) 208 Cal.App.3d 772, 777-779.)
As we
explained, a judgment creditor may meet its evidentiary burden of showing that
a proposed additional judgment debtor was an alter ego of an original judgment
debtor and manipulated the assets of the original judgment debtor to the
detriment of creditors, yet fail to establish the “virtual representation†or
requirement of due process, which is a necessary prerequisite to adding an
additional judgment debtor. We
said: “[D]ue process requires
additional judgment debtor have controlled the litigation that resulted in the
judgment, it also requires the alter ego to have been sufficiently motivated to
defend the litigation as though his or her personal liability was at
stake. In other words, the interests of
the alter ego and the original judgment debtor must have substantially
coincided. Otherwise, it cannot be said
that the alter ego was ‘virtually represented’ in the litigation, even if the
alter ego controlled that litigation on behalf of the original judgment
debtor.â€
D. An
Affair’s Complaint in the Present
Action
In its
complaint in the present action, An Affair alleged that the three Truss
defendants, plus three other persons Petersen attempted to add as judgment
debtors to the judgment, namely, Luis Raphael Trujillo, George Alvarez, and
California Cove at Hawaii LLC, plus two persons who were not named in
Petersen’s motion, namely, Christopher B. Young and Mario Alvarez, were alter
egos of CCC and on that basis were liable to An Affair for approximately
$215,000 in landscaping and irrigation materials and services that An Affair
provided to CCC during 2005 and 2006.
The complaint does not mention the settlement agreement or $100,000
judgment in the prior action, Petersen’s unsuccessful motion to add six of the
eight defendants in the present action as additional judgment debtors, or this
court’s opinion in the prior action affirming the order denying Petersen’s
motion.
E. The
Truss Defendants’ Motion for Judgment on the Pleadings
The Truss defendants’ motion for
judgment on the pleadings asserted that the complaint failed to state a cause
of action (Code Civ. Proc., § 438, subd. (c)(1)(B)(ii)), and was based on
three grounds: (1) An Affair had already
obtained a judgment on its underlying claims in the present action; (2) An
Affair had already assigned the judgment to Petersen and therefore lacked
standing to pursue the present action; and (3) Petersen’s postjudgment motion
to add additional judgment debtors had been denied by the trial court, and that
denial had been affirmed by this appellate court.
F. The
Trial Court’s Ruling
In its order
granting the motion, the trial court noted that An Affair had obtained a
judgment on its “underlying claims†pursuant to the settlement agreement, and
was “left the rights obtained in the settlement agreement.†The court also pointed out that issues of the
Truss defendants’ alter ego or liability as additional judgment debtors had
been “litigated before the trial court and court of appeal.â€
Accordingly,
the trial court ordered the complaint dismissed. The court did not specify that the complaint
was to be dismissed against only the moving party Truss defendants, though this
was implicit in the court’s order. The
register of actions indicates, however, that the “entire action†was dismissed
“without prejudice†against all defendants, including five named defendants who
were not parties to the Truss defendants’ motion.
III. DISCUSSION
A. An
Affair’s Contentions on Appeal
An Affair claims the trial court (1)
erroneously concluded that An Affair’s present claims against the Truss
defendants were barred, because in the prior action, neither the trial court
nor this court ruled on whether the Truss defendants were alter egos of CCC or
CC LaQuinta, and (2) erroneously dismissed the complaint against Mario Alvarez
and Christopher B. Young, because Petersen did not seek to add either of these
persons as additional judgment debtors in his postjudgment motion in the prior
action.
We reject the
first claim; however, we agree that the complaint was erroneously (and
apparently inadvertently) dismissed against Mario Alvarez, Christopher B.
Young, and the other named defendants who were not parties to the Truss
defendants’ motion.
B. Standard
of Review
A motion for judgment on the
pleadings is equivalent to a general demurrer, but is filed after the time for
filing a demurrer has expired. (
(f).) “Like a general demurrer, a motion
for judgment on the pleadings tests the sufficiency of the complaint to state a
cause of action.†(Miller v. Campbell, Warburton, Fitzsimmons, Smith, Mendel & Pastore
(2008) 162 Cal.App.4th 1331, 1337.) The
court assumes the truth of all factual allegations in the complaint, along with
matters subject to judicial notice. (
We independently review an
order granting a motion for judgment on the pleadings. (Bezirdjian
v. O’Reilly (2010) 183 Cal.App.4th 316, 321.)
C. An
Affair’s Present Claims Against the Truss Defendants are Barred by the Doctrine
of Res Judicata or Claim Preclusion
In its
complaint in the present action, An Affair seeks to recover around $215,000
from the Truss defendants for landscaping and other materials and services it
provided to CCC on the LaQuinta project during 2005 and 2006, on the ground the
Truss defendants are alter egos of CCC and are therefore liable for its
debts. In the prior action, An Affair
sued CCC on the same primary right or claim, settled the claim for $120,000,
and obtained a $100,000 judgment on the settlement agreement against CCC, CC
LaQuinta, and Las Ventanas at LaQuinta, after CCC failed to pay the $100,000
balance due on the settlement agreement.
(Code Civ. Proc., § 664.6.)
An Affair then
assigned the judgment to Petersen, who in the prior action filed a postjudgment
motion seeking to name the Truss defendants, among others, as judgment debtors
on the $100,000 judgment, on the ground they were the alter egos of CCC and CC
LaQuinta. The motion was denied, and on
appeal this court affirmed the order denying the motion. In our opinion in the prior action, we
explained that Petersen presented no evidence that any of the alleged alter ego
defendants, including the Truss defendants, were “virtually represented†in the
litigation against CCC in the prior action or controlled the litigation as
though their own liability were at stake—even if Petersen could show that any
of the alleged alter ego defendants were, in fact, alter egos of CCC or CC
LaQuinta. (NEC Electronics Inc. v. Hurt, supra, 208 Cal.App.3d at pp.
777-779.)
“Res judicata
is a doctrine which prevents parties from relitigating a cause of action
previously determined between them.†(
1189, 1193.) Under state law, a cause of
action is based on the violation of a single primary right, rather than on the
particular theory upon which recovery is sought (e.g., breach of contract,
quantum meruit). (Bay Cities Paving & Grading, Inc. v. Lawyers’ Mutual Ins. Co.
(1993) 5 Cal.4th 854, 860.)
As the
assignor and privy of Petersen, the doctrine of res judicata bars An Affair
from reasserting in the present action the same primary right or claim against
the Truss defendants that Petersen unsuccessfully asserted against them in his
postjudgment motion in the prior action—namely, that the Truss defendants are
liable to An Affair for CCC’s unpaid debt on the LaQuinta project, based on
their status as alter egos of CCC. (See
(2003) 111 Cal.App.4th 1077, 1082.)
“The
primary aspect of res judicata is sometimes referred to as ‘“claim
preclusionâ€â€™; the secondary aspect is referred to as ‘collateral estoppel’ or
‘“issue preclusion.â€â€™ [Citation.] “‘The rule of claim preclusion, [citation],
is that a party ordinarily may not assert a civil claim arising from a
transaction with respect to which he has already prosecuted such a claim,
whether or not the two claims wholly correspond to each other. The rule of issue preclusion, sometimes
referred to as collateral estoppel [citation], is that a party ordinarily may
not relitigate an issue that he fully and fairly litigated on a previous
occasion.â€â€™ [Citation.]†(Benasra
v. Mitchell Silberberg & Knupp (2002)
96 Cal.App.4th 96, 104.)
An Affair’s present claims
against the Truss defendants are barred by the doctrine of claim
preclusion. As indicated: “‘The principle underlying the rule of claim
preclusion is that a party who once has
had a chance to litigate a claim before an appropriate tribunal usually
ought not to have another chance to do so.
A related but narrower principle—that one who has actually litigated an issue should not be allowed to relitigate
it—underlies the rule of issue preclusion.’â€
(7 Witkin, Cal. Procedure (5th ed. 2008) Judgment, § 338, p. 942,
italics added.)
“‘The law of res judicata
expresses the terms for assessing whether the procedural system afforded the
contending party an adequate opportunity to litigate. In the now accepted phrase, the question is
whether that opportunity was “full and fair.â€
Modern civil procedure usually does provide full and fair freedom to
present substantive contentions and full and fair access to evidence.’†(7 Witkin, Cal. Procedure,
942.) By contrast, “[r]es judicata
principles should not apply where the ‘scope of substantive inquiry and the
potential for development of evidence are much more restricted than the
corresponding opportunity afforded in a court of general
jurisdiction. . . .’†(
(1995) 37 Cal.App.4th 642, 650, quoting Rest.2d Judgments, ch. 1, p. 10.)
Through his postjudgment
motion in the prior action, Petersen, as the assignee of An Affair, had every
chance to litigate the claim that the Truss defendants were liable on the
judgment that an Affair obtained against CCC in the prior action. Moreover, Petersen chose to pursue his claims
against the Truss defendants through his postjudment motion in the prior
action, rather than file a separate action against the Truss defendants, as he could
have done. Accordingly, An Affair should
not be heard to complain that Petersen did not have a full and fair opportunity
to develop the necessary evidence to support his claim in the prior
action. Moreover, An Affair, as the
assignor and privy of Petersen, is precluded from relitigating the same claim
in the present action.
An Affair
maintains it is not barred from asserting its breach of contract claims against
the Truss defendants because, in the prior action, neither the trial court nor
this court actually determined whether the Truss defendants were alter egos of
CCC or CC LaQuinta. This argument misses
the point of claim preclusion. An
Affair, through its assignee, Petersen, had a full and fair opportunity in the
prior action to litigate its claim that the Truss defendants were liable on the
judgment. An Affair is therefore
precluded from relitigating this entire
claim in the present action—regardless of whether the subsidiary issue of
whether the Truss defendants were alter egos of CCC or CC La Quinta was
actually determined in the prior action.
In our opinion
in the prior appeal we concluded that the Truss defendants could not be named
as additional judgment debtors because Petersen adduced no evidence that the
Truss defendants, or any of the other proposed judgment debtors, were virtually
represented in the litigation against CCC or were motivated to defend the
litigation as though their personal liability were at stake. (NEC
Electronics Inc. v. Hurt, supra, 208 Cal.App.3d at pp. 777-779.) It was therefore unnecessary for either the
trial court in the prior action or this court to actually determine whether the
Truss defendants were alter egos of CCC or CC La Quinta, in order to rule on
the entire claim.
name="_ftnref6" title="">[6]
D. The
Complaint Was Erroneously (and Apparently Inadvertently) Dismissed Against
Several Named Defendants Who Were Not Before the Court on the Motion
An Affair
argues the trial court erroneously dismissed the complaint against Mario
Alvarez and Christopher B. Young because Petersen did not seek to add either of
these defendants as additional judgment debtors in his postjudgment motion in
the prior action. We agree the complaint
was erroneously dismissed against these defendants but for a more fundamental
reason: neither was a party to the Truss
defendants’ motion. In fact, the
complaint appears to have been inadvertently dismissed against these two
defendants and the three other named defendants who were not parties to the
motion, namely, Luis Raphael Trujillo, Mario Alvarez, and California Cove at
Hawaii LLC.
The order granting
the Truss defendants’ motion was filed on November 16, 2010, following the
October 4, 2010, hearing on the motion.
The order dismissed the complaint without specifying whether it was to
be dismissed solely against the three moving party Truss defendants, though
that was implicit in the order granting the motion. Nevertheless, the register of actions shows
that on November 16, the date the order was filed, the “entire action†was
dismissed without prejudice.
At the
conclusion of the October 4 hearing, the trial court indicated it did not
intend to dismiss the complaint against any defendants other than the moving
party Truss defendants. This became
evident when counsel for the Truss defendants asked the court to vacate the
trial date and set a case management conference on the ground the complaint had
not been served or had only recently been served on the other defendants. The court told counsel to make an appropriate
motion to change the trial date because the court was not “changing anything
today without the parties that are not represented here. That’s an improper ex parte.â€
We recognize
that a trial court has inherent authority to dismiss, on its own motion, a
complaint that fails to state a cause of action. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter
Group 2011) ¶ 7.370, p. 7(1)-86.) But
this was apparently not the reason the complaint was dismissed against the five
named defendants who were not parties to the motion. Rather, the dismissal against these defendants
appears to have been inadvertent.
In any event,
the complaint was improperly dismissed against the defendants who were not
parties to the motion. The issue on the
Truss defendants’ motion was whether the complaint stated a cause of action
against the Truss defendants—not whether the complaint stated a cause of action
against any of the other defendants.
IV. DISPOSITION
The order
granting the Truss defendants’ motion for judgment on the pleadings and
dismissing the complaint against the Truss defendants is affirmed. The matter is remanded to the trial court
with directions to vacate the apparently inadvertent dismissal of the complaint
against the other five named defendants who did not join and were not parties
to the Truss defendants’ motion. This
disposition is without prejudice to any other order dismissing the complaint
against any of the other defendants. The
parties shall bear their respective costs on appeal.
NOT
TO BE PUBLISHED IN OFFICIAL REPORTS
/s/ King
J.
We concur:
/s/ McKinster
Acting P.J.
/s/ Miller
J.
name="_ftn1" title=""> [1] The eight named defendants in the present
action are Luis Raphael Trujillo, George Alvarez, Christopher B. Young, Mario
Alvarez, Trussnet USA, Inc., Trussgroup Limited, Trussnet USA Development Co.
Inc., and California Cove at Hawaii, LLC.
name="_ftn2" title=""> [2] The Truss defendants are Trussnet USA, Inc., Trussgroup Limited, and
Trussnet USA Development Co., Inc.
