Filed 9/23/26 NCP Imperial v. L.A. County Flood Control Dist. CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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not been certified for publication or ordered published for purposes of rule 8.1115.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
SECOND APPELLATE DISTRICT
DIVISION TWO
NCP IMPERIAL, LLC, et al., B334618, B336982
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. 23NWCV01150)
v.
LOS ANGELES COUNTY
FLOOD CONTROL DISTRICT,
Defendant and
Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Olivia Rosales, Judge. Reversed and remanded.
Anderson, McPharlin & Conners LLP, William R. Larr and
Ali Z. Vaqar for Plaintiffs and Appellants.
Nossaman LLP, Patrick J. Richard and Nathan Guttman
for Defendant and Respondent.
NCP Imperial, LLC, and Family Property Holdings, LLC
(appellants), filed an inverse condemnation case seeking
compensation from Los Angeles County Flood Control District
(County) and the Department of State Hospitals (DSH) for an
underground drainage pipe running through their real property.
After the trial court found appellants lacked standing, the parties
stipulated to judgment seeking to facilitate appellants’ appeal.
While that appeal was pending, appellants filed this action
against the County for quiet title and declaratory relief and
dismissed the pending appeal. The County demurred to the
complaint on grounds that res judicata barred appellants from
relitigating any claims based on the underground drainage pipe.
The trial court agreed and sustained the demurrer without leave
to amend.
We reverse because the judgment in the prior inverse
condemnation action expressly excluded from the disposition
questions other than standing from disposition.
FACTUAL AND PROCEDURAL BACKGROUND
When reviewing an order sustaining a demurrer, we treat
the facts alleged in the operative complaint and judicially noticed
documents as true.1 (Brown v. Deutsche Bank National Trust Co.
(2016) 247 Cal.App.4th 275, 279.)
I. Prior inverse condemnation action
A. Allegations
Appellants sued County and DSH (collectively, defendants).
The operative first amended complaint filed in April 2022 (L.A.
Super. Ct. No. 21STCV37773) contained one cause of action for
inverse condemnation.
1 On March 7, 2024, we granted appellants’ request for
judicial notice dated February 2, 2024.
2
Appellants are fee owners of 7.24 acres of real property
located at 12501 Imperial Highway in Norwalk (Property). The
Property is improved with a six-story office building. Appellants
subdivided the Property into lots 5 to 8 for development.
The Property is bordered by two parcels of land: on the
north (North Parcel) the land is owned by the State of California
(State) and includes the Metropolitan State Hospital; on the west
(West Parcel) the Property is improved with condominiums. A
78-inch reinforced concrete sewer pipeline (Pipeline), built by the
DSH in 1968, runs from the North Parcel to the West Parcel.
The Pipeline then travels under the Property for 339 feet and
terminates south of the Property at a catch basin under Imperial
Highway.
DSH previously owned the Property and the West Parcel.
In 1976, DSH conveyed the Property by quitclaim deed that did
not reserve any easement rights to the Pipeline running under
the Property. DSH allegedly abandoned any right, title, or
interest to the Pipeline.
Appellants acquired the Property in 2018 intending to
redevelop the Property. They then discovered defendants had
connected a 102-inch pipeline to a 78-inch piece of the Pipeline
for the latter to handle storm water overflow as part of the
Bloomfield Drain Project. Defendants’ connection of the two
pipelines was purportedly done without legal right, title,
permission, or consent after DSH failed to reserve any interest in
the Pipeline.
The use of the Pipeline interfered with appellants’ ability to
develop the Property because they must comply with the County
of Los Angeles’ stringent permitting process before defendants
allow them to redevelop the Property. In the inverse
3
condemnation case, appellants sought compensation for the
alleged taking by defendants.
B. Demurrer, stipulated judgment, and appeal
DSH demurred to the first amended complaint, arguing
appellants lacked standing to sue for inverse condemnation
because they did not own the Property at the time the Pipeline
was connected to the Bloomfield Drain Project. The trial court
sustained the demurrer without leave to amend.
Prior to the trial court’s ruling on the demurrer, the County
moved for summary judgment on the same grounds asserted by
DSH in its demurrer. Appellants sought to appeal the court’s
order on the DSH’s demurrer. To facilitate appeal, the parties
stipulated to entry of judgment for the purpose to “hasten[]
review in the Court of Appeal” and to “forgo[] unnecessary court
time and expense of proceeding with the County’s MSJ in order to
obtain an appealable judgment following the Court’s adverse
determination of a critical issue (i.e., that the Plaintiffs lack
standing).” The stipulation included the parties “have further
agreed and confirmed that this Judgment is not intended to, and
this Court confirms that this Judgment does not, settle any
dispute between any of the parties hereto.”
In its judgment, the trial court incorporated the parties’
stipulations by reference, determined appellants lacked standing
against both the County and DSH, and vacated the County’s
summary judgment motion. The court decreed the judgment was
“entered without trial and without adjudication of any issue of
fact or law other than as may be set forth herein” and “entered
for the sole purpose of expediting appellate review.”
On February 3, 2023, appellants filed a notice of appeal
from the stipulated judgment. While the appeal was pending,
4
appellants filed a complaint for quiet title and declaratory relief.
On June 14, 2023, the appeal was dismissed at appellants’
request.
II. Current quiet title action
A. Allegations
On April 14, 2023, appellants sued the County for quiet
title and declaratory relief causes of action. The operative
complaint involves the same Property, the same surrounding
North and West Parcels previously owned by DSH, and the same
78-inch and 102-inch pipe running under the parcels.
The allegations in this quiet title action are mostly
consistent with the allegations in the inverse condemnation
action. Appellants again allege when the DSH conveyed the
Property in 1976, it did not reserve any easement rights for the
Pipeline running through the Property. In or about 1990, the
County started directing storm waters from the hospital and
other properties north of the North Parcel to a newly constructed
102-inch pipeline known as the Bloomfield Drain. Due to the
new 102-inch pipeline, DSH and the County no longer claim any
ownership of, or right to continue use, of the Pipeline.
The County still asserts a right to use the Pipeline on an
intermittent and infrequent basis for storm water overflow from
the Bloomfield Drain. Appellants maintain that the County’s
claim on the Pipeline is without basis, as it never obtained a
written conveyance of easement rights on the Property, never
held any recorded rights on the Property, and holds no interest in
the Property. Appellants urge the County’s claim interferes with
appellants’ efforts to redevelop the Property.
Appellants seek a judgment quieting their title to the
Property in fee simple, free from any adverse claim by the
5
County, as well as a declaration of the rights, duties, and
obligations of the parties in the action.
B. Demurrer, judgment, and appeal
The County demurred to the quiet title complaint,
asserting that it was barred by res judicata based on the
disposition of the prior inverse condemnation action. The County
argued the dismissal of the appeal in the prior action finalized
the judgment for purposes of res judicata.
On November 7, 2023, the trial court sustained the
demurrer without leave to amend, finding the judgment in the
prior action was on the merits because the court had found
appellants failed to plead an element of inverse condemnation,
specifically its ownership of the Property. The court also
determined that appellants’ failure to include the quiet title and
declaratory relief claims in the prior action precluded the
assertion of those claims in the quiet title action because both
actions involved the same parties and the same drainage pipe.
The court also rejected appellants’ contention that application of
res judicata would promote fundamental unfairness.
On February 13, 2024, judgment was entered in favor of
the County and notice of its entry was served. Appellants timely
appealed.2
2 This appeal is consolidated with the appeal in B336982. In
this appeal (B334618), appellants appealed the November 7, 2023
order sustaining the demurrer without leave to amend. In
B336982, appellants appealed the February 13, 2024 judgment of
dismissal. On May 3, 2024, the two appeals were consolidated
pursuant to the parties’ stipulation. B334618 has been
designated the lead case. We treat the notice of appeal in
B334618 as a premature notice of appeal from the February 13,
2024 judgment. (Cal. Rules of Court, rule 8.104(d)(2).)
6
We conclude that res judicata does not apply here because
the parties excluded issues other than appellants’ inverse
condemnation standing from the stipulated judgment in the
earlier inverse condemnation action. We therefore reverse and
remand.
DISCUSSION
I. Standard of review
Once a demurrer is sustained and judgment of dismissal is
entered, we determine de novo whether the complaint states a
cause of action. (Folgelstrom v. Lamps Plus, Inc. (2011) 195
Cal.App.4th 986, 989.) We review a denial of leave to amend for
abuse of discretion. (Saterbak v. JPMorgan Chase Bank, N.A.
(2016) 245 Cal.App.4th 808, 813.) “We review a dismissal on
grounds of res judicata de novo as an issue of law.” (Guerrero v.
Department of Corrections & Rehabilitation (2018) 28
Cal.App.5th 1091, 1098.)
II. Doctrine of res judicata
The doctrine of res judicata has two aspects. The first,
called claim preclusion, “prevents relitigation of the same cause
of action in a second suit between the same parties or parties in
privity with them.” (Mycogen Corp. v. Monsanto Co. (2002) 28
Cal.4th 888, 896 (Mycogen).) The second aspect of res judicata,
called collateral estoppel or issue preclusion, “‘precludes
relitigation of issues argued and decided in prior proceedings.’”
(Ibid.)
Here, the trial court found the claim preclusion aspect of
res judicata applied. Claim preclusion bars a plaintiff from
bringing a second lawsuit on an identical cause of action that has
already been litigated to judgment. (Mycogen, supra, 28 Cal.4th
at p. 904.) Claim preclusion also “extends to all legal theories,
7
proofs, and demands for relief that might have been presented in
the first matter, provided both suits assert the same cause of
action.” (Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509,
541, fn. 21, italics omitted.) The purpose of claim preclusion is
“to limit the burden a plaintiff may impose upon the judicial
system and upon prospective defendants on account of a single
injury.” (Id. at p. 531.)
Whether two cases involve the same causes of action
involves the application of the “primary rights” theory. (Boeken
v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 797.) Under the
theory, “the determinative factor is the harm suffered.” (Id. at
p. 798.) Accordingly, “[F]or purposes of applying the doctrine of
res judicata, the phrase ‘cause of action’ has a more precise
meaning: The cause of action is the right to obtain redress for a
harm suffered, regardless of the specific remedy sought or the
legal theory (common law or statutory) advanced.” (Ibid.)
“Claim preclusion arises if a second suit involves (1) the
same cause of action (2) between the same parties (3) after a final
judgment on the merits in the first suit.” (DKN Holdings LLC v.
Faerber (2015) 61 Cal.4th 813, 824 (DKN Holdings).)
III. Res judicata does not apply to this action
In their briefing, the parties focus on whether the inverse
condemnation action and the quiet title action involve the same
primary right, whether the judgment in the first action
constitutes a judgment on the merits, and whether application of
res judicata was fundamentally unfair. We find it unnecessary to
address these issues because, as appellants argue, the parties
here agreed to exclude questions other than whether appellants
had standing to assert an inverse condemnation claim from the
stipulated judgment in the first action. Accordingly, even if all
8
three elements of res judicata were satisfied, res judicata still
would not apply to the quiet title and declaratory relief claims in
this action.
A stipulated judgment has the same res judicata effect as a
judgment after a contested trial. (Warga v. Cooper (1996) 44
Cal.App.4th 371, 377.) However, “it is axiomatic that its res
judicata effect extends only to those issues embraced within the
consent judgment. [Citations.] Thus, while a stipulated
judgment normally concludes all matters put into issue by the
pleadings, the parties can agree to restrict its scope by expressly
withdrawing an issue from the consent judgment.” (Ellena v.
State of California (1977) 69 Cal.App.3d 245, 260 (Ellena).)
Louie v. BFS Retail & Commercial Operations, LLC (2009)
178 Cal.App.4th 1544 (Louie) illustrates the point. There, a
consent decree resolved claims for injunctive and declaratory
relief but expressly reserved any claim for damages. (Id. at
p. 1547.) The court held that res judicata did not bar a later
damages action because the reserved claim had been withdrawn
from the judgment’s scope. (Id. at pp. 1557–1560.)
One of the cases cited in Louie was Miller & Lux, Inc. v.
James (1919) 180 Cal. 38 (Miller & Lux). In Miller & Lux, the
parties stipulated that plaintiffs could divert 760 cubic feet from
a river and that the stipulation could not be used to prove a
diversion above that amount. (Id. at pp. 40, 42.) Our Supreme
Court found that res judicata did not bar the plaintiffs from
seeking to divert more water in a subsequent lawsuit because the
parties had withheld the issue of whether the plaintiffs could use
more than 760 cubic feet from the judgment. (Id. at p. 44.)
Here, in the prior inverse condemnation action, the parties
agreed to the judgment to facilitate an appeal concerning
9
whether appellants lacked standing. The parties further agreed
that judgment did not settle any dispute between the parties.
The trial court incorporated the parties’ agreements into its
judgment and entered the judgment “without adjudication of any
issue of fact or law other than as may be set forth herein.”
Consequently, the judgment in the first action expressly excluded
resolution of any claim or issue other than whether appellants
had standing to assert an inverse condemnation claim.
The County contends that by arguing the stipulated
judgment only dealt with one element of inverse condemnation,
appellants are conflating claim preclusion with issue preclusion,
as claim preclusion applies to claims that could have been raised
in a prior action but were not. While claim preclusion has been
confused with issue preclusion (DKN Holdings, supra, 61 Cal.4th
at pp. 823–825), claim preclusion nevertheless does not apply
here because the parties expressly withheld nonstanding issues
from the scope of the judgment. That the withheld claims could
have been asserted in the first action does not change the
analysis; claim preclusion does not reach claims the parties
expressly agreed to exclude from the judgment’s scope.
The County relies on cases barring a later suit to quiet title
where the plaintiff had earlier litigated over the same property.
But none of these involved a stipulated judgment in which the
parties mutually agreed to withdraw every issue but one from the
judgment’s scope.
In Weikel v. TCW Realty Fund II Holding Co. (1997) 55
Cal.App.4th 1234, 1249, the court barred claims plaintiff had left
out of an earlier action but “could have been litigated therein.”
That is the ordinary rule against unilateral claim-splitting. It
does not apply to claims both parties expressly agreed to
10
withdraw from a stipulated judgment. Cade v. Superior Court
(1961) 191 Cal.App.2d 554 and Myers v. Superior Court (1946) 75
Cal.App.2d 925 are not claim preclusion cases at all. Each
concerned the rule of exclusive concurrent jurisdiction: which of
two courts may proceed when related actions are pending in
different counties. Neither addressed the preclusive effect of a
final judgment. (Cade, at p. 559; Myers, at p. 930.)
In Miller & Lux, the Supreme Court explained that the
purpose of res judicata “is to prevent vexatious litigation and to
require the parties to rest upon one decision in their controversy,
but where they expressly agreed to withdraw an issue from the
court, the reason for the rule ceases.” (Miller & Lux, supra, 180
Cal. at p. 44.) “If they consent to adjudicate their differences
piecemeal, there is no reason that the court should extend the
rules of law to prevent that which they had expressly agreed
might be done.” (Ibid.)
Thus, when the parties agree to exclude a claim from a
judgment, the Supreme Court has held that no party can seek to
preclude subsequent litigation of the claim by invoking claim
preclusion. (See also Code Civ. Proc., § 1911 [“That only is
deemed to have been adjudged in a former judgment which
appears upon its face to have been so adjudged, or which was
actually and necessarily included therein or necessary thereto.”].)
If we were to agree with the County’s view of claim preclusion,
parties to a lawsuit could never agree to limit the scope of a
stipulated judgment, as a party could successfully preclude from
a subsequent lawsuit a claim expressly omitted from a stipulated
judgment by invoking claim preclusion.
Because of the parties’ agreement, appellants were entitled
to dismiss the appeal from the judgment in the first action,
11
abandon their inverse condemnation claim, and proceed with the
quiet title and declaratory relief claims in this action.
Accordingly, we reverse the judgment of dismissal entered in
favor of the County in this action.
DISPOSITION
The judgment is reversed. The trial court is ordered to
vacate the judgment of dismissal entered in favor of respondent
Los Angeles County Flood Control District and enter an order
overruling respondent’s demurrer. Appellants NCP Imperial,
LLC, and Family Property Holdings, LLC, shall recover their
costs on appeal.
CHAVEZ, J.
We concur:
LUI, P. J.
GOORVITCH, J.
12