Judge Curtis A. Kin, Case 22STCV06690 2022-09-13 Tentative Ruling

Judge: Curtis A. Kin, Case: 22STCV06690, Date: 2022-09-13 Tentative Ruling

Case Number: 22STCV06690 Hearing Date: September 13, 2022 Dept: 72

DEMURRERS TO FIRST AMENDED COMPLAINT (3)

MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT

Date: 9/13/22 (9:30 AM)

Case: Dean R. Isaacson v. Zachary Zalben et al. (22STCV06690)

TENTATIVE RULING:

Defendants Zachary Zalben, Darren Weinstock, and DBJKG, LLC’s Demurrer to First Amended Complaint is SUSTAINED WITH LEAVE TO AMEND.

Plaintiff Dean R. Isaacson’s Motion for Leave to File Second Amended Complaint is DENIED.

I. DEMURRERS TO FIRST AMENDED COMPLAINT

Defendants Zachary Zalben, Darren Weinstock, and DBJKG, LLC’s request for judicial notice of the Complaint filed in Assisted Living America, LLC v. BE La Cienega LLC et al., Case No. 19STCV25674 (“ALA Action”) is GRANTED, but only for the existence of the document, not the truth of the matters asserted therein. (See Evid. Code, §452, subd. (d); Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-69.)

Defendants’ request for judicial notice of the dismissal of the ALA Action is GRANTED, pursuant to Evidence Code § 452(d).

Defendants’ other requests for judicial notice are DENIED as “unnecessary to the resolution” of the issues before the Court. (Martinez v. San Diego County Credit Union (2020) 50 Cal.App.5th 1048, 1075.)

The Court finds that the operative First Amended Complaint is barred by res judicata.

“As generally understood, ‘[t]he doctrine of res judicata gives certain conclusive effect to a former judgment in subsequent litigation involving the same controversy.’ [Citation.] The doctrine ‘has a double aspect.’ [Citation.] ‘In its primary aspect,’ commonly known as claim preclusion, it ‘operates as a bar to the maintenance of a second suit between the same parties on the same cause of action. [Citation.]’ [Citation.] ‘In its secondary aspect,’ commonly known as collateral estoppel, ‘[t]he prior judgment ... “operates” ’ in ‘a second suit ... based on a different cause of action ... “as an estoppel or conclusive adjudication as to such issues in the second action as were actually litigated and determined in the first action.” [Citation.]’ [Citation.] ‘The prerequisite elements for applying the doctrine to either an entire cause of action or one or more issues are the same: (1) A claim or issue raised in the present action is identical to a claim or issue litigated in a prior proceeding; (2) the prior proceeding resulted in a final judgment on the merits; and (3) the party against whom the doctrine is being asserted was a party or in privity with a party to the prior proceeding. [Citations.]’” (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 797.)

First, the claims and issues in this action (“FAC” or “Isaacson Action”) are identical to the claims and issues in Assisted Living America, LLC v. BE La Cienega LLC et al., Case No. 19STCV25674 (“ALA Compl.” or “ALA Action”).

In this Isaacson Action, plaintiff Dean Isaacson is suing defendants Zachary Zalben, Darren Weinstock, and DBJKG, LLC in connection with a joint venture for the development of real property located at 1022-26, 1032, and 1042 S. La Cienega Blvd. in Los Angeles and construction of an assisted living facility thereon. (FAC ¶¶ 10, 11.) Isaacson alleges that he would not have entered into the transaction that gave defendants control of the real property had defendants not misrepresented that they intended to develop the property. (FAC ¶¶ 10, 11, 27.) Instead of developing the property, defendants sold the property and deprived plaintiff of the value of his $600,000 loan. (FAC ¶¶ 15, 18.) Isaacson is alleging Fraud and Deceit and Promissory Fraud causes of actions against defendants.

In the ALA Action, Assisted Living America, LLC (“ALA”) asserted the same claims of Fraud and Deceit and Promissory Fraud in this action against various defendants, including Zachary Zalben, Darren Weinstock, and DBJKG, LLC, the same defendants in this Isaacson Action. ALA alleged that Weinstock and Zalben repeatedly misrepresented that they intended to build an assisted living/skilled nursing facility on real property located at 1022, 1026, 1032, and 1042-1054 South La Cienega Blvd. in Los Angeles. (ALA Compl. ¶¶ 12, 15.) Based on the misrepresentations, ALA agreed to convey the real property to the limited liability companies formed to effectuate the joint venture. (ALA Compl. ¶¶ 13, 16, 17.) Defendants never constructed the assisted living/skilled nursing facility. (ALA Compl. ¶ 19.) Instead, Weinstock and Zalben entered into a ground lease that provided no return to plaintiff. (ALA Compl. ¶ 20.)

Plaintiff argues that the fraud he asserts in this action occurred after the ALA Action was dismissed, namely, when defendants sold the land and improperly received $5.5 million. Plaintiff’s recasting of the purported fraud by defendants does not save plaintiff from the preclusive effect of the prior action. “For purposes of res judicata, California applies the primary right theory to define [a] cause of action as: (1) a primary right possessed by the plaintiff, (2) a corresponding duty imposed upon the defendant, and (3) a wrong done by the defendant which is a breach of such primary right and duty. Thus, a single cause of action is based on the harm suffered, rather than on the particular legal theory asserted or relief sought by the plaintiff.” (See Balasubramanian v. San Diego Community College (2000) 80 Cal.App.4th 977, 991; Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 904.)

In this action, Isaacson’s injury stems from his reliance on Zalben and Weinstock’s false representations concerning their intent to build an assisted living facility in deciding to enter into the joint venture. (FAC ¶¶ 22-28, 32-36.) Isaacson alleges that had he known the representations were false, Isaacson and ALA would have never conveyed the property to defendants. (Isaacson Compl. ¶¶ 11, 27.) In the ALA Action, ALA’s injury stemmed from its reliance on Zalben and Weinstock’s false representations concerning their intent to build an assisted living facility in deciding to enter into the joint venture. (ALA Compl. ¶¶ 30-34, 38-41.) ALA alleged that had it known the representations were false, ALA would have never conveyed the property to defendants. (ALA Compl. ¶¶ 34, 50.)

In both actions, the harm was based on Zalben and Weinstock’s false representations. Whether the property was disposed of through a lease, as alleged in the ALA Action, or a sale, as alleged in this action, the Fraud and Deceit and Promissory Fraud causes of actions in both actions are based on the plaintiffs’ reliance on the fraudulent representations.

For the foregoing reasons, both the ALA Action and the Isaacson Action assert the same Fraud and Deceit and Promissory Fraud causes of action. Further, both the ALA Action and the Isaacson Action are based on alleged fraudulent misrepresentations made by Weinstock and Zalben regarding the development of an assisted living facility on property located on South La Cienega Boulevard in Los Angeles. Therefore, this action raises the same claims and issues that were litigated in the prior ALA Action.

Second, the ALA action resulted in a final judgment on the merits. On February 9, 2021, the ALA was dismissed with prejudice pursuant to a Request for Dismissal filed by counsel for ALA. “A retraxit arising from a dismissal with prejudice thus operates as a legal fiction, and it is given the same finality as if the matter were adjudicated and proceeded to a final judgment on the merits.” (Alpha Mechanical, Heating & Air Conditioning, Inc. v. Travelers Casualty & Surety Co. of America (2005) 133 Cal.App.4th 1319, 1331.) While plaintiff alleges that the ALA Action was dismissed after he attempted to intervene (Isaacson Compl. ¶¶ 16, 17), “It does not matter what weakness, if any, in plaintiff's previous lawsuit might have led [plaintiff] to dismiss it with prejudice. Once plaintiff did so, the primary right . . . had been adjudicated in defendant's favor.” (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 798.) Accordingly, the prior ALA Action resulted in a final judgment on the merits.

Third, plaintiff, the party against whom res judicata is being asserted, was in privity with ALA, the plaintiff in the ALA Action. “‘“Privity” as used in the context of res judicata or collateral estoppel, does not embrace relationships between persons or entities, but rather it deals with a person’s relationship to the subject matter of the litigation.’” (Cal Sierra Development, Inc. v. George Reed, Inc. (2017) 14 Cal.App.5th 663, 674.)

In this action, Isaacson’s alleged damages arise from defendants’ failure to build the assisted living facility on the subject property, depriving Isaacson of a return on the property. (Isaacson Compl. ¶¶ 18-20.) Isaacson alleges that he negotiated with Zalben and Weinstock concerning the formation of the joint venture. (Isaacson Compl. ¶¶ 10, 11.) Based on Zalben and Weinstock’s stated commitment to build the assisted living facility, Isaacson decided to enter into the joint venture with defendants. (Isaacson Compl. ¶¶ 11, 13.) Indeed, Isaacson alleges: “Had the defendants not fraudulently induced me with these now proven false statement they defendants would never have been allowed to enter the deal, take control of the land or be able to sell the property and receive proceeds 10x's the 500,000. agreed to.” (Isaacson Compl. ¶ 11.) In the ALA Action, ALA alleges that, based on representations made to Isaacson, it entered into the joint venture with Zalben and Weinstock and conveyed the property to the joint venture. (ALA Compl. ¶¶ 31-34.) Because Isaacson’s reliance on Zalben and Weinstock’s false representations concerning the construction of an assisted living facility was the subject of the ALA Action and the Isaacson Action, Isaacson was in privity with ALA, the plaintiff in the ALA Action.

In a declaration filed on September 6, 2022, plaintiff argues that the Court in the ALA Action determined that the ALA Action and this action are not related cases, as set forth in Rule of Court 3.300. A notice of related case “allows the trial court to promote efficiency, to avoid duplicative effort, to combat judge-shopping, and to minimize the prospect of conflicting results.” (Harris v. Rojas (2021) 66 Cal.App.5th 817, 820.) The notice of related case allows the trial judge in the low-numbered case to “decide how to handle the parallel litigation.” (Id.) The trial judge could decide not to deem the cases related. Indeed, Rule of Court 3.300(h)(1) vests the trial judge in the earliest filed case with the discretion to deny relation of the cases. (Rule of Court 3.300(h)(1) [“If all the related cases have been filed in one superior court, the court, on notice to all parties, may order that the cases . . . be related and may assign them to a single judge or department”].) Accordingly, the determination by the Court in the ALA Action does not divest the authority of this Court to determine whether this action is barred by res judicata based on the resolution of prior case.

Because the three requirements for res judicata are satisfied, plaintiff’s First Amended Complaint is barred by res judicata.

The demurrer is SUSTAINED in its entirety. For the reasons stated below, plaintiff is granted ten (10) days LEAVE TO AMEND.

II. MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT

On July 13, 2022, the day before the initial hearing on the demurrer to the First Amended Complaint, plaintiff Dean R. Isaacson filed a motion seeking leave to file a Second Amended Complaint. Plaintiff seeks to add causes of action of Unjust Enrichment, Breach of Oral Agreement, and Collusion to the First Amended Complaint.

Plaintiff did not comply with Rule of Court 3.1324. Plaintiff did not “[s]tate what allegations are proposed to be added to the previous pleading, if any, and where, by page, paragraph, and line number, the additional allegations are located,” as required by Rule of Court 3.1324(a)(3). Plaintiff also did not include a separate declaration specifying the effect of the amendment, why the amendment is necessary and proper, when the facts giving rise to the amendment were discovered, and the reasons why plaintiff did not request the amendment earlier, as required by Rule of Court 3.1324(b).

Accordingly, the motion is DENIED as to the Second Amended Complaint proposed in this motion.

However, because the Court only heard one demurrer in this action, the Court allows plaintiff leave to amend to file a Second Amended Complaint that accounts for the ruling on the demurrer above and to assert any claim that is not barred by res judicata.