Talley v. Miller & Schroeder

Filed 9/12/07 Talley v. Miller & Schroeder CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from judgments of dismissal of the Superior Court of San Diego County, Linda B. Quinn, Judge. Affirmed in part and reversed in part.

Plaintiff and appellant Bruce R. Talley sued a number of individual and corporate defendants for fraud and related theories, based upon their different roles in allegedly participating in a securities fraud scheme, the "Heritage Bonds" transactions lasting from 1996-1999. Plaintiff was a securities sales representative who was previously employed by securities firm Miller & Schroeder Financial, Inc. (Miller & Schroeder), the now bankrupt predecessor of one of the current defendants and respondents, the Marshall Group, Inc. (Marshall).^[1] Plaintiff alleges that in the scope of his employment by Miller & Schroeder, he sold worthless Heritage bonds to his investor clients, who then sued him and others, resulting in the loss of his livelihood and other injury. He seeks to recover damages from the various defendants and respondents on different theories, based on the nature of their participation in the Heritage Bonds securities fraud, and he claims personal financial loss of over $5 million.

To briefly outline the identities of the other named defendants and respondents: Plaintiff worked at Miller & Schroeder with several of the individual named defendants, who were officers and key employees there (e.g., respondents Victor Dhooge and Kenneth Larsen).^[2] Other individual named defendants and respondents are Robert Kasirer and his affiliated companies, and his wife Debra Kasirer, who were promoters of Heritage health care facilities and the recipients of investors' funds in the securities scheme. Other named defendants and respondents are Jerold Goldstein and Leo Dierckman, who were officers and affiliates of the Kasirer group, which was attempting to develop the Heritage facilities.

Additionally, plaintiff has sued two corporate defendants, U.S. Trust Corporation (U.S. Trust), the indenture trustee for the worthless bonds, and Valuation Counselors Group, Inc. (Valuation), the appraiser for real property that was security for the bonds.

Earlier, in federal court, plaintiff was sued under the Private Securities Litigation Reform Act (15 U.S.C.  78a et seq.; PSLRA) by one of his clients, the Betker family (Betker), who bought millions of dollars in Heritage Bonds. (Betker Partners One et al. v. U.S. Trust Corporation, N.A. et al. (C.D. Cal. 2001) No. CV 01-5752-DT-RCx (Betker) (the underlying federal action).) As a defendant in that action, Talley filed a cross-complaint for indemnity and contribution. In opposition to plaintiff's first amended complaint in this state action (the complaint), as we next outline, these defendants filed demurrers in superior court, mainly alleging the pleading was barred by principles of res judicata, due to plaintiff's filing and dismissal with prejudice, after settlement with Betker in that underlying federal action, of that federal cross-complaint against alleged joint tortfeasors. They additionally relied upon their own settlements in that action in which some of them obtained Bar orders against further litigation on the same claims, as will be further explained post (e.g., the Kasirer good faith settlement approval and "entry of Bar order"). In other grounds of demurrer, defendants extensively argued the complaint was defective for failure to state sufficient facts or due to the bar of the applicable statutes of limitations.

Marshall additionally alleged any action based on fraudulent conveyance theories against it was barred by a 2002 bankruptcy court ruling that approved its own monetary settlement in an adversary proceeding in Miller & Schroeder's case. (In re SRC Holding Company/Miller & Schroeder Inc. (Bankr. Minn. 2002) Nos. 40284-40286 (the bankruptcy matter).)

In ruling on the various demurrers in four separate orders, which we now review, the trial court took judicial notice of those federal district court and bankruptcy court filings and Bar orders, and sustained the demurrers to all claims, ruling that the current pleading relates to the same primary rights against fraudulent conduct that were allegedly violated and contested by defendants and cross-defendants in the Betker case, or by parties in privity with them, in the context of plaintiff's dismissed federal cross-complaint for indemnity. (Evid. Code,  452, 459.)

Plaintiff declined an opportunity to amend his now-operative theories, which are (1) fraud, (3) breach of fiduciary duty, (4) aiding and abetting breach of fiduciary duty, and (7) fraudulent conveyance. Plaintiff appeals the dismissal of his complaint as to the defendants and respondents named above, which we will group as follows: (A) Marshall, the predecessor of Miller & Schroeder; (B) Robert Kasirer, the alleged architect of the fraudulent bond scheme, and his affiliated personal corporations and companies, as well as his wife Debra Kasirer and associate Leo Dierckman; (C) an individual Kasirer associate, Jerold Goldstein, and a Miller & Schroeder employee, Victor Dhooge; and (D) the corporate defendants, U.S. Trust (indenture trustee) and Valuation (appraiser).

On appeal, plaintiff argues the trial court erred in all of its res judicata rulings, based on the dismissal of his cross-complaint, because that previous federal cross-complaint sought only declaratory relief, indemnity and contribution against certain defendants, whereas in this action, he is seeking "affirmative relief" mainly against different defendants, based upon injury to him personally from the fraud and other torts alleged, and therefore different primary rights should be involved and there should be no bar. He also contends he has pled fraud with the necessary specificity, as well as adequately pleading breaches of recognized fiduciary duties and related theories. He further contends there are no statute of limitations problems due to his late discovery of the allegedly fraudulent acts in October 2001, upon his being separately sued by former clients.

As we will discuss, Marshall has persuasively demonstrated that plaintiff's sole theory against it, fraudulent conveyance, was conclusively litigated and disposed of in the Minnesota bankruptcy matter, where plaintiff appeared as an unsecured creditor, and Marshall may no longer be pursued by plaintiff on that basis. As to Marshall, the demurrers were properly sustained without leave to amend, and we affirm that judgment of dismissal.

Likewise, the Kasirer group and Debra Kasirer have adequately demonstrated that the district court issued a Bar order against any further litigation arising out of the same Heritage Bonds transactions as are disputed here, and Talley was a party in the same federal court action and is specifically named in the order as precluded from further suit in those matters, due to the good faith settlement reached by Kasirer with the Betker plaintiffs. That order also specifically includes Dierckman as one of the settling defendants who is entitled to protection from further suit. Plaintiff has appealed that order to the Ninth Circuit Court of Appeals, and appeal is pending, but for our purposes, under the rule of Levy v. Cohen (1977) 19 Cal.3d 165, 172(Levy), it is currently deemed to be final.^[3] We must consider ourselves bound by the broad language of that Bar order. As to the Kasirer defendants and Dierckman, the demurrers were properly sustained without leave to amend, and we affirm that judgment of dismissal.

Likewise, the record contains a similar settlement and Bar order specifically referring to former Miller & Schroeder employee Victor Dhooge (also charged here with fraud and breach of fiduciary duty), as entitled to protection from any further litigation arising out of the Heritage Bonds transactions.^[4] Another such settlement and Bar order, similarly broad in scope, was issued in favor of individual Kasirer associate Goldstein, who is now charged with fraud, and this court allowed Goldstein to submit a copy of it, to complete the record referencing it. Due to the broad language of all those Bar orders,

these demurrers were properly sustained without leave to amend regarding Dhooge and Goldstein, and we affirm those trial court orders of dismissal. Although we have discussed these parties' extensive arguments regarding primary rights and res judicata bars to the current action, we decline to rely upon those grounds, as we will explain further in part IIID, post.

However, with respect to the remaining named defendants and respondents, U.S. Trust and Valuation, who are charged with aiding and abetting breach of fiduciary duty (and fraud as to Valuation), no similar Bar orders appear in the record. Under all the circumstances, we do not consider the res judicata arguments to be a valid ground of demurrer, and we further find the trial court ruling was erroneous on other grounds. As will be explained, additional demurrers were not reached by the trial court, and remain for resolution (i.e., lack of standing, uncertainty or limitations bars). We therefore reverse the judgments of dismissal as to U.S. Trust and Valuation only, but affirm the balance of the dismissal judgments.

FACTUAL AND PROCEDURAL BACKGROUND

A

Original Federal Court Actions, Cross-Action; Settlement;

Talley's Previous State Court Complaint

Miller & Schroeder was the lead underwriter which financed, structured, and marketed numerous (12) tax-exempt revenue bond offerings, raising money from investors for various Heritage entities, to finance the development of certain health care facilities. Plaintiff alleges that from 1996-1999, these entities and individuals made improper transfers of bond monies among themselves, and committed fraud on the Heritage bondholders, and others, including plaintiff, via the use of the Heritage Bonds, as follows: "The Defendants designed, built, and operated a Ponzi Scheme series of fraudulent bond offerings which they provided their broker, Bruce Talley, to sell to the public."

Upon the collapse of the Heritage Bond scheme in 1999, one of plaintiff's clients (Betker) sued plaintiff, Miller & Schroeder, and other defendants (including Dhooge and Larsen) in the underlying federal action, for securities fraud under the PSLRA, seeking millions of dollars in damages. In response, plaintiff filed his cross-complaint seeking indemnity and contribution and requesting a defense, based upon the defendants' alleged misrepresentations and/or concealed knowledge of the questionable validity of the Heritage Bonds. The named cross-defendants in federal court were his former employer, Miller & Schroeder, Larsen, Dhooge, and a large group of former defendants, including John M. Clarey et al, who were control persons for the firm.^[5] The basis of the cross-complaint was that if Talley were held liable to the Betker plaintiffs, it would be solely due to the conduct of the cross-defendants, such that he was entitled to indemnity for any vicarious or secondary liability, as well as contribution and a declaration of rights and duties. (15 U.S.C.  78u-4(g) [providing for rights of contribution and settlement discharges in private securities fraud actions].)

Following the filing of the underlying Betker action, a federal class action was brought separately against the same set of defendants, except Talley was not named as a class action defendant. The class action was consolidated with the Betker action for discovery purposes as part of the multidistrict Heritage Bonds litigation. Eventually, Betker settled with Talley, who in December 2004 dismissed his federal cross-complaint with prejudice. In his reply brief, plaintiff goes beyond the record and explains that Betker mainly wanted to settle with various third-party lawyer defendants in the federal action, and Betker settled with plaintiff in order to make that happen. However, plaintiff did not pay any money to Betker nor did plaintiff recover any other relief on his dismissed cross-complaint.

In connection with other settlements reached by Betker with the Kasirer group, Dhooge/Clarey et al., and Goldstein, the district court issued its Bar orders to protect the settling defendants (i.e., Kasirer, the Dhooge/Clarey defendants, and Goldstein) from further litigation "arising out of or related to the released claims or the transactions, facts, or occurrences giving rise to those claims . . . ." These orders were made under the authority of the PSLRA and Code of Civil Procedure section 877.6.

The Kasirer Bar order dated December 6, 2004, states that it does not resolve the class action allegations against Kasirer. (Since Talley individually was not a party to the class action, we will not further discuss the class action.) The Kasirer Bar order includes Dierckman among its "settling defendants" who were entitled to a release of claims, as well as the Kasirers and their companies. A similar Dhooge/Clarey et al. Bar order had been filed August 9, 2004, and the Goldstein order was issued February 7, 2005.

The first such good faith settlement and Bar order (Dhooge/Clarey et al.) states that all persons are barred from pursuing any claims, etc. "arising out of or related to the underwriting, sale, or purchase of the Heritage Bonds, or any of the transactions or occurrences alleged, or that could be alleged, in any of the actions that comprise the (multidistrict litigation). . . ." These included claims and cross-complaints for indemnity, contribution, or damages, however denominated, against any of the settling defendants. (However, purchasers of the Heritage Bonds were not precluded from continuing their actions against the settling defendants to recover losses. Talley was not a purchaser.)

The Kasirer Bar order used the same general language to bar further litigation against the settling defendants arising out of or related to the released claims or the transactions or occurrences giving rise to those claims. The district court's Bar order made additional rulings that certain specific claims, including Talley's, were dismissed with prejudice, and the court found that the existing cross-claims all arose from the same core of facts, "i.e., the underwriting, marketing, and sale of the Heritage Bonds, and that they deal with the same alleged representations and/or omissions . . . no evidence was presented by Bruce Talley [or other defendants] that any of them suffered any direct loss or damage separate and/or independent from the indemnity and/or contribution claims asserted . . . and these claims are 'interrelated' to the factual allegations from which Betker Plaintiffs' claims arise." Likewise, the Goldstein district court order barred all persons and entities from prosecuting any claim or cross-claims "arising out of or related to the claims released in the Settlement Agreement, or the transactions, facts or occurrences giving rise to those claims," such as could have been alleged in the multidistrict litigation.^[6]

Talley has appealed to the Ninth Circuit Court of Appeals from the Kasirer, the Dhooge/Clarey, and the Goldstein federal district court good faith settlement and Bar orders. As of the date of oral argument in this Court, counsel confirmed that the federal appeals have not yet been resolved. (See fn. 3, ante.)

While the underlying federal action was ongoing, on December 18, 2002, plaintiff filed the first version of this state case, Talley v. Miller & Schroeder (Super. Ct. San Diego County, 2002, No. GIC802187). This action was stayed in August 2003 by the trial court, due to the pending federal case, and plaintiff then dismissed it without prejudice on or about June 28, 2004.

B

Current State Court Complaint: General Summary

Talley filed his complaint in October 2004 and amended it in 2005. We next generally outline the factual background for his theories that are still pursued on appeal. At the outset, however, we note that although plaintiff also originally alleged a negligence theory and other economic torts (causes of action nos. 2, 5, 6, interference with business advantage, etc.), demurrers to those claims were sustained without leave to amend, and he does not challenge those portions of the rulings.^[7]

Consequently, we next outline the facts underlying the four remaining causes of action that are the subjects of this appeal (fraud, breach of fiduciary duty, aiding and abetting same, and fraudulent conveyance). Plaintiff generally alleges that he trusted the defendants to tell the truth about these bond products, "and to provide him with diligently researched, fully-vetted, properly-operated and ethically-run Bond deals. Believing they had done so, he sold the Bonds to his clients and the public. Unbeknownst to Mr. Talley, the defendants had commingled investors' funds, stolen bondholders' money, lied about the status and business underlying the bonds, concealed the nefarious background of the Bonds' operators, and lied about the poor due diligence they had conducted." Based on their recommendations, he "sold to his clients bonds in each of the Heritage Entities' 12 bond offerings, to the tune of millions of dollars, beginning in February 1996 and continuing through March 1999."

Based upon those defendants' breaches of duty, which he alleges were not discovered until October 25, 2001 when a client went to arbitration against him, plaintiff contends that his clients "lost tens of millions of dollars and Mr. Talley lost his career. He cannot work in the securities industry because his industry license has been effectively destroyed by Defendants' actions. His clients blame him for their losses, and a number of them have sued him." He further contends, "[t]he loan participation business that Plaintiff spent countless hours and efforts building is ruined and cannot be pursued because Plaintiff has lost his base on which to build it. [] Because of defendants' actions, Plaintiff has lost his job income, his savings, his house, and suffers from depression and severe emotional distress." In his opening brief, he contends defendants' actions violated "his distinct primary right to be free of personal injury and harm."

We next briefly outline the alleged activities of the following defendant groups, as set forth in the complaint: (A) Marshall, the predecessor of Miller & Schroeder; (B) Kasirer group, Debra Kasirer, and their associate Dierckman; (C) the remaining individual Kasirer affiliate, Goldstein, as well as Miller & Schroeder employee Dhooge, and (D) the two corporate defendants, U.S. Trust (the indenture trustee for the bonds), and Valuation (the appraiser).

Regarding Marshall: Plaintiff now alleges that after Miller & Schroeder filed for bankruptcy in Minnesota in January 2002, Marshall was a successor in interest to all the Miller & Schroeder individual and corporate defendants, and fraudulently obtained their assets as follows: "The sole purpose behind the formation of this new entity was to enable the defendants to seize and keep and hide the assets of Miller & Schroeder while alienating and shedding the obligations and liabilities, including the liabilities and obligations to Plaintiff, which Miller & Schroeder owed and knew it would owe. In short, a fraudulent transfer." (Italics added.)

Regarding the Kasirer group and Debra Kasirer: Defendant Robert Kasirer "controlled, directly or indirectly," the Heritage entities and bond scheme, and directed the commingling of funds, and prior to the conception of the Heritage Bonds Ponzi scheme, "Kasirer had a long history of business failures and legal troubles arising from his involvement with similar bonds, a fact which Miller & Schroeder knew or should have known but concealed." Debra Kasirer, as a trustee of the family trust and owner of a family corporation, allegedly "received and accepted and concealed transfers of Heritage Bonds funds which she knew did not belong to her or Robert Kasirer." Dierckman, an affiliate of the Kasirer defendants and the Heritage defendants, gave tours of the health facilities properties and was involved in the underwriting process, including preparation of the official statements for the bonds, which were misleading.

With respect to the remaining individuals: Goldstein allegedly exercised dominion and control over the Heritage entities through his capacities as their president, general counsel, chief operating officer and/or director, and he allowed improper transfers of bond monies among the various Heritage entities. Dhooge, a Miller & Schroeder investment banker, was a control person in the firm who structured the Heritage Bond offerings and negotiated with the issuers and Kasirer.

With respect to the corporate defendants, U.S. Trust (indenture trustee) is a for-profit business marketing itself to the investing public as providing trust services nationwide and having expertise, among other things, in government bonds and bond projects. Its subsidiary, U.S. Trust Texas, was the direct dealer for the Heritage Bonds. In acting as the trustee of the Heritage Bonds, plaintiff alleges the U.S. Trust entities undertook "to guard the interests of the investors. Pursuant to the Indentures, Loan Agreement and the Trust Deed and Mortgages it undertook and assumed a duty to Plaintiff, and to the investors to whom Plaintiff had sold and would sell the bonds, to monitor the Heritage Entities and Heritage Bonds in the best interests of the investors. . . ." However, U.S. Trust allegedly failed to report defendants' improper transfers of bond proceeds among and between various bond offerings and facilities.^[8]

Also, as to Valuation, plaintiff alleges that it was one of the companies performing bond security property appraisals, allegedly at outrageously high valuations. All defendants are generally alleged to be the agents and/or employees of each other.

C

Current State Court Complaint: Specific Theories Against Each Defendant

The operative allegations of the remaining causes of action may further be summarized as follows. As against all remaining defendants except U.S. Trust, plaintiff pleads fraud (first cause of action). Generally, he contends all the defendants prepared information which they presented to plaintiff in connection with the offerings, which purported to provide full and complete information about the projects, but this information "was negligently and/or knowingly deficient, misleading, incomplete, and/or fraudulent, unbeknownst to Plaintiff . . . . Defendants further knew that Plaintiff was relying on this information in deciding whether, when and how much of the Heritage bond offerings to offer to his clients." Once the bond scheme fell apart, plaintiff alleges the Miller & Schroeder defendants looted the company and left the shell in bankruptcy court, by "engineer[ing] a sham sale of the company's assets . . . in order to insulate themselves from liability for their actions. They left their clients and their employees hanging, alone, to face the claims and bear the losses from the fraudulent bond scheme." Plaintiff alleges he detrimentally relied on these representations and has suffered millions of dollars in financial loss in his career because of this fraud.

In the third cause of action (for which the only remaining defendants are Dhooge, possibly Marshall as successor to Miller & Schroeder, and possibly Robert Kasirer individually; Larsen and Clarey et al. have been dismissed), plaintiff alleges: "Defendants owed a fiduciary duty to Plaintiff to deal with him in the highest degree of good faith, integrity and fair dealing in the design, creation, operation, marketing, disclosure, research, preparation, offering for sale and sale of the Heritage Bonds, and to present him with legitimate and honest and suitable products to sell to his clients. . . .  Defendants' fiduciary duties arose from their position as Plaintiff's employer and as designers, creators, marketers, operators, . . . researchers, preparers and underwriters of bonds for Plaintiff to sell to his clients, lead investor and their directorship position, their agreements with Plaintiff, and from their course of dealing with Plaintiff, their representations to him about the Heritage Bonds and bonds offered for sale in general, and others, including the duty not to do any acts which caused damage to Plaintiff's clients and to Plaintiff's business and profession."^[9]

Next, in his fourth cause of action for aiding and abetting breach of fiduciary duty (against the Kasirer group, Debra Kasirer, Dierckman, Goldstein, U.S. Trust, and Valuation), plaintiff claims they assisted in the breaches of fiduciary duty by the Miller & Schroeder employees (such as Dhooge and Larsen, the predecessor of Marshall, and Mr. Kasirer). For example, "Unbeknownst to plaintiff, all the Heritage Bonds were unsuitable for sale to any investor, because the normal risk inherent in any bond was replaced with a certainty of failure, due to Defendants' actions herein. Had Plaintiff known these true facts, which the Defendants knew but didn't disclose to him despite

their obligations to do so, he would not have sold the Heritage Bonds to any of his clients, and would have not remained with the company." The allegedly concealed facts included improper funds transfers, excessive appraisals, and improper documentation by these defendants.

In the seventh cause of action for fraudulent conveyance, plaintiff sues the Kasirer defendants and Debra Kasirer for an improper transfer of the $4 million Beverly Hills family residence to a personal family trust, as well as certain transfers of $770,000 and $1.9 million in investors' funds to family companies, all to shelter the Kasirers from liability.

The prayer of the complaint seeks damages estimated at $5 million, an order to set aside fraudulent transfers of assets, and further relief.

D

Demurrers and Rulings: Summary

All defendants brought extensive demurrers. Marshall relied on the earlier bankruptcy settlement it reached with the trustee for Miller & Schroeder, on fraudulent conveyance claims. All the other defendants mainly relied on res judicata claims based on the dismissed federal cross-complaint, along with other grounds of demurrers. Plaintiff opposed all demurrers, relying in part on earlier refusals by the federal district court to dismiss portions of the cross-complaint (although Talley eventually voluntarily dismissed it with prejudice).

We next set forth the reasoning of the trial court in sustaining the demurrers brought by the following defendant groups: (1) Marshall; and (2) the remaining defendants, Kasirer group, Debra Kasirer and Dierckman; the two remaining individuals, Goldstein and Dhooge; and U.S. Trust and Valuation. In an effort to avoid unnecessary confusion, we will defer a complete statement of the trial court's rulings on the res judicata grounds until the discussion portion of this opinion. In part 2, post, we will only set forth the initial and lead ruling obtained by the Clarey group, and then explain how the trial court relied on it later, with respect to all the others.

1. Marshall

First, we summarize the trial court's conclusions regarding Marshall, as that demurrer ruling is based upon different grounds (bankruptcy litigation), than are the res judicata rulings arising out of Talley's dismissed federal cross-complaint. The trial court rejected plaintiff's effort to proceed against Marshall on the first cause of action for fraud, and to the extent that plaintiff apparently sought to proceed against Marshall as one of the Miller & Schroeder defendants, the ruling could be read to apply to the third cause of action as well. The court reasoned: "The bankruptcy trustee for bankrupt Miller & Schroeder is the one who has standing to assert the claims that plaintiff pleads in the causes of action challenged by defendant The Marshall Group, Inc.'s demurrer. Those claims arise from defendant The Marshall Group, Inc.'s purchase of assets from bankrupt Miller & Schroeder. [] In addition, the bankruptcy court in an order approved a settlement agreement (see, Exhibits 3, 6 & 7 to defendant The Marshall Group, Inc.'s supporting judicial notice request) that released any and all claims against the defendant The Marshall Group, Inc. that arises from its purchase of bankrupt Miller & Schroeder's assets. That bankruptcy court order precludes plaintiff from maintaining the first [and other] causes of action of his (first) amended complaint against The Marshall Group, Inc., including under a successor liability claim."

2. Res Judicata Grounds: the Kasirers, Dierckman, Goldstein, Dhooge, U.S. Trust,

and Valuation

The rulings regarding the above sets of remaining defendants closely followed the reasoning of the August 9, 2005 order on demurrer by the former defendant group, Clarey et al.^[10] The trial court relied on the same analysis with respect to the primary rights and res judicata arguments. Thus, the trial court took judicial notice of the federal order of dismissal and sustained the subject demurrers as follows:

"As pled, the Court finds that the action is barred under the doctrine of res judicata. Whenever a judgment in one action is raised as a bar to a later action under the doctrine of res judicata, a key issue is whether the same cause of action is involved in both suits. California law approaches the issue by focusing on the 'primary right' at stake: If two actions involve the same injury to the plaintiff and the same wrong by the defendant then the same primary right is at stake even if in the second suit the plaintiff pleads different theories of recovery, seeks different forms of relief and/or adds new facts supporting recovery. [Citation.] If the same primary right is involved in two actions, judgment in the first bars consideration not only of all matters actually raised in the first suit but also all matters which could have been raised as to that issue. [Citation.]

"In [the underlying federal court action] plaintiff sought indemnity based upon alleged misrepresentations and/or concealed knowledge of the questionable validity of the Heritage Bonds. Based on the pleadings in this action, plaintiff makes the same allegations.

"In opposition, plaintiff claims he is not seeking indemnity in this action, but 'affirmative relief' based upon injury to him personally. However, in this action, plaintiff pleads that as a result of defendants' actions, plaintiff has suffered financial loss in the amount to be proven at trial 'believed to be in excess of $5,000,000.' Although the damages may be more extensive than the cross-complaint for indemnity, they both relate to the same fraud allegedly purported by defendants and cross-defendants in the Betker case. Leave to amend is granted to allege a violation of a primary right other than alleged in the Betker cross-complaint."

In sustaining the current demurrers with leave to amend, on the same res judicata grounds, the trial court took judicial notice of the federal court order dismissing the cross-complaint as part of the Betker settlement with plaintiff. The court also took judicial notice of the federal district court Bar orders in the Kasirer settlement with Betker, in the Dhooge/Clarey settlement with Betker, and the Goldstein settlement.

Moreover, separate demurrers were also sustained with respect to certain problems identified about alleging an aiding and abetting theory regarding another's breach of fiduciary duty (i.e., lack of agency allegations), based on the trial court's reliance on the authority of Everest Investors No. 8 v. Whitehall Real Estate Limited Partnership XI (2002) 100 Cal.App.4th 1102 (Everest Investors), analyzing conspiracy allegations.

E

Appeal; Judicial Notice on Appeal

Plaintiff declined to amend and now appeals. Both the appellant's appendix and the numerous respondents' appendices contain the same judicially noticeable material of the pleadings and orders from the federal case involving Betker and the cross-complaint, and the Kasirer, Dhooge and Goldstein settlements. In his reply brief, plaintiff adds a narrative explanation of significant procedural facts, in that Betker sought to settle with various third-party lawyer defendants in the federal action, and plaintiff's dismissal of this cross-complaint was necessary to facilitate that resolution, but plaintiff did not pay any money to Betker nor did plaintiff recover any other relief on his dismissed cross-complaint.

Also, Marshall has obtained a judicial notice order from this Court of the Minnesota bankruptcy pleadings and order, in which the bankruptcy trustee for Miller & Schroeder brought a fraudulent conveyance action against Marshall, and obtained a settlement and judgment in which Marshall paid over $1.2 million (approximately $1.4 million) to the trustee.

As previously noted, Larsen has not filed a respondent's brief and plaintiff has dismissed that portion of the appeal. No appearance has been made by Dhooge. The other six sets of respondents have filed briefs. At oral argument, counsel represented that to their knowledge, the federal appeals have not yet been resolved regarding the Kasirer, Dhooge, and Goldstein Bar orders arising out of their settlements.

DISCUSSION

I

INTRODUCTION

For purposes of analyzing the rulings on demurrer, we take as true the allegations in the complaint. (Brenelli Amedeo, S.P.A. v. Bakara Furniture, Inc. (1994) 29 Cal.App.4th 1828, 1834, fn. 1 (Brenelli Amedeo).) We liberally construe the allegations of the complaint to determine whether sufficient facts are stated to constitute a cause of action, and seek to attain substantial justice among the parties. (Ibid.; Grinzi v. San Diego Hospice Corp. (2004) 120 Cal.App.4th 72, 78.) While we accept as true all facts properly pled in the complaint, we do not assume the truth of "contentions, deductions or conclusions of law." (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967 (Aubry).) We also consider all properly judicially noticed matters, including those demonstrating any applicability of res judicata principles. (Evid. Code,  452, 459; Frommhagen v. Board of Supervisors (1987) 197 Cal.App.3d 1292, 1299; Citizens for Open Access to Sand and Tide, Inc. v. Seadrift Ass'n. (1998) 60 Cal.App.4th 1053, 1065 (COAST).)

The trial court exercises its discretion in deciding whether to grant leave to amend. (Aubry, supra, 2 Cal.4th at p. 967.) Here, plaintiff did not seek amendment, preferring to stand upon the pleadings regarding the primary rights asserted as to most of the remaining defendants, i.e., (A) Kasirer group, Debra Kasirer and Dierckman, (B) the individuals Goldstein and Dhooge, and (C) the two remaining corporate defendants, U.S. Trust and Valuation. In part III, post, we will discuss those res judicata issues arising out of the dismissal of the cross-complaint in the underlying federal litigation. These include whether the same primary rights are involved here as were raised and resolved in the cross-complaint in that Betker litigation. The effect of the Bar orders upon the various defendants is a separate issue.

In part IV, post, we will discuss to the extent necessary the additional arguments and the trial court's rulings regarding U.S. Trust and Valuation, on the other grounds of demurrers, including uncertainty, statute of limitations, lack of standing, etc.

Next, however, as to the demurrer ruling specifically regarding Marshall, plaintiff contends there is no applicable bar to his complaint from a different source, the Minnesota bankruptcy adversary proceeding and order dealing with fraudulent conveyances of Miller & Schroeder assets, to Marshall. We now turn to that contention.

II

FRAUD AND FIDUCIARY DUTY THEORIES AGAINST MARSHALL

Plaintiff bases all his allegations against Marshall on the background facts that before Miller & Schroeder went into bankruptcy in Minnesota in January 2002, it transferred all its assets to others, including its successor in interest, Marshall, a Minnesota corporation doing business in California and other places. Plaintiff contends, "The sole purpose behind the formation of this new entity was to enable the defendants to seize and keep and hide the assets of Miller & Schroeder while alienating and shedding the obligations and liabilities, including the liabilities and obligations to Plaintiff, which Miller & Schroeder owed and knew it would owe. In short, a fraudulent transfer." As part of the relief sought in the prayer of the complaint, plaintiff requested an order to set aside fraudulent transfers of assets, and further relief.

Specifically against Marshall, plaintiff now pleads fraud, in that it allegedly participated in the activities of other defendants in the "looting" of the company, to leave only a shell in bankruptcy court, by "engineer[ing] a sham sale of the company's assets . . .  in order to insulate themselves from liability for their actions. They left their clients and their employees hanging, alone, to face the claims and bear the losses from the fraudulent bond scheme." Similarly, allegations of breach of fiduciary duty owed to plaintiff are generally asserted, regarding duties which arose from "their position as Plaintiff's employer and as designers, creators, marketers, operators, . . . researchers, preparers and underwriters of bonds for Plaintiff to sell to his clients, lead investor and their directorship position, their agreements with Plaintiff, and from their course of dealing with Plaintiff, their representations to him about the Heritage Bonds and bonds offered for sale in general, and others, including the duty not to do any acts which caused damage to Plaintiff's clients and to Plaintiff's business and profession."

In its demurrer, Marshall mainly alleged claims preclusion from orders made in the Marshall adversary proceeding in the Minnesota bankruptcy matter. It sought judicial notice (also obtained here) of the pleadings and orders issued in proceedings by the bankruptcy trustee for Miller & Schroeder against Marshall, for fraudulent conveyance of assets. The bankruptcy trustee obtained a settlement and judgment in which Marshall paid approximately $1.4 million to the trustee, including fees and costs.

The trial court sustained Marshall's general demurrer to the fraud claims against it, and also to the negligence and business torts formerly claimed. The ruling stated that only the bankruptcy trustee for Miller & Schroeder would have had standing to assert the claims that plaintiff was now pursuing, because "[t]hose claims arise from defendant The Marshall Group, Inc.'s purchase of assets from bankrupt Miller & Schroeder. [] In addition, the bankruptcy court in an order approved a settlement agreement [citation] that released any and all claims against the defendant The Marshall Group, Inc. that arises from its purchase of bankrupt Miller & Schroeder's assets. That bankruptcy court order precludes plaintiff from maintaining [all] causes of action of his (first) amended complaint against The Marshall Group, Inc., including under a successor liability claim." A special demurrer, based on defect or misjoinder of parties, was deemed to be moot.

Plaintiff challenges this ruling, contending that Marshall is a successor in interest to Miller & Schroeder, and therefore remains a proper defendant in the fraud and fiduciary duty causes of action. Plaintiff relies on Ray v. Alad Corporation (1977) 19 Cal.3d 22, 28, for the proposition that when a corporation purchases the principal assets of another corporation, it also assumes the other's liabilities. There are different bases for this rule, and plaintiff argues Marshall qualifies because it is a "mere continuation of the seller." (Ibid.) To prevail on that theory, plaintiff would have to demonstrate: "(1) no adequate consideration was given for the predecessor corporation's assets and made available for meeting the claims of its unsecured creditors; (2) one or more persons were officers, directors, or stockholders of both corporations. [Citations.]" (Id. at p. 29.)

Plaintiff goes on to contend that his current fraud and breach of fiduciary duty claims could not have been asserted by the Miller & Schroeder trustee in bankruptcy, against Marshall, and therefore he, as an ordinary plaintiff, "may proceed against a culpable associate of the bankrupt party." (Practice Service Corp. v. HCA Health Services (1995) 37 Cal.App.4th 1003, 1006 (Practice Service Corp.).) He contends these conclusory allegations should be enough to survive demurrer. (But see, Hughes v. Western MacArthur Co. (1987) 192 Cal.App.3d 951, 956 (Hughes).)

In response, Marshall also relies on Practice Service Corp., supra, 37 Cal.App.4th 1003, for the concept that where a judgment creditor sues the owner of a bankrupt corporation that allegedly looted the corporation's assets, "only the bankruptcy trustee had standing to recover the looted assets." (Id. at p. 1006.) It contends that the trustee for Miller & Schroeder already litigated the same basic claims now being brought by plaintiff, and that plaintiff filed a creditor's claim, had notice of the proceedings, and should be bound by them.

Regarding the preclusive nature of that ruling, Marshall cites to hornbook law that "An arrangement confirmed by a bankruptcy court has the effect of a judgment rendered by a federal district court. [Citation.]  . . . [] Proceedings in bankruptcy are proceedings in rem and all persons concerned, including creditors, are deemed to be parties to the proceedings. [Citations.] As an unsecured creditor of the limited partnership, plaintiff  . . .  was a party to the consolidated proceeding in the bankruptcy court." (Levy, supra, 19 Cal.3d 165, 172.) Marshall therefore argues that when the Miller & Schroeder bankruptcy trustee proceeded against it on a fraudulent conveyance theory, and obtained an order approving its settlement, plaintiff was a party with notice of those proceedings as an unsecured creditor, and cannot now raise similar theories. This position is well supported by authority such as In re Medomak Canning (1st Cir. 1990) 922 F.2d 895, 900-901, in which the court explained that a court-approved settlement in bankruptcy court, reached by a bankruptcy trustee for the debtor with a third party, receives the same res judicata effect as a litigated judgment. (Ibid.) "A trustee in bankruptcy is a fiduciary representing the estate and creditors. [Citation.] In order efficiently to administer the estate, a trustee's court-approved settlement must have finality, and settling parties must be assured that those the trustee represents will not relitigate settled claims. Such a result is implicitly recognized in Bankruptcy Rule 9019, which requires notice to interested parties prior to approval of such a settlement." (Id. at p. 901.)

Marshall therefore argues that plaintiff is merely artfully repleading a claim that was the property of the Miller & Schroeder bankruptcy estate. (Practice Service Corp., supra, 37 Cal.App.4th 1003, 1007; Curtis v. Kellogg and Andelson (1999) 73 Cal.App.4th 492, 506 [trustee is the representative of the bankruptcy estate with authority to collect the debtor's assets].) Essentially, no more than fraudulent conveyance of Miller & Schroeder assets is alleged, rather than any independent actions by Marshall, and the Miller & Schroeder trustee already litigated that set of issues and received a final award and judgment in bankruptcy court. Marshall also joins in other grounds raised by other defendants, on the basis that any subordinate successor in interest claims against Marshall should also fail.

We agree with Marshall that plaintiff cannot now recharacterize his fraudulent conveyance theories in different manners to escape the effect of the bankruptcy court approval of the settlement agreement and release between the trustee and Marshall. Plaintiff had notice of those proceedings and did not file any objections. In light of the substance of the judicially noticed materials, it is not enough for plaintiff to allege broadly that Marshall is a successor in interest to Miller & Schroeder, because only the same basic conduct by Marshall appears to be attacked here. (See Hughes, supra, 192 Cal.App.3d at p. 956.) Based on the above authorities, the bankruptcy order has claims preclusive effect, no possibility of amendment is apparent, and the demurrer was properly sustained.

III

RES JUDICATA PRINCIPLES AND EFFECT OF THE BAR ORDERS

A

Introduction

The chief basis of the trial court's rulings on demurrers as to the non-Marshall defendants was the bar of res judicata. Plaintiff challenges those rulings in favor of (A) the Kasirer group, Debra Kasirer and Dierckman; (B) the two remaining individuals, Goldstein and Dhooge; and (C) the two corporate defendants, U.S. Trust and Valuation.Each of those parties successfully argued Talley's dismissal with prejudice of his cross-complaint for declaratory relief, indemnity and contribution (i.e., as to any potential Betker liability), in the underlying federal court action, should have claims preclusive effect upon all the current causes of action, fraud and related theories, due to identical primary rights involved. All defendants additionally rely upon the Bar orders in the record that were reached in connection with the various settlements with Betker, as precluding relitigation of the same basic claims. (See fn. 6, ante.)

Also, the trial court set out additional bases for sustaining the demurrers as to the fourth cause of action only, which alleged that some defendants had aided and abetted breaches of fiduciary duties committed by others. Other grounds for demurrer raised were not reached by the trial court. We will discuss those arguments separately in part IV, post.

Here, however, we first set out basic res judicata principles, to determine the effect of the dismissal of the federal cross-complaint upon the current pleading, with respect to the various Bar orders and a comparison of the rights to relief asserted in both actions.

B

Elements of Res Judicata

In Mycogen Corporation v. Monsanto Company (2002) 28 Cal.4th 888, 896-897 (Mycogen), the policy of res judicata is simply stated: "A clear and predictable res judicata doctrine promotes judicial economy. Under this doctrine, all claims based on the same cause of action must be decided in a single suit; if not brought initially, they may not be raised at a later date. ' "Res judicata precludes piecemeal litigation by splitting a single cause of action or relitigation of the same cause of action on a different legal theory or for different relief." ' [Citation.]" (Id. at pp. 896-897, citing Lucido v. Superior Court (1990) 51 Cal.3d 335, 341 (Lucido).) To further define the two aspects of this doctrine: " 'Res judicata' describes the preclusive effect of a final judgment on the merits. Res judicata, or claim preclusion, prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them. Collateral estoppel, or issue preclusion, 'precludes relitigation of issues argued and decided in prior proceedings.' " (Mycogen, supra, at p. 896.)

In both of its major aspects, bar and collateral estoppel, the doctrine will apply to all courts, so the federal judgment or order may be controlling if all the required elements are satisfied. (Code Civ. Proc.,  1908, subd. (a) [referring to the judgment of "a court or judge of this state, or of the United States"], see 7 Witkin, Cal. Procedure (4th ed. 1997) Judgment, 293, p. 838.) Even if the criteria for applying the res judicata doctrine can be established, courts may nevertheless decline to apply the doctrine " 'if injustice would result or if the public interest requires that relitigation not be foreclosed. [Citations.]' [Citation.]" (COAST,supra, 60 Cal.App.4th 1053, 1065.)

Levy,supra, 19 Cal.3d 165, 171-172, sets out the criteria for identifying when the doctrine should be applied. It "precludes parties or their privies from relitigating an issue that has been finally determined by a court of competent jurisdiction. [Citation.] 'Any issue necessarily decided in such litigation is conclusively determined as to the parties or their privies if it is involved in a subsequent lawsuit on a different cause of action.' [Citation.] The application of the doctrine in a given case depends upon an affirmative answer to these three questions: (1) Was the issue decided in the prior adjudication identical with the one presented in the action in question? (2) Was there a final judgment on the merits? (3) Was the party against whom the plea is asserted a party to or in privity with a party to the prior adjudication? [Citations.]" (Ibid.)

Gamble v. General Foods Corp. (1991) 229 Cal.App.3d 893, 898(Gamble), outlines the rule for determining whether two actions, filed in different courts, will constitute only a single cause of action, as both affecting the same primary right: "Where, as here, an action is filed in a California state court and the defendant claims the suit is barred by a final federal judgment, California law will determine the res judicata effect of the prior federal court judgment on the basis of whether the federal and state actions involve the same primary right. [Citation.]" (Ibid.) The federal test for determining if the same cause of action is involved is somewhat different, and examines whether the two actions arose from the same "transactional nucleus of facts" or a single "core of operative facts." (Ibid.)

It is essential to address at the outset the scope of the various orders in the federal action that are claimed to have preclusive effect. These include not only Talley's own dismissal with prejudice of the Talley cross-complaint, but also the three settlement and Bar orders issued by the district court in connection with separate settlements in Betker that were reached by Kasirer, the Dhooge/Clarey group and Goldstein. (At oral argument, counsel for U.S. Trust and Valuation stated that they had obtained similar orders in the class action portion of the federal litigation, but those were not before the trial court and should not be considered here; see fn. 6, ante.) All of these orders arose out of the multidistrict Heritage Bonds litigation, but they only disposed of the Betker claims against the various settling defendants, not the class actions. At that time, Talley was a codefendant who was seeking indemnity and contribution, if he were held liable to Betker, and his request was therefore contingent in nature. His cross-complaint for indemnity, equitable indemnity, contribution, and declaratory relief named as cross-defendants only the Miller & Schroeder defendants, of whom only Dhooge remains. This raises the difficult issue of which current defendants can appropriately assert the protection of Talley's dismissal with prejudice of his cross-complaint, since it directly affected in federal court only Dhooge and Larsen of the currently named parties in this state court action (although Larsen has been dismissed due to his current settlement here).

Thus, in light of the judicial notice taken of the federal Bar orders in the record (which are final for our purposes), we next inquire whether under Gamble, supra, 229 Cal.App.3d 893, 898, the federal test for determining if the same cause of action is involved should be applied to those defendants affected by the Bar orders. This test inquires whether the two actions arose from the same "transactional nucleus of facts" or a single "core of operative facts." (Ibid.) Since our review of the demurrer rulings is de novo, we address this ground first, in the alternative, before turning to the trial court's choice of analysis, primary rights.

C

Scope of Federal Bar Orders in favor of Defendants

Kasirer Group, Dierckman, Dhooge, and Goldstein

Talley is currently appealing elsewhere (9th Circuit) the Bar orders issued as to Kasirer, the Dhooge/Clarey defendants and Goldstein, in connection with the federal Betker settlement. Under the federal rule, "a judgment or order, once rendered, is final for purposes of res judicata until reversed on appeal or modified or set aside in the court of rendition. [Citations.]" (Levy,supra, 19 Cal.3d 165, 172.)

The terms of the settlement and Bar orders issued by the district court provide that the Kasirers, along with Dierckman, are within the definition of settling defendants. The Dhooge and Goldstein orders also identified them as settlors. All these orders broadly state that pursuant to Code of Civil Procedure section 877.6 and the PSLRA, all defendants, cross-complainants and/or nonsettling parties are barred from asserting, in any forum, any claims or cross-claims arising out of or related to the released claims or the transactions, facts or occurrences giving rise to those claims. The district court expressly dismissed Talley's claims against Kasirer et al., as settling defendants, with prejudice. Similarly and reciprocally, the released persons were barred from asserting other claims arising out of the same transactions. The Kasirer ruling further stated that Talley had not presented any evidence of direct losses or damages that were separate or independent from the indemnity or contribution claims already asserted, and those claims were deemed to be inter-related to the factual allegations giving rise to the claims by the Betker plaintiffs. The other orders do not expressly identify the remaining parties who may not bring further claims against the settling parties, but they reference the same actions and cross-actions, such as Talley's federal cross-complaint.

At this time, while the federal appeals are pending, the Bar orders should be considered final. (See fn. 3, ante.) To interpret their proper effect in light of the factual and procedural context in which they arose, including the cross-complaint dismissal, we must consider basic indemnity principles. As set out in Western Steamship Lines, Inc. v. San Pedro Peninsula Hospital (1994) 8 Cal.4th 100 (Western Steamship), the main purpose of the doctrine of equitable indemnity is " ' "to distribute the loss [among multiple tortfeasors] in proportion to the allocable concurring fault." ' " (Id. at p. 110.) Accordingly, to promote that purpose, there is an "express exception immunizing from further liability defendants who enter into good faith settlements. [Citations.] In light of the 'strong public policy in favor of encouraging settlement