Judge: Serena R. Murillo, Case: 23STCV06402, Date: 2023-09-25 Tentative Ruling
Case Number: 23STCV06402 Hearing Date: September 25, 2023 Dept: 31
TENTATIVE
Defendant Coast
National Insurance Company’s demurrer is OVERRULED.
Request for Judicial Notice
Defendant’s
Request for Judicial Notice
Defendant
requests judicial notice of: (1) docket of Los Angeles Superior Court Case No.
18STCV01690, entitled Coast National Insurance Company v. Yoko Saito,
filed on October 18, 2018 (“Recission Action”; Exh. 1); April 17, 2019 Minute
Order granting the request by Coast National for entry of default judgment in
favor of Coast National and against Yoko Saito in the Rescission Action (Exh.
2); and April 26, 2019 Notice of Entry of Judgment and attached April 17, 2019
Judgment in the Rescission Action. (Exh. 3.)
Defendant’s requests are GRANTED pursuant
to Evidence Code section 452(d).
Plaintiff’s Request for Judicial Notice
Plaintiff requests judicial notice
of: (1) Complaint for Declaratory Judgment - Rescission in 18STCV01690 (Exh.
1); (2) Application for Default Judgment by Court Against Yoko Saito (Exh. 2);
(3) Declaration of Limor Lehavi (Exh. 3); (4) Declaration of Amy Valley (Exh.
4); (5) Declaration of Latoya M. AIlen (Exh. 5); and Compendium of Exhibits.
(Exh. 6.)
Judicial Notice is GRANTED pursuant to
requests Evidence Code section 452(d) as to items 1, and 2, and denied as to
the rest. Plaintiff has not shown under what section of the Evidence Code the
remainder of the requests may be judicially noticed.
Legal Standard
A demurrer for sufficiency tests
whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)
When considering demurrers, courts read the allegations liberally and in
context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216,
1228.) The court “treat[s] the demurrer as admitting all material facts
properly pleaded, but not contentions, deductions or conclusions of fact or law
….” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525).) In a demurrer
proceeding, the defects must be apparent on the face of the pleading or via
proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994).)
A demurrer tests the pleadings alone and not the evidence or other extrinsic
matters; therefore, it lies only where the defects appear on the face of the
pleading or are judicially noticed. (Code Civ. Proc., §§ 430.30, 430.70.) The
only issue involved in a demurrer hearing is whether the complaint, as it
stands, unconnected with extraneous matters, states a cause of action. (Hahn,
supra, 147 Cal.App.4th at 747.)
Meet and Confer
The demurrer is accompanied by the declaration of
Limor Lehavi, which satisfies the meet and confer requirement.
Discussion
Defendant demurs
to the complaint, arguing that a prior judgment of rescission obtained by
default judgment requires that this court sustain the demurrer without leave to
amend, based on res judicata.
“If all of the facts necessary to show that an
action is barred by res judicata are within the complaint or subject to
judicial notice, a trial court may properly sustain a general demurrer.”
(Frommhagen v. Bd. of Supervisors (1987) 197 Cal.App.3d 1292, 1299.) “A party who asserts claim or issue
preclusion as a bar to further litigation bears the burden of proving that the
requirements of the doctrine are satisfied.” (Hong Sang Market, Inc. v. Peng
(2018) 20 Cal.App.5th 474, 489 [citing to Vella v. Hudgins (1977) 20 Cal.3d
251, 257].)
“The doctrine of
res judicata precludes parties or their privies from relitigating a cause of
action that has been finally determined by a court of competent
jurisdiction. Any issue necessarily
decided in such litigation is conclusively determined as the parties or their
privies if it is involved in a subsequent lawsuit on a different cause of
action.” (Bernhard v. Bank of America
Nat. Trust & Savings Ass’n (1942) 19 Cal.2d 807, 810.)
“In general, collateral estoppel precludes
a party from relitigating issues litigated and decided in a prior
proceeding. (Citations.) ‘Traditionally,
we have applied the doctrine only if several threshold requirements are
fulfilled. First, the issue sought to be precluded from relitigation must be
identical to that decided in a former proceeding. Second, this issue must have
been actually litigated in the former proceeding. Third, it must have been
necessarily decided in the former proceeding. Fourth, the decision in the
former proceeding must be final and on the merits. Finally, the party against
whom preclusion is sought must be the same as, or in privity with, the party to
the former proceeding. (Citation.)’”
(Gikas v. Zolin (1993) 6
Cal.4th 841, 848–849.)
The
doctrine of collateral estoppel may be applied based upon a prior default
judgment. (See, e.g., English v. English (1937) 9 Cal.2d 358, 363–364,
70 P.2d 625; Brown v. Brown (1915) 170 Cal. 1, 5;¿Mitchell v. Jones
(1959) 172 Cal.App.2d 580; ¿O'Brien v. Appling (1955) 133 Cal.App.2d 40,
42.) “[A] default judgment conclusively establishes, between the parties so
far as subsequent proceedings on a different cause of action are concerned, the
truth of all material allegations contained in the complaint in the first
action, and every fact necessary to uphold the default judgment;¿but such
judgment is not conclusive as to any defense or issue which was not raised and
is not necessary to uphold the judgment.” (Mitchell, supra, 172
Cal.App.2d at pp. 586–587.)
Res judicata applies to a default judgment
provided that the default judgment is valid and specifically shows on what
count or cause of action it was based. (English v. English (1937) 9 Cal.2d 358; Freeze v. Salot (1954) 122 Cal.App.2d 561.) Thus, the defendant is
estopped from denying any of the allegations of the complaint in a subsequent
action. (Martin v. General Finance Co.
(1966) 239 Cal.App.2d 438.)
Notwithstanding the above, a default
judgment is only conclusive as to matters that were properly pleaded in the
complaint. (Maddux v. County Bank of San
Luis Obispo (1900) 129 Cal. 665.) Additionally, a default judgment is not
conclusive as to matters that occurred after the complaint was filed and not
covered in the complaint. (Brown v. Brown,
supra, 170 Cal. 1; Maddux,
supra, 129 Cal. 665.) Further, a default judgment is not conclusive in a
subsequent action on a different cause of action regarding any defenses the
defendant may have, even though the same defenses, if pleaded and proved in the
first action, would have defeated the plaintiff’s recovery. This is because
there was no trial in the first action, thus, the issues raised by the defenses
were not adjudicated. (English v. English
(1937) 9 Cal.2d 358.)
Here, based on the
foregoing authorities, a default is not conclusive in this action on different
causes of action regarding any defense Saito or Plaintiff may have had, which
was not necessary to uphold the judgment. First, the complaint in this matter
alleges additional causes of action. As such, it is necessary to determine
whether the different causes of action relate to any defenses Saito of
Plaintiff had. However, Defendant has not briefed whether the issues raised by
the complaint in this matter were the same issues litigated in the default
matter, including any defenses Plaintiff may have had which were not necessary
to uphold the judgment, including, among other things: (1) whether Defendant
engaged in post-claims underwriting, (2) whether Defendant should have
discovered Saito’s misrepresentation sooner, and (3) whether Defendant acted
promptly in rescinding the contract. The Court notes that these defenses, which
are raised in the complaint now, were not raised by Defendant’s complaint in
the default matter. (RJN, Exh. 1.) A default judgment is only conclusive as to
matters that were properly pleaded in the complaint. (Maddux, supra, 129 Cal. 665.) As such, Defendant has not met its
burden of proving that the requirements of the doctrine are satisfied. “A party
who asserts claim or issue preclusion as a bar to further litigation bears the
burden of proving that the requirements of the doctrine are satisfied.” (Hong
Sang Market, Inc. v. Peng, supra, 20 Cal.App.5th at 489 [citing Vella
v. Hudgins, supra, 20 Cal.3d 251, 257].) The Court does not express any
views at this time in light of the fact that these matters have not been
briefed.
As a result,
Defendant’s demurrer is OVERRULED. If Defendant wishes to raise the issue of
res judicata again, it should be prepared to meet its burden to prove each
element including showing that each of Plaintiff’s defenses were actually
litigated in the default matter.
Conclusion
Based on the
foregoing, Defendant’s demurrer is OVERRULED.
Moving party is
ordered to give notice.