Judge Thomas Falls, Case 22PSCV00670 2022-09-22 Tentative Ruling

(1) Defendant DARIN HUBBARD’S DEMURRER TO PLAINTIFF’S COMPLAINT is SUSTAINED without leave to amend as the claim is barred by res judicata.

(2) Defendant DARIN HUBBARD’S MOTION TO STRIKE PORTIONS OF PLAINTIFF’S COMPLAINT is MOOT as no controversy exists without a viable action.

This case involves alleged representations made by the defendant’s agent in the purchase of real property. Plaintiff Karen Harbaugh (“Plaintiff”) alleges the following against Defendant Darin Hubbard (“Defendant”): On July 30, 2019, Plaintiff and Defendant entered into a residential broker agreement (“Agreement”) for the purchase of real property. Prior to purchasing the property, Defendant allegedly made representations that the HVAC system had no issues and that plumbing inspection was unnecessary. After escrow closed, Plaintiff learned that the property’s plumbing and piping was found to require extensive repairs and that the HVAC system was unusable. Defendant received a commission of $8,760.00 from Plaintiff.

On June 30, 2022, Plaintiff filed suit against Defendant and Doe Defendants for:

5. Broker Liability to Purchaser for Intentional Nondisclosure of Material Facts,

6. Broker Liability to Prospective Purchaser for Failure to Inspect and Disclose,

On August 29, 2022, Defendant filed the instant Demurrer with a Motion to Strike. No opposition was filed as of September 21, 2022.

A demurrer may be asserted on any one or more of the following grounds: (a) The court has no jurisdiction of the subject of the cause of action alleged in the pleading; (b) The person who filed the pleading does not have legal capacity to sue; (c) There is another action pending between the same parties on the same cause of action; (d) There is a defect or misjoinder of parties; (e) The pleading does not state facts sufficient to constitute a cause of action; (f) The pleading is uncertain (“uncertain” includes ambiguous and unintelligible); (g) In an action founded upon a contract, it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct; (h) No certificate was filed as required by CCP §411.35 or (i) by §411.36.(Code Civ. Proc., §430.10.) Accordingly, a demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. (Code Civ. Proc., §430.30(a); Blank v. Kirwan, (1985) 39 Cal.3d 311, 318.)

The face of the pleading includes attachments and incorporations by reference (Frantz v. Blackwell, (1987) 189 Cal.App.3d 91, 94); it does not include inadmissible hearsay. (Day v. Sharp, (1975) 50 Cal.App.3d 904, 914.)

The sole issue on demurrer for failure to state a cause of action is whether the facts pleaded, if true, would entitle the plaintiff to relief. (Garcetti v. Superior Court, (1996) 49 Cal.App.4th 1533, 1547; Limandri v. Judkins, (1997) 52 Cal.App.4th 326, 339.) The ultimate facts alleged in the complaint must be deemed true, as well as all facts that may be implied or inferred from those expressly alleged. (Marshall v. Gibson, Dunn & Crutcher, (1995) 37 Cal.App.4th 1397, 1403.) Nevertheless, this rule does not apply to allegations expressing mere conclusions of law, or allegations contradicted by the exhibits to the complaint or by matters of which judicial notice may be taken. (Vance v. Villa Park Mobilehome Estates, (1995) 36 Cal.App.4th 698, 709.)

A court may take judicial notice of any court of record of the United States. (Evid. Code § 452, subds. (d) [“Records of (1) any court of this state or (2) any court of record of the United States or of any state of the United States.”].)

Here, Defendant requests the court take judicial notice of Plaintiff’s small claims complaint.

a. Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. …¿

1. As part of the meet and confer process, the demurring party shall identify all of the specific causes of action that it believes are subject to demurrer and identify with legal support the basis of the deficiencies. The party who filed the complaint, cross-complaint, or answer shall provide legal support for its position that the pleading is legally sufficient or, in the alternative, how the complaint, cross-complaint, or answer could be amended to cure any legal insufficiency.¿

The demurring party must file and serve with the demurrer a declaration stating the means by which the demurring party met and conferred with the party who filed the pleading subject to demurrer, or that the party who filed the pleading subject to demurrer failed to respond to the meet and confer request of the demurring party or otherwise failed to meet and confer in good faith.

Here, Defense Counsel Curtis Gole states that he met and conferred with Plaintiff’s Counsel, Marc Grossman, via email on August 20, 2022 and August 22, 2022. The email delineates the complaint’s deficiencies and is supported with legal authority. In response to Defense Counsel’s email, Plaintiff’s Counsel responded:

Res judicata as to small claims court does not include any issue preclusion and I am pretty sure my client did not mention all those causes of action in her small claims case. WE have factual admissions sufficient to sustain a Judgment. I suggest you not run up the attorney fee on a case your client cannot win.

While the court would have preferred a more civil response and one supported by legal authority (i.e., case law that states res judicata does not apply to small claims cases), the court finds the communication sufficient for meet and confer efforts.

iii. The 3^rd, 7^th, and 8^th causes of actions are deficient because the complaint neither attached a contract as an exhibit nor alleges its material terms and Defendant is not a party to any contract

Res judicata prohibits the relitigation of claims and issues which have already been adjudicated in an earlier proceeding. The doctrine has two components. “‘In its primary aspect the doctrine of res judicata [or “claim preclusion”] operates as a bar to the maintenance of a second suit between the same parties on the same cause of action.’ ... The secondary aspect is ‘collateral estoppel’ or ‘issue preclusion,’ which does not bar a second action but ‘precludes a party to an action from relitigating in a second proceeding matters litigated and determined in a prior proceeding.’” (Kelly v. Vons Companies, Inc. (1998) 67 Cal.App.4th 1329, 1335, quoting People v. Damon (1996) 51 Cal.App.4th 958, 968.) “The doctrine of res judicata, whether applied as a total bar to further litigation or as collateral estoppel, ‘rests upon the sound policy of limiting litigation by preventing a party who has had one fair adversary hearing on an issue from again drawing it into controversy and subjecting the other party to further expense in its reexamination.’” (Vella v. Hudgins (1977) 20 Cal.3d 251, 257, quoting In re Crow (1971) 4 Cal.3d 613, 622-623.)

The California Supreme Court holds that res judicata may bar claims based on the same cause of action not even raised in the prior suit, because those claims should have been raised in the prior suit.

A clear and predictable res judicata doctrine promotes judicial economy. Under this doctrine, all claims based on the same cause of action must be decided in a single suit; if not brought initially, they may not be raised at a later date. “‘Res judicata precludes piecemeal litigation by splitting a single cause of action or relitigation of the same cause of action on a different legal theory or for different relief.’” (Weikel v. TCW Realty Fund II Holding Co. (1997) 55 Cal.App.4th 1234, 1245, 65 Cal.Rptr.2d 25.) A predictable doctrine of res judicata benefits both the parties and the courts because it “seeks to curtail multiple litigation causing vexation and expense to the parties and wasted effort and expense in judicial administration.” (7 Witkin, Cal. Procedure (4th ed. 1997) Judgment, § 280, p. 820.)

Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 897. Claim preclusion applies to small claims plaintiffs who have their claims decided against them. Pitzen v. Superior Court (2004) 120 Cal.App.4th 1374, 1381.

“For purposes of collateral estoppel, an issue was actually litigated in a prior proceeding if it was properly raised, submitted for determination, and determined in that proceeding.” (Hernandez v. City of Pomona (2009) 46 Cal.4th 501, 511.) “The identical issue requirement addresses whether identical factual allegations are at stake in the two proceedings, not whether the ultimate issues or dispositions are the same.” (Id.) “Although the focus is on the identity of the specific issue litigated and decided based on the facts presented, it has also been held that ‘[a]n issue decided in a prior proceeding establishes collateral estoppel even if some factual matters or legal theories that could have been presented with respect to that issue were not presented.’” (Textron Inc. v. Travelers Casualty & Surety Co. (2020) 45 Cal.App.5th 733, 746 [citations omitted]) (italics original). Thus, in defining an issue, “the factual predicate of the legal issue decided in the prior case must be sufficient to frame the identical legal issue in the current case, even if the current case involves other facts or legal theories that were not specifically raised in the prior case.” (Id.)

Here, the First Case alleged that “Defendant who was the realtor did not inform me that the entire HVAC system was hazardous.” (RJN, Ex. B, ¶3.) In the instant case, the principal allegation forming the crux of each legal theory is that “Plaintiff relied upon Defendant Darin Hubbard’s false representations to her detriment.” (Complaint ¶15.) Effectively, both identically frame the issue as whether Defendant failed to inform Plaintiff of material defects with the property. Although Plaintiff’s First Case only referenced the HVAC system, but that is inconsequential because Plaintiff was aware of the plumbing problems during the property inspection and then within three days of moving. (Demurrer p. 10.) In any event, even if the First Case did not explicitly raise the factual matter regarding plumbing, it could have been raised. Thus, the First Case precludes the Instant Action.

The First Case precludes plaintiff’s claims here even though the First Case was a small claims action. In Pitzen, the appellate court, after carefully distinguishing between its facts and cases that do not afford a preclusive effect to small claims cases, stated the following:

In summary, we can perceive of no rationale for refusing to afford collateral estoppel effect to claims litigated and decided against a small claims plaintiff. Fundamental fairness dictates that such a plaintiff, having chosen to litigate in an informal setting by bringing an action in small claims court, cannot cite the informality of that forum to gain a second chance to litigate a previously decided issue in a related matter. Allowing a small claims plaintiff to relitigate an issue already decided against him in the forum of his choice is inconsistent with the public policy that a plaintiff electing to proceed in a small claims court is to be finally bound by an adverse judgment.

(Pitzen, supra, 120 Cal.App.4th at p. 1386.) The court in Pitzen, however, also came to its conclusion based on the following two “fundamental reasons”:

These cases suggest that a primary factor in determining whether to give collateral estoppel effect to a prior final judgment is whether the record in the former proceeding adequately reflects the issues actually litigated and decided in that proceeding . . .

There is also a second, more fundamental reason to limit the scope of the Sanderson exception. Sanderson and its progeny all involved a claim that collateral estoppel applied against a small claims defendant who had lost in the small claims court.

Here, though there is no record as to the non-jury trial in the First Case, the court does not find this deficiency material. It is clear that the First Case is based on a legal theory of misrepresentation by omission of the habitability of the property, and it is also clear that the judgment against plaintiff rejected that legal theory.

Furthermore, relying on the second fundamental reason in that “the usual application of collateral estoppel has been applied to allow a small claims plaintiff to relitigate an issue decided against him in small claims court,” here, the court finds that factor significantly favors Defendant because the court granted defendant judgment in the First Case. (Id.)

Therefore, as the First Case fully and fairly determined the issue of whether Defendant breached any duty to Plaintiff, an identical issue that Plaintiff now reasserts, collateral estoppel applies.

Res judicata, or claim preclusion, is a doctrine that “describes the preclusive effect of a final judgment on the merits.” (Mycogen, supra, 28 Cal.4th at p. 896.) The doctrine bars the relitigation of a cause of action that previously was adjudicated or could have been litigated in another proceeding between the same parties or parties in privity with them. (Federation of Hillside & Canyon Assns. v. City of Los Angeles (2004) 126 Cal.App.4th 1180, 1202.) Put differently, “if a plaintiff prevails in an action, the cause is merged into the judgment and may not be asserted in a subsequent lawsuit; a judgment for the defendant serves as a bar to further litigation of the same cause of action.” (Mycogen Corp., supra, 28 Cal.4th at p. 897.) Accordingly, by precluding piecemeal litigation, the doctrine promotes judicial economy as it “seeks to curtail multiple litigation causing vexation and expense to the parties and wasted effort and expense in judicial administration.” (Mycogen Corp., supra, 28 Cal.4th at p. 897, quoting 7 Witkin, Cal. Procedure (4th ed. 1997) Judgment, § 280, p. 820) (italics original). To apply, the following elements must be satisfied: “(1) the decision in the prior proceeding is final and on the merits; (2) the present proceeding is on the same cause of action as the prior proceeding; and (3) the parties in the present proceeding or parties in privity with them were parties to the prior proceeding.” (Id.)

On April 2, 2021, Plaintiff filed a small claims action in the Case No. 21WCSC00421 (“First Case”.) (RJN, Ex. B.) In the First Case, Plaintiff alleged the following against Defendant: “Defendant who was the realtor did not inform me that the entire HVAC system was hazardous.” (RJN, Ex. B, ¶3.) On May 25, 2021, the Honorable Kenneth M. Fuller issued the following Minute Order:

The Parties are sworn. The cause is called for Trial. The Plaintiff testifies on her own behalf. Plaintiff Karen Harbaugh's exhibit 1 (A packet of exhibits (documents) (collectively)) is admitted by reference. The Plaintiff rests. The Defendant testifies on his own behalf. Defendant Mr. Darin Lee Hubbard's exhibit A (A packet of exhibits (documents) (collectively)) is admitted by reference. The Defendant rests. The Court hears closing argument from the Plaintiff. The Plaintiff rests. The Court takes the matter under submission.

That same day, notice of entry of judgment was filed, which provides as follows: “Defendant Mr. Darin Lee Hubbard does not owe the plaintiff Karen Harbaugh any money on plaintiff’s claim.” (RJN, Ex. B, p. 11 of 14 of PDF.)

Thus, a judgment was entered following a non-jury rial, a trial which was based on evidence (i.e., packet of exhibits).

b. Whether the Present Proceeding is on the Same Cause of Action in the First Case?

“A ‘cause of action’ is comprised of a ‘primary right’ of the plaintiff, a corresponding ‘primary duty’ of the defendant, and a wrongful act by the defendant constituting a breach of that duty.” (Crowley v. Katleman (1994) 8 Cal.4th 666, 681-682.) Simply put, a plaintiff’s primary right is her right to be free from the particular injury suffered, regardless of the legal theory. (Id) (emphasis added).

Here, though causes of action were not enumerated in the First Case (nor are they required for a small claims case), Plaintiff essentially alleged that Defendant misrepresented the condition of the property. (See RJN, Ex. B [“Defendant who was the realtor did not inform me that the entire HVAC system was hazardous [and] the Realtor accepts no blame.”].) As such, Plaintiff’s “primary right” was to purchase property “free from material defects and the related causes of action including fraud, negligent misrepresentation, breach of contract, constructive fraud, nondisclosure of material facts, failure to inspect and disclose, breach off fiduciary duty, and the breach of good faith and fair dealing.” (Demurrer p. 11:11-16.) The only difference between the First Case and the instant case is the remedy: in the First Case Plaintiff sought $10,000 for the “invoice amount” and the instant case seeks general, special, exemplary, and punitive damages. Different legal theories and remedies, however, are inconsequential as “[e]ven where there are multiple legal theories upon which recovery might be predicated,” and though an injured party may be entitled to many forms of relief, “the relief is not to be confounded with the cause of action, one not being determinative of the other” because one injury gives rise to “but a single cause of action.” (Id.)

Therefore, the First Case and the instant case seek to vindicate the same primary right (i.e., same injury from Defendant’s same alleged misrepresentations arising from the same agreement arising from the same property).

c. Whether the Parties in the Instant Case Were the Same Parties to the First Case?

Here, the Plaintiff in both the First Case and the instant case is Karen Harbaugh. The Defendant in both the First Case and the instant case is Darin Lee Habbard.

Therefore, as both the Plaintiff and Defendant remain the same in both cases, this element is met.

Because (i) there was a final judgment on the merits in the First Case, (ii) both cases share the same primary right, and (iii) the same parties are involved, the bar of res judicata applies.

Because both collateral estoppel and claim preclusion apply, the court need not address Defendant’s third argument.

Based thereon, the demurrer is SUSTAINED. The court declines to grant leave to amend for two reasons. First, the burden is on Plaintiff to prove there is a reasonably possibility that any defects in the complaint be cured by amendment, but, having filed no Opposition, this burden is not met. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Second, even if Plaintiff sought leave to amend, the court finds that only wholly different facts could maybe cure complaint, which would belie the instant allegations.

Therefore, the demurrer is SUSTAINED without leave to amend and the Motion to Strike is MOOT.

[1] Defendant also argues that “[e]ven though Plaintiff litigated on her own, if she was unhappy with the results, she could have appealed the case, rather than filed a new lawsuit.” (Demurrer p. 8:17-19.) That is inaccurate statement of law. According to Code of Civil Procedure section 116.710, “[t]he plaintiff in a small claims action shall have no right to appeal the judgment on the plaintiff's claim.” (Code Civ. Proc.,¿§116.710, subd., (a)) (emphasis added).