Judge: Teresa A. Beaudet, Case: 25STCV02123, Date: 2025-06-16 Tentative Ruling

Case Number: 25STCV02123    Hearing Date: June 16, 2025    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiff Joshua Newton (“Plaintiff”) filed this action for declaratory relief against Defendants James Packer (“Packer”), Kevin Tsujihara (“Tsujihara”), Brett Ratner (“Ratner”), and Avi Lerner (“Lerner”) on January 24, 2025. Plaintiff filed a First Amended Complaint (“FAC”) on February 7, 2025.

Plaintiff’s FAC seeks a judicial determination that the settlement agreements which were the subject of an underlying matter, 24STCP03215, are illegal and void ab initio.

In 2017, a non-party to this case, pseudonym “Melissa Parker”, asserted quid pro quo sexual harassment against Defendants. Defendants and Parker began talks to reach a settlement/confidentiality agreement for her claims. Plaintiff in this case is a movie director and was Ms. Parker’s then boyfriend. Soon after settlement talks began, Plaintiff was included in these negotiations. Plaintiff initially agreed that, in exchange for not disclosing certain information about Defendants, Defendants would invest $667,000.00 in a motion picture directed by Plaintiff.

After this initial agreement was finalized, Plaintiff attempted to renegotiate the terms of the arrangement. Defendants eventually agreed to invest $3,500,000.00 in Plaintiff’s movie. They also agreed that the money could only be used to finance the film, and that if Plaintiff breached the agreement, he would be obligated to return the investment and forfeit ownership of the movie.

In June 2020, Defendants commenced arbitration to enforce their rights under the revised agreement. Defendants alleged that Plaintiff had both breached the settlement agreement and engaged in fraud by mis-spending the funds invested in Plaintiff’s movie.

On January 22, 2024, the arbitration hearing on these issues began. On April 17, 2024, the Arbitrator issued their interim award and ruling. On June 27, 2024, the Arbitrator issued her final arbitration award in favor of Defendants. Defendants were awarded $3,500,00.00 in compensatory damages, $1,000,000.00 in punitive damages, $3,932,773.99 in attorney’s fees, $513,842.84 in costs, and $1,359,724.70 in pre-judgment interest. This amounts to an award of $10,306,341.53.

On May 9, 2025, this Court denied Plaintiff’s petition to vacate the arbitration award in the underlying case. The Court granted Defendants’ petition to confirm the arbitration award on the same date and entered judgment in their favor on May 27, 2025.

Defendants now demur to Plaintiff’s FAC in this case. Plaintiff opposes.

Request for Judicial Notice

Defendants request that the Court take judicial notice of (1) an interim arbitration award dated April 17, 2024, (2) a final arbitration award dated June 27, 2024, and (3) Plaintiff’s petition to vacate arbitration award filed in LASC Case No. 24STCP03215 on March 21, 2025. The Court grants Defendants’ requests for judicial notice because the above documents are court records filed in the underlying case, 24STCP03215, which may be judicially noticed under Evid. Code, § 452(d).

Discussion

a.      Res Judicata

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff's proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)  

Here, Defendants demur to the FAC on the grounds that Plaintiff’s FAC is barred under res judicata. Defendants argue Plaintiff’s claims in the FAC were already litigated before an arbitrator in an underlying arbitration.

“The tenets of res judicata prescribe the preclusive effect of a prior final judgment on the merits. [Citation.] The doctrine has two distinct aspects: claim preclusion and issue preclusion.  .¿.¿. Claim preclusion, often referred to as res judicata, provides that ‘a valid, final judgment on the merits precludes parties or their privies from relitigating the same ‘cause of action’ in a subsequent suit.’ [Citation.] Issue preclusion, or collateral estoppel, ‘¿“precludes relitigation of issues argued and decided in prior proceedings.”¿’ [Citation.]” (City of Oakland v. Oakland Police & Fire Retirement System (2014) 224 Cal.App.4th 210, 227-228 (City of Oakland).) Both require that (1) a claim or issue raised in the present action is identical to a claim 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 in privity with a party to the prior proceeding. (Brinton v. Bankers Pension Services, Inc. (1999) 76 Cal.App.4th 550, 556.) The scope of the rule extends further to matters that could have been raised even if the matter was not expressly pleaded or otherwise urged. (Bucur v. Ahmad (2016) 244 Cal.App.4th 175, 185.)

When applying res judicata, “the key issue is whether the same cause of action is involved in both suits. California law approaches the issue by focusing on the ‘primary right’ at stake: if two actions involve the same injury to the plaintiff and the same wrong by the defendant then the same primary right is at stake even if in the second suit the plaintiff pleads different theories of recovery, seeks different forms of relief and/or adds new facts supporting recovery.” (Henry v. Clifford (1995) 32 Cal.App.4th 315, 321.)

Here, there is no question that the parties here are the same parties as in the underlying action and that judgment has been entered in the underlying action. Plaintiff argues in opposition that the FAC is not barred because there has been no final judgment confirming the final arbitration award and that the arbitrator’s ruling cannot preclude this action. However, the Court granted Defendants’ petition to confirm the arbitration award on May 9, 2025 and entered judgment in their favor on May 27, 2025. Even if the arbitration award had not been confirmed, it is well-settled that an arbitral award is the equivalent to a final judgment for the purposes of the res judicata analysis even if it is unconfirmed. (Bucur, supra, 244 Cal.App.4th at p.186.) The motion will turn on whether the claims or issues raised in the FAC were identical to those litigated in the prior proceeding.

Plaintiff admits in the FAC that this action arises from the same settlement agreements referenced in the underlying arbitration wherein an arbitrator issued a final award on June 27, 2024. The FAC essentially alleges that Plaintiff signed the 2017 settlement agreement under duress and that the subsequent amendment to the settlement agreement was coercive. (FAC ¶¶31-41, 50.) Specifically, Plaintiff alleged that the agreement’s terms which required Parker’s silence were coercive. (FAC ¶50.) Additionally, Plaintiff alleges that the agreement and amendment were contrary to public policy, constituted an attempt to exempt Defendants from responsibility for their own fraud, and that the agreement was unlawful. (FAC ¶49.)

The arbitrator’s interim award in the underlying case addresses the same issues Plaintiff raises in the FAC in this case. Specifically, the arbitrator found that the confidentiality provisions in the settlement agreements were fully enforceable and that Plaintiff’s claims for duress were waived when he signed the December 17, 2017 amended settlement agreement. (RJN Exh. 1, pp. 20-22.) Additionally, the arbitrator found that the settlement agreements were not illegal or unenforceable as Plaintiff alleged. (Id., pp.22-23.) As for Plaintiff’s arguments with respect to public policy issues, the arbitrator noted Plaintiff’s public policy arguments and issued the final award despite these arguments. (RJN Exh. 2, p. 3.)

The underlying matter involved the same primary right at stake here because in both matters, Plaintiff alleged that the settlement agreements were unenforceable because they were unlawful or coercive. Additionally, the issues raised in the FAC are identical to those already addressed in the underlying arbitration. Thus, the FAC is barred under the doctrine of res judicata.

Plaintiff argues in opposition that a contract’s illegality may be raised at any time. However, as discussed above, the issue of whether the settlement agreements were unlawful was already raised in arbitration. Even if Plaintiff advanced different legal theories, the matter is still barred by res judicata because this action involves the same primary right as the underlying arbitration.

The Court finds that Plaintiff’s FAC is barred under the doctrine of res judicata. Defendants’ demurrer is sustained. The Court need not reach Defendants’ arguments pertaining to collateral estoppel.

b. Leave to Amend

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 [“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”].) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Here, the Court finds there is no reasonable possibility that the FAC may be amended to cure the deficiencies described above because Plaintiff’s claims are barred by res judicata. Therefore, the demurrer is sustained without leave to amend.

Plaintiff is ordered to give notice of this order. 

DATED:  June 16, 2025               ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court