Judge: Mark H. Epstein, Case: 23SMCV00040, Date: 2023-09-06 Tentative Ruling

Case Number: 23SMCV00040    Hearing Date: September 6, 2023    Dept: I

The demurrer is SUSTAINED WITHOUT LEAVE TO AMEND.  Plaintiff sues defendants for breach of contract.  The theory is that defendants failed to remit the value of a 12.5% interest in an LLC to plaintiff.  The LLC developed a luxury condominium unit in Beverly Hills.  According to plaintiff, not only did defendants fail to convey the 12.5% interest in the LLC to him, they did not even return plaintiff’s investment in the project.  Defendants demur on the ground that the complaint is barred by res judicata.  Plaintiff opposes.

Defendants’ request for judicial notice is GRANTED.  Although plaintiff objects, the objections were not timely.  Even were they timely, though, the documents may be judicially noticed.  The request is for an October 12, 2021 minute order issued by the court, the judgment in the earlier case, the notice of entry of that judgment, and various other pleadings filed in that case.  The court emphasizes that it can consider the existence of court documents, but it does not consider them for the truth of the matters asserted therein.  Thus, for example, the court will not consider the truth of the allegations in the earlier complaint, but the court can take notice that the complaint was filed and the allegations therein were made because the allegations will be pertinent (true or not) to the scope of res judicata.

Having reviewed the earlier complaint, the court must agree with the defense that the allegations here are substantively the same as those in that case, which was dismissed with prejudice.  The resulting judgment was not appealed, and it is now final.  That means that the judgment has res judicata effect.  Res judicata means that conclusive effect is given to a former judgment involving the same parties and the same controversy; it cannot be relitigated.  (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788.)  There are two aspects of res judicata: claim preclusion and issue preclusion.  Claim preclusion is the doctrine of merger and bar, meaning that all claims that were or should have been brought in the prior action are either merged into the judgment or barred by the judgment.  It is not based on a finding of fact; it is based on the notion that there must be finality to litigation.  Claim preclusion requires that the same cause of action was litigated by the same parties resulting in a final judgment.  (DKN Holdings, LLC v. Faerber (2015) 61 Cal.4th 813.)  Issue preclusion is a bit different.  It bars re-litigation of an issue that has previously been decided on its merits.  It is the issue’s re-litigation that is precluded, not any resulting consequence.  Issue preclusion also requires that there be a final judgment, but that final judgment must have decided the specific issue being allegedly re-litigated.  However, unlike claim preclusion, the party seeking issue preclusion need not have been a party in the prior action.  (Ibid.)

Here, plaintiff appears to be alleging the same facts against the same parties.  The prior action was dismissed with prejudice at trial by the court.  More particularly, the earlier case was filed in 2018 but at the trial on October 12, 2021, plaintiff stated he was not ready for trial.  That led to the order dismissing the case with prejudice.  That is sufficient for claim preclusion, although not issue preclusion.  By dismissing the case “with prejudice,” the prior court ordered that the identical case not be brought again.

The court notes that plaintiff opposed the demurrer, but never addressed the res judicata argument.  All that was addressed was whether the causes of action were adequately pled as a more general matter.  That is troubling because res judicata was very conspicuously the point of the demurrer.

Because plaintiff cannot plead around this problem, leave to amend will be denied.  Further, the whole point of res judicata is to end litigation.  By allowing leave to amend, defendants lose the benefit of res judicata.

By issuing this ruling, the court, of course, makes no comment on whether the allegations plaintiff makes are true or false, or whether (absent res judicata) plaintiff would or would not prevail.  The court is only saying that Judge Burdge dismissed the case with prejudice and it therefore cannot be brought again.

Defendants are to prepare the order of dismissal.