Rodgers v. Sargent Controls & Aerospace

DISCUSSION

Appellant challenges the trial court’s ruling that he is precluded under collateral estoppel principles from litigating the merits of the issue of respondent’s liability to him as a successor corporation of Amot. Appellant focuses upon the lack of identity of parties in the prior and current actions to argue that the requirements of collateral estoppel were not met by respondent. He recognizes that the collateral estoppel doctrine had been extended to those “in privity” with parties to a prior action, but maintains that his only connection with the cases in which lack of successor liability was found— that he is represented by the “same counsel” as the “otherwise unrelated parties”—does not suffice to foreclose him from litigating an issue previously resolved in favor of respondent. Appellant therefore claims that “the doctrine of collateral estoppel was improperly applied by the trial court” to decide the summary judgment motion, “and its order and judgment must be reversed.”

“The standard for deciding a summary judgment motion is well-established, as is the standard of review on appeal. ‘[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law. . . . There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.’ [Citation.]” (Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566 , 572 [ 32 Cal.Rptr. 3d 244 ].)

“Summary judgment is an appropriate remedy when the doctrine of collateral estoppel refutes all triable issues of fact suggested by the pleadings and supporting documents. [Citation.] We review the trial court’s decision de novo.” (Kelly v. Vons Companies, Inc. (1998) 67 Cal.App.4th 1329 , 1335 [ 79 Cal.Rptr.2d 763 ].)

I. The Claim of Waiver of the Collateral Estoppel Defense.

As a threshold matter we find that respondent did not waive the issue of collateral estoppel by failing to plead it as an affirmative defense, as asserted by appellant. We observe that only the preclusion of relitigation of claims pursuant to the principles of res judicata is an affirmative defense that must be pled or otherwise raised in the trial court to avoid waiver. (Dillard v. McKnight (1949) 34 Cal.2d 209 , 219 [ 209 P.2d 387 ]; David v. Hermann

Here, the issue of successor liability had not been resolved in the other cases until after respondent filed an answer to appellant’s complaint in February of 2001. Respondent then raised the issue of the collateral estoppel effect of orders in the Vasen and Pena cases in its summary judgment motion, in conjunction with the alternative contention that if the prior rulings were not considered binding, successor liability was nevertheless negated by the evidence. Respondent proceeded to present and litigate the issue of successor liability, but not without also claiming as a preliminary matter that the issue had been conclusively determined in previous litigation. No waiver of the issue occurred, so we proceed to determine whether collateral estoppel operates to foreclose appellant from seeking recovery from respondent as a corporate successor of Arnot.

II. The Effect of the Prior Rulings in Other Cases on the Successor Liability Issue.

Issue preclusion by collateral estoppel “prevents ‘relitigation of issues argued and decided in prior proceedings.’ [Citation.]” (Castillo v. City of Los Angeles (2001) 92 Cal.App.4th 477 , 481 [ 111 Cal.Rptr.2d 870 ]; see also Bob Baker Enterprises, Inc. v. Chrysler Corp. (1994) 30 Cal.App.4th 678 , 686 [ 36 Cal.Rptr.2d 12 ].) The doctrine “rests upon the ground that the party to be affected, or some other with whom he is in privity, has litigated, or had an opportunity to litigate the same matter in a former action in a court of competent jurisdiction, and should not be permitted to litigate it again to the

“Even if these threshold requirements are satisfied, the doctrine will not be applied if such application would not serve its underlying fundamental principles.” (Gikas v. Zolin, supra, 6 Cal.4th 841 , 849.) “ ‘[T]he determination whether a party is in privity with another for purposes of collateral estoppel is a policy decision.’ [Citations.] ‘Privity is essentially a shorthand statement that collateral estoppel is to be applied in a given case [assuming the other requirements are satisfied]; there is no universally applicable definition of privity.’ [Citations.]” (Ibid.) “In the final analysis, the determination of privity depends upon the fairness of binding appellant with the result obtained in earlier proceedings in which it did not participate. [Citation.] ‘ “Whether someone is in privity with the actual parties requires close examination of the circumstances of each case.” [Citation.]’ [Citation.]” (Citizens for Open Access etc. Tide, Inc. v. Seadrift Assn., supra, 60 Cal.App.4th 1053 , 1070.) “ ‘We review the court’s conclusion of privity de novo . . . because the issue, which ultimately involves the requisites and limits of due process, is a legal one.’ [Citation.]” (Victa v. Merle Norman Cosmetics, Inc. (1993) 19 Cal.App.4th 454 , 464 [ 24 Cal.Rptr.2d 117 ].)

We have no quarrel with the proposition advanced by respondent that appellant’s interests in exposing Sargent to liability as a successor corporation are comparable to those of the plaintiffs in the Vasen and Pena cases. Further, those common interests appear to have been represented in the prior cases. “A party is adequately represented for purposes of the privity rule ‘if his or her interests are so similar to a party’s interest that the latter was the former’s virtual representative in the earlier action. [Citation.]’ [Citation.] We measure the adequacy of ‘representation by inference, examining whether the . . . party in the suit which is asserted to have a preclusive effect had the same interest as the party to be precluded, and whether that. . . party had a strong motive to assert that interest. . . .’ [Citation.]” (Citizens for Open Access etc. Tide, Inc. v. Seadrift Assn., supra, 60 Cal.App.4th 1053 , 1070-1071.) The plaintiffs in the Vasen and Pena cases had the same motive to obtain a finding of successor liability as appellant does here, and were represented by the same attorneys.

We also agree that imposing issue preclusion would further the cognizable interests of avoiding harassment of respondent with repeated litigation, reducing the possibility of inconsistent judgments, and promoting

That appellant is represented by the same counsel as were the plaintiffs in the prior actions does not, we conclude, suffice to extend the doctrine of privity to his case. In Vega v. Jones, Day, Reavis & Pogue (2004) 121 Cal.App.4th 282 , 298-299 [ 17 Cal.Rptr.3d 26 ], the defendant law firm which represented an acquiring company in a merger transaction argued that a summary judgment obtained in its favor on fraud claims brought by three shareholders in earlier lawsuits barred the identical fraud claim by the plaintiff, also a shareholder, under the doctrine of res judicata. The defendant pointed out that the plaintiff “is also a former shareholder . . . , his fraud claim is the same as their claims, he knew about their lawsuits, and he is using the same attorney,” thus the relationship is “ ‘sufficiently close’ to justify application of the principle of preclusion . . . .” (Id., at p. 299, italics added.) Despite the common interests of the plaintiffs in the two actions and their shared counsel, the court declined to apply the concept of privity to Vega’s case. The court explained: “The cases uniformly state that, in addition to an identity or community of interest between the party to be estopped and the losing party in the first action, and adequate representation by the latter, ‘the circumstances must have been such that the party to be estopped should reasonably have expected to be bound by the prior adjudication.’ [Citation.] [f] We discern no basis for concluding Vega ‘should reasonably have expected to be bound by’ the adjudication of lawsuits in which he did not participate in any way, in which he had no proprietary or financial interest, and over which he had no control of any sort. [Citations.] The only relationship between Vega and the prior lawsuit is that he and the plaintiffs in those suits were shareholders in the same company. We are aware of no precedent for finding this to be a ‘sufficiently close’ relationship to justify application of the principle of preclusion, and we decline to create one.” (Ibid.)

We also conclude that representation of different plaintiffs in different cases by the same attorneys is not a factor that justifies imposition of collateral estoppel to preclude litigation of an issue by appellant as a nonparty to the prior actions, at least without evidence that through his attorney he participated in or controlled the adjudication of the issue sought to be relitigated. (Webb v. Distefano (D.Neb. 1983) 575 F.Supp. 639 , 644—645.) To find that an identity of attorneys presenting the same issue on behalf of

Respondent directs our attention to Cauefield v. Fidelity and Casualty Company of New York (5th Cir. 1967) 378 F.2d 876 (Cauefield), as illustrative of “how collateral estoppel can and should be applied in circumstances very analogous to those here.” In Cauefield, a grave desecration case brought by relatives of those buried in a cemetery was stayed in federal court while a Louisiana state court action, referred to as the “Thomas case,” went forward. (Id., at p. 877.) Following trial in state court the jury found that no desecration occurred, and the verdict was affirmed on appeal. The issues subsequently presented in the federal court case were “identical to those already tried in the state court,” the “same relief’ was sought in both cases (ibid.), both sets of plaintiffs retained the same lawyers, the second set of plaintiffs actively participated as witnesses in the first trial and conceded that the evidence “they would be able to produce would not differ in the least from that which they themselves and the other relatives presented and which was passed on” in the state court action against the plaintiffs. (Id., at p. 878.) The indefinite continuance granted in the federal case specifically to await resolution of the state action also indicated, the court pointed out, “that the Thomas case tacitly was intended to resolve all the numerous identical claims that the cemetery had been desecrated.” (Id., at p. 877.)

The court in Cauefield recognized that the “doctrine of res judicata plainly does not apply” in this case, which in Louisiana “uncompromisingly” demanded “identity of parties,” but found that the federal court case was foreclosed by the “common-law concept recognized in Louisiana” of “judicial estoppel,” which had fashioned “exceptions” to the rigid identity-of-parties requirement. (Caufield, supra, 378 F.2d 876 , 878.) The court was convinced, however, “that presented with the unusual facts of the case before us, the Louisiana courts also would find that appellants are estopped by the state court judgment in order to preclude relitigation of the desecration issue. In reaching

We are not in this appeal presented with consideration of the Louisiana “judicial estoppel” doctrine. We further find that the “unusual facts” upon which the decision in Cauefield rested are absent here and compel a different result. (Humphreys v. Tann, supra, 487 F.2d 666 , 670-671; In re Nissan Motor Corp. Antitrust Litigation (S.D.Fla. 1979) 471 F.Supp. 754 , 758-759.) While an identity of attorneys exists, the plaintiff in the present action did not present testimony or otherwise participate in any part of the Vasen and Pena cases. (Webb v. Distefano, supra, 575 F.Supp. 639 , 645.) Further, unlike the conceded situation in Cauefield, appellant has offered some additional evidence to support his claim of successor liability that he did not have the opportunity to present in the prior cases. And finally, again in contrast to Cauefield, nothing in the record suggests any “tacit agreement” that the Vasen and Pena cases were intended to resolve all of the identical claims against Sargent. (Benson and Ford, Inc. v. Wanda Petroleum Co. (5th Cir. 1987) 833 F.2d 1172 , 1175-1176.)

We understand respondent’s frustration with the burden that falls upon a defendant repeatedly forced to adjudicate with the same attorneys issues already resolved in its favor. Nevertheless, we cannot expand the concept of privity beyond its contemplated and justified bounds where to do so would run afoul of due process considerations that limit the scope of issue preclusion. (Humphreys v. Tann, supra, 487 F.2d 666 , 671; In re Nissan Motor Corp. Antitrust Litigation, supra, 471 F.Supp. 754 , 759; Vega v. Jones, Day, Reavis & Pogue, supra, 121 Cal.App.4th 282 , 298-299.) We note, however, that attempted relitigation of an identical issue that has been previously unsuccessful may at some point—at least without the benefit of favorable new evidence—furnish grounds for imposition of sanctions under Code of Civil Procedure section 128.5, or other statutes providing for an award of reasonable expenses, including attorney fees, for frivolous, bad faith, or unmeritorious actions, motions or pleadings.