Merry v. Coast Community College District

Plaintiff commenced work on the project in 1972 and completed it in 1974. He wrote the material for the series, participated in planning and “shooting” the film, appeared on the screen as the narrator, and took part in handling technical and other details involved in the production of the series. Following completion of the series, the district began to lease the film to school districts and educational television stations throughout the United States. Plaintiff has demanded that the district provide him an accounting of the royalties and residuals but the district has refused.

The Federal Court Actions

In September of 1975, plaintiff filed an action against the district in the United States District Court for the Central District of California (Merry I) alleging the basic facts summarized above. The complaint was denominated an action to redress violations of plaintiff’s civil rights under color of law, for declaratory relief, for infringement of common law copyright, recovery under quasi-contract and imposition of constructive trust. The district moved to dismiss the action on the ground it was not a person within the meaning of the Civil Rights Act ( 42 U.S.C. § 1983 ).^[1] The motion was granted and a judgment of dismissal was entered in January 1976.

In March 1976, plaintiff filed a second action in federal district court (Merry II) naming as defendants the district, members of its board of trustees, and certain administrative officers and employees of the district. The action was captioned as one to “redress various grievances and violations of civil rights under color of law” and “for declaratory relief.” The complaint alleged substantially the same facts alleged in Merry I, and asserted claims under the Civil Rights Act, the Fifth and Fourteenth Amendments, and article I, section 8, clause 8 of the United States Constitution, and sought declaratory relief respecting plaintiff’s rights to the profits, royalties and residuals realized by the district from the series. The gist of plaintiff’s claims was that the district deprived him of his property interest in the television film series without due process by coercing him through threats and intimidations to sign the contract waiving his interest in the series.

Defendants moved for summary judgment in Merry II on the ground there was no genuine issue as to any material fact and that the facts failed

to state a claim upon which relief could be granted under the Civil Rights Act, the Fifth and Fourteenth Amendments, article I, section 8 of the United States Constitution, or the copyright laws of the United States. The court signed findings of fact and conclusions of law^[2] in which it concluded that plaintiff failed to state a claim on which relief could be granted under the United States Constitution or federal statutes; that there was “no genuine issue as to any material fact raised by the complaint and the defendants, and each of them, are entitled to a summary judgment ... on the merits.” Judgment was entered that plaintiff take nothing by his complaint and that “the action be dismissed on the merits.”

The State Action

In April 1976, during the pendency of Merry II, plaintiff filed an action in the superior court (Meny III) naming as defendants the district and certain of its administrative personnel and alleging substantially the same facts alleged in Meny II. The complaint sought rescission of the contract provision waiving royalties and residuals from the film series on grounds of fraud, undue influence and mistake of law, damages for infringement of common law copyright, an accounting and declaratory relief. The district demurred to the second amended complaint on two grounds: (1) The action was barred under the doctrine of res judicata by reason of the judgment in Merry II, and (2) failure to allege facts showing substantial compliance with the California Tort Claims Act. The trial court sustained the demurrer on the res judicata ground and entered an order dismissing the action with prejudice.^[3] Plaintiff appeals from the order of dismissal.

Plaintiff contends that the Merry II judgment is not res judicata of the state claims presently asserted because although state claims were raised in Merry II, the court failed to pass upon them and further that the state claims involve a distinct and different primary right from that involved in

the federal action.^[4] Defendants contend that plaintiff is barred from maintaining the instant action because: (1) His state claims could have been raised and considered by the federal court in Merry II under its pendent jurisdiction and (2) the rule against splitting a cause of action precludes plaintiff from pursuing his state claims in a state court following the final judgment on the merits in Merry II on his federal claims.

For reasons we explain below, we have concluded that since it clearly appears that the federal court would have declined to exercise its pendent jurisdiction to adjudicate plaintiff’s state claims had they been raised, the Merry II summary judgment is not a bar to the maintenance of the instant action.

Preliminarily, we briefly review the basic res judicata principles pertinent to this appeal.

The two aspects of the res judicata effect of a final judgment on the merits are: (1) The judgment bars the parties (or those in privity with them) from litigating the same cause of action in a subsequent proceeding and (2) the parties (or those in privity with them) are collaterally estopped from litigating in a subsequent proceeding on a different cause of action any issue actually litigated and determined in the former proceeding. (In re Russell, 12 Cal.3d 229 , 233 [ 115 Cal.Rptr. 511 , 524 P.2d 1295 ]; Busick v. Workmen's Comp. Appeals Bd, 7 Cal.3d 967 , 972-973 [ 104 Cal.Rptr. 42 , 500 P.2d 1386 ]; Martin v. Martin, 2 Cal.3d 752 , 758 [ 87 Cal.Rptr. 526 , 470 P.2d 662 ]; Bernhard v. Bank of America, 19 Cal.2d 807 , 810 [ 122 P.2d 892 ]; Ellena v. State of California, 69 Cal.App.3d 245 , 253 [ 138 Cal.Rptr. 110 ]; Ford Motor Co. v. Superior Court, 16 Cal.App.3d 442 , 447-448 [ 94 Cal.Rptr. 127 ]. Rest., Judgments, § 68, com. a, pp. 293-295.) The res judicata aspect which bars relitigation of the same cause of action precludes piecemeal litigation by splitting a single cause of action. (Wulfjen v. Dolton, 24 Cal.2d 891 , 894 [ 151 P.2d 846 ]; Scoggin v. Schrunk (9th Cir.) 522 F.2d 436 , 437, cert. den., 423 U.S. 1066 [ 46 L.Ed.2d 657 , 96 S.Ct. 807 ]; Flynn v. State Board of Chiropractic Examiners (9th Cir.) 418 F.2d 668 . See generally, 3 Witkin, Cal. Procedure (2d ed. 1971) Pleading,

§ 32, pp. 1715-1717.) It also precludes relitigation of the same cause of action on a different legal theory or for different relief. (Slater v. Blackwood, 15 Cal.3d 791 , 795 [ 126 Cal.Rptr. 225 , 543 P.2d 593 ]; Panos v. Great Western Packing Co., 21 Cal.2d 636 , 638-639 [ 134 P.2d 242 ]; Wulfjen v. Dolton, supra, 24 Cal.2d 891 , 895-896; City of Los Angeles v. Superior Court (Levy), 85 Cal.App.3d 143 , 152 [ 149 Cal.Rptr. 320 ].) The prior final judgment on the merits settles issues which were not only actually litigated but every issue that might have been raised and litigated in the first action. (Olwell v. Hopkins, 28 Cal.2d 147 , 152 [ 168 P.2d 972 ]; Rest., Judgments (1942) §§ 62, 63, pp. 242-265.)

Because the prior judgment in the instant case was rendered by a federal court, it must be given the same effect by state courts that it would have in a federal court. (Levy v. Cohen, 19 Cal.3d 165 , 173 [ 137 Cal.Rptr. 162 , 561 P.2d 252 ], cert. den., 434 U.S. 833 [ 54 L.Ed.2d 94 , 98 S.Ct. 119 ]. 4 Witkin, Cal. Procedure (2d ed. 1971) Judgment, § 156, pp. 3301-3302.) Also, principles governing a federal court’s power to exercise pendent jurisdiction over nonfederal claims come into play in determining the preclusive effect of the judgment in a subsequent state court action on the state claims. (On pendent jurisdiction generally, see 3A Moore’s Federal Practice (2d ed.) Pendent Jurisdiction, ¶ 18.07, p. 18-29 et seq.; Annot., Pendent Federal Jurisdiction, 5 A.L.R. 3d 1040 .)

A federal court has the power to exercise pendent jurisdiction over state claims where the federal claim is sufficient to confer subject matter jurisdiction and the state and federal claims “derive from a common nucleus of operative fact.” (Mine Workers v. Gibbs, 383 U.S. 715 , 725 [ 16 L.Ed.2d 218 , 228, 86 S.Ct. 1130 ].)^[5] If, disregarding their federal or state character, “plaintiff’s claims are such that he would ordinarily be expected to try them all in one judicial proceeding, then, assuming substantiality of the federal issues there is power in federal courts to hear the whole.” (Id., at p. 725 [16 L.Ed.2d at p. 228], fn. omitted.) Exercise of pendent jurisdiction, however, is not a matter of plaintiff’s right; it rests in the discretion of the court. (Id., at p. 726 [16 L.Ed.2d at p. 228].) Gibbs cautioned; “Needless decisions of state law should be avoided both as a matter of comity and to promote justice between the parties, by procuring for them a surer-footed reading of

applicable law. Certainly, if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well. Similarly, if it appears that the state issues substantially predominate, whether in terms of proof, of the scope of the issues raised, or of the comprehensiveness of the remedy sought, the state claims may be dismissed without prejudice and left for resolution to state tribunals.” (Id., at pp. 726-727 [16 L.Ed.2d at p. 228], fns. omitted.)

With the foregoing basic principles in mind, we proceed to the question whether the summary judgment in Merry II barred the instant action.

Plaintiff contends that the Merry II judgment is not a bar because although his complaint in that action alleged facts sufficient to permit vindication of his state claims, since the federal court failed to adjudicate them the judgment was not on the merits insofar as his state claims are concerned. The contention reflects a lack of understanding of one of the basic principles of res judicata. Since the present action derives from the same operative facts alleged in Merry II, the Merry II judgment would operate as a bar whether or not state claims were actually raised and litigated if they could have been litigated in that action.^[6] “A final judgment on the merits between parties who in law are the same operates as a bar to a subsequent action upon the same cause of action, settling not only every issue that was raised, but also every issue that might have been raised in the first action.” (Olwell v. Hopkins, supra, 28 Cal.2d 147 , 152.)

As defendants point out the foregoing res judicata principle has been applied in the Ninth Circuit cases of Scoggin v. Schrunk, supra, 522 F.2d 436 , 437, and Flynn v. State Board of Chiropractic Examiners, supra, 418 F.2d 668 . However, those cases do not, as defendants suggest, compel the conclusion that the Merry II judgment is a bar to plaintiff’s state action. Scoggin involved the question whether plaintiff’s federal court action under the Civil Rights Act was barred by a prior state court judgment on a state claim based on the same operative facts. Plaintiff’s attempt to avoid the res judicata effect of the state court judgment on the ground the federal claim was not raised in the state action was rejected. The court held that the federal action was barred whether or not the federal claim was raised in the state court because the state judgment on the merits precluded “assertion of every legal theory or ground for recovery that

might have been raised” in the state court. (Scoggin v. Schrunk, supra, 522 F.2d 436 , 437.) Since a state court has concurrent jurisdiction to enforce federal law in state civil actions unless Congress has conferred exclusive jurisdiction on federal courts (Williams v. Horvath, 16 Cal.3d 834 , 837 [ 129 Cal.Rptr. 453 , 548 P.2d 1125 ]; Brown v. Pitchess, 13 Cal.3d 518 , 523 [ 119 Cal.Rptr. 204 , 531 P.2d 772 ]), plaintiff in Scoggin could have raised and litigated her federal Civil Rights Act claim in the state court. Similarly, Flynn v. State Board of Chiropractic Examiners, supra, 418 F.2d 668 , involved the preclusive effect of a prior state court judgment on a federal court action. As in Scoggin, the federal constitutional claim could have been raised and adjudicated in the state action.^[7] Here, we have the converse of Scoggin and Flynn; namely, the preclusive effect of a federal court summary judgment rejecting plaintiff’s federal claim on his subsequent state court action to enforce his state claims. The answer to that question turns on whether plaintiff could have litigated his state claims in Merry II.

Defendants argue that had plaintiff raised his state claims in Merry II, once the federal law portion of the case had been adjudicated, the court, under its “plenary power” to hear pendent state law claims, would have decided whether to adjudicate the state claims or to dismiss them without prejudice. Accordingly, defendants maintain that “[w]hatever result might have obtained, the fact remains that plaintiff could have raised his state law claims in the federal court.”

Although it is frequently said that a former final judgment on a cause of action settles not only the issues actually litigated but issues that “might have been raised,” the latter expression manifestly means more than simply “raised” by the pleadings. As expressed in Levy v. Cohen, supra, 19 Cal.3d 165 , at page 173: “[T]he doctrine of res judicata prevents the readjudication of all matters . . . which were, or might have been, litigated in a prior proceeding between the same parties.” (Italics supplied.) Perhaps an even more accurate statement of the principle is that a final valid judgment is “conclusive on the parties, ... as to all matters, fact and law, that were or should have been adjudicated in the proceeding.” (1B Moore’s Federal Practice (2d ed.) ¶ 0.405[1], p. 624, fn.

408 , 96 S.Ct. 567 ]; Calderone Enter. Corp. v. United Artists Theatre Circuit (2d Cir. 1971) 454 F.2d 1292 , 1297, cert. den., 406 U.S. 930 [ 32 L.Ed.2d 132 , 92 S.Ct. 1776 ]; Ciccone v. Waterfront Com’n of New York Harbor (S.D.N.Y. 1977) 438 F.Supp. 55 , 59-60; Braunstein v. Laventhol & Horwath (S.D.N.Y. 1977) 433 F.Supp. 1077 , 1081. See 3A Moore’s Federal Practice (2d ed.) ¶ 18.07 [1-3], pp. 18-52—18-63; Annot., Pendent Federal Jurisdiction, 5 A.L.R.3d 1040 , 1066-1067.) The Ninth Circuit Court of Appeals has consistently held that where the federal claim is dismissed on a motion for summary judgment before there has been a substantial expenditure of the court’s time or energy on the case, proper exercise of discretion requires dismissal of the state claims without prejudice to plaintiff’s right to litigate them in a proper state forum. (Hodge v. Mountain States Tel. & Tel. Co. (9th Cir. 1977) 555 F.2d 254 ; Toensing v. Brown (9th Cir. 1975) 528 F.2d 69 , 72; Walling v. Beverly Enterprises (9th Cir. 1973) 476 F.2d 393 ; Sunbeam Lighting Co. v. Pacific Associated Lighting, Inc. (9th Cir. 1964) 328 F.2d 300 , 303; Wham-O-Mfg. Co. v. Paradise Manufacturing Co. (9th Cir. 1964) 327 F.2d 748 [140 U.S. Pat. Q. 357], cited with approval in Gibbs, supra, 383 U.S. at p. 726, fn. 16 [16 L.Ed.2d at p. 228].) Here, the fact that the state action was pending when the motion for summary judgment was filed in Merry II, a fact of which the district judge was apprised, adds to the unlikelihood that the court would have retained jurisdiction to adjudicate state claims. (See T. B. Harms Company v. Eliscu (2d Cir. 1964) 339 F.2d 823 [144 U.S.Pat.Q. 46], cert. den., 381 U.S. 915 [ 14 LEd.2d 435 , 85 S.Ct. 1534 ].)

Defendants argue that it is inappropriate for us to conjecture what the Merry II court might have done had plaintiff raised his state claims in that action because defendants’ “motion for summary judgment would have been broader in scope,” the implication being that under an all-encompassing motion for summary judgment, the court might have adjudicated state as well as federal claims. Hodge v. Mountain States Tel. & Tel. Co., supra, 555 F.2d 254 , dealt with this precise problem. The district court granted a summary judgment for defendants on both federal and state claims. On appeal the reviewing court upheld the summaiy judgment on the federal claim but reversed as to the state claim, holding: “When a district court dismisses all federal claims prior to trial, it should not retain jurisdiction over pendent state claims.” (Id., at p. 261.) Accordingly, the court remanded the state law claims with instructions to dismiss them for want of federal jurisdiction.^[8]

At oral argument defendant district also suggested that had plaintiff asserted his state claims in Merry II, the district might have permitted the case to go to trial on the merits of the federal and state claims. However, substantiality of a federal claim is ordinarily determined on the basis of the pleadings so that if it appears from the complaint that the federal claim should be disposed of on a motion to dismiss for failure to state a claim upon which relief can be granted. (Fed. Rules Civ. Proc., rule 12(b)(6)), or on a motion for summary judgment (Fed. Rules Civ. Proc., rule 56), a district court should refrain from exercising pendent jurisdiction in the absence of extraordinary circumstances. (Kavit v. A. L. Stamm & Co., supra, 491 F.2d 1176 , 1179-1180; Tully v. Mott Supermarkets, Inc., supra, 540 F.2d 187 , 196.) As we have noted, the insubstantiality of plaintiff’s federal claims in Merry II was apparent from the face of the pleadings. Therefore, we are not indulging in conjecture or speculation when we say that the Merry II court would clearly have declined to exercise pendent jurisdiction to decide plaintiff’s state law claims had he raised them.

Defendants argue, however, that apart from the question whether the Merry II court would have exercised pendent jurisdiction, the summary judgment on the federal claim precluded plaintiff from maintaining his state action because to permit him to do so would violate the rule against splitting a cause of action. Defendants argue that under Professor Pomeroy’s theory of a cause of action, Merry II and Merry III both involved the invasion of the same “primary right.” Plaintiff responds with equal vigor that his state claims are based upon an entirely different “primary right” than that involved in Merry II. We need not attempt to resolve this murky issue.^[9] Plaintiff’s right to pursue his state remedies in the state court depends, not on whether it involves a different “primary right” but on whether under federal law the summary judgment on the federal claim is res judicata of the state law claims.

In Gibbs the United States Supreme Court stated that it assumed that under the test for pendent jurisdiction enunciated in its earlier decision in Hurn v. Oursler, supra, 289 U.S. 238 , a district court’s finding of a jurisdictional bar to the adjudication of a state claim would not be res judicata in any subsequent state suit on a state claim. (Mine Workers v. Gibbs, supra, 383 U.S. 715 , 724 [ 16 L.Ed.2d 218 , 227].) Although Gibbs liberalized the standard for the exercise of pendent jurisdiction, we find nothing in the opinion indicating that a federal court’s refusal to exercise pendent jurisdiction under the guidelines established in Gibbs should be treated as res judicata of the state claim. On the contrary, the stated rationale for the Gibbs criteria for declining pendent jurisdiction was based on considerations of comity and promotion of justice between the parties by leaving to a court that can provide a “surer-footed reading” of applicable state law the authority to make a final determination of state claims. (Mine Workers v. Gibbs, supra, 383 U.S. 715 , 726-727 [ 16 L.Ed.2d 218 , 228-229]. See Hagans v. Lavine, 415 U.S. 528 [ 39 L.Ed.2d 577 , 94 S.Ct. 1372 ].)

Accordingly, it has been held that a refusal to exercise pendent jurisdiction over a state claim following pretrial dismissal of a federal claim does not bar litigation of state claims in the state court. (Calderone Enter. Corp. v. United Artists Theatre Circuit, supra, 454 F.2d 1292 , 1297; Trans World Airlines, Inc. v. Hughes, (S.D.N.Y. 1973) 359 F.Supp. 783 , 785; Retail Clerks U., Local 770 v. Retail Clerks Int. Ass’n. (C.D.Cal. 1973) 359 F.Supp. 1285 , 1288; Hughes v. Trans World Airlines, Inc. (Del.Super.) 336 A.2d 572 , 577, cert. den., 423 U.S. 841 [ 46 L.Ed.2d 61 , 96 S.Ct. 72 ]. 3A Moore’s Federal Practice (2d ed.) ¶ 18.07[1.-3], p. 18-71.) Although under rule 41, subdivision (b) of the Federal Rules of Civil Procedure^[10] dismissal of a federal claim on a motion for summary judgment is, insofar as the federal claim is concerned, on the merits, such dismissal does not bar nonfederal claims. (Trans World Airlines, Inc. v. Hughes, supra, 359 F.Supp. 783 , 785.) Nor must the dismissal of the state claim be “without prejudice” in order to preserve plaintiffs right to sue in the state court, (id., at p. 785.) Where, as here, state claims were not raised in the federal action, there was no occasion to dismiss them. Consequently, the fact that the Merry II judgment failed to do so or failed to provide that it was without prejudice to plaintiffs right to pursue his state claims in a proper state forum does not render it preclusive of a subsequent state action on the state claims.