Nopuente v. Choy
Filed 1/31/14
Nopuente v. Choy CA1/5
NOT
TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115.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
FIRST
APPELLATE DISTRICT
DIVISION
FIVE
ISABELITA NOPUENTE,
Cross-complainant
and Appellant,
v.
NANCY CHOY et al.,
Cross-defendants and Respondents.
A135162
(
Super.
Isabelita Nopuente (Nopuente)
respondents’ summary judgment motion
and its denial of Nopuente’s motion for leave to amend her
cross-complaint. We affirm, concluding
that Nopuente’s claims against respondents are barred by the res judicata
doctrine and the trial court did not err in denying Nopuente’s motion for leave
to amend.
BACKGROUND
In November 2003, Nopuente initiated
an arbitration proceeding
before the National Association of Securities Dealers, Inc. (the NASD
proceeding), against Tony Choy (Choy), H.D. Vest, and others. Nopuente’s “Statement of Claim†alleged that
Choy, as her securities broker, improperly managed Nopuente’s investments and
converted them to his own use. She
alleged that Choy was an agent of H.D. Vest and that H.D. Vest failed to supervise
Choy properly. Nopuente filed a
“Preliminary Memorandum of Law in Support of Statement of Claim†that described
her various theories of liability, including
contract, fraud, breach of fiduciary duty, unfair business practices, and
violation of the Consumers Legal Remedies Act (CLRA; Civ. Code, § 1750 et
seq.). A number of those causes of
action are also listed in a March 2004 claim submission agreement. In October 2004 and August 2005, Nopuente
filed amended claims that included allegations similar to those in the original
statement of claim. Choy’s answers in
the NASD proceeding alleged that Nopuente authorized and actively pursued
speculative and high risk investments, which was the cause of her investment
losses.
In October 2004, Choy filed a
complaint against Nopuente in the Superior Court for the County of Alameda. Choy alleged he provided Nopuente accounting
services and opened an investment account in her name. As part of the investment strategy, Choy and
Nopuente were appointed directors of OB1, Ltd.
Choy alleged that Nopuente wrongfully depleted funds from OB1, Ltd.,
from another company (Interstate Financial Corp.), and from an account with
Wallstreet Electronica, Inc. Choy’s
complaint alleged causes of action against Nopuente for intentional
misrepresentation, negligent misrepresentation, “actual†fraud, “constructiveâ€
fraud, misappropriation, conversion of partnership assets, conversion, breach
of partnership agreement, breach of fiduciary duty, and damage to reputation.
In December 2004, Nopuente filed a
cross-complaint against Choy and others alleging that Choy induced her to
invest over $1 million from an inheritance, and most of those funds were lost
due to investments made by Choy or other wrongdoing by Choy.
In November 2005, Nopuente filed a
motion to stay the trial court action pending resolution of the NASD
proceeding. Over Choy’s opposition, the
court stayed the action until April 2006 “in light of the fact that resolution
of the issues to be arbitrated may likely affect the issues to be determined in
the instant action.â€
In March 2007, Nopuente filed her
first amended and operative cross-complaint (FACC) against Choy and other
cross-defendants, including the cross-defendants that are the respondents in
the present case, as well as Wallstreet Electronica, Inc., and H.D. Vest. She alleged causes of action for money had
and received, breach of fiduciary duty, conversion, fraud, negligent misrepresentation,
negligence, breach of oral and written contracts, breach of the implied
covenant of good faith and fair dealing, unjust enrichment, conspiracy,
imposition of a constructive trust, declaratory relief, and an accounting. Generally speaking, Nopuente alleged that
Choy represented and advised her in various financial transactions that
resulted in substantial losses, and the other cross-defendants were involved
with Choy in the transactions.
In May and June 2007, respectively,
Wallstreet Electronica, Inc., and H.D. Vest filed petitions to compel
arbitration of the FACC. Over Nopuente’s
objections, the trial court granted the petitions. The court ordered Nopuente to submit to the
ongoing NASD proceeding “all of her claims and causes of action†against
Wallstreet Electronica, Inc., and H.D. Vest, and the court stayed the civil
action as to them. Subsequently, the
court stayed the action “in its entirety pending completion of the
arbitration.â€
name="_ftnref3" title="">[3]
In April 2009, the NASD arbitration
panel (the Panel) issued its decision in the NASD proceeding. The Panel stated that during the arbitration
Nopuente specified her claims were based on the following causes of
action: money had and received, breach
of fiduciary duty, conversion, fraud, negligent misrepresentation, negligence,
breach of oral contract, breach of written contract, breach of the implied
covenant of good faith and fair dealing, unjust enrichment, conspiracy, and
violation of the CLRA. The Panel ruled
against Nopuente, finding that she “did not prove any of the claims and/or
causes of action asserted against†H.D. Vest and Choy. The Panel also found “that the material
portions of . . . Nopuente’s testimony regarding her claims
. . . were not creditable.â€
The Panel ruled “that neither of the Claimants[, Nopuente and OB1,
Ltd.,] shall receive any relief, and all claims by Claimants are denied in
their entirety.â€
In July 2009, Nopuente filed a
petition to vacate the arbitration award.
H.D. Vest opposed the petition and requested confirmation of the
arbitration award. In August 2009, the
court denied the petition, granted the request to confirm the award, and
entered judgment denying recovery from H.D. Vest and Choy (Choy Judgment). Nopuente appealed and in January 2011 this
court affirmed in Choy I. This court held that the Panel’s exclusion of
evidence related to two real estate transactions that funded Nopuente’s
investments did not substantially prejudice her rights; the Panel did not err
in failing to grant her an accounting; and the Panel did not refuse to exercise
jurisdiction over the claims in the FACC.
In October 2009, after entry of the
Choy Judgment but before this court’s decision in Choy I, respondents moved for summary judgment on the FACC. Respondents relied on the doctrine of res
judicata, arguing that, because their only alleged liability in the FACC was
derivative of Choy’s liability, they too were entitled to judgment in their
favor. In February 2012, after this
court’s decision in Choy I was final,
the trial court granted respondents’ motion for summary judgment. The court reasoned that the confirmed
arbitration award in favor of Choy was entitled to res judicata effect, barring
relitigation of the causes of action in the FACC. Because respondents’ liability was derivative
of Choy’s liability, respondents were entitled to a judgment of dismissal. The trial court also denied Nopuente’s
September 2011 motion to amend the FACC.
The court entered judgment in favor of respondents and this appeal
followed.
Discussion
I. The Res Judicata Doctrine Bars Nopuente’s Claims Against Respondents
Nopuente argues the trial court
erred in concluding the doctrine of res judicata bars her claims against
respondents in the FACC. We review de
novo to determine whether the party moving for summary judgment has met its
burden of proving that there is no triable issue as to any material fact and
that the moving party is entitled to judgment as a matter of law. (Merrill
v. Navegar, Inc. (2001) 26 Cal.4th 465, 476.)
“Res judicata prohibits the relitigation
of claims and issues which have already been adjudicated in an earlier
proceeding. The doctrine has two
components. ‘ “In its primary
aspect the doctrine of res judicata [or ‘claim preclusion’] operates as a bar
to the maintenance of a second suit between the same parties on the same cause
of action.†. . . The
secondary aspect is “collateral estoppel†or “issue preclusion,†which does not
bar a second action but “precludes a party to an action from relitigating in a
second proceeding matters litigated and determined in a prior proceeding.†’ [Citations.]â€
(Kelly v. Vons Companies, Inc.
(1998) 67 Cal.App.4th 1329, 1335; see also Vandenberg
v. Superior Court (1999) 21 Cal.4th 815, 828 (Vandenberg).)
The elements of res judicata in its
claim preclusion form are (1) the claim in the present action must be identical
to a claim litigated or that could have been litigated in a prior proceeding;
(2) the prior proceeding resulted in a final judgment on the merits; and (3)
the party against whom the doctrine is being asserted was a party or in privy
with a party to the prior proceeding. (
Cal.2d 807, 813; see also Brinton v.
Bankers Pension Services, Inc. (1999) 76 Cal.App.4th 550, 556 (
based on a prior judicial decision, a prior judgment confirming an arbitration
award may also bar a subsequent claim based on the same cause of action. (See Code Civ. Proc., § 1287.4;
(2005) 131 Cal.App.4th 566, 576-579 (LeVine);
Brinton, supra, 76 Cal.App.4th at pp. 556-558; Thibodeau v. Crum (1992) 4 Cal.App.4th 749, 755;
Cal.App.3d 322, 328 (Sartor).)
res judicata benefits both the parties and the courts because it ‘seeks to
curtail multiple litigation causing vexation and expense to the
judicial administration.’ [Citation.]â€
(Mycogen Corp. v. Monsanto Co.
(2002) 28 Cal.4th 888, 897; see also Vandenberg,
supra, 21 Cal.4th at p. 829 [the
purpose of the res judicata doctrine is “to preserve the integrity of the
judicial system, promote judicial economy, and protect litigants from
harassment by vexatious litigationâ€].)
In the present case, Nopuente does
not dispute the third element required for application of res judicata—that she
was a party to the NASD proceeding. As
to the first element, Nopuente disputes that the claims in the FACC are
identical to those addressed in the NASD proceeding. It is undisputed the claims resolved in the
Choy Judgment, which confirmed the arbitration award, are the same claims on
which respondents sought summary judgment—that is, respondents sought summary
judgment on the same FACC on which Choy obtained judgment. (Burdette
v. Carrier Corp. (2008) 158 Cal.App.4th 1668, 1674 (Burdette) [“Claim preclusion bars a second action upon the same
claim against the same parties litigated to a final judgment in a prior
action. . . . The test of
the claim is the cause tendered by the pleadings and resolved on the
merits.â€].) Moreover, Nopuente does not
dispute that the allegations against respondents in the FACC involve the same
invasions of primary rights as the allegations against Choy. (LeVine,
supra, 131 Cal.App.4th at pp.
575-576, 579; Brinton,
Nevertheless, Nopuente argues her
claims against respondents are not barred by res judicata because the Panel did
not have jurisdiction over all the claims in the FACC and the claims actually
considered by the Panel did not encompass all the primary rights implicated by
the causes of action in the FACC. However, it is too late for Nopuente to
challenge the scope of the Choy Judgment, which confirmed the Panel award,
resolving in Choy’s favor on the merits all of the claims against him in the
FACC. Nopuente’s challenge to the Choy
Judgment was heard and rejected by this court in Choy I. Among other things,
in Choy I we concluded the Panel took
jurisdiction over the claims in the FACC.
As we explained in Choy I, the
Panel listed causes of action identified by Nopuente, which were largely the
same as those in the FACC and in her memorandum of law in support of her
arbitration claims; the Panel concluded she “did not prove†those claims. (See Burdette,
supra, 158 Cal.App.4th at pp. 1674-1675 [“A trial on the merits includes a
trial in which the plaintiff fails to provide evidence in support of the
claim. Res judicata bars the
relitigation not only of claims that were conclusively determined in the first
action, but also matter that was within the scope of the action, related to the
subject matter, and relevant to the issues so that it could have been
raised.â€].) Nopuente presents no
authority supporting the proposition that, in applying the res judicata
doctrine, this court can disregard the claims actually resolved in the Choy
Judgment and reconsider the validity of the judgment, despite the fact that
Nopuente already had a full opportunity to challenge the judgment in her
previous appeal.
name="_ftnref5" title="">[5]
As to the second element, Nopuente
contends the Choy Judgment is not a final judgment that can be given res
judicata effect because “ ‘ “There can be but one final judgment in
an action . . . .†’ â€
(Bank of America v. Superior Court
(1942) 20 Cal.2d 697, 701-702.) However,
the Choy Judgment did “ ‘ “finally
determine[] the rights†’ †of Choy and H.D. Vest in relation to the
FACC (id. at p. 701); Nopuente
appealed and this court affirmed the judgment.
Although claims in the FACC remained unresolved as to other
cross-defendants, that did not undermine the finality of the Choy
Judgment. (See Morehart v. County of Santa Barbara (1994) 7 Cal.4th 725, 740
[referring to rule that “[j]udgment in a multiparty case determining all issues
as to one or more parties may be treated as final even though issues remain to
be resolved between other partiesâ€]; see also Millsap v. Federal Express Corp. (1991) 227 Cal.App.3d 425,
430.) Nopuente cites no authority
supporting the proposition that the judgment could only be treated as final for
res judicata purposes following resolution of the claims against the other
cross-defendants. Because Nopuente has
failed to support her contention with reasoned argument and relevant citations
to authority, the issue requires no further consideration. (Badie
v. Bank of America (1998) 67 Cal.App.4th 779, 784-785 (Badie).)
Nopuente also asserts the res
judicata doctrine is inapplicable because “there is no ‘second action,’ â€
but her argument on the point relates to the purported absence of a final
judgment. Any argument that the NASD
proceeding is not sufficiently separate for purposes of the res judicata
doctrine has been forfeited. (
present case is nearly identical to that in Sartor,
where homeowners sued an architectural firm and its employees. (Sartor,
supra, 136 Cal.App.3d at p.
324.) The claims against the firm were
sent to arbitration and the action was stayed.
(Id. at p. 325.) The result of the arbitration was favorable
to the firm and subsequently the individual employees moved for summary
judgment on res judicata grounds. (
trial court should have granted the motion because the employees could not be
liable if the firm was not liable. (
Nopuente argues respondents waived
the defense of res judicata because they did not assert it in their answers. Code of Civil Procedure section 1908.5
provides that, “When a judgment or order of a court is conclusive, the judgment
or order must be alleged in the pleadings if there be an opportunity to do so;
if there be no such opportunity, the judgment or order may be used as
evidence.†That language has been
interpreted as requiring a defendant to plead the defense of res judicata, “if
there be an opportunity to do so.†(
215 Cal.App.2d 587, 592 [discussing Code Civ. Proc., former § 1962, subd.
6, now Code Civ. Proc., § 1908.5]; see also Hulsey v. Koehler (1990) 218 Cal.App.3d 1150, 1158.) In the present case, respondents’ answers
were filed before entry of the Choy Judgment and, indeed, respondents’ motion for
summary judgment asserting the res judicata defense was filed before the Choy
Judgment became final on appeal.
Nopuente fails to explain how respondents had an opportunity to plead
the defense. Under these circumstances,
it was proper to use the Choy Judgment as evidence to support respondents’
motion for summary judgment. (Code Civ.
Proc., § 1908.5.)
Nopuente contends the trial court
erred in granting respondents’ motion for summary judgment because several of
the cross-defendants, the three OB1 entities, and Interstate Financial
Corporation, were not properly represented by respondents’ counsel. In particular, she argues that control over the
OB1 entities and Interstate Financial Corporation is disputed and respondents’
counsel is disqualified from representing those entities because of a conflict
of interest. She also argues that
Interstate Financial Corporation is an unregistered corporation lacking
capacity to sue.
name="_ftnref7" title="">[7] However, Nopuente cites to
nothing in the record showing that she moved to disqualify respondents’ counsel
from representing either of the entities.
(See People ex rel. Dept. of
Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135,
1144-1145.) Absent such a motion,
respondents’ counsel had authority to file the motion for summary judgment on
behalf of the OB1 entities and Interstate Financial Corporation, and Nopuente
fails to cite any authority that her assertions about the scope of respondents’
counsel’s representation demonstrate the trial court erred in granting the
motion for summary judgment.
Nopuente’s remaining contentions may
be addressed briefly. Respondents did
not bear the burden of presenting additional evidence demonstrating that all
the claims covered by the judgment were actually litigated in the NASD
proceeding, because the trial court could properly rely on the Choy Judgment in
determining the scope of the claims resolved therein. The fact that the trial court had previously
overruled demurrers to the FACC did not preclude the grant of summary judgment
because Nopuente has failed to show those prior rulings necessarily reflected a
conclusion respondents’ liability in the FACC was not merely derivative.
on the proposition from criminal law that the acquittal of an accomplice does
not bar the conviction of another is unavailing. In the present case, Choy is the principal
alleged actor; if his conduct was not actionable, there is no basis to hold
respondents liable. (
[“summary judgment was properly granted because [the defendant’s] liability is
dependent upon the commission of an underlying tort by [a medical partnership] and
its partners, a claim decided adversely to [the] plaintiff in the prior
arbitrationâ€]; Brinton,
[“since defendant’s liability is merely derivative . . . , it is
unnecessary for [the] defendant to have been a party to the prior action to
assert a claim preclusion defense in this caseâ€]; see also LeVine, at pp. 574-576; Sartor,
supra, 136 Cal.App.3d at p. 328.)
II. The Trial Court Did Not Abuse Its Discretion in Denying Leave to Amend
Nopuente contends the trial court
abused its discretion (Melican v. Regents
of University of California (2007) 151 Cal.App.4th 168 (
leave to amend the FACC to include new causes of action.
“ ‘ “[T]he trial court has
wide discretion in allowing the amendment of any pleading [citations], [and] as
a matter of policy the ruling of the trial court in such matters will be upheld
unless a manifest or gross abuse of discretion is shown. [Citations.]†’ [Citation.]
Nevertheless, it is also true that courts generally should permit
amendment to the complaint at any stage of the proceedings, up to and including
trial. [Citations.] But this policy applies ‘ “only ‘[w]here
no prejudice is shown to the adverse party.’ †’ [Citation.]
Moreover, ‘ “ ‘even if a good amendment is proposed in proper
form, unwarranted delay in presenting it may—of itself—be a valid reason for
denial.’ †’ [Citations.] Thus, appellate courts are less likely to
find an abuse of discretion where, for example, the proposed amendment is ‘ “offered
after long unexplained delay . . . or where there is a lack of
diligence . . . .†’
[Citation.]†(
Here, nearly seven years passed
between the filing of Nopuente’s original cross-complaint in December 2004 and
the September 2011 request to file a second amended cross-complaint. Nopuente explains that her proposed new
causes of action for violations under the Racketeer Influenced and Corrupt
Organizations Act (RICO; 18 U.S.C. § 1961 et seq.) and the unfair
competition law (UCL; Bus. & Prof. Code, § 17200 et seq.) are based on
misconduct occurring after the filing
of the FACC. But the FACC was filed in
March 2007; Nopuente does not explain why she could not have sought to amend
the pleading at some point in the four and one-half years between then and
September 2011. As in
to allow [Nopuente] to defeat [respondents’] summary judgment motion by
allowing [her] to present a ‘moving target’ unbounded by the pleadings.†(Melican,
supra, 151 Cal.App.4th at p. 176; see
also Huff v. Wilkins (2006) 138
Cal.App.4th 732, 746.) The trial court
did not abuse its discretion in denying Nopuente’s request for leave to amend.
Nopuente also argues the trial court
was required under Code of Civil Procedure section 426.50 to permit her to
amend the FACC. That section provides
that, absent bad faith, a court “shall†allow a party to amend a compulsory
cross-complaint to assert a cause of action related to the causes of action in
the complaint.
name="_ftnref9" title="">[9] (See Silver Organizations Ltd. v. Frank (1990) 217 Cal.App.3d 94,
98-102.) A “ ‘[r]elated cause of
action’ means a cause of action which arises out of the same transaction,
occurrence, or series of transactions or occurrences as the cause of action
which the plaintiff alleges in his complaint.â€
(Code Civ. Proc., § 426.10, subd. (c).) Nopuente fails to explain how the section
applies to her proposed new causes of action for RICO and UCL violations. She asserts that those proposed causes of
action are based on misconduct occurring after
the filing of the FACC, so it appears they do not arise out of the same
transactions at issue in the complaint.
(See Al Holding Co. v. O’Brien
& Hicks, Inc. (1999) 75 Cal.App.4th 1310, 1313-1314 [“The critical time
period to which [Code of Civil Procedure] section 426.30 looks is that point in
time when the complaint has been filed and served against a defendant and the
defendant ‘fails to allege in a cross-complaint any related cause of action
which (at the time of serving his answer to the complaint) he has against the
plaintiff.’ â€], italics omitted.)
Nopuente fails to cite to any authority that her new claims are within
the scope of Code of Civil Procedure section 426.50; thus, she fails to show
the trial court erred in denying her request for leave to amend under that
statutory provision.
Disposition
The trial court’s judgment is
affirmed. Costs on appeal are awarded to
respondents.
SIMONS,
J.
We concur.
JONES, P.J.
BRUINIERS, J.
cross-defendants Nancy Choy; Matthew Choy; the Nancy Wu Living Trust; the Tony
Choy Living Trust; the Matthew Choy Living Trust; the Choy Family Trust; Nish,
a limited partnership; OB1 Ltd.; OB1 Trust I; OB1 Trust II; Choy &
Associates; Excel Financial; and Interstate Financial Corporation
(collectively, respondents).
taken from this court’s unpublished decision in Choy v. Nopuente (Jan. 28, 2011, A126779) (
We grant respondents’ March 18, 2013 request that we
take judicial notice of this unpublished decision (Fink v. Shemtov (2010) 180 Cal.App.4th 1160, 1171), and we deny the
remainder of respondents’ request because the other materials are unnecessary
to our analysis.
