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 Post subject: Affair With Plants: Rule 187 Motion to Amend
PostPosted: Mon Feb 13, 2012 6:26 am 
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An Affair With Plants and Flowers, Inc., 2012 WL 421380 (Cal.App. 4 Dist., Unpublished, Feb. 10, 2012).

Not Officially Published

(Cal. Rules of Court, Rules 8.1105 and 8.1110, 8.1115)

An Affair With Plants and Flowers, Inc., Plaintiff and Appellant.

Trussnet Usa Inc. et al., Defendants and Respondents.

E052884

Court of Appeal,

Fourth District, Division 2, California.

Filed February 10, 2012

APPEAL from the Superior Court of Riverside County. Harold W. Hopp, Judge. Affirmed with directions. (Super.Ct.No.INC10000241)

Scott Harlow for Plaintiff and Appellant.

Law Offices of Mark C. Fields and Mark C. Fields for Defendants and Respondents.

v.

OPINION

KING, J.

I. INTRODUCTION

Plaintiff and appellant, An Affair With Plants and Flowers, Inc. (An Affair), filed the present action against eight named defendants,FN1 including the Truss defendants.FN2 The Truss defendants moved for judgment on the pleadings on the ground the complaint failed to state a cause of action. (Code Civ. Proc., sec. 438, subd. (c)(1)(B)(ii).) The trial court granted the motion, and An Affair appeals.

FN1. The eight named defendants in the present action are Luis Raphael Trujillo, George Alvarez, Christopher B. Young, Mario Alvarez, Trussnet USA, Inc., Trussgroup Limited, Trussnet USA Development Co. Inc., and California Cove at Hawaii, LLC.

FN2. The Truss defendants are Trussnet USA, Inc., Trussgroup Limited, and Trussnet USA Development Co., Inc.

We affirm. The complaint against the Truss defendants is barred by the doctrine of res judicata or claim preclusion, and was properly dismissed. But the order granting the Truss defendants' motion for judgment on the pleadings dismissed the complaint against all of the defendants, including five named defendants who were not parties to the Truss defendants' motion. This appears to have been inadvertent. We therefore affirm the order granting the motion with directions to vacate the dismissal of the complaint against all defendants other than the three Truss defendants.

II. FACTS AND PROCEDURAL BACKGROUND FN3

FN3. The facts are taken from the allegations of the present complaint, records from a prior action, Riverside County Superior Court case No. INC066099, and the records in an appeal in the prior action, case No. E047497, which includes additional records from the prior action. (Code Civ. Proc., sec. 438, subd. (d); Evid.Code, sec. 452, subd. (d); Barker v. Hull (1987) 191 Cal.App.3d 221, 224.)

A. The Settlement Agreement and Judgment in the Prior Action

In their motion for judgment on the pleadings, the Truss defendants claimed the present complaint against them was barred by the doctrine of collateral estoppel because An Affair had already obtained a judgment for $100,000 against three other parties based on the same underlying claims asserted in its present complaint. The judicially noticed records in a prior action, namely, Riverside County Superior Court case No. INC066099, shows the judgment was obtained against California Cove Communities, Inc. (CCC), California Cove at LaQuinta, Inc. (CC LaQuinta), and Las Ventanas at LaQuinta, LLC (collectively the original judgment debtors).

In the prior action, An Affair alleged that CCC breached oral and written contracts to pay it approximately $280,000 for landscaping and irrigation materials and services that An Affair provided to CCC on a development project known as Las Ventanas in LaQuinta during 2005 and 2006. CCC disputed the quality of the materials and services provided.

In September 2007, An Affair entered into a settlement agreement with CCC and the two other original judgment debtors. CCC agreed to pay An Affair $120,000 and paid an initial installment of $20,000, but failed to pay the $100,000 balance when due on December 31, 2007.

An Affair enforced the settlement agreement by obtaining a judgment in the prior action against the original judgment debtors in the principal sum of $100,000. (Code Civ. Proc., sec. 664.6.) In March 2008, An Affair assigned the judgment to its chief financial officer, Michael Petersen, who had negotiated the settlement agreement with the original judgment debtors. Petersen conducted postjudgment discovery.

B. Petersen's Postjudgment Motion in the Prior Action to Add Judgment Debtors

In September 2008, Petersen filed a postjudgment motion in the prior action to amend the judgment to add nine additional judgment debtors. Petersen claimed the nine additional proposed judgment debtors were alter egos of CCC and CC LaQuinta, and as such were liable for the judgment amount. (Code Civ. Proc., sec. 187; Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Center Bd. (1996) 41 Cal.App.4th 1551, 1554–1555.) "Amendment of a judgment to add an alter ego 'is an equitable procedure based on the theory that the court is not amending the judgment to add a new defendant but is merely inserting the correct name of the real defendant.' " ( Carr v. Barnabey's Hotel Corp. (1994) 23 Cal.App.4th 14, 21–22.)

The trial court denied Petersen's motion on the ground he failed to establish by a preponderance of admissible evidence that any of the alleged alter egos controlled the litigation against the original judgment debtors. Petersen appealed, and in a nonpublished opinion this court affirmed the order denying his motion. ( Petersen v. California Cove Communities, Inc. (Feb. 25, 2010, E047497) [nonpub. opn.].)

C. This Court's Opinion in the Prior Action

In our opinion in the prior action, we indicated that much of the evidence Petersen adduced to establish that the proposed additional judgment debtors were the alter egos of CCC or CC La Quinta, and had manipulated its assets to their personal benefit was, as the defendants claimed, "a world-class collection of hearsay, double hearsay, and documents lacking either foundation, authentication and/or relevance." Petersen claimed, among other things, that insufficient evidence supported the order denying his motion. He also claimed the court prejudicially erred in failing to rule on defendants' hearsay and other evidentiary objections to the declarations he filed in support of the motion.

We rejected Petersen's claims and concluded that substantial evidence supported the court's determination that Peterson failed to meet his burden of showing that any of the proposed judgment debtors, including the Truss defendants, were virtually represented in the litigation against CCC as though their own liability were at stake. We explained that even if Petersen had established—with competent, admissible evidence—that any of the proposed judgment debtors were the alter egos of CCC and manipulated CCC's assets to the detriment of its creditors, he adduced no evidence that any of the proposed judgment debtors, including the Truss defendants, were "virtually represented" in the litigation or controlled the litigation as though their own liability were at stake. ( NEC Electronics Inc. v. Hurt (1989) 208 Cal.App.3d 772, 777–779.)

As we explained, a judgment creditor may meet its evidentiary burden of showing that a proposed additional judgment debtor was an alter ego of an original judgment debtor and manipulated the assets of the original judgment debtor to the detriment of creditors, yet fail to establish the "virtual representation" or requirement of due process, which is a necessary prerequisite to adding an additional judgment debtor. We said: "[D]ue process requires not only that an alter ego or proposed additional judgment debtor have controlled the litigation that resulted in the judgment, it also requires the alter ego to have been sufficiently motivated to defend the litigation as though his or her personal liability was at stake. In other words, the interests of the alter ego and the original judgment debtor must have substantially coincided. Otherwise, it cannot be said that the alter ego was 'virtually represented' in the litigation, even if the alter ego controlled that litigation on behalf of the original judgment debtor."

D. An Affair's Complaint in the Present Action

In its complaint in the present action, An Affair alleged that the three Truss defendants, plus three other persons Petersen attempted to add as judgment debtors to the judgment, namely, Luis Raphael Trujillo, George Alvarez, and California Cove at Hawaii LLC, plus two persons who were not named in Petersen's motion, namely, Christopher B. Young and Mario Alvarez, were alter egos of CCC and on that basis were liable to An Affair for approximately $215,000 in landscaping and irrigation materials and services that An Affair provided to CCC during 2005 and 2006. The complaint does not mention the settlement agreement or $100,000 judgment in the prior action, Petersen's unsuccessful motion to add six of the eight defendants in the present action as additional judgment debtors, or this court's opinion in the prior action affirming the order denying Petersen's motion.

E. The Truss Defendants' Motion for Judgment on the Pleadings FN4

FN4. In support of its motion for judgment on the pleadings, the Truss defendants adduced records from the prior action and requested that the trial court judicially notice them. (Code Civ. Proc., sec. 438, subd. (d); Evid.Code, sec. 452, subd. (d).) On our own motion, we have taken judicial notice of the records from the appeal in case No. E047497 (Evid.Code, secs. 452, subd. (d), 459), which includes our opinion in the appeal and additional records from the prior action.

The Truss defendants' motion for judgment on the pleadings asserted that the complaint failed to state a cause of action (Code Civ. Proc., sec. 438, subd. (c)(1)(B)(ii)), and was based on three grounds: (1) An Affair had already obtained a judgment on its underlying claims in the present action; (2) An Affair had already assigned the judgment to Petersen and therefore lacked standing to pursue the present action; and (3) Petersen's postjudgment motion to add additional judgment debtors had been denied by the trial court, and that denial had been affirmed by this appellate court.

F. The Trial Court's Ruling on the Motion

In its order granting the motion, the trial court noted that An Affair had obtained a judgment on its "underlying claims" pursuant to the settlement agreement, and was "left the rights obtained in the settlement agreement." The court also pointed out that issues of the Truss defendants' alter ego or liability as additional judgment debtors had been "litigated before the trial court and court of appeal."

Accordingly, the trial court ordered the complaint dismissed. The court did not specify that the complaint was to be dismissed against only the moving party Truss defendants, though this was implicit in the court's order. The register of actions indicates, however, that the "entire action" was dismissed "without prejudice" against all defendants, including five named defendants who were not parties to the Truss defendants' motion.

III. DISCUSSION

A. An Affair's Contentions on Appeal

An Affair claims the trial court (1) erroneously concluded that An Affair's present claims against the Truss defendants were barred, because in the prior action, neither the trial court nor this court ruled on whether the Truss defendants were alter egos of CCC or CC LaQuinta, and (2) erroneously dismissed the complaint against Mario Alvarez and Christopher B. Young, because Petersen did not seek to add either of these persons as additional judgment debtors in his postjudgment motion in the prior action.

We reject the first claim; however, we agree that the complaint was erroneously (and apparently inadvertently) dismissed against Mario Alvarez, Christopher B. Young, and the other named defendants who were not parties to the Truss defendants' motion.

B. Standard of Review

A motion for judgment on the pleadings is equivalent to a general demurrer, but is filed after the time for filing a demurrer has expired. ( Hopp v. City of Los Angeles (2010) 183 Cal.App.4th 713, 717; Code Civ. Proc., sec. 438, subd. (f).) "Like a general demurrer, a motion for judgment on the pleadings tests the sufficiency of the complaint to state a cause of action." ( Miller v. Campbell, Warburton, Fitzsimmons, Smith, Mendel & Pastore (2008) 162 Cal.App.4th 1331, 1337.) The court assumes the truth of all factual allegations in the complaint, along with matters subject to judicial notice. ( Ibid.) We independently review an order granting a motion for judgment on the pleadings. ( Bezirdjian v. O'Reilly (2010) 183 Cal.App.4th 316, 321.) FN5

FN5. " 'The standard for granting a motion for judgment on the pleadings is essentially the same as that applicable to a general demurrer, that is, under the state of the pleadings, together with matters that may be judicially noticed, it appears that a party is entitled to judgment as a matter of law.' [Citation.] Matters which are subject to mandatory judicial notice may be treated as part of the complaint and may be considered without notice to the parties. [Citation.] Matters which are subject to permissive judicial notice must be specified in the notice of motion, the supporting points and authorities, or as the court otherwise permits.' [Citation.] 'Judgment on the pleadings does not depend upon a resolution of questions of witness credibility or evidentiary conflicts. In fact, judgment on the pleadings must be denied where there are material factual issues that require evidentiary resolution. [Citation.] In determining whether the pleadings, together with matters that may be judicially noticed, entitle a party to judgment, a reviewing court can itself conduct the appropriate analysis and need not defer to the trial court.' [Citation.]" ( Bezirdjian v. O'Reilly, supra, 183 Cal.App.4th at pp. 321–322.)

C. An Affair's Present Claims Against the Truss Defendants are Barred by the Doctrine of Res Judicata or Claim Preclusion

In its complaint in the present action, An Affair seeks to recover around $215,000 from the Truss defendants for landscaping and other materials and services it provided to CCC on the LaQuinta project during 2005 and 2006, on the ground the Truss defendants are alter egos of CCC and are therefore liable for its debts. In the prior action, An Affair sued CCC on the same primary right or claim, settled the claim for $120,000, and obtained a $100,000 judgment on the settlement agreement against CCC, CC LaQuinta, and Las Ventanas at LaQuinta, after CCC failed to pay the $100,000 balance due on the settlement agreement. (Code Civ. Proc., sec. 664.6.)

An Affair then assigned the judgment to Petersen, who in the prior action filed a postjudgment motion seeking to name the Truss defendants, among others, as judgment debtors on the $100,000 judgment, on the ground they were the alter egos of CCC and CC LaQuinta. The motion was denied, and on appeal this court affirmed the order denying the motion. In our opinion in the prior action, we explained that Petersen presented no evidence that any of the alleged alter ego defendants, including the Truss defendants, were "virtually represented" in the litigation against CCC in the prior action or controlled the litigation as though their own liability were at stake—even if Petersen could show that any of the alleged alter ego defendants were, in fact, alter egos of CCC or CC LaQuinta. ( NEC Electronics Inc. v. Hurt, supra, 208 Cal.App.3d at pp. 777–779.)

"Res judicata is a doctrine which prevents parties from relitigating a cause of action previously determined between them." ( Wright v. Ripley (1998) 65 Cal.App.4th 1189, 1193.) Under state law, a cause of action is based on the violation of a single primary right, rather than on the particular theory upon which recovery is sought (e.g., breach of contract, quantum meruit). ( Bay Cities Paving & Grading, Inc. v. Lawyers' Mutual Ins. Co. (1993) 5 Cal.4th 854, 860.)

As the assignor and privy of Petersen, the doctrine of res judicata bars An Affair from reasserting in the present action the same primary right or claim against the Truss defendants that Petersen unsuccessfully asserted against them in his postjudgment motion in the prior action—namely, that the Truss defendants are liable to An Affair for CCC's unpaid debt on the LaQuinta project, based on their status as alter egos of CCC. (See City of Simi Valley v. Superior Court (2003) 111 Cal.App.4th 1077, 1082.)

"The primary aspect of res judicata is sometimes referred to as ' "claim preclusion" '; the secondary aspect is referred to as 'collateral estoppel' or ' "issue preclusion." ' [Citation.] " 'The rule of claim preclusion, [citation], is that a party ordinarily may not assert a civil claim arising from a transaction with respect to which he has already prosecuted such a claim, whether or not the two claims wholly correspond to each other. The rule of issue preclusion, sometimes referred to as collateral estoppel [citation], is that a party ordinarily may not relitigate an issue that he fully and fairly litigated on a previous occasion." ' [Citation.]" ( Benasra v. Mitchell Silberberg & Knupp (2002) 96 Cal.App.4th 96, 104.)

An Affair's present claims against the Truss defendants are barred by the doctrine of claim preclusion. As indicated: " 'The principle underlying the rule of claim preclusion is that a party who once has had a chance to litigate a claim before an appropriate tribunal usually ought not to have another chance to do so. A related but narrower principle—that one who has actually litigated an issue should not be allowed to relitigate it—underlies the rule of issue preclusion.' " (7 Witkin, Cal. Procedure (5th ed. 2008) Judgment, sec. 338, p. 942, italics added.)

" 'The law of res judicata expresses the terms for assessing whether the procedural system afforded the contending party an adequate opportunity to litigate. In the now accepted phrase, the question is whether that opportunity was "full and fair." Modern civil procedure usually does provide full and fair freedom to present substantive contentions and full and fair access to evidence.' " (7 Witkin, Cal. Procedure, supra, Judgment, sec. 338, p. 942.) By contrast, "[r]es judicata principles should not apply where the 'scope of substantive inquiry and the potential for development of evidence are much more restricted than the corresponding opportunity afforded in a court of general jurisdiction....' " ( Gouvis Engineering v. Superior Court (1995) 37 Cal.App.4th 642, 650, quoting Rest.2d Judgments, ch. 1, p. 10.)

Through his postjudgment motion in the prior action, Petersen, as the assignee of An Affair, had every chance to litigate the claim that the Truss defendants were liable on the judgment that an Affair obtained against CCC in the prior action. Moreover, Petersen chose to pursue his claims against the Truss defendants through his postjudment motion in the prior action, rather than file a separate action against the Truss defendants, as he could have done. Accordingly, An Affair should not be heard to complain that Petersen did not have a full and fair opportunity to develop the necessary evidence to support his claim in the prior action. Moreover, An Affair, as the assignor and privy of Petersen, is precluded from relitigating the same claim in the present action.

An Affair maintains it is not barred from asserting its breach of contract claims against the Truss defendants because, in the prior action, neither the trial court nor this court actually determined whether the Truss defendants were alter egos of CCC or CC LaQuinta. This argument misses the point of claim preclusion. An Affair, through its assignee, Petersen, had a full and fair opportunity in the prior action to litigate its claim that the Truss defendants were liable on the judgment. An Affair is therefore precluded from relitigating this entire claim in the present action—regardless of whether the subsidiary issue of whether the Truss defendants were alter egos of CCC or CC La Quinta was actually determined in the prior action.

In our opinion in the prior appeal we concluded that the Truss defendants could not be named as additional judgment debtors because Petersen adduced no evidence that the Truss defendants, or any of the other proposed judgment debtors, were virtually represented in the litigation against CCC or were motivated to defend the litigation as though their personal liability were at stake. ( NEC Electronics Inc. v. Hurt, supra, 208 Cal.App.3d at pp. 777–779.) It was therefore unnecessary for either the trial court in the prior action or this court to actually determine whether the Truss defendants were alter egos of CCC or CC La Quinta, in order to rule on the entire claim. FN6

FN6. Following the appeal in the prior action, the judgment in the prior action became "final" for purposes of relitigating the claim, asserted by Petersen in his postjudgment motion in the prior action, that the Truss defendants were liable on the judgment as additional judgment debtors. (See 7 Witkin, Cal. Procedure, supra, Judgment, sec. 364, p. 986.)

D. The Complaint Was Erroneously (and Apparently Inadvertently) Dismissed Against Several Named Defendants Who Were Not Before the Court on the Motion

An Affair argues the trial court erroneously dismissed the complaint against Mario Alvarez and Christopher B. Young because Petersen did not seek to add either of these defendants as additional judgment debtors in his postjudgment motion in the prior action. We agree the complaint was erroneously dismissed against these defendants but for a more fundamental reason: neither was a party to the Truss defendants' motion. In fact, the complaint appears to have been inadvertently dismissed against these two defendants and the three other named defendants who were not parties to the motion, namely, Luis Raphael Trujillo, Mario Alvarez, and California Cove at Hawaii LLC.

The order granting the Truss defendants' motion was filed on November 16, 2010, following the October 4, 2010, hearing on the motion. The order dismissed the complaint without specifying whether it was to be dismissed solely against the three moving party Truss defendants, though that was implicit in the order granting the motion. Nevertheless, the register of actions shows that on November 16, the date the order was filed, the "entire action" was dismissed without prejudice.

At the conclusion of the October 4 hearing, the trial court indicated it did not intend to dismiss the complaint against any defendants other than the moving party Truss defendants. This became evident when counsel for the Truss defendants asked the court to vacate the trial date and set a case management conference on the ground the complaint had not been served or had only recently been served on the other defendants. The court told counsel to make an appropriate motion to change the trial date because the court was not "changing anything today without the parties that are not represented here. That's an improper ex parte."

We recognize that a trial court has inherent authority to dismiss, on its own motion, a complaint that fails to state a cause of action. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2011) para. 7.370, p. 7(1)–86.) But this was apparently not the reason the complaint was dismissed against the five named defendants who were not parties to the motion. Rather, the dismissal against these defendants appears to have been inadvertent.

In any event, the complaint was improperly dismissed against the defendants who were not parties to the motion. The issue on the Truss defendants' motion was whether the complaint stated a cause of action against the Truss defendants—not whether the complaint stated a cause of action against any of the other defendants.

IV. DISPOSITION

The order granting the Truss defendants' motion for judgment on the pleadings and dismissing the complaint against the Truss defendants is affirmed. The matter is remanded to the trial court with directions to vacate the apparently inadvertent dismissal of the complaint against the other five named defendants who did not join and were not parties to the Truss defendants' motion. This disposition is without prejudice to any other order dismissing the complaint against any of the other defendants. The parties shall bear their respective costs on appeal.

We concur:

MCKINSTER, Acting P.J.

MILLER, J.

= = = = = = = = J U D G M E N T E N F O R C E M E N T = = = = = = = =

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