CALIFORNIA CIVIL

PROCEDURE
Third Edition
LexisNexis Law School Publishing
Advisory Board

William Araiza
Professor of Law
Brooklyn Law School

Ruth Colker
Distinguished University Professor & Heck-Faust Memorial Chair in
Constitutional Law
Ohio State University Moritz College of Law

Olympia Duhart
Associate Professor of Law
Nova Southeastern University Shepard Broad Law School

Samuel Estreicher
Dwight D. Opperman Professor of Law
Director, Center for Labor and Employment Law
NYU School of Law

David Gamage
Assistant Professor of Law
UC Berkeley School of Law

Joan Heminway
College of Law Distinguished Professor of Law
University of Tennessee College of Law

Edward Imwinkelried
Edward L. Barrett, Jr. Professor of Law
UC Davis School of Law

Paul Marcus
Haynes Professor of Law
William and Mary Law School

Melissa Weresh
Director of Legal Writing and Professor of Law
Drake University Law School
[i/ii]
CALIFORNIA CIVIL
PROCEDURE

Third Edition

Walter W. Heiser
Professor of Law
University of San Diego School of Law
 [ii/iii]

Casebook ISBN: 978-0-7698-5279-9

Looseleaf ISBN: 978-0-7698-5528-8 (print)
eBook ISBN: 978-1-5791-1658-3 (eBook)

Library of Congress Cataloging-in-Publication Data

Heiser, Walter W.
California civil procedure / Walter W. Heiser. -- 3rd ed.
p. cm.
Includes index.
ISBN 978-0-7698-5279-9
1. Civil procedure--California--Cases. I. Title.
KFC995.A7H45 2012
347.794'05--dc23
2012017609

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 [iii/iv]

PREFACE TO THIRD EDITION

There have been numerous changes in the law of civil procedure since the
publication of the Second Edition of the California Civil Procedure casebook in
2005. The Third Edition reflects some of the more significant developments in
constitutional amendments, procedural statutes, rules of court, and case law
since 2005; and preserves materials from the First and Second Editions that
remain current and relevant.

The California statutes and Rules of Court discussed and quoted in the Third
Edition are current as of March 1, 2012. The judicial decisions reproduced and
analyzed are based on California Supreme Court opinions published through 53
Cal. 4th 735 (2012), and on California Court of Appeal opinions officially
published through 192 Cal. App. 4th 1527 (2011).
 [v/vi]

PREFACE TO SECOND EDITION

There have been numerous changes in the law of civil procedure since the
publication of the First Edition of the California Civil Procedure casebook in
1996. The Second Edition reflects some of the more significant developments in
constitutional amendments, procedural statutes, rules of court, and case law, as
of October 1, 2004. The Supreme Court of California has been particularly
active in deciding civil procedure cases during the past eight years. The Second
Edition discusses some of the more significant of these decisions, as well as
numerous California Court of Appeal decisions. Likewise, the Judicial Council
has been very active in revising the California Rules of Court. By comparison,
the California Legislature has been somewhat less active in the area of civil
procedure during this period, but what new laws it has enacted are very
significant. These important procedural statutes are discussed or quoted in the
Second Edition.

The judicial decisions reproduced and analyzed in the Second Edition are
based on California Supreme Court opinions published through 34 Cal. 4th 366
(2004), and on California Court of Appeal opinions officially published through
111 Cal. App. 4th 1472 (2003).
 [vii/viiii]

PREFACE TO FIRST EDITION

The immediate purpose of these materials is to provide a vehicle for

upperclass law students to explore the complexities of civil procedure as
practiced in the California state courts. The ultimate goal is to increase the
competency of future California attorneys with respect to their office and
courtroom practice. California Civil Procedure is an intricate series of topics,
spanning the spectrum from broad theories to detailed precepts. This book
attempts to achieve a balance between general principles and specific rules,
with emphasis on those areas of most importance to practitioners.

The organization and methodology employed are mostly traditional.

Authorities were selected for reproduction based on their coverage of essential
concepts whose application to future cases will require resolution of significant
analytical and policy conflicts. Extensive textual analysis places each
reproduced case or statute into broader context, as do frequent questions, notes,
and observations. The purpose here is two-fold: to enhance coverage of the area
under consideration and, more importantly, to stimulate both individual student
reflection and classroom discussion.

Although students should find these materials quite helpful in understanding

topics to which they were previously exposed, this book is not intended
primarily as a review of first year civil procedure. The emphasis instead is
often on those areas where California procedure departs from the general or
federal rules. These materials do, however, make frequent comparisons to
analogous Federal Rules of Civil Procedure and federal practice.

The arrangement of the topics largely reflects the sequence of considerations

likely encountered in taking a typical civil case from the stages of initial client
contact to commencement of the action in court, through pretrial preparation,
trial proceedings, post-trial motions, and appellate review. This sequence need
not be followed. Each chapter was developed as an independent topic, and can
be assigned in whatever sequence seems appropriate to the instructor.

This book contains far more material than can comfortably be covered in a
typical three-credit, one-semester course. The intent is to permit each teacher to
structure his or her course by choosing among the full panoply of available
topics. Some schools have limited their required civil procedure course to one
semester. Those schools may wish to offer more extensive upperclass
California Civil Procedure courses, perhaps one focusing on pretrial
procedures and another on trial and appellate procedures. This book contains
sufficient material for such comprehensive courses.

Chapters 1 and 2 are short chapters designed as the initial assignment for an
introductory class. After that, several sequencing options are available for a one
semester course. Instructors who wish to emphasize those areas of California
Civil Procedure that are unique should assign Chapters 4 (Statutes of
Limitations), 5 (Conflict of Laws), 8 (Preclusive Effects of Prior Judgments),
sections of Chapter 9 discussing “Doe” defendant practice, sections of Chapter
10 dealing with new party cross-complaints and equitable indemnity, sections of
Chapter 12 covering default judgments and arbitration, the new trial portions of
Chapter 13, and Chapters 14 and 15. Instructors who desire to add some
practical professional responsibility issues may add Chapter 3 to the beginning
of this list.

Instructors who wish to emphasize more basic aspects of California civil

procedure [viii/ix]may find the following sequence to their liking: Chapters 1 and
2, followed by assignments from Chapters 4 (Statutes of Limitations), 6 (The
Proper Court), 8 (Preclusive Effects of Prior Judgments), 9 (Pleadings), 10
(Joinder), 11 (Discovery), and 13 (Trials). Instructors with the luxury of more
than three credits or of two semesters may pick and choose among all these
chapters as appropriate.
 [ix/x]

ACKNOWLEDGMENTS

I am grateful to Professors Rex R. Perschbacher and Margaret Z. Johns,

University of California at Davis School of Law, for their contributions to the
first edition, many of which remain in the third edition. Special thanks to Katie
Chifcian, Brandon Kelsey, and Robert Olsen for their research assistance on the
third edition; to Mike Misa and Pancy Lin for their research assistance on the
second edition; and to Elizabeth Angres, Lisa D’Errico, Tracy Frost, Beth
Knisely, Amy Jackson, Byron Mousmoules, Jerry Polansy, Robin Wahl and
Phebe Wang, for their research contributions to the first edition. Finally, I would
like to again express my gratitude to my wife, Susan, for her continued support
and patience throughout these projects.

March, 2012
[xi/xii]
TABLE OF CONTENTS

Chapter 1 INTRODUCTION TO CALIFORNIA CIVIL

PROCEDURE

Chapter 2 SOURCES OF PROCEDURAL LAW

§ 2.01 A BRIEF HISTORY OF CALIFORNIA PROCEDURE

[A] Justice in Frontier California

[B] The Impact of the Fields on California Procedure

[C] Subsequent History

§ 2.02 SOURCES OF CALIFORNIA PROCEDURAL LAWS

[A] “Written Law”

[1] The United States Constitution and Laws

[2] The California Constitution

[3] The California Code of Civil Procedure

[4] California Rules of Court

CALIFORNIA RULES OF COURT (2012)

Rule 8.1105. Publication of Appellate Opinions

Rule 8.1115. Citation of Opinions

Rule 8.1120. Requesting Publication of Unpublished Opinions

Rule 8.1125. Requesting Depublication of Published Opinions

[5] Local Rules of Court

Tliche v. Van Quathem

[a] Local Rules “Not Inconsistent with State Law”

 [a] Local Rules “Not Inconsistent with State Law”

[b] Case Management (“Fast Track”) Rules

[c] Local Departmental Rules

[B] “Unwritten” Law

[1] Judicial Decisions

[2] Learned Treatises

Earl W. Schott, Inc. v. Kalar

[3] Secondary Authorities

[4] Law Revision Commission Official Comments

§ 2.03 THE CALIFORNIA JUDICIAL SYSTEM

[A] California Trial Court Unification

[B] The California Judicial System

[xii/xiii]

Chapter 3 CONSIDERATIONS BEFORE

UNDERTAKING REPRESENTATION

§ 3.01 INTRODUCTORY NOTE ON PROFESSIONAL RESPONSIBILITY

ISSUES

§ 3.02 LAWYERS’ DUTIES TO THEIR CLIENTS

[A] The Duty of Confidentiality

Notes and Questions

[B] The Duty of Loyalty — Conflicts of Interest

[C] Taking Cases You Are Competent to Handle

§ 3.03 AVOIDING MERITLESS LITIGATION

 Crowley v. Katleman

Notes and Questions on Frivolous Litigation

§ 3.04 FEES AND FEE AGREEMENTS

[A] Fee Agreements, Generally

[B] Statutory Limits on Contingent Fees

Chapter 4 STATUTES OF LIMITATIONS, LACHES,

AND RELATED MATTERS

§ 4.01 INTRODUCTORY NOTE

Developments in the Law — Statutes of Limitations, 63 Harv. L. Rev.

1177, 1185–86 (1950)

Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice

§ 4.02 ASCERTAINING APPLICABLE TIME LIMITATION PERIODS

[A] Statutory Limitation Periods

[1] Statutory Classifications

[2] Categorizing Actions for Statute of Limitations Purposes

[3] Statutory Overlap

[4] Various Specific Statutes of Limitations in the Civil Procedure

and Other Codes

[B] Contractual Modification of Statutory Time Period

[1] Contractual Extension of Statutory Limitation Period

[2] Contractual Abridgement of Statutory Limitation Period

[C] Legislative Modification of Statutory Time Periods

[1] Abridgement of Time to Sue

[2] Enlargement of Time to Sue

 [2] Enlargement of Time to Sue

[D] Calculation of Statutory Time Period

§ 4.03 ACCRUAL OF A CAUSE OF ACTION

[A] The General California “Discovery” Rule

Jolly v. Eli Lilly & Company

Fox v. Ethicon Endo-Surgery, Inc.

Notes and Questions Regarding Accrual and the Discovery Rule

[xiii/xiv]

[B] Developing Applications of the Discovery Rule

[1] Judicial Evolution

Evans v. Eckelman

Moreno v. Sanchez

Notes and Questions

[2] Legislative Modification of the Discovery Rule

[a] Various Legislative Approaches

[b] Superseding Limitations

[c] Legislative Expansion: Asbestos Exposure Litigation

[3] Difficult Accrual Cases

[a] Nuisance

[b] Breach of Warranty

[c] Injury to Property

[d] Defamation

[e] Other Difficult Accrual Cases

 [f] Wrongful Discharge from Employment

[g] Continuous Accrual

[4] Special Accrual Issues in Medical Negligence Actions Governed

by CCP § 340.5

[a] Section 340.5

[b] Wrongful Death Cases

[c] Actions by Minors

[C] Extent of Harm Required for Accrual: Appreciable and Actual Harm

Pooshs v. Philip Morris USA, Inc.

Notes and Questions Regarding Pooshs and the “Double Injury

Problem”

§ 4.04 TOLLING THE STATUTE OF LIMITATIONS

[A] Introductory Note

[B] Specific Bases for Tolling Limitations Periods

[1] Statutory “Disability”

[a] Limitations

[b] Exceptions

[2] Absence or Nonresidence of Defendant

[a] Constitutionality of Section 351

[b] Statutory Exceptions

[3] Other Statutory Tolling Provisions

[4] Professional Malpractice Statutes

[a] Medical Malpractice

[b] Legal Malpractice

 [c] Legal Malpractice: “Actual Injury”

[d] Legal Malpractice: “Continuous Representation”

[xiv/xv]

[5] Servicemembers Civil Relief Act

[6] The Federal “Savings” Statute

[7] Equitable Tolling of Statutes of Limitations

Garabedian v. Skochko

Prudential-LMI Commercial Insurance v. Superior Court

Notes and Questions Regarding Equitable Tolling

[8] Estoppel and Other Equitable Tolling Doctrines

Muraoka v. Budget Rent-a-Car, Inc.

Bernson v. Browning-Ferris Industries Of California, Inc.

Notes and Questions Regarding Estoppel

[9] Tolling and Class Actions

Jolly v. Eli Lilly And Company

Notes and Questions

[10] Relation Back Doctrine and Cross-Complaints

Sidney v. Superior Court

Notes and Questions

§ 4.05 COMMENCEMENT OF AN ACTION

[A] Generally

[B] Choice of Law

[C] Prerequisites to Filing Complaint

 [1] Medical Malpractice Prelitigation Notice

[a] The 90-Day Tolling Provision

[b] Judicial Interpretations

[D] Actions Against Public Entities and Employees

[1] Claim-Filing Requirements of California Government Claims Act

Phillips v. Desert Hospital District

[2] Purposes of Government Claims Act

[3] Government Claims Act Doctrine of Substantial Compliance

[a] Substantial Compliance, Generally

[b] Limits to Substantial Compliance

[c] Minimum Requirements of a Claim

[d] New Allegations in Complaint

[e] Scope of Doctrine

[f] Cross-Complaints

[4] Government Claims Act and Estoppel

[5] Government Claims Act Tolling Provisions

[E] Notices, Claims and Other Prerequisites

[1] Notice to Prospective Defendant

[2] Demand Requirements

[3] Certificate of Merit

[4] Notice and Claim Prerequisite

[xv/xvi]

[5] Security for Costs

 [F] Statutes of Limitations in Federal Courts

[G] Procedural Aspects of Statutes of Limitations

[1] Affirmative Defense

[2] Pleading Statutes of Limitations

[3] Procedural Devices for Invoking Statute of Limitations

§ 4.06 EXHAUSTION OF ADMINISTRATIVE REMEDIES

[A] The Exhaustion Requirement

Department Of Personnel Administration v. Superior Court

Notes and Questions Regarding Exhaustion of Administrative

Remedies

[B] Exceptions to the Exhaustion Requirement

[C] Waiver

[D] Exhaustion and Primary Jurisdiction

§ 4.07 THE DOCTRINE OF LACHES

[A] Elements of Defense

[1] In General

[2] Unreasonable Delay

[3] Prejudice

[B] Actions to Which Laches Is Applicable

[C] Manner of Asserting Laches

Chapter 5 CALIFORNIA CONFLICT OF LAWS

DOCTRINE

§ 5.01 INTRODUCTORY NOTE

§ 5.02 AN OVERVIEW OF THE HISTORICAL EVOLUTION OF CHOICE-
OF-LAW THEORIES

[A] The First and Second Restatements

William M. Richman and William L. Reynolds, Understanding

Conflict of Laws

[B] California and the Restatements

§ 5.03 GOVERNMENT INTEREST ANALYSIS AND TORT CASES IN

CALIFORNIA

[A] An Introduction to Interest Analysis

Robert A. Sedler, the Governmental Interest Approach to Choice of

Law: An Analysis and a Reformulation

[B] False Conflicts

Hurtado v. Superior Court

Notes and Questions Regarding Hurtado and False Conflicts

[C] True Conflicts

Bernhard v. Harrah’s Club

Notes and Questions Regarding Bernhard and True Conflicts

[xvi/xvii]

[D] Comparative Impairment

[1] Resolving True Conflicts

[a] Professor Currie’s Pure Interest Analysis Approach

[b] The California Approach

[2] Professor Baxter’s Comparative Impairment Analysis

William F. Baxter, Choice of Law and the Federal System

More Notes and Questions Regarding Bernhard and Comparative

 Impairment

[E] Further Development of Comparative Impairment

[1] Supreme Court Fine-Tuning

Offshore Rental Co. v. Continental Oil Co.

Kearney v. Salomon Smith Barney, Inc.

Notes and Questions

[2] Lower Court Application

[a] Zimmerman v. Allstate Ins. Co.

Notes and Questions Regarding Zimmerman v. Allstate Ins. Co.

[b] Denham v. Farmers Insurance Co.

Notes and Questions Regarding Denham v. Farmers Insurance

Co.

[3] Other States’ Doctrines for Torts

[a] Are the Approaches Really Different in Practice?

[b] Commentary on Interest Analysis

§ 5.04 CALIFORNIA CHOICE-OF-LAW DOCTRINE IN CONTRACT CASES

[A] Choice-of-Law Agreements

Nedlloyd Lines B.V. v. Superior Court

Guardian Savings And Loan Assn. v. MD Associates

Notes and Questions on California Choice-Of-Law Agreements

[B] Conflicts Analysis When No Choice-of-Law Agreement

Stonewall Surplus Lines Ins. Co. v. Johnson Controls, Inc.

Notes and Questions Regarding Contracts Conflicts Analysis in the

Absence of a Choice-Of-Law Agreement
 [C] Notes on the Restatement (Second) Conflict of Laws and Contract
Issues

[1] The Second Restatement, Generally

Restatement, Second, Conflict of Laws

Notes and Questions Regarding the Second Restatement

[2] Statutory Directives

§ 5.05 STATUTES OF LIMITATIONS AND CHOICE OF LAW

[A] Introductory Note

McCann v. Foster Wheeler LLC

[xvii/xviii]

Notes and Questions

[B] The California Borrowing Statute

Notes and Comments Regarding California’s Borrowing Statute

§ 5.06 MISCELLANEOUS CHOICE-OF-LAW APPLICATIONS

[A] Corporations

[1] Government Interest Analysis

[2] The “Internal Affairs” Doctrine

[B] Family Law Matters

[1] Community Property

[2] Marriage

[3] Dissolution of Marriage

[4] Child Custody

[5] Child and Spousal Support

 [C] Class Actions

[D] Choice-of-Law Doctrine in Federal Courts

[E] Waiver

Chapter 6 THE PROPER COURT

§ 6.01 SUBJECT MATTER JURISDICTION

[A] Introductory Note

[B] Superior Court Jurisdiction

[1] Trial Court Unification

[2] “Limited” vs. “Unlimited” Civil Cases

[a] Limited Civil Case

[b] Reclassification

[c] Amount in Controversy

[d] Judgment Below Classification Minimum Amount

[e] Small Claims Court

[f] Probate Court

[C] Court vs. Administrative Tribunal Jurisdiction

[1] Exclusive Agency Jurisdiction

[a] Agricultural Labor Relations Board (ALRB)

[b] Alcoholic Beverage Control (ABC) Board

[c] Public Employment Relations Board (PERB)

[d] Public Utilities Commission (PUC)

[e] Workers’ Compensation Appeals Board (WCAB)

 [f] State Bar Court

[2] Jurisdiction to Determine Jurisdictional Issues

[a] Exhaustion of Administrative Remedies

[b] Primary Jurisdiction

[3] No Waiver of Jurisdictional Defense

[xviii/xix]

§ 6.02 PERSONAL JURISDICTION

[A] Personal Jurisdiction, Generally

Cassiar Mining Corp. v. Superior Court

Notes and Questions

[B] Due Process

[1] “Minimum Contacts”

[2] “Reasonableness” Factors

[3] Transient Jurisdiction

[4] The “Effects” Test

[5] Nonresident Parent Corporations

[a] The Alter Ego and Agency Theories

[b] Representative Services Doctrine

[6] Recent Decisions

[a] Snowney v. Harrah’s Entertainment, Inc.

[b] Bridgestone Corp. v. Superior Court

[c] Hunt v. Superior Court

[d] Edmunds v. Superior Court

 [d] Edmunds v. Superior Court

[e] Other Recent Decisions

[C] Raising the Personal Jurisdiction Defense

CALIFORNIA CODE OF CIVIL PROCEDURE (2012)

Section 418.10. Motion to Quash Service of Summons or to Stay or

Dismiss Action; Procedure

Section 418.11. Appearance for Ex Parte Relief or Provisional

Remedy; Not General Appearance Nor Waiver of Motion Rights

Section 1014. Appearance Defined, Right to Notices Before and After

Appearance

[1] Waivable Due Process Right

[a] General Appearance

[b] Federal Procedure Compared

[c] Forum Selection Clauses

[2] Appellate Review

[a] Writ of Mandate

[b] Federal Review Compared

§ 6.03 VENUE

[A] Statutory Venue

Brown v. Superior Court

[1] General Venue Rules and Exceptions

[a] Actions Involving Real Property

[b] Actions Against Public Officials and Entities

[c] Personal Injury Actions

[xix/xx]
 [d] Dissolution of Marriage

[e] Actions Against Corporations and Associations

[f] Contract Actions

[g] Other Venue Exceptions

[h] Residence Defined

[2] Mixed Actions

[a] The “Main Relief” Rule

[b] Venue Follows the Transitory Cause of Action

[c] Mixed Action Rules: Multiple Causes and Single Defendant

[d] Mixed Action Rules: Multiple Defendants and Causes of

Actions

[3] Venue Puzzles

[4] Importance of Complaint

[a] Misjoined Defendants

[b] Declaratory Relief

[5] Venue in Limited Civil Cases

[B] Raising Improper Venue

[1] Motion to Transfer

[a] Federal Rules Compared

[b] Waiver of Wrong Venue Objection

[c] Jurisdictional Venue

[2] Effect of Motion to Transfer

[a] Suspension of Jurisdiction

 [b] Appellate Review

[c] Transfer to Proper Court

[3] Change of Venue for Convenience of Witnesses, Etc.

[a] Federal Procedure Compared

[b] Transfer to Convenient Court

[c] Time for Motion

[d] Necessity of Specific Factual Showing

[e] Payment of Fees

[4] Removal statute

[5] Coordination statutes

[C] Contractual Venue Provisions

§ 6.04 SERVICE OF PROCESS

[A] Introductory Note on Manner of Service

[B] Service Within California

Bein v. Brechtel-jochim Group, Inc.

Olvera v. Olvera

[1] Personal Service

[2] Substituted Service

[a] On Individuals
[xx/xxi]

[b] On Entities

[c] Federal Rules

[3] Publication
 [a] Reasonable Diligence

[b] Proof of Diligence

[c] Due Process

[d] “Actual Notice”

[4] Service By Mail Within California

[C] Service in Another State

In Re The Marriage Of Tusinger

[1] Service Options

[2] “Other Evidence”

[a] Taylor-Rush v. Multitech Corp.

[b] Dill v. Berquist Construction Co.

[c] Cruz v. Fagor America, Inc.

[3] Service by Mail

[4] Due Process and Service by Mail

[5] Substituted Service on Agent Within California

[a] Corporations and Other Entities

[b] Contract

[c] Implied Agent

[d] Alternative Methods

[D] Service Outside the United States

[1] International Service Agreements

[a] Hague Service Convention

[b] Inter-American Convention

 [2] Service When No Treaty Applies

[E] Procedures for Asserting Lack of Proper Service

[1] Motion to Quash

[a] Burden of Proof

[b] Effect of Granted Motion

[c] Appellate Review

[d] Federal Rules

[2] Time Limits on Service of Process

[a] Mandatory Dismissal

[b] Discretionary Dismissal

[c] Court Rules

[3] Summons

[4] Process Servers

[5] Proof of Service

[6] Special Service Statutes

[xxi/xxii]

[7] Federal Incorporation of State Laws

§ 6.05 FORUM NON CONVENIENS

[A] Relevant Factors Under the California Doctrine

Stangvik v. Shiley Incorporated

[1] Adequate Alternative Forum

[a] Unfavorable Change in Law

[b] No Remedy Exception

 [b] No Remedy Exception

[2] Plaintiff’s Residence

[3] Dismissal vs. Stay

[4] Procedures for Raising Forum Non Conveniens

[a] Before General Appearance

[b] After General Appearance

[c] Procedures Compared

[5] Balance of Convenience Factors

[B] Forum Selection Agreements

Cal-State Business Products & Services, Inc. v. Ricoh

Notes and Questions on Forum Selection Agreements

Chapter 7 PROVISIONAL REMEDIES

§ 7.01 ATTACHMENT AND RELATED PREJUDGMENT REMEDIES

[A] Writ of Attachment

Western Steel And Ship Repair, Inc. v. RMI, Inc.

[1] The Attachment Law (CCP § 482.010 et seq.)

[2] Attachment Limitations

[a] Attachment Limited to Certain Claims

[b] Attachment Limited to Certain Property

[c] “Substantive” Limitations on Attachment

[d] Undertakings

[e] Ex Parte Writ of Attachment

[3] Attachment Procedures

 [3] Attachment Procedures

[a] Ex Parte Attachment Procedures

[b] Attachment Procedure on Noticed Hearing

[4] Claim of Exemption Procedure

[a] Personal Property

[b] Real Property; Homesteads

[5] Nonresident Attachment

[a] Purpose

[b] Due Process Issues

[B] Other Provisional Remedies

[1] Temporary Protective Orders

[2] Claim and Delivery

[xxii/xxiii]

[3] Receivership

[4] Temporary Restraining Order

[5] Contractual Arbitration

[6] Lis Pendens

Kirkeby v. Superior Court

[a] The Lis Pendens Notice

[b] Effect of Lis Pendens

[c] Motion to Expunge

[d] Lis Pendens a Provisional Remedy?

[e] Due Process Issues

[f] Availability of Lis Pendens

 [f] Availability of Lis Pendens

[C] Official Forms and Other Resources

[1] California Judicial Council Forms

[2] California Law Revision Commission Comments

§ 7.02 PRELIMINARY INJUNCTIVE RELIEF

[A] Preliminary Injunctions

California Code of Civil Procedure § 527 (2012)

Abba Rubber Company v. Seaquist

[1] Preliminary Injunctions, Generally

[2] Preliminary Injunctions: Interim Harm

[a] Irreparable Injury

[b] Threatened Harm

[c] Governmental Entity Applicant

[d] Special Statutes

[3] Preliminary Injunctions: Undertaking

[a] Sufficiency of Undertaking

[b] Federal Rules Compared

[c] When Undertaking Not Required

[d] Waiver of Undertaking

[B] Temporary Restraining Orders (TRO)

[1] TRO Prerequisites

[2] TRO Procedural Safeguards

[a] Duration

[b] Enforcement
 [b] Enforcement

[3] Anti-Suit Injunctions

Chapter 8 PRECLUSIVE EFFECTS OF PRIOR

JUDGMENTS

§ 8.01 INTRODUCTORY NOTE ON RES JUDICATA AND COLLATERAL

ESTOPPEL

§ 8.02 RES JUDICATA (CLAIM PRECLUSION)

[A] The Primary Rights Doctrine

[xxiii/xxiv]

Holmes v. David H. Bricker, Inc.

Slater v. Blackwood

Sawyer v. First City Financial Corp.

Notes and Questions on Primary Rights Analysis

[1] A Historical Analysis

Walter W. Heiser, California’s Unpredictable Res Judicata (Claim

Preclusion) Doctrine

[2] Cause of Action

[3] Primary Rights Determined by Precedent

[4] Primary Rights distinguished from Theories of Recovery

[a] Importance of Harm Suffered?

[b] Sawyer: Tort vs. Contract?

[c] Importance of Same Injury?

[5] Primary Rights v. Remedies

[6] Inherent Ambiguity of the Primary Rights Theory

 [6] Inherent Ambiguity of the Primary Rights Theory

Takahashi v. Board Of Education

Notes and Questions Regarding Takahashi v. Board of Education

and Primary Rights

[7] The Declaratory Judgment Exception to Primary Rights Doctrine

[B] Conduct Which Violates Both State and Federal Laws

[1] Introductory Note

[2] One or Two Primary Rights?

[C] Res Judicata and Pendent Claims

[1] Introductory Note

Koch v. Hankins

Notes and Questions Regarding Pendant Claims

[2] State Claim Not Raised

[D] Primary Rights vs. Restatement Doctrine

[1] Introductory Note

[2] Federal-State Recognition of Judgments

[a] Prior State Judgment in Federal Courts

[b] Prior Federal Judgment in California Courts

[E] Compulsory Cross-Complaints and Res Judicata

[1] The Compulsory Cross-Complaint Statutes

[2] Transactional Standard

[a] Impact on Primary Rights Doctrine?

[b] Should California Abandon Primary Rights?

[F] The Requirement of Final Judgment on the Merits

[1] Final Judgment, California Rule

[2] Final Judgment, Federal Rule

[3] California Interpretations of Final Judgment

[xxiv/xxv]

[a] Claim vs. Issue Preclusion

[b] Final Interlocutory Judgment

[c] Successive Judgments

[d] Inconsistent Judgments

[4] Decision on the Merits

[a] Default Judgment?

[b] Summary Judgment?

[c] General Demurrer?

[d] Stipulated Judgments and Consent Judgments?

[e] Voluntary Dismissal?

[6] Claim Preclusive Effect of Non-Judicial Tribunal Decision

[a] Administrative Agency Decisions

[b] Contractual Arbitration

[c] Judicial Arbitration

[7] Sister State Judgments

[a] Res Judicata Effect

[b] Enforcement of Sister State Judgments

[8] Pleading, Proof, and Waiver of Res Judicata

[a] Raising Claim Preclusion

 [b] Raising Issue Preclusion

[c] Raising Res Judicata in Appellate Court

[d] Raising Failure to Plead Compulsory Cross-Complaint

[e] Proof of Res Judicata

[f] Estopped to Assert Res Judicata

[g] Special Trial of Res Judicata Defense

[G] Another Action Pending

[1] Plea in Abatement

[2] Exclusive Concurrent Jurisdiction

[3] Anti-Suit Injunctions

§ 8.03 COLLATERAL ESTOPPEL (ISSUE PRECLUSION)

[A] Introductory Note

[B] The California Collateral Estoppel Doctrine

Sutphin v. Speik

Frommhagen v. Board Of Supervisors

[1] Collateral Estoppel Doctrine, Generally

[a] The Basic California Prerequisites

[b] Public Policy Considerations

[c] The “Public Interest” Exception

[2] What is an “Identical Issue” for Purposes of Collateral Estoppel?

[a] Identical Issues: “Issue” vs. “Legal Theory”

[b] Different Historical Transaction

[xxv/xxvi]
 [c] Change in Factual Circumstance

[d] Scrutiny of Facts Necessary

[e] Different Legal Context

[f] Different Standards of Proof

[3] Issues Actually Litigated and Determined

[a] “Issues” vs. “Theories”

[b] Identifying Issues “Actually Litigated and Determined”

[c] Collateral Estoppel Effect of Default Judgment

[d] Retraxit

[e] Stipulated Judgments

[f] Need for Clearer Collateral Estoppel Guidelines

[4] Issue “Necessarily Decided” in Prior Proceeding

[a] The “Necessary” Requirement, Generally

[b] The Alternative Grounds Rule

[5] Issues of Law

[C] Collateral Estoppel and Mutuality

[1] Introductory Note on Mutuality

[2] Mutuality Doctrine Rejected

[3] Offensive Nonmutual Collateral Estoppel

[4] Collateral Estoppel Effect of Noncourt Proceedings

[a] Administrative Agency Decisions

[b] Contractual Arbitration

[5] Final Judgment for Purposes of Collateral Estoppel

 [a] Settlement Pending Appeal

[b] Administrative Agency Decisions

§ 8.04 PRIVITY

Dyson v. State Personnel Board

Notes and Questions Regarding Privity

§ 8.05 LAW OF THE CASE; JUDICIAL ESTOPPEL

[A] Law of the Case Doctrine

Clemente v. State Of California

Notes and Questions Regarding Law of the Case

[B] Judicial Estoppel Doctrine

Chapter 9 STATING CLAIMS AND DEFENSES:

PLEADINGS

§ 9.01 INTRODUCTORY NOTE

§ 9.02 THE COMPLAINT

[A] Pleading Ultimate Facts

Semole v. Sansoucie

Notes and Questions on the Sufficiency of the Complaint

[B] Heightened Specificity Requirements in Pleading

[xxvi/xxvii]

[1] Pleading Fraud

[2] Pleading Other Disfavored Causes of Action

[C] Inconsistent and Alternative Pleading

 Shepard & Morgan v. Lee & Daniel, Inc.

Notes and Questions on Inconsistent Pleading Allegations

[D] Prayer for Relief

[1] In General

[2] Statement of Damages

[3] Special Pleading Rules for Punitive Damages

[a] Prepleading Requirements: “Substantial Probability that the

Plaintiff will Prevail”

[b] Are Prepleading Requirements Necessary?

§ 9.03 AMENDMENTS

[A] Introductory Note

[B] Amended Complaints and the Relation Back Doctrine

Honig v. Financial Corporation Of America

[1] Liberal Amendment Policy

[a] Amended Pleadings, Generally

[b] Amendments to Conform to Proof

[c] Amendment After Demurrer Sustained

[2] The Relation Back Doctrine

[a] New Cause of Action Permitted

[b] The “Same General Set of Facts” Requirement

[c] Fictitious Defendants

[d] Should the California Court Adopt a More Pragmatic

Approach?

[e] New Plaintiffs

 [3] Amendments to Correct Naming Mistakes

§ 9.04 CALIFORNIA’S FICTITIOUS (“DOE”) DEFENDANT PRACTICE

[A] Introductory Note

[1] Federal Rule 15(c)

(c) Relation Back of Amendments.

[2] California’s Doe Defendant Practice

[3] Evolution of the California Doctrine

Streicher v. Tommy’s Electric Co.

General Motors Corp. v. Superior Court

Notes and Questions

[B] Requirements for the Use of California’s Doe Defendant Practice

[1] Timely Filed Original Complaint

[2] Ignorance of the Defendant’s “Name”

[a] Ignorance of the Defendant’s Actual Name

[b] Ignorance of the Facts Giving Rise to the Cause of Action

[xxvii/xxviii]

[c] Ignorance That the Law Provides a Cause of Action

[d] The Requirement of Actual Ignorance

[3] Pleading “Ignorance”

[a] Ignorance Must Be Pleaded in Original Complaint

[b] Is Failure to Plead “Ignorance” Curable by Amendment?

[4] The Relation Back Doctrine

[a] Requirements
 [b] New Causes of Action

[5] Service Within Three Years

[a] Mandatory Dismissal

[b] Discretionary Dismissal

[6] Other Limitations on Section 474

[a] Government Claim Act

[b] Fast Track and Fictitious Defendant Practice

[7] Practical Considerations

[C] Federal Rule 15(c) Compared

[1] Federal Rule 15(c)(1)(C)

[2] Federal Rule 15(c)(1)(A)

§ 9.05 THE DEMURRER

[A] Introductory Note

[1] General and Special Demurrers

[2] Procedures

[3] Federal Rules Compared

[B] Standards for General Demurrers

[1] General Demurrer Assumes Truth of Allegations

[2] Judicial Notice

Dryden v. Tri-Valley Growers

[a] Mandatory Judicial Notice

[b] Permissive Judicial Notice

[c] Judicial Notice of Court Records

 [3] Judicial Council Form Complaints

[4] Demurrer vs. Answer

[C] Amendment After Sustained Demurrer

Careau & Co. v. Security Pacific Business Credit, Inc.

Notes and Questions Regarding Sustained Demurrer and Leave to

Amend

§ 9.06 MOTIONS RELATED TO PLEADINGS

[A] Motion to Strike

[1] Grounds

[2] Procedures

[3] Motion to Strike Pursuant to “Anti-SLAPP” Statute

[xxviii/xxix]

[B] Motion for Judgment on the Pleadings

[1] Grounds

[2] Judgment on the Pleadings and Summary Judgment

[3] Partial Judgment on the Pleadings

[4] Leave to Amend

§ 9.07 THE ANSWER

[A] Introductory Note

[B] Denials

[1] Failure to Deny Constitutes an Admission

[2] General vs. Specific Denials

[3] Functions of the Answer

 [C] Raising “New Matter”

Hulsey v. Koehler

[1] Affirmative Defenses

[2] What Constitutes “New Matter”?

[D] Verification of the Answer

§ 9.08 CROSS-COMPLAINTS

[A] Introductory Note

[B] Compulsory and Permissive Cross-Complaints

Currie Medical Specialties, Inc. v. Newell Bowen

Crocker National Bank v. Emerald

[1] Compulsory Cross-Complaint

[a] “Related Cause of Action”

[b] Time For Filing

[c] Res Judicata Compared

[2] Cross-Complaint vs. Affirmative Defense

[a] General Distinctions

[b] Setoff

[c] Equitable Indemnity

[d] Statutes of Limitations

Chapter 10 JOINDER OF PARTIES AND CLAIMS

§ 10.01 PERMISSIVE JOINDER OF PARTIES AND CLAIMS

[A] Permissive Joinder of Plaintiffs

 [B] Permissive Joinder of Defendants

Farmers Insurance Exchange v. Adams

Notes and Questions Regarding Permissive Joinder

[C] Permissive Joinder of Claims

§ 10.02 COMPULSORY JOINDER OF PARTIES

Sierra Club, Inc. v. California Coastal Commission

Notes and Questions Regarding Compulsory Joinder

[xxix/xxx]

§ 10.03 INTERPLEADER

[A] California Interpleader Requirements and Procedures

[B] Federal Interpleader

§ 10.04 NEW PARTY CROSS-COMPLAINTS AND EQUITABLE

INDEMNITY

[A] Cross-Complaints Adding New Parties

American Motorcycle Assn. v. Superior Court

Notes and Questions Regarding New Party Cross-Complaints

[B] Equitable Indemnity

[1] Introductory Note

Bracket v. State Of California

Abbott Ford, Inc. v. Superior Court

[2] Effect of Good Faith Settlement

[a] First, an easy hypothetical

[b] Now for a real case

 [c] A more difficult real case

[d] The Prejudgment Interest Complication

[e] Complications in Calculating Offset Credits

[3] Good Faith Settlement Determination

[a] Relevant Factors

[b] Valuation Problems

[c] Evidentiary Basis

[d] Allocation of Settlement Amounts in Complex Litigation

[e] Total Equitable Indemnity

[f] Rights of Settling Defendant

[g] Which Parties Bound?

[4] Fair Responsibility Act of 1986

[5] Statute of Limitations

[6] Contractual and Statutory Indemnity

[a] Express Contractual Indemnity

[b] Implied Contractual Indemnity

[c] Statutory Indemnity

[7] Equitable Indemnity in Non-Negligence Actions

[a] Strict Liability and Intentional Torts

[b] Contract Actions

[c] Public Policy Limitations

[8] Contribution

[9] Sliding Scale Agreements and Other Untraditional Settlements

 [a] Sliding Scale Agreements

[b] Conditional Settlements

[c] Structured Settlements

[10] Good Faith Settlement Procedures

[xxx/xxxi]

[11] Indemnity in Federal Courts

[a] Federal Common Law Doctrine of Contribution

[b] Comparison of Federal and California Approaches

§ 10.05 INTERVENTION

[A] The California Requirements

Simpson Redwood Co. v. State Of California

[1] Permissive Intervention

[a] Bustop v. Superior Court

[b] People ex rel. Rominger v. County of Trinity

[c] Mary R. v. B. & R. Corp.

[d] Direct Interest?

[e] Discretion

[2] Intervention of Right

[a] Statutory Prerequisites of CCP § 387(b)

[b] Special Statutes

[B] Intervention Procedures

[1] Status of Intervener

[a] Costs and Attorney Fees

 [b] Statute of Limitations

[c] Diligent Service and Prosecution

[2] Timely Application

[a] Intervention Possible at Any Time

[b] Aggrieved Person May Intervene and Appeal

[c] Unreasonable Delay

[3] Intervention Application Procedure

[a] Leave of Court Required

[b] Appellate Review

[C] Federal Intervention Rules

[1] Intervention of Right

[2] Permissive Intervention

§ 10.06 CAPACITY, REAL PARTY IN INTEREST AND STANDING

[A] Capacity

[1] Disability

[a] Minors and Incompetents

[b] Corporations

[2] Entity Status of Organizations

[a] Partnerships and Other Unincorporated Associations

[b] Estates

[3] Raising the Capacity Issue

[4] Capacity in Federal Court

[B] Real Party in Interest and Standing

 [xxxi/xxxii]

[1] The General California Doctrine

Tinsley v. Palo Alto Unified School District

Notes and Questions Regarding Real Party in Interest/Standing

Doctrine

[2] Statutory Exceptions

[a] Personal Representatives and Trustees

[b] Homeowner Associations

[c] Other Statutory Exceptions

[3] Standing vs. Real Party in Interest

[a] Purposes

[b] More Than One Real Party?

[4] Taxpayer Lawsuits

[a] Liberal Construction

[b] Restrictions on Taxpayer Suits

[c] Liberal Standing

[d] Taxpayer Suits in Federal Courts

[5] Federal Standing and Real Party Doctrines

[a] Real Party Rule

[b] Article III Standing Requirements

[c] Federal Standing Requirements in State Courts

[C] Survival of Actions

[1] Legislative Revision

 [2] Survival Statutes

[a] Decedent’s Cause of Action

[b] Cause of Action Against Decedent

§ 10.07 CLASS ACTIONS

[A] General California Requirements

[1] Introductory Note

[a] No Comprehensive Class Action Statute

[b] Prerequisites

Richmond v. Dart Industries, Inc.

[2] The “Ascertainable Class” Requirement

[a] “Community of Interest” Intertwined

[b] Broad Consumer Classes

[3] The Community of Interest Requirement

[a] Common Questions of Law or Fact Must Predominate Over

Individual Issues

[b] Class Action Treatment Must Result in Substantial Benefits to

Both the Litigants and the Court

[c] The Class Representative Must Adequately Represent the

Interests of the Class
[xxxii/xxxiii]

[B] Class Action Procedures

[1] Introductory Note

[2] Raising the Class Action Issue

[a] Raising the Issue by Demurrer

 [b] Class Action Discovery

[3] Class Determination Prior to Liability Decision

[4] Appellate Review of Class Determination

[a] Federal Approach Compared

[b] Problems with California Rule

[C] Notice to Class Members

[1] Notice Requirements, Generally

[2] Nature of Required Notice: Individual vs. Publication

[a] Notice to Permit “Opt Out”

[b] Federal Notice Rule Not Binding

[c] Due Process Concerns

[3] Who Pays the Cost of Class Notice

[a] Cost Allocation Factors?

[b] Federal Rule Compared

[c] Appellate Review

[4] Right to Opt Out of Class

[a] Due Process Concerns

[b] Determination of Opt Out Right

[5] Settlement

[a] Court Approval Required

[b] The Notice Requirement

[c] Conflicts of Interest

[D] Class Action Remedies

 [1] Fluid Class Recovery

[a] Supreme Court Endorsement

[b] Legislative Endorsement

[c] Controversial Remedy

[2] Attorney Fees

[3] Incentive Payments to Class Representatives

Chapter 11 DISCOVERY

§ 11.01 CALIFORNIA DISCOVERY PRINCIPLES

[A] Introductory Note

[B] Coverage of the Civil Discovery Statutes

[1] General Coverage

[2] Limited Civil Cases

[3] Small Claims Court

[xxxiii/xxxiv]

[4] Post-Judgment Discovery

[5] Arbitration

[C] Scope of Discovery under the Act, Generally

Pacific Telephone & Telegraph Co. v. Superior Court

Notes and Questions Regarding Scope of Discovery

[D] Protection of Privileged Information

[1] Privilege, Generally

[2] Absolute Privileges

 [3] The Attorney-Client Privilege

Costco Wholesale Corp. v. Superior Court

Notes and Questions Regarding Attorney-Client Privilege

[4] The Physician-Patient Privilege

Torres v. Superior Court

Notes and Questions Regarding the Physician-Patient Privilege

[5] Qualified Privileges

[6] The Right of Privacy

Valley Bank Of Nevada v. Superior Court

Babcock v. Superior Court

[a] Consumer Records

[b] Tax Returns

[c] Medical Records

[d] Sexual History

[e] Memberships

[f] Personnel Information

[g] Employment Records

[h] Private Settlement Agreements

[i] Financial Condition in Punitive Damages Claims

[E] Protection of Attorney’s Work Product

[1] Introductory Note

[2] Absolute Work Product Protection

Nacht & Lewis Architects, Inc. v. Superior Court

 BP Alaska Exploration, Inc. v. Superior Court

Notes and Questions Regarding Absolute Work Product Protection

[3] Comparison to Federal Work Product Doctrine

[a] Expanded work product protection

[b] Absolute protection of opinion documents

[c] Inadvertent Disclosure of Privileged Information

[4] Qualified Work Product Protection

In Re Jeanette H.

Notes and Questions Regarding Qualified Work Product

[xxxiv/xxxv]Protection

§ 11.02 INDIVIDUAL DISCOVERY DEVICES

[A] Interrogatories

[1] Introductory Note

[2] Types of Written Interrogatories

[a] Contention Interrogatories

[b] Continuing Interrogatories

[3] Responses to Interrogatories

[a] Responses, Generally

[b] Time

[c] Protective Order

[d] Reasonable Effort

[e] Oath

[f] Inaccurate Response

[g] Objections
 [4] Compelling Further Responses

[B] Inspections

[1] Demands for Inspections of Items Controlled by a Party

[a] Inspection Procedures

[b] Inspection Requirements

[c] Electronically Stored Information

[2] Inspections of Items Not Controlled by a Party

[a] Deposition Subpoenas

[b] Inspections

[C] Depositions

[1] Oral Depositions in California

[a] Deponents

[b] Time

[c] Place of Deposition

[d] Deposition Officer

[2] Procedures during Depositions

[a] Record and Transcript

[b] Examination of Deponent

[c] Objections and Protective Orders

[3] Use of Depositions at Trial

[a] Party vs. Nonparty

[b] Videotape Depositions

[4] Oral Depositions in Another State

 [5] Oral Depositions in Another Country

[6] Written Depositions

[D] Medical Examinations

[xxxv/xxxvi]

[1] Noticed Examination of Plaintiff in Personal Injury Action

[a] Conduct of the Examination

Abex Corp. v. Superior Court

Notes and Questions Regarding Conduct of Examinations

[b] Exchange of Examination Reports

[c] Court Ordered Examinations

Vinson v. Superior Court

Notes and Questions Regarding Mental Examinations

[d] Other Limits on Examinations

[E] Exchange of Information About Trial Experts

[1] Expert Witness Disclosures

Schreiber v. Estate of Kiser

Notes and Questions Regarding Expert Witness Disclosures

[2] Withdrawal of Designated Expert

[3] Testimony of Undesignated Experts

[a] Limited Right to Call Undesignated Expert

[b] Failure to Comply with Expert Disclosure Requirements

[c] Augmentation of Expert List

[F] Requests for Admissions

 Cembrook v. Superior Court

Notes and Questions Regarding Requests for Admissions

§ 11.03 ENFORCEMENT OF DISCOVERY REQUESTS

[A] Introductory Note

[B] Sanctions

Collison & Kaplan v. Hartunian

Notes and Questions Regarding Sanctions

[C] Appellate Review of Sanctions Orders

Chapter 12 RESOLUTION OF CASES BEFORE

TRIAL

§ 12.01 SUMMARY JUDGMENT

[A] Introductory Note

[1] Moving Party’s Initial Burden

[2] California’s Burden-Shifting Approach

[B] California Summary Judgment Procedure

Gaggero v. Yura

Juge v. County Of Sacramento

Notes and Questions on Summary Judgment

§ 12.02 DEFAULT JUDGMENT

[A] Introductory Note

[1] Generally

[2] Relief Limited to Demand

 [xxxvi/xxxvii]

[3] General Procedures

[B] Entry of Default

[C] Obtaining Default Judgments

[1] Clerk’s Judgment

[a] Clerk’s Judgment Authorized in Certain Contract Actions

[b] Clerk’s Judgment May Include Interest and Costs

[c] Authority to Enter Clerk’s Judgment Narrowly Construed

[2] Court Judgment

[3] Procedures for Court’s Default Judgment

[a] Prove-up Hearing

[b] Use of Affidavits and Declarations

[4] Statutory Restrictions on Default Judgments

[5] Time Restrictions

[a] Time to Respond

[b] Time to Request Default

[c] Statement of Damages

Schwab v. Rondel Homes, Inc.

Notes and Questions Regarding Default Judgments in Personal

Injury Actions

[D] Problems Caused by Amendments to the Complaint

[1] Does an Amended Complaint Require Defendant to File an

Amended Answer?

[2] Does an Amended Complaint Open the Default?

 [E] Res Judicata Effect of Default Judgment

[F] Default Judgments in Federal Courts

[G] Relief from Default Judgments

[1] Introductory Note

Olvera v. Olvera

Beeman v. Burling

Notes and Questions Regarding Relief from Default Judgments

[2] Relief Sought Within Six Months

[a] Six Months Limitation

[b] Reasonable Time Limitation

[3] Excusable vs. Inexcusable Neglect or Mistake

[a] Examples of Excusable Neglect

[b] Examples of Inexcusable Neglect or Mistake

[c] Inexcusable Neglect of Attorney Not Imputed to Client When

Positive Misconduct

[d] Imposition of Conditions When Granting Relief

[4] Relief Sought After Six Months

[a] Equitable Relief

[xxxvii/xxxviii]

Rappleyea v. Campbell

[b] Extrinsic Fraud or Mistake

[c] Intrinsic Fraud or Mistake

[d] Viability of Extrinsic/Intrinsic Distinction

 [5] Void Judgments

[a] Judgment Void on Its Face

[b] Judgment Valid on Its Face But Otherwise Void

[c] Validity of Sister State Judgments

[6] Independent Action in Equity

[7] Relief from Default Judgment in Federal Courts

§ 12.03 INVOLUNTARY DISMISSALS

[A] Introduction

[B] Mandatory Dismissals for Lack of Prosecution

[1] Failure to Serve the Action within Three Years of Filing

[a] Effect of Amended Complaint

[b] Statutory Tolling Provisions

[c] Extensions of the Three-Year Limit

Brookview Condominium Owners’ Assn. v. Heltzer

Enterprises-Brookview

Notes and Questions

[2] Failure to Bring the Case to Trial within Five Years

[a] When Action is “Brought to Trial”

[b] Plaintiff’s Motion for Preference

[c] Statutory Exceptions to Mandatory Dismissal

Nye v. 20th Century Insurance Co.

Notes and Questions

[3] Failure to Bring the Case to New Trial within Three Years

[C] Discretionary Dismissals for Lack of Prosecution

 [1] Failure to Serve Defendant within Two Years

[a] Excusable Delay

[b] Prejudice Not Required

[c] Prejudice Presumed

[2] Failure to Bring the Case to Trial within Two Years

[a] Discretionary Dismissal Rules

[b] Discretionary Dismissal for Failure to Appear

[c] Discretionary Dismissal and Attorney Negligence

[d] Mandatory Relief From Dismissal Under CCP § 473(b)

[3] Failure to Bring the Case to New Trial within Two Years

[D] Involuntary Dismissals under Fast Track Rules

[1] Introductory Note on Fast Track Rules

Government Code § 68616 (2012)

[xxxviii/xxxix]

[2] Dismissal and Other Fast Track Sanctions

[E] Involuntary Dismissals on Other Statutory Grounds

§ 12.04 VOLUNTARY DISMISSAL

Zapanta v. Universial Care, Inc.

Notes and Questions Regarding Voluntary Dismissal

§ 12.05 SETTLEMENT

[A] Settlement Issues

[1] Conflict of Interests Among Attorney, Court, and Client

 [2] Conflict of Interest Between Party and Party’s Insurer

[3] Authority to Settle

[4] Judgment by Stipulation

[5] Offer to Allow Judgment

[6] Effect of Good Faith Settlement in Multi-Party Litigation

[7] Structured Settlements

[8] Negotiation Techniques

§ 12.06 ARBITRATION

[A] Contractual Arbitration

Moncharsh v. Heily & Blase

[1] Scope of Judicial Review of Arbitration Award

[a] When Do Arbitrators “Exceed Their Powers” within the

Meaning of CCP § 1286.2(a)(4)?

Advanced Micro Devices, Inc. v. Intel Corp.

Notes and Questions Regarding Arbitrators’ Powers

[b] Do Arbitrators “Exceed Their Powers” When They Order

Injunctive Relief?

[c] Statutory Rights Exception to Rule of Arbitral Finality

[2] Standard of Judicial Review Determined by the Agreement

Cable Connection, Inc. v. DirecTV, Inc.

Notes and Questions Regarding Cable Connection

[3] Scope of Arbitration Is Determined by the Agreement

[4] Forfeiture of Right to Arbitrate by Failure to Timely Demand

Arbitration

[5] Waiver of Right to Compel Arbitration

 [5] Waiver of Right to Compel Arbitration

[a] Necessity of Petition to Compel Arbitration and Request for

Stay

[b] Appealability of Order on Petition to Compel Arbitration

[6] Validity of Arbitration Agreement

[a] Who Determines the Validity of the Arbitration Agreement

[b] Unconscionable Arbitration Agreements

[c] Class Arbitration Waivers

[d] Mandatory Employment Arbitration Agreements

[xxxix/xl]

Armendariz v. Foundation Health Psychcare Services, Inc.

Notes and Questions Regarding Mandatory Employment

Arbitration Agreements

[7] Disqualification of Arbitrator

[a] Appointment of Arbitrator

[b] Disclosures and Disqualification

[c] Effect of Arbitrator Bias on Award

[8] Other Contractual Arbitration Statutes

[a] Special California Arbitration Statutes

[b] The Federal Arbitration Act

[B] Judicial Arbitration

[1] Introductory Note

[2] Judicial Arbitration Award Becomes an Unappealable Judgment if

No Trial Requested

[3] Cases Subject to Judicial Arbitration

 [3] Cases Subject to Judicial Arbitration

[4] Sanctions for Failure to Participate in Judicial Arbitration

[5] Limited Authority to Challenge Arbitration Award When No Trial

Requested

[6] Arbitrator Must Determine All Issues

[7] Effect of Request for Trial de Novo in Multi-party Litigation

Chapter 13 TRIAL PROCEEDINGS AND POST-

TRIAL MOTIONS

§ 13.01 INTRODUCTORY NOTE

[A] The Jury Trial Influence

[B] Pretrial Proceedings

[1] Delay Reduction and Case Management Rules

[2] Pretrial Conferences

[3] Trial Continuances Disfavored

[C] Disqualification of the Trial Judge

[1] Challenge for Cause: Disqualification for Actual or Perceived

Bias

[a] Statutory Grounds for Disqualification

[b] Constitutional Grounds for Disqualification

[2] Peremptory Challenge

§ 13.02 TRIAL BY JURY

[A] Right to Trial by Jury

C & K Engineering Contractors v. Amber Steel Co.

[1] Constitutional Right to Jury Trial in California Courts

 [a] The Legal/Equitable Dichotomy

[b] Actions Involving Both Legal and Equitable Issues

[c] Other Forms of Historical Analysis

[xl/xli]

[d] Constitutional Right to Jury Trial Not a Static Right

[e] Statutory Right to Jury Trial

[2] Waiver of Right to Jury Trial

[a] Waiver Not Irrevocable

[b] Contractual Waiver in Advance of Litigation

[3] The Federal Constitutional Right to Jury Trial in Federal Courts

Understanding Civil Procedure

[B] Selection of the Jury

[1] Selection of Trial Jury Panel

[2] Voir Dire in Civil Jury Trials

[3] Challenges to Individual Jurors

[a] Challenges for Cause

[b] Peremptory Challenges

[c] Constitutional Limitations on Exercise of Peremptory

Challenges

[d] Permissible Scope of Voir Dire

[C] The Trial Process

[1] The Order of Proceedings

[2] The California Evidence Code

 [3] Burden of Proof and Related Issues

[4] Expedited Jury Trials

[5] Trial Techniques

[D] Advising the Jury

[1] Comments by the Judge

[2] Closing Argument

Sabella v. Southern Pacific Co.

Gallagher v. Municipal Court

[a] Scope of Proper Argument

[b] Ethical Considerations

[c] When Does Improper Argument Require Reversal?

[3] Jury Instructions

[a] Right to a Jury Instruction

[b] Content of Jury Instructions

[c] Jury Instructions Procedure

[E] Jury Verdicts

[1] Types of Verdicts

[a] Nonunanimous Verdicts

[b] General Verdicts vs. Special Verdicts

[c] When Special Verdicts Are Recommended or Required

[d] General Verdict Accompanied by Special Findings

§ 13.03 TRIAL WITHOUT A JURY

[xli/xlii]
 [A] Order of Proceedings

[B] Motion for Judgment

[C] Statement of Decision

§ 13.04 JUDICIAL SUPERVISION OF JURY DECISIONS

[A] Nonsuit and Directed Verdict

[1] Nonsuit upon Completion of Plaintiff’s Evidence

[2] Nonsuit Upon Completion of Opening Statement

[3] Directed Verdict

[4] Motion for Mistrial

[B] Judgment Notwithstanding the Verdict (JNOV)

Clemmer v. Hartford Insurance Co.

[1] JNOV vs. New Trial Order

[2] Partial JNOV

[3] Time Limits for JNOV Motion

[4] JNOV Motions Integrally Related to New Trial Motions

[5] Judgment as a Matter of Law (JNOV) in Federal Court

[C] Impeachment of Verdict for Juror Misconduct

Smoketree-Lake Murray, Ltd. v. Mills Concrete Construction Co.

Moore v. Preventive Medicine Medical Group, Inc.

Notes and Questions Regarding Impeachment of Verdict

[1] Impeachment for Reliance on Juror Expertise or Other Outside

Evidence

[a] Exposure to Outside Information

[b] Jurors’ Personal Experiences

 [c] Improper Chance Verdicts

[d] Juror Inattentiveness

[2] Presumption of Prejudice When Jury Misconduct Proven

[3] Juror Misconduct During Voir Dire

[4] Impeachment of Verdicts in Federal Court

[D] Motion for New Trial

[1] Introductory Note

Sanchez-Corea v. Bank Of America

Dominguez v. Pantalone

Notes and Questions Regarding New Trial Orders

[2] Motion for New Trial: Procedures

[a] Aggrieved Party Must File Motion

[b] New Trial Motion and Declarations Must Be Timely Filed

[c] The New Trial Order Must State Grounds and Specify Reasons

[d] 60-Day Limit on Trial Court’s Power to Decide Motion

[3] Motion for New Trial: Grounds

[a] Statutory Grounds Exclusive

[xlii/xliii]

[b] Motion an Exercise of Discretion

[c] Insufficiency of the Evidence

[d] Excessive Damages and Conditional New Trial Orders

(Remittitur)

[e] Newly Discovered Evidence

 [f] Accident or Surprise

[g] Jury Misconduct and Other Irregularities

[4] Federal Court New Trial Motions Compared

[a] Federal Grounds

[b] Federal Procedures

Chapter 14 JUDGMENTS AND ENFORCEMENT OF

JUDGMENTS

§ 14.01 INTRODUCTORY NOTE ON JUDGMENTS AND ENFORCEMENT

OF JUDGMENTS

[A] Introduction to Securing and Enforcing Judgments

[B] General Statutory Guidance on Judgments and Remedies

§ 14.02 INTEREST

[A] Introductory Note on Postjudgment and Prejudgment Interest

Stein v. Southern California Edison Co.

[B] Prejudgment Interest

[1] Civil Code § 3287(a)

[a] Levy-Zentner Co. v. Southern Pacific Transportation Co.

[b] Polster, Inc. v. Swing

[c] Cassinos v. Union Oil Co.

[d] Policy Conflict

[e] Effect of Unliquidated Cross-Complaint

[f] Public Entities

[g] Suspension
 [h] Administrative Agency Awards

[2] Civil Code § 3288: Prejudgment Interest in Non-Contract Actions

[a] Prudent Practice

[b] No Interest on Noneconomic Damages Under § 3288

[c] Application of § 3288 in Nonjury Cases

[3] Civil Code § 3291

[4] Effect of Good Faith Settlement

[5] Prejudgment Interest in a Breach of Contract Action

[a] Liquidated Damages

[b] Unliquidated Damages

[c] Rate of Prejudgment Interest

§ 14.03 RECOVERY OF ATTORNEY FEES

[xliii/xliv]

[A] Introductory Note on the American Rule and Exceptions

[B] Attorney Fee Awards Based on Contract

Moallem v. Coldwell Banker Commercial Group, Inc.

[1] Code of Civil Procedure § 1021

[2] Civil Code § 1717

[a] Civil Code § 1717 Limited to Actions “On a Contract”

[b] Apportionment of Award in Combined Actions

[c] Civil Code § 1717 May Apply Although Contract

Unenforceable

[3] Recovery of Attorney Fees by Nonsignatory

 [4] Liability of Nonsignatory for Attorney Fees

[5] “Prevailing Party” under Civil Code § 1717

[a] Problems in Determining Prevailing Party Status

[b] When No Prevailing Party

[c] Hsu v. Abbara

[d] Prevailing Party for Costs

[6] Effect of Dismissal of Action on Recovery of Attorney Fees Under

§ 1717

[7] Must a Fee Award Await Final Disposition of Substantive Rights?

[8] Relationship Between Civil Code § 1717 and CCP § 998

[9] Procedure for Claiming Attorney Fees Based on a Contract

[a] Noticed Motion Procedure

[b] Calculation of Fee Amount

[C] Attorney Fee Awards Based on Judge-Made Equitable Theories

[1] The Common Fund Theory

[a] General Doctrine

[b] Common Fund Theory Distinguished from Other Judge-Made

Exceptions

[c] Common Fund Theory Distinguished from Private Attorney

General Statute

[2] The Substantial Benefit Theory

[3] The Equitable Private Attorney General Theory

[4] The Tort of Another Doctrine

[5] Exceptions Based on Equitable Theories in the Federal Courts

 [a] Federal “Common Fund” Doctrine

[b] Federal “Bad Faith” Doctrine

[D] Attorney Fees Awarded as an Element of Damages

[E] Attorney Fee Awards Based on Statutory Authority

[1] Code of Civil Procedure Section 1021.5

Beasley v. Wells Fargo Bank

Notes and Questions Regarding CCP § 1021.5

[xliv/xlv]

[2] Other State Statutory Authority for an Award of Attorney Fees

[3] Criteria For an Award Under CCP § 1021.5

[a] “Important Right”

[b] “Significant Benefit”

[c] “Financial Burden of Private Enforcement”

[d] “Necessity of Private Enforcement”

[4] Determining the Successful Party Under CCP § 1021.5

[a] Necessity of Causal Connection Between Lawsuit and Result

Achieved

[b] Successful Party Need Not Prevail on Every Claim

[5] Limited Discretion to Deny Fee Award When Statutory Criteria

Satisfied

[a] Limited Discretion to Deny Fees to Prevailing Plaintiff

[b] Limited Discretion to Award Fees to Prevailing Defendant

[c] Policy Reasons for Limited Discretion

[d] Suits Involving Public Entities

 [F] Calculating the Amount of the Attorney Fee Award

[1] The Lodestar Method

[2] Calculating the Lodestar Amount

[a] Reasonable Hourly Rate

[b] Proof of Market Rate

[3] The Lodestar Multiplier

[a] Examples of Lodestar Multiplier

[b] Federal Approach to Lodestar Multiplier

[c] Independent California Rule

[d] Policy Considerations

[e] Use of Negative Multiplier to Reflect Partial Success

[G] Appellate Attorney Fee Awards

[H] Procedure for Obtaining Attorney Fees Based on Statute

[1] Pleading and Procedure

[a] Pleading of Fee Request Not Required

[b] Collateral Matter

[2] Noticed Motion Procedure

§ 14.04 RECOVERY OF COSTS BY PREVAILING PARTY

[A] Introductory Note

CALIFORNIA CODE OF CIVIL PROCEDURE (2012)

Section 1032. Recovery of costs by prevailing party as matter of right.

Section 1033.5. Items allowable as costs

CALIFORNIA RULES OF COURT (2012)

 Rule 3.1700. Prejudgment costs
[xlv/xlvi]

[B] Prevailing Party Under CCP § 1032

[1] McLarand, Vasquez & Partners, Inc. v. Downey Sav. & Loan
Assn.

[2] Goodman v. Lozano

[3] Voluntary Dismissals

[C] Multiple Parties

[D] Certain Costs Recoverable as a Matter of Right; Others as a Matter

of Discretion

[1] Costs Allowable of Right

[2] Discretionary Costs

[3] Costs Must Be Reasonably Necessary

Science Applications Int’l Corp. v. Superior Court

Notes and Questions on “Reasonably Necessary” Costs

[4] Special Cost Statutes

[E] Procedures for Claiming and Contesting Costs

[F] Recovery of Costs of Enforcing Judgment

[G] Effect of Statutory Offers to Compromise on Recovery of Costs

[1] Introductory Note on CCP § 998

CALIFORNIA CODE OF CIVIL PROCEDURE (2012)

Section 998. Withholding or augmenting costs following rejection

or acceptance of offer to allow judgment

Stallman v. Bell
 Poster v. Southern California Rapid Transit Dist.

Notes and Questions Regarding Recovery of Costs Under CCP §

998

[2] What Constitutes A More Favorable Judgment?

[a] Is An Award of Costs or Attorney Fees Included?

[b] Other Additions and Subtractions

[3] Consequences of Failure to Obtain a More Favorable Judgment

[a] Effect on Award of Costs and Expert Witness Expenses

[b] Prejudgment Interest

[4] Section 998 Inapplicable to Certain Proceedings

[H] Recovery of Costs in Federal Court

[1] Costs

[2] Offers of Judgment

§ 14.05 RELIEF FROM FINAL JUDGMENT

[A] Introductory Note

Kulchar v. Kulchar

Notes and Questions Regarding Relief from Final Judgment

§ 14.06 ENFORCEMENT OF JUDGMENTS

[A] Introductory Note

[xlvi/xlvii]

Kahn v. Berman

[B] Procedures for Enforcement of Judgments

[1] Entry of Judgment

[2] Abstract of Judgment

[3] Judgment Lien

[a] Effect of Judgment Lien

[b] Priorities

[4] Execution and Levy

[a] Writ of Execution

[b] Execution Lien

[c] Execution and Levy on Personal Property

[5] Exemptions

[a] Property Subject to Enforcement

[b] Personal Property Exemptions

[c] Homestead Exemptions, Generally

[d] Homestead Exemptions: Two Types Overlap

[e] Homestead Exemptions: Two Types Distinguished

[f] Homestead Exemptions: Procedures

[g] Homestead Exemptions: History and Policy

[h] Homestead Exemptions: Various Questions

[6] Wage Garnishment

[a] Wage Garnishment Procedures

[b] Exemptions

[c] Restrictions on Employer

[7] Enforcement of Judgments Against Public Entities

[a] Duty of Local Public Entity to Pay Judgments

 [b] Duty of State with Respect to Payment of Judgments

[c] Judgment Against Public Employee

[8] Debtor Examinations and Other Discovery Devices

[a] Debtor’s Examination

[9] Creditors’ Suits and Other Miscellaneous Creditors’ Remedies

[a] Creditors’ Suits

[b] Other Creditors’ Remedies

[C] Third-Party Claims

[D] Enforcement of Injunctions and Other Nonmoney Judgments

In Re Feiock

Notes and Questions on the Use of Contempt Proceedings to Enforce

Nonmoney Judgments

[E] Satisfaction of Judgment

[F] Independent Action on Judgment

[1] Alternative Method to Extend Enforceable Life of Judgment

[xlvii/xlviii]

[2] Ten-Year Limitation Period

[G] Effect of Appeal on Enforcement of Money Judgment

[H] Enforcement of Sister State Judgments

Silbrico Corp. v. Raanan

Notes and Questions Regarding Enforcement of Sister State Judgments

Chapter 15 APPEALS AND WRITS

§ 15.01 APPEALS

[A] Appealable Judgments and Orders

CALIFORNIA CODE OF CIVIL PROCEDURE (2012)

Section 904.1. Appealable judgments and orders.

UAP-Columbus JV 3261 32 v. Nesbitt

Morehart v. County Of Santa Barbara

[1] The One-Final-Judgment-Rule

[a] Certain Nonfinal Decisions Appealable

[b] The Problem of Bifurcated Trials

[c] Finality Determined by Substance of Decree

[2] Statutory Bases for Appeals

[3] Judge-Made Exceptions to Statutory One-Final-Judgment-Rule

[a] Ruling on Collateral Matter

[b] Judgment Final as to One Party

[c] Order Determining Separate and Independent Issues

[4] Untimely Appeals

[a] Late Appeals

[b] Premature Appeals

[5] Appealability of Orders

[a] Appealability of Postjudgment Orders Under CCP § 904.1(a)(2)

[b] Judicial Interpretations of CCP § 904.1(a)(2)

[c] Order Must “Neither Add nor Subtract” from Judgment

[d] New Trial and JNOV Orders

 [6] Appealable Judgments in Federal Courts

[a] Federal Final Judgment Rule

[b] Federal Collateral Order Doctrine

[c] Federal Rule 54(b)

[B] Standing to Appeal

[1] Voluntary Dismissal?

[2] Remittitur?

[3] Prevailing Party?

[4] Moot Appeal?

[C] Timeliness of Appeals

[xlviii/xlix]

[1] Time Limitations for Appeals

[a] General Time Limits

[b] Extensions for Postjudgment Motions

[c] Cross-Appeals

[d] Cross-Appeal When Both Sides Aggrieved

[e] Protective Cross-Appeals

[2] Time Limitations for Federal Appeals

[D] Scope of Appellate Review

In Re Marriage Of Ananeh-Firempong

[1] Scope of Appellate Review Determined by Record

[a] Adequate Record for Appellate Review

[b] Statement of Decision

 [c] Complete Record of Proceedings

[d] Preserving Error for Appeal

[e] Offer of Proof

[2] Standards of Appellate Review

[a] Substantial Evidence Rule

[b] Independent (De Novo) Review

[c] Abuse of Discretion

[d] Scope of Appellate Review in Federal Court

[e] Administrative Mandamus

[E] The Prejudicial Error Rule

Soule v. General Motors Corp.

Notes and Questions Regarding the Prejudicial Error Rule

[F] Stays Pending Appeal

CODE OF CIVIL PROCEDURE (2012)

Section 916(a). Stay on perfection of appeal.

Section 917.1(a). Appeal from money judgment; undertaking to stay

enforcement.

[1] General Rule and General Exceptions

[a] Undertaking Required

[b] Discretionary Stays

[2] When General Rule Applicable

[3] Procedure for Obtaining Stay

[4] Purposes of Stays

[5] Writ of Supersedeas

[G] The Appellate Procedure

[1] Designating the Record on Appeal

[2] Applications and Motions

[3] Appellate Briefs

[a] Formal Requirements

[xlix/l]

[b] Practical Guides

[4] Oral Argument

[5] Decision, Rehearing, Remittitur

[a] Submission and Decision

[b] Rehearing

[c] Costs

[d] Sanctions

[e] Remittitur

[f] Appellate Review of “Limited Civil” Cases

[6] Review by California Supreme Court

[a] General Procedure

[b] Discretionary Review

[c] Petition for Review

[d] Effect of Denial of Petition for Review

[e] Options When Petition Granted

[7] Publication and Depublication of Appellate Court Opinions

 [a] Supreme Court Opinions

[b] Publication Procedures

[c] Depublication by Supreme Court Order

[d] Citation of Unpublished Opinions Prohibited

[8] Stipulated Reversals

§ 15.02 EXTRAORDINARY WRITS

[A] Introductory Notes

[1] Writs, Generally

[2] Appeals

[3] Extraordinary Writs

[4] Primer on Extraordinary Writ Practice

[a] “Writ”

[b] Parties Involved

[c] Types of Writs

[d] “Alternative” and “Peremptory” Writs

[e] “Statutory” Writs

[f] “Common Law” Writs

[g] “Extraordinary” Remedy

[B] Types of Extraordinary Writs

[1] Writ of Mandate

[a] Functions

[b] Ministerial Act

[c] Controls Discretion

 [d] Writ Issued Against Nonjudicial Entities

[2] Writ of Prohibition

[l/li]

[a] Threatened Acts

[b] Jurisdictional Writ

[3] Writ of Certiorari

[a] Prerequisites

[b] Contempt Review

[4] Writ of Supersedeas

[5] Selecting the Appropriate Writ

[a] Flexible Approach

[b] May an Improper Appeal Be Treated as a Writ?

[c] Precision Unnecessary

[C] Writ Prerequisites and Procedures

Omaha Indemnity Company v. Superior Court

Brandt v. Superior Court

Sav-On Drugs, Inc. v. Superior Court

Palma v. U.S. Industrial Fasteners, Inc.

[1] Basic Writ Prerequisites

[a] Inadequate Remedy at Law

[b] Irreparable Injury

[c] Beneficial Interest

[2] Additional Writ Criteria

 [a] Nonstatutory Criteria

[b] Alternative Writ Issuance

[3] Proper Court for Writ

[4] Review of Writ Decisions

[5] Alternative vs. Peremptory Writ

[a] Choice of Writ Procedure

[b] Peremptory Writ in the First Instance

[c] Practical Dilemma

[d] Procedure After Issuance of Alternative Writ

[6] Time Limitations for Filing Writ Petitions

[a] Statutory Writs

[b] Nonstatutory Writs

[7] Res Judicata

[a] Law of the Case

[b] Effect of Summary Denial

[8] Practical Considerations

[a] Practice Guides

[b] Responsive Pleading

[9] Most Writs Denied

[10] Discretion Revisited

[a] Writ Use Widely Available

[li/lii]

[b] Discretionary?
 [D] Extraordinary Writs in Federal Courts

[1] Statutory Authority

[2] Judicial Hostility

[a] Limited Mandamus Use Authorized by United States Supreme

Court

[b] Mandamus Use by Ninth Circuit

§ 15.03 ADMINISTRATIVE MANDAMUS

[A] Introductory Note

[B] General Prerequisites

Code of Civil Procedure § 1094.5 (2012)

Anton v. San Antonio Community Hospital

[1] Administrative Mandamus, Generally

[a] Exclusive Means of Judicial Review

[b] Review of Nongovernment Decisions

[2] Decisions Subject to Administrative Mandamus

[a] What Constitutes Evidentiary Hearing?

[b] What Constitutes Agency Discretion?

[c] Adjudicative vs. Legislative Decision?

[3] Administrative vs. Traditional Mandamus

[a] When Is Traditional Mandamus Applicable?

[b] When Is Administrative Mandamus Applicable?

[c] Which Type of Review Is More Advantageous?

[4] Other Prerequisites to Administrative Mandamus

[a] Finality
 [b] Traditional Mandamus Prerequisites

[C] Nature of Judicial Review by Administrative Mandamus

[1] Scope of Judicial Review under § 1094.5(b)

[a] Fair Trial

[b] Sufficiency of Agency Findings

[2] Nature of Judicial Review under § 1094.5(c)

[a] The Independent Judgment Standard

[b] Complete Record

[c] The Substantial Evidence Standard

[d] Trial De Novo?

[e] New Evidence

[3] The Fundamental Vested Right Test

[a] General Distinction Possible?

[b] Some Classification Problems

[c] Exceptions

[d] Quasi-Legislative Decisions

[lii/liii]

[e] Constitutional Basis

[f] Criticisms

[g] Repudiation of Specific Holding in Anton

[D] Administrative Mandamus Procedures

[1] Statutes of Limitations for Administrative Mandamus

 [2] The Writ Petition

[3] Remedies Available Through Administrative Mandamus

[a] Judgment, Generally

[b] Money Damages

[4] Appellate Review

Table of Cases
Index
[1/2]
Chapter 1

INTRODUCTION TO CALIFORNIA CIVIL

PROCEDURE

This book is designed for those upper class law students who intend to
practice law in California and therefore wish to learn more about California
civil procedure. Most upper class law students possess considerable knowledge
of civil procedure generally as a result of a required first-year civil procedure
course during which they studied the Federal Rules of Civil Procedure. Some
may have had exposure to the practical aspects of California civil procedure
through clinical internships or clerkships. But few students — and few recent
graduates for that matter — have an in-depth understanding of the important
doctrines, rules, and policies which define civil litigation in California. The
goal of this book, or perhaps more accurately of a course using this book, is to
provide a systematic and meaningful exposition of civil procedure as practiced
in the California courts.

Many students are already aware of some formal differences between civil
procedure in the federal and the California courts. The California courts, for
example, use different terminology. A federal court “motion to dismiss for
failure to state a claim upon which relief can be granted” is called a “general
demurrer” in California procedure; the federal joinder devices of
“counterclaim,” “cross-claim,” and “impleader” are all referred to as “cross-
complaints” in California; and a federal appellate court’s “mandate” is a
California appellate court’s “remittitur.” Anyone who has read a California
appellate opinion published in the Official Reports (i.e., California Reports and
California Appellate Reports) may also know of another formal difference
between federal and California practice. The California courts follow the
California Style Manual (4th ed. 2000) instead of The Bluebook with respect
to citation format and may prefer attorneys to do so also.

Another type of formal difference between California and federal practice

may be apparent to those students with clinical or clerkship experiences: far
more legal forms have been approved for use in civil litigation in the California
courts. Some of these legal forms are mandatory and must be used by civil
practitioners wherever applicable. Others, particularly the numerous complaint
and pleading forms approved by the Judicial Council, are optional but are
welcomed by the courts. And speaking of pleadings, many students are
undoubtedly aware that California requires “fact” or “code” pleading and not
federal “notice” pleading, although most may be hard-pressed to explain the
meaning of this difference in pleading form.

The main focus of this book is not, however, on the formal differences
between California and federal practice. The emphasis instead is on those
aspects of [2/3]California civil procedure that are not only different in form but
may also make a significant difference in the preparation, presentation, and
ultimate outcome of a civil case in the California as opposed to the federal
system.

The methodology employed in this book includes reproduction of important

California court opinions and procedural statutes, as well as extensive notes and
questions, all designed to enlighten as to California procedural doctrine and
practice. This book devotes particular attention to those areas of California
civil procedure that are unique, both when compared to federal and to other
states’ procedural laws. A concomitant goal is to provide students with a brief
summary of the federal or general position on each major topic as a basis of
comparison and as a review of first-year civil procedure.

This book is organized into 15 chapters. Chapters 1 and 2 are introductory.

Chapters 3 through 5 address some of the issues an attorney must consider
before commencing civil litigation in a California court. Chapter 3 surveys
important professional responsibility concerns which an attorney may need to
resolve prior to undertaking client representation. Chapter 4 covers statutes of
limitations and related doctrines which may time-bar an otherwise viable cause
of action. Because of the importance of statutes of limitations to practitioners,
and the unique treatments provided by California law, issues of accrual and
tolling are explored in detail. Chapter 5 discusses the California conflict or
choice-of-law doctrine, a topic not usually covered in civil procedure courses.
The highly conceptual comparative impairment conflicts doctrine developed by
the California courts for use in tort cases is difficult and unique, and accordingly
receives considerable attention.

The next two chapters contain materials relevant to the commencement of a

civil action in the California court system. Chapter 6 surveys such issues as
subject matter jurisdiction, personal jurisdiction, venue, forum non conveniens,
forum selection agreements, and service of process. The treatment of these
matters is relatively brief — a reflection of their somewhat limited importance
in the California court system and of their similarities to the federal doctrines.
Chapter 7 discusses provisional remedies with particular attention to California
prejudgment attachment statutes.

Chapters 8 through 10 discuss the various procedural laws which determine

the size of civil litigation in the California courts. Chapter 8 analyzes the
preclusive effects of prior judgments. This chapter devotes considerable
attention to the California primary rights doctrine which defines the res judicata
(claim preclusion) effect of a prior judgment, as well as to the doctrines of
collateral estoppel (issue preclusion), privity, and law of the case. Chapter 9
discusses the rules applicable to complaints, amended complaints, cross-
complaints, demurrers, and motions. More importantly, this chapter includes
extensive analysis of California’s unique fictitious (“Doe”) defendant practice
which, through appropriate pleading, greatly extends most statutes of limitations.
Chapter 10 provides coverage of California’s permissive and compulsory
joinder statutes, intervention, and other joinder devices, with emphasis on class
action doctrine. Also included is an in-depth analysis of three related topics:
third-party cross-complaints, comparative equitable indemnity among joint
tortfeasors, and California’s good faith settlement procedures.

[3/4]

The preparation of a civil case for trial is covered in Chapters 11 and 12.
Chapter 11 surveys the California discovery statutes, with emphasis on
privileges and enforcement. Chapter 12 discusses the various methods by which
a case may be resolved before trial and includes extensive materials on
summary judgments, involuntary dismissals for failure to prosecute, and
arbitration.

The final three chapters address issues applicable to trials, judgments, and
appeals in the California courts. Chapter 13 analyzes the right to jury trial as
guaranteed in civil cases by the California Constitution, the conduct and
supervision of jury trials, and such post-trial procedures as a motion for new
trial and for judgment notwithstanding the verdict. Chapter 14 covers the
procedure for obtaining and attacking judgments, and contains a useful overview
of the important issues with respect to enforcement of judgments. Finally,
Chapter 15 discusses appealable orders and judgments, the appellate process,
and the publication of appellate opinions; and contains extensive materials on
extraordinary appellate writs and administrative mandamus.

Upon completion of a course using this book, a law student or new lawyer
should have a good understanding of the laws, policies, and practices that make
up California civil procedure. The primary goal is to make the new attorney
more competent to conduct civil litigation in the California courts. A secondary
goal is to reveal the procedural advantages and disadvantages of litigating in
California state courts as opposed to federal courts so that the choice between
filing an action in one system or the other will be an informed one. The
achievement of these goals should directly benefit not only the law student who
will soon be a California attorney and that attorney’s clients, but hopefully also
the courts, the bar, and all others affected by California civil litigation.
[5/6]
Chapter 2

SOURCES OF PROCEDURAL LAW

§ 2.01 A BRIEF HISTORY OF CALIFORNIA

PROCEDURE
[A] Justice in Frontier California

The Spanish-Mexican settlement of California began in 1769 when an

expedition set out to establish the first mission at San Diego. By 1821, when
Mexico declared its independence from Spain, there were 21 missions in
California. In 1781, the “Regulations for Governing the province of the
Californias” were approved by the King of Spain. These regulations provided
detailed rules for the organization and administration of the pueblos, the civilian
settlements which began to spring up in California.

The regulations provided for each village to have a local judge, an “alcalde.”
In addition to serving as a judge, the alcalde functioned as the head official in
the town. He mediated civil disputes between individuals through a process
known as “conciliation.” Each party was heard by the alcalde; then the alcalde
would render judgment within eight days. The alcalde’s judgment was usually
final: the only form of appeal was a trip to Monterey to see the governor, and
this rarely occurred. Even though the Spanish Civil Law technically governed
his decisions, the alcalde generally had no legal training at all, so he simply
used common sense and the advice of “two good men” from the town. Yet, the
alcalde system was the beginning of the judiciary in California.

The Mexican period in California lasted from the time of Mexican

independence in 1821 until the Mexican-American war in 1846. During this
time, huge land grants were made to individuals by the governors of California,
marking the rise of the ranch system. These grants were generally upheld, as
was required under the treaty of Guadalupe Hildago which ended the war. In
1837, the Mexican legislature had passed an act to set up a complex judicial
system in California, but this system was never actually implemented before the
war. See generally Richard R. Powell, Compromises of Conflicting Claims: A
Century of California Law, 1760 to 1860, 19-59 (1977).

[B] The Impact of the Fields on California Procedure

When the first California Constitution became effective on December 20,

1849, the alcalde system was still in effect. The new Constitution provided for a
complex judiciary with a three-justice Supreme Court, District and County
courts, and justices of the peace. However, when Stephen J. Field arrived in
San Francisco on December 28, 1849, the judicial provisions of the Constitution
had not been [6/7]implemented. Thus in January of 1850, Field was elected First
Alcade of the new town of Marysville. In Field’s words, “[I]n the anomalous
condition of affairs under the American occupation, [alcaldes] exercised almost
unlimited powers.” He tried many cases, both civil and criminal. In May, the
new District Judge Turner arrived, ending Field’s tenure as alcalde.
Unfortunately, the two did not get along well at all. When Field, appearing as a
lawyer in Turner’s court, asked permission to explain a statute, he was fined
five hundred dollars and imprisoned in his own office. Turner even attempted to
have Field disbarred, but the state Supreme Court reinstated him. In the ensuing
public controversy, Turner threatened Field’s life, and Field challenged a
Turner supporter to a duel. When Field was elected to the Legislature in 1851,
his first act as a member of the Judiciary Committee was to draft a new
Judiciary Act which banished Turner to a new district far up in Northern
California.

However, Stephen Field’s greatest contribution during his term as a legislator

was the Civil Practice Act of 1851. This was Stephen Field’s version of the
“Field Code of Civil Procedure,” created in New York by his older brother
David Dudley Field. California’s Civil Practice Act incorporated all of the
important changes in civil procedure brought about by the Field Code, including
abolishing the procedural distinction between law and equity, abolishing the
common law forms of pleading, and requiring pleading of “ultimate facts”
instead of issue pleading. Additionally, the California Civil Practice Act
included new provisions regarding exemptions for debtors in bankruptcy, and a
provision allowing local usages regarding mines to govern disputes when no
other law was in effect. Stephen Field also adapted New York’s Code of
Criminal Procedure for California. According to Stephen Field, he modified
over 300 sections in the two Codes, and added over 100 new sections. The
Common Law and the new procedure were accepted very quickly in a state
which, at least theoretically, was governed by the Civil Law only years before.
According to Powell, “Within three years after the adoption of the California
Constitution, a lawyer who had practiced in an eastern state would have
encountered no serious difficulties in working under the California procedures.”
See Powell, supra at 138–142; Stephen J. Field, California Alcalde, 27-57,
63–64 (1950); see generally Alison Reppy, The Field Codification Concept, in
David Dudley Field Centenary Essays, 17 (1949).

[C] Subsequent History

In 1872, California attempted to codify its law, enacting four codes whose
purpose was to “supply the defects of and give completeness to the existing
legislation of the State.” Cal. Stats. 1869-70, c. 516 sec. 2. The four codes were
Political, Civil, Civil Procedure, and Penal. The Code of Civil Procedure
retained most of the substance of Field’s Civil Practice Act. From the start,
there was dissatisfaction about the codes, and a committee was appointed in
1873 to examine them. Stephen Field (who was then a justice of the United
States Supreme Court) served on this committee, which found that the codes
were “perfect in their analysis, admirable in their order and arrangement, and
furnishing a complete code of laws.” The enactment of the codes even brought
congratulations from David Dudley Field, who was having little success getting
New York to codify its own laws. In 1907 the Code of Civil Procedure was
amended to eliminate overlapping [7/8]and conflicting code sections. In 1929, a
commission was created to produce a logical, subject-based system of codes,
but this did not actually happen until 1953. The 1953 Code of Civil Procedure
was substantially carried forward from the previous Code. See Ralph N. Kleps,
The Revision and Codification of California Statutes 1849-1953, 42 Cal. L.
Rev. 766 (1954).

In modern times, amendments to the Code of Civil Procedure have been

substantially influenced by the Federal Rules of Civil Procedure. An example of
this is the “transaction or occurrence” test for joinder from Federal Rules 13(a)
(compulsory counterclaim) and 20(a) (permissive joinder of parties),
incorporated into sections 378 (joinder of plaintiffs), 379 (joinder of
defendants), and 426.10 & 426.30 (compulsory cross-complaint) of the
California Code of Civil Procedure. In addition, Federal Rule 11
(representations to court upon signing pleading), Rule 19 (compulsory joinder),
Rule 24(a) (intervention of right), Rule 42 (consolidation; separate trials), Rule
45 (subpoenas), and the federal discovery rules have been substantially
incorporated into the California Code of Civil Procedure. See, e.g., §§ 128.7
(frivolous actions), 387(b) (intervention), 389 (compulsory joinder). Despite
the strong influence of the Federal Rules, California civil procedure can be
quite different from federal civil procedure in many important respects. See
Chapter 1, Introduction to California Civil Procedure, supra.

§ 2.02 SOURCES OF CALIFORNIA PROCEDURAL

LAWS
[A] “Written Law”

According to Section 1895 of the California Code of Civil Procedure (CCP),

all laws in California are either “written” or “unwritten.” The written law is
contained in the California Constitution and statutes, and in the United States
Constitution and statutes. CCP § 1897. Unwritten law is law “not promulgated
and recorded … but which is, nevertheless, observed and administered in the
courts …. It has no certain repository, but is collected from the reports of the
decisions of the courts, and the treatises of learned men.” CCP § 1899.

[1] The United States Constitution and Laws

Although the origins of specific California procedural laws lie elsewhere, the
United States Constitution is in one sense the ultimate source. Both as a
conceptual proposition and an actual check when challenged, all state
procedural laws must be consistent with the requirements of the Fourteenth
Amendment. The federal Due Process Clause provides the ultimate “fairness”
standard by which state procedural statutes, rules, and court actions are
measured. A California procedural law which violates this federal standard is
invalid and unenforceable. See, e.g., Kulko v. Superior Court, 436 U.S. 84, 98
S. Ct. 1690, 56 L. Ed. 2d 132 (1978) (California state court’s exercise of
personal jurisdiction over nonresident parent in child support action violated
federal Due Process Clause); Randone v. Appellate Depart., 5 Cal. 3d 536, 96
Cal. Rptr. 709, 488 P.2d 13 (1971) , cert. denied, 407 U.S. 924 (then-existing
California attachment statute, which authorized prejudgment attachment without
notice and an opportunity for a hearing, violated Due Process Clause); Moyal v.
Lanphear, 208 Cal. App. 3d 491, 256 Cal. Rptr. 296 (1989) (Dismissal of
plaintiff’s [8/9]complaint by trial court as sanction for failure to comply with
local fast track deadlines held violation of plaintiff’s due process rights).

In at least one instance, the California Legislature has expressly incorporated

by reference the United States Constitution into the applicable state standard.
Code of Civil Procedure § 410.10, which defines the personal jurisdiction of
the state courts, provides: “A court of this state may exercise jurisdiction on any
basis not inconsistent with the Constitution of this state or of the United States.”

Article VI of the United States Constitution makes federal statutes, as well as

the federal Constitution, the “supreme Law of the Land.” Consequently, state
courts are generally obligated to enforce substantive claims based on federal
statutes. Testa v. Katt , 330 U.S. 386, 67 S. Ct. 810, 91 L. Ed. 967 (1947). Most
federal procedural statutes, such as the jurisdiction and venue provisions in
Title 28 of the United States Code, apply only to claims litigated in the federal
courts. However, Congress may intend that certain federal procedural statutes
apply in state court actions as well. In such cases, the federal statute will
preempt contrary state law in the state court. See, e.g., Felder v. Casey, 487
U.S. 131, 108 S. Ct. 2302, 101 L. Ed. 2d 123 (1988) (Wisconsin Supreme
Court’s reliance on the state’s notice-of-claim statute to bar a suit brought under
federal civil rights statute held invalid); Dice v. Akron, Canton & Youngstown
Railroad Co., 342 U.S. 359, 72 S. Ct. 312, 96 L. Ed. 398 (1952) (Federal
Employers’ Liability Act required state court to follow federal practice, not
contrary state practice, with respect to jury determination of fraud issues); 28
U.S.C. § 1367(d) (tolling state statute of limitations for at least 30 days as to
supplemental jurisdiction claims dismissed by federal district court);
Servicemembers Civil Relief Act, 50 U.S.C. App. § 501 et seq. (providing
comprehensive procedural protections of the rights of those in the military
service in civil litigation in state and federal courts).

[2] The California Constitution

In addition to a general due process provision which mirrors that of the

United States Constitution, the California Constitution contains a number of
more specific sections which help define our civil litigation process. For
example, Section 16 of Article I (as amended in 1998) provides with respect to
civil jury trials:

Trial by jury is an inviolate right and shall be secured to all, but in a

civil cause three-fourths of the jury may render a verdict. * * * In a civil
cause a jury may be waived by the consent of the parties expressed as
prescribed by statute.

In civil causes the jury shall consist of 12 persons or a lesser number

agreed on by the parties in open court. In civil causes other than causes
within the appellate jurisdiction of the court of appeal, the Legislature may
 provide that the jury shall consist of eight persons or a lesser number
agreed on by the parties in open court.

The judicial power of the state courts, the structure of the court system, basic
trial and appellate court jurisdiction, and the election and the removal of judges
are all set forth in Article VI. Section 6 of Article VI establishes the Judicial
Council of California; defines its membership to consist of the Chief Justice of
the Supreme [9/10]Court plus various other specified judges and officials; and
empowers it to adopt state-wide rules for court administration, practice and
procedure. Section 13 of Article VI imposes prejudicial error (“miscarriage of
justice”) as a prerequisite to overturning an erroneous judgment, and section 14
requires appellate decisions in writing and with reasons stated.

[3] The California Code of Civil Procedure

The Code of Civil Procedure (CCP), consisting of hundreds of statutes, is the

primary source of procedural law for California state courts. This Code covers
such topics as subject matter jurisdiction, statutes of limitations, joinder of
parties and claims, service of process, pleadings and motions, attachment, trial
and pretrial motions, extraordinary writs, appeals, judgments, and enforcement
of judgments.

Unlike the relatively succinct Federal Rules of Civil Procedure which apply
in federal trial courts, the California Code is lengthy, comprehensive, and quite
detailed. For example, Federal Rule 56 delineates the standards and procedures
for summary judgment motions on one page, but CCP § 437c takes 2 1/2 pages
of similar size type; Federal Rule 30 specifies the procedures for oral
depositions in 2 1/4 pages, CCP § 2025.010-.620 requires seven (7) pages to
cover the same topic. The code approach employed by California usually means
that most specific procedural questions can be answered by simply locating the
relevant CCP sections.

Other statutory codes also contain important procedural provisions, often

limited to particular types of cases. See, e.g., Government Code § 900 et seq.
(procedures for presentation of claims against public entities and officials under
the California Tort Claims Act); Family Code §§ 200–291 (procedures relating
to dissolution of marriage and related proceedings); Civil Code §§ 1780-1784
(remedies and procedures for actions under the Consumers Legal Remedies
Act); Evidence Code §§ 450-460 (judicial notice); Business & Professions
Code §§ 6146–6149 (limitations on contingent fee agreements).
 [4] California Rules of Court

Pursuant to the authority contained in the California Constitution and in

various code sections, the Judicial Council of California has adopted numerous
state-wide rules of practice and procedure. These Rules of Court supplement
statutory and constitutional provisions, and have the force of law.

The scope of the numerous and detailed California Rules of Court is difficult
to characterize. Some rules govern procedures in the appellate courts, Rules
8.100–8.936, Cal. Rules of Ct.; others fine-tune civil pretrial and trial
procedures in the trial courts, Rules 2.100-3.2000. Some specifically relate to
family law proceedings, some to coordination of civil actions, and others to
court-annexed arbitration and mediation. Rules 5.15-5.475, 3.500-3.550, 3.800-
3.875, Cal. Rules of Ct. Some cover seemingly mundane topics, such as the form
and size requirements of papers presented for filing specified in Rules 2.100–
2.119; others provide essential information on important matters not covered
elsewhere, such as the time deadlines for filing a notice of appeal in Rule 8.104.
The criteria for publication of appellate opinions, for example, are found in
Rules 8.1105-8.1125 and no place else:

[10/11]

CALIFORNIA RULES OF COURT (2012)

Rule 8.1105. Publication of Appellate Opinions

(a) Supreme Court. All opinions of the Supreme Court are published in the
Official Reports.

(b) Courts of Appeal and appellate divisions. Except as provided in (e), an

opinion of a Court of Appeal or a superior court appellate division is published
in the Official Reports if a majority of the rendering court certifies the opinion
for publication before the decision is final in that court.

(c) Standards for certification. An opinion of a Court of Appeal or a

superior court appellate division — whether it affirms or reverses a trial court
order or judgment — should be certified for publication in the Official Reports
if the opinion:

(1) Establishes a new rule of law;

(2) Applies an existing rule of law to a set of facts significantly different

from those stated in published opinions;

(3) Modifies, explains, or criticizes with reasons given, an existing rule

of law;

(4) Advances a new interpretation, clarification, criticism, or

construction of a provision of a constitution, statute, ordinance, or court
rule;

(5) Addresses or creates an apparent conflict in the law;

(6) Involves a legal issue of continuing public interest;

(7) Makes a significant contribution to legal literature by reviewing

either the development of a common law rule or the legislative or judicial
history of a provision of a constitution, statute, or other written law;

(8) Invokes a previously overlooked rule of law, or reaffirms a

principle of law not applied in a recently reported decision; or

(9) Is accompanied by a separate opinion concurring or dissenting on a

legal issue, and publication of the majority and separate opinions would
make a significant contribution to the development of the law.

(d) Factors not to be considered. Factors such as the workload of the court,
or the potential embarrassment of a litigant, lawyer, judge, or other person
should not affect the determination of whether to publish an opinion.
 (e) Changes in publication status.

(1) Unless otherwise ordered under (2), an opinion is no longer

considered published if the Supreme Court grants review or the rendering
court grants rehearing.

(2) The Supreme Court may order that an opinion certified for
publication is not to be published or that an opinion not certified is to be
published. The Supreme Court may also order publication of an opinion, in
whole or in part, at any time after granting review.

(f) Editing.

[11/12]

(1) Computer versions of all opinions of the Supreme Court and Courts
of Appeal must be provided to the Reporter of Decisions on the day of
filing. Opinions of superior court appellate divisions certified for
publication must be provided as prescribed in rule 8.887.

(2) The Reporter of Decisions must edit opinions for publication as

directed by the Supreme Court. The Reporter of Decisions must submit
edited opinions to the courts for examination, correction, and approval
before finalization for the Official Reports.

Rule 8.1115. Citation of Opinions

(a) Unpublished opinion. Except as provided in (b), an opinion of a

California Court of Appeal or superior court appellate division that is not
certified for publication or ordered published must not be cited or relied on by a
court or a party in any other action.

(b) Exceptions. An unpublished opinion may be cited or relied on:

(1) When the opinion is relevant under the doctrines of law of the case,
 res judicata, or collateral estoppel; or

(2) When the opinion is relevant to a criminal or disciplinary action

because it states reasons for a decision affecting the same defendant or
respondent in another such action.

(c) Citation procedure. A copy of an opinion citable under (b) or of a cited

opinion of any court that is available only in a computer-based source of
decisional law must be furnished to the court and all parties by attaching it to the
document in which it is cited or, if the citation will be made orally, by letter
within a reasonable time in advance of citation.

(d) When a published opinion may be cited. A published California opinion

may be cited or relied on as soon as it is certified for publication or ordered
published.

Rule 8.1120. Requesting Publication of Unpublished Opinions

(a) Request.

(1) Any person may request that an unpublished opinion be ordered

published.

(2) The request must be made by a letter to the court that rendered the
opinion, concisely stating the person’s interest and the reason why the
opinion meets a standard for publication.

(3) The request must be delivered to the rendering court within 20 days
after the opinion is filed.

(4) The request must be served on all parties.

(b) Action by rendering court.

(1) If the rendering court does not or cannot grant the request before the
 (1) If the rendering court does not or cannot grant the request before the
decision is final in that court, it must forward the request to the Supreme
Court with a copy of its opinion, its recommendation for disposition, and a
brief [12/13]statement of its reasons. The rendering court must forward these
materials within 15 days after the decision is final in that court.

(2) The rendering court must also send a copy of its recommendation and
reasons to all parties and any person who requested publication.

(c) Action by Supreme Court. The Supreme Court may order the opinion
published or deny the request. The court must send notice of its action to the
rendering court, all parties, and any person who requested publication.

(d) Effect of Supreme Court order to publish. A Supreme Court order to

publish is not an expression of the court’s opinion of the correctness of the
result of the decision or of any law stated in the opinion.

Rule 8.1125. Requesting Depublication of Published Opinions

(a) Request.

(1) Any person may request the Supreme Court to order that an opinion
certified for publication not be published.

(2) The request must not be made as part of a petition for review, but by
a separate letter to the Supreme Court not exceeding 10 pages.

(3) The request must concisely state the person’s interest and the reason
why the opinion should not be published.

(4) The request must be delivered to the Supreme Court within 30 days
after the decision is final in the Court of Appeal.

(5) The request must be served on the rendering court and all parties.
 (b) Response.

(1) Within 10 days after the Supreme Court receives a request under (a),
the rendering court or any person may submit a response supporting or
opposing the request. A response submitted by anyone other than the
rendering court must state the person’s interest.

(2) A response must not exceed 10 pages and must be served on the
rendering court, all parties, and any person who requested depublication.

(c) Action by Supreme Court.

(1) The Supreme Court may order the opinion depublished or deny the
request. It must send notice of its action to the rendering court, all parties,
and any person who requested depublication.

(2) The Supreme Court may order an opinion depublished on its own
motion, notifying the rendering court of its action.

(d) Effect of Supreme Court order to depublish. A Supreme Court order to

depublish is not an expression of the court’s opinion of the correctness of the
result of the decision or of any law stated in the opinion.

________

[13/14]

The Appendix to the California Rules of Court also contains some valuable
procedural information. For example, Section 3.25 of the Standards of Judicial
Administration provides fairly detailed suggestions for the examination of
prospective jurors in civil trials; and Section 2.2 contains case-disposition
goals for implementation of the Trial Court Delay Reduction Act by the trial
courts.

[5] Local Rules of Court

 You might think a detailed Code of Civil Procedure plus hundreds of state-
wide Rules of Court would provide sufficient bases for the regulation of civil
procedure. Unfortunately, the California courts do not. Pursuant to the authority
provided by CCP § 575.1 and Government Code § 68070(a), each county has
promulgated numerous local rules applicable to civil actions in its superior
courts. Typically they govern such areas of local variation as the filing
requirements for papers, the procedures for scheduling hearings, telephonic
rulings, and special rules for specific departments. With the advent of the Trial
Court Delay Reduction Act, local rules have taken on increased importance. The
following case reproduced below illustrates some of the typical concerns with
local rules and their enforcement.

TLICHE v. VAN QUATHEM

COURT OF APPEAL OF CALIFORNIA,
SECOND APPELLATE DISTRICT
66 Cal. App. 4th 1054, 78 Cal. Rptr. 2d 458 (1998)

Aldrich, Justice.

This appeal raises the issue of the trial court’s authority and obligations
regarding dismissal of a complaint for violation of local fast track rules.
Plaintiff and appellant Samy Tliche doing business as Pirata Restaurant (Tliche)
appeals from the order of dismissal of his complaint against defendants and
respondent Carl Van Quathem, VQA Property Management, and Alca Properties
(collectively Van Quathem).

Tliche contends the trial court erred in dismissing his complaint for violation
of a local delay reduction rule requiring service of the summons and complaint
on defendant within 60 days of filing the complaint and in denying his motion to
vacate the order of dismissal. * * *

FACTUAL AND PROCEDURAL BACKGROUND

On December 21, 1995, Tliche filed a complaint against defendants for

various causes of action arising from Tliche’s lease of certain premises from
defendants for restaurant use. Nineteen or more unsuccessful attempts were
made to serve defendants through early February 1996.
 On August 22, 1996, the trial court issued an order to show cause for failure
to prosecute the case, citing Superior Court of Los Angeles Rules, rule 7 et
seq.,1 and [14/15]Code of Civil Procedure sections 583.150, 583.360 and
583.420 and Government Code section 68608, subdivision (b). Thereafter,
Tliche’s counsel initiated renewed efforts to serve defendants and substituted
service was eventually effected on about October 5, 1996.

In the interim, at the September 23, 1996 hearing on the order to show cause,
Tliche’s counsel did not appear by 9:30 a.m., and the trial court ordered the
case dismissed in its entirety. A copy of the minute order stating the case was
dismissed in its entirety was sent to Tliche’s counsel on that same date. The
order did not specify any local rule or code section as authority for the
dismissal.

On February 18, 1997, Tliche’s counsel apparently believing his

nonappearance was the reason for the dismissal filed a motion for an order
vacating the dismissal and reinstating the complaint pursuant to Code of Civil
Procedure section 473.4 In support of the motion, Tliche’s counsel submitted his
declaration, corroborated by the declaration of his secretary, regarding the
circumstances of his “mistake, inadvertence, surprise [and] neglect” which
resulted in his nonappearance at the hearing on the order to show cause and the
dismissal of the complaint. Defendants opposed the motion. In his reply to the
opposition, Tliche’s counsel argued defendants had avoided service for a
number of months and submitted documentation of his efforts to serve
defendants.

At the March 5, 1997 hearing, the trial court denied Tliche’s motion to vacate
the dismissal without prejudice, stating, “Although the counsel for plaintiff
admits fault in his failure to appear at the hearing at which his clients’ [sic.]
case was dismissed, such failure to appear was not the cause of the dismissal.
The case was dismissed because by the date of the hearing, 9/23/96, the case
had been pending for more than 9 months and the defendant [sic.] had not been
served. Local Rule 7.7 requires that the complaint be served within 60 days
after it is filed. The moving papers also do not state grounds for discretionary
relief for EXCUSABLE neglect because no attempt to serve the defendant after
2/11/96 is shown and no explanation is given for [15/16]the unreasonable delay of
almost 5 months between the date the case was dismissed and the date that the
motion for relief under Code of Civil Procedure Section 473 was filed.”
 On March 28, 1997, Tliche filed a new motion for an order vacating the
dismissal, this time supported by his declaration identical in substance to that
supporting his first motion. At the April 29, 1997 hearing, the trial court took the
matter off calendar on the grounds the motion had not been filed within six
months of the date the case was dismissed and therefore the court lacked
jurisdiction to rule on the motion. On May 5, 1997, Tliche filed a timely notice
of appeal.

What are the limitations on the trial court’s power to prescribe the sanction of
dismissal of an action for noncompliance with local delay reduction rules? Is
the sanction of dismissal for failure to serve subject to the time limits set forth in
Code of Civil Procedure sections 583.410 and 583.420, subdivision (a)(1), two
years after the action is commenced?

DISCUSSION

1. The Trial Court Delay Reduction Act.

Article 5 of the Government Code, commencing with section 68600, was

enacted in 1986 as a pilot project. Known as The Trial Court Delay Reduction
Act (the Act), it drastically altered the management of civil cases in California.
In 1990 the original act was repealed and the current, revised act, with
statewide application effective July 1, 1992, was adopted.

The California Judicial Council (the Council) as the policy and rulemaking
body for the courts was directed by the Legislature to promulgate “standards of
timely disposition” of civil and criminal actions. (Gov. Code, § 68603, subd.
(a).) In establishing these standards the Council was to be “… guided by the
principles that litigation, from commencement to resolution, should require only
the time reasonably necessary for pleadings, discovery, preparation, and court
events, and that any additional elapsed time is delay and should be eliminated.”
(Ibid.)

Following this mandate, the Council promulgated case disposition time

standards. (Standards of Judicial Administration, § 2.1 et seq.) Under these
standards, general civil cases other than a small claims or unlawful detainer
case are to be resolved as follows:

“(1) 90 percent disposed of within 12 months after filing;

“(2) 98 percent disposed of within 18 months after filing;

“(3) 100 percent disposed of within 24 months after filing.”

(Standards of Judicial Administration, § 2.3 (b).)

Under the Act, judges are to assume responsibility “… to eliminate delay in

the progress and ultimate resolution of litigation, to assume and maintain control
over the pace of litigation, to actively manage the processing of litigation from
commencement to disposition, and to compel attorneys and litigants to prepare
and resolve all litigation without delay, from the filing of the first document
invoking [16/17]court jurisdiction to final disposition of the action.” (Gov. Code,
§ 68607.)

2. Courts’ Authority to Enact Local Rules and Impose Sanctions.

The Legislature granted the courts’ express statutory power to adopt local
rules “designed to expedite and facilitate the business of the court” (Code Civ.
Proc., § 575.1) in 1982. The Council is authorized to promulgate rules
governing pretrial conferences in civil cases at issue. (Code Civ. Proc., § 575.)

With the legislative mandate to manage cases, the Legislature granted to the
courts authority to impose sanctions for noncompliance with rules adopted to
implement the Act. These include the power to dismiss actions or strike
pleadings. (Gov. Code, § 68608, subd. (b).) However, in imposing the ultimate
sanction of dismissal, judges are required to consider the history of the conduct
of the case. Government Code section 68608, subdivision (b) provides: “Judges
shall have all the powers to impose sanctions authorized by law, including the
power to dismiss actions or strike pleadings, if it appears that less severe
sanctions would not be effective after taking into account the effect of
previous sanctions or previous lack of compliance in the case . Judges are
encouraged to impose sanctions to achieve the purpose of this [Act].” (Italics
added.)
 Code of Civil Procedure section 575.2, subdivision (a) permits a court’s
local rules to prescribe sanctions, including dismissal of an action, for
noncompliance with those rules. However, like Government Code section
68608, subdivision (b), there is an important limitation placed upon a judge’s
exercise of this power. This limitation is found in subsection (b) of section
575.2 which provides: “It is the intent of the Legislature that if a failure to
comply with these rules is the responsibility of counsel and not of the party, any
penalty shall be imposed on counsel and shall not adversely affect the party’s
cause of action or defense thereto.”

I n Garcia v. McCutchen (1997) 16 Cal. 4th 469, 940 P.2d 906, the
California Supreme Court concluded that, under governing statutes, a court may
not dismiss an action for noncompliance with local court rules implementing the
Act, if the noncompliance is the responsibility of counsel, not the litigant.

In harmonizing the Act with this provision of the Code of Civil Procedure, the
Supreme Court explained, “Nothing in either the statutory language or the
legislative history of the Act reflects a legislative intent to override section
575.2(b)’s limits on a court’s sanctioning powers or to give courts expanded
dismissal powers with respect to fast track rules. Instead, the words the
Legislature chose reflect a contrary intent, i.e., to give courts only those
sanctioning powers ‘authorized by law.’ (Gov. Code, § 68608(b).)” ( Id., at pp.
481–482.)

Therefore, there are at least two limitations or restrictions on the trial court’s
power to dismiss an action for noncompliance with local rules: (1) dismissal is
inappropriate if the noncompliance was the responsibility of counsel alone,
rather than the party (Code Civ. Proc., § 575.2, subd. (b); Garcia v.
McCutchen, supra, 16 Cal. 4th at p. 481); and (2) dismissal is appropriate only
if less severe sanctions would be ineffective (Gov. Code, § 68608, subd. (b)).

3. Application of facts to the law.

In dismissing the action on September 23, 1996, the trial court did not state its
[17/18]reasons. The order signed by the court stated: “ORDER TO SHOW
CAUSE RE: FAILURE TO PROSECUTE THE CASE; [¶] No appearance by
9:30 a.m. [¶] Case is dismissed in its entirety. [¶] IT IS SO ORDERED.”
However, at the March 5, 1997 hearing on Tliche’s motion for an order vacating
the dismissal, the trial court explained that it dismissed the action because the
case had been pending for more than nine months and the defendants had not
been served, in violation of Local Rule 7.7, which requires the complaint be
served within 60 days of its filing.

The act of service of the complaint when a party is represented by counsel is

usually an act peculiarly within the control of counsel, and not the party. We
recognize there may be cases where the party, not counsel, is the reason for non-
service, for example where the party has directed the attorney not to serve the
complaint. The court might, in certain cases, infer client culpability where a
previous sanction order or orders have not brought about compliance with the
court’s local rules.

However, in this case there is no evidence of prior sanctions against either

the party or counsel nor is there evidence in the record that the client was in any
way responsible for the delay in service of the complaint on the defendants.
Under these circumstances, the order of dismissal must be reversed. It was
premature and unauthorized as the trial court failed to apply statutorily mandated
principles.

4. The Time Limitations of Code of Civil Procedure section 583.410 et seq.

Citing Roman v. Usary Tire & Service Center (1994) 29 Cal. App. 4th 1422,
Tliche contends the time limitations specified in the Code of Civil Procedure
proscribe the trial court’s authority to dismiss an action for delay in prosecution
under delay reduction rules. Accordingly, Tilche argues, the case may not be
dismissed unless service is delayed for more than two years.

In Roman v. Usary Tire & Service Center, supra, 29 Cal. App. 4th 1422, this
division does not address dismissal pursuant to fast track rules. In Roman, the
trial court dismissed the action one year and eleven months after the complaint
was filed, pursuant to Code of Civil Procedure section 583.410, subdivision
(a), a provision in Article 4 of Chapter 1.5 of Title 8 of the Code (Code Civ.
Proc., §§ 583.410-583.430, “Discretionary Dismissal for Delay”). The court of
appeal reversed the order of dismissal, holding the trial court lacked authority
to dismiss this case pursuant to Code of Civil Procedure section 583.410,
subdivision (a), because that provision is expressly subject to the time
limitations specified in section 583.420. Section 583.420 provides, in relevant
part: “(a) The court may not dismiss an action pursuant to this article for delay
in prosecution except after one of the following conditions has occurred: [¶] (1)
Service is not made within two years after the action is commenced against the
defendant.” (Emphasis added.) (Roman, supra, 29 Cal. App. 4th at pp. 1430–
1431.) The decision in Roman has no relevance to the trial court’s authority
pursuant to fast track rules.

That this is so is further made clear by Code of Civil Procedure section

583.150, which provides that the entire chapter (Chapter 1.5) “… does not limit
or affect the authority of a court to dismiss an action or impose other sanctions
under a rule adopted by the court pursuant to Section 575.1 or by the Judicial
Council pursuant [18/19]to statute, or otherwise under inherent authority of the
court.” The fast track rules are such rules.

Therefore, there is no prohibition against a local court, by local rule,

providing for dismissal of an action if the summons and complaint have not been
served within 60 days provided: (1) the failure to serve is the fault of the client
and not the attorney and (2) less severe sanctions have not been effective.

5. The Motions to Vacate the Order of Dismissal.

In light of our finding that the initial order of dismissal was invalid, the
propriety of the trial court’s rulings on Tliche’s subsequent motions to vacate
the order of dismissal is no longer pertinent. In his first motion pursuant to Code
of Civil Procedure section 473, Tliche’s counsel mistakenly focused on his
failure to appear, not on his failure to serve, and then delayed so that his second
motion to vacate the order of dismissal was untimely and beyond the
jurisdiction of the court. Tliche, the client, should not lose his action through the
trial court’s error in ordering dismissal, which error was compounded by
Tliche’s own counsel’s failure to challenge the order effectively.

DISPOSITION

Order of dismissal reversed. The case is remanded to the trial court with
directions to vacate the order of dismissal and to reconsider the imposition of
sanctions for the violation of the local delay reduction rule regarding the failure
to serve the summons and complaint within 60 days.
 Tliche’s counsel is to bear costs of appeal.

Footnotes:

1 Local rule 7.7 states: “(c) The failure to meet the deadline set forth in Subdivision (a) may result in the
issuance of an Order to Show Cause why sanctions should not be imposed, including dismissal for failure to
prosecute (Code of Civil Procedure Section 583.150 and Government Code Section 68608(b)) or,
alternatively, why other action should not be taken. At the hearing on such OSC the Court may (1) impose
such sanctions as authorized by law and (2) make further appropriate orders regarding the preparation of
the case for trial. Failure to attend the hearing on such OSC may result in additional sanctions, including
dismissal of the case (see Rule 7.13).”

Local rule 7.13 states: “The Court may impose appropriate sanctions for the failure or refusal (1) to
comply with the Rules, (2) to comply with any order made hereunder or (3) to meet the time standards
and/or deadlines established herein. Counsel are directed to Code of Civil Procedure sections 128, 128.5,
177.5, 575.2, 583.150, 583.430, 2016 through 2036, Government Code Section 68609(d), and Rule 227 of the
California Rules of Court. Such sanctions may be imposed on a party and/or, if appropriate, on counsel for
such party. While the court may impose sanctions for specified conduct, the court should do so sparingly and
only when clearly warranted.”

4 Section 473, subdivision (b) in pertinent part, states: “Notwithstanding any other requirements of this
section, the court shall, whenever an application for relief is made no more than six months after entry of
judgment, is in proper form, and is accompanied by an attorney’s sworn affidavit attesting to his or her
mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his
or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or
dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact
caused by the attorney’s mistake, inadvertence, surprise, or neglect.”

[a] Local Rules “Not Inconsistent with State Law”

Government Code § 68070(a) expressly authorizes the adoption of local court

rules “not inconsistent with law.” A local court rule has the force of a
procedural statute, provided it does not conflict with statutory law or with state-
wide court rules. See, e.g., Mito v. Temple Recycling Center Corp., 187 Cal.
App. 4th 276, 113 Cal. Rptr. 3d 445 (2010) (L.A. County Superior Court local
rule which authorized clerk to reject a complaint unless accompanied by a
Cover Sheet preempted by Cal. Ct. Rule 3.220(c) which required clerk to file
complaint despite the absence of the Cover Sheet); Mentzer v. Hardoin, 28 Cal.
App. 4th 1365, 34 Cal. Rptr. 2d 214 (1994) (Practice of L.A. County Superior
Court with regard to filing of judicial arbitration awards, set forth in L.A.
Superior Court Judicial Arbitration Handbook, conflicted with state statute and
held invalid); Moyal v. Lanphear, 208 Cal. App. 3d 491, 498, 256 Cal. Rptr.
296 (1989) (local fast track rule providing for imposition of monetary sanctions
for failure to timely file joint at-issue memorandum had force of law).

In Elkins v. Superior Court, 41 Cal. 4th 1337, 63 Cal. Rptr. 3d 483, 163 P.3d
160 (2007), the California Supreme Court considered a challenge to a local
superior court rule that required parties in dissolution of marriage trials to
present their case by means of written declarations. The testimony of witnesses
under direct examination was not allowed except in “unusual circumstances,”
although upon [19/20]request parties were permitted to cross-examine declarants.
The court held that, as applied to contested marital dissolution trials, the local
rule is inconsistent with various provisions of the Evidence Code and the Code
of Civil Procedure.

Although some informality and flexibility have been accepted in marital

dissolution proceedings, the Elkins court reasoned that, pursuant to Family Code
§ 210, such proceedings are governed by the same statutory rules of evidence
and procedure that apply in other civil trials. Written testimony in the form of a
declaration constitutes hearsay and is inadmissible at trial, subject to specific
statutory exceptions, unless the parties stipulate to the admission of declarations
or fail to enter a hearsay objection. Although Family Code § 2336(a) requires
items of proof in support of a default judgment be in the form of an affidavit,
there is no statutory exception to the hearsay rule for contested marital
dissolution trials. Consequently, the Elkins court concluded that the local rule is
inconsistent with the statewide hearsay rule and therefore beyond the superior
court’s rule-making authority.

[b] Case Management (“Fast Track”) Rules

The Trial Court Delay Reduction Act requires each county to adopt local
rules of procedure, including time standards for the completion of all critical
stages of the litigation process, to meet the standards for delay reduction
imposed by the Act. Gov. Code §§ 68612, 68620. The Act encourages local rule
experimentation to achieve its goals, subject only to the minimum statutory time
periods specified in Government Code § 68616 and to the case flow
management guidelines contained in Rules 3.700-3.771 and 3.1380-3.1385 of
the California Rules of Court. The consequence was a proliferation of local
rules which defined precisely when and how each stage of the civil litigation
process must be accomplished, but with considerable variation from county to
county.
 Responding to the proliferation of local rules and the attendant local
variations in procedure, the Judicial Council adopted new Rules of Court in
2002, 2004, and 2008 which set forth uniform state-wide requirements
concerning motions, demurrers, discovery, case management, and the form and
format of papers. Rules 2.100-2.306, 3.700-3.771 & 3.1100-3.1312, Cal. Rules
of Court. Rule 3.20(a) states that, by enacting these new rules, the Judicial
Council intends to preempt local rules in these fields:

The Judicial Council has preempted all local rules relating to

pleadings, demurrers, ex parte applications, motions, discovery,
provisional remedies, and form and format of papers. No trial court, or any
division or branch of a trial court, may enact or enforce any local rule
concerning these fields. All local rules concerning these fields are null and
void unless otherwise permitted or required by statute or a rule in the
California Rules of Court.

However, this Judicial Council preemption does not apply to local fast track
rules adopted under the Trial Court Delay Reduction Act. Rule 3.20(b)(4), Cal.
Rules of Court. See also Volkswagen of America, Inc. v. Superior Court , 94
Cal. App. 4th 695, 114 Cal. Rptr. 2d 541 (2001) (General Order No. 55,
adopted by the San Francisco Superior Court to help manage its complex
asbestos litigation, not preempted by state rules).

[20/21]

Failure to comply with local fast track rules may lead to sanctions, usually
monetary, but in appropriate circumstances case-dispositive, penalties. CCP §
575.2(a) authorizes trial courts to impose sanctions for failure to comply with
any local rules, but § 575.2(b) cautions that “if the failure to comply with these
rules is the responsibility of counsel and not of the party, any penalty may be
imposed on counsel and shall not adversely affect the party’s cause of action or
defense thereto.” See Public Works Bd. v. Bragg , 183 Cal. App. 3d 1018, 228
Cal. Rptr. 576 (1986) (concluding that a trial court is required on its own
motion to implement CCP § 572(b), if the negligent counsel does not so move).
In addition, the Trial Court Delay Reduction Act expressly addresses the
imposition of sanctions for violation of local fast track rules. Government Code
§ 68608(b) states:

Judges shall have all the powers to impose sanctions authorized by

 law, including the power to dismiss actions or strike pleadings, if it
appears that less severe sanctions would not be effective after taking into
account the effect of previous sanctions or previous lack of compliance in
the case.

The Courts of Appeal reached different conclusions in attempting to reconcile

these two statutory provisions, disagreeing on whether the more specific
authority in Government Code 68608(b) overrides the general authority in CCP
§ 572. The California Supreme Court subsequently resolved this issue in Garcia
v. McCutchen, 16 Cal. 4th 469, 66 Cal. Rptr. 2d 319, 940 P.2d 906 (1997) ,
where it held that the limitations on the power to impose case-dispositive
sanctions expressed in CCP § 575.2(b) were applicable to violations of all
types of local rules, including local “fast track” rules designed to implement the
mandates of the Trial Reduction Delay Act. Tliche v. Van Quathem, reproduced
supra, is a post-Garcia case.

[c] Local Departmental Rules

County-wide rules are not the only types of local rules. Often a particular
branch or district of a court will adopt rules that apply solely to cases in that
branch or district. In addition, an individual judge may adopt a policy which
applies solely to cases in that judge’s courtroom. Typically these rules were not
published, but were posted outside the courtroom or announced by the judge.
Pursuant to a 1993 amendment to CCP § 575.1(c), however, such individual
judge and department rules must be published as part of the general publication
requirements for all local rules. See Rule 10.613, Cal. Rules of Court
(requirements for adopting, filing, distributing, and maintaining local court
rules).

[B] “Unwritten” Law

[1] Judicial Decisions

Judicial Decisions Make Procedural Law. As this casebook attests, judicial

decisions are a prevalent source of procedural law. The courts not only
interpret the written law, but possess the inherent power to make procedural
law. For example, although CCP § 382 authorizes the class action joinder
device, no California statute or court rule provides procedural criteria for its
use in civil litigation generally. Nevertheless, the California Supreme Court has
directed the trial courts to utilize the specific procedures prescribed by Rule 23
of the Federal Rules of Civil Procedure. [21/22]La Sala v. American Savings &
Loan Assn., 5 Cal. 3d 864, 872, 97 Cal. Rptr. 849, 489 P.2d 1113 (1971) ; see
Green v. Obledo, 29 Cal. 3d 126, 145–146, 172 Cal. Rptr. 206, 624 P.2d 256
(1981) (“It is well established that in the absence of relevant state precedents
our trial courts are urged to follow the procedures prescribed in Rule 23 of the
Federal Rules of Civil Procedure for conducting class actions.”); City of San
Jose v. Superior Court, 12 Cal. 3d 447, 453, 115 Cal. Rptr. 797, 525 P.2d 701
(1974) (“This court has urged trial courts to be procedurally innovative,
encouraging them to incorporate procedures from outside sources in determining
whether to allow the maintenance of a particular class suit. More specifically,
we have directed them to rule 23 of the Federal Rules of Civil Procedure ….”).

Retroactive Effect. The general rule is that judicial decisions in civil actions
are given retroactive effect. This means that a decision of the California
Supreme Court overruling a former decision or announcing a new rule of law
should normally apply to all actions that already have been filed or litigated but
are not yet final. See, e.g., Newman v. Emerson Radio Corp., 48 Cal. 3d 973,
978, 258 Cal. Rptr. 592, 772 P.2d 1059 (1989) (observing that the California
courts have consistently applied tort decisions retroactively even when those
decisions declared new causes of action); Peterson v. Superior Court, 31 Cal.
3d 147, 151–152, 181 Cal. Rptr. 784, 642 P.2d 1305 (1982) (concluding new
rule announced by Supreme Court that punitive damages are recoverable from
intoxicated driver who causes personal injury should be applied retroactively).

However, the courts have recognized exceptions to the general rule when
considerations of fairness and public policy precluded retrospective operation
of judicial decisions. See, e.g., Newman v. Emerson Radio Corp. , supra
(collecting cases); Moradi-Shalal v. Fireman’s Fund Ins. Co. , 46 Cal. 3d 287,
250 Cal. Rptr. 116, 758 P.2d 58 (1988) (judicial reinterpretation of a statute to
preclude private third-party causes of action for unfair insurer practices not
given retroactive effect; considerations of fairness and public policy required
prospective application to permit those who had already embarked on litigation
to receive the benefit of the court’s express prior ruling on which they had
relied).

The question of the retroactivity of a court decision usually arises in the

context of the substantive rejection of a form of recovery, but the general rule
and exceptions also apply to judicial interpretation of procedural law. See, e.g.,
Howard v. Thrifty Drug & Discount Stores , 10 Cal. 4th 424, 436, n.3, 41 Cal.
Rptr. 2d 362, 895 P.2d 469 (1995) (decision narrowing court’s former decision
construing the tolling provisions of the involuntary dismissal statute for failure
to prosecute given retroactive effect; fairness and public policy exceptions not
applicable because parties could not have justifiably relied on the previous
court decision); Isbell v. County of Sonoma, 21 Cal. 3d 61, 74–75, 145 Cal.
Rptr. 368, 577 P.2d 188 (1978) (decision declaring California’s confession of
judgment procedure unconstitutional given only limited retroactive application);
Neel v. Magana, Olney, Levy, Cathcart & Gelfand , 6 Cal. 3d 176, 193, 98 Cal.
Rptr. 837, 491 P.2d 421 (1971) (retroactive effect given to holding that cause of
action for legal malpractice does not accrue until client discovers, or should
discover, relevant facts); Smith v. Rae-Venter Law Group, 29 Cal. 4th 345, 127
Cal. Rptr. 2d 516, 537–39, 58 P.2d 367 (2002) (new interpretation of a fee-
shifting statute which authorizes an award of attorney fees and costs against a
party “unsuccessful on appeal” from a Labor Commission wage [22/23]claim
decision would be applied prospectively only because the parties relied on
prior interpretations of the statute in weighing the potential costs of an
unsuccessful appeal).

Stare Decisis. The Court of Appeal (Fourth District, Div. Three) in Sarti v.
Salt Creek, Inc., 167 Cal. App. 4th 1187, 85 Cal. Rptr. 3d 506 (2008) ,
provided the following primer on the doctrine of stare decisis as applied in the
California courts (Id. at 1193):

All trial courts are bound by all published decisions of the Court of
Appeal (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450,
455 [20 Cal. Rptr. 321, 369 P.2d 937] ), the only qualifications being that
the relevant point in the appellate decision must not have been disapproved
by the California Supreme Court and must not be in conflict with another
appellate decision. As the Supreme Court said in Auto Equity Sales (a
case that ought to be covered in the very first weeks of every legal research
and writing class in any California law school): “Under the doctrine of
stare decisis, all tribunals exercising inferior jurisdiction are required to
follow decisions of courts exercising superior jurisdiction. Otherwise, the
doctrine of stare decisis makes no sense. The decisions of this court are
binding upon and must be followed by all the state courts of California.
Decisions of every division of the District Courts of Appeal are binding
upon all the justice and municipal courts and upon all the superior
courts of this state, and this is so whether or not the superior court is
acting as a trial or appellate court. Courts exercising inferior jurisdiction
must accept the law declared by courts of superior jurisdiction.” (Ibid.,
italics added and omitted.)1

Unlike at least some federal intermediate appellate courts,2 though,

 Unlike at least some federal intermediate appellate courts,2 though,
there is no horizontal stare decisis in the California Court of Appeal. 3 This
court — this panel — is not bound by Minder [v. Cielito Lindo
Restaurant, 67 Cal. App. 3d 1003, 136 Cal. Rptr. 915 (1977) , an earlier
decision by the Court of Appeal for the Second Appellate District, Div.
Five on the same issue currently under review] and we may take a more
critical approach to that opinion. * * * [W]e respectfully decline to follow
it.

Footnotes:

1 The passage means that a trial judge sitting in San Francisco is equally bound by decisions from
divisions of the Court of Appeal sitting in Fresno, San Diego and even Orange County just as much as he or
she is bound by decisions by a panel sitting in San Francisco. California doesn’t work the way the federal
courts do, with so-called “rules of the circuit” where a trial judge is bound to a given intermediate appellate
subdivision.

2 For example, the sprawling Ninth Circuit adheres to a rule of “intracircuit stare decisis” because
consistency would otherwise be impossible. (Ulrich & Sidley Austin LLP, 1 Fed. Appellate Prac. Guide 9th
Cir. 2d § 8:19 [“The Ninth Circuit’s 28 authorized, active judges can be combined into 3,276 different three-
judge panels …. The principal way the Ninth Circuit avoids having these shifting three-judge panels issue
conflicting decisions is to follow a rule of intracircuit stare decisis: panel decisions bind subsequent panels
except in certain narrow situations discussed below or unless overruled by the court en banc.”].)

3 (E.g., Jessen v. Mentor Corp. (2008) 158 Cal.App.4th 1480, 1489, fn. 10 [71 Cal. Rptr. 3d 714]
[“Contrary to Jessen’s contention, we are not bound by the contrary decision by Division One of this court.
… ‘“One district or division may refuse to follow a prior decision of a different district or division, for the
same reasons that influence the federal Courts of Appeals of the various circuits to make independent
decisions.”’” (Citation omitted.)].)

[23/24]

[2] Learned Treatises

The California courts often rely on legal treatises and secondary authorities to
illuminate gray areas of the law. The most authoritative treatise by far is the ten-
volume California Procedure authored by Bernard E. Witkin, now in its fifth
edition (2008) and supplemented annually. First published in 1954, Witkin’s
treatise has been cited thousands of times over the years in judicial opinions.
See Clyde Leland, The Ineffable Bernie Witkin, 9 Calif. Lawyer 44 (Dec.
1989). Another influential treatise is Weil, Brown, Rylaarsdam & Edmon, Civil
Procedure Before Trial , a loose-leaf service published by The Rutter Group
and updated annually.

Precisely what qualifies as a learned treatise is unclear. Also unclear is the

meaning of the reference to “treatises of learned men” in CCP § 1899 as
constituting, along with court decisions, “unwritten law.” With this reference in
mind, consider the following case:

EARL W. SCHOTT, INC. v. KALAR

COURT OF APPEAL OF CALIFORNIA,
FIFTH APPELLATE DISTRICT
20 Cal. App. 4th 943, 24 Cal. Rptr. 2d 580 (1993)

Buckley, Justice.

We are presented here with the issue of whether a complaining party is

required to designate and serve a corporation in its corporate capacity in order
to obtain an enforceable default judgment. We conclude such a requirement
exists.

PROCEDURAL HISTORY

On January 18, 1991, Earl W. Schott, Inc. (Schott), filed a complaint for
breach of contract, fraud and common counts against “Gary Kalar, individually
and DBA Kalar Construction Co.” (hereafter collectively called Kalar) ….

On May 20, 1991, Schott filed its first proof of service of the summons and
complaint. This proof of service indicated that on May 16 both Gary Kalar, an
individual, and Kalar Construction Company, an association or partnership,
were served by leaving a copy of the summons and complaint with Ken Amey,
their office manager. There was no declaration of due diligence filed at that time
nor a notation of the subsequent mailing of a copy of the summons and
complaint.

On June 24, 1991, respondent filed a request for entry of default. Noting that
respondent’s proofs of service were defective, the clerk refused to enter the
default as requested. Schott subsequently made three more requests for entry of
default. Each request was denied because the proof of service was defective.

On October 21, 1991, respondent successfully requested and received entry

of default by the clerk of the court. The default was based on a substituted
service via delivery of the summons and of the complaint to Ken Amey, office
manager for Gary Kalar, as an individual. Default judgment was entered on
January 14, 1992, against Gary Kalar, individually and doing business as Kalar
Construction. From this [24/25]judgment, Gary Kalar, individually and doing
business as Kalar Construction, appeals.

DISCUSSION

Defendant’s Status

In a somewhat artful attempt to urge the application of Code of Civil

Procedure section 415.20, subdivision (a) (applicable to corporations and
which does not require due diligence),2 Schott refers to Kalar Construction
Company as a corporation and peppers his respondent’s brief on appeal with
references to “Kalar, Inc.” Schott’s brief assumes, without proper showing, that
Kalar Construction Company is a corporation. In fact, neither Schott’s
complaint, the proofs of service nor the other papers filed in the trial court
indicate that the Kalar Construction Company is a corporation. In the present
case, the complaint, summons and judgment of the lower court all listed “Gary
Kalar, individually, and dba Kalar Construction” as the defendants.

At oral argument, Schott’s counsel contested Kalar’s citation of Weil and

Brown, Civil Procedure Before Trial (The Rutter Group 1993) Pleadings,
paragraph 6:33, page 6.9 for the following premise: “To obtain an enforceable
judgment [by default], the complaint must name the business entity in its right
capacity.” Counsel correctly noted this assertion is not supported by reference
to statutory or case authority. 4 While the accuracy of this assertion is beyond
doubt and is a principle generally accepted by practitioners and judicial officers
alike, we sought specific binding authority containing such a holding.
Surprisingly, there appears to be no published authority explicitly and directly
holding that a complaint must name the business entity in its proper capacity.
However, such a conclusion is supported by existing authority. For example, in
Aiken v. Mariposa Mining Co. (1856) 6 Cal. 186, the Supreme Court
determined that in an action against a corporation, service upon an individual
not specifically designated as an officer of the corporation was insufficient. The
court then reversed the entry of default judgment against the corporation. And in
Ferry v. North Pacific Stages (1931) 112 Cal. App. 348 [296 P. 679] , service
was invalid upon a named defendant corporation when the affidavit recited
process was served upon defendant as an association. * * *

Likewise here, Schott was explicit in suing Gary Kalar as an individual and
serving the Kalar Construction Company as an association or partnership.

[25/26]

Moreover, the Judicial Council comment on section 416.10 provides,

“Service on a corporation or unincorporated association can only be
accomplished by serving some individual as its representative .” (See Judicial
Council com., 14 West’s Ann. Code Civ. Proc. (1973 ed.) § 416.10, p. 586,
italics added.) If the existence of corporate structure is not alleged in either the
complaint or the summons, it is not possible for an individual to have been
served in his or her representative capacity for the unnamed corporation.

* * * [I]t cannot be seriously argued that the Kalar Construction Co., an

association or partnership, is the same entity as Kalar Construction Co., Inc. By
law, they are distinct.

Though such a distinction may appear hypertechnical, our courts have

consistently enforced procedures which ensure jurisdiction. Therefore, because
Schott failed to name Kalar Construction, Inc., as a proper party, no valid
judgment was entered against Kalar Construction, Inc., as jurisdiction was never
effected over the corporation.

Our conclusion precludes application of section 415.20, subdivision (a) and

invokes application of subdivision (b) of section 415.20. Therefore, given
Schott’s concession that there was no compliance with the due diligence
requirements of section 415.20, subdivision (b), Kalar Construction Co. was not
properly served. Hence, regardless of the legal status of the company, no
effective judgment was entered.

DISPOSITION
 The judgment is reversed. Costs are awarded to appellant.

Footnotes:

2 In its supplemental brief, Schott concedes that its failure to comply with due diligence requirements
rendered the attempted service upon Gary Kalar, individually, ineffective.

4 “[S]econdary authority is not the law itself. It was not written by the legislature, a court, an agency, a
city council, etc. Secondary authority can never be mandatory authority; it can only be persuasive.” (Statsky
& Wernet, Case Analysis and Fundamentals of Legal Writing (3d ed. 1989) p. 207.) We recognize the
anomaly of citing to secondary authority to establish that secondary authority is not binding. However, the
“treatises of learned men” are also part of the “[u]nwritten law.” (Code Civ. Proc., § 1899.) Such treatises
may be considered to find the applicable law in a given situation. (White v. Merrill (1889) 82 Cal. 14, 18 [22
P. 1129] (conc. opn. of Thornton, J.).) Yet, works such as “Restatement[s] of the Law do not have the
force of statutory enactment nor do they supersede judicial decisions.” (Janofsky v. Garland (1941) 42
Cal. App. 2d 655, 658 [109 P.2d 750].)

[3] Secondary Authorities

Secondary authorities are not themselves law and do not have the binding
force of statutes, court rules, or judicial precedents. Nevertheless, as Schott
illustrates, secondary authorities can be quite persuasive. When construing
unclear procedural statutes, the California courts frequently rely on legislative
histories contained in Judicial Council, California Law Revision Commission,
or legislative committee reports to ascertain legislative intent.

Scholarly publications have proven very persuasive in areas not governed by

statutes or court rules. For example, the conflict of law doctrine developed by
the California Supreme Court for use in tort cases is based on theories
expressed by influential scholars in law review articles, see Bernhard v.
Harrah’s Club , 16 Cal. 3d 313, 128 Cal. Rptr. 215, 546 P.2d 719 (1976) ; and
specific collateral estoppel questions are often answered by reference to the
Restatement (Second) of Judgments, see, e.g., Sandoval v. Superior Court, 140
Cal. App. 3d 932, 190 Cal. Rptr. 29 (1983) . As discussed previously, the
California courts often rely on legal treatises such as Witkin’s California
Procedure and Weil, Brown, Rylaarsdam & Edmon, Civil Procedure Before
Trial.
 [26/27]

[4] Law Revision Commission Official Comments

The California Law Revision Commission is charged by statute with the duty
to examine the law and recommend legislation to make needed reforms.
Government Code §§ 8280-8298. The Commission ordinarily prepares an
official Comment explaining each section it recommends for enactment,
amendment, or repeal. Official Comments of the California Law Revision
Commission with respect to new code provisions “are declarative of the intent
not only of the draftsmen of the code but also of the legislators who
subsequently enacted it.” People v. Williams , 16 Cal. 3d 663, 667–668, 128
Cal. Rptr. 888, 547 P.2d 1000 (1976) . Therefore, Official Comments “are
persuasive, albeit not conclusive, evidence of that intent.” Bonanno v. Central
Contra Costa Transit Auth., 30 Cal. 4th 139, 148, 132 Cal. Rptr. 2d 341, 65
P.3d 807 (2003).

§ 2.03 THE CALIFORNIA JUDICIAL SYSTEM

[A] California Trial Court Unification

Prior to 1998, California’s trial courts consisted of superior and municipal

courts, each with its own jurisdiction and number of judges fixed by the
Legislature. Subsequently, the California voters approved Proposition 220 in
June, 1998, and Proposition 48 in November, 2002, that amended the California
Constitution to eliminate references to the constitutional authority to vest
judicial power in the municipal courts. Cal. Const. Art. VI, § 5 (repealed), § 6, §
8, § 16 & § 23. As a result of these constitutional amendments, the superior
court now has jurisdiction in all matters that were previously under the
jurisdiction of either the superior or municipal courts. Cal. Const., Art. VI, § 10.
Even after unification, however, the jurisdictional differences between the
superior courts and the former municipal courts remain relevant for purposes of
certain trial court procedures, such as the size of the jury, and for purposes of
the proper court for appellate review. Cal. Const., Art. I, § 16; Art. VI, § 11.

The Courts of Appeal have appellate jurisdiction as to the type of cases that
were within the original jurisdiction of the superior courts on June 30, 1995,
and in other cases as prescribed by statute. Cal. Const., Art. VI, § 11. As to all
other cases, referred to in the legislation implementing Prop. 220 as “limited
civil cases,” the appellate division of the superior court has appellate
jurisdiction. Cal. Const., Art. VI, § 11; CCP §§ 77-86, 904.2. Under the current
statutory scheme, the definition of “limited civil cases” corresponds to the type
of cases that could only be heard in municipal court prior to unification, i.e.,
generally speaking, civil cases in which the amount in controversy is $25,000 or
less. CCP § 86. The Legislature has the authority to change appellate
jurisdiction of the Courts of Appeal, and therefore necessarily of the appellate
division of the superior court, by changing the jurisdictional amount in
controversy. Cal. Const., Art. VI, § 11.

[27/28]

[B] The California Judicial System

The following profile of the California judicial system is reproduced, in part,

from California Judicial Branch and California Courts, with additions and
modifications taken from 2011 Court Statistics Report, Statewide Case Load
Trends 2000-2001 Through 2009-2010, published by the Judicial Council of
California.

CALIFORNIA JUDICIAL BRANCH

The California court system — the largest in the nation, with more than 2,000
judicial officers, 22,000 court employees, and more than 10 million cases —
serves over 38 million people. The state Constitution vests the judicial power
of California in the Supreme Court, Courts of Appeal, and superior courts. The
Constitution also provides for the formation and functions of the Judicial
Council, the policymaking body for the state courts and other agencies.

CALIFORNIA SUPREME COURT

The Supreme Court of California is the state’s highest court. Its decisions are
binding on all other California courts. The court conducts regular sessions in
San Francisco, Los Angeles, and Sacramento; it may also hold special sessions
elsewhere.

Membership qualifications
 One Chief Justice and six associate justices are appointed by the Governor
and confirmed by the Commission on Judicial Appointments. The appointments
are confirmed by the public at the next general election; justices also come
before voters at the end of their 12-year terms. To be considered for
appointment, a person must be an attorney admitted to practice in California or
have served as a judge of a court of record in this state for 10 years immediately
preceding appointment (Cal. Const., art. VI, § 10).

Jurisdiction

The Supreme Court has original jurisdiction in proceedings for extraordinary

relief in the nature of mandamus, certiorari, and prohibition. The court also has
original jurisdiction in habeas corpus proceedings (Cal. Const., art. VI, § 10).
The state Constitution gives the Supreme Court the authority to review decisions
of the state Courts of Appeal (Cal. Const., art. VI, § 12). This reviewing power
enables the Supreme Court to decide important legal questions and to maintain
uniformity in the law. The court selects specific issues for review, or it may
decide all the issues in a case (Cal. Const., art. VI, § 12). The Constitution also
directs the high court to review all cases in which a judgment of death has been
pronounced by the trial court (Cal. Const., art. VI, § 11). Under state law, these
cases are automatically appealed directly from the trial court to the Supreme
Court (Pen. Code, § 1239(b)).

In addition, the Supreme Court reviews the recommendations of the

Commission on Judicial Performance and the State Bar of California concerning
the discipline of judges and attorneys for misconduct. The only other matters
[28/29]coming directly to the Supreme Court are appeals from decisions of the
Public Utilities Commission.

Business Transacted

Total filings increased slightly from the previous year, with 9,652
(civil=1,549) filings in 2009-2010 compared with 9,274 filings in 2008-09.
Dispositions fell slightly, from 9,513 in 2008-09 to 9,379 in 2009–10. Twenty-
six automatic appeals (death penalty cases) were disposed of in 2009–10,
compared to twenty-five in 2008–09. Filings of original proceedings in 2009–
10 numbered 3,680, up from 3,524 in 2008–09. Filings in State Bar disciplinary
proceedings in 2009–10 reached a total of 688.
 The number of written opinions decreased, from 116 in 2008–09 to fewer
than 100 in 2009–10. The Supreme Court ordered only four (4) Court of Appeal
opinions depublished in 2009–10, the lowest number of opinions ordered
depublished in over 25 years. The Supreme Court continued to meet its
commitment to issue decisions within 90 days of oral argument or submission of
the last brief.

Petitions for Review

The total number of petitions for review of Court of Appeal decisions

decreased slightly from 5,151 in 2008–09 to 5,131 in 2009–10. Petitions for
review in civil appeals totaled 1,225 in 2009–10, up from 1,081 in 2008–09.
An additional 323 civil writ petitions were filed in 2009–10, up from 239 in
2008–09. Petitions for review in criminal appeals were at 3,906 in 2009–10,
compared to 3,831 in 2008–09.

The Supreme Court granted only 86 (civil=45, criminal=41) petitions for

review for expected decision in 2009-10, down from 111 the previous year. It
also granted and held 44 petitions pending an expected decision in a lead case.
An additional 43 petitions were granted and immediately transferred back to a
Court of Appeal for further proceedings. Grants for all three reasons totaled
173, or 3 percent of petitions acted upon. As in prior years, there was a higher
percentage of grants in civil matters (5%) than in criminal matters (3%).

Original Proceedings

Civil original proceedings totaled 323, and criminal totaled 3,357, in 2009–
10. Habeas corpus petitions constitute the bulk of criminal writ petitions. With
the exception of habeas corpus petitions, most such writ petitions seek review
of interlocutory decisions of lower courts.

COURTS OF APPEAL

Established by a constitutional amendment in 1904, the Courts of Appeal are

California’s intermediate courts of review. California has six appellate
districts, each with at least one division. The six appellate districts are
composed of 19 divisions and 105 justices. District headquarters are: First
District, San Francisco; Second District, Los Angeles; Third District,
Sacramento; Fourth District Division One, San Diego; Fifth District, Fresno;
and Sixth District, San Jose. The Legislature has constitutional authority to
create new Court of Appeal districts and [29/30]divisions (Cal. Const., art. VI, §
3).

Membership, qualifications

Each district (or division, in the case of the Second and Fourth Districts) has
a presiding justice and two or more associate justices. The total number of
justices was 105 in 2009–10. Appellate justices are appointed by the Governor
and confirmed by the Commission on Judicial Appointments. The same rules
that govern the selection of Supreme Court justices apply to those serving on the
Courts of Appeal.

Jurisdiction

Courts of Appeal have appellate jurisdiction when superior courts have

original jurisdiction, and in certain other cases prescribed by statute. Like the
Supreme Court, they have original jurisdiction in habeas corpus, mandamus,
certiorari, and prohibition proceedings (Cal. Const., art. VI, § 10). There were
22,515 contested matters in the Courts of Appeal during the 2009–10 fiscal
year.

The Courts of Appeal also receive appeals (technically, writ proceedings)

from decisions of the Workers’ Compensation Appeals Board, the Agricultural
Relations Appeals Board, and the Public Employment Relations Board.

Cases are decided by three-judge panels. Decisions of the panels, known as

opinions, are published in the California Appellate Reports if those opinions
meet certain criteria for publication. In general, the opinion is published if it
establishes a new rule of law, involves a legal issue of continuing public
interest, criticizes existing law, or makes a significant contribution to legal
literature (Cal. Const., art. VI, § 14; Rules of Court, rule 8.1105(c)). During
fiscal year 2009–10, nine (9) percent of Court of Appeal opinions were
certified as meeting the criteria for publication, the same as in 2008–09.
 Business Transacted

A total of 22,515 records of appeal and original proceedings were filed in

the Courts of Appeal in 2009–10, down from 24,048 in 2008–09. Filings of
records of appeal increased slightly from 13,617 in 2008–09 to 13,738 in
2009–10. A total of 6,122 notices of appeal were filed in civil cases (4,539
records of appeal).

Total filings of original writ proceedings rose slightly to 8,707 cases in

2009-10. However, civil original writ proceedings dropped slightly to 2,017,
while criminal filings of original proceedings rose to 6,305. During the same
year, 1900 civil writ petitions were summarily denied, another 149 were
disposed of by written opinion.

Total dispositions decreased slightly from the previous year to 24,442 in

2009-10. Written opinions also decreased slightly to 10,270 cases (total
civil=3,056) in 2009–10.

Trial Court Affirmative Rate

Among cases disposed by written opinion, there was little change from the
previous year in the proportions of cases affirmed, reversed, and dismissed. As
i n [30/31]previous fiscal years, approximately 78% of civil appeals decided by
opinion, and 94 % of criminal appeals, were affirmed during 2009–10.

Opinions Certified for Publication

The publication rate of opinions remained stable at 9 percent in 2009–10.

The highest publication rate was for civil appeals (17%) and for original
proceedings (17%), then criminal (4%) and juvenile appeals (4%).

The courts apparently interpret the standards (rule 8.1105(c)) of the

California Rules of Court) for determining publishability somewhat differently.
The overall publication rate ranged from a low of 4 percent (Fifth District) to a
high of 10 percent (First, Third, and Sixth Districts).
 Case-Processing Time

Statewide, half of the civil appeals disposed of by opinion in 2009-10 took

more than 438 days from notice of appeal to decision. The outlook was
somewhat better for criminal appeals, for which the statewide median time from
filing of notice of appeal to decision was 400 days.

In both civil and criminal appeals, studies indicate that most case delay is
beyond an appellate court’s control. For example, appellate courts typically
must wait a significant amount of time for the trial court record to be completed.
The period from the filing of the record to the filing of the appellant’s and
respondent’s brief constitutes another large block of time. After the record and
briefs are filed, most Courts of Appeal decide cases quite promptly.

SUPERIOR COURTS

Membership, qualifications

The superior courts have 1,646 authorized judges and 376 commissioners and
referees. The California Legislature determines the number of judges in each
court. Superior court judges serve six year terms and are elected by county
voters on a nonpartisan ballot at a general election. Vacancies are filled through
appointment by the Governor. A superior court judge (with the exception of
former municipal court judges in recently unified courts) must have been an
attorney admitted to practice law in California or have served as a judge of a
court of record in this state for at least 10 years immediately preceding election
or appointment.

Jurisdiction

Superior courts now have trial jurisdiction over all criminal cases including
felonies, misdemeanors, and traffic matters. They also have jurisdiction over all
civil cases including family law, probate, juvenile, and general civil matters.
More than 10 million cases were filed in the trial courts at some 532 court
locations throughout the state during 2009–2010. Appeals in limited civil cases
(where $25,000 or less is at issue) and misdemeanors are heard by the appellate
division of the superior court. When a small claims case is appealed, a superior
court judge decides the case.

[31/32]

Business Transacted

Superior court filings fell slightly, from 10,255,360 in 2008-09 to 10,074,941

in 2009–10. There were 8,782,281 dispositions in 2009–10, up slightly from the
number in 2008–09. Dispositions by jury trials in civil and criminal cases
decreased from 12,521 in 2008–09 to 11,047 in 2009–10. Appeals filed with
the Appellate Division of the Superior Court in limited civil, misdemeanor, and
infraction cases totaled 5,013 in 2009–10; dispositions totaled 4,649during that
same period.

Civil Cases

Civil case filings decreased from 1,731,135 in 2008–09 to 1,647,817 during

2009–10. Of these, only 220,631 were unlimited civil cases, 720,308 were
limited civil cases, 452,671 were family law cases, 42,200 were probate cases,
and 211,987were small claims court cases. Civil dispositions totaled 1,113,606
including 195,335 unlimited civil cases. Only 1400 unlimited civil cases were
decided by jury trials, or less than one (1) percent of the total unlimited civil
case dispositions; there were another 190 jury trials in limited civil cases.
Sixty-six (66%) percent of all civil cases were dismissed before trial during
2009–10, including 4.3% for delay in prosecution.

Case-Processing Time

Civil case processing time improved slightly compared to previous years. In

2009–10, 72% of all unlimited civil cases were disposed of within 12 months,
87% within 18 months, and 93% within 24 months. Likewise, 88% of limited
civil cases were disposed of within 12 months, 97% within 18 months, and 99%
within 24 months. Criminal case processing time did not change significantly,
with 88 percent of all felonies being disposed of in less than 12 months.

COURT SYSTEM AGENCIES

 The Constitution also provides for agencies concerned with judicial
administration: Judicial Council Commission on Judicial Appointments,
Commission on Judicial Performance, and Habeas Corpus Resource Center.
Their duties are described below.

Judicial Council

Chaired by the Chief Justice, the Judicial Council is the governing body of the
California courts. The California Constitution directs the Judicial Council to
provide policy guidelines to the courts, make recommendations annually to the
Governor and Legislature, and adopt and revise California Rules of Court in the
areas of court administration, practice and procedure. The council performs its
constitutional and other functions with the support of its staff agency, the
Administrative Office of the Courts.

The 21 voting members of the Judicial Council consist of the Chief Justice,
one Associate Justice of the Supreme Court, 3 justices of the Courts of Appeal,
10 judges of the superior courts, 4 attorney members appointed by the State Bar
Board of Governors, and 1 member from each house of the Legislature. The
[32/33]Council also has approximately 11 advisory members, who include court
executives or administrators. The council performs most of its work through
internal committees and advisory committees and task forces.

Commission on Judicial Appointments

The Governor’s appointees to the Supreme Court and the Courts of Appeal
must be confirmed by the Commission on Judicial Appointments. No appellate
appointment is final until the commission has filed its approval with the
Secretary of State.

Commission on Judicial Performance

The California Constitution provides for a Commission on Judicial

Performance, which deals with the censure, removal, retirement, or private
admonishment of judges and commissioners for either misconduct or inability to
perform their duties on account of permanent disability. The commission has
authority to conduct proceedings against any California judge after it
investigates cases of willful misconduct in office, persistent failure or inability
to perform the duties of office, habitual intemperance, conduct prejudicial to the
administration of justice that may be detrimental to the judicial office itself, or a
disability of a permanent character that seriously interferes with performance of
duties.

Effective March 1, 1995, Proposition 190 authorized the commission to

remove, retire, or censure a judge. Automatic Supreme Court review was
eliminated, although the court is permitted discretionary review if it rules within
120 days.
[33/34]
Chapter 3

CONSIDERATIONS BEFORE UNDERTAKING

REPRESENTATION

§ 3.01 INTRODUCTORY NOTE ON PROFESSIONAL

RESPONSIBILITY ISSUES
In most significant civil litigation, critical decisions are made jointly by
clients in consultation with their lawyers. Thus, lawyers in their role as lawyers
are a worthy subject of inquiry in any civil procedure course. Lawyers in
California are governed by all the laws that apply to their clients and by special
professional obligations. These obligations are found principally in the State
Bar Act that is part of the Business and Professions Code and in the California
Rules of Professional Conduct. You have already or will soon study them in
detail in your Professional Responsibility course that you must take during law
school.

For purposes of our treatment here, we will explore some initial

considerations lawyers face in undertaking the representation of a civil litigant.
These considerations divide into two sets of obligations: (1) obligations
lawyers owe to clients; and (2) obligations lawyers owe to the courts, to
adversaries, and to third parties. We note at the outset that, absent special
considerations usually involving court appointments, lawyers have no obligation
to represent a client just because she walks into the lawyer’s office with money
to pay the lawyer’s fee. Indeed, sometimes lawyers’ best decisions are those
not to represent a client.

§ 3.02 LAWYERS’ DUTIES TO THEIR CLIENTS

Lawyers owe their clients duties of confidentiality, of loyalty, and of
competence.
 [A] The Duty of Confidentiality

You will already be familiar with the attorney-client privilege that is a part of
California’s Evidence Code. See Evid. Code §§ 950-962. Although the attorney-
client privilege protects clients and their lawyers from being forced to reveal
confidential communications through the coercion of legal process, lawyers
have an even broader obligation to protect confidential client information. This
duty of confidentiality is expressed in § 6068 of the California Business and
Professions Code. Prior to 2004, this statutory duty demanded absolute
confidentiality. However, pursuant to an amendment to § 6068 effective July 1,
2004, this duty is now slightly more limited in scope:

It is the duty of an attorney to do all of the following:

[34/35]

***

(e) (1) To maintain inviolate the confidence, and at every peril to himself or
herself to preserve the secrets, of his or her client.

(2) Notwithstanding paragraph (1), an attorney may, but is not required to,
reveal confidential information relating to the representation of a client to the
extent that the attorney reasonably believes the disclosure is necessary to
prevent a criminal act that the attorney reasonably believes is likely to result in
death of, or substantial bodily injury to, an individual.

Fred C. Zacharias, Privilege and Confidentiality in California, 28 U.C. Davis

L. Rev. 367, 369–71 (1995) [footnotes omitted].

Although lawyers often use “privilege” and “confidentiality”

interchangeably, courts and commentators usually have taken care to
distinguish the concepts. Privilege and confidentiality have the same roots.
Their shared goals include encouraging clients to rely upon attorneys,
enhancing lawyers’ ability to operate effectively in the adversary system,
fostering client dignity and autonomy, and enabling lawyers to find out
about and dissuade clients from engaging in misconduct. Traditionally,
courts have administered the privilege, while lawyer organizations have
 determined the scope of confidentiality. Concerned with ascertaining truth
and with the rights of adversaries, courts have construed privilege
“narrowly.” They have recognized the existence of numerous practical
exceptions. In contrast, lawyers and bar organizations have been more
interested in preserving attorney-client relationships. They have taken a
broad and rigid view of confidentiality’s scope.

California has codified these separate approaches. The California

Evidence Code notes the existence of attorney-client privilege, but
provides a laundry list of exceptions that courts administer. California’s
statutory attorney-client confidentiality rule — found in the Business and
Professions Code — is interpreted by local and state bar committee
opinions and enforced by a special Bar Court, rather than trial judges.
[Prior to 2004,] [t]he Business and Professions Code’s language
demand[ed] absolute confidentiality. * * *

NOTES AND QUESTIONS

(1) Prior to July 1, 2004, Bus. & Prof. Code § 6068(e) contained only the
language now set forth in subsection (e)(1), and therefore demanded absolute
confidentiality. See Zacharias, Privilege and Confidentiality in California,
supra at 371–72. What are the policy reasons for imposing such an absolute
duty of confidentiality on an attorney? Do you think the current version of §
6068(e), which now permits a qualified duty in limited circumstances, reflects a
better policy judgment? Why?

(2) Current § 6068(e)(2) permits, but does not require, an attorney to disclose
confidential client information when a client threatens to commit a criminal act
likely to result in death or substantial bodily harm. Why is this duty to disclose
[35/36]permissive? Under what circumstances might an attorney decide not to
disclose such information? Is a bright-line, mandatory disclosure requirement
preferable?

(3) If you reasonably believe that your client will commit a criminal act
likely to result in the death of a third party but decide pursuant to § 6068(e)(2)
not to reveal the client’s secret threat, does that mean you will be immune from
liability if sued for wrongful death by the family of the individual killed by your
client? See Tarasoff v. Regents of Univ. of California , 17 Cal. 3d 425, 131
Cal. Rptr. 14, 551 P.2d 334 (1976) (holding psychiatrist liable for not
disclosing patient’s threat to kill third party); but see Zacharias, Privilege and
Confidentiality in California, supra at 402–404 (noting that no American court
has extended Tarasoff liability to the lawyer context).

(4) California amended its Evidence Code in 1993 to eliminate the attorney-
client privilege when the lawyer reasonably believes disclosure of otherwise
confidential information is necessary to prevent a criminal act that the lawyer
reasonably believes is likely to result in death or substantial bodily harm to an
individual. Evid. Code § 956.5. With the 2004 amendment to Business and
Professions Code § 6068(e), and the subsequent adoption of Rule 3-100 of the
Rules of Professional Conduct further explaining the circumstances under which
disclosure of confidential information is permissible, California now joins the
vast majority of American jurisdictions which have recognized a confidentiality
exception to prevent serious bodily crime. See Fred C. Zacharias, Lawyers As
Gatekeepers, 41 San Diego L. Rev. 1387, 1398 (2004); John S. Dzienkowski,
Professional Responsibility Standards, Rules & Statutes , pp. 97–104 (2004-
2005).

[B] The Duty of Loyalty — Conflicts of Interest

California Rule of Professional Conduct 3-310(B) admonishes attorneys to

avoid the representation of “adverse interests,” which the Rule broadly defines
to encompass a wide variety of legal, business, financial, professional, or
personal relationships with a party, witness, or the subject matter of the
representation. The Rule directs attorneys to disclose such real or potential
conflicts, and to eliminate the conflict by refusing to represent one client or by
obtaining “informed written consent” of each client after disclosure. In Flatt v.
Superior Court, 9 Cal. 4th 275, 36 Cal. Rptr. 2d 537, 885 P.2d 950 (1994) , the
California Supreme Court discussed the different duties and standards
applicable when the conflict of interest involves simultaneous representation of
clients as opposed to successive representation of clients:

We granted review in this legal malpractice action to consider the

scope of an attorney’s duty to give advice when severing a relationship
with a new or prospective client after learning that the representation —
involving the filing of a lawsuit — would conflict irreconcilably with the
duty of loyalty owed to an existing client, the target of the contemplated
litigation. We conclude that the requirement of undivided loyalty to the first
client negates any duty on the part of the attorney to inform the second
client of the statute of limitations applicable to the proposed lawsuit or
even of the advisability of seeking alternative counsel, the two purported
advisory [36/37]duties that form the basis for this action for damages against
the attorney by the second client. * * *

The dispositive principle … can be derived from the well established

ethical stricture against attorney conflicts of interest embodied in rule 3-
310 of our Rules of Professional Conduct (hereafter Rule 3-310).
Subdivision (C)(2) of Rule 3-310 — and its counterparts in the Model
Code of Professional Responsibility and the Model Rules of Professional
Conduct, both promulgated by the American Bar Association (ABA) —
provides that an attorney “shall not … [¶] … [¶] [a]ccept or continue
representation of more than one client in a matter in which the interests of
the clients actually conflict ….”

The practical administration of the rule has not been confined to what
is perhaps the most egregious example of its violation — simultaneously
representing opposing parties in the same litigation. Rather, in parsing the
effect of the ethical principle against attorney client conflicts of interest in
a variety of settings, the courts have identified two separate interests
underlying the prohibition and formulated two distinct tests to determine
the circumstances in which each applies.

Where the potential conflict is one that arises from the successive
representation of clients with potentially adverse interests, the courts have
recognized that the chief fiduciary value jeopardized is that of client
confidentiality. Thus, where a former client seeks to have a previous
attorney disqualified from serving as counsel to a successive client in
litigation adverse to the interests of the first client, the governing test
requires that the client demonstrate a “substantial relationship” between
the subjects of the antecedent and current representations.

The “substantial relationship” test mediates between two interests that

are in tension in such a context — the freedom of the subsequent client to
counsel of choice, on the one hand, and the interest of the former client in
ensuring the permanent confidentiality of matters disclosed to the attorney
in the course of the prior representation, on the other. Where the requisite
substantial relationship between the subjects of the prior and the current
representations can be demonstrated, access to confidential information by
the attorney in the course of the first representation (relevant, by definition,
to the second representation) is presumed and disqualification of the
attorney’s representation of the second client is mandatory; indeed, the
disqualification extends vicariously to the entire firm. * * *

Both the interest implicated and the governing test are different,
however, where an attorney’s potentially conflicting representations are
simultaneous. In such a situation — perhaps the classic case involving an
attorney’s interests in conflict with those of the client — the courts have
discerned a distinctly separate professional value to be at risk by the
attorney’s adverse representations. The primary value at stake in cases of
simultaneous or dual representation is the attorney’s duty — and the
client’s legitimate expectation — of loyalty, rather than confidentiality.
And because the substantial relationship test is founded on the need to
protect [37/38]against the improper use of client secrets — a concern that
often is not implicated by the simultaneous representation of clients in
unrelated matters — and applies “where the representation of a former
client has been terminated and the parameters of such relationship …
fixed,” such a test “does not set a sufficiently high standard by which the
necessity for disqualification should be determined” in cases involving
dual representation.

In evaluating conflict claims in dual representation cases, the courts

have accordingly imposed a test that is more stringent than that of
demonstrating a substantial relationship between the subject matter of
successive representations.3 Even though the simultaneous representations
may have nothing in common, and there is no risk that confidences to
which counsel is a party in the one case have any relation to the other
matter, disqualification may nevertheless be required. Indeed, in all but a
few instances, the rule of disqualification in simultaneous representation
cases is a per se or “automatic” one. * * *

The reason for such a rule is evident, even (or perhaps especially) to
the nonattorney. A client who learns that his or her lawyer is also
representing a litigation adversary, even with respect to a matter wholly
unrelated to the one for which counsel was retained, cannot long be
expected to sustain the level of confidence and trust in counsel that is one
of the foundations of the professional relationship. All legal technicalities
aside, few if any clients would be willing to suffer the prospect of their
attorney continuing to represent them under such circumstances. As one
commentator on modern legal ethics has put it: “Something seems radically
out of place if a lawyer sues one of the lawyer’s own present clients in
 behalf of another client. Even if the representations have nothing to do with
each other, so that no confidential information is apparently jeopardized,
the client who is sued can obviously claim that the lawyer’s sense of
loyalty is askew.” (Wolfram, Modern Legal Ethics (1986 ed.) § 7.3.2, p.
350, italics added.) It is for that reason, and not out of concerns rooted in
the obligation of client confidentiality, that courts and ethical codes alike
prohibit an attorney from simultaneously representing two client
adversaries, even where the substance of the representations are
unrelated.4 * * *

[38/39]

Flatt, supra, 9 Cal. 4th at 278–79, 282–85.

California Rule of Professional Conduct 3-310(B) directs attorneys to

disclose such real or potential conflicts, and to eliminate the conflict by refusing
to represent one client or by obtaining “informed written consent” of each client
after disclosure. Under what circumstances might a client consent to an
attorney’s representation of conflicting interests? Are there some situations in
which the conflicts are such that written consent may not suffice? See Klemm v.
Superior Court, 75 Cal. App. 3d 893, 898, 142 Cal. Rptr. 509 (1977) (noting
that, as a matter of law, a purported consent to dual representation of litigants
with adverse interests at a contested hearing or trial was neither intelligent nor
informed); Blue Water Sunset, LLC v. Markowitz , 192 Cal. App. 4th 477, 122
Cal. Rptr. 3d 641 (2011) (disqualification was mandatory because attorney
simultaneously represented clients with adverse interests when he prepared
demurrer and other papers).

When a conflict of interest requires an attorney’s disqualification from a

matter, the disqualification normally extends vicariously to the attorney’s entire
law firm. See Flatt v. Superior Court, 9 Cal. 4th 275, 283, 36 Cal. Rptr. 2d
537, 885 P.2d 950 (1994) . In People v. Speedee Oil Change Systems, Inc., 20
Cal. 4th 1135, 86 Cal. Rptr. 2d 816, 980 P.2d 371 (1999) , the Supreme Court
applied the same disqualification rule when a party unknowingly consults an
attorney “of counsel” to the law firm representing the party’s adversary in the
subject of the consultation. The Speedee Oil opinion also contains a useful
general discussion of disqualification principles, and of the determination as to
whether an attorney-client relationship has reached a point where the attorney
can be subject to disqualification for a conflict of interest. See Speedee Oil,
supra, 20 Cal. 4th at 1147-1152 (observing that the primary concern is whether
and to what extent the attorney acquired confidential information). See also City
and County of San Francisco v. Cobra Solutions, Inc., 38 Cal. 4th 839, 43 Cal.
Rptr. 3d 771, 135 P.3d 20 (2006) (upholding disqualification of City Attorney
and his entire Office where City Attorney previously, while in private practice,
represented a client who is being sued by the city in a matter substantially
related to the prior representation).

Footnotes:

3 The paradigmatic instance of such prohibited dual representation — one roundly condemned by courts
and commentators alike — occurs where the attorney represents clients whose interests are directly
adverse in the same litigation. So patently improper is the spectacle of this sort of conflict that George
Sharswood, a justice of the Supreme Court of Pennsylvania and a 19th century writer on legal ethics, wrote
in 1854 that it “‘ought, like parricide in the Athenian law, to be passed over in silence in a code of
professional ethics.’” (Developments in the Law — Conflicts of Interest in the Legal Profession (1981)
94 Harv. L. Rev. at p. 1247.)

4 There are, of course, exceptions even to this rule. The principle of loyalty is for the client’s benefit;
most courts thus permit an attorney to continue the simultaneous representation of clients whose interests
are adverse as to unrelated matters provided full disclosure is made and both agree in writing to waive the
conflict. (See, e.g., Steinberg & Sharpe, Attorney Conflicts of Interest: The Need for a Coherent
Framework (1990) 66 Notre Dame L. Rev. 1, 3, fn. 7, and materials cited.) But this class of cases is a rare
circumstance, typically involving corporate clients, and overcoming the presumption of “prima facie
impropriety” is not easily accomplished. It is not, in any event, one that concerns us in this case, given Flatt’s
understandable decision not to represent Daniel in his contemplated lawsuit against Hinkle and his firm.
There was thus no occasion here for disclosure and client waiver of the conflict.

[C] Taking Cases You Are Competent to Handle

Rule 3-110(A) of the California Rules of Professional Conduct makes

incompetence the subject of discipline: “A member shall not intentionally,
recklessly, or repeatedly fail to perform legal services with competence.”

Subsection (B) defines “competence” to mean applying the “1) diligence, 2)

learning and skill, and 3) mental, emotional, and physical ability reasonably
necessary” to perform a legal service. Subsection (C) makes it possible for
lawyers — for example, lawyers recently out of law school — to gain the
necessary competence during representation:

If a member does not have sufficient learning and skill when the legal
 service is undertaken, the member may nonetheless perform such services
competently by 1) associating with or, where appropriate, professionally
[39/40]consulting another lawyer reasonably believed to be competent, or 2)
by acquiring sufficient learning and skill before performance is required.

The requirement that lawyers must “intentionally, recklessly, or repeatedly”

perform incompetently, limits the impact of this rule. Nevertheless, there are
instances of discipline as a result of repeated failures in a single case. See King
v. State Bar, 52 Cal. 3d 307, 276 Cal. Rptr. 176, 801 P.2d 419 (1990) (attorney
ordered suspended for multiple instances of misconduct in each of two cases);
In the matter of Broderick, 3 Cal. State Bar Ct. Rptr. 138, 154–55 (Review
Dept. 1994) (multiple instances of misconduct).

There is no doubt, however, that a single instance of incompetent

performance can subject a California lawyer to an action for malpractice by the
injured party. See Smith v. Lewis, 13 Cal. 3d 349, 118 Cal. Rptr. 621, 530 P.2d
589 (1975) (legal malpractice judgment against defendant attorney affirmed
where defendant, due to inadequate legal research, negligently failed to assert
his client’s community interest in her husband’s retirement benefits in prior
marriage dissolution proceeding in which defendant had represented the
plaintiff wife). In all aspects of his or her representation of a client, a lawyer
has a duty to use the skill, prudence, and diligence commonly possessed by
other lawyers in California. Failure to exercise this duty, if it injures the client,
gives rise to a claim for legal malpractice.

In most instances, it is the concern over a possible malpractice claim, not

discipline, that is likely to be foremost in a lawyer’s mind as she makes
decisions about the conduct of litigation. Although lawyers are not liable for
“mere errors in judgment” or “tactical decisions” during litigation, they are
liable for a failure to exercise a well-informed judgment or tactical decision.
Lawyers must know or look up settled principles of law using standard research
techniques and conduct reasonable factual investigations. In many ways, these
standards parallel those required to avoid sanctions for bringing frivolous
litigation. We now turn to that topic.

§ 3.03 AVOIDING MERITLESS LITIGATION

CROWLEY v. KATLEMAN
SUPREME COURT OF CALIFORNIA
 8 Cal. 4th 666, 34 Cal. Rptr. 2d 386, 881 P.2d 1083 (1994)

Mosk, Justice.

In Bertero v. National General Corp. (1974) 13 Cal. 3d 43 [118 Cal. Rptr.

184, 529 P.2d 608, 65 A.L.R.3d 878] (Bertero), we held that a suit for
malicious prosecution lies for bringing an action charging multiple grounds of
liability when some but not all of those grounds were asserted with malice and
without probable cause. In the case at bar we are called on to reconsider the
question. * * *

Arthur Crowley was Beldon Katleman’s best friend, next-door neighbor, and
attorney. In 1973 Beldon Katleman married Carole Katleman, a woman some 30
years his junior. After a brief marriage characterized by the probate court as
[40/41]“stormy,” he divorced her in 1975. Crowley represented Beldon Katleman
in the divorce proceedings, and as a result of that representation Carole
Katleman became extremely hostile towards Crowley.

On January 2, 1976, Beldon Katleman executed a will, naming Crowley as

executor. Crowley did not draft the will, nor did he participate in its drafting or
its formal execution. The will recited that Katleman was not married; that he had
an adult daughter by a prior marriage and two grandchildren by that daughter;
and that he had no siblings, but that his mother was still living. In the will
Katleman expressly declined to provide for his adult daughter and her issue.
Instead, he made a specific bequest to his mother’s longtime servant, and
disposed of the residue as follows: if his mother survived him the residue
would be held in trust for her benefit during her lifetime, and after her death
would be distributed to Crowley; if she did not survive him, he gave the residue
directly to Crowley. Crowley was named trustee. The will included a standard
no contest clause disinheriting any beneficiary or heir who contested it.

In 1980 Beldon married Carole Katleman for the second time; and although,
according to the probate court, “the second marriage also had its stormy
moments when he threatened to again divorce Mrs. Katleman,” they were still
married when he died on September 28, 1988. Beldon Katleman never revoked
his 1976 will, nor did he execute a subsequent will. Because Beldon
Katleman’s mother had died in 1982, Crowley became the principal
beneficiary.
 Shortly after Beldon Katleman’s death, Crowley offered Carole Katleman
one-half of her deceased husband’s estate. 3 She refused his offer, and instead
told third parties she would have Crowley disbarred and would “spend every
penny or dime” to make sure he received nothing from the estate. She also told
Crowley she was not aware of any will or codicil executed by Beldon Katleman
other than his 1976 will. A search for such a document turned up none.

On October 4, 1988, Crowley filed a petition to probate Beldon Katleman’s

will. The court appointed Crowley special administrator of the estate.

On October 28, 1988, Carole Katleman, represented by the defendant

attorneys, filed a will contest. As amended, the contest alleged in six separate
counts six grounds for invalidating the will, to wit, that (1) Crowley exerted
undue influence over Beldon Katleman; (2) Beldon Katleman revoked the will
by destroying it; (3) the will was not in fact his last will; (4) he lacked
testamentary capacity when he executed the will; (5) the will was not duly
executed; and (6) Crowley defrauded Beldon Katleman to induce him to make
the will. Carole Katleman then successfully petitioned the probate court to
remove Crowley as special administrator of the estate because of the pendency
of her will contest.

On December 6, 1989, the probate court granted Crowley’s motion for

summary adjudication of issues as to the ground of the will contest alleging lack
of due execution, declaring that the will had been properly executed and
witnessed. The court denied the motion as to the remaining grounds, ruling there
were triable issues of material fact as to each.

[41/42]

Shortly before trial of the will contest Crowley again offered Carole
Katleman one-half of the estate, but she again refused his offer.

After substantial discovery, the will contest was litigated in a trial lasting
almost three weeks. On August 3, 1990, the probate court ruled that none of the
six grounds alleged by Carole Katleman for invalidating the will was
meritorious. Rather, the court adjudged that the will was not the product of
either undue influence or fraud by Crowley, Beldon Katleman did not revoke the
will by destroying it, the will was his last will, he had testamentary capacity
when he executed the will, and the will was duly executed. The court therefore
ordered the will admitted to probate and appointed Crowley its executor.

Carole Katleman took an appeal from the judgment. On May 22, 1991,
however, she filed a voluntary dismissal of the appeal with prejudice. The
judgment thereby became a final decision on the merits in Crowley’s favor.

While the will contest was pending Carole Katleman also filed a claim for a
share of the estate as an omitted spouse. (Prob. Code, § 6560.) Crowley
opposed the claim on the ground, inter alia, that by filing the will contest Carole
Katleman triggered the no contest clause of the will and thus gave up her
omission rights. On August 12, 1991, the probate court ruled to the contrary as a
matter of law, concluded that Carole Katleman was an omitted spouse, and
awarded her the share prescribed by statute, i.e., all the community property and
one-half of Beldon Katleman’s separate property. ( Ibid.) In so ruling, however,
the court observed that “Carole’s will contest does indeed seem to be vindictive
…. But even if her attack was pure vengeance, and no matter whether Mr.
Crowley’s righteous outrage is justified, the enforcement of the no contest
clause is not a proper substitute for a malicious prosecution action for whatever
damages Mr. Crowley can prove.”

Some six weeks later Crowley filed the present action for malicious
prosecution against Carole Katleman and the attorney defendants. The first two
causes of action are against Carole Katleman. They allege that the will contest
terminated in Crowley’s favor and that Carole Katleman acted maliciously and
without probable cause in contesting the will on the grounds that (1) it was not
duly executed, (2) it was void for fraud, (3) Beldon Katleman lacked
testamentary capacity, (4) it was not his last will, and (5) Beldon Katleman
revoked the will by destroying it. It is further alleged that the will contest “was
not premised on an honest or good faith belief by [Carole Katleman] of the
merits of such claims, but was instead based upon her malicious, vindictive
hatred of [Crowley], to cause [him] to suffer emotional distress, to injure his
reputation, and her desire to assert as many claims as possible against him, out
of spite.” We observe that the first two causes of action allege that only five of
the six grounds of the will contest lacked probable cause; they are silent as to
the undue influence ground.

The third cause of action is against the attorney defendants. It alleges

generally that they instigated and continued the will contest maliciously and
without probable cause. Specifically, it alleges that the attorney defendants
knew, or should have known, there was no probable cause for contesting the
will on the grounds that (1) it was not duly executed, (2) it was not Beldon
Katleman’s last will, (3) it was void for fraud, and (4) Beldon Katleman lacked
testamentary capacity; it further asserts that no reasonable attorney would have
believed these grounds of the contest were [42/43]legally tenable. This cause of
action thus alleges that only four of the six grounds of the will contest lacked
probable cause, and is silent as to the undue influence and revocation grounds.

Carole Katleman and the attorney defendants (hereafter collectively

defendants) filed a general demurrer to the malicious prosecution complaint,
asking the court to take judicial notice of the probate proceedings. * * *

On January 28, 1992, the court sustained defendants’ demurrer without leave
to amend, but failed to clearly state its reasons. Although the code requires that
“the court shall include in its decision or order a statement of the specific
ground or grounds upon which the decision or order is based” (Code Civ. Proc.,
§ 472d), here the court recited only that it took judicial notice of the probate
proceedings and that it “bases its decision on Sheldon Appel Co. v. Albert &
Oliker, 47 Cal. 3d 863 [254 Cal. Rptr. 336, 765 P.2d 498] (1989) and
Freidberg v. Cox , 197 Cal. App. 3d 381 [242 Cal. Rptr. 851] (1987) .” The
court thereafter dismissed the malicious prosecution action in its entirety, and
Crowley took this appeal.

The Court of Appeal reversed the judgment “under compulsion” of Bertero,

supra, 13 Cal. 3d 43, 55–57. The court and defendants strongly criticized the
Bertero rule, however, and we granted review to consider their points.

“To establish a cause of action for the malicious prosecution of a civil

proceeding, a plaintiff must plead and prove that the prior action (1) was
commenced by or at the direction of the defendant and was pursued to a legal
termination in his, plaintiff’s, favor [citations]; (2) was brought without
probable cause [citations]; and (3) was initiated with malice [citations].”
(Bertero, supra, 13 Cal. 3d at p. 50.)

In the case at bar it is undisputed that the will contest was initiated by
defendants and that it terminated in a decision on the merits in Crowley’s favor
as to each ground of the contest. It is also undisputed that in charging each such
ground defendants acted with malice. The dispute relates to the third element of
the cause of action, i.e., lack of probable cause to bring the contest.

Because the case is before us on a demurrer, the issue is whether the

complaint properly pleads the element of probable cause. Specifically, the issue
is whether a malicious prosecution action for bringing a will contest on multiple
grounds may be maintained when the plaintiff does not allege that all the
grounds asserted in the contest lacked probable cause. In the case at bar, as
noted above, none of the three causes of action alleges that defendants lacked
probable cause for the undue influence ground.

As the Court of Appeal correctly observed, “This case is virtually identical

to Bertero.” In Bertero, supra, 13 Cal. 3d 43, the employee plaintiff (Bertero)
sued the defendant employers for breach of an employment contract. By way of
affirmative defenses the answer attacked the validity of the contract on three
grounds, alleging that Bertero (1) obtained the contract by duress, (2) obtained
the contract by undue influence, and (3) gave no consideration for the contract.
The defendants then filed a cross-complaint against Bertero to recover salary
already paid to him under the [43/44]contract, alleging the same three grounds of
invalidity as the answer. The matter was tried and Bertero prevailed in all
respects: the judgment declared the employment contract valid, awarded
Bertero damages for its breach, and dismissed the cross-complaint with
prejudice.

After the judgment was affirmed on appeal, Bertero filed another action
against the same defendants for malicious prosecution of their failed cross-
complaint, charging that all three grounds of the cross-complaint were malicious
and lacked probable cause. Again Bertero prevailed, and was awarded
additional damages. On appeal from that judgment the defendants challenged,
inter alia, an instruction that allowed the jury to find for Bertero even if only one
of the three theories of liability in the cross-complaint lacked probable cause.
Affirming the judgment with a minor modification, this court held the instruction
correct. (13 Cal. 3d at pp. 55–57.)

We began by reviewing the dual harms to society and to the individual that
the cause of action for malicious prosecution is designed to redress: “The
malicious commencement of a civil proceeding is actionable because it harms
the individual against whom the claim is made, and also because it threatens the
efficient administration of justice.” (Bertero, supra, 13 Cal. 3d at p. 50.) * * *

As noted above, defendants in the case at bar … contend there was probable
cause for the undue influence ground of the will contest because the court trying
the contest found that the confidential relationship between Crowley and Beldon
Katleman had given rise to a presumption of such influence. Again we rejected
an identical contention in Bertero: “Our conclusion that an action for malicious
prosecution lies when but one of alternate theories of recovery is maliciously
asserted disposes of a further contention of [the defendants in Bertero]. They
argue a statutory presumption of a lack of consideration and undue influence
[citation] in the creation of the employment contract in favor of Bertero. Their
theories of recovery in their cross-pleading, however, encompassed duress as
well. Whatever the merits of the claimed presumptions, and we do not reach that
issue, the cause of action for malicious prosecution could be predicated on
maliciously asserted charges that Bertero exercised duress in obtaining the
employment contract.” (13 Cal. 3d at p. 57, fn. 5.)

Nor could defendants herein contend they were compelled to assert all the
statutory grounds for a will contest under pain of being deemed to have waived
them: as we said in rejecting a similar argument in Bertero, “A litigant is never
compelled to file a malicious and fabricated action. It is not the assertion of a
claim that is actionable but rather the malicious character of the assertion.” (13
Cal. 3d at p. 52.)

For all these reasons the Court of Appeal was correct in concluding that “The
holding in Bertero is controlling.” Under the rule of that decision, the complaint
in the case at bar states a cause of action for malicious prosecution even though
it does not allege that every one of the grounds asserted in the will contest
lacked probable cause. * * *

[44/45]

II

Unable to distinguish Bertero, defendants ask us to overrule it. * * *

Defendants … contend that we should abandon the rule of Bertero, supra, 13
Cal. 3d 43, and replace it with a new rule based on the “primary right” theory.
To understand this contention it will be helpful to briefly review the main points
of the primary right theory.

The primary right theory is a theory of code pleading that has long been
followed in California. It provides that 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. The most
salient characteristic of a primary right is that it is indivisible: the violation of a
single primary right gives rise to but a single cause of action. (Slater v.
Blackwood (1975) 15 Cal. 3d 791, 795 [126 Cal. Rptr. 225, 543 P.2d 593] .) A
pleading that states the violation of one primary right in two causes of action
contravenes the rule against “splitting” a cause of action.

As far as its content is concerned, the primary right is simply the plaintiff’s
right to be free from the particular injury suffered. (Slater v. Blackwood, supra,
15 Cal. 3d 791, 795.) It must therefore be distinguished from the legal theory on
which liability for that injury is premised: “Even where there are multiple legal
theories upon which recovery might be predicated, one injury gives rise to only
one claim for relief.” (Ibid.) The primary right must also be distinguished from
the remedy sought: “The violation of one primary right constitutes a single cause
of action, though it may entitle the injured party to many forms of relief, and the
relief is not to be confounded with the cause of action, one not being
determinative of the other.”

***

[I]n their opening brief in this court defendants … argue that (1) although the
cause of action in the prior proceeding stated multiple grounds or theories of
liability, it must nevertheless have been premised on the violation of a single
primary right, and therefore, (2) if there was probable cause to assert the
violation of that primary right on any one theory of liability, such probable
cause is sufficient to defeat a malicious prosecution claim even if the other
theories of liability lacked probable cause.

The reasoning is flawed by a non sequitur. It is true that under the primary
right theory a properly pleaded cause of action must be premised on a single
primary right even though it states multiple grounds of liability. But it does not
follow from the primary right theory that probable cause to assert that cause of
action on one ground of liability defeats a malicious prosecution claim when the
other grounds lacked probable cause. Whether such “partial probable cause” is
sufficient for this purpose, as we shall see, is a question of policy under the
substantive law of malicious prosecution; the primary right theory of pleading
simply does not address the matter.11 * * *

[45/46]

Finally, defendants criticize the rule of Bertero, supra, 13 Cal. 3d 43, on

various grounds. They make essentially five arguments, adopting in large part
the views of the Court of Appeal herein, but none is persuasive.

1. Defendants’ main objection is that the Bertero rule is assertedly

incompatible with “the fundamental interest which the malicious prosecution
tort is designed to protect — ‘the interest in freedom from unjustifiable and
unreasonable litigation’” (Sheldon Appel [Co. v. Albert & Oliker (1989) 47
Cal. 3d 863, at p. 882 [254 Cal. Rptr. 336, 765 P.2d 498] ). Defendants argue
that when there is probable cause for at least one of the theories of liability
asserted in the prior action, the defendant has to defend against that theory in any
event and hence the “litigation” is not unjustifiable and unreasonable. Of course,
the defendant also has to defend against the theories of liability asserted in the
prior action without probable cause, but defendants dismiss that fact with the
explanation that in so doing the defendant “has simply been required to respond
to additional allegations and arguments directed at a single prior right.”

The explanation, however, begs the question. By defining the “litigation” in

issue as the prior action per se rather than each theory of liability litigated,
defendants assume the point to be proved. It is true that such a defendant must in
any event defend against the one valid theory of liability; but the defendant’s
obligation also to defend against the invalid theories of liability may well be so
burdensome — as the complaint alleges in the case at bar — that it amounts to
an impairment of the defendant’s interest in freedom from unjustifiable and
unreasonable litigation. Whether this is so is a question to be answered, again,
not by the primary right theory but by the substantive law of malicious
prosecution.

2. Next, defendants contend in effect that the Bertero rule is no longer

necessary because the trial court now has statutory powers to deal with
frivolous or delaying conduct that it lacked in 1974 when Bertero was decided
and that provide a remedy superior to the cause of action for malicious
prosecution in these circumstances. For this proposition defendants rely on a
passage in Sheldon Appel in which we took note of legislative measures
designed “to facilitate the early weeding out of patently meritless claims and to
permit the imposition of sanctions in the initial lawsuit — against both litigants
and attorneys — for frivolous or delaying conduct.” (47 Cal. 3d at pp. 873–
874.) Among the statutes cited in Sheldon Appel defendants particularly stress
Code of Civil Procedure section 128.5, enacted in 1981 (hereafter section
128.5). That statute authorizes trial courts to award certain expenses, including
attorney fees, resulting from “bad-faith actions or tactics that are frivolous or
solely intended to cause unnecessary delay.” (Id., subd. (a).) It is true that
“actions or tactics” are defined to include, as an example, “the filing and
service of a complaint” [46/47](id., subd. (b)(1)), but it does not follow that the
Legislature intended to substitute this remedy for the cause of action for
malicious prosecution, less still to overrule Bertero.

The legislative history shows that the Legislature’s intent was far more
modest. [When the Legislature revised section 128.5 in 1988, it] added an
express declaration (now section 128.5, subdivision (e)) that “The liability
imposed by this section is in addition to any other liability imposed by law for
acts or omissions within the purview of this section.” (Italics added.) This
declaration has been correctly cited for the proposition that “The purpose of the
section was to broaden the authority of the courts to manage their calendars
expeditiously; the section was not intended as a substitute for substantive causes
of action arising out of the underlying facts.” (Brewster v. Southern Pacific
Transportation Co. (1991) 235 Cal. App. 3d 701, 711 [1 Cal. Rptr. 2d 89] , fn.
omitted.) Among those substantive causes of action is, properly circumscribed,
the action for malicious prosecution.

There is still another reason to conclude that the Legislature did not intend
either to substitute section 128.5 for the cause of action for malicious
prosecution or to overrule Bertero: the remedies are not coextensive. Section
128.5 allows compensation only for out-of-pocket litigation costs, including
attorney fees, that directly result from the objectionable conduct; the relief
cannot include consequential damages. (Brewster v. Southern Pacific
Transportation Co., supra, 235 Cal. App. 3d at pp. 710-712.) By contrast,
Bertero stressed that a plaintiff who pleads and proves a case of malicious
prosecution may recover not only litigation costs and attorney fees but also
“compensation for injury to his reputation or impairment of his social and
business standing in the community [citations], and for mental or emotional
distress [citation].” (13 Cal. 3d at p. 51, fn. omitted.) In appropriate cases such
compensation can be well justified and significant in amount12

For all these reasons, section 128.5 and the cause of action for malicious
prosecution provide distinct remedies that are at most alternatives to each other:
as explained in the companion case of Estate of Katleman, supra, 13 Cal. App.
4th 51, 67, echoing the view of the trial court herein, “an adequate remedy for a
frivolous or vindictive will contest is available in the form of an action for
malicious prosecution.” In a footnote at this point the Court of Appeal
continued: “Alternatively, the trial court might have made an award of sanctions
against Carole [Katleman] if it found her action to be in bad faith. (Code Civ.
Proc., § 128.5; Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal. 3d 863,
873–874.) Additional remedies are unnecessary and inappropriate.” (13 Cal.
App. 4th at p. 67, fn. 8, italics added.)

3. Defendants also charge that under the Bertero rule the apportionment of
damages between the theories of liability that are and are not supported by
probable cause is difficult and “highly speculative.” There is no showing,
however, that juries cannot perform that task fairly and consistently if they are
properly instructed — they draw more subtle distinctions every day. Moreover,
any difficulty in this regard is chargeable to the tortfeasor. * * *

[47/48]

4. Defendants next adopt the complaint of the Court of Appeal herein to the
effect that the Bertero rule is assertedly incompatible with the modern practice
of pleading “inconsistent counts” — i.e., alternative factual or legal theories —
when the pleader is in doubt as to which theory most accurately reflects the
events and can be established by the evidence. (See, e.g., Grudt v. City of Los
Angeles (1970) 2 Cal. 3d 575, 586 [86 Cal. Rptr. 465, 468 P.2d 825], and cases
cited.) The concern is unfounded. Bertero was not meant to discourage that
practice, and we are not aware that it has had any such effect during the past 20
years. Certainly defendants make no such showing. As noted above, the Bertero
rule requires only that the plaintiff refrain from asserting or pursuing such
theories if they lack probable cause and are motivated by malice. (13 Cal. 3d at
p. 57.) The plaintiff remains free to allege any and all “inconsistent counts” that
a reasonable attorney would find legally tenable on the basis of the facts known
to the plaintiff at the time. (See Sheldon Appel, supra, 47 Cal. 3d at pp. 878,
885–886.)
 5. Lastly, defendants contend the Bertero rule is “particularly inappropriate”
in a will contest. [The Court rejects this argument, ruling that a will] contest
satisfies the requirement of a “prior action … commenced by or at the direction
of the defendant ….” (Bertero, supra, 13 Cal. 3d at p. 50.) No less than the
abusive cross-complaint asserted in Bertero, “When such action is prompted by
malice and is not based on probable cause, it is actionable as in the case of
other affirmative, malicious prosecutions.” (Id. at p. 53.) The case at bar is by
no means the first instance of a malpractice action premised on such a will
contest.

III

“The elements of the common law malicious-prosecution cause of action have

evolved over time as an appropriate accommodation between the freedom of an
individual to seek redress in the courts and the interest of a potential defendant
in being free from unjustified litigation.” (Oren Royal Oaks Venture v.
Greenberg, Bernhard, Weiss & Karma, Inc. (1986) 42 Cal. 3d 1157, 1169
[232 Cal. Rptr. 567, 728 P.2d 1202] .) When the prior action charged multiple
grounds of liability and there was probable cause for some grounds but not for
others, the question arises whether the malicious prosecution plaintiff has
satisfied the requirement of showing that the prior action was brought without
probable cause. We have seen that neither the statutes enacted nor the cases
decided since Bertero, supra, 13 Cal. 3d 43, satisfactorily answer this question.
Instead the solution lies in identifying the competing policies at work and in
determining which preponderates when applied in the circumstances of the case
at bar.

Defendants identify the two main policies that are served by the remedy of
imposing sanctions for frivolous or delaying conduct in the original action
(hereafter the sanctions remedy): (1) it encourages free access to the courts for
the settlement of disputes, and (2) it avoids burdening the judicial system by
additional litigation. (See Sheldon Appel, supra, 47 Cal. 3d at pp. 872–873.)

As explained in Bertero, the cause of action for malicious prosecution

(hereafter the tort remedy) is likewise intended to redress two kinds of harm.
(1) The individual who is sued “is harmed because he is compelled to defend
against a fabricated claim which not only subjects him to the panoply of
psychological [48/49]pressures most civil defendants suffer, but also to the
additional stress of attempting to resist a suit commenced out of spite or ill will,
often magnified by slanderous allegations in the pleadings.” (13 Cal. 3d at pp.
50–51.) And (2) “The judicial process is adversely affected by a maliciously
prosecuted cause not only by the clogging of already crowded dockets, but by
the unscrupulous use of the courts by individuals ‘… as instruments with which
to maliciously injure their fellow men.’” (Id. at p. 51, italics added.)

We begin with the second pair of policies served by these remedies: each
seeks to avoid burdening the judicial system by additional litigation. Does one
outweigh the other? Defendants assert that the judicial burden caused by a
subsequent malicious prosecution action is greater than the burden of defending
against groundless theories of recovery in the original action. In some cases this
may be true; but in other cases — and we must accept the complaint’s
allegations that this is such a case — to mount a defense against multiple
baseless and malicious grounds may well be no less onerous than to mount a
defense against separate causes of action. This is because the burden of
litigating such grounds depends on such diverse factors as how many grounds
are asserted, how different are the facts that must be proved to support and
defeat them, how extensive is the discovery necessary to develop those facts,
how many witnesses and documents are required to make that proof — even,
indeed, how thoroughly the parties prepare their case and how vigorously they
present and oppose it at trial. In light of these variables the most we can fairly
say is that the two “judicial burden” policies tend to equalize in the balance,
i.e., that the judicial cost of a subsequent malicious prosecution action is not
necessarily greater than that of defending against multiple baseless and
malicious grounds in the original action.

We are therefore remitted to comparing the first pair of policies stated above:
we must decide which weighs more in this context — (1) the policy of
encouraging free access to the courts, served by the sanctions remedy, or (2) the
policy of redressing the harm suffered by individuals compelled to defend
against unjustifiable litigation, served by the tort remedy.

It is true that untrammeled access to the courts promotes social peace by

providing the citizenry with an alternative to potentially dangerous self-help
methods of redressing private grievances. But it is not an unmixed blessing:
many of our courts are burdened by overcrowded dockets and long delays, and
all litigation exacts both public and private costs. We are willing as a society to
incur those burdens and costs when the litigation is well founded or, even when
ultimately unsuccessful, was at least initiated with probable cause and without
malice. In those circumstances the balance tips in favor of the policy of
encouraging judicial access. That policy becomes counterproductive, however,
when it operates to promote litigation that is groundless and motivated by
malice; such litigation has no place in our judicial system, and we are therefore
unwilling to bear its costs.

After careful consideration, we see no reason to reach a different result when

the litigation in question is the assertion of baseless and malicious grounds of
liability in a single lawsuit: in both instances the balance tips in favor of the
policy of making whole the individuals harmed by such abuse of our courts. * *
*

For all these reasons we reaffirm the rule of Bertero, supra, 13 Cal. 3d 43,
as the [49/50]law governing the issue presented by this case.

The judgment of the Court of Appeal is affirmed.

Arabian, Justice, Dissenting.

A wealthy businessman, with a net worth estimated at $10 million, dies.

Instead of leaving his estate — or any part of it — to his wife, as might be
expected, his will directs that the entire fortune go to his lawyer, a man who
happens to be his neighbor and, we are told, best friend. Can any sensible
person doubt that, whatever the testator’s intent, these facts are a compelling
blueprint for a will contest? And if the circumstances suggest that the aggrieved
widow is likely to file a lawsuit attacking the validity of the will, is it any
surprise that her conscientious lawyers will feel bound to allege every
alternative theory supporting the claim that there was wrongdoing behind the
testamentary disposition of her husband’s millions?

I take these propositions to be self-evident. Yet the majority would permit the
beneficiary of this most peculiar will to sue the widow and her lawyers for tort
damages if any one of the several theories alleged in her will contest petition is
rejected as lacking probable cause. I cannot join in a holding that not only
perpetuates dubious law for no better reason than that it exists, but is blind to
realities of contemporary litigation practice that should impel the court to the
opposite result. * * *

A malicious prosecution suit imposes substantial litigation costs on both the

litigants and the courts — not least because malice is such a highly factual issue
that it often precludes summary disposition. It is for these reasons, among
others, that we have made it clear that the policies controlling the availability of
the malicious prosecution tort action transcend the interest in protecting the
defendant in the prior lawsuit from having to defend against spurious claims and
make it a “disfavored” cause of action that is “carefully circumscribed.” In light
of these concerns, I would not only reconsider the correctness of our holding in
Bertero v. National General Corp. (1974) 13 Cal. 3d 43 [118 Cal. Rptr. 184,
529 P.2d 608, 65 A.L.R.3d 878] (Bertero), but would hold that where, as here,
alternative theories of liability in support of a single unitary right are alleged
by the plaintiff in the complaint in the first action and one of them is determined
to have been supported by probable cause, the defendant in the first action may
not pursue a derivative malicious prosecution claim. Instead, the defendant must
rely on those sanctions for plaintiff’s misconduct made available by statute in
the original action. Such a result, of course, would require us to overrule our
contrary holding in Bertero. * * *

NOTES AND QUESTIONS ON FRIVOLOUS LITIGATION

(1) Malicious Prosecution. Although you are possibly familiar with the tort
action for malicious prosecution that is the primary subject of Crowley v.
Katleman, reproduced supra, it is probably the least efficient deterrent to
frivolous litigation. In order to recover damages for malicious prosecution, the
“victim” of such litigation must commence and successfully litigate another
entire action, must avoid the defenses the Crowley court notes, and must then
collect the judgment. This is [50/51]expensive and time-consuming for the victim
and of no real value for frivolous litigation’s other victim, the courts, which
must expend even more time and resources and endure not less, but more,
litigation. Other alternatives are available that are more summary in character
and perhaps just as effective.

( a ) Probable Cause. One of the elements of an action for malicious

prosecution is the absence of probable cause for bringing the prior action. In
Sheldon Appel Co. v. Albert & Oliker, 47 Cal. 3d 863, 254 Cal. Rptr. 336, 765
P.2d 498 (1989) , the California Supreme Court addressed the probable cause
element of malicious prosecution and held (1) the existence or nonexistence of
probable cause is a legal question to be resolved by the court in the malicious
prosecution case, (2) probable cause is to be determined objectively without
reference to whether the attorney bringing the prior action believed the case was
tenable, and (3) probable cause exists if “any reasonable attorney would have
thought the claim tenable.” Sheldon Appel, supra, 47 Cal. 3d at 886.

Applying these standards in Wilson v. Parker, Covert & Chidester , 28 Cal.

4th 811, 123 Cal. Rptr. 2d 19, 50 P.3d 733 (2002) , the Supreme Court observed
that denial of a defense summary judgment motion on grounds that a triable issue
exists, rather than on procedural or technical grounds, or of a nonsuit,
demonstrates the existence of probable cause. “Because malicious prosecution
suits have the potential to penalize and deter the legitimate invocation of the
judicial process for redress of grievances,” the Wilson court noted, “only
claims that a reasonable litigant or attorney would have seen as lacking all merit
should form the basis for such a suit.” Wilson, supra, 28 Cal. 4th at 817–818.
“Denial of a defense summary judgment motion,” the court reasoned,
“establishes that the plaintiff has substantiated, or can substantiate, the elements
of his or her cause of action with evidence that, if believed, would justify a
favorable verdict.” Id. at 824.

May an attorney be held liable for malicious prosecution when he commences

a lawsuit properly but then continues to prosecute it after learning it is not
supported by probable cause? See Zamos v. Stroud, 32 Cal. 4th 958, 12 Cal.
Rptr. 3d 54, 87 P.3d 802 (2004).

( b ) Favorable Determination. Still other recent cases have focused on

whether the malicious prosecution plaintiff obtained an entirely favorable
determination on the merits of the prior action. See e.g., Casa Herrera, Inc. v.
Beydoun, 32 Cal. 4th 336, 9 Cal. Rptr. 3d 97, 83 P.3d 497 (Cal. 2004)
(termination of prior breach of contract action based on parol evidence rule
satisfied favorable termination element); Ferreira v. Gray, Cary, Ware &
Freidenrich, 87 Cal. App. 4th 409, 104 Cal. Rptr. 2d 683 (2001) (where the
prior litigation was concluded by a settlement after trial on the merits, there is
no favorable termination for purposes of pursuing a subsequent malicious
prosecution action); Dalany v. American Pac. Holding Corp., 42 Cal. App. 4th
822, 50 Cal. Rptr. 2d 13 (1996) (a stipulated judgment in an earlier action did
not constitute a favorable determination on the merits for purposes of the instant
malicious prosecution action); Eells v. Rosenblum, 36 Cal. App. 4th 1848, 43
Cal. Rptr. 2d 323 (1995) (plaintiff failed to demonstrate the favorable
determination element of a malicious prosecution cause of action, where the
earlier action was voluntarily dismissed based on a procedural or jurisdictional
defect).

[51/52]
 In Siebel v. Mittlesteadt, 41 Cal. 4th 735, 62 Cal. Rptr. 3d 155, 161 P.3d 527
(2007), the Supreme Court distinguished Ferreira v. Gray, Cary, Ware &
Freidenrich, supra, and held that a postjudgment settlement constitutes a
favorable termination of a lawsuit for a subsequent malicious prosecution action
when the malicious prosecution plaintiff received a favorable judgment in the
underlying action, and settled without giving up any portion of the judgment in
his favor. The court contrasted such a postjudgment settlement with a pretrial
settlement that obviates an adjudicated judgment on the merits, and therefore
generally is not a favorable termination because there is nothing to reflect the
malicious prosecution plaintiff’s innocence on the merits.

In Brennan v. Tremco Inc. , 25 Cal. 4th 310, 105 Cal. Rptr. 2d 790, 20 P.3d
1086 (2001), the Supreme Court addressed the question of whether a person
may sue for the malicious prosecution of an action that the parties resolved
through contractual arbitration. Clearly concerned about the proliferation of
malicious prosecution actions, the Brennan court concluded that whether the
underlying action started in court or in arbitration, an action terminated in
contractual arbitration will not support a malicious prosecution action against
parties to the arbitration or their attorneys.

(2) Lawyer Discipline. One of the alternatives methods to deter frivolous

litigation is lawyer discipline. Among the duties of an attorney according to
section 6068(c) of the California Business and Professions Code is “To counsel
or maintain such actions, proceedings, or defenses only as appear to him or her
legal or just ….” Subsection (g) also counsels California lawyers: “Not to
encourage either the commencement or the continuance of an action or
proceeding from any corrupt motive of passion or interest.” More recently, Rule
3-200 of the California Rules of Professional Conduct provides that a member
of the California bar should not seek, accept or continue employment if he or she
knows or should know that the client’s objective is:

(A) To bring an action, conduct a defense, assert a position in

litigation, or take an appeal without probable cause and for the purpose of
harassing or maliciously injuring any person; or

(B) To present a claim or defense in litigation that is not warranted

under existing law, unless it can be supported by a good faith argument for
an extension, modification, or reversal of such existing law.
 Violations of any one of these sections may result in discipline by the
California State Bar. Disciplinary sanctions range from private reprovals
(usually a private letter telling the lawyer what he did was wrong and not to do
it again) through suspension and disbarment. See Business & Professions Code
§ 6078. While discipline helps the systemic interest in remedying and
discouraging meritless litigation, and does so with a minimum of judicial
involvement — it is handled by the State Bar unless the affected lawyer
challenges the action and seeks review by the California Supreme Court — it
does not provide much tangible compensation for the parties injured by the
meritless litigation. The same is generally true of other sanction provisions.
They are directed at the misbehaving lawyer, but are not intended to secure
compensation. Examples include contempt proceedings — any monetary
sanction is payable to the court — monetary sanctions payable to the
[52/53]county in which the court sits for violation of a lawful court order (CCP §
177.5), and sanctions for a frivolous appeal (CCP § 907).

Obviously, both traditional avenues for addressing meritless litigation have

serious flaws. They are either consuming of the time of both courts and litigants
(malicious prosecution) or relatively efficient, but without adequate
compensatory mechanisms (discipline). In recent years, the courts and
legislature have searched for a third alternative that would combine the best
elements of both avenues. Currently, California has launched an experiment that
copies federal practice under Rule 11 in the hope of finding the elusive golden
mean.

(3) Section 128.5 sanctions and new section 128.7. As Crowley mentions, in
1981 the Legislature enacted Code of Civil Procedure section 128.5. This
section authorizes trial courts to “order a party, the party’s attorney, or both to
pay any reasonable expenses, including attorney’s fees, incurred by another
party as a result of bad faith actions or tactics that are frivolous or solely
intended to cause unnecessary delay.” CCP § 128.5(a) [emphasis added]. The
section has had much less impact than the 1983-93 version of federal Rule 11.
To be considered frivolous, a bad faith action or tactic had to be “(A) totally
and completely without merit or (B) for the sole purpose of harassing an
opposing party.” § 128.5(b)(2). In addition, the California appellate courts have
divided on the question of whether subjective bad faith is required in order to
impose sanctions. Recent authority has been more supportive of a requirement
that the action both lack any merit and have been brought for an improper
purpose. See; Levy v. Blum, 92 Cal. App. 4th 625, 112 Cal. Rptr. 2d 144
(2001); Javor v. Dellinger, 2 Cal. App. 4th 1258, 3 Cal. Rptr. 2d 662 (1992).

As a result of these limitations, in 1994 the Legislature added a new section

128.7 to the Code of Civil Procedure, applicable to pleadings and motions filed
after January 1, 1995. Section 128.7 is patterned directly on Federal Rule of
Civil Procedure 11, as amended in 1993. The section requires that “[e]very
pleading, petition, written notice of motion, or other similar paper shall be
signed by at least one attorney of record in the attorney’s individual name” or by
a party not represented by an attorney. CCP § 128.7(a). The heart of the section,
§ 128.7(b), imposes on the attorney or party a series of “certifications” any time
the attorney or party makes a “presentation” to the court:

(b) By presenting to the court, whether by signing, filing, submitting,

or later advocating, a pleading, petition, written notice of motion, or other
similar paper, an attorney or unrepresented party is certifying that to the
best of the person’s knowledge, information, and belief, formed after an
inquiry reasonable under the circumstances, all of the following conditions
are met:

(1) It is not being presented primarily for an improper purpose, such

as to harass or to cause unnecessary delay or needless increase in the cost
of litigation.

(2) The claims, defenses, and other legal contentions therein are
warranted by existing law or by a nonfrivolous argument for the extension,
modification, or reversal of existing law or the establishment of new law.

[53/54]

(3) The allegations and other factual contentions have evidentiary

support or, if specifically so identified, are likely to have evidentiary
support after a reasonable opportunity for further investigation or
discovery.

(4) The denials of factual contentions are warranted on the evidence

or, if specifically so identified, are reasonably based on a lack of
information or belief.
 Like the current version of federal Rule 11, sanctions are discretionary with
the court, not mandatory upon finding a violation of one of the certifications.
Also like Rule 11, there is a “safe harbor” provision. A party served with a
motion for section 128.7 sanctions ordinarily has 21 days in which to withdraw
or correct the challenged paper before the motion is filed. § 128.7(c)(1).
Sanctions are “limited to what is sufficient to deter” repetition of the conduct.
Paying the injured party’s attorneys fees as a sanction is limited to specified
circumstances and when “warranted for effective deterrence.” § 128.7(d).
Under section 128.7(d) sanctions may be made payable to the court. See Kane v.
Hurley, 30 Cal. App. 4th 859, 35 Cal. Rptr. 2d 809 (1994) , and Levy v. Blum,
supra, 92 Cal. App. 4th at 635–638, for thorough discussions of this issue and
sections 128.5 and 128.7 generally; and Marriage of Schnabel, 30 Cal. App.
4th 747, 36 Cal. Rptr. 2d 682 (1994), for a discussion of the imposition of
sanctions, pursuant to CCP § 907, for a frivolous appeal.

( 4 ) Voluntary Dismissal to Avoid Section 128.7 Sanctions . The “safe

harbor” provision of CCP § 128.7(c)(1) requires that the party seeking sanctions
follow a two-step procedure. First, the party must serve a notice of motion for
sanctions on the offending party at least 21 days before filing the motion with the
court, which specifically describes the sanctionable conduct. Service of the
motion on the offending party begins a 21-day safe harbor period during which
the sanctions motion may not be filed with the court. If the pleading is
withdrawn, the motion for sanctions may not be filed with the court. If the
pleading is not withdrawn, the motion for sanctions may then be filed. See Levy
v. Blum, 92 Cal. App. 4th 625, 637, 112 Cal. Rptr. 2d 144 (2001).

If a plaintiff’s complaint is dismissed during the 21-day safe harbor period,

either voluntarily or involuntarily, the trial court no longer has the authority to
award sanctions under § 128.7(c)(1). See, e.g., Hart v. Avetoom, 95 Cal. App.
4th 410, 115 Cal. Rptr. 2d 511 (2002) ; Malovec v. Hamrell , 70 Cal. App. 4th
434, 82 Cal. Rptr. 2d 712 (1999). The Hart court observed that allowing a
party to serve and file a sanctions motion after the conclusion of the case would
completely defeat the purpose of the safe harbor provision. How so? What is the
purpose of the safe harbor provision? Does the trial court still have the authority
to award sanctions under § 128.7(c)(1) when the offending pleading or motion
is resolved by the trial court before the full 21-day safe harbor period has
expired? See Li v. Majestic Industry Hills LLC, 177 Cal. App. 4th 585, 99 Cal.
Rptr. 3d 334 (2009) (collecting cases indicating an award of sanctions in such
circumstances is improper); Banks v. Hathaway, Perrett, Webster, Powers &
Chrisman, 97 Cal. App. 4th 949, 118 Cal. Rptr. 2d 803 (2002) (an order
sustaining a demurrer without leave to amend does not bar a motion for § 128.7
sanctions unless the order is reduced to a judgment before the sanctions motion
is served and filed).

[54/55]

Does a plaintiff’s voluntary dismissal of his action with prejudice, after

defendant’s motion for § 128.7 sanctions has been filed and taken under
submission, deprive the trial court of authority to grant the motion and impose
sanctions on plaintiff for filing an improper complaint? See Eichenbaum v.
Alon, 106 Cal. App. 4th 967, 131 Cal. Rptr. 2d 296 (2003) (the availability of §
128.7 sanctions against an offending plaintiff who has voluntarily dismissed his
action depends upon whether the sanctions motion was filed before or after
dismissal). Is a motion for sanctions served before, but filed after, entry of
judgment moot where the service and filing complied with the safe harbor
provision of CCP § 128.7(c)(1)? See Day v. Collingwood, 144 Cal. App. 4th
1116, 50 Cal. Rptr. 3d 903 (2006) (trial court had jurisdiction to consider
postjudgment motion for sanctions).

Footnotes:

3 At the time of Beldon Katleman’s death his estate was valued in excess of $10 million.

11 In their reply brief defendants … shift their argument. They urge that regardless of the assertion of
invalid theories of liability, a malicious prosecution claim cannot be maintained if there was probable cause to
assert the violation of the primary right itself — or, as the Court of Appeal put it, when the cause of
action is brought with probable cause. The argument is no more persuasive than its predecessors. When a
complaint alleges multiple theories of liability or “counts,” the counts “are merely ways of stating the same
cause of action differently.” (Bay Cities Paving & Grading, Inc. v. Lawyers’ Mutual Ins. Co. (1993) 5
Cal. 4th 854, 860, fn. 1 [21 Cal. Rptr. 2d 691, 855 P.2d 1263] .) Accordingly, the only way that a litigant can
show probable cause for the cause of action as a whole — or for the “primary right” — is to show probable
cause for each of the counts or theories alleged. In this event the whole is indeed the sum of the parts.

12 Finally, we understand that trial courts may be more reluctant to charge litigants or attorneys
appearing before them with bad faith than juries to whom such persons are total strangers. The case at bar
presents a striking example of this phenomenon. * * *

§ 3.04 FEES AND FEE AGREEMENTS

 [A] Fee Agreements, Generally

High on the list of initial concerns for both lawyer and client is the matter of
the lawyer’s fee. Although essentially all civil litigation matters involve a
negotiated fee arrangement between a client who is free to choose whether to be
represented by the lawyer and a lawyer who is free to accept or reject the client
matter, the amount of the lawyer’s fee and the form of the fee agreement are
subject to regulation by law and ethical restrictions.

California’s Rules of Professional Conduct prohibit lawyers from “enter[ing]

into an agreement for, charg[ing], or collect[ing] an illegal or unconscionable
fee.” Cal. Rules of Prof. Conduct 4-200(A). This rule provides only a series of
factors for evaluating whether a fee is unconscionable “on the basis of all the
facts and circumstances” at the time of the agreement. See Shaffer v. Superior
Court, 33 Cal. App. 4th 993, 39 Cal. Rptr. 2d 506 (1995) (determination of
whether client got what he paid for and therefore of whether attorney’s fee was
conscionable must be based on Rule 4-200 factors and not upon either the
attorney’s costs or profit margin).

Furthermore, virtually all California lawyers’ fee agreements must be in

writing. Bus. & Prof. Code section 6147 requires contingent fee agreements
with plaintiffs to be in writing. Section 6148 requires a written fee agreement in
all other cases, “in which it is reasonably foreseeable that the total expense to a
client, including attorney fees, will exceed” $1,000.00. Other than a very minor
fixed fee case, it is difficult to find a matter that does not require a written
agreement under these two sections. Both sections 6147 and 6148 contain many
other required provisions for fee agreements, including certain disclosures
regarding the lawyer’s malpractice coverage. You will be well advised to study
these sections in detail. Failure to comply with these provisions renders the fee
agreement voidable at the client’s option, with the lawyer limited to collecting a
“reasonable fee.” Bus. & Prof. Code §§ 6147(b), 6148(c). The State Bar has
developed a series of sample fee agreements for use in litigated matters. See
CEB, Fee Agreement Forms Manual (2d ed. 2010)

Rule 2-200(A)(1) of the California Rules of Professional Conduct provides

that a member of the State Bar “shall not divide a fee for legal services with a
lawyer who [55/56]is not a partner of, associate of, or shareholder with the
member unless … [t]he client has consented in writing thereto ….” In Chambers
v. Kay, 29 Cal. 4th 142, 126 Cal. Rptr. 2d 536, 56 P.3d 645 (2002) , the
Supreme Court held the plaintiff attorney’s noncompliance with Rule 2-200(A)
(1)’s written client consent requirement precluded plaintiff from obtaining a
share of contingent fees pursuant to a fee-sharing agreement with co-counsel.
See also Fletcher v. Davis, 33 Cal. 4th 61,14 Cal. Rptr. 3d 58, 90 P.3d 1216
(2004) (an attorney who wishes to secure payment of hourly legal fees by
obtaining a charging lien against the client’s future recovery must obtain the
client’s consent in writing). Subsequently, however, in Huskinson & Brown,
LLP v. Wolf , 32 Cal. 4th 453, 9 Cal. Rptr. 3d 693, 84 P.3d 379 (2004) , the
Supreme Court held that noncompliance with Rule 2-200(A)(1) does not bar a
plaintiff attorney from recovering a portion of those fees based on a quantum
meruit award.

[B] Statutory Limits on Contingent Fees

In addition to the general prohibition against unconscionable fees, in personal

injury actions against health care providers (typically medical malpractice
actions), lawyers’ contingent fees are limited by statute to 40% of the first
$50,000; 33 1/3% of the next $50,000; 25% of the next $500,000; and 15% of
the amount in excess of $600,000. Bus. & Prof. Code § 6146(a). The
constitutionality of these contingent fees limits, which are part of the Medical
Injury Compensation Reform Act (“MICRA”), was upheld in Roa v. Lodi Med.
Group, Inc., 37 Cal. 3d 920, 211 Cal. Rptr. 77, 695 P.2d 164 (1985) . These
MICRA limits apply “regardless of whether the recovery is by settlement,
arbitration, or judgment,” Bus. & Prof. Code § 6146(a). They cannot be waived
by a client. Fineberg v. Harney & Moore , 207 Cal. App. 3d 1049, 255 Cal.
Rptr. 299 (1989). MICRA prohibits an attorney from either contracting for or
collecting a contingent fee in excess of the statutory limits in a medical
malpractice case. Bus. & Prof. Code § 6146.

An attorney who collects fees in violation of MICRA must, of course, refund

the excess fees. More significantly, an attorney’s willful failure to comply with
the limitations constitutes a breach of ethical duty which may result in serious
disciplinary action by the State Bar. See, e.g., In the Matter of David M.
Harney, 3 Cal. State Bar Ct. Rptr. 226 (Rev. Dept. 1995) (State Bar Court
placed prominent medical malpractice attorney on probation for two years on
conditions, including six months actual suspension, for gross negligence in
collecting a fee which exceeded the MICRA limits by $266,850; and observed
that if it had found the attorney’s violation had occurred through intentional
dishonesty rather than gross neglect, disbarment would have been the
appropriate discipline).
[57/58]
Chapter 4

STATUTES OF LIMITATIONS, LACHES, AND

RELATED MATTERS

§ 4.01 INTRODUCTORY NOTE

DEVELOPMENTS IN THE LAW —
STATUTES OF LIMITATIONS
63 Harvard L. Rev. 1177, 1185–86 (1950)*

Purposes of Statutes of Limitations

When the legislature prescribes time limits on the assertion of rights, it

deprives one party of the opportunity, after a time, of invoking the public power
in support of an otherwise valid claim. So firmly have statues of limitations
become imbedded in our law in the course of centuries that legislatures seldom
reconsider them in the light of the various functions that they actually perform;
the delicate process of adjustment is left to rationalization and interpretation by
the courts. The primary consideration underlying such legislation is undoubtedly
one of fairness to the defendant. There comes a time when he ought to be secure
in his reasonable expectation that the slate has been wiped clean of ancient
obligations, and he ought not to be called on to resist a claim when “evidence
has been lost, memories have faded, and witnesses have disappeared.” Another
factor may be an estimate of the effectiveness of the courts, and a desire to
relieve them of the burden of adjudicating inconsequential or tenuous claims.
While these considerations run throughout the law of limitations, other collateral
purposes may be important in the consideration of legislation affecting
particular parties and particular types of claims.

In ordinary private civil litigation, the public policy of limitations lies in

avoiding the disrupting effect that unsettled claims have on commercial
intercourse. The particular period selected, however, often varies with the
degree of permanence of the evidence required to prove either liability or extent
of damage; sometimes it indicates the relative favor with which the legislature
looks upon certain types of claims or certain classes of plaintiffs or defendants.
***

The relative importance of statutes of limitations in implementing these

various purposes will vary with the effectiveness of other legal institutions
subserving the same ends. For instance, a workable Statute of Frauds, strict
rules of evidence, and trained triers of fact may be more effective safeguards
against the dangers of stale [58/59]evidence than are arbitrarily fixed time
periods. An efficient title registration system would better protect the bona fide
purchaser of land than the law of adverse possession, with all its exceptions and
qualifications. And a sufficiently responsible class of public officials might be
enough to insure the criminal and the taxpayer against willfully delayed
prosecution. Nevertheless, the certainty of the fixed time periods clearly serves
the interests of everyone, for even plaintiffs benefit from a sure knowledge of
the time after which a suit would be futile.

LEGAL MALPRACTICE
Ronald E. Mallen & Jeffrey M. Smith
Vol. 3, § 24:3-§ 24:4 (2011 ed.)*

Recurring Problems — Time Limitations

The most frequently alleged error in a legal malpractice action is the failure
of the attorney to comply with a time limitation. No matter the area involved, the
practice of law is interwoven with requirements that acts must be performed
within a specified period of time.1 Although most of these limitations are
obvious and well known, some have esoteric or uncertain meaning.

The ABA statistics show that the litigation attorney is most susceptible to
missing a time limitation. Often the error is the failure to sue before the statute
of limitation bars the claim. If the action is filed, the attorney must diligently
prosecute the action within the statutory period or bear the risk of a
discretionary dismissal or, eventually, a mandatory dismissal. If a case is tried
and lost, the attorney may fail to make a timely motion for a new trial or to
pursue promptly an appeal. Even if the attorney achieves a favorable judgment,
time limitations may impair the right to execute upon the judgment. * * *
 There is a common belief that an attorney who missed a statutory time
requirement was negligent. Some courts have even treated such a showing as
negligence per se. Missed time limitations usually result from the failure to find
out the correct date of the loss, an inadequate or nonexistent calendaring system,
or inadvertence. The error, however, may relate to a judgmental decision in
interpreting facts or uncertain issues of law. * * *

Whether the attorney was negligent usually presents a question of fact to be

evaluated by the standard of care. Thus, the failure to act or the rendering of
erroneous advice regarding a time limitation is negligent only if the attorney
failed to exercise ordinary skill and knowledge. * * *

[59/60]

Recurring Problems — Time Limitations — Statistics

There is a general belief that the largest single cause of legal malpractice
claims is missed time limitations. The nearly 30,000 claims collected by the
National Legal Malpractice Data Center of the ABA’s Standing Committee on
Lawyers’ Professional Liability Committee substantiates that assumption. * * *

A lawyer or law firm should know those time limitations indigenous to the
practice and should learn those deadlines on matters not routinely handled.
Legal work in an unfamiliar area of law should begin with the lawyer
ascertaining all applicable time limitations. Underlying some missed time
limitations is the failure to investigate and ascertain appropriate parties or legal
theories. Unfortunately, the revelation of such remedies is often accompanied by
learning that a statute of limitations expired.

________

Generally speaking, a civil action in California must be commenced within a

statutorily prescribed period “after the cause of action shall have accrued.”
CCP § 312. This seemingly straightforward definition masks a welter of
interrelated issues. Once a practitioner understands these issues there is little
excuse for “missing” a statute of limitations.
 The first of these issues is what statutory limitation period applies to a
particular cause of action. Second is the question of when does a cause of action
“accrue” such that the relevant statute of limitations begins to run. Third is
whether any circumstances will toll or suspend the running of a limitation
period after the cause of action has accrued. Fourth is when is an action
considered to be “commenced” for purposes of satisfying a statute of
limitations. A final issue is whether any mechanisms exist for extending the
limitation period to permit joinder of new parties and causes of action after the
lawsuit has commenced. Because of the importance of statutes of limitations to
California practitioners, this chapter analyzes each of these issues in some
detail.

The history of California statute of limitations law might be summarized as

follows: The Legislature initially enacted rather short statutory time limitations
for the commencement of categories of civil actions. Because these limitations
often produced harsh results, the courts in effect lengthened them through a
series of judicially created exceptions. More recently the Legislature has
restricted these judicial exceptions with respect to certain specific causes of
action. This process of judicial expansion and legislative contraction has taken
place over the past few decades and continues today. See Stephen V. O’Neal,
Note, Accrual of Statutes of Limitations: California’s Discovery Exceptions
Swallow the Rule, 68 Cal. L. Rev. 106 (1980).

Footnotes:

* Copyright 1950 by Harvard Law Review. Reprinted with permission.

* Copyright 2011 by West Publishing Company. Reprinted with permission of Thomson Reuters.

1 For example, in California the complexity and awesome numbers of statutes of limitations were
apparent in a compendium which abstracted statutes of limitations even three decades ago. The digests
included over 1500 statutes from 27 California State Codes. The study did not include the State’s
Administrative Code or any county or city ordinance or regulation. See California Statutes of Limitations,
7 Sw. U. L. Rev. 1 (1975) . [This California survey has been updated several times, most recently in 29 Sw.
U. L. Rev. 679-1178 (1998)].

[60/61]
§ 4.02 ASCERTAINING APPLICABLE TIME
LIMITATION PERIODS
[A] Statutory Limitation Periods

The first step in resolving any statute of limitations problem is to ascertain the
applicable statutorily prescribed limitation period. The Legislature has enacted
specific statutory time limits for nearly every known cause of action. Sections
312-365 of the Code of Civil Procedure contain many of these limitations.
However, numerous special limitation provisions are scattered throughout
various other codes. E.g., Civil Code § 1783 (action under Consumer Legal
Remedies Act must be brought within 3 years); Commercial Code § 2725
(action for breach of contract for sale of goods, 4 years); Corporations Code §
25506 (action to enforce liability for prohibited practices in sales of securities);
Government Code § 945.6 (action against public entity for which claim
required); Insurance Code § 10350.11 (action to recover on group disability
policy, 3 years); Labor Code § 5405 (worker’s compensation proceedings, 1
year); Probate Code, § 9100 (creditor claims against decedent’s estate); and
Revenue and Taxation Code § 19371 (action by Franchise Tax Board to recover
taxes due, 10 years). A brief survey indicates that nearly every California code
contains at least some significant special statutes of limitations. See California
Statutes of Limitation, 27 Sw. U. L. Rev. 679-1178 (1998) , for a compendium
of over 1500 of the California statutes of limitations.

[1] Statutory Classifications

The Code of Civil Procedure classifies limitation periods by several general

methods. Perhaps the most common classification method is according to the
substantive right involved in the action, such as libel (one year, CCP § 340(c))
or oral contract (two years, § 339). Many recent special statutes further limit
this approach by also applying only to a specific category of defendants, such as
actions for professional negligence against health care providers (§ 340.5) or
attorneys (§ 340.6).

Another common method is classification based on the nature of the injury

involved, such as personal injury (two years, CCP § 335.1) or injury to real
property (three years, § 338(b)). Special statutes also may limit this approach to
specific defendants, such as actions against developers for injury to real
property due to latent defects (§ 337.15). A related method is classification
based on the nature of the relief sought, such as actions for recovery of real
property (CCP §§ 315-327).

A fairly safe assumption is that there is a statutorily prescribed limitation

expressly covering every known cause of action. And if not expressly covered,
the action may come under the four-year catch-all provision of CCP § 343.

[2] Categorizing Actions for Statute of Limitations Purposes

The process of finding the relevant statute of limitations usually means simply
locating the specific code provision applicable to the cause of action. A lawsuit
which involves several different causes of action requires that each one be
analyzed [61/62]separately as to the applicable limitation. The same set of facts
may give rise to several distinct causes of action against several different
defendants, some of which may be time-barred while others are not. See, e.g.,
Krieger v. Nick Alexander Imports, Inc., 234 Cal. App. 3d 205, 285 Cal. Rptr.
717 (1991) (in action for damages arising from alleged defective BMW, causes
of action based on negligence and breach of covenant of good faith were barred
by applicable statutes of limitations, but those based on breach of warranty and
misrepresentation were allowed to proceed as timely filed); Romano v.
Rockwell International, Inc., 14 Cal. 4th 479, 59 Cal. Rptr. 2d 20, 926 P.2d
1114 (1996) (applying various statutes of limitations, as relevant, to issues of
accrual of plaintiff’s tort, contract, and FEHA counts in a wrongful discharge
action).

Consequently, precisely what causes of action a plaintiff decides to bring,

and to some extent how a plaintiff decides to characterize them, will determine
which statutes of limitations apply. Does this mean that artful pleading can be
used to circumvent a statutory limitation? Regardless of the form of the
pleading, a court will attempt to ascertain the substance of the action in
determining the relevant statute of limitations. For example, in Hatch v. Collins,
225 Cal. App. 3d 1104, 275 Cal. Rptr. 476 (1990) , the plaintiffs characterized
their complaint as “breach of fiduciary duty” and “breach of contractual
obligation” in order to come under the four-year limitation period applicable to
such actions by CCP § 343 and § 337. However, the Court of Appeal viewed
the complaint as essentially one for fraud and therefore governed by the three-
year limitation period of CCP § 338. The court then concluded that plaintiffs’
complaint, filed approximately 3-1/2 years after the action accrued, was barred.
See also Hensler v. City of Glendale, 8 Cal. 4th 1, 22-23, 32 Cal. Rptr. 2d 244,
876 P.2d 1043 (1994) (statute of limitations applicable to inverse condemnation
action determined by the “gravaman” of the cause of action; “The nature of the
right sued upon and not the form of action nor the relief demanded determines
the applicability of the statute of limitations under our code”).

Sometimes the substance of a cause of action is easy to determine, but still

difficult to categorize for statute of limitations purposes. In Beasley v. Wells
Fargo Bank, N.A., 235 Cal. App. 3d 1383, 1 Cal. Rptr. 2d 446 (1991) , for
example, a class of credit card holders sought refund of late fees collected by
the defendant Bank, on the grounds that these fees were assessed pursuant to an
invalid liquidated damages provision in the credit card agreement. Plaintiff’s
class action did not seek refund based on the written contract, but instead on an
implied promise arising out of the contract. Is plaintiffs’ recovery subject to the
two-year statute of limitations for an action on an unwritten contract, CCP §
339(1), or the four-year statute for an action on a written contract, CCP §
337(1)?

A statute of limitations bars a cause of action commenced after the limitations

period has expired. May it also bar a defense to a cause of action? See Styne v.
Stevens, 26 Cal. 4th 42, 109 Cal. Rptr. 2d 14, 26 P.3d 343 (2001) (“[A]
defense may be raised at any time, even if the matter alleged would be barred by
a statute of limitation if asserted as the basis for affirmative relief.”).

[62/63]

[3] Statutory Overlap

The various statutory limitations are designed to be mutually exclusive.

However, the legislative classification system sometimes results in overlap in
statutory coverage. One such problem arises where a cause of action is covered
by a general statute and a more specific conflicting statute. For example, a
damage action against a doctor for injuries caused by negligence is literally
covered by CCP § 335.1, which sets forth a two-year limitation for personal
injury actions, and by CCP § 340.5, which contains a more complex scheme for
medical malpractice actions based on negligence. Which statute controls? Not
surprisingly, the more specific medical malpractice statute applies. See Young
v. Haines, 41 Cal. 3d 883, 894, 226 Cal. Rptr. 547, 718 P.2d 909 (1988) (“The
cardinal rule of statutory construction is to ascertain and give effect to the intent
of the Legislature …. Section 340.5 is part of an interrelated legislative scheme
enacted to deal specifically with all medical malpractice claims. As such, it is
the later, more specific statute which must be found controlling over an earlier
statute, even though the earlier statute would by its terms cover the present
situation.”).
 This problem often arises in actions covered by general limitations in the
Code of Civil Procedure and in some more specialized substantive code, such
as the California Uniform Commercial Code. E.g., Collection Bureau of San
Jose v. Rumsey, 24 Cal. 4th 301, 99 Cal. Rptr. 2d 792, 6 P.3d 713 (2000) (one-
year limitations period of former CCP § 353 [now CCP § 366.2], specially
applicable to surviving causes of actions on the liabilities of decedents by
Probate Code § 13554, and not the four-year limitations period of CCP § 377
generally applicable to open book accounts, governs an action by a collection
agency against a surviving spouse for recovery of the medical expenses of a
deceased spouse’s last illness). Krieger v. Nick Alexander Imports, Inc., 234
Cal. App. 3d 205, 285 Cal. Rptr. 717 (1991) (breach of warranty action based
on Song-Beverly Consumer Warranty Act governed by limitation in Commercial
Code § 2725, not by CCP § 338(a) or § 337(1)).

A similar problem arises where an action is covered by two general statutes

of limitations, one addressed to the nature of the injury and the other to the
substantive right involved. In Cardoso v. American Med. Sys., Inc., 183 Cal.
App. 3d 994, 228 Cal. Rptr. 627 (1986), plaintiffs’ action was for personal
injuries caused by a malfunctioning prosthesis manufactured by the defendant.
Defendant demurred, based on plaintiffs’ failure to commence this personal
injury action within one year as required by former CCP § 340(3). Plaintiffs
contended that they stated a cause of action for breach of warranty governed by
the longer limitations period for contract actions. The court held that the one-
year limitation of former CCP § 340(3) applied because the action was for
personal injury damages, regardless of whether the action was based on tort or
contract.

The cause of action in Cardoso also came under the plain language of
Commercial Code § 2725(1), which provides a four-year limitation for an
“action for breach of any contract for sale” of goods, including breach of
warranty. On what basis could the court in Cardoso properly conclude that
former CCP § 340(3) controls instead of the more recent and specific
Commercial Code § 2725(1)? See Becker v. Volkswagen of America, Inc ., 52
Cal. App. 3d 794, 798–802, 125 Cal. Rptr. 326 (1975) , [63/64]for a good
discussion of legislative intent behind the enactment of Commercial Code §
2725.

Occasionally a cause of action is governed by the plain language of two

special statutes of limitations. Does CCP § 340.5 (medical malpractice) or
Government Code § 945.6 (tort claims against governmental entities) control
where the plaintiff alleges injuries due to professional negligence by a county
hospital? See Torres v. County of Los Angeles , 209 Cal. App. 3d 325, 333,
335–37, 257 Cal. Rptr. 211 (1989); Anson v. Merced County, 202 Cal. App. 3d
1195, 249 Cal. Rptr. 457 (1988). Which statute of limitations — CCP § 335.1, §
340.2, § 340.5, or Gov. Code §§ 945-950 — applies where a plaintiff’s
physical disability is caused by negligent exposure to asbestos during surgery at
a state-owned medical clinic?

[4] Various Specific Statutes of Limitations in the Civil Procedure and Other
Codes

As indicated above, many of the civil statutes of limitations are contained in

Sections 312-365 of the Code of Civil Procedure. These are too numerous and
complex to summarize here, but some of the most frequently encountered ones
are: CCP § 337, written contracts generally, 4 years; § 337.15, construction
defects, 10 years; § 338, statutory liability, trespass, fraud, and pollution, 3
years; § 339, oral contracts, 2 years; § 366.2, outside time limit of one year for
any type of claim against a decedent; § 340.1, childhood sexual abuse; § 340.2,
exposure to asbestos; § 340.5, medical malpractice; and § 340.6, attorney
malpractice.

Effective January 1, 2003, the statute of limitations for assault, battery,

wrongful death, and personal injury actions “caused by the wrongful act or
neglect of another,” has been increased to two years. CCP § 335.1 (adopted
2002). The statute of limitations for other intentional torts, such as libel,
slander, and false imprisonment, remains one year. CCP § 340. The shortest
statute of limitations in this Code is 30 days to contest certain local assessments,
CCP § 349. Which actions have the longest statutory limitation period? See,
e.g., CCP § 348 (recovery of money deposited with bank) and Civil Code §
3490 (public nuisances).

Several statutes of limitation are located in other codes. Some of the most
important are: Commercial Code § 2725, four years to commence action for
breach of contract for sale of goods; Government Code §§ 945-945.8, actions
against public entities for money damages; and Government Code §§ 950-950.6
actions against public employees for injury, discussed in § 4.04 of this Chapter,
infra.

Various federal statutes contain statutes of limitations applicable to federal

causes of action. See Federal Statutes of Limitation, 26 Sw. U. L. Rev. 425-
891 (1997), for a compendium of over 7000 federal statutes which contain
special statutes of limitations governing specific claims. The Supremacy Clause,
Article VI of the United States Constitution, may require the application of a
federal limitation when a federal claim is brought in state court. See, e.g., White
v. Moriarty, 15 Cal. App. 4th 1290, 19 Cal. Rptr. 2d 200 (1993) (in FDIC
cases, state court must follow limitation period in 12 U.S.C. § 1821, not CCP §
337(1)); California Aviation, Inc. v. Leeds , 233 Cal. App. 3d 724, 284 Cal.
Rptr. 687 (1991) (two-year federal bankruptcy limitations extension statute, 11
U.S.C. § 108(a), applied instead of [64/65]one-year state limitation statute for
attorney malpractice, CCP § 340.6(a)); Angeles Chem. Co. v. Spencer & Jones,
44 Cal. App. 4th 112, 51 Cal. Rptr. 2d 594 (1996) (federal environmental
statute’s limitations period and later accrual date mandated by that statute’s
discovery rule preempted the 10-year maximum of CCP § 337.15, where claims
were based on a latent construction defect that resulted in toxic contamination of
plaintiff’s property).

[B] Contractual Modification of Statutory Time Period

[1] Contractual Extension of Statutory Limitation Period

Section 360.5 of the Code of Civil Procedure authorizes contractual waiver

of a statutory limitation period if “the waiver is in writing and signed by the
person obligated.” Section 360.5 limits the duration of this waiver to four years,
renewable for another four years. A written contractual waiver executed prior
to the running of a statutory limitation period extends the limitation for four
years from the expiration of the statutory period, renewable for another four
years. California First Bank v. Braden, 216 Cal. App. 3d 672, 264 Cal. Rptr.
820 (1989). Does an attorney’s written waiver of a statute of limitations
constitute waiver “signed by the person obligated” within the meaning of §
360.5? See Carlton Browne & Co. v. Superior Court , 210 Cal. App. 3d 35,
258 Cal. Rptr. 118 (1989) , for an analysis of this question, including an
excellent discussion of the principles of statutory construction. Note that
Commercial Code § 2725(1) permits parties to agree to shorten the period of
limitations in contracts for sale of goods, but prohibits agreements to extend the
statutory period.

[2] Contractual Abridgement of Statutory Limitation Period

Parties to a contract may also agree to a shorter limitation period for

commencement of an action than is permitted by an otherwise applicable statute.
Such contractual limitations are generally enforced so long as the shortened
limitation period is a reasonable one which manifests no undue advantage and
no unfairness. See Lawrence v. Western Mut. Ins. Co. , 204 Cal. App. 3d 565,
251 Cal. Rptr. 319 (1988). How should a court determine the “reasonableness”
of a shorter contractual limitation period? See Moreno v. Sanchez , 106 Cal.
App. 4th 1415, 1429–34, 131 Cal. Rptr. 2d 684 (2003), reproduced infra.

Section 2071 of the Insurance Code expressly authorizes a contractual

limitation period of one year for insurance contracts. Likewise, Section 2725(1)
of the Commercial Code authorizes agreements by parties to a contract for sale
of goods to reduce the statutory limitation period (four years) to not less than
one year. A one-year contractual limitation period has been enforced as not
unreasonable in light of § 2725(1), and, when included as an additional term in
the acceptance of an offer, may not even be viewed as “materially altering” a
contract between merchants within the meaning of § 2207 of the Commercial
Code. Therma-Coustics Mfg., Inc. v. Borden, Inc ., 167 Cal. App. 3d 282, 213
Cal. Rptr. 611 (1985).

[65/66]

[C] Legislative Modification of Statutory Time Periods

[1] Abridgement of Time to Sue

The Legislature may, from time to time, modify the length of a statutory
limitations period. Such amendments raise interesting questions of retroactive
application. Where the Legislature shortens a limitations period, retroactive
application is generally permissible provided the party still has a reasonable
time within which to avail itself of the remedy before the shortened statute
extinguishes the right to sue. See, e.g., Coachella Valley Mosquito & Vector
Control Dist. v. California Public Employment Relations Bd., 35 Cal. 4th
1072, 1091–92, 29 Cal. Rptr. 3d 234, 112 P.3d 623 (2005) ; Brown v. Bleiberg ,
32 Cal. 3d 426, 437, 186 Cal. Rptr. 228, 651 P.2d 815 (1982) . What constitutes
a reasonable amount of time? See Coachella Valley Mosquito, supra (when
necessary to provide a reasonable time to sue, a shortened limitations period
may be applied prospectively so that it commences on the effective date of the
statute, rather than on the date the cause of action accrued); Rosefield Packing
Co. v. Superior Court, 4 Cal. 2d 120, 122–24, 47 P.2d 716 (1935) (question is
one of constitutional law, not one committed to the discretion of the trial court;
one-year period found reasonable).
 [2] Enlargement of Time to Sue

A more complicated question arises when the Legislature lengthens a

limitation period. Does the new, longer period apply to causes of action that
would have been time-barred under the old statute? From a constitutional due
process perspective, the courts seem to agree that the Legislature is free to
revive a cause of action after the statute of limitations has expired, unless the
passage of the statutory period creates a prescriptive property right such as in
adverse possession. See, e.g., Liebig v. Superior Court, 209 Cal. App. 3d 828,
831–35, 257 Cal. Rptr. 574 (1989), relying on Chase Sec. Corp. v. Donaldson,
325 U.S. 304, 65 S. Ct. 1137, 89 L. Ed. 1628 (1945).

A new statute that enlarges the statutory limitations period applies to actions
that are not already barred by the original limitations period at the time the new
statute goes into effect. Andonagui v. May Department Stores Co., 128 Cal.
App. 4th 435, 27 Cal. Rptr. 3d 145 (2005) (the two-year statute of limitations
for personal injury action in CCP § 335.1 applies to actions not already time-
barred by the one-year statute of limitations in former CCP § 340(3) when §
335.1 became effective on January 1, 2003); Liebig v. Superior Court, supra,
209 Cal. App. 3d at 833. However, where the application of a new or amended
statute of limitations would have the effect of reviving an already time-barred
claim, the general rule against retroactive application of the statute is applicable
in the absence of a clear indication of legislative intent to the contrary. Moore v.
State Bd. of Control, 112 Cal. App. 4th 371, 5 Cal. Rptr. 3d 116 (2003)
(collecting cases).

I n Gallo v. Superior Court, 200 Cal. App. 3d 1375, 246 Cal. Rptr. 587
(1988), the Court of Appeal noted that there is probably no due process
impediment to retroactive application of a statute reviving a civil cause of
action, citing Chase Sec. Corp. v. Donaldson, supra. “A potential defendant has
no vested right in the sense of repose conferred by his knowledge a lawsuit
against him appears to be barred. The issue is one of fairness and of statutory
construction, rather than constitutional [66/67]right.” Gallo, 200 Cal. App. 3d at
1383. The Gallo court adopted a rule of statutory construction that “an
enlargement of limitations operates prospectively unless the statute expressly
provides otherwise.” Id. at 1378. The Court of Appeal then concluded that
newly enacted CCP § 340.3 did not apply retroactively because it contained no
express statutory language on retroactivity, and no other general principles
supplied the necessary legislative intent to revive time-barred actions.
 This same approach was adopted in Liebig v. Superior Court, supra, where
the defendant argued that plaintiff’s action for childhood sexual molestation was
not revived by newly amended CCP § 340.1. The Court of Appeal concluded
that the 1986 amendment to CCP § 340.1, which expressly revives time-barred
causes of action, does apply retroactively. The Court of Appeal adopted the
rationale of Gallo, supra, and ruled that even if a vested right exists in repose of
a cause of action, vested rights are not immune from retroactive laws when an
important public policy is at stake. Liebig, 209 Cal. App. 3d at 834. The court
found evidence of such a public policy in the express retroactivity language of §
340.1. Likewise in Nelson v. Flintkote Co., 172 Cal. App. 3d 727, 218 Cal.
Rptr. 562 (1985), the court applied the extension of the statute of limitations for
asbestosis to causes of action already barred under the previous limitation
period, based on the express language of CCP § 340.2. But in David A. v.
Superior Court, 20 Cal. App. 4th 281, 24 Cal. Rptr. 2d 537 (1993) , the court
construed the ambiguous 1990 amendments to CCP § 340.1 as insufficient to
demonstrate that the Legislature intended those amendments to revive lapsed
childhood sexual abuse claims.

When the Legislature expressly provides that such an amended statute of

limitations applies retroactively, can it revive an action that was previously
filed by the plaintiff but dismissed pursuant to the earlier statute of limitations?
See Perez v. Roe , 146 Cal. App. 4th 171, 52 Cal. Rptr. 3d 762 (2006) (the
Legislature’s attempt to revive plaintiffs’ childhood sexual abuse actions
violated the separation of powers doctrine because final judgments of dismissal
had been entered in earlier actions based on the statute of limitations previously
in effect).

[D] Calculation of Statutory Time Period

Section 12 of the Code of Civil Procedure states that “[t]he time in which any
act provided by law is to be done is computed by excluding the first day, and
including the last, unless the last day is a holiday, and then it is also excluded.”
Consequently, the day on which a cause of action accrues is excluded in
computing the limitation period. SCT, U.S.A. Inc. v. Mitsui Mfr. Bank , 155 Cal.
App. 3d 1059, 1065, 202 Cal. Rptr. 547 (1984). If the last day for
commencement is a holiday, the period is extended to and including the next day
not a holiday. CCP § 12a. Saturdays and Sundays are deemed holidays per CCP
§ 10 and § 12a; as well as any day a city, county, state or public office, other
than a branch office, is closed, insofar as the business of that office is
concerned. CCP §§ 12b, 135.
 Certain additional holidays are specified by statute. E.g., Gov. Code §§ 6700,
6701. The existence of a holiday at the end of the statutory period can mean the
difference between a barred action and a viable one. E.g., Mink v. Superior
Court, 2 Cal. App. 4th 1338, 4 Cal. Rptr. 2d 195 (1992) (plaintiff’s motion for
relief from dismissal granted based on plaintiff’s excusable mistake in
discovering that ten-year [67/68]statute of limitations had not run because period
ended on a weekend, followed by a Monday holiday.).

Few computation difficulties arise where statutory limitations are expressed

in days or in years. When expressed in terms of months, however, limitation
periods do present a problem. How would you compute a statutory requirement
that an action be commenced within “six months,” such as in Government Code
§ 945.6? Compare Gonzales v. County of Los Angeles, 199 Cal. App. 3d 601,
245 Cal. Rptr. 112 (1988) (“six month” period of Gov. Code § 945.6 means six
actual calendar months, or 182 days, whichever is longer), with Davis v.
Thayer, 113 Cal. App. 3d 892, 902–03, 170 Cal. Rptr. 328 (1980) (“six
months” in CCP § 473 equivalent to a “half year” and therefore, under Gov.
Code § 6803, means 182 days). For an argument that the Gonzales interpretation
of “months” should apply to the over 132 California statutes which use such
limitation language, see Michael A. Schmitt, How Long Is Six Months in
California? Enquiring Minds Want to Know!, 19 Sw. U. L. Rev. 205 (1990).

§ 4.03 ACCRUAL OF A CAUSE OF ACTION

[A] The General California “Discovery” Rule

The first step in resolving a statute of limitations problem, as discussed

above, is to ascertain the length of the statutorily prescribed period for a cause
of action. Section 312 of the Code of Civil Procedure then requires that the
action be commenced within that period after the cause of action has “accrued.”
The next question is to determine when a cause of action has “accrued” such that
the statutory limitation period begins to run. This question can be quite complex
in California. Surprisingly, the Code of Civil Procedure does not provide a
general definition of “accrual” applicable to all statutes of limitations. Instead,
the California courts have traditionally provided the general rules regarding
accrual, as our principal case below illustrates. More recently, however, the
Legislature has defined the accrual point for certain specific causes of action,
such as medical malpractice, CCP § 340.5; legal malpractice, CCP § 340.6(a);
childhood sexual abuse, CCP § 340.1(a); injury due to exposure to asbestos,
CCP § 340.2; and breach of contract for sale of goods, Com. Code § 2725(2).
 JOLLY v. ELI LILLY & COMPANY
SUPREME COURT OF CALIFORNIA
44 Cal. 3d 1103, 245 Cal. Rptr. 658, 751 P.2d 923 (1988)

Panelli, Justice.

This case presents the following questions: whether a plaintiff, in a suit for
personal injury caused by a defective drug, who is unaware of any specific facts
establishing wrongful conduct on the part of any drug manufacturer, may delay
bringing an action until she discovers such facts; whether a claim, otherwise
barred by the statute of limitations, can be revived due to our decision in Sindell
v. Abbott Laboratories (1980) 26 Cal. 3d 588 [163 Cal. Rptr. 132, 607 P.2d
924], in which we [68/69]held that a plaintiff who is unable to identify the
particular manufacturer of a fungible drug that caused injury to her can state a
claim by joining defendants who manufactured a substantial percentage of the
market share of the allegedly defective drug; and whether the filing of the class
action in Sindell, supra, tolled the statute of limitations for members of the
putative class until the class was denied certification. We answer these
questions in the negative and so conclude that the suit is time-barred.

I. Facts

Plaintiff Jolly was born in 1951. In 1972, she first learned that while she was
in utero her mother had ingested the synthetic drug estrogen diethylstilbestrol
(DES) for the prevention of miscarriage. Plaintiff was told in 1972 that DES
daughters could suffer injuries. Therefore, she went to a DES clinic at the
UCLA Medical Center for a checkup. She was diagnosed as having adenosis, a
precancerous condition that required careful monitoring. In 1976, she had an
abnormal pap smear and underwent a dilation and curettage, a surgical
procedure to remove abnormal tissue. In 1978, plaintiff underwent a complete
hysterectomy and a partial vaginectomy in order to remove malignancy. As of
1972, plaintiff was aware, or at least suspected, that her condition was a result
of her mother’s ingestion of DES during pregnancy.

Starting in 1972, plaintiff attempted to discover the manufacturer of the DES

ingested by her mother. Efforts were increased in 1976 and 1978 when
plaintiff’s condition became acute. Unfortunately, the doctor who prescribed the
drug had died, and plaintiff was unable to locate his records. Although the
dispensing pharmacist did remember filling the DES prescription, he did not
recall or have records pertaining to the specific brand used. This was not
unusual since DES was a fungible drug, that is, hundreds of pharmaceutical
companies made DES from a single agreed formula. The hospital where
plaintiff was born was of no assistance because plaintiff’s mother did not use
DES while there.

At least as of 1978, plaintiff was aware of the pendency of one or more DES
suits alleging that DES manufacturers were liable to those injured due to their
failure to test or failure to warn. Although she believed that DES had caused her
injuries and that those who marketed DES had wrongfully marketed a defective
product, there is no conclusive evidence in the record to show that a reasonable
investigation by plaintiff in 1978 would have disclosed specific proven facts
that would establish any wrongful conduct on the part of a DES drug
manufacturer. In fact, even today defendants allege that DES is not defective, but
for purposes of summary judgment have admitted the allegation of some
defectiveness.

Further, plaintiff believed that she had no cause of action if she could not
identify the particular manufacturer of the drug her mother took during
pregnancy. Because her efforts to identify that manufacturer were unsuccessful,
plaintiff did not file suit.

In March 1980, we decided Sindell v. Abbott Laboratories, supra, 26 Cal.

3d 588, and held that if a plaintiff could not identify the precise drug
manufacturer of the ingested DES, she could state a cause of action against the
DES manufacturers of [69/70]a substantial percentage of the market share of the
drug. Defendants would be liable, assuming the remaining material allegations
in the complaint were proven, unless they could disprove their involvement.
Almost one year after Sindell, plaintiff Jolly brought this action.

Defendants moved for summary judgment, asserting that the action was barred
by Code of Civil Procedure [former] section 340, subdivision (3),2 setting forth
a one-year statute of limitations period for an action “for injury … caused by the
wrongful act or neglect of another.” Although conceding the applicability of the
one-year statutory period, plaintiff denied that the suit was time-barred. She
asserted that the statute did not commence until she learned of the Sindell
decision, because only then did she realize that she would be able to
successfully bring her claim.

Plaintiff maintained that Sindell created a new cause of action by redefining

“causation.” Prior to Sindell, she claimed, only the specific manufacturer of the
pills that were ingested was deemed to have “caused” the injury. After Sindell,
according to plaintiff, it was the generic drug DES that “caused” the harm, and
therefore all DES manufacturers were tortfeasors.

The trial court granted defendants’ motion and entered judgment in their
favor. The Court of Appeal reversed, relying on its earlier decision in
Kensinger v. Abbott Laboratories (1985) 171 Cal. App. 3d 376 [217 Cal. Rptr.
313]. The Court of Appeal did not address Jolly’s main argument, that the
statute could not begin to run until after our decision in Sindell, supra, except by
way of a footnote declining to adopt her position. We granted defendants Eli
Lilly and Company, Rexall Drug Company, and E.R. Squibb and Sons, Inc.’s
subsequent petition for review.

II. The Kensinger Decision

As previously noted, both sides agree that the one-year limitations period of
section 340, subdivision (3) applies to this case. Both sides also agree that the
common law rule, that an action accrues on the date of injury (Lambert v.
McKenzie (1901) 135 Cal. 100, 103 [67 P. 6] ), applies only as modified by the
“discovery rule.” The discovery rule provides that the accrual date of a cause of
action is delayed until the plaintiff is aware of her injury and its negligent
cause.4 (Sanchez v. South Hoover Hospital, supra, 18 Cal. 3d 93, 99. A
plaintiff is held to her actual knowledge as well as knowledge that could
reasonably be discovered through investigation of sources open to her. (Id. at p.
101). The parties differ as to what constitutes sufficient knowledge to start the
statute running.

The Court of Appeal applied Kensinger, supra, 171 Cal. App. 3d 376, a
factually similar case, and found that it was a question of fact as to whether the
statute of limitations began to run more than one year before plaintiff Jolly filed
her [70/71]complaint. The Kensinger court acknowledged the well established
rule that ignorance of the legal significance of known facts or the identity of the
defendant would not delay the running of the statute — only ignorance of one or
more “critical facts” could have that effect. (171 Cal. App. 3d at p. 383).
 However, the key point in Kensinger was its determination that one “critical
fact” was knowledge of some wrongful conduct. Specifically, the court held that
a plaintiff may have “no knowledge of facts indicating wrongdoing by a
particular defendant. In such a situation, litigation might be premature for lack of
knowledge of any factual basis for imputing fault to a manufacturer rather than
ignorance of supportive legal theories …. Knowledge of the occurrence and
origin of harm cannot necessarily be equated with knowledge of the factual
basis for a legal remedy ….” (171 Cal. App. 3d at pp. 383–384; italics added).
Accordingly, the Kensinger court held that the statutory clock did not begin to
tick until the plaintiff knew or reasonably should have known of the facts
constituting wrongful conduct, as well as the fact of her injury and its relation to
DES.5 The Court of Appeal, applying Kensinger, held that it could not be said
that “as a matter of law” Jolly was or should have been aware of facts
establishing wrongdoing, e.g., “either failure to test or failure to warn,” until
within one year of the date she filed suit.

The rule proposed in Kensinger goes too far. 6 Under the discovery rule, the
statute of limitations begins to run when the plaintiff suspects or should suspect
that her injury was caused by wrongdoing, that someone has done something
wrong to her. 7 As we said in Sanchez and reiterated in Gutierrez, the
limitations period begins once the plaintiff “‘has notice or information of
circumstances to put a reasonable person on inquiry ….’” * * * A plaintiff need
not be aware of the specific “facts” necessary to establish the claim; that is a
process contemplated by pretrial discovery. Once the plaintiff has a suspicion
of wrongdoing, and therefore an incentive to sue, she must decide whether to
file suit or sit on her rights. So long as a suspicion exists, it is clear that the
plaintiff must go find the facts; she cannot wait for the facts to find her.

For example, in Miller v. Bechtel Corp. (1983) 33 Cal. 3d 868 [191 Cal.
Rptr. 619, 663 P.2d 177] , we held that plaintiff was barred by the statute of
limitations from pursuing her suit for fraud, even though she filed suit soon after
she discovered facts confirming her long-held suspicion that her former husband
had concealed the [71/72]true worth of his assets during dissolution negotiations.
We noted that the plaintiff had doubts at the time she signed the dissolution
agreement as to the actual value of her husband’s Bechtel stock. However,
neither she nor her attorney took adequate steps then to investigate the matter.
Years later, when the stock was sold for an amount well beyond that stated
during the dissolution discussions, plaintiff brought suit. We held that her early
suspicion put her on inquiry notice of the potential wrongdoing, which an
investigation would have confirmed. Her failure timely to investigate barred the
action. This conclusion was reached over a strong dissent, in which it was
argued that the statute of limitations should not begin to run until plaintiff
discovered the facts constituting the misconduct — her mere suspicion was not
enough.

Another case in point is Gray v. Reeves (1978) 76 Cal. App. 3d 567. In

Gray, a plaintiff suffered an allergic reaction to a drug in 1971, but delayed
filing suit against the prescribing doctor and manufacturer until 1973. The Court
of Appeal affirmed the trial court’s award of summary judgment for defendants
based on the statute of limitations. The court noted plaintiff’s admission that in
1971 he knew that defendants “did something wrong.” Even without specific
facts as to why the drug was defective, plaintiff was on notice at that time that he
had a potential cause of action. (See also Graham v. Hansen (1982) 128 Cal.
App. 3d 965, 972-973 [180 Cal. Rptr. 604] [“If plaintiff believes because of
injuries she has suffered that someone has done something wrong,” the statutory
period begins]).

The foregoing is fully consistent with the policy of deciding cases on the
merits as well as the policies underlying the statute of limitations. In Davies v.
Krasna (1975) 14 Cal. 3d 502, 512 [121 Cal. Rptr. 705, 535 P.2d 1161, 79
A.L.R. 3d 807], we held that the fundamental purpose of the statute is to give
defendants reasonable repose, that is, to protect parties from defending stale
claims. A second policy underlying the statute is to require plaintiffs to
diligently pursue their claims. Because a plaintiff is under a duty to reasonably
investigate and because a suspicion of wrongdoing, coupled with a knowledge
of the harm and its cause, will commence the limitations period, suits are not
likely to be unreasonably delayed, and those failing to act with reasonable
dispatch will be barred. At the same time, plaintiffs who file suit as soon as they
have reason to believe that they are entitled to recourse will not be precluded.8

While resolution of the statute of limitations issue is normally a question of

fact, where the uncontradicted facts established through discovery are
susceptible of only one legitimate inference, summary judgment is proper. In this
case it is clear that application of the discovery rule supports the trial court’s
judgment. Plaintiff stated that as early as 1978 she was interested in “obtaining
more information” about DES because she wanted to “make a claim”; she felt
that someone had done something wrong to her concerning DES, that it was a
defective drug and that she should be compensated.9 She points to no evidence
contradicting her candid [72/73]statements. Thus, plaintiff is held to her
admission; she suspected that defendants’ conduct was wrongful during 1978 —
well over a year before she filed suit. This suspicion would not have been
allayed by any investigation. To the contrary, a timely investigation would have
disclosed numerous articles concerning DES and many DES suits filed
throughout the country alleging wrongdoing.

Plaintiff’s contention that our decision in Sindell redefined “causation” and

“wrongful,” providing the crucial “fact” necessary for her to suspect
wrongdoing, is without merit. Sindell, supra, 26 Cal. 3d 588, is fully discussed
below. At this point it is necessary only to point out the oft-stated rule that it is
the discovery of facts, not their legal significance, that starts the statute. All of
the facts set out in Sindell that are relevant to plaintiff’s case were either
already known by her in 1978 or could have been discovered through a
reasonable investigation.11 Indeed, plaintiff admits that she learned of no new
facts between 1978 and 1980.

In sum, the limitations period begins when the plaintiff suspects, or should
suspect, that she has been wronged. Here, plaintiff suspected as much no later
than 1978. Because she did not file suit until 1981, her suit, unless otherwise
saved, is time-barred.13

III. The Effect of Sindell

Plaintiff’s major argument, which was summarily rejected by the trial court
and the Court of Appeal, is that our landmark decision in Sindell v. Abbott
Laboratories, supra, constituted the “fact” that activated the statute. Plaintiff
does not dispute the general rule that ignorance of the identity of the defendant
does not affect the [73/74]statute of limitations. However, she asserts that the rule
does not apply to the facts of her case.

Plaintiff contends that prior to Sindell, the defective “product” was defined
as the specific DES pills her mother ingested. Consequently, plaintiff could not
establish a causal link between any particular manufacturer and her injury. She
argues that Sindell redefined the defective “product” as generic DES, making all
manufacturers of DES contributors to her injury. Thus, now she is able to
establish a causal link between the harm suffered and defendants.

Defendants reply that this was not the intended effect of Sindell. They argue
that Sindell merely shifted from plaintiff to defendants the burden of proving
which manufacturer’s drug caused plaintiff’s injury.
 There is merit in both contentions. Sindell is more than a mere “burden
shifting” case. Although based in part on Summers v. Tice (1943) 33 Cal. 2d 80
[199 P.2d 1, 5 A.L.R. 2d 91] , Sindell went beyond that precedent.14 In Sindell
we noted that all DES manufacturers presumptively contributed to the alleged
injury in that DES was a generic drug, manufactured from an agreed formula.
Hence, all DES manufacturers shared in the alleged societal wrong. We held
that between an innocent plaintiff and a group of allegedly negligent defendants,
one of whom probably caused the injury, the latter should bear the costs of the
harm, and we were willing to fashion a new remedy to meet that goal.
Therefore, we imposed liability on defendants even though there was a
significant possibility that the manufacturer of the particular pills ingested by a
plaintiff’s mother was not a party to the suit.

At the same time, we did not create an entirely new tort, nor identify a new
“product.” Sindell merely bridged the causal gap between DES manufacturers
as a group and plaintiff’s injury. Where the actual manufacturer of the ingested
DES is unknown, causation by joined manufacturers of a substantial share of the
DES that a plaintiff’s mother might have taken would be presumed, subject, of
course, to each drug manufacturer’s ability to rebut the presumption by proving
that the actual pills in question were not its product.

***

From the foregoing, it is clear that Sindell did not provide plaintiff with the
critical “fact” that started the limitations period. Nor did it create a new tort
with an independent starting date for purposes of the statute of limitations.
Rather, Sindell demonstrated the legal significance of facts already known to
plaintiff. The statute had started to run for plaintiff well before Sindell was
decided.

At a less legalistic but more fundamental level, plaintiff argues, with some
persuasive force, that prior to Sindell she could not have prevailed on her suit.
She notes that during the time that defendants argue her action would have been
timely, McCreery v. Eli Lilly & Co., supra [87 Cal. App. 3d 77, 150 Cal. Rptr.
730 (1978)], (overruled by Sindell, supra) effectively barred her claim. In
McCreery, the Court [74/75]of Appeal held that a plaintiff who could not identify
the precise manufacturer of the pills ingested by her mother did not allege a
cause of action. Plaintiff undoubtedly fell into this group. The response to
plaintiff’s contention is that a change in the law, either by statute or by case law,
does not revive claims otherwise barred by the statute of limitations.

The seminal case on point is Monroe v. Trustees of the California State

Colleges (1971) 6 Cal. 3d 399 [99 Cal. Rptr. 129, 491 P.2d 1105] . Professor
Monroe was fired from the California State College system for failing to take a
loyalty oath. The statute requiring the oath was held constitutional in Pockman
v. Leonard (1952) 39 Cal. 2d 676 [249 P.2d 267] . In view of that case,
Professor Monroe did not seek judicial review of the state’s action within the
statutory period. We overruled Pockman in Vogel v. County of Los Angeles
(1967) 68 Cal. 2d 18 [64 Cal. Rptr. 409, 434 P.2d 961] , and declared the
statute unconstitutional.

Shortly thereafter, Professor Monroe brought suit in part for back wages. We
held that this portion of Professor Monroe’s suit was untimely because a change
in the law applied only to timely filed claims; the change could not revive
claims already barred by the statute of limitations. Although prior to Vogel,
Professor Monroe was effectively precluded from bringing his claim, it was not
“impossible” for him to do so. We held that “no legal obstacle barred a judicial
challenge to [his] initial discharge” and that the “mere existence of a contrary
precedent has never been considered sufficient to toll the statute of limitations.”
Precedent is in unanimous accord with this rule.

In all of the above-cited cases, the court recognized that the rule may work a
harsh result. Nonetheless, it is justified in three ways. First, the rule encourages
people to bring suit to change a rule of law with which they disagree, fostering
growth and preventing legal stagnation. Second, the statute of limitations is not
solely a punishment for slow plaintiffs. It serves the important function of
repose by allowing defendants to be free from stale litigation, especially in
cases where evidence might be hard to gather due to the passage of time. Third,
to hold otherwise would allow virtually unlimited litigation every time
precedent changed. For example, in Li v. Yellow Cab Co. (1975) 13 Cal. 3d 804
[119 Cal. Rptr. 858, 532 P.2d 1226, 78 A.L.R. 3d 393] , this court held that
contributory negligence was not a total bar to recovery. There were undoubtedly
thousands of potential plaintiffs through the years who had been reasonably
advised to the contrary by competent counsel and so failed to bring suit.
Nevertheless, allowing them all to sue within a year after the Li decision would
have been untenable. Courts simply are not equipped to handle cases dating
back many years, eventually brought because the law has changed. This
prohibition against revival of claims can obviously create a hardship on such
unfortunate plaintiffs (and a windfall to fortunate defendants). However, the
hardship is no greater than that incurred by plaintiffs who received an adverse
final judgment based on the “old” law and are barred from relitigating their case
by res judicata. * * *

Moreover, in early 1978, plaintiff’s legal situation was not as dismal as it

initially appears. First, she was in no worse a position than Judith Sindell, who
ultimately prevailed in changing the law. Second, there were other, more
traditional theories available on which plaintiff could base her lawsuit, such as
civil conspiracy or joint [75/76]liability under Summers v. Tice, supra. While it
is true that these theories were not clearly meritorious (indeed they were
ultimately rejected by us in Sindell), they did provide plaintiff with a
nonfrivolous cause of action. Although in the latter part of 1978, McCreery,
supra, appeared to foreclose such a suit, that case was an intermediate appellate
court decision. In this regard, the last word on the subject had not been spoken,
and other Courts of Appeal were free to disregard that case. Therefore, plaintiff
was not entirely forestalled, even as a practical matter, from bringing a timely
suit.

Finally, even without using any of the above theories, plaintiff could have
filed a timely complaint under section 474, which allows suit to be filed against
a Doe party. From the time such a complaint is filed, the plaintiff has three years
to identify and serve the defendant. Hence, in the instant case, plaintiff could
have brought a timely Doe action, effectively enlarging the statute of limitations
period for three years. Had she done so, her complaint would have been
pending when Sindell, supra, was decided.

In sum, plaintiff’s argument that Sindell created or revived her cause of action
must fail. * * *

Conclusion

The judgment of the Court of Appeal is reversed. The cause is remanded with
instructions to affirm the judgment of the trial court in favor of defendants.

FOX v. ETHICON ENDO-SURGERY, INC.

SUPREME COURT OF CALIFORNIA
35 Cal. 4th 797, 27 Cal. Rptr. 3d 661, 110 P.3d 914 (2005)
Moreno, Justice.

Plaintiff Brandi R. Fox filed a medical malpractice action after gastric bypass
surgery performed on her resulted in severe complications. In the course of
discovery, Fox received information that a medical device used during the
surgery may have malfunctioned, causing her injury. Fox then amended her
complaint to add a products liability cause of action against the manufacturer of
the device, Ethicon Endo-Surgery, Inc. (Ethicon). Ethicon filed a demurrer
raising a statute of limitations defense, to which plaintiff responded by relying
upon the delayed discovery rule most recently discussed by this court in
Norgart v. Upjohn Co. (1999) 21 Cal.4th 383 [87 Cal. Rptr. 2d 453, 981 P.2d
79] (Norgart).

Plaintiff alleges that she could not, with reasonable investigation, have
discovered earlier that the medical device might have caused her injury. We
granted review to determine whether such an allegation is sufficient to withstand
demurrer, or whether we should adopt the bright-line rule announced in Bristol-
Myers Squibb Co. v. Superior Court (1995) 32 Cal.App.4th 959, 966 [38 Cal.
Rptr. 2d 298] (Bristol-Myers Squibb), that “[w]hen a plaintiff has cause to sue
based on knowledge or suspicion of negligence the statute [of limitations] starts
to run as to all potential defendants.”

[76/77]

We conclude that, under the delayed discovery rule, a cause of action accrues
and the statute of limitations begins to run when the plaintiff has reason to
suspect an injury and some wrongful cause, unless the plaintiff pleads and
proves that a reasonable investigation at that time would not have revealed a
factual basis for that particular cause of action. In that case, the statute of
limitations for that cause of action will be tolled until such time as a reasonable
investigation would have revealed its factual basis. We disapprove the decision
in Bristol-Myers Squibb v. Superior Court, supra, 32 Cal.App.4th 959, to the
extent that it holds to the contrary.

I. FACTS AND PROCEDURAL HISTORY

 On April 10, 1999, respondent Brandi R. Fox underwent Roux-en-Y gastric
bypass surgery and postsurgical treatment.1 The operation was performed by
Dr. Herbert Gladen. During the surgery, Fox was under general anesthesia and
unconscious. Fox went home following the surgery, but returned soon after the
surgery because she felt ill.

Fox’s condition worsened, moving Dr. Gladen to perform exploratory surgery

a few days after the gastric bypass operation. The exploratory surgery revealed
a perforation at the stapled closure of the small intestine, which caused fluid to
leak into Fox’s abdominal cavity. Dr. Gladen attempted to seal the perforation.
In his operative report for the exploratory surgery, Dr. Gladen failed to identify
a cause for the perforation. Fox required additional medical care and remained
hospitalized until March 4, 2000.

On April 6, 2000, Fox served Dr. Gladen, and the hospital and medical
center in Fresno where the surgery and subsequent care took place, with a notice
of intent to commence action pursuant to Code of Civil Procedure section 364.
Fox filed a complaint for medical malpractice against the doctor and the treating
hospitals in Fresno County Superior Court on June 28, 2000. In her complaint,
Fox claimed that “[d]efendants lacked the necessary knowledge and skill to
properly care for [her] condition and were negligent and unskillful in the
diagnosis, treatment, and prescription procedures utilized in treating [her]
condition. The negligence claimed is for negligently performing pre-surgical,
surgical, and post-surgical care so as to cause injuries and damages to … Fox.”

Fox named as defendants Dr. Gladen, the hospital and medical center, and
Does 1 to 100, inclusive. The complaint alleged that “the defendants named
herein as DOES 1 through 100, inclusive, were the agents, servants, and
employees of each of the remaining defendants, and in doing the things
hereinafter alleged, were acting within the course and scope of their authority as
such agents, servants, or employees, and with the permission and consent of
their codefendants.”

When Fox deposed Dr. Gladen on August 13, 2001, the doctor testified that
he [77/78]had discovered a leak at the stapled closure of Fox’s small intestine
during the exploratory surgery. He further noted that the bowel had been stapled
with an “Ethicon GIA-type stapler,” that the hospital had furnished the stapler,
and that he had found on previous occasions that such a stapler had caused
postsurgery leaks.
 Accordingly, on November 28, 2001, Fox filed a first amended complaint
adding the manufacturer of the stapler, Ethicon, as a named defendant. In the first
amended complaint, Fox asserted a products liability cause of action against
Ethicon, alleging that she was injured by an “Ethicon GIA-type stapler” on or
about April 10, 1999. Fox used a Judicial Council form for products liability
causes of action, specifying counts for strict liability relating to the design,
manufacture, and assembly of the stapler, negligence, and breach of implied
warranty. The first amended complaint also alleged that Fox “did not discover,
nor suspect, nor was there any means through which her reasonable diligence
would have revealed, or through which she would have suspected the Ethicon
GIA-type stapler as a cause of her injury until the deposition of [Dr. Gladen]
was taken on August 13, 2001.”

Ethicon demurred to the first amended complaint, contending that the products
liability claim was time-barred by the one-year statute of limitations under Code
of Civil Procedure former section 340, former subdivision 3. In opposition, Fox
noted that she had no knowledge that the gastric bypass surgery would involve
the use of a stapler or any similar device.

Fox further stated that she never learned during the postsurgical care
following the gastric bypass operation that the stapler had malfunctioned or
could have caused the leakage and other problems, and that she first discovered
the possibility of a stapler malfunction when her counsel notified her of Dr.
Gladen’s deposition testimony. Finally, Fox offered to file a second amended
complaint to clarify the facts supporting her assertion that she had no reason to
suspect the stapler until after Dr. Gladen’s testimony, and that no reasonable
person would have suspected that the Ethicon product had malfunctioned.

Fox’s attorney also filed a declaration stating that neither the operative report
nor the reparative operative report indicated that the stapler had malfunctioned
or misfired. The declaration also stated that Dr. Gladen’s testimony was taken
during the normal course of discovery in a medical malpractice lawsuit, Fox
was reasonably diligent in pursuing the lawsuit and discovery, and Fox could
allege that Dr. Gladen never mentioned a stapler malfunction or defect during
the entire course of his postsurgical care.

On June 17, 2002, the superior court sustained Ethicon’s demurrer to the
products liability cause of action without leave to amend, relying upon Norgart,
supra, 21 Cal.4th 383, and Bristol-Myers Squibb, supra, 32 Cal.App.4th 959,
to conclude that the statute of limitations barred the products liability cause of
action. The superior court stated that when a plaintiff sues based on knowledge
or suspicion of negligence, including medical malpractice as in Fox’s case, the
statute of limitations begins to run as to all defendants, including manufacturers
possibly liable under products liability theories. The superior court also stated
that Fox failed to demonstrate that amending the complaint could “overcome the
limitations defense.” Fox timely appealed from the superior court’s order
sustaining Ethicon’s demurrer as to the products liability cause of action.

[78/79]

The Court of Appeal reversed the superior court’s order and remanded with
directions to grant Fox leave to amend to allege facts explaining why she did not
have reason to discover earlier the factual basis of her products liability claim.
In so ruling, the Court of Appeal held that Bristol-Myers Squibb’s “bright line
rule of imputed simultaneous discovery of causes of action” did not apply.
Ethicon petitioned this court, and we granted review.

II. DISCUSSION

This case requires us to address once again the proper application of a statute
of limitations. (See Gutierrez v. Mofid (1985) 39 Cal.3d 892 [218 Cal. Rptr.
313, 705 P.2d 886] ; Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103 [245 Cal.
Rptr. 658, 751 P.2d 923] (Jolly) ; Bernson v. Browning-Ferris Industries
(1994) 7 Cal.4th 926 [30 Cal. Rptr. 2d 440, 873 P.2d 613] (Bernson); Norgart,
supra, 21 Cal.4th at p. 395.) * * *

In order to rely on the discovery rule for delayed accrual of a cause of action,
“[a] plaintiff whose complaint shows on its face that his claim would be barred
without the benefit of the discovery rule must specifically plead facts to show
(1) the time and manner of discovery and (2) the inability to have made earlier
discovery despite reasonable diligence.” (McKelvey v. Boeing North
American, Inc. (1999) 74 Cal.App.4th 151, 160 [86 Cal. Rptr. 2d 645].) In
assessing the sufficiency of the allegations of delayed discovery, the court
places the burden on the plaintiff to “show diligence”; “conclusory allegations
will not withstand demurrer.” (Ibid.)

Simply put, in order to employ the discovery rule to delay accrual of a cause
of action, a potential plaintiff who suspects that an injury has been wrongfully
caused must conduct a reasonable investigation of all potential causes of that
injury. If such an investigation would have disclosed a factual basis for a cause
of action, the statute of limitations begins to run on that cause of action when the
investigation would have brought such information to light. In order to
adequately allege facts supporting a theory of delayed discovery, the plaintiff
must plead that, despite diligent investigation of the circumstances of the injury,
he or she could not have reasonably discovered facts supporting the cause of
action within the applicable statute of limitations period.

Under the statute of limitations applicable to this case, a plaintiff must bring a
cause of action for products liability within one year of accrual. (Code Civ.
Proc., § 340, former subd. 3.)3 Products liability claims brought under either
negligence or strict liability theories are subject to delayed accrual under the
discovery rule. (See Fireman’s Fund Ins. Co. v. Sparks Const., Inc. (2004)
114 Cal.App.4th 1135, 1150 [8 Cal. Rptr. 3d 446] .) Normally, the general rule
for defining the accrual of a cause of action should govern a cause of action for
products liability. (See Norgart, supra, 21 Cal.4th at p. 404.) For both
negligence and strict liability products liability claims, [79/80]the last element to
occur is generally, as a practical matter, the injury to the future plaintiff.

Fox alleges that she was injured by an “Ethicon GIA-type stapler” on April
10, 1999. She timely filed her medical malpractice claim on June 28, 2000.4
Her cause of action for products liability was alleged for the first time in the
first amended complaint filed on November 28, 2001, more than one year after
her injury. Accordingly, Fox’s products liability action would only be timely if
the discovery rule acted in some fashion to delay accrual of the cause of action.5

The Court of Appeal below applied the discovery rule to Fox’s products
liability claims against Ethicon, and ordered that the trial court judgment
sustaining the demurrer without leave to amend be reversed and that the case be
remanded to the trial court with directions to enter an order sustaining the
demurrer with leave to amend the cause of action for products liability.

“On appeal from a judgment dismissing an action after sustaining a demurrer

without leave to amend, … [t]he reviewing court gives the complaint a
reasonable interpretation, and treats the demurrer as admitting all material facts
properly pleaded.” (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962,
966–967 [9 Cal. Rptr. 2d 92, 831 P.2d 317] (Aubry); Blank v. Kirwan (1985)
39 Cal.3d 311, 318 [216 Cal. Rptr. 718, 703 P.2d 58].) * * *
 Here … we must assume to be true Fox’s allegations that she “did not
discover, nor suspect, nor was there any means through which her reasonable
diligence would have revealed, or through which she would have suspected the
Ethicon GIA-type stapler as a cause of her injury until the deposition of [Dr.
Gladen] was taken on August 13, 2001.” In addition, we also consider whether
any defect in the first amended complaint could have been cured by Fox’s
proposed amendment to that complaint, in which she would have stated that she
had no reason to suspect the stapler until after Dr. Gladen’s testimony, and that
no reasonable person would have suspected that the Ethicon product had
malfunctioned.

In order to employ the discovery rule to delay accrual of a cause of action, a

plaintiff must demonstrate that he or she conducted a reasonable investigation of
all potential causes of his or her injury. Fox has only partially met this
requirement by alleging that there was no way “through which her reasonable
diligence would have revealed, or through which she would have suspected the
Ethicon GIA-type stapler as a cause of her injury” until August 13, 2001. Fox’s
first amended complaint was, as the Court of Appeal below held, insufficient to
withstand demurrer because it [80/81]failed to allege specific facts supporting the
allegations quoted above. The defect in Fox’s first amended complaint,
however, could have been cured by the proposed amendment to that complaint.

Fox’s proposed second amended complaint would have properly alleged that
the products liability cause of action did not accrue until after the stapler
malfunction was revealed during the deposition of Dr. Gladen. The facts that
Fox seeks to add to her complaint support her allegation that she did not suspect,
nor did she have reason to discover, facts supporting a products liability action
against Ethicon until after deposing Dr. Gladen. Accordingly, we conclude that
the Court of Appeal did not err in ordering the trial court to grant Fox leave to
amend her complaint.6

Ethicon, however, contends that we should adopt the more restrictive Bristol-
Myers Squibb formulation of the discovery rule. Ethicon does not argue that the
Bristol-Myers Squibb formulation is mandated by this court’s decisions, or that
we have expressly or impliedly adopted it, but rather asserts that the Bristol-
Myers Squibb approach is consistent with our formulation of the discovery rule
in prior cases.
 In Bristol-Myers Squibb, the plaintiff’s silicone breast implant was ruptured
in an altercation in 1982. Two years later, the plaintiff learned that the implant
had ruptured, that silicone was migrating down her arm, and that the silicone
was a cause of physical injury in the form of ulcerations. The plaintiff argued
that because she had been told that silicone was an inert and harmless substance,
she did not actually suspect the manufacturer of the implant of wrongdoing until
after reading a newspaper article in late 1990.

The Court of Appeal held that the statute of limitations on the plaintiff’s
products liability cause of action against the manufacturers of her silicone breast
implants began to run when the statute of limitations on her medical malpractice
action commenced. (Bristol-Myers Squibb, supra, 32 Cal.App.4th at p. 967.)
As the court stated: “[w]hen a plaintiff has cause to sue based on knowledge or
suspicion of negligence the statute starts to run as to all potential defendants,”
regardless of whether those defendants are alleged as wrongdoers in a separate
but related cause of action. (Id. at p. 966.)

We have neither approved nor disapproved the Bristol-Myers Squibb

formulation. In Norgart, we declined to address whether the discovery rule
applied by the Court of Appeal in that case was correct, 7 or whether the more
restrictive Bristol-Meyers Squibb standard reflected the correct rule. We
expressly declined to resolve “any conflict between the holding of the Court of
Appeal in Bristol-Myers Squibb and the holding of the Court of Appeal below,”
holding instead that the wrongful death cause of action at issue in that case was
barred under either [81/82]formulation. (Norgart, supra, 21 Cal.4th at p. 406.) * *
*

In our previous cases addressing the discovery rule, we affirmed that

ignorance of the identity of the defendant does not delay accrual of a cause of
action, but that ignorance of a generic element of the cause of action does.
(Norgart, supra, 21 Cal.4th at p. 399.) Such a distinction certainly exists in the
context of a products liability action. Although the identity of the manufacturer-
wrongdoer is not an essential element of a products liability cause of action, and
therefore ignorance of its identity will not delay the running of the statute of
limitations (see Bernson, supra, 7 Cal.4th at p. 932), a plaintiff’s ignorance of
wrongdoing involving a product’s defect will usually delay accrual because
such wrongdoing is essential to that cause of action. (See, e.g., Clark v. Baxter
Healthcare Corp. (2000) 83 Cal.App.4th 1048, 1060 [100 Cal. Rptr. 2d 223]
[triable issue of fact existed as to when plaintiff knew or suspected
wrongfulness component of products liability cause of action].)
 It is therefore consistent with our prior applications of the discovery rule to
delay accrual of a products liability cause of action even when a related
medical malpractice claim has already accrued, unless the plaintiff has reason
to suspect that his or her injury resulted from a defective product. More broadly
stated, if a plaintiff’s reasonable and diligent investigation discloses only one
kind of wrongdoing when the injury was actually caused by tortious conduct of a
wholly different sort, the discovery rule postpones accrual of the statute of
limitations on the newly discovered claim.

In both Jolly and Norgart, the plaintiffs suspected or had reason to suspect
that a product had caused their injury. In Jolly, the plaintiff alleged injury
caused by her mother’s ingestion of the synthetic drug estrogen diethylstilbestrol
(DES) while Jolly was in utero. The undisputed evidence in that case showed
that, as of 1972, Jolly at least suspected that her condition was a result of her
mother’s ingestion of DES. Accordingly, we held that because the plaintiff at
least suspected that DES was the cause of her injuries as of 1972, the statute of
limitations began to run at that time, even though Jolly was unable to establish
the identity of the manufacturer of the DES ingested by her mother.

Likewise, in Norgart, the daughter of the plaintiffs had committed suicide in

her home by intentionally taking an overdose of prescription drugs, including
Halcion. We upheld the superior court’s grant of summary judgment against the
plaintiffs, reversing the Court of Appeal, and finding that the plaintiffs had
reason soon after their daughter’s death to discover their causes of action for
wrongful death against Upjohn for manufacturing and distributing Halcion. More
specifically, in Norgart we found that there was no triable issue of material fact
and that Upjohn was entitled to judgment on the statute of limitations defense
because the plaintiffs had reason to discover their cause of action against
Upjohn soon after their daughter’s death when they learned at that time of her
depression and suicide by taking an overdose of prescription drugs, including
Halcion. The plaintiffs also learned of a possible connection between Halcion
and the suicide, because such connection was disclosed during the plaintiffs’
investigation on the drug’s package insert, which warned of a possible suicide
risk.

This court’s decisions in Jolly and Norgart each presuppose a situation in

which [82/83]the factual basis for a claim was reasonably discoverable through
diligent investigation. In both Jolly and Norgart, the court emphasized that the
plaintiffs had ample reason to suspect the basis of their claims. Indeed, the
application of the discovery rule as articulated in this opinion would not have
yielded a different result had it been applied in either Jolly or Norgart.

The Court of Appeal in Bristol-Myers Squibb failed to distinguish between a

plaintiff’s ignorance of the identity of a particular defendant — a fact that is not
an element of the underlying cause of action — and ignorance that a product was
the cause of the injury. In Norgart, we made clear that a cause of action accrues
when a plaintiff has reason to discover “a factual basis” for the claim. The
bright-line rule announced in Bristol-Myers Squibb, however, applies to all
defendants regardless of whether those defendants are alleged as wrongdoers in
the same cause of action, or in a separate but related cause of action alleging a
wholly different kind of tortious wrongdoing.

As the allegations in this case illustrate, a diligent plaintiff’s investigation

may only disclose an action for one type of tort (e.g., medical malpractice) and
facts supporting an entirely different type of tort action (e.g., products liability)
may, through no fault of the plaintiff, only come to light at a later date. Although
both claims seek to redress the same physical injury to the plaintiff, they are
based on two distinct types of wrongdoing and should be treated separately in
that regard. Accordingly, the Bristol-Myers Squibb rule that all claims arising
from an injury accrue simultaneously, even if based upon distinct types of
wrongdoing, is inconsistent with the generic elements approach prescribed by
Norgart. We therefore agree with the Court of Appeal below that the Bristol-
Myers Squibb formulation is inconsistent with the iteration of the discovery rule
announced in this court’s earlier decisions.

Ethicon contends that the formulation of the discovery rule used by the Court
of Appeal is contrary to public policy because it would encourage plaintiffs to
“wait for the facts.” We disagree. A plaintiff seeking to utilize the discovery
rule must plead facts to show his or her inability to have discovered the
necessary information earlier despite reasonable diligence. This duty to be
diligent in discovering facts that would delay accrual of a cause of action
ensures that plaintiffs who do “wait for the facts” will be unable to successfully
avoid summary judgment against them on statute of limitations grounds.

It would be contrary to public policy to require plaintiffs to file a lawsuit “at

a time when the evidence available to them failed to indicate a cause of action.”
(Leaf v. City of San Mateo (1995) 104 Cal.App.3d 398, 408 [163 Cal. Rptr.
711].) Were plaintiffs required to file all causes of action when one cause of
action accrued, as they would be under the Bristol-Myers Squibb rule, they
would run the risk of sanctions for filing a cause of action without any factual
support. (Code Civ. Proc., § 128.5; see Finnie v. Town of Tiburon (1988) 199
Cal.App.3d 1, 14 [244 Cal. Rptr. 581] [holding lack of factual basis for claim
to be grounds for imposing sanctions].) Indeed, it would be difficult to describe
a cause of action filed by a plaintiff, before that plaintiff reasonably suspects
that the cause of action is a meritorious one, as anything but frivolous. At best,
the plaintiff’s cause of action would be subject to demurrer for failure to specify
supporting facts. In sum, the interest of the courts [83/84]and of litigants against
the filing of potentially meritless claims is a public policy concern that weighs
heavily against the Bristol-Myers Squibb formulation of the discovery rule.

III. DISPOSITION

The judgment of the Court of Appeal is affirmed.

NOTES AND QUESTIONS REGARDING

ACCRUAL AND THE DISCOVERY RULE

(1) Accrual Rule, Generally. The California Legislature has never enacted a
general statute which defines the accrual point for all categories of civil actions.
The traditional judicial statement of when a statute of limitations begins to run is
“upon the occurrence of the last element essential to the cause of action.” Neel
v. Magana, Olney, Levy, Cathcart & Gelfand , 6 Cal. 3d 176, 187, 98 Cal.
Rptr. 837, 491 P.2d 421 (1971) . This rather vague definition of “accrual”
evolved into the often-stated rule that a statute of limitations begins to run on the
“date of injury.” A fundamental component of this traditional common law rule
was that accrual will not be delayed by the plaintiff’s ignorance of the fact of
injury or of the identity of the wrong-doer. See Stephen V. O’Neal, Note,
Accrual of Statutes of Limitations: California’s Discovery Exceptions
Swallow the Rule, 68 Cal. L. Rev. 106, 107 (1980).

As the Jolly case illustrates, the discovery rule now modifies the traditional
common law date-of-injury rule. In its most basic form, the discovery rule
alleviates the unfairness inherent in the traditional rule where a plaintiff, despite
reasonable diligence, is unable to discover the fact of injury within the
applicable limitations period. This unfairness is particularly acute when the
applicable statute of limitations is a short one, such as the one-year period for
personal injury actions in former CCP § 340(3). Not surprisingly, many of the
early cases adopting the “discovery rule” are personal injury actions. See
O’Neal, Accrual of Statutes of Limitations, supra, 106-116.

(2) The California Discovery Rule. In Bristol-Myers Squibb Co. v. Superior

Court, 32 Cal. App. 4th 959, 38 Cal. Rptr. 2d 298 (1995) , the court applied the
Jolly “reasonable suspicion” formula expansively to bar a negligence action
against the manufacturer of silicone-gel-filled breast implants. Plaintiff Jones
received two breast implants inserted by her doctor in 1976. In 1982, Jones was
involved in an altercation with another woman which resulted in severe battery
to Jones’ upper torso. Jones believed one of her implants had ruptured and that
the silicone had migrated to her underarm. She saw her doctor for these
symptoms in 1982, and was told that it was not possible for the silicone from a
ruptured implant to be in her arm.

After consulting other physicians, Jones learned by 1984 that the silicone had
in fact migrated down her arm and was causing serious physical injury. She also
consulted an attorney at that time about a possible malpractice claim against her
doctor and a battery action against her assailant, but did not commence litigation
at that time. Subsequently in December, 1990, Jones read a newspaper article
about [84/85]a breast implant support group, and for the first time became
suspicious that the manufacturer of her implants might be responsible for her
injuries. She then filed her negligence action against the defendant manufacturer
in April, 1991.

Applying the Jolly formula to these facts, the court held that plaintiff’s action
against the defendant manufacturer was barred by the applicable one-year
statute of limitations. The court reasoned that plaintiff Jones knew of her injury
and of the facts which would create a suspicion of negligence on the part of
someone by 1984. The court rejected plaintiff’s argument that, because she
initially attributed her injuries to her batterer and her doctor, she had no basis
for suspicion of wrongdoing by the defendant manufacturer until 1991, stating:
“As Jolly teaches us, however, this excuse will not suffice. When a plaintiff has
cause to sue based on knowledge or suspicion of negligence, the statute starts to
run as to all potential defendants.” Id. at 966.

Did the Supreme Court in Fox v. Ethicon Endo-Surgery, Inc . approve or

disapprove of the holding in Bristol-Myers Squibb? How so? Precisely what
aspect of Bristol-Myers Squibb did the Fox court criticize?

(3) The Supreme Court in Jolly rejected defendant’s argument that the
limitations period should commence when the plaintiff knows of her injury and
its factual cause. What does defendant’s argument mean? How is defendant’s
“factual cause” discovery rule different from the discovery rule ultimately
endorsed by the court in Jolly? Under the defendant’s argument, when did the
plaintiff in Jolly discover her injury and its factual cause?

(4) The Federal Discovery Rule. The federal courts in construing the Federal
Torts Claim Act have adopted the “factual cause” version of the discovery rule.
In United States v. Kubrick, 444 U.S. 111, 100 S. Ct. 352, 62 L. Ed. 2d 259
(1979), plaintiff suffered loss of hearing in 1968 after antibiotic treatment of an
infection of the femur at a Veterans Administration hospital. In January, 1969, a
specialist informed Kubrick that his hearing loss may have been caused by the
antibiotic treatment. Kubrick submitted a claim for disability benefits, which
was denied by the VA because there was no evidence of negligence by the VA
in administering the antibiotic. Finally on June, 1971 Kubrick learned from a
doctor that not only did the antibiotic cause his deafness but that it was
negligently administered. Kubrick then commenced an action in federal court in
1972, pursuant to the Federal Torts Claim Act.

The United States Supreme Court held that Kubrick’s lawsuit was barred by
the applicable two-year statute of limitations. The court ruled that Kubrick’s
claim accrued in January, 1969, when he was aware of his injury and that it was
caused by the antibiotic. The court expressly rejected the view that plaintiff’s
claim did not accrue until June, 1971, when he first learned that his injury was
negligently inflicted. The court concluded that generally a claim against the
government under the Federal Torts Claim Act accrues as soon as a plaintiff is
aware of his injury and its cause, even though he does not reasonably suspect his
injury was the result of negligence.

Would the plaintiff’s action in Kubrick have been barred if the federal court
applied the California version of the discovery rule as set forth in Jolly? Why
did the [85/86]federal court in Kubrick apply federal law and not state law in
determining the appropriate discovery rule?

(5) The court in Jolly stated that “[t]he discovery rule provides that the
accrual date of a cause of action is delayed until the plaintiff is aware of her
injury and its negligent cause …. A plaintiff is held to her actual knowledge as
well as knowledge that could reasonably be discovered through investigation of
sources open to her.” Jolly, 44 Cal. 3d at 1109. How is this statement of the
discovery rule different from the rule utilized by the Court of Appeal in
Kensinger v. Abbott Lab., 171 Cal. App. 3d 376, 383–84, 217 Cal. Rptr. 313
(1985), which was disapproved by the Supreme Court in Jolly?

(6) “Reasonable Suspicion.” The Supreme Court in Jolly restated the

discovery rule as follows: “Under the discovery rule, the statute of limitations
begins to run when the plaintiff suspects or should suspect that her injury was
caused by wrongdoing, that someone has done something wrong to her.” Jolly,
44 Cal. 3d at 1110. What constitutes “reasonable suspicion”? Does this have
anything to do with the relationship between the plaintiff and defendant prior to
litigation? See Miller v. Bechtel Corp., 33 Cal. 3d 868, 191 Cal. Rptr. 619, 663
P.2d 177 (1983) (Limitations period commenced to run at time of marital
property settlement when plaintiff suspicious of her husband’s undervaluation of
certain stock, and not when she learned the stock’s true value when husband
sold stock several years later); Sanchez v. South Hoover Hosp., 18 Cal. 3d 93,
101-102, 132 Cal. Rptr. 657, 553 P.2d 1129 (1976) (patient has right to rely on
a lesser standard of “diminished diligence” in discovery of wrongful treatment
by physician while physician-patient relationship continues, but if plaintiff does
not take physician’s assurances at face value, then diminished duty to discover
period may be terminated or attenuated); Unjian v. Berman, 208 Cal. App. 3d
881, 256 Cal. Rptr. 478 (1989) (discovery of negligent cause of injury was
delayed where patient who continued under doctor’s care inquired about cause
of apparent injury and was given explanation by doctor calculated to allay any
suspicion of negligence). Does what constitutes “reasonable suspicion” depend
on the nature of the injury? See Prudential-LMI Commercial Ins. v. Superior
Court, 51 Cal. 3d 674, 687, 274 Cal. Rptr. 387, 798 P.2d 1230 (1990) (the
more substantial or unusual the nature of the damage discovered, the greater the
duty to exercise diligence in investigation).

(7) “Constructive Suspicion.” In Nelson v. Indevus Pharm., Inc., 142 Cal.

App. 4th 1202, 48 Cal. Rptr. 3d 668 (2006), the plaintiff, a user of the
prescription diet drug Fen-phen during 1997, brought a personal injury action
against the defendant drug marketer in 2003 after the plaintiff had an
echocardiogram. Although it was undisputed that the plaintiff did not know
about the dangers of Fen-phen before the spring of 2002, the defendant argued
that plaintiff’s action was barred by the statute of limitations because of the
wide-spread publicity about the drug’s dangers in 1997. The court rejected
defendant’s “constructive suspicion” argument, and held that under the
discovery rule plaintiff’s cause of action did not accrue in 1997. The court
noted that a patient who actually learns of the dangerous side effects of a drug
she has taken ignores her knowledge at her peril, but the discovery rule only
requires an investigation when a plaintiff has reason to investigate. However,
the plaintiff here had no obligation to read newspapers or watch television news
and otherwise seek out news of dangerous side effects not disclosed by her
prescribing doctor or [86/87]by the drug manufacturer. See also Unruh-Haxton v.
Regents of Univ. of California, 162 Cal. App. 4th 343, 76 Cal. Rptr. 3d 146
(2008) (trial court improperly took judicial notice of approximately 100
newspaper articles and press releases regarding defendant’s wrongdoing when
it determined that plaintiffs should have suspected wrongdoing; constructive
suspicion based on publicity alone was insufficient to trigger the statute of
limitations).

The Nelson court bolstered its conclusion by referring to CCP § 340.8, which
provides the statute of limitations for any civil action for injury or illness based
upon exposure to a hazardous material or toxic substance. Section 340.8
provides in part: “Media reports regarding the hazardous material or toxic
substance contamination do not, in and of themselves, constitute sufficient facts
to put a reasonable person on inquiry notice that the injury or death was caused
or contributed to by the wrongful act of another.” The Nelson court ruled that
under its plain meaning § 340.8 applies to cases which allege personal injury
caused by harmful chemicals, and not simply to actions concerning
environmental hazards.

(8) Actual Suspicion. The discovery rule sets forth two alternate tests for
triggering the limitations period: (1) a subjective test requiring actual suspicion
by the plaintiff that the injury was caused by wrongdoing; and (2) an objective
test requiring a showing that a reasonable person would have suspected the
injury was caused by wrongdoing. Jolly, supra, 44 Cal. 4th at 1110. The first to
occur under these two tests begins the limitations period. Id. What constitutes
“actual suspicion”?

The court in Kitzig v. Nordquist, 81 Cal. App. 4th 1384, 97 Cal. Rptr. 2d 762
(2000), considered this question in the context of a patient who obtained a
second opinion during ongoing medical treatment. Between 1992 and 1995, the
defendant dentist in Kitzig performed eight dental implant surgeries on the
plaintiff. After one of these surgeries in March, 1994, an implant failed and
caused a hole in plaintiff’s sinus, which she discovered after experiencing food
escaping from her nose when she ate. Admittedly “suspicious” that the defendant
may have done something wrong because she had a hole in her sinus, plaintiff
consulted a second dentist in May, 1994. That doctor reassured plaintiff that the
hole was not a significant issue and that everything was fine. Plaintiff then
returned to the defendant for more implant surgeries and continued her treatment
with him until April, 1995, when plaintiff began treatment with an oral surgeon
because the implants kept failing. Plaintiff commenced a dental malpractice
action against the defendant in 1996.

Relying on Jolly, the defendant in Kitzig argued that the plaintiff’s

malpractice action was not commenced within one year after plaintiff was
actually suspicious of wrongdoing when she consulted another doctor in May,
1994, and was therefore barred by the statute of limitations (CCP § 340.5). A
majority of the court rejected this argument, finding that under the circumstances
plaintiff’s suspicion in May, 1994 was not “meaningful” because it had no effect
on her ongoing relationship with the defendant. “Holding that a second opinion
necessarily triggers a malpractice statute of limitations whenever a patient is
motivated by a possible suspicion — however momentary — that her doctor
was ‘doing something wrong,’ the majority reasoned, ‘would hinder a patient’s
ability to obtain the best medical care.’” Kitzig, supra, 81 Cal. App. 4th at
1393. The dissent viewed the majority’s holding as [87/88]ignoring Jolly and as
contrary to plaintiff’s unequivocal admission that over one year before she filed
suit, she suspected that the defendant did something wrong to her, prompting her
to seek another dentist’s opinion. Kitzig, 81 Cal. App. 4th at 1402–12.

Do you agree with the majority or the dissent in Kitzig? Under the majority’s
view of the subjective test for the discovery rule, what evidence would satisfy
the requirement of “actual suspicion” by the plaintiff that the injury was caused
by wrongdoing? Note that the medical malpractice statute of limitations (CCP §
340.5) does not contain an express tolling exception for “continuous
representation,” such as the one found in the legal malpractice statute of
limitations (CCP § 340.6). Was this an oversight by the Legislature when it
enacted § 340.5, or are there policy reasons for tolling the limitations period
during the time of “continuous representation” as to legal malpractice actions
but not as to medical malpractice actions? Does the lack of such a tolling
provision for medical malpractice actions undercut the majority’s holding in
Kitzig?

(9) Does the discovery rule endorsed by the Supreme Court in Jolly
encourage or discourage unnecessary litigation? Premature litigation? In what
sense might litigation be “unnecessary” or “premature”? Is the version of the
discovery rule applied by the Court of Appeal in Kensinger preferable because
it delays litigation until more specific facts are known? In rejecting the
Kensinger rule, what policies did the Supreme Court find more important to
further?
 (10) Note that the Supreme Court in Jolly did not modify the traditional
common law rule that ignorance of the legal significance of known facts will not
delay the running of a statute of limitations. What does this mean? Does this
mean that the statute will run even where a party diligently investigates facts but
is advised by an expert that the facts do not constitute an actionable wrong? See,
e.g., Gutierrez v. Mofid, 39 Cal. 3d 892, 218 Cal. Rptr. 313, 705 P.2d 886
(1985) (if one has suffered appreciable harm and suspects malpractice as its
cause, the fact that an attorney has given discouraging advice does not postpone
commencement of the limitations period; the risk that discouraging legal advice
will lead to loss of a cause of action must fall upon the plaintiff who obtains the
advice, rather than upon a wholly uninvolved defendant). Does Jolly signify that
the statute will run even where the defendant misstates the viability of the legal
theory supporting plaintiff’s action? See, e.g., Neff v. New York Life Ins. Co., 30
Cal. 2d 165, 180 P.2d 900 (1947) . Even where the defendant is an insurance
company that misrepresents the legal theory of policy coverage in denying a
claim? See Love v. Fire Ins. Exchange , 221 Cal. App. 3d 1136, 271 Cal. Rptr.
246 (1990). Or where the plaintiff relies on the defendant’s representations
regarding legal advice, and a fiduciary relationship existed between plaintiff
and defendant? See Eisenbaum v. Western Energy Resources, Inc. , 218 Cal.
App. 3d 314, 267 Cal. Rptr. 5 (1990).

(11) Another important limitation of the discovery rule adopted in Jolly is the
well-established rule that the ignorance of the identity of the wrongdoer will not
delay the running of a statute of limitations. In other words, the statute of
limitations begins to run when a plaintiff knows of her injury, its cause, and
suspects wrongdoing, even though she does not know who caused her injury.
This was particularly a problem for the plaintiff in Jolly, was it not? What
procedural devices [88/89]are available to a plaintiff who does not know which
specific defendant to sue? Should the general rule apply when, as a result of the
defendant’s intentional concealment, the plaintiff is not only unaware of the
defendant’s identity but is effectively precluded as a practical manner from
ascertaining it through normal discovery procedures? See Bernson v. Browning-
Ferris Indus., 7 Cal. 4th 926, 30 Cal. Rptr. 2d 440, 873 P.2d 613 (1994)
(defendant may be equitably estopped from asserting statute of limitations when,
as the result of intentional concealment, the plaintiff is unable to discover
defendant’s actual identity), reproduced infra.

(12) Do you understand the plaintiff’s main argument based on Sindell? Are
you persuaded by the court’s analysis that Sindell did not create a new tort?
Prior to Sindell, could plaintiff have stated a cause of action without identifying
the precise manufacturer of the pills ingested by her mother? What procedural
devices could the plaintiff have utilized, prior to the Sindell decision, to avoid
the running of the statute of limitations? See discussion of Doe Defendants, §
9.04, infra.

(13) How realistic is the Supreme Court’s observation that plaintiff Jolly
could have initiated timely litigation despite the adverse precedent of McCreery
v. Eli Lilly & Co., 87 Cal. App. 3d 77, 150 Cal. Rptr. 730 (1978) , which was
overruled by Sindell? Are you persuaded by the court’s justification of the rule
that the existence of contrary precedent has never been considered sufficient to
toll the statute of limitations? Is a less harsh rule possible, which would still
satisfy the policies behind the current rule? Is there any way to distinguish
Monroe v. Trustees of the Cal. State Colleges , 6 Cal. 3d 399, 99 Cal. Rptr.
129, 491 P.2d 1105 (1971) , relied on by the Supreme Court for this rule, from
the circumstances of the Jolly case? Relying on Jolly, the Supreme Court in
Howard Jarvis Taxpayers Assn. v. City of La Habra , 25 Cal. 4th 809, 107 Cal.
Rptr. 2d 369, 23 P.3d 601 (2001) , reaffirmed the principle that a change in
substantive case law governing a cause of action does not revive a claim
otherwise barred by the statute of limitations.

(14) In Fox v. Ethicon Endo-Surgery, Inc. , reproduced supra, the Supreme

Court broadly stated that “if a plaintiff’s reasonable and diligent investigation
discloses only one kind of wrongdoing when the injury was actually caused by
tortious conduct of a wholly different sort, the discovery rule postpones accrual
of the statute of limitations on the newly discovered claim.” What constitutes
“tortious conduct of a wholly different sort” for purposes of the delayed
discovery rule?

(15) In Fox, the statute of limitations defense was raised by a demurrer to the
plaintiff’s amended complaint in which she alleged that she could not, with
reasonable investigation, have discovered earlier that the medical device might
have caused her injury. Accordingly, the court assumed the truth of her
allegations and held that her amended complaint was not barred by the statute of
limitations. Given the nature of plaintiff’s injury, do you think she will have
difficulty convincing a fact-finder that she could not have discovered earlier that
the stapler was the source of her injury? What facts are relevant to the question
of whether she could have discovered this source of her injury earlier “with
reasonable investigation”? In addition to formal discovery, what avenues of
reasonable investigation are available to someone who has suffered an injury
like the plaintiff’s post-surgery complications?

[89/90]

(16) The discovery rule has now been adopted in a wide variety of tort cases.
See Steven J. Andre, California Personal Injury Statutes of Limitations: The
Modern Tort and the Judicial Abandonment of an Archaic Doctrine , 27 Santa
Clara L. Rev. 657 (1987). Although most of these cases involve personal
injuries, some involve injury to property. E.g., Moreno v. Sanchez , 106 Cal.
App. 4th 1415, 131 Cal. Rptr. 2d 684 (2003) (collecting cases); CAMSI IV v.
Hunter Technology Corp., 230 Cal. App. 3d 1525, 282 Cal. Rptr. 80 (1991) .
The discovery rule also applies in contract cases where the breach occurred in
secret and without immediately discoverable harm. E.g., Gryczman v. 4550
Pico Partners, Ltd., 107 Cal. App. 4th 1, 131 Cal. Rptr. 2d 680 (2003) ; April
Enterprises, Inc. v. KTTV, 147 Cal. App. 3d 805, 827, 195 Cal. Rptr. 421
(1983).

Footnotes:

2 [Effective January 1, 2003, the one-year statute of limitations for personal injury actions in former
CCP § 340(3) was increased to two years by new CCP § 335.1.] All further statutory references are to the
Code of Civil Procedure unless otherwise indicated.

4 Defendants argue that the statute should commence when the plaintiff knows of her injury and its
factual cause. Although that position has been adopted in some jurisdictions (see e.g., United States v.
Kubrick (1979) 444 U.S. 111 (1979).

5 Plaintiff maintains that the Kensinger rule was foreshadowed by prior California authority. However,
the cases that she cites do no more than set out the discovery rule as previously described. They do not
directly address the question of whether a suspicion of wrongdoing without knowledge of particular facts
establishing misconduct will begin the statutory period. (See Young v. Haines (1986) 41 Cal. 3d 883 [226
Cal. Rptr. 547, 718 P.2d 909] [effect of fraudulent concealment by a physician]; Brown v. Bleiberg (1982)
32 Cal. 3d 426 [186 Cal. Rptr. 228, 651 P.2d 815] [same]; Gutierrez [v. Mofid], 39 Cal. 3d 892 [218 Cal.
Rptr. 313, 705 P.2d 886 (1985)], supra [same]; * * * Martinez-Ferrer v. Richardson-Merrell, Inc. (1980)
105 Cal. App. 3d 316 [164 Cal. Rptr. 591] [effect on statute of limitations when plaintiff might have had no
cause of action at earlier point in time, but believed that he did]).

6 We recognize that some jurisdictions have adopted rules similar to that set out in Kensinger. (See,
e.g., Anthony v. Abbott Laboratories (R.I. 1985) 490 A.2d 43 (relied on in Kensinger); Dawson v. Eli
Lilly & Co. (D.D.C. 1982) 543 F. Supp. 1330; Lopez v. Swyer (1973) 62 N.J. 267 [300 A.2d 563]).
However, as will be shown, the rule in California is otherwise.

7 In this context, “wrong,” “wrongdoing,” and “wrongful” are used in their lay understanding.

8 To the extent that Kensinger, supra , 171 Cal. App. 3d 376, conflicts with the foregoing, it is
disapproved. Of course, nothing stated herein affects the well-established rule that the ignorance of the legal
significance of known facts or the identity of the wrongdoer will not delay the running of the statute.

9 Specifically, the following dialogue was contained in plaintiff’s deposition and was part of the motion
for summary judgment:

Q: “Why at that time were you interested in obtaining more information [about the DES ingested
by plaintiff’s mother]?

A: “To see if I had any type of recourse.

Q: “You mean in terms of making a claim or recovering from someone for your injury?

A: “Sure, yes.

Q: “In 1978 did you feel that you should have some kind of recourse?

A: “Yes.

Q: “You felt that someone had done something wrong to you?

A: “Yes.

Q: “And that you should be compensated for it?

A: “Yes.

Q: “You believed at that time, in 1978, that DES was a defective drug, is that right?

A: “Yes.”
 11 This case does not present us with a situation where the plaintiff conducted a prompt investigation
and brought suit as soon as the results of the investigation were known, but even so filed her claim after the
limitations period had expired. In such a situation, the cause of action might still be timely. (See Whitfield v.
Roth (1974) 10 Cal. 3d 874, 887-889 [112 Cal. Rptr. 540, 519 P.2d 588] [concerning the 100-day period set
forth in the Government Tort Claims Act]).

13 Plaintiff’s failure to file suit despite her suspicion of wrongdoing is not surprising in the context of this
case. By her own admission, her real reason for delaying action was that she did not know whom to sue, not
that she did not know whether to sue.

14 In Summers, we held that an innocent plaintiff who could not identify which of two negligent hunters
shot him, but was sure that one of them was the culprit, could bring suit by joining both. The burden then
shifted to each defendant to show that he did not cause the injury.

1 Gastric bypass surgery, used to treat morbid obesity, makes the stomach smaller and allows food to
bypass part of the small intestine. In a Roux-en-Y gastric bypass, the stomach is made smaller by creating a
small pouch at the top of the stomach with surgical staples or a plastic band. The smaller portion of the
stomach is connected directly to the middle portion of the small intestine (jejunum), bypassing the rest of the
stomach and the upper portion of the small intestine (duodenum).

3 At present, the statute of limitations for an action for injury to an individual caused by the wrongful act
or neglect of another must be commenced within two years from the date of accrual. (Code Civ. Proc., §
335.1.) This change was effected in 2002, when the Legislature found the one-year limitations period of
section 340, former subdivision 3 “unduly short” and adopted a two-year period “to ensure fairness to all
parties.” (Stats. 2002, ch. 448, § 1.)

4 The one-year statute of limitations period for a medical malpractice action is set forth separately in
section 340.5 of the Code of Civil Procedure. The limitations period prescribed by section 340.5 may be
extended by 90 days under Code of Civil Procedure section 364, ….

5 Even had Fox filed her products liability claim against Ethicon simultaneously with her medical
malpractice claim on June 28, 2000, the claim would likely still have been untimely absent an application of
the delayed discovery rule. Fox filed her medical malpractice claim slightly more than one year after her
injury on April 6, 2000, due to the above mentioned 90-day extension afforded medical malpractice claims by
Code of Civil Procedure section 364, subdivision (d). However, the 90-day extension of the limitations period
provided by section 364, subdivision (d) is limited to claims “based upon” professional negligence (see
Preferred Risk Mutual Ins. Co. v. Reiswig (1999) 21 Cal.4th 208, 218 [87 Cal. Rptr. 2d 187, 980 P.2d
895]), and would therefore not extend the limitations period for a products liability claim.

6 Although we hold that plaintiff has shown that the defect in the products liability claim in her first
amended complaint could have been cured, we express no opinion on plaintiff’s ability to prove that she
should not have earlier suspected that her injuries were caused by a defective stapler.

7 In Norgart, the Court of Appeal had held that “under the discovery rule, when ‘there are potentially
multiple’ ‘unrelated’ ‘concurring causes,’ a plaintiff discovers, or has reason to discover, a cause of action
‘based on a particular act of wrongdoing’ by a particular defendant, only when he at least suspects, or has
reason to suspect, that act of wrongdoing by that defendant.” (Norgart, supra, 21 Cal.4th at p. 406.)

[B] Developing Applications of the Discovery Rule

[1] Judicial Evolution

The discovery rule is still in the process of judicial evolution as new

applications require. For example, in Evans v. Eckelman, reproduced below,
the court considered whether the discovery rule should apply to a tort action
brought by plaintiffs against their foster parent for damages resulting from
alleged sexual abuse of them as children. In Moreno v. Sanchez , also
reproduced below, the court applied the rule to an action brought by plaintiff
buyers against a home inspector for failure to discover certain defects in the
house the plaintiffs ultimately purchased.

EVANS v. ECKELMAN
COURT OF APPEAL OF CALIFORNIA,
FIRST APPELLATE DISTRICT
216 Cal. App. 3d 1609, 265 Cal. Rptr. 605 (1990)

Low, Presiding Justice.

[Plaintiffs alleged abuse occurring in 1966-68, but did not file their action
until 1987. The longest then applicable limitation period for sexual molestation
was three years from the wrongful act. Although the statutory limitation period
was tolled during plaintiffs’ minority, all plaintiffs were adults by 1977. The
Court of Appeal reviewed the history of the discovery rule in California, and
noted that two common themes ran through the cases applying this rule of
delayed accrual.]

Two common themes run through the cases applying the discovery rule of
accrual. First, the rule is applied to types of actions in which it will generally
be difficult for plaintiffs to immediately detect or comprehend the breach or the
resulting injuries. In some instances the cause or injuries are actually hidden, as
in the case of a subterranean trespass, the erasure of video tapes held in the sole
custody of the defendant (April Enterprises, Inc. v. KTTV, supra , 147 Cal. App.
3d at p. 832), or foreign objects left in a patient’s body after surgery (see, e.g.,
Ashworth v. Memorial Hospital (1988) 206 Cal. App. 3d 1046, 1054–1062
[254 Cal. Rptr. 104]). Even when the breach and damage are not physically
hidden, they may be beyond what the plaintiff could reasonably be expected to
comprehend. An action for [90/91]professional malpractice, for example,
typically involves the professional’s failure to apply his or her specialized
skills and knowledge. “Corollary to this expertise is the inability of the layman
to detect its misapplication; the client may not recognize the negligence of the
professional when he sees it.” (Neel v. Magana, Olney, Levy, Cathcart &
Gelfand, [6 Cal. 3d 176] at p. 188 [98 Cal. Rptr. 837, 491 P.2d 421 (1971)] .)
The same rationale has been adopted where defendant held itself out or was
required by law to be specially qualified in a trade.

Second, courts have relied on the nature of the relationship between

defendant and plaintiff to explain application of the delayed accrual rule. The
rule is generally applicable to confidential or fiduciary relationships. (United
States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 Cal. 3d 586, 598 [83
Cal. Rptr. 418, 463 P.2d 770] ; …) The fiduciary relationship carries a duty of
full disclosure, and application of the discovery rule “prevents the fiduciary
from obtaining immunity for an initial breach of duty by a subsequent breach of
the obligation of disclosure.” (Neel v. Magana, Olney, Levy, Cathcart &
Gelfand, supra, 6 Cal. 3d at p. 189.)

The court in April Enterprises, Inc. v. KTTV, supra , also noted the
importance of the relationship between defendant and plaintiff: “In most
instances, in fact, the defendant has been in a far superior position to
comprehend the act and the injury. And in many, the defendant had reason to
believe the plaintiff remained ignorant he had been wronged. Thus, there is an
underlying notion that plaintiffs should not suffer where circumstances prevent
them from knowing they have been harmed. And often this is accompanied by
the corollary notion that defendants should not be allowed to knowingly profit
from their injuree’s ignorance.” (147 Cal. App. 3d at p. 831.)

It has been widely recognized that the shock and confusion engendered by
parental molestation, together with the parent’s demands for secrecy, may lead a
child to deny or block the traumatic events from conscious memory, or to turn
the anger and pain inward so that the child blames himself or herself for the
events. (See Comment, Adult Incest Survivors and the Statute of Limitations:
The Delayed Discovery Rule and Long-Term Damages (1985) 25 Santa Clara
L. Rev. 191, 192–195 [hereafter Adult Incest Survivors]; Tyson v. Tyson (1986)
107 Wn. 2d 72 [727 P.2d 226, 234–235] (dis. opn. of Pearson, J.); cf. People v.
Bowker (1988) 203 Cal. App. 3d 385, 393–394 [249 Cal. Rptr. 886] [expert
testimony on “accommodation” patterns by molestation victims may be admitted
in criminal case to dispel myths and misconceptions, for example, to explain
delayed revelation or recantations]). Even where memory of the events
themselves is not suppressed, it may be some time before the victim can face the
full impact of the acts. (See Adult Incest Survivors, supra, at p. 194; Tyson v.
Tyson, supra, at p. 235.) The parent-child relationship is a confidential one,
placing special duties on the parent for the protection of the child’s health and
wellbeing, as well as special rights of custody and control. Stepparents, foster
parents, and others in positions of parental authority enjoy similar rights over
the child.

As a practical matter a young child has little choice but to repose his or her
trust with a parent or parental figure. When such a person abuses that trust, he
commits two wrongs, the first by sexually abusing the child, the second by using
the child’s dependency and innocence to prevent recognition or revelation of the
abuse. This [91/92]may be accomplished by enforcing secrecy around the acts or
even by teaching the child that the sexual acts are normal or necessary to the
relationship. As in the professional negligence cases, application of the delayed
discovery rule would serve to prevent the molester from using the child’s
ignorance and trust to conceal the primary tort.

Because of the youth and ignorance of the victims, as well as the unique
duties and authority held by the parent, child sexual abuse by a parent or
parental figure may in some cases be as effectively concealed from the victim as
an underground trespass, a foreign object left in the body after surgery, or the
abstruse errors made by a hired professional. The plaintiff must plead facts
showing the time and manner of the delayed discovery (County of Alameda v.
Superior Court (1987) 195 Cal. App. 3d 1283, 1286 [241 Cal. Rptr. 312] ), and
if he or she can do so it would be unjust and inconsistent with previous cases to
not apply the discovery rule.

***

We conclude that the purposes of the statute of limitations and the rationale of
the delayed discovery rule as it has developed in our courts require that accrual
of a cause of action for child sexual abuse by a parent or similar figure of
authority be delayed until the plaintiff knows or reasonably should know of the
cause of action. “‘[The limitations period] is intended to run against those who
are neglectful of their rights and who fail to use reasonable and proper diligence
in the enforcement thereof ….’ It is not the policy of the law to unjustly deprive
one of his remedy ….’” (Manguso v. Oceanside Unified School Dist., supra,
88 Cal. App. 3d at p. 730.) * * *

Although the allegations of the complaint as it stands are insufficient to

invoke the delayed discovery rule, there is a reasonable possibility plaintiffs
can amend to allege an unawareness, lasting into adulthood, that the acts done to
them were wrongful. In addition, the complaint does not preclude amendment to
allege that plaintiffs had repressed, into adulthood, memory of the events
themselves; such repression would also be sufficient to invoke the discovery
rule. * * *

MORENO v. SANCHEZ
COURT OF APPEAL OF CALIFORNIA,
SECOND APPELLATE DISTRICT
106 Cal. App. 4th 1415, 131 Cal. Rptr. 2d 684 (2003)

Johnson, Justice.

[Plaintiffs Armando Moreno and Gloria Contreras purchased a 49-year old

house in Whittier in 1998. Under the terms of their agreement to purchase,
plaintiffs had the right to have the property inspected and to approve the
inspection results as a condition to the close of escrow. They hired a home
inspector, defendant Sanchez, to conduct the inspection.

The inspection contract, which contained a modification of the limitations

periods governing claims against the home inspector, provided: “No legal
action or proceeding of any kind, including those sounding in tort or contract,
can be [92/93]commenced against Inspector/Inspection Company, or its officers,
agents or employees more than one year after the date of the subject inspection.
Time is expressly of the essence herein. This time period is shorter than
otherwise provided by law.”
 Moreno, who is a lawyer, a Los Angeles Superior Court Commissioner and a
licensed real estate broker, requested that Sanchez delete this clause. Sanchez
refused. Moreno then signed the agreement and initialed the limitations clause.
Defendant Sanchez conducted his inspection on August 18, 1998. His inspection
report did not indicate any serious problems with the heating and cooling
system. After escrow closed, the plaintiffs moved into the property in
November, 1998. In December, 1998, both plaintiffs became ill. Thereafter,
Contreras’s illness became chronic; in early September 1999, a culture revealed
she had a bacterial infection.

In September 1999, after extensive tests by various engineers, the plaintiffs

discovered several serious defects in the house not disclosed by Sanchez’s
earlier inspection, including a defect in the central heating and cooling systems
which permitted the unit to draw dust, dirt and dust mites into the house.
Subsequently, on October 19, 1999, fourteen months after defendant’s
inspection, the plaintiffs filed this suit against Sanchez alleging breach of
contract, negligence and negligent misrepresentation. Defendant demurred on the
grounds that all of the plaintiffs’ claims were barred by the one-year statute of
limitations provided in the home inspection contract.

Plaintiffs filed opposition, arguing among other things, the one-year statute of
limitations was unreasonable and thus the discovery rule should apply in this
instance. Ultimately the trial court ruled the one-year statute of limitations was
reasonable and thus barred each of the causes of action alleged against the
defendant. Accordingly, the court sustained the defendant’s demurrer without
leave to amend and dismissed the complaint. Plaintiffs appealed.]

A number of statutes specifically provide for delayed accrual of a cause of

action until the discovery, or the opportunity to discover, the facts constituting
the cause of action. Most notable among these are situations involving fraud or
mistake. Meanwhile judicial decisions have declared the discovery rule
applicable in situations where the plaintiff is unable to see or appreciate a
breach has occurred. These sorts of situations typically involve underground
trespass, Oakes v. McCarthy Co. (1968) 267 Cal. App. 2d 231, 255 [73 Cal.
Rptr. 127]; negligently manufactured drugs, Jolly v. Eli Lilly & Co. (1988) 44
Cal.3d 1103, 1109 [245 Cal. Rptr. 658, 751 P.2d 923] ; products liability, G. D.
Searle & Co. v. Superior Court (1975) 49 Cal. App. 3d 22, 25 [122 Cal. Rptr.
218]; violations of the right of privacy, Cain v. State Farm Mut. Auto Ins. Co.
(1976) 62 Cal. App. 3d 310, 315 [132 Cal. Rptr. 860] ; latent defects in real
property, Allen v. Sundean (1982) 137 Cal. App. 3d 216, 222 [186 Cal. Rptr.
863]; or breaches of contract committed in secret. April Enterprises, Inc. v.
KTTV (1983) 147 Cal. App. 3d 805, 832 [195 Cal. Rptr. 421].

Delayed accrual of a cause of action is viewed as particularly appropriate

where the relationship between the parties is one of special trust such as that
involving a fiduciary, confidential or privileged relationship. Employing this
rationale, the discovery rule has been applied, sometimes by statute and
sometimes through judicial decisions, to claims against professionals such as
trustees, Cortelyou v. Imperial Land Co. (1913) 166 Cal. 14, 20 [134 P. 981] ;
[93/94]stockbrokers, Twomey v. Mitchum, Jones & Templeton, Inc . (1968) 262
Cal. App. 2d 690 [69 Cal. Rptr. 222] ; escrow agents, Amen v. Merced County
Title Co. (1962) 58 Cal.2d 528, 534, 25 Cal. Rptr. 65, 375 P.2d 33 ; insurance
agents, United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 Cal.3d
586, 596–598 [83 Cal. Rptr. 418, 463 P.2d 770] ; accountants, Moonie v. Lynch
(1967) 256 Cal. App. 2d 361, 365–366 [64 Cal. Rptr. 55] ; physicians,
Huysman v. Kirsch (1936) 6 Cal.2d 302, 312–313 [57 P.2d 908] ; attorneys,
Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 187
[98 Cal. Rptr. 837, 491 P.2d 421] ; and title companies, Prudential Home
Mortgage Co. v. Superior Court (1998) 66 Cal.App.4th 1236, 1248 [78 Cal.
Rptr. 2d 566].

However, justification for the discovery rule has not been restricted to
regulated and licensed professions. Courts have also employed the rule of
delayed accrual in cases involving trades people who have held themselves out
as having a special skill, or are required by statute to possess a certain level of
skill. In Evans v. Eckelman [(1990) 216 Cal. App. 3d 1609, 265 Cal. Rptr.
605] the court noted the rationale behind applying the discovery rule against
professionals applied with equal force to trades people who represent they have
the level of skill and expertise necessary to perform a specialized service for
the consuming public. The same rationale has been adopted where defendant
held itself out or was required by law to be specially qualified in a trade.
(Allred v. Bekins Wide World Van Services (1975) 45 Cal. App. 3d 984 at pp.
990–99 [120 Cal. Rptr. 312] [(packing and shipping service company)];
Seelenfreund v. Terminix of Northern Cal., Inc. (1978) 84 Cal. App. 3d 133 at
pp. 137–138 [148 Cal. Rptr. 307] [(licensed termite inspection company)].)

These same considerations are present in the home inspection context as well.
For many people, purchasing a residence is the single biggest investment they
make in their lives. Most want as much information as possible about a property
before purchasing. However, few have the knowledge or experience necessary
to fully analyze the quality of a home’s structure, systems or components
themselves. Fewer still are also structural engineers, general contractors,
electrical contractors or the like. It is precisely because most people lack the
necessary skills to recognize potential defects on their own that prospective
homeowners hire a home inspection company in the first instance. For a fee they
entrust this responsibility to a person who represents he has sufficient
knowledge, skill and expertise to discover and report on the material defects in
a given property. These potential homeowners look to the professional to guide
and inform their choice about a given residence, not only to learn of existing
material defects, but also about other potentially serious flaws which require
further investigation. However, because most people are ill equipped to know
whether the home inspector in fact discovered and reported all the material
defects with the home, most homeowners will not recognize a problem has been
overlooked, or noticed but not reported, until something goes wrong and the
damage becomes apparent. Needless to say, a faulty home inspection can have
disastrous financial consequences for many homeowners.

In short, situations involving home inspectors share many characteristics with

those involving other professionals in which delayed accrual has been
recognized as appropriate and necessary. Although not as regulated as some
fields, the Legislature has recognized the significance of the role home
inspectors occupy in this [94/95]state’s economy, as well as the potential hazards
of fraudulently or negligently performed inspections. As with other forms of
professional malpractice, specialized skill is required to analyze a residence’s
structural and component parts. Because of the hidden nature of these systems
and components a potential homeowner may not see or recognize a home
inspector’s negligence, and thus may not understand he has been damaged until
long after the inspection date. This fact, coupled with the trust the potential
homeowners must necessarily place in the professional home inspector, compel
the conclusion causes of action for breach of a home inspector’s duty of care
should accrue in all cases, not on the date of the inspection, but when the
homeowner discovers, or with the exercise of reasonable diligence should have
discovered, the inspector’s breach.

The delayed discovery rule is founded on important public policy

considerations. In fact, these considerations are sufficient to overcome ordinary
statutory time limits the Legislature has enacted. That is, the Legislature may
have created a one-year statute of limitations for a certain cause of action. But if
the courts determine the cause of action arises in circumstances where the
delayed discovery rule applies, plaintiffs can file suit years after the expiration
of the one-year statutory limitations period, assuming it takes that long to
discover their cause of action. If a legislated limitations period must yield to a
judicially created delayed discovery rule, how can it be argued a contractually
agreed limitations period is immune from that rule and its underlying
rationale?45

Under general California law a person has four years to bring an action on a
contract. [Code Civil Pro. § 337.1.] California law also provides for a statute of
limitations specifically applicable to home inspections. The Business and
Professions Code similarly provides up to four years to bring suit for breach of
a home inspector’s duty to use the degree of care a reasonably prudent home
inspector would exercise. [Business and Professions Code section 7199
provides the time to bring an action against a home inspector for “breach of duty
arising from a home inspection report shall not exceed four years from the date
of the inspection.”] These four-year periods supply home purchasers a
reasonable amount of time to discover a home inspector’s breach and to file
suit.

As the dissent correctly observes, the Legislature did not itself provide for a
rule of delayed discovery when it enacted the four-year outside limitations
period for actions against home inspectors. We can attach no special
significance to this fact. Legislative adoptions of delayed discovery have often
come only in response to such judicially created rules. For example, the
Legislature enacted Code of Civil Procedure section 340.6 providing for
delayed discovery for attorney malpractice actions in 1977, years after the
Supreme Court’s decision in Neel v. Magana, Olney, Levy, Cathcart &
Gelfand [supra, 6 Cal.3d 176.] recognizing for the first time the propriety of the
rule in the legal malpractice context. Similarly, the Legislature did not create a
statutory rule of delayed discovery in the medical malpractice context until 1970
[Code Civ. Proc. section 340.5], and long after the Supreme Court
[95/96]judicially recognized such a rule in Huysman v. Kirsch [(1936) 6 Cal.2d
302, 57 P.2d 908.] . The Legislature’s provision in this instance for an outside
maximum limitation period is entirely consistent with other delayed discovery
statutes as a mechanism to ensure the limitations period does not continue for
infinity.

It is true California courts have afforded contracting parties considerable

freedom to modify the length of a statute of limitations. See, e.g., Hambrecht &
Quist Venture Partners v. American Medical Internat., Inc. (1995) 38 Cal.
App. 4th 1532, 1548, 46 Cal. Rptr. 2d 33 [court enforced choice of law
provision in parties’ contract which provided for a shorter statute of limitations
than California’s]. Courts generally enforce parties’ agreements for a shorter
limitations period than otherwise provided by statute, provided it is reasonable.
“Reasonable” in this context means the shortened period nevertheless provides
sufficient time to effectively pursue a judicial remedy. * * *

However, a contractually shortened limitations period has never been

recognized outside the context of straightforward transactions in which the
triggering event for either a breach of a contract or for the accrual of a right is
immediate and obvious. Moreover, no decision upholding the validity of a
contractually shortened limitation period has done so in the context of an action
against a professional or skilled expert where breach of a duty is more difficult
to detect. Instead, most reported decisions upholding shortened periods involve
straightforward commercial contracts plus the unambiguous breaches or accrual
of rights under those contracts. [Citations and case summaries omitted.]

In short, none of these decisions upholding parties’ “freedom to modify the

length of the statute of limitations,” is factually analogous to the case at bar. Nor
do any of them involve a cause of action to which the delayed discovery rule
applies. In each of the foregoing decisions the plaintiffs knew of the breaches or
the accrual of rights at the moment the cause of action accrued. It was thus
appropriate in those situations to permit the limitations period to run from the
moment of the triggering event. In the present context, by contrast, a cause of
action may not be known, or even suspected, until long after the home inspection
is completed. A shortened limitations period in this context may thus foreclose
an effective judicial remedy for many homeowners. For this reason, for a
provision in a home inspection contract shortening the statute of limitations to be
enforceable, we hold accrual of a cause of action occurs not with the inspection,
but when the homeowner discovers, or through the exercise of reasonable
diligence should have discovered, the breach.

***

It is one thing to say a contract can shorten the time period for filing a lawsuit
after the lawsuit has accrued. It is quite another to say a contract can redefine
when accrual occurs — especially when public policy has defined that
triggering event as the plaintiff’s discovery of his cause of action — not the date
the defendant committed the acts which gave rise to that cause of action.

Indeed if courts were to enforce consumers’ contractual waiver of their rights

under the delayed discovery rule in contracts between home inspectors and
home buyers, why not when the contracts are between lawyers and clients,
physicians and patients, and in every other professional and trade relationship
currently subject to [96/97]that rule? In all these situations, including home
inspection transactions, the supplier of services nearly always enjoys a
knowledge and bargaining advantage over the consumer. So it should not prove
difficult to include such provisions in most if not all such contracts. Yet, our
research has not uncovered a single appellate case where a lawyer or physician
or anyone else subject to the delayed discovery rule has even attempted to
wiggle out of that rule by imposing a contract purporting to waive the
consumer’s right to the benefits of that rule.

In short, no authority exists which sanctions a contractual provision

permitting parties to opt out of the benefits of the discovery rule in situations
where the discovery rule would otherwise apply. This suggests there exists an
implicit consensus that an effective judicial remedy against professionals or
skilled crafts people requires accrual occur only upon discovery of the breach
and thus the law will not tolerate contractual nullification of that policy. * * *

[W]e are unable to find a contractual provision “reasonable” where it only

gives homeowners a single year to discover their causes of action against home
inspectors. A four-year outside limit on the time permitted for the homeowner to
discover the inspector’s negligence and its adverse consequences is clearly
“reasonable.” A contractual provision setting a somewhat shorter outside limit
conceivably might be “reasonable,” too. But a one-year outside boundary
completely vitiates the delayed discovery rule. Indeed such a provision
blatantly substitutes a straight one-year statute of limitations for the delayed
discovery rule.

Consistent with the policies behind this rule, we hold the buyers’ causes of
action did not accrue under the one-year statute of limitations provided in the
home inspection contract until they discovered, or with the exercise of
reasonable diligence, should have discovered the home inspector negligently
failed to discover, or negligently failed to report, material defects in the home. *
* * The judgment is reversed and the cause is remanded to the trial court with
directions to vacate the dismissal, to overrule the demurrer, and for further
proceedings consistent with this opinion. Appellants are awarded their costs on
appeal.
Perluss, P.J., dissenting.

Under California law parties may agree to a provision shortening the statute
of limitations, “qualified, however, by the requirement that the period fixed is
not in itself unreasonable or is not so unreasonable as to show imposition or
undue advantage. [Citations.]” (Capehart v. Heady (1962) 206 Cal. App. 2d
386, 388, 23 Cal. Rptr. 851; see Hambrecht & Quist Venture Partners v.
American Medical Internat., Inc. (1995) 38 Cal. App. 4th 1532, 1548, 46 Cal.
Rptr. 2d 33.) * * *

In the case at bar, the one-year limitations provision was clearly stated in the
parties’ contract; cautioned that it imposed a time period for filing suit that “is
shorter than is otherwise provided by law”; was unambiguous in its application
to both contract and tort claims; was the subject of negotiation between Moreno
and the home inspector; and, after Moreno failed to obtain the inspector’s
agreement to delete the provision, was separately initialed by Moreno. There is
no dispute the provision was reasonable in those respects. Moreover, California
courts have uniformly enforced provisions shortening the four-year statutory
limitations period [97/98]for breach of a written contract (Code Civ. Proc., § 337,
subd. 1) to one year (e.g., Capehart v. Heady, supra, 206 Cal. App. 2d at p.
388) and to even shorter periods, as well. (E.g., Tebbets v. Fidelity and
Casualty Co., [(1909)] 155 Cal. 137, at p. 138 [99 P. 501] [six months].)

The majority, however, concludes the parties’ agreement is unreasonable as a

matter of law because it impliedly required Moreno to waive the benefit of the
nonstatutory delayed discovery rule first recognized earlier in its opinion. I
respectfully disagree.

No statute prohibits the parties to a home inspection contract from agreeing to

a shortened limitations period. (Hambrecht & Quist Venture Partners, supra ,
38 Cal.App.4th at p. 1548 [“Except as restricted by statute, California courts
accord contracting parties substantial freedom to modify the length of the statute
of limitations.”].) Indeed, permitting the parties to bargain for such a provision
is fully consistent with the 1996 legislation governing practices in the home
inspection industry. The parties’ agreement does not otherwise offend public
policy. (See, e.g., Tebbets, supra, 155 Cal. at p. 139 [statutes of limitations are
“statutes of repose, carrying with them, not a right protected under the rule of
public policy, but a mere personal right for the benefit of the individual, which
may be waived”].) * * *
 Moreover, while imposing a duty of reasonable care on home inspectors in
[Bus. & Prof. Code] section 7196, the Legislature itself did not provide for a
rule of delayed discovery, as it did, for example, when establishing the
limitations period for professional malpractice actions against health care
providers (Code Civ. Proc., § 340.5) and attorneys (Code Civ. Proc., § 340.6,
subd. (a)) and actions for damages suffered as a result of domestic violence
(Code Civ. Proc., § 340.15, subd. (a)(2)). Rather, section 7199, adopted in
1996, specifies a maximum time period within which a lawsuit must be filed
measured from the date of the inspection itself : “The time for commencement
of a legal action for breach of duty arising from a home inspection report shall
not exceed four years from the date of the inspection.” * * *

Whether or not the delayed discovery rule should be applied to negligence

claims against a home inspector in an appropriate case, the majority advances
no compelling reason to disregard the parties’ express contractual agreement to
limit the homebuyers’ right to sue to a one-year period measured from the date
of inspection. Indeed, the primary ground advanced for invalidating the parties’
agreement is simply the absence of authority enforcing such a provision, which
the majority suggests indicates “an implicit consensus” that such contractual
limitations provisions are invalid. * * *

Because no statute restricts the right of the parties to a home inspection

agreement to contract for a shorter limitations period, I believe the parties’
“substantial freedom to modify the length of the statute of limitations”
(Hambrecht & Quist Venture Partners, supra , 38 Cal.App.4th at p. 1548)
requires that we enforce their agreement. Accordingly, I would affirm the order
of the trial court sustaining [defendant’s] demurrer to the second amended
complaint.

[98/99]

NOTES AND QUESTIONS

(1) Is Evans a proper application of the discovery rule as set forth in Jolly?
The allegations of injury due to child abuse in Evans present a compelling case
for extension of the discovery rule. Is it a wise extension? Is the court’s
“unawareness” analysis limited to child abuse cases? Are there many other
types of cases which would also satisfy Evans’ “unawareness” analysis? What
are they?
 (2) The Evans reasoning was followed by the court in Marsha V. v. Gardner ,
231 Cal. App. 3d 265, 281 Cal. Rptr. 473 (1991) , a case whose facts and
pleadings are nearly identical to those in Evans. Unlike Evans, however, the
Court of Appeal in Marsha V. affirmed the trial court’s sustaining of the
demurrer without leave to amend because the plaintiff’s attorney had indicated
to the trial court that the facts as originally pleaded were the facts that occurred.
Marsha V., 231 Cal. App. 3d at 274. In Curtis T. v. County of Los Angeles, 123
Cal. App. 4th 1405, 21 Cal. Rptr. 3d 208 (2004) , a tort action against the
defendant county in which the minor plaintiff alleged he was molested for
several years while living in a foster home, the court followed Evans and held
that the plaintiff “must be given leave to amend to allege, if he is able to do so
truthfully — given his youth, ignorance, and inexperience, as well as his foster
parents’ alleged complicity in the abuse — that he lacked real awareness, until
his mother’s discovery of the alleged molestation, that what happened to him
between the ages of five and eight was wrong.” Curtis T., supra, 123 Cal. App.
4th at 1409.

(3) Note that the Legislature amended CCP § 340.1 in 1991, 1994, and 1998,
applicable to any action commenced after January 1, 1991, to provide a
comprehensive statute of limitations for child sexual abuse cases. Section
340.1(a) states:

In an action for recovery of damages suffered as a result of childhood

sexual abuse, the time for commencement of the action shall be within eight
years of the date the plaintiff attains the age of majority or within three
years of the date the plaintiff discovers or reasonably should have
discovered that psychological injury or illness occurring after the age of
majority was caused by the sexual abuse, whichever period expires later
….

Is § 340.1(a) a codification of Evans v. Eckelman, supra, or something

different? See Lent v. Doe, 40 Cal. App. 4th 1177, 47 Cal. Rptr. 2d 389 (1995)
(under the version of § 340.1 in effect after 1994, the delayed discovery
provisions of § 340.1(a) relate to injuries occurring after the age of majority,
regardless of whether the plaintiff suffered actual injury at the time of abuse and
never repressed his memory of the events); Sellery v. Cressey , 48 Cal. App. 4th
538, 55 Cal. Rptr. 2d 706 (1996) (the 1991 and subsequent versions of §
340.1(a) were intended to toll the statute of limitations even for plaintiffs who
recalled their childhood abuse, and therefore an action by a 37-year-old woman
was not time barred because she first saw the connection between her
psychological ailments and her abuse when she entered therapy in 1991 and
filed her lawsuit in 1992).

(4) What combination of factors did the Moreno court find relevant to its
determination of whether to apply the delayed discovery rule? Which factors
did the court view as the most important ones? In light of Moreno, can you
identify any [99/100]professions, trades, or relationships to which the discovery
rule would not apply?

(5) Do you agree with the Moreno v. Sanchez majority or the dissent on the
question of whether the contractual modification of the four-year statute of
limitations was reasonable? If parties to a contract are permitted to shorten the
limitations period, why should they not also be permitted to modify the
applicable accrual rule? Do you think the result would have been different in
Moreno if the contract specified the date of inspection as the accrual point but
shortened the statute of limitations to two years? To four years? If the contract
did not define the accrual date but simply shortened the statute of limitations to
one year?

Footnotes:

45 Even assuming a homeowner could waive the benefits of the discovery rule, it would have to be a
knowing waiver. The contract itself would have to apprise the homeowner of the existence of his right to
the discovery rule, and what that meant, and required him to expressly waive that right. Nothing approaching
such a knowing waiver occurred here. * * *

[2] Legislative Modification of the Discovery Rule

The discovery rule is a judicial modification of a common law rule defining

“accrual.” This court-made doctrine is applicable in many ordinary tort and
contract cases because the Legislature has not indicated, in a general way, a
contrary intent regarding “accrual.” But in a number of specific areas, the
Legislature has now statutorily defined when certain causes of action accrue.

[a] Various Legislative Approaches

Some of these statutory provisions simply codify the basic discovery rule.
E.g., CCP § 338(d), action for relief based on fraud or mistake; CCP § 339(1),
action upon an oral contract, except as provided in Com. Code § 2725; CCP §
359; and Civil Code § 986.

But other statutes modify, and in some instances eliminate, the discovery rule.
Some of these are quite important. The most notable is contained in Section
2725 of the Commercial Code, which sets forth a four-year statute of limitations
for actions for breach of any contract for sale of goods. Section 2725(2) states
that a “cause of action accrues when the breach occurs, regardless of the
aggrieved party’s lack of knowledge of the breach.” Another is CCP § 337.15
which contains a ten-year limitation for actions against real estate developers,
contractors and architects for property damage arising out of a latent deficiency,
which accrues upon “the substantial completion of the development or
improvement.” CCP § 337.15(a). See Mills v. Forestex Co., 108 Cal. App. 4th
625, 134 Cal. Rptr. 2d 273 (2003) (collecting cases construing meaning of
“latent defect” under § 337.15); Creekridge Townhome Owners Assn., Inc. v. C.
Scott Whitten, Inc., 177 Cal. App. 4th 251, 99 Cal. Rptr. 3d 258 (discussing the
difference between a “patent” defect governed by CCP § 337.1 and a “latent”
defect under § 337.15).

[b] Superseding Limitations

Some statutes adopt the discovery rule but include a superseding limitation
period which accrues on the date of injury. The two most notable examples are
CCP § 340.5, which governs actions for injury or death against health care
providers based on professional negligence; and CCP § 340.6, which governs
actions against attorneys for wrongful acts. Section 340.5 generally requires that
a medical negligence action be commenced within three years of the date of
injury or one year after discovery of the injury, “whichever occurs first.” See,
e.g., McNall v. Summers, 25 Cal. App. 4th 1300, 30 Cal. Rptr. 2d 914 (1994)
[100/101](plaintiff’s failure to file her action within three years of the
manifestation of appreciable harm overrode the one-year discovery
requirement). Likewise, § 340.6 generally requires that an attorney malpractice
action be commenced within four years from the date of the wrongful act or one
year after discovery of the wrongful act, “whichever occurs first.” See Samuels
v. Mix, 22 Cal. 4th 1, 91 Cal. Rptr. 2d 273, 989 P.2d 701 (1999) (unlike the
common law discovery rule, CCP § 340.6(a) requires the defendant to prove
when the plaintiff discovered, or should have discovered, the facts constituting
the defendant’s alleged attorney malpractice). Both statutes contain some
exceptions, discussed infra, and must be examined closely. What policy
considerations do these two statutory limitations schemes reflect?
 Code of Civil Procedure § 340.5 has survived constitutional challenges, see
Young v. Haines, 41 Cal. 3d 883, 226 Cal. Rptr. 547, 718 P.2d 909 (1986) ; but
see Torres v. County of Los Angeles , 209 Cal. App. 3d 325, 257 Cal. Rptr. 211
(1989) (less advantageous accrual point determination for minors than for adults
in CCP § 340.5 held arbitrary and unconstitutional); but has at times been
strictly construed. See, e.g., Brown v. Bleiberg , 32 Cal. 3d 426, 186 Cal. Rptr.
228, 651 P.2d 815 (1982) (CCP § 340(3), not § 340.5, applies to medical
malpractice allegations of battery and breach of warranty); Meyer v. Carnow,
185 Cal. App. 3d 169, 229 Cal. Rptr. 617 (1986) (CCP § 340.5 does not
provide limitations for action to compel arbitration of medical negligence
claim; four-year limitations for actions on written contract in CCP § 337
governs).

[c] Legislative Expansion: Asbestos Exposure Litigation

In some instances, the Legislature has enacted statutes which not only adopt,
but actually expand, the common law discovery rule. For example, CCP § 340.2
provides that for personal injury actions based on occupational exposure to
asbestos, an action must be commenced within one year after the date the
plaintiff discovers that he has suffered “disability” caused by such exposure.
Section 340.2(b) defines “disability” to mean loss of time from work as a result
of such exposure which precludes performance of the employee’s regular
occupation.

When does an action accrue for an employee suffering from lung disease
where the disease severely impacts her personal life, but does not preclude her
from continued employment, and she actually knows it is caused by exposure to
asbestos at her job? See Uram v. Abex Corp., 217 Cal. App. 3d 1425, 266 Cal.
Rptr. 695 (1990); Blakey v. Superior Court, 153 Cal. App. 3d 101, 200 Cal.
Rptr. 52 (1984). Where after six months of incapacitation from lung disease, the
employee returned to work with limited duties, but was diagnosed with lung
cancer eight years later? See Williamson v. Plant Insulation Co., 23 Cal. App.
4th 1406, 28 Cal. Rptr. 2d 751 (1994).

In Duty v. Abex Corp., 214 Cal. App. 3d 742, 263 Cal. Rptr. 13 (1989) , the
plaintiff was exposed to asbestos while employed by defendant in 1944-45 and
1951-53. Plaintiff only worked for defendant during these wartime periods, and
retired from all employment in 1968. She first began to suffer severe lung
disease in 1979, and was informed that it was caused by asbestos exposure.
However, plaintiff did not [101/102]file a personal injury action against defendant
until 1985. Is plaintiff’s action barred by the statute of limitations? Does former
CCP § 340(3) or § 340.2 apply? If § 340.2 applies, at what point did her cause
of action accrue? The court in Duty noted that CCP § 340.2 was enacted
because of the harsh results of applying former § 340(3) to victims of
progressive disease as opposed to victims of traumatic injury, and that § 340.2
codifies the discovery rule with one significant difference: The statutory period
never commences to run until plaintiff suffers a “disability” within the meaning
of § 340.2(b). Did the plaintiff in Duty suffer such a “disability”? Can a retired
person ever suffer such a “disability”? Compare Uram v. Abex Corp., supra
(disability retirement), with Williamson v. Plant Insulation Co., supra
(voluntary retirement).

In Hamilton v. Asbestos Corp., Ltd., 22 Cal. 4th 1127, 95 Cal. Rptr. 2d 701,
998 P.2d 403 (2000) , the Supreme Court resolved a progressive disease or
“double-injury” issue, with respect to the statute of limitations for asbestos
exposure litigation, that had divided the courts of appeal. For two decades prior
to 1963, plaintiffs’ decedent Arthur Mitchell was employed in various industrial
workplaces where he was exposed to asbestos. Mitchell’s exposure to asbestos
ended in 1963 when he went into business for himself. In the 1970s, Mitchel
began experiencing breathing difficulties, diagnosed in 1979 as caused by
asbestosis, a noncancerous breathing problem common in workers who have
suffered prolonged exposure to asbestos. He continued to work in his business
until he retired in 1989, not because of breathing difficulties but because he had
reached the normal retirement age of 65.

After his retirement, Mitchell’s breathing problems gradually grew worse. In

1993, he filed an action (Mitchell I) for damages against several parties
involved in the making, selling, and using of asbestos products. Subsequently in
late 1995, before the trial of Mitchell I, Mitchell was diagnosed with a rare
form of cancer primarily triggered by exposure to asbestos. Mitchell then filed a
second action for damages (Mitchell II) against defendant Asbestos
Corporation alleging that exposure to asbestos caused his cancerous condition.
The two actions were consolidated for trial. During the trial, the superior court
denied defendant’s motion to dismiss on the ground that Mitchell II was barred
by the statute of limitations set forth in CCP § 340.2. The jury returned a verdict
for the plaintiff, and defendant Asbestos Corporation appealed.

Giving the words of CCP § 340.2 their plain meaning, the Supreme Court
held that Mitchell II was not time-barred. The court read § 340.2 as providing
in effect that an action for injury arising from asbestos exposure must be filed
within one year after the plaintiff first suffered a “disability” and noted that
because this special statute defines “disability” as “loss of time from work as a
result of [asbestos] exposure which preclude[d] the performance of [plaintiff’s]
regular occupation,” Mitchell did not suffer a “disability” when he was
diagnosed with asbestosis in 1979 or when he retired for reasons unrelated to
his earlier asbestos exposure in 1989. Mitchell, supra, 22 Cal. 4th at 1140–42.
Moreover, the court concluded that Mitchell did not suffer a “disability” within
the meaning of § 340.2, and hence the one-year statute of limitations period had
not begun to run, when he filed Mitchell II. Id. at 1142. In so ruling, the
Supreme Court discussed with [102/103]approval several Court of Appeal
decisions to the same effect, including Duty v. Abex Corp., supra.

[3] Difficult Accrual Cases

In addition to delayed discovery of injury, there are a variety of other

circumstances where the accrual of a cause of action may be difficult to
determine. Specific statutes and cases provide guidance in some of these
circumstances. See generally Developments In the Law — Statutes of
Limitations, 63 Harv. L. Rev. 1177, 1205-1219 (1950) ; 3 Witkin, California
Procedure, Actions, §§ 493-674 (5th ed. 2008). Some examples follow:

[a] Nuisance

When does a cause of action for nuisance accrue where the complained of
activities occur over a long period of time? In Baker v. Burbank-Glendale-
Pasadena Airport Auth., 39 Cal. 3d 862, 218 Cal. Rptr. 293, 705 P.2d 866
(1985), for example, plaintiffs sued for nuisance caused by excessive noise
from flights over their homes. In determining whether plaintiffs’ claims were
barred by the applicable three-year statute of limitations, the Supreme Court
distinguished between “permanent” and “continuing” nuisance. A continuing
nuisance is an ongoing disturbance which may be abated or discontinued at any
time; a permanent nuisance is the type which by one act causes permanent injury.
Id. at 868–69. A permanent nuisance action accrues upon creation of the
nuisance; a continuing nuisance accrues upon every repetition of the wrongful
act. Id. Is the plaintiffs’ action in Baker based on continuing or permanent
nuisance? What about a damage action brought by a landowner against a lessee
who wrongfully contaminated the property with hazardous waste during the
leasehold? See Mangini v. Aerojet-General Corp., 12 Cal. 4th 1087, 51 Cal.
Rptr. 2d 272, 912 P.2d 1220 (1996) (plaintiffs failed to present any substantial
evidence that contamination was capable of being abated at a reasonable cost
and therefore nuisance was permanent rather than continuing); McCoy v.
Gustafson, 180 Cal. App. 4th 56, 103 Cal. Rptr. 3d 37 (2009) (permanent
nuisance because no evidence that soil contamination by migrating oil could be
abated at a reasonable cost by reasonable means). See also Wilshire Westwood
Assoc. v. Atlantic Richfield Co., 20 Cal. App. 4th 732, 24 Cal. Rptr. 2d 562
(1993) (the crucial test of a continuing nuisance is whether the offensive
condition can be discontinued or abated at any time).

[b] Breach of Warranty

When is the accrual point in an action for breach of warranty? A classic case
might be where a nursery sells 900 fruit trees warranted: (1) as being high
quality free from all disease, and (2) that they will produce navel oranges
within five years. Six years later the buyer sues because buyer then discovers:
(1) 300 trees are diseased and were when sold, (2) another 300 trees did not
bear fruit until year six and then they bore valencia oranges not navel oranges,
and (3) the remaining 300 trees first bore valencia oranges in various
subsequent years. When does the cause of action for breach of warranty accrue?
See Sweet v. Watson’s Nursery , 23 Cal. App. 2d 379, 73 P.2d 284 (1937)
(court distinguished between present and [103/104]prospective warranties);
Southern Cal. Enterprise v. Walter & Co. , 78 Cal. App. 2d 750, 178 P.2d 785
(1947) (collecting cases). How does the California Commercial Code deal with
this problem in contracts for sale of goods? Commercial Code § 2725(2)
provides: “A breach of warranty occurs when tender of delivery is made,
except that where a warranty explicitly extends to future performance of the
goods and discovery of the breach must await the time of such performance the
cause of action accrues when the breach is or should have been discovered.”
Are the causes of action in our orange tree example timely under Commercial
Code § 2725? See Krieger v. Nick Alexander Imports, Inc., 234 Cal. App. 3d
205, 215–19, 285 Cal. Rptr. 717 (1991) (a promise to repair defects that occur
during a future period held the very definition of express warranty of future
performance); Carrau v. Marvin Lumber & Cedar Co., 93 Cal. App. 4th 281,
290–92, 112 Cal. Rptr. 2d 869 (2001) (discussing the scope of the “future
performance” exception).

[c] Injury to Property

When does a cause of action for tortious injury to property accrue? When the
current owner discovers the injury? Or when any owner — such as a prior
owner — discovered the injury? For example, assume that A owns real property
and negligently releases toxic waste into the soil and groundwater. A then sells
the property to B, but does not reveal the toxic waste contamination. After the
purchase, B discovers the damage to the property caused by A, but does nothing
within the applicable one-year limitation period. B subsequently sells the
property to C, but does not inform C of the toxic waste. C takes possession, and
diligently discovers that the property is worthless due to A’s toxic waste
negligence. C files an action against A for tortious injury to the property, shortly
after discovering the harm. Is C’s action barred by the statute of limitations? In
CAMSI IV v. Hunter Tech. Corp. , 230 Cal. App. 3d 1525, 1534–35, 282 Cal.
Rptr. 80 (1991), the court indicated that knowledge of injury by a prior owner is
imputed to the current owner. The owner who discovers the injury must bring a
claim to court within the statutory period or the claim will be barred for that and
all subsequent owners. Is this rule fair to the current owner, such as C? What
policies are reflected by the court’s adoption of this rule? Is C without any
recourse here? Should this imputation of knowledge rule apply if A and B knew
of the toxic waste, and B acted as A’s agent in concealing this defect when C
purchased the property? See Valenzuela v. Superior Court , 3 Cal. App. 4th
1499, 5 Cal. Rptr. 2d 186 (1992). Are the same policy concerns controlling
here? Does the cause of action accrue when an owner actually discovers such
injury to property, or when a reasonably diligent inspection would have
revealed the soil contamination? See Wilshire Westwood Assoc. v. Atlantic
Richfield Co., 20 Cal. App. 4th 732, 740, 24 Cal. Rptr. 2d 562 (1993).

[d] Defamation

In Shively v. Bozanich, 31 Cal. 4th 1230, 7 Cal. Rptr. 3d 576, 80 P.3d 676
(2003), the Supreme Court held that although the discovery rule may apply to
inherently covert defamations, a cause of action for defamation published in a
book accrues on the date the book was first generally distributed to the public,
regardless of the date on which the plaintiff actually learned of the existence of
the book and read its [104/105]contents. Likewise, the delayed discovery rule does
not apply to a cause of action for unauthorized commercial appropriation of
likeness, such as the unauthorized use of an image of the plaintiff on a product
label that is widely distributed to the public. Christoff v. Nestle USA, Inc., 47
Cal. 4th 468, 97 Cal. Rptr. 3d 798, 213 P.3d 132 (2009) (although discovery
rule is inapplicable to unauthorized commercial use of likeness, repeated
production of label may begin the statute of limitations anew because the label
was “republished” within the meaning of the single-publication rule). Does the
discovery rule apply to delay the accrual of a cause of action for defamation
contained in a publication where the publication is not widely distributed. See
Hebrew Academy of San Francisco v. Goldman, 42 Cal. 4th 883, 70 Cal. Rptr.
3d 178, 173 P.3d 1004 (2007) (the discovery rule is inapplicable not only as to
books and newspapers that are published with general circulation, but also as to
publications that are given only limited circulation and are not generally
distributed to public).

[e] Other Difficult Accrual Cases

 Other similarly difficult accrual issues arise in actions for breach of
continuing obligation to make periodic payments under an installment contract
or a pension agreement, e.g., Conway v. Bughouse, Inc., 105 Cal. App. 3d 194,
200, 164 Cal. Rptr. 585 (1980) (the statute of limitations commences to run for
an unpaid installment when that periodic payment actually falls due); breach of
title insurer’s duty to defend, Lambert v. Commonwealth Land Title Ins. Co.,
53 Cal. 3d 1072, 282 Cal. Rptr. 445, 811 P.2d 737 (1991) (cause of action
against title insurer accrued upon refusal to defend, but statutory period is
equitably tolled until underlying action is terminated by final judgment); inverse
condemnation, e.g., Lee v. Los Angeles County Metropolitan Transit Authority,
107 Cal. App. 4th 848, 132 Cal. Rptr. 2d 444 (2003) (an action for continuous
and repeated damage to real property based on inverse condemnation and
nuisance does not accrue until the situation has stabilized); Otay Water District
v. Beckwith, 1 Cal. App. 4th 1041, 3 Cal. Rptr. 2d 223 (1991) (claim accrued
when governmental entity takes possession of property and, where no direct
physical invasion and fact of taking not immediately apparent, tolled until
damage is reasonably appreciable); quiet title, Mayer v. L & B Real Estate, 43
Cal. 4th 1231, 78 Cal. Rptr. 3d 62, 185 P.3d 43 (2008) (whether the statute of
limitations bars an action to quiet title may turn on whether the plaintiff is in
undisturbed possession of the land, unless the plaintiff has adequate notice that
title to the property has been transferred or sold).

Actions for equitable indemnity may also present difficult accrual issues. The
ordinary rule is that an equitable indemnity action does not accrue for statute of
limitations purposes until a tort defendant pays a judgment or settlement for
which that defendant is entitled to indemnity. See Department of Transp. v.
Superior Court, 26 Cal. 3d 744, 163 Cal. Rptr. 585, 608 P.2d 673 (1980) .
However, there are several exceptions. See, e.g., CCP § 337.15(c) (special
rules for independent actions for indemnity in construction defect cases); §
359.5; and Gov. Code § 901. See also Greyhound Lines, Inc. v. County of
Santa Clara, 187 Cal. App. 3d 480, 481, 231 Cal. Rptr. 702 (1986) (Gov.
Code § 901 created a special accrual date for pursuing equitable indemnity
claims against the government); Bradley v. Breen, 73 Cal. App. 4th 798, 86 Cal.
Rptr. 2d 726 (1999) (a cross-complaint [105/106]for equitable indemnity against a
decedent’s estate was barred because not commenced within one year after the
date of death as required by CCP § 366.2).

[f] Wrongful Discharge from Employment

When do the statutes of limitations begin to run in a wrongful termination case

in which the plaintiff alleges causes of action sounding in contract and tort, as
well as violations of the California Fair Employment and Housing Act (FEHA),
Gov. Code § 12900 et seq.? On the date the employee is informed
unequivocally that his or her employment will be terminated, or on the
subsequent date when employment actually is terminated? See Romano v.
Rockwell Intl., Inc., 14 Cal. 4th 479, 59 Cal. Rptr. 2d 20, 926 P.2d 1114 (1996)
(statutes of limitations applicable to causes of action for wrongful discharge
begin to run at the time of actual termination of employment). See also Mullins
v. Rockwell Intl. Corp., 15 Cal. 4th 731, 63 Cal. Rptr. 2d 636, 936 P.2d 1246
(1997) (based on the reasoning in Romano, the statute of limitations runs from
the date of actual termination of employment in a contract action for wrongful
termination, whether or not constructive discharge is alleged).

[g] Continuous Accrual

In Howard Jarvis Taxpayers Assn. v. City of La Habra , 25 Cal. 4th 809, 107
Cal. Rptr. 2d 369, 23 P.3d 601 (2001) , an action for declaratory and mandamus
relief challenging the validity of a city ordinance and the ongoing collection of
taxes pursuant to the ordinance but not seeking refunds of taxes paid, the
Supreme Court held that the defendant city’s continued imposition and
collection of tax is an ongoing violation upon which the limitations period
begins anew with each collection.

[4] Special Accrual Issues in Medical Negligence Actions Governed by CCP

§ 340.5

[a] Section 340.5

Section 340.5 codifies the common law discovery rule for medical
negligence actions. E.g., Dolan v. Borelli , 13 Cal. App. 4th 816, 16 Cal. Rptr.
2d 714 (1993). Difficult problems can arise in determining when a plaintiff has
“discovered” the manifestation of an injury. For example, in Dolan v. Borelli,
supra, the defendant performed surgery on plaintiff Dolan in 1985 to relieve
pain in Dolan’s wrist, supposedly releasing Dolan’s right carpal tunnel
ligament. Dolan continued to suffer pain, and consulted a second doctor. A
second operation was performed on Dolan’s wrist in 1986, at which time the
new doctor discovered that the carpel tunnel release had not previously been
performed by the defendant. When did plaintiff discover her injury within the
meaning of § 340.5 and Jolly?

And in Steingart v. White, 198 Cal. App. 3d 406, 243 Cal. Rptr. 678 (1988) ,
the plaintiff was aware of a lump on her breast and consulted the defendant
doctor in February, 1982. Defendant advised her that the lump was benign. In
April 1985 [106/107]another physician diagnosed the lump as a malignancy and
performed a radical mastectomy. Plaintiff commenced a negligence action
against defendant in March, 1986. Is plaintiff’s action barred by the one-year
and/or three-year limitation in § 340.5? When did plaintiff suffer “injury” within
the meaning of § 340.5?

[b] Wrongful Death Cases

When does a cause of action accrue in a medical negligence action for

wrongful death? In Larcher v. Wanless , 18 Cal. 3d 646, 135 Cal. Rptr. 75, 557
P.2d 507 (1976), the heirs of deceased Virginia Larcher commenced a wrongful
death action against the defendant doctor for negligently prescribing drugs
which caused Larcher’s death. Plaintiffs’ decedent suffered severe paralysis
beginning in 1968, and was aware of its negligent cause by 1972. Mrs. Larcher
died in 1974, and her heirs filed their wrongful death action two months later.
The trial court granted summary judgment for defendant on the ground that the
action was barred by CCP § 340.5 because it was not filed within one year of
decedent’s injuries, which were discovered at the latest in 1972.

The Supreme Court reversed, holding that a wrongful death cause of action
does not accrue until the event of decedent’s death. The court noted that
wrongful death is not merely a continuation or survival of decedent’s claim for
personal injuries, but an entirely new cause of action created in the heirs and
based on the death of the decedent as that death inflicted injury upon them.
Larcher, 18 Cal. 3d at 656-57. Until that death, the heirs have suffered no
“injury” under former CCP § 377 (now CCP §§ 377.60-377.62) and hence have
no basis for filing suit. Likewise, the word “injury” in § 340.5, as that statute
applies to wrongful death actions, must be read to refer to the wrongfully caused
death of plaintiffs’ decedent. Id. at 658–59.

If Mrs. Larcher had filed a negligence action for personal injuries against the
doctor in 1974 but prior to her death, would the action have been time-barred?
If not time-barred, what would happen to the action when Mrs. Larcher died?
See § 10.06[c] Survival of Actions, infra. Assume that Mrs. Larcher and her
heirs were unaware of the cause of her paralysis, and her heirs did not become
suspicious of wrongdoing until her death. The heirs pursued their suspicions
regarding a connection between Mrs. Larcher’s death and the defendant’s
negligent prescription, but did not file the wrongful death suit against the
defendant doctor until 16 months after her death. Is this lawsuit barred by the
statute of limitations? See Kleefeld v. Superior Court, 25 Cal. App. 4th 1680,
31 Cal. Rptr. 2d 12 (1994).
 [c] Actions by Minors

Code of Civil Procedure § 340.5 states that “[a]ctions by a minor shall be

commenced within three years from the date of the alleged wrongful act,” except
when limited tolling provisions apply. “Wrongful act” is not synonymous with
“injury,” and the delayed discovery rule is not read into this accrual language
for minors. Young v. Haines, supra , 41 Cal. 3d 883, 894–96. Consequently, §
340.5 provides different, and generally less favorable, treatment for minors than
for adults with respect to accrual. What is the policy basis for this different
treatment of minors? Is it a rational basis? See Photias v. Doerfler, 45 Cal.
App. 4th 1014, 53 Cal. Rptr. 2d 202 (1996) (no rational basis for treating
minors differently from [107/108]adults with respect to accrual of a cause of action
for medical malpractice, and CCP § 340.5 therefore violates a minor’s right to
equal protection of the law).

[C] Extent of Harm Required for Accrual: Appreciable and Actual

Harm

Related to the issue of delayed discovery of injury is the question of how

substantial must an injury be to trigger the commencement of the relevant statute
of limitations. Under the traditional view, the statute of limitations begins to run
as soon as the plaintiff is aware of any harm, however slight. See Sonbergh v.
MacQuarrie, 112 Cal. App. 2d 771, 774, 247 P.2d 133 (1952) . The Supreme
Court modified this rule in Davies v. Krasna, 14 Cal. 3d 502, 121 Cal. Rptr.
705, 535 P.2d 1161 (1975) , where it observed that “we generally now
subscribe to the view that the period cannot run before plaintiff possesses a true
cause of action, by which we mean that events have developed to a point where
plaintiff is entitled to a legal remedy, not merely a symbolic judgment such as an
award of nominal damages.” Davies, 14 Cal. 3d, at p. 513. The Davies court
formulated the following rule of general application: “[A]lthough a right to
recover nominal damages will not trigger the running of the period of limitation,
the infliction of appreciable and actual harm, however uncertain in amount, will
commence the statutory period.” Id. at p. 514.

The Davies rule presents some particularly troublesome problems where a

defendant’s wrongful act causes an immediate, relatively minor tangible injury
— but an injury that nonetheless constitutes “appreciable and actual harm” —
and subsequently results in a far more substantial injury many years later. Some
courts held that the earlier injury, even if less severe than the later injury, starts
the statute of limitations running as to both injuries, and the expiration of the
statute on the earlier injury bars a suit on the later one. E.g., Miller v. Lakeside
Village Condo. Assn., 1 Cal. App. 4th 1611, 2 Cal. Rptr. 2d 796 (1991) ;
DeRose v. Carswell, 196 Cal. App. 3d 1011, 242 Cal. Rptr. 368 (1987) . Other
courts found that, under various theories, suit on a later manifesting injury was
not time-barred even when the limitations period on the earlier injury had
expired. Zambrano v. Dorough, 179 Cal. App. 3d 169, 224 Cal. Rptr. 323
(1986) (plaintiff, who initially suffered a variety of personal injuries such as
pain, blood clots, and a ruptured fallopian tube caused by defendant’s
malpractice, was not time-barred from seeking damages for loss of reproductive
capacity when three years later she developed additional injuries caused by
defendant’s earlier malpractice that required a complete hysterectomy);
Martinez-Ferrer v. Richardson-Merrell, Inc. , 105 Cal. App. 3d 316 (1980)
(plaintiff who developed cataracts sixteen years after taking an anti-cholesterol
drug not barred by the statute of limitations from bringing a products liability
action against the manufacturer, even though the drug initially caused minor eye
problems and a rash that lasted six weeks).

The longstanding rule in California is that “[a] single tort can be the
foundation for but one claim for damages.” DeRose v. Carswell, 196 Cal. App.
3d 1011, 1024, fn. 5, 242 Cal. Rptr. 368 (1987) ; Miller v. Lakeside Village
Condo. Assn., 1 Cal. App. 4th 1611, 1622, 2 Cal. Rptr. 2d 796 (1991) . See
Grisham v. Phillip Morris U.S.A., Inc., 40 Cal. 4th 623, 641–46, 54 Cal. Rptr.
3d 735, 151 P.3d 1151 (2007) (discussing [108/109]the rule where the plaintiff
alleges two types of claims: one for personal injury and another for economic
injury). However, in Pooshs v. Phillip Morris USA, Inc., reproduced below,
the California Supreme Court recognized an exception to this rule, and resolved
the troublesome “double injury problem,” at least in the context of latent disease
cases.

POOSHS v. PHILIP MORRIS USA, INC.

SUPREME COURT OF CALIFORNIA
51 Cal. 4th 788, 123 Cal. Rptr. 3d 578, 250 P.3d 181 (2011)

Kennard, Justice.

Plaintiff was a cigarette smoker for 35 years, from 1953 through 1987. In
1989, she was diagnosed with chronic obstructive pulmonary disease (COPD),
which plaintiff knew was caused by her smoking habit. Nevertheless, she did
not sue the manufacturers of the cigarettes that she had smoked, and the statutory
period for doing so elapsed.

In 1990 or 1991, plaintiff was diagnosed with periodontal disease, which she
knew was caused by her smoking habit. Again, she did not sue the various
cigarette manufacturers, and the statutory period for doing so elapsed.

In 2003, plaintiff was diagnosed with lung cancer. This time, she sued. We
must decide whether the lawsuit is barred by the statute of limitations, which
requires that a suit be brought within a specified period of time after the cause
of action accrues.

The matter comes to us from the United States Court of Appeals for the Ninth
Circuit. (See Cal. Rules of Court, rule 8.548.) The Ninth Circuit has asked us to
answer two questions: “(1) Under California law, when may two separate
physical injuries arising out of the same wrongdoing be conceived of as
invading two different primary rights? [¶] (2) Under California law, may two
separate physical injuries — both caused by a plaintiff’s use of tobacco — be
considered ‘qualitatively different’ for the purposes of determining when the
applicable statute of limitations begins to run?” (Pooshs v. Phillip Morris USA,
Inc. (9th Cir. 2009) 561 F.3d 964, 966–967 (Pooshs).) In granting the Ninth
Circuit’s request, we restated the two questions in a single question: “When
multiple distinct personal injuries allegedly arise from smoking tobacco, does
the earliest injury trigger the statute of limitations for all claims, including those
based on the later injury?”

We hold that two physical injuries — both caused by the same tobacco use
over the same period of time — can, in some circumstances, be considered
“qualitatively different” for purposes of determining when the applicable statute
of limitations period begins to run. (Grisham v. Philip Morris U.S.A., Inc.
(2007) 40 Cal.4th 623, 645 [54 Cal. Rptr. 3d 735, 151 P.3d 1151] (Grisham).)
Specifically, when a later-discovered disease is separate and distinct from an
earlier-discovered disease, the earlier disease does not trigger the statute of
limitations for a lawsuit based on the later disease. This holding is consistent
with the conclusions reached by courts in other jurisdictions addressing the
same issue, often in the context of asbestos-related [109/110]litigation.1 We limit
our holding to latent disease cases, without deciding whether the same rule
should apply in other contexts.

In addressing the issue presented here, we emphasize that our role is only to
answer the “question of California law” that the Ninth Circuit posed to us. (Cal.
Rules of Court, rule 8.548(a).) We play no role in assessing the merits of
plaintiff’s factual assertions, which must be determined in the federal court.
Specifically, plaintiff asserted in the federal district court that her lung cancer is
a disease that is separate and distinct from her other two smoking-related
diseases. Although this assertion appears plausible on its face, its resolution
requires medical expertise. Here, the factual record was never developed
because the federal court considered plaintiff’s separate-disease assertion to be
irrelevant for purposes of applying the statute of limitations, and it granted
summary judgment for defendants. On plaintiff’s appeal to the Ninth Circuit, that
court then asked us whether plaintiff’s assertion that her diseases are separate
and distinct has any relevance under California statute of limitations law. The
Ninth Circuit’s reference order states: “For the purposes of summary judgment
… [i]t is uncontested that the etiology for lung cancer is distinct from the
etiology for COPD and periodontal disease.”2 (Pooshs, supra, 561 F.3d at p.
967.) Therefore, in addressing the issue before us, we assume plaintiff’s
assertion to be true, and we focus solely on its legal implications.

Plaintiff Nikki Pooshs filed this action in San Francisco Superior Court in
January 2004, less than a year after she was diagnosed with lung cancer. The
complaint named various corporate defendants, many of them cigarette
manufacturers. Plaintiff alleged that she smoked cigarettes from 1953 until the
end of 1987, that she was ignorant of many of the dangers associated with
cigarette smoking, and that defendants misled her about those dangers,
concealed from her the addictive properties of tobacco, and took other steps to
induce her to smoke. She asserted 13 theories of recovery, including allegations
of negligence, products liability, misrepresentation, fraud, conspiracy, failure to
warn, unfair competition, and false advertising.

Defendants removed the case to federal court and then filed several motions
to dismiss. After several dismissals, only four cigarette manufacturers and their
public relations agent remained as defendants. These remaining defendants
sought dismissal of the complaint, citing the Ninth Circuit’s decision in Soliman
v. Philip Morris Inc. (9th Cir. 2002) 311 F.3d 966 [110/111](Soliman). In that
case, a California plaintiff alleged that he had smoked cigarettes since the late
1960’s and could not quit. He claimed nicotine addiction as one of his injuries,
in addition to several respiratory and emotional disorders. He further claimed
that he did not learn that smoking was addictive (and that he was addicted) until
late 1999. In March 2000, he sued various tobacco companies in state court.
The Soliman defendants removed the case to federal court and then moved to
dismiss the complaint on statute of limitations grounds. The defendants doubted
that the plaintiff, who had smoked for 32 years, could have discovered his
health problems only months before bringing suit. They argued that he had
constructive knowledge much earlier, and therefore his suit was time-barred.
The district court, applying California law, dismissed the complaint because of
expiration of the statute of limitations period. The plaintiff appealed to the Ninth
Circuit.
 The Ninth Circuit affirmed the district court’s judgment in Soliman, supra,
311 F.3d 966 . The Ninth Circuit observed that the plaintiff alleged addiction as
one of his injuries and he had constructive knowledge of that addiction long
before he filed suit.3 The court reasoned that the general public is “presumed by
California law to know that smoking causes addiction” (id. at p. 974) and
therefore a “longtime smoker” like the plaintiff may not claim delayed discovery
of that injury (id. at p. 975). Because the plaintiff could be “charged with this
knowledge” long before he filed suit, the Ninth Circuit in Soliman concluded
that the action was time-barred. (Ibid.)

Here, relying on Soliman, the federal district court granted defendants’

motion to dismiss. The court found that “while the plaintiff in the present case
may not claim addiction as an injury in quite so specific a way as did the
plaintiff in Soliman, the allegation that the plaintiff here became addicted to
nicotine and was injured by that addiction runs as a thread throughout the
complaint.” (Pooshs v. Altria Group, Inc. (N.D.Cal. 2004) 331 F. Supp. 2d
1089, 1095.) The district court found Soliman to be controlling and dismissed
with prejudice plaintiff’s claims against defendants.

Plaintiff appealed to the Ninth Circuit, which held the appeal in abeyance
pending our decision in Grisham, supra, 40 Cal.4th 623. In Grisham, we
considered whether the Ninth Circuit in Soliman, supra, had correctly construed
California law. Grisham addressed these two questions: (1) Is there a
presumption under California law that, at least since 1988, the general public
has been aware of the addictive nature and health dangers of smoking (thereby
barring under the statute of limitations a cause of action for addiction-based
economic losses) and (2) If the cause of action for addiction-based economic
losses is time-barred, is a claim for physical injuries resulting from the same
tobacco use also time-barred?

With respect to the first question, we held in Grisham, supra, 40 Cal.4th 623,
that there is no special presumption that smokers are aware of the dangers of
smoking. We observed, however, that there is a general, rebuttable presumption
that a plaintiff has knowledge of the wrongful causes of an injury. To rebut this
general [111/112]presumption a plaintiff must make certain specific allegations
that the plaintiff in Grisham had not made and, in light of her other allegations,
could not plausibly make. Accordingly, in that case the plaintiff’s economic
injury claim was time-barred under the applicable statute of limitations.

With respect to the second question in Grisham, we expressly chose not to

decide whether a claim alleging smoking-related physical injury involves a
different primary right than a claim alleging smoking-related economic injury.
Instead, we decided the case solely as a matter of statute of limitations law. We
noted that economic injury and physical injury are “qualitatively different” types
of injury, and we concluded that an appreciable injury of the first type does not
commence the statutory period for suing based on a later-discovered injury of
the second type. We did not, however, address in Grisham whether this same
distinction would apply in a case like the one now before us, where both
injuries are physical.

While Grisham was pending before us, defendants in this case took plaintiff’s
deposition and learned that she had suffered from significant medical effects
from smoking long before she was diagnosed with lung cancer and long before
she filed her current, lung-cancer-based lawsuit. Specifically, she was
diagnosed in 1989 with COPD, which is a diagnosis used to describe both
emphysema and chronic bronchitis. Plaintiff also admitted knowing as early as
1989 that this pulmonary disease was caused by smoking. And later, in 1990 or
1991, she was diagnosed with periodontal disease, which her periodontist told
her was caused by smoking. She did not sue defendants for either of these
diseases despite knowing that they were caused by smoking.

After we decided Grisham, the Ninth Circuit vacated the district court’s
judgment in this case and remanded the matter to that court. Defendants then
moved for summary judgment, this time asserting that plaintiff’s physical
injuries diagnosed in 1989 (COPD) and in 1990 or 1991 (periodontal disease)
commenced the statutory period for bringing her present action, which is based
on the third disease (lung cancer). Having suffered significant physical injuries
with knowledge that smoking was the cause of those injuries, and having failed
to sue defendants within the applicable statutory periods, plaintiff could not —
in defendants’ view — later bring suit and assert that her physical injuries
turned out to be worse than previously thought. Allowing the suit under those
circumstances, defendants asserted, would conflict with the well-settled rule
that a statute of limitations starts to run when the plaintiff suffers “appreciable
and actual harm, however uncertain in amount.” (Davies v. Krasna (1975) 14
Cal.3d 502, 514 [121 Cal. Rptr. 705, 535 P.2d 1161] (Davies); see also
DeRose v. Carswell (1987) 196 Cal. App. 3d 1011, 1022 [242 Cal. Rptr. 368]
(DeRose).)

Plaintiff responded that her three physical injuries (COPD, periodontal

disease, and lung cancer) were separate diseases, and that each was therefore
the basis of a distinct primary right. Plaintiff stated “that COPD is a separate
illness, which does not pre-dispose or lead to lung cancer and that it has nothing
medically, biologically, or pathologically to do with lung cancer.” She further
argued that the primary right at issue here is not the right to be free from the
wrongful exposure to tobacco smoke; rather, it is the right to be free from lung
cancer caused by the wrongful exposure to tobacco smoke, and that this primary
right is different from [112/113]the right to be free from COPD or from
periodontal disease caused by the wrongful exposure to tobacco smoke. The
federal district court, to which the case had been remanded by the Ninth Circuit,
rejected that argument.

In the view of the federal district court, plaintiff’s various physical injuries
were merely different ways in which she was damaged by a single alleged
wrong (tobacco exposure), like suffering a broken arm and a broken leg from a
single car accident. To draw distinctions among the different types of physical
injury (i.e., COPD, periodontal disease, and lung cancer) that plaintiff suffered
from smoking and then to allow separate suits for each injury, would — the
district court said — conflict with the rule against splitting a cause of action:
“The longstanding rule in California … is that ‘[a] single tort can be the
foundation for but one claim for damages.’” (DeRose, supra, 196 Cal. App. 3d
at p. 1024, fn. 5.) Accordingly, the district court granted summary judgment for
defendants.

Plaintiff again appealed to the Ninth Circuit, which then asked us for
clarification of California law on the application of the statute of limitations
when two separate diseases arise at different times from the same alleged
wrongdoing. (Pooshs, supra, 561 F.3d at pp. 966–967.) We granted the Ninth
Circuit’s request.

II

A statute of limitations strikes a balance among conflicting interests. If it is

unfair to bar a plaintiff from recovering on a meritorious claim, it is also unfair
to require a defendant to defend against possibly false allegations concerning
long-forgotten events, when important evidence may no longer be available.
Thus, statutes of limitations are not mere technical defenses, allowing
wrongdoers to avoid accountability. (Norgart v. Upjohn Co. (1999) 21 Cal.4th
383, 395–397 [87 Cal. Rptr. 2d 453, 981 P.2d 79] .) Rather, they mark the point
where, in the judgment of the Legislature, the equities tip in favor of the
defendant (who may be innocent of wrongdoing) and against the plaintiff (who
failed to take prompt action): “[T]he period allowed for instituting suit
inevitably reflects a value judgment concerning the point at which the interests
in favor of protecting valid claims are outweighed by the interests in prohibiting
the prosecution of stale ones.” (Johnson v. Railway Express Agency (1975) 421
U.S. 454, 463–464 [95 S. Ct. 1716, 44 L. Ed. 2d 295].)

Critical to applying a statute of limitations is determining the point when the

limitations period begins to run. Generally, a plaintiff must file suit within a
designated period after the cause of action accrues. (Code Civ. Proc., § 312.) A
cause of action accrues “when [it] is complete with all of its elements” — those
elements being wrongdoing, harm, and causation. (Norgart v. Upjohn Co.,
supra, 21 Cal.4th at p. 397.)

Application of the accrual rule becomes rather complex when, as here, a

plaintiff is aware of both an injury and its wrongful cause but is uncertain as to
how serious the resulting damages will be or whether additional injuries will
later become manifest. Must the plaintiff sue even if doing so will require the
jury to speculate regarding prospective damages? Or can the plaintiff delay suit
until a more accurate assessment of damages becomes possible? Generally, we
have answered those questions in favor of prompt litigation, even when the
extent of damages remains [113/114]speculative. Thus, we have held that “the
infliction of appreciable and actual harm, however uncertain in amount, will
commence the statutory period.” (Davies, supra, 14 Cal.3d at p. 514.)

The most important exception to that general rule regarding accrual of a cause
of action is the “discovery rule,” under which accrual is postponed until the
plaintiff “discovers, or has reason to discover, the cause of action.” (Norgart v.
Upjohn Co., supra, 21 Cal.4th at p. 397.) Discovery of the cause of action
occurs when the plaintiff “has reason … to suspect a factual basis” for the
action. (Id. at p. 398; see also Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103,
1110–1111 [245 Cal. Rptr. 658, 751 P.2d 923] .) “The policy reason behind the
discovery rule is to ameliorate a harsh rule that would allow the limitations
period for filing suit to expire before a plaintiff has or should have learned of
the latent injury and its cause.” (Buttram v. Owens-Corning Fiberglas Corp.
(1997) 16 Cal.4th 520, 531 [66 Cal. Rptr. 2d 438, 941 P.2d 71].)

III

Defendants’ core argument is that plaintiff’s 1989-diagnosed COPD, either

alone or in combination with the 1990- or 1991-diagnosed periodontal disease,
constituted “appreciable and actual harm” (Davies, supra, 14 Cal.3d at p. 514),
triggering the running of the pertinent statute of limitations on her indivisible
cause of action for smoking-related injury. In 2003, plaintiff was diagnosed with
lung cancer, which led her to sue defendants. As of 1991, defendants assert,
plaintiff had suffered actual harm, her damages were not merely nominal,4 and
she knew that the harm she had suffered was from smoking. Therefore, in
defendants’ view, plaintiff should have brought her lawsuit at that time. That she
might eventually develop lung cancer in 2003 was, according to defendants,
merely an uncertainty as to the amount of harm, which did not delay the running
of the statute of limitations. In short, defendants’ view is that plaintiff could
have sued in 1991 but failed to do so. Because defendants’ argument depends
heavily on the “appreciable and actual harm” rule we announced in Davies and
then clarified in Grisham, we discuss those cases in detail below.

Unlike this case, Davies, supra, 14 Cal.3d 502, was not a personal injury
case. Rather, Davies involved a cause of action for “breach of confidence” —
that is, the breach of an obligation, imposed by law, to maintain the
confidentiality of a story idea. In 1951, the plaintiff, Valentine Davies,
submitted a written story in confidence to the defendant, Norman Krasna, who
later incorporated the idea into a successful Broadway play. (Davies, at pp.
504–505, 511.) Davies knew as early as 1955 that Krasna had breached his
obligation to maintain the confidentiality of the story (id. at p. 512), and Davies
suffered actual harm at that time (because the breach “‘substantially destroyed
the marketability of [the] story’” (id. at p. 514)). Nevertheless, Davies did not
sue Krasna until 1958, when Krasna began profiting financially from the story.
We held that the applicable two-year statute of limitations began to run in 1955
when Davies first learned of the breach and suffered [114/115]“appreciable and
actual harm.” In that context, we said: “[N]either uncertainty as to the amount of
damages or difficulty in proving damages tolls the period of limitations.” (Ibid.)

Significantly, in Davies, we were considering only a single type of injury

(economic injury based on the misappropriation of intellectual property), and
the issue was whether uncertainty as to the extent of the damages associated
with that single injury delayed the running of the statute of limitations. Thus, we
did not consider in Davies whether “the infliction of appreciable and actual
harm” of one type (for example, economic injury) would “commence the
statutory period” with respect to harm of a completely different type (for
example, physical injury). Nor did we consider whether “the infliction of
appreciable and actual harm” in the form of a specific disease (such as COPD
here) would “commence the statutory period” with respect to a separate and
distinct disease (as the lung cancer here is alleged to be). Therefore, Davies
does not govern this case. We have never stated what commences the running of
the statutory period in a case like this one, in which a later-discovered physical
injury is alleged to be separate from an earlier-discovered physical injury. Our
decision in Grisham emphasized the limits of our holding in Davies.

As relevant here, the plaintiff in Grisham, supra, 40 Cal.4th 623, sued

cigarette manufacturers for smoking-related injuries. She contended that the
cigarette manufacturers had wrongfully induced her addiction to tobacco, and
she alleged claims for economic injury (the cost of purchasing cigarettes) and
personal injury (emphysema and periodontal disease). We concluded in
Grisham that the economic injury claim was barred by the applicable statute of
limitations because the plaintiff knew or should have known about her injury
long before she filed suit. That conclusion raised the question whether the
personal injury claims were also barred, on the theory that the plaintiff had
suffered only one indivisible harm and that the physical injuries were simply
another category of damages related to that single harm. In addressing this
question in Grisham, we did not decide whether the two injuries (economic and
physical) implicated two separate primary rights. Instead, we focused
exclusively on the statute of limitations, and we held that appreciable harm in
the form of an economic injury does not begin the running of the statute of
limitations on a suit to recover damages for a physical injury. Grisham
interpreted the “appreciable and actual harm” rule of Davies to be limited to
cases involving a single type of injury, and we found no case applying that rule
to a later-discovered injury of a different type. (Grisham, at p. 644.)6

[115/116]

In Grisham, we also emphasized the impractical consequences of a contrary

conclusion, relying on Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th
797 [27 Cal. Rptr. 3d 661, 110 P.3d 914] (Fox). There, the plaintiff underwent
gastric bypass surgery. She later sued the surgeon and the hospital for medical
malpractice. During discovery, she learned that her alleged injury might have
been caused by a defective stapler manufactured by a nonparty. The plaintiff
then amended her complaint to add as a defendant the stapler manufacturer,
which asserted the statute of limitations as a defense. We concluded in Fox that
knowledge of the facts supporting a medical malpractice cause of action against
one defendant does not necessarily commence the running of the statute of
limitations with respect to a separate products liability cause of action against a
different defendant.
 Grisham, supra, 40 Cal.4th 623, involved a claim against the same
defendants alleging different injuries, whereas Fox, supra, 35 Cal.4th 797,
involved a claim against different defendants alleging the same injury.
Nevertheless, we held that the policy underlying our holding in Fox was equally
applicable in Grisham. In Grisham, we quoted the following language from
Fox: “‘[I]t would be contrary to public policy to require plaintiffs to file a
lawsuit “at a time when the evidence available to them failed to indicate a cause
of action.” [Citations.] Were plaintiffs required to file all causes of action when
one cause of action accrued, … they would run the risk of sanctions for filing a
cause of action without any factual support. [Citations.] Indeed, it would be
difficult to describe a cause of action filed by a plaintiff, before that plaintiff
reasonably suspects that the cause of action is a meritorious one, as anything but
frivolous. At best, the plaintiff’s cause of action would be subject to demurrer
for failure to specify supporting facts [citation].’” (Grisham, supra, 40 Cal.4th
at pp. 644–645, quoting Fox, supra, 35 Cal.4th at p. 815.)

Applying that language from Fox, to the facts in Grisham, supra, 40 Cal.4th
623, we rejected a rule that “would compel cigarette smokers either to file
groundless tort causes of action based on physical injury against tobacco
companies as soon as they discovered they were addicted to cigarettes and had
an unfair competition cause of action …, or risk losing their right to sue in tort
for such physical injury.” (Id. at p. 645.) Such a requirement, Grisham said,
“would violate the essence of the discovery rule that a plaintiff need not file a
cause of action before he or she ‘“has reason at least to suspect a factual basis
for its elements.” [Citations.]’ [Citation.]” (Ibid.) Furthermore, “[i]t would
directly contravene ‘the interest of the courts and of litigants against the filing of
potentially meritless claims.’ [Citation.]” (Ibid.)

In Grisham, we expressly stopped short of deciding the issue presented here,

i n [116/117]which a single wrong gives rise to two injuries of the same general
type (physical injuries), but the two injuries become manifest at different times
and are alleged to be separate and distinct. Nevertheless, we see no reason not
to apply to this case the logic of Grisham. In both cases, the injuries arose at
different times and were separate from one another. In Grisham, the injuries
were separate from one another in that one was economic and the other was
physical; here, the Ninth Circuit has asked us to assume that the injuries are
three separate diseases.

It is critical to consider the posture in which this matter comes to us. To

defeat summary judgment in the federal district court, plaintiff needed to identify
an issue of fact that, if decided in her favor, would allow her to overcome
defendants’ statute of limitations defense. (See generally Anderson v. Liberty
Lobby, Inc. (1986) 477 U.S. 242, 248 [106 S. Ct. 2505, 91 L. Ed. 2d 202];
Celotex Corp. v. Catrett (1986) 477 U.S. 317, 322 [106 S. Ct. 2548, 91 L. Ed.
2d 265].) The issue of fact that plaintiff identified in the federal district court
was that her lung cancer is a disease that is separate from her earlier-
discovered COPD and periodontal disease. For example, plaintiff stated “that
COPD is a separate illness, which does not pre-dispose or lead to lung cancer
and that it has nothing medically, biologically, or pathologically to do with lung
cancer.” It is not our role to decide or even question the factual validity of that
assertion. Rather, our role is to determine, as a legal matter, whether plaintiff’s
assertion has any relevance under California law for purposes of applying the
statute of limitations, for that is the question that the Ninth Circuit asked us to
decide. In other words, the Ninth Circuit has asked us to assume plaintiff’s
assertion to be true and to decide, as a matter of California law, whether two
physical injuries that constitute separate diseases and that become manifest at
different times can be considered “qualitatively different” (Grisham, supra, 40
Cal.4th at p. 645) for purposes of applying the statute of limitations. The answer
is “yes.”

As already discussed, we emphasized in Grisham that it made little sense to

require a plaintiff whose only known injury is economic to sue for personal
injury damages based on the speculative possibility that a then latent physical
injury might later become apparent. Likewise, here, no good reason appears to
require plaintiff, who years ago suffered a smoking-related disease that is not
lung cancer, to sue at that time for lung cancer damages based on the
speculative possibility that lung cancer might later arise. Nothing we said in
Davies, supra, 14 Cal.3d 502, requires such a rule, and defendants here have
cited no case that supports such a rule. Moreover, although we reaffirm the
application of the “appreciable and actual harm” rule to cases that do not
involve latent diseases, application of that rule to bar plaintiff’s lung cancer
claim before her lung cancer had become manifest would violate the policy
underlying the discovery rule, which, as we noted earlier, is to prevent “the
limitations period … [from] expir[ing] before a plaintiff has or should have
learned of the latent injury and its cause.” (Buttram v. Owens-Corning
Fiberglas Corp., supra, 16 Cal.4th at p. 531.)

It is true that here plaintiff’s COPD involved the same part of the body (the
lungs) as her lung cancer. Nevertheless, as we noted earlier, the Ninth Circuit
has asked that in deciding the statute of limitations issue we accept as true
plaintiff’s factual assertion “that COPD is a separate illness, which does not
pre-dispose or lead to lung cancer and that it has nothing medically,
biologically, or pathologically [117/118]to do with lung cancer.” Assuming that
assertion to be true, it does not matter that both diseases affect the lungs. The
significant point is that the later-occurring disease (lung cancer) is, according to
plaintiff’s offer of proof, a disease that is separate and distinct from the earlier-
occurring disease (COPD). Therefore, under the logic of our decision in
Grisham, the statute of limitations bar can apply to one disease without applying
to the other.

IV

In response to the Ninth Circuit’s inquiry, we conclude that when a later-

discovered latent disease is separate and distinct from an earlier-discovered
disease, the earlier disease does not trigger the statute of limitations for a
lawsuit based on the later disease.

NOTES AND QUESTIONS REGARDING

POOSHS AND THE “DOUBLE INJURY PROBLEM”

(1) The Supreme Court in Pooshs held that two physical injuries in latent
disease cases can be considered “qualitatively different” for purposes of
determining when the applicable statute of limitations period begins to run when
a later-discovered disease is “separate and distinct” from an earlier-discovered
disease. What constitutes a “qualitatively different” physical injury that is
“separate and distinct” from an earlier physical injury? What facts are relevant
to this inquiry?

(2) The Pooshs decision resolves the troublesome “double injury problem”
where a wrongful act first causes relatively minor actual and appreciable injury
but years later results in far more substantial injury, at least in the context of
latent disease cases. See, e.g., DeRose v. Carswell, 196 Cal. App. 3d 1011, 242
Cal. Rptr. 368 (1987) (one cause of action and accrual point for all tort
injuries); contra Martinez-Ferrer v. Richardson-Merrell, Inc. , 105 Cal. App.
3d 316 (1980) (earlier injury and later injury constitute two causes of action and
therefore two separate accrual points). Should the Pooshs court’s reasoning
also apply to double injury cases not involving latent diseases?
 (3) In footnote 6 of the Pooshs opinion, the Supreme Court observes that “[i]f
two primary rights (and hence two causes of action) are alleged, these two
causes of action can accrue independently for purposes of applying the statute of
limitations without the need for an exception to the rule that a single tort
supports only a single claim.” What does this observation mean? What is an
example of when two primary rights are alleged in a case seeking damages for
physical injuries?

(4) The Supreme Court in Pooshs specifically held that “when a later-
discovered disease is separate and distinct from an earlier-discovered disease,
the earlier disease does not trigger the statute of limitations for a lawsuit based
on the later disease.” Pooshs, 51 Cal. 4th at 803. What policies are furthered by
this rule? Is this rule consistent with the policies underlying statutes of
limitations? See Miller v. Lakeside Village Condo. Assn., Inc ., 1 Cal. App. 4th
1611, 1630–34, 2 Cal. Rptr. 2d 796 (1991) (Johnson, J., concurring)
(Independent suits for different [118/119]injuries furthers judicial economy, and
eliminates the risks of over- or under-compensating plaintiffs); Michael A.
Green, The Paradox of Statutes of Limitations in Toxic Substances Litigation,
76 Cal. L. Rev. 965, 969, 980–1014 (1988) (elimination of statutes of
limitations in toxic substances litigation would improve the accuracy of
litigation outcomes, enhance efficiency in the resolution of toxic substances
cases, and promote the legitimacy of the litigation outcomes from society’s
perspective). What policies are disserved by this approach?

Footnotes:

1 The leading case is Wilson v. Johns-Manville Sales Corp. (D.C. Cir. 1982) 684 F.2d 111, 112, 221
U.S. App. D.C. 337] (Wilson), in which a federal court of appeals concluded “that time to commence
litigation does not begin to run on a separate and distinct disease until that disease becomes manifest.”
Cases from jurisdictions throughout the United States have followed Wilson. (See, e.g., Nicolo v. Philip
Morris, Inc. (1st Cir. 2000) 201 F.3d 29; Jackson v. Johns-Manville Sales Corp. (5th Cir. 1984) 727
F.2d 506; Goodman v. Mead Johnson & Co. (3d Cir. 1976) 534 F.2d 566 …; see also cases cited in
Grisham, supra, 40 Cal.4th at p. 643, fn. 12.)

2 At oral argument before this court, defendants clarified that this factual point is “uncontested” only for
purposes of the summary judgment issue. Defendants contend that even if plaintiff’s diseases are
separate and distinct, the point is irrelevant to the application of the statute of limitations bar, and the validity
of that contention is the legal issue before us.

3 In Soliman, supra, 311 F.3d 966, the Ninth Circuit did not decide whether, under California law,
addiction alone is an actionable injury. Instead, the court relied on the fact that the plaintiff had alleged
addiction as an injury. The court said: “Soliman can’t claim that his addiction is an appreciable injury and, at
the same time, ask us to ignore it in determining when his claim accrued.” (Id. at p. 973.)

4 According to the United States Department of Health & Human Services, COPD is the fourth leading
cause of death in the United States. (See Centers for Disease Control and Prevention, Nat. Center for
Health Statistics, Leading Causes of Death ….)

6 As mentioned, the court in Grisham, supra, 40 Cal.4th 623, concluded the plaintiff’s later-manifesting
claim for physical injury was timely without also determining whether that claim involved the same primary
right as the plaintiff’s earlier-manifesting claim for economic damage. In so doing, we necessarily, albeit
implicitly, assumed that, even if the plaintiff’s various claims involved only a single primary right (as the
defendants there asserted), we could still apply the statute of limitations separately to the plaintiff’s physical
injury claim. (Id. at pp. 643, 646.) In other words, we necessarily accepted the possibility that a plaintiff can
have a single cause of action that accrues (for statute of limitations purposes) at different times with respect
to different types of harm, thus permitting some damage claims to proceed although others are time-barred.

To that extent, Grisham, supra, 40 Cal.4th 623, logically supports the recognition of an exception to the
rule that “a single tort can be the foundation for but one claim for damages.” (Miller v. Lakeside Village
Condominium Assn. (1991) 1 Cal.App.4th 1611, 1622 [2 Cal. Rptr. 2d 796] ; see DeRose, supra, 196 Cal.
App. 3d 1011, 1024.) Because the exception is inferred from Grisham’s holding, it is necessarily limited to
cases presenting the same legal and factual situation, that is, a statute of limitations defense to a claim
alleging a latent disease that is separate and distinct from, and becomes manifest long after, the initial
effects of the plaintiff’s injury. Of course, the need for such an exception in any particular case depends on
how the relevant primary rights are defined. If two primary rights (and hence two causes of action) are
alleged, those two causes of action can accrue independently for purposes of applying the statute of
limitations without the need for an exception to the rule that a single tort supports only a single claim. (See
Code Civ. Proc., § 312.)

§ 4.04 TOLLING THE STATUTE OF LIMITATIONS

[A] Introductory Note

After a cause of action has accrued, there are a number of situations in

California which will suspend the running of a statutory limitation period. Many
of these general tolling provisions are set forth in Sections 351-358 of the Code
of Civil Procedure. Other specific tolling provisions are included in special
statutes of limitations. E.g., CCP § 340.5 (statutory period for commencing
medical malpractice action tolled upon proof of fraud, intentional concealment,
or presence of foreign body), and CCP § 340.6 (statutory period for
commencing legal malpractice action tolled during time attorney continues to
represent plaintiff, etc.). But these statutory provisions do not provide the only
bases for tolling. The courts have greatly expanded the application of these
tolling situations through liberal interpretations of the code and, in the case of
“equitable tolling,” by simply creating judicial tolling doctrines based on
concepts of fairness.

[B] Specific Bases for Tolling Limitations Periods

[1] Statutory “Disability”

If a person has a “disability” within the meaning of CCP § 352 at the time a
cause of action accrues, the applicable statute of limitations is suspended during
the time of such “disability.” Section 352(a) defines “disability” to mean that
the person is “under the age of majority” or “insane.” Section 352.1 adds
“imprisoned on a criminal charge.” These general tolling provisions are subject
to several important qualifications and exceptions.

[a] Limitations

No person can toll a statute of limitation based on “disability” unless the

disability existed when the right of action accrued. CCP § 357. Consequently,
once a cause of action has accrued and the limitation period has begun to run,
the period will not be suspended because of a “disability” subsequent to
accrual. Congregational Church Bldg. Society v. Osborn , 153 Cal. 197, 94 P.
881 (1908); but see CCP § 354 (statute tolled by reason of state of war
regardless of whether cause of action already accrued). The disability of
imprisonment is further limited in two ways. First, regardless of the actual
sentence, the tolling period cannot exceed two years. CCP § 352.1(a). Second,
tolling provisions do not apply to most actions relating to the conditions of
confinement. CCP § 352.1(c).

[119/120]

[b] Exceptions

There are several important statutory exceptions to the traditional “disability”

tolling provisions of CCP § 352(a). For example, these provisions do not apply
to an action against a public entity or public employee on a cause of action for
which a claim is required to be presented by the California Claims Act,
Government Code §§ 905.2, 945.6 & 950.2, CCP § 352(b). However, the
California Claims Act does contain some special tolling provisions of its own,
particularly with respect to an application to present a late claim. See, e.g.,
Gov. Code §§ 911.4 and 946.6, discussed infra.

Nor do they apply to medical malpractice actions, at least as to tolling during

minority. CCP § 340.5 requires minors to commence actions within three years
of the wrongful act, except that actions by a minor under the age of six years
must be commenced within three years or prior to his eighth birthday, whichever
provides a longer period. The very limited tolling period for minors in § 340.5
was upheld in Young v. Haines , 41 Cal. 3d 883, 226 Cal. Rptr. 547, 718 P.2d
909 (1988), although the court did also construe the other tolling provisions in
the second sentence of § 340.5 as applicable to minors. Also, the one year
period for filing an administrative complaint of discrimination under the Fair
Employment and Housing Act (FEHA), Gov. Code § 12960, is not tolled during
plaintiff’s minority because FEHA is not among the statutes covered by CCP §
352. See Balloon v. Superior Court, 39 Cal. App. 4th 1116, 46 Cal. Rptr. 2d
161 (1995).

[2] Absence or Nonresidence of Defendant

One of the most controversial tolling provisions is contained in CCP § 351,

which states:

If, when the cause of action accrues against a person, he is out of the
state, the action may be commenced within the term herein limited, after his
return to the state, and if, after the cause of action accrues, he departs from
the state, the time of his absence is not part of the time limited for the
commencement of the action.

Section 351 was originally enacted in 1872, at a time when service on absent
defendants in an in personam action was generally unavailable. See Walter W.
Heiser, Can the Tolling of Statutes of Limitations Based on the Defendants’
Absence from the State Ever Be Consistent with the Commerce Clause?, 76
Missouri L. Rev. 385, 387–89 (2011) . But with the adoption of modern long-
arm statutes in California, several methods of service became available to
confer jurisdiction to enter a personal judgment against an absent defendant.
See, e.g., CCP §§ 415.20-415.50. As a result, the continued vitality of a tolling
provision based on absence was subject to doubt and criticism. See
Developments in the Law — Statutes of Limitations, 63 Harv. L. Rev. 1177,
1226–28 (1950); Samuel W. Halper, Note, Limitation of Actions: Absence of
the Defendant: Tolling the Statute of Limitations on a Foreign Cause of
Action, 1 UCLA L. Rev. 619 (1954).
 However, in Dew v. Appleberry, 23 Cal. 3d 630, 153 Cal. Rptr. 219, 591
P.2d 509 (1979), the Supreme Court applied CCP § 351 literally despite the fact
the defendant was amenable to service of process. Plaintiff was injured on
defendant’s [120/121]premises on September 23, 1973, but did not file her action
seeking personal injury damages until September 24, 1974. The court held
plaintiff’s action not barred by the one-year statute of limitation because the
period was tolled by § 351 due to defendant’s absence from California for five
weeks during the year following plaintiff’s injury. The court rejected
defendant’s argument that § 351 did not apply because defendant was always
amenable to service of process. The court reasoned that repeals by implication
are not favored, and therefore § 351 still applied despite the changes in the
service statutes. The court noted that § 351 does not make its tolling provision
depend on availability of service, but on defendant’s physical presence in
California.

The Court of Appeal has interpreted CCP § 351 to apply where the defendant
is a nonresident of California when the cause of action accrues, despite
language in § 351 suggesting a contrary construction. See Cvecich v. Giardino,
37 Cal. App. 2d 394, 99 P.2d 573 (1940) (although neither plaintiff nor
defendant was ever a resident of California, limitation period tolled). Under this
interpretation, a statute of limitations is suspended as to a non-resident
defendant, and will never begin to run until the defendant actually enters the
state! Kohan v. Cohan, 204 Cal. App. 3d 915, 251 Cal. Rptr. 570 (1988) ; see
also Green v. Zissis , 5 Cal. App. 4th 1219, 7 Cal. Rptr. 2d 406 (1992) (statute
of limitations on action to enforce judgment tolled because defendant absent
from state since prior judgment). This interpretation of § 351 has particularly
troubled scholars, see Developments in the Law — Statutes of Limitations,
supra, 63 Harv. L. Rev. at 1224-28; as well as judges, see, e.g., Cardoso v.
American Medical Systems, Inc., 183 Cal. App. 3d 994, 228 Cal. Rptr. 627
(1986). Why? What rational basis exists for the continued application of this
tolling provision to nonresidents?

What if the defendant is a corporation neither incorporated in nor with its

principle place of business in California, but doing business in California? Is a
statute of limitations permanently suspended in California as to such nonresident
corporate defendants? Is Corporations Code § 2111, which provides that a
foreign corporation is amenable to process in California by service upon the
Secretary of State, relevant here? See Loope v. Greyhound Lines, Inc., 114 Cal.
App. 2d 611, 250 P.2d 651 (1952) (§ 351 held inapplicable to nonresident
defendant corporation in view of California statutory provisions relative to
substituted service on foreign corporations). Should it be relevant after Dew?

I n Cardoso v. American Med. Sys., Inc., 183 Cal. App. 3d 994, 228 Cal.
Rptr. 627 (1986), the Court of Appeal, relying on Loope, held that the
availability of substituted service of process upon a nonresident corporation
renders the tolling provisions of § 351 inapplicable. “To rule otherwise would
result in the anomalous situation that a statute of limitation would never run in
actions filed against foreign corporations. This would be contrary to the avowed
purpose of such statutes to prevent stale claims.” Cardoso, 183 Cal. App. 3d at
999. Likewise, in Epstein v. Frank, 125 Cal. App. 3d 111, 177 Cal. Rptr. 831
(1981), the court held that the tolling provisions of § 351 are not available to
California limited partnerships where the sole general partner is absent from the
state. Are Cardoso and Epstein consistent with the reasoning of Dew?

[121/122]

[a] Constitutionality of Section 351

Until recently, constitutional challenges to the validity of CCP § 351 had been
unsuccessful in state court. See, e.g., Dew v. Appleberry, supra, 23 Cal. 3d at
636–37; Kohan v. Cohan, supra, 204 Cal. App. 3d at 923–24. But in Abramson
v. Brownstein, 897 F.2d 389 (9th Cir. 1990) , the U.S. Court of Appeals
concluded that CCP § 351 violates the Commerce Clause of the U.S.
Constitution. Plaintiff Abramson commenced an action in federal court in
California against defendant Brownstein for breach of contract. Defendant was a
nonresident of California who had never been physically present in the state.
The action was clearly time-barred under the relevant California statutes of
limitations, unless the tolling provision of CCP § 351 applied. The federal
appellate court, relying on Bendix Autolite Corp. v. Midwesco Enterprises,
Inc., 486 U.S. 888, 108 S. Ct. 2218, 100 L. Ed. 2d 896 (1988), held that § 351
did apply but is unconstitutional in violation of the Commerce Clause of the U.S.
Constitution. The court ruled that § 351 forced a nonresident defendant to
choose between being present in California for several years or forfeiture of the
limitations defense, and, as such, was an impermissible burden on interstate
commerce.

After Abramson, is § 351 of any further use in California? The effect of

Abramson on CCP § 351 was considered in Mounts v. Uyeda, 227 Cal. App. 3d
111, 277 Cal. Rptr. 730 (1991) . Plaintiff Mounts filed a tort action against
defendant Uyeda for infliction of emotional distress, alleging that defendant
pointed a gun at plaintiff in a threatening manner. Both parties were residents of
California and both were driving cars at the time of the incident, which occurred
on January 30, 1988. Plaintiff commenced her action on January 31, 1989;
defendant moved for summary judgment because the action was not commenced
within one year. Plaintiff sought to utilize § 351 by arguing the limitations
period was tolled due to defendant’s absence from the state for four days during
the year.

The Mounts court first held that CCP § 351, and not Vehicle Code § 17463,
applied to the action. Next, the court considered the effect of Abramson v.
Brownstein, supra. The court noted that Abramson did not declare § 351
unconstitutional on its face. As applied to the facts before it, the court ruled that
§ 351 was not unconstitutional because both parties were residents of California
and the alleged action did not involve interstate commerce. The court then
concluded that § 351 did not violate the Commerce Clause as applied, and that
the statute of limitations was tolled during defendant’s absence. Mounts, supra,
227 Cal. App. 3d at 120–122. Subsequently, the court in Pratali v. Gates, 4
Cal. App. 4th 632, 5 Cal. Rptr. 2d 733 (1993) , held that § 351 does not violate
the Commerce Clause because the defendant, a noncommercial resident of Idaho
who had defaulted on a personal note, was not engaged in interstate commerce.

The constitutional soundness of CCP § 351 was revisited in Filet Menu, Inc.
v. Cheng, 71 Cal. App. 4th 1276, 84 Cal. Rptr. 2d 384 (1999) . The Filet Menu
court concluded that § 351 violates the Commerce Clause not only as applied to
nonresident defendants, but also as applied to resident defendants who travel in
the course of interstate commerce. However, the court emphasized that its
conclusion was limited to travel for facilitation of interstate commerce —
tolling statutory periods for the duration of out-of-state travel unrelated to
interstate [122/123]commerce, such as for vacation trips or to attend college, does
not violate the Commerce Clause. Id. at 1283–84.

More recently, in Heritage Mktg. & Ins. Services, Inc. v. Chrustawka, 160
Cal. App. 4th 754, 73 Cal. Rptr. 3d 126 (2008) , the court considered the
constitutionality of CCP § 351 when applied to defendants who resided in
California when the cause of action accrued but permanently relocated to Texas
before the statute of limitations expired. The court concluded that absence-based
tolling under such circumstances violated the Commerce Clause regardless of
the reason for the defendants’ move out of state. Heritage Marketing, supra,
160 Cal. App. 4th at 762-64. The court reasoned as follows (Id. at 764):
 By creating disincentives to travel across state lines and imposing
costs on those who wish to do so, the statute prevents or limits the exercise
of the right to freedom of movement. Applying section 351 under the facts
of this case would impose an impermissible burden on interstate commerce
as it would force defendants to choose between remaining residents of
California until the limitations periods expired or moving out of state and
forfeiting the limitations defense ….

Do you agree with this interpretation of the Commerce Clause? Under the
reasoning employed by the Heritage Marketing court, under what
circumstances would absence-based tolling pursuant to CCP § 351 be consistent
with the Commerce Clause? For a discussion of the constitutionality of CCP §
351 and absence-based tolling statutes in effect in other states, see Walter W.
Heiser, Can the Tolling of Statutes of Limitations Based on the Defendants’
Absence from the State Ever Be Consistent with the Commerce Clause?, supra
(arguing that CCP § 351 violates the Commerce Clause when applied to a
resident defendant who is temporarily absent from California regardless of the
reason for the interstate travel).

[b] Statutory Exceptions

A considerable portion of the court’s opinion in Mounts deals with the

question of whether CCP § 351 or Vehicle Code § 17463 governs with respect
to tolling. Mounts, supra, 227 Cal. App. 3d at 114-20. Vehicle Code § 17463
contains an express exception to CCP § 351, and applies to actions arising out
of the operation of a motor vehicle in California. Vehicle Code § 17463
provides that a statute of limitations shall not be tolled during a defendant’s
absence from the state except when defendant cannot be located through the
exercise of reasonable diligence. See Litwin v. Estate of Formela, 186 Cal.
App. 4th 607, 111 Cal. Rptr. 3d 868 (2010) (Vehicle Code § 17463 excludes
nonresident as well as resident motorists from § 351 absence-based tolling, and
nonresident motorists may be served by serving the Director of the DMV). The
court in Mounts concluded that Vehicle Code § 17463 did not apply to
plaintiff’s action, and that therefore CCP § 351 did apply. The court made no
finding as to whether defendant was reasonably locatable when absent from the
state, yet held Vehicle Code § 17463 inapplicable. On what basis could the
court justify this holding?

Vehicle Code § 17463, in conjunction with Vehicle Code §§ 17459 and

17460, is one of the few express statutory exceptions to the operation of CCP §
351. Both [123/124]CCP § 340.5 (medical malpractice) and § 340.6 (legal
malpractice) contain specific special tolling provisions. Do these statutes
contain an implied exception to CCP § 351? See Laird v. Blacker , 2 Cal. 4th
606, 618, 7 Cal. Rptr. 2d 550, 828 P.2d 691 (1992) (Legislature expressly
intended CCP § 340.6(a) to disallow tolling under any circumstances not
enumerated in the statute); Jocer Enterprises, Inc., v. Price, 183 Cal. App. 4th
559, 569–70, 107 Cal. Rptr. 3d 539 (2010) (the tolling provision of CCP §
340.6(a)(4) encompasses the circumstances set forth in § 351).

[3] Other Statutory Tolling Provisions

The Code of Civil Procedure contains other general tolling exceptions to the
running of a statute of limitations: Section 352.5 (defendant subject to
independent order of restitution for injury as a condition of probation); § 366.1
and § 366.2 (death of plaintiff or defendant extends relevant statute of
limitations for certain survived actions); § 353.1 (extends relevant statute of
limitations up to six months when court has assumed jurisdiction over attorney’s
practice); § 354 (state of war); § 355 (plaintiff has one year to file new action
where prior favorable judgment for plaintiff reversed on appeal other than on
the merits); and § 356 (commencement of action stayed by injunction or statutory
prohibition).

[4] Professional Malpractice Statutes

Code of Civil Procedure §§ 340.5 and 340.6 contain special tolling

provisions applicable only to medical and legal malpractice actions,
respectively.

[a] Medical Malpractice

Section 340.5 provides:

In an action for injury or death against a health care provider based

upon such person’s alleged professional negligence, the time for the
commencement of action shall be three years after the date of injury or one
year after the plaintiff discovers, or through the use of reasonable diligence
should have discovered, the injury, whichever occurs first. In no event
shall the time for commencement of legal action exceed three years
unless tolled for any of the following: (1) upon proof of fraud, (2)
 intentional concealment, or (3) the presence of a foreign body, which has
no therapeutic or diagnostic purpose or effect, in the person of the
injured person. Actions by a minor shall be commenced within three years
from the date of the alleged wrongful act except that actions by a minor
under the full age of six years shall be commenced within three years or
prior to his eighth birthday whichever provides a longer period. Such time
limitation shall be tolled for minors for any period during which parent or
guardian and defendant’s insurer or health care provider have committed
fraud or collusion in the failure to bring an action on behalf of the injured
minor for professional negligence. (Emphasis added.)

Does § 340.5 provide the exclusive bases for tolling, such that neither § 351
nor § 352 apply? See Belton v. Bowers Ambulance Service, 20 Cal. 4th 928, 86
Cal. Rptr. 2d 107, 978 P.2d 591 (1999) (although no tolling provision outside
of CCP § 340.5 can [124/125]extend the three-year maximum time period for
commencement of a medical malpractice action, based on a careful reading of
the plain language, § 340.5 does not provide the exclusive basis for tolling the
one-year limitation period); Kaplan v. Mamelak, 162 Cal. App. 4th 637, 75
Cal. Rptr. 3d 861 (2008) (CCP § 351 applies in medical malpractice cases to
allow tolling of the one-year statute of limitations during any days the defendant
doctor was out of state); Alcott Rehab. Hosp. v. Superior Court, 93 Cal. App.
4th 94, 112 Cal. Rptr. 2d 807 (2001) (insanity provision in CCP § 352 tolled
the one-year statute of limitations in § 340.5 with respect to a medical
malpractice action brought by a mentally incompetent women against a licensed
skilled nursing facility). Such that equitable tolling doctrines, discussed infra,
do not apply?

Does § 340.5 preclude use of extension of the limitation period by fictitious

defendant practice? See Snoke v. Bolen, 235 Cal. App. 3d 1427, 1 Cal. Rptr. 2d
492 (1991). With respect to minors, do the tolling provisions of the fourth
sentence of § 340.5 and not of the second sentence apply, or do both? In Young
v. Haines, supra, 41 Cal. 3d at 896–901, the Supreme Court concluded that the
tolling provisions of both sentences are available to minors, and that a contrary
construction may be unconstitutional. Does the language of § 340.5 support this
construction as to minors?

[b] Legal Malpractice

Code of Civil Procedure §§ 340.6(a)(1)-(4) provide special tolling

provisions for the four-year maximum limitation period for legal malpractice
actions during the time: (1) the plaintiff has not sustained “actual injury,” (2) the
attorney continues to represent the plaintiff regarding the specific subject matter
in which the alleged negligence occurred, (3) the attorney willfully conceals
facts, or (4) the plaintiff is under legal or physical disability. Does § 340.6(a)
provide the exclusive basis for tolling such that CCP § 352 does not apply? §
351? Equitable tolling doctrines? Why is the limitation period tolled while the
attorney continues to represent the plaintiff? Why did the Legislature include this
provision for attorneys, but not for doctors in § 340.5?

[c] Legal Malpractice: “Actual Injury”

What constitutes “actual injury” within the meaning of CCP § 340.6(1)? Has a
client sustained “actual injury” when an adverse administrative or trial court
decision is entered against the client as a result of her attorney’s negligence, but
an appeal is still pending with respect to this decision? In Laird v. Blacker , 2
Cal. 4th 606, 7 Cal. Rptr. 2d 550, 828 P.2d 691 (1992) , the Supreme Court
concluded that a client suffers “actual injury” within the meaning of § 340.6
upon entry of an adverse trial court judgment due to attorney negligence, despite
availability of appeal or other postjudgment relief. The court viewed accrual
under § 340.6 as focusing on the discovery of malpractice — the fact and
knowledge of damage — and not on the amount of that damage. Id. at 614–15.

In Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison , 18 Cal. 4th

739, 76 Cal. Rptr. 2d 749, 958 P.2d 1062 (1998) , the Supreme Court revisited
the question of what constitutes “actual injury” within the meaning of CCP §
340.6. In [125/126]Jordache, the client (plaintiff Jordache) alleged that its
attorneys (defendant Brobeck) failed to advise it about, or assert a timely claim
to, liability insurance benefits covering a third party’s lawsuit (the Marciano
action for alleged marketing of “knockoff” apparel) against Jordache. Jordache
acknowledged that it discovered Brobeck’s alleged malpractice more than one
year before it commenced the malpractice action. However, Jordache contended
it did not sustain actual injury until it later settled its action against its insurer
(National Union) for less that the full benefits Jordache claimed.

The Supreme Court ruled that “[a]ctual injury occurs when the client suffers
any loss or injury cognizable as damages in a legal malpractice action based on
the asserted errors or omission,” Jordache, supra, 18 Cal. 4th at 743, and
therefore injury occurred in the instant case before Jordache’s settlement with
its insurer [id. at 752–54]:

Actual injury refers only to the legally cognizable damage necessary

 to assert the cause of action. There is no requirement that an adjudication
or settlement must first confirm a causal nexus between the attorney’s error
and the asserted injury. The determination of actual injury requires only a
factual analysis of the claimed error and its consequences. The inquiry
necessarily is more qualitative than quantitative because the fact of
damage, rather than the amount, is the critical factor.

Of course, nominal damages will not end the tolling of section 340.6’s
limitations period. Thus, there is no basis for Jordache’s expressed
concern that the statutory period will run once the plaintiff sustains the
“first dollar” of injury. Instead, the inquiry concerns whether “events have
developed to a point where plaintiff is entitled to a legal remedy, not
merely a symbolic judgment such as an award of nominal damages.”
However, once the plaintiff suffers actual harm, neither difficulty in
proving damages nor uncertainty as to their amount tolls the limitations
period.

Here, the undisputed facts established that Jordache sustained actual

injury as a result of Brobeck’s alleged neglect no later than December
1987. By then, Jordache had lost millions of dollars — both in unpaid
insurance benefits for defense costs in the Marciano action and in lost
profits from diversion of investment funds to pay these defense costs. As
Brobeck asserts, these damages were sufficiently manifest, nonspeculative,
and mature that Jordache tried to recover them as damages in its insurance
coverage suits. * * *

What are the practical consequences of the Supreme Court’s interpretation of

“actual injury”? Does the interpretation further judicial economy? Does it
increase the potential for unfairness to the malpractice plaintiff? How so? What
policy is furthered by the Supreme Court’s interpretation? See Tyler T. Ochoa &
Andrew J. Wistrich, Limitation of Legal Malpractice Actions: Defining Actual
Injury and the Problem of Simultaneous Litigation, 24 Sw. U. L. Rev. 1
(1994).

When does a client sustain “actual injury” where the attorney fails to bring an
action within the applicable statute of limitations? At the time the statute of
limitations expired, or later when the underlying action is actually dismissed by
the [126/127]court as barred by the statute of limitations? In Adams v. Paul, 11
Cal. 4th 583, 46 Cal. Rptr. 2d 594, 904 P.2d 1205 (1995) , the Supreme Court
held that the determination of when a client suffers “actual injury” as a
consequence of the attorney negligently missing the statute of limitations is a
question of fact, and not one subject to a bright line rule. What does the Adams
court mean by this? See, e.g., Truong v. Glasser , 181 Cal. App. 4th 102, 111–
15, 103 Cal. Rptr. 3d 811 (2009) (plaintiffs first sustained actual injury when
they obtained and were obligated to pay new counsel to escape the
consequences of former attorney’s alleged malpractice). In what factual
situations does a client suffer “actual injury” at the time the statutory limitations
period lapsed? Under what circumstances does a lapsed limitations period
create only the potential for future harm?

[d] Legal Malpractice: “Continuous Representation”

When does “continuous representation” cease within the meaning of §

340.6(a)(2)? When the client becomes dissatisfied, views the relationship as
over, and seeks new counsel? Or later when the client retains new counsel, and
formally notifies the prior attorney? Or not until a formal substitution of attorney
is executed? Compare Hensley v. Caietti, 13 Cal. App. 4th 1165, 1169-73, 16
Cal. Rptr. 2d 837 (1993) (the question of representation should be viewed from
the perspective of the client), with Worthington v. Rusconi , 29 Cal. App. 4th
1488, 35 Cal. Rptr. 2d 169 (1994) (CCP § 340.6(a)(2) required an objective
determination of whether the representation has ended; “continuity of
representation ultimately depends, not on the client’s subjective beliefs, but
rather on evidence of an ongoing mutual relationship and of activities in
furtherance of the relationship”). See also Lockton v. O’Rourke, 184 Cal. App.
4th 1051, 109 Cal. Rptr. 3d 392 (2010) (reviewing several cases that discuss
when “continuous representation” ends); LaClette v. Galindo, 184 Cal. App.
4th 919, 109 Cal. Rptr. 3d 660 (2010) (reviewing cases and concluding that
continuous representation should be view objectively from the client’s
perspective).

What if the prior attorney continues to assist the client during this period? See
O’Neill v. Tichy , 19 Cal. App. 4th 114, 25 Cal. Rptr. 2d 162 (1993) (tolling
provision of § 340.6(a)(2) unaffected by client’s knowledge of attorney’s
wrongful act as long as representation continues); Fritz v. Ehrmann, 136 Cal.
App. 4th 1374, 39 Cal. Rptr. 3d 670 (2006) (The tolling period includes an
attorney’s attempts to rectify the problem or mitigate the client’s damages after
the malpractice manifests itself). What if the negligent attorney abandons the
client? Gonzalez v. Kalu, 140 Cal. App. 4th 21, 43 Cal. Rptr. 3d 866 (2006) (in
the event of an attorney’s unilateral withdrawal or abandonment of the client, the
representation ends when the client actually has or reasonably should have no
expectation that the attorney will provide further legal services).
 In Beal Bank, SSB v. Arter & Hadden, LLP, 42 Cal. 4th 503, 66 Cal. Rptr. 3d
52, 167 P.3d 666 (2007) , the Supreme Court answered a question that had
divided the lower courts: When an attorney leaves a firm and takes a client with
him, does the tolling in ongoing matters continue for claims against the former
firm and partners? The court concluded that such tolling does not continue
because when a lawyer leaves a firm and takes a client with him, the firm’s
representation of the client ceases.

[127/128]

[5] Servicemembers Civil Relief Act

50 U.S.C. App. § 526 provides that “[t]he period of a servicemember’s

military service may not be included in computing any period limited by law …
for the bringing of any action or proceeding in any court, or in any board,
bureau, commission department, or other agency … by or against the
servicemember ….” This tolling provision is part of the federal
Servicemembers Civil Relief Act, 50 U.S.C. App. § 501 et seq.

This federal tolling requirement applies to all “persons in military service,”

which is defined in 50 U.S.C. App. § 511. Application of § 526 is mandatory as
to any person in military service; it does not require a showing of prejudice by
reason of such service. Syzemore v. County of Sacramento, 55 Cal. App. 3d
517, 522–24, 127 Cal. Rptr. 741 (1976). Section 526 applies to all federal and
California statutes of limitations, including the claim filing requirements for
actions against government entities contained in the Government Code, § 901 et
seq., id.; and even to time limitations for bringing an action to trial. Buttler v.
City of Los Angeles, 153 Cal. App. 3d 520, 200 Cal. Rptr. 372 (1984).

This federally mandated tolling doctrine has considerable application in

California, does it not?

[6] The Federal “Savings” Statute

28 U.S.C. § 1367, enacted by Congress in 1990, codifies the federal doctrines

of pendant and ancillary jurisdiction, and renames them “supplemental
jurisdiction.” Section 1367(a) authorizes the federal courts to assert
supplemental jurisdiction over state-based claims which are related to claims
within the federal court’s original jurisdiction. Section 1367(b) provides some
specific restrictions on supplemental jurisdiction, and § 1367(c) delineates
when a federal court may decline to exercise supplemental jurisdiction. Section
§ 1367(d) then states:

The period of limitations for any claim asserted under subsection (a),
and for any other claim in the same action that is voluntarily dismissed at
the same time as or after the dismissal of the claim under subsection (a),
shall be tolled while the claim is pending and for a period of 30 days after
it is dismissed unless State law provides for a longer tolling period.

Section 1367(d) imposes a new tolling provision on each state. A party now
has a minimum of 30 days within which to commence an action in state court on
any claim previously asserted under § 1367 that was dismissed by the federal
court. See Kendrick v. City of Eureka, 82 Cal. App. 4th 364, 98 Cal. Rptr. 2d
153 (2000) (tolling provision of § 1367(d) includes time during which federal
appeal with the Court of Appeals is pursued, and the 30-day grace period
commences once the judgment of dismissal is affirmed, but is not extended by
the later filing of a petition for writ of certiorari with the U.S. Supreme Court).
If a plaintiff files state and federal claims in federal court with only 4 days
remaining on the applicable state statute of limitations and those claims are
subsequently dismissed without prejudice, how much time under 28 U.S.C. §
1367(d) does the plaintiff have to file an action in state court? See Guevara v.
Ventura County Comm. College Dist ., 169 Cal. App. 4th 167, 87 Cal. Rptr. 3d
50 (2008) (requiring the plaintiff to file in state court within 4 days [128/129]after
the federal court dismissal would undermine the 30-day tolling period provided
by federal law).

[7] Equitable Tolling of Statutes of Limitations

GARABEDIAN v. SKOCHKO
COURT OF APPEAL OF CALIFORNIA,
FIFTH APPELLATE DISTRICT
232 Cal. App. 3d 836, 283 Cal. Rptr. 802 (1991)

Stone (W.A.), Justice.

This appeal concerns whether the pendency of a federal tort claim for
personal injuries against the United States government tolls the statute of
limitations applicable to a state action against a defendant who was not a
government employee and who was dismissed from a subsequent federal action
because the federal court did not have jurisdiction over him. Under the
circumstances of this case we will hold the federal tort claim did not toll the
state statute of limitations.

THE CASE

The trial court sustained without leave to amend the demurrer of respondent,
Steven Skochko, to the first amended complaint of appellant, Haig Garabedian,
and entered a judgment of dismissal. The basis of the court’s order was that the
one-year statute of limitations barred appellant’s action for personal injuries.

THE FACTS

In 1987 appellant was a real estate agent. He had obtained permission of the
United States Department of Housing and Urban Development (HUD) to show
homes owned by HUD. HUD requested him to show a particular home to
potential purchasers. On June 3 he went to the HUD home to inspect the
premises before showing the property. He slipped and fell into an empty
swimming pool because of debris which had accumulated around the pool. He
sustained serious injuries as a result of the accident.

On or about May 6, 1988, appellant filed a claim with HUD as required by

the Federal Tort Claims Act. The claim did not name respondent. HUD rejected
the claim by letter dated July 25, 1988, denying responsibility for appellant’s
injuries. The letter advised that although HUD owned the property, it was
managed by respondent, an independent contractor. The letter denied HUD’s
responsibility for the negligent acts or omissions of the independent contractor.
Until receipt of the letter rejecting the claim, appellant had no knowledge an
independent contractor rather than a HUD employee managed the property.

In August 1988 appellant filed an action in federal court against respondent

and the United States. One year later, pursuant to a recent United States Supreme
[129/130]Court decision,2 the federal court dismissed respondent from that action
without prejudice.
 Appellant then filed this negligence action in state court against respondent on
September 7, 1989.

DISCUSSION

Code of Civil Procedure [former] section 340, subdivision (3) required that
appellant bring his state action against respondent prior to June 3, 1988 — one
year after the date of the accident. Instead, appellant filed his complaint more
than 15 months after the expiration of the limitations period. Unless the statute of
limitations was tolled for the period of time during which he pursued his federal
action against HUD, his action is time-barred. Our question is whether the
complaint alleges facts sufficient to establish such tolling.

The complaint alleges appellant did not know, and could not have known,
anyone other than a HUD employee could possibly have been responsible for
the negligence that resulted in appellant’s injuries. He therefore pursued his
remedy under the Federal Tort Claims Act in a timely and good faith manner. He
did not learn of the independent contractor status of respondent until July 27,
1988, when HUD’s letter so advised him. Although appellant was unable to file
an action against respondent within one year of the date of the accident,
respondent nevertheless had knowledge of the claim prior to that time.

Appellant contends the statute of limitations on his state cause of action was
tolled during the period between May 6, 1988, and September 7, 1989, while he
was pursuing his federal remedy. He relies upon several tolling theories.

A. Neither HUD nor Respondent “Effectively Prevented” Appellant From

Proceeding in the State Court.

As a general rule, absent some wrongdoing on the part of a defendant, a

plaintiff’s ignorance of his cause of action or the identity of the wrongdoer does
not prevent the running of the limitations period. Although appellant implies
either HUD or respondent, or both of them, are somehow responsible for his
predicament, he has alleged no facts which would give rise to an estoppel or
would indicate fraudulent concealment.

Thus, HUD did not effectively prevent appellant from proceeding against
respondent within the limitations period. He cites no authority establishing a
legal obligation by HUD to advise him of respondent’s identity and status in
sufficient time to investigate and initiate the appropriate proceedings.

B. Appellant Was Not “Legally Prevented” From Proceeding in the State

Court.

Appellant claims HUD legally prevented him from proceeding in a separate

state action against respondent during the time when his claim was pending
against [130/131]HUD. Filing a claim with the responsible federal agency is a
legal prerequisite to the filing of a civil action against the United States for
money damages arising out of the negligence of a government employee. (28
U.S.C. § 2675.) However, a claim is not a legal prerequisite to filing a civil
action against a defendant who is not a government employee. The complaint
fails to allege facts sufficient to establish appellant was somehow legally
prevented from filing a state action against respondent while his claim was
pending with HUD.

C. The “Several Remedies” Rule Did Not Toll the Statute of Limitations.

The “several remedies” rule has been recognized as a separate ground for
tolling the limitations period and is based upon the principle that “… regardless
of whether the exhaustion of one remedy is a prerequisite to the pursuit of
another, if the defendant is not prejudiced thereby, the running of the limitations
period is tolled ‘[w]hen an injured person has several legal remedies and,
reasonably and in good faith, pursues one.’ [Citations.]” (Elkins v. Derby
(1974) 12 Cal. 3d 410, 414 [115 Cal. Rptr. 641, 525 P.2d 81, 71 A.L.R. 3d
839].)

In addition to Elkins, the “several remedies” rule has been developed in three
cases: Tu-Vu Drive-In Corp. v. Davies (1967) 66 Cal. 2d 435 [58 Cal. Rptr.
105, 426 P.2d 505]; County of Santa Clara v. Hayes Co. (1954) 43 Cal. 2d 615
[275 P.2d 456]; and Myers v. County of Orange (1970) 6 Cal. App. 3d 626 [86
Cal. Rptr. 198].

I n Myers, a widow brought an action against the county for the wrongful
discharge of her deceased husband after she failed to obtain a declaration of his
reinstatement through administrative channels in order to receive death benefits.
The court held the period within which she was required to file a claim with the
county had been tolled while she pursued her administrative remedy.

“When an injured person has several legal remedies and, reasonably and in
good faith, pursues one designed to lessen the extent of the injury or damages,
the statute of limitations does not run on the other while he is thus pursuing the
one ….” (6 Cal. App. 3d at p. 634.)

The Myers court continued:

“[U]pon the death of her husband, plaintiff was faced with two
alternative procedures. Being uncertain of the applicability to her situation
of the doctrine of the necessary exhaustion of administrative remedies, she
could either file a claim with the county for damages and thereafter institute
suit, in which she would have undoubtedly been confronted with a claim by
the county that the suit could not be maintained because of her failure to
exhaust administrative remedies, or she could apply for a hearing by the
appeal board and seek to have the order of discharge rescinded and her
husband reinstated as an employee from the date of discharge until the date
of his death. She chose to pursue the latter remedy, and, in our opinion, in
so doing, she acted reasonably, for, if she had been successful, there would
have been no damages resulting from the discharge, and no claim for
damages or suit for damages would have been necessary.” (Myers v.
County of Orange, supra, 6 Cal. App. 3d at pp. 635–636.)

I n Elkins v. Derby, supra, the court adopted the “several legal remedies”
[131/132]language of Myers. Plaintiff had timely pursued his workers’
compensation remedy against the defendant but the claim was denied when the
Workers’ Compensation Appeals Board decided Elkins was not an “employee”
within the meaning of the workers’ compensation act because he had not
received compensation for his services. Shortly after the board’s decision
became final, Elkins filed an action against the defendant for recovery for the
same injuries that prompted the workers’ compensation claim. The court held
the statute of limitations on the personal injury action against the defendant had
been tolled for the period of time during which the plaintiff had pursued the
administrative remedy against the defendant. (12 Cal. 3d at p. 412.) * * *

[I]n … County of Santa Clara v. Hayes Co., supra, … a newspaper made

errors in publishing a proposed county charter. The errors were not noticed until
after voters had approved the charter. Although the county could have sued the
newspaper for damages upon discovery of the errors, it chose to submit the
charter to the Legislature for approval, hoping the errors would not result in
invalidation of the charter. Although the Legislature approved the charter, it was
subsequently invalidated in quo warranto proceedings. In the subsequent legal
action for damages, the court held the limitations period had been tolled from
the date the charter had been first considered effective until it had been
judicially declared invalid. The court reasoned that submission of the document
to the Legislature in the first instance was a reasonable formal response to the
problem and that it would have been “anomalous” to penalize the county for
proceeding as it had. (43 Cal. 2d at pp. 618–619.)

The object of the “several remedies” rule is to excuse the plaintiff from the
burden of pursuing duplicate and possibly unnecessary procedures in order to
enforce the same rights or obtain the same relief. (Elkins v. Derby, supra, 12
Cal. 3d at pp. 412–413.)

The common thread in these cases is that the parties against whom the
plaintiffs sought some kind of preliminary relief before filing suit eventually
became the named defendants in the state court actions. Here, however,
respondent, who became a defendant in the state court action, was not named in
the federal tort claim. By the time appellant filed his federal lawsuit naming
respondent as a defendant, more than one year had elapsed following the
accident. * * *

We recognize that had the federal court determined respondent was a

government employee rather than an independent contractor, a state action
would not have been available since the Federal Tort Claims Act is the
exclusive remedy for claims against a federal government employee acting
within the scope of government employment. (28 U.S.C. § 2679.) Moreover, all
of appellant’s claims would have been resolved in the federal proceeding; the
state action would not have been necessary. For purposes of tolling it is
immaterial that the federal court subsequently determined respondent was not a
government employee.

“[T]he question of tolling is not to be determined retrospectively depending

upon the success or failure of the plaintiff in pursuing the alternative remedy.
[Citation.] … The injured person should not be required ‘to predict at his peril
the precise legal theory [remedy] supporting ultimate recovery. He should not
be placed in the dilemma of awaiting “jurisdictional” decisions … [of one
tribunal] … while the [132/133]clock of limitations ticks in his ear.’ [Citation.]”
(Myers v. County of Orange, supra, 6 Cal. App. 3d at p. 636.)

However, as noted in Freeman v. State Farm Mut. Auto. Ins. Co. [(1975)]
14 Cal. 3d 473 [121 Cal. Rptr. 477, 535 P.2d 341] , the underlying assumption
of the “several remedies” rule is that the plaintiff is aware of alternative
remedies and makes a conscious, rational and reasonable decision to pursue one
remedy in order to eliminate the need to pursue the other. Those cases applying
the rule do not address a situation in which the plaintiff has failed to ascertain
the need to pursue an alternative remedy until after the statute of limitations has
run on the alternative remedy. Freeman holds, albeit in a different context, that
the “several remedies” rule is not available in such a situation.

Appellant has not stated facts sufficient to toll the statute of limitations on his
cause of action for personal injuries against respondent for the period of time he
was pursuing his remedy against HUD.

D. “Equitable Tolling” Did Not Suspend the Period of Limitations.

Equitable tolling of a statute of limitations was first acknowledged as a

recognized doctrine with identifiable elements it Addison v. State of California
(1978) 21 Cal. 3d 313 [146 Cal. Rptr. 224, 578 P.2d 941]. In Addison, state and
county officers raided plaintiffs’ business and seized numerous records in
contemplation of criminal proceedings which were never initiated. Plaintiffs
filed timely damage claims against the state and county which were denied with
the warning that plaintiffs were required to file a court action on the claim
within six months. Three and one-half months later, plaintiffs filed a complaint
in federal court alleging violation of federal civil rights, and, on the basis of
pendant jurisdiction, several state causes of action for which claims had been
filed and rejected. After concluding the civil rights action would not lie against
the public entities, the federal court dismissed the federal action and the
remaining state causes of action, without prejudice to refiling in state court. At
that point, the limitations period for bringing the state action had run. Addison
held the filing of the federal action suspended the running of the limitations
period within which a suit could be brought against the public entities. (21 Cal.
3d at p. 315.)

Addison explains:
 “It is fundamental that the primary purpose of statutes of limitation is
to prevent the assertion of stale claims by plaintiffs who have failed to file
their action until evidence is no longer fresh and witnesses are no longer
available. ‘[T]he right to be free of stale claims in time comes to prevail
over the right to prosecute them.’ (Telegraphers v. Ry. Express Agency
(1944) 321 U.S. 342, 349 [64 S. Ct. 582, 88 L. Ed. 788, 792]; see also
Burnett v. New York Central R. Co. (1965) 380 U.S. 424, 428 [85 S. Ct.
1050, 13 L. Ed. 2d 941, 945].) The statutes, accordingly, serve a distinct
public purpose, preventing the assertion of demands which through the
unexcused lapse of time, have been rendered difficult or impossible to
defend. However, courts have adhered to a general policy which favors
relieving plaintiff from the bar of a limitations statute when, possessing
several legal remedies he, [133/134]reasonably and in good faith, pursues one
designed to lessen the extent of his injuries or damage. [Citations.]

“… [A]pplication of the doctrine of equitable tolling requires timely

notice, and lack of prejudice, to the defendant, and reasonable and good
faith conduct on the part of the plaintiff. These elements seemingly are
present here. As noted, the federal court, without prejudice, declined to
assert jurisdiction over a timely filed state law cause of action and
plaintiffs thereafter promptly asserted that cause in the proper state court.
Unquestionably, the same set of facts may be the basis for claims under
both federal and state law. We discern no reason of policy which would
require plaintiffs to file simultaneously two separate actions based upon
the same facts in both state and federal courts since ‘duplicative
proceedings are surely inefficient, awkward and laborious.’ (Elkins v.
Derby, supra, 12 Cal. 3d at p. 420; but see Rumberg v. Weber Aircraft
Corp. (C.D.Cal. 1976) 424 F. Supp. 294.)

“Furthermore, since the federal court action was timely filed,

defendants were notified of the action and had the opportunity to begin
gathering their evidence and preparing their defense. No prejudice to
defendants is shown, for plaintiffs’ state court action was filed within one
week of the dismissal of the federal suit. To apply the doctrine of equitable
tolling in this case, in our view, satisfies the policy underlying the statute
of limitations without ignoring the competing policy of avoiding technical
and unjust forfeitures.” (21 Cal. 3d at pp. 317–319.)

As stated by the Addison court, the three elements necessary to establish the
doctrine of equitable tolling are (1) timely notice to the defendant, (2) lack of
prejudice to the defendant, and (3) reasonable and good faith conduct on the part
of the plaintiff. (21 Cal. 3d at p. 319.)

The central question here is whether formal notice to one defendant is

sufficient notice to another defendant.

In Thompson v. California Fair Plan Assn. (1990) 221 Cal. App. 3d 760
[270 Cal. Rptr. 590], plaintiff filed a declaratory relief action against the
defendant insurance company in order to have a policy of fire insurance
reformed to reflect that she was the insured. She subsequently filed suit against
the insurance company and individual agents of the insurance company alleging
conspiracy to deprive her of insurance proceeds. In an effort to avoid
application of the statute of limitations, she sought to invoke the doctrine of
equitable tolling.

“The timely notice requirement includes the necessity that the first claim alert
the defendant in the second claim to the need to investigate the facts which form
the basis for the second claim. [Citation.] Here defendant Roy W. Anderson was
not named in the first suit for declaratory relief. It is difficult to imagine how he
could have been alerted to the need to investigate the facts of the second claim.
In addition, lack of prejudice requires that the two claims be identical or at least
so similar that the defendant’s investigation of the first claim will put him in a
position to fairly defend the second. [Citation.]” (221 Cal. App. 3d at p. 765.) *
**

We assume, as the complaint alleges, that respondent had notice of the claim
filed [134/135]with HUD. We conclude, however, that the doctrine of equitable
tolling does not apply merely because defendant B has obtained timely
knowledge of a claim against defendant A for which defendant B knows or
believes he may share liability. This point seems to have been recognized in
Collier v. City of Pasadena (1983) 142 Cal. App. 3d 917 [191 Cal. Rptr. 681] ,
in which the court stated, “under ordinary circumstances [a] workers’
compensation claim would not equitably toll a personal injury action against a
third party who might also be liable for the injury.” (142 Cal. App. 3d at pp.
924–925.)

In Dowell v. County of Contra Costa (1985) 173 Cal. App. 3d 896 [219 Cal.
Rptr. 341], plaintiff contended the statute of limitations on her cause of action
against the county was tolled during the pendency of her claim against the State
of California for damages arising out of the same facts. * * * The court …
addressed the arguments.

“The Addison court did not address the problem of whether the
statute is tolled as to one defendant while awaiting action on a claim
filed against another defendant. In Sierra Club, Inc. v. California
Coastal Com., supra, 95 Cal. App. 3d at [pages] 503–504, the court stated
that the doctrine of equitable tolling applies only where the plaintiff
commences a second action which is in reality a continuation of an earlier
action involving the same parties, facts and cause of action. Due to the
lack of identity of the parties, the existence of continuing administrative
proceedings by Dowell against the State would not toll the statute of
limitation for Dowell’s cause of action against the County.

“The conclusion in Sierra Club is consistent with the reasoning in

Addison. The Addison court listed three basic requirements for application
of the doctrine of equitable tolling: timely notice, lack of prejudice to the
defendants and reasonable and good faith conduct on the part of the
plaintiff. (Addison v. State of California, supra 21 Cal. 3d at p. 319.) …

“In the present case the same cannot be said. Dowell’s failure to file
suit against the County until action on her claim against the state did
not provide the County with notice of her intention to bring suit or
prevent prejudice to the County in gathering information and preparing
its defense. Since the claim proceedings against the state and County
were entirely separate and the County was not put on notice of Dowell’s
intention to sue, the doctrine of equitable tolling was inapplicable.
(Addison v. State of California, supra, 21 Cal. 3d at pp. 319–321.)” (173
Cal. App. 3d at p. 903, italics added.)

Similarly here, although filing the claim with HUD put the agency on notice of
appellant’s intended suit against the government, it did not put respondent on
notice of appellant’s intended suit against him.

The complaint does not allege facts sufficient to toll the statute of limitations
on appellant’s action against respondent.

Judgment affirmed. Costs on appeal to respondent.

 [135/136]

PRUDENTIAL-LMI COMMERCIAL INSURANCE v. SUPERIOR

COURT
SUPREME COURT OF CALIFORNIA
51 Cal. 3d 674, 274 Cal. Rptr. 387, 798 P.2d 1230 (1990)

Lucas, Chief Justice.

Petitioner Prudential-LMI Commercial Insurance (Prudential) and real parties

in interest (plaintiffs) each seek review of a Court of Appeal decision issuing a
writ of mandate directing summary judgment in favor of Prudential. The action
involves progressive property damage to an apartment house owned by
plaintiffs and insured over the years by successive insurers, including
Prudential. We granted review to address three issues: (i) when does the
standard one-year limitation period (hereafter one-year suit provision)
contained in all fire policies (pursuant to Ins. Code, § 2071)1 begin to run in a
progressive property damage case; (ii) should a rule of equitable tolling be
imposed to postpone the running of the one-year suit provision from the date
notice of loss is given to the insurer until formal denial of the claim; and (iii)
when there are successive insurers, who is responsible for indemnifying the
insured for a covered loss when the loss is not discovered until several years
after it commences? The last issue can be resolved by placing responsibility on
(a) the insurer insuring the risk at the time the damage began, (b) the insurer
insuring the risk at the time the damage manifested itself, or (c) all insurers on
the risk, under an allocation (or exposure) theory of recovery.

As explained below, we hold that the one-year suit provision begins to run on
the date of inception of the loss, defined as that point in time when appreciable
damage occurs and is or should be known to the insured, such that a reasonable
insured would be aware that his notification duty under the policy has been
triggered. We also hold that this limitation period should be equitably tolled
from the time the insured files a timely notice, pursuant to policy notice
provisions, to the time the insurer formally denies the claim in writing. In
addition, we conclude that in a first party property damage case (i.e., one
involving no third party liability claims), the carrier insuring the property at the
time of manifestation of property damage is solely responsible for
indemnification once coverage is found to exist.

As we explain further below, we emphasize that our holding is limited in

application to the first party progressive property loss cases in the context of a
homeowners insurance policy. As we recognized in Garvey v. State Farm Fire
& Casualty Co. (1989) 48 Cal. 3d 395, 405–408 [257 Cal. Rptr. 292, 770 P.2d
704], there are substantial analytical differences between first party property
policies and third party liability policies. Accordingly, we intimate no view as
to the application of our decision in either the third party liability or commercial
liability (including toxic tort) context.

[136/137]

BACKGROUND

1. The Policy

Plaintiffs, as trustees of a family trust, built an apartment house in 1970-1971

and insured it with four successive fire and extended coverage property insurers
between 1971 and 1986. Prudential insured the risk between October 27, 1977,
and October 27, 1980. It issued an all-risk homeowners policy which insured
against “All Risks of Direct Physical Loss except as hereinafter excluded.” The
policy insured for both property loss and liability.

As noted above, we are concerned here only with the first party property loss
portion of plaintiffs’ policy. It insured against all risks of direct physical loss
subject to the terms and conditions set forth in the policy, which provided
definitions and general policy provisions explaining to the insured the
coverages and exclusions of the policy. The specified exclusions included loss
“caused by, resulting from, contributed to or aggravated by any earth movement,
including but not limited to earthquake, mudflow, earth sinking, rising or
shifting; unless loss by fire or explosion ensues, and this Company shall then be
liable only for such ensuing loss.”

The policy contained several standard provisions adopted from the

“California Standard Form Fire Insurance Policy” and section 2071, entitled
“Requirements in case loss occurs.” The provisions in relevant part required the
insured to: “give written notice … without unnecessary delay, protect the
property from further damage … and within 60 days after the loss, unless such
time is extended in writing by this company, the insured shall render to this
company a proof of loss, signed and sworn to by the insured, stating the
knowledge and belief of the insured as to the following: the time and origin of
the loss, [and] the interest of the insured and all others in the property ….” In the
same section of the policy, the provision entitled “When loss payable” required
the insurer to pay the amount of loss for which the company may be liable “60
days after proof of loss … is received by this company and ascertainment of the
loss is made whether by agreement between the insured and this company
expressed in writing or by the filing with this company of an award as
[otherwise provided in the policy — i.e., pursuant to the policy arbitration and
appraisal provisions].”

Plaintiffs’ policy also contained the standard one-year suit provision first
adopted by the Legislature in 1909 as part of the “California Standard Form
Fire Insurance Policy.” (See §§ 2070, 2071.) It provided: “No suit or action on
this policy for the recovery of any claim shall be sustainable in any court of law
or equity unless all the requirements of this policy shall have been complied
with, and unless commenced within 12 months next after inception of the loss.”
With this background in mind, we turn to the facts underlying this claim.

2. The Facts

While replacing the floor covering in an apartment unit in November 1985,

plaintiffs discovered an extensive crack in the foundation and floor slab of the
building. In December 1985, they filed a claim with their brokers, who
immediately notified Prudential and the other companies that had issued
insurance policies on the property during plaintiffs’ period of ownership.
Prudential conducted an investigation of the claim, which included an
examination under oath of plaintiffs in [137/138]February 1987. Prudential
concluded the crack was caused by expansive soil that caused stress, rupturing
the foundation of the building. In August 1987, shortly before receiving formal
written notice that their claim had been denied under the policy’s earth
movement exclusion, plaintiffs sued Prudential, the three other insurers that had
insured the property between 1971 and 1986, and their insurance brokers or
agents, alleging theories of breach of contract, bad faith, breach of fiduciary
duties and negligence.

Prudential sought summary judgment and, alternatively, summary adjudication

of 16 issues arising out of the complaint, contending there was no evidence any
loss was suffered during its policy period and hence it could not be required to
indemnify plaintiffs. Prudential observed that carpeting had been installed in
1982, covering the area later damaged, but asserted that at the time of
installation (nearly two years after Prudential’s coverage had ended), plaintiffs
observed no damage or evidence of cracking. Prudential also claimed that
because plaintiffs filed suit 20 months after filing their claim, the action was
barred by the standard one-year suit provision contained in its policy, pursuant
to section 2071.

The court denied the motion in its entirety, stating that triable issues existed
as to whether the earth movement exclusion applied, whether the damage
occurred during the policy period, and when the crack first appeared. Prudential
sought a writ of mandate to review the denial of the motion, arguing only that the
action was time-barred because plaintiffs failed to comply with the policy’s
notice-of-claim requirement and one-year suit provision.

The Court of Appeal issued a peremptory writ of mandate directing the trial
court to vacate its order denying the insurer’s summary judgment motion and to
enter another order granting the relief requested. * * * As stated above, both
plaintiffs and Prudential seek review on the one-year suit provision and
successive insurer issues. We begin by discussing section 2071, the delayed
discovery principle announced by the Court of Appeal, and application of the
doctrine of equitable tolling to the limitations period.

DISCUSSION

1 . Section 2071: One-year Suit Provision — History of the Limitations

Period

Under California law, all fire insurance policies must be on a standard form
and, except for specified exceptions, may not contain additions thereto. (§
2070). This standard form provides that no suit or action for recovery of any
claim shall be sustainable unless commenced within 12 months after the
“inception of the loss.” (§ 2071). Section 2071 was adopted by the Legislature
in 1909 (with a 15-month suit provision) as part of the “California Standard
Form Fire Insurance Policy.” The provision was amended in 1949 to reflect the
nearly uniform adoption (by 45 states at the time) of a 1-year limitations period
in the “Model New York Standard Fire Form Policy.” * * * California’s version
of the model New York policy, section 2071, has remained substantially
unchanged since its amendment in 1949. * * *

When a clause in an insurance policy is authorized by statute, it is deemed

consistent with public policy as established by the Legislature. In addition, the
statute must be construed to implement the intent of the Legislature and should
n o t [138/139]be construed strictly against the insurer (unlike ambiguous or
uncertain policy language). With this history in mind, we consider how to define
the inception of a loss for purposes of triggering section 2071 when the loss
occurs some time before any damage is discovered by the insured.

2. Delayed Discovery and Inception of the Loss

***

Although the concept of a standard policy was intended to provide

policyholders with a clear indication of their duties under the policy, courts
have not uniformly agreed when the limitation period begins to run in cases
involving property damage not discovered until years after damage actually
occurs. All courts recognize, however, that determination of when the statute of
limitations period commences depends on the interpretation of the phrase
“inception of the loss” in section 2071.

Some courts, strictly construing “inception of the loss,” define it as the

occurrence of the physical event causing the loss. [Citations omitted] * * *
Several first party cases have acknowledged support for a delayed discovery
rule that holds an insured responsible for initiating a claim based on the date on
which the insured could reasonably have concluded his property suffered a loss.
***

We agree that “inception of the loss” should be determined by reference to

reasonable discovery of the loss and not necessarily turn on the occurrence of
the physical event causing the loss. Accordingly, we find that California law
supports the application of the following delayed discovery rule for purposes of
the accrual of a cause of action under section 2071: The insured’s suit on the
policy will be deemed timely if it is filed within one year after “inception of the
loss,” defined as that point in time when appreciable damage occurs and is or
should be known to the insured, such that a reasonable insured would be aware
that his notification duty under the policy has been triggered. To take advantage
of the benefits of a delayed discovery rule, however, the insured is required to
be diligent in the face of discovered facts. The more substantial or unusual the
nature of the damage discovered by the insured (e.g., the greater its deviation
from what a reasonable person would consider normal wear and tear), the
greater the insured’s duty to notify his insurer of the loss promptly and
diligently. (See, e.g., April Enterprises, Inc. v. KTTV, supra , 147 Cal. App. 3d
805, 833 [generally question of fact whether reasonable diligence has been
exercised in discovering claim]).

Determining when appreciable damage occurs such that a reasonable insured

would be on notice of a potentially insured loss is a factual matter for the trier
of fact. The insured’s unreasonableness in delaying notification of the loss until
a particular point in time may be raised as a separate affirmative defense by an
insurer in response to a complaint by the insured for recovery of benefits under
the policy. The insurer has the burden of proving those allegations by a
preponderance of the evidence.

In this case, plaintiffs’ policy required notice of loss to be given “without

unnecessary delay,” and proof of loss to be filed within 60 days of the loss. A
factual question remains as to the properly calculated accrual date under the
delayed discovery principles announced above. Plaintiffs therefore should be
allowed to [139/140]amend their complaint to allege facts showing their discovery
of the loss was reasonable.

3. Doctrine of Equitable Tolling

Our inquiry does not end with adoption of a delayed discovery rule. After
filing their notice of loss, plaintiffs waited more than 18 months to file the
present action. Thus, even under our delayed discovery rule, the one-year suit
provision would, unless otherwise inapplicable or excused, bar plaintiffs from
pursuing the present action. The seemingly anomalous conclusion — that an
insured must file a lawsuit before the insurer has completed its investigation and
denied the claim — has been questioned in other jurisdictions that have the
identical statutory scheme as California.

Two divergent views have developed. Several state courts have strictly
interpreted the standard limitation clauses. [Citations omitted.] Other state
courts have devised rules to equitably toll the limitation period until an
insurer’s formal denial of the claim by the insured. The leading case for this
view is Peloso v. Hartford Fire Insurance Co. [(1970)] 56 N.J. 514 [267 A.2d
498] (Peloso), involving an action by an insured seeking recovery for fire
damage to his home. The policy contained a one-year suit provision identical to
the one contained in plaintiffs’ policy here. * * * Other states have followed
Peloso’s lead. [Citations omitted.] In addition, as the parties observe, a few
states have enacted statutes that expressly extend the one-year limitation
provision. * * * Early California cases took inconsistent approaches to the
issue. * * *

More recent cases have applied the equitable doctrines of waiver and
estoppel to allow a suit filed after the limitation period expired to proceed. It is
settled law that a waiver exists whenever an insurer intentionally relinquishes
its right to rely on the limitations provision. * * * For example, if the insurer
expressly extends the one-year suit provision during its claim investigation, the
insurer waives its right to raise a timeliness defense to the insured’s action. 5
Similarly, an insurer that leads its insured to believe that an amicable
adjustment of the claim will be made, thus delaying the insured’s suit, will be
estopped from asserting a limitation defense.

By contrast, equitable tolling has most often been applied in California when
the plaintiff first files a claim before an administrative agency and then files a
second proceeding after the limitation period has expired. Under these
circumstances, courts have held the policy underlying the statute of limitations
— prompt notice to permit complete and adequate defense — has been satisfied
and that the period should be tolled in equity to preserve the plaintiff’s claim. *
**

Like the Peloso court, we conclude the Legislature’s intent to provide

insureds with a full year (excluding the tolled period) in which to commence
suit can be inferred from the fact that the period provided by section 2071 is
considerably shorter than the usual four years for ordinary contracts (Code Civ.
Proc., § 337) and ten years for an action against developers for property damage
caused by latent [140/141]defects. (Id., § 337.15; Peloso, supra, 267 A.2d 498 at
p. 501). We find Peloso’s reasoning consistent with the trend in other states
toward equitable tolling of the one-year suit provision in the limited
circumstances in which the insurer (or other party against whom the claim has
been made) has received timely notice of the loss and thus is able to investigate
the claim without suffering prejudice.

4. Policy Considerations
 Persuasive policy considerations support equitable tolling of the limitations
period: Prudential suggests that suspension of the one-year suit provision during
the time the insurer investigates the loss will frustrate the provision’s primary
purpose of preventing the revival of stale claims. But as stated in Bollinger [v.
National Fire Ins. Co. (1944) 25 Cal. 2d 399 [154 P.2d 399]] , “Originally the
shortened limitation periods were inserted into policies by insurers. Some
courts declared such provisions void as against public policy while other courts
enforced them in order to protect freedom of contract.” We emphasized in
Bollinger that the purpose of a shortened limitation period was to obtain the
advantage of an early trial of the matters in dispute and to make more certain
and convenient the production of evidence on which the rights of the parties
depended, and not to achieve a technical forfeiture of the insured’s rights by
enforcing the limitation provision when the insured has given timely notice of a
claim to his insurer. We do not believe that an equitable tolling of the one-year
limitation period will frustrate the purpose of section 2071, or work a hardship
on the insurer, whose investigation will necessarily have preceded the denial of
coverage.

Moreover, the principle of equitable tolling presents several advantages in

eliminating the unfair results that often occur in progressive property damage
cases. First, it allows the claims process to function effectively, instead of
requiring the insured to file suit before the claim has been investigated and
determined by the insurer. Next, it protects the reasonable expectations of the
insured by requiring the insurer to investigate the claim without later invoking a
technical rule that often results in an unfair forfeiture of policy benefits.
Although an insurer is not required to pay a claim that is not covered or to
advise its insureds concerning what legal arguments to make, good faith and fair
dealing require an insurer to investigate claims diligently before denying
liability. Third, a doctrine of equitable tolling will further our policy of
encouraging settlement between insurers and insureds, and will discourage
unnecessary bad faith suits that are often the only recourse for indemnity if the
insurer denies coverage after the limitation period has expired.

Equitable tolling is also consistent with the policies underlying the claim and
limitation periods — e.g., the insurer is entitled to receive prompt notice of a
claim and the insured is penalized for waiting too long after discovery to make a
claim. For example, if an insured waits 11 months after discovering the loss to
make his claim, he will have only 1 month to file his action after the claim is
denied before it is time-barred under section 2071. (See e.g., Peloso, supra,
267 A.2d at p. 502.)

Finally, the anomaly caused by a literal application of the one-year suit

provision is demonstrated by the facts of this case. Plaintiffs allege they notified
Prudential of their loss in December 1985, one month after it was discovered.
Assuming this delayed discovery was reasonable, they then had 60 days to file a
proof of loss and Prudential had another 60 days to determine liability under the
policy. During this [141/142]time, any suit on the policy filed by plaintiffs would
have been premature. Negotiations apparently continued until January 1987,
when plaintiffs assertedly received a letter from Prudential proposing that
coverage would be denied based on the earth movement exclusion unless the
insureds had any additional information that would favor coverage. At this
point, plaintiffs sought counsel who contacted Prudential. In February 1987,
Prudential requested that plaintiffs submit to an examination under oath pursuant
to policy terms. It was not until September 1987, that plaintiffs’ claim was
denied unequivocally. Thus, if the one-year suit provision were literally
applied, plaintiff’s suit would have been untimely before the insurer denied
coverage.

We conclude that proper resolution of the foregoing anomaly is to allow the

one-year suit provision of section 2071 to run from the date of “inception of the
loss,” as defined above, but to toll it from the time an insured gives notice of the
damage to his insurer, pursuant to applicable policy notice provisions, until
coverage is denied. As Peloso, supra, 267 A.2d 498, observed, “[i]n this
manner, the literal language of the limitation provision is given effect; the
insured is not penalized for the time consumed by the company while it pursues
its contractual and statutory rights to have a proof of loss, call the insured in for
examination, and consider what amount to pay; and the central idea of the
limitation provision is preserved since an insured will have only 12 months to
institute suit.” (Id. at pp. 501–502.) We agree with Peloso that such an approach
to the limitation provision is more easily applied than the concepts of waiver
and estoppel in the many different fact patterns that may arise.

In the present case, plaintiffs allege that approximately one month had elapsed
between the date the loss was discovered and the date notice thereof was given
to Prudential. As stated above, we conclude plaintiffs should be allowed to
amend their complaint to allege facts showing their action was filed within one
year of their delayed discovery of the loss. If, on remand, it is determined that
the delayed discovery of the loss was reasonable, the one-year suit provision
would be tolled from December 1985 until September 1987, when plaintiffs
were notified by Prudential that coverage was denied. Plaintiffs would then
have had 11 months to institute suit against Prudential, so that any suit filed
before September 1988 would be considered timely.

5. Progressive Loss Rule

We next examine allocation of indemnity between successive first party

property insurers when the loss is continuous and progressive throughout
successive policy periods, but is not discovered until it becomes appreciable,
for a reasonable insured to be aware that his notification duty under the policy
has been triggered. * * *

Prudential argues that even assuming the applicable one-year suit provision
does not bar the suit, it should not be responsible for any covered loss because
plaintiffs presented no evidence that a loss was suffered during the period of its
policy term (Oct. 27, 1977, to Oct. 27, 1980). It also asserts that because its
policy period ended in 1980 — five years before the damage was allegedly
discovered by plaintiffs — it should not be responsible for indemnification of
any covered loss. Prudential asks the court to adopt a “manifestation rule” of
property coverage that fixes liability for first party property losses solely on the
insurer whose policy was in force at the time [142/143]the progressive damage
became appreciable or “manifest.” In discussing both the manifestation and
continuous exposure theories, we keep in mind the important distinction that
must be made in a causation analysis between first party property damage cases
and third party liability cases. * * *

[W]e conclude that in first party progressive property loss cases, when, as in
the present case, the loss occurs over several policy periods and is not
discovered until several years after it commences, the manifestation rule
applies. As stated above, prior to the manifestation of damage, the loss is still a
contingency under the policy and the insured has not suffered a compensable
loss. Once the loss is manifested, however, the risk is no longer contingent;
rather, an event has occurred that triggers indemnity unless such event is
specifically excluded under the policy terms. Correspondingly, in conformity
with the loss-in-progress rule, insurers whose policy terms commence after
initial manifestation of the loss are not responsible for any potential claim
relating to the previously discovered and manifested loss. Under this rule, the
reasonable expectations of the insureds are met because they look to their
present carrier for coverage. At the same time, the underwriting practices of the
insurer can be made predictable because the insurer is not liable for a loss once
its contract with the insured ends unless the manifestation of loss occurred
during its contract term.

One final question must be addressed regarding the application of a

manifestation rule of coverage in progressive loss cases: how does the rule
relate to our rules of delayed discovery and equitable tolling announced above?
We have previously defined the term “inception of the loss” as that point in time
when appreciable damage occurs and is or should be known to the insured, such
that a reasonable insured would be aware that his notification duty under the
policy has been triggered. We conclude that the definition of “manifestation of
the loss” must be the same. Under this standard, the date of manifestation and
hence the date of inception of the loss will, in many cases, be an issue of fact for
the jury to decide. When, however, the evidence supports only one conclusion,
summary judgment may be appropriate. For example, when the undisputed
evidence establishes that no damage had been discovered before a given date
(i.e., no manifestation occurred), then insurers whose policies expired prior to
that date could not be liable for the loss and would be entitled to summary
judgment. The litigation can then be narrowed to include only the insurers
whose policies were in effect when the damage became manifest.

CONCLUSION

Based on the principles discussed above, we conclude plaintiffs should be

allowed to amend their complaint to allege that their delayed discovery of the
loss at issue was reasonable, and that they timely notified Prudential of the loss
without unnecessary delay following its manifestation. If it is found that
plaintiffs’ delayed discovery of the loss was reasonable, then the rule of
equitable tolling would operate to toll the one-year suit provision from the date
the insured filed a timely notice of loss to Prudential’s formal denial of
coverage. Whether Prudential must then indemnify plaintiffs for any covered
claim under the policy necessarily depends on whether that insurer was the
carrier of record on the date of manifestation of the [143/144]loss. Although it
appears from the present record that manifestation of loss occurred in
November 1985, after Prudential’s policy had expired, we note that plaintiffs
have joined other insurers in the litigation. Therefore, in the absence of
conclusive evidence, we decline to speculate concerning the date manifestation
of loss occurred. The decision of the Court of Appeal is reversed and the cause
remanded for proceedings consistent with our opinion.

NOTES AND QUESTIONS REGARDING

 EQUITABLE TOLLING

(1) The Supreme Court first recognized the doctrine of “equitable tolling” in
Bollinger v. National Fire Ins. Co., 25 Cal. 2d 399, 154 P.2d 399 (1944) , and
subsequently expanded it in Addison v. State of California, supra, quoted
extensively by the Court of Appeal in Garabedian. How would you define the
doctrine after Addison and Prudential-LMI? What factors were important to the
Supreme Court in deciding to authorize equitable tolling based on the facts of
those two cases? In what other fact situations might this doctrine now apply?
Could this doctrine have been of any use to the plaintiff in Jolly v. Eli-Lilly &
Co., supra? Is this doctrine available where the plaintiff voluntarily dismisses
the initial action? See Appalachian Ins. Co. v. McDonnell Douglas Corp., 214
Cal. App. 3d 1, 40–42, 262 Cal. Rptr. 716 (1989).

For a novel application of equitable tolling, see Lambert v. Commonwealth

Land Title Ins. Co., 53 Cal. 3d 1072, 282 Cal. Rptr. 445, 811 P.2d 737 (1991) ,
where the Supreme Court held that the two-year limitation period of CCP § 339
for an action under a title insurance policy for failure to defend accrues when
the insurer refuses the insured’s tender of defense, but is tolled until the
underlying action is terminated by final judgment. For an extended discussion,
by a divided court, of the proper application of equitable tolling, Lambert, and
Prudential-LMI to an action by plaintiff against the defendant title insurance
company for failure to list an easement affecting property that plaintiff had
purchased, see Forman v. Chicago Title Ins. Co., 32 Cal. App. 4th 998, 38 Cal.
Rptr. 2d 790 (1995).

In Mitchell v. Frank R. Howard Mem. Hosp., 6 Cal. App. 4th 1396, 1407-08,
8 Cal. Rptr. 2d 521 (1992), the court refused to equitably toll the statute of
limitations because the plaintiff had waited more than nine months after
dismissal of plaintiff’s identical federal court action, and already had two other
virtually identical state court actions dismissed for failure to prosecute, prior to
commencing the current state court action. The court, applying Addison, found
that the plaintiff had not acted reasonably and in good faith by delaying the filing
of the instant action. See also Hull v. Central Pathology Service Med. Clinic,
28 Cal. App. 4th 1328, 1336, 34 Cal. Rptr. 2d 175 (1994) (Bollinger equitable
tolling doctrine not satisfied because plaintiff did not diligently pursue new
claims).

(2) Compare Addison’s equitable tolling doctrine with the federal “savings”
statute, 28 U.S.C. § 1367(d). Do they operate coextensively in situations where
a party seeks to re-file a claim in California state court that has previously been
dismissed from federal court? Compare Kolani v. Gluska, 64 Cal. App. 4th
402, 75 Cal. Rptr. 2d 257 (1998) (holding that § 1367(d) codifies the principles
of equitable [144/145]tolling adopted in Addison and substitutes a 30-day bright-
line limit in place of Addison’s case-by-case “reasonableness” analysis), with
Bonifield v. County of Nevada, 94 Cal. App. 4th 298, 305–306, 114 Cal. Rptr.
2d 207 (2001) (concluding that the plain language of § 1367(d) cannot be
construed to supplant California’s common law doctrine of equitable tolling
with a “bright-line” 30-day rule). Are there situations where equitable tolling is
more favorable to the plaintiff? Where § 1367(d) is more favorable? If § 1367
had been applicable in Addison, would that federal savings provision have
made the court’s equitable tolling ruling unnecessary?

(3) The Garabedian court discussed the “several remedies” rule as a

doctrine separate from “equitable tolling.” Are these two doctrines
distinguishable? Or are they simply both aspects of the equitable tolling doctrine
developed in Addison? Do you agree with the Garabedian court’s refusal to
find equitable tolling based on Addison? Do you agree with the court’s
conclusion that the plaintiff’s claim filed with HUD did not sufficiently alert
defendant Skochko of the need to investigate the facts which formed the basis of
plaintiff’s subsequent state court action, within the meaning of Addison? What
type of “timely notice to the defendant” does Addison require, anyway? Why did
the plaintiff’s federal court action, which did (improperly) name Skochko as a
defendant based on pendant jurisdiction, not constitute the requisite “timely
notice”? The plaintiff’s state court complaint alleged that defendant had notice
of the claim filed with HUD. Do you understand why the Court of Appeal
nevertheless affirmed the trial court’s sustaining of the demurrer without leave
to amend? Do you agree with this affirmance?

Equitable tolling was applied in Stalberg v. Western Title Ins. Co. , 27 Cal.
App. 4th 925, 32 Cal. Rptr. 2d 750 (1994). The plaintiffs were downstream
property owners who discovered that a fictitious easement had been created
across their properties in favor of upstream property owners. The plaintiffs
initiated a quiet title action against the upstream owners. Western Title
Insurance Co., the plaintiff’s title insurer, participated in and partially financed
this action. The plaintiffs learned in 1979, while the quiet title action was
pending, that Western was also the title insurer for the upstream owners, and
that Western had created the fictitious easement when it drafted and recorded
the upstream property owners’ deeds. Upon completion of the quiet title action
in 1983, plaintiffs filed an action against defendant Western for slander of title.
Defendant Western asserted the three-year statute of limitations for slander of
title, CCP § 338(g), and plaintiff claimed the period should be equitably tolled.
The court agreed with the plaintiffs, and held that the limitations period was
tolled because the plaintiffs gave timely notice to the defendant and acted
reasonably in pursuing first the quiet title action and then the slander of title
action against defendant. Is the holding in Stalberg consistent with Garabedian?
Are these cases distinguishable? How so?

(4) Implied tolling. In Lewis v. Superior Court, 175 Cal. App. 3d 366, 220
Cal. Rptr. 594 (1985), the Court of Appeal adopted a new implied tolling
exception to the running of the statute of limitations. Plaintiff Lewis was injured
in an automobile collision on March 17, 1983. She retained attorney Bartlett, a
sole practitioner, to represent her in negotiations and any necessary lawsuit.
Bartlett had planned on filing her personal injury lawsuit on March 16, 1984, if
settlement was not finalized by then. But on March 12, 1984, attorney Bartlett
was himself struck by a car, and was physically and mentally disabled until
April, 1984. Unknown to Lewis, Bartlett [145/146]did not file Lewis’s complaint
until April 27, 1984. The trial court struck plaintiff’s personal injury allegations
as barred by the one-year statute of limitation. The Court of Appeal reversed,
finding an implicit legislative intent to toll the statute of limitations under such
circumstances. The court noted that no express statutory tolling provision
recognized this exception, but the general purposes of provisions such as CCP §
353.1 impliedly authorize it. The court reasoned that statutes of limitation must
permit implicit exceptions “were compliance is impossible and manifest
injustice would otherwise result.” Supra, 175 Cal. App. 3d at 380.

Is the holding in Lewis an extension of the “equitable tolling” doctrine set

forth in Addison and Prudential-LMI, or something different? What problems
do you see with the Lewis ruling? How is the plaintiff in Lewis any different
from a plaintiff whose attorney negligently allows the statute of limitation to run
before filing? From a plaintiff whose attorney gives the plaintiff bad advice
regarding the viability of an action, with the result that the statute runs?
Compare Gutierrez v. Mofid, 39 Cal. 3d 892, 218 Cal. Rptr. 313, 705 P.2d 886
(1985) (one-year discovery limitation period for medical malpractice not tolled
when a plaintiff with knowledge of facts underlying his malpractice claim is
told by attorney that he has no legal remedy), with Ebersol v. Cowan, 35 Cal. 3d
427, 197 Cal. Rptr. 601, 673 P.2d 271 (1983) (diligent but unsuccessful
attempts to secure counsel constitute “excusable neglect” justifying relief from
100 day claim-filing requirement for suit against government entity).

(5) Recognition of the doctrine of equitable tolling may be impermissible

where it is inconsistent with the legislative scheme of the relevant statute of
limitations. See, e.g., Lantzy v. Centex Homes, 31 Cal. 4th 363, 2 Cal. Rptr. 3rd
655, 73 P.3d 517 (2003) (the 10-year statutory period in CCP § 337.15 is the
outside limit for an action against a developer or contractor for latent defects
and is not subject to equitable tolling, but such a defendant may nonetheless be
equitably estopped to assert this statute of limitations if it prevented a timely
suit by its conduct upon which the plaintiff reasonably relied); Gordon v. Law
Offices of Aguirre & Meyer, 70 Cal. App. 4th 972, 83 Cal. Rptr. 2d 119 (1999)
(the limitations period in CCP § 340.6 for bringing a legal malpractice action is
not subject to equitable tolling because the Legislature intended the statute’s
explicit tolling provisions to be exclusive); Leasequip, Inc. v. Dapeer, 103 Cal.
App. 4th 394, 126 Cal. Rptr. 2d 782 (2002) (the tolling provisions of CCP §
340.6 are exclusive and preclude equitable tolling, but do not preclude the use
of equitable estoppel).

(6) Where exhaustion of an administrative remedy is mandatory prior to filing

suit, equitable tolling is automatic. Elkins v. Derby, 12 Cal. 3d 410, 414, 115
Cal. Rptr. 641, 525 P.2d 81 (1974) . Is a statute of limitations also subject to
equitable tolling when plaintiff voluntarily pursues an internal administrative
remedy prior to filing a complaint? See McDonald v. Antelope Valley Comm.
College Dist., 45 Cal. 4th 88, 84 Cal. Rptr. 3d 734, 194 P.3d 1026 (2008)
(equitable tolling applies to the voluntary pursuit of internal administrative
procedures prior to filing a FEHA claim).

Footnotes:

2 Finley v. United States (1989) 490 U.S. 545 [109 S. Ct. 2003, 104 L. Ed. 2d 593] held the Federal
Tort Claims Act does not provide a vehicle by which to invoke pendant party jurisdiction over claims which
would otherwise not come within the jurisdiction of the federal court.

1 All further statutory references are to the Insurance Code unless otherwise noted.

5 As amicus curiae observe, however, similar conduct by the insurer after the limitation period has run
— such as failing to cite the limitation provision when it denies the claim, failing to advise the insured of the
existence of the limitation provision, or failing to specifically plead the time bar as a defense — cannot, as a
matter of law, amount to a waiver or estoppel.

[146/147]
 [8] Estoppel and Other Equitable Tolling Doctrines

As the Prudential-LMI opinion suggests, there are other equitable tolling

doctrines in addition to the one applied in Addison and Prudential-LMI, supra.
One such equitable doctrine is waiver of the defense by defendant’s conduct.
See, e.g., Brookview Condo. Owners’ Assn. v. Heltzer Enterprises-Brookview ,
218 Cal. App. 3d 502, 512–14, 267 Cal. Rptr. 76 (1990) ; Elliano v. Assurance
Co. of America, 3 Cal. App. 3d 446, 452–53, 83 Cal. Rptr. 509 (1970) . A
related, far-reaching doctrine is estoppel, which the Prudential-LMI court
summarized, 51 Cal. 3d at 689–90, by reference to 3 Witkin, California
Procedure, Actions §§ 685-700 (4th ed. 1996).

The two cases reproduced below, Muraoka v. Budget Rent-a-Car, Inc. , 160
Cal. App. 3d 107, 206 Cal. Rptr. 476 (1984) , and Bernson v. Browning-Ferris
Indus. of California, Inc., 7 Cal. 4th 926, 30 Cal. Rptr. 2d 440, 873 P.2d 613
(1994), contain discussion of examples of this estoppel doctrine. In Muraoka,
the plaintiff alleges estoppel based on defendant’s unperformed promises of
compensation through settlement, as well as on defendant’s failure to inform
plaintiff of the applicable one-year statute of limitation. In Bernson, the plaintiff
argues estoppel based on the defendants’ intentional concealment of their
identity.

MURAOKA v. BUDGET RENT-A-CAR, INC.

COURT OF APPEAL OF CALIFORNIA,
SECOND APPELLATE DISTRICT
160 Cal. App. 3d 107, 206 Cal. Rptr. 476 (1984)

McClosky, Justice.

Plaintiff John Muraoka appeals from the judgment of dismissal entered

against him after the trial court sustained without leave to amend the demurrer of
defendant Budget Rent-A-Car, Inc. (Budget) to plaintiff’s second amended
complaint.

FACTS
 In substance, the material allegations of plaintiff’s second amended complaint
are: Plaintiff was injured on July 31, 1980, when the automobile he was driving
was struck by an automobile negligently driven by John Nelson Pennington. Mr.
Pennington was driving that automobile with the consent of its owner Budget.
Plaintiff immediately notified Budget of the accident. On September 4, 1980,
Budget sent plaintiff a letter requesting more information from him and stating
that “‘upon completion of our investigation, we will immediately contact you
further regarding your claim.’” In response to this request, plaintiff sent Budget
copies of his medical bills and information regarding his property damage. On
October 21, 1980, Budget sent plaintiff the following letter:

“Thank you for forwarding the copies of the draft and medical bills
for your property damage and bodily injury claim. We realize that Western
Pioneer Insurance Company paid for your vehicle and therefore they are
the party to collect for this portion of your claim.

[147/148]

“The bodily injury portion however is collectable by you and in order

to do so we need to have you sign the Medical Information form to obtain
your doctors [sic] report on the condition while you were under his car.
[sic]

“Please sign the attached and I will forward to Dr. Sakurai for his
report.

“Then we can settle this portion of your claim.”

On March 11, 1981, Dr. Sakurai, plaintiff’s doctor, released plaintiff from
treatment. On April 23, 1981, Budget wrote Dr. Sakurai requesting information
regarding plaintiff’s medical treatment. On June 15, plaintiff’s insurance agent
sent Budget the following correspondence at plaintiff’s request:

“Mr. Muraoka called us on June 15, 1981 about 2:00 P.M. to inform
us that he has not heard from you yet.

“He is quite concerned about it being almost a year since the day of
 the accident.

“He hopes that a settlement can be made soon without litigation since
he is being pressed by his doctor for an outstanding bill.

“Mr. Muraoka requests a letter of intention at once.”

On August 14, 1981, plaintiff called Ms. Albergio at Budget and was told that
his medical reports had not yet been received. Plaintiff phoned Dr. Sakurai’s
office and was told that there had been no request for them. On August 14, Ms.
Albergio requested those reports from the doctor’s office and after the terms for
their payment were negotiated, they were sent out on September 23. On October
13, 1981, plaintiff called Ms. Albergio but was unable to contact her. The next
day, plaintiff contacted Ms. Albergio and was told that the reports had just been
received and that upon their review she would contact him.

On October 22, Budget made plaintiff settlement offers of $1,400 and $1,600.
On October 26, plaintiff called Budget to turn down its offer. Budget responded
that its offer was final. On November 3, plaintiff told Budget that he wanted to
make an equitable settlement or he would bring suit. On November 9, Budget
sent plaintiff the following letter: “Following your recent telephone calls to this
office a complete review of your file has been conducted. It appears that the
accident in question occurred on July 31, 1980. Since the Statute of Limitations
for stating a bodily injury claim is one year in California, we are respectfully
closing this file at this time.”

On June 30, 1982, plaintiff initiated this action by filing his original
complaint. Thereafter, the trial court sustained Budget’s demurrers to plaintiff’s
original and first amended complaints with leave to amend. Plaintiff then filed
the subject second amended complaint. Budget interposed general and special
demurrers to each cause of action of that complaint which the trial court
sustained without leave to amend. This ruling resulted in an order (judgment) of
dismissal from which plaintiff appeals. * * *

Appellant initially contends that his “first cause of action for negligence is not
barred by the statute of limitations.”

[148/149]
 The general demurrers Budget interposed to the first cause of action were that
the cause of action was barred by the applicable one-year statute of limitations
and that it had no duty to notify plaintiff of that statute of limitations. The trial
court sustained these demurrers without leave to amend.

Where a complaint shows upon its face that the statute of limitations has run,
the plaintiff may anticipate the defense of limitation of action and allege facts to
establish an estoppel. (Kunstman v. Mirizzi (1965) 234 Cal. App. 2d 753, 755
[44 Cal. Rptr. 707].)

A defendant “cannot escape the consequences of [its] acts or conduct

affirmatively engaged in to procure delay for purposes of settlement, or
investigation or otherwise, upon which the [plaintiff] has relied and by which he
has been induced to delay the filing of a claim until after the expiration of the
statutory period. Such conduct, so relied upon, becomes the basis of an estoppel
against the party responsible for the delay ….” (Benner v. Industrial Acc. Com.
(1945) 26 Cal. 2d 346, 350 [159 Cal. Rptr. 24]; …). “Actual fraud in the
technical sense, bad faith, or an intent to mislead, are not essential to create such
an estoppel.” (Industrial Indem. Co. v. Ind. Acc. Com. (1953) 115 Cal. App. 2d
684, 690 [252 P.2d 649].)

But “[before] an estoppel to assert an applicable statute of limitations may be

said to exist, certain conditions must be present: ‘[The] party to be estopped
must be apprised of the facts; the other party must be ignorant of the true state of
facts, the party to be estopped must have intended that its conduct be acted upon,
or so act that the other party had a right to believe that it was so intended; and
the other party must rely on the conduct to its prejudice.’ (California Cigarette
Concessions, Inc. v. City of Los Angeles, 53 Cal. 2d 865, 869 [3 Cal. Rptr.
675, 350 P.2d 715] ; citing Safway Steel Products, Inc. v. Lefever , 117 Cal.
App. 2d 489, 491 [256 P.2d 32]).” (Sumrall v. City of Cypress (1968) 258 Cal.
App. 2d 565, 569 [65 Cal. Rptr. 755].)

In his second amended complaint, plaintiff pleads that as a result of Budget’s

above described conduct he “was lulled into a false sense of security. Plaintiff
refrained from commencing a civil action for damages within the statutory time
period because he was induced by defendants [sic] promises and conduct to
believe that he would be fully compensated for his damages without litigation.
However, these promises that plaintiff would be fully compensated for his
damages were made with no intention of performing them. [¶]. Furthermore …
plaintiff was told that it would be fine with defendants to wait to settle
plaintiff’s claim until after defendant [sic] requested and received Dr. Sakurai’s
medical report. Plaintiff believed and relied upon those statements and conduct
of defendants, and as a result did not consult with counsel or file a civil lawsuit
within the statutory time. [¶] Furthermore … defendant Budget affirmatively
engaged in promises and conduct to procure delay for the promises of settlement
and investigation (i.e., to obtain medical reports on the plaintiff), upon which
plaintiff relied and by which plaintiff was induced to delay filing a civil action
until after the statute of limitations expired.”

Budget, in asserting that its alleged conduct is not sufficient to estop it from
asserting the statute of limitations relies exclusively on Kunstman v. Mirizzi,
supra, 234 Cal. App. 2d 753. In Kunstman, the plaintiff was injured on
September 26, 1962. In November 1962, and several times thereafter, the
defendant’s insurer [149/150]indicated that liability was clear and that it would
settle with plaintiff, if she provided her medical reports. Plaintiff replied that
her condition had not yet “bottomed out” and that medical reports would be
furnished when it did. In October 1963, the insurer denied liability and informed
plaintiff that it relied on the statute of limitations in doing so. Plaintiff alleged
“that this conduct lulled her attorney into a sense of security which caused him
to defer the filing of a complaint in the belief that the cause of action would be
settled and she was thus induced to withhold such filing within the period of the
proper statute of limitations, and that the defendants were estopped by this
conduct from pleading the statute of limitations.” (Id., at p. 755.)

The trial court sustained the insurer’s demurrer based upon the statute of
limitations. The appellate court affirmed, holding that plaintiff failed to allege
any misrepresentation, or promises on the part of the insurer sufficient in law to
support plaintiff’s claim that she was induced to delay, the filing of her
complaint in reliance thereof. (Kunstman v. Mirizzi, supra, 234 Cal. App. 2d at
p. 758.)

In contrast to Kunstman, in the case at bench plaintiff alleges that Budget was
the protagonist for the delay in the settlement discussions in order to conduct an
investigation and that in reliance on this conduct plaintiff “was induced to delay
filing a civil action until after the statute of limitations expired.” As the court in
Blake v. Wernette (1976) 57 Cal. App. 3d 656, 660 [129 Cal. Rptr. 426]
explained: “When a plaintiff relies on an estoppel against the assertion of the
statute of limitations, the sufficiency of the allegations of estoppel may be tested
by a general demurrer. [Citations.] Once it is determined that the elements of an
estoppel have been sufficiently pleaded, however, the question whether the
statute of limitations is tolled by the conduct of the defendant is one of fact
which should be left for resolution by a jury and not determined upon general
demurrer.”

In the first cause of action of his second amended complaint, plaintiff

sufficiently alleges the estoppel of Budget to plead the statute of limitations. The
determination of whether the evidence provided to support those allegations
will be sufficient to toll the statute of limitations is a question to be determined
by the trier of fact. Accordingly, the trial court erred in sustaining the general
demurrer to plaintiff’s first cause of action grounded on the statute of
limitations.

Plaintiff’s alternative allegation in his first cause of action that the statute of
limitations should be tolled because Budget “intentionally concealed from
plaintiff that he must file a lawsuit within one year of his injury …” is without
merit. Plaintiff provides no discussion as to why Budget had a duty to disclose.
Such a duty arises only in specified situations. Plaintiff fails to factually allege
any of these.

Since plaintiff’s estoppel allegations in the first cause of action were, when
coupled with the other allegations therein, sufficient to state a cause of action it
follows that the general demurrer to that cause of action was incorrectly
sustained. We note, however, that plaintiff’s allegation in that first cause of
action contained insufficient facts to state a cause of action based upon
defendant’s supposed duty to disclose the statute of limitations. * * *

The order (judgment) of dismissal is reversed insofar as it is based upon the

sustaining of demurrers to the causes of action for negligence, intentional
misrepresentation, [150/151]and negligent misrepresentation. In all other respects
the order (judgment) of dismissal is affirmed.

BERNSON v. BROWNING-FERRIS INDUSTRIES OF CALIFORNIA,

INC.
SUPREME COURT OF CALIFORNIA
7 Cal. 4th 926, 30 Cal. Rptr. 2d 440, 873 P.2d 613 (1994)
Arabian, Justice.

May the authors of an allegedly defamatory writing who conceal their

identities be equitably estopped from pleading the statute of limitations in a
libel action? * * *

I. FACTS

***

During the latter half of 1988, Hal Bernson, a member of the Los Angeles
City Council, became aware that he was the subject of a highly critical dossier
circulating among the Los Angeles media. The 36-page document, entitled “Los
Angeles Councilman Hal Bernson — An Analysis of City/Campaign Financial
Travel 1983-1988,” stated that Bernson had used campaign funds and charged
the City of Los Angeles for expenses, including “extensive personal travel” in
Europe and Asia, which were “unusual” and “legally questionable.” Nothing in
the document identified its author, sponsor or distributor.

As explained in his opposition papers, although Bernson managed to obtain a

copy of the report, he had no information as to the identity of the parties behind
it until February 6, 1990. On that date, two reporters for the Los Angeles Times
informed Bernson during the course of an interview that they understood the
report had been prepared by defendant Browning-Ferris Industries, Inc. (BFI).
Bernson immediately contacted H. Randall Stoke, legal counsel to BFI, to
confirm the reporters’ statements. Stoke, however, denied any knowledge of the
report or its source. Several days later, Attorney Stoke sent a letter to the Los
Angeles Times (copy to Bernson) in which Stoke emphatically denied that his
client, BFI, had any responsibility “direct or indirect” for the preparation of the
report. Further, Stoke demanded that the Times retract its attribution of
authorship to BFI and “advise councilman Bernson that BFI was not …
involved in any such matter.”

Accepting Attorney Stoke’s representations, Bernson alleges that he remained

unenlightened of the report’s authorship until late May 1991. At that time,
another Times reporter informed Bernson’s chief deputy that an independent
political consultant, defendant Mark Ryavec, had prepared the dossier on behalf
of BFI. Based on this information, Bernson concluded that Stoke’s previous
representations of BFI’s noninvolvement had been false. Less than one year
later, Bernson filed the instant libel action against BFI, Mark Ryavec and Lynn
Wessell (the political consultants who allegedly prepared the report) and Les
Bittenson (the BFI employee who allegedly hired Ryavec and Wessell).

[151/152]

The trial court sustained without leave to amend defendant Ryavec’s

demurrer on the basis of the one-year statute of limitations applicable to
Bernson’s tort claims (Code Civ. Proc., [former] § 340, subd. (3)) and entered a
judgment of dismissal. The remaining defendants (BFI, Ryavec and Wessell)
answered and then moved for summary judgment also on the ground that the
action was time-barred. The trial court granted the motion and entered judgment
in favor of BFI, Bittenson and Wessell. The Court of Appeal affirmed. We
granted Bernson’s petition for review.

II. DISCUSSION

Bernson contends here, as he argued below, that defendants should be

estopped from asserting the statute of limitations because they affirmatively
concealed the fact that they had commissioned, authored, and disseminated the
allegedly defamatory dossier. The statute was equitably tolled, in Bernson’s
view, until he was able to discover the identity of the responsible parties in
May 1991. Thus, his action — filed within one year thereof — should be
deemed timely. * * *

A. General Principles

To evaluate and resolve this dispute requires a brief review of certain settled
principles. The statute of limitations usually commences when a cause of action
“accrues,” and it is generally said that “an action accrues on the date of injury.”
(Jolly v. Eli Lilly & Co. (1988) 44 Cal. 3d 1103, 1109 [245 Cal. Rptr. 658, 751
P.2d 923].) Alternatively, it is often stated that the statute commences “upon the
occurrence of the last element essential to the cause of action.” (Neel v.
Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal. 3d 176, 187 [98 Cal.
Rptr. 837, 491 P.2d 421] ; Gutierrez v. Mofid (1985) 39 Cal. 3d 892, 899 [218
Cal. Rptr. 313, 705 P.2d 886].) These general principles have been significantly
modified by the common law “discovery rule,” which provides that the accrual
date may be “delayed until the plaintiff is aware of her injury and its negligent
cause.” (Jolly v. Eli Lilly & Co., supra, 44 Cal. 3d at p. 1109.)

A close cousin of the discovery rule is the “well accepted principle … of

fraudulent concealment.” (Sanchez v. South Hoover Hospital (1976) 18 Cal. 3d
93, 99 [132 Cal. Rptr. 657, 553 P.2d 1129] .) “It has long been established that
the defendant’s fraud in concealing a cause of action against him tolls the
applicable statute of limitations, but only for that period during which the claim
is undiscovered by plaintiff or until such time as plaintiff, by the exercise of
reasonable diligence, should have discovered it.” (Ibid.) Like the discovery
rule, the rule of fraudulent concealment is an equitable principle designed to
effect substantial justice between the parties; its rationale “is that the culpable
defendant should be estopped from profiting by his own wrong to the extent that
it hindered an ‘otherwise diligent’ plaintiff in discovering his cause of action.”
(Id. at p. 100, italics omitted; see also Pashley v. Pacific Elec. Ry. Co. (1944)
25 Cal. 2d 226, 231–232 [153 P.2d 325].)

Consistent with these principles, a cause of action for libel generally accrues
when the defamatory matter is published (Strick v. Superior Court (1983) 143
Cal. App. 3d 916, 922 [192 Cal. Rptr. 314] ); under the discovery rule,
however, the date [152/153]of accrual may be delayed where the defendant’s
actions hinder plaintiff’s discovery of the defamatory matter. (See Manguso v.
Oceanside Unified School Dist. (1979) 88 Cal. App. 3d 725 [152 Cal. Rptr.
27]; McNair v. Worldwide Church of God (1987) 197 Cal. App. 3d 363, 379
[242 Cal. Rptr. 823]; …)

B. Ignorance of Defendant’s Identity

While ignorance of the existence of an injury or cause of action may delay the
running of the statute of limitations until the date of discovery, the general rule in
California has been that ignorance of the identity of the defendant is not essential
to a claim and therefore will not toll the statute. (See Gale v. McDaniel (1887)
72 Cal. 334, 335 [13 P. 871] ; Jolly v. Eli Lilly & Co., supra, 44 Cal. 3d at p.
1114.) As we have observed, “the statute of limitations begins to run when the
plaintiff suspects or should suspect that her injury was caused by wrongdoing,
that someone has done something wrong to her.” (Jolly v. Eli Lilly Co., supra,
44 Cal. 3d at p. 1110.) Aggrieved parties generally need not know the exact
manner in which their injuries were “effected, nor the identities of all parties
who may have played a role therein.” (Teitelbaum v. Borders (1962) 206 Cal.
App. 2d 634, 639 [23 Cal. Rptr. 868].)
 Although never fully articulated, the rationale for distinguishing between
ignorance of the wrongdoer and ignorance of the injury itself appears to be
premised on the common sense assumption that once the plaintiff is aware of the
injury, the applicable limitations period (often effectively extended by the filing
of a Doe complaint) normally affords sufficient opportunity to discover the
identity of all the wrongdoers. As we explained in Jolly v. Eli Lilly & Co.,
supra, 44 Cal. 3d 1103 (rejecting the plaintiff’s assertion that her ignorance of
the particular manufacturer of the drug which caused her injuries tolled the
statute): “[P]laintiff could have filed a timely complaint under [Code of Civil
Procedure] section 474, which allows suit to be filed against a Doe party. From
the time such a complaint is filed, the plaintiff has three years to identify and
serve the defendant. [Citations.] Hence, in the instant case, plaintiff could have
brought a timely Doe action, effectively enlarging the statute of limitations
period for three years.” (Id. at p. 1118.)4 Because the plaintiff in Jolly was
aware of some of the manufacturers, she could have utilized the normal
procedure of filing suit against them, naming Doe defendants, and then taking
discovery to identify the remainder. That, indeed, is the normal situation for
which the fictitious name statute, Code of Civil Procedure section 474, is
designed: When the plaintiff is ignorant of the name of “a defendant,” the
plaintiff must file suit against the known wrongdoers, and, when the Doe’s true
name is discovered, the complaint may be amended accordingly. (Code Civ.
Proc., § 474.)

The question here, however, is whether the general rule should apply when,
as a [153/154]result of the defendant’s intentional concealment, the plaintiff is not
only unaware of the defendant’s identity, but is effectively precluded as a
practical matter from ascertaining it through normal discovery procedures. * * *
Although we have not previously considered the issue as framed, the question
has been addressed in several other jurisdictions. * * * As these and other cases
demonstrate, the equitable principle that a defendant who intentionally conceals
his or her identity may be equitably estopped from asserting the statute of
limitations to defeat an untimely claim, has been widely embraced. [Citations
omitted.]

As many of the foregoing decisions observe, and as this court has often stated,
the primary interest served by statutes of limitations is that of repose. Such
statutes ensure that plaintiffs proceed diligently with their claims and mitigate
the difficulties faced by defendants in defending stale claims, where factual
obscurity through the loss of time, memory or supporting documentation may
present unfair handicaps. (Gutierrez v. Mofid, supra, 39 Cal. 3d at p. 898.)
Nevertheless, where the bar becomes a sword rather than a shield, wielded by a
party that has intentionally cloaked its identity, factors of fairness and unjust
enrichment come into play, which courts are bound to consider in equity and
good conscience. As we long ago observed, “The statute of limitations was
intended as a shield for [defendant’s] protection against stale claims, but he may
not use it to perpetrate a fraud upon otherwise diligent suitors.” (Pashley v.
Pacific Elec. Ry. Co., supra, 25 Cal. 2d at p. 231.) * * *

One should not profit from one’s own wrongdoing. Accordingly, we hold that
a defendant may be equitably estopped from asserting the statute of limitations
when, as the result of intentional concealment, the plaintiff is unable to discover
the defendant’s actual identity. Although several of the out-of-state decisions
cited earlier conclude that a tort claim “accrues” only when the identity of the
defendant is discovered, we need not go so far here. It is sufficient to hold
simply that, under the circumstances described, the statute may be equitably
tolled.

The rule of equitable estoppel includes, of course, the requirement that the
plaintiff exercise reasonable diligence. (Sanchez v. South Hoover Hospital,
supra, 18 Cal. 3d at p. 99.) Thus, under our holding the statute will toll only
until such time that the plaintiff knows, or through the exercise of reasonable
diligence should have discovered, the defendant’s identity. Lack of knowledge
alone is not sufficient to stay the statute; a plaintiff may not disregard reasonably
available avenues of inquiry which, if vigorously pursued, might yield the
desired information.

One factor which must be considered pertinent to the diligence inquiry is

whether the filing of a timely Doe complaint would, as a practical matter, have
facilitated the discovery of the defendant’s identity within the requisite three-
year period for service of process. (Code Civ. Proc., § 583.210, subd. (a); Jolly
v. Eli Lilly & Co., supra, 44 Cal. 3d at p. 1118.) Where the identity of at least
one defendant is known, for example, the plaintiff must avail himself of the
opportunity to file a timely complaint naming Doe defendants and take
discovery. However, where the facts are such that even discovery cannot pierce
a defendant’s intentional efforts to conceal his identity, the plaintiff should not
be penalized.

Recognition of a potential equitable estoppel under the foregoing

circumstances will not unduly burden the trial courts. Indeed, our holding will
have virtually no [154/155]effect on the vast majority of civil cases. It is only in
those relative few where the defendant asserts a statute of limitations defense
and the plaintiff claims that he was totally ignorant of the defendant’s identity as
a result of the defendant’s fraudulent concealment, that the issue will even arise;
among those few, it will be the rare and exceptional case in which the plaintiff
could genuinely claim that he was aware of no defendants, and even more rare
that, given knowledge of at least one, he could not readily discover the
remainder through the filing of a Doe complaint and the normal discovery
processes. * * *

We conclude that a remand is appropriate. Our holding that a defendant’s

intentional concealment of his identity may justify an estoppel represents a new
rule of law, as do our standards emphasizing the burden on the plaintiff to
demonstrate reasonable diligence, including the filing of a complaint against
known defendants. On remand the parties will have the opportunity in light of
our decision to focus on and develop these pertinent legal and factual issues:
whether, under the circumstances, defendants’ anonymous commission, drafting
and circulation of the allegedly defamatory dossier constituted intentional
concealment; whether defendants’ actions thereby deprived plaintiff, in fact, of
knowledge of defendants’ identity; and whether plaintiff exercised reasonable
diligence in attempting to discover defendants’ identity.7 * * *

Accordingly, the judgment of the Court of Appeal is reversed, and the matter
remanded for further proceedings consistent with the views expressed herein.

NOTES AND QUESTIONS REGARDING ESTOPPEL

(1) Under what circumstances is a defendant ever under a duty to disclose an

applicable statute of limitations to a plaintiff, such that failure to disclose will
provide a basis for estoppel? See Spray, Gould & Bowers v. Associated Intl.
Ins. Co., 71 Cal. App. 4th 1260, 84 Cal. Rptr. 2d 552 (1999) (defendant
insurer’s direct violation of regulations requiring the insurer to notify a claimant
insured of time limits pertaining to the claim may provide a basis of estoppel
against the insurer’s assertion of a contract limitations defense); Insurance Code
§§ 2070.1, 11580.2(k).

(2) The estoppel argument upheld by the court in Muraoka has been applied
to a variety of circumstances in addition to misrepresentations as to the need for
litigation, such as fraudulent concealment of a cause of action. See, e.g., Griffis
v. S.S. Kresge Co., 150 Cal. App. 3d 491, 197 Cal. Rptr. 771 (1984) (defense
counsel withheld information or was overtly false regarding statutory time
period); see also Brown v. Bleiberg , 32 Cal. 3d 426, 186 Cal. Rptr. 228, 651
P.2d 815 (1982) (defendant doctor estopped from asserting malpractice
limitation because he misrepresented to plaintiff the nature and purpose of
surgery performed); Vu v. Prudential Property & Cas. Ins. Co ., 26 Cal. 4th
1142, 1153–54, 113 Cal. Rptr. 2d 70, 33 P.3d 487 (2001) (defendant insurer
may be estopped to raise the statute of limitations defense if the plaintiff insured
can show that he reasonably relied on the insurer’s factual misrepresentation
that his damages were less than his policy’s deductible amount).

[155/156]

(3) An interesting application of estoppel occurred in Cuadros v. Superior

Court, 6 Cal. App. 4th 671, 8 Cal. Rptr. 2d 18 (1992) , where the plaintiff filed
a personal injury action against the (wrong) defendant rental car companies,
whose names were strikingly similar to the proper company. For three years the
(wrong) defendants acted as though they were the properly named defendants in
defending the action, even participating in nonbinding arbitration. During the
arbitration, the defendants revealed that the car which caused plaintiff’s injuries
was not owned by them, but by a different rental car company. The trial court
did not permit the plaintiff to amend her complaint to name the correct defendant
because the statute of limitations had expired. The Court of Appeal reversed,
and held that the defendant’s conduct was sufficient to invoke the doctrine of
equitable estoppel; and that under the circumstances, the plaintiff must be
allowed to amend her complaint to name the correct company as a defendant. Is
this a proper application of equitable estoppel? Did the correct rental company
engage in any misleading conduct? Under what circumstances could the court
justify estopping that company, as opposed to the wrong defendants, from
asserting the statute of limitations bar?

(4) This potentially far-reaching equitable estoppel doctrine does have some
limitations. In Elliott v. Contractors’ State License Bd. , 224 Cal. App. 3d
1048, 274 Cal. Rptr. 286 (1990), the Court of Appeal ruled that the defendant
agency was not estopped to assert the statute of limitations despite plaintiff’s
argument that the agency never responded to plaintiff’s written inquiries for
clarification of the administrative law judge’s order and for information about
procedures and forms for appealing the order. The court found that the defendant
agency did not engage in any affirmative misleading conduct, and neither owed
nor assumed any duty to advise plaintiff of his rights. Other cases have reached
the same conclusion on similar facts. E.g., Barber v. Superior Court, 234 Cal.
App. 3d 1076, 285 Cal. Rptr. 668 (1991) (refusal by defense expert to
voluntarily cooperate with plaintiff not fraudulent concealment for purposes of
estoppel of limitations); Brookview Condo. Owners’ Assn. v. Heltzer
Enterprises-Brookview, 218 Cal. App. 3d 502, 267 Cal. Rptr. 76 (1990)
(collecting cases which required misleading or deceptive act by defendant as
prerequisite for estoppel to seek dismissal).

Even where the defendant does engage in affirmative misleading conduct, that
conduct must have induced the plaintiff to delay filing the action for estoppel to
apply. See, e.g., Stalberg v. Western Title Ins. Co. , 27 Cal. App. 4th 925, 931–
32, 32 Cal. Rptr. 2d 750 (1994) (although defendant made numerous
misrepresentations regarding easement, defendant not equitably estopped from
asserting statute of limitations bar because plaintiffs knew correct facts); Lantzy
v. Centrex Homes , 31 Cal. 4th 363, 2 Cal. Rptr. 3d 655, 73 P.3d 517 (2003)
(defendant developer who made unfulfilled promises to repair construction
defects not equitably estopped from asserting statute of limitations defense
because no facts to indicate defendant’s conduct induced plaintiffs homeowners
to forbear suing within the 10-year limitation period of CCP § 337.15). Snapp
& Associates Ins. Services, Inc. v. Robertson, 96 Cal. App. 4th 884, 117 Cal.
Rptr. 2d 331 (2002) (doctrine of fraudulent concealment does not come into
play, whatever the lengths to which the defendant has gone to conceal the
wrongs, if a plaintiff is otherwise on notice of a potential claim).

[156/157]

(5) The Supreme Court in Bernson held that intentional concealment of the
defendant’s identity tolls the statute of limitations until such time as the plaintiff
knows, or through the exercise of reasonable diligence should have discovered,
the defendant’s actual identity. The Court specifically grounded this holding in
the doctrine of equitable estoppel, and expressly declined to base it on the
delayed discovery rule. What difference does this make? Why was the Court
reluctant to modify the California discovery rule in this manner? The Bernson
court opined that this holding would affect only a few cases. Do you agree?
Why? Would the effect be greater if the Bernson court had held that a cause of
action does not accrue until the plaintiff discovers, or through reasonable
diligence, should have discovered, the defendant’s identity? How so?

(6) In Regents of the Univ. of California v. Superior Court , 20 Cal. 4th 509,
85 Cal. Rptr. 2d 257, 976 P.2d 808 (1999) , the Supreme Court discussed the
judicially created doctrine of fraudulent concealment applied in Bernson. The
purpose of the doctrine, according to the court, is to “disarm a defendant who,
by his own deception, has caused a claim to become stale and a plaintiff
dilatory.” Regents of the Univ. of California, 20 Cal. 4th at 533. The court
further noted that the doctrine enters into a statute of limitations, if at all, from
without by being read into it judicially. However, the language of or purpose
behind a particular statute of limitations, such as the 30-day limitation set forth
in the Opens Meeting Act, Gov. Code § 11130(a), may preclude application of
the doctrine of fraudulent concealment. Id. at 533–35.

(7) Equitable estoppel may be available even where the limitations statute at
issue expressly precludes equitable tolling. See, e.g., Lantzy v. Centrex Homes ,
31 Cal. 4th 363, 2 Cal. Rptr. 3d 655, 73 P.3d 517 (2003) (ten-year limitations
period to bring action for latent defect construction in CCP § 337.15 not subject
to equitable tolling, but defendants may be estopped to assert this limitations
defense while their promises or attempts to repair defect are pending);
Leasequip, Inc. v. Dapeer, 103 Cal. App. 4th 394, 126 Cal. Rptr. 2d 782
(2002) (although equitable tolling not applicable to CCP § 340.6, defendant
equitably estopped from raising that legal malpractice statute of limitation);
Battuello v. Battuello, 64 Cal. App. 4th 842, 75 Cal. Rptr. 2d 548 (1998)
(equitable estoppel prevented defendant form asserting one-year limitation in
CCP § 366.2 despite that statute’s express provision that precluded equitable
tolling).

Footnotes:

4 Code of Civil Procedure section 583.210, subdivision (a), provides that the summons and complaint
shall be served upon a defendant within three years after the complaint is filed. When the complaint is
amended to substitute the true name of the defendant for the fictional name, the amended complaint “relates
back” to the timely original complaint and hence is not barred by the statute of limitations. (Barrington v. A.
H. Robins Co., (1985) 39 Cal. 3d 146 at pp. 150-151 [216 Cal. Rptr. 405, 702 P.2d 563] ; Austin v.
Massachusetts Bonding & Insurance Co. (1961) 56 Cal. 2d 596, at p. 603 [15 Cal. Rptr. 817, 364 P.2d
68].)

7 The relevant period of inquiry concerning defendants’ alleged concealment and plaintiff’s diligence in
discovering defendants’ identity is, of course, the one-year limitations period following plaintiff’s discovery
of the alleged defamatory writing.

[9] Tolling and Class Actions

Yet another nonstatutory grounds for tolling was recently discussed in Jolly v.
Eli Lilly & Co., supra, 44 Cal. 3d 1103, 1118-26 , whose facts are set forth
supra:

[157/158]

JOLLY v. ELI LILLY AND COMPANY

SUPREME COURT OF CALIFORNIA
44 Cal. 3d 1103, 1118–1126, 245 Cal. Rptr. 658, 751 P.2d 923 (1988)

***

Application of American Pipe

Relying on American Pipe & Construction Co. v. Utah (1974) 414 U.S. 538
[94 S. Ct. 756, 38 L. Ed. 2d 713] and its progeny, plaintiff argues that the filing
of the class action in Sindell, supra, tolled the statute of limitations with respect
to individual members of the putative class until the class was denied
certification in 1982. Defendants respond that the issue is not properly before
us, as it was not raised below (Cal. Rules of Court, rule 29), a contention we
reject in light of the issue’s great public importance. Alternatively, defendants
argue that the tolling principle set forth in American Pipe, supra, and followed
by the Court of Appeal in Bangert v. Narmco Materials, Inc. (1984) 163 Cal.
App. 3d 207 [209 Cal. Rptr. 438], has no application to the present case. We
agree that American Pipe is inapplicable here.

We have repeatedly directed that in the absence of controlling state authority,

California courts should utilize the procedures of rule 23 of the Federal Rules of
Civil Procedure to ensure fairness in the resolution of class action suits. Under
rule 23, the filing of a timely class action commences the action for all members
of the class as subsequently determined. In American Pipe, the United States
Supreme Court held that, under limited circumstances, if class certification is
denied, the statute of limitations is tolled from the time of commencement of the
suit to the time of denial of certification for all purported members of the class
who either make timely motions to intervene in the surviving individual action,
or who timely file their individual actions. Although we are not bound by the
United States Supreme Court decisions, we nevertheless consider the
applicability of American Pipe here.
 In American Pipe the State of Utah commenced a civil action, claiming that
defendants conspired to rig steel and concrete pipe prices in violation of the
Sherman Act. The suit purported to be a class action, brought on behalf of
Utah’s public agencies and others who were end users of the pipe. On
defendant’s motion, the district court denied class action status for failure to
satisfy the numerosity requirement of rule 23(a)(1) of the Federal Rules of Civil
Procedure. The public agencies who were alleged as class members then filed
motions to intervene. The court denied the motions on statute of limitations
grounds. The Ninth Circuit reversed.

The United States Supreme Court in a unanimous decision affirmed the circuit
court: “We hold that in this posture, at least where class action status has been
denied solely because of failure to demonstrate that ‘the class is so numerous
that joinder of all members is impracticable,’ the commencement of the original
class suit tolls the running of the statute for all purported members of the class
who make timely motions to intervene after the court has found the suit
inappropriate for class action status.”

In Bangert v. Narmco Materials, Inc., supra, the Court of Appeal extended

[158/159]American Pipe to apply to a class action suit against a plastics research
plant seeking injunctive and monetary relief for property damage, economic loss
and physical injuries. The asserted class consisted of persons living within a
half-mile radius of the plant. The trial court denied class certification on
grounds of insufficient community of interest. Thereafter the court denied as
untimely plaintiffs’ motion for leave to amend the complaint nunc pro tunc to
add as plaintiffs 92 members of the class designated in the original complaint.

The Court of Appeal reversed. Citing American Pipe, the court held that the
filing of the complaint tolled the running of the statute of limitations for all
members of the purported class until class action certification was denied, even
though, unlike American Pipe, denial was not for lack of numerosity, but for
insufficient community of interest.

Plaintiff urges us to follow the Bangert court’s extension of American Pipe

so as to find that the filing of the Sindell class action tolled the statute of
limitations applicable to her individual suit. To resolve this issue, we need to
consider both the nature of the Sindell action and the rationale underlying
American Pipe.
 Judith Sindell filed suit in 1976. She purported to be suing on her own behalf
and, “with respect to certain relief,” on behalf of a class of women allegedly
similarly situated. For herself, individually, Sindell claimed damages for
specific personal injury suffered as a result of her mother’s ingestion of DES
during pregnancy. In her cause of action relating to the class claims, Sindell
described the class as female residents of California “who have been exposed
to DES before birth and who may or may not know that fact or danger, and as a
result of which, have or may have contracted or in the future may contract
adenocarcinoma or vaginal or cervical adenosis or precancerous tumors of the
breast or cancer of the bladder.” For the class, Sindell sought only declaratory
relief and an order directing defendants to publicize the dangers of DES and the
necessity of medical evaluations and to fund the establishment and maintenance
of clinics to provide free examinations to the DES daughters.

Six years later, in 1982, the trial court denied certification. As reason, the
court cited, in relevant part, the lack of commonality among class members on
issues of proximate cause, extent of injury, and appropriate medical examination
or treatment. “As a general rule,” the court observed, “so-called ‘mass
accidents’ or ‘common disasters’ are considered not appropriate for class
litigation. This inappropriateness is based upon the overwhelming uniqueness of
the issues stemming from the necessity for the trier to hear and determine
individually each victim’s injuries, his suffering, financial loss, etc. Thus even
though a common question may be involved (e.g., the defendant’s tort) the matter
is not suitable for a class action.”

The question to be asked, then, is whether the Sindell, supra, mass-tort class
action fits the rationale of American Pipe, supra. We believe the answer is no.

Underlying the tolling rule of American Pipe were two major policy
considerations. The first was the protection of the class action device. In cases
where class certification is denied for what the high court characterized as
“subtle factors,” unforeseeable by class members, a rule that failed to protect
putative class members from the statute of limitations after denial of
certification would induce [159/160]potential class members to “file protective
motions to intervene or to join in the event that a class was later found
unsuitable,” depriving class actions “of the efficiency and economy of litigation
which is a principal purpose of the procedure.”

The second consideration involved the effectuation of the purposes of the

statute of limitations. “The policies of ensuring essential fairness to defendants
and of barring a plaintiff who has ‘slept on his rights,’” the high court stated,
“are satisfied when, as here, a named plaintiff who is found to be representative
of a class commences a suit and thereby notifies the defendants not only of the
substantive claims being brought against them, but also of the number and
generic identities of the potential plaintiffs who may participate in the
judgment.” In these circumstances, the court concluded, the purposes of the
statute of limitations would not be violated by a decision to toll. (See,
generally, Comment, Class Actions and Statutes of Limitations (1981) 48 U.
Chi. L. Rev. 106, 108-109).

The tension between these two considerations, as at least one commentator

has observed (Comment, supra, 48 U. Chi. L. Rev. 106, 110-111), has led
lower courts in applying American Pipe to use different approaches. Some
courts concentrate on the protection of the class action device. [Citations
omitted.] Other courts focus on the policies underlying the statute of limitations
and thus inquire whether the defendant received notice of a subsequent
plaintiff’s claim from the prior class suit. * * * [Citations omitted.] Still others
apply American Pipe broadly to mean that the statute of limitations must always
be tolled, eliminating discussion of the reason for denial of class status or the
notice issue.

Considering both policy considerations — protecting the efficiency and

economy of litigation and protecting the defendant from unfair claims — we
decline to extend the tolling doctrine of American Pipe to the present case.
Rather, for the reasons set forth below, we conclude that the Sindell class action
complaint neither sufficiently put defendants on notice of the substance and
nature of plaintiff’s claims, nor served to further economy and efficiency of
litigation, so as to justify affording plaintiff shelter under the protective
umbrella of American Pipe.

This court has held that the ultimate determination of whether a class action is
appropriate turns on the existence and extent of common questions of law and
fact. As the trial court in the present case correctly observed, mass-tort actions
for personal injury most often are not appropriate for class action certification.
The major elements in tort actions for personal injury — liability, causation,
and damages — may vary widely from claim to claim, creating a wide disparity
in claimants’ damages and issues of defendant liability, proximate cause,
liability of skilled intermediaries, comparative fault, informed consent,
assumption of the risk and periods of limitation. Thus, for example, in DES
litigation, use of the class action device has consistently been rejected.
California DES litigation has not departed from this trend; no reported
California cases have approved DES litigation in class action form.

The same reasons that render certification of mass-tort claims generally

inappropriate render inappropriate the application and extension of American
Pipe to the present case. Because of the nature of the Sindell complaint — as
indicated, Judith Sindell did not seek to certify the class as to personal injury
claims, the gravamen of plaintiff’s complaint — and the differences in issues of
fact and law — [160/161]plaintiff’s action for damages puts into issue the prenatal
treatment of her mother, the specific form of DES prescribed (e.g., tablet,
capsule), the dosage taken, her mother’s obstetrical history and many other
issues necessarily involved in proving causation, damages and defenses — the
Sindell class suit could not have apprised defendants of plaintiff’s substantive
claims. Therefore, plaintiff cannot now claim that Sindell’s complaint put
defendants on notice of allegations related to personal injury within the statutory
period of limitation so that they might prepare their defense.

This deficiency in Sindell’s class action suit is alone sufficient to deny

plaintiff relief under American Pipe. As Justice Blackmun, in his concurrence in
American Pipe, cautioned: “Our decision … must not be regarded as
encouragement to lawyers in a case of this kind to frame their pleadings as a
class action, intentionally, to attract and save members of the purported class
who have slept on their rights. Nor does it necessarily guarantee intervention for
all members of the purported class. [¶] As the Court has indicated, the purpose
of statutes of limitations is to prevent surprises ‘through the revival of claims
that have been allowed to slumber until evidence has been lost, memories have
faded, and witnesses have disappeared.’ [Citations].” (American Pipe, supra,
414 U.S. 538, 561 [38 L. Ed. 2d 713, 731] (conc. opn. of Blackmun, J.).) * * *

Our position in the present case ensures that the abuse warned of by Justice
Blackmun will not occur. By refusing to extend American Pipe’s tolling
doctrine to allow the instant suit, we heed Justice Blackmun’s admonishment to
district judges to exercise discretion in applying the American Pipe rule in
order to “prevent the type of abuse mentioned above and [to] preserve a
defendant whole against prejudice arising from claims for which he has
received no prior notice.” Because the Sindell complaint never put defendants
on notice that personal injury damages were being sought on a class basis, it
would be unfair to defendants to toll the statute of limitations on such personal
injury actions. And because the Sindell complaint did not seek personal injury
damages on behalf of the class, even those absent class members who were
aware of that action could not reasonably have relied on the complaint as a
basis for postponing their own personal injury actions. Thus, our ruling today
does not result in duplicative litigation of the sort feared by the court in
American Pipe, nor does it deprive rule 23 of the Federal Rules of Civil
Procedure of its purpose to further the efficiency and economy of litigation.

In light of our disposition, we need not address the broader question whether
in any personal injury mass-tort case the filing of a class action complaint can
serve to toll the statute of limitations for putative class members when the class
ultimately is denied certification for lack of commonality. We observe,
however, that because personal-injury mass-tort class-action claims can rarely
meet the community of interest requirement in that each member’s right to
recover depends on facts peculiar to each particular case, such claims may be
presumptively incapable of apprising defendants of “the substantive claims
being brought against them” (American Pipe, supra, 414 U.S. 538, 555 [38 L.
Ed. 2d 713, 727]), a prerequisite, in our view, to the application of American
Pipe. This being so, putative class members would be ill advised to rely on the
mere filing of a class action complaint to toll their individual statute of
limitations. The presumption, rather, should be to the contrary — i.e., that lack
of commonality will defeat certification and preclude [161/162]application of the
American Pipe tolling doctrine.

For the reasons previously stated, we hold that the American Pipe tolling rule
is unavailable to plaintiff. Specifically, we find that plaintiff and other similarly
situated plaintiffs seeking personal injury damages in DES cases may not rely on
the Sindell class action suit to toll the statute of limitations pursuant to American
Pipe.20

Conclusion

The judgment of the Court of Appeal is reversed. The cause is remanded with
instructions to affirm the judgment of the trial court in favor of defendants.

NOTES AND QUESTIONS

(1) Why precisely did the Supreme Court in Jolly find the American Pipe
tolling doctrine inapplicable? Although dicta, the court expressed the view that
the American Pipe tolling doctrine does not apply when a class is ultimately
denied certification for lack of commonality as opposed to numerousity. Do you
understand the reasons for the court’s distinction here? Do you agree with it? Is
it a proper interpretation of the U.S. Supreme Court decision in American Pipe?
Does that matter here? Note that the California Supreme Court states “we are
not bound by the United States Supreme Court decisions.” Isn’t the U.S.
Supreme Court the highest court in the country? Is this insurrection?!? Why not?

(2) Although not necessary to its decision, the court in Jolly forcefully
indicates that the American Pipe tolling doctrine should never apply to personal
injury mass-tort cases filed as class actions. Obviously, this is a clear message
to future litigants and the lower courts.

However, in San Francisco Unified Sch. Dist. v. W.R. Grace & Co ., 37 Cal.
App. 4th 1318, 1336–41, 44 Cal. Rptr. 2d 305 (1995), the court ruled that the
three-year statute of limitations for injury to property was tolled during the
period of time that plaintiff was a member of a nationwide asbestos class action
certified in federal court, from the inception of the class action until plaintiff
opted out of the class. The court distinguished Jolly by finding that, unlike the
mass tort personal injury claims of the class action in Jolly, the property damage
claims in the federal class action provided meaningful notice of plaintiff’s
claims against defendant Grace. Id. at 1338–39. See also Becker v. McMillin
Constr. Co., 226 Cal. App. 3d 1493, 277 Cal. Rptr. 491 (1991) (American Pipe
tolling applied to putative class in mass tort property damage action which was
decertified for lack of commonality).

Footnotes:

20 Insofar as Bangert v. Narmco Materials, Inc., supra, is inconsistent with our holding, that case is
disapproved.

[10] Relation Back Doctrine and Cross-Complaints

Generally, an amended complaint relates back to the date of a timely filed

original complaint, and thus avoids the statute of limitations, if it (1) rests on the
same general set of facts and (2) refers to the same accident and the same
injuries, [162/163]as the original complaint. Barrington v. A.H. Robins Co., 39
Cal. 3d 146, 216 Cal. Rptr. 405, 702 P.2d 563 (1985) . See § 9.03 Amendments,
infra. A timely filed complaint may also toll the statute of limitations as to
cross-complaints filed by the defendant.

SIDNEY v. SUPERIOR COURT

COURT OF APPEAL OF CALIFORNIA,
SECOND APPELLATE DISTRICT
198 Cal. App. 3d 710, 244 Cal. Rptr. 31 (1988)

Thompson, Justice.

In this case we hold that the statute of limitations does not bar amending a
compulsory cross-complaint to state a cause of action against the plaintiff for a
different injury arising from the same accident where the cause of action was not
barred when the original complaint was filed. Petitioner Erik Sidney seeks a
writ of mandate commanding respondent superior court to grant him leave to
amend his cross-complaint to seek damages for personal injury as well as
property loss. Petitioner is the defendant in a negligence action filed by plaintiff
Pauline Kinoshita.

On November 7, 1985, petitioner’s car collided with a vehicle driven by

plaintiff Kinoshita. On February 24, 1986, plaintiff filed a complaint for
personal injury and property damage against petitioner. On April 17, 1986,
petitioner filed a cross-complaint for property damages against plaintiff and Al
Munari Produce.1 On April 27, 1987, petitioner filed a notice of motion for
leave to amend his cross-complaint by adding a cause of action for personal
injuries.2 Petitioner alleged his failure to include the personal injury claim in
his first cross-complaint was due to the “mistake” and “neglect” of prior
counsel, consisting of confusion between two attorneys (one retained by
petitioner and one retained by his insurer). Plaintiff opposed the motion,
arguing, inter alia, that petitioner was not entitled to relief under Code of Civil
Procedure section 426.503 because he was not acting in good faith in failing to
file a cause of action for personal injuries within the statute of limitations
period.

The superior court denied petitioner’s motion on the express ground that the
“statute of limitations appears to have run on the personal injury claim.” The
court explained that the “[doctrine] of relation back does not apply in this
situation when the original complaint related to a claim of ‘property’ damage”
and cited to Barrington v. A.H. Robins Co. (1985) 39 Cal. 3d 146 [216 Cal.
Rptr. 405, 702 P.2d 563] . Petitioner sought mandamus relief and we granted an
alternative writ.

[163/164]

DISCUSSION

Petitioner contends that the trial court erred in denying him leave to amend on
the ground that the one-year statute of limitations governing personal injury
claims ([former] § 340, subd. (3)) had run. Petitioner claims that the statute was
tolled by the filing of plaintiff’s complaint for personal injuries sustained in the
same accident. We agree.

At issue is whether the rule for applying the relation back doctrine to an
amended compulsory cross-complaint is the same as for an amended complaint,
rather than an initial cross-complaint. In the case of a complaint, the general rule
is that an “amended complaint relates back to the original complaint, and thus
avoids the statute of limitations as a bar against named parties … [only] if it: (1)
rests on the same general set of facts as the original complaint; and (2) refers to
the same accident and same injuries as the original complaint.” (Barrington v.
A.H. Robins Co., supra, 39 Cal. 3d 146, 151; Smeltzley v. Nicholson Mfg. Co.
(1977) 18 Cal. 3d 932, 939–940 [136 Cal. Rptr. 269, 559 P.2d 624, 85
A.L.R.3d 121].) Thus, if the same rule applies to amending the cross-complaint,
the trial court’s ruling was proper since after the expiration of the one-year
statute, a complaint alleging only property damages could not be amended to
seek damages for personal injury, a different primary injury.

Although “[ordinarily] the statute of limitations will bar a cross-complaint in

the same fashion as if the defendant had brought an independent action,” the rule
is different when “the original complaint was filed before the statute of
limitations on the cross-complaint had elapsed.” (Liberty Mut. Ins. Co. v. Fales
(1973) 8 Cal. 3d 712, 715, fn. 4 [106 Cal. Rptr. 21, 505 P.2d 213] ). Such a
cross-complaint need only be subject-matter related to the plaintiff’s complaint
— i.e., arise out of the same occurrence (see §§ 426.10, 428.10) — to relate
back to the date of filing the complaint for statute of limitation purposes.

“[The] courts have fashioned a rule that a statute of limitations is suspended

or tolled as to a defendant’s then unbarred causes of action against the plaintiff
arising out of the same transaction by the filing of the plaintiff’s complaint.”
(Electronic Equipment Express, Inc. v. Donald H. Seiler & Co. (1981) 122
Cal. App. 3d 834, 844 [176 Cal. Rptr. 239] .) “The principle underlying the rule
that a statute of limitations is suspended by the filing of the original complaint is
that the plaintiff has thereby waived the claim and permitted the defendant to
make all proper defenses to the cause of action pleaded.” (Trindade v. Superior
Court (1973) 29 Cal. App. 3d 857, 859–860 [106 Cal. Rptr. 48].)

In Trindade, the plaintiff timely filed a negligence action for personal injuries
against defendant Trindade. More than two years after the automobile accident,
Trindade filed a cross-complaint against the plaintiff for personal injuries
arising from the accident. The trial court sustained a demurrer without leave to
amend on statute of limitations grounds. The appellate court reversed, holding
the cross-complaint was not time-barred. The Trindade court pointed out: “It
has consistently been held that the commencement of an action tolls the statute of
limitations as to a defendant’s then unbarred cause of action against the
plaintiff” related to the accident or occurrence upon which the action is brought.

[164/165]

We are satisfied that the same “relation back” standard applies for an
amended cross-complaint as for an initial cross-complaint. Neither the
underlying rationale of the rule nor the language of the cases proclaiming it
indicates an intent to only toll the statute temporarily until an initial cross-
complaint is filed. To the contrary, the waiver principle is based on plaintiff’s
action in commencing the action. The reason for the rule continues to exist so
long as that action is pending and is unrelated to how many times it takes
defendant to assert all his related defenses and claims.

Moreover, the cases make clear that the only relevant criteria for starting and
ending the tolling of the statute are, respectively, the commencement of the
action by the filing of the plaintiff’s complaint and the end of the action by
judgment. “‘The statute is a bar to the defendant’s affirmative claim only if the
period has already run when the complaint is filed. The filing of the complaint
suspends the statute during the pendency of the action, and the defendant may set
up his [cross] claim by appropriate pleading at any time.’ [Citation.]”
(Trindade v. Superior Court, supra, 29 Cal. App. 3d at p. 860; see also 3
Witkin, Cal. Procedure (3d ed. 1985) § 322, p. 353.) Early California cases
show that the principle is well established that as long as a defendant’s claim
existed at the commencement of the action, the statute remains suspended
throughout the action. (See, e.g., McDougald v. Hulet (1901) 132 Cal. 154,
160–161 [64 P. 278].)

In Whittier v. Visscher (1922) 189 Cal. 450, 456 [209 P. 23] , our Supreme
Court, in rejecting a claim that a cross-complaint was barred by the statute of
limitations, explained: “[The] authorities in this state seem to be agreed that if
the right of action relied on was alive at the commencement of the suit the statute
does not run against it, when, as in this case, the full statutory period has expired
thereafter during the pendency of the action and before the claim is pleaded as a
cross-complaint.” * * *

Furthermore, in McDougald v. Hulet, supra, 132 Cal. 154, the court not only
rejected the trial court’s conclusion that the cross-complaint was barred but also
held that the court erred in denying the defendant leave to file a second amended
answer during the trial. The McDougald court stated that “[the] filing of the
complaint suspended the running of the statute of limitations as to the matters
arising out of the transaction” set forth “in the answer, whether it is called an
answer, or a counterclaim, or a cross-complaint” which “existed at the
commencement of the action.” (Id. at pp. 160–161.) In holding that the refusal to
permit amendment at time of trial was error, the court stressed that amendments
should be liberally allowed.
 We perceive no reason to fashion a rule to restart the statute of limitations
running again as soon as a defendant files an initial cross-complaint. Because of
the strong public policy that seeks to dispose of litigation on the merits rather
than on procedural grounds, the statute of limitations is a disfavored defense
which should be strictly construed so as to avoid forfeiture of rights. The
objective of statutes of limitation in barring stale claims is not involved here
since the amended cross-complaint arises from the same automobile collision
incident as the complaint and was therefore no more stale than the complaint.
Moreover, since it is well settled that the statute of limitations could not have
barred defendant-petitioner from waiting to file an initial cross-complaint for
personal injuries as well as property [165/166]damage at any time during
pendency of the action up until judgment, the amended cross-complaint filed
herein before trial was no more stale than an initial cross-complaint might have
been. Indeed, here the personal injury cause of action was filed a year and one-
half after the accident whereas in Trindade, it was not filed till more than two
years after.

We decline to restrict the “relation-back” rules governing amendment of a

compulsory cross-complaint to those governing amendment of a complaint.
Plaintiff and defendant are not in parallel positions. Plaintiff chose to initiate the
lawsuit. The defendant has no choice but to defend.

Moreover, the Legislature has created a distinctive statutory scheme

regulating compulsory cross-complaints. Where as here, the cause of action is
related to the subject-matter of the plaintiff’s complaint, defendant must raise all
possible claims by cross-complaint or be forever barred from asserting any of
them in any later lawsuit even as a defensive offset (§ 431.70) and even if the
limitations period had not expired (§ 426.30). Furthermore, in the chapter on
compulsory cross-complaints, the Legislature has not only made it clear that the
court retains power to permit a defendant to amend a cross-complaint to avoid
forfeiture of a related claim but has also mandated liberality in allowing such
amendments at any time during the course of the lawsuit. (§ 426.50.) * * *

We, therefore, conclude that the statute of limitations does not bar amending a
cross-complaint to state a cause of action against the plaintiff for a different
injury arising from the same accident where the cause of action was not barred
when the original complaint was filed. (See fn. 4.) Hence, the trial court erred in
ruling that petitioner’s cause of action for personal injury against plaintiff
Kinoshita was barred by the statute of limitations since it was not barred at the
time plaintiff filed his negligence action arising out of the same motor vehicle
accident.4 * * *

NOTES AND QUESTIONS

(1) Why did the Sidney court permit relation back of defendant Sidney’s
cross-complaint for personal injuries against plaintiff Kinoshita, when it would
not have permitted relation back for a similar claim against third-party
defendant [166/167]Al Munari Produce Co.? See Sidney, fn. 4, supra.

(2) Assume in Sidney that defendant Sidney did file a timely cross-complaint
against third-party defendant Al Munari Produce Co. for property damages only.
Al Munari then files a cross-complaint against Sidney for negligently destroying
the company vehicle. In response to Al Munari’s cross-complaint, Sidney seeks
to amend his cross-complaint to assert a personal injury claim against Al
Munari Produce Co. Is Sidney’s personal injury claim against Al Munari still
barred by the statute of limitations, or does his amended cross-complaint relate
back?

(3) In Sidney, the collision took place on November 7, 1985, and Kinoshita
filed his complaint for personal injury on February 24, 1986. Assume that
instead of filing an answer and cross-complaint, Sidney never entered an
appearance in the action. Two years later, the court dismissed Kinoshita’s case
for lack of prosecution. Sidney then files suit against Kinoshita for property and
personal injury damages caused by the same collision. Defendant Kinoshita
demurs on the ground that Sidney’s action is barred by the statute of limitations.
Plaintiff Sidney argues that Kinoshita’s complaint in the first lawsuit tolled the
statute of limitations as to any cause of action that could have been brought by
Sidney as a cross-complaint, but was never filed, in that prior lawsuit. Does
Kinoshita’s complaint in the prior litigation toll the statute of limitations such
that Sidney’s complaint in the second lawsuit relates back to it? See Luna
Records Corp. v. Alvarado, 232 Cal. App. 3d 1023, 283 Cal. Rptr. 865 (1991).

(4) Assume that as a result of the collision in Sidney, plaintiff Kinoshita

suffered only property damage to his vehicle and defendant Sidney suffered only
personal injuries. Kinoshita waits one and three-quarter years before filing his
property damage negligence case against Sidney. Defendant Sidney is served
with the complaint, and now wishes to file a cross-complaint for personal injury
damages against plaintiff Kinoshita. Is Sidney’s cross-complaint barred by the
then-applicable one-year statute of limitations? See CCP § 431.70; Constr.
Protective Services, Inc. v. TIG Specialty Ins. Co., 29 Cal. 4th 189, 126 Cal.
Rptr. 2d 908, 57 P.3d 372 (2002) (explaining the defensive function of CCP §
431.70’s set-off procedure); Carnation Co. v. Olivet Egg Ranch, 189 Cal. App.
3d 809, 820, 229 Cal. Rptr. 261 (1988) (claims must be mutual if they are to
qualify as “cross-demands” under CCP § 431.70).

(5) Federal Rule of Civil Procedure 15(c)(2) permits relation back of an

amended pleading when “the claim or defense asserted in the amended pleading
arose out of the conduct, transaction, or occurrence set forth … in the original
pleading.” How is this federal relation back doctrine different from California’s
with respect to amended complaints? The federal standard is more liberal in
allowing relation back of amended complaints, is it not? Why is the California
standard, as stated in Barrington v. A.H. Robins Co., limited to the “same
injuries as the original complaint”? Should it be? Are the two relation back
doctrines the same as to amended pleadings by the defendant? If California
followed the federal doctrine, would Sidney have been decided differently by
the Court of Appeal? By the trial court? See Chapter 9, Pleadings, § 9.03
Amendments, infra, for a more complete discussion of the federal and
California relation back doctrines.

Footnotes:

1 The original cross-complaint alleged the plaintiff was driving a vehicle owned by Al Munari Produce
with Munari’s consent in the course of employment and agency.

2 Although Al Munari Produce was still named as a cross-defendant in the title, the proposed first
amended cross-complaint alleged that plaintiff Kinoshita was the owner as well as the driver of the vehicle
and did not refer to any alleged negligence by Al Munari Produce.

3 Unless otherwise stated, all statutory references are to the Code of Civil Procedure.

4 The proposed amended cross-complaint appears to be directed only against plaintiff Kinoshita.
Petitioner apparently does not seek to state a cause of action for personal injury against cross-defendant Al
Munari Produce Company. Nor could he do so. There is no tolling or “relation back” to save cross-
complaints against third parties brought into the action by the defendant. No waiver can be inferred as to a
third party. Since Munari did not do any act in the nature of a waiver, the reason for the rule that a statute
of limitations is suspended upon the filing of the original complaint does not exist. (Trindade v. Superior
Court, supra, 29 Cal. App. 3d 857, 859–860.) A cross-complaint against Munari must be timely on the date
it is filed. In short, for purposes of the statute of limitations, such a cross-complaint against a third party is
treated the same as a complaint and subject to the same “relation back” doctrine.
 Here, petitioner’s original cross-complaint against Munari, filed in April 1986, five months after the
accident, was timely. But an amended claim for personal injury filed in April 1987 would be barred by the
one-year statute of limitations. It cannot relate back to the original April 1986 cross-complaint for property
damages because it does not seek recovery for the “same injuries.” (Barrington v. A.H. Robins Co.,
supra, 39 Cal. 3d 146, 151 ….)

[167/168]

§ 4.05 COMMENCEMENT OF AN ACTION

[A] Generally

The various statutes of limitations discussed above all require that an action
be “commenced” within a prescribed period after the cause of action has
accrued. What constitutes “commencement” of an action in California?
Fortunately, the Legislature does provide a general rule here: CCP § 350 states
that an action is commenced, with respect to statutes of limitations in the Code
of Civil Procedure, “when the complaint is filed.” Consequently, unlike some
other states, California does not generally require service of the complaint and
summons within the statute of limitation period. (Beware, however, that CCP §
583.210(a) requires service of the complaint within three years of filing, and
CCP § 583.420(a)(1) authorizes discretionary dismissal if not served within
two years. Local “Fast Track” rules may require even shorter times for service.
See Chapters 6 and 12, infra; Government Code § 68616(a).)

[B] Choice of Law

There is one interesting exception to this general rule regarding

commencement. Under certain circumstances, CCP § 361 requires a California
court to apply a statute of limitations from another state. See Chapter 5,
California Conflict of Laws Doctrine, infra, for a full discussion of this choice-
of-law statute. Where that foreign statute incorporates the requirement that an
action is commenced by service of process on the defendant, the California
courts will adopt this definition of “commencement.” See, e.g. Delfosse v.
C.A.C.I., Inc.-Federal, 218 Cal. App. 3d 683, 691–92, 267 Cal. Rptr. 224
(1990).

[C] Prerequisites to Filing Complaint

 Some special statutory schemes modify the general rule of “commencement”
by inserting a prerequisite to the filing of the complaint. The most important
such scheme applies to actions against public entities and public employees,
discussed below. Another notable modification is contained in CCP § 364
dealing with the commencement of actions based on a health care provider’s
professional negligence. Others are discussed infra.

[1] Medical Malpractice Prelitigation Notice

CCP § 364 requires a medical malpractice plaintiff to give a defendant at

least 90 days’ prior notice of the intention to file the action. No particular form
of notice is required, but the plaintiff must notify the defendant of the legal basis
of the claim and the type of loss sustained, including with specificity the nature
of the injuries suffered. CCP § 364(b). Failure to comply with this notice
prerequisite does not affect the jurisdiction of the court, but will be grounds for
discipline of the plaintiff’s attorney. CCP § 365. See Preferred Risk Mut. Ins.
Co. v. Reiswig, 21 Cal. 4th 208, 213–14, 87 Cal. Rptr. 2d 187, 980 P.2d 895
(1999) (failure to comply with the 90-day notice provision does not invalidate
court proceedings); Edwards v. Superior Court , 93 Cal. App. 4th 172, 112 Cal.
Rptr. 2d 838 (2001) (failure to specify [168/169]in the § 364 notice all injuries
suffered cannot bar a plaintiff from including the injury unintentionally omitted
from the notice in the lawsuit against the medical practitioner if it is not
otherwise barred by the statute of limitations).

[a] The 90-Day Tolling Provision

One interesting question involves the interpretation of § 364(d), which states:

“If the notice is served within 90 days of the expiration of the applicable statute
of limitations, the time for commencement of the action shall be extended 90
days from the service of the notice.” What does this tolling provision mean? For
example, if the one-year statute of limitations of § 340.5 will end on September
3, 2004, and the plaintiff serves her § 364 notice on September 2, when is the
last day the complaint can be timely filed within the meaning of both § 340.5 and
§ 364(d)? On December 1 or December 2? Neither? Does § 364 effectively
shorten the statutory limitation period from one year to nine months?

[b] Judicial Interpretations

In Woods v. Young, 53 Cal. 3d 315, 279 Cal. Rptr. 613, 807 P.2d 455 (1991),
the Supreme Court resolved these questions concerning CCP § 364. The court
interpreted § 364 as tolling the statute of limitations when the notice of intent to
sue is served during, but not before, the last ninety days of the one-year
limitation period. Woods, 53 Cal. 3d at 325. Because the statute of limitations is
tolled for 90 days and not merely extended by 90 days from the date of service
of the notice, this construction results in a period of one year and 90 days within
which to file the lawsuit. Id. However, when the notice is served before the last
90 days of the one-year limitations period, the tolling provision of § 364(d)
does not apply and the plaintiff must commence a law suit within the one-year
limitations period. Id. at 326–27.

Why, under Woods, is the dilatory plaintiff who serves the § 364 notice
during the last 90 days of the limitation period rewarded, but not the diligent
plaintiff who serves the notice earlier? What is the purpose of the § 364 notice?
Does this more favorable treatment of those who serve the § 364 during the last
90 days violate the Equal Protection Clause? See Woods, supra, 53 Cal. 3d at
327 (“The distinction between a plaintiff who promptly gives notice and one
who gives notice in the last 90 days of the limitations period does serve the
legislative objective of allowing time for negotiations without the formal
initiation of legal proceedings.”). What about our hypothetical plaintiff who
serves the notice on the last day of the one-year limitations period, i.e.,
September 2? After Woods v. Young, supra , when is the last day that plaintiff
can commence a timely lawsuit? See 53 Cal. 3d at 326, fn. 3.

Does the 90-day tolling period of § 364(d) apply to the three-year outside
limitations period in § 340.5? See Russell v. Stanford Univ. Hosp. , 15 Cal. 4th
783, 64 Cal. Rptr. 2d 97, 937 P.2d 640 (1997) (the 90-day tolling period of §
364 applies to the three-year maximum statute of limitations in the same manner
that the tolling period applies to the one-year statute of limitation under CCP §
340.5).

[169/170]

[D] Actions Against Public Entities and Employees

[1] Claim-Filing Requirements of California Government Claims Act

Special prelitigation procedures and time limitations govern most civil

actions against public entities and employees in California. Government Code §
900 et seq.; CCP § 342. These procedures require as a condition precedent to
litigation that a plaintiff file a written claim in the proper form with the
appropriate state or local agency. Gov. Code §§ 905, 905.2.
 This claim-filing requirement applies to most claims for money or damages
against the state, including claims based on tort or express contract, Gov. Code
§ 905.2; to most claims for money or damages against local public entities, Gov.
Code § 905; and to claims against public employees for injury resulting from an
act or omission in the scope of employment, Gov. Code §§ 950-950.4. There are
some specific statutory exceptions to this claim presentation requirement, most
notably as to actions for inverse condemnation, § 905.1; and actions against the
Regents of the University of California, § 905.6. See also Gov. Code § 905 for a
list of exceptions applicable to actions against local public entities.

The Government Code sets forth a comprehensive process for the

presentation of these claims by individuals, and for the review of them by public
entities. Sections 910-910.4 delineate the content requirements for these claims.
But if a presented claim does not substantially comply with these content
requirements, the appropriate public entity must notify the claimant of the
insufficiency within 20 days to allow correction through amendment. Gov. Code
§§ 910.6, 910.8. Failure to provide this notice of insufficiency constitutes a
waiver of any defense based on a content defect in the claim. § 911.

A claim relating to a cause of action for death or for injury to person or to

personal property must be presented not later than “six months after the accrual
of the cause of action.” Gov. Code § 911.2 (This section was amended in 1987.
The pre-1987 time limit was only 100 days.) A claim relating to any other cause
of action must be presented not later than “one year after accrual of the cause of
action.” § 911.2. How is the date of accrual determined for such claims?
Section 901 provides that it is the date upon which the cause of action would be
deemed to have accrued within the meaning of the statute of limitations which
would be applicable thereto if there were no requirement that a claim be
presented to the public entity. Consequently, all the accrual principles otherwise
applicable to the underlying cause of action apply here, such as the “discovery
rule” and the “actual and appreciable injury rule.” See, e.g., Whitfield v. Roth,
10 Cal. 3d 874, 112 Cal. Rptr. 540, 519 P.2d 588 (1974) (date of accrual for
purposes of starting claim presentation in malpractice suit is when plaintiff
discovers the injury and its negligent cause); Brandon G. v. Gray, 111 Cal.
App. 4th 29, 34–36, 3 Cal. Rptr. 3d 330 (2003) (applying delayed discovery
rule to determine when cause of action accrued to purposes of claims
presentation process). Note, however, that pursuant to a 1981 amendment to §
901, the accrual date for a cause of action for equitable indemnity is the date
upon which a defendant is served with the complaint giving rise to the
defendant’s claim for equitable indemnity against the public entity.

[170/171]

What happens if an individual fails to present a claim within the required six-
month time period, but does present one later? Is the individual barred from
pursuing an action in court? Not always. For unlike statutes of limitations, the
claim-filing requirements are more forgiving. When a claim is presented after
the six-month period, the relevant public entity must notify the claimant that the
claim is being returned but that the claimant may apply for leave to present a
late claim. § 911.3(a). If no such notice is given to the claimant within 45 days
and the claim is proper as to content, any defense based on the untimeliness of
the claim is waived. § 911.3(b).

An application for leave to present a late claim must be filed “within a

reasonable time not to exceed one year after the accrual of the cause of action
and shall state the reason for the delay in presenting the claim.” § 911.4. This
one-year period is tolled only for mental incapacity, and specifically not for
minority. § 911.4. The public entity must grant this application if the failure to
present a timely claim was due to (1) mistake, inadvertence, surprise or
excusable neglect and the public entity was not prejudiced, § 911.6(b)(1); (2)
the claimant’s being a minor during all the time for the presentation of the claim,
§ 911.6(b)(2); (3) physical or mental incapacity caused the failure to present a
timely claim, § 911.6(b)(3); or (4) death of claimant, § 911.6(b)(4).

The public entity must grant or deny the application within 45 days, although
this time may be extended by agreement. § 911.6(a). Failure to act within this
time period constitutes a denial of the application. § 911.6(c). This denial may
be independently reviewed in court through a petition for an order relieving the
claimant from presenting a § 945.4 claim. Gov. Code § 946.6. See, e.g., Draper
v. City of Los Angeles, 52 Cal. 3d 502, 276 Cal. Rptr. 864, 802 P.2d 367
(1990) (trial court improperly denied relief from claim-filing requirements
where plaintiff was incapacitated and unconscious during claim-filing period,
even though attorney purportedly acting on her behalf filed a claim against
wrong public entity); Munoz v. State of California, 33 Cal. App. 4th 1767, 39
Cal. Rptr. 2d 860 (1995) (trial court properly denied plaintiff’s petition for
permission to file a late claim where plaintiff’s application for leave to present
a late claim had been misaddressed and therefore not actually received by the
correct public entity within the one-year late application limitations period);
Department of Water & Power v. Superior Court , 82 Cal. App. 4th 1288, 99
Cal. Rptr. 2d 173 (2000) (the party seeking late claim relief based on mistake
must establish he was diligent in investigating and pursuing the claim).

Government Code § 946.6, which authorizes judicial review of a public

entity’s denial of an application for leave to file a late claim, is a remedial
statute that courts often construe in favor of relief whenever possible. See, e.g.,
Bettencourt v. Los Rios Comm. College Dist., 42 Cal. 3d 270, 275-76, 228
Cal. Rptr. 190, 721 P.2d 71 (1986) (a trial court decision denying relief will be
scrutinized more carefully than an order granting relief); Reneria v. Juvenile
Justice, Dept. of Corrections & Rehabilitation, 135 Cal. App. 4th 903, 910–
11, 37 Cal. Rptr. 3d 777 (2006) (discussing cases where relief deemed proper
when an attorney relies on a member of her staff to perform certain tasks,
including calendaring deadlines, and the staff member errs); Barragan v.
County of Los Angeles, 184 Cal. App. 4th 1373, 109 Cal. Rptr. 3d 501 (2010)
(claimant’s physical disability, while not sufficient to establish incapacity, may
be sufficient to render neglect in obtaining counsel during the six-month period
[171/172]excusable). If the court grants this order, the claimant must commence a
lawsuit on the underlying cause of action within 30 days. Gov. Code § 946.6(f).

The manner of presenting a claim, or an application to present a late claim, is

governed by §§ 915-915.4. Generally, a claim may be delivered or mailed to the
appropriate public entity, § 915; and a mailed claim is deemed presented and
received at the time of mailing, § 915.2. Beginning in 2003, each public entity
subject to the Government Claims Act must provide forms specifying the
information to be contained in claims against that public entity, and a person
presenting a claim must use that form. Gov. Code § 910.4 (effective March 30,
2003). A claim may be returned to the person if not presented using the form.
Gov. Code § 910.4.

The relevant public entity must act on a claim within 45 days after the claim
has been presented, unless extended by agreement or, when the claim was
presented by mail, by § 915.2. Gov. Code § 912.4. If the entity fails or refuses to
act on the claim within this period, the claim shall be deemed to have been
rejected on the last day of the period. § 912.4(c). Where the entity does act on a
claim within this time period, the entity must notify the claimant of a total or
partial rejection, with a warning that the claimant has six months to file a court
action on the claim. § 913.

The claim-presenting procedure outlined above is a prerequisite to suit for

money or damages against a public entity or employee. Gov. Code §§ 945.4,
950.6. The lawsuit must be commenced within six months after service of the
notice of rejection; or if no such notice of rejection is given, within two years
from the accrual of the cause of action. § 945.6(a)(1) & (2). These time periods
may be extended due to imprisonment, § 945.6(b) & (c); but the other general
statutory tolling provisions for “disability” under CCP § 352 do not apply. CCP
§ 352(b). Failure to allege facts demonstrating compliance or excusing
compliance with the claim presentation requirement subjects a complaint against
a public entity to a general demurrer for failure to state a cause of action. State
v. Superior Court, 32 Cal. 4th 1234, 13 Cal. Rptr. 3d 534, 90 P.3d 116 (2004).

The Government Code sets forth a rather complex process for presenting
claims against public entities and employees, and for commencing actions in
court based on these claims. For more thorough practical analysis of this claims
process, see CEB, California Government Tort Liability Practice , §§ 5.1-7.88
(4th ed. 2011). The legislative and judicial attitude toward this process appears
to be a bit more lenient than that of other statutes of limitations, as our principal
case illustrates.

PHILLIPS v. DESERT HOSPITAL DISTRICT

SUPREME COURT OF CALIFORNIA
49 Cal. 3d 699, 263 Cal. Rptr. 119, 780 P.2d 349 (1989)

Kaufman, Justice.

We granted review in this case to determine whether a notice of intention to

commence an action based upon a health care provider’s alleged professional
negligence (Code Civ. Proc., § 364, subd. (a)) may activate the notice and
defense-waiver provisions (Gov. Code, §§ 910.8, 911, 911.3) of the Tort
Claims Act (Gov. Code, [172/173]§ 900 et seq.) (act).1 As explained below, we
conclude that a public entity must treat a notice, such as the notice at issue here,
that alerts it to the existence of a claim for monetary damages and an impending
lawsuit but fails to comply substantially with the claim presentation
requirements of the act, as a defective “claim” that triggers the operation of
sections 910.8, 911 and 911.3. These sections (1) require a public entity to
notify a claimant of any insufficiencies of content or timeliness that prevent a
claim as presented from satisfying the requirements of the act and (2) provide
that failure to give such notice waives any defenses based on those
insufficiencies.2 * * *
 On September 11, 1983, plaintiff Paula E. Phillips was admitted to Desert
Hospital (hospital), a public hospital district, the defendant herein. On the
advice of her doctors, she underwent a bilateral mastectomy and reconstructive
surgery. Mrs. Phillips and her husband, also a plaintiff, allege that the surgery
was both medically unnecessary and negligently performed and that as a result
she developed complications, including gangrene. Plaintiffs further allege that,
notwithstanding the unsuccessful surgery, Mrs. Phillips was released from the
hospital on October 2, 1983, without being informed of the nature or extent of
her condition. As a result, plaintiffs allege that Mrs. Phillips has been
compelled to seek extensive additional medical treatment, including surgical
intervention.

On April 6, 1984 (205 days after the surgery and 185 days after Mrs.
Phillips’s release from the hospital), plaintiffs’ counsel mailed to the hospital a
notice (hereafter 364 notice) pursuant to Code of Civil Procedure section 364,
subdivision (a), which requires potential medical malpractice plaintiffs to notify
health care providers of their intent to sue 90 days prior to filing a complaint.

Plaintiffs’ 364 notice was typed on their law firm’s stationery which bore the
firm’s name, address and telephone number, was signed by their attorney and
stated as follows:

[173/174]

“Desert Hospital
1150 North Indian Avenue
Palm Springs, California 92262

“Re: Intention to Commence Action

Paula E. Phillips and Richard A. Phillips
Date of Incident: September 12, 1983

“To Whom It May Concern:

“This letter will serve to advise you that this office intends to
commence an action against Desert Hospital on behalf of Paula E. Phillips
 and her husband Richard A. Phillips. This action arises out of apparent
Health Care Provider Negligence (Medical Malpractice) resulting from the
diagnosis, care, treatment, operation and related services rendered to Paula
E. Phillips on or about September 12, 1983 at Desert Hospital, Palm
Springs, California, and the subsequent complications, treatment, damages
and emotional distress resulting therefrom. Mr. Phillips will claim
damages for loss of consortium and for his mental and emotional suffering
resulting from the damages and disfigurement to his wife.” (Original
italics.)

Having received no response from the hospital, plaintiffs filed a complaint on

July 27, 1984, in which they alleged causes of action for negligence, willful
misconduct, fraud, conspiracy to defraud, concealment, intentional and negligent
infliction of emotional distress and loss of consortium. The complaint named as
defendants Mrs. Phillips’s treating physicians and the hospital.

The hospital demurred to the complaint on the ground that plaintiffs had failed
to state a cause of action because they did not allege compliance with the claim
presentation requirements of the act. * * *

The trial court sustained the demurrer without leave to amend and
subsequently dismissed the amended … complaint. Plaintiffs appealed from the
order of dismissal and the Court of Appeal affirmed the judgment. Plaintiffs then
petitioned for review. * * * We … granted review and now reverse.

II

On appeal below, the court addressed the question whether plaintiffs’ 364
notice complied substantially with the claim presentation requirements of the
act. Finding the answer in the negative, the Court of Appeal upheld the dismissal
of the plaintiffs’ action. While we agree that the 364 notice does not comply
substantially with the claim presentation requirements of the act (see fn. 7,
post), that conclusion is not dispositive of the case. The dispositive issue is
whether plaintiffs’ 364 notice triggered the notice and defense-waiver
provisions of the act (§§ 910.8, 911, 911.3). * * *

A. Notice and Defense-Waiver Provisions of the Tort Claims Act

 It is well settled that the purpose of the claims statutes “is to provide the
public entity sufficient information to enable it to adequately investigate claims
and to settle them, if appropriate, without the expense of litigation. [Citations.]”
(City of [174/175]San Jose v. Superior Court (1974) 12 Cal. 3d 447, 455 [115
Cal. Rptr. 797, 525 P.2d 701, 76 A.L.R. 3d 1223].) To achieve this purpose,
section 911.2 requires a claimant to present a claim to the public entity within a
specified time after accrual of the cause of action.3 In medical malpractice
cases, the action accrues on claimants’ actual or constructive discovery of the
malpractice. (Martinez v. County of Los Angeles (1978) 78 Cal. App. 3d 242,
245 [144 Cal. Rptr. 123].)

If the public entity determines a “claim as presented” fails to comply

substantially with sections 910 and 910.2, and is therefore defective, the public
entity may either “give written notice of [the claim’s] insufficiency, stating with
particularity the defects or omissions therein” within 20 days (§ 910.8; see fn. 2,
ante), or waive any defense “as to the sufficiency of the claim based upon a
defect or omission in the claim as presented ….” (§ 911). If the public entity
does send a notice of insufficiency, it may not take further action on the
defective claim for a period of 15 days after such notice is given. (§ 910.8; see
fn. 2, ante.) Whether or not it decides to provide a notice of insufficiency, the
public entity must notify the claimant within 45 days after the claim is presented
whether the claim, defective or otherwise, was timely filed. (§ 911.3, subd. (a);
see fn. 2, ante.) Thus, if a section 910.8 notice of insufficiency is sent, the board
must make a timeliness determination within 10 days after the last date the
claimant could amend the claim to cure the insufficiency identified. Failure to
provide such notice of timeliness waives a public entity’s defense based on
untimeliness even if the claim is otherwise insufficient, unless the claimant has
failed to state in the claim an address where such notices should be sent. (§
911.3, subd. (b); see fn. 2, ante.)

The Legislature has thus provided a comprehensive scheme which requires a

claimant to notify the appropriate public entity of a claim. This notification in
turn allows the public entity an opportunity to determine expeditiously the
claim’s timeliness and sufficiency. If the notice is untimely or lacks any of the
information required by sections 910 and 910.2, the public entity may require
the claimant to justify the delay or supply the missing data. If the public entity
fails to require the claimant to cure such defects, then it waives certain defenses
which are otherwise available to challenge a lawsuit based upon the claim. This
possibility of waiver encourages public entities to investigate claims promptly,
and to make and notify claimants of their determinations, thus enabling the
claimants to perfect their claims. The overall result is an incentive to public
entities to manage and control the claims made against them.

B. Section 910 Requirements and Defective Claims

Section 910 identifies the information a proper notice of claim should include
to enable a public entity to investigate and evaluate the claim to determine
whether settlement is appropriate. Prior to a 1987 amendment, section 910
provided that when a claim is presented, it “shall show:4 [¶] (a) The name and
post office address [175/176]of the claimant; [¶] (b) The post office address to
which the person presenting the claim desires notices to be sent; [¶] (c) The
date, place and other circumstances of the occurrence or transaction which gave
rise to the claim asserted; [¶] (d) A general description of the … injury, damage
or loss incurred so far as it may be known at the time of presentation of the
claim; [¶] (e) The name or names of the public employee or employees causing
the injury, damage, or loss, if known; and [¶] (f) The amount claimed as of the
date of presentation of the claim, including the estimated amount of any
prospective injury, damage, or loss, insofar as it may be known at the time of the
presentation of the claim, together with the basis of computation of the amount
claimed.”5

When a public entity receives a document which contains the information

required by section 910 and is signed by the claimant or her agent as required
by section 910.2, the public entity has been presented with a “claim” under the
act, and must act within 45 days or the claim is deemed to have been denied. (§
912.4.) Once a claim is denied or deemed to have been denied, the claimant
may then proceed to file a lawsuit. (§ 945.4.)

But it is not, as the hospital suggests, the filing of a complete and valid
“claim” that triggers the notice and defense-waiver provisions of the act. Such
confusion may stem from the Legislature’s use of the term “claim” to describe
two distinct situations. On the one hand, as previously noted, a “claim” is a
notice which complies with sections 910 and 910.2. On the other hand, the
notice and defense-waiver provisions, sections 910.8 and 911, use the phrase
“claim as presented” to identify a “claim” which is defective due to its failure
to comply substantially with sections 910 and 910.26 and, contrary to the
hospital’s position, it is only a “claim as presented [that] fails to comply
substantially” that triggers sections 910.8, 911 and 911.3. (§ 910.8; Foster v.
McFadden [(1973)], 30 Cal. App. 3d [943] at p. 947 [106 Cal. [176/177]Rptr.
685]). Accordingly, it only remains to be determined whether the hospital was
required to treat plaintiffs’ 364 notice as a defective claim triggering the notice
and defense-waiver provisions of sections 910.8, 911 and 911.3.

In this regard, the hospital attempts to distinguish between defective “claims”

which properly trigger the act’s notice and defense-waiver provisions and other
notices of possible claims, such as plaintiffs’ 364 notice, which, according to
the hospital, it was at liberty simply to ignore without consequence. However,
we perceive no principled basis for such a distinction and therefore conclude
that a notice, such as plaintiffs’ 364 notice, which discloses the existence of a
claim that if not paid or otherwise resolved will result in litigation, must be
treated as a defective “claim” activating the notice and defense-waiver
provisions of the act, sections 910.8, 911 and 911.3.

C. Plaintiffs’ Notice to the Hospital

Plaintiffs contend that, whether or not their 364 notice was insufficient under
section 910,7 the hospital’s receipt of the 364 notice activated sections 910.8,
911 and 911.3 and thus required the hospital to notify plaintiffs in writing as to
(a) what additional section 910 information was necessary to allow it to initiate
an investigation into the incident (§ 910.8) and (b) whether the notice of claim
was timely (§ 911.3, subd. (a)). Plaintiffs further contend that the hospital,
having failed to provide such notices, waived any defenses as to the sufficiency
of the claim based upon omitted section 910 requirements (§ 911) or
untimeliness (§ 911.3, subd. (b)).

In response, the hospital, citing Lutz v. Tri-City Hospital (1986) 179 Cal.
App. 3d 807 [224 Cal. Rptr. 787], argues that plaintiffs’ 364 notice cannot, as a
matter of law, be considered a “claim” under the act. * * *

The Lutz court … distinguished a 364 notice from a section 910 claim on the
ground that such a claim must be more detailed and specific than a 364 notice,
which need only “set out the legal basis for the claim and the type of loss
sustained, ‘including with specificity the nature of the injuries suffered.’” If a
claim complies substantially with sections 910 and 910.2, however, sections
910.8, 911 and 911.3 do not come into play. The latter sections become
significant only when the “claim as presented” does not substantially comply
with sections 910 and 910.2.
 We conclude, therefore, that a document constitutes a “claim as presented”
triggering sections 910.8, 911 and 911.3, if it discloses the existence of a
“claim” which, if not satisfactorily resolved, will result in a lawsuit against the
entity. A public entity’s receipt of written notice that a claim for monetary
damages exists and that litigation may ensue places upon the public entity the
responsibility, and gives it the opportunity, to notify the potential plaintiff
pursuant to sections 910.8 and 911 of the defects that render the document
insufficient under sections 910 and 910.2 and thus might hamper investigation
and possible settlement of the claim. Such a written notice claiming monetary
damages thereby satisfies the purposes of [177/178]the claims act — to facilitate
investigation of disputes and their settlement without trial if appropriate.

The hospital contends that plaintiffs could never have intended their 364
notice to function as a claim for purposes of the act because, by plaintiffs’ own
admission, they were not aware of the hospital’s status as a public entity. The
hospital fails to explain, however, why or how a claimant’s intent, even if
ascertainable, is relevant to the notice and defense-waiver provisions of the act.
Implementation of the purposes of the claim presentation requirements — to
require public entities to manage and control claims and to encourage timely
investigation and settlement to avoid needless litigation — depends not on a
claimant’s state of mind but rather on the information imparted to the public
entity. Thus, the relevant inquiry is not into plaintiffs’ subjective intent but
whether their 364 notice disclosed to the hospital that they had a claim against it
which, if not satisfactorily resolved, would result in their filing a lawsuit.

The Court of Appeal was concerned that if a letter captioned “Intention to

Commence Action” could activate the notice and defense-waiver provisions of
the act, then the hospital and other public health providers would be required to
treat all such letters written by dissatisfied patients or their attorneys which
threaten legal action as “claims,” or else risk the loss of defenses from failing to
notify the potential claimant of insufficiency or untimeliness pursuant to sections
910.8, 911 and 911.3, subdivision (b). But, provided the existence of a claim
for monetary damages is definitely disclosed by the document, that burden upon
the public entity is precisely the intended effect of the statutory notice and
defense-waiver provisions.

Foster v. McFadden, supra, 30 Cal. App. 3d 943, is directly in point. There,

the plaintiff was injured when he was struck by a bulldozer operated by a
sanitation district (district) employee. The plaintiff’s attorney wrote the
employee a letter, and sent a copy to the district, advising the employee of the
plaintiff’s name, and the date and place of the accident, and asking him to
forward the letter to his insurer or, if not insured, to contact the plaintiff’s
attorney. The district acknowledged being advised of the incident by notifying
the plaintiff’s attorney of the district’s insurance coverage and requesting the
attorney to direct further inquiries to its insurer. The plaintiff subsequently
brought an action against the district. The trial court entered judgment in the
district’s favor based solely on its conclusion that the plaintiff had failed to
comply with the claim presentation requirements of the act.

T h e McFadden court reversed, reasoning that the plaintiff’s letter

“accomplished the two principal purposes of a sufficient claim. It afforded the
district the opportunity to make a prompt investigation of the accident
occasioning the letter and it gave to the district the opportunity to settle without
suit, if it so desired.” Thus, the McFadden court concluded that the letter was
sufficient to activate the notice and defense-waiver provisions of sections 910.8
and 911.8

[178/179]

The concern of the Court of Appeal below that an improperly captioned

document could have an unintended legal effect is likewise misplaced. First, it
is settled that the caption or title of a notice does not diminish its legal effect as
a claim. More importantly, the notice and defense-waiver provisions (§§ 910.8,
911, 911.3), while falling short of placing an affirmative duty on public entities
to obtain the information deemed necessary to investigate incidents and to
determine whether settlement is appropriate, nevertheless furnish a strong
incentive to do so by sanctioning a public entity that fails to ask the claimant for
such information. Thus, if a public entity receives a document that alerts it to the
existence of a claim and the possibility of a lawsuit but fails to comply
substantially with sections 910 and 910.2, the purposes of the act are best
served by requiring the public entity to notify the claimant of the nature of the
claim’s insufficiencies or lack of timeliness or else waive, by operation of
sections 911 and 911.3, its defenses based on those deficiencies.

Inasmuch as the hospital failed to notify plaintiffs of the insufficiencies in

their 364 notice that rendered it defective to comply substantially with sections
910 and 910.2, the hospital has waived any defenses it may have otherwise
asserted based on such insufficiencies. (§ 911.) Further, as it failed to notify
plaintiffs of any timeliness defects (§ 911.3, subd. (a)), the hospital has
similarly waived any defenses it might have raised on the ground of plaintiffs’
asserted failure to present a timely claim (§ 911.3, subd. (b)). Accordingly,
there is no reason to allow plaintiffs to amend their complaint. * * *

For the foregoing reasons, we reverse the judgment of the Court of Appeal
with directions to remand to the trial court with directions to vacate its order
dismissing the action and to issue an order overruling the demurrer.

Footnotes:

1 All further statutory references are to the Government Code unless otherwise indicated.

2 Section 910.8 provides in relevant part: “If in the opinion of the board or the person designated by it a
claim as presented fails to comply substantially with the requirements of Sections 910 and 910.2, … the
board or such person may, at any time within 20 days after the claim is presented, give written notice of its
insufficiency, stating with particularity the defects or omissions therein …. The board may not take action on
the claim for a period of 15 days after such notice is given.”

Section 911 provides: “Any defense as to the sufficiency of the claim based upon a defect or omission in
the claim as presented is waived by failure to give notice of insufficiency with respect to such defect or
omission as provided in Section 910.8, except that no notice need be given and no waiver shall result when
the claim as presented fails to state either an address to which the person presenting the claim desires
notices to be sent or an address of the claimant.”

At the time this dispute arose, section 911.3 provided in relevant part: “(a) When a claim that is required
by Section 911.2 to be presented not later than the 100th day after accrual of the cause of action is
presented after such time without the application provided in Section 911.4, the board or other person
designated by it may, at any time within 45 days after the claim is presented, give written notice to the
person presenting the claim that the claim was not filed timely and that it is being returned without further
action …. [¶] (b) Any defense as to the time limit for presenting a claim described in subdivision (a) is
waived by failure to give the notice set forth in subdivision (a) within 45 days after the claim is presented,
except that no notice need be given and no waiver shall result when the claim as presented fails to state
either an address to which the person presenting the claim desires notices to be sent or an address of the
claimant.” The italicized words were amended in 1987 to reflect extension of the claims presentation period
to six months.

3 Before 1987, the time specified was 100 days. In 1987, the Legislature amended sections 911.2 and
911.3, extending the period within which claims must be presented from 100 days to 6 months. The
amendments do not apply to this appeal, however, nor do they affect our determination of the principal issue
on appeal.

4 In 1987, section 910 was amended to read in relevant part: “A claim shall be presented by the claimant
… and shall show all of the following ….” (Amended portion italicized.) Whatever intent the Legislature
may have had in adding this language is of no consequence here. The 1987 amendments apply only to
actions based on acts or omissions occurring on or after January 1, 1988. Moreover, since the Legislature
did not amend the notice-of-insufficiency provisions to eliminate the reference to insufficiencies due to
“defects or omissions” (§§ 910.8, 911, italics added), our determination of what type of document triggers
those provisions would not be affected even if the amendment to section 910 were applied to the instant
case.

5 The 1987 amendments changed section 910, subdivision (f), to read in pertinent part: “The amount
claimed if it totals less than ten thousand dollars ($10,000) …. If the amount claimed exceeds ten
thousand dollars ($10,000), no dollar amount shall be included in the claim. However, it shall
indicate whether jurisdiction over the claim would rest in municipal or superior court.” ([I]talics
added to reflect amendments.)

6 Although the notice of timeliness provision, section 911.3, subdivision (a), does not use the phrase
“claim as presented,” there are two reasons for concluding that section 911.3 applies both to defective
claims and to claims complying substantially with sections 910 and 910.2. First, as previously noted, by
providing 45 days within which a notice of timeliness must be sent to avoid waiving timeliness defenses,
section 910.8 allows a public entity 10 days after expiration of the time for (1) sending a notice of
insufficiency of a defective claim (20 days after the claim is presented) and (2) receiving any curing
amendments (15 days thereafter) to determine whether a claim is timely. Second, the only exception to
application of the timeliness-defense waiver occurs “when the claim as presented fails to state either an
address to which the person presenting the claim desires notices to be sent or an address of the claimant.”
(§ 911.3, subd. (b).) The insufficiency-defense waiver provision, section 911, contains the identical exclusive
exception to application of the insufficiency-defense waiver.

7 Plaintiffs argue that their 364 notice complied sufficiently with the section 910 requirements to enable
the hospital to investigate the incident adequately to determine if settlement negotiations were appropriate. It
is indisputable, however, that the 364 notice does not state the amount plaintiffs sought in damages as
required by section 910, subdivision (f), and therefore fails to comply substantially with section 910. Under
the analysis adopted herein we need not address that issue further.

8 McFadden predates the enactment of section 911.3, which was added to the act in 1983 and which
requires a governmental entity to respond to a claim within 45 days of receipt or waive its timeliness
defense. The McFadden holding would have applied equally to that provision, had it by then been enacted.

[2] Purposes of Government Claims Act

What is the purpose of the claims statutes, Government Code § 905 et seq.?
Of the notice required by CCP § 364? How do these purposes differ from those
purposes ascribed to statutes of limitations generally? Does this explain why
court decisions dealing with claim-presentation requirements have been more
liberal than statute of limitations cases in permitting exceptions to the rules of
timeliness? Compare Ebersol v. Cowan, 35 Cal. 3d 427, 197 Cal. Rptr. 601,
673 P.2d 271 (1983) (failure to present timely claim because plaintiffs’ prior
attorneys advised her she had no legal claim constitutes “excusable neglect”
within meaning of Gov. Code § 946.6, justifying relief from the claim statute),
with Gutierrez v. Mofid, 39 Cal. 3d 892, 900–903, 218 Cal. Rptr. 313, 705
P.2d 886 (1985) (failure to commence lawsuit within medical malpractice
statute of limitations not excused due to plaintiff’s reliance on legal advice that
she had no legal claim).

[179/180]

[3] Government Claims Act Doctrine of Substantial Compliance

[a] Substantial Compliance, Generally

Several cases following Phillips have found a defective claim which

satisfies the purposes of the claims statute to constitute substantial compliance
with Government Code §§ 910 and 910.2. E.g., Ocean Services Corp. v.
Ventura Port Dist., 15 Cal. App. 4th 1762, 19 Cal. Rptr. 2d 750 (1993)
(plaintiff’s letter and amended claim substantially complied with claims statute
because they enabled defendant to make early investigation of facts and assess
whether to litigate or settle); Watts v. Valley Med. Center , 8 Cal. App. 4th
1050, 10 Cal. Rptr. 2d 794 (1992) (CCP § 364 notice of intention to commence
medical malpractice action triggered claim presentation requirements); Wilson
v. Tri-City Hosp. Dist., 221 Cal. App. 3d 441, 270 Cal. Rptr. 436 (1990)
(letters by plaintiff’s attorney to defendant hospital district demanding damages,
and threatening suit, for wrongful termination constituted substantial compliance
with claims statute).

Is there substantial compliance with the claim presentation requirements

where the plaintiff driver seeks personal injury damages as the result of a
collision with a vehicle driven by a county employee, but the plaintiff’s timely
claim filed with the county asserted property damages and “unspecified
medical, lost income, and future medical” and did not specifically state the
plaintiff was seeking personal injury damages? The court in Connelly v. County
of Fresno, 146 Cal. App. 4th 29, 52 Cal. Rptr. 3d 720 (2006) , held that the
plaintiff did submit a claim that substantially complied with the Tort Claims Act
because it indicated that plaintiff sought to recover damages for personal
injuries suffered in the accident but that she did not yet know the extent of her
injuries, and therefore enabled the defendant county to make an adequate
investigation and settle the claim. Do you agree?
 [b] Limits to Substantial Compliance

What are the limits of this substantial compliance doctrine? Is there

substantial compliance with the claims presentation requirements when parents
failed to present a claim for emotional distress for themselves, but did for their
minor child’s injuries? See Nguyen v. Los Angeles County Harbor/UCLA Med.
Center, 8 Cal. App. 4th 729, 10 Cal. Rptr. 2d 709 (1992) (substantial
compliance doctrine has application only when there is a defect in claim form
but the statutory requirements have all been otherwise met). When the claim is
presented to the wrong, albeit a related, public entity? Compare Life v. County
of Los Angeles, 227 Cal. App. 3d 894, 278 Cal. Rptr. 196 (1991) (no
substantial compliance where claim sent to wrong entity and did not actually
reach correct entity) and Santee v. Santa Clara County Office of Ed., 220 Cal.
App. 3d 702, 269 Cal. Rptr. 605 (1990) (substantial compliance normally
raised where a timely but deficient claim has been presented to the correct
public entity), with Carlino v. Los Angeles County Flood Control Dist., 10
Cal. App. 4th 1526, 1532–35, 13 Cal. Rptr. 2d 437 (1992) (plaintiff
substantially complied with claim requirement although claim erroneously filed
with Board of Supervisors instead of directly with Flood Control
[180/181]District because District ultimately controlled by Board). When the
claimant presents a claim which is both untimely and defective in form? See
Fisher v. Pickens, 225 Cal. App. 3d 708, 275 Cal. Rptr. 487 (1990) (untimely
letter not viewed as claim because not accompanied by application for leave to
file late claim).

[c] Minimum Requirements of a Claim

Phillips was not a “substantial compliance” case, was it? What must a
plaintiff present in order to comply with the Phillips court’s requirement that a
claim, albeit a defective one, must be filed to trigger the notice and defense-
waiver provisions of Government Code §§ 910.8, 911, and 911.3? In City of
Stockton v. Superior Court, 42 Cal. 4th 730, 68 Cal. Rptr. 3d 295, 171 P.3d 20
(2007), the plaintiff developer filed an action against the defendant city and its
redevelopment agency, alleging breach of contracts that involved the
rehabilitation and leasing of a hotel and the construction of a cinema. The
defendants contended that the plaintiff’s complaint was barred for failure to
comply with the claim-filing requirements of Government Code § 905, and also
cross-claimed against the plaintiff seeking damages for misrepresentation and
breach of contract. In response, the plaintiff argued the defense-waiver
provisions of § 910.8 and § 911 applied because the defendants did not advise
plaintiff that correspondence between the parties prior to suit was insufficient to
constitute a claim. In other words, the plaintiff argued that correspondence
between the parties through which they attempted to restructure their plans in a
mutually agreeable manner constituted a “claim as presented.”

The Supreme Court rejected the plaintiff’s argument because nothing in the
correspondence relied on by plaintiff indicated that litigation might ensue if
defendants did not comply with the terms under discussion. “This is the most
essential element of a ‘claim as presented,’” the court noted, “because it
satisfies the primary purposes of the Government Claims Act: facilitating the
investigation of disputes and their settlement without trial if appropriate.” City
of Stockton, supra, 42 Cal. 4th at 744. The court also concluded that the
defendants did not waive their right to rely on the claim-filing requirements by
filing a cross-complaint, but that the plaintiff may raise affirmative defenses in
its answer to the cross-complaint. Id. at 745.

In Green v. State Center Community College Dist., 34 Cal. App. 4th 1348,
41 Cal. Rptr. 2d 140 (1995), plaintiff Green seriously injured her ankle when
she fell into a hole while walking across the grass-covered lawn of the Fresno
City College. At issue was whether the following letter, mailed to the College
by Green’s attorney, constituted a claim sufficient to trigger the notice-waiver
provisions of §§ 910.8, 911, and 911.3:

Fresno City College

1101 E. University Avenue
Fresno, CA 93741

RE Our Client: Marilyn Green

Date of Accident: October 7, 1991

Gentlemen:

[181/182]

Please be advised that the MAGILL LAW OFFICES has been

retained as attorney for Marilyn Green relative to the personal injuries
sustained from that certain accident which occurred on October 7, 1991.

Accordingly, please direct all further communications and

 correspondence regarding this accident to this office.

This is also to advise you that you do not have our authority to discuss
this incident with our client without our express written approval.

Thank you for your continued courtesy and cooperation in this matter.

Very truly yours,

MAGILL LAW OFFICES
/s/T.V. Magill
Timothy V. Magill

After a lengthy discussion of Phillips, the Green court concluded that the
above letter was not sufficient to trigger the statutory notice-waiver provisions.
Do you agree with this conclusion? Why? Based on Phillips, what legal
standard applies in determining whether correspondence constitutes a claim that
triggers the statutory notice-waiver provisions? See Green, supra, 34 Cal. App.
4th at 1358.

Schaefer Dixon Assoc. v. Santa Ana Watershed Project Auth. , 48 Cal. App.
4th 524, 55 Cal. Rptr. 2d 698 (1996), involved a contract dispute and money the
plaintiff, a contractor, claimed was owed to it by the Santa Ana Water Project
Authority (the agency). The contractor sent a series of letters to the agency
attempting to establish its right to payment. When the agency approved payment
for less than the amount claimed, the contractor’s attorneys sent several letters
to the agency, referring to the dispute, noting that an amount was still
outstanding, and informing the agency that the contractor would file suit if the
matter was not settled. The Schaefer court found that none of the attorneys’
letters might be deemed a “claim as presented” under the Government Claims
Act. The court found it significant that no letter advised the agency that litigation
was imminent, and that neither the contractor nor his attorneys viewed any letter
as the equivalent of a claim.

The Schaefer court expressed the practical concern that it may be unworkable
for a public entity to determine the point at which correspondence ceases being
an expression of unhappiness or the mere conveyance of information, and
becomes the assertion of a compensable “claim.” Id., at 536. Do you agree with
the conclusion reached by the Schaefer court?
 What about the reverse of the issue decided in Phillips: Must a tort claim
under Gov. Code § 910 also be deemed to be a notice of intent to sue for
purposes of CCP § 364 if the claim contains the information required by the
latter statute? The answer appears to be “no,” at least where the circumstances
did not establish that the claimant intended the tort claim to also function as a §
364 notice. See Wurts v. County of Fresno , 44 Cal. App. 4th 380, 51 Cal. Rptr.
2d 689 (1996) (a claimant who has complied with the letter and spirit of both §
364 and Gov. Code § 910 is entitled to the full benefit of both statutes, including
tolling for 90 days of the 6-month limitations period of Gov. Code § 945.6). Is
this reasoning consistent with Phillips? [182/183]See Wurts, supra, 44 Cal. App.
4th at 437–38. How would a court ascertain whether a plaintiff intended that a
filed tort claim also constituted a § 364 notice of intent to sue?

[d] New Allegations in Complaint

Is there substantial compliance where a plaintiff’s complaint in court contains

new allegations as to the cause of plaintiff’s injuries, different from those stated
in the claim? In Stockett v. Association of Cal. Water Agencies Joint Powers
Ins. Auth., 34 Cal. 4th 441, 20 Cal. Rptr. 3d 176, 99 P.3d 500 (2004) , the
Supreme Court considered the question of whether a dismissed government
employee is precluded under the Government Claims Act from asserting in a
complaint for wrongful termination theories of illegal motivation that were not
specified in the required notice of claim. Plaintiff Stockett was the general
manager of the defendant Association of California Water Agencies Joint
Powers Insurance Authority (JPIA), a public agency that provides insurance and
risk management services to public water agencies, until his termination in
1995. Stockett presented a notice of government tort claim to JPIA, alleging he
had been wrongfully terminated for supporting a female employee’s sexual
harassment complaints against JPIA’s insurance broker, which harassment was
in violation of the Fair Employment and Housing Act and the public policy of
the State of California.

After JPIA denied Stockett’s claim, Stockett filed a wrongful termination

lawsuit against JPIA. He later moved to amend his complaint to allege he had
been terminated in violation of public policy on three grounds: (1) opposing
sexual harassment; (2) objecting to a conflict of interest involving a JPIA
employee; and (3) exercising his First Amendment right of free speech by
objecting to certain JPIA practices. Defendant JPIA unsuccessfully opposed this
motion, arguing the facts in the amended complaint had not been set forth in the
government tort claim. Subsequently, a jury returned a verdict for the plaintiff,
awarding him $4.5 million in damages.
 Defendant JPIA sought appellate review, arguing Stockett’s tort claim had not
provided JPIA with sufficient notice of two wrongful termination theories
Stockett asserted at trial: that he was fired for opposing a conflict of interest,
and that he was fired for exercising the right to free speech. The Supreme court
rejected the defendant JPIA’s arguments, and held that plaintiff Stockett’s claim
was sufficient under the Government Claims Act to give JPIA notice of all
theories of wrongful termination. The court explained its holding as follows (34
Cal. 4th at 447-50):

[Government Code] section 945.4 requires each cause of action to be

presented by a claim complying with section 910, while section 910,
subdivision (c) requires the claimant to state the “date, place and other
circumstances of the occurrence or transaction which gave rise to the claim
asserted.” If the claim is rejected and the plaintiff ultimately files a
complaint against the public entity, the facts underlying each cause of
action in the complaint must have been fairly reflected in a timely claim.
(Nelson v. State of California (1982) 139 Cal. App. 3d 72, 79 [188 Cal.
Rptr. 479].) “[E]ven if the claim were timely, the complaint is vulnerable
to a [183/184]demurrer if it alleges a factual basis for recovery which is not
fairly reflected in the written claim.” (Ibid.)

The claim, however, need not specify each particular act or omission
later proven to have caused the injury. A complaint’s fuller exposition of
the factual basis beyond that given in the claim is not fatal, so long as the
complaint is not based on an “entirely different set of facts.” (Stevenson v.
San Francisco Housing Authority (1994) 24 Cal. App. 4th 269, 278 [29
Cal. Rptr. 2d 398].) Only where there has been a “complete shift in
allegations, usually involving an effort to premise civil liability on acts or
omissions committed at different times or by different persons than those
described in the claim” have courts generally found the complaint barred.
(Blair v. Superior Court [(1990) 218 Cal. App. 3d 221], at p. 226 [267
Cal. Rptr. 13].) Where the complaint merely elaborates or adds further
detail to a claim, but is predicated on the same fundamental actions or
failures to act by the defendants, courts have generally found the claim
fairly reflects the facts pled in the complaint.

Stockett’s claim complied with sections 910 and 945.4. He stated the
date and place of his termination, named those JPIA officers and agents he
believed responsible, and generally stated the “circumstances” (§ 910,
subd. (c)) of his termination. In addition, he stated the termination had been
wrongful because it was effected in violation of California public policy.
He thus notified JPIA of his wrongful termination cause of action, in
compliance with section 954.4’s command that each “cause of action” be
presented by notice of claim. While Stockett’s claim did not specifically
assert his termination violated the public policies favoring free speech and
opposition to public employee conflicts of interest, these theories do not
represent additional causes of action and hence need not be separately
presented under section 945.4.

Unlike Fall River v. Superior Court (1988) 206 Cal. App. 3d 431
[253 Cal. Rptr. 587], which JPIA cites as illustrating a fatal variance
between a plaintiff’s claim and complaint, the additional theories pled in
Stockett’s amended complaint did not shift liability to other parties or
premise liability on acts committed at different times or places. In Fall
River, the plaintiff was injured at school when a steel door struck his head.
His notice of claim stated the injury was caused by the school’s negligent
maintenance of the door, but his complaint additionally alleged the school
had negligently failed to supervise students engaged in horseplay. The
court held the factual divergence between claim and complaint was too
great; the complaint alleged liability “on an entirely different factual basis
than what was set forth in the tort claim.” (Id. at 435.) Stockett’s
complaint, in contrast, alleged liability on the same wrongful act, his
termination, as was stated in his notice of claim.

Nor were the fundamental facts underlying Stockett’s claim changed

in his amended complaint. Rather, the free speech and conflict of interest
theories simply elaborated and added detail to his wrongful termination
claim by alleging additional motivations and reasons for JPIA’s single
[184/185]action of wrongful termination. This case is thus similar to previous
cases holding that the claim fairly reflected the theories of liability set forth
in the complaint. * * *

In comparing claim and complaint, “we are mindful that ‘[s]o long as
the policies of the claims statutes are effectuated, [the statutes] should be
given a liberal construction to permit full adjudication on the merits.’”
(Smith v. County of Los Angeles [(1989)] 214 Cal. App. 3d [266]at p. 280
[262 Cal. Rptr. 754]). If the claim gives adequate information for the
public entity to investigate, additional detail and elaboration in the
complaint is permitted.

By notifying JPIA of its act (wrongful termination) that caused his

 By notifying JPIA of its act (wrongful termination) that caused his
injury (loss of earnings, mental and physical pain and suffering) and
naming those JPIA agents he believed responsible, Stockett’s claim
provided sufficient information for JPIA to investigate and evaluate its
merits. * * *

In summary, Stockett adequately presented to JPIA his wrongful

termination cause of action. His notice of claim satisfied the purposes of
the claims statutes by providing sufficient information for the public entity
to conduct an investigation into the merits of the wrongful termination
claim, and the complaint’s free speech and conflict of interest theories of
termination in violation of public policy were fairly reflected in the claim
because the complaint did not change the fundamental facts of the claim.
Stockett was therefore not precluded from amending his complaint to
include these theories or from presenting them to the jury.

In drafting a client’s written claim, what should an attorney do to minimize

the likelihood that the client may be barred from asserting new allegations of
facts and legal theories in a subsequent court complaint?

[e] Scope of Doctrine

Based on the above, how would you define the general scope and limits of the
substantial compliance doctrine in the claims statute context? Which claims
statute requirements are “jurisdictional” in the sense that failure to comply bars
a subsequent suit? Consider, for example, Nguyen v. Los Angeles County
Harbor/UCLA Med. Center, supra; Fisher v. Pickens, supra; and City of Los
Angeles v. Superior Court, 14 Cal. App. 4th 621, 17 Cal. Rptr. 2d 703 (1993)
(failure to petition court for relief from claims requirement within six months
after denial by City of application to present late claim, as required by § 946.6,
barred subsequent suit for personal property loss; failure to file lawsuit within
six months of City’s rejection of claim for real property damage barred
subsequent suit for those losses also).

[f] Cross-Complaints

Must a defendant comply with the claims requirements prior to filing a cross-
complaint in an action initiated by a public entity plaintiff? Does the answer
depend on the nature of the cross-complaint? See Krainock v. Superior Court,
216 Cal. App. 3d 1473, 265 Cal. Rptr. 715 (1990) (adopting rules for
determining [185/186]applicability of claims requirements to defensive cross-
complaints). Section 905 exempts state agencies from the claims requirements;
nevertheless, must a state agency comply with a city ordinance which requires
claim presentation as a prerequisite to a suit or cross-complaint against the city?
See City of Ontario v. Superior Court, 12 Cal. App. 4th 894, 16 Cal. Rptr. 2d
32 (1993) (even though § 905 exempts state agencies from claims requirements,
§ 935 authorized local government entities to enact their own procedures to
cover the exempted claims).

[4] Government Claims Act and Estoppel

The court in Phillips found it unnecessary to decide whether the defendants

were also barred under principles of estoppel from claiming noncompliance by
plaintiff with the claim presentation requirements. Do you think a public entity
should ever be subject to this estoppel doctrine?

I n John R. v. Oakland Unified School District, 48 Cal. 3d 438, 256 Cal.

Rptr. 766, 769 P.2d 948 (1989) , the Supreme Court noted that a public entity
may be estopped from asserting the limitations of the claims statute where its
agents or employees have prevented or deterred the filing of a timely claim by
some affirmative act, such as misleading statements about the need for, or
advisability of, a claim. Id. at 445. In John R., the plaintiff was a junior high
student who alleged sexual molestation by his teacher, and commenced litigation
without presenting any timely written claim under the California Government
Claims Act. The plaintiff argued that the defendant school district was estopped
from raising the defense of failure to present a timely claim because the teacher
had threatened to retaliate against the student if the boy reported the incidents of
sexual molestation. These threats were likely motivated by the teacher’s self-
interest, not by an intent to prevent the student from filing a claim against the
school district. Is this the type of conduct that should estop the defendant school
district from raising the timeliness defense? See John R., supra, 48 Cal. 3d at
445–47; Doe v. Bakersfield City Sch. Dist., 136 Cal. App. 4th 556, 39 Cal.
Rptr. 3d 79 (2006); Christopher P. v. Mojave Unified Sch. Dist. , 19 Cal. App.
4th 165, 23 Cal. Rptr. 2d 353 (1993).

Does equitable estoppel also apply when a public entity’s conduct prevents a
plaintiff from filing a lawsuit within the time limits established by the
Government Claims Act? See, e.g., Ard v. County of Contra Costa, 93 Cal.
App. 4th 339, 112 Cal. Rptr. 2d 886 (2001) (principles of equitable estoppel
apply when county’s conduct prevented plaintiff from filing suit within time
limit established by Gov. Code § 946.6); Ortega v. Pajaro Valley Unified Sch.
Dist., 64 Cal. App. 4th 1023, 1047, 75 Cal. Rptr. 2d 777, mod., 65 Cal. App.
4th 573d (1998) (public entity may be equitably estopped from relying on the
claim-presentation statutes where the public entity or one of its agents engaged
in some calculated conduct or make some representation or concealed facts
which induced the plaintiff not to file a claim or bring an action within the
statutory time).

[5] Government Claims Act Tolling Provisions

The statutory tolling provisions of the California Government Claims Act set
forth in Government Code §§ 911.4, 911.6, and 946.6 are quite detailed and
specific. These provisions preclude the use of the general statutory tolling
provisions [186/187]contained in the Code of Civil Procedure, pursuant to CCP §
352(b). The Act’s tolling provisions have produced some complicated
construction problems. See, e.g., Draper v. City of Los Angeles, 52 Cal. 3d
502, 276 Cal. Rptr. 864, 802 P.2d 367 (1990) (Gov. Code § 946.6(c)(3), which
provides relief from claim presentation requirement based on mental or physical
incapacitation, is designed to assure both that the claimant was disabled during
the claim filing period and that the disability was the reason the claimant could
not file timely claim.); Hernandez v. County of Los Angeles, 42 Cal. 3d 1020,
232 Cal. Rptr. 519, 728 P.2d 1154 (1986) (injured minor who has parents
capable of acting on his behalf may not invoke tolling provisions of § 911.4
even if the minor is mentally incapacitated, but must be permitted to file a late
claim pursuant to § 946.6(c)(2) if injured person was minor during time for
presentation of the claim); Martell v. Antelope Valley Hosp. Med. Center , 67
Cal. App. 4th 978, 79 Cal. Rptr. 2d 329 (1998) (tolling provision of CCP §
340.5 that extends the medical malpractice limitations period until a minor’s
eighth birthday does not constitute an exception to the six-month limitation
period in Gov. Code § 945.6 for suits against a public entity).

Does a CCP § 364 notice of intent to sue, served less than 90 days before the
expiration of the six-month limitation period of Gov. Code § 945.6(a)(1) within
which to commence a medical malpractice action against a public hospital,
operate to toll and extend the limitations period for 90 days? See Wurts v.
County of Fresno, 44 Cal. App. 4th 380, 51 Cal. Rptr. 2d 689 (1996) (a § 364
notice tolled the six-month statute of limitations for commencement of a lawsuit
against a public entity, and therefore that an action commenced seven months
after rejection of the tort claim by the County was not barred by Gov. Code §
945.6). For a recent decision attempting to harmonize the time limitations
imposed by the Government Claims Act and by CCP § 340.5 in a medical
malpractice action brought against a hospital operated by a public entity, see
Roberts v. County of Los Angeles, 175 Cal. App. 4th 474, 96 Cal. Rptr. 3d 60
(2009) (although plaintiff met the tolled six-month statute of limitations for a
claim against a public entity under Gov. Code § 945.6, the action was barred by
the three-year period in CCP § 340.5).

Do the various “equitable tolling” doctrines apply to the time limitations of

the California Government Claims Act, Gov. Code § 900 et seq.? See Addison
v. State of California, 21 Cal. 3d 313, 146 Cal. Rptr. 224, 578 P.2d 941
(1978).

Do the claim presentation requirements of the California Government Claims

Act apply when the plaintiff brings a 42 U.S.C. § 1983 federal civil rights action
against a public entity or employee in state court? See Felder v. Casey, 487 U.S.
131, 108 S. Ct. 2302, 101 L. Ed. 2d 123 (1988). Where the plaintiff brings a
state civil rights action against a public entity after exhausting the procedural
requirements of the Fair Employment and Housing Act, Gov. Code § 12900 et
seq.? See Garcia v. Los Angeles Unified Sch. Dist., 173 Cal. App. 3d 701, 710,
219 Cal. Rptr. 544 (1985).

[E] Notices, Claims and Other Prerequisites

A wide variety of California statutes require the prospective plaintiff to give

notice prior to filing a lawsuit, to make a preliminary claim or demand, or to
take some similar procedural step prior to commencement of the litigation. See
generally Ann Taylor Schwing, 15 California Affirmative, Defenses, Lack of
[187/188]Required Certificate, Notice, Claim or Demand, §§ 12:1-12:44 (2011).
Failure to comply with these requirements may have little or no effect on the
litigation, or may provide a complete defense: The severity of the penalty for
noncompliance depends in part on the purpose underlying the statutory
requirement. Id. Two of these condition precedents — notice of intention to file
a medical malpractice action pursuant to CCP § 364, and the claim filing
requirements for suits against government agencies and officials pursuant to
Government Code § 900 et seq. — have already been extensively discussed
above. A few additional examples warrant brief consideration.

[1] Notice to Prospective Defendant

A number of statutes simply require that a notice be given to the prospective

defendant prior to or at the time of the commencement of the action. For
example, Civil Code § 3082 et seq. requires that certain notices be filed and
served prior to enforcement of a mechanic’s lien. See generally CEB,
California Mechanics’ Liens (3d ed. 2011); Marsh, California Mechanics’
Lien Law (6th ed. 2011). Why are such preliminary notices required? Civil
Code §§ 1691 and 1693 require notice of rescission be given to the party against
whom relief will be sought, as a condition precedent to an action seeking to
rescind a contract, “promptly upon discovering the facts which entitle him to
rescind.” What purpose does this notice serve? Business and Professions Code
§ 6201 requires written notice of the right to arbitrate a fee dispute prior to an
attorney suing his client to recover unpaid attorneys’ fees. The California
Commercial Code requires certain notices prior to sale of personal property
collateral as a prerequisite to subsequent suit for deficiency judgment,
Commercial Code §§ 9610-9615; and requires that a buyer who has accepted a
tender of goods must notify the seller of a breach within a reasonable time after
discovery, or be barred from any remedy, § 2607. What are the purposes of
these notice requirements? A variety of statutes require notice to the California
Attorney General as a prerequisite to suit. E.g., CCP Code § 388 (certain
environmental pollution actions); Probate Code §§ 8111, 1209, 11701(d) &
17203 (certain probate actions involving charitable trusts).

If you are a landlord or a tenant, you may have already had experience with
another notice prerequisite! See CCP § 1161.

Some statutes do not require notice, but instead authorize parties to a contract
to require notice of injury, loss, or claim as a condition precedent to recovery.
The most common examples are insurance policies. Pursuant to the Insurance
Code, certain policies may include a requirement for prompt notice and proof of
loss following an accident or occurrence covered by the policy. E.g., Insurance
Code § 6010 (fire insurance), § 10350.5 (disability coverage). There are some
statutory limits here, such as notice cannot be required more promptly than 20
days after the covered incident. Ins. Code §§ 551-554. Why are such notices
authorized by statute?

Some statutes require notice to the defendant regarding plaintiff’s activities

even after a lawsuit is commenced. For example, CCP § 877.5 requires a
plaintiff to notify all defendants and the court prior to entering into a sliding
scale recovery agreement with some, but not all, defendants. Other statutes
require not simply notice, but actual approval from the court prior to the
plaintiff initiating certain [188/189]litigation action. E.g., CCP § 425.13 (court
permission necessary to allege punitive damages against health care provider)
and CCP § 425.14 (court order necessary to allege punitive damages against
religious corporation).
 [2] Demand Requirements

Some statutes require not only prior notice, but also a demand for corrective
action as a prerequisite to judicial relief. Most notable is Civil Code § 48a,
which requires in actions for libel against newspapers and for slander by radio
broadcast that a correction be demanded within 20 days after knowledge of the
publication or broadcast of the statements claimed to be libelous. Failure to
comply with Civil Code § 48a does not defeat the entire libel action, but limits
the plaintiff’s possible recovery to special damages and precludes general
damages. See Freedom Newspapers, Inc. v. Superior Court , 4 Cal. 4th 652, 14
Cal. Rptr. 2d 839, 842 P.2d 138 (1992) . Civil Code § 48.5 extends this demand
requirement to television broadcasts. Why is such notice a prerequisite to
recovery of general damages but not of special damages? Why is it limited to
specific categories of defendants, and not to all cases of libel and slander
generally?

Some other statutes imposing a demand prerequisite to litigation include the

following: Civil Code § 1782(a) (a consumer must notify prospective defendant
in writing and demand corrective action at least 30 days prior to bringing a
class action for damages under the Consumers Legal Remedies Act, Civil Code
§ 1750 et seq.); Corporations Code § 800(b)(2) (notice and demand for
remedial action on board of directors of corporation prior to commencing
stockholders’ derivative suit); and Civil Code § 1823 (demand for return of
property from bailee).

[3] Certificate of Merit

Code of Civil Procedure § 411.35 requires a plaintiff’s attorney to execute

and file a certificate of merit before service of a complaint for damages arising
out of professional negligence by an architect, engineer, or surveyor. The
certificate must declare that the attorney has reviewed the facts; has consulted
with an architect, engineer, or surveyor; and has concluded that there is
meritorious cause for filing such action. CCP § 411.35(b). Failure to file the
certificate is grounds for demurrer or motion to strike, and for an award of
expenses and attorney fees. CCP § 411.35(g) and (h); see Guinn v. Dotson, 23
Cal. App. 4th 262, 28 Cal. Rptr. 2d 409 (1994) (negligence action against
engineer properly dismissed for failure to file certificate of merit; defendant
entitled to an award of expenses and attorney fees). Where the attorney is unable
to conduct the required consultation because of a statute of limitations concern
and so declares, the certificate need not be filed until within 60 days after filing
the complaint. § 411.35(b)(2).

Similar rules apply to certain actions seeking damages suffered as a result of

alleged childhood sexual abuse, when brought by a plaintiff 26 years of age or
older. Generally, CCP § 340.1 requires such a plaintiff to file a certificates of
merit, executed by the attorney for the plaintiff and by a licensed mental health
practitioner, before the statute of limitations has expired. CCP § 340.1 (g) & (l);
see, e.g., Jackson v. Doe, 192 Cal. App. 4th 742, 121 Cal. Rptr. 3d 685 (2011)
(construing CCP § 340.1 (g) & (l) and affirming demurrer without leave to
amend because [189/190]plaintiff in childhood sexual abuse action did not file
certificate of merit before the statute of limitations and 60-day grace period
expired).

[4] Notice and Claim Prerequisite

Some statutes require not only that notice be given to the prospective
defendant as a condition precedent to litigation, but also that a claim be
submitted for consideration by the defendant. The claim-filing requirements for
actions against public agencies and employees set forth in the California
Government Claims Act, Government Code § 900 et seq., discussed supra, are
a most important example.

Other very important notice and claim requirements concern prospective

plaintiffs against the estate of a decedent. Sections 9000-9399 of the Probate
Code, for example, require that a claim be filed with the probate court before
certain actions can be commenced or continued against a decedent’s personal
representative on a cause of action against the decedent. This includes demands
for payment based on liability of the decedent arising in contract, tort or
otherwise; for payment of taxes; and for payment of funeral expenses. Prob.
Code § 9000. The time for filing such claims is governed by §§ 9100-9104.
Regardless of what statute of limitations may otherwise apply, generally a
creditor must commence an action within three months of the notice of rejection
of the claim. Prob. Code §§ 9250, 9352, and 9353; see Anderson v. Anderson,
41 Cal. App. 4th 135, 138, 48 Cal. Rptr. 2d 642 (1995) ; see also Dobler v.
Arluk Med. Center Indus. Group, Inc., 89 Cal. App. 4th 530, 535–39,107 Cal.
Rptr. 2d 478 (2001) (summarizing the statutory provisions governing claims
against probate and trust estates, and the various relevant statutes of limitations).

A plaintiff must also file a claim with the Department of Fair Employment
and Housing (DFEH) as a condition precedent to an action for discrimination
under the Fair Employment and Housing Act, Government Code § 12900 et seq.
A plaintiff must first file a written complaint with the DFEH within one year of
the alleged discriminatory practice. § 12960. The DFEH must then be given 150
days to consider the complaint, after which time a right to sue notice can be
requested by the plaintiff. § 12965(b). The plaintiff then has one year after the
date of the right to sue notice within which to commence an action in the
appropriate court. See Gov. Code § 12965(b). See Grant v. CompUSA, Inc.,
109 Cal. App. 4th 637, 135 Cal. Rptr. 2d 177 (2003) (discussing the various
FEHA preconditions to suit).

New provisions of the Civil Code require a condominium homeowners’

association to complete a dispute resolution process prior to filing an action
against a builder, developer, or general contractor seeking damages for
construction defects. Civil Code § 1375 (operative July 1, 2002). This elaborate
process may include such events as mutual inspections and exchanges of
information, settlement offers and negotiations, meet and confer sessions, and
submission of the conflict to a dispute resolution facilitator. § 1375(e)-(o).
Upon completion of this mandatory prefiling dispute resolution process, if the
parties have not settled the matter, the association may commence an action,
which shall be given trial priority by the superior court. § 1375.05.

New provisions of the Civil Code also specify the rights and requirements of
a homeowner with respect to a damage action for constructive defects against a
[190/191]builder, developer, or original seller; including applicable standards for
home construction, various statutes of limitations, the burden of proof, the
damages recoverable, the obligations of the homeowner, and a detailed
prelitigation procedure. Civil Code §§ 895-945.5; see, e.g., Anders v. Superior
Court, 192 Cal. App. 4th 579, 121 Cal. Rptr. 3d 465 (2011) (determining the
applicability of the statutory prelitigation procedures in Civil Code §§ 910-938
in actions by homeowners against builder where some sales contracts contained
alternative prelitigation procedures).

Several statutory schemes require a taxpayer to file a claim for a tax refund
with the appropriate taxing agency as a prerequisite to an action for a tax refund
in superior court. See, e.g., Rev. and Tax. Code § 5141 (claim for refund of
property taxes must be filed with county or city); Rev. & Tax. Code § 6932
(claim for refund of sales or use taxes must be filed before a lawsuit may be
brought). See also Geneva Towers Ltd. v. San Francisco , 29 Cal. 4th 769, 129
Cal. Rptr. 2d 107, 60 P.3d 692 (2003) (the six-month statute of limitations in
Tax Code § 5141 begins to run when the county or city rejects the claim for
refund in whole or in part; or, if the public entity fails to act within six months,
when the claimant elects to consider the claim rejected and bring an action for a
tax refund).

[5] Security for Costs

Generally, of course, a plaintiff is not required to provide security for

defendant’s costs as a condition precedent to an action at law. However, a
number of special statutes do authorize the imposition of such undertakings,
upon application of the defendant. Code of Civil Procedure § 1030(a) and (b),
for example, authorizes a defendant to move for “an order requiring the plaintiff
to file an undertaking to secure an award of costs and attorney’s fees which may
be awarded” when the plaintiff resides out of state or is a foreign corporation
and “there is a reasonable possibility that the moving defendant will obtain
judgment in the action.” If the court grants this motion, the plaintiff must file the
undertaking in the amount and within the time specified by the court. CCP §
1030(c) and (d). If the plaintiff fails to file this undertaking within the time
allowed, the plaintiff’s action must be dismissed as to that defendant. CCP §
1030(d).

Does CCP § 1030 require an out-of-state defendant who has filed a cross-
complaint against a California resident to post an undertaking in order to
continue prosecution of the cross-complaint? See Yao v. Superior Court , 104
Cal. App. 4th 327, 127 Cal. Rptr. 2d 912 (2002) (Section 1030 refers
unambiguously to a “plaintiff” and to construe the statute to include an out-of-
state cross-complainant would not promote the policy served by the statute).

Section 1030 applies only to nonresident plaintiffs. Does this raise any
questions as to its constitutionality? See Shannon v. Sims Service Center, Inc. ,
164 Cal. App. 3d 907, 913–14, 210 Cal. Rptr. 861 (1985) . If the court
determines that an undertaking by plaintiff is appropriate, is this determination
admissible at trial on the merits of plaintiff’s action? See CCP § 1030(f). Can a
plaintiff obtain appellate review of a determination requiring an undertaking?
See CCP § 1030(g); Beaudreau v. Superior Court , 14 Cal. 3d 448, 452, 121
Cal. Rptr. 585, 535 P.2d 713 (1975).

The requirement of security of costs filed by plaintiff is also authorized in a

few other special statutes, e.g., CCP §§ 391-391.7 (vexatious litigants), see
Moran v. [191/192]Murtaugh Miller Meyer & Nelson, LLP, 40 Cal. 4th 780, 55
Cal. Rptr. 3d 112, 152 P.3d 416 (2007) (in assessing whether a vexatious
litigant has a reasonable probability of success on his claim, the trial court may
weigh the evidence presented on the motion for security); CCP § 1029.6
(personal injury actions against health care professionals); CCP § 1029.5
(negligence actions against architects, engineers, and similar professionals);
Corp. Code § 800 (shareholder derivative actions). Of course in an equitable
action granting preliminary injunctive relief, the court must require an
undertaking to cover possible damages the defendant may suffer as a result of
the injunction, in the event the court finally decides the plaintiff was not entitled
to the injunction. CCP §§ 529-530; see, e.g., Mangini v. J.G. Durand Intl., 31
Cal. App. 4th 214, 37 Cal. Rptr. 2d 153 (1994) (trial court erred in issuing
preliminary injunction without requiring plaintiff to post a bond; improper for
trial court to waive bond on grounds that suit brought to protect consumers and
advance public interest).

These statutory requirements of security for costs may make access to courts
even more difficult for low income plaintiffs than it already is. Consider the
impact of CCP § 1030 on a low-income nonresident plaintiff who must sue a
defendant in California, perhaps because of the dictates of personal jurisdiction
or a forum selection clause. Does a California court have the power to waive
the statutory requirement of security for costs on grounds of indigence? See
Ferguson v. Keays , 4 Cal. 3d 649, 94 Cal. Rptr. 398, 484 P.2d 70 (1971) ;
Shannon v. Sims Service Center, Inc., supra, 164 Cal. App. 3d at 916.

[F] Statutes of Limitations in Federal Courts

There are no general federal statutes of limitations which govern large

categories of existing federal claims for relief. There are, however, over 7000
federal statutes which contain special statutes of limitations governing specific
claims. See Federal Statutes of Limitation, 26 Sw. U. L. Rev. 425-891 (1997) ,
for a comprehensive survey of these specific federal statutes. Moreover, 28
U.S.C. § 1658 contains a new general statute of limitations of four years for any
civil action arising under a federal statute enacted after December 1, 1990,
unless a specific statute provides otherwise.

There still are many federal actions where neither a specific statute of
limitation nor the new § 1658 applies. These include actions based on diversity
jurisdiction, and ones based on certain federal statutes enacted before the
effective date of § 1658. What statute of limitations do the federal courts apply
in such circumstances? When Congress has not established a time limitation, the
settled practice is to adopt the state law of limitations governing an analogous
cause of action, if it is not inconsistent with federal law or policy to do so.
Wilson v. Garcia , 471 U.S. 261, 266–67, 105 S. Ct. 1938, 85 L. Ed. 2d 254
(1985) (federal court must apply state statute of limitations for personal injury
actions to 42 U.S.C. § 1983 claims); Board of Regents v. Tomanio , 446 U.S.
478, 483–84, 100 S. Ct. 1790, 64 L. Ed. 2d 440 (1980).

The federal courts not only must apply the appropriate state limitation period
in such cases, but also the relevant state tolling statutes. See Abramson v.
Brownstein, 897 F.2d 389 (9th Cir. 1990) . Must a federal court applying a
California [192/193]statute of limitations also apply the California doctrine of
“equitable tolling”? See, e.g., Cervantes v. City of San Diego, 5 F.3d 1273 (9th
Cir. 1993); Donoghue v. City of Orange, 848 F.2d 926 (9th Cir. 1988) . Why
must a federal court apply state limitations law in the absence of a federal
statute of limitations?

Conversely, there are situations where a federal statutory limitation must be

applied in state court, despite conflicting state limitations law. This may occur
when a claim based on a federal statute is brought in state court, and the federal
statute contains a specific limitation period. E.g., White v. Moriarty, 15 Cal.
App. 4th 1290, 19 Cal. Rptr. 2d 200 (1993) (state court must follow limitation
period in 12 U.S.C. § 1821, not CCP § 337(1), in FDIC cases); California
Aviation, Inc. v. Leeds , 233 Cal. App. 3d 724, 284 Cal. Rptr. 687 (1991) (two-
year federal bankruptcy limitations extension statute, 11 U.S.C. § 108(a),
applies instead of one-year limitation statute for attorney malpractice, CCP §
340.6(a)). Why must a state court apply a federal statute of limitations and
disregard conflicting state limitations in such circumstances? See Art. VI, U.S.
Constitution.

[G] Procedural Aspects of Statutes of Limitations

[1] Affirmative Defense

Generally, a statute of limitations in California is considered to be

“procedural” in the sense that it affects the remedy only, not the substantive right
or obligation. 3 Witkin, California Procedure, Actions , §§ 432-467 (5th ed.
2008). One important consequence of this principle is that generally the statute
of limitations bar is an affirmative defense which must be raised by the
defendant in the trial court or the defense is waived. E.g., Beasley v. Wells
Fargo Bank, 235 Cal. App. 3d 1383, 1401, n.9, 1 Cal. Rptr. 2d 446 (1991)
(statute of limitations defense not waived where defendant failed to plead
affirmative defense but raised argument in its trial brief); Taylor v. Sanford ,
203 Cal. App. 2d 330, 345, 21 Cal. Rptr. 697 (1962) . And, as we have already
seen, the defense can be waived in advance by contract, CCP § 360.5; or even
after the statutory period has expired, by acknowledgment, CCP § 360.

A few statutory time limitations, however, are considered “substantive” in the

sense that they are regarded as conditions on the substantive right involved. See
3 Witkin, California Procedure, supra, §§ 441-445. A condition on a
substantive right is generally not waivable by the parties. Id. As a general rule,
if the Legislature creates a right or liability unknown at common law and in the
same statute fixes a limitation period, the time limitation is usually considered
substantive. Williams v. Pac. Mut. Life Ins. Co., 186 Cal. App. 3d 941, 949–
50, 231 Cal. Rptr. 234 (1986). The statute must evidence a legislative intent that
the limitation is an element of the plaintiff’s cause of action. See, e.g., Walton v.
City of Red Bluff, 2 Cal. App. 4th 117, 3 Cal. Rptr. 2d 275 (1991) . One
consequence here is that a plaintiff must plead facts which show compliance
with such a time limitation.

Traditional examples of substantive time periods are ones involving

prescriptive property rights, such as adverse possession and escheat statutes.
E.g., CCP §§ 321-326. Modern examples often involve newly created statutory
rights which include presentation of an administration claim as a prerequisite to
litigation, with accompanying time limitations. In Williams v. Pac. Mut. Life
Ins. Co., supra, for [193/194]example, the court concluded that the time limitations
provision of the California Fair Employment and Housing Act, Gov. Code §
12965, is a condition on a substantive right rather than a procedural limitation
period for commencement of an action. As such, the plaintiff must specifically
allege facts in his complaint showing compliance with this condition. Id.

[2] Pleading Statutes of Limitations

As discussed above, a plaintiff must plead facts showing compliance with a

time limitation that is “substantive.” But what about the usual situation where
statutes of limitations are considered procedural? Because a defendant must
raise the issue as an affirmative defense, should a plaintiff simply not worry
about allegations regarding statutes of limitations in the complaint?

Even where a statute of limitations is procedural, a plaintiff may need to

plead facts in anticipation of the defense. This is particularly true where a
plaintiff relies on the delayed discovery rule of accrual. Failure to plead facts
justifying delayed accrual will make a demurrer appropriate. E.g., CAMSI IV v.
Hunter Technology Corp., 230 Cal. App. 3d 1525, 282 Cal. Rptr. 80 (1991) .
The plaintiff must allege the time and manner of discovery, the circumstances of
discovery, and why in the exercise of reasonable diligence, the plaintiff could
not have made discovery sooner. In Fox v. Ethicon Endo-Surgery, Inc ., 35 Cal.
4th 797, 27 Cal. Rptr. 3d 661, 110 P.3d 914 (2005) , the Supreme Court
explained these pleading requirements as follows (35 Cal. 4th at 808):

In order to rely on the discovery rule for delayed accrual of a cause of

action, “[a] plaintiff whose complaint shows on its face that his claim
would be barred without the benefit of the discovery rule must specifically
plead facts to show (1) the time and manner of discovery and (2) the
inability to have made earlier discovery despite reasonable diligence.”
[Citation] In assessing the sufficiency of the allegations of delayed
discovery, the court places the burden on the plaintiff to “show diligence”;
“conclusory allegations will not withstand demurrer.” [Citation]

In addition to cases involving the delayed discovery rule, can you think of other
situations where the plaintiff may want to plead facts in anticipation of the
defense?

Because the statute of limitations is usually an affirmative defense, it must be

properly invoked by the defendant by appropriate pleading or else it may be
waived. E.g., Stokes v. Henson, 217 Cal. App. 3d 187, 193, 265 Cal. Rptr. 836
(1990). Even though a defendant raises the defense, a court may consider it
waived if the defendant pleads the wrong code section and no underlying facts
establishing the defense. Such was the result in Mysel v. Gross, 70 Cal. App. 3d
at Supp. 10, 138 Cal. Rptr. 873 (1977), where the court noted there are two
accepted ways to plead a statute of limitations: One method is to allege facts
showing the action is barred and indicate that the lateness in commencing the
action is urged as a defense; the second method is to comply with CCP § 458.
Mysel, supra, 70 Cal. App. 3d at Supp. 14. Code of Civil Procedure section
458 states:

In pleading the Statute of Limitations it is not necessary to state the

facts showing the defense, but it may be stated generally that the cause of
[194/195]action is barred by the provisions of Section ________ (giving the
number of the section and subdivision thereof, if it is so divided, relied
upon) of the Code of Civil Procedure; and if such allegation be
controverted the party pleading must establish on the trial, the facts
 showing that the cause of action is so barred.

[3] Procedural Devices for Invoking Statute of Limitations

Resolution of a statute of limitations issue is normally a question of fact. E.g.,

Jolly v. Eli Lilly & Co., supra. What procedural devices are appropriate for
raising this issue? Under what circumstances may the issue be raised by
demurrer? See CCP § 430.30; Roman v. County of Los Angeles, 85 Cal. App.
4th 316, 102 Cal. Rptr. 2d 13 (2000) (a general demurrer based on statute of
limitations is only permissible where dates alleged in the complaint clearly and
affirmatively show that the action is barred). By motion for summary judgment?
See, e.g., Jolly v. Eli Lilly & Co., supra. Are there any other procedural
devices by which this question of fact can be resolved? See, e.g., CCP § 597
and § 581c. See also Jefferson v. County of Kern, 98 Cal. App. 4th 606, 120
Cal. Rptr. 2d 1 (2002) (the date of accrual of a cause of action is subject to a
jury determination when the issue is raised in connection with a tort claim, and
that right to jury trial applies when there is a bifurcated trial pursuant to CCP §
597 to separately determine a statute of limitations defense).

§ 4.06 EXHAUSTION OF ADMINISTRATIVE

REMEDIES
[A] The Exhaustion Requirement

DEPARTMENT OF PERSONNEL ADMINISTRATION v. SUPERIOR

COURT
COURT OF APPEAL OF CALIFORNIA,
THIRD APPELLATE DISTRICT
5 Cal. App. 4th 155, 6 Cal. Rptr. 2d 714 (1992)

Puglia, Presiding Justice.

***

The State of California faced an unprecedented budgetary crisis at the outset

of fiscal year 1991-1992, with expenditures projected to exceed revenues by
more than $14 billion. Although the Legislature and the Governor addressed the
budget shortfall in a number of ways in the Budget Act of 1991 (the Act; Stats.
1991, ch. 118), the Act does not direct a pay cut for state employees. Rather, it
requires a $351 million reduction of employee compensation, and orders the
Director of Finance to allocate the necessary reductions to each item of
appropriation in the Act, with three exceptions. The Governor also reduced the
funds provided by the Legislature for employee compensation and benefit
increases. The governor gave his reasons for the reductions and approved the
Act on July 16, 1991.

[195/196]

In this setting, negotiations continued for new collective bargaining

agreements between petitioner Department of Personnel Administration (DPA)
and various unions representing state employees. For purposes of this
proceeding, the parties do not dispute that by autumn 1991, DPA and many of
the unions had reached impasse, after negotiating and participating in mediation
in good faith.

On November 5, 1991, DPA sent letters to two of the employee unions which
are real parties in interest herein, California Association of Professional
Scientists (CAPS) and California Association of Highway Patrolmen (CAHP),
informing them of actions DPA intended to take, effective November 12, 1991,
as a result of the negotiations impasse. The letter to CAPS indicated DPA
would implement terms and conditions of employment as follows:

***

“Salaries. Effective November 12, 1991, salaries will be reduced

five (5) percent as described in the State’s offer of June 24, 1991. A pay
letter will be issued to effectuate this change.

“Health Benefits. Effective December 1, 1991, the State employer’s

contribution rates will be: $157.-employee; $292.-employee plus one
dependent; and, $367.-employee plus two or more dependents. These rates,
as well as the rural subsidy rates, are as described in the State’s last offer
of August 12, 1991. [Note: Any increase in employee costs will be
deducted from the November pay warrant.]”
 The letter to CAHP was substantially the same.

CAPS and CAHP responded to DPA’s notification of its intent to impose its
final offer by filing a petition for writ of mandate and request for a stay in
respondent superior court on November 8, 1991. That day, respondent court
issued an alternative writ and a stay, ordering petitioners not to reduce the
salaries or health care contributions for state employee members of CAPS and
CAHP until respondent issued a final decision on the petition.

In addition to the two unions, the petition in the superior court named as
petitioners … a number of other unions representing state employees joined in
the proceeding as real parties in interest and interveners. In addition, the Public
Employment Relations Board (PERB) filed a “Statement of Jurisdiction,” in the
superior court proceeding asserting PERB lacks exclusive initial jurisdiction
over this dispute.

After a hearing, respondent superior court indicated it would issue a writ of

mandate. The court explained that Government Code section 19826, subdivision
(b) expressly precludes DPA from unilaterally reducing employee wages. 6
Moreover, the court concluded … the formula for state contributions to
employee health care premiums in section 22825.1, applies so as to preclude
DPA from decreasing employee health care premium contribution rates. * * *

On November 27, 1991, respondent superior court entered judgment granting

a [196/197]peremptory writ of mandate. The writ issued that day, commanding
DPA, its director and the Controller “… to desist and refrain from reducing the
wages of State employees in recognized bargaining units, and desist and refrain
from modifying the health care premium payment formula for said employees.”

DPA filed the instant petition for extraordinary relief on December 13, 1991.
* * * On January 14, 1992, we directed the parties to address in their briefing
the question, assuming PERB had exclusive initial jurisdiction, whether any
exception to the doctrine of exhaustion of administrative remedies applies so as
to excuse the failure to file unfair practice charges with PERB. * * *

At the threshold is the question whether respondent superior court improperly

assumed jurisdiction over a matter which is committed to PERB’s exclusive
initial jurisdiction. DPA contends PERB has exclusive jurisdiction because
DPA’s action in implementing its last, best offer arguably is either protected or
prohibited as an unlawful practice under the statutes regulating state employer-
employee labor relations. DPA points out that resolution of the underlying
questions regarding DPA’s authority after impasse to impose its last, best offer
on wages and health contribution rates necessarily requires consideration and
construction of the applicable labor relations statute, and contends such analysis
should first be undertaken by PERB. * * *

We shall assume without deciding that DPA is correct on the jurisdictional

question. Nevertheless, we shall conclude the state employee unions’ failure to
exhaust their administrative remedy by first filing charges of unfair practices
with PERB is excused in this case because of the potential for irreparable injury
and because filing with PERB would have been futile under the circumstances. *
**

In Abelleira v. District Court of Appeal (1941) 17 Cal. 2d 280, 293 [109

P.2d 942, 132 A.L.R. 715] , the court described the purpose of the exhaustion
doctrine: “The courts have repeatedly recognized the necessity of placing the
numerous and complex problems arising under statutes of the type involved
herein in the hands of expert bodies, familiar with the subject matter through
long experience. They have pointed out that to permit the initial consideration of
these matters by the courts would not only preclude the efficient operation of the
acts, but would overwhelm the courts with cases of a technical, specialized
character, and seriously impair their capacity to handle their normal work.” (17
Cal. 2d at p. 306.)

Later cases have described additional policies served by the exhaustion

doctrine. Thus, the exhaustion doctrine facilitates the development of a complete
record prior to resort to the courts (Yamaha Motor Corp. v. Superior Court
(1986) 185 Cal. App. 3d 1232, 1240-1241 [230 Cal. Rptr. 382] ) and, because
administrative procedure is part of the legislative process, the doctrine fulfills
separation of powers concerns by requiring completion of the administrative
procedure prior to court action (County of Contra Costa v. State of California
(1986) 177 Cal. App. 3d 62, 76–77 [222 Cal. Rptr. 750]).

However, none of these policies would be served by adherence to the

exhaustion doctrine in this case. When the underlying mandate proceeding was
filed in the superior court, PERB took the somewhat unusual step of filing a
statement disavowing jurisdiction over the dispute. Under these circumstances,
the separation [197/198]of powers concern articulated in County of Contra Costa,
supra, is not implicated because the administrative body has in fact invited
judicial intervention. Moreover, the facts are undisputed, so there is no need for
administrative development of the record. Nor does judicial intervention
interfere with the expertise of the agency or create problems of judicial
economy, given that the underlying issues are within the expertise of the courts
and would undoubtedly be resolved ultimately by the courts even if initial
jurisdiction were found in PERB. Finally, given that this case raises questions
of first impression which are bound for ultimate determination by the appellate
courts, there is little concern of conflicting decisions between PERB and the
courts.

Given the lack of policy support for the application of the exhaustion doctrine
in this case, it behooves us to examine the exceptions to that doctrine.
“Abelleira makes it abundantly clear that the exhaustion doctrine does not
implicate subject matter jurisdiction but rather is a ‘procedural prerequisite’
‘originally devised for convenience and efficiency’ and now ‘followed under
the doctrine of stare decisis, …’ ([17 Cal. 2d] at pp. 288, 291.) It is
‘jurisdictional’ only in the sense that a court’s failure to apply the rule in a
situation where the issue has been properly raised can be corrected by the
issuance of a writ of prohibition. [¶] Such a conclusion only makes sense when
the underlying nature of the exhaustion doctrine is considered. While Abelleira
indicates that the rule of exhaustion of administrative remedies has become ‘a
fundamental rule of procedure’ (17 Cal. 3d [sic] at p. 293), courts have
repeatedly recognized it is not inflexible dogma. [Citations.] There are
numerous exceptions to the rule including situations where the agency indulges
in unreasonable delay [citation], when the subject matter lies outside the
administrative agency’s jurisdiction, when pursuit of an administrative remedy
would result in irreparable harm, when the agency is incapable of granting an
adequate remedy, and when resort to the administrative process would be futile
because it is clear what the agency’s decision would be. [Citations.]” (Green v.
City of Oceanside (1987) 194 Cal. App. 3d 212, 222 [239 Cal. Rptr. 470] ,
original italics.)

Respondent superior court excused exhaustion of the administrative remedy in

this case because the ultimate legal issues, touching upon the separation of
powers between the legislative and executive branches, are better suited for
determination by the courts. However, constitutional challenges are frequently
raised to the application of an administrative statutory scheme, yet the courts
typically require such issues be presented to the administrative agency in the
first instance. (See, e.g., Lund v. California State Employees Assn. (1990) 222
Cal. App. 3d 174, 183 [271 Cal. Rptr. 425] ; ….) Hence, exhaustion cannot be
excused on this basis.7

However, the unique circumstances presented here suggest exhaustion should

be excused under the irreparable injury and futility exceptions. The irreparable
injury exception was first recognized in Abelleira, where the court
acknowledged the exception has been applied in cases “… dealing with rate
orders of regulatory commissions, where the administrative body imposes a
confiscatory rate on a public utility. Continued operation of the business at the
rate imposed pending an appeal [198/199]may in some instances be so unprofitable
as to amount to a destruction of the business, and therefore a taking of property
without due process of law.” (Abelleira v. District Court of Appeal, supra, 17
Cal. 2d at p. 296.) The irreparable injury exception has been rarely applied.
(See, e.g., Sail’er Inn, Inc. v. Kirby (1971) 5 Cal. 3d 1, 6–7 [95 Cal. Rptr. 329,
485 P.2d 529, 46 A.L.R.3d 351] [bar owners sought writ of mandate to prevent
Alcoholic Beverages Commission from revoking their licenses because they
hired women bartenders, contrary to Bus. & Prof. Code, § 25656; owners
“placed in the untenable situation of having to choose whether to obey possibly
conflicting federal and state laws and face a penalty under the one they choose
to disobey”]; Greenblatt v. Munro (1958) 161 Cal. App. 2d 596, 605–607 [326
P.2d 929] [court reached question whether bar owner’s conduct violated Penal
Code provision so that the Department of Alcoholic Beverage Control would
have benefit of that decision in reconsidering extent of penalty to impose on bar
owner].)

Here, the state and its employees may suffer irreparable injury if deprived of
a judicial ruling on the underlying issues prior to the expiration of the 1991-
1992 fiscal year. Indeed, DPA’s verified petition filed in this original
proceeding acknowledges the immediate need for judicial intervention by
arguing that unless the respondent court’s decision is immediately reversed,” …
“there will be an irrevocable impact on the State’s ability to balance the
1991/1992 budget which will force a reduction in the number of State
employees and the layoff of an even greater number of State employees, with a
corresponding greater reduction in the delivery of essential State services than
would occur if Petitioners were permitted to implement the adjustments to the
salary and health care premium contribution consistent with their last, best, and
final offer.” * * *

We take seriously the urgent need for definitive judicial review of this matter
prior to the end of the 1991-1992 fiscal year. Because of the unprecedented
nature of the fiscal crisis faced by the state, the urgent need for resolution of
these issues prior to the end of the year, and the great potential for irreparable
harm in the nature of increased layoffs of state employees, we believe the
failure of the unions to exhaust their administrative remedy by filing an unfair
practice charge with PERB should be excused. We recognize that had the unions
filed unfair practice charges with PERB, there was at least the possibility that
PERB could have ordered the same relief as that provided by respondent
superior court (see § 3513, subd. (h), 3541.3, subd. (j)). However, it is
extremely unlikely the entire process of PERB adjudication followed by judicial
review (see § 3520) would have been completed prior to the end of this fiscal
year.

Exhaustion should be excused for another, interrelated reason. Exhaustion is

excused for futility “… when the aggrieved party can positively state what the
administrative agency’s decision in his particular case would be.” (Ogo
Associates v. City of Torrance (1974) 37 Cal. App. 3d 830, 834 [112 Cal.
Rptr. 761].) Our record does not reveal whether the unions knew PERB was
declining to take jurisdiction over this matter at the time they filed their petition
for extraordinary relief in the respondent superior court. However, we note
PERB filed its “Statement of Jurisdiction” one week after that petition was
filed. Thus, virtually at the outset of this dispute, the parties were informed what
PERB’s decision would be as to the underlying jurisdictional question.
Assuming exhaustion of PERB’s remedy was required, PERB’s action in
declining jurisdiction would have required the unions to [199/200]seek
extraordinary relief to compel PERB to consider their unfair practice charges.
This process would undoubtedly have so extended the time to obtain a final
judicial determination of the merits of this dispute as to render it impossible of
resolution during the 1991-1992 fiscal year.8

For all of the reasons stated, we conclude that, assuming PERB had exclusive
initial jurisdiction, the unions’ failure to exhaust their administrative remedy by
pursuing unfair labor practice charges with PERB is excused.

We turn now to the principal substantive issue, whether DPA may impose its
last, best offer on wages after bargaining to impasse with the exclusive
representatives of state employees in recognized bargaining units. The
respondent court concluded section 19826, subdivision (b), in declaring DPA
“shall not establish, adjust, or recommend a salary range,” unambiguously
precludes DPA from implementing its final wage proposal at impasse. We
agree. * * *
 DPA’s role as salary-setter cannot be divorced from its role as the
employer’s negotiator. As to represented employees, the roles are one and the
same. Thus, when DPA bargains to impasse without reaching agreement on
salaries, the Dills Act provides that section 19826 applies. Given that
subdivision (b) of section 19826 expressly precludes DPA from adjusting
salaries, the sole conclusion that can be drawn is that the Legislature intended
postimpasse wage disputes to be resolved through the legislative process.

Left to be decided is whether DPA had authority at impasse to impose its last,
best offer regarding the rates of employer contributions to health care premiums.
***

Because we conclude respondent superior court erred in its ruling with

respect to the authority of DPA to impose its last, best offer as to the employer’s
contribution to health premium cost increases, we shall issue a peremptory writ.

NOTES AND QUESTIONS REGARDING EXHAUSTION OF

ADMINISTRATIVE REMEDIES

(1) Exhaustion of administrative remedies is a prerequisite to suit whether the

administrative remedy is set forth by statute, regulation, ordinance, or rule of the
agency involved. E.g., Lopez v. Civil Service Commission, 232 Cal. App. 3d
307, 314, 283 Cal. Rptr. 447 (1991) (exhaustion of administrative remedies
required whenever [200/201]authorized by statute or by rule of the administrative
agency involved); Green v. City of Oceanside , 194 Cal. App. 3d 212, 219–20,
239 Cal. Rptr. 470 (1987) (exhaustion doctrine applies where administrative
remedy is provided by statute; and applies as well when administrative
procedure is provided by regulation, resolution, or ordinance).

(a) Moreover, a party who challenges the quasi-judicial determination of

an entity must exhaust that entity’s internal remedies whether the entity is a
voluntary private or professional association, or a public agency. Westlake
Comm. Hosp. v. Superior Court, 17 Cal. 3d 465, 131 Cal. Rptr. 90, 551 P.2d
410 (1976) (exhaustion doctrine applied to an excluded physician’s failure to
pursue internal remedies of private hospital before filing civil suit for
damages); see Rojo v. Kliger, 52 Cal. 3d 65, 86, 276 Cal. Rptr. 130, 801 P.2d
373 (1990) (collecting examples of such associations, including cases involving
a labor union, fraternal organizations, a university, and a veterans’ association);
but see Schifando v. City of Los Angeles, 31 Cal. 4th 1074, 6 Cal. Rptr. 3d 457,
79 P.3d 569 (2003) (municipal employees who claim they have suffered
employment related discrimination need not exhaust city charter internal
remedies in addition to those required by the California Fair Employment and
Housing Act prior to filing an FEHA claim in superior court).

(b) As a general principle, the requirement of exhaustion of administrative

remedies applies to defenses as well as to claims. See Styne v. Stevens, 26 Cal.
4th 42, 109 Cal. Rptr. 2d 14, 26 P.3d 343 (2001) (when the defendant in a court
suit raises a colorable defense based on a statute which gives an administrative
agency exclusive original jurisdiction over controversies arising under the
statute, the merits of that defense can not be considered by the court until it has
first been submitted to, and examined by, the administrative agency).

(c) For exhaustion to apply, however, there must be an administrative

tribunal adjudication available which can reasonably be determined to be a
condition precedent to judicial relief. E.g., Mammoth Lakes Land Acquisition,
LLC v. Town of Mammoth Lakes , 191 Cal. App. 4th 435, 120 Cal. Rptr. 3d 797
(2010) (exhaustion requirement inapplicable where there is no effective
administrative remedy); City of Coachella v. Riverside County Airport Land
Use Commn., 210 Cal. App. 3d 1277, 1287, 258 Cal. Rptr. 795 (1989) (an
administrative remedy is provided only in those instances where the
administrative body is required to actually accept, evaluate and resolve disputes
or complaints); see Common Cause v. Bd. of Supervisors, 49 Cal. 3d 432, 441,
261 Cal. Rptr. 574, 777 P.2d 610 (1989) (statute or regulation must clearly
define machinery for the submission, evaluation, and resolution of complaints by
aggrieved parties for doctrine of exhaustion to apply; mere existence of some
official supervisory body not sufficient by itself to afford an administrative
remedy).

(d) The overlapping authority of administrative agencies may mean that the
tribunals of two separate agencies have concurrent jurisdiction to award the
relief sought by a claimant. Does the doctrine of exhaustion of administrative
remedies require a plaintiff to exhaust both administrative processes before
commencing a lawsuit in court? See Ruiz v. Dept. of Corrections , 77 Cal. App.
4th 891, 92 Cal. Rptr. 2d 139 (2000) (a state employee may pursue her claim of
employment discrimination with either the State Personnel Board or the
Department of Fair Employment and [201/202]Housing (FEHA), or both; but need
only exhaust one of these administrative processes before initiating an action in
court). See also Murray v. Oceanside Unified Sch. Dist., 79 Cal. App. 4th
1338, 95 Cal. Rptr. 2d 28 (2000) (discussing the exhaustion doctrine with
respect to an employment discrimination action against a public employer that
was subject to administrative claims structure of both the FEHA and the
Government Claims Act).

(2) Is exhaustion required where the appropriate administrative tribunal lacks

jurisdiction to award all the relief sought by the plaintiff? The Supreme Court
confronted this issue in Westlake Community Hosp. v. Superior Court , 17 Cal.
3d 465, 131 Cal. Rptr. 90, 551 P.2d 410 (1976) , where the plaintiff physician
commenced a civil tort suit for damages caused by the allegedly wrongful
revocation of her staff privileges at the defendant hospital. The plaintiff argued
that exhaustion of the hospital’s internal remedies was not a prerequisite to her
suit because the relief she sought in court, compensatory and exemplary
damages based on various tort claims, was not available through the defendant’s
internal reinstatement procedures. The defendant’s internal procedures could
provide reinstatement of privileges but could not provide a damage remedy, and
plaintiff did not seek reinstatement. Nevertheless, the Supreme Court ruled that
the plaintiff was not excused from exhausting the defendant’s administrative
remedies, even though the absence of an internal damage remedy makes ultimate
resort to the courts inevitable. Id. at 476–77. The Supreme Court reached the
same conclusion more recently in Campbell v. Regents of Univ. of California,
35 Cal. 4th 311, 323, 25 Cal. Rptr. 3d 320, 106 P.3d 976 (2005) (a party must
exhaust administrative remedies even though the agency may not have
jurisdiction to award all the relief, such as money damages, sought by the
plaintiff).

What policy considerations underlying the exhaustion doctrine justify the

requirement of an administrative proceeding prior to resort to the courts in such
cases?

(3) Is exhaustion required when the defendant’s actions give rise to a cause of
action based both on statutory grounds, for which agency exhaustion is required
by the statute, and on nonstatutory grounds not specifically within the agency’s
jurisdiction? In Rojo v. Kliger, supra , for example, the plaintiff asserted
statutory violations of the Fair Employment and Housing Act (FEHA) and
common law tort claims of wrongful discharge and emotional distress, as a
result of defendant’s alleged employment discrimination. Instead of submitting
these claims to the administrative body established under the FEHA, the
plaintiff filed a civil suit in court. The Supreme Court held exhaustion of
administrative remedies under the FEHA necessary before plaintiff may
proceed with her statutory FEHA claims, but held such prior resort unnecessary
before plaintiff may proceed with her civil suit based on the common law
claims for damages. Id. at 88.

The defendant in Rojo argued that the policy considerations underlying the
exhaustion doctrine justified extending the requirement to plaintiff’s related
common law claims not specifically within the agency’s jurisdiction, relying on
Westlake Community Hosp. v. Superior Court, supra . The Supreme Court
distinguished Westlake as a case dealing with exhaustion of private internal
remedies, not external administrative remedies in a public context. The Court
then concluded [202/203]that, unlike other cases which extended Westlake to
external public agencies, the instant case did not involve “such a paramount
need for specialized agency fact-finding expertise as to require exhaustion of
administrative remedies before permitting an aggrieved person to pursue … her
related nonstatutory claims and remedies in court.” Id. at 88.

What is the significance of the Rojo court’s distinction between “private

internal” and “public external” administrative remedies? Does this distinction
adequately distinguish Westlake? After Rojo, what tribunal options does an
employee have when pursuing employment discrimination claims?

(4) In 1943, the California Supreme Court adopted the rule that when the
Legislature has provided that a petitioner before an administrative tribunal
“may” seek reconsideration or rehearing of an adverse decision of that tribunal,
the petitioner always must seek reconsideration in order to exhaust his or her
administrative remedies prior to seeking recourse in the courts. Alexander v.
State Personnel Bd., 22 Cal. 2d 198, 137 P.2d 433 (1943) . Subsequently, in
Sierra Club v. San Joaquin Local Agency Formation Com., 21 Cal. 4th 489, 87
Cal. Rptr. 2d 702, 981 P.2d 543 (1999) , the Supreme Court overruled
Alexander and abandoned its rule, and held that the right to petition for judicial
review of a final decision of an administrative agency is not necessarily
affected by the party’s failure to file a request for a reconsideration or rehearing
before that agency. The court observed that a request for reconsideration of an
agency action may be necessary, however, where appropriate to raise matters
not previously brought to the agency’s attention.

(5) Exhaustion of administrative remedies is not required where the

administrative procedure itself is challenged for failure to comply with
minimum procedural safeguards imposed by statute or by the Due Process
Clause. See Unnamed Physician v. Bd. of Trustees of Saint Agnes Med.
Center, 93 Cal. App. 4th 607, 619-621,113 Cal. Rptr. 2d 309 (2001).
Footnotes:

6 Further statutory references to sections of an undesignated code are to the Government Code.

7 Courts have not required exhaustion where the petitioner raises a facial challenge to the
constitutionality of the administrative agency’s jurisdictional statute. (See, e.g., Lund v. California State
Employees Assn., supra, 222 Cal. App. 3d at p. 183.) But no such challenge is raised here.

8 We express no opinion as to the propriety of PERB’s filing the “Statement of Jurisdiction” in the
superior court. Although DPA contends the respondent superior court erred by considering that statement in
reaching its decision, DPA never objected to the statement below, and therefore waived any objection.

Nor do we intend to suggest a rule that would permit an administrative agency to control the question of
its jurisdiction by filing a “Statement of Jurisdiction” in judicial proceedings. However, because PERB did so
in this case, it is obvious the process of seeking a writ to compel PERB to assume jurisdiction would have
greatly increased the time required to resolve this dispute, thus aggravating the potential irreparable injury.
The need to resolve the legal questions in this case by an urgent deadline distinguishes Morton v.
Hollywood Park, Inc. (1977) 73 Cal. App. 3d 248 at page 254 [139 Cal. Rptr. 584] , where the court
recognized the usual rule that exhaustion of administrative remedies, when necessary, includes petitioning
for extraordinary relief to compel the administrative agency to take jurisdiction.

[B] Exceptions to the Exhaustion Requirement

The Department of Personnel Administration v. Superior Court opinion,

reproduced supra, sets forth the generally recognized exceptions to the
exhaustion doctrine. Their application is limited; although, as the opinion
illustrates, an exception can occasionally excuse exhaustion.

What factors did the court find particularly significant in applying the
exceptions in Department of Personnel Administration? Completion of an
administrative process prior to suit often means considerable delay before a
definitive ruling on important legal questions. Precisely why did this delay
constitute “irreparable injury” in Department of Personnel Administration?

Why was resort to the PERB administrative process considered “futile”? The
futility exception is a narrow one. George Arakelian Farms, Inc. v. Agric.
Labor Relations Bd., 40 Cal. 3d 654, 662-63, 221 Cal. Rptr. 488, 710 P.2d 288
(1985). It is not sufficient that a party can show what the agency’s ruling would
be on a particular issue or defense; rather exhaustion is required unless the
petitioner can positively demonstrate what the agency’s ruling would be on a
particular case. Coachella Valley Mosquito & Vector Control Dist. v.
California Public [203/204]Employment Relations Bd., 35 Cal. 4th 1072,
1081, 29 Cal. Rptr. 3d 234, 112 P.3d 623 (2005); Jonathan Neil & Assoc., Inc.,
v. Jones, 33 Cal. 4th 917, 936, 16 Cal. Rptr. 3d 849, 94 P.3d 1055 (2004).

Although the PERB filed a “Statement of Jurisdiction,” the agency did not
indicate how it would rule on the merits of plaintiff’s claims. Does this mean
that whenever an agency states it lacks jurisdiction over a claim, the futility
exception entitles the plaintiff to judicial review of both the jurisdictional
question and the merits without any further resort to the administrative process?
See Coachella Valley Mosquito, supra, 35 Cal. 4th at 1082 (“In deciding
whether to entertain a claim that an agency lacks jurisdiction before the agency
proceedings have run their course, a court considers three factors: the injury or
burden that exhaustion will impose, the strength of the legal argument that the
agency lacks jurisdiction, and the extent to which administrative expertise may
aid in resolving the jurisdictional issue”). Is Department of Personnel
Administration really a proper application of the futility exception, as
distinguished from the irreparable injury exception?

The “Statement of Jurisdiction” filed by PERB in the superior court

apparently was not the result of adversarial briefing by the parties. If the
defendant DPA had objected to this Statement, should the courts have
considered it as part of their exhaustion analyses? Although the Court of Appeal
questioned the propriety of PERB’s Statement, what role did this Statement play
in that court’s analysis?

The Court of Appeal in Department of Personnel Administration noted that

constitutional challenges to the application of an administrative agency scheme
must be initially presented to the agency for determination. What are the policy
reasons for requiring exhaustion of such legal issues? Should exhaustion be
excused where the plaintiff presents a legal issue and the facts are undisputed?
Does any recognized exception specifically excuse exhaustion on this basis
alone?

[C] Waiver

The question of whether failure to exhaust administrative remedies is

jurisdictional is a matter of some debate. Most courts follow the reasoning in
Green v. City of Oceanside , 194 Cal. App. 3d 212, 222, 239 Cal. Rptr. 470
(1987), and state that the exhaustion doctrine does not implicate fundamental
subject matter jurisdiction but rather is a procedural prerequisite to suit. E.g.,
Wallis v. Farmers Group, Inc. , 220 Cal. App. 3d 718, 735–36, 269 Cal. Rptr.
299 (1990). These courts therefore hold that the exhaustion defense is waived if
not raised and preserved in the trial court. Id. However, the Supreme Court
occasionally addresses the issue of exhaustion even though not raised by the
parties. E.g., Hittle v. Santa Barbara County Employees Retirement Assn., 39
Cal. 3d 374, 384, 216 Cal. Rptr. 733, 703 P.2d 73 (1985) . Is there any way to
reconcile these two views of waiver of the exhaustion defense? Which view is
better? Why?

[204/205]

[D] Exhaustion and Primary Jurisdiction

Although closely related to exhaustion of administrative remedies, primary

jurisdiction is a distinct doctrine. The California Supreme Court recently
compared the two doctrines in Farmers Insurance Exchange v. Superior
Court, 2 Cal. 4th 377, 390–92, 6 Cal. Rptr. 2d 487, 826 P.2d 730 (1992) , by
quoting with approval United States v. Western Pac. Railroad Co. , 352 U.S.
59, 63–64, 77 S. Ct. 161, 1 L. Ed. 2d 126 (1956), as follows:

“Exhaustion” applies where a claim is cognizable in the first

instance by an administrative agency alone; judicial interference is
withheld until the administrative process has run its course. “Primary
jurisdiction,” on the other hand, applies where a claim is originally
cognizable in the courts, and comes into play whenever enforcement of the
claim requires the resolution of issues which, under a regulatory scheme,
have been placed within the special competence of an administrative body;
in such a case the judicial process is suspended pending referral of such
issues to the administrative body for its views. * * *

The policy reasons behind the two doctrines are similar and
overlapping. The exhaustion doctrine is principally grounded on concerns
favoring administrative autonomy (i.e., courts should not interfere with an
agency determination until the agency has reached a final decision) and
judicial efficiency (i.e., overworked courts should decline to intervene in
an administrative dispute unless absolutely necessary). As explained
 above, the primary jurisdiction doctrine advances two related policies: it
enhances court decisionmaking and efficiency by allowing courts to take
advantage of administrative expertise, and it helps assure uniform
application of regulatory laws.

No rigid formula exists for applying the primary jurisdiction doctrine.

Instead, resolution generally hinges on a court’s determination of the extent
to which the policies noted above are implicated in a given case. This
discretionary approach leaves courts with considerable flexibility to avoid
application of the doctrine in appropriate situations, as required by the
interests of justice.

The California Supreme Court in Farmers Insurance relied on several

federal court cases as precedent for recognizing the primary jurisdiction
doctrine. Id. at 388–90. Is the primary jurisdiction doctrine more appropriate
for federal courts than for state courts? Why? Primary jurisdiction is analogous
to what federal court abstention doctrines? See Colorado River Water
Conservation Dist. v. United States, 424 U.S. 800, 96 S. Ct. 1236, 47 L. Ed. 2d
483 (1976); Burford v. Sun Oil Co., 319 U.S. 315, 63 S. Ct. 1098, 87 L. Ed.
1424 (1943).

The plaintiff in Farmers Insurance, the People, filed suit against various
insurers, alleging unfair business practices and seeking civil penalties and
injunctive relief to enforce the Good Driver Discount policy provisions of the
Insurance Code enacted pursuant to Proposition 103. The Supreme Court first
determined that the People’s unfair business practices claims were originally
cognizable in the courts, and did not require exhaustion of administrative
remedies. Id. at 391. The Court [205/206]then proceeded to endorse and apply the
primary jurisdiction doctrine, and directed the trial court to stay judicial
proceedings pending administrative proceedings before the Insurance
Commissioner. The Court held that the interest of judicial economy and
concerns for uniformity in applying complex insurance regulations militated in
favor of staying the judicial action pending completion of the administrative
proceedings. Id. at 396–402. See also Jonathan Neil & Assoc., Inc. v. Jones,
33 Cal. 4th 917, 16 Cal. Rptr. 3d 849, 94 P.3d 1055 (2004) (reversing judgment
for defendant insured because trial court abused its discretion in not staying
court proceeding and referring premium dispute issue to Insurance
Commissioner under doctrine of primary jurisdiction, even though doctrine of
exhaustion of administrative remedies not applicable).
 The Supreme Court in Farmers Insurance characterized Rojo v. Kliger,
supra, as a recent application of primary jurisdiction principles. Farmers
Insurance, 2 Cal. 4th at 395–96. Do you understand why the Supreme Court
referred to Rojo in this manner? The Supreme Court in Rojo concluded that the
plaintiff there did not have to submit her common law claims for damages
resulting from employment discrimination to the FEHA administrative process
prior to commencing a civil suit. Why did the Supreme Court find prior resort to
the administrative process unnecessary in Rojo, but necessary in Farmers
Insurance? What difference in the claims and administrative processes in those
two cases caused the Court to reach such different conclusions?

§ 4.07 THE DOCTRINE OF LACHES

[A] Elements of Defense

[1] In General

Statutes of Limitations apply to all civil causes of action, whether in law or in

equity. CCP § 312. In addition, the doctrine of laches applies specifically to
actions seeking equitable remedies. If the defense of laches is established, the
court will refuse equitable relief even though the relevant statutory period of
limitations has not yet expired. See, e.g., Conti v. Bd. of Civil Service
Commissioners., 1 Cal. 3d 351, 82 Cal. Rptr. 337, 461 P.2d 617 (1969) (citing
numerous other cases).

The basic elements of this judge-made doctrine are: “(1) The failure to assert
a right, (2) for some appreciable delay, (3) which results in prejudice to the
adverse party.” Marriage of Powers, 218 Cal. App. 3d 626, 642, 267 Cal.
Rptr. 350 (1990). A frequently adopted general statement of the doctrine is in
Miller v. Eisenhower Med. Center, 27 Cal. 3d 614, 624, 166 Cal. Rptr. 826,
614 P.2d 258 (1980) , quoting from Conti v. Bd. of Civil Service
Commissioners, supra, 1 Cal. 3d at 359:

[T]he affirmative defense of laches requires unreasonable delay in

bringing suit “plus either acquiescence in the act about which plaintiff
complains or prejudice to the defendant resulting from the delay ….”
Prejudice is never presumed; rather it must be affirmatively demonstrated
by the defendant in order to sustain his burdens of proof and the production
of evidence on the issue …. Generally speaking, the existence of laches
[206/207]is a question of fact to be determined by the trial court in light of all
 of the applicable circumstances, and in the absence of manifest injustice or
a lack of substantial support in the evidence its determination will be
sustained.

Why is there a judicially created doctrine of laches which may bar an

equitable action even though the action is timely commenced according to the
applicable statute of limitations? What are the policy reasons supporting this
equitable defense? Are these policies any different than the policies behind
statutes of limitations? What are the criticisms of this doctrine, both from a
policy and an interpretive viewpoint? See generally Gail L. Heriot, A Study in
the Choice of Form: Statutes of Limitation and the Doctrine of Laches, 1992
B.Y.U. L. Rev. 917 (1992) . The specific requirements of the California laches
doctrine are discussed below.

[2] Unreasonable Delay

The first prerequisite of the defense of laches is delay in bringing an action.

But not just any delay will suffice — the delay must be considered
“unreasonable.” What factors do the courts consider in determining whether
delay by a plaintiff is “unreasonable”? Unlike statutory time limitations, there
are no hard-and-fast rules here: “The unreasonableness of delay cannot be
considered in a vacuum, but must be measured against the applicable statute of
limitations and the practicalities included in deciding whether to proceed with a
lawsuit.” Hahn v. Bd. of Ed., 205 Cal. App. 3d 744, 753, 252 Cal. Rptr. 471
(1988) (five-month delay in filing writ of mandate by teacher contesting
reassignment not unreasonable in light of applicable three-year statute of
limitations and given the concerns plaintiff must weigh before undertaking legal
action, such as the potential effect of litigation on one’s future career, the
chances of success, the availability of alternative employment and the expenses
involved).

Analyses in several opinions suggest that a primary factor is the length of the
plaintiff’s delay in comparison to the applicable statute of limitations. E.g.,
Marriage of Modnick, 33 Cal. 3d 897, 909, 191 Cal. Rptr. 629, 663 P.2d 187
(1983) (two-year delay in filing motion to vacate divorce decree after
discovery of fraud not unreasonable; well within three-year statute of limitations
for such actions contained in CCP § 338. In determining the reasonableness of
plaintiff’s delay for purposes of laches, this court is “guided by the applicable
statute of limitations for an action at law”). This factor is not dispositive. In
many cases a delay is deemed unreasonable even though considerable time
remains to commence the action under the relevant statute of limitations. See,
e.g., Conti v. Bd. of Civil Service Commissioners, supra, 1 Cal. 3d at 357, n.3,
and cases cited therein.

Another consideration in determining “unreasonableness” is whether there is

some difficulty or excuse which justifies the plaintiff’s delay in bringing the
action. A variety of factors may be relevant here, such as plaintiff’s financial
inability to file suit earlier, e.g., Forker v. Bd. of Trustees , 160 Cal. App. 3d
13, 20, 206 Cal. Rptr. 303 (1984); Chang v. City of Palos Verdes Estates , 98
Cal. App. 3d 557, 562–63, 159 Cal. Rptr. 630 (1979) ; plaintiff’s physical or
mental condition, e.g., Marriage of Modnick, supra (plaintiff not dilatory
where she suffered from chronic depression and did not immediately understand
significance of facts constituting fraud action); or conduct by the defendant
which induces the plaintiff to delay commencement of litigation, [207/208]e.g.,
Williams v. Marshall , 37 Cal. 2d 445, 456, 235 P.2d 372 (1951) (delay of 15
months held excusable where defendant encouraged negotiations regarding
contract fraud, and plaintiff sought rescission after continuous negotiations
failed; “[w]here a party protests promptly on discovering that he has been
defrauded in making a contract, and enters into negotiations for a peaceful
settlement, which fail, a complaint filed within a reasonable time after such
failure is not barred by laches”); Mashon v. Haddock, 190 Cal. App. 2d 151,
174, 11 Cal. Rptr. 865 (1961) (defendant by his misrepresentations about the
need for an accounting was estopped from relying upon laches; “[w]here the
delay in commencing action is induced by the conduct of the defendant it cannot
be availed of by him as a defense.”).

The courts do not provide clear rules as to which of these various factors
will be most significant in particular cases. What constitutes unreasonable delay
necessarily varies with the circumstances of each case.

Delays as long as eleven and twelve years have been held not to be
unreasonable. E.g., Blue Cross of Northern Cal. v. Cory , 120 Cal. App. 3d
723, 743-44, 174 Cal. Rptr. 901 (1981) (11-year delay by State Controller in
bringing action to recover funds escheated to the state not unreasonable);
Huddleson v. Huddleson, 187 Cal. App. 3d 1564, 1573–74, 232 Cal. Rptr. 722
(1986) (12-year delay to commence action to establish community property
interest in retirement benefits not unreasonable where plaintiff acted promptly
following reports of judicial precedent recognizing such interest).

Delays as short as one month have been held to be unreasonable, e.g.,

Gutknecht v. Paul, 83 Cal. App. 2d 356, 188 P.2d 764 (1948) ; as well as
delays of only a few months, e.g., American Federation of Teachers v. Bd. of
Ed., 77 Cal. App. 3d 100, 108–09, 143 Cal. Rptr. 264 (1977) (six-month delay
in bringing mandamus by temporary employee claiming probationary status as
teacher is unreasonable), although such short delays usually do not support this
element of laches. See Hahn v. Bd. of Ed., 205 Cal. App. 3d 744, 753, 252 Cal.
Rptr. 471 (1988) (“While [mandamus] actions may be barred by laches after
delays for less than the limitations period …, no case we have found has upheld
laches as a defense for a delay of only five months.”). For a more thorough
discussion of the cases analyzing unreasonable delay, as well as the factors
applied in these cases, see Ann Taylor Schwing, California Affirmative,
Defenses, Laches, §§ 26:1-26:14 (2011).

To some extent, the determination of the reasonableness of the delay is

related to the element of prejudice, discussed in detail in the next section, infra.
See Marriage of Modnick, supra, 33 Cal. 3d at 908 (“[T]he greater the
prejudice, the more timely must be the relief sought.”). Consequently, a
relatively short delay by plaintiff may be “unreasonable” where defendant
demonstrates substantial prejudice. E.g., Finnie v. Town of Tiburon , 199 Cal.
App. 3d 1, 14, 244 Cal. Rptr. 581 (1988) (Plaintiff’s action to enjoin special
town election barred by laches where plaintiff did not commence action until
three months after first learning of, and just two weeks before, the scheduled
election. Defendant town demonstrated ample prejudice resulting from this
delay, such as extensive election preparations, printings, and expenses).

[208/209]

Is it possible for a plaintiff’s delay to be considered reasonable even though

the defendant has demonstrated prejudice due to the delay? In Hahn v. Bd. of
Ed., supra, the plaintiff waited five months before filing a writ of mandamus
challenging the defendant Board’s removal of her as school Coordinator and
reassignment to the classroom. Defendant asserted laches and argued prejudice
caused by plaintiff’s delay because it hired a new Coordinator, and had no need
for two. The court concluded that despite this prejudice, the plaintiff’s delay
was not unreasonable. Why is this type of prejudice not a factor in determining
the reasonableness of plaintiff’s delay, for purposes of laches, in an employee
reinstatement action?

[3] Prejudice

The doctrine of laches requires not only unreasonable delay but also
prejudice to the defendant resulting from the delay. E.g., Conti v. Bd. of Civil
Service Commissioners, supra. Prejudice will not be presumed, but must be
affirmatively proved by the defendant. Id.; Miller v. Eisenhower Med. Center,
supra. Where the defendant fails to meet his burdens of proof and production of
evidence on the issue of prejudice, laches will be denied regardless of how
unreasonable the plaintiff’s delay. E.g., Ragan v. City of Hawthorne, 212 Cal.
App. 3d 1361, 1368, 261 Cal. Rptr. 219 (1989) (laches not established because
no substantial evidence of prejudice to defendant resulting from plaintiff’s
three-year delay in contesting denial of retirement application); Bono v. Clark,
103 Cal. App. 4th 1409, 1419–20, 128 Cal. Rptr. 2d 31 (2002) (Despite finding
of unreasonable delay, laches held not applicable because defendant presented
no evidence of prejudice).

Whether a defendant’s evidence establishes the requisite prejudice for laches

depends on the circumstances of the case. The defendant must show that he did,
or omitted to do, something due to the delay that detrimentally altered his
position with respect to the plaintiff’s asserted claim or right. Conti v. Bd. of
Civil Service Commissioners, supra, 1 Cal. 3d at 360 (“If the delay has caused
no material change in statu quo, ante, i.e., no detriment suffered by the party
pleading the laches, his plea is in vain.”); Johnson v. City of Loma Linda, 24
Cal. 4th 61, 99 Cal. Rptr. 2d 316, 5 P.3d 874 (2000) (laches barred plaintiff
from pursing FEHA claim against defendant City where plaintiff waited more
than 18 months after City’s personnel board rejected plaintiff’s grievance before
he filed his petition for administrative mandate in superior court, and then failed
to pursue this petition for another 18 months; this unreasonable delay prejudiced
defendant City because remedies sought by plaintiff, reinstatement and back pay,
would require defendant to alter its new management structure and compel
defendant to make double payments).

Typically, the courts find prejudice where defendant demonstrates it has

incurred considerable expenses in reliance on plaintiff’s inaction, such that
enforcement of plaintiff’s claimed right is inequitable, e.g., Finnie v. Town of
Tiburon, supra; Holt v. Monterey County, 128 Cal. App. 3d 797, 801, 180 Cal.
Rptr. 514 (1982) (challenge to approval of subdivision barred by laches where
plaintiff delayed 2 1/2 years in bringing suit and developers expended over $4
million in reliance on the approval); where the defendant has already hired a
permanent replacement during plaintiff’s delay in bringing a reinstatement
action, e.g., Vernon Fire Fighters Assn. v. City of Vernon , 178 Cal. App. 3d
710, 723–27, 223 Cal. Rptr. 871 (1986) (laches barred plaintiffs’ suit for
reinstatement as fire fighters where defendant hired [209/210]permanent
replacements during four-year delay and now has no openings, and plaintiffs
have not waived claims for back pay and benefits); but see Farmer v. City of
Inglewood, 134 Cal. App. 3d 130, 142, 185 Cal. Rptr. 9 (1982) (city’s hiring of
permanent replacement employee during 15-month delay by plaintiff in bringing
action for reinstatement not found to constitute sufficient prejudice for laches,
following Chang v. City of Palos Verdes Estates , 98 Cal. App. 3d 557, 563,
159 Cal. Rptr. 630 (1979)); and where the plaintiff claims property after an
unreasonable delay, and the property has significantly increased in value during
the interim. See, e.g., Hamud v. Hawthorne, 52 Cal. 2d 78, 86, 338 P.2d 387
(1959).

Prejudice may also be established where the defendant proves that the delay
has resulted in loss of significant evidence. E.g., Getty v. Getty, 187 Cal. App.
3d 1159, 1170, 232 Cal. Rptr. 603 (1986) (death of important witness during
time of delay constituted requisite prejudice); City and County of San
Francisco v. Pacello, 85 Cal. App. 3d 637, 645 149 Cal. Rptr. 705 (1978)
(destruction of transcript of relevant administrative hearing during delay was
manifest prejudice); Vernon Fire Fighters Assn. v. City of Vernon, supra
(prejudice found in part because witnesses and evidence no longer available
due to death and retirement).

The requisite prejudice to defendant must be the result of the plaintiff’s delay,
and not be due to the defendant’s conduct or some other cause. See, e.g., Ateeq
v. Najor, 15 Cal. App. 4th 1351, 1359, 19 Cal. Rptr. 2d 320 (1993) (no laches
where delay due to defendant’s duress); Marriage of Powers, 218 Cal. App. 3d
626, 643, 267 Cal. Rptr. 350 (1990) (laches not applicable where wife’s estate
waited four years to claim husband’s pension benefits as community property,
even though defendant husband alleged prejudice because he retired in reliance
during interim; injury held attributable to husband because he knew community
property interest in retirement benefits was unresolved and would be subject to
claim by wife’s estate, but he took no steps to resolve issue prior to decision to
retire); Marriage of Park, 27 Cal. 3d 337, 345, n.7, 165 Cal. Rptr. 792, 612
P.2d 882 (1980) (relitigation of community property rights will cause expenses,
but such prejudice does not arise out of delay in bringing motion to vacate for
extrinsic fraud).

[B] Actions to Which Laches Is Applicable

The defense of laches is available in equitable actions but cannot be asserted

as a bar to an action at law for money damages. Abbott v. City of Los Angeles,
50 Cal. 2d 438, 462, 326 P.2d 484 (1958) ; Bodily v. Parkmont Village Green
Homeowners Assn., Inc., 104 Cal. App. 3d 348, 358, 163 Cal. Rptr. 658
(1980). Laches can also be asserted in legal actions where an equitable remedy
is sought, such as injunction relief. E.g., Finnie v. Town of Tiburon , 199 Cal.
App. 3d 1, 14, 244 Cal. Rptr. 581 (1988); see also Tustin Community Hosp.,
Inc. v. Santa Ana Community Hosp. Assn., 89 Cal. App. 3d 889, 153 Cal. Rptr.
76 (1979); constructive trust, e.g., David Welch Co. v. Erskine & Tulley , 203
Cal. App. 3d 884, 893–94, 250 Cal. Rptr. 339 (1988) (cction for breach of
fiduciary duty); or rescission of contract, e.g., Leeper v. Beltrami, 53 Cal. 2d
195, 211–17, 1 Cal. Rptr. 12, 347 P.2d 12 (1959) (action for rescission,
whether legal or equitable, barred by unjustified delay regardless of whether
action is for recovery of property, quiet title, or cancellation of deed); see Civil
Code §§ 1691, 1693.

[210/211]

However, laches is not available in actions which seek declaratory relief in

addition to money damages. E.g., Abbott v. City of Los Angeles, 50 Cal. 2d 438,
462, 326 P.2d 484 (1958); Northridge Hosp. Found. v. Pic’N’ Save No. 9, Inc.,
187 Cal. App. 3d 1088, 1101, 232 Cal. Rptr. 329 (1986) (Laches is not
available as a defense to an action at law, though combined with the cumulative
remedy of declaratory relief. Unlawful detainer is a legal action and therefore
laches not a bar).

The California courts have identified a number of equitable actions to which

laches may be a defense. These include actions for an accounting, actions for
partition of property, actions to establish or enforce a trust, actions to establish
community property rights, and stockholders’ derivative actions. See Ann
Taylor Schwing, California Affirmative, Defenses, Laches, §§ 26:7-26:13
(2011), and authorities cited therein.

The courts also make laches available in a number of important review

procedures, such as actions seeking judicial review of an administrative
decision, e.g., Miller v. Eisenhower Med. Center, supra (Supreme Court
suggested that in such cases there may be substantial reasons for finding laches
for delays for less than the applicable statute of limitations); Conti v. Bd. of
Civil Service Commission, supra (laches held applicable to administrative
mandamus actions); actions to set aside judgments, see, e.g., Marriage of
Modnick, supra (laches available in motion to set aside community property
aspects of dissolution degree on grounds of extrinsic fraud); Marriage of Park,
27 Cal. 3d 337, 345, 165 Cal. Rptr. 792, 612 P.2d 882 (1980) ; but see
Marriage of Baltins, 212 Cal. App. 3d 66, 91–92, 260 Cal. Rptr. 403 (1989)
(Laches, strictly speaking, is not an appropriate doctrine for motion to set aside
because it shifts the burden of proving unreasonable delay to the party opposing
the motion. Instead, the party seeking to set aside a judgment has the burden of
showing reasonable diligence in seeking relief); and to petitions for mandamus,
prohibition or certiorari seeking review of trial court rulings. See, e.g.,
Peterson v. Superior Court, 31 Cal. 3d 147, 163, 181 Cal. Rptr. 784, 642 P.2d
1305 (1982).

Laches is also a statutorily recognized defense to certain actions, such as

actions by one spouse against the other for relief from breach of fiduciary duty
with respect to community property, Family Code § 1101(d)(3); and actions for
rescission of contracts, Civil Code §§ 1691 and 1693. However, a 2003
amendment to Family Code § 4502 has eliminated the defense of laches in
actions brought by an individual to enforce a judgment for child, family or
spousal support. See Marriage of Garcia, 111 Cal. App. 4th 140, 3 Cal. Rptr.
3d 370 (2003).

Although available as a defense, laches apparently is disfavored when its

application would defeat a strong rule of policy adopted for public protection or
benefit. See, e.g., County of Los Angeles v. Berk, 26 Cal. 3d 201, 222, 161 Cal.
Rptr. 742, 605 P.2d 381 (1980) (laches will not be asserted against the
government to defeat a claim of public recreational easement in beach, when to
do so would nullify a strong rule of policy adopted for the benefit of the public);
Marriage of Lugo, 170 Cal. App. 3d 427, 435-36, 217 Cal. Rptr. 74 (1985)
(Despite five-year delay, county not estopped from collecting arrearages in
child support payments as reimbursement for welfare payments. The doctrine of
laches “is rarely invoked [211/212]against a public entity to defeat a policy
adopted for the protection of the public, such as in the present case”).

[C] Manner of Asserting Laches

Laches is an affirmative defense, and should be raised by an answer which

states facts establishing the defense. See Conti v. Bd. of Civil Service
Commissioners, supra, 1 Cal. 3d at 361. Laches may also be raised by
demurrer, “but only if the complaint shows on its face unreasonable delay plus
prejudice or acquiescence.” Id. at 362; Leeper v. Beltram, supra. And even if a
complaint alleges these elements, a demurrer will not be sustained where the
complaint also alleges justification for the delay. E.g., Barndt v. County of Los
Angeles, 211 Cal. App. 3d 397, 402–403, 259 Cal. Rptr. 372 (1989) . Generally
speaking, the existence of laches is a question of fact. Conti v. Bd. of Civil
Service Commissioners, supra. After pleaded as an affirmative defense, what
procedural device is appropriate for raising laches?

Laches may be raised by the trial court on its own motion. See, E.g., Ragan v.
City of Hawthorne, supra; City and County of San Francisco v. Pacello, 85
Cal. App. 3d 637, 644-47, 149 Cal. Rptr. 705 (1978) (trial court may find
laches even where not pleaded if it appears from the complaint or the evidence;
upheld here where substantial evidence of unexplained 8 1/2-year delay causing
prejudice appears in complaint and stipulated facts).

The party asserting laches has the burden of proof and production of evidence
on the elements of this defense. Miller v. Eisenhower Med. Center, supra .
Because laches is a question of fact, the defense must be presented in some
manner at the trial court level and cannot be initially asserted on appeal. See
California Tahoe Regional Planning Agency v. Day & Night Electric, Inc. ,
163 Cal. App. 3d 898, 903, n.1, 210 Cal. Rptr. 48 (1985) . The determination of
laches is addressed to the discretion of the trial court, and its determination will
be sustained on appeal unless there is a manifest injustice or a lack of
substantial support in the evidence. Miller v. Eisenhower Med. Center, supra ,
27 Cal. 3d at 624; Johnson v. City of Loma Linda, 24 Cal. 4th 61, 68, 99 Cal.
Rptr. 2d 316. 5 P.3d 874 (2000) (generally, a trial court’s laches ruling will be
sustained on appeal if there is substantial evidence to support the ruling).
[213/214]
Chapter 5

CALIFORNIA CONFLICT OF LAWS DOCTRINE

§ 5.01 INTRODUCTORY NOTE

Whenever litigation has a connection with more than one state, the court must
determine which state’s legal rules should govern the various issues in the case.
This determination is based on a “choice of law” or, using traditional California
terminology, a “conflict of laws” analysis. This chapter will explore the choice-
of-law doctrine developed and applied by the state courts in California.

A choice-of-law decision determines what law controls with respect to a

variety of important litigation issues such as statute of limitations, substantive
tort or contract law, and the amount and type of damages. Consequently, a
choice-of-law decision may determine the very success or failure of a lawsuit.

Generally speaking, there is no choice-of-law problem where litigation has

connections only with one state, and that state is also the forum state. A
California court will simply apply California law to any case where the parties,
events, and transactions relate only to California. But modern litigation often
involves multi-state considerations. The parties may not all be residents of
California, or some of the relevant transactions may have connections with
another state. Such multi-state cases usually require consideration of choice-of-
law questions.

Each state is free to adopt whatever choice-of-law doctrine it prefers, subject

only to minimal limitations imposed by the Due Process Clause of the
Fourteenth Amendment to the U.S. Constitution. See Allstate Insurance Co. v.
Hague, 449 U.S. 302, 101 S. Ct. 633, 66 L. Ed. 2d 521 (1981) (for a state’s
substantive law to be selected in a constitutionally permissible manner, that
state must have a significant contact or aggregation of contacts with the parties
and with the transaction giving rise to the litigation, creating state interests, such
that choice of its law is neither arbitrary nor fundamentally unfair). Choice-of-
law doctrine in most states, including California, is largely the result of court-
made development and not statutory enactment. In recent years, at least six
separate choice-of-law theories have found favor in one or more states. For a
brief discussion of these various theories, as well as a state-by-state survey of
choice-of-law doctrine, see Gregory E. Smith, Choice of Law in the United
States, 38 Hastings L.J. 1041 (1987); Symeon C. Symeonides, Choice of Law in
the American Courts in 2000: As the Century Turns, 49 Am. J. Comp. L. 1
(2001).

The California choice-of-law doctrine is not particularly difficult to state as a

series of black letter rules. For example, the current doctrine in multi-state tort
cases is succinctly stated as follows:

[214/215]

Analysis of a choice of law question proceeds in three steps: (1)

determination of whether the potentially concerned states have different
laws, (2) consideration of whether each of the states has an interest in
having its law applied to the case, and (3) if the laws are different and
each has an interest in having its law applied (a “true” conflict), selection
of which state’s law to apply by determining which state’s interests would
be more impaired if its policy were subordinated to the policy of the other
state. See Bernhard v. Harrah’s Club , 16 Cal. 3d 313, 320, 128 Cal. Rptr.
215, 546 P.2d 719 (1976).

Although easy to state, this doctrine is almost meaningless when stated in an

historical and factual vacuum. Consequently, this chapter will begin with a brief
historical account of choice-of-law doctrine, generally and in California. Next,
this chapter will present several California cases and case summaries in those
areas which typically involve the most difficult choice-of-law problems, i.e.,
multi-state tort and contract cases. Finally, the chapter will survey California
choice-of-law problems in a few other areas, such as statute of limitations,
corporations, and family law.

A few words of caution about California choice-of-law doctrine, and these

materials. Choice-of-law analysis is a complex, difficult, and fascinating topic.
The doctrine is also a continually evolving one, both nationally and in
California. Perhaps more than any other area of law, choice-of-law theories are
influenced by scholarly thinking and writings. This undoubtedly explains why
the theories are sometimes contradictory, incomprehensible, and difficult to
apply in actual cases! But it also explains why the courts repeatedly rely on
analysis contained in law review articles. One way to better understand
California’s choice-of-law doctrine is to read the articles often cited by the
California courts. Accordingly, this chapter includes numerous quotations from,
and citations to, these influential scholarly writings.

§ 5.02 AN OVERVIEW OF THE HISTORICAL

EVOLUTION OF CHOICE-OF-LAW THEORIES
[A] The First and Second Restatements

California, as well as every other state, developed a choice-of-law doctrine

of some type as soon as multi-state cases began appearing in state courts. The
first real attempt to unify state choice-of-law doctrines came in 1934 with the
adoption by the American Law Institute (ALI) of the Restatement of Conflict of
Law. A brief summary of the First Restatement, as well as of the Second
Restatement adopted by the ALI in 1971, is set forth below.

[215/216]

William M. Richman and William L. Reynolds,

UNDERSTANDING CONFLICT OF LAWS
(3d ed. 2002) pp. 179–218 (footnotes omitted)*

THE FIRST RESTATEMENT

The traditional system for choice of law in the United States was the system
embodied in the First Restatement. Based on the vested rights theory, the system
consisted of a few broad, hard and fast rules coupled with an array of escape
devices. Although most conflicts scholars have by now abandoned the First
Restatement system, it retains surprising popularity among the courts. * * *

The First Restatement — Theory

[a] A Bit of History

 In order to understand the First Restatement system for choice of law and the
vested rights theory, upon which it was based, it is important to consider a bit of
the history of choice-of-law theory. Early conflicts theorists asked a question
which modern writers are inclined to ignore: When an Ohio court decides a
conflicts case using a principle found in Michigan law, exactly what is it doing?
Is it “applying” the Michigan law, is it enforcing a Michigan “right,” or is it
creating an Ohio right which is modeled on a Michigan right which would have
existed had the case been a wholly Michigan case?

Joseph Story, the first American writer to treat the question, thought that the
forum court “applied” the foreign law based on the theory of comity — the
respect which one sovereign owes another. Because comity was a discretionary
doctrine, the forum court was not required to apply the foreign law, but did so
as a matter of courtesy. Dissatisfaction with this account of the choice of law
process spawned the Vested Rights Theory.

[b] Vested Rights

Some turn-of-the-century choice-of-law theorists objected to the notion of

comity. There were two criticisms. First, comity suggested that in a conflicts
case the forum court might “apply” foreign law, thus implying that the foreign
law operated outside the territory of the foreign sovereign. This notion
conflicted with the then-current territorial dogma that no law could have any
effect outside the territory of the sovereign which promulgated it. Second, the
theory of comity allowed too much rein to judicial discretion. It seemed to
suggest that a judge was free to decide on his own whether justice and
convenience required the application of foreign law. This expanded view of
judicial discretion was at odds with the prevalent notion of formalism, the view
that judges had little freedom and that their decisions were the inevitable result
of applying certain, relatively unchanging legal rules.

The vested rights theory provided an alternate view of the choice-of-law

process, [216/217]a view which was more acceptable to the territorialist and
formalist jurisprudence of the early twentieth century. The main proponents of
vested rights … held that foreign law could never operate outside the territory
of the foreign sovereign. Rather, the forum’s use of foreign law could be
explained in terms of the creation and enforcement of vested rights. In their
view, when an event (a tort, for example) occurred in a foreign territory, a right
was created. Because the only law that could operate in the foreign territory
was the law of the foreign sovereign, the existence and content of any such right
was determined by the foreign law. The forum court simply enforced the right
which had vested in the foreign territory according to the foreign law.

Under the theory, it was important to know when and where a particular right
vested, because the law of the place where the right vested would control the
content of the right. The practical result was a system of a few, broad relatively
rigid choice-of-law rules. Each governed a major area of the law (e.g., torts,
contracts, property) by identifying a particular contact (the tortious injury, the
making of the contract, the situs of the land) as the trigger for the vesting of a
right. Thus, questions in tort were decided by the law of the place of injury;
questions in contract, by the law of the place of making; and questions in
property, by the law of the situs of the land. * * *

The First Restatement in Practice — Broad Rules and Escape Devices

In spite of the conceptual difficulties with the vested rights theory, it was
adopted by the American Law Institute and incorporated into the First
Restatement. This traditional system of choice-of-law rules prevailed in most
American courts until the work of a new generation of judges and scholars
began to supplant it in the 1950s and 1960s. Even today, the First Restatement
system retains a good deal of vitality. In perhaps a third of the states, it is alive
and well as a the dominant general choice-of-law methodology. Furthermore,
even the states that have abandoned the First Restatement for most choice-of-
law problems retain it for issues involving interests in land.

The First Restatement system for choice of law consists of a few broad,
single-contact, jurisdiction-selecting rules coupled with an array of escape
devices. Each of these characterizations requires a brief comment. At first
glance, the rules do not appear to be few or broad; the Restatement contains
over 300 sections on choice of law. Most of the sections, however, can be
condensed into a few general summary rules. Nearly all questions in tort, for
example, are governed by the law of the place of injury, and nearly all questions
about property are governed by the law of the situs.

The rules of the First Restatement are jurisdiction-selecting rules. They pick
between competing states, not between competing rules. The court does not
consider the scope, content, or policy of the substantive rule of law until after
the state is chosen. Thus, in making the initial choice, the First Restatement rules
are not concerned with which substantive rule is “better,” or which validates the
parties’ intentions, or which is motivated by a policy which can be advanced by
its application in this case; rather, they are concerned only with identifying a
particular event and the jurisdiction (state) in which that event occurred.

[217/218]

Another feature of the First Restatement rules is that, unlike other choice-of-
law systems, they rely upon only one salient connection between the dispute and
the state. On the issue of the validity of a contract, for example, the Center of
Gravity Theory might look to several important contacts: the domicile of the
parties, the place where the contract was made, the place where it was to be
performed, the place where financial injury from breach might be felt. The First
Restatement considers only one contact: the place of making.

The courts that applied the First Restatement were not always satisfied with
the results produced by the simple, hard-and-fast rules. When faced with a rule
that required choice of X’s law when justice and common sense favored the law
of Y, the judges found ways to avoid the rule. Typically, they did not articulate
the considerations of policy, fairness, and party expectations that motivated their
decisions; conflicts theory of the time was too rigidly formalistic to permit so
grand a strategy. Rather, they invented escape devices — highly conceptual
maneuvers which permitted them to avoid an undesirable outcome without
breaking faith with the traditional system. Thus, they could recharacterize a
property issue as a tort problem and escape the law of the situs in favor of the
law of the place injury, or characterize a tort problem as a question of
procedure and escape the law of the place of injury in favor of the law of the
forum. Another possibility was renvoi; if the forum’s choice-of-law rule
directed the choice of X’s law and the result was offensive, the court could read
“X’s law” to mean X’s whole law — including its choice of law rules — which
might refer the issue back to forum law. Finally, courts occasionally took the
bull by the horns and refused for reasons of “public policy” to apply the law
suggested by the First Restatement’s rigid rules. * * *

Torts

[a] The Law of the Place of the Wrong

 The First Restatement specifies the law of the place of the wrong for nearly
all issues in torts. Thus, the law of the place of the wrong controls: the existence
of a legal injury (§ 378), defendant’s standard of responsibility (§ 381),
causation (§ 383), contributory negligence (§ 385), the fellow-servant rule (§
386), vicarious liability (§ 390), and the measure of damages (§ 412).

According to § 377, the place of the wrong is “in the state where the last
event necessary to make an actor liable for an alleged tort takes place.” In
almost all circumstances, the “last event” is the injury to the plaintiff, so the
“law of the place of the wrong” really means the law of the place of injury. To
put the matter flippantly, “look for the blood.” Typically, it does not matter that
defendant’s conduct may have occurred in another state. Thus, if defendant
standing in state A shoots plaintiff standing in state B, the law of B will control.
Similarly, if defendant negligently manufactures a product in state A which
injures plaintiff in state B, the law of B will control. * * *

[b] Escaping the Law of the Place of Injury

[1] Characterization

Decisions like [Alabama Great Southern R.R. Co. v.] Carroll [97 Ala. 126,
11 So. 803 (1892) [218/219](Alabama court must apply Mississippi negligence
law, which precludes recovery under fellow-servant rule, even though Alabama
is location of plaintiff’s residence, defendant’s residence, the contract of
employment, and the negligent act; solely because injury to plaintiff fortuitously
occurred in Mississippi)] reveal how arbitrary and unjust the place of injury
rule can be. Without abandoning the rule, courts were often able to avoid the
most egregious results by employing several conceptual escape devices. The
most fruitful was characterization. The ploy was to reclassify the issue for
decision as a non-tort issue and thus use another First Restatement rule to
generate a better result. In Grant v. McAuliffe [41 Cal. 2d 859, 264 P.2d 944
(1953)], the court used the substance/procedure distinction to recharacterize the
issue. Plaintiffs and decedent — all residents of California — were involved in
an auto accident in Arizona. Decedent died shortly after the accident, and
plaintiffs sued the administrator of his estate in California. Tort actions did not
survive the death of the tortfeasor under Arizona law, but they did survive
according to the law of California. Justice Traynor, writing for the Supreme
Court of California, avoided the application of the Arizona law and saved
plaintiff’s cause of action by classifying the issue of survival of actions as a
procedural question to be referred to the law of the forum rather than a tort issue
to be decided by the law of the place of injury.

A more typical use of characterization as an escape device involves changing

the substantive law category in which the case belongs. A well-known example
i s Haumschild v. Continental Casualty Co., [7 Wis. 2d 130, 95 N.W.2d 814
(1959)]. Plaintiff, a Wisconsin domiciliary, sued her ex-husband, also a
domiciliary of Wisconsin, for injuries which she received from his negligent
driving in California. California, the place of injury, had an interspousal
immunity rule; Wisconsin did not. Had the Wisconsin Supreme Court followed
the law of the place of injury, as dictated by Wisconsin precedent, plaintiff
would have been denied a recovery — a result the court found unpalatable.
Instead, the court was able to recharacterize the issue as a problem of status to
be governed by the law of the marital domicile — Wisconsin. * * *

Contracts

[a] The Place of Making

Before the first Restatement, American jurisdictions were divided over the
proper choice-of-law rule to govern the validity of contracts. Three principles
could claim some support: (1) the validation rule, which held that the validity of
a contract is controlled by the law that the parties presumably intended to
govern their dealings; (2) the place-of-performance rule, and (3) the place-of-
making rule. * * *

[T]he First Restatement adopted the place-of-making rule. Section 332

provides that the law of the place of making controls such issues of contract
validity as capacity, formalities, consideration, and defenses (illegality or fraud,
for example) which might make the contract void or voidable. Determination of
the place of making, therefore, is very important. * * *

There is only one major exception to the place-of-making rule. Section 358
provides that questions concerning details of performance are to be governed by
the [219/220]law of the place of performance. Such questions include the manner
of performance, the time and place of performance, the persons by and for
whom performance shall be rendered, the sufficiency of performance, and
excuses for non-performance. Although § 358 is the only major exception to the
place-of-making rule, it is an exception so large that it threatens to swallow the
rule. The Restatement was sensitive to this difficulty. Comment b to § 358
hedges by suggesting that the law of the place of performance “is not applicable
to the point where the substantial obligation of the parties is materially altered.”
Further, the Restatement acknowledges that it will not always be easy to
separate issues of validity from details of performance. * * *

[b] Escaping the Place of Making

Courts developed several techniques for escaping the place-of-making rule.

Two (manipulation of the place of making and use of the making/performance
distinction) are specialized devices, useful only in contract actions. Three
others (characterization, renvoi, and public policy) are the standard escape
techniques that courts have used in all sorts of cases. * * *

Property

It has been traditional in conflicts law to distinguish between immovable and

movable property. The distinction is generally comparable to that drawn
between real and personal property, except that a leasehold interest is classified
as an interest in immovable property in conflicts parlance, while in general
property parlance, it is considered personal rather than real property. The
organization of this Section follows the distinction drawn by the First
Restatement between interests in land and other sorts of property.

[a] Land

The First Restatement requires application of the law of the situs (the location
of the land) to nearly all questions concerning interests in land. The rule applies
to conveyances of land (§§ 214-222), adverse possession (§ 224), mortgages
and liens (§§ 225-231), marital property (§§ 237-238), trusts (§ 241), and
succession by will or intestacy (§§ 245-254). Indeed, the situs rule is among the
broadest of the First Restatement choice-of-law principles; it retains much of its
authority today, even though many modern courts have abandoned the First
Restatement in other areas. * * *

[b] Movables — Personal Property

[1] Inter Vivos Transactions

 [1] Inter Vivos Transactions

For nearly all inter vivos transactions of movables, the First Restatement
prescribes the law of the place where the movable was located at the time of the
transaction. Thus, the situs rule applies to conveyances (§§ 255-258), adverse
possession (§ 259), mortgages (§ 265), conditional sales (§ 272), liens and
pledges (§ 279), powers of appointment (§ 283), and trusts (§ 294). * * *

[2] Succession on Death

The First Restatement refers questions concerning testamentary disposition of

[220/221]movables and intestate succession of movables to the law of decedent’s
domicile at the time of death. * * *

The First Restatement — A Critique

The principal benefits claimed for the First Restatement system for choice of
law are ease of administration, predictability, and forum neutrality. By the use
of a few, simple rules, the Restatement sought to generate a system which was
easy to apply, certain of outcome, and not subject to change depending upon
where the suit was brought. The first goal was clearly attained; the rules are (at
least on the surface) easy to understand and apply. Predictability and forum
neutrality are another matter. If the rules were applied “right out of the box”
perhaps these ends could be reached, but the system of escape devices
substantially undermines predictability and forum neutrality. Further, the
importance of ease of application, predictability, and forum neutrality can be
easily overstated. A choice-of-law system which achieves those ends much
more efficiently than the First Restatement is one which directs the application
of the law of the state which is first (or last) in alphabetical order, yet no one
has seriously argued for such a system.

A preliminary problem with the First Restatement is its very simplicity. That
simplicity is bought at the price of insisting on a few broad rules which lump
together cases and issues which appear quite unrelated. In tort cases, for
example, the Restatement prescribes the law of the place of injury for all torts
from defamation to battery to misrepresentation. It seems improbable that such
diverse legal actions, restricted by widely different defenses and qualifications,
could all be profitably covered by a single choice-of-law rule. On the other
hand, the Restatement’s categories sometimes separate problems which should
be closely linked. A product liability plaintiff will typically plead a count of
strict liability in tort and a count in warranty. The two theories, one descended
from tort and the other from contract, seek to compensate the same injury, yet the
First Restatement will apply the law of the place of injury to one theory and the
law of the place of making to the other. That hardly passes an intuitive test of
rationality.

A far more serious problem with the First Restatement is that it often chooses
the law of a state with no interest in the resolution of the dispute. Suppose a
contract is negotiated in Connecticut for the delivery of goods in Connecticut by
a Connecticut seller to a Connecticut buyer. Although Connecticut is the only
state with a real interest in the transaction, if the parties had concluded their
negotiation at a trade convention in Florida, the Restatement would apply the
law of Florida to the contract. Surely that is a triumph of form over substance.

The reason for such anomalies is that the First Restatement rules are almost
entirely (and deliberately) blind to the policies behind competing internal laws.
Consider an automobile accident between two Californians, plaintiff and
defendant, which occurs about two miles south of the border between California
and Mexico. Suppose that plaintiff is seriously injured — about $200,000
worth. Further suppose that Mexico, desiring not to impoverish tortfeasors, has
established a negligence damage limitation of $6,000 but that California does
not limit damages because it favors full compensation for tort victims.
According to the Restatement, the law of Mexico should apply because Mexico
is the place of injury. But note how applying [221/222]Mexican law seriously
frustrates California’s policy of compensation without advancing Mexico’s goal
in the least. If Mexico is concerned about impoverishing tortfeasors, surely that
concern does not extend to Californians. Thus, the application of the First
Restatement’s mechanical formula produces a foolish result here for the simple
reason that the formula totally ignores the purposes behind Mexico’s and
California’s tort rules. Such blind adherence to the letter of the law, while
ignoring its spirit, would not be tolerated in a purely domestic case; why then
should it be the rule for conflicts cases?

A final problem with the First Restatement is the system of escape devices.
Basically the devices work to give some flexibility to the mechanical choice-of-
law rules. Because the rules by and large ignore government interests, the
policies behind legal rules, and justice in the individual case, the escape
devices have been used to import those considerations into the choice-of-law
process. In the hands of able and reflective judges, the escape devices have
been potent weapons for good. * * *

But even in the hands of able judges, the escape devices can be dangerous.
The danger is that First Restatement courts articulate only the technical
rationales for the escape devices — not the real policy interests and
considerations of justice which have, in fact, motivated them. In other words,
the escape device assures that the reasons for the court’s decision will have
little to do with the reasons announced in the court’s opinion. The result is that
the court has a freedom to indulge in unprincipled decision-making, which is
incompatible with the rule of law. Judges in our system have extraordinary
power; the requirement that their decisions be reasoned and public is one of the
only real constraints on that power. Devices which effectively hide the real
reasons for decisions considerably weaken that constraint and take our judicial
system far from the common law model of principled decision-making.

Despite its defects, the First Restatement has proved remarkably resilient in
the courts. The most recent exhaustive survey of American choice-of-law
decisions found that eleven jurisdictions still follow the traditional method in
contract or tort cases.

That total both over and understates the influence of the First Restatement
today. The understatement involves real property cases. The quoted total deals
only with contracts and tort conflict cases; in real property cases, courts of all
choice-of-law persuasions apply the situs rule almost universally. The
overstatement involves the level of commitment that First Restatement courts
show to the traditional lex loci methodology. Traditionalist courts routinely
deviate from the lex loci rules in insurance, usury, workers’ compensation, and
contract choice-of-law clause cases.

Another difficulty with the quoted total is that it reflects in part the absence of
recent choice-of-law decisions in some states. Part of the total, however,
represents a sizeable number of jurisdictions where recent decisions have
rejected the modern choice-of-law systems in favor of the comfortingly familiar
black letter rules of the First Restatement. In other words, in spite of its
inadequacies, the First Restatement retains considerable practical importance
today.

[222/223]
 The Second Restatement: History and Theory

[a] The Drafting History

Holmes’ famous aphorism that a page of history is worth a volume of logic

applies with special force to the Second Restatement. It is difficult to
understand the document and its hybrid method without some understanding of
the eighteen-year drafting history. The project began in 1953 as an attempt to
respond to the withering academic criticism of the First Restatement and to
accommodate the beginnings of a conflicts revolution that was occurring in the
courts. It ended in 1971 as a complex, negotiated settlement among several
warring factions of choice-of-law revolutionaries. As a descriptive
“restatement,” it was doomed to failure from the outset because it is impossible
to “restate” a revolution that is in progress and whose outcome is in doubt. As a
normative “pre-statement,” it has proved to be a huge success among the courts,
but an object of academic derision.

Repudiating the dogma of vested rights, the early drafts nevertheless retained
the First Restatement’s strong territorial bias but broadened its scope. Thus they
contained a multitude of specific jurisdiction-selecting rules, but they also
incorporated the “center of gravity” or “grouping of contacts” approach that had
begun to appear in progressive judicial opinions. Conspicuously absent,
however, was any serious attempt at policy analysis or consideration of the
content of competing internal rules. The predictable result of those omissions
was scathing criticism from the academic proponents of the more modern
theories, particularly Brainerd Currie and Albert Ehrenzweig. The response of
the drafters … was to attempt to co-opt the critics by incorporating many of
their ideas in the choice-of-law Principles of § 6. Three drafts were considered
between 1967 and 1969, when the Institute adopted the version which was
finally published in 1971. As a result of the drafting history, the final document
is, depending upon your point of view, either a balanced and sophisticated
amalgam or an incoherent mishmash.

[b] An Overview

The Restatement (Second) of Conflict of Laws is a complex approach to

choice of law that borrows from the wide array of traditional and modern
choice-of-law methodologies. * * * Like its predecessor, it is comprehensive
and detailed, containing hundreds of territorial choice-of-law rules divided by
subject matter (torts, contracts, property, etc.). It also incorporates, however,
much modern learning from the choice-of-law revolution including grouping-of-
contacts, interest analysis, validation, and party autonomy. To complicate
matters further, the reception of the Second Restatement has varied widely.
Excoriated by commentators, it has proved to be extremely popular among the
courts. Adopted by more than half of the states and influential, as well, in the
federal system, the Second Restatement is by far the most popular choice-of-law
regime in the country today. The courts have added a final level of complexity
with divergent interpretations of the Restatement’s basic approach, some of
which seems at odds with the intentions of the drafters.

Three basic elements define the choice-of-law approach of the Second

Restatement: (1) § 6 and the most significant relationship, (2) a few grouping-
of-contacts sections, and (3) numerous sections that provide choice-of-law rules
for specific legal [223/224]claims and issues. These are the subjects of
subsections [c]-[e].

[c] Section 6 and The Most Significant Relationship

[1] Statutory Directive

Section 6 (1) uncontroversially directs a court to follow a statutory directive

of its own state on choice of law. Although the subsection is uncontroversial, its
range of application is fairly narrow, as statutory directives on choice of law
are quite rare. As the comments suggest, “legislatures usually legislate … only
with the local situation in mind.” There are, however, a few exceptions: The
Uniform Commercial Code, for example, contains choice-of-law provisions, as
do many no-fault automobile accident compensation statutes.

[2] The Most Significant Relationship

In the absence of a choice-of-law statute, § 6 (2) counsels a choice based on a

series of factors that capture many of the themes of the choice-of-law
revolution:

(a) the needs of the interstate and international systems,

 (a) the needs of the interstate and international systems,

(b) the relevant policies of the forum,

(c) the relevant policies of other interested states and the relative
interests of those states in the determination of the particular issue,

(d) the protection of justified expectations,

(e) the basic policies underlying the particular field of law,

(f) certainty, predictability and uniformity of result, and

(g) ease in the determination and application of the law to be applied.

Section 6 (2) and the concept of the most significant relationship form the
heart of the Restatement (Second). They appear in section after section,
sometimes as a general residual choice-of-law directive to be used when no
specific section applies (e.g., § 145), sometimes as a check, such as a limit on
party autonomy in contract (e.g., § 187), and sometimes as an escape device
used to avoid the irrational result of a presumptive reference section (e.g., §
149, comment c).

The Restatement contains no explicit definition of the concept of “most

significant relationship,” but clearly implies that the state of the most significant
relationship is the state whose law would be applied by a court committed to
the choice-of-law Principles of § 6 (2). * * *

[e] The Specific Sections: A Wide Variety of Approaches

[1] Territorial Presumptions

The specific sections of the Second Restatement use a wide variety of choice-
of-law strategies. Most, by far, are territorial references, although they differ
from the single contact, jurisdiction-selecting rules of the First Restatement in
one significant respect. Nearly all are presumptive references that may be
overcome by use of the most significant relationship device of § 6 and the
grouping of contacts sections (§§ 145 and 188). * * *

[224/225]

The strength of the presumption varies widely. In some cases, the

presumption is nearly absolute. Thus nearly all issues of procedure and
evidence, except for limitations, burden of proof, and privilege are referred to
the law of the forum with no “most significant relationship” exception clause.
Similarly, and much more controversially, the sections dealing with real
property point absolutely to the law that would be applied by the courts of the
situs, and most of those dealing with the succession on death of personal
property refer, without an exception clause, to the law that would be applied by
the courts of decedent’s domicile.

The language of other sections reveals less confidence in the presumptive

reference. Thus for many types of tort claims and for many types of contracts,
the Second Restatement refers to a particular territorial contact, “unless, with
respect to the particular issue, some other state has a more significant
relationship under the principles stated in § 6” to the claim and the parties.
Sections treating particular contract and tort issues are even more tentative,
suggesting only that the supplied territorial reference will “usually” control.

Finally, some sections include no presumptive territorial reference at all,

referring instead to the appropriate general grouping-of-contacts section, which,
of course, incorporates by reference the choice-of-law principles of § 6.

[2] Non-Territorial Sections

In addition to its territorial presumptive references, the Second Restatement

also uses other choice-of-law methodologies in several of its specific sections.
Party autonomy figures importantly in the Restatement provisions governing
consensual, planned transactions. Thus, the drafters give the parties total control
over the construction of wills, trusts, and contracts, and substantial control over
the validity of contracts, and inter vivos trusts of movables.

Substantivism — choosing law by the result that it produces — informs at

least a few specific sections of the Restatement. The clearest examples are the
validating provisions affecting usurious contracts, powers of appointment,
testamentary trusts, foreign incorporations, and contract formalities. Another
example is § 139, which provides for the admission into evidence of a
communication if it is admissible according to the privilege law of either the
forum or the state that has the most significant relationship with the
communication.

Finally, a few of the specific sections of the Second Restatement are purely
interest-analytic. The best examples are the sections on presumptions, as well as
those on burdens of production and persuasion, which refer to the law of the
forum “unless the primary purpose of the relevant rule of the state of the
otherwise applicable law is to affect decision of the issue rather than to regulate
the conduct of the trial.”

[f] The Grouping-of-Contacts Sections

The grouping-of-contacts sections, §§ 145(2) and 188(2), serve a residual

function; thus when an issue or a claim in tort is not treated by a specific choice-
of-law directive, the forum should resort to the general rule of § 145. The early
drafts of these sections are the lineal descendants of the “center of gravity”
opinions that appeared early in the choice-of-law revolution, especially in New
York. Later drafts, [225/226]however, incorporated the insights of interest analysis
and provide a greater role for policy analysis than did the center of gravity
method. Thus, the final version of § 145 calls for application of the law of “the
state which … has the most significant relationship to the occurrence and the
parties under the principles stated in § 6.” Correspondingly, the role of the
enumerated contacts is diminished; they are simply “to be taken into account
[emphasis added] in applying the principles of § 6.”

[g] Applying the Second Restatement: The Drafters’ Intent

The Restatement gives no explicit directions on how its several disparate

elements should be combined into a single choice-of-law methodology. More
careful scrutiny, however, reveals what the drafters probably had in mind. In the
absence of a statutory choice-of-law directive, a court should determine first
whether a specific section covers the issue or claim before it. Most of the
specific sections will be presumptive territorial references, but some will use
other choice-of-law techniques. Nearly all, however, will include some
reference to § 6 and perhaps to one of the grouping-of-contacts sections, as
well. If no specific section covers the issue or claim, the court should refer to
the general grouping-of-contacts sections, which also include a reference to § 6.
Thus, with either the specific sections or the general grouping-of-contacts
sections, eventually the court will need to apply the factors of § 6(2).

Section 6 (2)(b) and (c) clearly contemplate performing some sort of interest
analysis. Presumably if that analysis indicates a false conflict, the court should
apply the law of the only interested state. If the case is a non-false conflict, the
court should use the factors of § 6(2)(d)-(g) to resolve the true conflict or
unprovided-for case. In no event, however, should the court use the grouping-of-
contacts sections to justify a center-of-gravity or contact-counting approach. The
contacts enumerated in the grouping-of-contacts sections have no independent
significance and are relevant only insofar as they implicate the factors of § 6(2).

[h] A Note on Escape Devices

The flexibility inherent in the most significant relationship test means that the
escape devices so commonly employed under the vested rights theory have
become more or less obsolete — at least for those who play the game by the
rules of the Second Restatement. Renvoi plays but a small role in the Second
Restatement, although the concept is generally available when uniformity of
result is the goal, it is relegated to service in only a few areas.
Substance/procedure is a game which also has a reduced role because the focus
has been shifted away from mechanical labeling and toward analysis of the
policies (especially the forum’s interest in judicial administration) that are
involved with respect to each issue in the case. Characterization, in general,
still enjoys a significant status because the presumptive jurisdiction-selecting
rules of the Restatement are organized by subject matter, an organization which
necessarily requires characterization. At times, of course, selection of the
correct label can be difficult, but the Restatement provides a partial solution to
the problem by eliminating presumptive rules in some areas where the
characterization might be problematic. Vicarious liability, for example, has
elements of tort, contract, and status, a combination which makes it an extremely
difficult problem to characterize. The Restatement finesses the issue by referring
vicarious liability question to the law of the state with the most significant
relationship to the [226/227]issue. That reference, of course, does not eliminate the
problem, but at least rids it of the characterization overtones.

Public policy is the only escape device that retains a prominent role in the
1971 Restatement. [The drafters], however, transformed it from a clumsy, post-
hoc trump card into one of the general considerations of § 6. That treatment of
public policy still leaves a good deal to the judge’s discretion, but a stricter
approach would probably do little except to drive the public policy
consideration underground once again.

The Second Restatement in the Courts

[a] Dominance

The Second Restatement is the dominant conflict methodology in American

courts today. Twenty-two jurisdictions follow the Restatement’s approach in
tort conflicts, and twenty-four do so in contract cases. Additionally, several
other jurisdictions follow the similar “significant contacts” approach, thus
yielding a majority of American jurisdictions. The next most popular American
choice-of-law methodology, the traditional First Restatement approach, can
claim less than half as many adherents.

Abuse and misuse of the subtleties of the Second Restatement is not,

however, ubiquitous. Other courts conscientiously locate the contacts in the
grouping of contacts sections and then use the § 6 factors to perform an interest
analysis. Thus they identify the policies behind the competing states’ laws,
classify the case as a false conflict, true conflict, or unprovided-for case, and
use the additional factors of § 6 to resolve non-false conflicts.

Some of the fault for obtuse judicial interpretations belongs to the drafters of
the Second Restatement. While § 6 requires an interest analysis, it does not do
so in very explicit language, nor do the comments. Further, the comments do
contain some language that easily can mislead an unsophisticated court. A
frequently-quoted example is a hypothetical in the comments to § 146 that gives
some courts the impression that they should override the place-of-injury rule
only in cases where the parties stray unintentionally into the place of injury,
whereas the principles of § 6 clearly justify the override in an ordinary, garden-
variety false conflict.

[c] Specific Versus General: In Practice

 Another issue that has emerged in the interpretation of the Second
Restatement is the role of the specific territorial presumptions. As indicated in §
70, the drafters intended that the court’s choice-of-law calculation begin with
the specific territorial presumptions, where applicable, and then proceed to the
“most significant relationship” analysis under § 6 and the grouping-of-contacts
sections. One might expect judges familiar with the traditional territorial system
to be over-deferential to the presumptive references and reluctant to engage in
the more-free-form process required by § 6.

In fact, however, the opposite approach seems to prevail. There is now some
evidence that many Second Restatement courts skip the initial presumptive
[227/228]reference and proceed directly to the “most significant relationship”
analysis. The evidence for this counter-intuitive development is a citation study
conducted by Professor Borchers [see Patrick J. Borchers, Courts and the
Second Conflicts Restatement: Some Observations and an Empirical Note, 56
Md. L. Rev. 1233 (1997)]. He found in tort and contract cases that the citations
to §§ 145 and 188 significantly outnumbered the total of citations to all the
presumptive-reference sections combined. Thus he concludes [id. at 1249]:

Over time, the Second Restatement has become something different

from the document it appears to be. Even the courts that claim to adhere to
the Second Restatement most likely do not look at it very often …. Instead,
courts and the attorneys practicing before them look to cases quoting
sections 6, 145, 188, or some of the other popular provisions. They content
themselves with block quotations of those general sections and then
proceed to solve the choice-of-law problem, considering only that general
section. For judges and lawyers, the Second Restatement exists not as a
handsome, two-volume book authored by the American Law Institute, but
rather as a kind of chain letter consisting of selective block quotations.

Footnotes:

* Copyright © 2003 by Matthew Bender & Company. All rights reserved. Reprinted with permission.

[B] California and the Restatements

Until the mid-1900s, California’s choice-of-law doctrine generally

incorporated the vested rights theory of the First Restatement. For example,
California courts applied the law of the place of wrong in tort actions,
regardless of the issues before the court. See, e.g., Loranger v. Nadeau, 215
Cal. 362, 366, 10 P.2d 63 (1932) ; Ryan v. North Alaska Salmon Co., 153 Cal.
438, 439, 95 P. 862 (1908) . In contract actions, California courts indicated that
the validity of a contract was governed by the law of the place of contracting,
and matters of performance were governed by the law of the place of
performance. See, e.g., Mercantile Acceptance Co. v. Frank , 203 Cal. 483, 265
P.2d 485 190 (1928) ; Sullivan v. Shannon, 25 Cal. App. 2d 422, 426, 77 P.2d
498 (1938).

The same dissatisfaction with the formalistic vested rights theory that lead to
the ALI’s adoption of the Second Restatement, also lead to the adoption of new
conflicts doctrine by the California courts. The modern California doctrine
directly relies on the Second Restatement in contract cases. And although
California has not adopted the Second Restatement for tort cases, the modern
California doctrine is clearly influenced by the Second Restatement’s concern
for government policies and interests in interstate cases.

§ 5.03 GOVERNMENT INTEREST ANALYSIS AND

TORT CASES IN CALIFORNIA
[A] An Introduction to Interest Analysis

California has not followed the Second Restatement approach in tort cases.
Instead the Supreme Court adopted a competing, although not necessarily
antagonistic, approach known as the “government interest analysis.” The genesis
of California’s modern conflicts doctrine is the “interest analysis” theory
developed by [228/229]Professor Brainerd Currie in a series of scholarly
writings. See, e.g., Brainerd Currie, Married Women’s Contracts: A Study in
Conflict-of-Laws Method, 25 U. Chi. L. Rev. 227 (1958); Brainerd Currie,
Notes on Methods and Objectives in the Conflict of Laws, 1959 Duke L.J. 171
(1959); Brainerd Currie, The Disinterested Third State , 28 Law & Contemp.
Probs. 754 (1963). However, as this section will discuss, California’s
government interest analysis, although based on Currie’s theory, differs from
Currie’s pure “interest analysis” approach in some key aspects.

In order to understand California’s current conflicts doctrine, it is first

necessary to master Currie’s “interest analysis” terminology and methodology.
 Robert A. Sedler, THE GOVERNMENTAL
INTEREST APPROACH TO CHOICE OF LAW:
AN ANALYSIS AND A REFORMULATION
25 UCLA L. Rev. 181, 183–190 (1977)*

INTRODUCTION

The governmental interest approach formulated by the late Brainerd Currie1

has been the catalyst of the modern “revolution” in choice of law in this country.
This revolution has resulted in the widespread abandonment of the rigid,
territorially based rules of the original Restatement in favor of a view of choice
of law that emphasizes considerations of policy and fairness to the parties.
Virtually all modern approaches to choice of law recognize the relevancy of the
policies and interests of the involved states; the disagreement is over how much
weight they are to be given in comparison with other considerations, and over
whether the resolution of conflicts problems should proceed case by case, as
would follow from Currie’s approach, or on the basis of narrow, policy-based
rules. * * *

I. CURRIE’S GOVERNMENTAL INTEREST APPROACH:

UNDERLYING THEORY AND METHODOLOGY

The underlying theory of Currie’s governmental interest approach is that

choice of law problems should be resolved by a consideration of first, the
policies behind the laws of the involved states, and second, the interest of each
state, in light of those policies, in having its law applied on the particular issue
as to which the laws differ. The factual contacts that the parties and the
transaction have with the various states do not have independent significance,
and are relevant only insofar as those contacts give rise to a governmental
interest in having a particular rule of substantive law applied on a particular
issue.

[229/230]

The methodology of interest analysis first directs scrutiny of the content of the
differing laws of the forum and of the other state or states whose law is
potentially applicable.19 The content of each state’s law will reflect a policy.
The second determination, then, is whether, in light of the policy reflected in that
law, the state has an interest in having its law applied on the point in issue. 20
Currie illustrated the application of interest analysis by a detailed consideration
of the problem of married women’s contract immunity involved in Milliken v.
Pratt, and the problem of survival of actions presented by Grant v. McAuliffe.
While fuller consideration of these cases will be left for later discussion, a
review of Currie’s method of determining preliminarily the existence or non-
existence of a governmental interest should be helpful at this juncture.

I n Milliken [v. Pratt, 125 Mass. 374 (1878)], a Massachusetts married

woman entered into a contract with a Maine creditor in Maine, by which she
agreed to stand surety for the debt of her husband. The contract was valid in
Maine, but would have been void in Massachusetts by reason of that state’s
statute protecting married women from liability on such contracts. In analyzing
the policies and interests of the involved states, Currie first asked whom
Massachusetts was intending to protect when it chose to subordinate its general
policy of enforcing contracts to a specific policy of shielding married women
from liability on surety contracts for the debts of their husbands. Since the
Massachusetts legislature would not presume to decide whether married women
from Maine or any other state needed such protection, the women with whose
welfare it was concerned were obviously Massachusetts married women. Thus,
Massachusetts had an interest in applying its law to implement its protective
policy for the benefit of a Massachusetts married woman irrespective of where
the creditor resided or where the contract was made. Maine’s policy, on the
other hand, was to promote security of transactions, and Maine had an interest in
applying that policy for the benefit of the Maine creditor. Thus, in Milliken each
involved state had an interest in applying its law in order to implement the
policy reflected by that law.

In Grant v. McAuliffe, [41 Cal. 2d 859, 264 P.2d 944 (1953)] , a California
victim [230/231]and a California tortfeasor were involved in an Arizona accident
in which the tortfeasor died. Under California law, the cause of action survived
the death of the tortfeasor; under Arizona law it did not. The policy behind the
California rule obviously was to protect the victim and to prefer the victim’s
interest over the interest of the tortfeasor’s estate. As Currie put it: “California
has an interest in the application of its law and policy whenever the injured
person is one toward whom California has a governmental responsibility.” This
interest would extend to a California plaintiff injured in Arizona. In discussing
the Arizona rule of non-survival of actions, Currie emphasizes the need to
determine a rational policy. He deemed the legislative motivation — inertia or
response to the pressures of the insurance lobby, for example — irrelevant in
determining a state’s policy for purposes of interest analysis: “The business of
courts in conflict-of-law cases is not to judge the policies of the states, but to
ascertain them and give them effect, so far as possible, when there is a
legitimate basis for effectuating them.” Currie found the most rational policy
basis for the Arizona rule to be that the “living should not be mulcted for the
wrongs of the dead.” Another possible policy would be protecting the
decedent’s insurer from liability whenever the insured died in the accident. In
any event the policy behind the Arizona law protects those interested in the
estate of the decedent and, we will assume, insurers of Arizona drivers. Since
the deceased was a California domiciliary, and the automobile was insured in
California, the policy reflected in Arizona law would not be advanced by its
application in this case. Thus, only California has an interest in applying its law.

The preliminary determination of the policies and interests of the involved

states leads to a particular cases’s falling into one of four “interest situations”:
(1) the false conflict, (2) the apparent conflict, (3) the true conflict, and (4) the
unprovided-for case. Each will be defined and discussed separately.

A. The False Conflict

When a consideration of the policies and interests of the involved states leads
to the conclusion that one state has an interest in having its law applied on the
point in issue while the other state does not, the false conflict is presented. In
such a situation Currie advocates application of the law of the only interested
state. The false conflict appears most frequently in accident cases such as Grant
v. McAuliffe, where two parties from a recovery state are involved in an
accident in a non-recovery state. In such cases, the policy of the recovery state
will be advanced by the application of its law, while the non-recovery state
generally will have no interest in applying its law. It is here that the place of the
wrong rule of the traditional approach produces a clearly unsound result, since
it requires the application of the law of the state that has no interest in having its
law applied to the detriment of the interest of the state that does. And it was in
such a case that the revolution in choice of law began. This breakthrough has
resulted in the widespread abandonment of the traditional approach in favor of
“modern solutions.” Most commentators and courts agree with Currie on
resolution of the false conflict: It should be resolved by applying the law of the
only interested state, whether the interested state is the forum or another state.

[231/232]
B. The Apparent Conflict

When Currie looked to the interests of the involved states, his initial inquiry
was directed to whether each state had a possible or hypothetical interest: Might
the policy behind a state’s law be advanced if it were applied on the point in
issue? If each state had a possible interest, the case presented an apparent
conflict. In such a situation Currie said that the court should reexamine the
respective policies and interests of the involved states and ask whether a more
moderate and restrained interpretation of the policy or interests of one of the
states could avoid the conflict. As he put it, “There is room for restraint and
enlightenment in the determination of what state policy is and where state
interests lie.” If the court concludes that a more moderate and restrained
interpretation of the policy or interest of one state can avoid the conflict, there
is, in effect, a false conflict, calling for application of the law of the only state
found to have an interest.

C. The True Conflict

Where a reconsideration of the policies and interests of the involved states

persuades the court that the conflict cannot be avoided by a more moderate and
restrained interpretation of the policy or interest of one state, the case presents
the true conflict. Such was the situation in Milliken v. Pratt. Massachusetts’
policy of protecting a married women from overreaching on the part of their
husbands was implicated, notwithstanding that the contract was entered into in
Maine with a Maine creditor. Likewise, Maine’s policy of promoting security of
transactions was implicated, notwithstanding that the defendant was a resident
of Massachusetts. In Curries’s words, “Each state has a policy, expressed in its
law, and each state has a legitimate interest, because of its relationship to one of
the parties, in applying its law and policy to the determination of the case.”48

Currie emphasizes that the traditional approach (or for that matter, any rules
approach), would resolve the conflict of interests by the application of a rule
which would be based, in one degree or another, on the factual contacts the
transaction had with the involved states. Apart from his view that factual
contacts are simply not “rational” criteria to resolve a conflict of interests,
Currie objects to any resolution of the true conflict in which the forum sacrifices
its own policy and interest. Whether it does so by the application of a rule or by
an “assessment of the respective values of the competing legitimate interests of
two sovereign states, in order to determine which is to prevail,” a court
performing the judicial function cannot, in Currie’s view, prefer the interest of
another state to its own. Therefore, in the case of the true conflict, Currie
maintains that the forum must advance its own policy and interest and apply its
own law.

[232/233]

Built into Currie’s methodology, then, is the premise that the result may differ
depending on where suit is brought, as it clearly will in the true conflict
situation. Such differences are unavoidable, says Currie; if uniformity is to be
achieved and the interest of one state is to be sacrificed in favor of another, it
must be done by Congress in the exercise of its powers under the full faith and
credit clause.

D. The Unprovided-For Case

Analysis of the policies and interests of the involved states may lead to the
conclusion that neither state has an interest in having its law applied on the point
in issue. Currie calls this situation the “unprovided-for case,” unprovided-for
because the analysis of the policies and interests of the involved states does not
by itself lead to a solution. Such cases will arise because, as Currie noted,
“[d]ifferent laws do not necessarily mean conflicting policies, when it is
remembered that the scope of policy is limited by the legitimate interests of the
respective states.” He uses as an example of the unprovided-for case a Grant v.
McAuliffe variation in which an Arizona plaintiff is injured in Arizona by a
California defendant. California’s policy is to protect accident victims, but it
has no interest in applying this policy in favor of an Arizona plaintiff injured in
Arizona by a California defendant. Arizona’s policy is to protect the estates of
deceased tortfeasors and their insurers; it has no interest in applying that policy
in the case of a California tortfeasor. Thus neither state cares what happens, and
it is necessary to go beyond the policies and interests reflected in the differing
laws to decide which law should be applied.

Currie did not fully develop solutions for the unprovided-for case. Rather, he
discussed it primarily in the context of unconstitutional discrimination, i.e.,
whether it was unconstitutional for a state to refuse to extend the benefit of its
law to a non-resident party. Currie’s approach [is] bereft of fully-developed
solutions for this interest situation.
 ***

Footnotes:

* Originally published in 25 UCLA L. Rev. 181. Copyright © 1977 by Robert A. Sedler. All rights
reserved. Reprinted with permission.

1 Currie’s major articles have been collected in B. Currie, Selected Essays on the Conflict of Laws
(1963) [hereinafter cited as Currie]. Two other articles published subsequently are Currie, The
Disinterested Third State, 28 L. & Contemp. Probs. 754 (1963); Currie, Full Faith and Credit, Chiefly to
Judgments: A Role for Congress, 1964 Sup. Ct. Rev. 89 [hereinafter cited as Currie, Full Faith and
Credit]. The basic elements of Currie’s approach are summarized in R. Crampton, D. Currie & H. Kay,
Conflict of Laws 221–224 (2d ed. 1975) [hereinafter cited as Crampton, Currie & Kay].

19 They will be referred to as the other involved states. We will generally use the two-state example,
because this is what usually occurs in practice. A state’s law is potentially applicable for conflicts purposes
whenever one of the parties resides there or whenever some of the legally significant facts occurred there.

20 The methodology is summarized in Notes on Methods and Objectives in the Conflict of Laws, in
Currie, supra note 1, at 183–84 (article originally published at 1959 Duke L.J. 171), and in Crampton, Currie
& Kay, supra note 1, at 221–24. It should be noted that the interest referred to is the interest of the state in
having its law applied in the kind of situation that is before the court. Where special circumstances are
present in the actual case that ordinarily are not present in that kind of situation, the interest is still deemed to
exist for purposes of Currie’s interest analysis.

For example, Currie sees the state where an accident occurred as having an interest in allowing a non-
resident injured there to recover, because in the absence of such recovery, the non-resident might be unable
to pay medical and hospital bills owed to resident creditors or might become a public charge. This interest is
deemed to be present in every case where a non-resident is injured in the forum, and it would not matter in
the particular case that the non-resident was immediately removed to a hospital in his home state. The
Constitution and the Choice of Law: Governmental Interests and the Judicial Function, in Currie,
supra note 1, at 205, 366–75 (article originally published at 26 U. Chi. L. Rev. 9 (1958)).

48 Married Women’s Contracts: A Study in Conflict-of-Laws Method , in Currie, supra note 1 at

107-08 (article originally published at 25 U. Chi. L. Rev. 227 (1958)). The true conflict would also be
presented in Currie’s variation of Grant v. McAuliffe, where an Arizona tortfeasor injured a California
plaintiff in California. Id. at 148–49. Whenever a recovery state plaintiff is injured by a non-recovery state
defendant, a true conflict is necessarily presented. Both states are interested in applying their law on the
recovery question, since the consequences of allowing or denying recovery will be felt in the parties’ home
states irrespective of where the accident occurred.
 [B] False Conflicts

HURTADO v. SUPERIOR COURT

SUPREME COURT OF CALIFORNIA
11 Cal. 3d 574, 114 Cal. Rptr. 106, 522 P.2d 666 (1974)

Sullivan, Justice.

In this proceeding, petitioner Manuel Cid Hurtado seeks a writ of mandate

directing respondent superior court to vacate its ruling that the applicable
measure of damages in the underlying action for wrongful death was that
prescribed by California law without any maximum limitation, rather than that
prescribed by the law of Mexico which limits the amounts of recovery. We have
concluded that the trial court correctly chose the law of California. We deny the
writ.

Real parties in interest, the widow and children of Antonio Hurtado

(hereafter [233/234]plaintiffs) commenced against Manuel Hurtado and Jack
Rexius (hereafter defendants) the underlying action for damages for wrongful
death, arising out of an automobile accident occurring in Sacramento County on
January 19, 1969. Plaintiffs’ decedent was riding in an automobile owned and
operated by his cousin, defendant Manuel Hurtado. Defendant Hurtado’s
vehicle, while being driven along a two-lane paved road, collided with a pick-
up truck, owned and operated by defendant Rexius, which was parked partially
on the side of the road and partially on the pavement on which defendant
Hurtado was driving. Upon impact, the truck in turn collided with an automobile
parked in front of it owned by Rexius and occupied by his son. Decedent died as
a result of the collision.

At all material times plaintiffs were, and now are residents and domiciliaries
of the State of Zacatecas, Mexico. Decedent, at the time of the accident, was
also a resident and domiciliary of the same place and was in California
temporarily and only as a visitor. All three vehicles involved in the accident
were registered in California; Manuel Hurtado, Jack Rexius and the latter’s son
were all residents of California. Both defendants denied liability.

Defendant Hurtado moved respondent court for a separate trial of the issue
whether the measure of damages was to be applied according to the law of
California or the law of Mexico. The motion was granted and at the ensuing trial
of this issue the court took judicial notice (Evid. Code, §§ 452, 453) of the
relevant Mexican law prescribing a maximum limitation of damages for
wrongful death. As a result it was established that the maximum amount
recoverable under Mexican law would be 24,334 pesos or $1,946.72 at the
applicable exchange rate of 12.5 pesos to the dollar. After submission of the
issue on briefs, the trial court announced its intended decision (Cal. Rules of
Court, rule 232) and filed a memorandum opinion, ruling in substance that it
would apply a measure of damages in accordance with California law and not
Mexican law. Defendant Hurtado then sought a writ of mandate in the Court of
Appeal to compel the trial court to vacate its ruling and to issue a ruling that
Mexico’s limitation of damages for wrongful death be applied. The Court of
Appeal granted an alternative writ and thereafter issued a peremptory writ of
mandate so directing the trial court. We granted a hearing in this court upon the
petition of plaintiffs.

It is clear that mandate is an appropriate remedy to review the proceedings

below. “Although it is well established that mandamus cannot be issued to
control a court’s discretion, in unusual circumstances the writ will lie where,
under the facts, that discretion can be exercised in only one way.” (Babb v.
Superior Court (1971) 3 Cal. 3d 841, 851 [92 Cal. Rptr. 179, 479 P.2d 379] ;
Mannheim v. Superior Court (1970) 3 Cal. 3d 678, 685 [91 Cal. Rptr. 585,
478 P.2d 17] ; …) Here the facts have been stipulated to and are not in dispute.
The sole issue is a question of law as to which measure of damages should be
applied. The trial court is under a legal duty to apply the proper law and may be
directed to perform that duty by writ of mandate. The absence of another
adequate remedy was determined by the Court of Appeal when it granted the
alternative writ.

In the landmark opinion authored by former Chief Justice Traynor for a

unanimous court in Reich v. Purcell (1967) 67 Cal. 2d 551 [63 Cal. Rptr. 31,
432 P.2d 727] (see Symposium, Comments on Reich v. Purcell (1968) 15
UCLA L. Rev. 551–654) , [234/235]we renounced the prior rule, adhered to by
courts for many years, that in tort actions the law of the place of the wrong was
the applicable law in a California forum regardless of the issues before the
court. We adopted in its place a rule requiring an analysis of the respective
interests of the states involved (governmental interest approach) the objective of
which is “to determine the law that most appropriately applies to the issue
involved.” (Reich v. Purcell, supra, at p. 554.)2
 The issue involved in the matter before us is the measure of damages in the
underlying action for wrongful death. Two states or governments are implicated:
(1) California — the place of the wrong, the place of defendants’ domicile and
residence, and the forum; and (2) Mexico — the domicile and residence of both
plaintiffs and their decedent.

The fact that two states are involved does not in itself indicate that there is a
“conflict of laws” or “choice of law” problem. (Comment, False Conflicts, 55
Cal. L. Rev. 74, 76; Cavers, The Choice of Law Process (1965) pp. 89–90.)
There is obviously no problem where the laws of the two states are identical.
Here, however, the laws of California and Mexico are not identical. Mexico
limits recovery by the survivors of the decedent in a wrongful death action to
24,334 pesos [$1,946.72]. California provides that the heirs of the decedent are
entitled to recover such sum, as under all the circumstances of the case, will be
just compensation for the pecuniary loss which each heir has suffered by reason
of the death of the decedent. * * *

Although the two potentially concerned states have different laws, there is
still no problem in choosing the applicable rule of law where only one of the
states has an interest in having its law applied. “When one of two states related
to a case has a legitimate interest in the application of its law and policy and the
other has none, there is no real problem; clearly the law of the interested state
should be applied.” (Currie, Selected Essays on Conflicts of Laws (1963) p.
189.)

The interest of a state in a tort rule limiting damages for wrongful death is to
protect defendants from excessive financial burdens or exaggerated claims. As
stated in Reich this interest “to avoid the imposition of excessive financial
burdens on [defendants] … is also primarily local.” (Reich v. Purcell, supra, at
p. 556; …); that is, a state by enacting a limitation on damages is seeking to
protect its residents from the imposition of these excessive financial burdens.
Such a policy “does reflect a preference that widows and orphans should be
denied full recovery.” (Cavers, op. cit. supra, at p. 151.) Since it is the
plaintiffs and not the defendants who are the Mexican residents in this case,
Mexico has no interest in applying its limitation of damages — Mexico has no
defendant residents to protect and has no interest in denying full recovery to its
residents injured by non-Mexican defendants.

As the forum, California “can only apply its own law” (Reich v. Purcell,
supra, at p. 553). When the forum undertakes to resolve a choice-of-law
problem presented to it by the litigants, it does not choose between foreign law
and its own law, but selects the appropriate rule of decision for the forum to
apply as its law to the case before [235/236]it. (Reich v. Purcell, supra, at p.
553.) Therefore, when the forum state undertakes its “search to find the proper
law to apply based upon the interests of the litigants and the involved states”
(Reich v. Purcell, supra, at p. 553), it is understood that “[n]ormally, even in
cases involving foreign elements, the court should be expected, as a matter of
course, to apply the rule of decision found in the law of the forum.” (Currie, op.
cit. supra, at p. 183.) “Only ‘when it is suggested that the law of a foreign state
should furnish the rule of decision’ must the forum determine the governmental
policy of its own and the suggested foreign laws, preparatory to assessing
whether either or both states have an interest in applying their policy to the
case.” (Kay, Comments on Reich v. Purcell , 15 UCLA L. Rev. 584, 585.) In
short, generally speaking the forum will apply its own rule of decision unless a
party litigant timely invokes the law of a foreign state. In such event he must
demonstrate that the latter rule of decision will further the interest of the foreign
state and therefore that it is an appropriate one for the forum to apply to the case
before it.

In the case at bench, California as the forum should apply its own measure of
damages for wrongful death, unless Mexico has an interest in having its measure
of damages applied. Since, as we have previously explained, Mexico has no
interest whatsoever in the application of its limitation of damages rule to the
instant case, we conclude that the trial court correctly chose California law.

To recapitulate, we hold that where as here in a California action both this

state as the forum and a foreign state (or country) are potentially concerned in a
question of choice of law with respect to an issue in tort and it appears that the
foreign state (or country) has no interest whatsoever in having its own law
applied, California as the forum should apply California law. Since this was
done, we deny the writ.

Nevertheless, although our holding disposes of the mandamus proceeding

before us, we deem it advisable to consider the argument addressed by
defendant to the interest of California in applying its measure of damages for
wrongful death. We do this because the argument reflects a serious misreading
of Reich which apparently has not been confined to the parties before us.

First, defendant contends that California has no interest in applying its

measure of damages in this case because Reich v. Purcell, supra, determined
that the interest of a state in the law governing damages in wrongful death
actions is “in determining the distribution of proceeds to the beneficiaries and
that interest extends only to local decedents and beneficiaries.” Decedent and
plaintiffs were residents of Mexico and not “local decedents and beneficiaries”
in California. Therefore, so the argument runs, California has no interest
whatever in how plaintiff survivors, residents of Mexico, should be
compensated for the wrongful death of their decedent, also a resident of Mexico,
and conversely Mexico does have an interest.

Defendant’s reading of Reich is inaccurate. It confuses two completely

independent state interests: (1) the state interest involved in creating a cause of
action for wrongful death so as to provide some recovery; and (2) the state
interest involved in limiting the amount of that recovery. In Reich this court
carefully separated these two state interests, although it referred to them in the
same paragraph. The state interest in creating a cause of action for wrongful
death is in “determining the [236/237]distribution of proceeds to the
beneficiaries”;4 the state interest in limiting damage is “to avoid the imposition
of excessive financial burdens on them [defendants] ….”5 (Reich v. Purcell,
supra, at p. 556.)

In the case at bench, the entire controversy revolves about the choice of an
appropriate rule of decision on the issue of the proper measure of damages;
there is no contention that plaintiffs are not entitled under the applicable rules of
decision to some recovery in wrongful death. The Mexican rule is a rule
limiting damages. Thus, the interest of Mexico at stake is one aimed at
protecting resident defendants in wrongful death actions and, as previously
explained, is inapplicable to this case, because defendants are not Mexican
residents. Mexico’s interest in limiting damages is not concerned with providing
compensation for decedent’s beneficiaries. It is Mexico’s interest in creating
wrongful death actions which is concerned with distributing proceeds to the
beneficiaries and that issue has not been raised in the case at bench.

The creation of wrongful death actions “insofar as plaintiffs are concerned”

is directed toward compensating decedent’s beneficiaries. California does not
have this interest in applying its wrongful death statute here because plaintiffs
are residents on Mexico. However, the creation of wrongful death actions is not
concerned solely with plaintiffs. As to defendants the state interest in creating
wrongful death actions is to deter conduct. We made this clear in Reich:
“Missouri [as the place of wrong] is concerned with conduct within her borders
and as to such conduct she has the predominant interest of the states involved.”
We went on to observe that the predominant interest of the state of the place of
the wrong in conduct was not in rules concerning the limitation of damages:
“Limitations of damages for wrongful death, however, have little or nothing to
do with conduct. They are concerned not with how people should behave but
with how survivors should be compensated.” Since it was not involved in
Reich, we left implicit in our conclusion the proposition that the predominant
interest of the state of the place of the wrong in conduct is in the creation of a
cause of action for wrongful death.

It is manifest that one of the primary purposes of a state in creating a cause of

action in the heirs for the wrongful death of the decedent is to deter the kind of
conduct within its borders which wrongfully takes life. It is also abundantly
clear that a cause of action for wrongful death without any limitation as to the
amount of recoverable damages strengthens the deterrent aspect of the civil
sanction: “the sting of unlimited recovery … more effectively penalize[s] the
culpable defendant and deter[s] it and others similarly situated from such future
conduct.” (Seidelson [The Wrongful Death Action, 10 Duquesne L. Rev. 525
(1972)], at p. 528, fn. 12.) [237/238]Therefore when the defendant is a resident of
California and the tortious conduct giving rise to the wrongful death action
occurs here, California’s deterrent policy of full compensation is clearly
advanced by application of its own law. This is precisely the situation in the
case at bench. California has a decided interest in applying its own law to
California defendants who allegedly caused wrongful death within its borders.
On the other hand, a state which prescribes a limitation on the measure of
damages modifies the sanction imposed by a countervailing concern to protect
local defendants against excessive financial burdens for the conduct sought to be
deterred.

It is important, therefore to recognize the three distinct aspects of a cause of

action for wrongful death: (1) compensation for survivors, (2) deterrence of
conduct and (3) limitation, or lack thereof, upon the damages recoverable. Reich
v. Purcell recognizes that all three aspects are primarily local in character. The
first aspect, insofar as plaintiffs are concerned, reflects the state’s interest in
providing for compensation and in determining the distribution of the proceeds,
said interest extending only to local decedents and local beneficiaries (see fn. 4,
ante); the second, insofar as defendants are concerned, reflects the state’s
interest in deterring conduct, said interest extending to all persons present
within its borders; the third, insofar as defendants are concerned, reflects the
state’s interest in protecting resident defendants from excessive financial
burdens. In making a choice of law, these three aspects of wrongful death must
be carefully separated. The key step in this process is delineating the issue to be
decided. * * *

Defendant’s final contention is that California has no interest in extending to

out-of-state residents greater rights than are afforded by the state of residence
…. Defendant urges seemingly as an absolute choice of law principle that
plaintiffs in wrongful death actions are not entitled to recover more than they
would have recovered under the law of the state of their residence. In effect
defendant argues that the state of plaintiffs’ residence has an overriding interest
in denying their own residents unlimited recovery.

Limitations of damages express no such state interest. A policy of limiting

recovery in wrongful death actions “does not reflect a preference that widows
and orphans should be denied full recovery.” (Cavers, op. cit. supra, at p. 151.)
***

Because Mexico has no interest in applying its limitation of damages in

wrongful death actions to nonresident defendants or in denying full recovery to
its resident plaintiffs, the trial court both as the forum, and as an interested state,
correctly looked to its own law.

The alternative writ of mandate is discharged and the petition for a

peremptory writ is denied.

NOTES AND QUESTIONS REGARDING

HURTADO AND FALSE CONFLICTS

(1) The California Supreme Court first explicitly adopted the “government
interest analysis” in Reich v. Purcell , 67 Cal. 2d 551, 63 Cal. Rptr. 31, 432
P.2d 727 (1967) , a tort case, although it implicitly applied an interest analysis
in even earlier [238/239]contract cases. See, e.g., Bernkrant v. Fowler, 55 Cal. 2d
588, 12 Cal. Rptr. 266, 360 P.2d 906 (1961).

In Reich v. Purcell, supra, the facts were as follows. Plaintiff Reich and his
family, residents of Ohio, were involved in an automobile collision with a car
driven by defendant Purcell, a resident and domiciliary of California who was
on his way to a vacation in Illinois. The head-on collision took place in
Missouri, and resulted in the death of plaintiff’s wife and child. Plaintiff Reich
then sued defendant Purcell for wrongful death in a California court. Missouri,
the place of the collision, limited wrongful death recovery to $25,000.
California and Ohio had no limitation on wrongful death damages. The issue
before the California Supreme Court was which state’s laws — Ohio, Missouri,
or California-governed the limitation of damages issue.

What interest did California have in Reich? Missouri? Ohio? Was there a
“false conflict” on this damage limitation issue, within the meaning of Hurtado,
between the laws of Missouri on the one hand and Ohio on the other? What type
of conflict was there between the laws of California and Ohio on this issue?
Between the laws of California and Missouri?

(2) Reich and Hurtado are referred to as “false conflicts” cases. Isn’t the
California wrongful death law different from Mexico’s in Hurtado, and isn’t
Ohio’s different from Missouri’s in Reich? Not only are these laws different,
but aren’t they in conflict on the issue of damage limitations? Then why are
these cases considered examples of “false conflicts”?

(3) Over what issue was there a conflict in Reich and Hurtado? What about
the underlying liability issue in each case? Should the court in Reich apply
Ohio, Missouri, or California negligence law to the question of liability? Should
the court in Hurtado apply California’s or Mexico’s negligence law on
liability? Why? The court did not focus on this liability issue in Reich and
Hurtado, and expressed no particular concern over the issue. Why do you
suppose this was not a significant issue to the parties in Reich and Hurtado?
Might it be a very significant issue today, under current negligence doctrine?

(4) Would the choice-of-law determination have been the same in Reich if
California had a limitation on wrongful death damages, but Missouri and Ohio
had no limitation? What law would the court apply to the damages issue in such
a hypothetical case? Do Reich and Hurtado provide a method of resolving this
hypothetical?

(5) Would the choice-of-law determination in Hurtado have been the same if
the plaintiffs were residents of California and the defendants residents of
Mexico, but the accident still occurred in California? What interest would
California have in such a case? Mexico? Would this still be a “false conflict”
case?
 (6) By what method does the California Supreme Court in Reich and Hurtado
ascertain the “interests” of the respective states with respect to the damage
limitation issue? Are you confident that the court engaged in an exhaustive
examination of the possible state interests? Can you think of other legitimate
state interests each state may have with respect to this issue? For example, in
Hurtado, what interest does California have in not applying its rule of unlimited
recovery [239/240]against a California driver, undoubtedly insured by a California
insurance company, sued in wrongful death by a Mexico (or a Missouri)
plaintiff?

(7) How easy is it to ascertain a state’s “interest” in a particular law when

applied to a specific issue? Where does one look to find an expression of a
state’s interest? The legislative history of the law, if it is a statute? And what if
the state’s law is purely judge-made? Who determines what the state’s interest
is? Do you see any problems here? Consider Professor Brainerd Currie’s
comments on this point, which first appeared in his Notes on Methods and
Objectives in the Conflict of Laws, 1959 Duke L.J. 171, 178 (1959):

This process [of determining the governmental policy and interest

expressed in a law] is essentially the familiar one of construction and
interpretation. Just as we determine by that process how a statute applies in
time, and how it applies to marginal domestic situations, so we may
determine how it should be applied to cases involving foreign elements in
order to effectuate the legislative purpose.

(a) Does Currie’s comment address all the uncertainty concerns generated by
this purposive approach? Does the familiar constructive process usually reveal
only one policy reflected in a law, or sometimes multiple policies? A clear state
interest reflected in a law, or a balance or compromise of various interests?
Does this not invite a court, as Professor Reese once observed, to “decide first
what rule it wishes to apply and to ascribe to that rule a purpose that makes its
application appropriate while ascribing at the same time to the potentially
applicable rules of other states purposes that would not be furthered by their
application”? Willis L.M. Reese, Chief Judge Fuld and Choice of Law, 71
Colum. L. Rev. 548, 559–60 (1971) (“Another unfortunate consequence of a
pure interest approach is the opportunity that it affords for judicial
masquerading”).

(b) Other scholars have similarly criticized this aspect of Currie’s interest
analysis. See, e.g., Joseph William Singer, Facing Real Conflicts, 24 Cornell
Int’l L.J. 197, 219–20 (1991) (because multiple purposes can plausibly be
attributed to most laws, courts have the impetus to resolve the case by finding a
false conflict if they can); Lea Brilmayer, Interest Analysis and the Myth of
Legislative Intent, 78 Mich. L. Rev. 392, 405 (1980) (attribution of an interest
to a law is unrealistic and reflects arbitrary judicial preferences). Are these
criticisms valid? Overstated?

(8) Hernandez v. Burger , 102 Cal. App. 3d 795, 162 Cal. Rptr. 564 (1980) .
Plaintiff, a resident and citizen of Mexico, suffered personal injuries when he
was struck by a car driven and owned by the defendants. The accident took
place in Baja California, Mexico. The defendants were California residents and
U.S. citizens. Plaintiff brought suit for damages against defendants in California,
and argued that California’s unlimited law of tort recovery applied to the issue
of damages. Defendant argued that Mexico’s rule of damages applied, which
would limit plaintiff’s recovery to a $2,000 maximum.

Plaintiff argued that Mexico’s only interest in applying its limitation of

damages law is to protect resident defendants against overwhelming economic
burdens, citing Reich and Hurtado. And because defendants were not residents
of Mexico [240/241]but of California, Mexico had no legitimate interest in
applying its damage limitation law to the case.

The court rejected plaintiff’s arguments, and decided that Mexico’s law
applies. First, the court found that California’s deterrent policy of full
compensation did not apply because the wrongful conduct took place in Mexico,
not California. Further, because plaintiff is a resident of Mexico, California has
no legitimate concern in extending its unlimited damages rule to plaintiff to
avoid his becoming a ward of California. Consequently, California has no
interest at all in applying its law of damages to the case.

Next, the court determined that Mexico did have an interest in applying its
limited damages law to the case, even though the defendants were not residents
of Mexico. The court took judicial notice that a major industry in Baja
California is tourism emanating from the United States, particularly California.
“Fostering tourism in Baja California is, of course, a legitimate interest of
Mexico and application of Mexico’s limited damages law to nonresident
motorists might well advance that interest.” Hernandez, 102 Cal. App. 3d at
802.
 The court then concluded that the case was one of “false conflict,” with only
Mexico having an interest in applying its law of damages. The court dismissed
plaintiff’s reliance on Hurtado and Reich as follows:

Plaintiff relies on discussions in both Hurtado and Reich in which it

was indicated that the primary interest a jurisdiction has in limiting
damages in wrongful death actions is the protection of resident defendants
against excessive or oppressive economic liability. (See Hurtado v.
Superior Court, supra, 11 Cal. 3d at pp. 582–583, 586; Reich v. Purcell,
supra, 67 Cal. 2d at p. 556.) That was, of course, true in those cases. In
Hurtado the accident occurred in California, not in Mexico, and Mexico
could have no legitimate interest in affecting the conduct of California
residents in California.

Similarly, although the accident in Reich occurred in Missouri, the

court held that Missouri had no significant interest in applying its law
limiting recovery of damages in wrongful death cases because no recovery
for wrongful death in that case would have any effect whatever on
Missouri. The defendant was a California resident on his way to vacation
in Illinois; the decedent and the plaintiffs were residents of Ohio. The court
reasoned: “That concern [avoiding the imposition of excessive financial
burdens on defendants] is also primarily local and we fail to perceive any
substantial interest Missouri might have in extending the benefits of its
limitation of damages to travelers from states having no similar limitation.
Defendant’s liability should not be limited when no party to the action is
from a state limiting liability and when defendant, therefore, would have
secured insurance, if any, without any such limit in mind. A defendant
cannot reasonably complain when compensatory damages are assessed in
accordance with the law of his domicile and plaintiffs receive no more
than they would had they been injured at home.” (67 Cal. 2d at p. 556.)

The reasoning of the Reich court points up the fundamental differences

between the circumstances in that case and those in the case at bench. Here
[241/242]one party, plaintiff, is a resident of a jurisdiction limiting liability;
here, plaintiff was injured at home; and here, plaintiff would recover more
than he would at home if the law of Mexico were not applied. As to the
consideration of insurance, even if we assume that defendants were insured
for liability arising out of an accident in Mexico, it is most likely that the
coverage afforded by such insurance and the premium paid therefor were
fixed with the Mexican limited damages law in mind.
 We recognize that Hurtado and Reich distinguished the policies or
interests involved in the creation of a cause of action (compensating
resident plaintiffs) from the policies or interests involved in the adoption
of a rule limiting the amount of damages recoverable (protecting resident
defendants from excessive financial burdens). (Hurtado v. Superior Court,
supra, 11 Cal. 3d at pp. 582–583, 586; Reich v. Purcell, supra, 67 Cal. 2d
at p. 556.) However, where a jurisdiction, here Mexico, is interested both
in the fact that the accident occurred within its borders and in the fact that
the person seeking compensation is a resident of that jurisdiction, we do
not believe the interest of the state in creating a cause of action or
recognizing a right to recover damages in the first instance can be totally
divorced from its concurrent interest in limiting the amount of damages
recoverable. It may well be that no cause of action would have been
recognized had the amount of damages recoverable not been limited. Here,
for example, Mexico’s recognition of a right to damages and its limitation
of the amount recoverable in all likelihood reflect a balancing and
accommodation of competing interests based on the societal values and
economic and commercial circumstances prevailing in Mexico. Thus, in
this case it cannot be said that Mexico’s law limiting the amount of
damages recoverable is entirely unrelated to her interest in affecting
conduct in Mexico.

We conclude that the interest of Mexico in the application of its law

limiting damages to an accident occurring within its borders resulting in
injury to one of its residents caused by a nonresident defendant is not
wholly lacking; that the State of California has no interest whatever in
applying its unlimited damages law to such a case; and that the trial court
was correct in determining that the law of Mexico should be applied to
limit plaintiff’s damages in this instance.

Accordingly, the judgment is affirmed.

(a) Are you persuaded by the Court of Appeal’s reasoning that Reich and
Hurtado are distinguishable from the circumstances in Hernandez, and that this
factual distinction justifies a different interest analysis outcome? What is your
reaction to the Hernandez court’s finding that Mexico’s damage limitation
advances the interest of tourism by Californians in Baja Mexico? Precisely how
is Mexico’s damage limitation law related to Mexico’s interest of affecting
conduct in Mexico?
 (b) Assuming Missouri has an interest in encouraging tourism in the “show
me” state, does this mean that Reich was not a false conflicts case because both
Missouri (limited damages) and Ohio (unlimited damages) had an interest in
applying their law? Assume the accident in Hernandez took place in a state of
Mexico which has no interest in advancing American tourism. Would the
Hernandez court have [242/243]reached the same choice-of-law conclusion?
Should it?

(c) The Hernandez case has been criticized as one where the court should
have found that neither Mexico nor California had an interest in applying its
respective damages law to the case. See Harold L. Korn, The Choice-of-Law
Revolution: A Critique, 83 Colum. L. Rev. 772, 936 (1983). This would mean,
using Professor Brainerd Currie’s interest analysis terminology, that Hernandez
actually represents an “unprovided-for case.” Do you agree?

(d) How would Currie resolve a choice of law issue in an “unprovided-for

case”? See Brainerd Currie, The Disinterested Third State , 28 L. & Contemp.
Probs. 754, 775–80 (1963). How would the California Supreme Court resolve
such an issue? The “unprovided-for case” (or “zero interest case”) presents one
of the must difficult problems for government interest analysts, and is a rich
source of scholarly examination. E.g., Larry Kramer, The Myth of the
Unprovided-For Case, 75 Va. L. Rev. 1045 (1989) (concluding that there are
no unprovided-for cases in the Currie sense); Aaron D. Twerski, Neumeier v.
Kuehner: Where Are The Emperor’s Clothes ?, 1 Hofstra L. Rev. 104 (1973);
Brainerd Currie, Selected Essays on Conflicts of Laws, 545–57 (1963); Robert
Sedler, Interstate Accidents and the Unprovided for Case: Reflections on
Neumeier v. Kuehner, 1 Hofstra L. Rev. 125 (1973); Sedler, The Governmental
Interest Approach to Choice of Law, supra , 25 UCLA L. Rev. at 189–90, 233–
36.

(9) Would the choice-of-law determination in Reich and Hurtado be different

if California still followed the First Restatement? Would it be different if
California followed “the most significant relationship test” of the Second
Restatement? Under § 145(2) of the Second Restatement, the state with the most
significant contacts with respect to an issue in tort is determined by considering,
in addition to the general factors mentioned in § 6 (reproduced supra), the
following contacts:

(a) the place where the injury occurred,

 (a) the place where the injury occurred,

(b) the place where the conduct causing the injury occurred,

(c) the domicil, residence, nationality, place of incorporation and

place of business of the parties, and

(d) the place where the relationship, if any, between the parties is
centered.

These contacts are to be evaluated according to their relative

importance with respect to the particular issue.

(10) If the damage limitation issue had not been raised by the defendants in
Reich and Hurtado, which state’s law would govern the calculation of damages
in those two cases? Why?

(11) Did the Supreme Court in Hurtado give any special treatment to the
choice-of-law issues because the case involved the laws of another country, not
simply of another state? Should the case have been treated differently? See
Wong v. Tenneco, Inc. , 39 Cal. 3d 126, 216 Cal. Rptr. 412, 702 P.2d 570
(1985).

Footnotes:

2 “The forum must search to find the proper law to apply based upon the interests of the litigants and the
involved states.” (Reich v. Purcell, supra , 67 Cal. 2d at p. 553.) The governmental interests approach is
applicable not only to situations involving multistate contacts but also to those involving a state of the United
States vis-a-vis a political entity of a foreign country.

4 “Wrongful death statutes create causes of action in specified beneficiaries and distribute the proceeds
to those beneficiaries. The proceeds in the hands of the beneficiaries are not distributed through the
decedent’s estate and, therefore, are not subject to the claims of the decedent’s creditors and consequently
do not provide a fund for local creditors. Accordingly, the interest of a state in a wrongful death action
insofar as plaintiffs are concerned is in determining the distribution of proceeds to the beneficiaries and that
interest extends only to local decedents and beneficiaries.” (Reich v. Purcell, supra , at p. 556, italics
added.)
 5 “Missouri’s limitation on damages expresses an additional concern for defendants, however, in that it
operates to avoid the imposition of excessive financial burdens on them. That concern is also primarily
local.” (Reich v. Purcell, supra, at p. 556; italics added.)

[243/244]

[C] True Conflicts

Reich and Hurtado both involved “false conflicts.” As those cases illustrate,
the California choice-of-law doctrine results in application of the law of the
interested state, whether the interested state is the forum or another state. But
what happens when two or more states do have an interest in having their laws
applied to an issue in a case, and their laws are very different?

BERNHARD v. HARRAH’S CLUB

SUPREME COURT OF CALIFORNIA
16 Cal. 3d 313, 128 Cal. Rptr. 215, 546 P.2d 719,
cert. denied, 429 U.S. 859 (1976)

Sullivan, Justice.

Plaintiff appeals from a judgment of dismissal entered upon an order

sustaining without leave to amend the general demurrer of defendant Harrah’s
Club to plaintiff’s first amended complaint.

Plaintiff’s complaint, containing only one count, alleged in substance the

following: Defendant Harrah’s Club, a Nevada corporation, owned and
operated gambling establishments in the State of Nevada in which intoxicating
liquors were sold, furnished to the public and given away for consumption on
the premises. Defendant advertised for and solicited in California the business
of California residents at such establishments knowing and expecting that many
California residents would use the public highways in going to and from
defendant’s drinking and gambling establishments.

On July 24, 1971, Fern and Philip Myers, in response to defendant’s

advertisements and solicitations, drove from their California residence to
defendant’s gambling and drinking club in Nevada, where they stayed until the
early morning hours of July 25, 1971. During their stay, the Myers were served
numerous alcoholic beverages by defendant’s employees, progressively
reaching a point of obvious intoxication rendering them incapable of safely
driving a car. Nonetheless defendant continued to serve and furnish the Myers
alcoholic beverages.

While still in this intoxicated state, the Myers drove their car back to
California. Proceeding in a northeasterly direction on Highway 49, near Nevada
City, California, the Myers’ car, driven negligently by a still intoxicated Fern
Myers, drifted across the center line into the lane of oncoming traffic and
collided head-on with plaintiff Richard A. Bernhard, a resident of California,
who was then driving his motorcycle along said highway. As a result of the
collision plaintiff suffered severe injuries. Defendant’s sale and furnishing of
alcoholic beverages to the Myers, who were intoxicated to the point of being
unable to drive safely, was negligent and was the proximate cause of the
plaintiff’s injuries in the ensuing automobile accident in California for which
plaintiff prayed $100,000 in damages.

Defendant filed a general demurrer to the first amended complaint. In essence

it was grounded on the following contentions: that Nevada law denies recovery
against a tavern keeper by a third person for injuries proximately caused by the
[244/245]former by selling or furnishing alcoholic beverages to an intoxicated
patron who inflicts the injuries on the latter; that Nevada law governed since the
alleged tort was committed by defendant in Nevada; and that section 25602 of
the California Business and Professions code which established the duty
necessary for liability under our decision in Vesely v. Sager (1971) 5 Cal. 3d
153 [95 Cal. Rptr. 623, 486 P.2d 151] , was inapplicable to a Nevada tavern.
The trial court sustained the demurrer without leave to amend and entered a
judgment of dismissal. This appeal followed.

We face a problem in the choice of law governing a tort action. As we have

made clear on other occasions, we no longer adhere to the rule that the law of
the place of the wrong is applicable in a California forum regardless of the
issues before the court. (Hurtado v. Superior Court (1974) 11 Cal. 3d 574, 579
[114 Cal. Rptr. 106, 522 P.2d 666] ; Reich v. Purcell (1967) 67 Cal. 2d 551,
555 [63 Cal. Rptr. 31, 432 P.2d 727] .) Rather we have adopted in its place a
rule requiring an analysis of the respective interests of the states involved — the
objective of which is “‘to determine the law that most appropriately applies to
the issue involved.’” (Hurtado, supra, at pp. 579–580, quoting from Reich,
supra, at p. 555.)

The issue involved in the case at bench is the civil liability of defendant
tavern keeper to plaintiff, a third person, for injuries allegedly caused by the
former by selling and furnishing alcoholic beverages in Nevada to intoxicated
patrons who subsequently injured plaintiff in California. Two states are
involved: (1) California — the place of plaintiff’s residence and domicile, the
place where he was injured, and the forum; and (2) Nevada — the place of
defendant’s residence and place of the wrong.

We observe at the start that the laws of the two states — California and
Nevada — applicable to the issue involved are not identical. California
imposes liability on tavern keepers in this state for conduct such as here alleged.
In Vesely v. Sager, supra , 5 Cal. 3d 153, 166, this court rejected the contention
that “civil liability for tavern keepers should be left to future legislative action
…. First, liability has been denied in cases such as the one before us solely
because of the judicially created rule that the furnishing of alcoholic beverages
is not the proximate cause of injuries resulting from intoxication. As
demonstrated, supra, this rule is patently unsound and totally inconsistent with
the principles of proximate cause established in other areas of negligence law
…. Second, the Legislature has expressed its intention in this area with the
adoption of Evidence Code section 669, and Business and Professions Code
section 25602 …. It is clear that Business and Professions Code section 25602
[making it a misdemeanor to sell to an obviously intoxicated person] is a statute
to which this presumption [of negligence, Evidence Code section 669] applies
and that the policy expressed in the statute is to promote the safety of the people
of California ….” Nevada on the other hand refuses to impose such liability. In
Hamm v. Carson City Nuggett, Inc. (1969) 85 Nev. 99 [450 P.2d 358, 359], the
court held it would create neither common law liability nor liability based on
the criminal statute banning sale of alcoholic beverages to a person who is
drunk, because “if civil liability is to be imposed, it should be accomplished by
legislative act after appropriate surveys, hearings, and investigations to
ascertain the need for it and the expected consequences to follow.” It is
noteworthy that in Ham the Nevada court in relying on the common law rule
denying liability cited our decision in Cole v. Rush (1955) 45 Cal. 2d 345 [289
P.2d 450] , later overruled by us in Vesely to the [245/246]extent that it was
inconsistent with that decision.

Although California and Nevada, the two “involved states” (Reich v. Purcell,
supra, 67 Cal. 2d 551, 553; see also Hurtado v. Superior Court, supra, 11 Cal.
3d 574, 579), have different laws governing the issue presented in the case at
bench, we encounter a problem in selecting the applicable rule of law only if
both states have an interest in having their respective laws applied.
“[G]enerally speaking the forum will apply its own rule of decision unless a
party litigant timely invokes the law of a foreign state. In such event he must
demonstrate that the latter rule of decision will further the interest of the foreign
state and therefore that it is an appropriate one for the forum to apply to the case
before it. [Citations.]” (Hurtado, supra, at p. 581.)

Defendant contends that Nevada has a definite interest in having its rule of
decision applied in this case in order to protect its resident tavern keepers like
defendant from being subjected to a civil liability which Nevada has not
imposed either by legislative enactment or decisional law. It is urged that in
Hamm v. Carson City Nuggett, supra, the Supreme Court of Nevada clearly
delineated the policy underlying denial of civil liability of tavern keepers who
sell to obviously intoxicated patrons: “Those opposed to extending liability
point out that to hold otherwise would subject the tavern owner to ruinous
exposure every time he poured a drink and would multiply litigation endlessly
in a claim-conscious society. Every liquor vendor visited by the patron who
became intoxicated would be a likely defendant in subsequent litigation flowing
from the patron’s wrongful conduct …. Judicial restraint is a worthwhile
practice when the proposed new doctrine may have implications far beyond the
perception of the court asked to declare it. They urge that if civil liability is to
be imposed, it should be accomplished by legislative act after appropriate
surveys, hearings, and investigations …. We prefer this point of view.”
Accordingly defendant argues that the Nevada rule of decision is the
appropriate one for the forum to apply.

Plaintiff on the other hand points out that California also has an interest in
applying its own rule of decision to the case at bench. California imposes on
tavern keepers civil liability to third parties injured by persons to whom the
tavern keeper has sold alcoholic beverages when they are obviously intoxicated
“for the purpose of protecting members of the general public from injuries to
person and damage to property resulting from the excessive use of intoxicating
liquor.” (Vesely v. Sager, supra , 5 Cal. 3d 153, 165.) California, it is urged,
has a special interest in affording this protection to all California residents
injured in California.

Thus, since the case at bench involves a California resident (plaintiff) injured
in this state by intoxicated drivers and a Nevada resident tavern keeper
(defendant) which served alcoholic beverages to them in Nevada, it is clear that
each state has an interest in the application of its respective law of liability and
nonliability. It goes without saying that these interests conflict. Therefore, unlike
Reich v. Purcell, supra, and Hurtado v. Superior Court, supra, where we were
faced with “false conflicts,” in the instant case for the first time since applying a
governmental interest analysis as a choice of law doctrine in Reich, we are
confronted with a “true” conflicts case. We must therefore determine the
appropriate rule of decision in a controversy where each of the states involved
has a legitimate but conflicting [246/247]interest in applying its own law in respect
to the civil liability of tavern keepers.

The search for the proper resolution of a true conflicts case, while
proceeding within orthodox parameters of governmental interest analysis, has
generated much scholarly examination and discussion.1 The father of the
governmental interest approach, Professor Brainerd Currie, originally took the
position that in a true conflicts situation the law of the forum should always be
applied. (Currie, Selected Essays on Conflict of Laws (1963) p. 184.)
However, upon further reflection, Currie suggested that when under the
governmental interest approach a preliminary analysis reveals an apparent
conflict of interest upon the forum’s assertion of its own rule of decision, the
forum should reexamine its policy to determine if a more restrained
interpretation of it is more appropriate. “[T]o assert a conflict between the
interests of the forum and the foreign state is a serious matter; the mere fact that
a suggested broad conception of the local interest will conflict with that of a
foreign state is a sound reason why the conception should be reexamined, with a
view to a more moderate and restrained interpretation both of the policy and of
the circumstances in which it must be applied to effectuate the forum’s
legitimate purpose …. An analysis of this kind … was brilliantly performed by
Justice Traynor in Bernkrant v. Fowler (1961) 55 Cal. 2d 588 [12 Cal. Rptr.
266, 360 P.2d 906] .” (Currie, The Disinterested Third State (1963) 28 Law &
Contemp. Prob., pp. 754, 757; see also Sedler in Symposium, Conflict of Laws
Round Table, supra, 49 Texas L. Rev. 211, at pp. 224–225 .) This process of
reexamination requires identification of a “real interest as opposed to a
hypothetical interest” on the part of the forum (Sedler, Value of Principled
Preferences, 49 Texas L. Rev. 224) and can be approached under principles of
“comparative impairment.” (Baxter, Choice of Law and the Federal Systems,
supra, 16 Stan. L. Rev. 1-22; Horowitz, The Law of Choice of Law in
California-A Restatement, supra, 21 UCLA L. Rev. 719, 748–758.)

Once this preliminary analysis has identified a true conflict of the

governmental interests involved as applied to the parties under the particular
circumstances of the case, the “comparative impairment” approach to the
resolution of such conflict seeks to determine which state’s interests would be
more impaired if its policy were subordinated to the policy of the other state.
This analysis proceeds on the principle that true conflicts should be resolved by
applying the law of the state whose interest would be the more impaired if its
law were not applied. Exponents of this process of analysis emphasize that it is
very different from a weighing process. The court does not “‘weigh’ the
conflicting governmental interests in the sense of determining which conflicting
law manifested the ‘better’ or the ‘worthier’ social policy on the specific issue.
An attempted balancing of conflicting state policies in that sense … is difficult
to justify in the context of a federal system in which, within constitutional limits,
states are empowered to mold their policies as they wish …. [The process] can
accurately be described as … accommodation of conflicting state policies, as
[247/248]a problem of allocating domains of law-making power in multi-state
contexts — limitations on the reach of state policies — as distinguished from
evaluating the wisdom of those policies …. [E]mphasis is placed on the
appropriate scope of conflicting state policies rather than on the ‘quality’ of
those policies ….” (Horowitz, The Law of Choice of Law in California — A
Restatement, supra, 21 UCLA L. Rev. 719, 753; see also Baxter, Choice of
Law and the Federal System, supra, 16 Stan. L. Rev. 1, 18-19.) However, the
true function of this methodology can probably be appreciated only casuistically
in its application to an endless variety of choice of law problems. (See, e.g., the
hypothetical situations set forth in Baxter, op. cit., pp. 10-17).

Although the concept and nomenclature of this methodology may have

received fuller recognition at a later time, it is noteworthy that the core of its
rationale was applied by Justice Traynor in his opinion for this court in People
v. One 1953 Ford Victoria (1957) 48 Cal. 2d 595 [311 P.2d 480] . There in a
proceeding to forfeit an automobile for unlawful transportation of narcotics we
dealt with the question whether a chattel mortgage of the vehicle given in Texas
and, admittedly valid both in that state and this, succumbed to the forfeiture
proceedings. The purchaser of the car, having executed a note and chattel
mortgage for the unpaid purchase price, without the consent of the mortgagee
drove the vehicle to California where he used it to transport marijuana.
Applicable California statutes made it clear that they did not contemplate the
forfeiture of the interest of an innocent mortgagee, that is a person whose
“interest was created after a reasonable investigation of the moral
responsibility, character and reputation of the purchaser and without any
knowledge that the vehicle was being, or was to be, used for the purpose
charged ….” Texas had no similar statute; nor had the mortgagee, though
proving that the mortgage was bona fide, also proved that he had made the
above reasonable investigation of the mortgagor.
 It was clear that Texas had an interest in seeing that valid security interests
created upon the lawful purchase of automobiles in Texas be enforceable and
recognized. California had an interest in controlling the transportation of
narcotics. Each interest was at stake in the case, since the chattel mortgage had
been validly created in Texas and the car was used to transport narcotics in
California. The crucial question confronting the court was whether the
“reasonable investigation” required by statute of a California mortgagee applied
to the Texas mortgagee. Employing what was in substance a “comparative
impairment” approach, the court answered the question in the negative. “It is
contended that a holding that the ‘reasonable investigation’ requirement is not
applicable to respondent will subvert the enforcement of California’s narcotics
laws. We are not persuaded that such dire consequences will ensue. The state
may still forfeit the interest of the wrongdoer. It has done so in this case.
Moreover, the Legislature has made plain its purpose not to forfeit the interests
of innocent mortgagees. It has not made plain that ‘reasonable investigation’ of
the purchaser is such an essential element of innocence that it must be made
even by an out-of-state mortgagee although such mortgagee could not reasonably
be expected to make such investigation.” (Id., at p. 599.)

Mindful of the above principles governing our choice of law, we proceed to

reexamine the California policy underlying the imposition of civil liability upon
tavern keepers. At its broadest limits this policy would afford protection to all
[248/249]persons injured in California by intoxicated persons who have been sold
or furnished alcoholic beverages while intoxicated regardless of where such
beverages were sold or furnished. Such a broad policy would naturally embrace
situations where the intoxicated actor had been provided with liquor by out-of-
state tavern keepers. Although the State of Nevada does not impose such civil
liability on its tavern keepers, nevertheless they are subject to criminal
penalties under a statute making it unlawful to sell or give intoxicating liquor to
any person who is drunk or known to be an habitual drunkard. (See Nev. Rev.
Stats. 202.100; see Hamm v. Carson City Nuggett, Inc., supra, 450 P.2d 358.)

We need not, and accordingly do not here determine the outer limits to which
California’s policy should be extended, for it appears clear to us that it must
encompass defendant, who as alleged in the complaint, “advertis[es] for and
otherwise solicit[s] in California the business of California residents at
defendant Harrah’s Club Nevada drinking and gambling establishments, and
knowing and expecting said California residents, in response to said advertising
and solicitation, to use the public highways of the State of California in going
and coming from defendant Harrah’s Club Nevada drinking and gambling
establishments.” Defendant by the course of its chosen commercial practice has
put itself at the heart of California’s regulatory interest, namely to prevent tavern
keepers from selling alcoholic beverages to obviously intoxicated persons who
are likely to act in California in the intoxicated state. It seems clear that
California cannot reasonably effectuate its policy if it does not extend its
regulation to include out-of-state tavern keepers such as defendant who
regularly and purposely sell intoxicating beverages to California residents in
places and under conditions in which it is reasonably certain these residents
will return to California and act therein while still in an intoxicated state.
California’s interest would be very significantly impaired if its policy were not
applied to defendant.

Since the act of selling alcoholic beverages to obviously intoxicated persons

is already proscribed in Nevada, the application of California’s rule of civil
liability would not impose an entirely new duty requiring the ability to
distinguish between California residents and other patrons. Rather the
imposition of such liability involves an increased economic exposure, which, at
least for businesses which actively solicit extensive California patronage, is a
foreseeable and coverable business expense. Moreover, Nevada’s interest in
protecting its tavern keepers from civil liability of a boundless and unrestricted
nature will not be significantly impaired when as in the instant case liability is
imposed only on those tavern keepers who actively solicit California business.

Therefore, upon reexamining the policy underlying California’s rule of

decision and giving such policy a more restrained interpretation for the purpose
of this case pursuant to the principles of the law of choice of law discussed
above, we conclude that California has an important and abiding interest in
applying its rule of decision to the case at bench, that the policy of this state
would be more significantly impaired if such rule were not applied and that the
trial court erred in not applying California law.

Defendant argues, however, that even if California law is applied, the

demurrer was nonetheless properly sustained because the tavern keeper’s duty
stated in [249/250]Vesely v. Sager, supra, 5 Cal. 3d 153, is based on Business and
Professions Code section 25602, which is a criminal statute and thus without
extraterritorial effect. * * *

It is also clear, as defendant’s argument points out, that since, unlike the
California vendor in Vesely, defendant was a Nevada resident which furnished
the alcoholic beverage to the Myers in that state, the above California statute
had no extraterritorial effect and that civil liability could not be posited on
defendant’s violation of a California criminal law. We recognize, therefore, that
we cannot make the same determination as quoted above with respect to
defendant that we made with respect to the defendant vendor in Vesely.

However, our decision in Vesely was much broader than defendant would
have it. There, at the very outset of our opinion, we declared that the traditional
common law rule denying recovery on the ground that the furnishing of alcoholic
beverage is not the proximate cause of the injuries inflicted on a third person by
an intoxicated individual “is patently unsound.” (5 Cal. 3d at p. 157.) * * *

In sum, our opinion in Vesely struck down the old common law rule of
nonliability constructed on the basis that the consumption, not the sale, of
alcoholic beverages was the proximate cause of the injuries inflicted by the
intoxicated person. Although we chose to impose liability on the Vesely
defendant on the basis of his violating the applicable statute, the clear import of
our decision was that there was no bar to civil liability under modern
negligence law. Certainly, we said nothing in Vesely indicative of an intention
to retain the former rule that an action at common law does not lie. The fact then,
that in the case at bench, section 25602 of the Business and Professions Code is
not applicable to this defendant in Nevada so as to warrant the imposition of
civil liability on the basis of its violation, does not preclude recovery on the
basis of negligence apart from the statute. Pertinent here is our observation in
Rowland v. Christian (1968) 69 Cal. 2d 108, 118–119 [70 Cal. Rptr. 97, 104,
443 P.2d 561, 568] : “It bears repetition that the basic policy of this state set
forth by the Legislature in section 1714 of the Civil Code is that everyone is
responsible for an injury caused to another by his want of ordinary care or skill
in the management of his property.”

The judgment is reversed and the cause is remanded to the trial court with
directions to overrule the demurrer and to allow defendant a reasonable time
within which to answer.

NOTES AND QUESTIONS REGARDING

BERNHARD AND TRUE CONFLICTS

(1) What is California’s interest in Bernhard in applying its third-party

liability law? How does the California Supreme Court ascertain California’s
interest? What is Nevada’s interest in applying its dram shop law? How does
the court ascertain Nevada’s interest?

(2) California and Nevada each had an interest in applying its third-party
liability law to the liability issue in Bernhard, and each had different laws on
this issue. Bernhard therefore is a case of “true conflicts,” within the meaning
of [250/251]Professor Brainerd Currie’s interest analysis. How would Professor
Currie resolve a “true conflict”? What method did the Supreme Court adopt in
Bernhard? Are they different methods? Would Currie’s method result in a
different outcome in Bernhard?

(3) Would the choice-of-law determination have been the same in Bernhard
if the defendant had been a small tavern in Northeastern Nevada which did not
advertise and did not know the plaintiffs were from California? If the accident
had occurred in Nevada instead of California? If the lawsuit were filed in a
Nevada Court and Nevada had a choice-of-law doctrine identical to
California’s?

(4) Would the choice-of-law determination have been the same in Bernhard
if Nevada imposed no civil liability or criminal penalties on a tavern keeper
who sells liquor to an intoxicated person? In 1973, Nevada did, in fact, repeal
the criminal statute relied on by the Court in Bernhard. The California Supreme
Court handed down its Bernhard decision in 1976, yet it made no reference to
Nevada’s elimination of criminal penalties on tavern keepers. Why did the
Court ignore this change in Nevada’s criminal law? Should the court have
ignored this legislative repeal?

(5) In Cable v. Sahara Tahoe Corp ., 93 Cal. App. 3d 384, 155 Cal. Rptr.
770 (1979), a California resident was injured in Nevada in 1975 while riding
as a passenger in a car driven by an Nevada resident who had become
intoxicated at the defendant Nevada casino. Plaintiff sustained permanent
injuries, and became a public charge in California. Plaintiff sued the defendant
casino for damages in a California court, based on the liability theory relied on
in Bernhard. Defendant demurred to the complaint, on the ground that Nevada
third-party (non)liability law applied.

(a) Does Cable present a “true conflict”? What is California’s interest in

applying its liability law? What is Nevada’s interest in applying its
(non)liability law? The court in Cable concluded that a “true conflict” was
“inescapable,” id. at 392. Do you agree? The court then undertook a
“comparative impairment” analysis, and decided that Nevada’s interest would
be more impaired if its law were not applied and therefore Nevada law should
govern the liability issue. Id. at 393–398.

(b) What relevant factors explain the different “comparative impairment”

result in Cable as opposed to Bernhard? That the accident occurred in Nevada
instead of California? That the intoxicated driver served by defendant was a
resident of Nevada instead of California? Why should these factors make a
difference? What would be the result in Cable if the tavern owner were also a
resident of California?

(c) The Court in Cable noted that the California Legislature enacted a statute
in 1978 which eliminated tavern keepers’ liability in California, specifically
abrogating the liability doctrine applied in Bernhard. Does this legislative
repeal mean that Cable was a case of “no conflict”? Do you think this statutory
repeal may have nevertheless influenced the court’s “comparative impairment”
analysis? How so?

(6) Does the court in Bernhard, Reich, and Hurtado set forth a clear choice-
of-law rule which results in predictable choice-of-law determinations in a wide
variety of tort cases? How would you characterize the California doctrine as to
this predictability goal? Do these cases at least provide some general guidelines
a s [251/252]to what factual factors are significant for choice-of-law analysis in
tort cases? What are these factual factors? Are they different from the factors
significant under the First Restatement? Are they likewise very different from
the factors designated as significant under the Second Restatement’s “most
significant relationship” test in tort cases?

Footnotes:

1 Baxter, Choice of Law and the Federal System (1963) 16 Stan. L. Rev. 1; Cavers, The Choice of
Law Process (1965) pages 114-224; Horowitz, The Law of Choice of Law in California — A
Restatement (1974) 21 UCLA L. Rev. 719, 748–758; Conflict of Laws Round Table: A Symposium
(1972) 57 Iowa L. Rev. 1219-1270; Symposium, Conflict of Laws Round Table (1971) 49 Texas L. Rev.
211-245; Sedler, Reviews — Conflicts Commentary (1972) 50 Texas L. Rev. 1064-1083; Weintraub,
Commentary on the Conflict of Laws (1971). We note that no case has been called to our attention, nor
are we aware of one, which has discussed this problem in a context relevant to the case at bench.
 [D] Comparative Impairment

[1] Resolving True Conflicts

The most difficult question for scholars and courts who accept interest
analysis is how to resolve “true conflicts.” Professor Brainerd Currie’s early
interest analysis writings provided a simple resolution of “true conflicts,” i.e.,
always apply the law of the forum state. Brainerd Currie, Notes on Methods
and Objectives in the Conflicts of Laws, 1959 Duke L.J. 171 (1959); Brainerd
Currie, Married Women’s Contracts: A Study in Conflicts of Laws , 25 U. Chi.
L. Rev. 227, 261–263 (1958). Later, Currie modified his method of resolving
true conflicts by adding a new consideration which might avoid a true conflict.
This new step applies where a court finds an “apparent conflict” between the
interests of two states. At that point, the court should reconsider its interest
analysis. A “more moderate and restrained interpretation” of the policy of one
state or the other may reveal that only one state has a legitimate interest in
applying its policy. In such cases, the “apparent conflict” is actually a “false
conflict.” See Robert Sedler, The Government Interest Approach to Choice of
Law, supra, 25 UCLA L. Rev. at 187–88.

[a] Professor Currie’s Pure Interest Analysis Approach

If upon reconsideration the court finds that a conflict between the legitimate
interests of the two states is unavoidable, the court should apply the law of the
forum. If the forum state is one of the two states with conflicting interests, the
court should not sacrifice the legitimate interests of its own state. But even
where the forum is disinterested but an unavoidable conflict exists between the
laws of two other states, the court should apply the law of the forum. Therefore,
even under Currie’s modified interest analysis approach, a court must always
resolve “true conflicts” by applying the law of the forum. See Brainerd Currie,
Comments on Babcock v. Jackson, 63 Colum. L. Rev. 1233, 1242–1243
(1963).

[b] The California Approach

The California Supreme Court in Bernhard did not follow Professor Currie’s
method of resolving “true conflicts.” Instead, the Court adopted the approach
proposed by Professor William F. Baxter, as set forth in his article Choice of
Law and the Federal System, 16 Stan. L. Rev. 1 (1963), known as the
“comparative impairment” approach. As the court states in Bernhard, Baxter’s
approach seeks to determine which state’s interest would be more impaired if
its policy were subordinated to the policy of the other state. This analysis
proceeds on the principle that true conflicts should be resolved by applying the
law of the state whose interests would be more impaired if its law were not
applied.

[252/253]

[2] Professor Baxter’s Comparative Impairment Analysis

The “comparative impairment” analysis, even though succinctly stated by the

Court in Bernhard, is not so easy to comprehend. The following discussion
from Baxter, Choice of Law and the Federal Systems, supra at 6–22, may shed
some light:

William F. Baxter,
CHOICE OF LAW AND THE FEDERAL SYSTEM
16 Stan. L. Rev. 1, 6-22 (1964) (footnotes omitted)*

Rules of internal law are characteristically phrased in universal terms. State

X provides, by statute or judicial decision, that every person who harms another
shall be liable to the other if, but only if, harm was caused by conduct creating
an unreasonable risk of harm to the other. This rule requires no relationship
between the occurrence of the parties and State X as a condition precedent to its
application. Yet the lawmakers of State X would concede, if their attention
were focused on the point, that State Y might properly treat differently some
cases like those to which State X would apply its rule. State Y might, for
example, apply a rule of absolute liability to cases of a food processor
distributing an adulterated product.

Consider the course of discussion that would occur if the lawmakers of X and
Y assembled for interstate negotiations on the scope of application of the
inconsistent rules. Each group at the outset might unreasonably demand
application of its law in every situation having any contact with its state. But as
each became aware that the other had roughly equal bargaining power and
tactical skill, the usual fruits of negotiation would emerge: each would
cautiously give up what it wanted less to obtain what it wanted more, each
side’s perception of its own self-interest and of the other’s objectives would
sharpen, and the final agreement would approximate maximum utility to each. In
the course of negotiations the participants would realize the basis of this
particular conflict of law: the lawmakers had allocated differently certain costs
of civilized society. X lawmakers were more favorably disposed to food
processors than were Y lawmakers; Y lawmakers, comparatively speaking,
favored consumers. Neither group was oblivious to the welfare of the category
of persons it had, in the immediate context, treated less favorably: Y lawmakers
afforded legal protection to food processors in other contexts, and X lawmakers
protected consumers — even vis-a-vis food processors — where negligence
was shown. But that each had reached different comparative judgments
regarding product liability is evident. And from that conclusion, the paramount
negotiating objective of each becomes clear: the same value judgment that
dictated the respective internal rules of law now dictates the choice-of-law
objective. X lawmakers want X law to apply in cases involving X food
processors, and Y lawmakers want Y law to apply in cases involving Y
consumers. Because the objective of Y is not necessarily inconsistent with that
of X, negotiating progress can be made. X is willing to relinquish to the Y
sphere of influence cases not involving X processors in exchange for bringing
[253/254]within its legal control cases involving X processors; Y takes a similar
position with respect to Y consumers.

Although the scope of agreement probably does not cover even a majority of
possible conflicts cases involving the two laws, the negotiators have made
significant progress. It inheres in their recognition that internal rules affecting
private rights are focused on people, as individuals or groups; that such rules
prefer one group to another in particular situations; that a conflict of laws occurs
when different states make opposite preferences; that a state has a claim to the
application of its law in a case involving a member of the group it prefers who
is identified with that state; and that this claim ought to be dispositive of the
case if the other state has no countervailing claim.

The cases disposed of by the above points of agreement are those Professor
Currie has called false conflicts cases. * * *

I disagree, however, with Currie’s conclusion that real conflicts cases, cases
in which each state has some interest in the application of its law, should not be
similarly resolved but should be decided by applying the rule of the forum. The
same analysis by which Currie distinguishes real from false conflicts cases can
resolve real conflicts cases. The question “Will the social objective underlying
the X rule be furthered by the application of the rule in cases like the present
one?” need not necessarily be answered “Yes” or “No”; the answer will often
be, “Yes, to some extent.” The extent to which the purpose underlying a rule
will be furthered by application or impaired by nonapplication to cases of a
particular category may be regarded as the measure of the rule’s pertinence and
of the state’s interest in the rule’s application to cases within the category.
Normative resolution of real conflicts cases is possible where one of the
assertedly applicable rules is more pertinent to the case than the competing rule.

There will, of course, be cases in which the contending state interests appear
to be in balance or nearly so. Borderline cases arise that thwart easy application
of every principle of law, but they are decided nonetheless. The judge decides
on the basis of some marginal factor and justifies his decision as best he can in
his opinion. That some choice cases share this common fate seems preferable to
subjecting them and many more to the law of the forum, a particularly
undesirable mode of resolving choice questions. By eliminating doctrinal
uniformity, a rule calling for application of the law of the forum impairs
predictability in all primary situations unless it is then possible to assert that
litigation in more than one state will never be possible. Moreover, it introduces
predictability at the secondary, or litigation, level where the disadvantages of
predictability may equal its advantages. In these respects Currie’s proposal
compares unfavorably with any rule of decision, however arbitrary, that
facilitates primary predictability. * * *

Differences in the degree of pertinence of a state’s law to a given case may

often be perceived by focusing more sharply on the character of identification
that exists between the comparatively favored interest and the state. * * *

Internal rules intended to regulate conduct pose somewhat different problems

from rules intended merely to distribute economic losses, but they are also
susceptible to analysis in terms of governmental interests. In this context, as in
t h e [254/255]other, lawmakers often speak in universal terms but must be
understood to speak with reference to their constituents. Here too the resolution
of conflict-of-laws cases is essentially a process of allocating respective
spheres of lawmaking influence; and if the process is to have a normative basis,
the criterion must be maximum attainment of underlying purpose by all
governmental entities. This necessitates identifying the focal point of concern of
the contending lawmaking groups and ascertaining the comparative pertinence of
that concern to the immediate case. * * *

Suppose a State Y resident, while driving a truck on State X highways in

violation of the X speed limit, causes injury to another resident of Y, and X but
not Y attaches a per se negligence subrule to violations of its speed limits. Y
lawmakers have a superior claim to control loss-distribution rights and duties
between the Y residents involved. Although no X resident is involved, the fact
that the proscribed conduct took place in X cannot be dismissed as irrelevant.
The objective of the X lawmakers in passing the speed limit and one of their
objectives in establishing the per se subrule was to create a condition of safety
for the principal users of the state’s highways, X residents. The application of
X’s per se rule in a case involving only Y residents is not totally unrelated to
that objective: effectuation of regulatory purpose of the per se rule depends on
deterrence, which depends on expectation of the rule’s application. * * *

If the Y driver causes injury to an X resident while driving in X at a speed in

excess of the X speed limit, X’s per se rule should be applied. X has an interest
in implementing its regulatory provision, and its interest in the application of its
loss-distribution rule offsets Y’s corresponding loss-distribution interest. If an
X driver causes injury to a Y resident while driving at excessive speed within
X, the X per se rule should also be applied. X has an interest in implementing
its regulatory provision, and again the respective loss-distribution factors offset
one another.

If these conclusions are accepted, it seems to follow in the original per se

rule hypothetical case involving only Y parties that X’s per se rule ought not to
be applied. There, X’s regulatory interest stands alone in opposition to Y’s
loss-distribution interest. The suggestion is not that some rough parity in the
number of instances allocated to each state is to be achieved; rather, it is that the
X regulatory interest will not be impaired significantly if it is subordinated in
the comparatively rare instances involving two nonresidents, who are residents
of a state or states that reject the per se subrule. Conduct on X highways will not
be affected by knowledge of Y residents that the X per se rule will not be
applied to them if the person they injure happens to be a co-citizen. To the extent
that the objective of the per se rule is loss-distribution rather than regulation, X
has no legitimate interest in the rule’s application because neither party is
identified with X. * * *

Take, for [another] example, a situation in which State X has a usury statute
and State Y does not. State X, as well as State Y, recognized the commercial
importance of performance of consensual undertakings and access to the largest
possible number of customers. But in a particular class of situations X, unlike
Y, has decided an exception should be made. X protects borrowers having
defined characteristics from the consequences of their inadequate bargaining
power or bad judgment. For [255/256]internal purposes X may define the
protected class broadly or narrowly and by characteristics the lender can
ascertain and apply with ease or only with difficulty.

The focal point of concern of X lawmakers is the X borrower of the type

protected internally. The X usury law should not be applied to a case not
involving such a borrower; to do so would not further any purpose of X and
would defeat not only the contrary policy of Y but also the general, though
qualified, policy of X favoring commercial freedom and reliance on
undertakings.

State X policy would be given maximum implementation by a choice rule that

required application of X law in any case involving an X borrower of the class
protected internally. Although involvement of an X borrower of the protected
class is a necessary condition to the application of X law, it ought not to be a
sufficient condition. A choice rule based on the state identification of the lender
would give maximum scope to Y’s policies but would seriously impair those of
X. The protection X has afforded its borrowers probably has several
consequences. Local lenders may make loans to the better risks within the class
at the maximum legal rate, a rate somewhat lower than otherwise would have
been afforded them, rather than forego entirely that segment of business. But
another part of the protected class is denied local loans and therefore has an
incentive to borrow outside the state. If the law of the state where the loan is
made or is payable or of the lender’s state is the choice criterion, the purpose of
the X lawmakers will be substantially impaired by the emergence of a flock of
lenders just across the state line.

A choice rule based on the lender’s knowledge of the borrower’s residence

and of other characteristics of membership in the protected class affords
maximum implementation of the policies of both states. Consensual expectations
of the lender would be protected except when he had reason to know the
transaction was forbidden by X. And the objectives of X, the borrower’s state,
would be shielded from wholesale evasion: the nature of the transaction assures
that prior to extending credit the lender will discover in most cases the
borrower’s residence and in many cases other characteristics of membership in
the protected class.

***

The preceding group of hypothetical situations illustrates several

propositions. First, in choice-of-law cases there are two distinct types of
governmental objectives, internal and external. The internal objectives are those
underlying each state’s resolution of conflicting private interests. These
objectives inhere in a case even if the fact situation is wholly localized to a
single state. In a usury case, for example, the competing private interests of
commercial freedom and protection of economically weak borrowers are
present even if the case is wholly internal to either State X or State Y. External
objectives are introduced when a transaction affects persons identified with
different states. They are the objectives of each state to make effective, in all
situations involving persons as to whom it has responsibility for legal ordering,
that resolution of contending private interests the state has made for local
purposes. In each real conflicts case the external objective of one state must be
subordinated. The choice problem posed is that of allocating spheres of
lawmaking control.

The second proposition the hypothetical situations illustrate is that one can
[256/257]articulate and apply a normative principle to determine which external
objective to subordinate. The principle is to subordinate, in the particular case,
the external objective of the state whose internal objective will be least
impaired in general scope and impact by subordination in cases like the one at
hand.

Implicit in the principle is an assertion that a court can and should go beyond
a determination whether a state has any governmental interest in the application
of its internal law — that a court can and should determine which state’s
internal objective will be least impaired by subordination in cases like the one
before it. This determination is very different in kind from the weighing process
often referred to by similar rubrics, but the two are often confused. Professor
Freund, for example, in an early statement of a governmental interest analysis of
choice-of-law problems, speaks of weighing the interests of the several states;
he clearly envisions the super-value-judgment approach at several points in his
article but is concerned with the comparative impairment of conflicting local
objectives at other points. Professor Currie, too, in arguing that courts should
not attempt to weigh the contending interests in real conflicts cases, subsumes
both the super-value-judgment approach and the comparative-impairment
analysis within his prohibition; he states that he sees little difference between
the two. Therefore, in arguing that courts should not weigh, Professor Currie has
not found it necessary to articulate separate arguments against the super-value-
judgment and the comparative-impairment analysis. With respect to both he has
counseled against judicial resolution on two bases: First, courts are
inadequately equipped to discover the facts upon which resolution must turn;
and secondly, such resolution is a highly political function not to be committed
to courts in a democracy.

I agree with Currie’s conclusion regarding super-value-judgments …. Neither

of Currie’s objections seems to me to be a compelling argument against judicial
resolution of choice problems by application of the principle of comparative
impairment. The inquiries that must precede application of this principle are
often difficult. Judicial attempts to apply the principle often would be
accompanied by inadequately articulated opinions and sometimes would be
demonstrably erroneous. But such failings attend judicial application of many
legal criteria; and even if it is assumed that error is more common in the
application of general than of precise criteria, it does not follow that all such
criteria ought to be abandoned. In deciding whether real conflicts issues ought to
be resolved by application of the suggested standard, the relevant question
cannot be “Will such application resolve the issues infallibly?” Rather the
question is, “Which is the most satisfactory of alternative modes of resolution?”

I cannot accept Professor Currie’s mode of resolution as a more satisfactory

alternative. As has been noted elsewhere and conceded by Currie, it makes no
provision for selection between the competing policies of other states by a
forum having no interest of its own. A more fundamental objection is that which
Currie and others have used to discredit the mechanical choice-of-law system
expounded by Professor Beale and the first Restatement: Currie’s system, like
the Restatement system, will, in Currie’s delightfully apt phraseology, “casually
defeat now the one and now the other policy, depending upon a purely fortuitous
circumstance.” Under Currie’s proposal, the fortuitous circumstance is the act of
forum selection by the plaintiff. It is fortuitous because it has no greater
normative content than the [257/258]conceptual signposts of the Restatement.
Indeed, with respect to real conflicts cases, the mechanical system of the
Restatement must be preferred, for it affords the utility inherent in primary
predictability and avoids the costs of predictable nonuniformity.

The comparative-impairment principle is advocated because, without

sacrificing primary predictability, it invokes the normative criterion of
implementing state policies. The principle seems to me vulnerable to attack only
on the ground of uncertainty — that it is so vacuous in content and uncertain in
application as to be inappropriate for adjudicative administration. Professor
Currie seems to invoke a part of this uncertainty objection when he states that
courts should not attempt to weigh the comparative external objectives because
they are not equipped to discover the facts upon which resolution must turn.
Neither this part of the objection …, nor the more general objection seems to me
to be persuasive. * * *

The objection that courts are not equipped to discover the facts upon which
resolution must turn is equally applicable to a very large percentage of our
judge-made rules of law. * * * In its briefest form the response is that the
comparative-impairment principle can be applied with conviction and
predictability in a substantial majority of cases and that the gains in effectuation
of local policies will more than offset the costs incurred by marginal reduction
of primary predictability.

Professor Currie’s second reason why courts should not balance competing
state interests in real conflicts cases is that to do so is to assume a “political
function of a very high order …, a function which should not be committed to
courts in a democracy.” Perhaps this assertion rests on his usually tacit premise
that balancing interests necessarily involves making super-value judgments. A
contrary view, that super-value judgments are separable from the comparative-
impairment principle, is one of the cornerstones of this paper; and if Currie’s
second reason does depend on a premise of inseparability, I rest on my
preceding argument.

Professor Currie’s “political function” argument may be a corollary of his

argument that courts are not equipped to ascertain necessary legislative facts; he
may be saying that the legislative branch is better equipped, and therefore the
matter should be left to them. This argument is irrelevant to the situation of a
court required to decide cases not covered by legislative choice rules, the
situation most frequent in this area. These cases must be decided, and they ought
to be decided on the basis of the best assessment the court can make of
comparative impairment.

MORE NOTES AND QUESTIONS REGARDING

BERNHARD AND COMPARATIVE IMPAIRMENT

(1) How different is Baxter’s “comparative impairment” approach to

resolving true conflicts from Currie’s revised approach? Did the court in
Bernhard treat these two approaches as synonymous? What general choice-of-
law goal is furthered by “comparative impairment” that arguably is not furthered
by Currie’s method of resolving true conflicts? What other goal is arguably not
furthered by “comparative impairment”?
 [258/259]

(2) Both Currie and Baxter agree that a court’s interest analysis must not
include attempts at “super-value judgments” as to which state’s law is the
“better” law. Likewise, the Court in Bernhard emphasized that a court must “not
‘weigh’ the conflicting governmental interests in the sense of determining which
conflicting law manifested the ‘better’ or the ‘worthier’ social policy on the
specific issue.” Bernhard, 16 Cal. 3d at 320. What are the policy reasons for
this prohibition on the weighing of interests in resolving true conflicts? More
importantly, what then is the nature of the proper inquiry when undertaking a
comparative impairment analysis? Is this a comprehensible inquiry? Is this what
the court really did in Bernhard?

(3) Do you agree with the court’s conclusion in Bernhard that Nevada’s
interests were not substantially impaired by the imposition of civil liability on
the Nevada tavern? A strong argument could be made, could it not, that if
Nevada protects its taverns from liability to its own residents, Nevada has an
even greater interest in preventing their liability to out-of-state residents. See
John J. Wasilczyk, Note, Conflict of Laws, 65 Cal. L. Rev. 290, 296 (1977).
This argument also illustrates a broader criticism of the “comparative
impairment” analysis, does it not?

(4) “Comparative impairment” analysis has been criticized for imprescission,

manipulability, and a propensity for interest-counting; as well as because it
reflects natural law premises. Leo Kanowitz, Comparative Impairment and
Better Law: Grand Illusions in the Conflict of Laws, 30 Hastings L.J. 255, 293
(1979). Professor Herma Hill Kay criticized “comparative impairment” on
many of the same grounds, including the importation into the structure of
government interest analysis of value-laden factors inconsistent with Currie’s
basic approach. Professor Kay recommends a return to Currie’s approach
whereby “true conflicts” are resolved by always applying the law of the forum.
Herma Hill Kay, The Use of Comparative Impairment to Resolve True
Conflicts: An Evaluation of the California Experience, 68 Cal. L. Rev. 577
(1980).

(5) Do you agree with these scholarly criticisms of the “comparative

impairment” method? Do you agree with Professor Kay’s recommendation that
these criticisms can be alleviated by a return to pure Currie interest analysis?
Footnotes:

* © 1963 by the Board of Trustees of the Leland Stanford Junior University. Reprinted with permission.

[E] Further Development of Comparative Impairment

[1] Supreme Court Fine-Tuning

OFFSHORE RENTAL CO. v. CONTINENTAL OIL CO.

SUPREME COURT OF CALIFORNIA
22 Cal. 3d 157, 148 Cal. Rptr. 867, 583 P.2d 721 (1978)

Tobriner, Justice.

This case presents a problem of conflict of laws. Plaintiff, a California

corporation, sues for the loss of services of a “key” employee, whom defendant
negligently injured on defendant’s premises in Louisiana. The trial court,
applying Louisiana law, concluded that plaintiff could not maintain a cause of
action against defendant, [259/260]and accordingly dismissed the complaint.
Plaintiff appeals from the judgment contending that under California law an
employer has a cause of action for negligent injury to a key employee and that
the trial court should therefore have applied California law. As we explain, we
have concluded that the trial court correctly applied Louisiana law in this case,
and thus we affirm the judgment.

Plaintiff Offshore Rental Company, a California corporation, maintains its

principal place of business in California, but derives its revenues in large part
from leasing oil drilling equipment in Louisiana’s Gulf Coast area.
Headquartered in New York, defendant Continental Oil Company, a Delaware
corporation, does business in California, Louisiana, and other states.

In November 1967, plaintiff opened an office in Houston, Texas, for the

purpose of establishing a base closer to the Gold Coast. In June 1968 plaintiff’s
vice-president, Howard C. Kaylor, went from that office to Louisiana to confer
with defendant’s representatives. During the course of that trip defendant
negligently caused injury to Kaylor on defendant’s premises in Louisiana.
 At the time of his injury, Kaylor was responsible for obtaining contracts for
plaintiff’s increased business in Louisiana. Although defendant compensated
Kaylor for his injuries, plaintiff subsequently filed the underlying action in
California to recover $5 million in damages occasioned by the loss of Kaylor’s
services.

In a bifurcated trial on the issue of choice of law, the trial court found that
“[a]ll significant contacts operative in this case [were] in the State of Louisiana
with the exception of the fact that plaintiff corporation was a resident of
California,” and concluded as a matter of law that “[t]he question of whether or
not a corporation may maintain an action for damages arising out of personal
injuries to [its] employee must be determined by application of the laws of the
state of Louisiana which is the state in which all significant operative contacts
existed.” Because the court found that Louisiana law did not permit the
maintenance of such an action, the court granted judgment for defendant.

Questions of choice of law are determined in California, as plaintiff correctly

contends, by the “governmental interest analysis” rather than by the trial court’s
“most significant contacts theory.” As we announced in Reich v. Purcell (1967)
67 Cal. 2d 551, 553 [63 Cal. Rptr. 31, 432 P.2d 727] , under the governmental
interest analysis approach, the forum in a conflicts situation “must search to find
the proper law to apply based upon the interests of the litigants and the involved
states.” As we shall explain, however, we have concluded that despite its
analytic error, the trial court correctly dismissed plaintiff’s cause of action.

The matter presently before us involves two states: California, the forum, a
place of business for defendant, as well as plaintiff’s state of incorporation and
principal place of business; and Louisiana, the locus of the business of both
plaintiff and defendant out of which the injury arose, and the place of the injury.2
As we pointed out in our decision in Hurtado v. Superior Court (1974) 11 Cal.
3d 574 [114 Cal. Rptr. 106, 522 P.2d 666] , however, the fact that two states are
involved does not in itself indicate that there is a “conflict of laws” or “choice
of laws” problem. As we [260/261]stated in Hurtado, “[t]here is obviously no
problem where the laws of the two states are identical.” (11 Cal. 3d at p. 528.)

Here, however, the laws of Louisiana and California are not identical. In the
leading case interpreting Louisiana law, Bonfanti Industries, Inc. v. Teke, Inc.
(La. App. 1969) 224 So. 2d 15, affd., (1969) 254 La. 779 [226 So. 2d 770]), a
Louisiana corporation, relying on Louisiana Civil Code article 174, brought suit
for the loss of services of one of its key officers occasioned by the Louisiana
defendant’s negligence. Although article 174 provides that “The master may
bring an action against any man for beating or maiming his servant” (emphasis
added), the Louisiana court held that the corporate plaintiff could state no cause
of action in modern law for the loss of services of its officer. * * *

On the other hand, expressions in the California cases, although chiefly dicta,
support the present plaintiff’s assertion that California Civil Code section 49
grants a cause of action against a third party for loss caused by an injury to a key
employee due to the negligence of the third party. Section 49 provides that “The
rights of personal relations forbid: … [¶](c) Any injury to a servant which
affects his ability to serve his master ….” Plaintiff contends that the master-
servant relation protected by section 49 encompasses plaintiff’s employment
relationship with its injured vice-president, and thus that section 49 grants a
cause of action against defendant for damages to plaintiff caused by defendant’s
negligence.

If we assume, for purposes of analysis, that section 49 does provide an

employer with a cause of action for negligent injury to a key employee, the laws
of California and Louisiana are directly in conflict. Nonetheless, “[a]lthough the
two potentially concerned states have different laws, there is still no problem in
choosing the applicable rule of law where only one of the states has an interest
in having its law applied …. ‘When one of two states related to a case has a
legitimate interest in the application of its law and policy and the other has
none, there is no real problem; clearly the law of the interested state should be
applied.’ (Currie, Selected Essays on the Conflict of Laws (1963), p. 189.)”
(Hurtado v. Superior Court, supra, 11 Cal. 3d at p. 580.)

We must therefore examine the governmental policies underlying the

Louisiana and California laws, “preparatory to assessing whether either of both
states have an interest in applying their policy to the case.” (Kay, Comments on
Reich v. Purcell (1968) 15 UCLA L. Rev. 584, 585.) Only if each of the states
involved has a “legitimate but conflicting interest in applying its own law” will
we be confronted with a “true” conflicts case. (Bernhard v. Harrah’s Club
(1976) 16 Cal. 3d 313, 319 [128 Cal. Rptr. 215, 546 P.2d 719].)

Turning first to Louisiana, 5 we note that Louisiana’s refusal to permit

recovery for loss of a key employee’s services is predicted on the view that
allowing recovery [261/262]would lead to “undesirable social and legal
consequences.” (Bonafanti Industries, Inc. v. Teke, Inc., supra , 224 So. 2d at
p. 17.) We interpret this conclusion as indicating Louisiana’s policy to protect
negligent resident tortfeasors acting within Louisiana’s borders from the
financial hardships caused by the assessment of excessive legal liability or
exaggerated claims resulting from the loss of services of a key employee.
Clearly the present defendant is a member of the class which Louisiana law
seeks to protect, since defendant is a Louisiana “resident” whose negligence on
its own premises has caused the injury in question. Thus Louisiana’s interest in
the application of its law to the present case is evident: negation of plaintiff’s
cause of action serves Louisiana’s policy of avoidance of extended financial
hardship to the negligent defendant.

Nevertheless, we recognize as equally clear the fact that application of

California law to the present case will further California’s interest. California,
through section 49, expresses an interest in protecting California employers
from economic harm because of negligent injury to a key employee inflicted by a
third party. Moreover, California’s policy of protection extends beyond such an
injury inflicted within California, since California’s economy and tax revenues
are affected regardless of the situs of physical injury. Thus, California is
interested in applying its law in the present case to plaintiff Offshore, a
California corporate employer that suffered injury in Louisiana by the loss of the
services of its key employee.6

Hence this case involves a true conflict between the law of Louisiana and the
law of California. In Bernhard v. Harrah’s Club, supra , we described the
proper resolution of such a case. We rejected the notion that in a situation of
true conflict the law of the forum should always be applied. Instead, as we
stated, “Once [a] preliminary analysis has identified a true conflict of the
governmental interests involved as applied to the parties under the particular
circumstances of the case, the ‘comparative impairment’ approach to the
resolution of such conflict seeks to determine which state’s interest would be
more impaired if its policy were subordinated to the policy of the other state.
This analysis proceeds on the principle that true conflicts should be resolved by
applying the law of the state whose interest would be the more impaired if its
law were not applied.” (16 Cal. 3d 313, 320.)

As Professor Horowitz has explained, this analysis does not involve the court
i n [262/263]“weighing” the conflicting governmental interests “in the sense of
determining which conflicting law manifest[s] the ‘better’ or the ‘worthier’
social policy on the specific issue. An attempted balancing of conflicting state
policies in that sense … is difficult to justify in the context of a federal system in
which, within constitutional limits, states are empowered to mold their policies
as they wish.” (Horowitz, The Law of Choice of Law in California — A
Restatement (1974) 21 UCLA L. Rev. 719, 753.)

Rather, the resolution of true conflict cases may be described as “essentially

a process of allocating respective spheres of lawmaking influence.” (Baxter,
Choice of Law and the Federal System (1963) 16 Stan. L. Rev. 1, 11-12.) The
process of allocation demands several inquiries. First, while “[i]t is not always
possible to say fairly whether [the] policy [underlying a state’s law] is one that
was much more strongly held in the past than it is now, … this ground of
analysis should not be ignored.” (Emphasis added.) (Von Mehren & Trautman,
The Law of Multistate Problems (1965) p. 377.)

Professor Freund has pointed out that “Statutes [in a domestic case], by
reason of their pattern or their prevalence, may evidence a legal climate of
opinion which makes less oppressive the responsibility of the judge in choosing
between two inferences from a statute or between two possible rules of law. A
similar resort may be made in multistate cases. If one of the competing laws is
archaic and isolated in the context of the laws of the federal union, it may not
unreasonably have to yield to the more prevalent and progressive law, other
factors of choice being roughly equal. A married woman’s disability to make a
contract, imbedded in the law of one state, may be carried away by the current if
contact is made with the main stream in another state. Perhaps one of the
functions of conflict-of-laws decisions is to serve as growing pains for the law
of a state, at all events in a federation such as our own.” (Italics added.)
(Freund, Chief Justice Stone and the Conflict of Laws (1946) 59 Harv. L. Rev.
1210, 1216.)

Thus the current status of a statute is an important factor to be considered in a

determination of comparative impairment: the policy underlying a jurisdiction’s
law may be deemed “attenuated and anachronistic and properly … be limited to
domestic occurrences in the event of [a multistate] clash of interests.” (Freund,
Chief Justice Stone, supra, 59 Harv. L. Rev. 1210, 1224.) Moreover, a
particular statute may be an antique not only in comparison to the laws of the
federal union, but also as compared with other laws of the state of its enactment.
Such a statute may be infrequently enforced or interpreted even within its own
jurisdiction, and, as an anachronism in that sense, should have a limited
application in conflicts case.

Another chief criterion in the comparative impairment analysis is the

“maximum attainment of underlying purpose by all governmental entities. This
necessitates identifying the focal point of concern of the contending lawmaking
groups and ascertaining the comparative pertinence of that concern to the
immediate case.” (Italics added.) (Baxter, Choice of Law, supra, 16 Stan. L.
Rev. 1, 12.) The policy underlying a statute may be less “comparatively
pertinent” if the original object of the statute is no longer of pressing
importance: a statute which was once intended to remedy a matter of grave
public concern may since have fallen in significance to the periphery of the
state’s laws. As Professor Currie observed in another context, [263/264]“If the
truth were known, it would probably be that [those few states which have
retained the archaic law of abatement have done so] simply because of the
proverbial inertial of legal institutions, and that no real policy is involved.”
(Selected Essays on the Conflict of Laws, supra, p. 143.)

Moreover, the policy underlying a statute may also be less “comparatively

pertinent” if the same policy may easily be satisfied by some means other than
enforcement of the statute itself. Insurance, for example, may satisfy the
underlying purpose of a statute originally intended to provide compensation to
tort victims. The fact the parties may reasonably be expected to plan their
transactions with insurance in mind may therefore constitute a relevant element
in the resolution of a true conflict.

In sum, the comparative impairment approach to the resolution of true

conflicts attempts to determine the relative commitment of the respective states
to the laws involved. The approach incorporates several factors for
consideration: the history and current status of the states’ laws; the function and
purpose of those laws.

Applying the comparative impairment analysis to the present case, we first

probe the history and current status of the laws before us. The majority of
common law states that have considered the matter do not sanction actions for
harm to business employees, recognizing that even if injury to the master-servant
relationship were at one time the basis for an action at common law, the radical
change in the nature of that relationship since medieval times nullifies any right
by a modern corporate employer to recover for negligent injury to his
employees. With the decision in Bonafanti Industries, Inc. v. Teke, Inc., supra ,
discarding the obsolete concept of recovery for loss of a servant’s services, the
Louisiana courts have thus joined the “main stream” of American jurisdictions:
Louisiana law accords with the common law’s consistent refusal generally to
recognize a cause of action based on negligent, as opposed to intentional,
conduct which interferes with the performance of a contract between third
parties or renders its performance more expensive or burdensome.

Indeed California has itself exhibited little concern in applying section 49 to

the employer-employee relationship: despite the provisions of the antique
statute, no California court has heretofore squarely held that California law
provides an action for harm to business employees, and no California court has
recently considered the issue at all. If, as we have assumed, section 49 does
provide an action for harm to key corporate employees, in Professor Freund’s
words the section constitutes a law “archaic and isolated in the context of the
laws of the federal union.” We therefore conclude that the trial judge in the
present case correctly applied Louisiana, rather than California, law, since
California’s interest in the application of its unusual and outmoded statute is
comparatively less strong than Louisiana’s corollary interest, so lately
expressed, in its “prevalent and progressive” law.

An examination of the function and purpose of the respective laws before us

provides additional support for our limitation of the reach of California law in
the present case. The accident in question occurred within Louisiana’s borders;
although the law of the place of the wrong is not necessarily the applicable law
for all tort actions (Reich v. Purcell, supra, 67 Cal. 2d 551, 555), the situs of
the injury remains a relevant consideration. At the heart of Louisiana’s denial of
liability lies [264/265]the vital interest in promoting freedom of investment and
enterprise within Louisiana’s borders , among investors incorporated both in
Louisiana and elsewhere. The imposition of liability on defendant, therefore,
would strike at the essence of a compelling Louisiana law.

Furthermore, in connection with our search for the proper law to apply based
on the “maximum attainment of underlying purpose by all governmental
entities,” we note the realistic fact that insurance is available to guard against
the exigencies of the present case. As one commentator has remarked, “[T]he
fact that the potential [tort] victim does not usually calculate his risk and plan
his insurance program accordingly, hardly detracts from the consideration that
he can fairly be made to bear the consequences of not doing so.” (Ehrenzweig, A
Treatise on the Conflict of Laws (1962) pp. 575–576) The present plaintiff, a
business corporation, is a potential “victim” peculiarly able to calculate such
risks and to plan accordingly. Plaintiff could have obtained protection against
the occurrence of injury to its corporate vice-president by purchasing key
employee insurance, certainly a reasonable and foreseeable business expense.
By entering Louisiana, plaintiff “exposed [it]self to the risks of the territory,”
and should not expect to subject defendant to financial hazard that Louisiana law
had not created. (Cavers, The Choice-of-Law Process (1965) p. 147.)12

Although it is equally true that defendant is a business corporation able to

calculate the risks of potential tort liability and to plan accordingly, because
defendant’s operations in Louisiana presumably involved dealing with key
employees of companies incorporated in diverse states defendant would most
reasonably have anticipated a need for the protection of premises’ liability
insurance based on Louisiana law. Accordingly, under these circumstances, we
conclude that the burden of obtaining insurance for the loss at issue here is more
properly borne by the plaintiff corporation.

We have explained that Louisiana law precludes a corporate employer from

stating a cause of action for losses caused by negligent injuries to a key
employee. We have assumed for the purposes of the present case that California
law grants a cause of action for such injuries, and thus directly conflicts with the
law of Louisiana. Upon examination of the nature and purpose of the states’
respective laws, however, we have determined that the California statute has
historically been of minimal importance in the fabric of California law, and that
the Louisiana courts have recently interpreted their analogous Louisiana statute
narrowly in light of that statute’s obsolescence. We do not believe that
California’s interests in the application of its law to the present case are so
compelling as to prevent an accommodation to the stronger, more current
interest of Louisiana. We conclude therefore that Louisiana’s interests would be
the more impaired if its law were not applied, and consequently that Louisiana
law governs the present case. Since the law of Louisiana provides no cause of
action for the present plaintiff, we hold that the trial court correctly dismissed
plaintiff’s cause of action.

[265/266]

The judgment is affirmed.

KEARNEY v. SALOMON SMITH BARNEY, INC.

SUPREME COURT OF CALIFORNIA
39 Cal. 4th 95, 45 Cal. Rptr. 3d 730, 137 P.3d 914 (2006)
George, Chief Justice.

The complaint in this case alleges that employees at the Atlanta-based branch
of defendant Salomon Smith Barney (SSB) — a large, nationwide brokerage
firm that has numerous offices and does extensive business in California —
repeatedly have recorded telephone conversations with California clients
without the clients’ knowledge or consent. These facts give rise to a classic
choice-of-law issue, because the relevant California privacy statute generally
prohibits any person from recording a telephone conversation without the
consent of all parties to the conversation, whereas the comparable Georgia
statute does not prohibit the recording of a telephone conversation when the
recording is made with the consent of one party to the conversation.

In this proceeding, several California clients of SSB filed a putative class

action against SSB seeking to obtain injunctive relief against its Atlanta-based
branch’s continuing practice of recording telephone conversations, resulting
from calls made to and from California, without knowledge or consent of the
California clients, and also seeking to recover damages and/or restitution based
upon recording that occurred in the past. SSB filed a demurrer to the complaint,
maintaining that no relief is warranted, because the conduct of its Atlanta-based
employees was and is permissible under Georgia law.

The trial court sustained SSB’s demurrer and dismissed the action. The Court
of Appeal affirmed the judgment rendered by the trial court, concluding that
application of Georgia law is appropriate and supports the denial of all relief
sought by plaintiffs. We granted review to consider the novel choice-of-law
issue presented by this case.

Past decisions establish that in analyzing a choice-of-law issue, California

courts apply the so-called governmental interest analysis, under which a court
carefully examines the governmental interests or purposes served by the
applicable statute or rule of law of each of the affected jurisdictions to
determine whether there is a “true conflict.” If such a conflict is found to exist,
the court analyzes the jurisdictions’ respective interests to determine which
jurisdiction’s interests would be more severely impaired if that jurisdiction’s
law were not applied in the particular context presented by the case. (See, e.g.,
Reich v. Purcell (1967) 67 Cal.2d 551 [63 Cal. Rptr. 31, 432 P.2d 727] ;
Hurtado v. Superior Court (1974) 11 Cal.3d 574 [114 Cal. Rptr. 106, 522 P.2d
666]; Bernhard v. Harrah’s Club (1976) 16 Cal.3d 313 [128 Cal. Rptr. 215,
546 P.2d 719] ; Offshore Rental Co. v. Continental Oil Co. (1978) 22 Cal.3d
157 [148 Cal. Rptr. 867, 583 P.2d 721] (Offshore Rental).)

***

[266/267]

III

Beginning with Chief Justice Traynor’s seminal decision for this court in
Reich v. Purcell, supra, 67 Cal.2d 551 (hereafter Reich), California has
applied the so-called governmental interest analysis in resolving choice-of-law
issues. In brief outline, the governmental interest approach generally involves
three steps. First, the court determines whether the relevant law of each of the
potentially affected jurisdictions with regard to the particular issue in question
is the same or different. Second, if there is a difference, the court examines each
jurisdiction’s interest in the application of its own law under the circumstances
of the particular case to determine whether a true conflict exists. Third, if the
court finds that there is a true conflict, it carefully evaluates and compares the
nature and strength of the interest of each jurisdiction in the application of its
own law “to determine which state’s interest would be more impaired if its
policy were subordinated to the policy of the other state” (Bernhard v.
Harrah’s Club, supra , 16 Cal.3d 313, 320), and then ultimately applies “the
law of the state whose interest would be the more impaired if its law were not
applied.” (Ibid.)

A review of several of the leading decisions of this court applying the

governmental interest analysis illustrates how this approach actually operates in
practice. [Here the Supreme Court summarizes the Reich, Hurtado, Bernhard,
and Offshore Rental decisions.]

IV

Keeping in mind the choice-of-law principles and methodology set forth in

these prior cases, we turn to the choice-of-law issue presented by the facts of
this case. Here, the two potentially affected jurisdictions are California and
Georgia, and the initial question is whether a conflict exists between the
applicable law of each jurisdiction. In resolving that initial question, we must
determine not only whether California law and Georgia law differ from one
another, but also whether each state’s law was intended to apply to a telephone
conversation that occurs in part in California and in part in Georgia.

We begin with the California statutory scheme.

In 1967, the California Legislature enacted a broad, protective invasion-of-

privacy statute in response to what it viewed as a serious and increasing threat
to the confidentiality of private communications resulting from then recent
advances in science and technology that had led to the development of new
devices and techniques for eavesdropping upon and recording such private
communications. One of the provisions of the 1967 legislation — section 637.2
— explicitly created a new, statutory private right of action, authorizing any
person who has been injured by any violation of the invasion-of-privacy
legislation to bring a civil action to recover damages and to obtain injunctive
relief in response to such violation.5 * * *

[267/268]

The recording of telephone conversations is governed by the provisions of

section 632, one of the original provisions of the 1967 legislation. Under
subdivision (a) of section 632, “[e]very person who, intentionally and without
the consent of all parties to a confidential communication, by means of any
electronic amplifying or recording device, … records the confidential
communication, whether the communication is carried on among the parties in
the presence of one another or by means of a telegraph, telephone, or other
device” (italics added), violates the statute and is punishable as specified in the
provision. * * *

As made clear by the terms of section 632 as a whole, this provision does not
absolutely preclude a party to a telephone conversation from recording the
conversation, but rather simply prohibits such a party from secretly or
surreptitiously recording the conversation, that is, from recording the
conversation without first informing all parties to the conversation that the
conversation is being recorded. If, after being so advised, another party does not
wish to participate in the conversation, he or she simply may decline to continue
the communication. A business that adequately advises all parties to a telephone
call, at the outset of the conversation, of its intent to record the call would not
violate the provision.

[Next, the Court analyzes the language and purpose of section 632, and
concludes] that section 632 applies when a confidential communication takes
place in part in California and in part in another state.

We turn next to the applicable Georgia law.

Georgia, like California, has enacted a broad statute addressing

eavesdropping upon or recording of private conversations. The basic provision
of the Georgia privacy statute provides in relevant part that “[i]t shall be
unlawful for: (1) Any person in a clandestine manner intentionally to overhear,
transmit, or record or attempt to overhear, transmit, or record the private
conversation of another which shall originate in any private place ….” (Ga.
Code Ann. § 16-11-62.) * * *

At the same time, however, another provision of the relevant Georgia

statutory scheme explicitly provides that “[n]othing in Code Section 16-11-62
[that is, the foregoing statutory provision] shall prohibit a person from
intercepting a wire, oral, or electronic communication where such person is a
party to the communication or one of the parties to the communication has
given prior consent to such interception.” (Italics added.) (Ga. Code. Ann. §
16-11-66.) Georgia decisions long [268/269]have interpreted the relevant Georgia
privacy statutes as not applicable to a situation in which a conversation is
recorded by one of the participants in the conversation. (See, for example,
Mitchell v. State (Ga. 1977) 239 Ga. 3 [235 S.E.2d 509, 510–511].) In this
respect, of course, Georgia law differs from California law.14

With regard to the further question whether the Georgia privacy statutes are
intended to apply to a telephone call in which one of the parties is in Georgia
and one of the parties is in another state, there is nothing in the language of the
Georgia statutes that expressly addresses this issue. In light of the underlying
purpose of the Georgia statute, however, we believe that — as we have
concluded with regard to the California statute — the applicable Georgia
statutes were intended, and reasonably should be interpreted, to apply to such a
call. * * *

Accordingly, we conclude that the Georgia statute, as well as the California

statute, applies to the telephone calls at issue in this case, and that the law of
each state differs with regard to the legality of such conduct. Although it is
unlawful under California law for a party to a telephone conversation to record
the conversation without the knowledge of all other parties to the conversation,
such conduct is not unlawful under Georgia law.

Plaintiffs maintain, however, that although California law and Georgia law
differ, there nonetheless is no true conflict in this situation. Although it is
evident that California has a legitimate interest in having its law applied in the
present setting because plaintiffs are California residents whose telephone
conversations in California were recorded without their knowledge or consent,
plaintiffs contend that Georgia does not have an interest in having its law
applied here, because the fundamental purpose of the Georgia statute is to
protect the privacy of conversations that have some relationship to Georgia and
in this case there is no claim that the privacy of any Georgia resident or any
person or business in Georgia has been violated.

Although plaintiffs are correct that the facts of this case do not implicate the
privacy interests protected by the Georgia statute, the Georgia statute also can
reasonably be viewed as establishing the general ground rules under which
persons in Georgia may act with regard to the recording of private
conversations, including telephone calls. Because Georgia law prohibits the
recording of such conversations except when the recording is made by one of
the parties to the conversation or with such a party’s consent, persons in
Georgia reasonably may expect, at least as a general matter, that they lawfully
can record their own conversations with others without obtaining the other
person’s consent, and Georgia has a legitimate interest [269/270]in not having
liability imposed on persons or businesses who have acted in Georgia in
reasonable reliance on the provisions of Georgia law. Because the conduct of
SSB that is at issue in this case involves activity that its employees engaged in
within Georgia, we believe that Georgia possesses a legitimate interest in
having its law applied in this setting.

Accordingly, we conclude that this case presents a true conflict of laws.

 V

… [T]he governing authorities establish that once a court’s preliminary

analysis has identified a true conflict, “the ‘comparative impairment’ approach
… seeks to determine which state’s interest would be more impaired if its
policy were subordinated to the policy of the other state.” (Bernhard, supra, 16
Cal.3d 313, 320.) As our prior decisions have emphasized, in conducting this
evaluation “[t]he court does not ‘“weigh” the conflicting governmental interests
in the sense of determining which conflicting law manifest[s] the “better” or the
“worthier” social policy on the specific issue’” (ibid.), because “‘[a]n
attempted balancing of conflicting state policies in that sense … [would be]
difficult to justify in the context of a federal system in which, within
constitutional limits, states are empowered to mold their policies as they
wish.’” (Ibid.) Instead, the comparative impairment process can more
“‘accurately be described as … [an] accommodation of conflicting state
policies’” (ibid.), attempting, to the extent practicable, to achieve “the
‘maximum attainment of underlying purpose by all governmental entities.’”
(Offshore Rental, supra, 22 Cal.3d 157, 166.) Under the comparative
impairment approach, true conflicts are resolved “by applying the law of the
state whose interest would be the more impaired if its law were not applied.”
(Bernhard, supra, 16 Cal.3d at p. 320.)

We proceed to evaluate the relative impairment of each state’s interests that

would result were the law of the other state to be applied in this setting,
beginning with California’s.

In considering the degree of impairment of California’s interest that would

result if Georgia law rather than California law were applied, we note initially
that the objective of protecting individuals in California from the secret
recording of confidential communications by or at the behest of another party to
the communication was one of the principal purposes underlying the 1967
invasion of privacy enactment. [Here the Supreme Court reviews the legislative
history of the 1967 California statutes.]

In addition, it is clear that this is most certainly not an instance like Offshore
Rental, supra, 22 Cal.3d 157, in which the court found that the California statute
in question was “ancient” and rarely if ever utilized or relied upon and
concluded that the state had little current interest in the application of its own
law. (Id. at pp. 167-168.) On the contrary, California decisions repeatedly have
invoked and vigorously enforced the provisions of section 632 and have looked
to the policy embodied in the provision in analyzing invasion-of-privacy claims
in related contexts. * * * Thus, we believe that California must be viewed as
having a strong [270/271]and continuing interest in the full and vigorous
application of the provisions of section 632 prohibiting the recording of
telephone conversations without the knowledge or consent of all parties to the
conversation.

We also believe that the failure to apply section 632 in the present context
would substantially undermine the protection afforded by the statute. Many
companies who do business in California are national or international firms that
have headquarters, administrative offices, or — in view of the recent trend
toward outsourcing — at least telephone operators located outside of
California. If businesses could maintain a regular practice of secretly recording
all telephone conversations with their California clients or customers in which
the business employee is located outside of California, that practice would
represent a significant inroad into the privacy interest that the statute was
intended to protect. As noted above, an out-of-state company that does business
in another state is required, at least as a general matter, to comply with the laws
of a state and locality in which it has chosen to do business. As this court
determined in Bernhard, supra, 16 Cal.3d 313, 322–323, with regard to the
need to apply California law relating to the liability of tavern owners to the out-
of-state tavern owner at issue in that case, the failure to apply California law in
the present context seriously would undermine the objective and purpose of the
statute.

Moreover, if section 632 — and, by analogy, other similar consumer-oriented

privacy statutes that have been enacted in California — could not be applied
effectively to out-of-state companies but only to California companies, the
unequal application of the law very well might place local companies at a
competitive disadvantage with their out-of-state counterparts. To the extent out-
of-state companies may utilize such undisclosed recording to further their
economic interests — perhaps in selectively disclosing recordings when
disclosure serves the company’s interest, but not volunteering the recordings’
existence (or quickly destroying them) when they would be detrimental to the
company — California companies that are required to comply with California
law would be disadvantaged. By contrast, application of section 632 to all
companies in their dealings with California residents would treat each company
equally with regard to California’s concern for the privacy of the state’s
consumers.

In sum, we conclude that the failure to apply California law in the present
context would result in a significant impairment of California’s interests.

By contrast, we believe that, for a number of reasons, the application of

California law rather than Georgia law in the context presented by the facts of
this case would have a relatively less severe effect on Georgia’s interests.

First, because California law, with regard to the particular matter here at
issue, is more protective of privacy interests than the comparable Georgia
privacy statute, the application of California law would not violate any privacy
interest protected by Georgia law. In addition, there is, of course, nothing in
Georgia law that requires any person or business to record a telephone call
without providing notice to the other [271/272]parties to the call, and thus persons
could comply with California law without violating any provision of Georgia
law.

Second, with respect to businesses in Georgia that record telephone calls,

California law would apply only to those telephone calls that are made to or
received from California, not to all telephone calls to and from such Georgia
businesses. * * *

Furthermore, applying California law to a Georgia business’s recording of

telephone calls between its employees and California customers will not
severely impair Georgia’s interests. As discussed above, California law does
not totally prohibit a party to a telephone call from recording the call, but rather
prohibits only the secret or undisclosed recording of telephone conversations,
that is, the recording of such calls without the knowledge of all parties to the
call. Thus, if a Georgia business discloses at the outset of a call made to or
received from a California customer that the call is being recorded, the parties
to the call will not have a reasonable expectation that the call is not being
recorded and the recording would not violate section 632. Accordingly, to the
extent Georgia law is intended to protect the right of a business to record
conversations when it has a legitimate business justification for doing so, the
application of California law to telephone calls between a Georgia business and
its California clients or customers would not defeat that interest. * * * Although
the application of California law to telephone calls between Georgia and
California would impair Georgia’s interests to the extent Georgia law is
intended to protect a business’s ability secretly to record its customers’
telephone calls, we believe that, particularly as applied to a business’s blanket
policy of routinely recording telephone calls to and from California customers,
this consequence would represent only a relatively minor impairment of
Georgia’s interests.

For the foregoing reasons, we conclude that, as a realistic matter, the

application of California law in this context would not result in a severe
impairment of Georgia’s interests.

Accordingly, because we have found that the interests of California would be

severely impaired if its law were not applied in this context, whereas Georgia’s
interest would not be significantly impaired if California law rather than
Georgia law were applied, we conclude that, with the one exception we discuss
below, California law should apply in determining whether the alleged secret
recording of telephone conversations at issue in this case constitutes an unlawful
invasion of privacy.

VI

Although, for the reasons just discussed, we have concluded that, as a general
matter, the comparative impairment analysis supports the application of
California law in this context, we believe it is appropriate to make an exception
with regard to one distinct issue — the question of SSB’s potential monetary
liability for its past conduct.

[272/273]

As we have noted above, prior California decisions establish that one of the
objectives of the comparative impairment analysis “is the ‘maximum attainment
of underlying purpose by all governmental entities ….’” (Offshore Rental,
supra, 22 Cal.3d 157, 166, italics added.) In seeking to maximize each affected
state’s interest to the extent feasible in the present context, we believe it is
appropriate, for the reasons discussed below, to restrain the application of
California law with regard to the imposition of liability for acts that have
occurred in the past, in order to accommodate Georgia’s interest in protecting
persons who acted in Georgia in reasonable reliance on Georgia law from being
subjected to liability on the basis of such action.

To begin with, we recognize that Georgia has a legitimate interest in ensuring

that individuals and businesses who act in Georgia with the reasonable
expectation that Georgia law applies to their conduct are not thereafter
unexpectedly and unforeseeably subjected to liability for such actions. The
Court of Appeal in the present case relied heavily upon this interest in reaching
its conclusion, and we believe that court’s assessment of the substantiality of
this state interest is reasonable. (Accord People v. One 1953 Ford Victoria
(1957) 48 Cal.2d 595, 599 [311 P.2d 480] [recognizing propriety of
accommodating reasonable expectations of persons who act in another state in
reasonable reliance on the other state’s law].)

To be sure, one legitimately might maintain that SSB reasonably should have
anticipated that its recording of a telephone conversation with a California
client when the client is in California would be governed by California law,
regardless of where the SSB employee with whom the client is speaking
happens to be located. Although SSB would have reached that conclusion had it
undertaken the extended choice-of-law analysis set forth above, we recognize
that at the time of SSB’s past actions the few lower court decisions that had
considered a legal challenge to the recording of an interstate telephone
conversation had reached differing conclusions as to which state’s law should
apply — the law of the state where the person who recorded the conversation
was situated, or instead the law of the state where the person whose words
were being recorded was located. Although none of the prior cases involved the
type of repeated recording of customer telephone calls by a business entity that
is involved here, we nonetheless believe that prior to our resolution of the issue
in this case a business entity reasonably might have been uncertain as to which
state’s law was applicable and reasonably might have relied upon the law of the
state in which its employee was located. Under these circumstances, we believe
Georgia has a legitimate interest in not having SSB subjected to liability on the
basis of its employees’ past actions in Georgia.

At the same time, although California law expressly authorizes the recovery
of damages for violations of section 632 (§ 637.2, subd. (a)), we believe that it
is appropriate to recognize that ascribing a monetary value to the invasion of
privacy resulting from the secret recording of a telephone conversation is
difficult in any event, and that the deterrent value of such a potential monetary
recovery cannot affect conduct that already has occurred. Under these
circumstances, we conclude that denying the recovery of damages for conduct
that was undertaken in the past in ostensible reliance on the law of another state
— and prior to our clarification of which state’s law applies in this context —
will not seriously impair California’s interests.

[273/274]

Accordingly, although we conclude that in general California law is

applicable in this setting and that plaintiffs may seek injunctive relief to require
SSB to comply with California law in the future, we shall apply Georgia law
with respect to SSB’s potential monetary liability for its past conduct, thus
relieving SSB of any liability for damages for its past recording of
conversations. (Cf., e.g., Ex parte Archy (1858) 9 Cal. 147, 171 [applying
clarification of choice-of-law rule prospectively].)17 In light of our decision, of
course, out-of-state companies that do business in California now are on notice
that, with regard to future conduct, they are subject to California law with
regard to the recording of telephone conversations made to or received from
California, and that the full range of civil sanctions afforded by California law
may be imposed for future violations.18

***

For the reasons discussed above, the judgment of the Court of Appeal is
reversed insofar as it precludes plaintiffs from going forward with their action
to obtain injunctive relief, and is affirmed insofar as it upholds the dismissal of
the action with regard to the recovery of monetary damages and restitution.
Plaintiffs shall recover their costs on appeal.

NOTES AND QUESTIONS

(1) Why did the court in Offshore Rental assume there was a true conflict
between California and Louisiana law? Seven years after it decided Offshore
Rental, the California Supreme Court finally decided whether the California
statute created a cause of action on behalf of a corporation for injuries to a key
employee. The Court concluded that such a doctrine has no relevance to present-
day employer/employee relationships because it is “obsolete, archaic and
outmoded.” I. J. Weinrot and Son, Inc. v. Jackson , 40 Cal. 3d 327, 340, 220
Cal. Rptr. 103, 112, 708 P.2d 682, 691 (1985) . Why did the court in Offshore
Rental decline to make this determination? If it had, would there have been any
need to apply “comparative impairment”?

(2) What factors did the court in Offshore Rental focus on as part of its
comparative impairment analysis? How does this differ from Bernhard? Is the
court’s comparative impairment analysis consistent with Baxter’s comparative
impairment model? How would you generally describe the comparative
impairment method after Offshore Rental? What role did insurance play in the
court’s analysis? Should “the fact that parties may reasonably be expected to
plan their transactions with insurance in mind” constitute a relevant element in
the resolution of a true [274/275]conflict? Or is this element intrinsic to a state’s
interest in applying its law? See David E. Seidelson, Resolving Choice-of-Law
Problems Through Interest Analysis in Personal Injury Actions , 30 Duq. L.
Rev. 869, 904-907 (1992).

(3) The Supreme Court’s use of comparative impairment in Offshore Rental

has been sharply criticized by scholars as an example of “better law” analysis,
and therefore as an example of precisely the type of “super-value judgment”
considered inappropriate by Currie and Baxter. See Herma Hill Kay, The Use
of Comparative Impairment to Resolve True Conflicts: An Evaluation of the
California Experience, 68 Cal. L. Rev. 577, 586-591 (1980); Leo Kanowitz,
Comparative Impairment and Better Law: Grand Illusions in the Conflict of
Laws, 30 Hastings L.J. 255, 286–300 (1978). Is this an accurate criticism of the
court’s analysis in Offshore Rental? Is it more accurate to criticize Offshore
Rental as focusing on territorialism, and not comparative impairment, in
resolving the conflict? See William A. Reppy, Eclecticism in Choice of Law:
Hybrid Method or Mishmash?, 34 Mercer L. Rev. 645, 673–77 (1983).

(4) Consider again the reasons why Currie concludes that a court should not
make “super-value judgments” in resolving true conflicts. Doesn’t Baxter’s
“comparative impairment” approach inherently involve such judgments, despite
the court’s denial in Bernhard? If so, is the court in Offshore Rental perhaps
more honest by openly determining which state’s interests are more intensely
held, as opposed to hiding behind objective-sounding analysis?
 (5) How did the court in Offshore Rental determine the policies and interests
of Louisiana and California with respect to the issue of recovery for loss of a
key employee’s services? Read closely footnote 5 of the court’s opinion, supra.
Is the court saying that it must determine a choice-of-law issue regardless of
whether the issue is raised by the parties? Regardless of whether the defendant
satisfactorily demonstrates that a foreign state has an interest in having its law
applied to the case? How should a court determine a state’s interest when that
state’s law may further more than one policy? Should the court attempt to
ascertain the most important or most rational policy? How would a court go
about doing this? See footnote 6, Offshore Rental.

(6) What do you make of the Kearney court’s distinction between the
injunctive and damages relief sought by the plaintiff, as a basis for different
choice-of-law outcomes? Is this distinction consistent with government
interest/comparative impairment analysis? Does the Supreme Court’s distinction
reflect other choice-of-law principles? Or is the court simply making a
Solomonic resolution of the parties’ dispute?

(7) The unedited version of the California Supreme Court’s opinion in

Kearney contains an excellent summary of all its prior decisions — Reich,
Hurtado, Bernhard, and Offshore Rental — that apply government interest
analysis and the comparative impairment doctrine. See Kearney v. Salomon
Smith Barney, Inc., 39 Cal. 4th 95, 107–115, 45 Cal. Rptr. 3d 730, 740–46,
137 P.3d 914, 922–27 (2006).

Footnotes:

2 Neither party has urged that the law of Delaware or Texas is applicable.

5 Although, as plaintiff contends, defendant did not in fact “demonstrate” Louisiana’s policies and
interests in the application of Louisiana law, we may make our own determination of those policies and
interests, without taking “evidence” as such on the matter. Plaintiff’s contention rests on an unduly literal
interpretation of our statement in Hurtado v. Superior Court, supra, 11 Cal. 3d 574, 581, that “generally
speaking the forum will apply its own rule of decision unless a party litigant timely invokes the law of a
foreign state. In such event he must demonstrate that the latter rule of decision will further the interest of
the foreign state and therefore that it is an appropriate one for the forum to apply to the case before it.” We
note in this regard that Evidence Code section 452 expressly provides that “Judicial notice may be taken of
… [¶](a) The decisional, constitutional, and statutory law of any state of the United States ….”
 6 While this protection of the employer is the most rational policy that can be attributed to California, it is
not the only one possible. The sparse legislative history of section 49 suggests that the Legislature may have
retained the statutory action for injury to a servant in the belief that this statutory cause of action was
necessary in order to preserve an employer’s right of subrogation under the workers’ compensation law.
(See Governor’s Recommendation to Assem. and Sen. that Assem. Bill No. 1699 be amended (May 12,
1939) 1 Assem.J. (1939 Reg. Sess.) p. 2086. Compare Stats. 1939, ch. 1103, § 5, p. 3037, with Stats. 1939,
ch. 128, § 1, p. 1245.) As more recent cases make clear, however, the specific subrogation statutes of the
worker’s compensation law are sufficient, in themselves, to establish the employer’s right to subrogation
(see Lab. Code, §§ 3850-3864; County of San Diego v. Sanfax Corp. (1977) 19 Cal.3d 862 [140
Cal.Rptr. 638, 568 P.2d 363] ), and thus section 49 plays no substantial role in encouraging employers to
meet their responsibility under the workers’ compensation law. Moreover, the present defendant has
compensated plaintiff’s employee for his injuries; the record indicates no claim by defendant for indemnity.

12 We emphasize that plaintiff did not expose itself to any risk that Louisiana encourages negligent
conduct by resident corporations. On the contrary, as a consequence of Louisiana’s general policy against
negligent behavior, defendant has already been obliged to compensate plaintiff’s employee for his personal
injuries.

5 Section 637.2 currently provides in full:

“(a) Any person who has been injured by a violation of this chapter may bring an action against the
person who committed the violation for the greater of the following amounts:

“(1) Five thousand dollars ($5,000).

“(2) Three times the amount of actual damages, if any, sustained by the plaintiff.

“(b) Any person may, in accordance with Chapter 3 (commencing with Section 525) of Title 7 of Part 2
of the Code of Civil Procedure, bring an action to enjoin and restrain any violation of this chapter, and may
in the same action seek damages as provided by subdivision (a).

“(c) It is not a necessary prerequisite to an action pursuant to this section that the plaintiff has suffered,
or be threatened with, actual damages.”

14 The dichotomy between the California and Georgia privacy statutes in this regard is representative of
a division in analogous privacy statutes throughout the nation. Privacy statutes in a majority of states (as
well as the comparable federal provision) — like the Georgia statute — prohibit the recording of private
conversations except with the consent of one party to the conversation, but a sizeable minority of states (11
states, according to an apparently well-researched law review article) — including California — prohibit
such recording without the consent of all parties to the conversation. (See Bast, What’s Bugging You?
Inconsistencies and Irrationalities of the Law of Eavesdropping (1998) 47 DePaul L.Rev. 837, 870.)
 17 For the same reasons that lead us to conclude that monetary damages may not be obtained on the
basis of SSB’s past actions, we also conclude that it would be inappropriate to require SSB to provide
reimbursement under the provisions of the unfair competition law on the basis of such past actions.

18 To avoid any misunderstanding regarding the scope of our ruling, we note that this case does not
present the question whether secret recordings that were made prior to this decision would or would not be
admissible in a judicial or other proceeding, and we express no opinion on that question. Furthermore,
because this case does not involve the isolated recording of a personal telephone call by an out-of-state
individual in a nonbusiness setting, or the recording of a phone call by an out-of-state business that has a
reasonable, individualized basis for believing that a particular caller is engaged in criminal or wrongful
conduct, we have no occasion to determine how the comparative impairment analysis would apply in those
or other comparable settings.
 [275/276]

[2] Lower Court Application

The Courts of Appeal have applied government interest analysis on several

occasions in tort cases, sometimes with questionable results.

[a] Zimmerman v. Allstate Ins. Co., 179 Cal. App. 3d 840, 224, Cal. Rptr. 917 (1988)

During June, 1979, plaintiff Zimmerman, a truck driver then residing in

Illinois, was injured in a collision in Oklahoma between his truck and a vehicle
driven by Aaron McIntosh, a resident of Oklahoma. Subsequently, in late 1979,
plaintiff moved to California and resided there since. In 1981, plaintiff
commenced a civil action against McIntosh in an Oklahoma court, which was
later settled.

In 1984, plaintiff then filed an action against defendant Allstate, McIntosh’s

insurer, in a California court. Plaintiff’s complaint alleged a bad faith cause of
action against defendant Allstate, and further alleged that he was a resident of
California during the entire time Allstate committed the alleged bad faith acts
against him. The defendant demurred. Oklahoma law does not permit a third-
party bad faith cause of action against an insurer, but California law at that time
clearly did authorize such claims. The trial court sustained the demurrer, and
plaintiff appealed.

The Court of Appeal found that both California and Oklahoma had a
legitimate interest in applying their respective laws to the case, and therefore
the case presented a true conflict. California’s interest, manifest by its Unfair
Trade Practices Act, is in regulating the practices of insurers within California,
as well as in affording redress to California residents damaged by unfair
practices of insurers. Oklahoma’s interest is in regulating the practices of
insurers within its borders, as well as in protecting defendant insurers and,
through them, its insureds. The court then undertook a comparative impairment
analysis, but split on the result.

The majority found that California’s only relevant interest here was in
compensation of plaintiff based on his status as a resident of the state, and
viewed California’s interest in regulating defendant’s conduct as irrelevant
because the complained-of bad faith conduct occurred in Oklahoma. Moreover,
applying California law based solely on plaintiff’s post-accident residency
would encourage forum shopping in bad faith insurance actions. The majority
also found that Oklahoma has the greater interest in regulating the conduct of
Allstate where the complained-of conduct occurred in that state, as well as in
protecting the insurer, and through it the insured, McIntosh, against third-party
bad faith claims.

The dissent agreed that the case presented a true conflict, but found that
California’s interests would be more severely impaired if Oklahoma law were
applied. The dissent noted that Allstate is a nationwide company, and is subject
to California’s Unfair Trade Practices Act when, as here, it deals with
California residents. Although defendant’s acts may physically have occurred in
Oklahoma, the impact of these acts is alleged to have occurred in California.
California has the greater interest in applying its law to out-of-state insurers
whose conduct injures state residents.

[276/277]

NOTES AND QUESTIONS REGARDING

ZIMMERMAN v. ALLSTATE INS. CO.

(1) Do you agree with the majority’s comparative impairment determination

in Zimmerman, or with the dissent’s? Do you understand how Oklahoma’s law
protects Oklahoma insureds? Are you persuaded by the majority’s concerns of
forum shopping in insurance bad faith cases? Perhaps the majority’s concern is
with house shopping, as well as with forum shopping? Would the majority’s
conclusion be any different if plaintiff Zimmerman had been a lifetime resident
of California who was only passing through Oklahoma when the accident
occurred?

(2) The Zimmerman opinions cite to Offshore Rental, but do not engage in
any analysis of which state’s policy is more strongly held now than in the past,
or of which state’s law is more prevalent and progressive. Why do you think the
court did not apply these factors? If it had applied them, which state has the
more prevalent and progressive law on third-party bad faith insurance claims?
How would you determine this?

(3) In 1988, the Supreme Court in Moradi-Shalal v. Fireman’s Fund Ins.

Co., 46 Cal. 3d 287, 250 Cal. Rptr. 116, 758 P.2d 58 (1988) , overruled earlier
precedent and held that California no longer recognizes a private cause of action
against insurers for third-party bad faith claims. If the events in Zimmerman had
occurred after 1988, would the court have found a true conflict between
Oklahoma and California law?

[b] Denham v. Farmers Insurance Co., 213 Cal. App. 3d 1061, 262 Cal. Rptr. 146 (1989)

The Court of Appeal considered the same choice of law issue in Denham as
it had in Zimmerman. The facts in Denham are almost identical to those in
Zimmerman, except that the Denham plaintiffs were residents of California
when the accident occurred. During 1982, plaintiff Denham was injured in
Nevada in a car crash with Jerome Beetow, a resident of Nevada. Denham filed
suit against Beetow in a Nevada court. Beetow was insured by Farmers
Insurance Company under a policy issued in Nevada. Farmers refused to settle
Denham’s lawsuit, and Denham obtained a judgment against Beetow in excess
of Farmer’s policy limits.

In 1987, plaintiff Denham then filed suit in California, alleging third-party

bad faith claims against defendant Farmers Insurance. Defendant demurred,
arguing that Nevada law applied. Nevada did not recognize third-party bad faith
insurance claims.

Referring to Zimmerman, the Court of Appeal found that both California and
Nevada had an interest in applying their respective laws, and a true conflict
existed. However, the court noted that after the decision in Zimmerman, the
California Supreme Court in Moradi-Shalal v. Fireman’s Fund Ins. Co. , 46
Cal. 3d 287, 250 Cal. Rptr. 116, 758 P.2d 58 (1988) , overruled earlier
precedent and held that California statutes do not authorize a private cause of
action against insurers for third-party bad faith claims. However, by its own
terms the Moradi-Shalal decision did not apply retroactively to actions filed
before the date of that opinion if the insured’s liability had been conclusively
determined. Accordingly, the court in [277/278]Denham found that plaintiffs’
complaint still stated a cause of action under California law, if California law
were applicable.

The Court of Appeal, as in Zimmerman, then engaged in a comparative

impairment analysis. The court first considered the factor of whether the policy
underlying each state’s law “is one that was more strongly held in the past than
it is now,” citing Offshore Rental. The court then reasoned that because
Moradi-Shalal overruled future private actions for third-party bad faith,
California’s interest in applying its law is clearly not as strong as it was in the
past. And, because California’s only link to the case is plaintiff’s residence,
Nevada has a greater interest in applying its law here, as Oklahoma did in
Zimmerman.

NOTES AND QUESTIONS REGARDING

DENHAM v. FARMERS INSURANCE CO.

(1) Does it make sense to view Farmer’s conduct as occurring in Nevada

when it deals with a California resident, and perhaps through its California
office? What if the Denhams’ first lawsuit against Beetow had been litigated in
California, not Nevada?

(2) The Court of Appeal applied Offshore Rental’s “more strongly held in
the past than it is now” factor, and apparently found it quite significant to the
resolution of the choice-of-law question. Do you think this factor was properly
applied by the court in Denham? Why?

[3] Other States’ Doctrines for Torts

Only a handful of states have adopted interest analysis as their stated choice-
of-law doctrine for tort cases, and California may be the only state that has
adopted the comparative impairment approach for resolution of true conflicts.
See Peter Hay, Patrick J. Borchers & Symeon C. Symeonides, Conflict of Laws
§§ 2.18-2.25 (4th ed. 2010); Symeon C. Symeonides, Choice of Law in the
American Courts in 2010: Twenty-Fourth Annual Survey, 59 Am. J. Comp. L.
303, 330–31 (2011).

[a] Are the Approaches Really Different in Practice?

An empirical study of 802 reported tort cases in several states suggests,

however, that in practice the Second Restatement, “interest analysis,” and
Professor Leflar’s “better law” approach are largely indistinguishable in
patterns of results. See Patrick J. Borchers, The Choice-of-Law Revolution: An
Empirical Study, 49 Wash. & Lee L. Rev. 357 (1992).

[b] Commentary on Interest Analysis

The government interest analysis continues to generate an enormous amount of

scholarly criticism and support. In addition to the various authorities previously
referenced in this chapter, several recent writings contain useful expositions,
including Harold G. Maier, Finding the Trees in Spite of the Metaphorist: The
Problem of State Interests in Choice of Law, 56 Alb. L. Rev. 753 (1993) ;
Douglas Laycock, Equal Citizens of Equal and Territorial States: The
Constitutional [278/279]Foundations of Choice of Law, 92 Colum. L. Rev. 249
(1992); Lea Brilmayer, Conflict of Laws: Foundations and Future Directions ,
ch. 2 (1991); Louise Weinberg, Against Comity, 80 Geo. L.J. 53 (1991); Joseph
W. Singer, A Pragmatic Guide to Conflicts, 70 B.U. L. Rev. 731 (1990);
Friedrich K. Juenger, A Critique of Interest Analysis, 32 Am. J. Comp. L. 1
(1984); Bruce Posnak, Choice of Law: Interest Analysis and Its “New Crits,”
36 Am. J. Comp. L. 681 (1988); Russel J. Weintraub, A Defense of Interest
Analysis in the Conflict of Laws and the Use of That Analysis in Products
Liability, 46 Ohio St. L.J. 493 (1985).

§ 5.04 CALIFORNIA CHOICE-OF-LAW DOCTRINE

IN CONTRACT CASES
[A] Choice-of-Law Agreements

NEDLLOYD LINES B.V. v. SUPERIOR COURT

SUPREME COURT OF CALIFORNIA
3 Cal. 4th 459, 11 Cal. Rptr. 2d 330, 834 P.2d 1148 (1992)

Baxter, Justice.

We granted review to consider the effect of a choice-of-law clause in a

contract between commercial entities to finance and operate an international
shipping business. In our order granting review, we limited our consideration to
the question whether and to what extent the law of Hong Kong, chosen in the
parties’ agreement, should be applied in ruling on defendant’s demurrer to
plaintiff’s complaint.

We conclude the choice-of-law clause, which requires that the contract be

“governed by” the law of Hong Kong, a jurisdiction having a substantial
connection with the parties, is fully enforceable and applicable to claims for
breach of the implied covenant of good faith and fair dealing and for breach of
fiduciary duties allegedly arising out of the contract. Our conclusion rests on the
choice-of-law rules derived from California decisions and the Restatement
Second of Conflict of Laws, which reflect strong policy considerations favoring
the enforcement of freely negotiated choice-of-law clauses. Based on our
conclusion, we will reverse the judgments of the Court of Appeal and remand
for further proceedings.

STATEMENT OF FACTS AND PROCEEDINGS BELOW

Plaintiff and real party in interest Seawinds Limited (Seawinds) is a shipping

company, currently undergoing reorganization under chapter 11 of the United
States Bankruptcy Code, whose business consists of the operation of three
container ships. Seawinds was incorporated in Hong Kong in late 1982 and has
its principal place of business in Redwood City, California. Defendants and
petitioners Nedlloyd Lines B.V., Royal Nedlloyd Group N.V., and KNSM Lines
B.V. (collectively referred to as Nedlloyd) are interrelated shipping companies
incorporated in the Netherlands with their principal place of business in
Rotterdam.

In March 1983, Nedlloyd and other parties (including an Oregon corporation,

a [279/280]Hong Kong corporation, a British corporation, three individual
residents of California, and a resident of Singapore) entered into a contract with
Seawinds to purchase shares of Seawinds’s stock. The contract, which was
entitled “Shareholders’ Agreement in Respect of Seawinds Limited,” stated that
its purpose was “to establish [Seawinds] as a joint venture company to carry on
a transportation operation.” The agreement also provided that Seawinds would
carry on the business of the transportation company and that the parties to the
agreement would use “means reasonably available” to ensure the business was
a success.

The shareholders’ agreement between the parties contained the following

choice-of-law and forum selection provision: “This agreement shall be
governed by and construed in accordance with Hong Kong law and each party
hereby irrevocably submits to the non-exclusive jurisdiction and service of
process of the Hong Kong courts.”

In January 1989, Seawinds sued Nedlloyd, alleging in essence that Nedlloyd

breached express and implied obligations under the shareholders’ agreement by:
“(1) engaging in activities that led to the cancellation of charter hires that were
essential to Seawinds’ business; (2) attempting to interfere with a proposed
joint service agreement between Seawinds and the East Asiatic Company, and
delaying its implementation; (3) making and then reneging on commitments to
contribute additional capital, thereby dissuading others from dealing with
Seawinds, and (4) making false and disparaging statements about Seawinds’
business operations and financial condition.” Seawinds’s original and first
amended complaint included causes of action for breach of contract, breach of
the implied covenant of good faith and fair dealing (in both contract and tort),
and breach of fiduciary duty. This matter comes before us after trial court
rulings on demurrers to Seawinds’s complaints.

Nedlloyd demurred to Seawinds’s original complaint on the grounds that it

failed to state causes of action for breach of the implied covenant of good faith
and fair dealing (either in contract or in tort) and breach of fiduciary duty. In
support of its demurrer, Nedlloyd contended the shareholders’ agreement
required the application of Hong Kong law to Seawinds’s claims. In opposition
to the demurrer, Seawinds argued that California law should be applied to its
causes of action.

In ruling on Nedlloyd’s demurrer, the trial court expressly determined that

California law applied to all of Seawinds’s causes of action. It sustained the
demurrers with leave to amend as to all causes of action, relying on grounds not
pertinent to the issues before us. Nedlloyd sought a writ of mandate from the
Court of Appeal directing the application of Hong Kong law. After the Court of
Appeal summarily denied Nedlloyd’s initial writ petition, we granted
Nedlloyd’s petition for review. * * *

In the meantime, the trial court overruled Nedlloyd’s demurrer to Seawinds’s

first amended complaint, again applying California law to Seawinds’s causes of
action. The Court of Appeal summarily denied Nedlloyd’s second writ petition
challenging the order overruling the latter demurrer; we also granted review of
that order and consolidated proceedings on the two writ matters so as to
preserve the choice-of-law issue for review. As noted above, we have limited
review in both proceedings to the choice-of-law issue.

[280/281]

DISCUSSION
I. The proper test.

We have not previously considered the enforceability of a contractual choice-

of-law provision. We have, however, addressed the closely related issue of the
enforceability of a contractual choice-of-forum provision, and we have made
clear that, “No satisfying reason of public policy has been suggested why
enforcement should be denied a forum selection clause appearing in a contract
entered into freely and voluntarily by parties who have negotiated at arm’s
length.” (Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal. 3d
491, 495–496 [131 Cal. Rptr. 374, 551 P.2d 1206] (Smith).) The forum
selection provision in Smith was contained within a choice-of-law clause, and
we observed that, “Such choice of law provisions are usually respected by
California courts.” (Id., at p. 494.) We noted this result was consistent with the
modern approach of section 187 of the Restatement Second of Conflict of Laws
(Restatement). (17 Cal. 3d at p. 494.) Prior Court of Appeal decisions, although
not always explicitly referring to the Restatement, also overwhelmingly reflect
the modern, mainstream approach adopted in the Restatement. (Mencor
Enterprises, Inc. v. Hets Equities Corp. (1987) 190 Cal. App. 3d 432, 435–
436 [235 Cal. Rptr. 464] [explicit reference to Rest. § 187]; …).1

We reaffirm this approach. In determining the enforceability of arm’s-length

contractual choice-of-law provisions, California courts shall apply the
principles set forth in Restatement section 187, which reflects a strong policy
favoring enforcement of such provisions.2

More specifically, Restatement section 187, subdivision (2) sets forth the
following standards: “The law of the state chosen by the parties to govern their
contractual rights and duties will be applied, even if the particular issue is one
which the parties could not have resolved by an explicit provision in their
agreement directed to that issue, unless either (a) the chosen state has no
substantial relationship to the parties or the transaction and there is no other
reasonable basis for the parties’ choice, or (b) application of the law of the
chosen state would be contrary to a fundamental policy of a state which has a
materially greater interest than the chosen state in the determination of the
particular issue and which, under [281/282]the rule of § 188, would be the state of
the applicable law in the absence of an effective choice of law by the parties.”3

Briefly restated, the proper approach under Restatement section 187,

subdivision (2) is for the court first to determine either: (1) whether the chosen
state has a substantial relationship to the parties or their transaction, or (2)
whether there is any other reasonable basis for the parties’ choice of law. If
neither of these tests is met, that is the end of the inquiry, and the court need not
enforce the parties’ choice of law. If, however, either test is met, the court must
next determine whether the chosen state’s law is contrary to a fundamental
policy of California.5 If there is no such conflict, the court shall enforce the
parties’ choice of law. If, however, there is a fundamental conflict with
California law, the court must then determine whether California has a
“materially greater interest than the chosen state in the determination of the
particular issue ….” (Rest., § 187, subd. (2).) If California has a materially
greater interest than the chosen state, the choice of law shall not be enforced, for
the obvious reason that in such circumstance we will decline to enforce a law
contrary to this state’s fundamental policy. 6 We now apply the Restatement test
to the facts of this case.

II. Application of the test in this case.

A. Breach of contract.

Nedlloyd did not assert in its second demurrer that the amended complaint
failed [282/283]to state a cause of action under Hong Kong law for breach of
contract. Rather, Nedlloyd challenged the amended complaint’s breach of
contract allegations only on the ground of uncertainty. (Code Civ. Proc., §
430.10, subd. (f).) In light of our order limiting review to the issue of whether
Hong Kong law “should be applied in ruling on the demurrers,” we need not and
do not consider the correctness of the trial court’s ruling on the demurrer to this
cause of action. As we shall explain, however, Hong Kong law, although not
asserted as a bar to Seawinds’s contract cause of action at the pleading stage,
does govern all causes of action pleaded in the amended complaint, including
the contract cause of action.

B. Implied covenant of good faith and fair dealing.

1. Substantial relationship or reasonable basis.

As to the first required determination, Hong Kong — “the chosen state” —

clearly has a “substantial relationship to the parties.” (Rest., § 187, subd. (2)
(a).) The shareholders’ agreement, which is incorporated by reference in
Seawinds’ first amended complaint, shows that Seawinds is incorporated under
the laws of Hong Kong and has a registered office there. The same is true of one
of the shareholder parties to the agreement — Red Coconut Trading Co. The
incorporation of these parties in Hong Kong provides the required “substantial
relationship.” (Id., com. f [substantial relationship present when “one of the
parties is domiciled” in the chosen state]; …)

Moreover, the presence of two Hong Kong corporations as parties also

provides a “reasonable basis” for a contractual provision requiring application
of Hong Kong law. “If one of the parties resides in the chosen state, the parties
have a reasonable basis for their choice.” (Consul Ltd. v. Solide Enterprises,
Inc., supra, 802 F.2d 1143, 1147 .) The reasonableness of choosing Hong Kong
becomes manifest when the nature of the agreement before us is considered. A
state of incorporation is certainly at least one government entity with a keen and
intimate interest in internal corporate affairs, including the purchase and sale of
its shares, as well as corporate management and operations. (See Corp. Code, §
102 [applying California’s general corporation law to domestic corporations].)

2. Existence of fundamental public policy.

We next consider whether application of the law chosen by the parties would
be contrary to “a fundamental policy” of California. We perceive no
fundamental policy of California requiring the application of California law to
Seawinds’s claims based on the implied covenant of good faith and fair dealing.
The covenant is not a government regulatory policy designed to restrict freedom
of contract, but an implied promise inserted in an agreement to carry out the
presumed intentions of contracting parties. (Foley v. Interactive Data Corp.
(1988) 47 Cal. 3d 654, 689–690 [254 Cal. Rptr. 211, 765 P.2d 373] (Foley)
[“When a court enforces the implied covenant it is in essence acting to protect
‘the interest in having promises performed’ [citation] — the traditional realm of
a contract action — rather than to protect some general duty to society which the
law places on an employer without regard to the substance of its contractual
obligations to its employee.”].)

Seawinds directs us to no authority exalting the implied covenant of good

faith and fair dealing over the express covenant of these parties that Hong Kong
law shall [283/284]govern their agreement. We have located none. Because
Seawinds has identified no fundamental policy of our state at issue in its
essentially contractual dispute with Nedlloyd, the second exception to the rule
of section 187 of the Restatement does not apply.

C. Fiduciary duty cause of action.

1. Scope of the choice-of-law clause.

Seawinds contends that, whether or not the choice-of-law clause governs

Seawinds’s implied covenant claim, Seawinds’s fiduciary duty claim is
somehow independent of the shareholders’ agreement and therefore outside the
intended scope of the clause. Seawinds thus concludes California law must be
applied to this claim. We disagree.

When two sophisticated, commercial entities agree to a choice-of-law clause

like the one in this case, the most reasonable interpretation of their actions is
that they intended for the clause to apply to all causes of action arising from or
related to their contract. Initially, such an interpretation is supported by the plain
meaning of the language used by the parties. The choice-of-law clause in the
shareholders’ agreement provides: “This agreement shall be governed by and
construed in accordance with Hong Kong law and each party hereby irrevocably
submits to the non-exclusive jurisdiction and service of process of the Hong
Kong courts.” (Italics added.)7

The phrase “governed by” is a broad one signifying a relationship of absolute

direction, control, and restraint. Thus, the clause reflects the parties’ clear
contemplation that “the agreement” is to be completely and absolutely
controlled by Hong Kong law. No exceptions are provided. In the context of this
case, the agreement to be controlled by Hong Kong law is a shareholders’
agreement that expressly provides for the purchase of shares in Seawinds by
Nedlloyd and creates the relationship between shareholder and corporation that
gives rise to Seawinds’s cause of action. Nedlloyd’s fiduciary duties, if any,
arise from — and can exist only because of — the shareholders’ agreement
pursuant to which Seawinds’s stock was purchased by Nedlloyd.

In order to control completely the agreement of the parties, Hong Kong law
must also govern the stock purchase portion of that agreement and the legal
duties created by or emanating from the stock purchase, including any fiduciary
duties. If Hong Kong law were not applied to these duties, it would effectively
control only part of the agreement, not all of it. Such an interpretation would be
inconsistent [284/285]with the unrestricted character of the choice-of-law clause.

Our conclusion in this regard comports with common sense and commercial
reality. When a rational business person enters into an agreement establishing a
transaction or relationship and provides that disputes arising from the agreement
shall be governed by the law of an identified jurisdiction, the logical conclusion
is that he or she intended that law to apply to all disputes arising out of the
transaction or relationship. We seriously doubt that any rational businessperson,
attempting to provide by contract for an efficient and business-like resolution of
possible future disputes, would intend that the laws of multiple jurisdictions
would apply to a single controversy having its origin in a single, contract-based
relationship. Nor do we believe such a person would reasonably desire a
protracted litigation battle concerning only the threshold question of what law
was to be applied to which asserted claims or issues. Indeed, the manifest
purpose of a choice-of-law clause is precisely to avoid such a battle.

Seawinds’s view of the problem — which would require extensive litigation

of the parties’ supposed intentions regarding the choice-of-law clause to the end
that the laws of multiple states might be applied to their dispute — is more
likely the product of postdispute litigation strategy, not predispute contractual
intent. If commercially sophisticated parties (such as those now before us) truly
intend the result advocated by Seawinds, they should, in fairness to one another
and in the interest of economy in dispute resolution, negotiate and obtain the
assent of their fellow parties to explicit contract language specifying what
jurisdiction’s law applies to what issues. * * *

For the reasons stated above, we hold a valid choice-of-law clause, which
provides that a specified body of law “governs” the “agreement” between the
parties, encompasses all causes of action arising from or related to that
agreement, regardless of how they are characterized, including tortious breaches
of duties emanating from the agreement or the legal relationships it creates.

2. Enforceability of chosen law as to fiduciary duty claim.

Applying the test we have adopted, we find no reason not to apply the
parties’ choice of law to Seawinds’s cause of action for breach of fiduciary
duty. As we have explained, Hong Kong, the chosen state, has a “substantial
relationship to the parties” because two of those parties are incorporated there.
Moreover, their incorporation in that state affords a “reasonable basis” for
choosing Hong Kong law.

Seawinds identifies no fundamental public policy of this state that would be

offended by application of Hong Kong law to a claim by a Hong Kong
corporation against its allegedly controlling shareholder. We are directed to no
California statute or constitutional provision designed to preclude freedom of
contract in this context. Indeed, even in the absence of a choice-of-law clause,
Hong Kong’s overriding interest in the internal affairs of corporations
domiciled there would in most cases require application of its law. (See Rest., §
306 [obligations owed by majority shareholder to corporation determined by the
law of the state of incorporation except in unusual circumstances not present
here]; …)

For strategic reasons related to its current dispute with Nedlloyd, Seawinds
seeks to create a fiduciary relationship by disregarding the law Seawinds
voluntarily [285/286]agreed to accept as binding — the law of a state that also
happens to be Seawinds’s own corporate domicile. To allow Seawinds to use
California law in this fashion would further no ascertainable fundamental policy
of California; indeed, it would undermine California’s policy of respecting the
choices made by parties to voluntarily negotiated agreements.

DISPOSITION

By a choice-of-law clause in a fully negotiated commercial contract, the

parties have chosen Hong Kong law to apply to their dispute in this case,
including each of the causes of action asserted by Seawinds.

Seawinds’s action is now proceeding based on its first amended complaint,

which will be the focus of further proceedings applying Hong Kong law to
resolve the parties’ differences. Therefore, the judgments of the Court of Appeal
in the consolidated proceedings and the matters are remanded to the Court of
Appeal with instructions to issue a peremptory writ of mandate directing the
trial court to reconsider its ruling on Nedlloyd’s demurrer to Seawinds’s first
amended complaint in light of applicable Hong Kong law.

Panelli, Justice, Concurring and Dissenting.

 I generally concur in the majority opinion’s explanation of the standards
controlling when a contractual choice-of-law provision will be honored by the
courts of this state and with the majority’s application of these standards to
Seawinds’s cause of action for breach of the covenant of good faith and fair
dealing. I write separately to express my disagreement with the majority’s
conclusion, based on the record before us, that the choice-of-law clause in this
case governs Seawinds’s cause of action for breach of fiduciary duty. In my
view, the majority’s analysis of the scope of the choice-of-law clause is
unsound.

The choice-of-law clause in this case reads in pertinent part: “This agreement
shall be governed by and construed in accordance with Hong Kong law ….”
The majority determines that the scope of the choice-of-law clause, which was
incorporated into the first amended complaint by attachment, extends to related,
noncontractual causes of action, such as Seawinds’s breach of fiduciary duty
claim. In so doing, the majority opinion adopts the rule that “[w]hen two
sophisticated, commercial entities agree to a choice-of-law clause like the one
in this case, the most reasonable interpretation of their actions is that they
intended for the clause to apply to all causes of action arising from or related to
their contract.” Without citing any authority, the majority opinion announces a
binding rule of contractual interpretation, based solely upon “common sense and
commercial reality.” * * * In this case, the language of the incorporated contract
easily can be read to apply only to contractual causes of action: “This agreement
shall be governed … by Hong Kong law.”

In my view, the majority’s mistaken construction of the choice-of-law clause

is clear when the language used in the present contract is compared, as
Nedlloyd urges us to do, with the language construed by this court in Smith,
Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal. 3d 491 [131 Cal.
Rptr. 374, 551 P.2d 1206] . [286/287]In that case, this court determined that claims
for unfair competition and intentional interference with advantageous business
relationships were governed by a choice-of-forum clause as “‘actions or
proceedings instituted by … [Smith] under this Agreement with respect to any
matters arising under or growing out of this agreement ….’” (id. at p. 497,
italics in the original.) In contrast to the language used by Nedlloyd and
Seawinds in their agreement, the contractual language, “arising under or
growing out of this agreement,” which was used in Smith, explicitly shows an
intent to embrace related noncontractual claims, as well as contractual claims.
Although similar language was readily available to them, the sophisticated
parties in the present case did not draft their choice-of-law clause to clearly
encompass related noncontractual causes of action. Therefore, on demurrer and
in the absence of parol evidence, I cannot fairly construe the contractual
language at issue here to be consistent with the interpretation proposed by
Nedlloyd and adopted in the majority opinion. To do so would violate the
statutory canon of contract interpretation that “[t]he language of a contract is to
govern its interpretation, if the language is clear and explicit, and does not
involve an absurdity.” (Civ. Code, § 1638.) * * *

I am keenly aware of the need for predictability in the enforcement of

commercial contracts. Nevertheless, although courts and litigants may wish the
law were otherwise, not every issue can be conclusively determined at the
pleading stage. On the present record, the scope of the choice-of-law clause
must be construed in favor of Seawinds.

Kennard, Justice, concurring and dissenting.

***

Sophisticated commercial parties who desired choice-of-law and choice-of-

forum provisions to control all related contractual and noncontractual aspects of
their relationship could achieve their aim by using clauses that resembled those
this court enforced in Smith, [Valentino and Smith, Inc. v. Superior Court
(1976)] supra, 17 Cal. 3d 491, governing “any matters arising under or growing
out of the agreement.” Other sophisticated parties who desired more narrow
clauses could draft specific clauses suited to the parties’ needs in the
expectation that those clauses would be enforced as they were intended. * * *

In this case, the parties have elected to have their agreement governed by
Hong Kong law. Applying the test articulated in the Restatement Second of
Conflict of Laws, I conclude, like the majority, that Hong Kong law, the law
expressly chosen by the parties, should be applied to Seawinds’ contractual
cause of action for breach of the implied covenant of good faith and fair dealing.
But the goal of protecting contracting parties’ reasonable expectations is not
served by applying Hong Kong law to Seawinds’ noncontractual cause of action
for breach of fiduciary duty. Absent extrinsic evidence that the parties intended
a broader application of their choice-of-law provision, the choice-of-law
provision is most reasonably interpreted as applying only to contractual causes
of action. Unlike the majority, therefore, I conclude that the trial court should not
apply Hong Kong law to determine whether Seawinds has stated a cause of
action for breach of fiduciary duty.

[287/288]

GUARDIAN SAVINGS AND LOAN ASSN. v. MD ASSOCIATES

COURT OF APPEAL OF CALIFORNIA,
FIRST APPELLATE DISTRICT
64 Cal. App. 4th 309, 75 Cal. Rptr. 2d 151 (1998)

Swager, Justice.

MD Associates, Michael D. Barker (hereafter Barker), The Ninth and

Mission Corporation and Barker-Patrinely Group, Inc., appeal from a judgment
of foreclosure, entered on an order granting summary adjudication, which
adjudicated two of the defendants, MD Associates and Barker, personally liable
on the secured indebtedness. We affirm the judgment with respect to the
principal issues on appeal ….

PROCEDURAL AND FACTUAL BACKGROUND

The foreclosure suit arises from cross-purchases of property in connection

with the sale of property in San Francisco known as 100 First Street. We
review the facts in a light favorable to appellants, consistent with the principle
that affidavits opposing a motion for summary judgment are to be liberally
construed. (6 Witkin, Cal. Procedure (4th ed. 1997) Proceedings Without Trial,
§ 218, p. 630.)

[Plaintiff Guardian Savings, a Texas savings and loan association, brought

this foreclosure action against its development partner, Michael P. Barker, and
several business entities, including MD Associates, the Ninth and Mission
Corporation, and the Barker-Patrinely Group, Inc. The parties had been
involved in complicated multiple secured transactions concerning cross-
purchases of commercial real estate located at 100 First Street and 1235
Mission Street in San Francisco, California. The parties’ agreement included a
choice-of-law provision that Texas law governed these transactions. Two of the
promissory notes secured by the 1235 Mission Street property matured on
February 28, 1995, but the defendants failed to pay the amount owing under the
notes. On September 22, 1995 plaintiff Guardian Savings filed a complaint for
judicial foreclosure of its security interests in 1235 Mission Street and certain
pledged certificates against the various defendants. The defendants filed an
answer raising a series of affirmative defenses.]

Guardian subsequently filed a motion for summary judgment or, in the

alternative, for summary adjudication of each cause of action of the complaint
and each of appellant’s affirmative defenses. The trial court granted the motion
for summary adjudication in orders filed September 3, 1996, and October 21,
1996, and entered a judgment of foreclosure. The judgment determined that MD
Associates was indebted to Guardian in the amount of $14,320,911 on the first
note and $2,920,878 on the second note, with additional specified interest
accruing per day from September 16, 1996. It ordered the sale of the 1235
Mission Street property and the series B certificates and adjudicated MD
Associates and Michael D. Barker personally liable for payment of the sums
secured by the deeds of trust on the property and the pledge of the certificates.
The court retained jurisdiction to determine the amount of the deficiency
judgment, if any, to be entered after payment to Guardian of the proceeds of
sale.

[288/289]

DISCUSSION

A. Choice-of-law Provision

As the principal assignment of error in this appeal, appellants contend that the
trial court erred in enforcing a choice-of-law provision adopting Texas law,
included in both the first and second notes secured by the 1235 Mission Street
property. It is undisputed that Guardian Savings is a Texas savings and loan
association. MD Associates is a joint venture between Barker and Dean
Patrinely that, at the inception of this secured transaction,1 had contacts with
Texas essentially equivalent to those of a Texas domiciliary. Both notes are
captioned “Houston, Texas” and give a Houston address for the joint venture;
they specifically rely on Texas regulatory law and were payable at Guardian’s
Texas office. The joint venture agreement of MD Associates identifies Barker
and Patrinely as residents of Harris County, Texas; contains a choice-of-law
provision adopting Texas law; states that the joint venture is formed under the
laws of the State of Texas; describes the joint venture as having a place of
business at the same Houston address found in the notes; and requires notices to
be given at that Houston address. In a response to answers to interrogatories, the
defendants themselves describe MD Associates as a “Texas joint venture.”

Appellants claim that MD Associates gave the secured notes for the purpose
of acquiring the rights to 1235 Mission Street that Guardian possessed under
agreements with Delta for purchase of 100 First Street and thus the notes related
in substance to purchase-money security interests. While California Code of
Civil Procedure section 580b bars a deficiency judgment following foreclosure
of a purchase-money security interest, Texas law imposes no similar restriction.
Appellants concede that, if the choice-of-law provision was enforceable, the
trial court properly entered a deficiency judgment on the unpaid balance of the
notes.

In determining the enforceability of the choice-of-law provision, we are

guided by the analysis in Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.
4th 459 [11 Cal. Rptr. 2d 330, 834 P.2d 1148] , which held a choice-of-law
provision choosing Hong Kong law to be fully enforceable and applicable to the
plaintiff’s claims. The court rested its decision “on the choice-of-law rules
derived from California decisions and the Restatement Second of Conflict of
Laws2 which reflect strong policy considerations favoring the enforcement of
freely negotiated choice-of-law clauses.” (Id. at p. 462.)

The Nedlloyd court adopted the “modern approach” of section 187 of the
Restatement as a statement of applicable principles, stating unequivocally: “In
determining the enforceability of arm’s-length contractual choice-of-law
provisions, California courts shall apply the principles set forth in Restatement
section 187 ….” (Nedlloyd Lines B.V. v. Superior Court, supra , 3 Cal. 4th at
pp. 464-465, fn. [289/290]omitted.) Since the present case does not concern an
issue “which the parties could have resolved by an explicit provision in their
agreement” (Rest., § 187, subd. (1)) but rather the “substantial validity” of a
deficiency judgment based on the provisions of secured promissory notes (Rest.,
§ 187, com. d, p. 564), it is governed by subdivision (2) of section 187.

Restatement section 187, subdivision (2) provides: “The law of the state
chosen by the parties to govern their contractual rights and duties will be
applied, even if the particular issue is one which the parties could not have
resolved by an explicit provision in their agreement directed to that issue,
unless either [¶](a) the chosen state has no substantial relationship to the parties
or the transaction and there is no other reasonable basis for the parties’ choice,
or [¶] (b) application of the law of the chosen state would be contrary to a
fundamental policy of a state which has a materially greater interest than the
chosen state in the determination of the particular issue and which, under the
rule of § 188, would be the state of the applicable law in the absence of an
effective choice of law by the parties.”

As summarized in the Nedlloyd decision, the analytical approach adopted by

Restatement section 187 requires “The Court first to determine either: (1)
whether the chosen state has a substantial relationship to the parties or their
transaction or (2) whether there is any other reasonable basis for the parties’
choice of law. If neither of these tests is met, that is the end of the inquiry, and
the court need not enforce the parties’ choice of law. If, however, either test is
met, the court must next determine whether the chosen state’s law is contrary to
a fundamental policy of California. If there is no such conflict, the court shall
enforce the parties’ choice of law. If, however, there is a fundamental conflict
with California law, the court must then determine whether California has a
‘materially greater interest than the chosen state in the determination of the
particular issue ….’ [Citation.]” (Nedlloyd Lines B.V. v. Superior Court,
supra, 3 Cal. 4th at p. 466, fns. omitted.)

Applying this test, it is clear that the chosen state, Texas, has a substantial
relationship to the parties. “‘A party’s incorporation in a state is a contact
sufficient to allow the parties to choose that state’s law to govern their
contract.’” (Nedlloyd Lines B.V. v. Superior Court, supra , 3 Cal. 4th at p. 467,
…) Thus, the Nedlloyd court found a substantial relationship when two of at
least nine contracting parties were incorporated in the chosen state, and, in
Hambrecht & Quist Venture Partners v. American Medical Internat., Inc .
(1995) 38 Cal. App. 4th 1532 [46 Cal. Rptr. 2d 33] at Page 1546, the court
found a substantial relationship where two of the three parties to the transaction
in question were incorporated in the chosen state. Here, Guardian, the payee
under the promissory notes, was undisputedly a corporation formed under Texas
law and doing business in that state.

We next must consider whether the application of Texas law pursuant to the
choice-of-law provision is contrary to “a fundamental policy of California.” We
are guided by the purposes attributed to the antideficiency legislation, and the
case law pertaining to waiver of Code of Civil Procedure section 580b4
protections. Our analysis leads us to conclude that the bar to deficiency
judgments set forth in [290/291]section 580b reflects a fundamental policy that is
in conflict with the choice-of-law provision contained in the agreements.
 Section 580b provides in pertinent part: “No deficiency judgment shall lie in
any event … under a deed of trust … given to the vendor to secure payment of
the balance of the purchase price of that real property …, or under a deed of
trust … on a dwelling for not more than four families given to a lender to secure
repayment of a loan which was in fact used to pay all or part of the purchase
price of that dwelling occupied, entirely or in part, by the purchaser.” It was
enacted in 1933 as part of a series of statutes, including the fair-market-value
limitations of sections 726 and 580a, that were intended to aid debtors who had
lost real property through foreclosure in the depression. (Cornelison v.
Kornbluth (1975) 15 Cal. 3d 590, 600–601 [125 Cal. Rptr. 557, 542 P.2d 981] ;
…) The related provisions of section 580d, which bars a deficiency judgment
following private sales, were enacted later in 1940. The statute assumed its
present form in 1963 through an amendment, which clearly defined the rights of
nonvendor purchase-money lenders. (Stats. 1963, ch. 2158, § 1, p. 4500.) The
amendment distinguished between nonvendor purchase-money loans with
respect to whether or not they were made for homeownership, applying the
antideficiency protection only to loans for that purpose.

In Roseleaf Corp. v. Chierighino (1963) 59 Cal. 2d 35, 42 [27 Cal. Rptr.

873, 378 P.2d 97] (hereafter Roseleaf), the court ascribed the legislative
purpose of section 580b to two policy objectives relating to economic
stabilization-preventing overvaluation of real property and avoiding the
aggravation of an economic downturn in a depression. “Section 580b places the
risk of inadequate security on the purchase money mortgagee. A vendor is thus
discouraged from overvaluing the security. Precarious land promotion schemes
are discouraged, for the security value of the land gives purchasers a clue as to
its true market value. [Citation.] If inadequacy of the security results, not from
overvaluing, but from a decline in property values during a general or local
depression, section 580b prevents the aggravation of the downturn that would
result if defaulting purchasers were burdened with large personal liability.
Section 580b thus serves as a stabilizing factor in land sales.” (Roseleaf, supra,
at p. 42.) The second of these objectives — to prevent the aggravation of a
depression-induced downturn in property values — was termed the “primary
purpose of section 580b” in Cornelison v. Kornbluth, supra, 15 Cal. 3d at p.
603, which analyzed the statutory purpose solely in terms of that objective.

A third legislative purpose — the equitable allocation of risk — finds some

limited recognition in dicta and scholarly comment and is reflected in decisions
limiting the scope of section 580b. In Cornelison v. Kornbluth, supra, 15 Cal.
3d at p. 601, the court observed that “[i]n certain situations,” the Legislature
regarded deficiency judgments as being “too oppressive,” even when restricted
by the fair-market-value limitations of sections 726 and 580a. Deficiency
judgments on purchase-money security interests may sometimes be regarded as
oppressive where the seller is restored to ownership of the property through the
foreclosure proceedings and also retains principal payments received from the
purchaser. Moreover, it has been suggested that the seller may fairly be required
to assume the risk of inadequate security because the seller is better able to
know the value of the land than the buyer. * * *

[291/292]

The Supreme Court has recognized considerations of equitable allocation of

risk restricting application of section 580b to subordinated purchase-money
securities. In Spangler v. Memel (1972) 7 Cal. 3d 603 [102 Cal. Rptr. 807, 498
P.2d 1055] (hereafter Spangler), the plaintiffs sold their home to commercial
real estate developers and agreed to subordinate their purchase-money security
interest to the purchasers’ construction loan. The purchasers defaulted on the
construction loan and the lender foreclosed, depriving the plaintiffs of their
subordinated security interest. Affirming a judgment in favor of the plaintiffs for
the balance of the purchase price, the court noted the inequity of applying
section 580b in this situation: “If … section 580b is applied to prevent the
vendor from suing on his promissory note, after the development has failed and
the senior lienor has caused the property to be sold, the risk of the failure of the
commercial development is thrust upon the vendor. In fact, however, the success
of the commercial development depends upon the competence, diligence and
good faith of the developing purchaser. It would seem proper, therefore, that the
purchaser not the vendor bear the risk of failure, particularly since in the event
of default, the junior lienor vendor will lose both the land and the purchase
price.” (7 Cal. 3d at p. 613.)

Though the Spangler court relied in part on the legislative purposes ascribed
to section 580b in the Roseleaf decision, the court in Budget Realty, Inc. v.
Hunter, supra, 157 Cal. App. 3d at p. 516, viewed the “more convincing
rationale of Spangler” to be the “equitable analysis” of risk allocation. The
same focus on the element of risk is found in other decisions dealing with
subordinated purchase-money security interests.

Finally, as it applies to homeowners, section 580b reflects a policy

encouraging homeownership by limiting risks of financial loss in acquiring a
home. In Nevin v. Salk (1975) 45 Cal. App. 3d 331, 341 [119 Cal. Rptr. 370] ,
the court ventured the opinion that “the main goal of the Legislature in enacting
and amending section 580b was to protect the ordinary buyer from personal
liability when purchasing a home.” While this statement may be overly broad,
the importance of homeowner protection is unmistakably revealed in the 1963
amendment to section 580b. As section 580b applies to the sale of a home, the
amendment extended the antideficiency protections to both vendor financing and
third party financing for the purchase price; with respect to other sales, the
antideficiency protection applies only to vendor financing.

Without attempting to assess the relative importance of the objectives

attributed to section 580b, we are persuaded that the statute reflects a
“fundamental policy” of the state within the meaning of section 187 of the
Restatement. Comment g to section 187 acknowledges that “[n]o detailed
statement can be made of the situations where a ‘fundamental’ policy of the state
… will be found to exist” and affirms only that “[t]o be ‘fundamental,’ a policy
must in any event be a substantial one” and “need not be as strong as would be
required to justify the forum in refusing to entertain suit upon a foreign cause of
action ….” (Rest., § 187, com. g, p. 568.)

We note that decisions in other jurisdictions have found a fundamental policy

within the meaning of Restatement section 187 underlying legislation comprising
a scheme of economic regulation or intended to redress “oppressive use of
superior [292/293]bargaining power.” The policies underlying such legislation
bear some analogy to the economic objectives mentioned in the Roseleaf
decision and the equitable allocation of risk discussed above.

Our conclusion that the antideficiency legislation reflects a fundamental

policy is supported by California precedents dealing with the waiver or evasion
of section 580b. It is well established that “[t]he antideficiency provisions of
Code of Civil Procedure section 580b may not be contractually waived as a
condition of the encumbrance of real property with a purchase money mortgage
or deed of trust … so long as it continues to be secured with the original real
estate.” (Palm v. Schilling, supra, 199 Cal. App. 3d at p. 65.) Such an
agreement, “if made, [is] contrary to public policy, void and ineffectual for any
purpose.” (Valinda Builders, Inc. v. Bissner (1964) 230 Cal. App. 2d 106, 112
[40 Cal. Rptr. 735].) Similarly, the courts have invalidated attempts to
circumvent section 580b by looking to the substance rather than the form of a
transaction. The statute has been applied even though a transaction was
structured through separate escrows (BM Property Development v. Melvin
(1988) 198 Cal. App. 3d 526, 531 [243 Cal. Rptr. 715] ) or by use of a straw
man (Ziegler v. Barnes (1988) 200 Cal. App. 3d 224, 228–230 [246 Cal. Rptr.
69]). * * *

These precedents, in our opinion, reveal a policy sufficiently strong to be

characterized as fundamental within the meaning of Restatement section 187
because they elevate the statutory policy of section 580b above the consensual
arrangements of the parties. If the policy underlying section 580b bars
avoidance of the statute by contractual waiver or a formal structuring of a
transaction, it should be fundamental enough to restrict use of a choice-of-law
provision to avoid application of the statute. In many circumstances, the
enforcement in California courts of a choice-of-law provision adopting out-of-
state law will be the practical equivalent of enforcing a contractual waiver of
section 580b. Since the threshold requirement of Restatement section 187 is met
whenever the lender is a domiciliary in the chosen state,12 creditors could often
use a choice-of-law provision to accomplish a result that would be “contrary to
public policy, void and ineffectual” if attempted directly by a contractual
waiver.

Having concluded that section 580b reflects a fundamental policy in

California, we turn to the last criterion of the Restatement test — whether
California has “a materially greater interest than the chosen state in the
determination of the particular issue.” (Rest., § 187, subd. (2).) We construe the
reference to “the particular issue” as calling for an inquiry into the specific facts
of an individual case. (Ibid.)

The policies underlying section 580b in fact have limited application to the
present case. First, the transaction does not involve the sale of a home, which
would implicate the strong policies reflected in the 1963 amendment of the
statute. Second, the policy of equitable risk allocation does not apply to a
transaction negotiated between sophisticated Texas domiciliaries. While
California may have an interest in [293/294]the performance of a transaction
within the state, it has a more questionable interest in the equitable nature of the
transaction where the rights and duties of the parties were established by
agreement of nondomiciliaries outside its jurisdiction. Such an interest is
clearly absent where, as here, the bargain was negotiated between
sophisticated, professional investors in a specialized field. Finally, the second
objective recognized in the Roseleaf decision, which the Spangler court
regarded as the “primary” objective — to prevent the aggravation of a downturn
in market prices — becomes more problematic when both parties are
domiciliaries of another state. Whether or not the transaction implicates this
policy will be dependent on many circumstances that cannot be as readily
presumed as in the case of a transaction with more contacts within the state.

At the same time, the interest of Texas in assuring the justified expectations of
the parties to an agreement has maximum force where the agreement is
negotiated between domiciliaries of that state. In DeSantis v. Wackenhut Corp.,
supra, 793 S.W.2d at p. 677, the Texas Supreme Court observed that “the most
basic policy of contract law … is the protection of the justified expectations of
the parties. [Citations.] The parties’ understanding of their respective
contractual rights and obligations depends in part upon the certainty with which
they may predict how the law will interpret and enforce their agreement.
[Citation.] [¶] When parties to a contract … expect to perform their respective
obligations in multiple jurisdictions, they may be uncertain as to what
jurisdiction’s law will govern construction and enforcement of the contract. To
avoid this uncertainty, they may express in their agreement their own choice that
the law of a specified jurisdiction apply to their agreement. Judicial respect for
their choice advances the policy of protecting their expectations.”

Under the specific circumstances of the present case, we hold that

California’s interest in the enforcement of the policies underlying section 580 is
not materially greater than Texas’s policy of assuring the justified expectations
of the parties. We recognize that the issue is close and limit our holding to the
peculiar facts of this case: a series of complex security interests on a large
commercial property, negotiated between sophisticated Texas domiciliaries.
Under these narrow circumstances, we consider that Restatement section 187
calls for enforcement of the provision in the promissory note adopting Texas
law. In the absence of the bar of section 580b, the trial court properly entered a
judgment for the unpaid balance on the notes. * * *

NOTES AND QUESTIONS ON

CALIFORNIA CHOICE-OF-LAW AGREEMENTS

(1) The Supreme Court in Nedlloyd Lines directly relied on § 187(2) of the
Second Restatement to formulate the test for determining enforceability of a
contractual choice-of-law provision. Section 187(2) contains some ambiguities,
does it not? What constitutes a “substantial relationship” between the chosen
law and the parties or their transaction? What factors did the Supreme Court
focus on in Nedlloyd to find the requisite “substantial relationship”? Would you
describe this relationship between Hong Kong law and the parties as
“substantial,” or as “minimal”?

[294/295]

(a) Section 187(2) also authorizes enforcement of a choice-of-law clause

where, in the absence of a “substantial relationship,” there is some other
“reasonable basis” for the parties’ choice of law. Why would the parties choose
a state’s law that has no relation to the parties or their transaction? What types
of contractual relationships are likely to produce such a choice? See, e.g., 1-
800-Got Junk? LLC v. Superior Court, 189 Cal. App. 4th 500, 116 Cal. Rptr.
3d 923 (2010) (reasonable basis existed for franchisor headquartered in
Vancouver to specify application of Washington law in agreement with
California franchisee because multistate franchisor has an interest in having all
its franchise agreements governed by one body of law). What constitutes a
“reasonable basis,” generally? How did the Nedlloyd court apply this factor?
Did the court apply this factor in the context anticipated by the Second
Restatement?

(b) Pursuant to § 187(2), a court should not enforce a choice-of-law

provision when the chosen state’s law is contrary to a “fundamental policy” of
California. What constitutes a “fundamental policy”? Every state law expresses
a policy of the state. How is a “fundamental policy” distinguishable from a run-
of-the-mill policy? See Brack v. Omni Loan Co., Ltd., 164 Cal. App. 4th 1312,
1323, 80 Cal. Rptr. 3d 275 (2008) (“The relative significance of a particular
policy or statutory scheme can be determined by considering whether parties
may, by agreement, avoid the policy or statutory requirement”); Kirt O’Neal,
Contractual Choice of Law: The Case for a New Determination of Full Faith
and Credit Limitations, 71 Tex. L. Rev. 1019 (1993) . How did the Guardian
Savings court apply this factor?

(c) In Application Group, Inc. v. Hunter Group, Inc. , 61 Cal. App. 4th 881,
72 Cal. Rptr. 2d 73 (1998), the court applied Restatement (Second) § 187(2)(b)
and refused to enforce a contractual choice-of-law provision which specified
that Maryland law governed contract related disputes because the application of
Maryland law to the parties’ dispute would be contrary to fundamental public
policy of California. Plaintiff Application Group, a California corporation, had
recruited and hired an employee from defendant Hunter Group, a competitor
Maryland corporation, despite a covenant not to compete in the employee’s
contract with the defendant. The employee and Application Group brought an
action to declare that the covenant not to compete was illegal under California
law. The defendant invoked the Maryland choice-of-law clause, and argued that
the covenant was valid under Maryland law. The Court of Appeal upheld the
trial court’s refusal to enforce the choice-of-law agreement.

Relying on Nedlloyd Lines B.V. v. Superior Court , the court in Application

Group first determined that the chosen state — Maryland — had a “substantial
relationship” to the parties and their transaction and that there was a
“reasonable basis” for the parties’ contractual choice-of-law provision, and
then determined whether the clause was nevertheless unenforceable under the
public policy exception of Restatement § 187(b)(2). The court found that
Maryland’s law was contrary to a strong public policy of the State of California
expressed in § 16600 of the Business and Professions Code, which makes
noncompetition covenants unenforceable.

Although both states had an interest in applying its law to this case, the court
concluded that under the circumstances, “California has a materially greater
[295/296]interest than does Maryland in the application of its law to the parties’
dispute, and that California’s interests would be more seriously impaired if its
policy were subordinated to the policy of Maryland.” Application Group, 61
Cal. App. 4th at 902. California’s interests were to protect freedom of
movement of persons whom California-based employers wish to employ in
California and to ensure that California employers will be able to compete
effectively for the most talented employees. Maryland’s interests in enforcing
noncompetition covenants was to serve Maryland employers in preventing
recruitment of employees who provide “unique services,” and the misuse of
trade secrets.

T he Application Group court viewed Maryland’s interests as adequately

protected under trade secrets laws. Moreover, the application of Maryland law
would allow an out-of-state employer/competitor to limit employment and
business opportunities in California. Accordingly, the court upheld the trial
court’s refusal to enforce the choice-of-law clause because the application of
Maryland law enforcing a noncompetition covenant would be contrary to
California’s fundamental policy. Application Group, 61 Cal. App. 4th at 902.
The court then concluded that California law applied, in the absence of an
enforceable choice-of-law agreement, under either the government interest
approach or the “relevant contacts” approach of § 188(2) of the Second
Restatement. Id. at 903.

(d) In America Online, Inc. v. Superior Court, 90 Cal. App. 4th 1, 108 Cal.
Rtpr. 2d 699 (2001), the court refused to enforce a choice of law clause,
accompanied by a forum selection clause, in a consumer contract that designated
Virginia law as governing, and Virginia as the exclusive jurisdiction for,
disputes arising out of the contractual relationship. The court found these
clauses unenforceable for two independent reasons. First, one of the plaintiff’s
causes of action sought class action relief under the California Consumers Legal
Remedies Act (CLRA), Civil Code § 1750 et seq., and this Act contains a
provision that voids any purported waiver of rights under the CLRA as being
contrary to California public policy. “Enforcement of the contractual forum
selection and choice of law clauses,” the court reasoned, “would be the
functional equivalent of a contractual waiver of the consumer protections under
the CLRA and, thus, is prohibited under California law.” American Online, 90
Cal. App. 4th at 5.

Second, the American Online court also found the clauses unenforceable
because Virginia law does not allow consumer lawsuits to be brought as class
actions and the available remedies are more limited than those afforded by
California law. Accordingly, the rights of the plaintiff and the California
consumer class members “would be substantially diminished if they are
required to litigate their dispute in Virginia, thereby violating an important
public policy underlying California’s consumer protection law.” Id. at 5. Do
you agree with this second, independent reason for finding the clauses
unenforceable?

(e) In ABF Capital Corp. v. Grove Properties Co., 126 Cal. App. 4th 204, 23
Cal. Rptr. 3d 803 (2005), the court refused to enforce a choice-of-law provision
in a partnership agreement that provided the agreement would be construed
under New York law. The plaintiff, a New York company, sued defendants, a
California partnership and individual, for breach of contract. The superior court
sustained defendants’ demurrer and entered judgment for defendants. The
defendants then [296/297]sought an award of contractual attorney fees. The
partnership agreement contained a one-sided attorney fee provision that
obligated the defendants, but not the plaintiff, to pay attorney fees if plaintiff
enforced the agreement through adjudication. New York law would enforce a
unitary attorney fees provision. However, California law — Civil Code § 1717
— would create reciprocal rights from a nonreciprocal attorney fees provision.
The trial court applied New York law and denied defendants’ motion for
attorney fees; defendants appealed.

Applying § 187 and § 188 of the Second Restatement, the Court of Appeal
concluded California law applies to the issue of attorney fees and reversed the
trial court. The court first found that Civil Code § 1717 reflects a fundamental
public policy of California concerning the reciprocity of attorney fees
provisions in contracts. The court then decided that California has a materially
greater interest than New York in the attorney fees issue because of California’s
strong interest in seeing its residents receive fair play with respect to attorney
fees when resort is made to the California courts. “California has a materially
greater interest in enforcing the equitable rules governing access to its courts —
including the reciprocal attorney fees rule — than New York has in assuring the
enforcement of New York law concerning attorney fees,” the court reasoned,
“when those attorney fees are not incurred as a result of any use of New York
courts, and have no effect on the accessibility to New York courts.” ABF
Capital, 126 Cal. App. 4th at 220.

The ABF Capital court then addressed one final step in the analysis: Would
California law apply in the absence of an effective choice-of-law agreement by
the parties? The court noted that other California decisions, such as Guardian
Savings & Loan Assn. v. MD Associates, reproduced supra, tend to overlook
this part of the analysis. Applying the principles of government interest analysis
and the factors stated in § 188 of the Second Restatement, the court concluded
that California law applies. The court emphasized that under § 188, the relevant
“contacts are to be evaluated according to their relative importance with respect
to the particular issue,” which here is the procedural issue of attorney fees and
not substantive issues of the partnership or its operations. ABF Capital, 126
Cal. App. 4th at 220–23.

(2) Civil Code section 1646.5 authorizes an exception to the “substantial

relationship” requirement for contracts relating to a transaction involving more
than $250,000, including those otherwise covered by Commercial Code §
1301(a). Civil Code § 1645.5 provides that parties to such transactions may
agree that the law of California may govern their rights and duties “whether or
not the contract … or transaction bears a reasonable relation to this state.” What
policies did the Legislature seek to further by enacting Civil Code § 1645.5? Is
§ 1645.5 consistent with § 187(2) of the Second Restatement? If not, does that
matter? If parties rely on § 1645.5 and choose the law of a state which has no
reasonable relationship to the parties, the contract, or the transaction, will a
court’s application of that law be unconstitutional? See O’Neal, Contractual
Choice of Law, supra.

(3) All members of the Supreme Court in Nedlloyd concurred in endorsing §

187(2), and in enforcing the parties’ choice-of-law clause as to the cause of
action for breach of the covenant of good faith and fair dealing. However, three
justices dissented as to the application of this clause to the cause of action for
breach of fiduciary duty. What were the reasons for these dissents? Was it
because the [297/298]dissenters believed contractual choice-of-law provisions
can govern only contractual, as opposed to noncontractual, causes of action? Do
you agree with the majority’s or dissent’s interpretation of the clause in
question?

(4) In light of the Nedlloyd opinions, how should you state a choice-of-law
provision when your client wants California law to govern only contractual
disputes arising from the agreement, but wants Hong Kong law to govern any
noncontractual disputes? How would you state a choice-of-law provision where
your client wants California law to govern all disputes arising from the
contractual relationship, and you want to draft a clause that will be enforced by
all members of the Supreme Court? How would you state a provision where
your client wants some aspect of California law incorporated as a term of the
contract, but wants Hong Kong law to apply to any dispute arising out of the
contractual relationship?

(5) Another prerequisite to enforcement of a choice-of-law clause is that the

clause must be valid as a matter of contract formation principles. The court in
Nedlloyd noted that, as with a forum selection clause, a choice-of-law clause
must be entered into freely and voluntarily by the parties who have negotiated at
arm’s length. Nedlloyd, 3 Cal. 4th at 464. The clause must not be the product of
fraud, undue influence, or unequal bargaining power. See The Bremen v. Zapata
Off-Shore Co., 407 U.S. 1, 12-13, 92 S. Ct. 1907, 32 L. Ed. 2d 513 (1972);
Cal-State Business Products & Services, Inc. v. Ricoh, 12 Cal. App. 4th 1666,
1678–81, 16 Cal. Rptr. 2d 417 (1993); Mark J. Kelson, Choice-of-Law, Venue,
and Consent-to-Jurisdiction Provisions in California Lending Agreements:
Can Good Draftsmanship Overcome Bad Choice-of-Law Doctrine?, 23 Loy.
L.A. L. Rev. 1337, 1371–84 (1990) (discussing problems of unconscionability
in choice-of-law and forum clauses in commercial lending agreements).

This means that every case which involves resistance to enforcement of a

choice-of-law clause could potentially include an inquiry into whether the
clause is valid under contract formation principles, does it not? See, e.g., Furda
v. Superior Court, 161 Cal. App. 3d 418, 426, 207 Cal. Rptr. 646 (1984)
(inquiry into whether forum selection clause was adhesive in nature prior to
clause enforcement); Jeffry A. Liesemer, Carnival’s Got the Fun … and the
Forum: A New Look at Choice-of-Forum Clauses and the Unconscionability
Doctrine After Carnival Cruise Lines, Inc. v. Shute, 53 U. Pitt. L. Rev. 1025
(1992).

(a) Which state’s law of contract validity governs such an inquiry — the law
of the forum or the law designated in the choice-of-law clause? For example,
assume in Nedlloyd that the plaintiff had alleged that the provision designating
Hong Kong law was invalid because the provision was the product of unfair
bargaining, and therefore should not be enforced. Should the California court
apply Hong Kong law or California law when determining this validity issue?
See generally Linda S. Mullenix, Another Choice of Forum, Another Choice of
Law: Consensual Adjudication Procedure in Federal Court , 57 Ford. L. Rev.
291, 346–56 (1988); Michael Gruson, Governing-Law Clauses in
International and Interstate Loan Agreements — New York Approach, 1982 U.
Ill. L. Rev. 207 (1982).

(b) Another troublesome issue is whether a court should enforce a choice-of-

law clause in a standard form consumer contract which, due to unequal
bargaining power between buyer and seller, is not the product of free
negotiation. The U.S. [298/299]Supreme Court addressed this issue as to forum
selection clauses in Carnival Cruise Lines v. Shute, Inc., 499 U.S. 585, 111 S.
Ct. 1522, 113 L. Ed. 2d 622 (1991), and concluded that such clauses in
consumer contracts should generally be enforced where the consumer had notice
of the clause. Because it was an admiralty jurisdiction case decided by federal
common law, Carnival Cruise is not binding on state courts generally. Id. at
590. Should the California courts enforce a choice-of-law clause in a standard
form consumer contract? See Washington Mut. Bank v. Superior Court , 24 Cal.
4th. 906, 103 Cal. Rptr. 2d 320, 15 P.3d 1071 (2001) (California has no public
policy against the enforcement of choice-of-law provisions contained in
contracts of adhesion where they are otherwise appropriate); Furda v. Superior
Court, supra (forum clause in adhesion contract not necessarily unenforceable).

Footnotes:

1 Federal courts applying California’s conflicts law have also adhered to this approach. (Consul Ltd. v.
Solide Enterprises, Inc. (9th Cir. 1986) 802 F.2d 1143, 1146–1147 ; …) The mainstream nature of this
approach is further reflected by a recent study indicating that 15 states other than California follow the
general approach of the Restatement Second. (Chow, Limiting Erie in a New Age of International Law:
Toward a Federal Common Law of International Choice of Law (1988) 74 Iowa L. Rev. 165, 190–191.)
 2 There may be an exception to application of the Restatement approach. Choice-of-law issues arising
from contracts subject to the Uniform Commercial Code are governed by California Commercial Code
section 1105, subdivision (1), which provides that, subject to specified exceptions, the parties may choose the
law of a state having a “reasonable relation” to the transaction. This “reasonable relation” test appears to be
similar to the “substantial relationship” test we adopt from the Restatement. (See official code com. to U.
Com. Code § 1-105 [Deering’s Ann. Cal. U. Com. Code, § 1105 (1986 ed.) p. 10; 23A West’s Ann. Cal.
U. Com. Code, § 1105 (1964 ed.) p. 37].) Neither party to this action, however, contends that California
Uniform Commercial Code section 1105 applies to their contract. We therefore need not and do not
determine whether and to what extent, if any, the Commercial Code and Restatement approaches are
different.

3 Subdivision (1) of section 187 of the Restatement states: “(1) The law of the state chosen by the
parties to govern their contractual rights and duties will be applied if the particular issue is one which the
parties could have resolved by an explicit provision in their agreement directed to that issue.” As comment c
to section 187, subdivision (1) explains: “The rule of this Subsection is a rule providing for incorporation by
reference and is not a rule of choice of law. The parties, generally speaking, have power to determine the
terms of their contractual engagements. They may spell out these terms in the contract. In the alternative,
they may incorporate into the contract by reference extrinsic material which may, among other things, be
the provisions of some foreign law …. [M]ost rules of contract law are designed to fill gaps in a contract
which the parties could themselves have filled with express provisions.” (Rest., § 187, subd. (1), com. C, p.
563.) The record in this case does not indicate that the parties incorporated by reference extrinsic material
in the form of Hong Kong law in order to fill a gap in their contract. Subdivision (1) therefore is not at issue,
and we need not and do not further consider its potential application or scope.

5 To be more precise, we note that Restatement section 187, subdivision (2) refers not merely to the
forum state — for example, California in the present case — but rather to the state “… which, under the
rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the
parties.” For example, there may be an occasional case in which California is the forum, and the parties
have chosen the law of another state, but the law of yet a third state, rather than California’s, would apply
absent the parties’ choice. In that situation, a California court will look to the fundamental policy of the third
state in determining whether to enforce the parties’ choice of law. The present case is not such a situation.

6 There may also be instances when the chosen state has a materially greater interest in the matter than
does California, but enforcement of the law of the chosen state would lead to a result contrary to a
fundamental policy of California. In some such cases, enforcement of the law of the chosen state may be
appropriate despite California’s policy to the contrary. ( S.A. Empresa, etc. v. Boeing Co., supra , 641 F.2d
746, 749.) Careful consideration, however, of California’s policy and the other state’s interest would be
required. No such question is present in this case, and we thus need not and do not decide how Restatement
section 187 would apply in such circumstances.

7 As we have noted, the choice-of-law clause states: “This agreement shall be governed by and
construed in accordance with Hong Kong law ….” (Italics added.) The agreement, of course, includes
the choice-of-law clause itself. Thus the question of whether that clause is ambiguous as to its scope (i.e.,
whether it includes the fiduciary duty claim) is a question of contract interpretation that in the normal course
should be determined pursuant to Hong Kong law. (S.A. Empresa, etc. v. Boeing Co., supra , 641 F.2d
746, 751 [interpreting choice-of-law clause pursuant to law chosen by the parties]; McGill v. Hill (1982) 31
Wn. App. 542 [644 P.2d 680, 683] .) The parties in this case, however, did not request judicial notice of
Hong Kong law on this question of interpretation (Evid. Code, § 452, subd. (f)) or supply us with evidence
of the relevant aspects of that law (Evid. Code, § 453, subd. (b)). The question therefore becomes one of
California law. (Com’l Ins. Co. of Newark v. Pacific-Peru Const. (9th Cir. 1977) 558 F.2d 948, 952;
Rest., § 136, subd. (2), com. h. p. 378.)

1 Though Barker declares that he moved his family to California “in 1986” and that MD Associates was
headquartered in San Francisco in 1990, we find no triable issue of fact with regard to the status of the joint
venture as a Texas domiciliary at the time the financing was negotiated in early 1986. In the interest of
assuring the justified expectations of the parties (Rest. 2d Conf. of Laws, § 6, subd. (2)(d)), the 1990
restructuring should be governed by the same choice-of-law rule as the original financing.

2 Hereafter referred to simply as Restatement.

4 All further references to code sections are to the Code of Civil Procedure unless otherwise indicated.

12 Only five other states have purchase-money antideficiency statutes. (Comment, Application of
California’s Antideficiency Statutes in Conflict of Laws Contexts, supra , 73 Cal.L.Rev. at p. 1365, fn.
167.)

[B] Conflicts Analysis When No Choice-of-Law Agreement

STONEWALL SURPLUS LINES INS. CO. v.

JOHNSON CONTROLS, INC.
COURT OF APPEAL OF CALIFORNIA,
FOURTH APPELLATE DISTRICT
14 Cal. App. 4th 637, 17 Cal. Rptr. 2d 713 (1993)

Benke, Acting Presiding Justice.

In this case a San Diego jury returned a verdict assessing $6.5 million in
exemplary damages against a Wisconsin corporation. The corporation’s liability
insurers, residents of Connecticut, Alabama, Texas and Illinois, filed a
declaratory relief action alleging they were not required to provide the
corporation with any indemnity for the exemplary damages. The corporation
answered the complaint, alleging Wisconsin law governed the policies and
under Wisconsin law the insurers were liable for both compensatory and
punitive damages.
 On cross-motions for summary judgment the trial court agreed with the
insurers and entered judgment in favor of the insurers. On appeal we affirm.

The parties agree that in California an insured may not seek indemnity from
an insurer for exemplary damages. Because the defective battery which gave
rise to the underlying claim was manufactured in California and caused injury in
California to a California resident, California has an interest which supports
application of this restriction on insurance coverage.

FACTUAL AND PROCEDURAL HISTORY

A Jones Action.

On June 3, 1986, a resident of San Diego, Gary Jones was assisting his
neighbor Fred Hill “jump-start” Hill’s car. While Jones was working on Hill’s
battery it exploded. Jones suffered brain damage and was blinded in one eye. As
a result of his injuries Jones has experienced persistent seizures.

[299/300]

The battery in Hill’s car was manufactured in Fullerton, California, by

defendant and appellant Johnson Controls, Inc. (Johnson Controls). Hill
purchased the battery from a Sears store in San Diego.

Jones and his wife, Mona, filed a complaint against Hill, Sears, and Johnson
Controls in superior court in San Diego. Following trial, the jury returned a
verdict which found Johnson Controls and Sears had been negligent and that
their negligence caused Jones’s injuries. The jury found Jones had not been
negligent. The jury awarded Jones $2,905,000 in compensatory damages and his
wife $325,000 in damages.

In addition, the jury found Johnson Controls had acted with malice, fraud or
oppression. As we have previously noted, the jury found that $6.5 million was
an appropriate amount of punitive damages to impose on Johnson Controls.
Judgment in the amount of $10,693,649.228 was entered against Johnson
Controls.
 B. These Proceedings.

On March 17, 1989, shortly after the verdict in the Jones action was returned,
plaintiffs and respondents Stonewall Surplus Lines Insurance Company
(Stonewall), Constitution State Insurance Company (Constitution) and Republic
Insurance Company (Republic) filed a declaratory relief action against Johnson
Controls and the Joneses in superior court in San Diego. The insurers alleged
they had provided excess liability insurance to Johnson Controls at the time
Jones was injured. The insurers further alleged they were not required to
indemnify Johnson Controls for the exemplary damages awarded because such
indemnification was contrary to public policy and because they had not been
given timely notice of the Joneses’ claim.

After making an unsuccessful attempt to remove the case to district court and
an unsuccessful attempt to have the case dismissed on forum non conveniens
grounds, Johnson Controls filed an answer. As an affirmative defense Johnson
Controls alleged the insurance policies issued by the excess insurers were
governed by Wisconsin law and that, in any event, a judgment in the excess
insurers’ favor would be an unconstitutional impairment of Johnson Controls’s
contract rights and violate its right to due process of law.

The insurers moved for summary adjudication. They argued that, as alleged in
their complaint, they are not liable for the punitive damages assessed against
Johnson Controls. Johnson Controls filed a cross-motion for summary judgment
or, in the alternative, summary adjudication. Johnson Controls, as alleged in its
answer, argued the insurance contracts were governed by Wisconsin law which
permits insurance companies to indemnify punitive damages awards.

The trial court agreed with the insurers and granted their motion and denied
Johnson Controls’s motion. Having found the insurers had no obligation to
indemnify the punitive damage award and no other triable issue of material fact,
the trial court entered judgment in favor of the insurers. Johnson Controls filed a
timely notice of appeal.

[300/301]

ISSUES ON APPEAL
 As it did below, Johnson Controls argues its rights under the insurance
policies are governed by the law of Wisconsin, the state where its headquarters
are located. Johnson Controls contends Wisconsin law is required by both
conflict of laws principles and the United States Constitution. We reject these
contentions and affirm the judgment.

DISCUSSION

We begin our analysis of Johnson Controls’s conflict of laws argument by

determining whether there is any conflict between the laws of California and
Wisconsin. As succinctly described in Hurtado v. Superior Court (1974) 11
Cal. 3d 574, 580 [114 Cal. Rptr. 106, 522 P.2d 666] : “The fact that two states
are involved does not in itself indicate that there is a ‘conflict of laws’ or
‘choice of law’ problem. There is obviously no problem where the laws of the
two states are identical.” (Id., at p. 580; …)

The parties agree that in California an insurer is not liable for any portion of
a judgment which awards punitive damages. (City Products Corp. v. Globe
Indemnity Co. (1979) 88 Cal. App. 3d 31, 42 [151 Cal. Rptr. 494] (City
Products); …) As explained in City Products, “the policy of this state with
respect to punitive damages would be frustrated by permitting the party against
whom they are awarded to pass on the liability to an insurance carrier. The
objective is to impose such damages in an amount which will appropriately
punish the defendant in view of ‘the actual damages sustained,’ the magnitude
and flagrancy of the offense, the importance of the policy violated, and the
wealth of the defendant.” [Citation.] Consideration of the wealth of the
defendant would of course be pointless if such damages could be covered by
insurance. The onus of the award would depend entirely upon the amount of
insurance coverage and not upon the legally relevant factors. We conclude,
therefore, that the public policy of this state prohibits insurance covering the
punitive damages levied against plaintiff.” (City Products, supra, 88 Cal. App.
3d at p. 42.) The prohibition against insuring exemplary damages applies
whether the conduct which gave rise to the award of punitive damages was
intentional or committed in conscious disregard of the safety or rights of the
plaintiff.

The rule in Wisconsin is different. (See Brown v. Maxey (1985) 124 Wis. 2d
426 [369 N.W.2d 677, 686–688] .) In Brown v. Maxey a landlord was held
liable for burns suffered by one of his tenants in a fire; in addition to
compensatory damages the jury awarded $200,000 in punitive damages. The
Supreme Court of Wisconsin held the jury could award punitive damages based
on the landlord’s reckless disregard of his tenant’s safety.

The Wisconsin court also held the landlord’s insurer was required under the
terms of its policy to pay both the compensatory and punitive portions of the
judgment. (Brown v. Maxey, supra , 369 N.W.2d at pp. 686–688.) The court
found that as defined in the policy “[t]he term ‘damages’ is sufficiently broad to
cover [301/302]liability for both compensatory and punitive damages. Punitive
damages are not specifically excluded from the policy language.” (Brown v.
Maxey, supra, 369 N.W.2d at p. 686.)

Unlike the court in City Products, the Wisconsin Supreme Court found that
public policy did not prevent indemnity for punitive damages.

“‘Public policy’ is no magic touchstone. This state has more than one
public policy. Another and countervailing public policy favors freedom of
contract, in the absence of overriding reasons for depriving the parties of
that freedom. Still another public policy favors the enforcement of
insurance contracts according to their terms, where the insurance company
accepts the premium and reasonably represents or implies that coverage is
provided. [Citation.]

“… We find no overriding reason to deprive these parties of what

they have freely contracted. State Farm had the option of excluding liability
for punitive damages. It failed to do so and has presumably collected
premiums which it believed to be sufficient consideration for such
coverage. [Citation.]

“Moreover, we are not convinced that allowing insurance coverage

for punitive damages will totally alleviate the deterrent effect of such
awards. For example, as a consequence of the punitive damage award,
defendant Maxey’s insurance premiums may rise, he may find himself
unable to obtain insurance coverage, the punitive damage award may
exceed coverage, and his reputation in the community may be injured.

“Finally, punitive damages are designed not only to deter and punish
 “Finally, punitive damages are designed not only to deter and punish
the wrongdoer, but also are designed to serve as a deterrent to others.
Allowing insurance coverage to extend to punitive damages will not thwart
this purpose.” (Brown v. Maxey, supra, 369 N.W.2d at pp. 687–688.)

In this case we cannot avoid consideration of the conflict between the laws of
California and Wisconsin. Under California law public policy prevents Johnson
Controls from avoiding the deterrent effect of the punitive damages by obtaining
indemnity from its insurers.

On the other hand, like the insurance policy discussed in Brown v. Maxey, the
excess insurers’ policies do not expressly exclude coverage for punitive
damages. * * * Thus, under Brown v. Maxey the excess insurance policies
would provide indemnity for the punitive damages assessed in the Jones action
and Johnson Controls’s contractual right to such indemnity would prevail over
any public policy supporting imposition of punitive damages.

In short then, there is a true conflict of laws here because the substantive law
of California leads to a different result than the substantive law of Wisconsin.

II

“California now follows a methodology characterized as the ‘governmental

interest’ approach to choice of law problems. Applying this method, the forum
must search to find the proper law to apply based upon the interests of the
litigants and [302/303]the involved states. (Reich v. Purcell [(1967)] supra, [67
Cal. 2d 551] at p. 553.) With the governmental interest approach, ‘relevant
contacts’ stressed by the Restatement Second of Conflict of Laws are not
disregarded, but are examined in connection with the analysis of the interest of
the involved state in the issues, the character of the contract and the relevant
purposes of the contract law under consideration. The forum must consider all
the foreign and domestic elements and interests involved in the case to
determine the applicable rule. (Reich v. Purcell, supra, 67 Cal. 2d at p. 555.)”
(Dixon Mobile Homes, Inc. v. Walters (1975) 48 Cal. App. 3d 964, 972 [122
Cal. Rptr. 202], fn. omitted [overruled on other grounds by Bullis v. Security
Pacific Nat. Bank (1978) 21 Cal. 3d 801, 815 (148 Cal. Rptr. 22, 582 P.2d
109, 7 A.L.R.4th 642)]; …)

In considering the interests of the parties and the states involved, initially we
note there is no express choice of law provision in the policies issued by the
excess insurers. The absence of a choice by the parties is significant because
where the parties have made a choice of law, their choice is usually enforced.
(Rest. 2d Conf. of Laws, § 187; …)

Where no effective choice of law has been made by the parties, the relevant
contacts to be considered in a dispute over the validity of a contract or the rights
thereunder are set forth in section 188, subdivision (2) of the Restatement
Second of Conflict of Laws: “(a) the place of contracting, [¶] (b) the place of
negotiation of the contract, [¶] (c) the place of performance, [¶] (d) the location
of the subject matter of the contract, and [¶] (e) the domicil, residence,
nationality, place of incorporation and place of business of the parties. [¶]
These contacts are to be evaluated according to their relative importance with
respect to the particular issue.” (See also Dixon Mobile Homes, Inc. v.
Walters, supra, 48 Cal. App. 3d at p. 972; …)

Where, as here, a casualty insurance contract is in dispute, particular

importance is placed on the location of the subject matter of the contract, i.e. the
location of the insured risk. (See California Casualty Indemnity Exchange v.
Pettis (1987) 193 Cal. App. 3d 1597, 1607 [239 Cal. Rptr. 205]; Witkin, supra,
Contracts, § 71, pp. 106; Rest. 2d, Conf. of Laws, § 193.) “The Restatement
Second of Conflict of Laws section 193 states: “The validity of a contract of
fire, surety or casualty insurance and the rights created thereby are determined
by the local law of the state which the parties understood was to be the
principal location of the insured risk during the term of the policy, unless with
respect to the particular issue, some other state has a more significant
relationship ….’ As the court explained in Cunningham v. Equitable Life
Assur. Soc. of U.S. (2d Cir. 1981) 652 F.2d 306 : ‘In contracts of casualty
insurance, … the principal location of the insured risk is given particular
emphasis in determining the choice of the applicable law. [Citation.] This is so
because location has an intimate bearing upon the nature of the risk and the
parties would naturally expect the local law of the state where the risk is to be
principally located to apply. [Citations.] Moreover, the state where the insured
risk will be principally located during the term of the policy has an interest in
the determination of issues arising under the insurance contract.’ (Id., at p. 308,
fn. 1.)” (California Casualty Indemnity Exchange v. Pettis, supra, 193 Cal.
App. 3d at p. 1607.)

More importantly for our purposes, “Where a multiple risk policy insures
against [303/304]risks located in several states, it is likely that the courts will
view the transaction as if it involved separate policies, each insuring an
individual risk, and apply the law of the state of principal location of the
particular risk involved. (Rest. 2d, Conflict of Laws, § 193, Comment f.)”5
(Witkin, supra, Contracts, § 71, p. 106; … but see Vigen Const. Co. v. Millers
Nat. Ins. Co. (N.D. 1989) 436 N.W.2d 254, 257; St. Paul Surplus Lines v.
Diversified Athletic (N.D. Ill. 1989) 707 F. Supp. 1506, 1513.6

We believe the multiple risk approach suggested by Witkin and the

Restatement should apply here. Initially, we note that in an effort to obtain
excess coverage, Johnson Controls circulated an underwriting submission
prepared by its insurance broker. Attached to the underwriting submission is a
list of 18 states and 5 foreign countries where Johnson Controls operates
manufacturing facilities and 128 locations from Adelaide, Australia to
Youngstown, Ohio where the corporation has sales and service facilities.
According to the text of the underwriting submission, Johnson Controls expected
to produce $2.6 billion in sales during the 1985-1986 policy period. * * *

Thus, the record here supports the conclusion Johnson Controls is a large
corporation with worldwide operations and, more importantly, both Johnson
Controls and its insurers carefully considered the complexity of the
corporation’s activities at the time the policies were issued. Under these
circumstances we believe Johnson Controls and its insurers would reasonably
expect not only that the corporation’s liability to a third party might be governed
by the law of a state with significant interests at stake, but that Johnson
Controls’s right to indemnity for such a claim might also be governed by that
state’s law. As suggested by Witkin and the Restatement, given the nature of the
risks insured, this is a case where in reality Johnson Controls did not obtain a
single policy which it could expect would be governed by the law of one state;
rather, Johnson Controls obtained separate [304/305]policies which insure
separate risks located in any number of states where the corporation does
business.7

Our adoption of the multiple risk approach is significant in measuring the

competing interests of California and Wisconsin. First, there can be little doubt
that from the perspective of Johnson Controls and the insurers, California is the
principal location of the risk created by the defective battery. The battery was
manufactured in California, sold to a retailer here and purchased by a California
resident. Thus, Johnson Controls and the insurers would reasonably expect this
risk to be governed by California law. (Rest. 2d, Conf. of Laws, § 193, com. f.)
 As we have seen, in Brown v. Maxey the court found Wisconsin’s interest in
protecting the reasonable expectations of its insureds outweighs any additional
deterrence provided by a rule which relieves insurers from responsibility for
punitive damages. Because Johnson Controls would reasonably expect
California law would apply to the battery it manufactured and sold here,
application of the California rule would not seriously impair the expectation
interest Wisconsin has sought to protect by permitting insurers to pay punitive
damage awards. Rather, since we have concluded Johnson Controls obtained
multiple policies, application of the California rule would give Johnson
Controls the benefit of its bargain with the insurers.8

In contrast, failure to apply California’s rule would severely impair

California’s interests. As we have seen California’s paramount interest is in
protecting its residents by deterring tortfeasors. Here, the liability imposed
grew out of severe injury suffered by a California resident while he was in
California and caused by manufacturing and marketing activities which occurred
exclusively in this state. It is difficult to imagine circumstances where
California would have a greater interest in altering the future behavior of a
defendant by compelling payment directly from the defendant rather than its
insurers.9

In sum then California’s rule applies here because it is the principal location
of the risk involved, because application of California’s rule is entirely
consistent with Wisconsin’s interest in protecting the reasonable expectations of
its insured and [305/306]because California has a significant interest in applying
its rule.

III

In addition to its choice of laws contentions, on appeal Johnson Controls

argues application of California law is barred by the due process and full faith
and credit clauses of the United States Constitution. (U.S. Const., 14th Amend.,
art. IV, § 1.) We reject this argument.

Due process and full faith and credit require “that for a State’s substantive
law to be selected in a constitutionally permissible manner, that State must have
a significant contact or significant aggregation of contacts, creating state
interests, such that choice of its law is neither arbitrary nor fundamentally
unfair.” (Allstate Ins. Co. v. Hague (1981) 449 U.S. 302, 313 [101 S. Ct. 633,
66 L. Ed. 2d 521, 530–531]; see also Phillips Petroleum Co. v. Shutts (1985)
472 U.S. 797, 821–822 [105 S. Ct. 2965, 86 L. Ed. 2d 628, 648–649].) As we
pointed out in our discussion of the choice of laws issue, California has a
substantial interest in regulating Johnson Controls’s manufacturing activities in
this state, especially as here, where those activities have injured one of its
residents.

Judgment affirmed.

NOTES AND QUESTIONS REGARDING CONTRACTS CONFLICTS

ANALYSIS IN THE ABSENCE OF A CHOICE-OF-LAW AGREEMENT

(1) The insurance policies in Stonewall Surplus did not contain choice-of-
law provisions. Are there any good business reasons for not including such a
clause in a contract which involves a multi-state transaction? Why do some
multi-state contracts not contain a choice-of-law clause? If the insurance
policies in Stonewall Surplus had contained clauses designating that
“Wisconsin law will govern all disputes arising out of the contractual
relationship,” would the Court of Appeal have applied California law to the
insurance coverage issue? Would such a clause be enforced under § 187(2) of
the Second Restatement? Under the doctrine propounded by the Supreme Court
in Nedlloyd? What arguments might there be for not enforcing such a choice-of-
law provision in a case like Stonewall Surplus?

(2) What was the basis of the court’s choice-of-law analysis in Stonewall
Surplus? Section 188 of the Second Restatement? The “governmental interest”
doctrine? Both? The court determined that there was a true conflict of laws
“because the substantive law of California leads to a different result than the
substantive law of Wisconsin.” Stonewall Surplus, 14 Cal. App. 4th at 645.
Does this constitute a “true conflict” within the meaning of Currie interest
analysis? Did the Court of Appeal actually undertake a “governmental interest”
analysis within the meaning of Reich v. Purcell, supra, in finding a “true
conflict”; or did the court misconstrue that analysis? Is Stonewall Surplus more
appropriately viewed as a “false conflict” case? Why?

(a) After finding a true conflict between California and Wisconsin law, how
did the court in Stonewall Surplus resolve this conflict? By undertaking a
“comparative [306/307]impairment” analysis? An analysis based on the Second
Restatement? Both? What factors did the court view as being determinative of
the choice-of-law question? Why? Do you agree with the manner by which the
court “measured” the competing interests of California and Wisconsin? Was the
methodology utilized by the Court of Appeal in Stonewall Surplus consistent
with the “comparative impairment” analysis utilized by the Supreme Court in
Bernhard v. Harrah’s Club, supra?

(b) Why did the insurers in Stonewall Surplus bring a declaratory judgment
action in California instead of simply denying coverage and waiting for Johnson
Controls, their insured, to sue them for recovery on the policies? Do you think
the insurers’ decision to seek declaratory relief was due, in part, to choice-of-
law concerns? How so? Assume that Johnson Controls had sued the insurance
companies in a Wisconsin court for breach of the insurance contract. If the
Wisconsin court applied § 188 of the Second Restatement to the case, do you
think that the Wisconsin court would reach the same conclusion as the California
court in Stonewall Surplus and apply California law to the case? Should it?
Wisconsin courts apparently apply Professor Robert Leflor’s “better rule of
law” choice-of-law doctrine to contract cases. See Gregory E. Smith, Choice of
Law in the United States, 38 Hastings L.J. 1041, 1167–68 (1987). Even without
a full understanding of that doctrine, do you think a Wisconsin court would be
likely to apply California law as the “better law” in our hypothetical case?
Why?

(c) What interest does Jones, the party who was injured by the Johnson
Controls battery, have in the Stonewall Surplus case? Should the court have
considered California’s interest vis-a-vis Jones as part of its “governmental
interest” analysis? How might this interest, if cognizable, affect the court’s
analysis? What if Jones were a resident of Wisconsin and had been injured by
the exploding battery while vacationing in California? Should Jones’ residence
make any difference? What if the injury to Jones occurred in Wisconsin, not
California?

(3) In Dixon Mobile Homes, Inc. v. Walters , 48 Cal. App. 3d 964, 122 Cal.
Rptr. 202 (1975), the plaintiff mobile home dealer, a Nevada corporation
whose principal place of business was in Nevada, sued the defendant, a
California resident who purchased a mobile home from plaintiff in Nevada, for
failure to make timely payments on the conditional sales contract for the
purchase of a mobile home. The sales contract was signed in Nevada, payments
were made by mail from California to Nevada, and plaintiff delivered the
mobile home to defendant in California. Plaintiff filed suit in a California
superior court, seeking to recover possession of the mobile home and a
deficiency judgment. Defendant cross-complained for fraud and for violations of
the California Rees-Levering Act, alleging that the financing provisions of the
purchase order were left blank and did not contain the warnings and statement of
buyer’s rights required by the Rees-Levering Act.

The California Rees-Levering Act protects buyers from the abusive practices
of motor vehicle dealers; and provides relief of restitution, rescission, and
attorney fees, to the purchaser. Nevada statutes regulate transactions of the type
involved, but do not provide the specific consumer remedies and attorney fees
of the Rees-Levering Act.

The trial court applied California law, including the Rees-Levering Act, to
the contract issues in the case; and awarded judgment for defendant in the
amount of [307/308]$7,339.70 plus attorney’s fees, and possession of the mobile
home to the plaintiff. Plaintiff appealed, contending that Nevada law should be
applied to the disputed contract and not the Rees-Levering Act. The Court of
Appeal affirmed.

The Court of Appeal, Dixon Mobile Homes, 48 Cal. App. 3d at 972–73,

resolved the choice-of-law contract issue in the following manner:

The factual situation presented is complex, involving multi-state

contacts. In such situations, no single state alone can be deemed to have the
exclusive governing rights. (Reich v. Purcell (1967) 67 Cal. 2d 551, 553
[63 Cal. Rptr. 31, 432 P.2d 727] .) In recognition of this principle,
California now follows a methodology characterized as the “governmental
interest” approach to choice of law problems …. Applying this method, the
forum must search to find the proper law to apply based upon the interests
of the litigants and the involved states. (Reich v. Purcell, supra, at p. 553.)
With the governmental interest approach, “relevant contacts” stressed by
the Restatement Second of Conflict of Laws are not disregarded, but are
examined in connection with the analysis of the interest of the involved
state in the issues, the character of the contract and the relevant purposes of
the contract law under consideration. The forum must consider all the
foreign and domestic elements and interests involved in the case to
determine the applicable rule. (Reich v. Purcell, supra, 67 Cal. 2d at p.
555.) As we view the application of the foregoing guidelines to the issues
presented, it is clear the trial court correctly applied California rather than
Nevada law. The protection of California consumers from abusive and
deceptive sellers, whether local or foreign, is an important subject for
protection by California. The California consumer is harmed as much by
either one. California has expressed this interest through the adoption of the
Rees-Levering Act to specifically prevent fraudulent and deceptive
practices in the conditional sales of motor vehicles.

California, as the forum, has a special interest in having its own law
apply. The law of the forum will be displaced only if there is a compelling
reason for doing so. It is applicable unless either the appellant or
respondent has been forced into a forum devoid of such contact as would
justify application of its own law. Here, in addition to being the residence
of the buyer, the following additional California contacts are present: the
buyer initiated his payments in California; the seller delivered and
installed the mobile home in California; the loan was secured by California
property; and all acts relating to breach (attempted repossession and
collection) occurred in California. It is apparent from the findings that
California has substantial contacts totally justifying the application of
California law.

It is equally clear that Nevada does not have an interest in having its
law applied. It may be assumed that Nevada could have a policy of
protecting its sellers from having contracts invalidated by the various laws
of the several states. However, as indicated, Nevada’s interest is similar to
California’s. The practices utilized by appellant are controlled and
penalized by both states. The contract involved did not meet the
requirements of either Nevada or California law. The court in Hurtado v.
Superior Court [308/309](1974) 11 Cal. 3d 574, 580 [114 Cal. Rptr. 106,
522 P.2d 666] commented as follows: “Although the two potentially
concerned states have different laws, there is still no problem in choosing
the applicable rule of law where only one of the states has an interest in
having its law applied. [Citations.] ‘When one of two states related to a
case has a legitimate interest in the application of its law and policy and
the other has none, then there is no real problem; clearly the law of the
interested state should be applied.’ [Citation.]”

We find no interest needing the protection of the Nevada laws and

conclude the court properly made a choice of law in applying the Rees-
Levering Act. Having so concluded, we can dispose of appellant’s
contention that attorney’s fees were erroneously awarded. The Rees-
Levering Act specifically provides for the award of reasonable attorney’s
fees and costs to the prevailing party in any action on a conditional sales
 contract subject to provisions of the act.

(a) Was Dixon Mobile Homes a case of “false conflict,” “true conflict,” or
really one of “no conflict”? How did the court characterize the case? Was the
court correct in concluding that Nevada did not have an interest in having its
law applied? The court noted that the Nevada statute did not go as far as the
California statute in providing specific remedies, and apparently did not
provide for attorney fees. Is this not similar to the limitation on damages
considered in Reich and Hurtado, supra? When the Nevada statute is viewed
this way, what policy or interest is it intended to further? Was that Nevada
interest in conflict with Califoria’s interest in Dixon Mobile Homes?

(b) Did the court in Dixon Mobile Homes apply the “government interest”
approach to the contracts choice-of-law issue, or did it apply the approach of
the Second Restatement? Do these two approaches appear to be incompatible?
What use of the Restatement did the court make in Dixon Mobile Homes? Did
the court make proper use of the Restatement’s approach to resolving conflicts
in contract cases?

(4) Since the 1967 landmark decision in Reich v. Purcell, supra, a tort case,
and the ALI’s adoption of the Second Restatement in 1971, the California
Supreme Court has had only one opportunity prior to Nedlloyd to address
choice-of-law issues in a contract case. Ironically, in that case, Wong v.
Tenneco, Inc., 39 Cal. 3d 126, 216 Cal. Rptr. 412, 702 P.2d 570 (1985) , the
Supreme Court resolved the choice-of-law issue by applying neither the
government interest approach nor the Second Restatement’s “most significant
relationship” approach.

Plaintiff Wong, a California resident, owned and operated a produce farm in

Mexico which, due to its foreign ownership, was unlawful under Mexico law.
Wong entered into a series of financing and marketing agreements with Tenneco,
a California corporation. Yielding to pressure from Mexican growers, Tenneco
severed its relationship with Wong, eventually resulting in Wong’s loss of
control over his farming operations. Wong then sued Tenneco in California
Superior Court for breach of contract and tort. Although a jury trial resulted in a
verdict for Wong, the trial court later ruled that Wong was barred from recovery
because the entire transaction was illegal under the laws of Mexico. The
Supreme Court affirmed the [309/310]application of Mexican law, relying on the
international law doctrine of comity:
 Instead of a standard contract claim we deal with a question of the
respect due the constitution and statutory laws of a sovereign nation. The
parties entered into this produce marketing/financing arrangement with full
knowledge that the farming operations upon which the agreement depended
were being carried out in violation of Mexican Law. When one party
abandoned the floundering scheme, the other sought redress in the
California courts, to recover that which was unrecoverable under Mexican
law. The trial court properly declined to involve our courts in this flagrant
effort to circumvent Mexican law.

The doctrine of comity is fully applicable in the present case. Under

that longstanding principle of the law of nations, the forum state will
generally apply the substantive law of a foreign sovereign to causes of
action which arise there. (Loranger v. Nadeau (1932) 215 Cal. 362, 366
[10 P.2d 63, 84 A.L.R. 1264]; Blythe v. Ayres (1892) 96 Cal. 532, 561 [31
P. 915]. See Stockton v. Ortiz (1975) 47 Cal. App. 3d 183, 200 [120 Cal.
Rptr. 456].) The philosophy behind the comity doctrine is easily identified:
respect for the sovereignty of other states or countries, “‘considerations of
mutual utility and advantage’” (Blythe, supra, 96 Cal. at p. 561), and
“business and social necessity” (Hutchinson v. Hutchinson (1941) 48 Cal.
App. 2d 12, 22 [119 P.2d 214]). It is the first of these factors that is central
to our inquiry today and compels the application of Mexican law.

(a) The dissent in Wong argued that the rule of comity did not apply, and that
under California’s government interest approach, the court should find a false
conflict and apply California law to the contract. The dissent quoted from
Hurtado v. Superior Court, 11 Cal. 3d at 580, fn.2, that “[t]he government
interests approach is applicable not only to situations involving multistate
contacts but also to those involving a state of the United States vis-a-vis a
political entity of a foreign country.” The majority’s only reference to the
government interest analysis was in a footnote, where it observed that because
Wong’s “farming operation was illegal under Mexican law, the only California
interest implicated is our public policy against enforcement of a contract
dependent upon violation of the laws of another sovereign.” Id. at 137, fn.13.
For a discussion of Wong and the doctrine of comity, see Holly Sprague,
Comment, Choice of Law: A Fond Farewell to Comity and Public Policy, 74
Cal. L. Rev. 1447, 1469–77 (1986).

(b) Does Wong’s comity analysis mean that California courts should apply
the law of a foreign country whenever the cause of action arose in that country?
Or at least consider the comity doctrine in such cases? The Court of Appeal in
Corrigan v. Bjork Shiley Corp., 182 Cal. App. 3d 166, 227 Cal. Rptr. 247
(1986), disapproved on other grounds, Stangvik v. Shiley, Inc., 54 Cal. 3d
744, 764, 1 Cal. Rptr. 2d 556, 819 P.2d 14 (1991) , did not even mention the
doctrine of comity in determining whether the law of Australia or California
applied to a wrongful death action alleging tort and contract claims. Plaintiffs,
Australian residents and relatives of the decedent, brought a products liability
action against defendant, a California-based company, seeking damages for a
defective heart valve prosthesis which caused the death of plaintiffs’ decedent.
The valve was manufactured by defendant in California, but its
[310/311]implantation in plaintiffs’ decedent, also an Australian resident, took
place in Australia. The court conducted governmental interest and comparative
impairment analyses, but never mentioned comity in determining that California
law — which was more favorable to plaintiffs on liability and damages —
applied. How is this case different from Wong? From an interest analysis
viewpoint, why did the court conclude that California law applied even though
plaintiffs were Australian residents?

(5) As Stonewall Surplus and Dixon Mobile Homes illustrate, the Courts of
Appeal take a hybrid approach to choice-of-law analysis in contract cases.
These courts generally apply the methods set forth in the Second Restatement,
but with some deference to government interest analysis. E.g., Kracht v. Perrin,
Gartland & Doyle, 219 Cal. App. 3d 1019, 1026–27, 268 Cal. Rptr. 637
(1990) (assignment of claim); California Casualty Indemnity Exchange v.
Pettis, 193 Cal. App. 3d 1597, 239 Cal. Rptr. 205 (1987) (stacking of uninsured
motorist coverage under insurance contract). Perhaps the most appropriate way
to view the current state of California choice-of-law doctrine for contract cases
is that the courts follow the Second Restatement, unless a specific application is
contrary to some established use of government interest analysis. Added to this,
of course, is the somewhat puzzling use of comity in international cases such as
Wong v. Tenneco, Inc., supra.

Footnotes:

5 Restatement Second, Conflict of Laws section 193, comment f, states: “A special problem is presented
by multiple risk policies which insure against risks located in several states. A single policy may, for
example, insure dwelling houses located in states X, Y and Z. These states may require that any fire
insurance policy on buildings situated within their territory shall be in a special statutory form. If so, the
single policy will usually incorporate the special statutory forms of the several states involved. Presumably,
the courts would be inclined to treat such a case, at least with respect to most issues, as if it involved three
policies, each insuring an individual risk. So, if the house located in state X were damaged by fire, it is
thought that the court would determine the rights and obligations of the parties under the policy, at least with
respect to most issues, in accordance with the local law of X. In any event, that part of a policy which
incorporates the special statutory form of a state would be construed in accordance with the rules of
construction of that state.”

6 In Vigen Const. Co. v. Millers Nat. Ins. Co., supra , 436 N.W.2d at page 257 and St. Paul Surplus
Lines v. Diversified Athletic, supra, 707 F. Supp. at page 1513, the courts relied solely on comment b to
section 193 of the Restatement Second of Conflict of Laws which states in part: “The location of the
insured risk will given greater weight than any other single contact in determining the state of the applicable
law provided that the risk can be located, at least principally, in a single state. Situations where this cannot
be done, and where the location of the risk has less significance, include (1) where the insured object will be
more or less constantly on the move from state to state during the term of the policy and (2) where the
policy covers a group of risks that are scattered throughout two or more states.” We do not believe it is
appropriate to rely solely on comment b without considering the applicability of comment f (see fn. 5, ante)
and the likelihood that the parties intended to create separate policies for the risks created in separate states.

7 We do not mean to suggest that such a multiple risk approach will be appropriate in all cases where an
insured’s activities expose it to liability in a number of states. In a variety of circumstances the particular
risks insured or a particular policy will make it clear that the parties do not expect the insured’s rights under
a policy will be controlled by the location of insured event. (See e.g., com. b to Rest. 2d, Conf. of Laws, §
193.)

8 We also note the court in Brown v. Maxey recognized Wisconsin has an interest, albeit a subsidiary
one, in providing deterrence to tortfeasors. Obviously, application of the California rule would enhance that
subsidiary interest.

9 In this regard Robert McMullan & Son, Inc. v. United States Fid. & Guar. Co. , (1980) 103 Cal.
App. 3d [198] at pages 205–206 [162 Cal. Rptr. 720], is readily distinguishable. In that case a California
insured sued a Maryland insurer for declaratory relief, alleging the insurer had breached its duty to defend.
The insured was successful and sought attorney fees under the law of Florida, the state where the claim
arose. In applying California law, we found Florida had no interest in deterring the insurer’s wrongful
conduct. Unlike the interests of Florida in Robert McMullan & Son, Inc. v. United States Fid. & Guar.
Co., here California is not concerned with governing the conduct of an nonresident insurer and its impact on
a nonresident insured. Rather, here application of California law will have a direct impact on a tortfeasor
whose activities within this state harmed a California resident.

[C] Notes on the Restatement (Second) Conflict of Laws and

Contract Issues

[1] The Second Restatement, Generally

RESTATEMENT, SECOND, CONFLICT OF LAWS

American Law Institute (1971, with 1988 revisions)*
 Chapter 8: CONTRACTS

Introductory Note: In the Restatement of this Subject, the term “contract” is

used to refer both to legally enforceable promises and to other agreements or
promises which are claimed to be enforceable but are not legally so.

1. The Nature of the Subject.

Contracts is one of the most complex and most confused areas of choice of
law. This complexity results in part from the wide uses of contracts, the
lawyer’s universal tool in business and personal affairs. The complexity is
increased by the many different kinds of contracts and of issues involving
contracts and by the many relationships a single contract may have to two or
more states.

The original Restatement provided (a) that issues of validity are determined
by the local law of the place of contracting, which was the place where
occurred the last [311/312]act necessary under the forum’s rules of offer and
acceptance to give the contract binding effect, assuming, hypothetically, that the
local law of the place where the act occurred rendered the contract binding …,
and (b) that issues of performance are determined by the local law of the place
of performance …. These rules were derived from the vested rights doctrine
which was also responsible for the adoption by the original Restatement of the
rule that rights and liabilities in tort are determined, with certain exceptions, by
the local law of the “place of wrong” …. The vested rights doctrine has not
prevailed in the courts and is rejected in the present Chapter and throughout the
present Restatement.

2. The Changes.

The original Contracts Chapter has been changed in four principal ways.
First, the original Restatement did not acknowledge any power in the parties to
choose the applicable law. The present Chapter recognizes that the parties have
such power subject to certain limitations (see § 187). Second, the present
Chapter no longer says dogmatically that, in the absence of an effective law by
the parties, the validity of a contract is governed by the local law of the place of
contracting. Instead, the applicable law is now said to be the local law of the
state which, with respect to the particular issue, has the most significant
relationship to the transaction and the parties (see § 188). Third, the original
Restatement made a sharp distinction between matters of validity and matters of
performance, stating that matters pertaining to damages, to sufficiency of
performance and to excuse for nonperformance are governed by the local law of
the place of performance rather than by the local law of the place of contracting.
This distinction has now been abandoned, and in the present Chapter all issues
involving contracts are said to be governed either by the law chosen by the
parties or, in the absence of an effective choice, by the local law of the state
which, with respect to the particular issue, has the most significant relationship
to the transaction and the parties. Lastly, the original Restatement laid down
rules applicable to the entire field of contracts and, except with respect to the
location of the place of contracting, made no attempt to distinguish between
particular kinds of contracts. Special rules for particular kinds of contracts are
stated in Title B of this Chapter.

TOPIC 1. VALIDITY OF CONTRACTS AND RIGHTS CREATED

THEREBY

TITLE A. GENERAL PRINCIPLES

Introductory Note: This Title states the general approach to be followed in

determining choice-of-law questions involving contracts. Title B (§§ 189–197)
deals with particular kinds of contracts, and Title C (§§ 198-207) with
particular issues involving contracts.

§ 186. Applicable Law

Issues in contract are determined by the law chosen by the parties in

accordance with the rule of § 187 and otherwise by the law selected in
[312/313]accordance with the rule of § 188.

§ 187. Law of the State Chosen by the Parties

(1) The law of the state chosen by the parties to govern their
 contractual rights and duties will be applied if the particular issue is one
which the parties could have resolved by an explicit provision in their
agreement directed to that issue.

(2) The law of the state chosen by the parties to govern their
contractual rights and duties will be applied, even if the particular issue is
one which the parties could not have resolved by an explicit provision in
their agreement directed to that issue, unless either

(a) the chosen state has no substantial relationship to the parties

or the transaction and there is no other reasonable basis for the parties
choice, or

(b) application of the law of the chosen state would be contrary

to a fundamental policy of a state which has a materially greater interest
than the chosen state in the determination of the particular issue and which,
under the rule of § 188, would be the state of the applicable law in the
absence of an effective choice of law by the parties.

(3) In the absence of a contrary indication of intention, the reference is

to the local law of the state of the chosen law.

§ 188. Law Governing in Absence of Effective Choice by the Parties

(1) The rights and duties of the parties with respect to an issue in
contract are determined by the local law of the state which, with respect to
that issue, has the most significant relationship to the transaction and the
parties under the principles stated in § 6.

(2) In the absence of an effective choice of law by the parties (see §

187), the contacts to be taken into account in applying the principles of § 6
to determine the law applicable to an issue include:

(a) the place of contracting,

(b) the place of negotiation of the contract,

 (c) the place of performance,

(d) the location of the subject matter of the contract, and

(e) the domicile, residence, nationality, place of incorporation

and place of business of the parties.

These contacts are to be evaluated according to their relative

importance with respect to the particular issue.

(3) If the place of negotiating the contract and the place of

performance are in the same state, the local law of this state will usually be
applied, [313/314]except as otherwise provided in §§ 189-199 and 203.

NOTES AND QUESTIONS REGARDING

THE SECOND RESTATEMENT

(1) As the quoted rules and comments indicate, the Second Restatement
treatment of contract issues represents a significant departure from the vested
rights theory of the First Restatement. Assuming no overriding statutory
directive (see § 6, Second Restatement, supra), a court must apply the law
specified by the parties in a valid choice-of-law clause. §§ 186-187. If no such
contractual clause exists, or if an existing clause is invalid or unenforceable
under § 187(2)(a) or (b), then generally a court must resolve a choice-of-law
issue by applying the law of the state which has the “most significant
relationship” to the transaction and parties. § 188.

(2) The “most significant relationship” test requires a court to consider

various relevant contacts, including those specified in § 188(2). The comments
to the Second Restatement emphasize that the “most significant relationship” test
is not simply a matter of applying the law of the state which quantitatively has
the most contacts. Instead, the existence of contacts such as those specified in §
188(2) indicate which states are most likely to be interested in having their law
applied to a particular issue, as well as their relative interests in light of the
relevant policies of all interested states. See ALI, Comment to § 188(2).
 (3) The Second Restatement also provides more specific rules for particular
kinds of contracts and contract issues. These specific rules apply in the absence
of a valid choice of law agreement between the parties. In the hierarchy of
applicability, these specific rules apply whenever a court considers the specific
category of contract case or issue covered by a rule. These specific rules are
intended to indicate that with certain kinds of contracts, a particular contact
plays an especially important role in the determination of the state of the
applicable law. ALI Introductory Note to §§ 189-197; see, e.g., Stonewall
Surplus Lines Ins. Co. v. Johnson Controls, Inc., supra.

(a) These specific rules actually set forth presumptions as to which state’s
law is applicable, but these presumptions need not be followed in all
circumstances. For example, Section 189 states that the validity of a contract for
the transfer of an interest in land is determined by the law of the state where the
land is situated unless some other state has a more significant relationship to the
transaction and parties.

(b) Likewise, separate specific rules govern contracts to sell interests in

chattels, § 191; life insurance contracts, § 192; contracts of fire, surety, or
casualty insurance, § 193; contracts of suretyship, § 194; contracts for repayment
of money lent, § 195; contracts for the rendition of services, § 196; and contracts
of transportation, § 197.

(c) Sections 198–207 contain specific rules for choice-of-law questions

directed at particular contract issues. For example, Section 206 states that
issues relating to details of performance of a contract are determined by the
local law of the place of [314/315]performance. Most of these “particular issue”
rules simply refer back to Sections 187–188, the general rules for choice-of-law
clauses and for the “most significant contacts” test. E.g., Capacity to Contract, §
198(1); Formalities required for Valid Contract, § 199; Effect of
Misrepresentation, Duress, Undue Influence and Mistake, § 201; Illegality, §
202(1); Usury, § 203; Measure of Recovery, § 207.

Footnotes:

* Copyright © 1971 and 1988 by the American Law Institute. All rights reserved. Reprinted with
permission.
 [2] Statutory Directives

The Second Restatement recognizes generally that a court must follow the
statutory directives of its own state on choice of law, and that the Second
Restatement’s principles are relevant only when there is no such statutory
directive. Restatement (Second) Conflict of Laws, § 6(1) and (2), supra.
California has enacted only a few general statutory directives on choice-of-law,
most notably in the commercial contracts area, e.g., Commercial Code §
1301(a), Civil Code § 1646.5 (certain choice-of-law agreements); in dealing
with some statute of limitation issues, CCP § 361 (borrowing statute), in dealing
with corporations, Corporations Code §§ 2115 & 2116 (shareholder derivative
suits); and for some family law matters such as spousal and child support,
Family Code §§ 4917, 4953.

One such statutory directive is § 1646 of the Civil Code, which applies to
contracts generally:

A contract is to be interpreted according to the law and usage of the

place where it is to be performed; or, if it does not indicate a place of
performance, according to the law and usage of the place where it is made.

What does § 1646 mean? How does it interrelate with the Second
Restatement and the governmental interest doctrine? See Frontier Oil Corp. v.
RLI Ins. Co., 153 Cal. App. 4th 1436, 63 Cal. Rptr. 3d 816 (2007) (the choice-
of-law rule in Civil Code § 1646 determines the law governing the
interpretation of the insurance policy, notwithstanding the application of the
governmental interest test to other choice-of-law issues; although the policy was
entered into in Texas between Texas parties, California law applies because
California was the intended place of performance of the contract with respect to
the disputed claims).

Section 10106(a) of the Commercial Code limits the law that may be chosen
by parties to a consumer lease to the law of a jurisdiction which has some
connection to the parties or the lease. Civil Code § 755 directs that real
property within California is governed by the law of California, except where
title is in the United States. Evidence Code § 311(a) provides that if the law of a
foreign state or nation is applicable but cannot be determined, the court may
apply California law if consistent with the Constitution, or may dismiss the
action. What policy considerations are reflected in § 311(a)?
 [315/316]

§ 5.05 STATUTES OF LIMITATIONS AND CHOICE

OF LAW
[A] Introductory Note

One choice-of-law issue that cuts across all substantive areas of law is the
question of which statute of limitations should apply to a cause of action. For
many years, California courts followed the traditional rule that statutes of
limitations are “procedural” for choice-of-law purposes, and are therefore
governed by forum law. See, e.g., Biewend v. Biewend, 17 Cal. 2d 108, 114,
109 P.2d 701 (1941) ; Travelers Indemnity Co. v. Bell , 213 Cal. App. 2d 541,
547, 29 Cal. Rptr. 67 (1963). The California courts were influenced by the First
Restatement, which embodied the general principle that forum law governed all
matters of procedure, and that statutes of limitations were always “procedural.”
Restatement, Conflict of Laws, §§ 585, 603 & 604 (1934).

The Second Restatement rejected this rigid view of the statute of limitations,
Restatement (Second) Conflict of Laws, § 142; and so have the California
courts.

McCANN v. FOSTER WHEELER LLC

SUPREME COURT OF CALIFORNIA
48 Cal. 4th 68, 105 Cal. Rptr. 3d 378, 225 P.3d 516 (2010)

George, Chief Justice.

This case presents a choice-of-law issue arising in a lawsuit filed by plaintiff

Terry McCann (plaintiff) to recover damages for an illness, mesothelioma,
allegedly caused by his exposure to asbestos. Although the complaint seeks
recovery from numerous defendants, the issue before us relates solely to the
potential liability of a single defendant, Foster Wheeler LLC (Foster Wheeler),
a company that specially designed, manufactured, and provided advice
regarding the installation of a very large boiler at an oil refinery in Oklahoma in
1957. At the time the boiler was being installed at the Oklahoma refinery,
plaintiff, then an Oklahoma resident and a newly hired engineering sales trainee
employed by the construction company that was installing the boiler, allegedly
was exposed to asbestos at various times over a two-week period while he
observed the application of asbestos insulation to the boiler by an independent
insulation contractor.

Eighteen years later, in 1975, after working at various jobs in Minnesota and
Illinois, plaintiff moved to Dana Point, California, to take a position as
executive director of Toastmasters International. In 2005, after having retired
from his Toastmasters position in 2001 and continuing to reside in California,
plaintiff was diagnosed with mesothelioma. A few months later, plaintiff filed
this action in California, naming numerous defendants, including Foster
Wheeler.[1]

Prior to trial, Foster Wheeler moved for summary judgment on various

grounds, [316/317]including that plaintiff’s action against it was governed by, and
barred under, an Oklahoma statute of repose that required any cause of action
against a designer or constructor of an improvement to real property to be filed
within 10 years of the substantial completion of the improvement. In opposing
the motion, plaintiff contended, first, that his cause of action for an injury or
illness caused by exposure to asbestos should be governed by the relevant
California statute of limitations (under which the action would have been timely
filed), rather than by Oklahoma law, and, second, that in any event Foster
Wheeler’s boiler was not an improvement to real property within the meaning of
the relevant Oklahoma statute of repose.

After the trial court initially determined that Oklahoma, rather than California,
law should apply to the timeliness issue …, the trial court found that Foster
Wheeler was a designer of an improvement to real property within the meaning
of the Oklahoma statute of repose and entered judgment dismissing Foster
Wheeler as a defendant in plaintiff’s underlying action.

On appeal, the Court of Appeal concluded that the trial court erred in
determining that Oklahoma law rather than California law should apply in these
circumstances; as a consequence, the Court of Appeal did not reach the question
whether the trial court erred in finding that the action against Foster Wheeler fell
within the reach of the applicable Oklahoma statute of repose. * * *

On petition by Foster Wheeler, we granted review primarily to consider

whether the Court of Appeal was correct in determining (1) that Oklahoma’s
interest in the application of its statute of repose is substantially limited to
application of the statute to companies headquartered in Oklahoma and does not
equally encompass out-of-state companies who design or construct
improvements to real property located in Oklahoma, and (2) that California’s
interests, rather than Oklahoma’s interests, would be more impaired by the
failure to apply the respective state’s law on the facts presented here.

For the reasons discussed more fully below, we conclude that the decision of
the Court of Appeal should be reversed. * * *

II

Traditionally, a state’s general choice-of-law rules have been formulated by

courts through judicial decisions rendered under the common law, rather than by
the Legislature through statutory enactments. In California, over the past four
decades this court’s decisions have adopted and consistently applied the so-
called “governmental interest” analysis as the appropriate general methodology
for resolving choice-of-law questions in this state. (See, e.g., Reich v. Purcell
(1967) 67 Cal.2d 551 [63 Cal. Rptr. 31, 432 P.2d 727] (Reich) ; Bernhard v.
Harrah’s Club (1976) 16 Cal.3d 313 [128 Cal. Rptr. 215, 546 P.2d 719]
(Bernhard); Offshore Rental Co. v. Continental Oil Co. (1978) 22 Cal.3d 157
[148 Cal. Rptr. 867, 583 P.2d 721] (Offshore Rental) ; Kearney v. Salomon
Smith Barney, Inc. (2006) 39 Cal.4th 95 [45 Cal. Rptr. 3d 730, 137 P.3d 914]
(Kearney).)

With respect to the category of statutes of limitation and statutes of repose,

however, many jurisdictions have enacted specific statutory provisions that
address the subject of choice of law. As discussed in a leading treatise and a
number of law [317/318]review articles, a majority of American states have
adopted so-called “borrowing statutes” that direct the courts of a state, in
lawsuits filed within that state, to apply or “borrow” the relevant statute of
limitations or statute of repose of a foreign jurisdiction under the particular
circumstances specified in the statute, rather than to apply the statute of
limitations of the forum jurisdiction. (See generally Leflar et al., American
Conflicts Law (4th ed. 1986) §§ 127-128, pp. 348–354 (Leflar Treatise); …) *
**

California first enacted a borrowing statute very early in its history, in 1851,
as part of the state’s initial comprehensive legislation regulating proceedings in
civil cases. (Stats. 1851, ch. 5, § 532, p. 134.) When the Code of Civil
Procedure was adopted in 1872, the early 1851 statute was codified, with only
a minor change in language, as section 361. The language of section 361, as
enacted in 1872, remains unchanged to this day.

Section 361 provides in full: “When a cause of action has arisen in another
State, or in a foreign country, and by the laws thereof an action thereon cannot
there be maintained against a person by reason of the lapse of time, an action
thereon shall not be maintained against him in this State, except in favor of one
who has been a citizen of this State, and who has held the cause of action from
the time it accrued.”

Section 361 thus creates a general rule that when a cause of action has arisen
in another jurisdiction but cannot be maintained against a particular defendant in
that jurisdiction because of the lapse of time, the action cannot be maintained
against that defendant in a California court. The statute contains an exception,
however, for a plaintiff “who has been a citizen of this State, and who has held
the cause of action from the time it accrued.” Past cases establish that this
exception applies only where the plaintiff was a California citizen at the time
the cause of action accrued, and does not extend to a plaintiff who became a
citizen of California after the cause of action accrued but before the lawsuit in
question was filed. (See, e.g., Biewend v. Biewend (1941) 17 Cal.2d 108, 115
[109 P.2d 701]; Grant v. McAuliffe (1953) 41 Cal.2d 859, 865 [264 P.2d 944] ;
…)

Although application of section 361 generally is straightforward in a case

involving, for example, a typical automobile accident — in which the allegedly
tortious conduct, the resulting injury, and compensable damage all occur at the
same time and in the same place — proper application of the statute is more
problematic in a case, like the present one, in which the defendant’s allegedly
injury-producing conduct occurred in another state at a much earlier date but the
plaintiff’s resulting illness or injury does not become apparent and reasonably is
not discovered until many decades later, at a time when the plaintiff has
established residence in California. In the factual setting here at issue, it may be
reasonably debatable whether plaintiff’s cause of action against Foster Wheeler
“arose” in Oklahoma or instead in California for purposes of section 361, and
whether plaintiff was a citizen of California or of Oklahoma at the time the
cause of action “accrued” within the meaning of the term as used in this
borrowing statute.
 Even if we assume either that the cause of action at issue “arose” in
California for purposes of section 361 or that plaintiff was a citizen of
California from the time the cause of action “accrued” within the meaning of this
statute — and thus that section 361 does not require application of Oklahoma
law rather than California law [318/319]on the facts of this case — we agree with
the Court of Appeal that this statute cannot properly be interpreted to compel
application of the California statute of limitations without consideration of
California’s generally applicable choice-of-law principles. Although at the time
section 361 was adopted, the then prevailing choice-of-law doctrine generally
would have called for the application of the relevant California statute of
limitations in a case in which section 361 did not mandate application of
another jurisdiction’s law (see, e.g., Royal Trust Co. v. MacBean (1914) 168
Cal. 642, 646 [144 P. 139] ), nothing in section 361 indicates that this statute
was intended to freeze the then prevailing general choice-of-law rules into a
statutory command, so as to curtail the judiciary’s long-standing authority to
adopt and modify choice-of-law principles pursuant to its traditional common
law role.

Accordingly, now that the earlier methodology for resolving choice-of-law

issues has been replaced in this state by the governmental interest mode of
analysis (see, e.g., Reich, supra, 67 Cal.2d 551, 553-557; Bernhard, supra, 16
Cal.3d 313, 316–321), in those instances in which section 361 does not mandate
application of another jurisdiction’s statute of limitations or statute of repose the
question whether the relevant California statute of limitations (or statute of
repose) or, instead, another jurisdiction’s statute of limitations (or statute of
repose) should be applied in a particular case must be determined through
application of the governmental interest analysis that governs choice-of-law
issues generally. (See, e.g., Ashland Chemical Co. v. Provence (1982) 129 Cal.
App. 3d 790, 793–794 [181 Cal. Rptr. 340] [holding that under California law,
governmental interest analysis is applicable to resolve a choice-of-law issue
relating to the statute of limitations]; …)

Thus, we now turn to the task of applying the general governmental interest
analysis to the circumstances before us in the present case.

III

Recently, in Kearney, supra, 39 Cal.4th 95, we summarized the mode of

analysis called for by the governmental interest approach. “In brief outline, the
governmental interest approach generally involves three steps. First, the court
determines whether the relevant law of each of the potentially affected
jurisdictions with regard to the particular issue in question is the same or
different. Second, if there is a difference, the court examines each jurisdiction’s
interest in the application of its own law under the circumstances of the
particular case to determine whether a true conflict exists. Third, if the court
finds that there is a true conflict, it carefully evaluates and compares the nature
and strength of the interest of each jurisdiction in the application of its own law
‘to determine which state’s interest would be more impaired if its policy were
subordinated to the policy of the other state’ [citation], and then ultimately
applies ‘the law of the state whose interest would be more impaired if its law
were not applied.’” (39 Cal.4th at pp. 107–108.)

With regard to the first of these steps, we agree with the Court of Appeal that
“[t]he laws of Oklahoma and California clearly differ.”

[319/320]

Under section 109 (the Oklahoma statute of repose), plaintiff’s cause of

action would be barred by the lapse of time, because that statute “bars any tort
action which arises more than ten years after the substantial completion of the
improvement to real property.” (Riley v. Brown and Root, Inc. (1992) 1992 OK
114 [836 P.2d 1298, 1300] .) Although the Oklahoma statute in question has
been interpreted not to bar products liability actions against the manufacturers
and sellers of mass-produced products — and thus would not preclude plaintiff
from suing companies that manufactured or sold the asbestos insulation to which
he was exposed — the Oklahoma Supreme Court has interpreted the statute of
repose to protect a manufacturer/designer of a specially designed improvement
to real property. (Ball v. Harnischfeger Corp. [(1994) 1994 OK 65] 877 P.2d
45, 50 [“If the manufacturer was acting as a designer, planner, construction
supervisor or observer, or constructor, the statute of repose will apply. It is the
specialized expertise and rendition of particularized design which separates
those protected from mere manufacturers and suppliers.”]; …)

Although, as we have explained above, plaintiff argued in the Court of

Appeal and continues to maintain in this court that the trial court erred in finding
that the boiler in question was an improvement to real property for purposes of
the Oklahoma statute of repose, the Court of Appeal never reached that issue,
because it concluded that even if Foster Wheeler fell within the reach of the
Oklahoma statute, under California’s choice-of-law principles California law
would apply. In reviewing the conclusion reached by the Court of Appeal, we
similarly shall assume for purposes of determining the choice-of-law issue that
Foster Wheeler’s conduct brought it within the reach of the relevant Oklahoma
statute of repose.7 Under this premise, plaintiff’s action against Foster Wheeler
plainly would be untimely under Oklahoma law, because this action was filed
more than 10 years after substantial completion of the improvement.8

By contrast, plaintiff’s action against Foster Wheeler clearly would be timely

if [320/321]California law were applied. Although this state has enacted a statute
of repose applicable to causes of action arising out of a latent deficiency in the
design or construction of an improvement to real property that is somewhat
similar to the relevant Oklahoma statute of repose (see Code Civ. Proc., §
337.15), the California statute, unlike its Oklahoma counterpart, applies only to
actions for injury to property, not to personal injury actions. (Martinez v.
Traubner (1982) 32 Cal.3d 755, 757–761 [187 Cal. Rptr. 251, 653 P.2d
1046].) Furthermore, California has enacted a special statute of limitations
explicitly governing the time for bringing an action “for injury or illness based
upon exposure to asbestos,” which permits such an action to be brought up to
one year after the plaintiff both (1) first suffered disability and (2) knew or
reasonably should have known that the disability was caused or contributed to
by exposure to asbestos. (Code Civ. Proc., § 340.2;10 see Hamilton v. Asbestos
Corp. (2000) 22 Cal.4th 1127, 1138 [95 Cal. Rptr. 2d 701, 998 P.2d 403] .)
Here, plaintiff, who previously had retired for reasons unconnected to his
asbestos-related illness, filed this action within a few months after he first was
diagnosed with mesothelioma, and thus the action clearly would be timely under
the provisions of section 340.2. (See Hamilton v. Asbestos Corp., supra, 22
Cal.4th at pp. 1138–1147.)

Accordingly, the law of Oklahoma clearly differs from the law of California
with respect to the timeliness of plaintiff’s cause of action.

The second step of the governmental interest analysis requires us to examine

“each jurisdiction’s interest in the application of its own law under the
circumstances of the particular case to determine whether a true conflict exists.”
(Kearney, supra, 39 Cal.4th at pp. 107–108.)
 Oklahoma decisions indicate that by establishing a relatively lengthy (10-
year) period in which a cause of action for a deficiency in design of an
improvement to real property may be brought, but at the same time terminating
all liability after that deadline regardless of whether the plaintiff’s injury had
yet occurred or become manifest, the relevant statute of repose was intended to
balance the interest of injured persons in having a remedy available for such
injuries against the interest of builders, architects, and designers of real
property improvements in being subject to a specified time limit during which
they would remain potentially liable for their actions in connection with such
improvements. (See, e.g., St. Paul Fire & Marine Ins. Co. v. Getty Oil Co.
[(1989) 1989 OK 137] 782 P.2d 915, 920–921.) The Oklahoma high court held
in St. Paul Fire & Marine Ins. Co. that the statute of repose, by establishing this
type of fixed time limit in which any cause of action must be brought, serves
“the legitimate government objectives of providing a measure of [321/322]security
for building professionals whose liability could otherwise extend indefinitely.”
(Id. at p. 921.) The court further noted that the statute “also serves the legitimate
objective of avoiding the difficulties in proof which arise from the passage of
time.” (Ibid.)

In discussing the interest of Oklahoma embodied in the statute, the Court of

Appeal in the present case expressed the view that “Oklahoma’s interest is
substantially a local one, that is, an interest in protecting Oklahoma defendants
from liability for conduct occurring in Oklahoma.” * * *

We conclude that the Court of Appeal did not accurately assess the interest of
Oklahoma embodied in the statute of repose here at issue. When a state adopts a
rule of law limiting liability for commercial activity conducted within the state
in order to provide what the state perceives is fair treatment to, and an
appropriate incentive for, business enterprises, we believe that the state
ordinarily has an interest in having that policy of limited liability applied to out-
of-state companies that conduct business in the state, as well as to businesses
incorporated or headquartered within the state. A state has a legitimate interest
in attracting out-of-state companies to do business within the state, both to
obtain tax and other revenue that such businesses may generate for the state, and
to advance the opportunity of state residents to obtain employment and the
products and services offered by out-of-state companies. In the absence of any
explicit indication that a jurisdiction’s “business friendly” statute or rule of law
is intended to apply only to businesses incorporated or headquartered in that
jurisdiction (or that have some other designated relationship with the state —
for example, to those entities licensed by the state), as a practical and realistic
matter the state’s interest in having that law applied to the activities of out-of-
state companies within the jurisdiction is equal to its interest in the application
of the law to comparable activities engaged in by local businesses situated
within the jurisdiction. * * *

Furthermore, just as the Court of Appeal erred in relying on the non-

Oklahoma location of Foster Wheeler’s incorporation or headquarters as a basis
for determining that Oklahoma lacked an interest in having its statute of repose
applied here, the appellate court similarly erred in suggesting that Oklahoma’s
interest in having its statute applied was negated by the circumstance that the
design and manufacture of the boiler in question occurred in New York rather
than in Oklahoma. The statute of repose here at issue protects not only
construction-related businesses that engage in their activities at the Oklahoma
site of the improvement, but also commercial entities, such as establishments
performing architectural and other design-improvement work, that conduct their
activities away from the location of the improvement but whose potential
liability flows from a plaintiff’s interaction with, or exposure to, the real
property improvement in Oklahoma. Under the premise that the activities of
Foster Wheeler in this case bring it within the reach of the Oklahoma statute of
repose, we conclude that, for purposes of the governmental interest analysis,
Oklahoma clearly possesses an interest in having the statute applied in the
present case and that its interest is not diminished by the circumstance that some
of Foster Wheeler’s activities occurred outside of Oklahoma.

Accordingly, contrary to the view expressed by the Court of Appeal, we

conclude [322/323]that Oklahoma has a real and legitimate interest in having its
statute of repose applied under the circumstances presented here.

At the same time, we also recognize that California has an interest in having
California law applied in this case.

As discussed above, the applicable California statute — Code of Civil

Procedure section 340.2 — permits an action for injury or illness based upon
exposure to asbestos to be brought up to one year after the plaintiff first suffered
disability (as defined by the statute) and knew or reasonably should have known
that the disability was caused or contributed to by such exposure. This statute,
enacted in 1979 to lengthen the period of time in which an asbestos-related
claim may be brought, reflects a state interest in providing persons who suffer
injury or illness as a result of their exposure to asbestos a fair and reasonable
opportunity to seek recovery for their injury or illness, taking into account not
only the typically lengthy period between exposure to asbestos and the
development of disease but also the often substantial period between the initial
discovery or diagnosis of a disease and the time when the disease becomes
disabling. (See, e.g., Hamilton v. Asbestos Corp., supra, 22 Cal.4th 1127,
1138–1139; Blakey v. Superior Court (1984) 153 Cal. App. 3d 101, 105–106
[200 Cal. Rptr. 52]; Nelson v. Flintkote Co. (1985) 172 Cal. App. 3d 727, 735
[218 Cal. Rptr. 562].)

The language of section 340.2 does not specify the class of persons to whom
the statute was intended to apply, but by its terms the provision is not limited
only to persons who were exposed to asbestos in California. In view of the
legislation’s clear recognition of the unusual nature of asbestos-related injury
and illness, and the statute’s objective to provide injured or ill persons a fair
and adequate opportunity to seek recovery for such asbestos-related harm, we
conclude that California has an interest in having this statute applied to a person,
like plaintiff, who is a California resident at the time the person discovers that
he or she is suffering from an asbestos-related injury or illness, even when the
person’s exposure to asbestos occurred outside California. * * * Accordingly,
California, as well as Oklahoma, has an interest in having its own law applied
in this case.

Because the applicable laws of Oklahoma and California differ and each
state has an interest in having its law applied under the circumstances of the
present case, we are faced with a “true conflict.” As explained above, in such
instances we apply the so-called “comparative impairment” approach.

Under the comparative impairment analysis, we must “carefully evaluate[]

and compare[] the nature and strength of the interest of each jurisdiction in the
application of its own law ‘to determine which state’s interest would be more
impaired if its policy were subordinated to the policy of the other state.’”
(Kearney, supra, 39 Cal.4th 95, 108.) * * * Accordingly, our task is not to
determine whether the Oklahoma rule or the California rule is the better or
worthier rule, but rather to decide — in light of the legal question at issue and
the relevant state interests at stake — which jurisdiction should be allocated the
predominating lawmaking power under the circumstances of the present case.
 [323/324]

In light of the relevant facts of this case, we conclude that a failure to apply
Oklahoma law would significantly impair Oklahoma’s interest. The conduct for
which plaintiff contends Foster Wheeler should be held liable — plaintiff’s
alleged exposure to asbestos during the application of insulation to a boiler
designed and manufactured by Foster Wheeler — occurred in Oklahoma in
1957, at a time when plaintiff was present in Oklahoma and was an Oklahoma
resident. As already discussed, the circumstance that Foster Wheeler is not an
Oklahoma company — the circumstance relied upon by the Court of Appeal —
is not a persuasive basis for finding that the failure to apply Oklahoma law
would not significantly impair Oklahoma’s interest. Oklahoma’s interest in the
application of its statute of repose applies equally to out-of-state businesses that
design improvements to real property located in Oklahoma and to Oklahoma
businesses that design such improvements situated within that state.

Although California no longer follows the old choice-of-law rule that

generally called for application of the law of the jurisdiction in which a
defendant’s allegedly tortious conduct occurred without regard to the nature of
the issue that was before the court (see Reich, supra, 67 Cal.2d 551, 553),
California choice-of-law cases nonetheless continue to recognize that a
jurisdiction ordinarily has “the predominant interest” in regulating conduct that
occurs within its borders (Reich, supra, 67 Cal.2d 551, 556; see Cable v.
Sahara Tahoe Corp. (1979) 93 Cal. App. 3d 384, 394 [155 Cal. Rptr. 770] ),
and in being able to assure individuals and commercial entities operating within
its territory that applicable limitations on liability set forth in the jurisdiction’s
law will be available to those individuals and businesses in the event they are
faced with litigation in the future. (See, e.g., Offshore Rental, supra, 22 Cal.3d
157, 168; Castro, supra, 154 Cal.App.4th 1152, 1180; Cable, supra, 93 Cal.
App. 3d 384, 394.)

In the present case, in the event Foster Wheeler were to be denied the
protection afforded by the Oklahoma statute of repose and be subjected to the
extended timeliness rule embodied in California law, the subordination of
Oklahoma’s interest in the application of its law would rest solely upon the
circumstance that after defendant engaged in the allegedly tortious conduct in
Oklahoma, plaintiff happened to move to a jurisdiction whose law provides
more favorable treatment to plaintiff than that available under Oklahoma law.

Although here it is clear that plaintiff’s move to California was not motivated
by a desire to take advantage of the opportunities afforded by California law
and cannot reasonably be characterized as an instance of forum shopping, the
displacement of Oklahoma law limiting liability for conduct engaged in within
Oklahoma, in favor of the law of a jurisdiction to which a plaintiff subsequently
moved, would — notwithstanding the innocent motivation of the move —
nonetheless significantly impair the interest of Oklahoma served by the statute of
repose. If Oklahoma’s statute were not to be applied because plaintiff had
moved to a state with a different and less “business-friendly” law, Oklahoma
could not provide any reasonable assurance — either to out-of-state companies
or to Oklahoma businesses — that the time limitation embodied in its statute
would operate to protect such businesses in the future. Because a commercial
entity protected by the Oklahoma statute of repose has no way of knowing or
controlling where a potential plaintiff may move in the future, subjecting such a
defendant to a different rule of law based upon the [324/325]law of a state to
which a potential plaintiff ultimately may move would significantly undermine
Oklahoma’s interest in establishing a reliable rule of law governing a business’s
potential liability for conduct undertaken in Oklahoma.

By contrast, a failure to apply California law on the facts of the present case
will effect a far less significant impairment of California’s interest. Certainly, if
the law of this state is not applied here, California will not be able to extend its
liberal statute of limitations for asbestos-related injuries or illnesses to some
potential plaintiffs whose exposure to asbestos occurred wholly outside of
California. Nonetheless, our past choice-of-law decisions teach that
California’s interest in applying its laws providing a remedy to, or facilitating
recovery by, a potential plaintiff in a case in which the defendant’s allegedly
tortious conduct occurred in another state is less than its interest when the
defendant’s conduct occurred in California. As we shall see, in a number of
choice-of-law settings, California decisions have adopted a restrained view of
the scope or reach of California law with regard to the imposition of liability
for conduct that occurs in another jurisdiction and that would not subject the
defendant to liability under the law of the other jurisdiction. Our view is that a
similar restrained view of California’s interest in facilitating recovery by a
current California resident is warranted in evaluating the relative impairment of
California’s interest that would result from the failure to apply California law in
the present setting.

[Here the Court discusses the comparative impairment decisions in Offshore

Rental, supra, 22 Cal.3d 157, and in Castro [v. Budget Rent-A-Car System,
Inc. (2007) 154 Cal.App.4th 1162 [65 Cal. Rptr. 3d 430]] . As these decisions
demonstrate, in allocating the “‘respective spheres of lawmaking influence’”
(Offshore Rental, supra, 22 Cal.3d 157, 165) in cases in which a California
resident is injured by a defendant’s conduct occurring in another state, past
California choice-of-law decisions generally hold that when the law of the other
state limits or denies liability for the conduct engaged in by the defendant in its
territory, that state’s interest is predominant, and California’s legitimate interest
in providing a remedy for, or in facilitating recovery by, a current California
resident properly must be subordinated because of this state’s diminished
authority over activity that occurs in another state. Although under the
circumstances of the present case this allocation of “lawmaking influence”
results in the subordination of California’s interest to the interest of Oklahoma,
in other instances in which a defendant is responsible for exposing persons to
the risks associated with asbestos or another toxic substance through its conduct
in California, this general principle would allocate to California the
predominant interest in regulating the conduct. (See, e.g., North American
Asbestos Corp. v. Superior Court (1986) 180 Cal. App. 3d 902, 907–908 [225
Cal. Rptr. 877] [holding California law applicable when the plaintiff was
exposed to asbestos in California by a company incorporated in another state,
where plaintiff’s action against the company would have been barred as
untimely under the other state’s law].)

Plaintiff contends, however, that the foregoing analysis is erroneous.. * * * In

arguing that Foster Wheeler should be viewed as having caused an injury that
occurred in California, plaintiff relies heavily upon the circumstances that he
was a resident of California when his exposure to asbestos many years earlier
in Oklahoma ultimately manifested itself as an illness and caused him to incur
[325/326]considerable medical expenses resulting from the disease. Those
circumstances, however, do not realistically distinguish the present matter from
a case, such as Castro, supra, 154 Cal.App.4th 1162, in which a California
resident is seriously injured in an automobile accident in another state and
returns home to California for extensive medical treatment and long-term care.
Although in such a case the plaintiff’s long-term medical expenses are likely to
be incurred in California and, if the plaintiff’s resources are insufficient, the
state ultimately may expend considerable financial resources for his or her care,
past California choice-of-law decisions as we have seen have not treated that
type of case as one in which a defendant’s conduct has caused an injury in
California. Those decisions instead have applied the choice-of-law analysis
discussed above, recognizing that the state in which the alleged injury-producing
conduct occurred (and in which a significant risk of harm to others is posed)
generally has the predominant interest in determining the appropriate parameters
of liability for conduct undertaken within its borders.
 For the reasons discussed above, we conclude that Oklahoma’s interest (as
embodied in its statute of repose) would be more impaired if its law were not
applied under the circumstances of this case than would be California’s interest
if its statute of limitations is not applied. Accordingly, we conclude that the
Court of Appeal erred in holding that California law rather than Oklahoma law
should apply to the issue before us.

IV

The judgment of the Court of Appeal is reversed and the matter is remanded
to that court with directions to address plaintiff’s additional contention that the
trial court erred in finding that the boiler in question constituted an improvement
to real property within the meaning of the relevant Oklahoma statute of repose.

NOTES AND QUESTIONS

(1) The California comparative impairment doctrine requires a court to

resolve a true conflict by determining which state’s interest would be more
impaired if its policy were subordinated to the policy of the other state. How
did the McCann court make this determination? On what factors did the
McCann court rely in finding that Oklahoma’s interest would be more impaired
if its statute of repose were not applied? Do you agree with the court’s
assessment and comparison of the Oklahoma and the California interests? Did
the McCann court engage in interest-weighing? Or did the court focus on
territorialism, and not comparative impairment, in resolving the true conflict?

(2) Ashland Chemical Co. v. Provence, 129 Cal. App. 3d 790, 181 Cal. Rptr.
340 (1982), is one of the first California cases to apply governmental interest
analysis to a statute of limitations issue. Plaintiff Ashland, a Kentucky
corporation, sued various defendants, all residents of California, on a
promissory note. The defendants promised to pay the note in Kentucky by
December, 31, 1975, but did not; the note stated it was “governed and construed
in accordance with the laws of the Commonwealth of Kentucky.” The action
would be timely if the Kentucky 15-year statute of limitations applied, but
barred if California’s four-year limitations statute [326/327](CCP § 337) applied.
Declining to apply the “traditional” choice-of-law-theory, under which statutes
of limitations are procedural and governed by forum law, the Ashland court
instead undertook a governmental interest analysis. The court found that
California was the only interested state because California is the forum and the
defendants are California residents. In contrast, the court reasoned, “Kentucky
has no interest in having its statute of limitations applied because here there are
no Kentucky defendants and Kentucky is not the forum.” Ashland, 129 Cal. App.
3d at 794. The Ashland court also refused to enforce the parties’ choice-of-law
agreement, in part because applying Kentucky’s longer statute of limitations
would violate the protective policy underlying California’s shorter statute of
limitations. Id. at 794–95.

(a) Do you agree with the Ashland court’s reasoning in refusing to enforce
the promissory note’s choice-of-law clause? Is the court’s determination
consistent with Nedlloyd? With § 187(2) of the Second Restatement? Does the
statute of limitations in question (CCP § 337) embody a “fundamental policy” of
California, within the meaning of § 187(2)?

(b) The Ashland court’s holding raises the possibility that the court would
apply Kentucky substantive contract law to the case, but the California statute of
limitations. Do the Due Process and Full Faith and Credit Clauses of the U.S.
Constitution permit a state court to apply another state’s substantive law but its
own statute of limitations to an action? See Sun Oil Co. v. Wortman , 486 U.S.
717, 108 S. Ct. 2117, 100 L. Ed. 2d 743 (1988) (U.S. Constitution does not
prohibit Kansas court from applying its own statute of limitations to all claims
before it, including claims barred under other relevant state law, but applying
various substantive laws of other relevant states to these same claims). What
does this encourage?

(3) In American Bank of Commerce v. Corondoni , 169 Cal. App. 3d 368,

215 Cal. Rptr. 331 (1985), the plaintiff commenced an action in superior court
to enforce a New Mexico money judgment plaintiff had obtained against
defendant 7 1/2 years earlier. Defendant, a resident of California, claimed the
action was barred by the 7-year New Mexico statute of limitations for
enforcement of judgments. Plaintiff argued that the action was timely under the
applicable California 10-year statute of limitations. The court undertook a
governmental interest analysis and, relying on Ashland Chemical Co. v.
Provence, supra, concluded that there was a “false conflict” between the New
Mexico and California statutes of limitations. Do you agree? Which statute of
limitations applies? Why? Whose statute of limitations would apply if the
defendant were a resident of New Mexico, not California?

(4) In Hambrecht & Quist Venture Partners v. American Medical Intl., Inc. ,
38 Cal. App. 4th 1532, 46 Cal. Rptr. 2d 33 (1996) , the court addressed the
question of whether a standard choice-of-law provision which stated that the
contract “shall be governed by and construed in accordance with the laws of the
State of Delaware” incorporated both the substantive law and the statutes of
limitations of Delaware. The court held that the provision did require
application of Delaware’s three-year statute of limitations for breach of contract
actions, even though it was shorter than the otherwise applicable California
four-year statute of limitations (CCP § 337(1)).

The court found that because two of the three parties to the contract were
incorporated in Delaware, Delaware had a “substantial relationship” to the
parties and provided a “reasonable basis” for the parties’ choice of Delaware
law, within the [327/328]meaning of § 187(2) of the Restatement (Second) of
Conflict of Laws. The court also found that the application of the shorter
Delaware statute of limitations to claims brought in the California courts was
not contrary to a fundamental policy of California. Relying on case law and
statutes which enforce reasonable agreements to shorten the four-year statute of
limitations for breach of contract, the court concluded that a choice of law
provision which has the effect of shortening the otherwise applicable California
statute of limitations does not conflict with any fundamental policy of California
and is enforceable.

Although the Hambrecht court cited Ashland Chemical Co. v. Provence,

supra, as supporting its decision to enforce the shorter statute of limitations, the
court questioned other aspects of the Ashland court’s analysis, including the
Ashland court’s suggestion that a choice-of-law provision is per se
unenforceable if the chosen state’s statute of limitations is longer than
California’s. Hambrecht, supra, 38 Cal. App. 4th 1532, 1549, n.17. Do you
agree with this criticism of the Ashland court’s analysis? Why?

Footnotes:

1 * * * After judgment was entered in the trial court and while the case was pending on appeal, Terry
McCann died. A motion was filed in the Court of Appeal to substitute his wife as successor in interest
pursuant to Code of Civil Procedure section 377.32, and that court granted the motion. * * *

7 Because the Court of Appeal did not address plaintiff’s challenge to the trial court’s determination that
the boiler in question constituted an improvement to real property for purposes of the relevant Oklahoma
statute, we conclude, in light of our determination that the appellate court erred in its resolution of the
choice-of-law issue, that it is appropriate to remand this matter to the Court of Appeal to permit that court,
in the first instance, to pass on plaintiff’s challenge to the trial court’s application of Oklahoma law to the
circumstances of this case.

8 While this matter was pending before this court, the Oklahoma Legislature enacted comprehensive
“lawsuit reform” legislation that includes the following provision pertaining to asbestos-related claims:
“Notwithstanding any other provision of law, with respect to any asbestos or silica claim not barred as of the
effective date of this act, the limitations period shall not begin to run until the exposed person or claimant
discovers, or through the exercise of reasonable diligence should have discovered, that the exposed person
or claimant is physically impaired as set forth in this chapter by an asbestos- or silica-related condition.”
(2009 Okla. House Bill No. 1603, § 64, subd. A [chaptered as ch. 228].)

Although the initial clause of this provision (“Notwithstanding any other provision of law”) could be
interpreted to mean that the new statute creates an exception to the Oklahoma statute of repose for
asbestos-related claims (permitting such claims to be brought so long as they satisfy all of the requirements
and limitations embodied in the new statute), the new provision explicitly applies only “to any asbestos …
claim not barred as of the effective date of this act” (italics added) and thus would not affect an action,
like the present one, that was barred by the Oklahoma statute of repose long before the enactment of the
new legislation. Accordingly, the Oklahoma statute of repose continues to represent the relevant Oklahoma
law for purposes of the present proceeding.

10 Code of Civil Procedure, section 340.2 provides in relevant part: “(a) In any civil action for injury or
illness based upon exposure to asbestos, the time for the commencement of the action shall be the later of
the following: [¶] (1) Within one year after the date the plaintiff first suffered disability. [¶] (2) Within one
year after the date the plaintiff either knew, or through the exercise of reasonable diligence should have
known, that such disability was caused or contributed to by such exposure. [¶] (b) ‘Disability’ as used in
subdivision (a) means the loss of time from work as a result of such exposure which precludes the
performance of the employee’s regular occupation.”

[B] The California Borrowing Statute

Because the traditional view of statute of limitations as “procedural”

encouraged forum shopping, California enacted a borrowing statute in 1872,
CCP § 361. See McCann Foster Wheeler LLC, reproduced supra. Section 361
states:

When a cause of action has arisen in another State, or in a foreign

country, and by the laws thereof an action thereon cannot there be
maintained against a person by reason of the lapse of time, an action
thereon shall not be maintained against him in this State, except in favor of
one who has been a citizen of this State, and who has held the cause of
action from the time it accrued.

NOTES AND COMMENTS REGARDING

 CALIFORNIA’S BORROWING STATUTE

(1) In McCann v. Foster Wheeler LLC, 48 Cal. 4th 68, 84–87, 105 Cal. Rptr.
3d 378, 225 P.3d 516 (2010) , reproduced supra, the Supreme Court discussed
the general rule and exceptions contained in California’s borrowing statute,
CCP § 361. What are they? What role did this borrowing statute play in the
McCann court’s decision to apply the Oklahoma statute of repose? Why did the
court in McCann not apply § 361? Did the court determine that § 361 was
inapplicable based on the facts of the case?

(2) When the manner and time of commencing an action is an integral part of
the borrowed statute of limitations, the courts have construed CCP § 361 to
require compliance with the borrowed state’s “commencement” definition. See,
e.g., Ginise v. Zaharia, 224 Cal. App. 2d 153, 36 Cal. Rptr. 406 (1964) .
Consequently, if an action is not timely commenced under a borrowed statute
until the complaint and summons are served (as opposed to the general
California rule that commencement for statute of limitation purposes occurs on
the date of filing the complaint), the California court must follow that definition
when applying § 361. Id. However, there is some authority for limiting this to
“commencement upon service” requirements [328/329]which are expressly
incorporated in the borrowed state’s statutory scheme, and not merely the result
of judicial construction by the borrowed state’s courts. Id. Likewise, § 361 does
not mandate inclusion of a borrowed state’s service requirements where those
requirements do not determine when an action “commences” for statute of
limitations purpose, but instead determine whether the filed action is being
prosecuted with due diligence. Delfosse v. C.A.C.I., Inc.-Federal, 218 Cal.
App. 3d 683, 691–93, 267 Cal. Rptr. 224 (1990).

(3) Section 361 may be preempted by a more specific choice-of-law statute,

such as that contained in the Uniform Interstate Family Support Act, Family
Code § 4953. See Marriage of Ryan, 22 Cal. App. 4th 841, 27 Cal. Rptr. 2d
580 (1994).

(4) Does CCP § 361 apply where the plaintiff brought the action in California
to obtain complete recovery because several defendants were not amenable to
service in Montana, where the cause of action arose, and not for the sole
purpose of avoiding the Montana statute of limitations? See Giest v. Sequoia
Ventures, Inc., 83 Cal. App. 4th 300, 99 Cal. Rptr. 2d 476 (2000) (Section 361
does not inquire into a nonresident plaintiff’s subjective intention in suing in
California). Does CCP § 361 apply where the plaintiff was a citizen of
California in the past but was a nonresident when his tort cause of action arose
in another state? See Cossman v. DaimlerChrysler Corp., 108 Cal. App. 4th
370, 133 Cal. Rptr. 2d 376 (2003) (nonresident plaintiff not exempt from the
reach of § 361 unless a citizen of California at the time his claimed accrued).

§ 5.06 MISCELLANEOUS CHOICE-OF-LAW

APPLICATIONS
[A] Corporations

[1] Government Interest Analysis

The California courts have applied the governmental interest and comparative
impairment approaches to issues of corporation law, such as treatment of suits
by or against dissolved corporations, e.g., North American Asbestos Corp. v.
Superior Court, 180 Cal. App. 3d 902, 225 Cal. Rptr. 877 (1986) (after
conducting comparative impairment analysis, court concluded that California
interest in applying Corporation Code § 2010’s unlimited time limit for suit by
California residents against dissolved Illinois corporation for injuries arising
out of its pre-dissolution asbestos activities greatly impaired if two-year Illinois
limitation statute applied by California court); Riley v. Fitzgerald, 178 Cal.
App. 3d 871, 223 Cal. Rptr. 889 (1986) (Texas limitation law applied in action
on behalf of dissolved Texas corporation because Texas’ interest in regulatory
affairs of its corporations greater than California’s interest in preventing fraud
by California residents against foreign residents); and in an action by directors
for an order to inspect the books and records of the defendant corporation, e.g.,
Havlicek v. Coast-to-Coast Analytical Services, Inc., 39 Cal. App. 4th 1844,
46 Cal. Rptr. 2d 696 (1995) (Delaware’s interest in regulating the activities of
its domestic corporations was less substantial where, as here, its only contact
with the defendant corporation was in issuing a certificate of incorporation; by
contrast California has a more substantial interest because the corporation’s
principal place of business was in California).

[329/330]

In Sullivan v. Oracle Corp., 51 Cal. 4th 1191, 127 Cal. Rptr. 3d 185, 254
P.3d 237 (2011) , the California Supreme Court undertook a government interest
analysis to determine whether the California’s overtime provisions applied to
non-resident employees who worked in California for a California-based
employer. Two of the plaintiffs resided in Colorado and the third in Arizona,
but they all worked for defendant Oracle in California as well as in several
other states. Plaintiffs sought overtime compensation for their work in
California pursuant to the California Labor Code’s overtime provisions, which
are more favorable to the plaintiffs than the overtime laws of their home states.
The defendant argued that the overtime laws of Arizona and Colorado should
apply because the plaintiffs resided in those states. The Supreme Court found
that California has a strong interest in protecting the health and safety of its
labor force, and that neither Arizona nor Colorado had any interest in regulating
overtime work performed in other states. Consequently, the Court ruled, the case
presented a false conflict and California law should apply. Sullivan, supra, 51
Cal. 4th at 1203–1206.

[2] The “Internal Affairs” Doctrine

The California courts do not apply the government interest analysis to all
issues of corporation law. Where an issue concerns the internal affairs of a
corporation, the courts will apply the law of the state of incorporation. See, e.g.,
State Farm Mut. Auto. Ins. Co. v. Superior Court, 114 Cal. App. 4th 434, 8
Cal. Rptr. 3d 56 (2003) (reviewing authorities and concluding the law of
Illinois, the place of defendant’s incorporation, applies to a nationwide class
action of shareholders alleging defendant’s board of directors did not pay
dividends as promised in the by-laws and other corporate documents); Vaughn
v. LJ Intl., Inc., 174 Cal. App. 4th 213, 94 Cal. Rptr. 3d 166 (2009) (internal
affairs doctrine in Corp. Code § 2116, not governmental interest choice-of-law
test, determines which state’s substantive law governs the right of a shareholder
to derivatively sue corporate directors on behalf of the company); but see Kruss
v. Booth, 185 Cal. App. 4th 699, 111 Cal. Rptr. 3d 56 (2010) (pursuant to Corp.
Code § 2115, California law governs certain internal affairs of a foreign
corporation if more than half of the voting stock is held by California residents).

This traditional conflicts rule, referred to as the internal affairs doctrine,

“recognizes that only one state should have the authority to regulate a
corporation’s internal affairs — matters peculiar to the relationships among or
between the corporation and its current officers, directors, and shareholders —
because otherwise a corporation could be faced with conflicting demands.”
State Farm Mut., supra, 114 Cal. App. 4th at 442.

[B] Family Law Matters

[1] Community Property

 Generally, marital interests in money and property acquired during a marriage
are governed by the law of the domicile of the spouses at the time of acquisition,
even when such money or property is used to purchase real property in another
state. Barber v. Barber, 51 Cal. 2d 244, 247, 331 P.2d 628 (1958) ; Rozan v.
Rozan, 49 Cal. 2d 322, 326, 317 P.2d 11 (1957) ; [330/331]Grappo v. Coventry
Financial Corp., 235 Cal. App. 3d 496, 505–506, 286 Cal. Rptr. 714 (1991).

[2] Marriage

A marriage valid where contracted is valid in California, Family Code § 308;

conversely, a marriage invalid where contracted is invalid in California. E.g.,
Marriage of Smyklo, 180 Cal. App. 3d 1095, 1099, 226 Cal. Rptr. 174 (1986)
(in action to determine validity of marriage, California court must apply
Alabama law on common law marriages); Estate of Levie, 50 Cal. App. 3d 572,
576, 123 Cal. Rptr. 445 (1975) (marriage invalid in Nevada because between
first cousins held invalid in California).

[3] Dissolution of Marriage

As with any other final judgment, California courts must give full faith and
credit to a valid judgment of dissolution of marriage entered in another state.
See Full Faith and Credit Clause, Art. IV, § 1, U.S. Constitution . However,
Family Code § 2091 provides that a divorce obtained in another jurisdiction
shall be of no effect in California if both parties to the marriage were domiciled
in California at the time the divorce proceeding was commenced. What was the
purpose of Family Code § 2091, originally enacted in 1949 as Civil Code §
5001? Is every application of § 2091 consistent with the Full Faith and Credit
Clause?

[4] Child Custody

Issues of interstate recognition, enforcement, and modification of child

custody decrees are governed by the Uniform Child Custody Jurisdiction and
Enforcement Act (UCCJEA), enacted in all states including California, Family
Code §§ 3400–3465; the federal Parental Kidnapping Prevention Act of 1980,
28 U.S.C. § 1738A; and the federal International Child Abduction Remedies
Act, 42 U.S.C. § 11601 et seq. For a detailed discussion of these statutory
provisions, and numerous California cases applying them, see 10 Witkin,
Summary of California Law, Parent and Child, §§ 157-193 (10th ed. 2005 &
2011 Suppl.); Anne B. Goldstein, The Tragedy of the Interstate Child: A
Critical Reexamination of the Uniform Child Custody Jurisdiction Act and the
Parental Kidnapping Prevention Act, 25 U.C. Davis L. Rev. 845 (1992).

[5] Child and Spousal Support

The Uniform Interstate Family Support Act (UIFSA), Family Code § 4900 et
seq., governs recognition, enforcement, and modification of sister state child
and spousal support orders, including issues of jurisdiction and choice of law.
The UIFSA replaced the Revised Uniform Reciprocal Enforcement of Support
Act (RURESA) in 1997. See Marriage of Rassier, 96 Cal. App. 4th 1431, 118
Cal. Rptr. 2d 113 (2002) ; Marriage of Newman, 80 Cal. App. 4th 846, 95 Cal.
Rptr. 2d 691 (2000).

Family Code § 4953 provides that the law of the state that issued a support
order governs the nature, extent, amount, and duration of current support
payments, as [331/332]long as the issuing tribunal retains “continuous, exclusive
jurisdiction” within the meaning of UIFSA. As long as one of the individual
parties or the child continues to reside in the issuing state, and as long as the
parties do not agree to the contrary, the issuing tribunal has continuing,
exclusive jurisdiction over its child support order. Uniform Interstate Family
Support Act Comment to Family Code § 4953 (2001); Family Code § 4909.
Thus, for example, under Family Code § 4953 a California court must recognize
and enforce an order of an issuing state (with continuing, exclusive jurisdiction)
for the support of a child until age 21, notwithstanding the fact that the duty of
support of a child generally ends at 18 under the law of California. See UIFSA
Comment, supra; Family Code §§ 3900, 3901.

Under the UIFSA, the issuing tribunal retains continuing, exclusive

jurisdiction over an order of spousal support throughout the entire existence of
the support obligation, and thereby prohibits modification of spousal support by
another state. Family Code §§ 4909(f), 4914; see Marriage of Rassier, supra
(notwithstanding the fact that neither of the parties now resides in Florida, a
California court does not have the authority to modify a spousal support order
issued by a Florida court). This prohibition avoids conflict of laws problems
that would otherwise occur where, for example, states take widely varying
views on the effect on a spousal support order of the obligee’s remarriage or
nonmarital cohabitation. See UIFSA Comment to Family Code § 4914.

[C] Class Actions

 The California courts may deem a nationwide class action unmanageable
where choice-of-law doctrine requires that numerous states’ laws be applied to
various class issues. See, e.g., Washington Mut. Bank v. Superior Court , 24
Cal. 4th. 906, 103 Cal. Rptr. 2d 320, 15 P.3d 1071 (2001) (observing that a
choice-of-law determination is of central importance to issues of predominance
of common legal questions and manageability where certification of a
nationwide consumer class is sought by the plaintiff); Osborne v. Subaru of
America, Inc., 198 Cal. App. 3d 646, 243 Cal. Rptr. 815 (1988) (nationwide
class action denied because various state rules on liability and damages
applicable); Clothesrigger, Inc. v. GTE Corp. , 191 Cal. App. 3d 605, 236 Cal.
Rptr. 605 (1987) (nationwide class action not necessarily rejected, but trial
court must undertake interest analysis as to class claims); Wershba v. Apple
Computer, Inc., 91 Cal. App. 4th 224, 241–44, 110 Cal. Rptr. 2d 145 (2001)
(finding significant contacts with California to support certification of
nationwide class consisting of 2.4 million computer company customers and to
support subjecting defendant to California’s consumer protection laws). The
same treatment is likely for nationwide class actions in federal courts, e.g.,
Phillips Petroleum Co. v. Shutts , 472 U.S. 797, 105 S. Ct. 2965, 86 L. Ed. 2d
628 (1985).

[D] Choice-of-Law Doctrine in Federal Courts

Pursuant to Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S. Ct.
1020, 85 L. Ed. 1477 (1941), generally a federal court in a diversity action must
apply the choice-of-law doctrine of the state in which it sits. See, e.g., Paulo v.
Bepex Corp., 792 F.2d 894, 896 (9th Cir. 1986) (federal court applied
California comparative impairment analysis in determining choice-of-law issue
in products liability [332/333]diversity action); Liew v. Official Receiver and
Liquidator, 685 F.2d 1192, 1195-98 (9th Cir. 1982) (applying California
governmental interest analysis).

[E] Waiver

One way to avoid complex choice-of-law problems in multi-state cases is to

simply not raise the issue. The general rule in California is that the law of the
forum state applies unless a party litigant makes a timely request to invoke the
law of a foreign state. See Hurtado v. Superior Court, 11 Cal. 3d 574, 581, 114
Cal. Rptr. 106, 522 P.2d 666 (1974) . If the request is not made before the trial
court, any objection to choice-of-law is deemed waived. A request made for the
first time on appeal is untimely. Danzig v. Jack Grynberg & Associates , 161
Cal. App. 3d 1128, 1139, 208 Cal. Rptr. 336 (1984), cert. denied, 474 U.S. 819
(1985); Estate of Patterson, 108 Cal. App. 3d 197, 207, 166 Cal. Rptr. 435
(1980).
[333/334]
Chapter 6

THE PROPER COURT

§ 6.01 SUBJECT MATTER JURISDICTION

[A] Introductory Note

The federal courts are courts of limited jurisdiction. The federal courts may
hear only those actions which are within the constitutional grant of judicial
power delineated by Article III of the U.S. Constitution, and even then only to
the extent that Congress by statute authorizes the assertion of federal court
jurisdiction over such actions. See, e.g., Marbury v. Madison, 5 U.S. (1
Cranch) 137, 2 L. Ed. 60 (1803) (Art. III defines outer limits of federal judicial
power); Sheldon v. Sill, 49 U.S. (8 How.) 441, 12 L. Ed. 1147 (1850) (lower
federal courts have no jurisdiction except as Congress confers by statute). The
statutes most often utilized for federal subject matter jurisdiction include 28
U.S.C. § 1331 (federal question), § 1332 (diversity), § 1343 (civil rights), §
1367 (supplemental jurisdiction), and § 1346 (actions against United States).
When a federal court determines that it lacks statutory or constitutional authority
to assert subject matter jurisdiction, the court must dismiss the claim. Resolution
of such claims is left to the state courts.

The California state courts, by contrast, are courts of general jurisdiction. See
Art. VI, § 10, California Constitution. Except for those actions within the
exclusive jurisdiction of the federal courts, e.g., 28 U.S.C. § 1338 (patents and
copyrights), § 1346 (actions against United States), 15 U.S.C. § 78aa (federal
securities claims), a California state court or tribunal has the authority to decide
all causes of action presented by the parties.

[B] Superior Court Jurisdiction

[1] Trial Court Unification

 Prior to 1998, California’s trial courts consisted of superior and municipal
courts, each with its own jurisdiction and number of judges fixed by the
Legislature. Subsequently, the California voters approved Proposition 220 in
June, 1998, and Proposition 48 in November, 2002, that amended the California
Constitution to eliminate references to the constitutional authority to vest
judicial power in the municipal courts. Cal. Const. Art. VI, § 5 (repealed), § 6, §
8, § 16 & § 23 (repealed). As a result of these constitutional amendments, the
superior court now has jurisdiction in all matters that were previously under the
jurisdiction of either the superior or municipal courts. Cal. Const., Art. VI, § 10.
Even after unification, however, the jurisdictional differences between the
superior courts and the former [334/335]municipal courts remain relevant for
purposes of certain trial court procedures, such as the size of the jury, and for
purposes of the proper court for appellate review. Cal. Const., Art. I, § 16; Art.
VI, § 11.

The Courts of Appeal have appellate jurisdiction as to the type of cases that
were within the original jurisdiction of the superior courts on June 30, 1995,
and in other cases as prescribed by statute. Cal. Const., Art. VI, § 11. As to all
other cases — referred to in the legislation implementing Prop. 220 as “limited
civil cases” — the appellate division of the superior court has appellate
jurisdiction. Cal. Const., Art. VI, § 11; CCP §§ 77-86, 904.2. Under the current
statutory scheme, the definition of “limited civil cases” corresponds to the type
of cases that could only be heard in municipal court prior to unification, i.e.,
generally speaking, civil cases in which the amount in controversy is $25,000 or
less. CCP § 86. The Legislature has the authority to change appellate
jurisdiction of the Courts of Appeal, and therefore necessarily of the appellate
division of the superior court, by changing the jurisdictional amount in
controversy. Cal. Const., Art. VI, § 11.

[2] “Limited” vs. “Unlimited” Civil Cases

[a] Limited Civil Case

Generally speaking, a “limited civil case” is an action in which the amount in

controversy does not exceed $25,000. CCP §§ 85(a), 86(a) (designating various
specific actions as limited civil cases). An “unlimited civil case” is an action
which seeks more than $25,000, CCP § 88; or one designated as an unlimited
civil case by statute regardless of the amount in controversy. See, e.g., Family
Code §§ 200, 4900-4976, 8500-9206 (dissolution of marriage, adoption, and
support proceedings); Probate Code §§ 2200, 7050 (guardianship,
conservatorship, and probate proceedings); CCP § 1250.010 (eminent domain
proceedings).

Although the procedural laws applicable to civil actions generally also apply
to limited civil cases, CCP § 90, there are some provisions applicable only to
limited civil cases. These include limitations on pleadings, CCP § 92;
simplified discovery, CCP §§ 93-96; admissibility of affidavits or declarations
in lieu of direct testimony, CCP § 98; lower filing fees, Gov. Code §§ 70613,
70614; and appeal to the appellate division of the superior court instead of the
court of appeal, CCP § 904.2.

[b] Reclassification

The clerk makes the initial jurisdictional classification of a civil case based
on the plaintiff’s classification designation in the caption of the complaint. CCP
§ 422.30(b); Rule 2.111(10), Cal. Rules of Ct. A party or the court on its own
motion may move for reclassification of a case that is erroneously classified.
CCP § 403.040; see Stern v. Superior Court, 105 Cal. App. 4th 223, 231–33,
129 Cal. Rptr. 2d 275 (2003) (trial court abused its discretion in reclassifying
the case without giving plaintiffs notice and an opportunity to contest the
reclassification). If a party files an amended pleading or a cross-complaint that
causes the action to exceed the maximum amount in controversy or otherwise
fail to satisfy the requirements for a limited civil case, and pays a
reclassification fee, the clerk must change the jurisdictional classification from
limited to unlimited. CCP §§ 403.020, 403.030; s e e [335/336]also CCP §
403.050 (reclassification pursuant to parties’ stipulation). An order
reclassifying a case is not an appealable order; a party seeking appellate review
of such an order must file a timely petition for a writ of mandate pursuant to
CCP § 403.080. Garau v. Torrance Unified School Dist. , 137 Cal. App. 4th
192, 40 Cal. Rptr. 3d 108 (2006).

[c] Amount in Controversy

The “amount in controversy” means the amount of the demand, or the

recovery sought, or the value of the property, that is in controversy in an action,
“exclusive of attorneys’ fees, interest, and costs.” CCP § 85(a) The superior
court must deny a motion to reclassify a civil case as “limited” (and thus keep
the matter in the “unlimited” classification) unless it appears to a legal certainty
that the plaintiff’s damages will necessarily be less than $25,000. See Ytuarte v.
Superior Court, 129 Cal. App. 4th 266, 276–79, 28 Cal. Rptr. 3d 474 (2005)
(to defeat a motion to reclassify from unlimited to limited, the party opposing
reclassification must present evidence to demonstrate a possibility that the
verdict will exceed $25,000); Stern, supra, 105 Cal. App. 4th at 233–34
(reversing trial court’s reclassification from unlimited to limited action because
it failed to make requisite finding that the matter would necessarily result in a
verdict below the jurisdictional minimum).

The changes in court organization, procedure, and nomenclature caused by

trial court unification have not altered the prior law governing the computation
of that amount. Stern, supra, 105 Cal. App. 4th at 227, 230-31. Therefore, when
a single plaintiff alleges multiple causes of action against a single defendant, the
demands of all the claims are aggregated in computing the amount in
controversy. Hammell v. Superior Court, 217 Cal. 5, 7–8, 17 P.2d 101 (1932) .
Aggregation is not permitted, however, when a single plaintiff has separate
claims against several defendants. Myers v. Sierra Valley Stock & Agricultural
Assn., 122 Cal. 669, 55 P. 689 (1898) . When properly-joined multiple plaintiffs
have joint causes of action against a single defendant, their joint claims are
aggregated in computing the amount in controversy. Frost v. Mighetto, 22 Cal.
App. 2d 612, 71 P.2d 932 (1937) . However, where the joined plaintiffs’ causes
of action are separate, their separate claims are not aggregated. Colla v.
Carmichael U-Drive Autos, 111 Cal. App. Supp. 784, 294 P. 378 (1930) .
These multiple plaintiff aggregation rules apply, for example, to class actions.
See Weaver v. Pasadena Tournament of Roses Assn. , 32 Cal. 2d 833, 198 P.2d
514 (1948).

[d] Judgment Below Classification Minimum Amount

When a good faith demand in a complaint exceeds the amount necessary for
classification as an unlimited civil case but the subsequent judgment is one that
could have been rendered in a limited civil case, the court is not required to
reclassify the action as a limited civil action but may refuse to award costs to
the prevailing plaintiff. CCP §§ 403.040(e), 1033(a). When a plaintiff in a
limited civil case recovers an amount within the jurisdictional limit of the small
claims court, the court may deny costs to the prevailing plaintiff or may allow
them in any amount it deems proper. CCP § 1033(b); see, e.g., Chavez v. City of
Los Angeles, 47 Cal. 4th 970, 982–89, 104 Cal. Rptr. 3d 710, 224 P.3d 41
(2010) (trial court did not [336/337]abuse its discretion in denying successful
plaintiff statutory attorney fees as costs in an action brought as an unlimited civil
case because the plaintiff recovered an amount that could have been recovered
in a limited civil case).

[e] Small Claims Court

 Each superior court must have a small claims division. CCP § 116.210.
Generally, the small claims court has jurisdiction in actions for recovery of
money if the amount of the demand does not exceed $5000, CCP § 116.220(a);
and also has jurisdiction in an action brought by a natural person if the amount
of the demand does not exceed $10,000, CCP § 116.221. In such actions, CCP §
116.220(b) authorizes the court to grant equitable relief in the form of
rescission, restitution, reformation, and specific performance. Is the small
claims courts’ jurisdiction exclusive or concurrent with the superior courts’ on
matters where the demand does not exceed $5000?

A plaintiff who files an action in small claims court waives any damages
above the jurisdictional limit. CCP § 116.220(d). A plaintiff who litigates in
small claims court has no right to appeal the judgment on the plaintiff’s claim.
CCP § 116.710(a). However, the defendant with respect to the plaintiff’s claim,
and a plaintiff with respect to a claim of the defendant, may appeal the judgment
to the superior court. CCP § 116.710(b). The appeal consists of a trial de novo
before a superior court judge. CCP § 116.770.

[f] Probate Court

The superior courts in many larger counties in California have separate

departments for probate matters. Such departments have primary jurisdiction
relating to certain probate matters assigned to such court by statute. See Probate
Code § 7050 (administration of decedents’ estates); Saks v. Damon Raike &
Co., 7 Cal. App. 4th 419, 428–30, 8 Cal. Rptr. 2d 869 (1992) (pursuant to
Probate Code § 17000(a), the probate department has exclusive jurisdiction of
proceedings concerning the internal affairs of trusts). The Probate Court in such
proceedings is, however, a court of general jurisdiction with all the powers of
the superior courts. Probate Code §§ 7050, 17001.

[C] Court vs. Administrative Tribunal Jurisdiction

[1] Exclusive Agency Jurisdiction

A statute may vest exclusive original jurisdiction in an administrative agency

over controversies within its grant of power, subject to appellate judicial
review, and thereby deny jurisdiction to the superior court. Such statutes and
agencies include the following:

[a] Agricultural Labor Relations Board (ALRB)

 Pursuant to Labor Code §§ 1160.8 and 1160.9, the ALRB has exclusive
original jurisdiction over unfair labor practices, subject to judicial review by
the appropriate Court of Appeal. Tex-Cal Land Management, Inc. v.
Agricultural Labor Relations Bd., 24 Cal. 3d 335, 156 Cal. Rptr. 1, 595 P.2d
579 (1979).

[337/338]

[b] Alcoholic Beverage Control (ABC) Board

Business and Professions Code § 23090.5 provides that no courts except the
Supreme Court and the courts of appeal shall have jurisdiction to review
decisions of the ABC Board. Top Hat Liquors v. Dept. of Alcoholic Beverage
Control, 13 Cal. 3d 107, 118 Cal. Rptr. 10, 529 P.2d 42 (1974) (Bus. & Prof.
Code § 23090.5 expressly withholds jurisdiction from courts until final
adjudicatory determination of ABC Board, subject only to limited judicial
review by appellate courts).

[c] Public Employment Relations Board (PERB)

Government Code § 3541.5 grants the PERB exclusive initial jurisdiction of

charges of unfair practices in public employment, subject to judicial review as
specified in § 3542. San Diego Teachers Assn. v. Superior Court , 24 Cal. 3d 1,
12–14, 154 Cal. Rptr. 893, 593 P.2d 838 (1979) (PERB has exclusive initial
jurisdiction to determine whether strike by public school teachers was an unfair
practice and what, if any, remedies it would pursue); Lowe v. Cal. Resources
Agency, 1 Cal. App. 4th 1140, 1146, 2 Cal. Rptr. 2d 558 (1991) (PERB has
exclusive jurisdiction to classify positions in state civil service); see State
Personnel Bd. v. Dept. of Personnel Admin., 37 Cal. 4th 512, 36 Cal. Rptr. 3d
142, 123 P.3d 169 (2005) (because PERB has exclusive jurisdiction over state
civil service disciplinary actions, alternative grievance/arbitration procedure
that bypassed PERB is invalid).

[d] Public Utilities Commission (PUC)

The PUC has exclusive jurisdiction over broad areas to regulate the
relationship between a public utility and its customers. People v. Superior
Court, 62 Cal. 2d 515, 518, 42 Cal. Rptr. 849, 399 P.2d 385 (1965) . Public
Utility Code § 1759 provides that no court, except the Supreme Court and the
courts of appeal, shall have jurisdiction to review a decision of the PUC.
However, pursuant to Public Utility Code § 2106, the superior court does have
jurisdiction to award damages for unlawful acts of a public utility, but limited to
those situations in which an award of damages would not hinder or frustrate the
PUC’s declared supervisory and regulatory policies. Waters v. Pac. Telephone
Co., 12 Cal. 3d 1, 4, 114 Cal. Rptr. 753, 523 P.2d 1161 (1974) ; Cellular Plus,
Inc. v. Superior Court, 14 Cal. App. 4th 1224, 18 Cal. Rptr. 2d 308 (1993) (§
2106 confers jurisdiction upon superior court to decide anti-trust price-fixing
actions brought by consumers against cellular telephone service companies);
Sarale v. Pac. Gas & Electric Co., 189 Cal. App. 4th 225, 117 Cal. Rptr. 3d 24
(2010) (divided court discusses §§ 1759 and 2106 and disagrees over whether
actions against power utility alleging excessive trimming of commercially
productive walnut trees would interfere with the PUC’s exercise of regulatory
authority over vegetation management around power lines). See also People v.
Pac. Bell, 31 Cal. 4th 1132, 7 Cal. Rptr. 3d 315, 80 P.3d 201 (2003) (action
filed in superior court by public prosecutor alleging that a public utility engaged
in false advertising and unfair business practices not barred by § 1759).

[338/339]

[e] Workers’ Compensation Appeals Board (WCAB)

Pursuant to Labor Code § 5955, the WCAB has exclusive jurisdiction, not
concurrent with the superior courts, over actions by employees for work-related
injuries. Scott v. Industrial Accident Com., 46 Cal. 2d 76, 293 P.2d 18 (1956) ;
Charles J. Vacanti, M.D. Inc v. State Comp. Ins. Fund ,, 24 Cal. 4th 800, 102
Cal. Rptr. 2d 562, 14 P.3d 234 (2001) (applying two-step test for determining
scope of workers compensation exclusivity); see also Greener v. Workers
Comp. Appeals Bd., 6 Cal. 4th 1028, 25 Cal. Rptr. 2d 539, 863 P.2d 784 (1993)
(plaintiff’s challenge to constitutionality of certain workers’ compensation
statutes held not within subject matter jurisdiction of superior court). A decision
of the WCAB may be reviewed by an appellate court. Labor Code §§ 5950,
5955; see Greener v. Workers Comp. Appeals Bd., supra , 6 Cal. 4th at 1044–
46 (appellate review by writ of mandamus authorized).

[f] State Bar Court

Pursuant to Business and Professions Code §§ 6078-6106.9, the State Bar

Court has exclusive initial jurisdiction over matters involving attorney
discipline, subject to review and confirmation by the Supreme Court. Rules 9.5-
9.23, Cal. Rules of Court; see, e.g., Grim v. State Bar, 53 Cal. 3d 21, 278 Cal.
Rptr. 682, 805 P.2d 941 (1991) ; In re Crooks , 51 Cal. 3d 1090, 275 Cal. Rptr.
420, 800 P.2d 898 (1990).
 [2] Jurisdiction to Determine Jurisdictional Issues

A superior court does, of course, have jurisdiction to determine questions of

whether the court or an administrative agency has exclusive jurisdiction over a
particular claim. E.g., Scott v. Industrial Accident Comm., supra, 46 Cal. 2d at
81–89; Rowland v. County of Sonoma, 220 Cal. App. 3d 331, 333, 269 Cal.
Rptr. 426 (1990).

[a] Exhaustion of Administrative Remedies

Even when a statutory scheme does not divest the superior courts of initial
exclusive jurisdiction, the provisions may require claimants to exhaust available
administrative remedies prior to commencing an action in superior court, e.g.,
Government Code § 11523 (judicial review of agency decision based on agency
record, pursuant to California Administrative Procedure Act, Gov. Code §
11340, et seq.); CCP § 1094.5 (administrative mandamus for judicial review of
final administrative hearing decision). See, e.g., Anton v. San Antonio
Community Hosp., 19 Cal. 3d 802, 140 Cal. Rptr. 442, 567 P.2d 1162 (1977)
(administrative mandamus prerequisites applied to decision of private
community hospital); Abelleira v. Dist. Court of Appeal, 17 Cal. 2d 280, 293,
109 P.2d 942 (1941) (exhaustion of statutory administrative remedy held a
jurisdictional prerequisite to resort to the courts).

Although some applications of this exhaustion requirement may not implicate

the superior courts’ fundamental subject matter jurisdiction because the
requirement may be waived or be subject to judicial exceptions, the exhaustion
requirement often postpones the superior court’s jurisdiction during the
pendency [339/340]of the administrative proceeding. See, e.g., Abelleira, supra,
17 Cal. 2d at 292–306; Green v. City of Oceanside, 194 Cal. App. 3d 212, 222,
239 Cal. Rptr. 470 (1987) (exhaustion doctrine did not implicate subject matter
jurisdiction but rather was a procedural prerequisite to suit); County of Contra
Costa v. State of California, 177 Cal. App. 3d 62, 222 Cal. Rptr. 750 (1986)
(when no exception or waiver applied, exhaustion of an administrative remedy
was a jurisdictional prerequisite to resort to the courts).

[b] Primary Jurisdiction

Even where a claim is originally cognizable in the courts and not in an

administrative agency, the court, under the doctrine of primary jurisdiction, may
stay judicial proceedings pending resolution of administrative proceedings on
the claim. Farmers Ins. Exchange v. Superior Court, 2 Cal. 4th 377, 6 Cal.
Rptr. 2d 487, 826 P.2d 730 (1992) (primary jurisdiction doctrine invoked to
suspend court action pending resolution of administrative agency proceedings
on complex insurance regulations issues).

The doctrines of exhaustion of administrative remedies and primary

jurisdiction are discussed in more detail in § 4.06, supra. The administrative
mandamus provisions are discussed in § 15.03, infra.

[3] No Waiver of Jurisdictional Defense

The defense of lack of subject matter jurisdiction may be raised at any time,
and by any party or by the court. CCP §§ 430.10, 430.80(a); Unruh v. Truck Ins.
Exchange, 7 Cal. 3d 616, 622, 102 Cal. Rptr. 815, 498 P.2d 1063 (1972) (lack
of subject matter jurisdiction may be asserted at any time, even for the first time
on appeal); Barnick v. Longs Drug Stores, Inc., 203 Cal. App. 3d 377, 379–80,
250 Cal. Rptr. 10 (1988) (same). However, in the interests of judicial economy,
the courts sometimes suggest that counsel may have a duty to raise this
fundamental objection at an early time. E.g., Rowland v. County of Sonoma,
220 Cal. App. 3d 331, 335, 269 Cal. Rptr. 426 (1990) . Nevertheless, subject
matter jurisdiction cannot be conferred by estoppel, waiver, or consent.
Summers v. Superior Court, 53 Cal. 2d 295, 298, 1 Cal. Rptr. 324, 347 P.2d
668 (1959); Rowland, supra, 220 Cal. App. 3d at 333 (court must dismiss
action if it lacks subject matter jurisdiction; parties cannot confer jurisdiction on
civil courts by stipulation or estoppel).

§ 6.02 PERSONAL JURISDICTION

[A] Personal Jurisdiction, Generally

Personal jurisdiction concerns the ability of a state court to enter a binding

judgment against a nonresident defendant. A state court’s personal jurisdiction
is limited by both the Due Process Clause of the Fourteenth Amendment to the
U.S. Constitution, and by that state’s long-arm statute defining the court’s
personal jurisdiction. Burger King Corp. v. Rudzewicz , 471 U.S. 462, 105 S.
Ct. 2174, 85 L. Ed. 2d 528 (1985); Insurance Corp. of Ireland, Ltd. v.
Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S. Ct. 2099, 72 L.
Ed. 2d 492 (1982).
 [340/341]

Unlike many states which limit the bases of their courts’ personal jurisdiction
by reference to specific statutory categories, the California long-arm statute,
CCP § 410.10, broadly states that “[a] court of this state may exercise
jurisdiction on any basis not inconsistent with the Constitution of this state or of
the United States.” CCP § 410.10 manifests the intent that California courts
exercise the broadest possible personal jurisdiction over nonresidents, limited
only by constitutional considerations. Sibley v. Superior Court, 16 Cal. 3d 442,
445, 128 Cal. Rptr. 34, 546 P.2d 322 (1976).

CASSIAR MINING CORP. v. SUPERIOR COURT

COURT OF APPEAL OF CALIFORNIA,
FOURTH APPELLATE DISTRICT
66 Cal. App. 4th 550, 78 Cal. Rptr. 2d 167 (1998)

Crosby, Justice.

For some 40 years, Cassiar Mining Corporation, a Canadian company,

admittedly sold thousands of tons of raw asbestos fiber directly to California
manufacturers who incorporated the asbestos into finished products. California
workers allegedly were exposed to these asbestos fibers here, thereby
sustaining progressive lung diseases. They claim Cassiar failed to adequately
warn of the health risks.

We apply the Supreme Court’s decision in Vons Companies, Inc. v. Seabest

Foods, Inc. (1996) 14 Cal. 4th 434 [58 Cal. Rptr. 2d 899, 926 P.2d 1085] to
find sufficient contacts to justify the exercise of specific jurisdiction. The instant
litigation results from injuries “related to” Cassiar’s forum activities of selling
asbestos to certain companies located in California.

Cassiar argues there is no “evidence of record” that plaintiffs were actually

exposed to the asbestos fibers it sold in California or sustained injury as a
result. Following Vons we will not impose such a strict causation burden for
jurisdictional purposes, nor will we require a mini-trial. It is manifestly “fair”
to require that Cassiar account in California for the consequences of its
activities within the state, and Cassiar has not presented any compelling
considerations to suggest otherwise.
 I

Cassiar was incorporated in Canada in 1951. It began its mining operations in

British Columbia in 1953, and mined, milled, and sold raw asbestos fiber. It
ceased operations in 1992, when it went bankrupt and subsequently dissolved.

Cassiar did not itself manufacture or sell any finished products. Instead it
sold the raw asbestos fibers to manufacturers, including companies such as
Johns-Manville, Fibreboard, and CertainTeed with plants in California. For
some 38 years (from 1953 until 1991), Cassiar sold thousands of tons of raw
asbestos to these California operations. It has made no sales or otherwise had
any contacts with California since 1991.

Cassiar first became a target of asbestos lawsuits in the 1970s. It has

appeared and defended such lawsuits in California and has not challenged
California’s specific [341/342]jurisdiction where it admittedly supplied the raw
asbestos to which the plaintiffs were exposed. (See, e.g., Gutierrez v. Cassiar
Mining Corp. (1998) 64 Cal. App. 4th 148, 151–152 [affirming in part and
reversing in part jury verdict against Cassiar for supplying asbestos to
plaintiff’s jobsite, a CertainTeed cement plant in Santa Clara].) As Cassiar
explains, “We do not contest jurisdiction in cases where it’s clearly connected
to Cassiar’s past contacts with the State of California. [¶] For example … a
case brought by workers who worked at the plant that Cassiar shipped fiber to,
we’d answer, defend, we don’t make an issue of it, but there’s a difference
between defending a limited number of cases where there’s a clear connection
with the forum and sort of an infinite number of cases where the connection is
speculative at best.”

The instant litigation is brought by 10 workers who allegedly sustained

asbestos-related lung injuries as a result of inhaling asbestos during the course
of their employment. Cassiar is one of 162 named defendants said to have
manufactured, distributed, supplied, or installed asbestos products to which
plaintiffs were exposed at their jobsites. Plaintiffs claim they were injured when
they inhaled asbestos supplied by Cassiar to such companies as Fibreboard (in
Emeryville), CertainTeed (in Santa Clara) and Johns-Manville (in Lompoc).
But, unlike the worker in Gutierrez, none of the plaintiffs worked at the
Fibreboard, CertainTeed or Johns-Manville plants where Cassiar shipped the
asbestos.
 Cassiar appeared specially and moved to quash service of the summons.
While conceding it sold asbestos fiber to these “certain discrete locations in
California between 1953 and 1991,” Cassiar declared, “no sales of asbestos
fiber [were made] at any time to any jobsite where any plaintiff alleges
occupational exposure to asbestos ….” Plaintiffs’ counter declarations did not
establish any causal link between their injuries and Cassiar’s California sales.

The superior court denied Cassiar’s motion to quash. Cassiar filed a petition
for writ of mandate. We issued an order to show cause and set the matter for
hearing.

II

Cassiar has a liberty interest in not being subjected to the jurisdiction of

California courts if its connection with this state falls below the “minimum
contacts” threshold, or if so doing will violate “traditional notions of fair play
and substantial justice.” (International Shoe Co. v. Washington (1945) 326
U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95.) The minimum contacts requirement
prevents nonresident defendants from being subjected to California jurisdiction
“‘solely as a result of “random,” “fortuitous,” or “attenuated” contacts.’” (Vons
Companies, Inc. v. Seabest Foods, Inc., supra, 14 Cal. 4th at p. 445, citing
Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 475, 85 Ed. 2d 528, 105
S. Ct. 2174.) This affords nonresidents some degree of predictability and
certainty about when they will be subjected to the jurisdiction of the forum state.
California’s long-arm statute is intended to provide the broadest possible
jurisdiction subject only to federal constitutional limitations. (Code Civ. Proc.,
§ 410.10; Sibley v. Superior Court (1976) 16 Cal. 3d 442, 445, 128 Cal. Rptr.
34, 546 P.2d 322.)

Cassiar’s contacts with California do not appear to be so continuous and

[342/343]systematic as to establish California’s general jurisdiction over any
cause of action against Cassiar, regardless of its relationship with the forum. (As
You Sow v. Crawford Laboratories, Inc . (1996) 50 Cal. App. 4th 1859, 1868.)
A Canadian company headquartered in Vancouver, Cassiar had no offices,
employees, bank accounts, or real property within the state. It did not advertise
in any California trade journals or publications. It had no further contacts with
California once it halted ordinary business operations in 1991.
 But that does not end our inquiry. Even if Cassiar had severed any California
connections long before the time of suit, it still may be subject to the state’s
specific jurisdiction if it has (1) purposefully derived benefits from California
activities, and (2) the subject lawsuit is “related to” or “arises out” of its
California contacts. (See Vons Companies, Inc. v. Seabest Foods, Inc., supra ,
14 Cal. 4th at p. 446.)

It is not true, as Cassiar has suggested, that jurisdiction is being sought merely
because “we sold asbestos fiber anywhere in the world and it somehow wound
up in California in some form, in some manner Cassiar had nothing to do with.”
Neither is jurisdiction invoked solely because of conclusory allegations in an
unverified complaint. (Goehring v. Superior Court (1998) 62 Cal. App. 4th
894, 909.) “Merely knowing the product will enter California” does not comply
with constitutional minimum contacts requirements; instead, the foreign
defendant must have “some control over [the] ultimate destination” in
California. (As You Sow v. Crawford Laboratories, Inc., supra , 50 Cal. App.
4th at p. 1869.)

Plaintiffs’ declarations show — and Cassiar does not dispute — that Cassiar
sold thousands of tons of raw asbestos fibers directly to California locations for
some 38 years. Far from fortuitous or random connections, the record shows
Cassiar purposefully directed raw asbestos fibers to these California sites. It
was Cassiar, not plaintiffs, which formed a “substantial economic connection
with this state.” To require Cassiar to answer plaintiffs’ complaint “is not to
allow a third party unilaterally to draw [Cassiar] into a connection with this
state; rather it was [Cassiar and the California-based manufacturers] who
established the connection.” (Vons Companies, Inc. v. Seabest Foods, Inc.,
supra, 14 Cal. 4th at p. 451.)1

[343/344]

In As You Sow v. Crawford Laboratories, Inc., supra, 50 Cal. App. 4th 1859,
1869, the court relied upon evidence of 16 discrete sales by an Illinois paint
manufacturer over a six-year period as substantial evidence of purposeful
availment in a Proposition 65 lawsuit regarding the adequacy of warnings of
hazardous materials. Even though its California sales never amounted to more
than one percent of its total sales, specific jurisdiction was established because
the manufacturer “purposefully consummated business arrangements with
California companies on 16 separate occasions so it could profit from the
products’ use in California.” (Id. at p. 1871.)
 It was equally foreseeable that asbestos fiber which was directed by Cassiar
to California would be used in California and could give rise to tort litigation in
California. Cassiar has “knowingly availed itself of the benefits accruing from
its activities within the forum ….” We conclude from this history that Cassiar
intended to serve the California market, thereby becoming subject to its specific
jurisdiction for lawsuits having a “substantial connection” with its forum
activities. (Vons Companies, Inc. v. Seabest Foods, Inc., supra , 14 Cal. 4th at
p. 452 [“as long as the claim bears a substantial connection to the nonresident’s
forum contacts, the exercise of specific jurisdiction is appropriate”].)

III

Cassiar attacks plaintiffs’ showing of a “substantial connection” between its

California asbestos sales and plaintiffs’ injuries. According to Cassiar, “you
can only have specific jurisdiction if the cause of action arises out of those
contacts with the state. If [it does] not, the state case has no specific jurisdiction.
That’s why it’s critical they come up with some evidence to show that Cassiar’s
sales into the State of California have something to do with these plaintiffs’
causes of action.”

For jurisdictional purposes, we find no legal support for Cassiar’s insistence

upon (as counsel urged during oral argument) a “plaintiff-specific link” between
its California sales of raw asbestos and the underlying litigation. Indeed, Vons,
the leading California authority, expressly rejected similar efforts to impose
such strict requirements in specific jurisdiction cases. In its place, the Supreme
Court chose a “relaxed, flexible standard, rather than one requiring that the
plaintiff’s claim arise out of the forum contact in any narrow sense ….” (Vons
Companies, Inc. v. Seabest Foods, Inc., supra, 14 Cal. 4th at p. 455.) A
unanimous court stated, “the defendant’s forum activities need not be directed at
the plaintiff in order to give rise to specific jurisdiction …. The nexus required
to establish specific jurisdiction is between the defendant, the forum, and the
litigation [citations] — not between the plaintiff and the defendant …. The
relevant contacts are said to be with the forum, because it is the defendant’s
choice to take advantage of opportunities that exist in the forum that subjects it
to jurisdiction.” (Id. at pp. 457–58.)

Vons involved an E.coli outbreak at various Jack-in-the-Box restaurants in

the Pacific Northwest allegedly caused by contaminated hamburger patties from
a Vons meat packing plant in El Monte. Vons, which became embroiled in
litigation in California, sought indemnity from WRMI, a Washington state
franchisee, for mishandling the meat, which WRMI purchased and cooked in
Washington. WRMI challenged Vons’ efforts to bring it into a California forum
because Vons failed to demonstrate that its tort liability had anything to do with
its contacts with the [344/345]California-based franchiser. According to WRMI
(and the Court of Appeal), “unless the forum contact proximately caused the
occurrence that injured the plaintiff, the connection between the contacts and the
claim is insufficient to permit the exercise of specific jurisdiction.” (Id. at p.
461.)

The Supreme Court rejected a mechanical proximate cause test for evaluating
the connection between a nonresident defendant’s forum activities and a
plaintiff’s cause of action. The court stressed that the relevant standard was
painted in “relatively broad terms” (id. at p. 468) and formulated in the
disjunctive: the cause of action either must “‘arise out of’ or be ‘related to’ the
defendant’s forum activity in order to warrant the exercise of specific
jurisdiction ….” (Id. at p. 451, italics added.)

Instead of a bright-line rule, the Supreme Court chose the amorphous “goal of
fairness” (Vons Companies, Inc. v. Seabest Foods, Inc., supra, 14 Cal. 4th at p.
468), recognizing “few answers will be written in black and white. The greys
are dominant and even among them the shades are innumerable.” (Id. at p. 475,
internal quotation marks omitted.) There is a sliding scale or continuum between
the defendant’s contacts and the plaintiff’s claim “so that the greater the intensity
of forum activity, the lesser the relationship required between the contact and
the claim.” (Id. at p. 453.)

The connection between plaintiffs’ complaint and Cassiar’s forum-based

activities meets the Vons relatedness test. Plaintiffs who were exposed to
asbestos fibers within California are suing Cassiar only because it purposefully
sold asbestos fiber in this state. Cassiar’s obligations (if any) to plaintiffs are
connected to its California-based activities. The goal of fairness to defendants
is met by extending the burdens of California jurisdiction over a defendant who
purposefully availed itself of the benefits of selling asbestos fibers within the
state. Since plaintiffs were harmed “‘while engaged in activities integral to the
relationship [Cassiar] sought to establish, we think the nexus between the
contacts and the cause of action is sufficiently strong to survive the due process
inquiry at least at the relatedness stage.’” (Vons Companies, Inc. v. Seabest
Foods, Inc., supra, 14 Cal. 4th at p. 470.)
 Our conclusion does not necessarily mean, as Cassiar contends, that it will be
subject to jurisdiction in California in all asbestos cases, even those that do not
involve plaintiffs exposed to fiber from Cassiar’s California sales. (Cassiar
gives, as an example, a plaintiff who was exposed to asbestos in Chile but who
subsequently moved to California where he got sick and died.) According to the
continuum described in Vons, “as the relationship of the defendant with the state
seeking to exercise jurisdiction over him grows more tenuous, the scope of
jurisdiction also retracts ….” (Vons Companies, Inc. v. Seabest Foods, Inc.,
supra, 14 Cal. 4th at p. 448.) Unlike the proffered analogy of a foreign
defendant, a foreign sale and a foreign exposure, the instant case involves
California contacts, California plaintiffs, and a California exposure. Plaintiffs
have shown the requisite connection between their causes of action and
Cassiar’s sales of asbestos fiber to California.

In insisting these 10 plaintiffs provide facts at the jurisdictional stage directly

linking their claims with its asbestos sales, Cassiar ignores the Supreme Court’s
caution against mixing tort concepts with jurisdictional ones because the two are
“entirely unrelated.” (Vons Companies, Inc. v. Seabest Foods, Inc., supra , 14
Cal. 4th at p. 464.) [345/346]A foreign defendant who has voluntarily chosen to
affiliate itself with a forum “reasonably must anticipate exposure to litigation in
the forum beyond claims that are in a narrow sense proximately caused by forum
activities.” (Id. at p. 464.)

Other courts agree. For example, in W.R. Grace & Co. v. CSR Limited,
supra, 279 Ill. App. 3d at p. 1046 [666 N.E.2d at p. 10], an Australian supplier
of raw asbestos fiber challenged Illinois’ jurisdiction because of the plaintiff’s
failure “to show that its blue fiber, and not that of another corporation, is
responsible for [his] injuries and death ….” The court tersely responded the
supplier had “confused jurisdictional issues with causation and proof issues.
The jurisdictional issue before us is preliminary to, and independent of, any
determination of the merits of [plaintiff’s] claims.” (Ibid.) As one commentator
observed, “We must avoid a ‘mini-trial’ on the jurisdictional issue.”
(Weintraub, A Map Out Of The Personal Jurisdiction Labyrinth (1995) 28
U.C. Davis L. Rev. 531, 547.)

Concerns about plaintiffs’ deficiencies of proof should be addressed through

the substantive law of torts. If, as Cassiar contends, plaintiffs lack substantial
evidence that their injuries were caused by exposure to its asbestos fibers, then
Cassiar may have a way out before trial.
 IV

Where, as here, plaintiffs have established sufficient minimum contacts to

pass constitutional muster, the burden shifts to Cassiar to make a compelling
case as to why jurisdiction is unreasonable. (Vons Companies, Inc. v. Seabest
Foods, Inc., supra, 14 Cal. 4th at p. 449.) Cassiar has not done so. California
has a strong interest in providing a forum to the 10 California residents who
experienced occupational exposure to asbestos on California jobsites. Cassiar
is not a stranger to California litigation (Gutierrez v. Cassiar Mining Corp.,
supra, 64 Cal. App. 4th 148) and has agreed to forum jurisdiction over
asbestos-related claims arising from its California-based sales. It makes little
sense to require these plaintiffs to pursue the vast bulk of this complex asbestos
litigation against 161 defendants in California, but to file a separate lawsuit
against Cassiar, the 162nd defendant, in British Columbia.

This is not Asahi Metal Industry Co. v. Superior Court, supra, 480 U.S. at p.
106, where a Taiwanese manufacturer of a motorcycle tire tube sought
indemnity in California from a Japanese manufacturer of its valve assembly.
Cassiar already has anticipated being called into account in California for the
consequences of sales of asbestos directed to this state. In light of these factors,
it is reasonable to assert specific jurisdiction here.

The petition for writ of mandate is denied. * * *

NOTES AND QUESTIONS

(1) Vons Companies, Inc. v. Seabest Foods, Inc. , 14 Cal. 4th 434, 58 Cal.
Rptr. 2d 899, 926 P.2d 1085 (1996) . In Vons, the California Supreme Court
attempted to clarify the personal jurisdiction concept of “specific jurisdiction”
by defining the [346/347]circumstances under which a cause of action “arises out
of or relates to” a defendant’s contacts with the forum. This was not an easy task
— the court’s discussion of this due process issue covers nearly 30 pages. See
Vons, supra, 14 Cal. 4th at 446–75; see also Virtual Magic Asia, Inc. v. Fil-
Cartoons, Inc., 99 Cal. App. 4th 228, 121 Cal. Rptr. 2d 1 (2002) (discussing
and applying the “substantial connection” test for specific jurisdiction in a
breach of contract action). The Cassiar opinion, reproduced supra, contains a
brief summary of the Court’s holdings in Vons, but only hints at the various
competing definitions considered by the Supreme Court.

The main focus of the Court’s analysis in Vons was on the nature of the nexus
between the defendant’s forum activities and the plaintiff’s cause of action. The
defendants in Vons had argued for the adoption of the proximate cause test
formulated by the Court of Appeal, i.e., unless the defendant’s forum contacts
proximately caused the occurrence that injured the plaintiff, the connection
between the contacts and the claim is insufficient to permit the exercise of
specific jurisdiction. Vons, supra, 14 Cal. 4th at 460–62. The Supreme Court
rejected the proximate cause test as too narrow and as inconsistent with fairness
rationale underlying the specific jurisdiction doctrine. Id. at 462–64. Likewise,
the Supreme Court rejected as overly restrictive a similar test proffered by the
defendants, referred to as the substantive relevance test.

The plaintiff in Vons argued that the required relationship between the
defendants’ forum contacts and the plaintiff’s cause of action should be
determined by an expansive “but for” test, which focuses on whether the
plaintiff’s injury would have occurred “but for” the defendants’ forum contacts.
Vons, supra, 14 Cal. 4th at 464-66. The plaintiff pointed out that the U.S. Court
of Appeals for the Ninth Circuit employed the “but for” test in its specific
jurisdiction analysis in Shute v. Carnival Cruise Lines, 897 F.2d 377, 385 (9th
Cir. 1990), and Ballard v. Savage, 65 F.3d 1495, 1500 (9th Cir. 1995) . Despite
the federal court precedent, the Court in Vons determined that the “but for” test
was too broad and amorphous. Vons, supra, 14 Cal. 4th at 467–68. The Vons
court wryly observed that “if the defendant is a lawyer who was received his or
her legal education in the forum, that legal education may be said to be a ‘but
for’ cause of any malpractice the lawyer commits anywhere in the nation, yet it
hardly seems a sufficient basis for the forum to exercise jurisdiction.” Id. at
467.

The Supreme Court ultimately concluded in Vons that the appropriate inquiry
for specific jurisdiction was whether the plaintiff’s cause of action has a
“substantial connection” with the defendants’ forum activities, and defined
“substantial connection” by reference to the facts of an earlier California
Supreme Court decision, Cornelison v. Chaney, 16 Cal. 3d 143, 127 Cal. Rptr.
352, 545 P.2d 264 (1978):

A claim need not arise directly from the defendant’s forum contacts in
order to be sufficiently related to the contact to warrant the exercise of
specific jurisdiction. Rather, as long as the claim bears a substantial
connection to the nonresident’s forum contacts, the exercise of specific
jurisdiction is appropriate. The due process clause is concerned with
protecting nonresident defendants from being brought unfairly into court in
the forum, on the basis of random contacts. That constitutional provision,
[347/348]however, does not provide defendants with a shield against
jurisdiction when the defendant purposefully has availed himself or herself
of benefits in the forum. The goal of fairness is well served by the standard
we originally set out in Cornelison, supra, 16 Cal. 3d 143, that is, there
must be a substantial connection between the forum contacts and the
plaintiff’s claim to warrant the exercise of specific jurisdiction. (Id. at p.
148.) * * *

[I]n Cornelison … we held that a California resident could sue a

Nebraska defendant in California for wrongful death in connection with an
accident that occurred in Nevada. Because the defendant was engaged in
the business of hauling goods by truck and made fairly frequent deliveries
in California, and the accident occurred while he was en route to
California for further deliveries, we found a “substantial nexus between
plaintiff’s cause of action and defendant’s activities in California.” (Id. at
p. 149.) We explained that the appropriate inquiry is whether the plaintiff’s
cause of action “arises out of or has a substantial connection with a
business relationship defendant has purposefully established with
California.” (Ibid.) We commented that if, as we found, the defendant’s
activities are not so wide ranging as to justify general jurisdiction, “then
jurisdiction depends upon the quality and nature of his activity in the forum
in relation to the particular cause of action. In such a situation, the cause of
action must arise out of an act done or transaction consummated in the
forum, or defendant must perform some other act by which he purposefully
avails himself of the privilege of conducting activities in the forum, thereby
invoking the benefits and protections of its laws. Thus, as the relationship
of the defendant with the state seeking to exercise jurisdiction over him
grows more tenuous, the scope of jurisdiction also retracts, and fairness is
assured by limiting the circumstances under which the plaintiff can compel
him to appear and defend. The crucial inquiry concerns the character of
defendant’s activity in the forum, whether the cause of action arises out of
or has a substantial connection with that activity, and upon the balancing
of the convenience of the parties and the interests of the state in assuming
jurisdiction.” (Id. at pp. 147–148, fn. omitted, italics added, citing Hanson
v. Denckla (1958) 357 U.S. 235, 250–253 [78 S. Ct. 1228, 2 L. Ed. 2d
1283, 1295–1298]; …) * * *

The Court of Appeal below focused on an asserted lack of

 The Court of Appeal below focused on an asserted lack of
relationship between [plaintiff] Vons, on the one hand, and [defendants]
Seabest and WRMI, on the other. The court suggested this lack of
relationship was critical in determining whether the claim was sufficiently
related to the forum contacts to permit the exercise of specific jurisdiction
in California. Contrary to the Court of Appeal’s thesis, however, the
defendant’s forum activities need not be directed at the plaintiff in order to
give rise to specific jurisdiction. (See, e.g., Keeton v. Hustler Magazine,
Inc. (1984) 465 U.S. 770, 775 [104 S. Ct. 1473, 79 L. Ed.2d 790, 798]
[publisher that distributes magazines to the public in a distant state may be
held accountable in that forum for damage to victim of defamation];
Cornelison, supra, 16 Cal. 3d 143 [jurisdiction found although the
defendant’s business activities in California were not directed at the
accident victim]; …) The United States Supreme Court has stated more
than once that the nexus required [348/349]to establish specific jurisdiction is
between the defendant, the forum, and the litigation (Helicopteros
[Nacionales de Columbia, S.A. v. Hall (1984)] 466 U.S. [408] at p. 411
[80 L. Ed. 2d 404 at p. 409]; Shaffer v. Heitner (1977) 433 U.S. 186, 204
[97 S. Ct. 2569, 53 L. Ed. 2d 683, 697–698]) — not between the plaintiff
and the defendant. For the purpose of deciding whether a defendant has
minimum contacts or purposefully has availed itself of forum benefits, the
relevant contacts are said to be with the forum, because it is the
defendant’s choice to take advantage of opportunities that exist in the forum
that subjects it to jurisdiction. (Asahi Metal Industry Co. v. Superior
Court (1987) 480 U.S. 102, 112 [107 S. Ct. 1026, 94 L. Ed. 2d 92, 104–
105] (plur. opn. by O’Connor, J.); Burger King [Corp. v. Rudzewics],
supra, 471 U.S. at pp. 475, 479 [85 L. Ed. 2d at pp. 542, 545];
Helicopteros, supra, 466 U.S. at p. 414 [80 L. Ed. 2d at p. 409]; Shaffer v.
Heitner, supra, 433 U.S. at p. 204 [53 L. Ed. 2d at pp. 697–698].)

Vons Companies, Inc. v. Seabest Foods, Inc., supra , 14 Cal. 4th at 457–58
(italics in original).

(2) General jurisdiction refers to those cases in which the plaintiff’s cause of
action did not “arise out of or relate to” the defendant’s forum activities, and
therefore requires “continual and systematic” forum contacts to satisfy the due
process requirements for personal jurisdiction. Vons, supra, 14 Cal. 4th at 445–
46; Helicopteros Nacionales de Columbia, S. A. v. Hall , 466 U.S. 408, 415, n.
9 & 416, 104 S. Ct. 1868, 80 L. Ed. 2d 404 (1984). In light of the analysis of
specific jurisdiction in Vons and Cassiar, under what circumstances would a
defendant be subject to personal jurisdiction in a California court under the
concept of “general jurisdiction”?
 (3) As the Court in Vons acknowledged, the federal Court of Appeals for the
Ninth Circuit employed the “but for” test in determining the requisite nexus
between a defendant’s forum contacts and a plaintiff’s claim, for purposes of
specific jurisdiction. The California Supreme Court in Vons rejected this
interpretation of the Due Process Clause and instead employed the “substantial
connection” test. Until this nexus issue is conclusively resolved by the U.S.
Supreme Court, the difference between the California and the federal courts
tests provides an interesting reason for forum shopping, does it not? How so?

Footnotes:

1 Other state courts have stressed this point in declining to extend jurisdiction over foreign mining
companies who shipped raw asbestos ore into the national stream of commerce outside the forum state.
(See, e.g., In re Minnesota Asbestos Litigation (Minn. 1996) 552 N.W.2d 242, 247 [“the plaintiffs must
show that CSR intended to directly or indirectly market its product in Minnesota or that CSR delivered its
asbestos into the stream of commerce with the expectation that it would be purchased by customers in
Minnesota”]; Anderson v. Metropolitan Life Ins. Co. (R.I. 1997) 694 A.2d 701, 703 [“there are no
allegations or other evidence in the record to suggest that CSR purposefully availed itself of the privileges,
benefits, and protections of doing business in Rhode Island”]; CSR Limited v. Link (Tex. 1996) 925 S.W.2d
591, 596 [“the record contains no evidence that CSR took any act purposefully directed toward selling or
distributing the raw asbestos fiber in Texas. Absent such a purposeful act, foreseeability alone cannot create
minimum contacts between CSR and Texas”].)

That, of course, is not our case. As discussed above, the record shows Cassiar purposely directed its
activities and products toward California by selling raw asbestos to “discrete locations” within the state.
Direct sales of raw asbestos to the forum satisfies specific jurisdiction even under the “stream of commerce
plus” view adopted by a plurality of the United States Supreme Court in Asahi Metal Industry Co. v.
Superior Court (1987) 480 U.S. 102, 112, 107 S. Ct. 1026, 94 L. Ed. 2d 92 (plur. opn. by O’Connor, J.);
…)

[B] Due Process

[1] “Minimum Contacts”

The “minimum contacts” analysis first developed in International Shoe Co.

v. Washington , 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945), remains the
central due process test for evaluating all assertions of state court personal
jurisdiction over nonresident defendants. See Shaffer v. Heitner, 433 U.S. 186,
207–12, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977) (all assertions of state court
personal jurisdiction must be evaluated according to the minimum contacts
standards of International Shoe and its progeny, regardless of whether the
litigation is characterized as in personam, in rem, or quasi in rem). That test is
deceptively simple to state: “[D]ue process requires only that in order to subject
a defendant to a judgment … if he not be [349/350]present within the territory of
the forum, he have certain minimum contacts with it such that the maintenance of
the suit does not offend traditional notions of fair play and substantial justice.”
International Shoe Co. v. Washington, supra, 326 U.S. at 316.

[2] “Reasonableness” Factors

However, the U.S. Supreme Court has also developed some subsidiary
considerations. In rare but appropriate cases, a state court should not assert
personal jurisdiction over a nonresident defendant, even one who has purposely
established minimum contacts in the forum state, where the exercise of
jurisdiction would not be “fair and reasonable.” Asahi Metal Industry Co. v.
Superior Court, 480 U.S. 102, 113, 107 S. Ct. 1026, 94 L. Ed. 2d 92 (1987).
This so-called “reasonableness” consideration includes evaluation of several
factors, such as the burden on the defendant, the interests of the forum state, the
plaintiff’s interest in obtaining relief, the interstate judicial system’s interest in
obtaining the most efficient resolution of controversies, and the shared interest
of the several states in furthering fundamental substantive social policies. Asahi,
supra, 480 U.S. at 113; Burger King Corp. v. Rudzewicz , 471 U.S. 462, 475,
105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985); World-Wide Volkswagen v.
Woodson, 444 U.S. 286, 292, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980); see Epic
Communications, Inc. v. Richwave Technology, Inc ., 179 Cal. App. 4th 314,
317–18, 336–37, 101 Cal. Rptr. 3d 572 (2009) (a refusal to exercise personal
jurisdiction cannot be justified by the mere fact that a claim arising from
California contacts is brought by a nonresident; while the plaintiff’s foreign
status might reduce the state’s interest in adjudicating the dispute, that is at most
a subsidiary consideration which cannot by itself justify a denial of access to the
California courts).

[3] Transient Jurisdiction

Another constitutional basis for personal jurisdiction is transient jurisdiction.

Burnham v. Superior Court, 495 U.S. 604, 110 S. Ct. 2105, 109 L. Ed. 2d 631
(1990). Transient jurisdiction depends solely on service of the complaint and
summons on the nonresident defendant while present in the forum state,
regardless of whether the defendant otherwise has any minimum contacts with
the forum state. Id.; Barbara Surtees Goto, Comment, International Shoe Gets
the Boot: Burnham v. Superior Court Resurrects the Physical Power Theory ,
24 Loy. L.A. L. Rev. 851 (1991) . The California courts endorse transient
jurisdiction. See, e.g., Silverman v. Superior Court, 203 Cal. App. 3d 145, 150,
249 Cal. Rptr. 724 (1988) (personal jurisdiction held proper where nonresident
defendant served with process while present in California at mandatory
settlement conference in a different action; California no longer recognizes
immunity from service for nonresident witnesses or parties).

Does service of the complaint and summons on the California Insurance

Commissioner pursuant to Insurance Code sections 1610 and 1611, which
provide that certain specified acts by a foreign insurer shall constitute the
appointment of the Commissioner as the insurer’s agent for service of process,
provide a basis for personal jurisdiction over such defendant insurer under the
concept of transient [350/351]jurisdiction? See Tri-West Ins. Services, Inc. v.
Seguros Monterrey Aetna, S.A., 78 Cal. App. 4th 672, 676, 93 Cal. Rptr. 2d 78
(2000).

[4] The “Effects” Test

The United States Supreme Court has recognized a variant of the minimum
contacts analysis for determining purposeful availment, referred to as the
“effects” test. Calder v. Jones, 465 U.S. 783, 104 S. Ct. 1482, 79 L. Ed. 2d 804
(1984). In Calder, a reporter in Florida wrote an article for the National
Enquirer about Shirley Jones, a well-known actress who lived and worked in
California. The president and editor of the National Enquirer reviewed and
approved the article, and the National Enquirer published the article. Jones
sued, among others, the reporter and the editor for libel in California. The
individual defendants moved to quash service of process, contending they
lacked minimum contacts with California. The U.S. Supreme Court disagreed
and held that California could exercise jurisdiction over the individual
defendants “based on the ‘effects’ of their Florida conduct in California.”
Calder, supra, 465 U.S. at 789. The Court found jurisdiction proper because
“California [was] the focal point both of the story and of the harm suffered.”
Ibid. “The allegedly libelous story concerned the California activities of a
California resident. It impugned the professionalism of an entertainer whose
television career was centered in California … and the brunt of the harm, in
terms both of [Jones’s] emotional distress and the injury to her professional
reputation, was suffered in California.” Id. at 788–89. The court also noted that
the individual defendants wrote or edited “an article that they knew would have
a potentially devastating impact upon [Jones]. And they knew that the brunt of
that injury would be felt by [Jones] in the State in which she lives and works
and in which the National Enquirer has its largest circulation.” Id. at 789–90.
 In Pavlovich v. Superior Court, 29 Cal. 4th 262, 127 Cal. Rptr. 2d 329, 58
P.3d 2 (2002), the California Supreme Court applied the Calder “effects” test in
the context of the posting of information on an internet web site. The defendant
website operator, a resident of Texas, posted the source code of a computer
program designed to defeat the copy protection system employed to encrypt and
protect copyrighted motion pictures contained on digital versatile discs
(DVD’s). The plaintiff, a California trade association created by the DVD
industry to control and administer licensing of encryption technology, filed an
action in a California court for misappropriation of trade secrets.

In a 4-3 decision, the Supreme Court held that the trial court’s exercise of
personal jurisdiction was inconsistent with due process. The Court ruled that the
“effects” test requires intentional conduct expressly aimed at or targeting the
forum state in addition to the defendant’s knowledge that his intentional conduct
would cause harm in the forum. Pavlovich, supra, 29 Cal. 4th at 270–71. But
the majority concluded that the defendant’s knowledge that his tortious conduct
may harm certain industries centered in California — i.e., the motion picture,
computer, and consumer electronics industries — was insufficient to establish
express aiming at California and, by itself, cannot establish purposeful
availment under the effects test. Id. at 273–78.

[351/352]

The dissent agreed that the mere operation of an internet website cannot
expose the operator to suit in any jurisdiction where the site’s contents might be
read, or where resulting injury might occur. However, the dissent viewed the
defendant’s internet website posting as “expressly aimed” at California because
his illegal conduct intentionally targeted the movie and the computer industries,
which he knew were centered in California: “[D]efendants who aim conduct at
particular jurisdictions, expecting and intending that injurious effects will be felt
in those specific places, cannot shield themselves from suit there simply by
using the Internet, or some other generalized medium of communication, as the
means of inflicting the harm.” Pavlovich, supra, 29 Cal. 4th at 289 (Baxter,
dissenting).

Do you agree with the majority or the dissent in Pavlovich? Why? Which
view is more faithful to Calder’s application of the “effects” test?
 [5] Nonresident Parent Corporations

Under what circumstances is a nonresident parent corporation subject to

personal jurisdiction in California based solely on the contacts of its California
subsidiary? The general rule is that a parent company’s ownership or control of
a subsidiary corporation does not, without more, subject the parent corporation
to the jurisdiction of the state where the subsidiary does business. See, e.g.,
DVI, Inc. v. Superior Court, 104 Cal. App. 4th 1080, 1092, 128 Cal. Rptr. 2d
683 (2002); Sonora Diamond Corp. v. Superior Court, 83 Cal. App. 4th 523,
540, 99 Cal. Rptr. 2d 824 (2000). For example, in Sammons Enterprises, Inc.
v. Superior Court, 205 Cal. App. 3d 1427, 253 Cal. Rptr. 261 (1988) , the court
held that a foreign corporation is not subject to personal jurisdiction based
solely on the independent activities of its wholly owned local subsidiary even
where the parent exercises general executive responsibility for the operations of
the subsidiary and reviews its major policy decisions.

[a] The Alter Ego and Agency Theories

However, the California courts have recognized two principles under which
the contacts of the subsidiary doing business in California are attributed to the
parent corporation: the alter ego doctrine and the agency theory. See, e.g.,
Sonora Diamond Corp., supra, 83 Cal. App. 4th at 537–42; BBA Aviation PLC
v. Superior Court, 190 Cal. App. 4th 421, 429, 433–35,117 Cal. Rptr. 3d 914
(2010); Rollins Burdick Hunter of So. Cal., Inc. v. Alexander & Alexander
Services, Inc., 206 Cal. App. 3d 1, 9-11, 253 Cal. Rptr. 338 (1988) . In
VirtualMagic Asia, Inc. v. Fil-Cartoons, Inc ., 99 Cal. App. 4th 228, 121 Cal.
Rptr. 2d 1 (2002), the court explained the fact-specific nature of the inquiry into
whether personal jurisdiction may be asserted over a parent corporation under
principles of alter ego or agency (VirtualMagic, 99 Cal. App. 4th at 244–45):

The courts have recognized that if a state may exercise jurisdiction

over a subsidiary corporation, it may also have jurisdiction over the parent
corporation if the elements of the alter ego or principal/agent theories are
present. (Sonora Diamond Corp. v. Superior Court [(2000)] 83 Cal. App.
4th [523] at pp. 536–537.) When the elements of alter ego are present, the
ordinary rule that treats a corporation as separate from its shareholders is
[352/353]disregarded, the court will deem the corporation’s acts as the acts
of those persons who own and control the entity, and the jurisdiction over
the corporation is passed through to its shareholders. (Id. at pp. 538–539.)
Under the principal/agent theory, if the forum may assert jurisdiction over
the subsidiary, the forum may extend its jurisdiction to the parent if the
parent exerts a sufficiently high degree of control over its subsidiary to
reasonably deem the subsidiary the agent of the parent under traditional
agency principles. (Id. at pp. 540–541.)

The assertion of jurisdiction under either theory requires a fact-

specific examination of numerous elements. The two principal questions to
establish alter ego are whether there is “such a unity of interest and
ownership between the corporation and its equitable owner that the
separate personalities of the corporation and the shareholder do not in
reality exist” and whether there would be “an inequitable result if the acts
in question are treated as those of the corporation alone.” (Sonora
Diamond Corp., supra, 83 Cal. App. 4th at p. 538.) The courts consider
numerous factors, including inadequate capitalization, commingling of
funds and other assets of the two entities, the holding out by one entity that
it is liable for the debts of the other, identical equitable ownership in the
two entities, use of the same offices and employees, use of one as a mere
conduit for the affairs of the other, disregard of corporate formalities, lack
of segregation of corporate records, and identical directors and officers.
(See Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal. App. 4th 1269,
1285, [31 Cal. Rptr. 2d 433].) No single factor is determinative, and
instead a court must examine all the circumstances to determine whether to
apply the doctrine. Moreover, even if the unity of interest and ownership
element is shown, alter ego will not be applied absent evidence that an
injustice would result from the recognition of separate corporate identities,
and “[d]ifficulty in enforcing a judgment or collecting a debt does not
satisfy this standard.” (Sonora Diamond Corp., supra, 83 Cal. App. 4th at
p. 539.)

Similarly, the principal/agent theory is a fact-driven inquiry that

requires examination of whether the parent exercises a sufficient degree of
control over its subsidiary to establish that the subsidiary can be described
as a means through which the parent acts, or is nothing more than an
incorporated department of the parent. Under those circumstances the
subsidiary will be deemed to be the agent of the parent in the forum state
and jurisdiction will extend to the parent. (Sonora Diamond Corp., supra,
83 Cal. App. 4th at p. 541.) It is the nature of the control exercised by the
parent over the subsidiary that is crucial, because some degree of control
is an ordinary and necessary incident of the parent’s ownership of the
subsidiary. Only when the degree of control exceeds this level and reflects
the parent’s purposeful disregard of the subsidiary’s independent corporate
existence that the principal/agent theory will be invoked. “As a practical
matter, the parent must be shown to have moved beyond the establishment
 of general policy and direction for the subsidiary and in effect taken over
performance of the subsidiary’s day-to-day operations in carrying out that
policy.” (Id. at pp. 541–542, original italics.)

[353/354]

Some courts have questioned whether principles of “alter ego” and “agency,”
as applied in VirtualMagic, supra, can justify the exercise of specific personal
jurisdiction over a nonresident parent company. For example, the court in
HealthMarkets, Inc. v. Superior Court, 171 Cal. App. 4th 1160, 90 Cal. Rptr.
3d 527 (2009), reasoned that reliance on state substantive law of agency and
alter ego to determine the constitutional limits of specific personal jurisdiction
is unnecessary and is an imprecise substitute for the appropriate jurisdictional
questions. The court concluded that the proper due process inquiry is as
follows:

A parent company purposely avails itself of forum benefits through the

activities of its subsidiary, as required to justify the exercise of specific
personal jurisdiction, if and only if the parent deliberately directs the
subsidiary’s activities in, or having a substantial connection with, the
forum state.

HealthMarkets, supra, 171 Cal. App. 4th at 1169. How does this purposeful
availment inquiry differ from the alter ego and agency tests applied in
VirtualMagic? Which approach do you think is the appropriate one? Why?

[b] Representative Services Doctrine

The California courts also recognize the representative services doctrine, a

variation of the general agency theory discussed above. See, e.g., BBA Aviation
PLC v. Superior Court, 190 Cal. App. 4th 421, 429–33, 117 Cal. Rptr. 3d 914
(2010) (representative services doctrine inapplicable where foreign parent
corporation is a holding company and the requisite high level of control over the
subsidiary not shown); In re Automobile Antitrust Cases I & II, 135 Cal. App.
4th 100, 37 Cal. Rptr. 3d 258 (2005) (foreign parent company defendants not
subject to personal jurisdiction under representative services doctrine because
no evidence that defendants controlled the day-to-day activities of their local
subsidiaries); Dorel Industries, Inc. v. Superior Court , 134 Cal. App. 4th
1267, 1269–80, 36 Cal. Rptr. 3d 742 (2005) (personal jurisdiction proper with
respect to defendant foreign grandparent corporation based on agency theory of
representative services doctrine where defendant used local subsidiary to
engage in business the defendant would otherwise have done itself). Unlike the
general agency theory, the narrow representative services doctrine does not
depend on whether the parent company enjoys pervasive and continuous control
over the subsidiary. Instead, personal jurisdiction may be exercised over a
foreign parent corporation when the local agent-subsidiary exists only to further
the business of the parent, and but for the local agent’s existence, the parent
would be performing those functions in the forum itself. BBA Aviation, supra,
190 Cal. App. 4th at 430; Automobile Antitrust Cases, supra, 135 Cal. App. 4th
at 119–121.

[6] Recent Decisions

The California courts have recently faced some interesting personal

jurisdiction questions. Consider the following cases, in light of the due process
requirements discussed above:

[354/355]

[a] Snowney v. Harrah’s Entertainment, Inc., 35 Cal. 4th 1054, 29 Cal. Rptr. 3d 33, 112 P.3d 28 (2005)

Plaintiff, a California resident, filed a class action against a group of Nevada

hotels for failing to provide notice of an energy surcharge imposed on hotel
guests. Although these hotels conducted no business and had no bank accounts or
employees in California, they did advertise heavily in California and obtained a
significant percentage of their business from California residents. The
advertising activities included billboards located in California, print ads in
California newspapers, and ads aired on California radio and television
stations. The hotels also maintained an internet web site and toll-free phone
number where visitors or callers may obtain room quotes and make
reservations.

The Supreme Court concluded that the superior court may properly exercise
personal jurisdiction over the Nevada hotels. Based on the defendants’
purposeful and successful solicitation of business from California residents, the
court found they had purposefully availed themselves of the privilege of doing
business in California (Snowney, 35 Cal. 4th at 1064–65):

By touting the proximity of their hotels to California and providing

driving directions from California to their hotels, defendants’ Web site
 specifically targeted residents of California. Defendants also conceded that
many of their patrons come from California and that some of these patrons
undoubtedly made reservations using their Web site. As such, defendants
have purposefully derived a benefit from their Internet activities in
California, and have established a substantial connection with California
through their Web site. In doing so, defendants have “purposefully availed
[themselves] of the privilege of conducting business in” California “via the
Internet.”

The Supreme Court also found a substantial connection between the

defendants’ forum activities and the plaintiff’s claim sufficient for specific
jurisdiction (Snowney, 35 Cal. 4th at 1068–69):

[W]e find that plaintiff’s claims have a substantial connection with

defendants’ contacts with California. Plaintiff’s causes of action for unfair
competition, breach of contract, unjust enrichment, and false advertising
allege that defendants failed to provide notice of an energy surcharge
during the reservation process and in their advertising. Thus, plaintiff’s
causes of action are premised on alleged omissions during defendants’
consummation of transactions with California residents and in their
California advertisements. Because the harm alleged by plaintiff relates
directly to the content of defendants’ promotional activities in California,
an inherent relationship between plaintiff’s claims and defendants’ contacts
with California exists. Given “the intensity of” defendants’ activities in
California, we therefore have little difficulty in finding a substantial
connection between the two.

[355/356]

[b] Bridgestone Corp. v. Superior Court, 99 Cal. App. 4th 767, 121 Cal. Rptr. 2d 673 (2002)

The plaintiff truck driver sued his employer and Firestone, a Tennessee
company that distributed Bridestone tires in California, seeking damages for
personal injuries sustained when one of the tires failed. The defendant employer
then filed a cross-complaint for equitable indemnity against the Bridgestone
Corporation, the manufacturer of the allegedly defective tire. Cross-defendant
Bridgestone is a Japanese company that manufactures and sells its tires in only
in Japan, for resale by various distributers. Bridgestone moved to quash, and
arguing that merely placing goods in the stream of commerce with knowledge
that they may be purchased in California does not constitute sufficient contacts
to support personal jurisdiction.

T h e Bridgestone court rejected this argument, and concluded that a

manufacturer’s placement of goods in the stream of commerce with the
expectation that they will be purchased from a distributor by consumers in
California constitutes purposeful availment if the income earned by the
manufacturer from the sale of its product in California is substantial. In so
holding, the court declined to follow contrary dicta regarding purposeful
availment in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 108–
113 (1987) (O’Connor, J., plurality opinion with respect to minimum contacts).
The court also found the exercise of personal jurisdiction would be fair and
reasonable because, unlike Asahi, the cross-plaintiffs are California residents
whose common interest in convenient and effective relief is best served in a
California forum, and California has an interest in providing a convenient forum
for its residents to redress injuries caused by out-of-state parties.

[c] Hunt v. Superior Court, 81 Cal. App. 4th 901, 97 Cal. Rptr. 2d 215 (2000)

When an out-of-state defendant’s only contact with California is a single

purchase from a California vendor of goods for delivery out of state, there are
insufficient minimum contacts to establish personal jurisdiction even though the
California vendor supplies financing to the buyer. Although regular purchasing
activities in California may be a basis for jurisdiction over an out-of-state
buyer, the general rule in California is that a non-resident making a one-time
purchase of goods from a seller in the forum state cannot be constitutionally
subject to the exercise of personal jurisdiction by the courts of the seller’s state.

[d] Edmunds v. Superior Court, 24 Cal. App. 4th 221, 29 Cal. Rptr. 2d 281 (1994)

Plaintiffs, limited partners in a now-dissolved California real estate

partnership, sued defendant Edmunds for legal malpractice and breach of
fiduciary duty in a California superior court. Edmunds is a Hawaii attorney not
admitted to practice in California, who had represented the plaintiffs in prior
litigation in Hawaii state court involving a Hawaii real estate transaction.
During this prior litigation, Edmunds participated in trans-Pacific telephone
conferences with plaintiffs’ [356/357]California attorneys and traveled to
California to take a deposition. In the current malpractice litigation, plaintiffs
allege that defendant Edmunds’ tortious acts in the prior litigation had a direct
adverse financial effect on the California partnership. Defendant specially
appeared and moved to quash for lack of personal jurisdiction. Should this
motion be granted? See id.
 [e] Other Recent Decisions

The courts of appeal have decided several other interesting personal

jurisdiction issues during the last few of years. E.g., Luberski, Inc. v. Oleificio
F.LLI Amato S.R.L , 171 Cal. App. 4th 409, 89 Cal. Rptr. 3d 774 (2009)
(California court had specific jurisdiction over Italian seller because the subject
of the dispute was the alleged nondelivery of $406,000 worth of olive oil to the
purchaser in California); Goldman v. Simpson, 160 Cal. App. 4th 255, 72 Cal.
Rptr. 3d 729 (2008) (once established, a court’s personal jurisdiction over a
defendant judgment debtor continues through subsequent proceedings in the
action to enforce or renew the judgment); Shisler v. Sanfer Sports Cars, Inc.,
146 Cal. App. 4th 1254, 53 Cal. Rptr. 3d 335 (2006) (Florida automobile
seller’s maintenance of a website not sufficient to establish personal
jurisdiction because it did not target California residents and there was no
ongoing business relationship between the parties, despite fact that the plaintiff
California buyer purchased an allegedly defective vehicle advertised on the
defendant seller’s web site); Archdiocese of Milwaukee v. Superior Court , 112
Cal. App. 4th 423, 5 Cal. Rptr. 3d 154 (2003) (upholding personal jurisdiction
over Wisconsin archdiocese in an action alleging sexual molestation by a
catholic priest under the “effects test” because the defendant archdiocese knew
the priest was a convicted pedophile and purposely reassigned him to
California).

[C] Raising the Personal Jurisdiction Defense

The Legislature amended Code of Civil Procedure § 418.10, effective

January 1, 2003, for the express purpose of conforming California practice with
respect to challenging personal jurisdiction to the practice under Rule 12 of the
Federal Rules of Civil Procedure, by adding new § 418.10(e), reproduced
below:

CALIFORNIA CODE OF CIVIL PROCEDURE (2012)

Section 418.10. Motion to Quash Service of Summons or to Stay or

Dismiss Action; Procedure

(a) A defendant, on or before the last day of his or her time to plead or within
any further time that the court may for good cause allow, may serve and file a
notice of motion for one or more of the following purposes:
 (1) To quash service of summons on the ground of lack of jurisdiction of
the court over him or her.

(2) To stay or dismiss the action on the ground of inconvenient forum.

(3) To dismiss the action pursuant to the applicable provisions of

Chapter 1.5 (commencing with Section 583.110) of Title 8 [Dismissal
based on lack of diligence in service or prosecution].

[357/358]

(b) The notice shall designate, as the time for making the motion, a date not
more than 30 days after filing of the notice. The notice shall be served in the
same manner, and at the same times, prescribed by subdivision (b) of Section
1005. The service and filing of the notice shall extend the defendant’s time to
plead until 15 days after service upon him or her of a written notice of entry of
an order denying his or her motion, except that for good cause shown the court
may extend the defendant’s time to plead for an additional period not exceeding
20 days.

(c) If the motion is denied by the trial court, the defendant, within 10 days
after service upon him or her of a written notice of an entry of an order of the
court denying his or her motion, or within any further time not exceeding 20 days
that the trial court may for good cause allow, and before pleading, may petition
an appropriate reviewing court for a writ of mandate to require the trial court to
enter its order quashing the service of summons or staying or dismissing the
action. The defendant shall file or enter his or her responsive pleading in the
trial court within the time prescribed by subdivision (b) unless, on or before the
last day of the defendant’s time to plead, he or she serves upon the adverse party
and files with the trial court a notice that he or she has petitioned for a writ of
mandate. The service and filing of the notice shall extend the defendant’s time to
plead until 10 days after service upon him or her of a written notice of the final
judgment in the mandate proceeding. The time to plead may for good cause
shown be extended by the trial court for an additional period not exceeding 20
days.

(d) No default may be entered against the defendant before expiration of his
or her time to plead, and no motion under this section, or under Section 473 or
473.5 when joined with a motion under this section, or application to the court
or stipulation of the parties for an extension of the time to plead, shall be
deemed a general appearance by the defendant.

(e) A defendant or cross-defendant may make a motion under this section and
simultaneously answer, demur, or move to strike the complaint or cross-
complaint.

(1) Notwithstanding Section 1014, no act by a party who makes a motion

under this section, including filing an answer, demurrer, or motion to strike
constitutes an appearance, unless the court denies the motion made under
this section. If the court denies the motion made under this section, the
defendant or cross-defendant is not deemed to have generally appeared
until entry of the order denying the motion.

(2) If the motion made under this section is denied and the defendant or
cross-defendant petitions for a writ of mandate pursuant to subdivision (c),
the defendant or cross-defendant is not deemed to have generally appeared
until the proceedings on the writ petition have finally concluded.

(3) Failure to make a motion under this section at the time of filing a
demurrer or motion to strike constitutes a waiver of the issues of lack of
personal jurisdiction, inadequacy of process, inadequacy of service of
process, inconvenient forum, and delay in prosecution.

[358/359]

Section 418.11. Appearance for Ex Parte Relief or Provisional

Remedy; Not General Appearance Nor Waiver of Motion Rights

An appearance at a hearing at which ex parte relief is sought, or an

appearance at a hearing for which an ex parte application for a provisional
remedy is made, is not a general appearance and does not constitute a waiver of
the right to make a motion under Section 418.10.

Section 1014. Appearance Defined, Right to Notices Before and After

Appearance
 A defendant appears in an action when the defendant answers, demurs, files a
notice of motion to strike, files a notice of motion to transfer pursuant to Section
396b, moves for reclassification pursuant to section 403.040, gives the plaintiff
written notice of his appearance, or when an attorney gives notice of appearance
for him. After appearance, a defendant or the defendant’s attorney is entitled to
notice of all subsequent proceedings of which notice is required to be given.
Where a defendant has not appeared, service of notice or papers need not be
made upon the defendant.

[1] Waivable Due Process Right

The due process personal jurisdiction requirement recognizes and protects an

individual liberty interest. Insurance Corp. of Ireland, Ltd. v. Compagnie des
Bauxites de Guinee, 456 U.S. 694, 702, 102 S. Ct. 2099, 72 L. Ed. 2d 492
(1982). Because the requirement of personal jurisdiction represents an
individual right, it can, like other such rights, be waived. Id. at 702. Such
waiver may be express or implied, and traditionally occurs when a defendant
does not raise this due process right in the proper procedural manner. Id. at
702–704.

[a] General Appearance

A defendant must raise an objection to personal jurisdiction in the manner

prescribed by CCP § 418.10. Pursuant to the 2003 amendment to § 418.10, the
defendant need not raise the objection by a special appearance, but may
simultaneously answer, demur, or move to strike, so long as the objection is
raised in defendant’s first appearance. CCP § 418.10(e) (effective Jan. 1,
2003); see Air Machine Com SRL v. Superior Court, 186 Cal. App. 4th 414,
112 Cal. Rptr. 3d 482 (2010) (construing § 418.10 and finding no waiver of
personal jurisdiction objection where defendants filed motion to quash before
they served plaintiff with an offer of judgment). If the defendant makes a general
appearance, as defined in CCP § 1014, before filing a motion to quash objecting
to personal jurisdiction, the defendant waives his right to contest the personal
jurisdiction of the court. See CCP § 418.10(e)(3).

A defendant’s appearance at certain ex parte proceedings, such as an

application for a temporary restraining order or other provisional relief, does
not constitute a general appearance. CCP § 418.11. However, any additional
litigation conduct, such as discovery in connection with an order to show cause
for a preliminary injunction, may be outside the protection of § 418.11. Factor
Health Mgmt. v. Superior Court, 132 Cal. App. 4th 246, 33 Cal. Rptr. 3d 599
(2005).

[359/360]

For a very thorough review of the California cases determining what activity
constitutes a general appearance within the meaning of CCP § 410.50(a) even
though the defendant has filed a timely motion to quash for lack of personal
jurisdiction, see Dial 800 v. Fesbinder, 118 Cal. App. 4th 32, 50–55, 12 Cal.
Rptr. 3d 711 (2004) (if a defendant seeks any affirmative relief on the merits,
such as a request for an award of contractual attorney fees, the application may
be deemed a general appearance). Code of Civil Procedure § 418.11 contains
exceptions to the general appearance and waiver rules when a defendant
appears in certain ex parte proceedings. What policy considerations likely
influenced the Legislature to adopt these exceptions?

When a defendant moves to quash service of process on jurisdictional

grounds, the plaintiff has the initial burden of demonstrating facts justifying the
exercise of jurisdiction. See, e.g., Vons Companies, Inc. v. Seabest Foods, Inc .,
14 Cal. 4th 434, 449, 58 Cal. Rptr. 2d 899, 926 P.2d 1085 (1996) ; Floveyor
Intl., Ltd. v. Superior Court, 59 Cal. App. 4th 789, 69 Cal. Rptr. 2d 457 (1997)
(upholding a motion to quash because the plaintiff failed to produce any
evidence that the defendant had any contacts with California). Once the facts
showing “minimum contacts” with the forum state have been established,
however, the burden to demonstrate that the exercise of jurisdiction would be
“unreasonable” shifts to the defendant. Vons, supra, 14 Cal. 4th at 449.

[b] Federal Procedure Compared

Under the Federal Rules of Civil Procedure, a defendant must raise an

objection to personal jurisdiction in his first appearance, although he has the
option of pleading it as a defense in the answer or raising it by a motion to
dismiss. Rule 12(b)(2), F.R.C.P. The objection is not waived by joining it with
other objections or defenses in a responsive pleading or motion. Rule 12(b)(2),
(g) & (h), F.R.C.P. The defense is only waived if omitted from the first
appearance, whether an answer or motions.

To what extent does the California procedure for challenging personal

jurisdiction under amended CCP § 418.10 conform to federal practice? The
court considered this question in Roy v. Superior Court, 127 Cal. App. 4th 337,
25 Cal. Rptr. 3d 488 (2005), and concluded critical differences still exist.
Under federal Rule 12(b), a defendant must raise an objection to personal
jurisdiction in his first appearance, although he has the option of pleading it as a
defense in the answer or raising it by a motion to dismiss. A defendant may
raise the objection along with any other defense without being deemed to have
waived the jurisdictional objection. Rule 12(b)(2), (g) & (h), F.R.C.P. If
properly pleaded as a defense, the objection is preserved and the defendant may
challenge personal jurisdiction through the time of trial. Rule 12(b)(2), (g) &
(h), F.R.C.P. ; see Roy, supra, 127 Cal. App. 4th at 343–45 (discussing the
federal practice under federal Rule 12).

However, unlike federal Rule 12(b), CCP § 418.10 does not give a defendant
the option to plead lack of jurisdiction as a defense and reserve determination of
that issue until as late as trial. Roy, supra, 127 Cal. App. 4th at 345. Section
418.10 “continues to prescribe the motion to quash as the means of challenging
personal jurisdiction.” Roy, 127 Cal. App. 4th at 345. The defendant may move
to quash and [360/361]simultaneously file an answer containing defenses to the
action, but “the latter is not a substitute for the former.” Id. The Roy court held
that the defendants in that case waived their objection by filing an answer that
raised the personal jurisdiction defense in their first appearance and then
participating in the litigation, but not filing a timely motion to quash. The court
also expressed its preference for the California practice over the federal
practice, noting CCP § 418.10 requires that the jurisdictional issue be raised
and finally resolved at an early stage. Id. at 343–44. Do you agree that the
California practice is preferable?

[c] Forum Selection Clauses

Can a defendant waive objections to personal jurisdiction in a particular

forum in advance through a contractual consent-to-jurisdiction or forum
selection clause? If an action is commenced in the contractually designated
forum, can the court assert personal jurisdiction based on the clause even though
the defendant lacks minimum contacts with the forum state? See Walter W.
Heiser, Forum Selection Clauses in State Court: Limitations on Enforcement
After Stewart and Carnival Cruise, 45 Fla. L. Rev. 361 (1993).

The California courts generally will enforce a reasonable forum selection

clause. E.g., Smith, Valentino & Smith, Inc. v. Superior Court , 17 Cal. 3d 491,
131 Cal. Rptr. 374, 551 P.2d 1206 (1976) ; Cal-State Bus. Products &
Services, Inc. v. Ricoh, 12 Cal. App. 4th 1666, 16 Cal. Rptr. 2d 417 (1993) .
However, the Legislature has placed some limits on forum clause enforcement
in certain areas. E.g., CCP § 410.42 (construction subcontracts); Commercial
Code § 10106(b) (consumer leases).

What constitutes a “reasonable” forum selection clause? Is such a clause

enforceable when it is a non-negotiated provision in a standard form consumer
contract? When it requires a consumer to litigate a cause of action against a
company in a far away state? See Cal-State Bus. Products and Service, Inc., v.
Ricoh, 12 Cal. App. 4th 1666, 16 Cal. Rptr. 2d 417 (1993) , reproduced and
discussed infra in § 6.05[B]; see also Carnival Cruise Lines, Inc. v. Shute, 499
U.S. 585, 111 S. Ct. 1522, 113 L. Ed. 2d 622 (1991).

[2] Appellate Review

The order of a federal district court denying a motion to dismiss for lack of
personal jurisdiction is not an appealable “final decision” within the meaning of
28 U.S.C. § 1291, see Catlin v. United States, 324 U.S. 229, 236, 65 S. Ct. 631,
89 L. Ed. 911 (1945), although in rare cases the district court may certify the
order for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). E.g.,
Klinghoffer v. S.N.C. Achille Lauro, 921 F.2d 21 (2d Cir. 1990) . Generally a
federal defendant must wait until the district court enters a final judgment on the
merits to seek appellate review of the denial of a properly raised personal
jurisdiction defense. See, e.g., Burger King Corp. v. Rudzewicz , 471 U.S. 462,
85 L. Ed. 2d 528, 105 S. Ct. 2174 (1985).

[361/362]

[a] Writ of Mandate

In contrast to the federal rules, CCP § 418.10(c) authorizes interlocutory

appellate review of a trial court order denying a motion to quash, by immediate
writ of mandate. Failure to timely seek such interlocutory review precludes
appeal later by defendant after a decision on the merits. See Danzig v. Jack
Grynberg & Assoc., 161 Cal. App. 3d 1128, 1141, 208 Cal. Rptr. 336 (1984) ,
cert. denied, 474 U.S. 819 (1985). An order granting a motion to quash is an
appealable order. CCP § 904.1(a)(3).

[b] Federal Review Compared

How do the California rules with respect to appellate review differ from the
federal rules? Which rules better promote judicial economy? Fairness? Why?
See Roy v. Superior Court, 127 Cal. App. 4th 337, 343–44, 25 Cal. Rptr. 3d
488 (2005) (expressing preference for the California practice over the federal
practice). What would be the effect in either court if a nonresident defendant
specially appeared to contest personal jurisdiction and lost on this issue, but
then defaulted and never further contested the action? See Baldwin v. Iowa State
Traveling Men’s Assn. , 283 U.S. 522, 51 S. Ct. 517, 75 L. Ed. 1244 (1931).
Would such a defendant be in any better position to later contest personal
jurisdiction by entering no appearance and permitting a default judgment? See
Baldwin, supra, 283 U.S. at 525–26; Marriage of Merideth, 129 Cal. App. 3d
356, 180 Cal. Rptr. 909 (1982).

§ 6.03 VENUE
[A] Statutory Venue

BROWN v. SUPERIOR COURT

SUPREME COURT OF CALIFORNIA
37 Cal. 3d 477, 208 Cal. Rptr. 724, 691 P.2d 272 (1984)

Bird, Chief Justice.

Do the special venue provisions of the California Fair Employment and

Housing Act (FEHA) (Gov. Code, § 12965, subd. (b)) control over the general
venue provisions of Code of Civil Procedure section 395, subdivision (a)
where both FEHA and non-FEHA causes of action are alleged?

I.

Petitioners, Andrew Brown, Charles Jones and Sam George, were employed
by real parties in interest, C.C. Myers, Inc., other corporate entities and several
individuals (hereafter defendants), on a highway construction project in
Alameda County. Defendants allegedly discriminated against and ultimately
discharged Brown and Jones because they are black. George, who is white and
was a foreman on the project, was discharged because he refused to participate
in defendants’ alleged discriminatory practices.

[362/363]
 On June 22, 1981, petitioners filed a complaint against defendants in the
Alameda County Superior Court, alleging (1) intentional infliction of emotional
distress, (2) wrongful discharge, and (3) a violation of petitioners’ federal civil
rights (42 U.S.C. § 1981). Each of the three claims was based on the same
factual allegations regarding liability and damages. Petitioners also filed
complaints alleging employment discrimination with the California Department
of Fair Employment and Housing (Department).

Sometime after petitioners filed their complaint in the superior court, the
Department notified them of their right to bring a civil action under the FEHA.
(Gov. Code, § 12900 et seq.)1

In June 1982, petitioners amended their complaint to add an FEHA cause of

action and to delete the federal civil rights claim. The FEHA cause of action
incorporated the same factual allegations regarding liability and damages as the
emotional distress and wrongful discharge claims.2

Prior to filing an answer, defendants moved for a change of venue to

Sacramento County on the grounds that three individual defendants resided
there, the corporate defendants’ principal places of business were located there,
and none of the defendants resided in Alameda County. Respondent court
granted the motion and ordered the case transferred to Sacramento County. No
reasons were stated in support of this ruling.

Petitioners seek a writ of mandate to compel respondent court to vacate its

order changing venue to Sacramento County. (Code Civ. Proc., § 400.)

II.

Venue is determined based on the complaint on file at the time the motion to
change venue is made. In this case, the complaint alleged three causes of action:
(1) intentional infliction of emotional distress, (2) wrongful discharge, and (3)
FEHA violations.

It is undisputed that if petitioners had alleged only FEHA violations, the

FEHA venue statute would govern. In that instance, venue would be in Alameda
County — the county in which the discriminatory practices were allegedly
committed. [363/364](§ 12965, subd. (b).3) However, here, two non-FEHA causes
of action were also alleged. These claims would normally be governed by Code
of Civil Procedure section 395, subdivision (a),4 which controls venue in
“transitory” actions.5

This court must determine whether the special provisions of the FEHA or the
general provisions of section 395 control if both FEHA and non-FEHA claims
arising from the same facts are alleged in the same complaint.6

It is well established that a defendant is entitled to have an action tried in the

county of his or her residence unless the action falls within some exception to
the general venue rule. Section 395 codifies this rule and provides that the trial
of the action shall be in the county of the defendant’s residence, “[except] as
otherwise provided by law.”

Three cases have construed the “[except] as otherwise provided by law”

language of section 395. In Delgado v. Superior Court (1977) 74 Cal. App. 3d
560 [141 Cal. Rptr. 528], the plaintiff filed an action in Sacramento County for
property damage, personal injuries and wrongful death. The named defendants
were Yolo County, a Sacramento automobile dealership and an automobile
manufacturer. Yolo County moved to change venue to that county under Code of
Civil Procedure section 394. That section provides that an action against a
county for an injury occurring there shall be tried in that county. The superior
court granted the motion.

[364/365]

The Court of Appeal affirmed the superior court’s ruling on the ground that
Code of Civil Procedure section 394 governed venue. The court reasoned that
the phrase “[except] as otherwise provided by law” is a “true subordinating
declaration” which permits application of section 395 only when no other venue
provision applies. (Delgado, supra, 74 Cal. App. 3d at p. 564.) * * *

Finally, in Tharp v. Superior Court (1982) 32 Cal. 3d 496 [186 Cal. Rptr.
335, 651 P.2d 1141] , an automobile dealership brought an action against the
secretary of the New Motor Vehicles Board to dismiss certain licensing
proceedings. The trial court granted the secretary’s motion for change of venue
to Sacramento County from Tulare County where the cause of action had arisen.
 In directing the trial court to vacate its order, this court held that venue was
controlled by Code of Civil Procedure section 393. Under that statute, trial had
to be held in the county where the cause of action arose against the public
officers for acts undertaken in their official capacity. The court concluded that
that statute constituted an exception to section 395.

In each of these cases, the more specific venue provisions governed. None of
these cases involved several causes of action subject to conflicting venue
provisions. In each case, the prevailing venue provisions were found to be bona
fide exceptions to section 395.

Here, neither party disputes that the FEHA venue statute establishes an
exception to section 395. The question is whether that exception governs all the
causes of action and prevails over section 395, just as the specific venue
provisions did in Delgado, … and Tharp. Thus, the issue is whether the FEHA
venue statute applies to non-FEHA claims which arise from the same facts as an
FEHA claim alleged in the same complaint.

In construing the FEHA venue statute, this court is guided by well-settled

rules. “The fundamental rule of statutory construction is that the court should
ascertain the intent of the Legislature so as to effectuate the purpose of the law.
[Citations.] Moreover, ‘every statute should be construed with reference to the
whole system of law of which it is a part so that all may be harmonized and
have effect.’ [Citation.]” (Select Base Materials v. Board of Equal. (1959) 51
Cal. 2d 640, 645 [335 P.2d 672] .) A construction rendering statutory language
surplusage “‘is to be avoided.’” (Moyer v. Workmen’s Comp. Appeals Bd.
(1973) 10 Cal. 3d 222, 230 [110 Cal. Rptr. 144, 514 P.2d 1224]; …)

To determine the Legislature’s intent, the court looks first to the words of the
statute. However, the legislative purpose will not be “sacrificed to a literal
construction of any part of the act.” (Select Base Materials v. Board of Equal.,
supra, 51 Cal. 2d at p. 645.) The language of a statute “‘should not be given a
literal meaning if doing so would result in absurd consequences which the
Legislature did not intend.’” [Citations.] (Younger v. Superior Court (1978) 21
Cal. 3d 102, 113 [145 Cal. Rptr. 674, 577 P.2d 101].

With these principles in mind, this court turns to the language of the FEHA
venue statute. Section 12965, subdivision (b) provides in relevant part that “the
person claiming to be aggrieved may bring a civil action under this part [§
12900 et seq.] against the person, employer, labor organization or employment
agency [365/366]named in the verified complaint …. Such an action may be
brought in any county in the state in which the unlawful practice is alleged to
have been committed ….” (Italics added.)

The phrase “such an action” obviously refers to “a civil action under this
part.” This latter phrase is reasonably susceptible of two constructions. As
defendants assert, the phrase could mean that only FEHA claims may be pursued
in the county where the discriminatory practice allegedly occurred.
Alternatively, as petitioners contend, the phrase could signify that any civil
action which contains an FEHA claim may be brought in that county. Both
constructions are reasonable.

It is not clear from the language of section 12965 which interpretation was
intended. Therefore, this court must look at the purpose of the law to ascertain
the Legislature’s intent.

The FEHA establishes a comprehensive scheme for combating employment

discrimination. As a matter of public policy, the FEHA recognizes the need to
protect and safeguard the right and opportunity of all persons to seek and hold
employment free from discrimination. (§ 12920.) This court has declared that
policy to be “fundamental.”

Moreover, the opportunity to be free from discriminatory practices in

seeking, obtaining, and holding employment is a “civil right.” (§ 12921.)
Employment discrimination “foments domestic strife and unrest, deprives the
state of the fullest utilization of its capacities for development and advance, and
substantially and adversely affects the interest of employees, employers, and the
public in general.” (§ 12920.) The express purpose of the FEHA is “to provide
effective remedies which will eliminate such discriminatory practices.” (Ibid.)
In addition, the Legislature has directed that the FEHA is to be construed
“liberally” so as to accomplish its purposes. (§ 12993.)

Section 12965, subdivision (b) affords a wide choice of venue to persons

who bring actions under the FEHA. This choice maximizes the ability of
persons aggrieved by employment discrimination to seek relief from the courts,
and it facilitates the enforcement of the FEHA.
 In addition, venue is an important consideration for a plaintiff in an
employment discrimination suit. Where the case is to be tried impacts on the
cost of the litigation. Victims of employment discrimination are frequently
unemployed — many times as the result of the alleged discrimination. They
often lack financial resources. For such individuals, the costs of litigation pose
a formidable barrier to the filing and prosecution of an FEHA action. The
Legislature recognized this barrier and sought to alleviate it by providing these
persons with a wide choice of venue. They should not be deprived of that
choice simply because they choose to plead alternative theories of recovery.
Nor should they be subject to the added burden of trying an action in a county
which may be hundreds of miles away from their own choice of venue.

Venue considerations also have a substantial impact on an attorney’s decision

to undertake representation. An attorney is more likely to accept representation
in an FEHA case if venue is available in a location that facilitates prosecution
of the [366/367]action and minimizes travel and other costs, including the costs of
securing important witnesses for trial.

Moreover, employment discrimination cases, by their very nature, involve

several causes of action arising from the same set of facts. A responsible
attorney handling an employment discrimination case must plead a variety of
statutory, tort and contract causes of action in order to fully protect the interests
of his or her client. In these cases, an overly technical reading of section 12965
would frustrate the intent of the statute and lead to absurd results.

If the statute were construed so as to apply to cases involving only FEHA

causes of action, aggrieved persons with FEHA claims would be faced with a
Hobson’s choice. If they wished to avail themselves of the FEHA venue rules,
they would be forced to abandon their non-FEHA claims or to try those claims
in a separate action in a different county than that in which the FEHA claims
were tried. Such a result would fly in the face of judicial economy. On the other
hand, if FEHA claimants wished to have the entire action tried in one county,
they would be forced to accede to the defendant’s chosen place of venue. This
scenario would render the FEHA’s special venue rules mere surplusage. Surely,
the Legislature never intended either result.

The wide choice of venue afforded plaintiffs by the FEHA venue statute
effectuates enforcement of that law by permitting venue in a county which
plaintiffs deem the most appropriate and convenient. The Legislature clearly
intended the FEHA venue provisions to apply not only to FEHA actions, but
also to related claims pled under alternative theories but based on the same set
of facts. To hold otherwise would dilute the efficacy of the injured employee’s
remedy by gutting the FEHA’s special venue provisions. The important civil
rights which the act codifies would in turn be rendered meaningless.

This court therefore holds that the special provisions of the FEHA venue
statute control in cases involving FEHA claims joined with non-FEHA claims
arising from the same facts.9 Thus, the FEHA venue statute governs the entire
action and section 395 does not apply. In so construing section 12965, this court
adds that statute to the list of exceptions found in Delgado … and Tharp.

III.

This holding does not dilute what have been called “mixed action” rules.
(See 6 Grossman & Van Alstyne, Cal. Practice (2d ed. 1981) Venue, § 365, p.
389 et seq. [hereafter Grossman & Van Alstyne].) In a mixed action, a plaintiff
alleges two or more causes of action each of which is governed by a different
venue statute. Or, two or more defendants are named who are subject to
different venue standards. “The [367/368]identifying characteristic of mixed
actions is that two or more inconsistent venue provisions … appear to be
concurrently applicable in the same case.” (Ibid.)

In cases with mixed causes of action, a motion for change of venue must be
granted on the entire complaint if the defendant is entitled to a change of venue
on any one cause of action. (Ah Fong v. Stearnes (1889) 79 Cal. 30, 33 [21 P.
381]; Morrison v. Superior Court (1980) 100 Cal. App. 3d 852, 855–856 [161
Cal. Rptr. 169]; …10)

It is true that this is a mixed action. The general venue provisions of section
395 normally govern causes of action for the intentional infliction of emotional
distress and wrongful discharge, while the special venue provisions of section
12965 govern FEHA causes of action. At first blush, it would appear that two
different venue statutes are applicable.

However, the important public policies sought to be effectuated by the FEHA

compel the conclusion that the FEHA venue provision controls here. A contrary
conclusion would render the special venue provisions of the FEHA mere
surplusage and frustrate the intent of the Legislature. Although the mixed action
rule recognizes a preference for trial in the county of a defendant’s residence,
that preference is outweighed by the strong countervailing policy of the FEHA
which favors a plaintiff’s choice of venue.

IV.

Petitioners alleged an FEHA cause of action as well as causes of action for

the intentional infliction of emotional distress and wrongful discharge. All three
claims rest upon the same factual allegations, and all three are based on the
same allegedly discriminatory practices. Those discriminatory practices are
alleged to have been committed in Alameda County, and the action was filed in
that county pursuant to the FEHA venue statute. Since that statute controls,
Alameda is the proper county for the trial of this action.

Accordingly, let a peremptory writ of mandate issue directing respondent

court to vacate its order changing venue to Sacramento County.11

Footnotes:

1 All statutory references are to the Government Code unless otherwise noted.

2 The intentional infliction of emotional distress claim asserted that petitioners were entitled to
compensatory damages for emotional distress, loss of earnings and punitive damages. Petitioners alleged,
inter alia, that each of the defendants engaged in and/or ratified “the use of racial slurs in reference to Black
people, [the] telling of jokes which degraded Black people, the discriminatory assignment of work to Black
employees, the discriminatory hiring, firing and laying off of Blacks, and the provision of discriminatory
terms and conditions of employment to Black persons.”

The wrongful discharge cause of action incorporated all of the liability and damages allegations of the
emotional distress cause of action, and additionally alleged that defendants had wrongfully discharged each
petitioner.

The FEHA cause of action similarly incorporated all of the liability and damages allegations of the
emotional distress cause of action and additionally alleged that (1) defendants’ conduct constituted racial
discrimination in employment in violation of the FEHA, (2) petitioners had satisfied the procedural conditions
for the filing of an FEHA action, and (3) petitioners should be reinstated as employees.
 3 Section 12965, subdivision (b) provides in relevant part: “Such an action may be brought in any
county in the state in which the unlawful practice is alleged to have been committed, in the county in
which the records relevant to such practice are maintained and administered, or in the county in which the
aggrieved person would have worked or would have had access to the public accommodation but for the
alleged unlawful practice, but if the defendant is not found within any such county, such an action may be
brought within the county of defendant’s residence or principal office.” (Italics added.)

4 Section 395, subdivision (a) provides in relevant part: “Except as otherwise provided by law … the
county in which the defendants or some of them reside at the commencement of the action is the proper
county for the trial of the action. If the action is for injury to person or personal property … either the
county where the injury occurs … or the county in which the defendants, or some of them reside at the
commencement of the action, shall be a proper county for the trial of the action.”

All further references to section 395 are to section 395, subdivision (a) of the Code of Civil Procedure.

5 For venue purposes, actions are classified as local or transitory. To determine whether an action is
local or transitory, the court looks to the “main relief” sought. Where the main relief sought is personal, the
action is transitory. Where the main relief relates to rights in real property, the action is local. ( See 2 Witkin,
Cal. Procedure, supra, Actions, § 424, at pp. 1255–1256.)

Since the main relief sought in intentional infliction of emotional distress and wrongful discharge claims is
personal in nature, those actions are classified as transitory.

6 As to the corporate defendants, there is yet another relevant venue statute, Code of Civil Procedure
section 395.5. That section provides in relevant part: “A corporation or association may be sued in the
county where the … liability arises ….”

Petitioners argue that as to the corporate defendants, venue is proper in Alameda County because the
alleged discriminatory practices occurred there.

However, it is well recognized that when a plaintiff brings an action against several defendants, both
individual and corporate, in a county in which none of the defendants reside, an individual defendant has the
right to change venue to the county of his or her residence. This is true even though the action was initially
brought in a county where the corporate defendants may be sued under Code of Civil Procedure section
395.5. (Carruth v. Superior Court (1978) 80 Cal. App. 3d 215, 220–221 [145 Cal. Rptr. 344, 12 A.L.R.4th
1269]; Mosby v. Superior Court (1974) 43 Cal. App. 3d 219, 226 [117 Cal. Rptr. 588] ; …) Therefore,
Code of Civil Procedure section 395.5 does not determine venue in this case.

9 In spite of this clear holding, nothing in this opinion suggests that a plaintiff may defeat a defendant’s
right to trial in the defendant’s county of residence by simply appending an FEHA count to a complaint. In
order for the FEHA venue provision to control, the non-FEHA claims must rest on similar factual allegations
as the FEHA count.
 Here, all the claims rest on similar facts. Also, it is clear that the FEHA claim was not added as an
afterthought, but was alleged after petitioners received the requisite right-to-sue letters from the
Department.

10 The operation of the mixed action rule has also been summarized as follows: “[If] in [a mixed] action
the non-residence county in which the action was commenced is improper venue with respect to one of the
counts, even though good as to the rest, the entire action will be transferred on motion to the county of a
defendant’s residence, because the entire action, being a mixed action, is not within any statutory exception
authorizing venue elsewhere than in a residence county.” (Grossman & Van Alstyne, supra, at pp. 418–
419, fn. omitted.)

11 Since petitioners’ choice of venue is proper under the FEHA venue statute, this court need not
address their alternative contention that injuries caused by wrongful discharge and intentional infliction of
emotional distress are “injuries to person” which render venue appropriate in the “county where the injury
occurs ….” (§ 395.)

[1] General Venue Rules and Exceptions

As Brown v. Superior Court illustrates, various statutory provisions govern

the determination of proper venue in California. These provisions often overlap
in a conflicting manner, but may be reduced to one fundamental premise, as
stated in [368/369]CCP § 395: A defendant is entitled to have an action tried in the
county of his residence unless the action falls within some statutory exception to
this general venue rule. When there are multiple defendants, venue is generally
proper in any county where at least one of them resides. CCP § 395. If none of
the defendants resides in California, venue is generally proper in any county
which plaintiff may designate in her complaint. CCP § 395; see, e.g., Hamilton
v. Superior Court, 37 Cal. App. 3d 418, 112 Cal. Rptr. 450 (1974) . As Brown
illustrates, there are a number of statutory exceptions to these general rules of
CCP § 395; these exceptions in turn may be subject to more specific exceptions.
Some of the most common exceptions are discussed below. For a thorough
discussion of the various venue provisions for civil actions generally, see CEB,
California Civil Procedure Before Trial, Venue §§ 8.1-8.78 (4th ed. 2011); 3
Witkin, California Procedure, Actions §§ 779-904 (5th ed. 2008); Schwing,
California Affirmative Defenses, Venue §§ 5:1-5:46 (2011).

[a] Actions Involving Real Property

The county in which real property, or some part of the property, is located is
the proper venue for most actions for recovery of the property or some interest
in the property. CCP § 392. The courts traditionally refer to such actions
involving real property as “local actions”; and to all other actions as
“transitory” actions. E.g., Peiser v. Mettler, 50 Cal. 2d 594, 328 P.2d 953
(1958); Massae v. Superior Court, 118 Cal. App. 3d 527, 173 Cal. Rptr. 527
(1981).

[b] Actions Against Public Officials and Entities

The county in which the cause of action or some part of it arose is generally
the proper venue for actions against a public officer for an official act. CCP §
393(1)(b). See, e.g. , California State Parks Found. v. Superior Court, 150
Cal. App. 4th 826, 58 Cal. Rptr. 3d 715 (2007) (examining the language of CCP
§ 393(b) and the public policy behind it, as well as the numerous cases
interpreting the statute, and concluding that § 393 applies to cases that seek to
vindicate public rights and is not limited to actions involving personal rights or
property). The courts liberally construe “public officer” to include many
agencies, departments, institutions, and boards. Regents of Univ. of Cal. v.
Superior Court, 3 Cal. 3d 529, 91 Cal. Rptr. 57, 476 P.2d 457 (1970).

However, notwithstanding any other statute, where the state is named as a

defendant in an action for death or injury to person or personal property, the
proper venue is the county where the injury occurred. Gov. Code § 955.2. This
provision is mandatory and, in multi-defendant actions, overrides otherwise
applicable venue provisions. State of California. v. Superior Court, 193 Cal.
App. 3d 328, 238 Cal. Rptr. 315 (1987). Gov. Code § 955.2 expressly
provides, however, that the court upon motion may change the place of trial
under the same circumstances as in an action between private parties.

The proper venue for an action against the state for taking or damaging
private property for public use is the county in which the property is situated.
Gov. Code § 955; see Tharp v. Superior Court, 32 Cal. 3d 496, 186 Cal. Rptr.
335, 651 P.2d 1141 (1982) (narrowly construing exceptions stated in § 955
which authorized the [369/370]Attorney General to change venue to Sacramento
County).

Proper venue in actions by or against a county is governed by CCP § 394, a

complicated statute which includes a removal provision, see, e.g., Delgado v.
Superior Court, 74 Cal. App. 3d 560, 141 Cal. Rptr. 528 (1977) (Section 394
controls over the general provisions of § 395); Colusa Air Pollution Control
Dist. v. Superior Court, 226 Cal. App. 3d 880, 889, 277 Cal. Rptr. 110 (1991)
(comparing § 395 and the removal provisions of § 394); Tutor-Saliba-Perini
Joint Venture v. Superior Court , 233 Cal. App. 3d 736, 285 Cal. Rptr. 1
(1991) (discussing when change of venue required under § 394 with respect to
action against local agency based on negligent injury to person or property); and
in actions by local public entities against the state by Gov. Code § 955.3.

[c] Personal Injury Actions

In an action for “injury to person or personal property,” or for wrongful

death, the proper venue is either the county where the injury occurred or the
county in which the defendants or some of them reside. CCP § 395. The courts
have defined “injury to person” narrowly to include physical or bodily injury,
but not injuries to character or reputation or mental or emotional distress. E.g.,
Cacciaguidi v. Superior Court, 226 Cal. App. 3d 181, 276 Cal. Rptr. 465
(1990) (abuse of process action not one for “injury to person”); Carruth v.
Superior Court, 80 Cal. App. 3d 215, 145 Cal. Rptr. 344 (1978) (damage
action for malicious prosecution); Cubic Corp. v. Superior Court, 186 Cal.
App. 3d 622, 231 Cal. Rptr. 18 (1986) (action for intentional infliction of
emotional distress). Why did the courts narrowly construe “injury to person” in
this manner? What venue provision governs in such actions if not this one?

[d] Dissolution of Marriage

In a dissolution of marriage proceeding, the proper venue is the county where

either the petitioner or respondent has been resident for three months next
preceding the commencement of proceedings. CCP § 395(a); Family Code §
2320.

[e] Actions Against Corporations and Associations

In an action against a corporation or association, the plaintiff has several

venue options: The county where the contract was made or is to be performed,
or where the obligation or liability arises, or where breach occurs, or of the
corporation’s principal place of business. CCP § 395.5. Although § 395.5
appears to only address contract actions, the courts construe it to govern tort
actions as well. See Mission Imports, Inc. v. Superior Court, 31 Cal. 3d 921,
928, 184 Cal. Rptr. 296, 647 P.2d 1075 (1982); Black Diamond Asphalt, Inc. v.
Superior Court, 109 Cal. App. 4th 166, 134 Cal. Rptr. 2d 510 (2003) (holding
§ 394 also applicable to statutory liability cases). The purpose of § 395.5 is to
permit a wider choice of venue in suits against a corporation than is permitted in
suits against an individual defendant. Mission Imports, supra, 31 Cal. 3d at
928. Why this purpose?
 [370/371]

[f] Contract Actions

In a contract action, the plaintiff has many venue options: The county where
the obligation is to be performed or in which the contract was entered into,
where any defendant resides; or, in certain consumer transactions for the sale of
goods or services, where the buyer or lessee resided at the time of the contract
or at the time of commencement of the action. CCP § 395(a) and (b).

[g] Other Venue Exceptions

Other statutory venue exceptions include those stated in § 395.1 (actions

against executors) and § 393(1)(a) (actions for recovery of statutory penalty or
forfeiture); as well as several specific venue provisions stated in special
statutes such as Government Code § 12965(b) (discrimination actions under
FEHA), Civil Code § 1780(c) (actions under Consumers Legal Remedies Act),
Probate Code §§ 7051, 7052 (proceedings concerning administration of
decedent’s estate), Civil Code § 1812.10 (venue under Unruh Retail Installment
Sales Act), Civil Code § 2984.4 (action under Rees-Levering Motor Vehicle
Sales and Finance Act), CCP § 1250.020 (eminent domain proceedings), and
Vehicle Code § 13559 (venue in action to review DMV order suspending or
revoking driver’s license).

[h] Residence Defined

Pursuant to Government Code § 244(a), the residence of an individual is

defined as the one place where a person remains and to which he or she returns
in seasons of repose. The residence of a corporation is its principal place of
business. See CCP § 395.2. What factors determine a corporation’s principal
place of business? See Rosas v. Superior Court, 25 Cal. App. 4th 671, 30 Cal.
Rptr. 2d 609 (1994) (for purposes of venue, corporation deemed bound by its
designation of a principal place of business in corporate documents filed with
the Secretary of State).

[2] Mixed Actions

The general statutory venue rules and exceptions often overlap and conflict
when a lawsuit involves multiple parties or causes of actions. Such “mixed
actions” may occur when plaintiffs permissively join transitory and local
actions or multiple transitory actions, governed by conflicting venue statutes;
and when one cause of action is brought but different forms of relief, some local
and others transitory, are sought. Because the venue statutes do not provide any
general approach for resolving these conflicts, the courts have developed their
own general rules. As you might expect with venue analysis, however, these
general court-made rules may be subject to exceptions in specific cases! See
generally Arvo Van Alstyne, Venue of Mixed Actions in California, 44 Cal. L.
Rev. 685 (1956).

[a] The “Main Relief” Rule

When a complaint alleges a single cause of action but seeks both local and
transitory relief, the court will ascertain the primary object or “main relief”
sought by the action to establish proper venue. See, e.g., Peiser v. Mettler, 50
Cal. 2d 594, 603–606, 328 P.2d 953 (1958) (in action by lessor for breach of
farm lease seeking [371/372]return of improvements and damages for loss of use
and waste, court determined that main relief sought was transitory for venue
purposes); Massae v. Superior Court, 118 Cal. App. 3d 527, 173 Cal. Rptr.
527 (1981) (in action by trustors under deed of trust seeking declaratory relief,
reformation, and damages, court determined main relief to be for reformation
and therefore the action local and governed by CCP § 392 for venue purposes).
Whether a complaint asserts a single or multiple causes of action is determined
by a “primary rights” analysis. E.g., Massae, supra, 118 Cal. App. 3d at 533.
The “primary rights” doctrine is discussed extensively in § 8.02 Res Judicata
(Claim Preclusion), infra.

[b] Venue Follows the Transitory Cause of Action

When a complaint joins local and transitory causes of action against a

defendant, the courts usually disregard the local causes of action to establish
proper venue. See, e.g., Pieser v. Mettler, supra ; Smith v. Smith, 88 Cal. 572,
26 P.2d 356 (1891) ; Turlock Theatre Co. v. Laws , 12 Cal. 2d 573, 86 P.2d 345
(1939). Why did the courts adopt this approach?

[c] Mixed Action Rules: Multiple Causes and Single Defendant

As the court in Brown v. Superior Court indicated, where there are multiple
transitory causes of action subject to conflicting venue provisions, in most cases
the court must grant a change of venue on the entire complaint whenever the
defendant is entitled to a change of venue on any one cause of action. However,
as Brown also illustrates, this judicial approach is subject to exceptions. What
was the nature of the exception utilized by the court in Brown? How might this
exception be stated as a general approach to determining venue in mixed
actions?

[d] Mixed Action Rules: Multiple Defendants and Causes of Actions

In cases involving multiple defendants and causes of action, when venue is

proper in the county in which one of the defendants resides as to one cause of
action, venue is proper in that county as to all properly joined causes of action
and defendants. See, e.g., Monogram Co. v. Kingsley, 38 Cal. 2d 28, 237 P.2d
265 (1951); Tutor-Saliba-Perini Joint Venture v. Superior Court , 233 Cal.
App. 3d 736, 742, 285 Cal. Rptr. 1 (1991). Plaintiff’s venue selection may not
be defeated even if all the defendants concur in a motion to change venue to a
county in which another defendant resides. Tutor-Saliba-Perini, supra, 233
Cal. 3d at 742. This approach applies even if some of the causes of action name
only nonresidents of the county selected by plaintiff, so long as a resident
defendant is named in others. Id.

This approach becomes more complicated when the action includes

individual and corporate defendants. See, e.g., Brown v. Superior Court, supra,
note 6; Mosby v. Superior Court, 43 Cal. App. 3d 219, 226, 117 Cal. Rptr. 588
(1974) (when a plaintiff brings an action against several defendants, both
individual and corporate, in a county which is neither the residence nor
principal place of business of any defendant, an individual defendant may
change venue to the county of his [372/373]residence even though venue initially
laid may otherwise be proper on one of the alternative grounds provided in §
395.5).

[3] Venue Puzzles

Based on these general statutory and judicial rules, and their exceptions,
consider the following venue puzzles:

(a) In Turlock Theatre Co. v. Laws , 12 Cal. 2d 573, 86 P.2d 345 (1939) , the
plaintiff lessor brought an action against defendant lessees, residents of San
Francisco County, to recover unpaid rentals under a lease of a theatre located in
Stanislaus County, and to terminate the lease and recover possession of the
property. The action was commenced in Stanislaus County and defendants
moved to transfer venue to San Francisco County. Should the motion to transfer
be granted? Why?
 (b) In Gallin v. Superior Court, 230 Cal. App. 3d 541, 281 Cal. Rptr. 304
(1991), the plaintiff commenced a class action in San Diego County on behalf of
purchasers of “Milli Vanilli” recordings against the defendant performers,
manager, record producers, distributors, and others. Plaintiff claimed that the
defendants committed deceptive consumer practices in violation of the
Consumer Legal Remedies Act, and common law fraud and breach of contract,
when they failed to disclose that the Milli Vanilli rock group did not perform its
own vocals in their recordings. Defendant Gallin, the manager, moved to
transfer venue to Los Angeles County on the basis that he resides there and none
of the defendants reside in San Diego, relying on CCP § 395(a) and various
mixed action rules. Plaintiff argued, relying on Brown, that venue in San Diego
County was proper under the special venue provision of the Consumer Legal
Remedies Act, Civil Code § 1780(c), which authorizes venue in the county
where the consumer sales transaction occurred. Should the motion to transfer be
granted? Why?

(c) In Capp Care, Inc. v. Superior Court , 195 Cal. App. 3d 504, 241 Cal.
Rptr. 741 (1987), plaintiff Proffitt and defendant Zalta established Capp Care,
Inc., a corporation engaged in health care cost reviews for preferred provider
organizations. When the corporation became highly profitable, defendant Zalta
allegedly forced plaintiff out of the company. Plaintiff sued in Los Angeles
County, alleging nine causes of action against defendant Zalta on various tort
and contract theories and one cause of action seeking involuntary dissolution of
defendant Capp Care, Inc. Defendants filed a motion for change of venue to
Orange County pursuant to Corporations Code § 171 and § 1800(a), which state
that the proper venue for an action for involuntary dissolution of a corporation is
the county of the corporation’s place of business. Plaintiff argued that although
Capp Care’s principal place of business was in Orange County, it conducted
business in Los Angeles County; and, more importantly, defendant Zalta was a
resident of Los Angeles County. Should the court grant the motion? Why?

(d) What is the proper venue for an action based on negligent design and
construction of a building? Plaintiff, owner of an office condominium project
located in Merced County, commenced an action in Santa Clara County against
several defendant corporations for negligence in design and construction of the
project. The complaint seeks damages for diminished value of the project
structures but not for the underlying real property, based on negligence, strict
liability, and breach of [373/374]warranty. Plaintiff and defendants are residents of
Santa Clara County. Is Santa Clara a proper county for venue? Which venue
statute controls here? CCP § 392 (injuries to real property)? § 395(a)? § 395.5
(corporations)? Why? See Foundation Engineers, Inc. v. Superior Court, 19
Cal. App. 4th 104, 23 Cal. Rptr. 2d 469 (1993).

[4] Importance of Complaint

Generally, as Brown v. Superior Court illustrates, venue must be determined

based on the allegations of the complaint on file at the time the motion to
transfer venue was made, Turlock Theatre Co. v. Laws, 12 Cal. 2d 573, 575, 86
P.2d 345 (1939) ; Peiser v. Mettler, supra , 50 Cal. 2d at 603, and not based on
subsequent amendments, see Armstrong Petroleum Corp. v. Superior Court ,
114 Cal. App. 3d 732, 738, 170 Cal. Rptr. 767 (1981) . Careful drafting of the
complaint is important because, although plaintiff’s choice of venue is presumed
correct, the complaint will be strictly construed against a plaintiff seeking to lay
venue in a county other than that of the defendant’s residence. Neet v. Holmes,
19 Cal. 2d 605, 612, 122 P.2d 557 (1942).

Is a plaintiff/cross-defendant against whom a cross-complaint has been filed

entitled to seek a transfer of venue based on a claim of improper venue as
determined by reference to the cross-complaint? In K.R.L. Partnership v.
Superior Court, 120 Cal. App. 4th 490, 15 Cal. Rptr. 3d 517 (2004) , the court
concluded that once proper venue has been established based on the complaint,
a cross-defendant is not entitled to a transfer of venue under CCP § 396b based
on a compulsory cross-complaint. The court explained: “When a plaintiff
commences a case, and proper venue of that case has been established in a
particular county, the plaintiff may not thereafter object to that county as an
improper venue for any compulsory cross-complaint the defendant must assert
against the plaintiff in that case.” K.R.L. Partnership, supra, 120 Cal. App. 4th
at 498.

[a] Misjoined Defendants

A plaintiff may exercise considerable control over the proper venue

determination based on the causes of action and theories plaintiff chooses to
assert in the complaint, the parties named as defendants, and the relief sought. If
a plaintiff improperly joins a defendant solely for the purpose of establishing
venue in the county of that defendant’s residence, however, that defendant’s
residence will not be considered in determining proper venue. CCP § 395(a);
Peiser v. Mettler, supra , 50 Cal. 2d at 601–603 (in deciding a motion for
transfer of venue, the trial court must determine whether the plaintiff had
reasonable grounds for the belief in good faith that plaintiff had a cause of
action against the resident defendant). What other legal and practical
considerations also limit the plaintiff’s ability to control venue by artful
pleading and joinder?

[b] Declaratory Relief

Generally, venue for declaratory relief actions is determined by reference to

the nature of the underlying subject matter of the action as shown by the
complaint. Mission Imports, Inc. v. Superior Court, 31 Cal. 3d 921, 930–31,
184 Cal. Rptr. 296, 647 P.2d 1075 (1982) (venue in declaratory relief action
determined by underlying [374/375]contract claims); Massae v. Superior Court,
118 Cal. App. 3d 527, 533–35, 173 Cal. Rptr. 527 (1981) (action should be
assessed for venue purposes in terms of its substance rather than its declaratory
relief form). In what types of cases is this “inversion-of-the-parties” approach
to determining venue most likely to apply? What are the problems with this rule,
and its application? See Massae v. Superior Court, supra, 118 Cal. App. 3d at
533–36.

[5] Venue in Limited Civil Cases

The statutory provisions generally do not set forth different venue rules for
limited civil cases, although they do contain specific pleading requirements
regarding venue for certain smaller civil cases. See CCP § 396a(b).

[B] Raising Improper Venue

[1] Motion to Transfer

A defendant who wishes to contest the plaintiff’s venue choice as not the
proper county must “at the time he or she answers, demurs, or moves to strike,
or, at his or her option, without answering, demurring, or moving to strike and
within the time otherwise allowed to respond to the complaint,” move to
transfer the action to the proper court. CCP § 396b(a). Otherwise, the
defendant’s objection to the improper court is waived, and the action may be
tried in the court where commenced. CCP § 396b(a).

[a] Federal Rules Compared

These California rules are similar to those of the federal courts with respect
to improper venue in that generally an objection to venue is not waived in
federal court by being joined with other objections or defenses, so long as the
objection is raised by pleading or motion at the defendant’s first appearance.
Rule 12(b)(3), (g) & (h), F.R.C.P.

[b] Waiver of Wrong Venue Objection

Unlike Federal Rule 12(b) & (h), however, CCP § 396b(a) requires that the
defendant make a motion to transfer venue at the time defendant files the first
responsive pleading. Failure to file a separate motion to transfer at time of
answer waives the objection to venue in the improper court; only raising the
issue by affirmative defense in an answer is inadequate. E.g., Northern
California Dist. Council of Hod Carriers v. Pennsylvania Pipeline, Inc., 103
Cal. App. 3d 163, 173–74, 162 Cal. Rptr. 851 (1980) ; Dugar v. Happy Tiger
Records, Inc., 41 Cal. App. 3d 811, 81920, note 11, 116 Cal. Rptr. 412 (1974).

[c] Jurisdictional Venue

Although venue provisions are sometimes said to be mandatory, they are not
generally considered jurisdictional because an objection to venue may be
waived by an untimely motion. Barquis v. Merchants Collection Assn. , 7 Cal.
3d 94, 101 Cal. Rptr. 745, 496 P.2d 817 (1972) . However, in a few special
instances where venue [375/376]provisions are part of a grant of subject matter
jurisdiction, they are considered jurisdictional and cannot be waived by the
parties. E.g., CCP § 1250.020 (venue for eminent domain proceedings), see
Comment to CCP § 1250.020; Probate Code §§ 7051, 7052 (venue for
proceedings concerning administration of decedent’s estate); Art. 10A, § 6, Cal.
Constitution (actions involving certain water resources legislation).

[2] Effect of Motion to Transfer

[a] Suspension of Jurisdiction

A timely filed motion to transfer venue on the ground that plaintiff

commenced the action in an improper court suspends the trial court’s
jurisdiction to act in the case other than hearing and deciding the motion.
Mission Imports, Inc. v. Superior Court, 31 Cal. 3d 921, 926, note 3, 184 Cal.
Rptr. 296, 647 P.2d 1075 (1982) ; but see CCP § 396b(c) (court in dissolution
of marriage proceeding may determine motions for temporary spousal and child
support prior to determination of motion to transfer venue). In what
circumstances might this “suspension of jurisdiction” be significant? See, e.g.,
Moore v. Powell , 70 Cal. App. 3d 583, 138 Cal. Rptr. 914 (1977) (delay
occasioned by change of venue determination and order does not suspend
jurisdiction within meaning of CCP § 583(f) [now CCP § 583.310 and §
583.340(a)]).

[b] Appellate Review

An order of the superior court in an unlimited civil case granting or denying a

motion to change the place of trial is not an appealable order, but may be
reviewed by a writ of mandate. CCP § 400. Such an order in a limited civil case
is appealable. CCP § 904.2(c). Why this difference in procedure for appellate
review?

[c] Transfer to Proper Court

When a court determines that plaintiff’s choice of venue was improper and
the action is transferred for that reason, the case must be transferred to any such
proper court as the parties may agree upon by stipulation. CCP § 398. If the
parties do not so agree, then to any proper court in the proper county as
designated by the defendant. CCP § 398. Only when the parties do not so agree
and the defendant does not so designate, may the court determine the proper
county for transfer. CCP § 398; Cubic Corp. v. Superior Court, 186 Cal. App.
3d 622, 231 Cal. Rptr. 18 (1986) (court may designate county of transfer only in
absence of party designation). What are the policy reasons for first permitting
the parties to agree on the transferee court when a transfer order is appropriate?

[3] Change of Venue for Convenience of Witnesses, Etc.

A trial court also has discretionary authority upon motion to change the place
of trial for the reasons specified in § 397, including “[w]hen the convenience of
witnesses and the ends of justice would be promoted by the change.” CCP §
397(c). For a thorough discussion of motions to change venue, see 2 CEB,
California Civil [376/377]Procedure Before Trial, Motions to Change Venue §§
20.1-20.42 (4th ed. 2011); 3 Witkin, California Procedure, Actions §§ 905-958
(5th ed. 2008).

[a] Federal Procedure Compared

Unlike the federal discretionary change of venue statute, 28 U.S.C. § 1404(a),

CCP§ 397(c) does not authorize consideration of the convenience of parties or
employees of parties. See, e.g., Peiser v. Mettler, 50 Cal. 2d 594, 612, 328
P.2d 953 (1958); Lieberman v. Superior Court, 194 Cal. App. 3d 396, 239 Cal.
Rptr. 450 (1987). Why not? There are two limited exceptions to this general
interpretation. One is when employees of one party are called as witnesses by
the adverse party. See Lieberman, supra, 194 Cal App. 3d at 401-402. Another
is when a party’s physical condition makes it impossible for the party to travel
to a distant county to give material evidence. See Peiser, supra, 50 Cal. 2d at
612. Why these two limited exceptions? Should the convenience of counsel be
of any relevance? See Lieppman v. Lieber, 180 Cal. App. 3d 914, 920, 225 Cal.
Rptr. 845 (1986).

[b] Transfer to Convenient Court

When a court orders discretionary change of venue pursuant to § 397, the

action must be transferred to a court which the parties may agree upon by
stipulation; or if they do not so agree, to the nearest court where the cause for
making the order does not exist. CCP § 398. Does this mean that a court may
order a discretionary change of venue to a county which is otherwise not a
proper court under the venue statutes? If so, why? Does this mean that where a
plaintiff commenced an action in an improper court and the defendant moves to
transfer under CCP § 396b, the court has discretion to retain the action in the
county where commenced if the convenience of witnesses will be promoted?
See CCP § 396b(d).

[c] Time for Motion

A § 397 motion for discretionary change of venue is not waived by failure to

assert it at the time of first responsive pleading, and in fact may be considered
premature if made before the defendant’s answer. See, e.g., Cooney v. Cooney,
25 Cal. 2d 202, 208, 153 P.2d 334 (1944) (motion to change venue for witness
convenience should be made within a reasonable time after the case is at issue
on the facts); Thompson v. Superior Court, 26 Cal. App. 3d 300, 306, 103 Cal.
Rptr. 94 (1972) (motion for change of venue for witness convenience should be
made within a reasonable time after answer is filed or after knowledge of
changed circumstances). Why this difference in treatment for a § 397 motion to
change venue in contrast to a § 396b motion to transfer?

[d] Necessity of Specific Factual Showing

The Court of Appeal in Flanagan v. Flanagan, 175 Cal. App. 2d 641, 346
P.2d 418 (1959) , reversed a trial court § 397 order changing venue because the
defendant’s affidavits did not contain specific factual averments as to the nature,
necessity, and materiality of the witnesses; nor of the reasons why attendance of
each would be inconvenient and why the ends of justice would be served by the
change. See also Peiser v. Mettler, 50 Cal. 2d 594, 607, 328 P.2d 953 (1958)
(the [377/378]affidavits in support of the motion for change of venue for witness
convenience must set forth the names of the witnesses, the nature of the
testimony expected from each, and the reasons why the attendance of each
would be inconvenient). Why is such specific factual information required to
support these motions?

[e] Payment of Fees

The venue provisions contain much statutory detail governing the procedural
aspects of transfer of venue, including imposition of costs, expenses, attorney
fees, and sanctions. CCP §§ 396b(b), 399. When an action is transferred
because it was commenced in an improper court, the action shall not be further
prosecuted in the transferee court until the specified costs and fees are paid.
CCP § 399; see, e.g., Stasz v. Eisenberg, 190 Cal. App. 4th 1032, 120 Cal.
Rptr. 3d 21 (2010) (trial court properly dismissed action after plaintiff failed to
pay costs and attorney fees ordered when court transferred the action pursuant to
CCP § 399(a)).

[4] Removal statute

Code of Civil Procedure § 394, which applies to actions by or against local

government entities and agencies, is a complicated removal statute designed to
avoid local prejudice by permitting transfer of such actions to a neutral county
for trial. See, e.g., Garrett v. Superior Court , 11 Cal. 3d 245, 113 Cal. Rptr.
152, 520 P.2d 968 (1974) (as remedial legislation, CCP § 394 should be
liberally construed, even as to its definition of “local agencies”); Colusa Air
Pollution Control Dist. v. Superior Court , 226 Cal. App. 3d 880, 889, 277
Cal. Rptr. 110 (1991) . Section 394 is technically not a venue statute — a
plaintiff still has the duty to bring the action initially in a proper county under
the appropriate venue statute. See, e.g., County of San Bernardino v. Superior
Court, 30 Cal. App. 4th 378, 35 Cal. Rptr. 2d 760 (1994) ; Colusa, supra, 226
Cal. App. 3d at 889–90.

Although § 394 contains mandatory transfer language, the statute is not

jurisdictional and may be waived if not timely raised. Newman v. County of
Sonoma, 56 Cal. 2d 625, 15 Cal. Rptr. 914, 364 P.2d 850 (1961) (defendant
county waived right to § 394 transfer by not making motion within reasonable
time); Ventura United School Dist. v. Superior Court , 92 Cal. App. 4th 811,
112 Cal. Rptr. 2d 260 (2001) (no unreasonable delay and no waiver where
defendant school district filed its § 394 motion within 30 days of plaintiff’s
settlement with another defendant local entity). When properly invoked,
however, CCP § 394 operates as an exception to CCP § 395 even in multiple
defendant actions. Delgado v. Superior Court, 74 Cal. App. 3d 560, 141 Cal.
Rptr. 528 (1977). The court must transfer to a neutral county even though the
action was properly commenced in the county of an individual defendant’s
residence. Delgado, 74 Cal. App. 3d at 563–64; McCarthy v. Superior Court,
191 Cal. App. 3d 1023, 1032–34, 236 Cal. Rptr. 833 (1987) (because right to
removal under § 394 is personal as to each defendant, venue must be changed
irrespective of the existence of other defendants who are residents of the
county). Section 394 requires transfer of cross-complaints asserted by or against
a city or county, and may therefore result in severance of the cross-complaint
from the underlying complaint. See, e.g., Metropolitan Transit System v.
Superior Court, 153 Cal. App. 4th 293, 62 Cal. Rptr. 3d 517 (2007) ;
Kennedy/Jenks Consultants, Inc. v. Superior Court, 80 Cal. App. 4th 948, 95
Cal. Rptr. 2d 817 (2000); [378/379]Ohio Casualty Ins. Group v. Superior Court ,
30 Cal. App. 4th 444, 35 Cal. Rptr. 2d 771 (1994) ; but see City of Chico v.
Superior Court, 89 Cal. App. 3d 187, 152 Cal. Rptr. 380 (1979) (CCP § 394
only applies to complaints and does not extend to cross-complaints against local
government).

The change of venue provisions of CCP § 397, however, are not subordinated
to § 394 — the mandatory removal language of § 394 does not prohibit a
discretionary change of venue for witness convenience or impartial trial.
Paesano v. Superior Court, 204 Cal. App. 3d 17, 250 Cal. Rptr. 842 (1988).

[5] Coordination statutes

Code of Civil Procedure §§ 404-404.9, which authorize coordination of

multiple lawsuits sharing a common question of fact or law before one judge in
a selected site, may override the conventional venue statutes when utilized. See
Rules 3.501-3.550, Cal. Rules of Ct.

[C] Contractual Venue Provisions

The California courts are unwilling to enforce contractual provisions which

specify the county for contract-related litigation. See, e.g., General Acceptance
Corp. v. Robinson, 207 Cal. 285, 277 P. 1039 (1929) (intrastate contract venue
provision held void when county specified for litigation not proper one under
statutory provisions); Alexander v. Superior Court, 114 Cal. App. 4th 723, 8
Cal. Rptr. 3d 111 (2003) (contractual venue selection clause that stipulates
venue in a county not a proper county under CCP § 395 for a breach of contract
action is invalid and unenforceable); Arntz Builders v. Superior Court, 122
Cal. App. 4th 1195, 19 Cal. Rptr. 3d 346 (2004) (Contractual venue provision
purporting to waive defendant’s right to transfer action brought by county to a
neutral forum pursuant to CCP § 394 is invalid). The courts distinguish between
an interstate forum selection clause, which is enforceable if reasonable, see
Smith, Valentino & Smith, Inc. v. Superior Court , 17 Cal. 3d 491, 131 Cal.
Rptr. 374, 551 P.2d 1206 (1976) (General Acceptance not controlling in
interstate contracts; forum selection clauses held valid and enforceable unless
shown to be unreasonable); and an intrastate venue selection clause, which is
invalid. They also distinguish a waiver of the right to transfer venue to a proper
county by failing to file a timely motion after an action has been instituted, as set
forth in CCP § 396b, from a contractual provision entered into before the action
has been filed designating an improper venue, which is against public policy
and void. Alexander, supra, 114 Cal. App. 4th at 726–731; Arntz, supra, 122
Cal. App. 4th at 1204. Are you persuaded that these distinctions justify the
refusal to enforce a venue selection agreement?

A few special statutes specifically declare such venue provisions void and
unenforceable when included in certain consumer contracts. E.g., CCP § 395(b)
& (c) (actions arising out of most consumer transactions); Civil Code § 1804.1
(Unruh Retail Installment Sales Act); Civil Code § 2983.7(f) (Rees-Levering
Motor Vehicle Sales and Finance Act); Commercial Code § 10106(b)
(limitation on power of parties to consumer lease to contractually designate
county for litigation). Does the existence of these explicit statutory restrictions
suggest that such venue [379/380]agreements may be enforceable in contracts not
governed by these statutes?
§ 6.04 SERVICE OF PROCESS
[A] Introductory Note on Manner of Service

Code of Civil Procedure Section 413.10 provides:

Except as otherwise provided by statute, a summons shall be served

on a person:

(a) Within this state, as provided in this chapter.

(b) Outside this state but within the United States, as provided in this
chapter or as prescribed by the law of the place where the person is
served.

(c) Outside the United States, as provided in this chapter or as

directed by the court in which the action is pending, or, if the court before
or after service finds that the service is reasonably calculated to give
actual notice, as prescribed by the law of the place where the person is
served or as directed by the foreign authority in response to a letter
rogatory. These rules are subject to the provisions of the Convention on the
“Service Abroad of Judicial and Extrajudicial Documents” in Civil or
Commercial Matter (Hague Service Convention).

Together with personal and subject matter jurisdiction, proper service of the
complaint and summons on the defendant is a prerequisite to a valid judgment.
See, e.g., Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.
Ct. 652, 94 L. Ed. 865 (1950) (constitutionally adequate notice is prerequisite
to valid judgment); Insurance Corp. of Ireland v. Compagnie des Bauxites de
Guinee, 456 U.S. 694, 701, 102 S. Ct. 2099, 72 L. Ed. 2d 492 (1982) (the
validity of an order depends on the court having jurisdiction over both the
subject matter and the parties); Ault v. Dinner For Two, Inc ., 27 Cal. App. 3d
145, 148, 103 Cal. Rptr. 572 (1972).

The Jurisdiction and Service of Process Act enacted in 1969 governs service
of process in the California courts. CCP § 410.10 et seq. Generally speaking,
the proper manner of service, and the person upon whom service must be made,
depends on the place where process is to be served (i.e., within California, in
another state, or outside the United States) and the type of party to be served
(e.g., an individual defendant, a corporation or association, or a public entity).
CCP §§ 413.10-417.40.

[380/381]

[B] Service Within California

BEIN v. BRECHTEL-JOCHIM GROUP, INC.

COURT OF APPEAL OF CALIFORNIA,
FOURTH APPELLATE DISTRICT
6 Cal App. 4th 1387, 8 Cal. Rptr. 2d 351 (1992)

Sonenshine, Justice.

Brechtel-Jochim Group, Inc., Thomas W. Brechtel, Linda Brechtel, Randy

Jochim and Ann Jochim appeal from a default judgment. They argue the trial
court had no personal jurisdiction over them. They maintain service of summons
and complaint upon a guard at the entrance of a gated community does not meet
the requirements of Code of Civil Procedure section 415.201 because a gate
guard is neither a competent member of the household nor a person apparently in
charge of the business. We disagree and affirm.

Robert Bein and William Frost & Associates (Bein) entered into written
contracts with Brechtel-Jochim Group, Inc., et al., for engineering work. Bein,
claiming it had completed the job, filed the underlying action when Brechtel
refused to pay. The complaint alleged breach of contract and common counts,
and named Brechtel and its sole shareholders, the Brechtels and the Jochims, as
defendants. Asserting the individuals were alter egos of the corporation, Bein
sought to pierce the corporate veil. The complaint prayed for damages in the
sum of $69,347.01 plus interest, reasonable attorney fees and costs of the suit.

Bein attempted to serve the Jochims at their home on three separate

occasions. They were finally served by substitute service on a “Linda Doe”
when she emerged from the residence. As she was handed the papers, she ran
back into the house and turned out the lights. Two days later, Bein mailed copies
of the summons and complaint to the Jochims’ residence. Proofs of service and
declarations verifying the attempted service were filed with the court.

Service upon the corporation and the Brechtels was equally difficult. Bein
unsuccessfully attempted to serve the business and the Brechtels at the
Brechtels’ residence. Each time, the process server was denied access to the
area by the gate guard stationed at the community’s entrance. The process server
finally resorted to substitute service upon the guard who, in response, threw the
papers on the ground. As the process server drove away, he saw the guard
retrieve the papers.

Bein mailed copies of the summons and complaint to the Brechtels’ residence
within a few days. Thereafter, the declaration of attempted service on the
Brechtels and the corporation was timely filed, along with the proof of service
of summons and complaint.

[381/382]

Neither the corporation nor its shareholders responded to the complaint. Bein
filed requests to enter defaults as to all of the defendants and notified each
defendant by mail.

At the default prove-up hearing, Douglas Frost, a Bein corporate officer,

testified his counsel told him no stock was ever issued by Brechtel. Following
testimony, the court entered default judgment against all named defendants in the
amount prayed for in the complaint. No motions to quash service or set aside the
judgment were filed by any of the defendants.

II

Appellants challenge the court’s jurisdiction, arguing service was

ineffective.2 They maintain Bein did not establish reasonable diligence in
attempting to effectuate personal service. They are wrong. Section 415.20,
subdivision (b) states: “If a copy of the summons and of the complaint cannot
with reasonable diligence be personally delivered to the person to be served as
specified in Section 416.60, 416.70, 416.80, or 416.90, a summons may be
served by leaving a copy of the summons and of the complaint at such person’s
dwelling house, usual place of abode, usual place of business, … in the
presence of a competent member of the household or a person apparently in
charge of his or her office, place of business, … at least 18 years of age, who
shall be informed of the contents thereof, and by thereafter mailing a copy of the
summons and of the complaint (by first-class mail, postage prepaid) to the
person to be served at the place where a copy of the summons and of the
complaint were left. Service of a summons in this manner is deemed complete
on the 10th day after the mailing.”

“‘Ordinarily, … two or three attempts at personal service at a proper place

should fully satisfy the requirement of reasonable diligence and allow
substituted service to be made.’ [Citation.]” (Espindola v. Nunez (1988) 199
Cal. App. 3d 1389, 1392 [245 Cal. Rptr. 596] .) The process server made three
separate attempts to serve the Brechtels at their residence. Each time, the gate
guard denied access. Substitute service was appropriate.

Appellants next maintain service on the gate guard fails to satisfy the statutory
requirements.3 Despite the great number of gated communities in the state, no
[382/383]California court has addressed this issue. Specifically, we must
determine whether a residential gate guard is a person apparently in charge of
the corporate office (§ 415.20, subd. (a)) and a competent member of the
household (§ 415.20, subd. (b)).

We first note that pre-1969 service of process statutes required strict and
exact compliance. However, the provisions are now to be liberally construed to
effectuate service and uphold jurisdiction if actual notice has been received by
the defendant, “‘and in the last analysis the question of service should be
resolved by considering each situation from a practical standpoint ….’”
(Pasadena Medi-Center Associates v. Superior Court (1973) 9 Cal. 3d 773,
778 [108 Cal. Rptr. 828, 511 P.2d 1180] .) The Supreme Court’s admonition to
construe the process statutes liberally extends to substituted service as well as
to personal service. (Espindola v. Nunez, supra, 199 Cal. App. 3d 1389, 1391.)
“To be constitutionally sound the form of substituted service must be
‘reasonably calculated to give an interested party actual notice of the
proceedings and an opportunity to be heard … [in order that] the traditional
notions of fair play and substantial justice implicit in due process are satisfied.’
[Citations.]” (Zirbes v. Stratton (1986) 187 Cal. App. 3d 1407, 1416 [232 Cal.
Rptr. 653].)
 The gate guard in this case must be considered a competent member of the
household4 and the person apparently in charge. Appellants authorized the guard
to control access to them and their residence. We therefore assume the
relationship between appellants and the guard ensures delivery of process. F. I.
duPont, Glore Forgan & Co. v. Chen (1977) 41 N.Y.2d 794 [396 N.Y.S.2d
343, 364 N.E.2d 1115] is instructive. There, the court found substitute service
on an apartment building doorman was statutorily sufficient. A deputy sheriff
twice attempted to serve defendants and, finding no one at home, left a card
under the door. On the third try, when the doorman refused to allow him to go
past the building’s front entrance, the deputy served the doorman. The court
reasoned “it cannot be held as a matter of law on this record that the action of
the doorman in refusing permission to the Deputy Sheriff to proceed to
apartment 4A was not attributable for purposes of this statute to defendants.” (at
p. 798 [364 N.E.2d at p. 1118].)6 “While the defendant may control the
acceptance of mail by his [or her] household, he [or she] may not thereby negate
the effectiveness of service otherwise effective under the law.” (Bossuk v.
Steinberg (1982) 88 A.D.2d 358 [453 N.Y.S.2d 687, 689–690].)

Litigants have the right to choose their abodes; they do not have the right to
control who may sue or serve them by denying them physical access. In
Khourie, Crew & Jaeger v. Sabek, Inc. (1990) 220 Cal. App. 3d 1009 [269
Cal. Rptr. 687], where a corporation attempted to avoid service by refusing to
unlock its door, the court [383/384]determined a “defendant will not be permitted
to defeat service by rendering physical service impossible.” (at p. 1013.) “The
evident purpose of Code of Civil Procedure section 415.20 is to permit service
to be completed upon a good faith attempt at physical service on a responsible
person. …” (Ibid., italics added.) Service must be made upon a person whose
“relationship with the person to be served makes it more likely than not that they
will deliver process to the named party.” (50 Court St. Assoc. v. Mendelson et
al. (1991) 151 Misc. 2d 87 [572 N.Y.S.2d 997, 999] .) Here, the gate guard’s
relationship with appellants made it more likely than not that he would deliver
process to appellants. We note they do not claim they failed to receive notice of
service.7

The corporation raises two other objections to its service. We are not
impressed. First, they argue no good faith attempt was made to serve its
designated agent. A good faith attempt to serve the agent was unnecessary
because service may be made on either the corporation’s agent or an officer.
(M. Lowenstein & Sons, Inc. v. Superior Court (1978) 80 Cal. App. 3d 762
[145 Cal. Rptr. 814].) Thomas Brechtel, as president of the corporation, was an
appropriate person to be served on behalf of the corporation.
 Appellants further maintain the declaration of attempted service was invalid
because it failed to identify the person to be served on behalf of the corporation.
But minor, harmless deficiencies will not be allowed to defeat service.
(Espindola v. Nunez, supra, 199 Cal. App. 3d 1389, 1391.)

III

Appellants argue the evidence was insufficient to find they were the alter ego
of the corporation and to sustain the damage award. We note they did not seek
relief from their default in the trial court. Sufficiency of the evidence is not
reviewable unless relief from the default proceedings has been sought.

The judgment is affirmed. Respondents to recover costs on appeal.

OLVERA v. OLVERA
COURT OF APPEAL OF CALIFORNIA,
FOURTH APPELLATE DISTRICT
232 Cal. App. 3d 32, 283 Cal. Rptr. 271 (1991)

Timlin, Justice.

Plaintiffs Elias S. Olvera, Sr., and Annie Olvera (hereinafter the Olveras)
appeal from an order vacating a default judgment entered in their favor against
defendant Paula Olvera (hereinafter Paula). Although the record and the briefs
on appeal [384/385]reflect a considerable lack of clarity with respect to the
governing law, we hold that the trial court properly granted relief.

STATEMENT OF FACTS

The Olveras filed this action on June 30, 1988, against Paula and Richard
Olvera for breach of contract, fraud and the remedy of specific performance.
Plaintiffs alleged that in 1985, they had orally agreed to lend $17,000 to
defendants, and that defendants had orally agreed either to execute a second
deed of trust on property located at 2840 Collingswood, in Riverside,
California, as security for the loan, or to obtain a loan on the property from
another source and repay plaintiffs “immediately.” Plaintiffs further alleged that
defendants had failed to repay the entire sum or to execute the trust deed as
security, and sought the remedies of a money judgment and specific performance
of the promise to execute a trust deed.

On the same date, the Olveras filed a notice of recordation of lis pendens
affecting the Collingswood property. The notice included a proof of service by
mail on Paula “c/o Casa Calderon, 197 Pomery, Pismo Beach, CA 93449.”

On September 12, 1988, the Olveras filed an application for order for
publication of summons. (Code Civ. Proc., § 415.50.) 3 The spaces in the form
application which were provided for an explanation of the efforts at personal
service were all filled in with the assertion that “Defendant no longer resides in
Riverside, Ca., and cannot be found” or variants of this phrase. Some further
explanation was given, as follows:

“Plaintiffs have contacted Defendant Richard M. Olvera, who is their

son, and who is the former husband of Defendant Paula D. Olvera; to
ascertain the present whereabouts of Paula D. Olvera, but all the former
husband knows is that defendant Paula D. Olvera may be somewhere in
California, but her exact residence or place of employment cannot be
ascertained. The plaintiffs believe that she may receive her mail by her
relatives in Pismo Beach, Ca., Paula D. Olvera formerly worked as a
secretary at Riverside General Hospital for about ten (10) years. She is no
longer employed there or elsewhere in Riverside, Ca., to the best
knowledge of Plaintiffs.

“Plaintiffs have received a letter from Defendant Paula D. Olvera, but

there was no/personal return address for said Defendant.

“Defendant Paula D. Olvera, left no forwarding address with her

former employer, to the best knowledge of the Plaintiffs.”

The application was verified by plaintiff Elias Olvera; however, there was
no accompanying affidavit establishing the existence of a cause of action against
Paula.
 The application sought publication in the Press-Enterprise, a newspaper of
general circulation published in Riverside, and the order for publication so
provided. There is no contention that the subsequent publication did not conform
to the provisions of Government Code section 6064; a proof of publication was
duly [385/386]filed showing completion of publication on October 7, 1988. As
publication began on September 16, the 28-day notice period under the
Government Code expired, and service was deemed complete, on October 13.

Paula did not respond within the statutory time and her default was entered on
November 17, 1988. On the same date, following testimony by Elias Olvera at a
prove-up hearing, judgment was entered in favor of the Olveras and against
Richard and Paula. The judgment provided that defendants were jointly liable
for the principal sum of $13,997, plus attorneys’ fees of $4,600, punitive
damages of $6,000, and $535.60 in costs. Paula was further ordered to execute
a note secured by a deed of trust on the Collingswood property in favor of the
Olveras.4

Notice of entry of judgment was sent to Paula on November 20, 1988, at the
Collingswood address, with a request for forwarding. However, it was returned
with the notation that she had left no forwarding address.

On November 3, 1989, Paula filed a “motion to set aside judgment.” The

stated bases were that the judgment was void due to improper service, and that
it was obtained through extrinsic fraud. Paula argued both that the Olveras had
failed to disclose information known to them which would have suggested to the
court that they had the power to effect personal service on her, and that the use
of the Press-Enterprise was not reasonably calculated to give her notice of the
action.

In support of this motion, Paula filed a declaration which included the

following information. On May 5, 1988, Richard had appeared at a laundry
“near my residence in Pismo Beach. Richard left and returned with our son,
[who was then 14 years old] in his vehicle.” Three days later, Richard returned
the son “to my mother’s house, which was also my residence with my son ….”
During the summer of 1988, the son spent two months with his grandparents, the
plaintiffs, and the son always knew where to reach Paula. On July 24, Paula
visited her son at Richard’s residence in Riverside. On September 5, she picked
up her son at the Olveras’ residence in Riverside.
 Paula’s telephone number was listed in the October 1988 telephone directory
which included the Pismo Beach region; it was listed under the name “D.
Olvera,” as she commonly used the name “Diane.” The exact date of issuance of
the directory was not established.

Paula’s mother had owned a restaurant in Pismo Beach called “Casa

Calderon,” located at 197 Pomeroy Avenue. The Olveras had visited the
restaurant on several [386/387]occasions and were aware that it was owned by
Paula’s mother; the restaurant’s telephone number and address were regularly
included in the telephone directories.

Finally, Paula was renting the house on Collingswood, and the tenant knew
her address, as rent checks were mailed to her each month.

Paula did not submit a proposed answer or other proposed pleading with her
motion.

In response, the Olveras attempted at length to rebut this showing, and also
argued that Paula’s facts did not prove that they knew, or could have
discovered, her whereabouts. They admitted knowing about the Casa Calderon,
but asserted — without factual support — that Paula was afraid of Richard and
kept her residence secret. They stated that they had called Paula’s mother, and
that the mother had said that Paula was not there but would be given a message
to call Elias Olvera. They claimed that Paula’s son had never told them where
she lived, and argued that their contact with the boy did not prove their
knowledge of his mother’s whereabouts. Similarly conceding that the
Collingswood house tenant might have known Paula’s address, they assert that
they did not know it and that Paula was concealing it. They point out that the
notice of entry of judgment was sent to the Collingswood address, and returned
as not forwardable.

The Olveras also pointed out that on August 22, 1988, Paula wrote to them
acknowledging receipt of “the letter from your attorney, which I understood to
say that you put a lean [sic] on the house on Collingwood.” The Olveras argued
that this letter, which apparently refers to the notice of lis pendens, demonstrates
Paula’s knowledge of the lawsuit, and they also quoted her promise that she
“intend [ed] to start making payments soon …. If you need to continue with the
legal action, it is fine with me ….”
 Paula’s reply regarding this letter of acknowledgement seized on the fact that
plaintiffs had received a response from her to the notice sent to 197 Pomeroy in
Pismo Beach; the envelope of the response displayed this as a return address as
well. The Olveras’ last counter-reply stressed that the telephone listing for “D.
Olvera” included no address, and that they had never reached Paula at the “Casa
Calderon.”

At the hearing, the trial court focused on the fact that publication was
requested in Riverside rather than in the Pismo Beach area, and commented that
the matter appeared to fall squarely within the provisions of section 473.5. * * *

DISCUSSION

A. Did Section 473.5 Apply to Paula?

Section 473.5, subdivision (a), permits the court to vacate a default judgment
if “service of a summons has not resulted in actual notice to a party in time to
defend ….” A motion for relief may be made within two years after entry of the
default judgment.

Under an earlier version of this statute, the right to relief was virtually
absolute [387/388]in cases of constructive service. However, although that version
did not mention the effect of actual notice of the lawsuit, it was established that
a defendant’s actual knowledge gave the court discretion to deny relief,
depending on such equitable factors as diligence and laches.

The present statute has been construed by at least one commentator to

preclude relief if the defendant has acquired actual knowledge of the action.
(See 8 Witkin, Cal. Procedure (3d ed. 1985) Attack on Judgment in Trial Court,
§ 193, p. 592.) Here, Paula’s August 1988 letter in response to receipt of the
notice of filing lis pendens is plain proof that she was aware that the Olveras
had commenced an action against her on June 30, 1988.

We note that “actual knowledge” has been strictly construed, with the aim of
implementing the policy of liberally granting relief so that cases may be
resolved on their merits. (Goya v. P.E.R.U. Enterprises (1978) 87 Cal. App. 3d
886, 891 [151 Cal. Rptr. 258].) In Goya, a finding of no “actual knowledge”
was upheld even though the defendants concededly received actual copies of the
summons and complaint; instead, the court accepted the contention that
defendants’ inability to understand English, and lack of business sophistication,
amounted to a lack of “actual knowledge.” In Rosenthal v. Garner (1983) 142
Cal. App. 3d 891 [191 Cal. Rptr. 300] , the court allowed relief under section
473.5 where, in addition to service by publication, plaintiff had sent a copy of
the summons and complaint to defendants’ counsel; the court refused to find this
imputed knowledge equivalent to the actual knowledge required by the statute.
(Accord, Tunis v. Barrow (1986) 184 Cal. App. 3d 1069 [229 Cal. Rptr. 389].)

The liberal approach of these cases would arguably support a literal reading
of the statute which makes actual notice irrelevant unless acquired as a result
of service of the summons. Alternatively, it suggests that Paula’s awareness that
a lawsuit had been filed in June, based upon the receipt of a notice of
recordation of lis pendens, did not necessarily give her “time to defend the
action.” Until summons is served, there is no need to respond; a defendant may
believe that the action will not be pursued. Additionally, a notice of lis pendens
does not necessarily disclose that any tort causes of action, such as fraud, are
part of the lawsuit.

However, we do not think that this policy can be stretched too far without
contravening the plain language of the statute and the practical reasons for
providing a mechanism for relief. Section 415.50, authorizing service by
publication, allows the court to acquire jurisdiction over a defendant who
cannot be served personally or by substituted service under section 415.20 or
415.30, even after diligent effort. Jurisdiction so acquired is constitutional.
(Miller v. Superior Court (1961) 195 Cal. App. 2d 779, 786 [16 Cal. Rptr.
36].) However, it is recognized that such service is on many occasions unlikely
to result in actual notice, and to some extent the same may be true of any form of
substituted or constructive service. Thus, section 473.5 reflects the
understanding that if any form of service of summons does not result in actual
knowledge, fundamental fairness may require that a subsequent default be set
aside.

We hold that if the court has acquired jurisdiction, i.e., summons has been
served, but service of summons has not resulted in actual notice to a defendant,
although the defendant has acquired actual knowledge of the action from another
source, this [388/389]does not preclude a defendant from seeking relief under
section 473.5. We note that the findings in subdivision (c) of section 473.5,
which the court must make before exercising its discretion, do not include a
determination by the court that defendant did not have actual notice from the
summons and from no other source.

The issue remains whether under the circumstances the court abused its
discretion in granting relief. A defendant who has been constructively served
may have “actual knowledge” about the action from information which is
fragmentary or unconfirmed. In a proper case, it may be insufficient to place
upon a defendant the duty of making inquiries about the lawsuit against her or
him; other circumstances — the limits of which we will not attempt to define
here — may also make a strict application of the “actual knowledge” exception
inequitable.

Such circumstances exist here. Paula was aware of the lawsuit after she was
sent a copy of the notice of lis pendens. However, she did not know that
plaintiffs had alleged a cause of action for fraud against her, or that punitive
damages were sought. Her letter of August 1988, may have reflected an
indifference to a lawsuit seeking only contract damages, but her reaction may
well have been different had she known that she was being sued for fraud and
deceit. Furthermore, at that time the court had not yet acquired jurisdiction over
her by service of process. She was under no obligation to respond. Finally, she
was justified in the belief that plaintiffs were aware of her whereabouts, and she
could reasonably await further action by the Olveras before affirmatively
making inquiries about the nature and progress of the litigation. Accordingly, we
hold that the trial court did not abuse its discretion and properly vacated the
judgment under section 473.5.

B. The Service by Publication Was Invalid, and the Judgment Was Void

As an alternative basis for affirming the judgment, we further find that the
order for publication was void.

Personal service remains the method of choice under the statutes and the
constitution. (See Judicial Council com., West’s Ann. Code Civ. Proc. (1973
ed.) § 415.20, p. 554 [Deering’s Ann. Code Civ. Proc. (1991 ed) § 415.20, p.
656]; Evartt v. Superior Court (1979) 89 Cal. App. 3d 795, 799 [152 Cal.
Rptr. 836].) When substituted or constructive service is attempted, strict
compliance with the letter and spirit of the statutes is required. (Stern v. Judson
(1912) 163 Cal. 726, 735 [127 P. 38] .) We are of the opinion that the affidavit
in support of the application for permission to accomplish service by
publication was both deficient on its face and materially misleading, and that the
Olveras not only failed to show due diligence, but failed to exercise it. The
judgment based on such service was therefore void and subject to direct or
collateral attack. (Evartt v. Superior Court, supra, 89 Cal. App. 3d at p. 802;
Donel, Inc. v. Badalian (1978) 87 Cal. App. 3d 327, 334 [150 Cal. Rptr. 855].)

The affidavit itself was not sufficient. It affirmatively discloses that plaintiffs
had received a letter from Paula; the assertion that the letter contained no
“personal” return address virtually demands some explanation of the reason
why the return address which was given was not considered helpful. Although
plaintiffs admitted knowing Paula’s general whereabouts, there was no
indication that they had [389/390]employed any of the usual means to find her. (See
Sanford v. Smith (1970) 11 Cal. App. 3d 991, 1001-1002 [90 Cal. Rptr. 256] ,
approving the standards of diligence required by the local rules of Los Angeles
Superior Court: recent inquiries of all relatives, friends, and other persons
likely to know defendant’s whereabouts; searches of city directories, telephone
directories, tax rolls, and register of voters; and inquiries made of occupants of
all real estate involved in the litigation.) Finally, plaintiffs did not allege that
they had employed either a private process server or the appropriate
governmental officer authorized to serve process in the Pismo Beach area to
attempt personal service.

The foundational facts for the repeated allegation that Paula could not be
found were so slight as to be unworthy of serious consideration. It is well
established that the affidavit submitted under section 415.50 must establish
reasonable diligence by “probative facts” based on personal knowledge. (In re
Behymer (1933) 130 Cal. App. 200, 204 [19 P.2d 829] ; Sanford v. Smith,
supra, 11 Cal. App. 3d 991, 998–999.) The affidavit here was not sufficient.9

It is also proper to consider not only the affidavit itself, but the facts
demonstrated by the applicant. (Donel, Inc. v. Badalian, supra, 87 Cal. App. 3d
327, 333.) In this context the Olveras’ repeated claims of actual ignorance of
Paula’s whereabouts are not persuasive. It is not actual ignorance that permits
resort to service by publication, but the inability to accomplish personal service
despite the exercise of reasonable diligence. Plaintiffs argue that their grandson
never told them Paula’s residence — but did they ask? Paula did not return their
calls — but did they, or their agent, ever personally visit Pismo Beach or the
Casa Calderon? Did they ever ask Paula when she visited or picked up her son?
Did they make any inquiries whatsoever through official channels?
 The last factor to be considered is the choice of the Riverside Press-
Enterprise for publication. Section 415.50, subdivision (b), requires the use of
the “newspaper, published in this state, that is most likely to give actual notice
to the party to be served ….” Nothing in the affidavit, or in the more detailed
facts before the trial court, supported the election of this newspaper. Plaintiffs
repeatedly insisted that Paula was no longer in Riverside and admitted only that
she received mail in Pismo Beach.

In short, the Olveras’ entire showing below utterly fails to establish any
diligence whatsoever and no concern for providing actual notice — let alone the
high standard required before service by publication may be authorized.
(Sanford v. Smith, supra, 11 Cal. App. 3d 991, 1001.) “[W]hen notice is a
person’s due, process which is a mere gesture is not due process. The means
employed must be such as one desirous of actually informing the absentee might
reasonably adopt to accomplish it.” (Mullane v. Central Hanover Tr. Co.
(1950) 339 U.S. 306, 315 [70 S. Ct. 652, 94 L. Ed. 865, 874].) The Olveras
simply stuck their heads in the sand and made no reasonable [390/391]effort to
accomplish personal service or discover Paula’s residence for substituted
service. As a result, the service by publication was invalid and the judgment
could not be sustained.

DISPOSITION

The requests by both sides for sanctions are denied. Plaintiffs shall pay
defendant’s costs on appeal.

The judgment is affirmed.

Footnotes:

1 All further statutory references are to the Code of Civil Procedure unless otherwise specified.

2 Appellants did not seek relief in the trial court; however, they attack the court’s jurisdiction. Thus, they
have not waived their right to appellate review of this issue.

3 The requirements for substitute service on a person are found in section 415.20, subdivision (b), set
forth ante.
 Section 415.20, subdivision (a) provides: “In lieu of personal delivery of a copy of the summons and of
the complaint to the person to be served as specified in Section 416.10, … a summons may be served by
leaving a copy of the summons and of the complaint during usual office hours in his or her office with the
person who is apparently in charge thereof, and by thereafter mailing a copy of the summons and of the
complaint (by first-class mail, postage prepaid) to the person to be served at the place where a copy of the
summons and of the complaint were left. Service of a summons in this manner is deemed complete on the
10th day after such mailing.”

Section 416.10 permits service on a corporation by delivery “(a) to the person designated as agent for
service of process …; [¶] (b) to the president or other head of the corporation, a vice president, a secretary
or assistant secretary, a treasurer or assistant treasurer, a general manager, or a person authorized by the
corporation to receive service of process.”

Section 417.10, subdivision (a) explains the procedure for substituted service on a corporation. “If served
under Section 415.10, 415.20, … such affidavit shall recite or in other manner show the name of the person
to whom a copy of the summons and of the complaint were delivered, and, if appropriate, his [or her] title or
capacity in which he [or she] is served ….”

4 The Legislature’s choice of the term household over family indicates that household is to be liberally
construed. (See Note, Substituted Service of Process on Individuals: Code Civ. Proc., § 415.20(b)
(1970) 21 Hastings L.J. 1257.)

6 In contrast, where the doorman did not hinder entrance, substitute service upon him was deemed
unacceptable. (Reliance Audio Visual Corp. v. Bronson (1988) 141 Misc. 2d 671 [534 N.Y.S.2d 313].)

7 There is an additional reason to find the service here adequate. Pursuant to section 415.20, subdivision
(b), the guard gate constitutes part of the dwelling. Although the parties do not address this issue, we look to
F. I. duPont. “In our analysis if a process server is not permitted to proceed to the actual [residence by the
gate guard or some other employee] the outer bounds of the actual dwelling place must be deemed to
extend to the location at which the process server’s progress is arrested.” (F. I. duPont, Glore Forgan &
Co. v. Chen, supra, 41 N.Y.2d 794, 797 [364 N.E.2d 1115, 1117].)

3 Unless otherwise noted, all subsequent statutory references are to the Code of Civil Procedure.

4 The complaint alleged that defendants had paid $4,003 on the loan, leaving a balance due, and
demanded, of $12,997. The judgment described this as a typographical error, and ordered that the complaint
be amended to show payments of only $3,003 and a sum due of $13,997.

This appears to violate the rule of section 580, that a judgment by default cannot exceed the sum
demanded in the complaint. Although the punitive damages award of $6,000 was less than the demand of
$7,500 — so that the total awarded was less than that demanded — this is immaterial. Compensatory and
punitive damages differ in nature and purpose, and a “‘demand or prayer for one is not a demand legally, or
otherwise, for the other, or both.’ [Citation omitted]”; thus, a judgment which exceeds the demand for
compensatory damages cannot be justified by a demand for punitive damages which remains unexhausted.
(Becker v. S.P.V. Construction Co. (1980) 27 Cal. 3d 489, 494–495 [165 Cal. Rptr. 825, 612 P.2d 915] .)
However, in light of our resolution of the case, any error in the calculation of the amount of the judgment is
not critical.

9 The application was not accompanied by an affidavit establishing the existence of a cause of action in
favor of the Olveras, as required by section 415.50, subdivision (a)(1). The complaint, although verified, was
no substitute for the required affidavit, and the existence of a cause of action was a jurisdictional
prerequisite to the issuance of the order for publication. (Harris v. Cavasso (1977) 68 Cal. App. 3d 723,
726 [137 Cal. Rptr. 410].) Although the form application for service by publication contains a form affidavit
for this purpose, it was not completed by plaintiffs.

[1] Personal Service

Personal delivery of a copy of the complaint and summons is the preferred

manner of service upon defendants within California. CCP § 415.10
(individuals); CCP §§ 416.10-416.90 (corporations, associations, public
entities, guardians).

[2] Substituted Service

[a] On Individuals

A s Bein v. Brechtel-Jochim Group, Inc. , reproduced supra, illustrates,

substituted service on an individual defendant is authorized only when process
cannot with “reasonable diligence” be personally delivered. CCP § 415.20(b);
see also Earl W. Schott, Inc. v. Kalar , 20 Cal. App. 4th 943, 24 Cal. Rptr. 2d
580 (1993) (failure to comply with due diligence requirements rendered
attempted service on individual defendant and subsequent default judgment
unenforceable). What constitutes “reasonable diligence” in this context? Two or
three attempts at personal service at a proper place? Compare Espindola v.
Nunez, 199 Cal. App. 3d 1389, 245 Cal. Rptr. 596 (1988) (three unsuccessful
attempts to personally serve defendant at home within four days constituted
reasonable diligence sufficient to uphold substituted service on defendant’s wife
at home), with Evartt v. Superior Court, 89 Cal. App. 3d 795, 152 Cal. Rptr.
836 (1979) (three unsuccessful attempts within two days to personally serve
defendant at home while defendant on short vacation insufficient to uphold
substituted service on defendant’s housesitter where plaintiff made no attempt to
personally serve defendant, a long-time resident, until three days before
expiration of three-year period within which plaintiff must effect service).
 The Bein court’s discussion of reasonable diligence has been quoted with
approval in recent decisions. See Stafford v. Mach, 64 Cal. App. 4th 1174,
1182–83, 75 Cal. Rptr. 2d 809 (1998) (“drop service” on the actual defendant,
on the sixth attempt to serve him at his home, was proper where the defendant
answered the door but refused to identify himself); Ellard v. Conway , 94 Cal.
App. 4th 540, 545–47,114 Cal. Rptr. 2d 399 (2001) (substituted service on
manager of private postal facility held proper where process server attempted
to serve defendants at their last known address, was advised by a guard at that
address that defendants had moved, and subsequently contacted the U.S. Postal
Service and obtained defendants’ forwarding address which was a
private/commercial post office box facility); Hearn v. Howard, 177 Cal. App.
4th 1193, 99 Cal. Rtpr. 3d 642 (2009) [391/392](upholding substituted service on
a defendant whose business address was a private post office box rental store
where, after three unsuccessful attempts to personally serve the defendant, the
complaint and summons were left with the mail store clerk).

Why did the plaintiff in Bein mail a copy of the complaint and summons to the
defendant Brechtels’ residence? Did this mailing, by itself, constitute a proper
statutory method of service on these defendants? See CCP §§ 415.30, 415.40.
Did it constitute valid service as a matter of due process? Was the service by
plaintiff Bein on the other individual defendants, the Jochims, proper under CCP
§ 415.20?

Note that after the decision in Bein, supra, the Legislature enacted CCP §
415.21, which provides that a sheriff, marshal, or registered process server,
upon proper identification, must be granted access to a gated community for
purposes of performing lawful service of process.

[b] On Entities

When the defendant is a corporation, an unincorporated association, or a

public entity, attempted personal service on the designated agent or officer is
not a prerequisite to substitute service on someone in charge of the office during
usual office hours. CCP § 415.20(a); see Earl W. Schott, Inc. v. Kalar, supra ,
20 Cal. App. 4th at 945 (distinguishing § 415.20(a), applicable to corporations
and not requiring due diligence, from § 415.20(b)). Why is a reasonable attempt
at personal service a prerequisite to substitute service with respect to individual
defendants, but not as to entity defendants? Why did the court in Bein discuss
“reasonable diligence” with respect to plaintiff Bein’s use of § 415.20 substitute
service?

[c] Federal Rules

Rules 4(e), F.R.C.P. , authorizes substitute service on someone residing at an

individual defendant’s place of abode as an unqualified alternative to personal
service. Likewise, the vast majority of states recognize substituted “abode”
service as a primary method of service; only California and a few other states
relegate it to a secondary method of service. See Philip Craig Starti, Note,
Substituted Service of Process on Individuals: Code of Civil Procedure
Section 415.20(b), 21 Hastings L.J. 1257, 1278 (1970) (concluding that the
requirement of reasonable diligence in CCP § 415.20(b) unnecessarily restricts
use of substituted service without significantly improving the likelihood that the
defendant will actually receive notice). What policy considerations support the
California view of substituted “abode” service? What ones support the federal
or majority rule? See Starti, Substituted Service, supra at 1274–80.

[3] Publication

As Olvera v. Olvera, reproduced supra, demonstrates, CCP § 415.50 permits

constructive service by publication only where the court is satisfied that the
party to be served cannot with “reasonable diligence” be served personally or
by substitute service. How would you define this “reasonable diligence”
prerequisite in light of the Olvera opinion? Is an exhaustive search of the
relevant phone book [392/393]sufficient? See Donel, Inc. v. Badalian, 87 Cal.
App. 3d 327, 150 Cal. Rptr. 855 (1978); In re Matthew S., 201 Cal. App. 3d
315, 247 Cal. Rptr. 100 (1988).

[a] Reasonable Diligence

The court in Espindola v. Nunez, supra, 199 Cal. App. 3d at 1392–93,

observed that the “reasonable diligence” showing necessary to uphold an order
for service by publication under § 415.50 requires more exhaustive attempts to
locate the defendant than is sufficient to uphold substituted service on an
individual defendant pursuant to § 415.20(b). Why is the court’s observation
likely an accurate one?

[b] Proof of Diligence

A plaintiff must not only exercise due diligence as a prerequisite for an order
of publication, but must also show due diligence in the application to the court.
CCP § 415.50. In light of Olvera v. Olvera, supra, what constitutes a sufficient
showing? How must the plaintiff make this showing? Is a detailed declaration
by the plaintiff’s attorney sufficient? See Sanford v. Smith, 11 Cal. App. 3d 991,
90 Cal. Rptr. 256 (1970) (declaration of attorney was hearsay and not adequate
to establish due diligence for publication order.).

[c] Due Process

The inability to accomplish service by other methods despite the exercise of

reasonable diligence is a constitutional as well as a statutory prerequisite to
resort to service by publication. Mullane v. Central Hanover Bank & Trust
Co., 339 U.S. 306, 70 S. Ct. 652, 94 L. Ed. 865 (1950). Due process requires
“notice reasonably calculated, under all the circumstances, to apprise interested
parties of the pendency of the action and afford them an opportunity to present
their objections.” Mullane, 339 U. S. at 314. Resort to service by publication is
constitutionally permissible in cases where it is not reasonably possible or
practicable to give more adequate notice, such as where persons are missing,
unknown, or whose interest or whereabouts cannot with due diligence be
ascertained. Id. at 317–18. “Notice by mail or other means as certain to ensure
actual notice is a minimum constitutional precondition to a proceeding which
will adversely affect the liberty or property interest of any party … if its name
and address are reasonably ascertainable.” Mennonite Bd. of Missions v.
Adams, 462 U.S. 791, 800, 103 S. Ct. 2706, 77 L. Ed. 2d 180 (1983). Was the
service by publication in Olvera also invalid on due process grounds?

[d] “Actual Notice”

What constitutes “actual notice” within the meaning of CCP § 473.5 in a

motion to vacate a default judgment entered after service by publication? Based
on the discussion in Olvera v. Olvera, supra, does “actual notice” exist in this
context only where the defendant has actual knowledge of the summons as the
result of reading the published summons in the newspaper? See Ellard v.
Conway, 94 Cal. App. 4th 540, 114 Cal. Rptr. 2d 399 (2001) (although actual
knowledge from a source other than service of summons does not preclude a
defendant from seeking relief from a [393/394]default judgment under CCP §
473.5, such knowledge may provide a proper basis for denying such relief
where the defendants had actual knowledge of the lawsuit in time to defend the
action but failed to file an answer due to inexcusable neglect).

[4] Service By Mail Within California

 Code of Civil Procedure § 415.30 authorizes a very limited form of service
by mail within California. The plaintiff must mail copies of the complaint and
summons, along with two copies of the “Notice and Acknowledgment of
Receipt of Summons,” and a prepaid self-addressed return envelope, to the
defendant. CCP § 415.30(b) specifies the required form and contents of this
“Notice and Acknowledgment.” See also Form POS-015, Judicial Council
Forms. Service is not deemed complete unless the defendant executes and
returns the acknowledgment. § 415.30(c). Consequently, if the defendant fails to
execute or return the acknowledgment form, the plaintiff must serve the
defendant in some other proper method. The defendant may, however, be liable
for reasonable expenses incurred by plaintiff in serving defendant by another
method. § 415.30(d). Federal Rule 4(d), as amended in 1993, authorizes a
similar method of service by mail within the United States, referred to as a
request for waiver of service. In what category of cases is this type of service
by mail likely to be effective?

[C] Service in Another State

IN RE THE MARRIAGE OF TUSINGER

COURT OF APPEAL OF CALIFORNIA,
SECOND APPELLATE DISTRICT
170 Cal. App. 3d 80, 215 Cal. Rptr. 838 (1985)

Gilbert, Justice.

Appellant Gary Tusinger appeals from an order of the superior court denying
his motion to quash service of summons and set aside a default judgment. We
affirm the order of the trial court which found that appellant had been properly
served.

FACTS

Respondent Rebecca Tusinger filed a petition in California to dissolve her

marriage to appellant on May 6, 1977. She mailed the summons and petition to
appellant’s address in Arkansas, and requested a return receipt in accordance
with Code of Civil Procedure section 415.40 which provides in pertinent part:
“A summons may be served on a person outside this state in any manner
provided by this article or by sending a copy of the summons and of the
complaint to the person to be served by first-class mail, postage prepaid,
requiring a return receipt.”

The summons was filed with the court on June 28, 1977, together with the
return receipt, signed by appellant’s mother, Margaret Tusinger. Respondent
ultimately obtained a default judgment, awarding her custody of the minor
children, with the issue of support reserved. On November 23, 1977, a final
judgment was entered.

[394/395]

Meanwhile, back in Arkansas appellant filed divorce proceedings, effecting

service of process by publication. In June of 1978, respondent filed an order to
show cause re child and spousal support, and personally served appellant in
California when he was visiting the children. Appellant did not appear, and the
court granted the relief prayed for by modifying the interlocutory judgment so
that respondent was awarded, among other things, child support in the amount of
$200 per month per child.

When the district attorney sought to collect child support arrearages in the
amount of $23,250, appellant filed his motion to quash service of summons,
which was heard on February 10, 1984. The trial court found the service to be
proper and denied the motion.

DISCUSSION

Appellant contends that service of the summons and petition was improper
because he was not personally served. Although Code of Civil Procedure
section 415.40 allows out of state service by mail, he argues, Code of Civil
Procedure section 417.20 requires actual delivery to the person to be served.

Code of Civil Procedure section 417.20 provides in pertinent part: “Proof

that a summons was served on a person outside this state shall be made: (a) If
served in a manner specified in a statute of this state, as prescribed by Section
417.10, and if service is made by mail pursuant to Section 415.40, proof of
service shall include evidence satisfactory to the court establishing actual
delivery to the person to be served, by a signed return receipt or other evidence.
…” Appellant’s mother, not appellant, was served.
 In addition, appellant argues that Code of Civil Procedure section 416.90,
which allows service on an authorized agent, is not applicable because there is
no evidence that appellant’s mother was an authorized agent.

We agree with respondent that jurisdiction was acquired by mail under Code
of Civil Procedure section 415.40 even though appellant’s mother signed the
return receipt, because “other evidence” demonstrated that appellant received
notice. We have taken judicial notice of the superior court file (Evid. Code, §
452, subd. (d)), and in particular, exhibit A to a declaration of respondent’s
attorney, filed in his opposition to appellant’s motion to quash. Exhibit A is a
letter dated June 1, 1977, from appellant’s attorney in Arkansas. The letter
indicates that the attorney represents appellant and begins with the following
sentence: “I am writing with reference to the divorce petition which Gary
Tusinger received a few days ago and which was initiated by his wife.”

The trial judge, in his well-reasoned ruling on the motion, considered this
letter as sufficient “other evidence” under the statute. The court came to the
obvious conclusion that sometime between May 23, 1977, and June 1, 1977,
appellant took the summons and petition to his attorney who wrote to
respondent’s attorney. Nowhere in the record does appellant contradict this.
Rather, he states in his declaration that he has “never seen the summons and
petition in the California proceeding which this case is based upon.” How could
this be so unless appellant closed his eyes while he secreted the summons and
petition in a plain paper bag, [395/396]which he then delivered to his attorney?
This seems unlikely, and we understand why appellant’s bald assertion strained
the trial judge’s credulity.

“Other evidence” in Code of Civil Procedure section 417.20, means that a

return receipt signed by a person being served out of state is not the only
evidence to establish proof of service. The “other evidence” here was more
than sufficient to satisfy the court that the summons and petition were served on
appellant. * * *

The order of the trial court is affirmed.

[1] Service Options

 A plaintiff has many options when required to serve a defendant located in
another state. As Marriage of Tusinger, reproduced supra, indicates, CCP §
415.40 authorizes service of process on a defendant in another state in any
manner provided by in the Jurisdiction and Service of Process Act for instate
service, plus service by mail. Additionally, CCP § 413.10(b) authorizes service
in another state in accordance with the law of the state where the defendant is to
be served. Are some of these service alternatives preferred over others, from a
statutory or due process perspective? For example, must a plaintiff pursue
personal service when available, as opposed to service by mail under §
415.40? See M. Lowenstein and Sons, Inc. v. Superior Court, 80 Cal. App. 3d
762, 145 Cal. Rptr. 814 (1978) (no constitutional requirement that personal
service on out-of-state defendant is indispensable when practical).

Is service by publication proper where the plaintiff knew the nonresident

defendant’s post office box address, but could not ascertain defendant’s
residence or business address? See Transamerica Title Ins. Co. v. Hendrix , 34
Cal. App. 4th 740, 40 Cal. Rptr. 2d 614 (1995) (plaintiff’s failure to attempt
service by mail pursuant to CCP § 415.30 at a nonresident defendant’s P.O. box
prior to application for an order for publication made the application motion
defective as a matter of law).

[2] “Other Evidence”

CCP § 415.40 and § 417.20(a) authorize service by mail on a person in

another state when actual delivery is established by signed return receipt or by
“other evidence.” What are some examples of sufficient “other evidence”?

[a] Taylor-Rush v. Multitech Corp., 217 Cal. App. 3d 103, 265 Cal. Rptr. 672 (1990)

The plaintiff in Taylor-Rush attempted service by mail pursuant to § 415.40

on defendant Cohen, a resident of New York. In upholding an order quashing
service, the court found the evidence of actual delivery insufficient:

The record contains a return receipt addressed to Cohen at “425 East

58th St., Apt. 4-D, New York, N.Y. 10022” (italics added) and is signed
by two persons other than Cohen. One signature is in the box marked
“Addressee” and the other signature is in the box marked “Agent.” There is
no evidence who these signators are or their relationship, if any, to Cohen.
Cohen’s declaration states that he has never been served with the
[396/397]summons and complaint or the amended complaint. Although the
 street address reflected on the return receipt is correct, he resides in
apartment 15A, not apartment 4-D. He has not authorized anyone, other
than his wife, to accept mail on his behalf, and does not know who signed
the return receipt. * * *

The plaintiff has the burden of demonstrating by a preponderance of

the evidence that all jurisdictional criteria [of CCP § 415.40 and §
417.20(a)] are met. (Ziller Electronics Lab GmbH v. Superior Court
(1988) 206 Cal. App. 3d 1222, 1232–33 [254 Cal. Rptr. 410].)

While a return receipt signed by someone authorized by a nonresident

defendant to sign for his mail is sufficient, the plaintiff must provide
separate evidence establishing the authority of the person who signed the
return receipt on defendant’s behalf. (Neadeau v. Foster (1982) 129 Cal.
App. 3d 234, 237–38 [180 Cal. Rptr. 806].) Other evidence of actual
receipt may also validate the otherwise defective service, such as where a
defendant’s attorney acknowledges the defendant’s receipt of the summons
(In re Marriage of Tusinger (1985) 170 Cal. App. 3d 80, 82–83 [215 Cal.
Rptr. 838].) Here, however, no such evidence has been presented.

Appellant argues that Cohen obviously received both the complaint

and its amendment since he refers in his declaration to matters “alleged in
the first amended complaint.” She also contends other pleadings and
motion papers were similarly addressed and never returned. Such
contentions are without merit. A defendant is under no duty to respond to a
defectively served summons. The notice requirement is not satisfied by
actual knowledge of the action without service conforming to the statutory
requirements, which are to be strictly construed. (Kappel v. Bartlett
(1988) 200 Cal. App. 3d 1457, 1466–67 [246 Cal. Rptr. 815] .) Due to the
defective service on Cohen, no jurisdiction was acquired over him.

Why was the defendant’s declaration referring to the complaint insufficient

“other evidence” in Taylor-Rush? How was that declaration different from the
attorney’s declaration found sufficient “other evidence” in Tusinger? Why was
the service by mail defective in Taylor-Rush, but not in Tusinger? Are these
two cases distinguishable? How?

[b] Dill v. Berquist Construction Co., 24 Cal. App. 4th 1426, 29 Cal. Rptr. 2d 746 (1994)
 The plaintiff in Dill attempted service by mail on two nonresident defendant
corporations pursuant to CCP § 415.40 and § 416.10. The plaintiff did not mail
the complaint and summons to one of the corporate officers specified to receive
service in CCP § 416.10, but instead mailed them directly to the corporate
defendants. With respect to each mailing, a postal receipt was returned to
plaintiff indicating that some employee of the corporation had signed and
acknowledged delivery.

The court held that the service was invalid because the plaintiff did not mail
the complaint and summons to one of the corporate individuals specified in §
416.10. Id. at 1436. The court recognized that substantial compliance with the
statutory [397/398]requirements for service of process, not strict compliance, was
required, and endorsed In re Marriage of Tusinger as a proper application of
the substantial compliance doctrine. However, the court ruled that plaintiff Dill,
unlike the plaintiff in Tusinger, had not demonstrated that the summons was
actually received by one of the persons to be served. The fact that the summons
actually reached some employees of the defendant corporations was insufficient
to establish substantial compliance; the plaintiff must demonstrate that the
summons actually reached one of the corporate individuals specified in §
416.10 to accept service for the corporation. Id. at 1435–36.

Was compliance with the statutory service requirements in Dill any less
substantial than in Tusinger? Was not the complaint and summons in Dill
actually delivered to each corporate defendant in much the same manner as in
Tusinger? Can these two cases be distinguished solely on the ground that the
Dill defendants were nonresident corporations and the Tusinger defendant was
an individual? Or are there other grounds to distinguish these two cases?

[c] Cruz v. Fagor America, Inc., 146 Cal. App. 4th 488, 52 Cal. Rptr. 3d 862 (2007)

The plaintiff in Cruz attempted to serve the out-of-state defendant corporation

by mail pursuant to CCP § 415.40 and § 416.10. The plaintiff properly
addressed and mailed the complaint and summons, return receipt requested, to
the defendant’s president. The return receipt was signed by an individual who
was not the corporation’s president. The defendant’s president never actually
received the complaint and summons. After a default judgment was entered for
the plaintiff, the defendant corporation contested the validity of the service. The
plaintiff submitted a declaration of his attorney attesting that the attorney had
received confirmation from a representative of the U.S. Postal Service that the
individual who signed the return receipt was an employee of the defendant
corporation who regularly received mail on the corporation’s behalf.
 T he Cruz court found this evidence sufficient to establish that an agent
authorized to receive mail on the defendant’s behalf received the complaint and
summons, and concluded the plaintiff had met all the statutory requirements for
effective service on a nonresident corporation. The Cruz court distinguished
Dill v. Berquist Construction Co., supra, because the plaintiff in Dill had not
complied with the statutory requirements for service on a corporation under
CCP § 416.10. Instead of mailing the complaint and summons to one of the
corporate officers specified to receive service in § 416.10, the plaintiff in Dill
improperly mailed them directly to the defendant corporation. The Cruz court
also distinguished Taylor-Rush v. Multitech Corp., supra , as a case where the
plaintiff mailed the complaint and summons to the proper defendant but at an
incorrect apartment number, and there was no evidence in Taylor-Rush as to
who the signators were or what the nature of their relationship to the defendant
was, if any.

Did the Cruz court properly distinguish Dill and Taylor-Rush? Is Cruz really
a case of a plaintiff submitting “other evidence” to prove actual delivery of the
complaint and summons?

[398/399]

[3] Service by Mail

How is the service by mail on a person in another state authorized by §

415.40 different from the service by mail within California authorized by §
415.30? What policy considerations likely caused the Legislature to authorize
more limited service by mail for in-state defendants than for out-of-state
defendants? Does due process require this difference in treatment?

[4] Due Process and Service by Mail

Does due process require proof of actual delivery by a signed return receipt
or some other evidence for valid service by mail? Does due process permit
California to utilize a service-by-mail statute which only requires proof of
mailing, and not proof of actual delivery? See Mennonite Board of Missions v.
Adams, 462 U.S. 791, 103 S. Ct. 2706, 77 L. Ed. 2d 180 (1983) (notice mailed
to defendant’s last known address is constitutional minimum in tax lien
foreclosure case); Mullane v. Central Hanover Bank & Trust Co., 339 U.S.
306, 70 S. Ct. 652, 94 L. Ed. 865 (1950) (service by mail constituted
reasonable notice to large class of nonresident trust beneficiaries with identical
shared interests, even though such service may not reach each individual
beneficiary). If constitutionally permissible, why did the Legislature require
proof of actual delivery when it enacted CCP § 415.30 and § 417.20(a)?

[5] Substituted Service on Agent Within California

In a wide variety of situations, California statutes authorize substituted

service on a designated agent of the defendant within California.

[a] Corporations and Other Entities

Corporations, partnerships, and other entities doing business in California

must designate an agent for service of process within the state. E.g., Corp. Code
§§ 1502–1505, 2105, 2107, 1701–1702, 2110-2111, 6210-6211, and 8210–
8212 (various domestic and foreign corporations); § 15800 (partnerships);
Insurance Code §§ 1600-1605 (insurance companies); CCP §§ 416.10-416.40. If
no such agent for service of process is designated by the entity, substitute
service may be made upon the California Secretary of State or other appropriate
governmental agent. E.g., Corp. Code §§ 1702, 2111, 15800(b). For a more
complete list of statutes which authorize such substitute service on a
governmental official, see Schwing, California Affirmative Defenses, Lack of
Proper or Effective Service § 2.8, pp. 91–98 (2011).

[b] Contract

The parties to a contract may agree to designate an agent for service of

process within the state. CCP § 416.90; see National Equipment Rental, Ltd. v.
Szukhent, 375 U.S. 311, 84 S. Ct. 411, 11 L. Ed. 2d 354 (1964) (service on
contractually appointed agent constitutionally adequate under due process).

[399/400]

[c] Implied Agent

Vehicle Code § 17451 provides that ownership or operation of a motor

vehicle within California by a nonresident is the equivalent to an appointment of
the Director of the Department of Motor Vehicles as agent for service of
process in any action arising from an accident resulting from operation of the
motor vehicle in California. If the plaintiff serves process on the Director
pursuant to this section, the plaintiff must also mail a copy to the defendant. Veh.
Code §§ 17454, 17455.

Does such service also confer personal jurisdiction over a nonresident

defendant vehicle owner based on the concept of transient jurisdiction? A
California court will be able to assert personal jurisdiction over a nonresident
defendant vehicle operator consistent with due process in a damage action for
injuries arising out of an accident in California, without relying on transient
jurisdiction. Why? Is substitute service on an implied governmental agent
constitutionally adequate notice as a matter of due process?

[d] Alternative Methods

Substituted service on a designated or implied agent is alternative to, not

exclusive of, the other statutorily authorized methods of service on a defendant.
M. Lowenstein & Sons, Inc. v. Superior Court, 80 Cal. App. 3d 762, 145 Cal.
Rptr. 814 (1978) (plaintiff serving nonresident corporation may serve
designated agent pursuant to CCP § 416.10 or, alternatively, may serve by mail
pursuant to CCP § 415.40); Anderson v. Sherman, 125 Cal. App. 3d 228, 235–
37, 178 Cal. Rptr. 38 (1981) (injured California resident may serve nonresident
motorist pursuant to Veh. Code §§ 17454 & 17455, or CCP § 415.40).

[D] Service Outside the United States

[1] International Service Agreements

The United States has ratified two multilateral international agreements which
govern service of process among signatory countries.

[a] Hague Service Convention

In 1969, the United States ratified the Hague Service Convention, which now
includes such other signatories as Canada, Japan, the Peoples’ Republic of
China, the United Kingdom, Germany, and most of the other European countries.
See 20 U.S.T. 361-73, T.I.A.S. No. 6638, 658 U.N.T.S. 163. For the text of this
convention, and a complete list of all signatory countries, see the United States
Code Annotated sections following Rule 4, F.R.C.P.

Articles 2-9 and 19 of the Hague Service Convention authorize uniform

procedures for extraterritorial service of judicial documents through a Central
Authority designated by each country, through diplomatic channels, or by any
method permitted by the internal law of the country where the service is to be
made.

Article 10 authorizes additional extraterritorial service methods, including

[400/401]direct service by mail; but only if the receiving country has ratified and
not objected to these alternative methods. Consequently, a determination of the
availability of these alternative methods requires an examination of the
receiving country’s accession to the Convention, as set forth in each country’s
“Declarations” concerning the Hague Service Convention. These Declarations
are reprinted in the United States Code Annotated sections following Rule 4,
F.R.C.P. The Declarations must also be consulted to determine each signatory
country’s requirements with respect to translation of documents to be served.

The U.S. Supreme Court in Volkswagenwerk AG v. Schlunk , 486 U.S. 694,

699, 108 S. Ct. 2104, 100 L. Ed. 2d 722 (1988), indicated in dicta that, by
virtue of the Supremacy Clause, the Hague Service Convention preempts
inconsistent methods of service prescribed by state law in all cases to which the
Convention applies. CCP § 413.10(c) requires the same deference to the
Convention in the California courts, as does Rule 4(f), F.R.C.P. , in the federal
courts. In Yamaha Motor Co., Ltd. v. Superior Court , 174 Cal. App. 4th 264,
94 Cal. Rptr. 3d 494 (2009), the plaintiff in a products liability action served
the defendant manufacturer, a Japanese corporation, through its American
subsidiary’s agent for service of process. Applying the holding in
Volkwagenwerk AG v. Schlunk, supra , a decision with almost identical facts,
the Yamaha court held that the Hague Service Convention’s provisions were not
implicated because California law provides for service of process on a foreign
corporation by serving its domestic subsidiary as agent and does not necessarily
require transmittal of the relevant documents for service abroad. See also Kott
v. Superior Court, 45 Cal. App. 4th 1126, 53 Cal. Rptr. 2d 215 (1996) (service
on a Canadian resident by publication in a Los Angeles newspaper did not
implicate the Hague Service Convention because such service does not require
the transmission of documents outside the United States).

For an excellent discussion of the Hague Service Convention, with analysis

of the disagreement among the courts over the proper construction of Article 10,
see Honda Motor Co. v. Superior Court, 10 Cal. App. 4th 1043, 12 Cal. Rptr.
2d 861 (1992) (Japan’s failure to object to Article 10(a), which protects “the
freedom to send judicial documents, by postal channels, directly to persons
abroad,” did not authorize service of process by a private litigant on a
corporation in Japan by means of certified mail), and Denlinger v.
Chinadotcom Corp., 110 Cal. App. 4th 1396, 2 Cal. Rptr. 3d 530 (2003)
(Article 10(a) of Hague Convention authorizes service of process by mail;
service by registered mail on defendants in Hong Kong held proper since China
has not objected to Article 10(a) in its declarations with respect to Hong Kong).

For commentary and analysis of the Hague Service Convention, see David
Epstein & Jeffrey L. Snyder, International Litigation: A Guide to Jurisdiction,
Practice and Strategy, §§ 4.01-4.05 (1993); Leonard A. Leo, Note, The
Interplay Between Domestic Rules Permitting Service Abroad by Mail and the
Hague Convention on Service: Proposing an Amendment to the Federal Rules
of Civil Procedure , 22 Cornell Int’l L.J. 335 (1989); Pamela R. Parmalee,
Note, International Service of Process: A Guide to Serving Process Abroad
Under the Hague Convention, 39 Okla. L. Rev. 287 (1986).

[401/402]

[b] Inter-American Convention

The United States ratified the Inter-American Convention on Letters Rogatory

in 1986. This Convention, which includes Argentina, Guatemala, Mexico,
Paraguay, Peru, the United States, and Uruguay among its signatories, authorizes
international service of process by methods very similar to those of the Hague
Service Convention. This Convention is reprinted in 14 Int’l Leg. Mat. 339
(1975), with additional Protocol reprinted in 18 Int’l Leg. Mat. 1238 (1979).
For commentary on the Inter-American Convention, see Lucinda A. Low,
International Judicial Assistance among the American States — The Inter-
American Conventions, 18 Int’l Law. 705 (1984); Richard D. Kearney,
Developments in Private International Law, 81 Am. J. Int’l Law 724 (1987)
(comparing Inter-American Convention and Hague Service Convention).

[2] Service When No Treaty Applies

How should extraterritorial service of process be accomplished in another

country when no international service treaty applies? See CCP § 413.10(c);
Rule 4(f), F.R.C.P.

[E] Procedures for Asserting Lack of Proper Service

 [1] Motion to Quash

A challenge to the validity of service of process must be made by filing a

motion to quash on or before the last day to plead in response to the complaint.
CCP § 418.10(a) & (b). Pursuant to a 2003 amendment to § 418.10, the
defendant need not raise the objection by a special appearance, but may
simultaneously answer, demur, or move to strike, so long as the objection is
raised in defendant’s first appearance. See CCP § 418.10(e) (effective Jan. 1,
2003). If the defendant makes a general appearance, as defined in CCP § 1014,
before filing a motion to quash objecting to lack of proper service, the defendant
waives his right to contest the validity of the service. See CCP § 418.10(e)(3);
Fireman’s Fund Ins. Co. v. Sparks Construction, Inc ., 114 Cal. App. 4th 1135,
8 Cal. Rptr. 3d 446 (2004) (a defendant who makes a general appearance
forfeits any objection to defective service, even when the defendant does not
know at the time that such an objection is available).

[a] Burden of Proof

When a defendant properly moves to quash service of process, the burden is

on the plaintiff to prove the facts establishing valid service. Dill v. Berquist
Construction Co., 24 Cal. App. 4th 1426, 1441–43, 29 Cal. Rptr. 2d 746
(1994); Taylor-Rush v. Multitech Corp ., supra, 217 Cal. App. 3d at 110–111;
Kroopf v. Guffey, 183 Cal. App. 3d 1351, 1356, 228 Cal. Rptr. 807 (1980). The
return of a process server registered pursuant to § 22350 et seq. of the Business
and Professions Code, however, establishes a presumption, affecting the burden
of producing evidence, of the truth of the facts stated in the return. Evidence
Code § 647. This presumption arises, however, only if the proof of service
complies with the statutory requirements regarding such proofs. See Dill, supra,
24 Cal. App. 4th at 1441–42 [402/403](proof of service which showed that
complaint was mailed to wrong corporate officer raised no presumption of
proper service).

[b] Effect of Granted Motion

If a motion to quash is granted, the service is quashed but the action is not
dismissed. The plaintiff may attempt to perfect the court’s jurisdiction by
obtaining valid service, subject to applicable time limits for service such as
those of CCP §§ 583.210-583.250. Roberts v. Home Ins. Indem. Co., 48 Cal.
App. 3d 313, 317, 121 Cal. Rptr. 862 (1975).

[c] Appellate Review

 If a motion to quash is denied, the defendant may obtain immediate appellate
review by a writ of mandate. CCP § 418.10(c). If the motion is granted, the
plaintiff has the right to appeal the order. CCP § 904.1(a)(3). Under what
circumstances would a plaintiff appeal an order quashing service rather than
simply re-serve the defendant?

[d] Federal Rules

The federal procedures for asserting insufficiency of process or service of

process are the same as for asserting lack of personal jurisdiction. Rule 12(b),
(g) & (h), F.R.C.P. Generally, the defendant must assert these defenses in the
first appearance in federal court, either by motion to dismiss or in the answer,
or the defenses are waived. Rule 12(h). However, a timely raised defense is not
waived if combined with another motion, or if stated in the answer. Rule 12(b),
(b)(4), (b)(5), & (g).

[2] Time Limits on Service of Process

[a] Mandatory Dismissal

The complaint and summons must be served upon a defendant within three
years after the action is commenced against the defendant. CCP §§ 583.210(a),
583.110. Return of summons or other proof of service must be made within 60
days after this required time for service of the summons and complaint. CCP §
583.210(b). These time-for-service requirements do not apply if the defendant
enters into a written stipulation or does some other act which constitutes a
general appearance. CCP § 583.220. Other exceptions and time exclusions are
set forth in CCP § 583.230 and § 583.240. Failure to serve within the
prescribed time will result in mandatory dismissal of the action. CCP §
583.250; see, e.g., Perez v. Smith, 19 Cal. App. 4th 1595, 24 Cal. Rptr. 2d 186
(1993) (action must be dismissed if complaint and summons not served within
three years unless plaintiff can demonstrate defendant was not amenable to
process during some portion of this period). These time-for-service rules and
exceptions are discussed in more detail in § 12.03, Involuntary Dismissals,
infra.

[403/404]

[b] Discretionary Dismissal

Service not made within two years after the action is commenced against the
defendant may result in discretionary dismissal for delay in prosecution
pursuant to CCP §§ 583.410, 583.420(a)(1); Rule 3.1342(e), Cal. Rules of Ct.
See, e.g., Williams v. Los Angeles Unified Sch. Dist., 23 Cal. App. 4th 84, 28
Cal. Rptr. 2d 219 (1994) (discussing factors relevant to dismissal
determination).

[c] Court Rules

Rule 3.110 requires service of the complaint on all named defendants, and
proofs of service filed, within 60 days after the filing of the complaint, unless
the court orders an extension of time. Rule 3.110(b) & (e), Cal. Rules of Ct.
Likewise, many local fast track rules service of the complaint within 60 days of
its filing. E.g., Sacramento County Superior Court Rule 11.03; San Diego
Superior Court Rule 2.1.5.

[3] Summons

The form and content requirements for a valid summons are specified in CCP
§ 412.20, as reflected in the Judicial Council approved summons form. Judicial
Council Form SUM-100. Specific statutes may require additional or different
information in the summons for particular causes of action, such as unlawful
detainer, CCP § 1167, Judicial Council Form SUM-130; family law actions,
Rule 5.25, Form FL-110; actions against a corporation, association, or
partnership, CCP § 412.30; condemnation, CCP §§ 1250.120(b), 1250.125; and
fictitious defendants, CCP § 474.

[4] Process Servers

A summons and complaint may be served by any person who is at least 18

years of age and not a party to the action. CCP § 414.10. Consequently, although
state laws also authorize a sheriff (Gov. Code § 26608), marshall (Gov. Code §
26665), or registered process server (Business and Professional Code §§
22350-22358) to serve the complaint and summons, the plaintiff has the option
to select any adult individual to serve these documents. What are the relative
advantages and disadvantages of selecting the sheriff to serve process? See
Gov. Code § 26662. A registered process server? See Bus. & Prof. Code §§
22353 and 22357; CCP § 413.40; Evid. Code § 647. An attorney? See Caldwell
v. Coppola, 219 Cal. App. 3d 859, 865, 268 Cal. Rptr. 453 (1990) . Some other
individual?

[5] Proof of Service

 After a summons has been served, the summons must be returned together
with proof of service as defined in CCP § 417.10 and § 417.20. CCP §
417.30(a); see Judicial Council Form POS-010. Actual service of process,
rather than proof of service, vests a court with jurisdiction to act in a matter.
Oats v. Oats, 148 Cal. App. 3d 416, 420, 196 Cal. Rptr. 20 (1983) ; Willen v.
Boggs, 21 Cal. App. 3d 520, 523–24, 97 Cal. Rptr. 917 (1971) . Proof and
return of service, however, must be made within the required time limits of CCP
§ 583.210 to avoid mandatory dismissal. Johnson & Johnson v. Superior
Court, 38 Cal. 3d 243, 211 Cal. Rptr. 517, 695 P.2d 1058 (1985) ;
[404/405]Bishop v. Silva, 234 Cal. App. 3d 1317, 285 Cal. Rptr. 910 (1991) .
What other purposes do return and proof of service serve? See Johnson &
Johnson, supra, 38 Cal. 3d at 247–56; Olvera v. Olvera, reproduced supra;
Marriage of Tusinger, reproduced supra.

[6] Special Service Statutes

Numerous specific statutes require or authorize service of process in a

manner different from, or in addition to, that of the general service statutes for
particular causes of action. Such special service statutes apply, for example, to
tort actions against the state, Gov. Code §§ 955.4, 955.6-.8, or against a public
agency, Gov. Code §§ 960.2-.8, CCP § 416.50; quiet title actions, CCP §
763.010-.030; condemnation actions, CCP § 1250.130 & .140; unlawful
detainer actions, CCP §§ 415.45-.47; and parents’ action on behalf of an injured
child, CCP § 376. For a more complete list of these special manner of service
statutes, see Schwing, California Affirmative Defenses, Lack of Proper or
Effective Service § 2.2, pp. 65–77 (2011).

[7] Federal Incorporation of State Laws

Federal Rule 4, F.R.C.P., as amended in 1993, authorizes a variety of options

for service of process in the federal courts. Some of the more important
differences between the Federal and California service rules were already
noted, supra. The federal service rules, however, also incorporate state law.
Rule 4(e)(1) provides that, unless otherwise required by federal law, service
upon an individual in a judicial district of the United States may be made by
“following state law for serving a summons in an action brought in the courts of
general jurisdiction in the state where the district court is located or where
service is made.” Rule 4(h)(1) authorizes a similar state law option for service
on a corporation, partnership, or other unincorporated association.
§ 6.05 FORUM NON CONVENIENS
[A] Relevant Factors Under the California Doctrine

STANGVIK v. SHILEY INCORPORATED

SUPREME COURT OF CALIFORNIA
54 Cal. 3d 744, 1 Cal. Rptr. 2d 556, 819 P.2d 14 (1991)

Mosk, Justice.

In this case we address the question of the appropriate standards to be

applied in deciding whether a trial court should grant a motion based on the
doctrine of forum non conveniens when the plaintiff, a resident of a foreign
country, seeks to bring suit against a California corporation in the courts of this
state. We granted review to resolve a conflict between the opinion of the Court
of Appeal in the present case on the one hand, and Corrigan v. Bjork Shiley
Corp. (1986) 182 Cal. App. 3d 166 [227 Cal. Rptr. 247] , and Holmes v. Syntex
Laboratories, Inc. (1984) 156 Cal. App. 3d 372 [202 Cal. Rptr. 773] ,
[405/406]on the other.

Plaintiffs, members of two families, one residing in Norway and the other in
Sweden, are the wives and children of two men who received heart valve
implants in the countries of their residence. The valves were designed and
manufactured in California by defendant Shiley Incorporated (Shiley), a
California corporation. In both cases, the valves allegedly failed, and the
patients died. Thereafter, plaintiffs filed suit in California against Shiley and its
parent company, a Delaware corporation (hereinafter defendants), alleging that
the valves were defective. They sought damages based on theories of
negligence, strict liability, breach of warranty, fraud, and loss of consortium.
One of the complaints also sought recovery for negligent infliction of emotional
distress.

Defendants moved to dismiss or stay the actions on the ground of forum non
conveniens, as authorized by section 410.30 of the Code of Civil Procedure.1
They asserted that the cases should be tried in Sweden and Norway because it
was in those countries that the plaintiffs resided, the valves were sold,
decedents received medical care, the alleged fraudulent representations were
made, and evidence regarding the provision of health care and other matters
existed. Plaintiffs countered that California was the more convenient place of
trial because the valves were designed, manufactured, tested and packaged in
California. The parties introduced conflicting evidence regarding plaintiffs’
legal rights and remedies in Scandinavia, and each claimed that the most
important and numerous documents and witnesses were located in the country
which they asserted was the most appropriate place for trial. The trial court
found in favor of defendants, concluding that California was an inconvenient
forum and that Sweden and Norway provided adequate alternative forums for
resolution of the actions. It stayed the actions, and retained jurisdiction to make
such further orders as might become appropriate. The order was subject to
seven conditions, with which defendants agreed to comply.2

The Court of Appeal affirmed, after discussing the various private and public
interest factors relevant to a determination of the appropriate forum for the trial
of an action under the doctrine of forum non conveniens. It declined to follow
Corrigan v. Bjork Shiley Corp., supra, 182 Cal. App. 3d 166 (hereafter
Corrigan), and Holmes v. Syntex Laboratories, Inc., supra, 156 Cal. App. 3d
372 (hereafter Holmes), a case which preceded Corrigan by two years.

Plaintiffs claim that the convenience of the parties and public policy would
be best served if the actions were tried in California, and that the Court of
Appeal [406/407]distorted the analysis of these factors in upholding the trial
court’s decision. They assert also that the appellate court failed to analyze or
give weight to certain matters which prior California decisions have held are
relevant to a determination of a forum non conveniens motion. We conclude that
the Court of Appeal correctly decided the case and affirm its judgment.

Forum non conveniens is an equitable doctrine invoking the discretionary

power of a court to decline to exercise the jurisdiction it has over a transitory
cause of action when it believes that the action may be more appropriately and
justly tried elsewhere. The doctrine was first applied in California in Price v.
Atchison, T. & S.F. Ry. Co. (1954) 42 Cal. 2d 577 [268 P.2d 457, 43 A.L.R.2d
756] (hereafter Price). We described the basis of the doctrine as follows:
“‘There are manifest reasons for preferring residents in access to often
overcrowded Courts, both in convenience and in the fact that broadly speaking it
is they who pay for maintaining the Courts concerned.’ … [T]he injustices and
the burdens on local courts and taxpayers, as well as on those leaving their
work and business to serve as jurors, which can follow from an unchecked and
unregulated importation of transitory causes of action for trial in this state …
require that our courts, acting upon the equitable principles …, exercise their
discretionary power to decline to proceed in those causes of action which they
conclude, on satisfactory evidence, may be more appropriately and justly tried
elsewhere.” (Id. at pp. 582–584.)

In determining whether to grant a motion based on forum non conveniens, a

court must first determine whether the alternate forum is a “suitable” place for
trial. If it is, the next step is to consider the private interests of the litigants and
the interests of the public in retaining the action for trial in California. The
private interest factors are those that make trial and the enforceability of the
ensuing judgment expeditious and relatively inexpensive, such as the ease of
access to sources of proof, the cost of obtaining attendance of witnesses, and the
availability of compulsory process for attendance of unwilling witnesses. The
public interest factors include avoidance of overburdening local courts with
congested calendars, protecting the interests of potential jurors so that they are
not called upon to decide cases in which the local community has little concern,
and weighing the competing interests of California and the alternate jurisdiction
in the litigation. (Piper Aircraft Co. v. Reyno (1981) 454 U.S. 235, 259–261
[102 S. Ct. 252, 70 L. Ed. 2d 419, 437–439] (hereafter Piper); Gulf Oil Corp.
v. Gilbert (1947) 330 U.S. 501, 507–509 [67 S. Ct. 839, 91 L. Ed. 1055, 1061–
1063].)

On a motion for forum non conveniens, the defendant, as the moving party,
bears the burden of proof. The granting or denial of such a motion is within the
trial court’s discretion, and substantial deference is accorded its determination
in this regard. (Piper, supra, 454 U.S. at p. 257 [70 L. Ed. 2d at pp. 436–437];
Credit Lyonnais Bank Nederland, N.V. v. Manatt, Phelps, Rothenberg &
Tunney (1988) 202 Cal. App. 3d 1424, 1436 [249 Cal. Rptr. 559].)

On the first of these issues, whether the case may be “suitably” tried in
Norway and Sweden, the answer is clear. * * * Defendants stipulated that they
would submit to jurisdiction in Sweden or Norway, respectively, as well as to
the tolling of the statute of limitations during the pendency of the actions in
California. Thus, the courts of Sweden and Norway present suitable forums for
trial of the actions.

[407/408]

We proceed, then, to the second and more difficult question, whether the
Court of Appeal erred in concluding that the balance of the private and public
interests justified a stay of the actions. The court relied heavily on Piper, supra,
454 U.S. 235, in reaching its decision. Piper, like the present case, involved
foreign plaintiffs who sought to hold an American manufacturer liable for deaths
which occurred in a foreign country. There, an airplane built by the defendant in
Pennsylvania, crashed in Scotland, killing several residents of that country. The
representative of the decedents’ estates filed a wrongful death action in federal
district court, alleging negligence and strict liability. The district court in
Pennsylvania granted a motion by defendants on the ground of forum non
conveniens, concluding that Scotland was the appropriate forum for trial of the
action. The circuit court reversed the judgment because Scottish law was less
favorable to the plaintiffs than the law of Pennsylvania.

This decision was in turn reversed by the Supreme Court, in an opinion which
discussed the factors to be considered in determining a forum non conveniens
motion. The high court, in its analysis of the doctrine, reiterated long-standing
principles, first clearly enunciated by it in Gulf Oil Corp. v. Gilbert, supra, 330
U.S. 501, and later applied in California in Price, supra, 42 Cal. 2d 577. The
court warned that the private and public interest factors must be applied
flexibly, without giving undue emphasis to any one element. A court should not
decide that there are circumstances in which the doctrine will always apply or
never apply. Otherwise, the flexibility of the doctrine would be threatened, and
its application would be based on identification of a single factor rather than the
balancing of several. (Piper, supra, 454 U.S. at pp. 249–250 [70 L. Ed. 2d at
pp. 431–432].)4 The high court recognized that there is “ordinarily a strong
presumption in favor of the plaintiff’s choice of forum” (id. at p. 255 [70 L. Ed.
2d at p. 435]), but held that a foreign plaintiff’s choice deserves less deference
than the choice of a resident.

The high court discussed in some detail the significance to be accorded to the
fact that the law of the forum state is more favorable to the plaintiff than that of
the alternate jurisdiction. In this connection, it observed that the laws of the
United States in product liability actions favor plaintiffs in several respects: the
law of strict liability, which exists in almost all 50 states but only a handful of
foreign countries; the existence of jury trials in such actions, resulting in
sometimes generous awards, contingent attorney fee arrangements, and more
liberal rules of discovery. It held that if substantial weight is given to the
circumstance that the law in the forum state is more favorable to the plaintiff
than the one in the alternate jurisdiction, “The American courts, which are
already extremely attractive to foreign plaintiffs, would become even more
attractive. The flow of litigation into the United States would increase and
further congest already crowded courts. [Fn. omitted.]” (Piper, supra, 454 U.S.
at p. 252 [70 L. Ed. 2d at p. 433].) Thus, the possibility of an unfavorable
change in the law is a “relevant consideration” only if the remedy in the
alternative [408/409]forum “is so clearly inadequate or unsatisfactory that it is no
remedy at all ….” (Id. at p. 254 [70 L. Ed. 2d at p. 435].)5

After analyzing the interests of the parties and of Scotland in the litigation, the
court concluded that “the incremental deterrence that would be gained if this
trial were held in an American court is likely to be insignificant. The American
interest in this accident is simply not sufficient to justify the enormous
commitment of judicial time and resources that would inevitably be required if
the case were to be tried here.” (Piper, supra, 454 U.S. at pp. 260–261 [70 L.
Ed. 2d at pp. 438–439].)6

In the present case, the trial court found that Sweden and Norway were
adequate alternative forums. Defendants produced evidence that Norway and
Sweden might permit recovery under a strict liability theory, that Norway might
allow special damages (but not punitive damages) in some circumstances, and
that the actions could be pursued in those countries without undue delay.
Although some of this evidence was contradicted by plaintiffs, the trial court’s
determination of these issues is supported by substantial evidence, and we defer
to its conclusion. Thus, the fact that California law would likely provide
plaintiffs with certain advantages of procedural or substantive law cannot be
considered as a factor in plaintiffs’ favor in the forum non conveniens balance.

Next we consider the effect of the residence of the parties in deciding a

motion based on forum non conveniens. Many cases hold that the plaintiff’s
choice of a forum should rarely be disturbed unless the balance is strongly in
favor of the defendant. (E.g., Goodwine v. Superior Court (1965) 63 Cal. 2d
481, 485 [47 Cal. Rptr. 201, 407 P.2d 1] ; Price, supra, 42 Cal. 2d 577, 585;
…) But the reasons advanced for this frequently reiterated rule apply only to
residents of the forum state: (1) if the plaintiff is a resident of the jurisdiction in
which the suit is filed, the plaintiff’s choice of forum is presumed to be
convenient and (2) a state has a strong interest in assuring its own residents an
adequate forum for the redress of grievances (Archibald v. Cinerama Hotels
(1976) 15 Cal. 3d 853, 859 [126 Cal. Rptr. 811, 544 P.2d 947]). [D]ismissal of
an action (as opposed to a stay) was ordinarily not permitted on the basis of
inconvenient forum if the plaintiff was a California [409/410]resident. (15 Cal. 3d
at p. 859; Goodwine v. Superior Court, supra, 63 Cal. 2d at p. 485.) Where,
however, the plaintiff resides in a foreign country, Piper holds that the
plaintiff’s choice of forum is much less reasonable and is not entitled to the
same preference as a resident of the state where the action is filed. At best,
therefore, under the rule laid down in Piper, the fact that plaintiffs chose to file
their complaint in California is not a substantial factor in favor of retaining
jurisdiction here.7

Defendant’s residence is also a factor to be considered in the balance of

convenience. If a corporation is the defendant, the state of its incorporation and
the place where its principal place of business is located is presumptively a
convenient forum. As noted above, Shiley is a California corporation with its
principal place of business in this state. * * *

But, as Piper, supra, 454 U.S. 235, and other authorities make clear, this
presumption is not conclusive. Even though evidence relating to the design,
manufacture, and testing of the airplane involved in Piper was located in the
United States, the plaintiffs were relegated to the Scottish courts to vindicate
their claims. A resident defendant may overcome the presumption of
convenience by evidence that the alternate jurisdiction is a more convenient
place for trial of the action.10

On this issue, the parties disagree sharply. The Court of Appeal held that
because virtually all witnesses and documents relating to the decedents’
medical care and treatment, medical histories, loss of earnings, and all the
witnesses to the familial impacts of their deaths are located in Scandinavia, it is
more convenient to try the actions there. Defendants point out in addition that,
although the alleged fraudulent representations emanated from California, they
were received and relied on in Scandinavia, and the Scandinavian doctors have
knowledge of decedents’ preexisting medical conditions, the factors relevant to
a risk-benefit analysis, and the handling of the heart valves prior to
implantation.

Plaintiffs counter that evidence relating to defendants’ allegedly culpable

conduct, such as the design, manufacture, testing and packing of the valves, is in
California; that warnings and advice to doctors using the valve were issued
from this state; and that investigations of the reasons for the valve failure were
conducted here. Plaintiffs represented that the Scandinavian witnesses to
damages and decedents’ medical care have agreed that they will be available to
testify in California. In addition, they assert, there are more than one million
pages of [410/411]documents in California that are relevant to the issue of the
valve failures, and it would be extremely time consuming and costly to translate
even a fraction of these into Swedish and Norwegian. Hundreds of witnesses
from California and perhaps other states will be called, some of whom would
not be available for trial in Scandinavia.

Defendants produced evidence that Swedish and Norwegian courts routinely

receive documents into evidence that are written in English, without requiring
translation. Among the conditions imposed by the trial court with which
defendants agreed to comply were to make available in Norway and Sweden
past and present employees of defendants and documents in their possession, as
required by the Scandinavian courts.11 They also agreed to defray the expenses
for the production of these witnesses and documents.

Before deciding whether the private convenience of the parties weighs in

favor of plaintiffs or defendants, we consider the interests of the California
public in retaining the trial of the actions in this state. Piper held that the
jurisdiction with the greater interest should bear the burden of entertaining the
litigation. (Piper, supra, 454 U.S. at pp. 260–261 [70 L. Ed. 2d at pp. 438–
439].)

The Court of Appeal considered four factors in holding that the public interest
favored the granting of the motions: (1) California’s interest in avoiding undue
congestion of its courts due to the trial of foreign causes of action; (2) this
state’s deterrent and regulatory interests in products manufactured here; (3)
appropriate deference to the laws and policy decisions of foreign governments;
and (4) the competitive disadvantage to California business if resident
corporations were required to defend lawsuits here based on injuries incurred
in other jurisdictions.

As to the first of these matters, the court concluded trial in California would
unduly burden the court. It noted that foreign plaintiffs have filed 108 actions in
California against Shiley relating to the heart valves, and that, according to
plaintiffs, about one million pages of documents are relevant to their actions,
and that the testimony of hundreds of witnesses might be required. Defendants
state that the number of cases filed against Shiley involving the heart valves had
increased to 235 by the time the briefs were filed. The court observed correctly
that preventing court congestion resulting from the trial of foreign causes of
action is an important factor in the forum non conveniens analysis.

Plaintiffs rely on authorities stating generally that if a case is “properly”

before the court or if the action is “legitimately and correctly brought before it,”
a court will retain the case even in the face of a congested calendar. We have no
argument with these propositions, and we agree with plaintiffs that dismissals or
stays for forum non conveniens should not be used primarily to control a court’s
docket. Nevertheless, there can be no question that the already congested courts
of this [411/412]state would be burdened by the trial of the numerous and complex
actions relating to the heart valve brought by plaintiffs who reside in foreign
countries. Whether this would constitute an “undue burden,” however, is another
question. In order to determine that issue, we must consider other factors as
well.

The appellate court next considered whether California’s interest in deterring

wrongful conduct justified retention of the actions. As we have already noted, in
Piper, the high court, after observing that Scotland had the stronger interest in
the litigation because the decedents who died in the airplane crash were
Scottish, and all potential defendants except those before the American court
were Scottish or English, held that the “incremental deterrence that would be
gained if this trial were held in an American court is likely to be insignificant.
The American interest in this accident is simply not sufficient to justify the
enormous commitment of judicial time and resources that would inevitably be
required if the case were to be tried here.” (Piper, supra, 454 U.S. at pp. 260–
261 [70 L. Ed. 2d at pp. 438–439].) The Court of Appeal adopted this
“incremental deterrence” reasoning and concluded that California’s interest in
deterring wrongful conduct did not outweigh the other factors pointing to trial in
Scandinavia.

Plaintiffs argue vigorously against this conclusion. They cite cases stating that
California has a strong interest in regulating the conduct of manufacturers that
produce products in this state which cause injury to persons in other
jurisdictions. (Hurtado v. Superior Court (1974) 11 Cal. 3d 574, 583–584
[114 Cal. Rptr. 106, 522 P.2d 666] ; Clothesrigger, Inc. v. GTE Corp. (1987)
191 Cal. App. 3d 605, 615 [236 Cal. Rptr. 605] ; …) This interest, as the cited
cases make clear, is to deter negligent conduct; the likelihood of a substantial
recovery against such a manufacturer strengthens the deterrent effect.

We are persuaded that under the facts in the present case, the additional
deterrence that would result if defendants were called to account for their
allegedly wrongful conduct in a California court rather than in the courts of
Scandinavia would be negligible. As we observe above, there are 235 lawsuits
pending in California relating to the heart valve. According to defendants, some
of these have been filed on behalf of persons with functioning valves who seek
damages for the anxiety engendered by the apprehension that the valves may fail.
At least 108 of these suits were filed by foreign residents, according to the
Court of Appeal. Many valves were implanted in California, and it is safe to
assume that the plaintiffs in some of the 235 actions are California residents.13
The burden imposed on defendants in trying these cases by California residents
in the California courts, and the damages that defendants might be required to
pay if they are found liable, would provide sufficient deterrence to prevent
wrongful conduct in the future even if the suits filed by nonresident plaintiffs
were tried elsewhere.

The Court of Appeal found that there were two additional factors that
weighed in favor of granting the motions. One is the competitive disadvantage to
California business that would result if California manufacturers were called on
to defend lawsuits involving extraterritorial injuries. * * * The other factor
relates to the [412/413]interests and policy concerns of Sweden and Norway in the
litigation, such as their interest in assuring that new medical devices be made
available promptly and inexpensively, policies that might be threatened by
applying American regulation of medical products and liability laws to actions
brought by foreign citizens. * * *

The Court of Appeal mentions the foregoing two factors only in passing, and
we may assume that they do not represent a significant basis for the court’s
decision. A detailed discussion of their effect on the balance of conveniences is
unnecessary since, as we shall conclude, the court was justified in upholding the
judgment on the basis of the other public and private interest factors which it
considered.

Plaintiffs place great reliance on an additional factor, which they complain

the Court of Appeal failed to consider, i.e., the relationship of defendants to
California. We hold above that a presumption of convenience to defendants
arises from the fact that Shiley is incorporated in California and has its
principal place of business here. Another aspect of defendants’ connection with
this state is that alleged wrongful conduct was committed here, and there is a
close connection between such conduct and plaintiffs’ causes of action. We
agree with plaintiffs that defendants’ cumulative connection with California is
an appropriate matter for consideration in deciding a forum non conveniens
motion.

The significance of such a connection is that, as Corrigan implies, it is not

unfair to a defendant to hold the trial in a state where a substantial part of the
wrongful conduct was committed. (182 Cal. App. 3d at pp. 180–181.)
However, Corrigan and other authorities cited by defendants also appear to
hold that a court is not unfairly burdened by the trial of an action in California if
a corporate defendant has its principal place of business here and the tort was
allegedly committed in this state. We reject this analysis, for it would require
that the court congestion factor always be decided in favor of the plaintiff and
against a California corporation which caused injury to consumers anywhere in
the world, if the product was manufactured here. While the cumulative
connection of the defendant and its conduct within the state is relevant in
deciding whether retention of an action would place an undue burden on the
courts, we cannot look only to such circumstances; matters like the complexity
of the case, whether it would consume considerable court time, and the
condition of the court’s docket are also relevant to the issue.

We come, then, to an assessment of the factors discussed above. We are

confronted with the somewhat anomalous situation that the parties seek to try the
action in a jurisdiction which would appear to violate their interest in a
convenient place for trial. Both plaintiffs and defendants are willing — indeed,
eager — to litigate the matter in a jurisdiction separated by an ocean and a
continent from their places of residence. Although both claim that they are
motivated by the convenience of the place of trial, this court, like others before
it, recognizes that an additional motivating factor — and perhaps the major one
— relates to the circumstance that trial in California will enhance the possibility
of substantial recovery. Plaintiffs seek and defendants resist trial in the
California courts substantially for this reason. In the service of this goal, they
are willing to transport numerous witnesses and documents many thousand
miles. * * *

… [T]here was clearly substantial evidence to sustain the trial court’s

determination that the balance of private and public interests favors defendants
under [413/414]traditional rules laid down in prior cases. It is true that much, but
not all, of the evidence concerning liability exists in California; but virtually all
the evidence relating to damages is in Scandinavia. Since defendants have
promised to supply documents in their possession if required by the
Scandinavian courts, the fact that a large number of documents will be involved
appears not to pose a significant inconvenience to plaintiffs. The Court of
Appeal concluded that these documents could be admitted into evidence without
translation, and although there was conflicting evidence on this score, its
conclusion was supported by the record.
 It is probable that both parties will suffer some disadvantage from trial in
their home forums. For example, former employees of defendants may be
beyond the jurisdiction of the Scandinavian courts and defendants may be unable
to make good their promise to produce them for trial in Scandinavia.
Conversely, defendants have no means by which to ensure that Scandinavian
medical witnesses and others whose testimony might be important will attend
the trial in California. But these problems are implicit in many cases in which
forum non conveniens motions are made, and it is for the trial court to decide
which party will be more inconvenienced.

The public interest factors clearly favor defendants’ position. If we hold that
the present cases may be tried in California, it will likely mean that the
remaining 108 cases involving the Shiley valve will also be tried here. The
burden on the California courts of trying these numerous complex actions is
considerable. Moreover, California’s interest in deterring future improper
conduct by defendants would be amply vindicated if the actions filed by
California resident plaintiffs resulted in judgments in their favor. Under all the
circumstances, we hold that the Court of Appeal was correct in concluding that
there was substantial evidence to support the trial court’s determination that the
private and public interest factors, on balance, justified the stays granted in
these actions.

Finally, we consider Corrigan, supra, 182 Cal. App. 3d 166, and Holmes,
supra, 156 Cal. App. 3d 372, the two decisions the Court of Appeal declined to
follow. Holmes involved a suit filed in California by British plaintiffs who
alleged that they were injured as a result of ingesting an oral contraceptive
produced by an American manufacturer whose principal place of business was
California. The court first held that California law, unlike federal law, affords
substantial deference to a foreign plaintiff’s choice of forum. We have
concluded above to the contrary, and, indeed, plaintiffs in these actions do not
claim that the same amount of deference is due to foreign and resident
plaintiffs.16

A second ground of the Holmes decision was that “California attaches far
greater [414/415]significance to the possibility of an unfavorable change in
applicable law” in the alternative forum than the federal courts. (156 Cal. App.
3d at p. 381.) The decision concluded that a factor of “fundamental importance”
in favor of denial of the motion for forum non conveniens was that the plaintiffs
would be substantially disadvantaged if the case were tried in Britain because
that country did not afford recovery on the basis of strict liability. We
disapprove of this holding. As Piper, supra, 454 U.S. 235, points out, if
substantial weight is given to the fact that the law in the forum state is more
favorable to a plaintiff than in the foreign jurisdiction, the balance will
ordinarily favor denial of the motion, and substantial weight should be given to
this factor only if the alternative forum provides no remedy at all.

Corrigan also was a wrongful death action involving the alleged failure of a
heart valve manufactured by Shiley. The valve was implanted in Australia, and
the Australian plaintiffs filed suit in California for strict liability, among other
causes of action. Defendant moved to dismiss on the ground of forum non
conveniens. The Court of Appeal reversed a trial court order staying the action.
It declined to follow Holmes insofar as that decision accorded a critical role to
the circumstance that the law of the alternative jurisdiction did not provide for
strict liability. However, the Corrigan court held that the fact the plaintiffs
would be disadvantaged by the absence of this precise remedy in Australia was
entitled to some weight. We have concluded above that this factor may not be
considered in the forum non conveniens balance. To the extent Corrigan holds
to the contrary, it is disapproved.

CONCLUSION

The judgment of the Court of Appeal is affirmed.

Footnotes:

1 Section 410.30 of the Code of Civil Procedure provides in relevant part, “when a court upon motion of
a party or its own motion finds that in the interest of substantial justice an action should be heard in a forum
outside this state, the court shall stay or dismiss the action in whole or in part on any conditions that may be
just.” All further statutory references are to the Code of Civil Procedure.

2 The conditions were: (1) submission to jurisdiction in Sweden and Norway; (2) compliance with
discovery orders of the Scandinavian courts; (3) agreement to make past and present employees reasonably
available to testify in Sweden and Norway at defendants’ cost if so ordered within the discretion of
Scandinavian courts; (4) tolling of the statute of limitations during the pendency of the actions in California;
(5) agreement to make documents in their possession in the United States available for inspection in Sweden
and Norway, as required by Scandinavian law, at defendants’ expense; (6) agreement that depositions in the
United States might proceed under section 2029; and (7) agreement to pay any final judgments rendered in
the Scandinavian actions.
 4 An undue emphasis on a single factor is especially threatening to a balanced analysis because some of
the matters to be weighed will by their nature point to a grant or denial of the motion. For example, the
jurisdiction’s interest in deterring future wrongful conduct of the defendant will usually favor retention of the
action if the defendant is a resident of the forum, whereas the court congestion factor will usually weigh in
favor of trial in the alternate jurisdiction.

5 It is not entirely clear from the language of Piper whether an unfavorable change of law should be
given no consideration whatsoever in the forum non conveniens balance or only slight consideration. The
high court states in various parts of its opinion that this factor should not be given “substantial weight” (e.g.,
Piper, supra, 454 U.S. at pp. 247, 250 [70 L. Ed. 2d at pp. 430, 432]), but in another passage it states that
an unfavorable change in the law might in some circumstances be a “relevant consideration.” (Id. at p. 254
[70 L. Ed. 2d at p. 435].) The first of these references indicates that a slight amount of weight may be
accorded to an unfavorable change in the law, whereas the second implies the contrary. In our view, the
fact that an alternative jurisdiction’s law is less favorable to a litigant than the law of the forum should not be
accorded any weight in deciding a motion for forum non conveniens provided, however, that some remedy is
afforded. (See, e.g., Lockman Found. v. Evangelical Alliance Mission (9th Cir. 1991) 930 F.2d 764,
768–769, and cases cited.) One basis underlying the doctrine, as Piper and other cases hold, is to avoid
burdening the trial court by requiring it to interpret the law of foreign jurisdictions, which compels it to
conduct “complex exercises in comparative law.” (Piper, supra , at p. 251 [70 L. Ed. 2d at p. 433] ; see
also, e.g., Gulf Oil Corp. v. Gilbert, supra, 330 U.S. at p. 509 [91 L. Ed. at pp. 1062–1063].) To impose
such a burden on the trial court for the purpose of facilitating its consideration of a factor of only slight
significance in the forum non conveniens balance would, we believe, be unwarranted.

6 The court noted that the law of California relating to forum non conveniens is “virtually identical” to
federal law. (Piper, supra, 454 U.S. at p. 248, fn. 13 [70 L. Ed. 2d at p. 431].)

7 It is difficult to justify giving preferential status to a plaintiff’s choice of forum if the plaintiff is not a
resident. Since the preference is based on factors which apply only to residents, it would appear that the
underlying justification for the preference does not apply to nonresidents. However, defendants do not make
this argument, and this view is admittedly contrary to Piper, which states that there is ordinarily a strong
presumption in favor of the plaintiff’s choice of forum, and the cases decided both before and after it. (Gulf
Oil Corp. v. Gilbert, supra, 330 U.S. at p. 508; … Price, supra, 42 Cal. 2d at p. 585; …) * * *

Holmes, supra, 156 Cal. App. 3d 372, holds that substantial deference is accorded even a foreign
plaintiff’s choice of forum. We disapprove of this ruling, which is contrary to not only Piper but to Corrigan
(supra, 182 Cal. App. 3d 166) as well.

10 The effect to be given a corporate defendant’s residence in the forum has two aspects: The first,
discussed above, relates to the convenience of the parties. The second, examined later herein, implicates
public policy considerations, such as California’s interest in deciding actions against resident corporations
whose conduct in this state causes injury to persons in other jurisdictions.

11 Plaintiffs assert that the stipulation that defendants will make past and present employees available to
testify in Scandinavia “if so ordered within the discretion of Swedish or Norwegian courts” does not remedy
the problem because the courts in those countries have no jurisdiction to order the appearance of foreign
witnesses. If the wording of this stipulation will not accomplish what was obviously its intent (to assure that
defendants will attempt to the best of their ability to make employee witnesses available to testify in
Scandinavian courts), plaintiffs may return to the trial court for a modification of the stipulation to
accomplish that objective.

13 At oral argument, it was undisputed that 30 California plaintiffs have brought suit on the same and
related claims in the courts of this state.

16 Plaintiffs cite two cases for the proposition that substantial limitations on the remedy may be
considered in deciding a motion for forum non conveniens. One held that an action for indemnity should be
retained in California because, inter alia, plaintiffs might be deprived of that remedy if their action were tried
in Kansas. (International Harvester Co. v. Superior Court (1979) 95 Cal. App. 3d 652, 660 [157 Cal.
Rptr. 324].) The other upheld a trial court order staying an action to collect double damages afforded by a
California statute, on the ground that Texas would apply California law and allow recovery under the
statute. (Chavarria v. Superior Court (1974) 40 Cal. App. 3d 1073, 1076 [115 Cal. Rptr. 549] .) In
International Harvester, if the case had not been retained, the plaintiff might have been denied the remedy
on which its complaint was based. Chavarria is more problematic. But the opinion focused on the issue
whether California or Texas law would be applied if the case were tried in Texas, not on the principle for
which plaintiffs offer the case.

[1] Adequate Alternative Forum

A s Stangvik v. Shiley, Inc., reproduced supra, indicates, a court will not

dismiss an action based on forum non conveniens unless a suitable alternative
forum is available to the plaintiff for trial of the action. How did the Supreme
Court define this prerequisite? Because defendants can always offer to stipulate
to submit to an alternative forum’s jurisdiction and to waive any applicable
statutes of limitations, how significant is the suitable alternative forum
requirement? Is there any reason why a defendant would refuse to make these
stipulations regarding an alternate place for trial? See Delfosse v. C.A.C.I., Inc.-
Federal, 218 Cal. App. 3d 683, 688, 267 Cal. Rptr. 224 (1990).

Must a moving party show that there is an alternative forum that has personal
jurisdiction over all the defendants in a multi-defendant action? Compare
Hansen v. Owens-Corning Fiberglas Corp., 51 Cal. App. 4th 753, 59 Cal.
Rptr. 2d 229 (1996) (in an asbestos exposure case involving 200 defendants, the
court held that the moving party seeking a forum non conveniens stay is not
required show all defendants are subject to jurisdiction in a particular
alternative forum), with American Cemwood Corp. v. American Home
Assurance Co., 87 Cal. App. 4th 431, 104 Cal. Rptr. 2d 670 (2001) (Hansen
inapposite where the moving party seeks a dismissal and there are only five
defendants; failure of the moving party to demonstrated that all five defendants
are subject to jurisdiction in British Columbia precluded a forum non
conveniens dismissal).

[415/416]

[a] Unfavorable Change in Law

What are the policy reasons for the Supreme Court’s ruling that the possibility
of an unfavorable change in law ordinarily should not be accorded any weight
in deciding a motion for forum non conveniens? Do you agree with this ruling?
Do any policy arguments support the position that such an unfavorable change
should be accorded some weight?

[b] No Remedy Exception

The Supreme Court in Stangvik did suggest that an unfavorable change in law
is a relevant consideration where the remedy in the alternative forum is so
clearly inadequate or unsatisfactory that it is “no remedy at all.” Under what
circumstances does this “no remedy at all” exception apply?

In Shiley, Inc. v. Superior Court , 4 Cal. App. 4th 126, 6 Cal. Rptr. 2d 38
(1992), several nonresident plaintiffs commenced actions in California against
defendant Shiley seeking damages for alleged emotional distress they suffered
as a result of the knowledge that their implanted heart valves may be defective
and malfunction, causing death. Because the valves had not yet failed, California
law only recognized a viable cause of action for fraud; but none of the various
states of plaintiffs’ domiciles recognized any cause of action for injuries caused
by a product which had not yet malfunctioned. In opposing defendant’s motion to
dismiss for forum non conveniens, the plaintiffs argued that their home states
were not suitable places for trial because the law in those states did not
recognize their causes of action. The Court of Appeal held that the “no remedy
at all” exception was inapplicable and the plaintiffs’ home states constituted
suitable forums. The court noted that under Stangvik a court cannot even
consider the fact that an alternative forum does not recognize a cause of action
which would be available to the plaintiff under California law. The “no remedy
at all” exception “applies only in ‘rare circumstances,’ such as where the
alternative forum is a foreign country whose courts are ruled by a dictatorship,
so that there is no independent judiciary or due process of law …. The
exception has never been applied to a sister state, and we decline to apply it
here.” Id. at 133–34.
 I s Shiley an accurate interpretation of Stangvik? Do you agree with the
holding in Shiley? What policy considerations likely influenced the court in
Shiley? After Shiley, is the “no remedy at all” exception practically meaningless
in interstate, as opposed to international, litigation? See Boaz v. Boyle & Co.,
40 Cal. App. 4th 700, 46 Cal. Rptr. 2d 888 (1995) (the fact that a plaintiff will
be disadvantaged by the law of the jurisdiction, or that the plaintiff will
probably or even certainly lose, does not render the alternative forum
“unsuitable”). How meaningful is the exception likely to be in international
litigation? See Chong v. Superior Court, 58 Cal. App 4th 1032, 68 Cal. Rptr.
2d 427 (1997) (no evidence that the courts of Hong Kong, the alternate forum,
will not continue to provide due process of law after China obtained
sovereignty over the former Crown Colony in 1997).

[416/417]

[2] Plaintiff’s Residence

As indicated in Stangvik v. Shiley, Inc . reproduced supra, Supreme Court

cases have established that if the plaintiff is a California resident, the doctrine
of forum non conveniens ordinarily does not permit the dismissal (as
distinguished from a stay) of the action. See Stangvik, supra, 54 Cal. 3d at 755
and cases cited therein. The plaintiffs in Stangvik were not residents of
California. Precisely what weight did the Stangvik court accord to the
plaintiffs’ choice of forum?

The court in Stangvik held that a court in the state of the defendant’s
residence is presumptively a convenient forum. What does this mean? How
strong is this presumption? What evidence did defendant Shiley show to
overcome this presumption in Stangvik? Assume that defendant Shiley was
neither incorporated nor had its principal place of business in California, but
otherwise conducted extensive heart valve business activities in California.
Why should a California court not be a presumptively convenient forum in such
a case? What difference would this make in the nature of the evidentiary
showing defendant Shiley would need to make to establish inconvenience?

[3] Dismissal vs. Stay

A court which dismisses a suit on grounds of forum non conveniens loses

jurisdiction over the action. A court which stays the action retains jurisdiction
over the parties and the cause, and can protect the interests of the parties
pending the final decision of the foreign court. Archibald v. Cinerama Hotels ,
15 Cal. 3d 853, 126 Cal. Rptr. 811, 544 P.2d 947 (1976) . Consequently, the
traditional rule is that, except in extraordinary cases, a trial court has no
discretion to dismiss (as opposed to stay) an action brought by a California
resident on grounds of forum non conveniens. Archibald, 15 Cal. 3d. at 858. The
exceptional case which may justify dismissal under forum non conveniens is one
in which California cannot provide an adequate forum due to lack of personal
jurisdiction over an indispensable party, or has no interest in doing so, such as
when no party is a California resident. Id. at 859.

The trial court in Stangvik stayed the action and retained jurisdiction to make
such further orders as might become appropriate. What type of orders might
become appropriate in that litigation? Could the trial court have dismissed the
action, consistent with the traditional rule? Under what circumstances might a
trial court which has stayed an action based on forum non conveniens decide to
dissolve the stay and resume jurisdiction over the parties and the cause? See
Archibald, supra, 15 Cal. 3d at 857–59.

Several recent decisions have relied on the distinction between a dismissal

and a stay to affirm a forum non conveniens stay even though the plaintiffs are
California residents. E.g., Berg v. MTC Electronics Technologies Co. , 61 Cal.
App. 4th 349, 71 Cal. Rptr. 2d 523 (1998); Century Indem. Co. v. Bank of
America, FSB, 58 Cal. App. 4th 408, 68 Cal. Rptr. 2d 132 (1997) . Other cases
have found this distinction relevant to the threshold issue of whether there is a
suitable alternative forum. E.g., Hansen v. Owens-Corning Fiberglas Corp., 51
Cal. App. 4th 753, 59 Cal. Rptr. 2d 229 (1996) (moving party seeking a forum
non conveniens stay not required to show all defendants are subject to personal
jurisdiction in a particular alternative forum); [417/418]American Cemwood Corp.
v. American Home Assurance Co., 87 Cal. App. 4th 431, 104 Cal. Rptr. 2d 670
(2001) (failure of the moving party to demonstrate that all defendants are subject
to jurisdiction in British Columbia precluded a forum non conveniens dismissal;
Hansen was inapposite because there the moving party only sought a stay).

[4] Procedures for Raising Forum Non Conveniens

[a] Before General Appearance

A defendant may move to stay or dismiss on the ground of inconvenient forum

within the time available for pleading to the complaint. CCP § 418.10(a)(2). If
the motion is denied, the defendant, within 10 days, may seek immediate
appellate review by writ of mandate. CCP § 418.10(c); Furda v. Superior
Court, 161 Cal App. 3d 418, 207 Cal. Rptr. 646 (1984).

[b] After General Appearance

The right to raise forum non conveniens is not waived, however, by failure to
make the motion prior to a responsive pleading. CCP § 410.30; see Marriage of
Tucker, 226 Cal. App. 3d 1249, 1257, 277 Cal. Rptr. 403 (1991) (under both
state and federal law, a forum non conveniens defense need not be raised prior
to filing a responsive pleading); Britton v. Dallas Airmotive, Inc., 153 Cal.
App. 4th 127, 62 Cal. Rptr. 3d 487 (2007) (a defendant does not waive the
forum non conveniens issue by failing to file a preappearance forum non
conveniens motion under CCP § 418.10). Even where the defendant has made a
general appearance, either party or the court may move for stay or dismissal
based on forum non conveniens. CCP § 410.30(b); see Britton, supra, 153 Cal.
App. 4th at 134–35 (CCP § 418.10 applies when a defendant brings a
preappearance forum non conveniens motion and § 410.30 applies after a
defendant has appeared). A trial court order granting such a motion, filed after a
general appearance, is an appealable order. CCP § 904.1(a)(3).

[c] Procedures Compared

What are the advantages and disadvantages of these two authorized

procedures for raising forum non conveniens? Which procedure is usually
preferable? Why?

[5] Balance of Convenience Factors

The court in Stangvik identifies several private and public interest factors
that a trial court must consider in determining a forum non conveniens motion.
What other such factors might be relevant? See Ford Motor Co. v. Ins. Co. of
North America, 35 Cal. App. 4th 604, 41 Cal. Rptr. 2d 342 (1995) (observing
that the various factors fit roughly into three broad categories: the relationship
of the case and the parties to each forum, concerns of judicial administration,
and convenience to the parties and witnesses). Which factors were considered
most significant to the Supreme Court in Stangvik? Do you think the Supreme
Court would have reached the same conclusion in Stangvik if none of the
plaintiffs in the various other pending lawsuits [418/419]were residents of
California? If only a handful of plaintiffs had commenced similar actions in
California courts?

Assume that the trial court in Stangvik had concluded, after assessing the
appropriate factors, that California was not an inconvenient forum and therefore
denied defendant Shiley’s motion to dismiss. Do you think the Supreme Court
would have affirmed or reversed this decision? Why?

Assume that prior to implant, the plaintiffs had each signed agreements with
defendant Shiley which specified that any litigation against Shiley that may arise
as a result of the implanted heart valve must be litigated in a court located in
California. How would such a forum selection clause affect the Stangvik court’s
analysis when balancing the various private and public interest factors in
determining defendant’s forum non conveniens motion? Would such a clause
have changed the result in Stangvik? How likely is a potential defendant to
agree to a California court as the contractually designated forum?

[B] Forum Selection Agreements

CAL-STATE BUSINESS PRODUCTS &

SERVICES, INC. v. RICOH
COURT OF APPEAL OF CALIFORNIA,
THIRD APPELLATE DISTRICT
12 Cal. App. 4th 1666, 16 Cal. Rptr. 2d 417 (1993)

Davis, Justice.

INTRODUCTION

As we explain more fully in the course of this opinion, Code of Civil

Procedure sections 410.30 and 418.10 (undesignated section references will be
to this code) are the means by which a defendant may challenge a plaintiff’s
selection of California as the forum for the litigation between them. Two
substantive bodies of law are affected by this procedural vehicle; the traditional
(or noncontractual) doctrine of forum non conveniens and the enforceability of
contractual forum-selection clauses. In light of the fact the appellant has fused
aspects of these related but distinct areas, we are called upon to delineate the
relevant criteria of each, to explain that this is not the proper context for
application of traditional forum non conveniens principles, and to determine that
a contractual forum-selection clause put in issue by the case before us is
enforceable.
 In response to the complaint filed by plaintiff Cal-State Business Products &
Services, Inc. (Cal-State), defendant “Ricoh” moved for an order staying or
dismissing this action as being brought in an inconvenient forum. (§ 410.30,
418.10.) The basis of the motion is forum-selection clauses contained in
contracts between Ricoh and Cal-State which designate New York as the proper
forum for any litigation connected with the contracts. The trial court ruled the
action was “best decided” in New York and issued a stay pending the resolution
of a suit brought by [419/420]Ricoh in a New York federal court. We shall affirm.

BACKGROUND

Both parties filed declarations and exhibits in the trial court in connection
with the motion. We draw our facts from these sources. [During 1990, John
Fisher, the president and principal shareholder of plaintiff Cal-State, executed a
series of contracts with defendant Ricoh, an office machines manufacturer
headquartered in New Jersey. Under these contracts, Ricoh agreed to give Cal-
State dealership rights to sell both photocopier and fax machines in the Stockton
and Sacramento areas of California. These contracts contained identical
integration and choice-of-law/forum clauses as follows:

“Dealer and Ricoh agree that this Agreement, and all documents
issued in connection therewith, shall be governed by and interpreted in
accordance with the laws of the State of New York …. [A]ny appropriate
state or federal district court located in the Borough of Manhattan, New
York City, New York shall have exclusive jurisdiction over any case of
controversy arising under or in connection with this Agreement ….”

A series of disputes arose between the parties during the next year. Cal-State
claimed it had not received certain promised dealerships; and Ricoh claimed
that Cal-State had not paid for machines it had received on credit.] … Cal-State
filed its original complaint against Ricoh in September 1991 in Sacramento
County Superior Court. As amended, the complaint alleged six causes of action:
restraint of trade …, unfair trade practices …, breach of contract …, two types
of fraud (the representations he would receive an exclusive Stockton dealership
and a copier dealership in Sacramento), and two species of negligent
misrepresentation …. The motion to stay/dismiss followed in December 1991.

In his declaration in opposition to the motion, Mr. Fisher asserted he was not
aware of the choice-of-forum provision, and it was never called to his attention
during negotiations for either set of contracts.7 He further claimed all witnesses
familiar with the negotiation resided in California. Ricoh claimed its files were
located in its New Jersey offices, close to the New York forum, as were
corporate witnesses who made decisions regarding Cal-State’s territory and
contracts. Ricoh also produced the first page of a complaint it filed in the
Southern District of the New York federal court seeking payment on the debt
owed by Cal-State on its account with Ricoh … filed in early 1992.

[The trial court granted Ricoh’s motion to stay.] Cal-State timely sought the
proper remedy of appeal. (§ 904.1, subd. (c).)

[420/421]

DISCUSSION

I. Forum Non Conveniens.

Ultimately, we must be concerned with the principles governing enforcement

of a contractual choice-of-forum clause. First, however, we discuss a related
matter.

As originated in federal case law, imported into California case law, and
codified in section 410.30,8 the doctrine of forum non conveniens allows a trial
court discretion to decline to exercise jurisdiction over a cause and parties
otherwise properly before it if it concludes the action may be more
appropriately and justly tried elsewhere. (Stangvik v. Shiley Inc. (1991) 54
Cal. 3d 744, 751 [1 Cal. Rptr. 2d 556, 819 P.2d 14] ; Great Northern Ry. Co. v.
Superior Court (1970) 12 Cal. App. 3d 105, 109 [90 Cal. Rptr. 461] .) The
doctrine is most typically applied where the parties and the transaction
underlying the litigation are foreign to the forum. The defendant bears the burden
of proof in attempting to override the plaintiff’s choice of forum. There is a 25-
factor analysis to guide the trial court in its resolution of the issue, which is not
disturbed absent an abuse of discretion. These factors may be boiled down to
three basic principles. Foremost is the availability of a suitable alternative
forum for the plaintiff. (Stangvik, supra, 54 Cal. 3d at pp. 751–752; Judicial
Council com., 14 West’s Ann. Code Civ. Proc. (1973 ed. at p. 492; Rest. 2d,
Conf. of Laws, § 84, com. c.) The court then balances factors relating to the
private interests of the litigants and the public interests of the forum state; among
these, a resident plaintiff’s choice of the forum is given substantial weight.
(Stangvik, supra, 54 Cal. 3d at pp. 751, 754–755; Rest. 2d, Conf. of Laws, §
84, com. c.) Federal courts have broader discretion in granting a forum non
conveniens motion because of their power to transfer venue to a federal court in
a different state, which results in their grant of transfer motions in situations not
normally within the forum non conveniens doctrine. Thus California courts
cannot blindly apply federal precedent.

We have set out these principles applicable to noncontractually based forum

non conveniens motions principally because of … the plaintiff’s arguments. * *
* Cal-State asserts that applying the principles summarized above to the
evidence adduced in connection with the motion demonstrates the trial court
abused its discretion in disturbing Cal-State’s choice of California as a forum. *
**

Neither the conclusory language used in ruling on the motion nor the scope of
the forum-selection clauses forces us to apply principles of forum non
conveniens that are applicable where a plaintiff had unbridled freedom to
choose the forum and the defendant was simply seeking to substitute that choice
with a forum more to its liking. We instead shift our attention to principles
applied in the situation where a [421/422]plaintiff has contracted away its right to
its forum of preference and a defendant is seeking to enforce its contractual right
to its preferred forum.

II. Enforcement of Forum-Selection Clauses.

Under the modern rule, “The parties agreement as to the place of the action
cannot oust a state of judicial jurisdiction, but such an agreement will be given
effect unless it is unfair or unreasonable.” (Rest. 2d, Conf. of Laws, § 80; …)
California declared its adherence to this rule in Smith, Valentino & Smith, Inc.
v. Superior Court (1976) 17 Cal. 3d 491 [131 Cal. Rptr. 374, 551 P.2d 1206]
(Smith)11 “In this mandate action we consider the extent to which California
courts in breach of contract actions may give effect to a contractual forum
selection clause providing for trial of the action in another state.” (Id. at p. 493.)
Although California has a public policy in favor of access to its courts by
resident plaintiffs, this is not thwarted by allowing residents to surrender this
right voluntarily in the course of negotiations; “[i]n so holding we are in accord
with the modern trend which favors [enforcement] of such forum selection
clauses.” (Id. at p. 495.) In so holding, the court relied on the United States
Supreme Court decision in The Bremen v. Zapata Off-Shore Co. (1972) 407
U.S. 1, 10 [92 S. Ct. 1907, 32 L. Ed. 2d 513, 520–521], which had enforced a
forum-selection clause as a matter of federal common law in an admiralty
proceeding.

“[A forum-selection provision] will be disregarded if it is the result of

overreaching or of the unfair use of unequal bargaining power or if the forum
chosen by the parties would be a seriously inconvenient one for the trial of the
partic[u]lar action.” (Rest. 2d, Conf. of Laws, § 80, com. a.) The Smith court
agreed with this formulation. “No satisfying reason of public policy has been
suggested why enforcement should be denied a forum selection clause appearing
in a contract entered into freely and voluntarily by parties who have negotiated
at arms’ length. For the foregoing reasons, we conclude that forum selection
clauses are valid and may be given effect [] in the court’s discretion and in the
absence of a showing that enforcement … would be unreasonable.” (Smith,
supra, 17 Cal. 3d at pp. 495–496 [italics supplied].)

In an earlier reference to the “modern trend,” the Smith court gave some
content to the otherwise-empty husk of the conclusory term “unreasonable”; “the
party assailing the clause [must] establish [] that its enforcement would be
unreasonable, i.e. that the forum selected would be unavailable or unable to
accomplish substantial justice.” (17 Cal. 3d at p. 494, italics supplied; accord
The Bremen, supra, 407 U.S. at p. 18, 32 L. Ed. 2d at p. 525].) As a further
measure of [422/423]reasonability, the court in Furda v. Superior Court (1984)
161 Cal. App. 3d 418 [207 Cal. Rptr. 646] added a requirement that the choice
of forum have some rational basis in light of the facts underlying the transaction.
(Id. at p. 426; cf. The Bremen, supra, 407 U.S. at p. 17 [32 L. Ed. 2d at pp.
524–525] [remarking that choice of forum reasonable because neutral and
experienced in subject matter].) On the other hand, neither inconvenience nor
additional expense in litigating in the selected forum is part of the test of
unreasonability. (Smith, supra, 17 Cal. 3d at p. 496; Furda, supra, 161 Cal.
App. 3d at pp. 426–427; The Bremen, supra, 407 U.S. at p. 16 [32 L. Ed. 2d at
pp. 523-524]).
 The fact the forum-selection clause is contained in a contract of adhesion and
was not the subject of bargaining does not defeat enforcement as a matter of
law, where there is no evidence of unfair use of superior power to impose the
contract upon the other party and where the covenant is within the reasonable
expectations of the party against whom it is being enforced. (Bos Material
Handling, Inc. v. Crown Controls Corp. (1982) 137 Cal. App. 3d 99, 108 [186
Cal. Rptr. 740]; Carnival Cruise Lines v. Shute (1991) [499] U.S. [585, 594–
95] [113 L. Ed. 2d 622,633, 111 S. Ct. 1522] ; Furda, supra, 161 Cal. App. 3d
at p. 426; cf. Eads v. Woodmen of the World Life Ins. (Okl. Ct. App. 1989) 785
P.2d 328, 329, 331 [contract invalid because plaintiff required to sign it in
order to retain job].) That a business with transactions in multiple jurisdictions
might insist on one forum in all its contracts is not of itself objectionable.
(Carnival Cruise Lines, supra, [499] U.S. at p. [593–95] [113 L. Ed. 2d at pp.
632, 633].)

Although not pertinent here, we also note a court will refuse to enforce a
forum-selection clause if this will bring about a result contrary to the public
policy of the forum. (Furda, supra, 161 Cal. App. 3d at p. 427; The Bremen,
supra, 407 U.S. at p. 15 [32 L. Ed. 2d at p. 523].)

A defendant may enforce a forum-selection clause by bringing a motion

pursuant to sections 410.30 and 418.10, the statutes governing forum non
conveniens motions, because they are the ones which generally authorize a trial
court to decline jurisdiction when unreasonably invoked and provide a
procedure for the motion. Significantly, the party opposing the enforcement of a
forum-selection clause (generally the plaintiff) bears the burden of proof.

In contrast with the abuse-of-discretion standard of review applicable in a

noncontractual forum non conveniens motion, a substantial-evidence standard of
review applies where a forum has been selected by contract. (Lifeco Services
Corp. v. Superior Court (1990) 222 Cal. App. 3d 331, 334 [271 Cal. Rptr.
385].)

***

B
 Having set out the applicable legal principles, we turn to the plaintiff’s
pertinent arguments.

[423/424]

1.

Cal-State’s first argument relating to the clauses asserts the forum-selection

clause should not be enforced because it was a boilerplate term over which no
negotiation was possible and which was outside Cal-State’s reasonable
expectations. However, as the authority we have cited above makes clear, the
fact that Cal-State had no power to change this term of the contract is of no
import so long as it signed the contract freely and voluntarily, and possessed the
power to walk away from negotiations if displeased with the provision. Nor is
the provision outside the reasonable expectations of Cal-State-obviously if two
parties to a contract are domiciled on opposite coasts, either one party or the
other will wind up with the home-court advantage (in the more literal sense of
the expression), so the plaintiff would have to recognize this would be part of
the price of doing business with Ricoh (indeed, as noted, the plaintiff has
abandoned on appeal his claim that he was unaware of the clause). Finally, the
fact that Ricoh insists on litigating all its contractual disputes in New York is
not irrational, and there is no evidence the forum was selected with the design to
thwart an opponent’s ability to litigate.

2.

The plaintiff argues the lack of “nexus” of the chosen forum (New York) to
the domicile of the parties or the place of execution of the contracts renders the
choice of forum unenforceable. However, Cal-State takes too limited a view of
the nexus requirement. The choice of forum need only have a “reasonable” basis
even if it is unrelated to the domiciles or transactions involved. (Cf. Rest. 2d,
Conf. of Laws, § 187, com. f [selection of law unrelated to parties].) While
New York City is not (strictly speaking) Ricoh’s domicile, it is a major
commercial center with propinquity to Ricoh’s headquarters. Without
denigrating the abilities of the New Jersey courts, we find it reasonable for
Ricoh to wish to make use of the New York City courts which would have (at
least institutionally) a great deal of expertise in commercial litigation. (The
Bremen, supra, 407 U.S. at p. 17 [32 L. Ed. 2d at pp. 524–525] [reasonable to
choose neutral forum with expertise in subject matter].) Thus, there is nothing
irrational about the forum selected by the contract which would defeat its
enforcement.

3.

Citing Lifeco, supra, 222 Cal. App. 3d 331, the plaintiff asserts the factors
relevant to a forum non conveniens motion which is not contractually based also
form part of the analysis where a forum has been selected pursuant to contract.
We cannot accept this proposition.

According to the Lifeco court, “In addition to the presence of a forum

selection clause, some other relevant factors are the relative availability of
evidence and burden of trial in one place rather than another; a state’s interest in
providing its residents a forum or regulating the activity involved; ease of
access to alternative forums; avoidance of multiplicity of suits and conflicting
adjudications; and closeness of connection between the cause of action and the
defendant’s local activities [citations omitted].” (222 Cal. App. 3d at p. 335.)

[424/425]

The relevance of these factors to what is not explicit. However, in each of the
cited cases the courts were determining whether nonresident defendants had
engaged in sufficient contacts with California to justify the assumption of
personal jurisdiction over them. * * * All of the cases indeed listed the factors
cited by the Lifeco court (which had their genesis in Fisher Governor Co. v.
Superior Court (1959) 53 Cal. 2d 222 [1 Cal. Rptr. 1, 347 P.2d 1] ). None of
these cases, however, involved a forum-selection clause or a motion for forum
non conveniens (which, after all, does not even come into play until a court has
jurisdiction). The significance of the factors is explained in Cornelison v.
Chaney (1976) 16 Cal. 3d 143 [127 Cal. Rptr. 352, 545 P.2d 264] : “[I]n
situations when, as here, justification for the exercise of jurisdiction is not
obvious, the convenience of the parties is a factor to be considered in
determining whether it would be fair to exercise jurisdiction over a defendant
who resides in another state.” (16 Cal. 3d at pp. 150–151.)

If the Lifeco Services Corp. court was stating these factors are relevant to the
decision to accept jurisdiction in the first place over the party objecting to
California as a forum, this is unremarkable. However, if the Lifeco Services
Corp. court is holding that these additional factors are relevant despite the
presence of an explicit forum selection clause, we decline to follow their
holding since their authority does not support that conclusion and we otherwise
find the two situations inapposite. As we noted earlier, the general factors are
pertinent only in the absence of a contractual provision, since under those
circumstances neither party possesses a right to any particular forum and the
selection of one over the other requires the weighing of a gamut of factors of
public and private convenience, not to mention the strong interest of a plaintiff’s
domicile in providing the plaintiff access to its courts. However, a party which
has contracted away its right to choose its home forum (as well as all the
concomitant conveniences of a home forum) has presumably done so because
the value it receives from the negotiated deal is worth the chance the party may
be required to litigate disputes elsewhere. To apply the general factors in this
context would in essence be rewriting the bargain struck between the parties,
which might not have been consummated in the absence of the forum selection
clause. Therefore, we will not include the Great Northern factors into our
analysis of the validity of the clauses.

4.

The plaintiff cites Standard Office Systems v. Ricoh Corp., Inc. (W.D. Ark.
1990) 742 F. Supp. 534 as a case which refused to give determinative effect to
the standard Ricoh forum-selection clause. Although in light of recent events the
state of Arkansas has gained added notoriety, nonetheless this is simply the
decision of a federal trial court applying the federal statute allowing for transfer
of venue from one federal district court to another. It is therefore inapposite.

5.

The plaintiff is left with its claim that New York is a forum which is
unavailable or unable to accomplish substantial justice. At most, the plaintiff
here has shown increased inconvenience and expense, which is insufficient.
Therefore, the forum-selection clause may properly be enforced through a stay
on the California action. [425/426]It should be noted that the California action
remains available in the event the New York forum in fact proves unavailable.

DISPOSITION
 The judgment (order) is affirmed.

NOTES AND QUESTIONS ON

FORUM SELECTION AGREEMENTS

(1) Forum Clauses, Generally. The California courts, like the federal courts
and those of all but a handful of other states, will enforce a freely negotiated
forum selection clause unless the resisting party shows that enforcement would
be “unreasonable.” The courts in other states have developed several different
notions of whether clause enforcement is “unreasonable.” How did the court in
Cal-State define this test? What would be a clear example of when clause
enforcement would be “unreasonable”? When the contractually designated
forum is very inconvenient and expensive to the resisting party and its
witnesses? When the witnesses to be called by the resisting party are not subject
to the compulsory process of the contractually designated forum? For a
discussion of these and related questions, see Walter W. Heiser, Forum
Selection Clauses in State Courts: Limitations on Enforcement after Stewart
and Carnival Cruise, 45 Fla. L. Rev. 361 (1993).

( 2) Forum Clauses and Forum Non Conveniens. The court in Cal-State

observed that a defendant may enforce a forum selection clause by bringing a
forum non conveniens motion, where a plaintiff commences the action in a court
other than the contractually designated forum. When a plaintiff does commence
an action in the designated forum, does the existence of the forum clause
preclude an attempt by the defendant to change the forum by a motion based on
forum non conveniens? Is this what the court held in Cal-State? When parties
agree to a forum selection clause, precisely what rights do they waive as part of
the bargaining process? What interests do they have the power to contractually
waive? Can they waive all the private and public interests associated with a
forum non conveniens motion? For a discussion of the relationship between
forum selection clauses and forum non conveniens, see Heiser, Forum Selection
Clauses in State Courts, supra, 45 Fla. L. Rev. at 393–401 (1993).

(3) Validity of Forum Clauses in Consumer Contracts . The first Supreme

Court cases, both U.S. and California, to approve the modern rule favoring
enforcement of forum selection clauses involved freely negotiated contracts
between commercial entities of roughly equal bargaining power. The Bremen v.
Zapata Off-Shore Co., 407 U.S. 1, 92 S. Ct. 1907, 32 L. Ed. 2d 513 (1972);
Smith, Valentino & Smith, Inc. v. Superior Court , 17 Cal. 3d 491, 131 Cal.
Rptr. 374, 551 P.2d 1206 (1976) . More recently, the U.S. Supreme Court
extended this modern rule to enforcement of forum clauses in nonnegotiated
standard form consumer contracts, at least where the consumers had notice of
the clause. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 111 S. Ct. 1522,
113 L. Ed. 2d 622 (1991) (clause presumed reasonable and enforced, even
though clause required Washington [426/427]consumers to litigate in Florida
courts). The California courts seem to have taken the same approach.

(a) The California courts apparently have adopted the Carnival Cruise Lines
approach. See, e.g., Net2Phone, Inc. v. Superior Court, 109 Cal. App. 4th 583,
135 Cal. Rptr. 2d 149 (2003) (enforcing forum selection clause between
customers and defendant telecommunications services provider designating
New Jersey courts, where clause accessed via hyperlink in defendant’s internet
website); Intershop Communications AG v. Superior Court, 104 Cal. App. 4th
191, 201–202, 127 Cal. Rptr. 2d 847 (2002) (forum selection clause within an
adhesion contract, which required plaintiff employee to litigate breach of stock
options exchange agreement in Germany, will be enforced so long as the clause
provided adequate notice to the plaintiff that he was agreeing to the jurisdiction
cited in the contract); Lu v. Dryclean-U.S.A. of Cal., Inc., 11 Cal. App. 4th
1490, 14 Cal. Rptr. 2d 906 (1992) (enforcing forum selection clause in
franchise agreement requiring plaintiffs, individual franchisees, to litigate in
Florida).

(b) However, in America Online, Inc., v. Superior Court, 90 Cal. App. 4th 1,
108 Cal. Rtpr. 2d 699 (2001), the court refused to enforce a forum selection
clause in a consumer contract that designated Virginia as the jurisdiction in
which all disputes arising out of the relationship must be litigated, and included
a choice of law clause requiring that Virginia law be applied to any such
dispute. The court found the clauses unenforceable for two independent reasons.
First, one of the plaintiff’s causes of action sought class action relief under the
California Consumers Legal Remedies Act (CLRA), Civil Code § 1750 et seq.,
and this Act contains a provision that voids any purported waiver of rights
under the CLRA as being contrary to California public policy. “Enforcement of
the contractual forum selection and choice of law clauses,” the court reasoned,
“would be the functional equivalent of a contractual waiver of the consumer
protections under the CLRA and, thus, is prohibited under California law.”
American Online, supra, 90 Cal. App. 4th at 5.

Second, the American Online court also found the clauses unenforceable
because Virginia law does not allow consumer lawsuits to be brought as class
actions and the available remedies are more limited than those afforded by
California law. Accordingly, the rights of the plaintiff and the California
consumer class members “would be substantially diminished if they are
required to litigate their dispute in Virginia, thereby violating an important
public policy underlying California’s consumer protection law.” American
Online, 90 Cal. App. 4th at 5. Do you agree with this second, independent
reason for finding the clauses unenforceable?

(c) In Aral v. Earthlink, Inc, 134 Cal. App. 4th 544, 36 Cal. Rptr. 3d 229
(2005), the court refused to enforce a forum selection clause designating
Georgia as the forum. The plaintiffs, California consumers, brought an action
under California’s unfair competition law against defendant, a Georgia internet
provider, alleging the plaintiffs were improperly charged for high speed service
during periods between the time the service was ordered and the time the
service could be accessed. The court concluded that a forum selection clause
that requires a consumer to travel 2,000 miles to recover a small sum is not
reasonable.

(d) The California Legislature has recently added some protection for
consumers with respect to enforcement of forum selection clauses in certain
actions where the [427/428]amount in controversy is less than $5000. Pursuant to
CCP § 116.225, an agreement entered into after January 1, 2003 establishing a
forum outside California for an action arising from the provision of goods,
services, property, or extensions of credit primarily for personal, family or
household purposes that is otherwise within the jurisdiction of the small claims
court of California is contrary to public policy and is void and unenforceable.

(4) The United States Supreme Court decision in Carnival Cruise Lines, Inc.
v. Shute, supra, enforcing a forum selection clause in a standard consumer form
contract, was an admiralty jurisdiction case based on federal common law and
therefore not binding on state courts generally. Scholars have roundly criticized
that decision as incorrect from the viewpoint of economic, social, political, and
contract policies. See, e.g., Lee Goldman, My Way and the Highway: The Law
and Economics of Choice of Forum Clauses in Consumer Form Contracts, 86
Nw. U. L. Rev. 700 (1992); Jeffrey A. Liesener, Carnival’s Got the Fun … and
the Forum: A New Look at Choice-of-Forum Clauses and the
Unconscionability Doctrine After Carnival Cruise Lines, Inc. v. Shute, 53 U.
Pitt. L. Rev. 1025 (1992); Linda S. Mullenix, Another Easy Case, Some More
Bad Law: Carnival Cruise Lines and Contractual Personal Jurisdiction, 27
Tex. Int’l L.J. 323 (1992). Do you agree with these criticisms?
 (5) Forum Selection and Choice-of-Law Clauses. As Cal-State illustrates, a
choice-of-law clause often accompanies a forum selection clause in a contract.
If the contractually designated law is that of a state other than the forum state,
which state’s law determines the enforceability of the forum selection clause?
For example, in Smith, Valentino & Smith, Inc. v. Superior Court, supra , the
plaintiff commenced a breach of agency contract action in a California superior
court in contravention of a forum selection clause which designated
Pennsylvania courts as the exclusive forums for contract-related litigation. The
agency contract also provided that Pennsylvania law governed disputes
concerning the contract. The plaintiff argued that the clause was void and
unenforceable under California law, although Pennsylvania law would enforce a
reasonable forum clause. Which state’s law — California or Pennsylvania —
should the California court apply in determining whether or not to enforce the
forum selection clause? See Smith, Valentino & Smith, Inc. v. Superior Court,
supra, 17 Cal. 3d at 494–95; see also Nedlloyd Lines B.V. v. Superior Court , 3
Cal. 4th 459, 11 Cal. Rptr. 2d 330, 834 P.2d 1148 (1992) ; Linda S. Mullenix,
Another Choice of Forum, Another Choice of Law: Consensual Adjudicatory
Procedure in Federal Court , 57 Fordham L. Rev. 291, 346–56 (1988); J.
Zachary Courson, Yavuz v. 61 MM, Ltd.: A New Federal Standard — Applying
Contracting Parties’ Choice of Law to the Analysis of Forum Selection
Agreements, 85 Denver U. L. Rev. 597 (2008) (discussing various cases).

7 Since he did not claim there was any active concealment of this clause in the arm’s-length negotiations
between the parties, this assertion — which strains credulity — is immaterial, as we long ago held (Greve v.
Taft Realty Co. (1929) 101 Cal. App. 343, 351-353 [281 P. 641] ; …) and as has been held in New York
(Generale Bank, New York Branch v. Choudhury (S.D.N.Y. 1991) 779 F. Supp. 303, 305 [applying New
York law]). Cal-State has not pressed this fact on appeal.

8 Section 410.30 and its procedural companion, section 418.10, codify the doctrine without specifying
any particular factors, leaving those to be developed by case law.

11 There has been no discussion by the parties regarding the enforceability of the choice-of-law
provision in the contract. Assuming New York law applies, Ricoh adduced authority in the trial court that
New York follows the Restatement Second rule. ( DiRuocco v. Flamingo Beach Hotel & Casino Inc.
(1990) 163 A.D.2d 270 [557 N.Y.S.2d 140] .) In the absence of any evidence that the courts of New York
have placed nuances upon the Restatement Second rule which differ from California law, we may apply the
law of our own jurisdiction. (Nedlloyd Lines B.V., supra, 3 Cal. 4th at p. 469, fn. 7.)
[429/430]
Chapter 7

PROVISIONAL REMEDIES

§ 7.01 ATTACHMENT AND RELATED

PREJUDGMENT REMEDIES
[A] Writ of Attachment

Attachment is a provisional remedy which permits a plaintiff creditor to seize

property in advance of trial and judgment to secure the payment of any judgment
eventually awarded. See generally 6 Witkin, California Procedure,
Provisional Remedies §§ 46-244 (5th ed. 2008). Attachment is an ancillary
remedy in California — a complaint commencing the main action must first be
filed before plaintiff may apply for a writ of attachment. CCP § 484.010.

WESTERN STEEL AND SHIP REPAIR, INC. v. RMI, INC.

COURT OF APPEAL OF CALIFORNIA,
FOURTH APPELLATE DISTRICT
176 Cal. App. 3d 1108, 222 Cal. Rptr. 556 (1986)

Kremer, Presiding Justice.

RMI, Inc. (RMI) appeals from the trial court order denying its motion to
quash a writ of attachment and release the attached property. * * *

Respondent Western Steel and Ship Repair, Inc. (Western) was RMI’s
subcontractor on a vessel overhaul job for the United States Navy. Western sued
RMI in contract for unpaid amounts allegedly owing under the subcontract. On
the day it filed the complaint, October 16, 1985, Western obtained an ex parte
attachment of RMI’s funds. The ex parte writ of attachment was obtained by
authority of Code of Civil Procedure section 485.010 which requires a showing
that great or irreparable injury will result if issuance of the writ of attachment is
delayed for a noticed hearing. The showing of great or irreparable injury which
Western made in the superior court to obtain the ex parte writ consisted of (1)
an attorney declaration executed by Western’s attorney, Friedenberg, saying he
gave no notice of the attachment procedure, based on the statements contained in
an attached declaration by Winthrop (President of Western) regarding “the
shaky financial condition” of RMI and “probability that RMI, INC. would take
action to conceal its assets if it had any notice of this proceeding, ….”; (2) the
Winthrop declaration, which said RMI told Western it did not have the money
presently to pay the claim against it and asked if Western would agree to
settlement terms involving an 18-month [430/431]payment schedule, and based on
these facts and the “precarious financial condition of RMI” Winthrop believed
if RMI were given notice of the attachment it would “take whatever steps were
necessary to hide its assets so as to prevent attachment of these assets.”

The next day, October 17, Western levied the writ against $45,510 in an RMI
bank account. Later that day, unaware of the attachment, RMI issued payroll
checks, which later were dishonored for insufficient funds on account of the
attachment.

RMI first learned of the attachment the afternoon of October 17 when the bank
refused to permit a routine withdrawal. RMI immediately attempted to attack the
writ of attachment by an ex parte motion to quash. Counsel for both RMI and
Western appeared before a judge the afternoon of October 17; the judge ruled
that although a Judicial Council form used by the superior court (Judicial
Council Form AT-170) permitted an ex parte attack on a writ of attachment, the
statutes do not provide for such a procedure; accordingly, the judge treated the
ex parte motion to quash as a motion to shorten time, which was granted, with a
hearing set for the following day, October 18, on RMI’s motion to quash the
writ of attachment.

The hearing set for October 18 was that day continued to October 21, for
unknown reasons. When the matter was heard on October 21, RMI contended
(1) Western had not established probable validity of its claim (a requirement of
prejudgment attachment) and (2) its showing of great or irreparable injury was
insufficient to justify ex parte issuance of the writ. Western took the position the
relevant statute governing the motion to quash, Code of Civil Procedure section
485.240, prevented reargument of the question of great or irreparable injury.
However, RMI argued it could not constitutionally be precluded from arguing
the sufficiency of Western’s showing in support of an ex parte writ of
attachment.

During the hearing, the trial judge made statements which are somewhat
conflicting and which cast in doubt his reasons for the ruling. At one point he
appeared to refuse to consider the constitutional challenge; then later he
indicated a belief in the statute’s validity; and he did permit RMI to argue the
question of great or irreparable injury, which permission could indicate his
belief in RMI’s entitlement to a hearing despite the statute. Regardless of what
his reasons were, he eventually denied RMI’s motion to quash the writ.

On its appeal from that order, RMI contends the trial judge shirked his
obligation to rule on the statute’s constitutionality, and also argues lack of
justification for the ex parte issuance of the writ. RMI does not contend here that
the attachment is otherwise improper, nor does the record reveal any serious
dispute as to the validity of the underlying attachment, aside from questions as to
the propriety of ex parte issuance.

DISCUSSION

The specific requirements for an ex parte attachment are stated as follows in

Code of Civil Procedure section 485.220: “(a) The court shall examine the
application and supporting affidavit and, except as provided in Section 486.030,
shall issue a right to attach order, which shall state the amount to be secured by
the attachment, [431/432]and order a writ of attachment to be issued upon the filing
of an undertaking as provided by Sections 489.210 and 489.220, if it finds all of
the following: (1) The claim upon which the attachment is based is one upon
which an attachment may be issued. [¶] (2) The plaintiff has established the
probable validity of the claim upon which the attachment is based. [¶] (3) The
attachment is not sought for a purpose other than the recovery upon the claim ….
[¶] (4) The affidavit accompanying the application shows that the property
sought to be attached, or the portion thereof to be specified in the writ, is not
exempt from attachment. [¶] (5) The plaintiff will suffer great or irreparable
injury (within the meaning of Section 485.010) if issuance of the order is
delayed until the matter can be heard on notice.”

In addition to the requirement of great or irreparable injury, the statutes

governing ex parte attachments also require the attachment to satisfy the general
requirements for prejudgment attachments. Those requirements here relevant are
that the action be a claim for money, based on a contract, where the total claim
is fixed or readily ascertainable and not less than $500 (Code Civ. Proc., §
483.010, subd. (a)); that the claim be unsecured (Code Civ. Proc., § 483.010,
subd. (b)); and that the application for attachment be accompanied by an
affidavit “showing that the plaintiff on the facts presented would be entitled to a
judgment on the claim upon which the attachment is based” (Code Civ. Proc., §
484.030).

Finally, the debtor on a motion to quash may attack either the validity of the
attachment or its amount, but specifically may not argue the issue whether the
writ should have been issued ex parte. The statute (quoted in full, supra) says,
“It shall not be grounds to set aside an order that the plaintiff would not have
suffered great or irreparable injury … if issuance of the order had been delayed
until the matter could have been heard on notice.” (Code Civ. Proc., § 485.240,
subd. (b).)

As we have said, the statute, Code of Civil Procedure section 485.240,

subdivision (b), precludes review of the issue of great or irreparable injury.
The reason it does so is plain. Once having occurred, the levy without notice
cannot be undone, and no remedy remains to the debtor other than to challenge
the validity of the attachment, if he can. A noticed procedure, namely the motion
to quash, is provided for making this challenge. At the hearing on such motion,
the plaintiff has the burden of proving that the attachment itself is proper (Loeb
& Loeb v. Beverly Glen Music, Inc. (1985) 166 Cal. App. 3d 1110, 1116 [212
Cal. Rptr. 830].) If he does so, there is no practical reason to quash the writ.
The damage of ex parte issuance, even if incorrect, has already been done. It
would serve little purpose, and would waste time and judicial resources, to
quash an otherwise properly issued writ because it should not have been issued
ex parte. The issue of its validity has already been determined, and the creditor
would have the immediate right to obtain another writ. Under such
circumstances, the only benefit to be gained from reviewing the irreparable
injury issue, and vacating the writ on that ground, would be an arguably
discouraging effect upon creditors tending to prevent misuse of the ex parte
procedure. However, such an effect would be very small, because the creditor
who improperly obtained an ex parte attachment, had it quashed for that reason,
and then immediately obtained another attachment, would be no worse off than if
he had originally waited for a noticed procedure. (Of course, where malice
could be shown in misuse of these procedures, other remedies exist for the
debtor, such as abuse of process or wrongful attachment remedies, serving to
deter such tortious conduct.)

[432/433]
 Examining the facts here, we agree with RMI that insufficient justification for
an ex parte writ of attachment was put before the trial court. The underlying
declaration of Winthrop, President of Western, states no evidence other than
RMI’s immediate inability to pay to support his conclusion that “if RMI, INC.
was given any notice at all of this hearing, RMI would take whatever steps were
necessary to hide its assets so as to prevent attachment of these assets.” Based
on this declaration, Western’s attorney submitted his declaration in support of
the ex parte attachment saying no notice was given “based on the statements
contained in the [Winthrop Declaration] … regarding the shaky financial
condition of defendant RMI, INC., and the probability that RMI, INC. would
take action to conceal its assets if it had any notice of this proceeding, ….” No
evidence at all was presented of any past dishonesty, failure to meet obligations,
or concealment of assets by RMI. These declarations are patently inadequate to
meet the statutory requirement of a showing of “great or irreparable injury”
based on an inference that “there is a danger that the property sought to be
attached would be concealed, substantially impaired in value, or otherwise
made unavailable to levy if issuance of the order were delayed ….” (Code Civ.
Proc., § 485.010, subds. (a), (b).) We agree with RMI that neither a precarious
financial condition nor refusal to pay a disputed claim warrants an inference that
a debtor will abscond with all his assets or otherwise conceal them from the
creditor.

Nevertheless, as we have said, any harm resulting from the issuance of the
writ without notice, about 20 days sooner than would otherwise have occurred,
is now essentially moot. If we were to quash the writ and release the properties
of RMI from levy, Western would be immediately entitled to another writ of
attachment. Absent some compelling justification, we are reluctant to sanction
such inefficient use of judicial resources and of litigants’ time and money.

In the landmark case invalidating an earlier attachment statute, our Supreme

Court specifically said the Legislature could draft a constitutionally valid
prejudgment attachment statute, which exempted necessities and which
permitted attachment before notice in “exceptional cases where, for example,
the creditor can additionally demonstrate before a magistrate that an actual risk
has arisen that assets will be concealed or that the debtor will abscond.”
(Randone v. Appellate Department (1971) 5 Cal. 3d 536, 563 [96 Cal. Rptr.
709, 488 P.2d 13] .) The Legislature clearly had Randone in mind when it
drafted the attachment statutes replacing the one there invalidated, and the
remedy discussed here clearly comports with the decisional language, requiring
the creditor to demonstrate before a magistrate the existence of risk of
concealment or loss. Nothing in Randone requires that if the magistrate errs in
appraising the risk to the creditor, an otherwise legitimate attachment must later
be vacated.

The court in Randone was primarily concerned with two evils: the attachment
of property constituting the debtor’s necessities of life; and the wrongful tying
up of the property of a debtor, who was likely to be ignorant of the remedies to
challenge such an attachment, and was therefore apt to be deprived of much-
needed assets for protracted periods of time during possibly meritless litigation.
Accordingly, the court considerably narrowed the permissible scope of the
prejudgment attachment remedy, and the resulting legislation reflects the
considerations articulated in Randone: the attachment remedy is narrowly
limited to liquidated, nonfrivolous [433/434]claims, and as against individual
debtors, must relate to a business matter (Code Civ. Proc., § 483.010); the claim
must be unsecured (id.); the writ will only issue upon affidavit that the property
sought to be attached is not exempt (Code Civ. Proc., §§ 484.510, 484.350); and
necessities of life are exempted (Code Civ. Proc., §§ 487.020, 704.010 et seq.);
the writ can only issue after a noticed hearing, except where, as discussed, a
magistrate can be convinced great or irreparable injury will result from delay
and notice; and where the writ issues ex parte, a remedy is provided, the motion
to quash, which has calendar preference and can be heard promptly (Code Civ.
Proc., § 485.240, subd. (e)). Regardless of whether the writ issues on notice or
ex parte, the creditor has the burden of demonstrating the validity of the
attachment. (Loeb & Loeb v. Beverly Glen Music, Inc., supra.) By these
safeguards, it would appear the Legislature has done all that it can to comply
w i th Randone and still provide an ex parte attachment remedy in limited
circumstances.

These procedures fairly meet the concerns of Randone. We do not think the
Randone court was concerned with a situation, as here, where the attachment is
not wrongful — where it is a legitimate prejudgment remedy — but where it
was erroneously issued too soon. Under such circumstances, no real harm is
done, and to provide the sanction of quashing the writ would waste the time of
all concerned. * * *

We conclude that whatever were the reasons of the trial judge, he reached the
correct result. The order denying the motion to quash the writ of attachment is
affirmed.
 [1] The Attachment Law (CCP § 482.010 et seq.)

Attachment procedures are solely creatures of statute and, as such, must be

strictly construed. Bank of America v. Salinas Nissan, 207 Cal. App. 3d 260,
270, 254 Cal. Rptr. 748 (1989). The current California attachment statutes, CCP
§§ 481.010 et. seq., are collectively referred to as “The Attachment Law.” CCP
§ 482.010. As our principal case indicates, The Attachment Law is the
legislative response to the due process concerns of Randone v. Appellate Dept.,
5 Cal. 3d 536, 96 Cal. Rptr. 709, 488 P.2d 13 (1971) . After extensive study and
recommendations by the Law Revision Commission, the Legislature
comprehensively revised the entire attachment procedure, effective 1977. See
generally 11 Cal. L. Revision Commn. Reports 701 (1973).

[2] Attachment Limitations

The Attachment Law contains several substantive and procedural limitations

on the availability of prejudgment attachment. Some of these limitations are
based on the constitutional concerns expressed in Randone v. Appellate Dept.,
supra. Other limitations reflect the Legislature’s balancing of creditor and
debtor interests.

[434/435]

[a] Attachment Limited to Certain Claims

The current statutory scheme limits the availability of attachment to certain

specific claims. As to resident defendants, there are four basic restrictions on
the types of actions in which prejudgment attachment is authorized. Generally,
(1) the action must be on a claim for money based on express or implied
contract, CCP § 483.010(a); (2) the total amount in controversy must be a fixed
or readily ascertainable amount not less than $500, exclusive of costs, interest
and legal fees, CCP § 483.010(a); (3) the claim must not be secured or, if
originally secured, the security has become valueless or has decreased in value
to less than the amount owing on the claim, CCP § 483.010(b); and (4), “[i]f the
action is against a defendant who is a natural person, an attachment may be
issued only on a claim which arises out of the conduct by the defendant of a
trade, business, or profession.” CCP § 483.010(c).

What are the likely policy reasons for these four statutory restrictions? Are
any of them mandated by the Supreme Court’s constitutional ruling in Randone?
As discussed below, these general restrictions do not apply initially to
attachments where the defendant debtor is a nonresident of California.

[b] Attachment Limited to Certain Property

Where the defendant is a corporation or partnership, all corporate or

partnership property is, generally, subject to attachment. CCP § 487.010(a) &
(b). However, where the defendant is a natural person, CCP § 487.010(c)
specifies the property which is subject to attachment. Although this list is quite
comprehensive, another important statutory protection further limits the
availability of a natural person’s property to attachment.

Pursuant to CCP § 487.020, certain property of a natural person is exempt

from attachment. This includes all property exempt from enforcement of a money
judgment, such as certain household furnishings, government benefits, and other
personal property (up to a statutorily specified amount of equity, see, e.g., CCP
§§ 704.010-704.210); property necessary for the support of a defendant who is a
natural person or for such defendant’s family; and earnings as defined by CCP §
706.011 which includes compensation payable by an employer to an employee
for personal services whether designated as wages, salary, commission, bonus
or otherwise. A recorded homestead declaration does not exempt a homestead
from attachment, although the attachment lien attaches only the amount of any
surplus over the total of all liens, encumbrances, and the homestead exemption.
CCP § 487.025. These exemptions from attachments do not apply to non-natural
person defendants, such as corporations or partnerships. CCP §§ 487.010-.020.

The procedure for claiming exemptions from attachment, and therefore not
waiving them, is discussed below. To what extent are these exemptions from
attachment based on the constitutional requirements of Randone?

[435/436]

[c] “Substantive” Limitations on Attachment

If, after a hearing on a noticed application for a writ of attachment, the court
finds that the claim is one upon which an attachment may be issued and the
property sought to be attached is not exempt, the court must also find the
following “substantive” prerequisites: (1) “The plaintiff has established the
probable validity of the claim upon which the attachment is based” and (2) “The
attachment is not sought for a purpose other than the recovery on the claim upon
which the attachment is based.” CCP § 484.090(2) & (3). How onerous are
these last two requirements? How difficult is it for a plaintiff to establish the
“probable validity” of a claim? CCP § 481.190 states that a claim has
“probable validity” where “it is more likely than not that the plaintiff will
obtain a judgment against the defendant on that claim.” What does this definition
mean, as a substantive standard for attachment? From a procedural perspective,
what does this standard necessitate?

[d] Undertakings

Prior to the issuance of a writ of attachment, the plaintiff must file an

undertaking (bond). The bond’s purpose is to pay the defendant any amount the
defendant may later recover against plaintiff in a wrongful attachment action.
CCP §§ 489.010-.210. An attachment issued without the required bond is void
ab initio. Vershbow v. Reiner , 231 Cal. App. 3d 879, 282 Cal. Rptr. 684
(1991).

The amount of this required undertaking is statutorily set as $10,000. CCP §

489.220(a). If the defendant objects to the amount of undertaking, and the court
determines that the probable recovery for wrongful attachment exceeds the
statutory amount, it will order an increased amount. § 489.220(b). Why is the
amount of the required undertaking statutorily limited?

[e] Ex Parte Writ of Attachment

If a plaintiff creditor seeks an ex parte writ of attachment, as our principal

case illustrates, the plaintiff must also show that “great or irreparable injury”
would result to the plaintiff if the attachment were delayed until after a noticed
hearing. CCP§ 485.010(a). What showing, according to CCP § 485.010(b), will
satisfy this additional requirement? How did the plaintiff in Western Steel fail
to satisfy this requirement of showing “great or irreparable injury”? What more
should the plaintiff have shown? How would the plaintiff obtain such evidence?

The court in Western Steel concluded that insufficient justification for an ex

parte writ of attachment was put before the trial court. Why did the court,
nevertheless, refuse to quash the writ? Do you agree with the court’s reasoning?
Do you think it is fair to the defendant? Do you agree with the court that any
harm resulting from the issuance of the ex parte writ is now moot? One
consequence of the ex parte writ attaching defendant RMD’s bank account was
that payroll checks issued by RMD were later dishonored for insufficient funds.
Is this harm moot? Does defendant have an adequate remedy through an action
for wrongful attachment? What about injured third parties?

A plaintiff’s liability to a defendant for statutory wrongful attachment, as

defined by CCP § 490.010, is limited to the amount of the undertaking filed by
[436/437]plaintiff. CCP § 489.220 specifies the undertaking amount as $10,000,
unless the court orders an increased amount. Common law remedies for
wrongful attachment are available, CCP § 490.060, but may be difficult to
achieve. See Dean Gloster, Comment, Abuse of Process and Attachment:
Toward A Balance of Power, 30 UCLA L. Rev. 1218-1248 (1983).

[3] Attachment Procedures

A writ of attachment may be issued ex parte, as in Western Steel , or may be

issued after a noticed hearing.

[a] Ex Parte Attachment Procedures

Upon filing the complaint, a plaintiff may immediately apply for a writ of
attachment by filing an application and supporting affidavits, and without any
notice provided to the defendant. If the court determines that plaintiff’s
application and supporting affidavits demonstrate satisfaction of the statutory
prerequisites for an ex parte writ, the court will issue a right to attach order and
writ of attachment, upon filing of the appropriate undertaking. CCP §§ 485.010-
.230. The levying officer then levies the writ (i.e., attaches the property), and
serves the complaint, summons, and the notice of attachment. CCP §§ 488.010-
.140.

The defendant whose property has been so attached ex parte may thereafter
apply for an order quashing the writ of attachment or reducing the amount to be
secured by the attachment. CCP § 485.240. Such application is made by notice
of motion and accompanying affidavits, although additional evidence may be
received at the hearing. § 485.240(d). At the hearing, the court must determine
whether the plaintiff is entitled to the attachment. If the court finds plaintiff is not
so entitled, it must quash the writ and order release of the levy on the property.
CCP § 485.240(c). If the court finds that plaintiff is entitled, the attachment
continues and plaintiff may apply for additional writs as to other property. §§
485.240(c); 484.310-.530.

[b] Attachment Procedure on Noticed Hearing

 In the absence of exceptional circumstances (i.e., “great irreparable injury”),
upon filing the complaint, a plaintiff must apply for a writ of attachment through
a noticed hearing procedure. Plaintiff must file an application for attachment,
with supporting affidavits, whose content demonstrates compliance with the
prerequisite for attachment. CCP §§ 484.010-0.30. Plaintiff must then serve the
complaint, summons, and notice of application and hearing, informing the
defendant of the scheduled hearing on the attachment application. CCP §§
484.040-.050. Plaintiff must also file an undertaking. CCP §§ 489.010-.230.

If the defendant wishes to oppose issuance of the writ of attachment, the

defendant must file and serve a notice of opposition no later than five days
before the hearing. CCP § 484.060. A defendant who desires to claim a
personal property exemption must likewise file and serve that claim no later
than five days before the hearing (see discussion below). CCP § 484.070. At the
hearing, the court must consider the showing made by the parties and determine
whether the plaintiff has [437/438]satisfied the prerequisites to attachment. CCP §
484.090. If the court so finds, it must issue a right to attach order and writ of
attachment. § 484.090. After the writ is issued, based on plaintiff’s instructions,
a levying officer will levy the writ on property in the manner prescribed by
statute. CCP §§ 488.010-488.740. What type of hearing is required by CCP §
484.040 prior to issuance of a prejudgment writ of attachment? According to
Hobbs v. Weiss , 73 Cal. App. 4th 76, 86 Cal. Rptr. 2d 146 (1999) , the term
“hearing” in this statutory context requires an oral hearing at which the trial
court may take evidence, entertain and rule on evidentiary objections, and
determine the merits based on written and oral presentations.

A defendant who wishes to further challenge an attachment issued by the trial

court after a noticed hearing must do so by means of an immediate interlocutory
appeal. CCP §§ 904.1(a)(5); 703.600. Failure to do so may preclude subsequent
review of the attachment. See Peck v. Hagan, 215 Cal. App. 3d 602, 607–609,
263 Cal. Rptr. 198 (1989) (failure to appeal refusal to discharge attachment has
res judicata effect).

What is the res judicata effect of the trial court’s finding, in issuing a writ of
attachment after a noticed hearing, that plaintiff has established the probable
validity of the underlying claim upon which the attachment is based? See CCP §
484.100 (“The court’s determinations … shall not be given in evidence nor
referred to at the trial ….”). What is the effect on the trial of the merits of
plaintiff’s underlying claim of the defendant’s failure to oppose the attachment
or to rebut evidence offered by the plaintiff at the hearing? See CCP § 484.110;
Film Packages, Inc. v. Brandywine Film Productions, Ltd., 193 Cal. App. 3d
824, 238 Cal. Rptr. 623 (1987).

[4] Claim of Exemption Procedure

As discussed previously, under CCP § 487.020, certain property of a

defendant (natural person) debtor may be exempt from attachment. However, if
the exemption is not claimed in a timely manner, the exemption may be waived.

[a] Personal Property

When a plaintiff applies for a writ of attachment through the noticed hearing
procedure and the defendant desires to claim at the hearing that certain personal
property specified in the application is exempt from attachment, the defendant
must file the claim of exemption not less than five days prior to the hearing. CCP
§ 484.070(a)-(e). If the plaintiff desires to oppose defendant’s claim of
exemption, plaintiff must file a notice of opposition not less than two days
before the hearing. CCP § 484.070(f).

If the defendant fails to timely assert a claim of exemption as to personal

property, or makes the claim but fails to prove it, the defendant is precluded
from claiming the exemption later. CCP § 484.070(a). The exemption as to
personal property is waived, even as to postjudgment execution, unless the
defendant can demonstrate a change in circumstances. CCP § 482.100. With
respect to an ex parte attachment and levy, the defendant must claim an
exemption as to personal property within 30 days after service of the notice of
attachment, or such [438/439]exemption is likewise waived. CCP § 485.610.

When a defendant does assert a timely claim of exemption as to personal

property, what is the effect of the plaintiff’s failure to file and serve a timely
notice of opposition to that claim pursuant to CCP § 484.070(f)? In Bank of
America v. Salinas Nissan, 207 Cal. App. 3d 260, 254 Cal. Rptr. 748 (1989) ,
the court concluded that plaintiff’s failure to timely file a notice of opposition to
defendant’s claim of exemption concedes the propriety of the defendant’s
exemption claims, even though the exemption claims may be preposterous. Id. at
270. What reasoning supports the court’s conclusion? If the plaintiff is
successful in obtaining a money judgment, is this property also exempt from
execution?

[b] Real Property; Homesteads

 Certain real property of a natural person, such as a principal dwelling or
“homestead” of a debtor, may be exempt from prejudgment attachment and
postjudgment execution up to a statutorily specified amount. CCP §§ 487.020-
.030; 704.710-704.995. A plaintiff may attach real property protected as a
homestead, but the attachment lien attaches only to the surplus over the total of
all liens, encumbrances, and the statutorily specified homestead exemption. §
487.025.

A plaintiff creditor seeking to attach real property must satisfy the same
prerequisites, and follow the same procedures, applicable to attachment of
personal property. E.g., CCP §§ 483.010 et seq.; 484.010 et seq.; 485.010 et
seq.; 487.010 et seq. Likewise, a defendant who wishes to claim real property
as exempt from attachment may assert the claim in the same manner as
applicable to personal property. CCP §§ 484.050 (attachment upon noticed
hearing); 485.610 (ex parte attachment). However, unlike personal property, a
defendant who fails to make the claim of exemption of real property at the time
of attachment is not precluded from later claiming the exemption. CCP §§
484.070(b); 485.610. The defendant debtor is permitted to claim an exemption
as to real property at any time prior to entry of judgment in the action. CCP §
487.030; see Martin v. Aboyan, 148 Cal. App. 3d 826, 196 Cal. Rptr. 266
(1983). What policy concerns likely influenced the Legislature to enact a more
forgiving exception waiver rule for real property as opposed to personal
property?

However, if a defendant does decide to claim an exemption to real property

at the time of attachment but fails to prove the property is exempt, the defendant
may not later claim that the property is exempt absent a change in circumstances.
CCP §§ 484.070(b), 482.100. For what reasons might a defendant debtor choose
not to assert a claim of exemption as to real property at the time of attachment?
Under what circumstances should a defendant assert such a claim at the time of
attachment?

[5] Nonresident Attachment

A different set of statutory principles and prerequisites govern, initially at

least, the attachment of property in California owned by a nonresident. Code of
Civil Procedure § 492.010 authorizes attachment in any action for recovery of
money against a natural person who does not reside in California, a foreign
corporation [439/440]not qualified to do business within California, or a foreign
partnership which has not designated a California agent for service of process.
Moreover, a writ of attachment issued against a nonresident may be levied on
any California property of the defendant. CCP § 492.040. The plaintiff may
apply for the writ of attachment ex parte, but with no specific showing of great
or irreparable injury necessary. CCP §§ 492.020-.030. If the defendant wishes
to challenge the propriety of the nonresident ex parte attachment, the defendant
may apply to quash the attachment through a noticed motion procedure. CCP §
492.050.

[a] Purpose

Nonresident attachment has a dual purpose: to secure property for eventual

satisfaction of a judgments and, traditionally, to operate where personal
jurisdiction of a defendant cannot be obtained but quasi in rem jurisdiction can
be obtained by seizure of the nonresident’s property in the state. See Nakasone
v. Randall, 129 Cal. App. 3d 757, 760, 181 Cal. Rptr. 324 (1982)
(distinguishing between nonresident attachment and ordinary attachment).
Consequently, if the nonresident defendant enters a general appearance in the
action, the attachment must be set aside unless plaintiff shows the attachment
satisfies the various prerequisites for ordinary attachment. CCP § 492.050(c);
Nakasone v. Randall, supra.

[b] Due Process Issues

Nonresident attachment raises some serious due process issues, does it not?
First, does the ex parte nonresident attachment process satisfy the constitutional
requirements set forth by the California Supreme Court in Randone? Does it
comply with the recent decision in Connecticut v. Doehr, 501 U.S. 1, 111 S. Ct.
2105, 115 L. Ed. 2d 1 (1991), where the U.S. Supreme Court held that ex parte
attachment of real property without a showing of “exigent circumstances” (e.g.,
imminent transfer or encumbrance) violated the defendant’s due process rights
under the Fourteenth Amendment? Does it comply with the Supreme Court’s
ruling in Shaffer v. Heitner, 433 U.S. 186, 97 S. Ct. 2569, 53 L. Ed. 2d 683
(1977), that all assertions of state court personal jurisdiction over an absent
defendant, including quasi in rem jurisdiction based on attachment of property
present in the forum state, must be evaluated according to the defendant’s
“minimum contacts” with the forum state? Are some applications of California’s
quasi in rem jurisdiction (nonresident attachment) statute directly contrary to
Shaffer? What are some examples?

[B] Other Provisional Remedies

[1] Temporary Protective Orders

 Code of Civil Procedure §§ 486.010-.110 authorizes another type of
provisional remedy which prohibits a defendant from transferring certain assets
pending a hearing on a writ of attachment. Similar to but less comprehensive
than an ex parte attachment, a court may be willing to issue a temporary
protective order in lieu of the more drastic ex parte writ. See CCP § 486.030. A
temporary protective order [440/441]expires forty days after issuance, or when
levy of attachment is made as to specific property described in the order,
whichever occurs earlier. CCP § 486.090.

[2] Claim and Delivery

Code of Civil Procedure §§ 511.010-512.120 authorize a plaintiff creditor to

bring an action to recover possession of personal property before judgment by
applying for the provisional remedy of claim and delivery. Upon filing the
complaint, a plaintiff may apply for a writ of possession by a noticed motion or,
in appropriate circumstances, ex parte. CCP §§ 512.010-512.020. The plaintiff
creditor must show that it is entitled to possession of the property claimed, and
that the property is wrongfully detained by the defendant. See CCP §§ 512.010
and 512.020 for the specific statutory prerequisites. If the court issues a writ of
possession, the property specified may be seized by the levying officer pending
final judgment in the action. §§ 512.080-512.120.

[3] Receivership

Although perhaps more commonly utilized as a means to effectuate a final

judgment, CCP § 564 authorizes the superior court to appoint a receiver to
manage and preserve the business or property of others pending litigation so that
relief awarded by judgment will be effective. See, e.g., Security Pacific
National Bank v. Geernaert, 199 Cal. App. 3d 1425, 1431-1432, 245 Cal.
Rptr. 712 (1988) (Court appointed receiver to manage ranch operated as
general partnership, in action brought by plaintiff bank to recover money loaned
to defendant partnership. “A receiver is an officer of the court appointed to
manage property that is the subject of litigation.”).

[4] Temporary Restraining Order

Another traditional provisional remedy is the temporary restraining order and

preliminary injunction. See CCP §§ 513.010, 525–533. These broad equitable
orders are discussed in more detail in the next section. One function of a
temporary restraining order is to prohibit a defendant from transferring,
removing, or impairing the value of specific property. CCP § 513.020. Such use
overlaps with other provisional remedies of attachment and temporary
protective order.

The Attachment Law does not preclude the granting of injunctive relief, CCP
§ 482.020; but a plaintiff will not be permitted to utilize temporary injunctive
relief as a means of circumventing the statutory prerequisites for attachment. In
Doyka v. Superior Court, 233 Cal. App. 3d 1134, 285 Cal. Rptr. 14 (1991) , for
example, the Court of Appeal vacated a preliminary injunction which enjoined
defendant from using the sum of $125,000 in any bank account as an attempt to
attach all of defendant’s liquid assets without satisfying the statutory
requirements for prejudgment attachment. The plaintiff’s action sought return of
monies loaned to defendant, an individual, for real estate renovations, and
secured by a deed of trust. In what ways did the preliminary injunction in Dayka
fail to satisfy the statutory prerequisites for attachment?

[441/442]

[5] Contractual Arbitration

A party to an arbitration agreement may file in court an application for a

provisional remedy in connection with an arbitrable controversy, but only upon
the ground that the arbitration award to which the applicant may be entitled
“may be rendered ineffectual without provisional relief.” CCP § 1281.8(b). The
provisional remedies available include attachments, temporary protective
orders, writs of possession, and preliminary injunctions. CCP § 1281.8(a).
However, this specific statutory authority for provisional judicial remedies to
protect against rendering a possible arbitration award ineffectual does not
supplant the general statutory requirements applicable to the requested
provisional remedy. See, e.g., Woolley v. Embassy Suites, Inc. , 227 Cal. App.
3d 1520, 1526–29, 278 Cal. Rptr. 719 (1991) (CCP § 1281.8 sets forth the
threshold requirement for obtaining a preliminary injunction during an
arbitration, but the applicant must also satisfy the traditional and statutory
requirements of preliminary injunctive relief).

[6] Lis Pendens

A notice of the pendency of an action, commonly referred to as a “lis

pendens,” is an important pretrial procedure available to any party who asserts
a claim to specific real property. The California Legislature, by adopting CCP §
405 et seq. in 1992, substantially overhauled the traditional lis pendens law.
See generally CEB, California Real Property Remedies and Damages §§ 13.1-
13.120 (2d ed. 2001).

KIRKEBY v. SUPERIOR COURT

SUPREME COURT OF CALIFORNIA
33 Cal. 4th 642, 15 Cal. Rptr. 3d 805, 93 P.3d 395 (2004)

Brown, Justice.

In this case, we consider whether a fraudulent conveyance claim affects title

to or the right to possession of specific real property and therefore supports the
recording of a notice of pendency of action — commonly referred to as a lis
pendens. We conclude that it does.

FACTS

FasTags, Inc. (FasTags) is a manufacturer and wholesale seller of

identification tags for pets. Petitioner Cynthia Kirkeby and her brother Frederick
W. Fascenelli developed the idea for the tags and jointly hold the patent for the
manufacturing processes. Frederick and his wife Diana Fascenelli (hereafter the
Fascenellis) hold 51 percent of the outstanding stock in FasTags, and Kirkeby
owns 39 percent. The remaining 10 percent of FasTags’ outstanding stock is
held by the FasTags Stock Trust, of which Kirkeby is the trustee.

After Kirkeby resigned from the FasTags board of directors in 1998, she
alleged the Fascenellis looted the company. According to Kirkeby, the
Fascenellis caused FasTags to execute improper patent licenses to increase
their own salaries and bonuses, to pay their personal expenses, and to make
improper loans. The [442/443]Fascenellis allegedly prevented Kirkeby from
seeking corporate records, canceled meetings so that Kirkeby could not elect a
member to the board of directors, and appointed directors without board
approval.

Kirkeby filed the instant action in late 2001. In the complaint, Kirkeby
alleged 27 causes of action, including a cause of action for fraudulent
conveyance, and sought declaratory and injunctive relief and damages in the
aggregate amount of $4.9 million on behalf of herself and FasTags.
 In her fraudulent conveyance cause of action, Kirkeby alleged that Frederick
obtained a $50,000 loan from FasTags by representing that he would use the
borrowed funds to construct a building to house FasTags’ operations. But
Frederick did not use this loan for its stated purpose. According to Kirkeby,
Frederick used the loan to purchase residential income property (the Oak Street
Property) for himself and Diana in June 2000. After making this purchase, the
Fascenellis immediately transferred their interest in the property to Italy &
Greek Holdings, a family limited partnership (the Family Partnership).

Prior to the purchase of the Oak Street Property — in May 1999 — Frederick
also transferred his interest in his family’s residence (the Clark Street Property)
to the Fascenelli Family Trust. Several months later, the Fascenellis — as
trustees of that trust — transferred the trust’s interest in the Clark Street
Property to the Family Partnership. Kirkeby alleged that the Fascenellis made
both of these transfers in order to defraud creditors in the collection of their
claims, and requested that the transfers be voided to the extent necessary to
satisfy the claims set forth in her complaint. These transfers formed the bases of
Kirkeby’s fraudulent conveyance claim as set forth in her complaint.

After filing her action, Kirkeby recorded a notice of lis pendens on the Oak
Street Property and the Clark Street Property. The Fascenellis moved to
expunge the lis pendens. The trial court granted the motion. During the hearing
on the motion to expunge, the court held that the complaint was primarily about
money damages and that the recording of a lis pendens was not appropriate
where a cause of action for fraudulent conveyance — Kirkeby’s only claim
relating to the real property at issue — was made but no ownership interest or
possessory interest had been claimed in the subject properties.

Kirkeby filed a writ petition seeking review of the expungement order. The
Court of Appeal denied the petition. The Court of Appeal held that Kirkeby’s
complaint did not affect title to or the right to possession of real property so as
to support her lis pendens, as required under Code of Civil Procedure section
405.4. The Court of Appeal determined that the basis of Kirkeby’s complaint
was to recover money that the Fascenellis wrongfully diverted to themselves in
the running of FasTags. With respect to Kirkeby’s fraudulent conveyance claim,
the Court of Appeal stated, “[w]ith the exception of the cause of action for
fraudulent conveyance, the complaint has nothing to do with real property. And
the goal of the fraudulent conveyance cause of action is to make the property
available for the collection of a judgment, not to further a claim by Kirkeby to
title or possession.”

We granted review.

[443/444]

DISCUSSION

“A lis pendens is a recorded document giving constructive notice that an

action has been filed affecting title or right to possession of the real property
described in the notice.” (Urez Corp. v. Superior Court (1987) 190 Cal. App.
3d 1141, 1144 [235 Cal. Rptr. 837] .) A lis pendens may be filed by any party in
an action who asserts a “real property claim.” (Code Civ. Proc., § 405.20.) 1
Section 405.4 defines a “‘Real property claim’” as “the cause or causes of
action in a pleading which would, if meritorious, affect (a) title to, or the right
to possession of, specific real property ….” “If the pleading filed by the
claimant does not properly plead a real property claim, the lis pendens must be
expunged upon motion under CCP 405.31.” (Code com., 14 West’s Ann. Code
Civ. Proc. (2004 supp.) foll. § 405.4, p. 239.)

Section 405.30 allows the property owner to remove an improperly recorded

lis pendens by bringing a motion to expunge. There are several statutory bases
for expungement of a lis pendens, including the claim at issue here: claimant’s
pleadings, on which the lis pendens is based, do not contain a real property
claim. (See § 405.31.)2 Unlike most other motions, when a motion to expunge is
brought, the burden is on the party opposing the motion to show the existence of
a real property claim. (See § 405.30.)

The Fascenellis moved to expunge pursuant to section 405.31 — lack of a

real property claim. Section 405.31 provides: “In proceedings under this
chapter, the court shall order the notice expunged if the court finds that the
pleading on which the notice is based does not contain a real property claim.” In
making this determination, the court must engage in a demurrer-like analysis.
“Rather than analyzing whether the pleading states any claim at all, as on a
general demurrer, the court must undertake the more limited analysis of whether
the pleading states a real property claim.” (Code com., 14 West’s Ann. Code
Civ. Proc., supra, foll. § 405.31, at p. 249.) Review “involves only a review of
the adequacy of the pleading and normally should not involve evidence from
either side, other than possibly that which may be judicially noticed as on a
demurrer.” (Code com., 14 West’s Ann. Code Civ. Proc., supra, foll. § 405.30,
at p. 248.) Therefore, review of an expungement order under section 405.31 is
limited to whether a real property claim has been properly pled by the claimant.
(Code com., 14 West’s Ann. Code Civ. Proc., supra, foll. § 405.31, at p. 249.)

Because only Kirkeby’s fraudulent conveyance claim relates to real property,

we must now determine whether that claim, as pled, affects “title to, or the right
to possession of, specific real property.” (§ 405.4.) We conclude it does.

A fraudulent conveyance claim is set forth in the Uniform Fraudulent Transfer

Act (UFTA), which is codified in Civil Code section 3439 et seq. “A fraudulent
conveyance is a transfer by the debtor of property to a third person undertaken
[444/445]with the intent to prevent a creditor from reaching that interest to satisfy
its claim.” (Yaesu Electronics Corp. v. Tamura (1994) 28 Cal.App.4th 8, 13
[33 Cal. Rptr. 2d 283].) A transfer under the UFTA is defined as “every mode,
direct or indirect, absolute or conditional, voluntary or involuntary, of disposing
of or parting with an asset …, and includes payment of money, release, lease,
and creation of a lien or other encumbrance.” (Civ. Code, § 3439.01, subd. (i).)
“A transfer of assets made by a debtor is fraudulent as to a creditor, whether the
creditor’s claim arose before or after the transfer, if the debtor made the transfer
(1) with an actual intent to hinder, delay, or defraud any creditor, or (2) without
receiving reasonably equivalent value in return, and either (a) was engaged in
or about to engage in a business or transaction for which the debtor’s assets
were unreasonably small, or (b) intended to, or reasonably believed, or
reasonably should have believed, that he or she would incur debts beyond his or
her ability to pay as they became due. [Citations.]” (Cortez v. Vogt (1997) 52
Cal.App.4th 917, 928 [60 Cal. Rptr. 2d 841], fns. omitted; see also Civ. Code, §
3439.04.)

Civil Code section 3439.07 sets forth the remedies in a fraudulent

conveyance action. Under subdivision (a)(1) of that section, a creditor who
makes a successful fraudulent conveyance claim may obtain “[a]voidance of the
transfer or obligation to the extent necessary to satisfy the creditor’s claim.”
Therefore, a fraudulent conveyance claim requesting relief pursuant to Civil
Code section 3439.07, subdivision (a)(1), if successful, may result in the
voiding of a transfer of title of specific real property. By definition, the voiding
of a transfer of real property will affect title to or possession of real property.
Therefore, a fraudulent conveyance action seeking avoidance of a transfer under
subdivision (a)(1) of Civil Code section 3439.07 clearly “affects title to, or the
right to possession of” (Code Civ. Proc., § 405.4) real property and is therefore
a real property claim for the purposes of the lis pendens statutes.

Hunting World, Inc. v. Superior Court (1994) 22 Cal.App.4th 67 [26 Cal.

Rptr. 2d 923] (Hunting World), offers additional support for this conclusion. In
Hunting World, the plaintiff filed a federal court action for trademark
infringement seeking money damages and the imposition of a constructive trust
on profits obtained as a result of the infringement. After being served with the
lawsuit, the defendant quitclaimed his interest in his family’s residence to his
wife. The plaintiff then brought a fraudulent conveyance action in state court to
set aside the conveyance and recorded a lis pendens against the property. On
appeal, the Court of Appeal reversed the trial court’s order granting the
defendant’s motion to expunge the lis pendens. Using the same reasoning we use
here, the Court of Appeal held that an action to set aside a fraudulent
conveyance fell within the “clear wording of the ‘real property claim’ prong of
lis pendens law ….” (Id. at p. 73.)

Nonetheless, like the defendants in Hunting World, the Fascenellis contend a

court “must look through the pleadings to ascertain the purpose of the party
seeking to maintain notice of lis pendens.” (Hunting World, supra, 22
Cal.App.4th at p. 73.) In support, the Fascenellis cite Urez Corp v. Superior
Court, supra, 190 Cal. App. 3d 1141, and several other cases. The Fascenellis’
argument fails based on the plain language of the applicable statute. Nowhere in
the language of section 405.31, or in its legislative history, is the court directed
to conduct such an examination during its demurrer-like analysis. Indeed, the
legislative history expressly requires courts to consider only the specific claim
as pled and to [445/446]determine whether that claim is a real property claim:
“This section concerns pleading. Prior law became confused because of failure
of the courts to distinguish between allegations (pleadings) and evidence. This
section concerns judicial examination of allegations only. Judicial examination
of factual evidence is separately governed by CCP 405.32. [¶] … This section
… mandates expungement if the pleading does not contain a real property claim.
The analysis required by this section is analogous to, but more limited than, the
analysis undertaken by a court on a demurrer …. [T]he court must undertake the
more limited analysis of whether the pleading states a real property claim.”
(Rep. on Assem. Bill No. 3620 (1991-1992 Reg. Sess.) 3 Assem. J. (1993-1994
Reg. Sess.) p. 4281.)

Lewis v. Superior Court [(1994)] 30 Cal.App.4th 1850 [37 Cal. Rptr. 2d

63], is inapposite and actually supports our conclusion. In Lewis, the real party
in interest “merely allege[d] that [seller] wrongfully took [real party in
interest’s] money and used the money to buy — not convey — the property.”
(Id. at p. 1865.) The Court of Appeal concluded that the real party in interest
had simply realleged its constructive trust claim, which could not support a lis
pendens. (Ibid.) The court therefore held that although a fraudulent conveyance
claim may support a lis pendens, the complaint in that case did not allege a
conveyance of real property. (Ibid.)7

By contrast, Kirkeby adequately pled a fraudulent conveyance claim by

alleging that the Fascenellis transferred title of the subject properties with the
intent to defraud. Specifically, she alleged “that Defendants made these transfers
with the actual intent to hinder, delay, and/or defraud all of their creditors in the
collection of their claims ….” Kirkeby also asked the court to void the transfers
of both properties to the extent necessary to satisfy the claims in her complaint.
As such, her fraudulent conveyance claim, if successful, will affect title to
specific real property. Accordingly, her lis pendens was improperly expunged
based on section 405.31.

In reaching this conclusion, we recognize that the lis pendens statute may be
abused. “While the lis pendens statute was designed to give notice to third
parties and not to aid plaintiffs in pursuing claims, the practical effect of a
recorded lis pendens is to render a defendant’s property unmarketable and
unsuitable as security for a loan. The financial pressure exerted on the property
owner may be considerable, forcing him to settle not due to the merits of the suit
but to rid himself of the cloud upon his title. The potential for abuse is obvious.
[Citations.]” (La Paglia v. Superior Court, supra, 215 Cal. App. 3d at p. 1326,
abrogated on another ground by Lewis v. Superior Court (1999) 19 Cal.4th
1232, 1258, fn. 17 [82 Cal. Rptr. 2d 85, 970 P.2d 872] .) Because of the effect
of a lis pendens, “[t]he history of the lis pendens legislation indicates a
legislative intent to restrict rather than broaden the application of the remedy.”
(Urez v. Superior Court, supra, 190 Cal. App. 3d at p. 1145.) Our courts have
followed suit by restricting rather than broadening the application of a lis
pendens. (Ibid.)

Nonetheless, we cannot ignore the plain language of the statute, which clearly
[446/447]establishes that fraudulent conveyance claims may support a lis pendens
where the plaintiff seeks to void a fraudulent transfer. If this is problematic, it is
up to the Legislature — and not this court — to change the law. In any event,
there are many other grounds for expunging a lis pendens. For example, under
section 405.32, the court is required to expunge a lis pendens “if the court finds
that the claimant has not established by a preponderance of the evidence the
probable validity of the real property claim.” Section 405.32 — unlike section
405.31 — “expressly concerns factual merit. Provision for a demurrer-like
review of the pleading is preserved in CCP 405.31.” (Code com., 14 West’s
Ann. Code Civ. Proc., supra, foll. § 405.32, at p. 250.) Section 405.32 therefore
requires a “judicial evaluation of the merits” of a claimant’s case. (Code com.,
14 West’s Ann. Code Civ. Proc., supra, foll. § 405.32, at p. 250.) Under
Section 405.33, even if a claimant shows a probably valid claim, the court may
still order a lis pendens expunged if adequate relief for the claimant may be
secured by the giving of an undertaking. In addition, “the property owner … may
be entitled to attorney fees and costs if successful” in expunging a lis pendens,
and “[t]rial courts should liberally impose these sanctions upon any who file
fraudulent transfer actions and record notices of lis pendens before uncovering
credible evidence of fraud.” (Hunting World, supra, 22 Cal.App.4th at p. 74.)
The availability of these statutory alternatives and the possible imposition of
attorney fees and sanctions should discourage abuse of the lis pendens statute.

Finally, we consider the Fascenellis’ argument that the UFTA does not allow
a lis pendens as a remedy. The UFTA expressly provides for remedies such as
attachments, injunctions, and the appointment of receivers. With respect to a lis
pendens as a remedy, “[a]lthough [the UFTA] does not provide for notices of lis
pendens, it does not exclude them either.” (Hunting World, supra, 22
Cal.App.4th at p. 73.) Support for including a lis pendens as a remedy is found
in Civil Code section 3439.07, subdivision (a)(3)(C), which entitles a creditor
bringing a UFTA claim to “[a]ny other relief the circumstances may require.”
We believe that this broad language allows a lis pendens remedy. In addition,
Civil Code section 3439.10 and its accompanying legislative comments also
provide a basis for supporting a lis pendens remedy in a fraudulent conveyance
action. Civil Code section 3439.10 provides that “the principles of law and
equity” supplement the provisions of the UFTA. The committee comment notes,
“Among the remedies preserved by this section are the following: [¶] 1. The
recordation of a lis pendens in an appropriate case.” (Leg. Com. com., 12A
West’s Ann. Civ. Code (1997 ed.) foll. § 3439.10, p. 364.)

DISPOSITION

We reverse the judgment of the Court of Appeal and remand for further
proceedings consistent with this opinion.
Footnotes:

1 Unless otherwise indicated, all further statutory references are to the Code of Civil Procedure.

2 Other bases for expungement include: (1) claimant’s failure to comply with the recording, service or
filing requirements of section 405.22 (see § 405.23); (2) claimant’s failure to establish the probable validity
of a real property claim by a preponderance of the evidence (see § 405.32); (3) claimant is secured by a
property owner filing an undertaking (see § 405.33); and (4) claimant’s failure to file an undertaking ordered
by the court as a condition to maintaining a lis pendens (see § 405.34).

7 Because it is not presented in this case, we do not address the question of whether a claim that seeks
to impose a constructive trust or equitable lien may be a basis for a lis pendens.

[a] The Lis Pendens Notice

Lis pendens is a notice of the pendency of an action in which a “real property

claim” is alleged. CCP § 405.2. As Kirkeby illustrates, a “real property claim”
is a pleaded cause of action which would, if victorious, affect title to, or
possession of, specific real property. CCP § 405.4. A lis pendens notice is a
simple document which can be prepared by a party’s attorney, served on
adverse parties and owners [447/448]of record, and recorded in each county
where the potentially affected real property is located. §§ 405.20, 405.21,
405.23. From the time of proper recordation, a purchaser, encumbrancer, or
other transferee of the real property described in the notice is deemed to have
constructive notice of the pending action. § 405.24. The rights and interest of the
claimant in the property, as ultimately determined in the pending action, relates
back to the date of the recording of the notice. § 405.24.

[b] Effect of Lis Pendens

The effect of a lis pendens is to give notice that a lawsuit has been filed
which may affect title to, or possession of, real property described in the notice.
A transfer of the property after a lis pendens is recorded binds the transferee to
a judgment subsequently rendered in the pending action. See Federal Deposit
Ins. Co. v. Charlton, 17 Cal. App. 4th 1066, 1069, 21 Cal. Rptr. 2d 686 (1993) .
But a lis pendens does not by itself make the party who recorded the notice a
secured creditor nor create any priority interest. See Stagen v. Stewart-West
Coast Title Co., 149 Cal. App. 3d 114, 123, 196 Cal. Rptr. 732 (1983) (“A
judgment favorable to the plaintiff relates to, and receives its priority from, the
date the lis pendens is recorded, and is senior and prior to any interests in the
property acquired after that date.”).

[c] Motion to Expunge

A party who wishes to challenge the propriety of a lis pendens, as in Kirkeby,

may do so by moving to expunge the notice. CCP § 405.30. The court shall order
the notice expunged if the pleadings do not allege a real property claim, or if the
claimant has not established by a preponderance of the evidence the probable
validity of her real property claim. § 405.32. The court may also expunge the
notice if it finds that adequate relief can be secured to the claimant by the giving
of an undertaking. § 405.33. Likewise, the court may at any time require the
claimant to give an undertaking as a condition to maintaining the notice in the
record title. § 405.34.

Does a lis pendens continue during the time for appeal, even though the party
who recorded the lis pendens was unsuccessful at trial? The court in Mix v.
Superior Court, 124 Cal. App. 4th 987, 21 Cal. Rptr. 3d 826 (2004) , held that
the trial court erred in denying the defendant’s motion to expunge a lis pendens
recorded by the plaintiff, where the plaintiff lost on the merits at trial. The court
ruled that CCP § 405.32 required the trial court to expunge a lis pendens when
the claimant was unsuccessful at trial, unless the trial court was willing to find
that its own decision was likely to be reversed on appeal. The plaintiff could,
however, seek a stay of the expungement order pending appeal.

[d] Lis Pendens a Provisional Remedy?

Although traditionally viewed as only a method of giving notice, some courts

characterize the lis pendens as a provisional remedy. See, e.g., Urez v. Superior
Court, 190 Cal. App. 3d 1141, 235 Cal. Rptr. 837 (1987) . The Code Comments
which accompanied the Legislature’s 1992 adoption of CCP § 405 et seq.
observed that this distinction is one of semantics, not of substance: “[T]he
recordation of a lispendens [448/449]gives a claimant a de facto, if not a de jure,
provisional remedy.” Code Comment, West’s Ann. Cal. CCP § 405.32 (1995
Suppl.). What is meant by this comment? What is the legal benefit of lis pendens
to the party recording the notice? What are the practical benefits? What is the
legal effect on the adverse party? What are the practical detriments? In what
ways does lis pendens differ from the provisional remedy of attachment?

[e] Due Process Issues

The pre-1992 lis pendens law (CCP §§ 409-409.9, repealed by Stats. 1992,
c.883 (A.B. 3620)) had been construed in Malcolm v. Superior Court, 29 Cal.
3d 518, 174 Cal. Rptr. 694, 629 P.2d 495 (1981) , to prohibit judicial review of
the evidentiary merits of the pleaded real property claim on a motion to
expunge. This construction, which had the effect of postponing any consideration
of the merits of the underlying action until trial, raised serious due process and
ethical concerns. What are these concerns? See Valerie L. Castle, Note, After
Malcolm v. Superior Court and Peery v. Superior Court: A Due Process
Analysis of California Lis Pendens, 70 Cal. L. Rev. 909 (1982). Does the
current lis pendens law, CCP § 405 et seq., eliminate these procedural due
process concerns? Does use of the current lis pendens law still present potential
ethical issues? How so?

[f] Availability of Lis Pendens

Lis pendens is available to any party, based on claims alleged in a complaint

or cross-complaint. CCP § 405.1. Either party in a dissolution of marriage
action is authorized to record a lis pendens notice where interest in real
property is involved. Family Code § 754. However, the pleading must allege a
community interest in specific real property in order to state a “real property
claim” within the meaning of CCP § 405.4. See Gale v. Superior Court, 122
Cal. App. 4th 1388, 19 Cal. Rptr. 3d 554 (2004) (common practice of family
lawyers of not specifying items of community or separate property does not
comply with the statutory requirements for lis pendens).

Do the California lis pendens statutes apply when litigation is filed in another
state but involves a claim to real property located in California? See The
Formula Inc. v. Superior Court, 168 Cal. App. 4th 1455, 86 Cal. Rptr. 3d 341
(2008) (California’s lis pendens statutes do not authorize recording a notice of
litigation that is pending in the courts of another state). Do they apply to an
arbitration proceeding involving real property? See Manhattan Loft, LLC v.
Mercury Liquors, Inc., 173 Cal. App. 4th 1040, 93 Cal. Rptr. 3d 457 (2009) (a
party to a pending arbitration cannot record a lis pendens without first filing a
civil action in superior court).

In most types of actions, the parties must decide whether to utilize lis pendens
based on a variety of legal and technical considerations. Under what
circumstances might a party decide not to utilize lis pendens even though
properly available? How likely is such a decision to occur?

[449/450]
 [C] Official Forms and Other Resources

[1] California Judicial Council Forms

The Judicial Council has approved an official form for nearly every step in
the provisional remedy process. E.g., Judicial Council Form AT-105:
Application for Right to Attach Order, Temporary Protective Order, Etc.;
Judicial Council Form AT-155: Notice of Opposition to Right to Attach Order
and Claim of Exemption. Use of these forms, by either a plaintiff creditor or a
defendant debtor as appropriate, is an efficient way to ensure that all the
statutory prerequisites or oppositions to a particular provisional remedy are
considered.

[2] California Law Revision Commission Comments

The statutory laws governing attachment and other provisional remedies in

California are comprehensive and quite complex. Nevertheless, proper
interpretation of the specific statutory requirements is not always easy. Of
particular assistance here are the authoritative Comments of the California Law
Revision Commission, which accompanied the various major revisions of the
Attachment Law. See, e.g., 16 Cal. L. Revision Comm’n Reports 703-823,
1603-1761 (1982); 11 Cal. L. Revision Comm’n Reports 705-739 (1973).
These comments provide guidance as to the Legislature’s intent. Van Arsdale v.
Hollinger, 68 Cal. 2d 245, 249–50, 66 Cal. Rptr. 20, 437 P.2d 508 (1968)
(“Reports of commissions which have proposed statutes that are subsequently
adopted are entitled to substantial weight in construing the statutes.”); Bank of
America v. Salinas Nissan, 207 Cal. App. 3d 260, 267, 254 Cal. Rptr. 748
(1989) (relying on the Law Revision Commission Comments as guidance to the
legislature’s intent, court construed Attachment Law as not requiring specific
description in attachment application of property sought to be attached when
defendant is partnership or corporation).

§ 7.02 PRELIMINARY INJUNCTIVE RELIEF

[A] Preliminary Injunctions

CALIFORNIA CODE OF CIVIL PROCEDURE § 527 (2012)

 (a) A preliminary injunction may be granted at any time before judgment upon
a verified complaint, or upon affidavits if the complaint in the one case, or the
affidavits in the other, show satisfactorily that sufficient grounds exist therefor.
No preliminary injunction shall be granted without notice to the opposing party.

***

(c) No temporary restraining order shall be granted without notice to the

opposing party, unless both of the following requirements are satisfied:

(1) It appears from facts shown by affidavit or by the verified complaint

that great or irreparable injury will result to the applicant before the matter
can be heard on notice.

[450/451]

(2) The applicant or the applicant’s attorney certifies one of the

following to the court under oath:

(A) That within a reasonable time prior to the application the applicant
informed the opposing party or the opposing party’s attorney at what time
and where the application would be made.

(B) That the applicant in good faith attempted but was unable to inform
the opposing party and the opposing party’s attorney, specifying the efforts
made to contact them.

(C) That for reasons specified the applicant should not be required to so
inform the opposing party or the opposing party’s attorney.

(d) In case a temporary restraining order is granted without notice in the

contingency specified in subdivision (c):

(1) The matter shall be made returnable on an order requiring cause to

be shown why a preliminary injunction should not be granted, on the
earliest day that the business of the court will admit of, but not later than 15
days or, if good cause appears to the court, 22 days from the date the
temporary restraining order is issued.
 (2) The party who obtained the temporary restraining order shall, within
five days from the date the temporary restraining order is issued or two
days prior to the hearing, whichever is earlier, serve on the opposing party
a copy of the complaint if not previously served, the order to show cause
stating the date, time, and place of the hearing, any affidavits to be used in
the application, and a copy of the points and authorities in support of the
application. The court may for good cause, on motion of the applicant or on
its own motion, shorten the time required by this paragraph for service on
the opposing party.

(3) When the matter first comes up for hearing, if the party who obtained
the temporary restraining order is not ready to proceed, or if the party has
failed to effect service as required by paragraph (2), the court shall
dissolve the temporary restraining order.

(4) The opposing party is entitled to one continuance for a reasonable

period of not less than 15 days or any shorter period requested by the
opposing party, to enable the opposing party to meet the application for a
preliminary injunction. If the opposing party obtains a continuance under
this paragraph, the temporary restraining order shall remain in effect until
the date of the continued hearing.

(5) Upon the filing of an affidavit by the applicant that the opposing
party could not be served within the time required by paragraph (2), the
court may reissue any temporary restraining order previously issued. The
reissued order shall be made returnable as provided by paragraph (1), with
the time for hearing measured from the date of reissuance. No fee shall be
charged for reissuing the order.

(e) The opposing party may, in response to an order to show cause, present
affidavits relating to the granting of the preliminary injunction, and if the
affidavits are served on the applicant at least two days prior to the hearing, the
applicant shall [451/452]not be entitled to any continuance on account thereof. On
the day the order is made returnable, the hearing shall take precedence of all
other matters on the calendar of the day, except older matters of the same
character, and matters to which special precedence may be given by law. When
the cause is at issue it shall be set for trial at the earliest possible date and shall
take precedence of all other cases, except older matters of the same character,
and matters to which special precedence may be given by law.

***

ABBA RUBBER COMPANY v. SEAQUIST

COURT OF APPEAL OF CALIFORNIA,
FOURTH APPELLATE DISTRICT
235 Cal. App. 3d 1, 286 Cal. Rptr. 518 (1991)

McKinster, Justice.

***

FACTUAL BACKGROUND

Roy J. Seaquist began manufacturing rubber rollers under the name of ABBA
Rubber Company in 1959. He sold the business in 1980. The plaintiff bought the
business in 1982.

J.T. “Jose” Uribe began working at ABBA in 1973. He remained there

through the various changes of ownership, rising to vice-president and general
manager in 1987. His brother, J.A. “Tony” Uribe began working for the
company in 1985, and later was promoted to sales manager. In these capacities,
both Uribes became very familiar with the identities of ABBA’s customers.

Meanwhile, Mr. Seaquist had started a metal fabrication business known as

Seaquist Company (Seaquist). In 1985, following the expiration of the
noncompetition clause in the agreement by which he had sold ABBA, Seaquist
also began manufacturing rubber roller products. However, it had no sales
force, and did not significantly expand.

On September 11, 1989, Jose Uribe either quit or was fired from ABBA. The
same day, he was hired by Seaquist, which simultaneously leased a new
building from which to operate an expanded rubber roller business. Several
weeks later, Seaquist hired Tony Uribe as a salesman. He had been fired by the
plaintiff in early 1989, and since then had been working for yet another
manufacturer of rubber rollers.

While the Uribes deny taking any records from ABBA, they admit to
soliciting business from some ABBA customers. They did this in part by means
of a letter which announced Jose Uribe’s relocation from ABBA to Seaquist,
and which invited the recipient to contact him regarding Seaquist’s “ability to
provide … an advantage in price, quality and service.”

[452/453]

PROCEDURAL BACKGROUND

The plaintiff filed a complaint on June 13, 1990, which alleged

misappropriation of trade secrets, unfair competition, intentional inference with
business relations, breach of contract, and other theories. It named as defendants
Mr. Seaquist, Jose Uribe, and Tony Uribe, and prayed for preliminary and
permanent injunctive relief and damages.

Six days later, the plaintiff made an ex parte application for a temporary
restraining order (TRO) and for an order to the defendants to show cause why a
preliminary injunction should not issue. Ultimately, the trial court denied the
application for the TRO, but granted the application for the preliminary
injunction. The preliminary injunction was signed on August 20, 1990, and
issued on August 24, 1990, when the plaintiff filed the requisite $1,000
undertaking.

The injunction restrained the defendants from engaging in any of the following
acts:

“1. Further solicitation of business from any of the recipients of the

September 15, 1989 solicitation letter sent by defendants;

“2. Solicitation of business from any person or entity who has

purchased rubber rollers from ABBA between January 1, 1989 and August
7, 1990, and who was on the ABBA customer list as of September 11,
1989 (hereafter referred to as ‘ABBA customers’), or facilitating any other
 person or entity’s solicitation of ABBA customers; and

“3. Divulging, making known or making any use whatsoever of the

trade secrets of ABBA, concerning the customers subject to the restraints
set forth in paragraph 2 of this Preliminary Injunction, which trade secrets
consist of:

“(a) the names of ABBA customers;

“(b) the contact persons for ABBA customers, their addresses

and telephone numbers;

“(c) the amounts and types of rubber rollers purchased from

ABBA by ABBA customers;

“(d) the dates on which each ABBA customer last purchased

rubber rollers from ABBA;

“(e) information as to when each ABBA customer opened its

account with ABBA; and

“(f) any other information relating to ABBA customers’ needs

and anticipated needs as communicated to ABBA by these customers.”

CONTENTIONS

The defendants contend that the trial court abused its discretion in issuing the
injunction, because the identity of the plaintiff’s customers was not a trade
secret. They also attack the form of the injunction, on the grounds that it does not
allow [453/454]them to determine, in advance and with certainty, what conduct is
permissible and what conduct is prohibited. Similarly, they contend that the
injunction is impermissibly overbroad, because it proscribes the solicitation of
businesses which are not customers of the plaintiff or the identities of which are
otherwise not secret. Finally, they assert that the amount of the undertaking
specified in the injunction is inadequate. * * *
 DISCUSSION

A. IS THE UNDERTAKING TOO LOW?

Prior to the issuance of the minute order in which the trial court announced its
decision on the application for the preliminary injunction, neither the plaintiff
nor the defendants had addressed the issues of either the requirement for or the
amount of the undertaking to be posted by the plaintiff in the event that the
plaintiff’s application was granted. Not surprisingly, therefore, the minute order
was silent on the need for or amount of any undertaking. Thereafter, the plaintiff
submitted a proposed preliminary injunction, which also had no provision for
any undertaking.

While no hearing was held concerning the form of the order, the defendants
submitted to the judge written objections to the form proposed by the plaintiff.
Those objections raised the lack of any provision for an undertaking, and
proposed the sum of $315,000, based upon the evidence which the plaintiff had
previously submitted concerning Seaquist’s income from former customers of
the plaintiff. The plaintiff responded that the defendants had waived their right
to “request” an undertaking, and that in any event an undertaking was not
required. As an aside, it noted that an undertaking of only $1,000 had been
specified in the exemplar which it had provided to the court. The trial court
amended the form of order proposed by the plaintiff by adding the requirement
of a $1,000 undertaking, and signed the injunction.

On appeal, the defendants renew their objection to the lack of a sufficient

bond.

1. Did the Defendants Waive Their Objection?

As its initial response to the defendants’ attack on the amount of the

undertaking, the plaintiff again contends that the objection has been waived.
Specifically, the plaintiff argues, without authority, that they waived their right
to make such a challenge because they failed to raise the issue prior to the
issuance of the trial court’s ruling on the application for the preliminary
injunction. Although not specifically raised by the plaintiff, we also consider
whether a waiver resulted from the defendants’ failure to contest the adequacy
of the undertaking by a noticed motion.

a. No Waiver by Failing to Request Undertaking in Advance.

The conditioning of the issuance of a preliminary injunction upon the posting

of an undertaking is statutorily required: “On granting an injunction, the court or
judge must require an undertaking on the part of the applicant ….” (Code Civ.
[454/455]Proc.,2 § 529, subd. (a), italics added.) That duty is mandatory, not
discretionary. Nothing in the statute conditions the trial court’s obligation to
require such an undertaking upon a request from the parties. To the contrary, an
injunction does not become effective until an undertaking is required and
furnished, and must be dissolved if an undertaking is not filed within the time
allowed by statute (§ 529, subd. (a)). Since an undertaking is an indispensable
prerequisite to the issuance of a preliminary injunction, regardless of whether
the party to be restrained has reminded the court to require the applicant to post
one, the restrained party does not waive its right to that statutorily mandated
protection by failing to affirmatively request it. Therefore, the defendants’ initial
silence did not waive their right to an undertaking.

Furthermore, the defendants are entitled, not merely to any undertaking, but to
an undertaking in an amount sufficient to pay the defendants “such damages …
as [they] may sustain by reason of the injunction, if the court fin ally decides that
the applicant was not entitled to the injunction.” (§ 529, subd. (a).) Once again,
this is an obligation imposed upon the trial court by statute, independent of any
request from the party to be restrained. Therefore, the mere fact that the
defendants did not expressly demand, prior to the time that the trial court took
the plaintiff’s application for preliminary injunction under submission, that any
such injunction be conditioned upon the posting of a sufficient undertaking, did
not result in a waiver of their right to challenge the amount of the subsequent
undertaking.

b. No Waiver by Failing to File a Motion.

A closer issue is whether such a waiver occurred because the defendants

failed to strictly comply with the statutory procedure governing objections to the
amounts of undertakings.

The Bond and Undertaking Law, enacted in 1982, applies to all bonds 4
“given as security pursuant to any statute of this state, except to the extent the
statute prescribes a different rule or is inconsistent.” (§§ 995.010 and 995.020,
subd. (a).) Article 9 of that law, comprised of sections 995.910 through
995.960, “governs objections to a bond given in an action or proceeding.” (§
995.910.) An “objection” includes a contention that “[t]he amount of the bond is
insufficient.” (§ 995.920, subd. (b).) Thus, that article governed the challenge
being made here, concerning the amount of the undertaking to be given in this
action pursuant to section 529.

Section 995.930 prescribes the manner in which such an objection is to be

made:

“(a) An objection shall be in writing and shall be made by noticed

motion. The notice of motion shall specify the precise grounds for the
objection. If a ground for the objection is that the amount of the bond is
insufficient, the notice of motion shall state the reason for the insufficiency
and shall include an estimate of the amount that would be sufficient.

“(b) The objection shall be made within 10 days after service of a

copy of the bond on the beneficiary or such other time as is required by the
statute [455/456]providing for the bond.

“(c) If no objection is made within the time required by statute, the

beneficiary is deemed to have waived all objections except upon a
showing of good cause for failure to make the objection within the time
required by statute or of changed circumstances.”

Obviously, the means used by the defendants here to communicate their

objection to the trial court — an ex parte objection rather than a noticed motion
— did not comply with the letter of those statutory procedures. Were they
nevertheless sufficient to prevent the waiver threatened by section 995.930,
subdivision (c)? * * *

[A]lthough the objection was not in the prescribed form, it nevertheless

complied with the substance of each of the statutory requirements, and thereby
met the objectives of section 995.930. While the abbreviated procedure adopted
by the defendants was not and is not statutorily authorized, it is doubtful whether
strict compliance with the procedural requirements of the statute would have
materially added to the substance, as opposed to the length, of the objection.
Instead, the trial court would have been presented with the same facts, the same
argument, and the same issue.5

Under these facts, we find that the defendants’ ex parte objection substantially
complied with the statutory procedure for contesting the sufficiency of the bond.
Since neither the trial court nor the plaintiff insisted upon strict compliance with
section 995.930, that substantial compliance is sufficient to prevent the waiver
provided by subdivision (c) of that section. Therefore, the defendants did not
waive their right to have this court review the adequacy of the amount of that
bond on appeal.

2. Is the Undertaking Insufficient?

Section 529, subdivision (a), requires that the amount of the undertaking be
sufficient to “pay to the party enjoined such damages … as the party may sustain
by reason of the injunction, if the court finally decides that the applicant was not
entitled to the injunction.” Thus, the trial court’s function is to estimate the
harmful effect which the injunction is likely to have on the restrained party, and
to set the undertaking at that sum. That estimation is an exercise of the trial
court’s sound discretion, and will not be disturbed on appeal unless it clearly
appears that the trial court abused its discretion by arriving at an estimate that is
arbitrary or capricious, or is beyond the bounds of reason.

In reviewing the trial court’s estimation, the first step is to identify the types
of damages which the law allows a restrained party to recover in the event that
the issuance of the injunction is determined to have been unjustified. The sole
limit imposed by the statute is that the harm must have been proximately caused
by the wrongfully issued injunction. (§ 529, subd. (a).) Case law adds only the
limitation [456/457]that the damages be reasonably foreseeable. (Rice v. Cook
(1891) 92 Cal. 144, 148 [28 P. 219] [not “‘remote’”]; Handy v. Samaha (1
931) 117 Cal. App. 286, 290 [3 P.2d 602] [“‘reasonably anticipated’”].)

When an injunction restrains the operation of a business, foreseeable dam

ages include “the profits which [the operator] would have made had he not been
prevented by the injunction from carrying on his business.” (Lambert v. Haskell
(1889) 80 Cal. 611, 618 [22 P. 327] .) Thus, the defendants correctly sought to
have the undertaking include the losses which they will incur by reason of the
prohibition against their continued solicitation of business from former
customers of the plaintiff. In their objection, the defendants argued that, by the
plaintiff’s own analysis of the evidence, those customers accounted for 87.7
percent of Seaquist’s invoices, representing $26,000 in sales per month, or
$315,000 per year. The plaintiff did not dispute their interpretation of the
evidence, either below or on appeal. Therefore, while those lost sales will
undoubtedly be offset to some degree by savings resulting from reduced sales
expenses or costs of goods sold, it is undisputed that t he injunction will cause
the defendants to incur very substantial lost profits.

At the final hearing on the application for the injunction, the trial court
appeared to believe that it would be a simple matter for the defendants to locate
new customers for their products, and that the proposed injunction, restraining
them from soliciting further orders from the plaintiff’s customers, would be only
a “minor inconvenience ….” This may have been the trial court’s rationale for
setting the undertaking at the nominal sum of $1,000.7 Certainly, it is the ground
upon which the plaintiff seeks to justify that action.

That reasoning, however, ignores the fact that section 529 requires that the
potential damages be estimated on the assumption that the preliminary injunction
was wrongfully issued, i.e., that the plaintiff did not have the right to keep the
defendants from soliciting its customers. Under that hypothetical circumstance,
the defendants would be entitled to solicit business from both the plaintiff’s
former customers and entirely new customers, and thus would be entitled to
retain all profits from sales to both subsets of potential buyers. Therefore, the
losses which they are likely to suffer from being precluded from soliciting
business from their existing customer base cannot be offset by any profits they
may make from sales to new customers. A nominal undertaking cannot be
justified on the ground that the defendants’ profitability could remain constant,
when their sales and profitability might have risen in the absence of the
injunction.

Furthermore, the plaintiff’s analysis ignores another type of damage which the
undertaking must take into account: attorney’s fees. “It is now well settled that
reasonable counsel fees and expenses incurred in successfully procuring a final
decision dissolving the injunction are recoverable as ‘damages’ within the
meaning of the language of the undertaking, to the extent that those fees are for
services that [457/458]relate to such dissolution [citations].” (Russell v. United
Pacific Ins. Co. (1963) 214 Cal. App. 2d 78, 88–89 [29 Cal. Rptr. 346]; …) * *
* If the preliminary injunction is valid and regular on its face, requiring the
defendant to defend against the main action in order to demonstrate that the
injunction was wrongfully issued, the prevailing defendant may recover that
portion of his attorney’s fees attributable to defending against those causes of
action on which the issuance of the preliminary injunction had been based.

Thus, in calculating the amount of the undertaking to be required in this case,

the trial court should have considered at least (1) the profits to be lost by the
defendants from the elimination of the vast majority of their existing customers,
and (2) the attorney’s fees and expenses to be incurred in either prosecuting an
appeal of the preliminary injunction, or defending at trial against those causes of
action upon which the preliminary injunctive relief had been granted. By setting
that undertaking at $1,000, the trial court impliedly estimated that those two
classes of damages would total no more than that sum.8

That estimation is not within the bounds of reason. Even ignoring the lost
profits, there is no reasonable possibility that the attorney’s fees and expenses
necessary to dissolve the injunction, either through appeal or trial, would not
exceed $1,000. It is well known that litigation is extraordinarily expensive. That
is especially true in commercial litigation such as this, in which two businesses
are fighting over the right to sell to a particular customer base amid allegations
of misappropriation of trade secrets and unfair competition. * * * When
attorney’s fees and lost profits are added into the equation, the utter inadequacy
of the undertaking is clear.

B. WAS THE ISSUANCE OF AN INJUNCTION AN

ABUSE OF DISCRETION?

The plaintiff contends that the injunction was necessary to restrain the
misappropriation of trade secrets, as authorized by the Uniform Trade Secrets
Act (Civ. Code, §§ 3426-3426.10) ….

1. Standard of Review

A court may enjoin actual or threatened misappropriations of trade secrets.

(Civ. Code, § 3426.2, subd. (a).) “[T]rial courts should evaluate two
interrelated factors when deciding whether or not to issue a preliminary
injunction. The first is the likelihood that the plaintiff will prevail on the merits
at trial.” (IT Corp. v. County of Imperial (1983) 35 Cal. 3d 63, 69 [196 Cal.
Rptr. 715, 672 P.2d 121] .) [458/459]That is because a request for an injunction
must be denied “unless there is a reasonable probability that plaintiff will be
successful in the assertion of his rights.” (Continental Baking Co. v. Katz,
supra, 68 Cal. 2d at p. 528.) “The second is the interim harm that the plaintiff is
likely to sustain if the injunction were denied as compared to the harm that the
defendant is likely to suffer if the preliminary injunction were issued.” (IT
Corp., supra, at pp. 69–70.) The trial court balances these two factors to
determine either “‘that, pending a trial on the merits, the defendant should or that
he should not be restrained from exercising the right claimed by him.’” (Id., p.
70, quoting from Continental Baking Co., supra, at p. 528.)

That determination “‘rests in the sound discretion of the trial court, and …
may not be interfered with on appeal, except for an abuse of discretion.’” (IT
Corp., supra, 35 Cal. 3d at p. 69 quoting from People v. Black’s Food Store
(1940) 16 Cal. 2d 59, 61 [105 P.2d 361] .) “A trial court will be found to have
abused its discretion only when it has ‘exceeded the bounds of reason or
contravened the uncontradicted evidence.’” [Citations.] Further, the burden rests
with the party challenging the injunction to make a clear showing of an abuse of
discretion.” (IT Corp., supra, at p. 69.)

Therefore, our inquiry is defined as follows: Have the defendants clearly

shown that the trial court either exceeded the bounds of reason or contravened
uncontradicted evidence when it concluded that they should be restrained from
exercising their alleged right to solicit the plaintiff’s customers?

2. Definition of Trade Secret

While the defendants also contest the form and scope of the injunction, their
sole challenge to the substance of the injunction is that the trial court abused its
discretion because there was no evidence, contradicted or otherwise, to
establish that the plaintiff’s customer list satisfied all of the elements of the
definition of a trade secret.

[Here the court determines that the plaintiff’s customer list constitutes a trade
secret within the meaning of Civil Code § 3426.1(d).]

DISPOSITION
 An injunction cannot remain in effect without an adequate undertaking.
Therefore, the preliminary injunction is reversed. No further preliminary
injunction shall be issued unless its issuance is conditioned upon the furnishing
of an adequate undertaking. We do not purport to determine what an adequate
amount would be. Rather, we leave that determination to the trial court, taking
into consideration the types of damages discussed in this opinion. If further
evidence or argument would assist the trial court in that determination, it may
wish to conduct a hearing in the manner of Code of Civil Procedure section
995.950.

Any preliminary or permanent injunction issued in this case in the future shall
both clearly and narrowly define the scope of the proscribed activities, in
accordance with the views expressed in this opinion.

Appellants shall recover their costs on appeal.

Footnotes:

2 Unless specified otherwise, all further statutory references are to the Code of Civil Procedure.

4 The law speaks primarily in terms of bonds, because it defines that term to include undertakings. (§
995.140, subd. (a)(2).)

5 Although the final order required a $1,000 bond where the tentative ruling had required no bond at all,
we do not view the factual circumstances, or the issue, as having been substantially changed by that
addition. Under the facts of this case, a $1,000 bond is the equivalent of no bond at all.

7 In the abstract, $1,000 is not an insignificant sum. It may be an appropriate undertaking in cases of
harassment or trespass. However, in the context of an undertaking designed to secure a business’s right to
recover damages resulting from the improvident issuance of legal process, it is negligible. For instance, the
statutory minimum for an undertaking filed in connection with a superior court’s writ of attachment is
$7,500. (§ 489.220.)

8 Since a trial court must deny an application for a preliminary injunction “unless there is a reasonable
probability that plaintiff will be successful in the assertion of his rights” (Continental Baking Co. v. Katz
(1968) 68 Cal. 2d 512, 528 [67 Cal. Rptr. 761, 439 P.2d 889] ), the trial court below, by granting the
application, impliedly found that the defendants were not likely to prevail at trial. From this finding, it may
have reasoned that only a nominal undertaking was necessary because it was not probable that the
defendants would ever be entitled to collect any damages for the harm caused by the preliminary injunction.
 If so, that reasoning is fallacious. The undertaking is designed to compensate the defendants in the event,
however unlikely, that the preliminary injunction is finally determined to have been unjustified. The
probability that they will actually obtain such a favorable determination, either through appeal or trial, is
irrelevant in determining the likely amount of those damages.

[459/460]

[1] Preliminary Injunctions, Generally

As our principal case indicates, a trial court must weigh two “interrelated”
factors in deciding whether to issue a preliminary injunction: (1) the likelihood
that the moving party will ultimately prevail on the merits, and (2) the relative
interim harm to the parties from issuance or nonissuance of the injunction. Butt
v. State of California, 4 Cal. 4th 668, 677–78, 15 Cal. Rptr. 2d 480, 842 P.2d
1240 (1992) (“The trial court’s determination must be guided by a ‘mix’ of the
potential merit and interim-harm factors; the greater the plaintiff’s showing on
one, the less must be shown on the other to support an injunction.”). Precisely
how do these two factors “interrelate”? May the court properly deny a
preliminary injunction even though it finds that the plaintiff will ultimately
prevail on the merits? See, e.g., Posey v. Leavitt, 229 Cal. App. 3d 1236, 280
Cal. Rptr. 568 (1991) (court has discretion to deny injunction even though
encroachment by defendant’s condominium already established in nuisance
action). May the court properly grant a preliminary injunction based on severe
irreparable interim harm where there is no possibility that the plaintiff will
ultimately prevail on the merits? See Common Cause v. Bd. of Supervisors, 49
Cal. 3d 432, 442–43, 261 Cal. Rptr. 574, 777 P.2d 610 (1989).

When a party makes a sufficient showing of likelihood of success on the

merits, may a trial court properly grant a preliminary injunction without
considering the relative harms that would be imposed by denying or granting the
preliminary injunction? See White v. Davis, 30 Cal. 4th 528, 561, 133 Cal.
Rptr. 2d 648, 68 P.3d 74 (2003) (“[T]he decision in Common Cause did not
suggest that when a party makes a sufficient showing of likely success on the
merits a trial court need not consider the relative balance of hardships at all”).

[2] Preliminary Injunctions: Interim Harm

The courts’ discussions of the preliminary injunction factors make

generalizations regarding “interim harm” very difficult. However, precedents
provide the following guidelines:

[a] Irreparable Injury

A preliminary injunction is more likely when the plaintiff demonstrates that it

is necessary to prevent “great or irreparable injury.” CCP § 526(a)(2). Of
course, what constitutes “irreparable injury” varies with the circumstances of
each case. Compare, e.g., Ketchens v. Reiner, 194 Cal. App. 3d 470, 480, 239
Cal. Rptr. 549 (1987) (loss of First Amendment freedoms unquestionably
constituted irreparable harm) with Gow v. Mitchell Brothers’ Santa Ana
Theater, 118 Cal. App. 3d 863, 173 Cal. Rptr. 476 (1981) (harm caused by
exhibition of alleged obscene films clearly constituted an irreparable injury);
see also American Academy of Pediatrics v. Van de Kamp , 214 Cal. App. 3d
831, 263 Cal. Rptr. 46 (1989) (implementation of parental consent statute will
cause irreparable harm for minors seeking therapeutic abortions); Butt v. State
of California, supra (closing of schools six weeks early due to school district
revenue shortfall would cause irreparable harm to students and parents).

If the plaintiff may be fully compensated by the payment of damages in the

[460/461]event she prevails on the merits, then irreparable injury does not exist.
See, e.g., Tahoe Keys Property Owners v. State Water Resources Control Bd. ,
23 Cal. App. 4th 1459, 1471, 28 Cal. Rptr. 2d 734 (1994) (citing cases). The
court must also consider the potential harm to the defendant and the public if a
preliminary injunction is granted. Id. at 1472–73 (preliminary injunction sought
to enjoin state agencies from collecting and expending allegedly unconstitutional
building permit fees held properly denied where plaintiff presented little risk of
irreparable injury, and defendant agencies and public would suffer significant
harm in their task of protecting the environment from degradation caused by
development).

[b] Threatened Harm

Plaintiffs are not required to wait until they have suffered actual harm before
they apply for an injunction, but may seek injunctive relief against the threatened
infringement of their rights. See, e.g., Maria P. v. Riles , 43 Cal. 3d 1281, 1292,
240 Cal. Rptr. 872, 743 P.2d 932 (1987) ; Southern Christian Leadership
Conference of Greater Los Angeles v. Malaikah Auditorium Co. , 230 Cal.
App. 3d 207, 281 Cal. Rptr. 216 (1991) (plaintiff allowed to seek preliminary
in junction to prevent threatened breach of contract).

[c] Governmental Entity Applicant

 “Where a government entity seeking to enjoin an alleged violation of a statute
or ordinance which specifically provides for injunctive relief establishes that it
is reasonably probable it will prevail on the merits, a rebuttable presumption
arises that the potential harm to the public outweighs the potential harm to the
defendant. If the defendant shows that it would suffer grave or irreparable harm
from the issuance of the preliminary injunction, the court must then examine the
relative harms to the parties.” IT Corp. v. County of Imperial, 35 Cal. 3d 63,
72, 196 Cal. Rptr. 715, 672 P.2d 121 (1983) . How does this approach to the
“interim harm” factor differ from the traditional two-prong approach taken in a
typical private case? Why not view the presumption as irrebuttable? Should
this approach also apply to such statutory injunction actions brought by non-
governmental parties?

[d] Special Statutes

The Legislature has enacted a number of statutes that specifically authorize

injunctive relief. E.g., Bus. & Prof. Code § 17078 (violation of Unfair Practices
Act); Bus. & Prof. Code § 17203 (violation of unfair competition statutes);
Family Code §§ 6200-6388 (restraining order pursuant to Domestic Violence
Prevention Act). Some of these special statutes authorize injunctive relief
without the necessity of showing injury beyond violation of the statute. E.g.,
Bus. & Prof. Code § 17082 (unnecessary for Unfair Practices Act plaintiff to
show actual or threatened injury).

Some specific injunction statutes also authorize procedural rules different

from those applicable to injunctions generally. E.g., CCP § 527.6 (civil
harassment); CCP § 527.8 (workplace violence); Family Code §§ 240-246
(dissolution of marriage and related family law matters, prevention of domestic
violence, etc.). Why did the Legislature provide special, expedited procedures
in such statutes?

[461/462]

[3] Preliminary Injunctions: Undertaking

As ABBA Rubber Co. v. Seaquist, reproduced supra, illustrates, the posting

of adequate security is, generally, a prerequisite to the issuance of a valid
preliminary injunction. CCP § 529; see, e.g., Mangini v. J.G. Durand
International, 31 Cal. App. 4th 214, 37 Cal. Rptr. 2d 153 (1994) (trial court
erred in issuing preliminary injunction without requiring plaintiff to post a bond;
unless statutory exception to bond requirement applicable, even a plaintiff
whose preliminary injunction advances the public interest must post sufficient
bond); Condor Enterprises, Ltd. v. Valley View State Bank , 25 Cal. App. 4th
734, 30 Cal. Rptr. 2d 613 (1994) (a court may not punish with contempt or other
sanctions disobedience to a preliminary injunction which is invalid because a
bond was not posted). What is the purpose of this undertaking requirement? See
CCP § 529(a). In what circumstances is a wrongfully enjoined party entitled to
recover damages, under § 529, against the bond? When an appellate court
determines that the trial court abused its discretion in issuing the preliminary
injunction? Or when the trial court did not abuse its discretion when issuing the
preliminary injunction but later determines that the applicant is not entitled to a
permanent injunction? See ABBA Rubber Co. v. Seaquist, supra; Wallace v.
Miller, 140 Cal. App. 3d 636, 189 Cal. Rptr. 637 (1983).

[a] Sufficiency of Undertaking

Within five days after the service of a preliminary injunction, the party
enjoined may object to the sufficiency of the undertaking. CCP § 529(a). How
does a court determine whether the required undertaking is sufficient? What,
according to ABBA Rubber, may the court consider in determining the probable
damages to the defendant that would result from a wrongfully issued preliminary
injunction? Do you agree with the ABBA Rubber court’s reasoning in finding that
the $1,000 bond was insufficient? Does CCP § 529 preclude a trial court from
imposing a nominal undertaking where the plaintiff’s probability of success on
the merits is extremely high? Should it? In ABBA Rubber, the defendant
appealed from both the issuance of the preliminary injunction and the adequacy
of the undertaking. Can a defendant appeal only the question of the sufficiency of
the amount of the undertaking? See County of Los Angeles v. City of Los
Angeles, 76 Cal. App. 4th 1025, 90 Cal. Rptr. 2d 799 (1999) (a trial court’s
order fixing the amount of a preliminary injunction bond is not separately
appealable).

[b] Federal Rules Compared

Rule 65 of the Federal Rules of Civil Procedure sets forth the procedures and
requirements for issuance of temporary restraining orders and preliminary
injunctions by the federal courts. The federal rules are similar to the California
provisions. Rule 65(c) requires an applicant to post security “in an amount that
the court considers proper” as a prerequisite to issuance of a temporary
restraining order or a preliminary injunction. Despite Rule 65(c), the federal
courts have upheld nominal bonds for preliminary injunctions to preserve
access to the federal courts in cases of private enforcement of environmental
laws. E.g., People ex rel. Van DeKamp v. Tahoe Regional Planning Agency ,
766 F.2d 1319, 1325–26 (9th Cir. 1985).

[462/463]

Does the ABBA Rubber court’s construction of CCP § 529 preclude nominal
bonds in such cases in the California courts? Should § 529 be so construed?
Why? For a discussion of the case for nominal injunction bonds in
environmental litigation in California, see Alexander T. Henson & Kenneth F.
Gray, Injunction Bonding in Environmental Litigation, 19 Santa Clara L. Rev.
541 (1979).

[c] When Undertaking Not Required

An undertaking is not a prerequisite to granting a preliminary injunction in

family law actions, Family Code §§ 231–246, CCP § 529(b); or where the
applicant is a public entity or official, § 995.220. See City of South San
Francisco v. Cypress Lawn Cemetery Assn., 11 Cal. App. 4th 916, 14 Cal.
Rptr. 2d 323 (1992) (inherent equitable powers of trial court to require bond
must yield to public policy expressed in CCP § 529(b)). Moreover, in any case
the court may, in its discretion, waive the requirement of a bond where the
applicant is an indigent person. CCP § 995.240. What are the policy reasons for
this authority to waive the bond? If the applicant is indigent and seeks waiver of
the undertaking requirement, what effect might this fact have on the court’s
willingness to grant a preliminary injunction? What effect should it have?

[d] Waiver of Undertaking

Can the injunction bond requirement of CCP § 529 be waived or forfeited by

the party to be enjoined? Although the analysis of this question in ABBA suggests
that the bond cannot be waived or forfeited, the court in Smith v. Adventist
Health System/West , 182 Cal. App. 4th 729, 740–49, 106 Cal. Rptr. 3d 318
(2010), held that the defendant waived its right to require a bond by failing to
respond to the plaintiff’s argument that a bond was unnecessary, before or after
the superior court granted the preliminary injunction. The Smith court viewed
ABBA as not controlling authority on this question, because the trial court in
ABBA did not find a waiver and did require a bond. Smith, 182 Cal. App. 4th at
742–44.

[B] Temporary Restraining Orders (TRO)

 [1] TRO Prerequisites

Upon proper application, a court may enter a temporary restraining order

(TRO) to preserve the status quo when “great or irreparable injury” would
result to the applicant before the matter can be determined at a preliminary
injunction hearing. CCP §§ 526(a)(2); 527(a). What constitutes “great or
irreparable injury”? What other prerequisites must an applicant satisfy in order
to seek a TRO without notice to the opposite party? Under what types of
circumstances should an applicant not be required to even attempt to inform the
opposing party of the application for a TRO? What are the consequences of not
attempting to inform the opposite party of an ex parte TRO application when
circumstances do not justify this failure to notify? See, e.g., Brewster v.
Southern Pac. Transp. Co., 235 Cal. App. 3d 701, 714, 1 Cal. Rptr. 2d 89
(1991) (attorney for plaintiff sanctioned by court in amount of $22,047.93 for
failure to notify defendant of application for TRO).

[463/464]

[2] TRO Procedural Safeguards

As with the provisional remedy of attachment, the temporary restraining order

procedure must comply with the Due Process Clause. What procedural
safeguards does CCP § 527 contain with respect to the issuance of a TRO? Do
they satisfy the due process concerns expressed in Randone v. Appellate Dept.,
5 Cal. 3d 536, 96 Cal. Rptr. 709, 488 P.2d 13 (1971) ? See Chrysler Credit
Corp. v. Waegele , 29 Cal. App. 3d 681, 105 Cal. Rptr. 914 (1973) (statute
authorizing use of temporary restraining order is narrowly drawn and satisfies
due process of law). The posting of security is not a prerequisite to the issuance
of a temporary restraining order under CCP § 529, see Wallace v. Miller , 140
Cal. App. 3d 636, 189 Cal. Rptr. 637 (1983) ; but may be required by the court.
See, e.g., City of South San Francisco v. Cypress Lawn Cemetery Assn., 11
Cal. App. 4th 916, 14 Cal. Rptr. 2d 323 (1992) (noting that a trial court has the
inherent authority to require a bond as a condition to issuing a TRO); Greenly v.
Cooper, 77 Cal. App. 3d 382, 143 Cal. Rptr. 514 (1978) (ruling that bond
plaintiff posted in connection with a TRO could also be posted in connection
with a preliminary injunction).

[a] Duration

A TRO is an interim order of limited duration designed to preserve the status

quo pending a hearing on an application for a preliminary injunction. CCP §
527. What is the maximum duration of a TRO? What is the maximum duration of
a preliminary injunction? Does the court’s denial of a TRO application
necessarily mean it will also deny a preliminary injunction? What are the
substantive and procedural differences between a TRO and a preliminary
injunction? Between a TRO and a prejudgment attachment? See Doyka v.
Superior Court, 233 Cal. App. 3d 1134, 285 Cal. Rptr. 14 (1991).

[b] Enforcement

A TRO is enforceable by contempt, but only after the court acquires personal
jurisdiction over the defendant. For purposes of contempt, a court has personal
jurisdiction over a defendant “from the time the summons is served on him” or
as of the time of a general appearance. CCP § 410.50. Does this mean that a
defendant who has actual notice of a TRO may ignore it with impunity until
served with the summons? See Chrysler Credit Corp. v. Waegele, supra , 29
Cal. App. 3d at 687–89 (defendant’s contempt upheld where defendant served
with TRO and deliberately violated its terms, even though not previously or
concurrently served with summons).

[3] Anti-Suit Injunctions

Civil Code § 3423 authorizes a California court to restrain a party subject to

its jurisdiction from proceeding in another action involving the same subject
matter or the same facts when “necessary to prevent a multiplicity of
proceedings.” Likewise, the “first filed rule” in California means that when two
courts of the same sovereignty have concurrent jurisdiction, the first to assume
jurisdiction over a particular subject matter of a particular controversy takes it
exclusively, and the second court should not thereafter assert control over that
subject matter. [464/465]Advanced Bionics Corp. v. Medtronic, Inc ., 29 Cal. 4th
697, 128 Cal. Rptr. 2d 172, 179, 59 P.3d 231 (2002) ; see also Franklin &
Franklin v. 7-Eleven Owners for Fair Franchising, 85 Cal. App. 4th 1168,
1175–78, 102 Cal. Rptr. 2d 770 (2000) (applying the exclusive concurrent
jurisdiction rule and upholding trial court’s postjudgment enjoining of
subsequent trials of identical actions in another superior court, pending appeal
of first action).

Do these rules authorize a California court to issue a TRO enjoining a party

to a California lawsuit from taking any further action in a case pending in
another state that may interfere with the California court’s proceedings? In
Advanced Bionics, supra, an action filed in California by plaintiffs, a former
employee and the California new employer, to declare defendant’s
noncompetition agreement void and unenforceable, the Supreme Court
concluded that the superior court improperly issued a TRO enjoining the
defendant former employer from proceeding in a later filed, parallel breach of
contract action in a Minnesota court. “[E]njoining proceedings in another state
requires an exceptional circumstance that outweighs the threat to judicial
restraint and comity principles,” the Supreme Court reasoned, but the potentially
conflicting judgments that naturally result from parallel proceedings do not
provide a reason for issuing a TRO. Advanced Bionics, 29 Cal. 4th at 708.

For a recent decision discussing the considerations relevant to the issuance of

an anti-suit injunction where the later-filed parallel action is in the courts of
another country, see TSMC North America v. Semiconductor Mfg. Intl. Corp.,
161 Cal. App. 4th 581, 74 Cal. Rptr. 3d 328 (2008) (the power to issue anti-suit
injunctions must be used sparingly because restraining a party from pursuing an
action in a court in another country involves delicate questions of international
comity and judicial restraint).
[465/466]
Chapter 8

PRECLUSIVE EFFECTS OF PRIOR JUDGMENTS

§ 8.01 INTRODUCTORY NOTE ON RES JUDICATA

AND COLLATERAL ESTOPPEL
The doctrine of res judicata describes a set of rules which determine the
preclusive effect of prior judgments. The doctrine in California is almost
entirely the result of judge-made law, e.g., Slater v. Blackwood, 15 Cal. 3d 791,
126 Cal. Rptr. 225, 543 P.2d 593 (1975) ; although a few statutes help define
some of the rules, e.g., CCP §§ 1049, 1908-1912.

The California doctrine has two familiar components. “First, it precludes

parties or their privies from relitigating the same cause of action that has been
finally determined by a court of competent jurisdiction.” Frommhagen v. Board
of Supervisors, 197 Cal. App. 3d 1292, 1299, 243 Cal. Rptr. 390 (1987) . This
aspect of the doctrine is known as “claim preclusion,” and is commonly referred
to as “res judicata.” “Second, although a second suit between the same parties
on a different cause of action is not precluded by a prior judgment, the first
judgment operates as an estoppel or conclusive adjudication as to such issues in
the second action as were actually litigated and determined in the first action.”
Id. This second aspect is known as “issue preclusion,” and is commonly
referred to as “collateral estoppel.” One word of caution with respect to this
terminology: The California courts sometimes use the term “res judicata” to
refer to both claim and issue preclusion.

On a very general level, the California doctrine is similar to the doctrine set
forth in the Restatement (Second) of Judgments (1982), Section 17, Effects of
Former Adjudication — General Rules:

A valid and final personal judgment is conclusive between the

parties, except on appeal or other direct review, to the following extent:
 (1) If the judgment is in favor of the plaintiff, the claim is extinguished
and merged in the judgment and a new claim may arise on the judgment …;

(2) If the judgment is in favor of the defendant, the claim is

extinguished and the judgment bars a subsequent action on that claim …;

(3) A judgment in favor of either the plaintiff or the defendant is

conclusive, in a subsequent action between them on the same or a different
claim, with respect to any issue actually litigated and determined if its
determination was essential to that judgment ….

[466/467]

The California claim preclusion doctrine is unique, however, where it

incorporates the “primary rights” theory.

§ 8.02 RES JUDICATA (CLAIM PRECLUSION)

[A] The Primary Rights Doctrine

HOLMES v. DAVID H. BRICKER, INC.

SUPREME COURT OF CALIFORNIA
70 Cal. 2d 786, 76 Cal. Rptr. 431, 452 P.2d 647 (1969)

Traynor, Chief Justice.

Plaintiffs brought this action in the municipal court to recover damages for
injury to their automobile. The court sustained defendant’s demurrer to the
complaint without leave to amend on the ground that the action was barred by a
judgment plaintiffs had obtained for personal injuries suffered in the same
accident. Plaintiffs appeal from the ensuing judgment of dismissal.

On August 24, 1962, plaintiffs purchased a used automobile from defendant.

The contract of sale contained an express warranty that “The used car sold
herein is hereby warranted to be in good operating condition and to remain in
such condition under normal use and service for a period of 30 days or 1000
miles, (whichever comes first) after delivery.” On September 15, 1962, while
Mr. Holmes was driving and Mrs. Holmes was riding as a passenger, the
automobile crashed into a fixed object along a downgrade on a mountain road,
causing injuries to plaintiffs and damage to the automobile.

On September 6, 1963, plaintiffs filed an action against defendant in the

superior court to recover damages for their personal injuries. Their complaint
pleaded five causes of action, each of which alleged that the accident was
caused by defective brakes. The first cause of action sought recovery for breach
of the express warranty quoted above; the second alleged breach of other
express warranties and of the implied warranties of merchantability and fitness
for the purpose intended; the third alleged defendant’s failure to test and adjust
the brakes as required by Vehicle Code section 24007; the fourth alleged
negligent servicing, testing, and inspecting; and the fifth sought recovery on the
basis of fraudulent representation that the automobile was in good condition.

On March 9, 1967, a jury returned a verdict for plaintiffs for $49,400, and the
judgment entered on the verdict has become final.

On February 23, 1966, while the personal injury action was pending,
plaintiffs filed this action against defendant in the municipal court for $1,138.12,
the amount of damage to the automobile in the 1962 accident. The complaint
pleaded two causes of action. The first was based on the express warranty in the
purchase agreement. It was identical with the first cause of action in the 1963
personal injury complaint except for the damages alleged. The second sought
recovery on the basis of fraudulent misrepresentations. It was dismissed by
stipulation and thereafter the [467/468]court sustained defendant’s demurrer to the
complaint without leave to amend, on the ground that “Plaintiff could and should
have urged in the Superior Court action, the claim that is now made in the first
cause of action.”

Plaintiff contends that the trial court’s ruling is contrary to the settled rule that
conduct that simultaneously causes harm both to the person and to the property
of one individual gives rise to two separate and distinct causes of action, one
for violation of the right to freedom from legally impermissible interference
with the integrity of the person and one for violation of the right to quiet
enjoyment of property. This application of the primary rights theory of causes of
action in California was first reflected in the permissive joinder provisions of
the practice act of 1851 based on the original Field Code. (Stats. 1851, ch. 5, §
64, pp. 59–60).2 Those provisions distinguished between causes of action
arising out of injuries to person and causes of action arising out of injuries to
property and did not recognize any cause of action that would include tortious
injuries to both person and property. Although the Legislature has broadened the
scope of permissible joinder of causes of action since 1851, it has consistently
recognized, both in the joinder provisions (See, e.g., Code Civ. Proc., § 427);
and in the applicable statutes of limitation (Code Civ. Proc., §§ 340.3 [injury to
person] and 338.3 [injury to property]) that the causes of action for injuries to
person and property are separate. The cases and the commentators are in
accord. (Todhunter v. Smith (1934) 219 Cal. 690, 693 (dictum) [28 P.2d 916] ;
Bowman v. Wohlke (1913) 166 Cal. 121 [135 P.37, Ann. Cas. 1915B 1011];
Lamb v. Harbaugh (1895) 105 Cal. 680 [39 P.56] ; McCarty v. Fremont (1863)
23 Cal. 196; …)

Kidd v. Hillman (1936) 14 Cal. App. 2d 507 [58 P.2d 662] , Commercial
Standard Ins. Co. v. Winfield (1938) 24 Cal. App. 2d 477 [75 P.2d 525] , and
Pacific Idem. Group v. Dunton (1966) 243 Cal. App. 2d 504 [52 Cal. Rptr.
332], invoked by defendant, are not to the contrary. In each of these cases a
former judgment had included recovery for both personal injuries and property
damage growing out of an automobile accident and the court recognized that the
former judgment could be pleaded as a defense to a later action for additional
property damage. Accordingly, they involved only the application of the settled
rule that a separate cause of action does not arise for each separate item of
property damaged as a result of one tortious act. (Sanderson v. Niemann (1941)
17 Cal. 2d 563, 572 [110 P.2d 1025].)

In the present case, however, plaintiffs have not pleaded a cause of action for
tortious injury to their automobile, but for breach of the express written
warranty [468/469]in the contract of sale. The breach alleged is the identical
breach of warranty alleged in their first cause of action in the prior suit.
Accordingly, the crucial question is whether a single breach of the express
warranty gave rise to two causes of action when it resulted in injury to both the
persons and the property of plaintiffs. We hold that it did not. The warranty
pleaded in this case was essentially contractual in character. It was created by
agreement of the parties; it did not arise by operation of law; and it was subject
to negotiation and modification at the time the contract was entered into. Under
these circumstances the applicable rule is that all damages for a single breach of
contract must be recovered in one action. (Coughlin v. Blair (153) 41 Cal. 2d
587, 598 [262 P.2d 305] ; Abbot v. 76 Land & Water Co. (1911) 161 Cal. 42
[118 P.425]; …)
 The judgment is affirmed.

SLATER v. BLACKWOOD
SUPREME COURT OF CALIFORNIA
15 Cal. 3d 791, 126 Cal. Rptr. 225, 543 P.2d 593 (1975)

Richardson, Justice.

We consider, and will reject, the contention that the unconstitutionality of the
guest statute enunciated by us in Brown v. Merlo (1973) 8 Cal. 3d 855 [106 Cal.
Rptr. 388, 506 P.2d 212, 66 A.L.R.3d 505] should be given retroactive effect.

Plaintiff, a minor, was injured in an automobile accident in 1969 while riding

as a guest in a car driven by defendant John Blackwood and owned by the
defendant Escondido Tire Supply Co., Inc. In March 1970 she filed an action for
damages, the complaint being framed in contemplation of the provisions of
California’s then existing “guest statute” (Veh. Code, § 17158), which limited
recovery to death or injuries resulting from intoxication or willful misconduct.
At trial, following plaintiff’s opening statement, the court granted defendants’
motion for nonsuit on the ground that plaintiff’s evidence would not support
recovery under section 17158. Judgment for defendant was entered pursuant to
Code of Civil Procedure section 581c.

Plaintiff appealed contending that the guest statute was unconstitutional and
that recovery should be permitted upon a showing of negligence alone. The
Court of Appeal rejected this argument and affirmed the trial court’s decision.
We denied a hearing in June 1972.

In February 1973 we held the guest statute unconstitutional as applied to an

injured nonowner guest. (Brown v. Merlo, supra, 8 Cal. 3d 855.) In May of that
year plaintiff, still a minor, filed a new complaint, based on the same accident
and naming the same parties as defendants. Her claim was not barred by the
statute of limitations. (See Code Civ. Proc., § 352.) In the second action plaintiff
sought recovery on a negligence theory, arguing that our decision in Brown
should be applied retroactively. Defendants demurred to the new complaint on
the ground that the original 1970 judgment was res judicata and constituted a bar
to the second suit. The trial court agreed, and demurrers to the new complaint
were sustained without leave to amend.

[469/470]

Plaintiff appeals, contending that the doctrine of res judicata is not

applicable. Specifically, she argues (1) that the first judgment is not a bar to the
new complaint because the judgment is based upon separate and distinct causes
of action; (2) that the trial court should have exercised its discretionary power
to reject the defense of res judicata in the interest of justice and fairness; and (3)
that defendants are estopped from relying on res judicata in this action because
they prevented plaintiff from litigating the issue in the prior proceedings. We
conclude that these arguments lack merit, and that the judgment should be
affirmed.

A valid final judgment on the merits in favor of a defendant serves as a

complete bar to further litigation on the same cause of action. (Busick v.
Workmen’s Comp. Appeals Bd. (1972) 7 Cal. 3d 967, 973 [104 Cal. Rptr. 42,
500 P.2d 1386] ; Panos v. Great Western Packing Co. (1943) 21 Cal. 2d 636,
639 [134 P.2d 242] ; 4 Witkin, Cal. Procedure (2d ed. 1971) Judgment, § 192,
p. 3332; Rest., Judgments, § 48.) Plaintiff in the matter before us, however,
argues that the second complaint states a new “cause of action.” In doing so
however, she misconstrues the meaning of that term. California has consistently
applied the “primary rights” theory, under which the invasion of one primary
right gives rise to a single cause of action. (Busick, supra, at p. 975; Wulfjen v.
Dolton (1944) 24 Cal. 2d 891, 895–896 [151 P.2d 846] .) The “primary right”
alleged to have been violated in the instant case is plaintiff’s right to be free
from injury to her person. (See Panos, supra, at p. 639; Rest., Judgments, § 63,
com. a.) It is clearly established that “… there is but one cause of action for one
personal injury [which is incurred] by reason of one wrongful act.” (Busick,
supra, at p. 975; see Panos, supra, at p. 638; 3 Witkin, Cal. Procedure (2d ed.
1971) Pleading, § 34, p. 1717.)

Our consideration of plaintiff’s argument involves a significant conceptual

matter. It is true that plaintiff has asserted different legal theories in the instant
case and in her 1970 complaint. However, the “cause of action” is based upon
the harm suffered, as opposed to the particular theory asserted by the litigant.
Even where there are multiple legal theories upon which recovery might be
predicated, one injury gives rise to only one claim for relief. “Hence a judgment
for the defendant is a bar to a subsequent action by the plaintiff based on the
same injury to the same right, even though he presents a different legal ground
for relief.” (3 Witkin, supra, Pleading, § 24, p. 1709; and see Panos v. Great
Western Packing Co., supra, 21 Cal. 2d at pp. 638–639; …) We therefore
cannot accept plaintiff’s first contention.

Plaintiff, however, points to certain language in Brown v. Merlo, supra, 8

Cal. 3d 855 at pp. 860, 863, in which we refer to the “cause of action” for
negligence and the “cause of action” for violation of the former guest statute. It
is argued that by use of such language we have implicitly agreed that a case such
as this one gives rise to multiple causes of action. However, the phrase “cause
of action” is “often used indiscriminately to mean what it says and to mean
counts which state differently the same cause of action, …” (Eichler Homes of
San Mateo, Inc. v. Superior Court (1961) 55 Cal. 2d 845, 847 [13 Cal. Rptr.
194, 361 P.2d 914] ; …) When read in context it is clear that our use of the term
“cause of action” in Brown, noted by plaintiff, refers to the “counts” asserted by
the plaintiff in her complaint.

Assuming that res judicata is available to defendants in the instant matter,

plaintiff argues that the trial court, nonetheless, should have exercised its
discretionary [470/471]power to reject the doctrine as a defense. There is some
authority for the proposition that, in particular circumstances, courts may refuse
to apply res judicata when to do so would constitute a manifest injustice. (See
Greenfield v. Mather (1948) 32 Cal. 2d 23, 35 [194 P.2d 1] ; …) We consider
the Greenfield doctrine of doubtful validity and it has been severely criticized.
(See 4 Witkin, supra, Judgment, § 150, p. 3295, et seq.) While we find it is
unnecessary for our present purposes to reach the question of whether
Greenfield itself should be directly overruled, we expressly hold that the rule of
that case is inapplicable where, as here, the only possible basis for its
implementation is founded on a change in law following the original judgment.

Previous appellate decisions of this state are in accord. For example, in

Zeppi v. State of California (1962) 203 Cal. App. 2d 386 [21 Cal. Rptr. 534] ,
plaintiffs sued the state for personal injuries. A demurrer on the ground of
governmental immunity was sustained and judgment entered for defendant. The
judgment was affirmed on appeal and we denied a petition for hearing.
Subsequently, in Muskopf v. Corning Hospital Dist. (1961) 55 Cal. 2d 211 [11
Cal. Rptr. 89, 359 P.2d 457] , we held that governmental entities were no longer
immune from liability for the torts of their agents. Plaintiffs in the original Zeppi
action thereupon made a motion in the trial court to vacate the judgment on the
grounds that the previous rulings sustaining the demurrer were the result of
mistakes. The trial court granted this motion. In reversing, the appellate court
agreed with defendant’s contention that res judicata was applicable stating: “In
every instance where a rule established by case law is changed by a later case
the earlier rule may be said to be ‘mistaken’ …. Such ‘mistakes’ or ‘injustices’
are not a ground for equity’s intervention. So to hold would be to emasculate, if
not wipe out, the doctrine of res judicata because the doctrine is most
frequently applied to block relitigation based upon contentions that a law has
been changed. Our courts have repeatedly refused to treat the self-evident
hardship occasioned by a change in the law as a reason to revive dead action
….” (Zeppi, supra, at pp. 388–389, italics added.) The court held that under the
circumstances, where the only “mistake” made in the earlier proceedings was in
assuming that the law would remain unchanged, there is no discretion to reject
the defense of res judicata. (Id., at p. 389.)

In Bank of America v. Department of Mental Hygiene (1966) 246 Cal. App.

2d 578 at page 585 [54 Cal. Rptr. 899], it was said “[the] rule appears clear in
California that a judgment which was contrary to the Constitution because it was
based upon a statute later held invalid, is nevertheless res judicata in a
subsequent suit.”

We agree with the positions taken by the Courts of Appeal in Zeppi and Bank
of America. It cannot be denied that judicial or legislative action which results
in the overturning of established legal principles often leads to seemingly
arbitrary and unwarranted distinctions in the treatment accorded similarly
situated parties. However, “[public] policy and the interest of litigants alike
require that there be an end to litigation.” (Panos v. Great Western Packing
Co., supra, 21 Cal. 2d 636 at p. 637.) The result urged by plaintiff, to borrow
the language of Justice Traynor’s dissent in Greenfield, would call “… into
question the finality of any judgment and thus is bound to cause infinitely more
injustice in the long run than it can conceivably avert in this case.” (Greenfield
v. Mather, supra , 32 Cal. 2d at p. 36.) The consistent application of the
traditional principle that final judgments, even [471/472]erroneous ones, are a bar
to further proceedings based on the same cause of action is necessary to the
well-ordered functioning of the judicial process. It should not be impaired for
the benefit of particular plaintiffs, regardless of the sympathy their plight might
arouse in an individual case.

Finally, we reject plaintiff’s argument that defendants, because they moved

for a nonsuit in the first action, are now estopped from asserting that judgment as
a bar to the instant action. It is true that a very few cases have held that the
defendant in a second action is precluded from asserting res judicata as a
defense because of his conduct in prior proceedings. * * * In these cases, the
courts have properly noted that defendants cannot inconsistently argue that a
claim is not cognizable in the first action and then, in a subsequent proceeding,
contend that the same issue should have been raised in the prior litigation. Such
a rule is appropriate where “the course pursued by the trial court and by counsel
in an earlier action was tantamount to an express determination on the part of the
court with the consent of opposing counsel that certain issues should be
reserved for future adjudication, and that the doctrine of res judicata did not
apply.” (Hall v. Coyle (1952) 38 Cal. 2d 543, 546 [241 P.2d 236].)

The foregoing principle, however, is not applicable to the case before us.
Defendants have not attempted to assert inconsistent positions in successive
litigations. There has been no conduct on their part which can be characterized
as constituting a consent, express or implied, that the issue of their negligence
was to be reserved for determination in a second lawsuit. Rather, they have
consistently argued that under the substantive law in effect at the time the
original complaint was filed, plaintiff had no legal theory upon which recovery
for her injuries could be predicated, and that a subsequent change in the law
cannot be a basis for reviving a dead claim.

The theories urged by plaintiff would cast doubt on the finality of any
judgment dependent upon a then valid substantive defense later held to be
unavailable. The general uncertainty induced in our judicial system by such a
result cannot be justified by occasional apparent inequities.

We therefore conclude that the order of the trial court sustaining defendants’
demurrer on the grounds of res judicata must be sustained. The judgment is
affirmed.

SAWYER v. FIRST CITY FINANCIAL CORP.

COURT OF APPEAL OF CALIFORNIA,
FOURTH APPELLATE DISTRICT
124 Cal. App. 3d 390, 177 Cal. Rptr. 398 (1981)

Froelich, Justice.

Plaintiffs appeal from adverse summary judgment rulings in favor of all

defendants. An understanding of the litigation requires an analysis of two
separate cases involving essentially the same parties, of which the present
appeal relates specifically to the second. For reference purposes these two
cases will be called [472/473]Sawyer I and Sawyer II. Each case arises from the
same general factual background.

Factual Background

The principal parties to both cases are the plaintiffs Sawyer, owners and
sellers of land; the defendants First City Financial Corporation, Ltd. (First City)
and its subsidiaries, purchasers and encumbrancers of the land who sought to
develop it; and Toronto Dominion Bank of California, the development lender
to First City’s subsidiary. The broad brush of facts is that in May of 1974 the
Sawyers sold 32 acres of land in La Jolla, California, to the subsidiary of First
City — F.C. Financial Associates, Ltd. — for $1,180,000 consisting of
$510,000 in cash and a note secured by deed of trust in the sum of $670,000.
Concurrently with the sale, F. C. Financial Associates committed to borrow
$1.8 million in the form of a development loan from Toronto Dominion Bank.
This loan was guaranteed by First City and was secured by a first deed of trust
on the realty, the Sawyers specifically subordinating their deed of trust to the
new encumbrance. The Sawyers as part of the sales documents specifically
waived any deficiency judgment with respect to their note and deed of trust,
with the result that after the sales and refinancing escrows closed their sole
resource for collection of their $670,000 note was foreclosure on their deed of
trust, now subordinate to a $1.8 million first deed of trust to the Bank.

Early in 1975, F.C. Financial Associates discontinued payments on the note

to Toronto Dominion Bank, asserting that it could not proceed further with
development of the land because the construction bids it had received were
excessively high. Total amounts owed on the note at that time approximated
$900,000. Toronto Dominion Bank commenced nonjudicial foreclosure
proceedings on April 1, 1975, and purchased the land at foreclosure sale in
September 1975, for its bid of $650,000. The land was ultimately transferred in
December 1976 to Lexington Properties, Inc., a corporation owned by one
Richard Ehrlich, for a purchase price of some $800,000.

The Sawyers contend in pleadings and other documentation that at the time of
the foreclosure sale Toronto Dominion Bank had agreed to resell the realty to
First City for a price equal to the bank’s total investment in it, but that this
transfer was delayed until the sale to Ehrlich and his corporation could be
arranged, so that neither First City nor its subsidiary again appeared as record
titleholder. Ehrlich and his corporation obtained development funds for the
property from a corporation called Lomitas Properties, Inc., which is a
corporation owned and controlled by the majority stockholders, directors and
officers of First City, and which derived its funds from First City.

Appellant’s view of the facts, therefore, is that the Sawyers were induced to
take a nonrecourse note for more than half the consideration involved in the sale
of their land, the security for which note was made subject to a large
development loan. The development borrower then defaulted on the note and
arranged with the development lender to foreclose, to buy in at the foreclosure
sale, and to resell to the development borrower for the amount of the
foreclosure sales price plus the balance of the loan guarantee. The practical
effect of this transaction, it is alleged, was to wipe out the obligation to the
Sawyers and permit First City to proceed with sale [473/474]or development of
the land without having to pay $650,000 of the purchase price. In order to avoid
airing the mechanics of the transaction, the agreement between the Toronto
Dominion Bank and First City was kept secret, and the resale to First City was
not recorded, the ultimate purchaser being a puppet of First City set up in an
apparently independent corporation, borrowing funds from a new and
anonymous lending company, but actually deriving development funds indirectly
from First City. We are alert to caution that the above construction of the facts
from and after the foreclosure sale is that alleged by the plaintiffs, who seek the
opportunity of proving same in a full-scale evidentiary trial.

Legal Proceedings

Sawyer I

Sawyer I was commenced in July of 1975. The defendants were F.C.

Financial Associates, its parent First City, and, later, another subsidiary of First
City (all sometimes called herein Financial); and Toronto Dominion Bank of
California (Bank). The several causes of action all were based upon contractual
theories. Reference was made to the land acquisition and development loan
agreement executed between Financial and Bank, which provided for the
construction of a planned residential development in accordance with an
existing permit. The Sawyers alleged that they were third party beneficiaries of
that agreement and had been damaged by the failure of Financial to perform in
accordance with it. The breach is alleged not only as a simple breach of
contract, but as a breach by the defendants of “a contractual duty of good faith
and fair dealing.” A separate cause of action asks for declaratory relief with
respect to the contractual commitments; and a final cause of action seeks
judicial foreclosure of the Sawyer note. The monetary relief prayed for was the
amount of the note ($674,500) plus attorney fees.

The case was tried in February of 1978. By stipulation the issues were
severed for trial and dispositive issues were presented to a judge, sitting
without jury. The judgment rendered in March of 1978, focused upon the issue
of the validity of the waiver by Sawyers of their right to a deficiency judgment.
This waiver was found to be effective and judgment was rendered in favor of
all defendants on all causes of action. Following affirmance on appeal, the
judgment became final in December of 1979.

Sawyer II

Sawyer II was filed in January of 1978. Entitled “Complaint for Damages

Based Upon Conspiracy and Fraud,” it joined as defendants all of the parties
named in Sawyer I and in addition the ultimate purchaser Ehrlich and his
corporation, Lexington Properties; the new financier of the development,
Lomitas Properties; and a number of officers and directors of the Financial
companies and the Bank. Three of the causes of action of this new lawsuit are
based upon an alleged conspiracy among the defendants to cause a default in the
Bank’s note and trust deed, hold a sham sale, and take other action for the
purpose of eliminating the obligation to the Sawyers. The only essential
difference in the three causes of action [474/475]is the date of commencement of
the alleged conspiracy — one alleging the evil motives from the very start of the
land acquisition transaction, a second alleging commencement of the conspiracy
when Financial defaulted on its note payments, and a third alleging
commencement of the conspiracy at the time of the foreclosure sale. The fourth
cause of action uses the same factual allegations as the basis for a claim of
intentional interference with contractual relation (Financial’s note obligation to
the Sawyers). Damages alleged are the same as in Sawyer I except that
additional punitive damages are sought.

The procedural history of Sawyer II is detailed as follows:

1. Promptly upon filing Sawyer II, counsel sought to consolidate with Sawyer
I, and moved for a continuance of the trial of Sawyer I. This motion was
opposed by the defendants, who objected because the issues and causes of
action of Sawyer II were different from those of Sawyer I, and also because the
case, then pending for two and one-half years, was scheduled for trial nine days
later. The court denied a motion to continue the trial of Sawyer I, and it was
tried without consolidation with Sawyer II.

2. In January of 1980, the Bank and its officers moved for summary judgment
in Sawyer II upon the ground of the res judicata effect of Sawyer I, and also
upon the basis of a written release which had been executed in favor of the Bank
in Sawyer I — removing the Bank from the case before its trial. The Honorable
Douglas Woodworth denied the motion based upon res judicata, but granted the
motion as to the Bank only, upon the ground of the written waiver. The bank
officers moved for reconsideration on the theory that the waiver should be
construed to cover them as well as the Bank, and this motion was taken under
submission by the judge in March of 1980. On July 24, 1980, Judge Woodworth
denied the motions by written minute order.

3. In May of 1980, a separate motion for summary judgment was filed by the
Financial corporations on the ground that Sawyer I was res judicata to the issues
of Sawyer II — that the plaintiffs had split their cause of action by attempting to
relitigate the same issues in a second lawsuit. The bank officers (whose motion
for reconsideration was then pending before Judge Woodworth) joined in this
motion, and it was set for hearing before the Honorable Franklin B. Orfield. On
July 25, 1980, Judge Orfield ruled in favor of all defendants on the ground of
res judicata and the enforceability of the Bank’s written release in Sawyer I.

The Appeal

Appellants appeal from the summary judgments of both Judge Woodworth

(dismissing the Bank) and Judge Orfield (dismissing all parties) …. Many bases
of appeal are urged: The central and most important issue, however, is the
question of res judicata. As reviewed in 3 Witkin, California Procedure (2d
ed. 1971) Pleading, section 32 et seq., page 1715, a single cause of action
cannot be split and made the subject of several suits. If a primary right is so
split, determination of the issues in the first suit will be res judicata to the
attempt to relitigate them in the second suit. Where the plaintiff has several
causes of action, however, even though they may arise from the same factual
setting, and even though they might have been [475/476]joined in one suit under
permissive joinder provisions, the plaintiff is privileged to bring separate
actions based upon each separate cause.
 Res Judicata Issue

A valid final judgment on the merits in favor of a defendant serves as a

complete bar to further litigation on the same cause of action. (Slater v.
Blackwood (1975) 15 Cal. 3d 791, 795 [126 Cal. Rptr. 225, 543 P.2d 593] .)
The question in this and similar cases, of course, is whether the attempted
second litigation involves the “same cause of action.” A “cause of action” is
conceived as the remedial right in favor of a plaintiff for the violation of one
“primary right.” That several remedies may be available for violation of one
“primary right” does not create additional “causes of action.” However, it is
also true that a given set of facts may give rise to the violation of more than one
“primary right,” thus giving a plaintiff the potential of two separate lawsuits
against a single defendant. (See 3 Witkin, supra, p. 1707 et seq.) The theoretical
discussion of what constitutes a “primary right” is complicated by historical
precedent in several well-litigated areas establishing the question of “primary
rights” in a manner perhaps contrary to the result that might be reached by a
purely logical approach. For instance, the primary right to be free from personal
injury has been construed as to embrace all theories of tort which might have
given rise to the injury. In Panos v. Great Western Packing Co. (1943) 21 Cal.
2d 636 [134 P.2d 242] , the plaintiff was injured in a meat packing house. His
first cause of action was based upon alleged negligence of the packing house in
permitting third parties to come upon the premises and operate equipment. A
defense judgment was then held to bar a second suit based upon an entirely
different factual theory of negligence — that the defendant itself had negligently
operated the equipment. In Slater v. Blackwood, supra, 15 Cal. 3d 791, a
defense judgment in a suit based upon violation of the guest statute (intoxication
or willful misconduct) was held to bar a second suit (after the guest statute was
held unconstitutional) based upon allegations of ordinary negligence.

Other examples of torts resulting in easily conceptualized types of damages

have been settled, one way or the other, by precedent. While one act of tortious
conduct might well be deemed to violate only one “primary right” — the right to
be free from the particular unlawful conduct — the resultant (1) injury to person
and (2) damage to property have been deemed creative of separate causes of
action. On the other hand, one course of wrongful conduct which damages
several pieces of property traditionally gives rise to only one cause of action.

Other classes of litigation, however, with perhaps less historical or

precedential background, are not so well defined in terms of deciding how many
“primary rights” derive from a single factual transaction. The tort in Agarwal v.
Johnson (1979) 25 Cal. 3d 932 [160 Cal. Rptr. 141, 603 P.2d 58] , was unfair
treatment of a minority race employee by an employer. Plaintiff’s first action
was in federal court for back wages under the authority of the federal Civil
Rights Act. The state Supreme Court determined this was no bar to a second suit
in superior court for general and punitive damages for defamation and
intentional infliction of emotional distress. Although the same set of facts is
presented in each claim, one primary right is created by the federal statute
prohibiting discriminatory employment practices; [476/477]and the second primary
right is grounded in state common law. Also, the “harm suffered” was deemed
separable — damages for lost wages in the federal action, and damages for
injury to reputation and peace of mind in the state case. Compare Mattson v.
City of Costa Mesa (1980) 106 Cal. App. 3d 441 [164 Cal. Rptr. 913] , where
the actionable facts consisted of an unlawful arrest of the plaintiff and his abuse
in confinement. His first action in federal court under the authority of the Civil
Rights Act was held to be a bar to a subsequent suit in state court for negligence,
assault and battery. The court found that the “primary rights” giving rise to the
state common law tort action were the same as those reflected in the Civil
Rights Act, and that the civil rights action was “simply a different way of
expressing an invasion of the same primary rights or the assertion of a different
legal theory for recovery.” (Id., at pp. 447–448.) In City of Los Angeles v.
Superior Court (1978) 85 Cal. App. 3d 143, 153 [149 Cal. Rptr. 320] , a
federal civil rights action followed by a superior court common law tort action,
both involving wrongful seizure of personal property, the appellate court
reached the same conclusion and applied the bar of res judicata on the ground
that “the civil rights action was designed to vindicate precisely the same
interests in … personal property that [the plaintiff] seeks to vindicate in the
matter before us.”

One would assume that the question of litigation of claims arising from one
transaction first on the basis of contract, and then on alleged tort theories, would
have received substantial appellate attention. The authorities, however, are
surprisingly sparse. The Restatement of the Law, Judgments (1942) chapter 3,
section 63, page 261, provides several illustrations involving actions to cancel
a deed. A failure to sustain the first action on contractual grounds (i.e., failure of
execution or delivery of the deed) is held to bar a subsequent action based upon
fraudulent procurement — thus suggesting that the “primary right” is the right to
cancel the deed (as applied to our case, to validate the note) and that this gives
rise to only one cause of action, whether it be framed in contract or tort.

Respondents rely upon two cases which purport to be illustrative of contract

actions followed by separate tort actions, arising from the same transaction:
Olwell v. Hopkins (1946) 28 Cal. 2d 147 [168 P.2d 972] ; and Steiner v.
Thomas (1949) 94 Cal. App. 2d 655 [211 P.2d 321] . The plaintiff’s claim in
Olwell resulted from farming operations carried on by a joint venture which
included a Washington corporation. In the first suit the action was dismissed
without a trial of the substantive issues on the ground that the corporation had
never qualified to do business in California with the result that the contract upon
which the suit was based was “void.” A second suit based upon the same
transaction alleged fraudulent concealment of facts and prayed that the
defendants be declared constructive trustees of certain realty. While this
scenario would seem to pose a problem similar to that of the case before us, it
was resolved without addressing the issue of the existence of separate causes of
action in contract and for fraud. The court assumed (and presumably counsel did
not argue to the contrary) that there was only one cause of action, and that the
second suit was merely an alternative statement of that one cause of action. (See
Olwell v. Hopkins, supra, 28 Cal. 2d at pp. 149, 150.) The question directly
addressed by the court was the effect of dismissal of the first suit without a trial
on the merits, and whether such dismissal on procedural grounds would operate
as a bar to a second action, recognizing that in order to constitute a bar, the
dismissal [477/478]must have been following “‘an adjudication of the merits of the
controversy, …’” (Id., at p. 149).

In Steiner, two successive actions were brought against an administrator of a

decedent’s estate for the purpose of recovering a certain parcel of real property
which had been transferred to the decedent by the plaintiff before the decedent’s
death. The first action was for rescission based upon fraud, alleging that the
realty had been transferred so as to permit the decedent to collect rents and that
the decedent had promised to reconvey the property at a later date. The second
lawsuit was based upon an alleged breach of an agreement to devise the
property to the plaintiff, as evidenced by two letters from the decedent to the
plaintiff. The court resolved the question of res judicata against the plaintiff,
focusing on the identity or similarity of facts litigated in the first suit as
compared to those in issue at the second suit. The court stated:

“The fact is that in the former action the merits of all the facts were
determined and relief was denied …. Upon presentation of the special plea
in the instant action the court had merely to decide whether the facts
alleged in the first suit for rescission of the contract were substantially
those alleged in the second action for breach of the same contract.”

The court thus construed the situation as one in which alternative remedies in
contract were successively brought — related to the same contract — rather
than a case in which an action on contract was followed by an action for an
intentional tort related to or as part of the transaction giving rise to the contract.
Neither Orwell nor Steiner appears controlling.

The case before us is not one in which the same factual structure is
characterized in one complaint as a breach of contract and in another as a tort.
The first action is solely on contract and is based upon the note, deed of trust,
and loan and development agreement. At the time of trial the principal issue
litigated was the effectiveness of the waiver of deficiency judgment, and this
issue was presented in the context of contractual theories. There was no
contention and no evidence was presented relating to a possible invalidation of
the waiver on grounds of fraud, misrepresentation or any other tort.

Sawyer II, of course, had as its object collection of the same promissory note
which was the subject matter of Sawyer I; but the basis of the claim is
completely different, and rests upon a completely separate set of facts. The
complaint assumes and admits that the forms of the waiver of deficiency and the
subordination are technically appropriate and enforceable. The pleading
reaches beyond these documents, however, to highlight other conduct of the
parties alleged to be tortious. The core of the alleged wrongful conduct is an
agreement among the parties to conduct what is characterized as a sham
foreclosure sale, the only substantive effect of which would be secretly to
discharge the obligation to Sawyer, leaving all other parties in essentially the
same position as prior to the sale. Surely one’s breach of contract by failing to
pay a note violates a “primary right” which is separate from the “primary right”
not to have the note stolen. That the two causes of action might have been joined
in one lawsuit under our permissive joinder provisions (see 3 Witkin, supra, at
p. 1915) does not prevent the plaintiff from bringing them in separate suits if he
elects to do so. While the monetary loss may be measurable by [478/479]the same
promissory note amount, and hence in a general sense the same “harm” has been
done in both cases, theoretically the plaintiffs have been “harmed” differently by
tortious conduct destroying the value of the note, than by the contractual breach
of simply failing to pay it. We conclude, therefore, that Sawyer II is based upon
a separate and severable cause of action from that litigated in Sawyer I, and that
it was error to grant summary judgment on the ground of res judicata.

Estoppel

A second prong to appellant’s argument about the summary judgment ruling as

respects res judicata is that the moving parties were estopped to deny the
separate nature of the two causes of action because they had earlier opposed a
motion to consolidate the two cases. Appellants rely upon United Bank & Trust
Co. v. Hunt (1934) 1 Cal. 2d 340 [34 P.2d 1001] , where the court at page 345
stated:

Where counsel by timely notice call to a court’s attention the

pendency of other proceedings covering kindred matters and strive to have
the same embraced within the scope of the inquiry, and such attempt is
successfully blocked by opposing counsel and the trial proceeds to the
investigation of the specific issue before the court, counsel who were
successful in preventing the consolidation of the issues cannot be heard
later to object to a trial of the related matters upon the ground of res
judicata. The course pursued by the court and counsel … was tantamount
to an express determination on the part of the court with the consent of
opposing counsel to reserve the issues involved for future adjudication.
[Citation.] Litigants cannot successfully assume such inconsistent positions.

The inconsistent position asserted to have been taken by defense counsel was
at the time of the hearing of a motion to continue the trial of Sawyer I. * * *

At the hearing of the motion for continuance on February 6, counsel for the
defendants did argue that the case should not be continued to permit
consideration of a consolidation motion because consolidation would be
improper by virtue of the different theories and causes of action in Sawyer II.
However, no express argument was made about, nor consideration given, to the
question of the res judicata effect of the prior trial of Sawyer I. In light of the
long period of preparation for trial and the then once-continued trial date
impending only nine days hence, the trial court presumably considered further
continuance to be prejudicial to the rights of the defendants. A court is not
required to grant a continuance of a trial when the pleadings have been
completed, adequate time for discovery has been provided, the issues are
joined, and one side is ready for trial, even though the moving party alleges
newly discovered facts or newly found issues which suggest more discovery or
an amendment to the pleadings.

The reasonable interpretation to be derived from a review of the record in

Sawyer I was that the court denied the motion for continuance because Sawyer I
was ready for trial, had been delayed previously and should not be delayed
further. Therefore, while we have determined that the motion for summary
judgment should not have been granted on the ground of res judicata, we must
agree with the [479/480]trial court that the moving parties were not estopped by
their prior conduct from making the motion.

Staniforth, Acting Presiding Justice, concurs.

Wiener, Justice, Concurring.

***

I conclude defendants, except for the Toronto Dominion Bank and its officers,
are estopped from raising the defense of res judicata. Accordingly, I agree with
the result reached by the majority. * * *

Plaintiffs filed their first case (No. 369573) in July 1975; their second (No.
409803) on January 11, 1978. On January 13, 1978, plaintiffs moved to
consolidate both cases because some of the parties and certain of the issues
were the same. Unable to serve all defendants, plaintiffs’ motion to consolidate
was reset beyond February 15, 1978, the trial date in case No. 369573. Pending
hearing on that motion, plaintiffs moved to continue the trial to allow the court to
consider the motion for consolidation. Counsel for First City defendants in
Sawyer I, one of whom is appellate counsel here, opposed the motion for
continuance by saying there was no basis for consolidation, arguing further that
“[plaintiffs] are pursuing theories of action for conspiracy and fraud in Case No.
409803, whereas in the above-captioned action plaintiffs are pursuing theories
for breach of contract, declaratory relief and judicial foreclosure. The issues
raised in the two cases are necessarily and substantially different.” (Italics
supplied.) * * *

If defendants’ counsel made the tactical decision to oppose the continuance

on the assumption that if successful they would then be able to prevent litigation
in the second case on the basis of res judicata, it would have been simple
enough for them to tell the court that res judicata was involved. If they had done
so the judge considering the motion would then have been able to evaluate all
relevant factors affecting his decision before exercising discretion in making his
ruling. In light of the language which defendants selected to oppose the motion
for the continuance the ruling on which prevented the court from ever
considering the merits of plaintiffs’ request for consolidation, it was reasonable
for both the court and plaintiffs’ counsel to conclude defendants’ opposition to
the continuance would not prevent a trial of the second case in which the issues
were represented to be “necessarily and substantially different.” Accordingly,
reasonably interpreted, defendants’ actions fall within the narrow rule of United
Bank & Trust Co. v. Hunt, supra. Once having represented to the court there
were two different actions with different issues, they may not now stop plaintiffs
from having a full trial on those “different issues.” * * *

NOTES AND QUESTIONS ON PRIMARY RIGHTS ANALYSIS

(1) As our principle cases illustrate, the central feature of California’s claim
preclusion doctrine is that a single cause of action cannot be split and made the
subject of separate lawsuits. Where a plaintiff has more than one cause of action
[480/481]against a defendant, however, the plaintiff may join them in one lawsuit
but is not required to do so either by rules of joinder or of res judicata. In other
words, a plaintiff who has two causes of action against a defendant may proceed
with two separate lawsuits. A judgment in one lawsuit will have no claim
preclusive effect on the other.

This makes the definition of “cause of action” of central importance, does it

not? As our cases illustrate, the California courts define a “cause of action” for
purposes of claim preclusion according to the “primary rights” theory, i.e., the
violation of each separate “primary right” gives rise to a separate cause of
action and, potentially, a separate lawsuit against the same defendant.

(2) How is “primary right” defined? More importantly, how do the courts
determine whether a set of facts gives rise to only one primary right as opposed
to multiple primary rights? The most frequently quoted response to these
questions is from Agarwal v. Johnson, 25 Cal. 3d 932, 954, 160 Cal. Rptr. 141,
603 P.2d 58 (1979) : “Under the ‘primary rights’ theory adhered to in California
it is true there is only a single cause of action for the invasion of one primary
right …. But the significant factor is the harm suffered; that the same facts are
involved in both suits is not conclusive.”

How significant was this “harm suffered” factor in Holmes v. Bricker? Slater
v. Blackwood? Sawyer v. First City Financial Corp.? Based on these three
cases, is it possible to state a definition of “primary right” that will guide
litigants and courts in future cases? How would you state such a rule?

Footnotes:

2 “The plaintiff may unite several causes of action in the same complaint, when they all arise out of:

“1st. Contracts, express or implied; or,

“2nd. Claims to recover specific real property … or,

“3rd. Claims to recover specific personal property … or,

“4th. Claims against a trustee, by virtue of a contract, or by operation of law; or,

“5th. Injuries to character; or,

“6th. Injuries to person; or,

“7th. Injuries to property.

“But the causes of action so united shall all belong to one only of these classes, and shall
affect all the parties to the action, and not require different places of trial, and shall be separately
stated.”

[1] A Historical Analysis

Walter W. Heiser, CALIFORNIA’S UNPREDICTABLE RES JUDICATA

(CLAIM PRECLUSION) DOCTRINE
35 San Diego L. Rev. 559, 571–576 (1998)*

The Primary Rights Theory — Living History.

The primary rights theory was developed by Professor John Norton

Pomeroy35 in the nineteenth century, and adopted by the California Supreme
Court as early as 1887.36 Under the primary rights theory advanced by Pomeroy,
a “cause of action” consists of a “primary right” possessed by the plaintiff, a
corresponding “primary [481/482]duty” of the defendant, and a wrongful act by the
defendant constituting a breach of that duty.37

Although the genesis of the primary rights theory is found in Pomeroy’s

writings, the historical evolution of the primary rights theory is intertwined with
California’s nineteenth century pleading and joinder rules. 38 The primary rights
theory was first reflected in the permissive joinder of claims provisions of the
California Practice Act of 1851. This 1851 Act, which was later codified in
former Section 427 of the California Code of Civil Procedure, divided all
claims into seven specific categories.40 Claims falling within separate
categories could not be joined in the [482/483]same complaint, and therefore had
to be pleaded in separate actions. For example, the original version of Section
427 permitted a plaintiff to join all claims for injuries to her person against a
defendant in one complaint, or certain claims for injuries to her property, but
prohibited plaintiff from pursuing both her personal injury and property damage
claims in one lawsuit.41

Viewed in this historical context, Pomeroy’s primary rights theory made

sense when adopted by the courts in the 19th century. If, for example, the joinder
rules prohibited a plaintiff from pleading claims for tortious injury to person
and to property against a defendant in one lawsuit, a personal injury judgment in
the first lawsuit should not extinguish plaintiff’s claims for property damages in
a second action.43 Such a claim preclusive effect would have been
fundamentally unfair to the plaintiff, particularly one who had established the
defendant’s liability in the first action. Moreover, issue preclusion was
available to minimize any unfairness to a defendant who had successfully
defended against liability in the first lawsuit.44

Over time, the California courts viewed the categories of permissibly

joinable claims designated in the original version of former Section 427 as
synonymous with Pomeroy’s classifications of primary rights. However, through
frequent amendments between 1907 and 1931, the Legislature attempted to
liberalize the restrictive categories of former Section 427. Although many were
poorly drafted and their meaning unclear, these revisions significantly modified
the seven categories of the original Section 427. * * * Th[ese] revisions, which
remained in effect until the repeal of former Section 427 in 1971, meant that the
statutory categories were no longer the same as Pomeroy’s primary rights
classifications. Consequently, the California Supreme Court sought to identify
some unifying themes to assist the lower courts in applying the primary rights
theory in cases where plaintiff’s claims did not fall neatly into one of former
Section 427’s categories. This effort proved largely unenlightening. The best the
Supreme Court could do was to emphasize that a judgment in a prior action was
a bar to a subsequent action based on the “same injuries,” even though the
second action raised new theories of recovery or requested new forms of
relief.48 Other than to continue to refer to the original [483/484]version of former
Section 427, the Court did little to generally define what constituted the “same”
as opposed to “different” injuries. Eventually, with the repeal of former Section
427, the court’s explicit reliance on this joinder statute as an aid to defining
primary rights came to an end.

Effective 1972, the California Legislature repealed Section 427 and replaced
it with a modern joinder of claims statute. Recognizing that the former
permissive joinder categories were arbitrary and inefficient, the Legislature
eliminated such restrictions in favor of a standard which permits a plaintiff to
join together any causes of action which she has against a defendant.50 his
unlimited joinder of claims standard, codified at Section 427.10(a), remains in
effect today. 51 With the adoption of unrestricted joinder of claims, the link
between claim joinder and res judicata — the historical and philosophical
justification for the primary rights theory — was now completely severed. The
challenge for the California Supreme Court was whether, and if so how, to
reformulate the court-made res judicata doctrine in response to this legislative
change. To date, on the few occasions it has had to expound on the doctrine, the
Supreme Court has taken a cautious approach. The courts of appeal have been
more adventuresome, but with inconsistent and therefore less predictable
results.

__________

Footnotes:

* Reprinted with permission of the San Diego Law Review.

35 John Norton Pomeroy (1828-1885) was a professor at the Hastings College of Law during the
nineteenth century and a prolific legal scholar. In addition to his influential multi-volume treatise on equity
jurisprudence and equitable remedies, in which he explained at length the primary rights theory of a cause of
action; Professor Pomeroy also published treatises on a wide variety of topics, including the civil procedure
in California and other states, code pleading and remedies, constitutional law, municipal law, wills and trusts,
and western water law. See infra notes 37 ….

36 See Hutchinson v. Ainsworth, 73 Cal. 452, 455, 15 P. 82 (1887) (citing Pomeroy and holding that the
facts upon which the plaintiff’s right to sue is based, and upon which the defendant’s duty has arisen,
coupled with the facts that make up the defendant’s wrong, constitute a cause of action); ….

37 See Crowley v. Katleman, 881 P. 2d 1083, 1090 (Cal. 1994) ; see also J. Pomeroy, Remedies and
Remedial Rights § 453, at 487 (1876) [hereinafter, Pomeroy, Remedies]; J. Pomeroy, Equity Jurisprudence
§§ 89-95, at 75–79 (1881) [hereinafter, Pomeroy, Equity]. Professor Pomeroy observed that although the
American courts had repeatedly distinguished a “cause of action” from the relief demanded in a case before
them, “they have not attempted to define the term ‘cause of action’ in any general and abstract manner, so
that this definition might be used as a test in all other cases.” Pomeroy, Remedies § 452, at 486. Pomeroy
then undertook to define the correct meaning of the term “cause of action,” apparently relying on natural
law concepts. Id. at 486–487.

Professor Pomeroy also undertook the onerous task of identifying all the rules which constitute “private
civil law” and assigning them to mutually exclusive classes of primary rights and duties. Pomeroy, Equity §§
89-95, at 75-79. According to Pomeroy, all such rights fell naturally into two grand divisions: those relating to
“Persons” and those concerned with “Things.” Id. at 77. The first of these divisions comprised “only those
rules the exclusive object of which is to define the status of persons.” Id. at 77.

Pomeroy separated the grand division of “Things” into two principal classes — “Real rights” and
“Personal rights.” Id. at 77-78. Real rights embraced three distinct subclasses:

1. Rights of property of every degree and kind over land and chattels, things real and things
personal; 2. The rights which every person has over and to his own life, body, limbs, and good name;
3. The rights which certain classes of persons, namely husbands, parents, and masters, have over
certain other persons standing in domestic relations with themselves, namely, wives, children, and
servants and slaves.

Id. at 78. The second class, “Personal rights,” included two subclasses: “1. Rights arising from contract;”
and 2. Quasi contract and fiduciary rights arising “from some existing relation between two persons or
groups of persons, which is generally created by law.” Id. at 79. Pomeroy viewed these general
classifications as embracing “all primary rights and duties, both legal and equitable, which belong to the
private civil law.” Id. at 79.

38 See [Robin] James, [Comment, Res Judicata: Should California Abandon Primary Rights?, 23
Loy. L.A. L. Rev. 551 (1989], at 372–385; Holmes v. David H. Brickner, Inc., 452 P. 2d 647, 649 (Cal.
1969). The restrictive claim joinder statutes were in effect when Pomeroy published his treatises defining
the primary rights theory. See generally James, supra at 359–360; Pomeroy, Equity, supra note 37;
Pomeroy, Remedies, supra note 37. * * *
 40 The original version of former Section 427 (enacted in 1872) codified, without change, the permissive
joinder provisions of the 1851 Act, and provided as follows:

The plaintiff may unite several causes of action in the same complaint, when they all arise out of:

1. Contracts, express or implied; or,

2. Claims to recover specific real property, with or without damages, for the withholding
thereof, or for waste committed thereon, and the rents and profits of the same; or,

3. Claims to recover specific personal property, with or without damages, for the withholding
thereof; or,

4. Claims against a trustee, by virtue of contract, or by operation of law; or,

5. Injuries to character; or,

6. Injuries to person; or,

7. Injuries to property.

But the causes of action so united shall all belong to only one of these classes, and shall affect
all parties to the action, and not require different places of trial, and shall be separately stated.

Cal. Civ. Proc. Code § 427, repealed by Act of July 1, 1972, ch. 244, § 23, 1971 Cal. Stat. 378.

41 Id.

43 The court in Schermerhorn v. Los Angeles Pac. R.R. Co., 123 P. 351 (Cal. 1912) , one of the few
appellate decisions to consider this question in the context of a res judicata determination, employed
precisely this reasoning in a simple car crash case. The court held that a prior judgment for property damage
did not preclude plaintiff’s instant suit for personal injuries, although caused by the same negligent act of the
defendant. The court reasoned that the second suit was not barred because, under former § 427, the
plaintiff could not have sought recovery for injuries to person and injuries to property in one action. Id. at
352.

44 In Todhunter v. Smith , 28 P.2d 916 (Cal. 1934) , for example, the court held that although res
judicata did not completely bar the plaintiff’s second action to recover damages for personal injuries
sustained in an automobile collision with the defendant, a prior judgment whereby plaintiff unsuccessfully
sought recovery for damage to his car collaterally estopped the plaintiff from relitigating the issue of
negligence.

48 In Slater v. Blackwood, 543 P.2d 593 (Cal. 1975) , the court ruled that a “cause of action” is based
upon the “harm suffered,” as opposed to the particular legal theory asserted by the litigant, and therefore a
judgment for the defendant is a bar to a subsequent action by the plaintiff based on the “same injury” to the
same right, even though plaintiff presents a different legal ground for relief. * * *

50 Act of July 1, 1972, ch. 244, sec. 23, § 427, 1971 Cal. Stat. 380. * * *

51 Cal. Civ. Proc. Code 427.10(a) (Deering 1995) (providing that “[a] plaintiff who in a complaint, alone
or with coplaintiffs, alleges a cause of action against one or more defendants may unite with such cause any
other causes which he has either alone or with any coplaintiffs against any such defendants”).

[2] Cause of Action

Accurate use of the term “cause of action” is particularly important in

applying the “primary rights” theory. This term is used in many ways for many
purposes, which makes its use for res judicata purposes even more confusing.
See, e.g., Bay Cities Paving & Grading, Inc. v. Lawyers’ Mutual Insurance
Co., 5 Cal. 4th 854, 21 Cal. Rptr. 2d 691, 855, P.2d 1263 (1993) (construing
“cause of action” with respect to malpractice insurance policy coverage);
Lilienthal & Fowler v. Superior Court, 12 Cal. App. 4th 1848, 16 Cal. Rptr. 2d
458 (1993) (distinguishing “cause of action” in summary adjudication statute,
where it means theory of liability, from res judicata, where it means the
invasion of a primary right).

In the vernacular of lawyers, a “cause of action” most often refers to a

“different theory of recovery.” Even courts use the term in that manner, as in
Holmes v. Bricker, supra , 70 Cal. 2d at 787 and 788. For example, many
lawyers typically say that a client’s personal injuries due to a defective product
give rise to several “causes of action” identified as breach of warranty, breach
of contract, strict liability, negligence, fraud, etc. And when they plead such a
case, lawyers typically allege each of these as a separate “cause of action” in
the complaint. This common use of “cause of action” is incorrect for res
judicata purposes, is it not? How many [484/485]“causes of action” are there in
our products liability example, for res judicata purposes?
 [3] Primary Rights Determined by Precedent

Despite the general uncertainty in defining a “primary right,” some

applications of the theory are (relatively) settled by precedent, as our principle
cases indicate. Litigants can feel reasonably comfortable in determining whether
one or two lawsuits are permissible in such circumstances. Perhaps the most
frequently encountered application involves a tort victim who simultaneously
suffers both personal injury and property damage caused by the defendant’s
single act. A typical example is negligence litigation arising out of the crash of
two cars, where one driver sues the other. The resulting personal injury to the
plaintiff driver is a separate primary right from the property damage to the
plaintiff’s car, and may be pursued in two separate lawsuits. See Holmes v.
Bricker, supra, and cases cited therein. Why then did the court in Holmes v.
Bricker, supra, conclude that plaintiff’s claim for property damage resulting
from that car crash was the same primary right as already litigated in the prior
action for personal injuries? Could the plaintiff in Holmes have avoided the res
judicata effect of the first judgment by pleading the second lawsuit differently?
If so, how?

Other areas (relatively) settled by precedent are also suggested in Sawyer

a nd Holmes. One wrongful act which results in injury to several pieces of
property traditionally gives rise to only one cause of action, as does one
wrongful act which results in multiple personal injuries to a plaintiff. See
Sawyer and cases cited therein; Swartzendruber v. City of San Diego, 3 Cal.
App. 4th 896, 904, 5 Cal. Rptr. 2d 64 (1992) (consequential damages did not
support a second cause of action); Allstate Ins. Co. v. Mel Rapton, Inc., 77 Cal.
App. 4th 901, 92 Cal. Rptr. 2d 151 (2000) (a separate cause of action does not
arise for each separate item of personal property damaged by one tortious act).
However, a wrongful act which causes injury to real property has been held to
constitute a separate primary right from injury to personal property situated on
the real property. McNulty v. Copp, 125 Cal. App. 2d 697, 271 P.2d 90 (1954).

[4] Primary Rights distinguished from Theories of Recovery

[a] Importance of Harm Suffered?

Slater v. Blackwood, supra, illustrates that a cause of action is based upon

the harm suffered as opposed to the particular theory of recovery asserted.
Likewise, the claims alleged in Holmes v. Bricker, supra , are actually different
theories of recovery and not separate causes of action under the primary rights
theory. Is Sawyer v. First City Financial Corp., supra, consistent with Slater
a nd Holmes? Isn’t the second action in Sawyer to obtain payment of the
promissory note simply the same cause of action with a different legal theory —
tort as opposed to contract — as the first action? The Sawyer court concluded
that plaintiffs were harmed differently by tortious conduct destroying the value
of the note than by a contract breach of failing to pay the note. Is this really a
different injury? Or is it another [485/486]theory for recovering the same injury?
Are you persuaded by the court’s analysis? Why?

In Boeken v. Philip Morris USA, Inc., 48 Cal. 4th 788, 108 Cal. Rptr. 3d
806, 230 P.3d 342 (2010) , after the plaintiff’s husband, a cigarette smoker, was
diagnosed with lung cancer, the plaintiff filed a common law action for loss of
consortium against the defendant cigarette manufacturer seeking compensation
for the permanent loss of companionship and affection. That action was
dismissed with prejudice. Then, after her husband’s death from lung cancer, the
plaintiff brought a wrongful death action under CCP § 377.60 against the same
defendant, again seeking compensation for loss of her husband’s companionship
and affection. Is the primary right at issue in the plaintiff’s statutory wrongful
death action for loss of consortium action the same as the primary right at issue
in the plaintiff’s previous common law action for loss of consortium? The
Supreme Court in Boeken concluded that both actions sought damages for the
same harm and involved the same primary right, and therefore res judicata bars
the wrongful death action insofar as it concerns loss of consortium. Boeken,
supra, 48 Cal. 4th at 800–804.

[b] Sawyer: Tort vs. Contract?

The primary rights ruling in Sawyer v. First City Financial Corp., supra, has
been questioned and distinguished, but has not been disapproved. See, e.g.,
Gamble v. General Foods Corp., 229 Cal. App. 3d 893, 902, 280 Cal. Rptr.
457 (1991) (distinguishing instant case from Sawyer “in that the Sawyers’ first
action was based on contract rights whereas second action was grounded on
fraud”); Jenkins v. Pope, 217 Cal. App. 3d 1292, 1299, n.3, 266 Cal. Rptr. 557
(1990) (Sawyer viewed as finding two separate primary rights violated by a
breach of contract and acts of fraud arising from different sets of facts; unlike
Sawyer, instant case involved one primary right for failure to pay attorneys fees
because actions for fraud and negligent misrepresentation were based on same
acts and misrepresentations); Wittman v. Chrysler Corp., 199 Cal. App. 3d
586, 593, n.3, 245 Cal. Rptr. 20 (1988) (“Brushing aside any doubts we might
have about the correctness of the Sawyer court’s reasoning, the [instant] case is
distinguishable because, here, the issue of fraud was tendered by the Wittmans’
answer [in the prior contract action], and they had an opportunity to litigate the
issue in the [prior] action.”).
 If Sawyer remains good law, precisely what “law” does Sawyer establish?
Can we safely rely on Sawyer for the following proposition: An action based on
breach of contract constitutes a separate primary right than one based on tort,
where the relief sought is the same? See Gamble v. General Foods Corp.,
supra. Why not? What about the following proposition: An action which seeks
the same remedy as a prior action constitutes a separate primary right where the
facts alleged in the second action are related, but different than, those of the
prior action? See Jenkins v. Pope, supra. Why or why not? One more
possibility: A plaintiff who seeks the same remedy as in a prior action but who
alleges the harm was caused in a different manner alleges a separate primary
right than was involved in the prior action?

In Brenelli Amedeo, S.P.A. v. Bakara Furniture, Inc. , 29 Cal. App. 4th 1828,
35 Cal. Rptr. 2d 348 (1994), the court relied on Sawyer to find the plaintiff’s
action was [486/487]not barred by res judicata. The plaintiff company had
obtained a judgment against the defendant corporation based on contractual
obligations. Subsequently, plaintiff commenced a second suit alleging that the
defendant’s tortious conveyance of assets prevented the plaintiff from collecting
on the first judgment. The court found the situation analogous to that presented in
Sawyer, and held that plaintiff’s prior action involved a different primary right
than the current suit against the same defendant. Id. at 1836–38. Do you agree?
Does Amadeo really involve the same situation as the one presented in Sawyer?

[c] Importance of Same Injury?

One of the first Supreme Court cases to clearly delineate the difference
between primary rights and theories of recovery is Panos v. Great Western
Packing Co., 21 Cal. 2d 636, 134 P.2d 242 (1943) , whose facts are briefly
summarized in Sawyer. The court in Panos held that two actions seeking
recovery for the same personal injuries suffered by plaintiff constituted one
primary right and the same cause of action, even though the plaintiff alleged
totally different factual theories of negligence in the two actions. See also Bay
Cities Paving & Grading v. Lawyers’ Mut. Ins. Co. , 5 Cal. 4th 854, 860, 21
Cal. Rptr. 2d 691, 855 P.2d 1263 (1993) (plaintiff had one primary right — the
right to be free from negligence by its attorney in connection with a debt
collection matter — in malpractice suit against the defendant attorney, even
though defendant allegedly breached that right in two factually different ways).

Compare Panos to the more recent decision in Branson v. Sun-Diamond

Growers, 24 Cal. App. 4th 327, 29 Cal. Rptr. 3d 314 (1994) . Branson, a former
marketing manager of the Sun-Diamond Growers corporation, became an
independent commodity food broker and took the Sun-Diamond Growers
account away from the former exclusive broker, Plate Company. Plate sued
Branson for intentional interference with contract, which resulted in a verdict of
$275,968 against Branson. Branson then filed a motion to compel statutory
indemnification of the verdict by Sun-Diamond Growers pursuant to
Corporations Code § 317, which requires a corporation to indemnify its agent
against a judgment arising from the agent’s good faith acts on behalf of the
corporation. The court in this prior litigation held that Sun-Diamond Growers
could not be ordered to indemnify Branson under § 317 because Branson had
not been sued for activity undertaken as an agent of Sun-Diamond, but for
activity taken entirely independently of Sun-Diamond.

Branson then commenced an action against Sun-Diamond Growers seeking

indemnification for the prior judgment based on allegations of contractual and
quasi-contractual rights of indemnity as opposed to statutory indemnity. The trial
court found Branson’s complaint barred by res judicata, and Branson appealed.
After an extensive review of the doctrine of res judicata, the Court of Appeal
reversed. The court held that Branson’s present complaint asserted a different
primary right than that involved in the prior judgment, and therefore the
contractual indemnity causes of action were not barred. Branson, 24 Cal. App.
4th at 340-45.

Do you agree with the holding in Branson? Is it consistent with Panos? Did
[487/488]Branson involve two different injuries, or one injury and two theories of
recovery? Why?

[5] Primary Rights v. Remedies

The number of different remedies a plaintiff seeks against a defendant for

wrongful conduct does not necessarily determine the number of causes of action
under the primary rights theory. For example, in Duffy v. City of Long Beach,
201 Cal. App. 3d 1352, 247 Cal. Rptr. 715 (1988) , the plaintiff sued the
defendant City in federal court seeking to enjoin the City from demolishing
plaintiff’s house as a public nuisance, alleging several federal constitutional
violations. The federal court found that the defendant City violated none of
plaintiff’s constitutional rights in declaring his house a public nuisance. The
City subsequently demolished the house as a nuisance. Plaintiff then filed suit
against the City in state court alleging various violations of his constitutional
rights, but this time seeking money damages for the demolition of his house. The
Superior Court sustained a demurrer by defendant on the ground of res judicata.

The Court of Appeal affirmed, holding that the prior action to enjoin the
impending demolition raised the same causes of action as the present action for
damages filed after the actual demolition. The court ruled that requesting a
different remedy does not distinguish the two lawsuits, and that “[a] mere
change in the form of relief requested does not avoid the res judicata bar.”
Duffy, 201 Cal. App. 3d at 1358. See also Tensor Group v. City of Glendale ,
14 Cal. App. 4th 154, 17 Cal. Rptr. 2d 639 (1993) (plaintiff’s current suit for
damages for inverse condemnation of its properties barred by earlier successful
mandamus action seeking declaratory and injunction relief for limitation placed
on plaintiff’s use of its properties); California Coastal Commission v. Superior
Court, 210 Cal. App. 3d 1488, 258 Cal. Rptr. 567 (1989) (same primary right
involved in prior administrative proceeding which imposed easement to beach
as condition of obtaining a building permit as involved in subsequent inverse
condemnation action for damages, only the type of relief sought is different).

Is it possible to seek the same remedy in two separate actions, with a

different primary right in each lawsuit? For example, in Nakash v. Superior
Court (Marciano), 196 Cal. App. 3d 59, 241 Cal. Rptr. 578 (1987) , the
plaintiffs sought rescission of their stock purchase agreement with defendants in
a prior action, which was dismissed with prejudice. Subsequently, the plaintiffs
filed a second action against defendants, again seeking rescission of the same
contract. Is the second action barred by the first judgment? Is rescission a cause
of action or a remedy? See id. at 70.

[6] Inherent Ambiguity of the Primary Rights Theory

One criticism of the primary rights theory is its inherent ambiguity. See
Walter W. Heiser, California’s Unpredictable Res Judicata (Claim
Preclusion) Doctrine, 35 San Diego L. Rev. 559, 602–603 (1998); Robin
James, Note, Res Judicata: Should California Abandon Primary Rights? , 23
Loy. L.A. L. Rev. 351, 387–402 (1989) . Neither the history nor the standard
definitions of the doctrine provide much guidance to a court faced with an
application not governed by precedent. A broad [488/489]characterization of what
constitutes a primary right will most likely mean that a plaintiff has only one
cause of action. A narrow characterization may mean a greater number of causes
of action, and more opportunities for multiple lawsuits. In light of the current
policy favoring judicial economy, how is a court likely to resolve this inherent
ambiguity in applying the primary rights doctrine? Consider the recent decision
i n Takahashi v. Board of Education , 202 Cal. App. 3d 1464, 249 Cal. Rptr.
578 (1988), reproduced below.

TAKAHASHI v. BOARD OF EDUCATION

COURT OF APPEAL OF CALIFORNIA,
FIFTH APPELLATE DISTRICT
202 Cal. App. 3d 1464, 249 Cal. Rptr. 578 (1988),
cert. denied, 490 U.S. 1011 (1989)

Hamlin, Associate Justice.

Plaintiff Mitsue Takahashi appeals from a judgment dismissing her causes of

action against defendants Livingston Union School District, Board of Education
of Livingston Union School District, Harold Thompson, Dale Eastlee and
Hamilton Brannan after the trial court granted defendants’ motions for summary
judgment in consolidated proceedings Nos. 70836 and 71869.

The basic issue on appeal is whether or not the judgments in the litigation
previously initiated by plaintiff in both California and federal courts against one
or more of the defendants in these consolidated actions operate as a bar to the
present actions under res judicata principles. Decision on the issue presented
requires us to determine the relationship between the procedures under the
California Fair Employment Practices Act (Gov. Code, § 12900 et seq.) and the
schoolteacher dismissal procedures. We will conclude that the judgments in the
previous litigation are res judicata on the issues in the consolidated actions and
will affirm the judgment.

PROCEDURAL BACKGROUND

***

Plaintiff was employed by the Livingston Union School District (district) in

1960 and continued in employment there until the fall of 1980, rendering her at
the time of the hearing a permanent or tenured teacher.

On May 8, 1978, plaintiff was given an evaluation of her job performance.

That evaluation isolated problems with classroom management as a specific
concern. She was notified at that time, during the 1977-1978 school year, that if
satisfactory improvement were not shown, formal dismissal proceedings would
be initiated during the 1978-1979 school year.

In an April 1979 formal evaluation of plaintiff’s performance, lack of student

control and classroom management were again isolated as serious problems. * *
* On November 15, 1979, a further evaluation of plaintiff’s job performance
was made. That evaluation noted several deficiencies and further noted that a
variety of [489/490]suggestions had been made to improve instruction and
classroom management that had not been implemented. It included the statement:
“if the deviciencies [sic] so noted are not significantly corrected, dismissal is
recommended.”

On May 12, 1980, plaintiff was issued a document entitled “notice of intent to
dismiss,” along with a statement of charges indicating that cause existed to
dismiss her on the basis of incompetency and that the district intended to do so.
Attached to the notice of charges was a copy of the November 15, 1979,
evaluation.

On June 26, 1980, a notice of accusation was served on plaintiff, informing

her that unless she requested a hearing within 15 days the board of trustees of
the district would proceed upon the accusation without a hearing. The hearing
referred to is one to be held as provided in Education Code section 44944. The
hearing was held on October 21, 1980, before the Commission on Professional
Competence (Commission) pursuant to Education Code section 44944.

At the termination hearing plaintiff challenged the Commission’s jurisdiction

based on the district’s failure to comply with the Stull Act (Ed. Code, § 44660
et seq.). That challenge was denied. In addition to the jurisdictional challenge,
plaintiff raised at the administrative hearing the following issues in her defense:
(1) that her students had good test scores; (2) that certain disruptive students
who should not have been in the same room had been put in her classroom; (3)
that other classes were also noisy; (4) that the criteria for judging incompetency
were inadequate and not uniform so that no objective, verifiable determination
of plaintiff’s competency or incompetency could be established; and (5) that she
believed she was doing as good a job as the other teachers.

There was no mention nor suggestion in the transcript of the administrative

hearing of any defense based on violation of plaintiff’s civil or constitutional
rights.

After the administrative hearing was completed, the Commission rendered its
decision … and ordered that plaintiff be dismissed from her position effective
forthwith.

On December 4, 1980, plaintiff filed in the Superior Court of Merced County

a petition for writ of mandate (first action) alleging that (1) the Commission
committed a prejudicial abuse of discretion in that the findings of the
Commission were not supported by the evidence and the findings did not
support the decision of incompetency; (2) the Commission proceeded without or
in excess of its jurisdiction because incompetency may only be proved by
reference to uniform, objective standards, which the district did not have; and
(3) the district lacked jurisdiction to proceed because it failed to include with
the 90-day notice an Education Code section 44660 evaluation (Ed. Code, §
44938), and since the focus of a charge of teacher incompetence is whether or
not the students learned the required material, the charge was rebutted by
evidence that plaintiff’s students accomplished their academic goals. (Code
Civ. Proc., § 1094.5, subd. (b)). That petition named both the California
Teachers’ Association (CTA) and Mitsue Takahashi as plaintiffs.

On May 1, 1981, the petition in the first action was argued and denied. The
reporter’s transcript of that hearing shows that plaintiff elected to argue only the
lack of jurisdiction of the Commission to dismiss plaintiff because of the failure
of [490/491]the district to comply with the provisions of the Stull Act. The action
was dismissed and judgment entered on June 9, 1981.

A notice of appeal was filed on August 5, 1981. This court affirmed the trial
court’s denial of the petition in the first action. That opinion was certified for
publication and appears as California Teachers Assn. v. Governing Board
[(1983]) 144 Cal. App. 3d 27 [192 Cal. Rptr. 358] . A petition for rehearing in
this court and a petition for hearing in the California Supreme Court were
denied. Plaintiff also petitioned the United States Supreme Court; certiorari was
denied by the United States Supreme Court, (1984) 465 U.S. 1008 [79 L. Ed. 2d
235, 104 S. Ct. 1003].

On November 10, 1983, plaintiff filed an action in the United States District
Court for the Eastern District of California for damages and injunctive relief
based on 42 United States Code sections 1981 and 1983 (hereafter federal court
case). The district court held that the decision in the first action precluded
plaintiff’s federal court case. The United States Court of Appeals for the Ninth
Circuit affirmed that holding in Takahashi v. Bd. of Trustees of Livingston (9th
Cir. 1986) 783 F.2d 848 , and certiorari was denied by the United States
Supreme Court, (1986) 476 U.S. 1182 [91 L. Ed. 2d 545, 106 S. Ct. 2916].

On November 15, 1982, plaintiff filed a complaint in the Superior Court of

Merced County for damages, case No. 70836. That complaint (hereafter the
common law case) alleged causes of action for breach of employment contract
and conspiracy to defraud. It specifically alleged that plaintiff’s employment
contract was breached by the district’s “terminating the plaintiff without just
cause” and cited seven specific instances of such breach. The second cause of
action alleged that various district employees conspired to “set the plaintiff up”
to “attempt to show justification in terminating the plaintiff.” The complaint in
the common law case was amended on September 22, 1983, to add causes of
action for intentional and negligent infliction of emotional distress.

On March 31, 1983, a separate complaint, case No. 71869, was filed seeking
“monetary, injunctive and declaratory relief.” That complaint (hereafter the civil
rights case) alleged causes of action for (1) wrongful discharge from
employment for exercise of plaintiff’s First Amendment rights of freedom of
speech and association; (2) unconstitutional discharge from employment for
exercise of right of liberty and property in employment in violation of the right
to due process (the complaint specifically alleged that: (a) plaintiff was
terminated from her employment because she held a job outside of her teaching
job, and (b) her right to due process was violated since no allegations or
charges relating to her outside employment were made); (3) termination of
employment in violation of equal protection of the laws, specifically that she
was terminated for holding outside employment and that other people holding
outside employment were not similarly terminated; (4) discrimination in
employment on account of race and ancestry, alleging that plaintiff was
terminated from her employment because defendants were “motivated by
pejorative stereotypes and biases as to Japanese persons”; (5) discrimination in
employment on account of sex, alleging that defendants terminated plaintiff
because they used “sex differential criteria in evaluation and criticism of
Takahashi”; (6) discrimination in employment on account of age, alleging “in
terminating Takahashi’s employment based upon ‘alleged incompetence’
purportedly consisting of an [491/492]inability to control student behavior,
defendants employed age-differential criteria.” * * *
 After the common law and civil rights cases were consolidated pursuant to
stipulation, defendants moved for summary judgment. The motion was heard,
and about three weeks later an untitled document was filed in the consolidated
action reading in its entirety as follows: “Defendants have moved for summary
judgment in these consolidated actions. [¶] This court concludes that previous
State and Federal court litigation bars these actions on the basis of res judicata.
[¶] There are no material facts in dispute and defendants are entitled to a
judgment as a matter of law. [¶] The issues here present were litigated or could
have been litigated in prior administrative and mandamus proceeding. [¶] The
motion is granted in both these actions.” Based on this grant of the motion for
summary judgment, the trial court entered a judgment dismissing the
consolidated actions.

DISCUSSION

Did the trial court err in concluding that the judgment in the first action
and/or the federal court case operates as a bar to these consolidated actions?

To determine if either judgment operates as a bar, we will examine the

doctrines of res judicata and collateral estoppel and the relationship of those
principles to the administrative hearing and the petition in the first action. We
then apply the elements of res judicata to these consolidated actions to
determine whether the same primary right is being asserted here as in the former
cases and if it is being asserted against the same parties or those in privity with
such parties. Finally, we will consider the effect of issues that were not litigated
and the impact of claims that plaintiff asserts could not have been raised at the
time of the administrative hearing or the first action. * * *

Plaintiff seems to be saying in part that the underlying action cannot be res
judicata since the original action was an administrative rather than a judicial
proceeding. People v. Sims [(1982) 32 Cal. 3d 468 [186 Cal. Rptr. 77, 651
P.2d 321]] , stands for the proposition that the final judgment of an
administrative hearing may have collateral estoppel effect in a subsequent court
proceeding (in that case a criminal proceeding). However, plaintiff is mistaken
in believing that it is the administrative proceeding that serves as the bar in this
case. The first action (in the superior court) is the state court proceeding upon
which the trial court based its finding of res judicata as to the consolidated
actions. As discussed, that first action was brought by plaintiff in December
1980. The trial court independently reviewed the record of the administrative
hearing, held a hearing at which plaintiff had the opportunity to present any
argument to the court, and determined independently that cause existed to
dismiss plaintiff on the basis of incompetency. That judgment has long since
become final.

A. The primary right involved here is the same as in the first action.

Plaintiff has argued that she is not precluded from bringing the present actions
since she did not assert the violation of the same rights as defenses to
termination for cause in the first action. She points out that her actions involve a
different [492/493]primary right and the Commission did not have the authority to
award her punitive damages, thus precluding an appropriate remedy in that
forum.

To determine the scope of causes of action, California courts employ the

“primary rights” theory. Under this theory, the underlying right sought to be
enforced determines the cause of action. In determining the primary right, “the
significant factor is the harm suffered.” (Agarwal v. Johnson (1979) 25 Cal. 3d
932, 954 [160 Cal. Rptr. 141, 603 P.2d 58]).

The United States Court of Appeals for the Ninth Circuit in Takahashi v. Bd.
of Trustees of Livingston, supra, 783 F.2d 848, concluded that plaintiff’s
federal court case was barred by the res judicata effect of the prior state court
judgment denying plaintiff’s petition in the first action. Plaintiff’s complaint in
the federal court case alleged that the district violated her rights under the
Fourteenth Amendment to the United States Constitution and 42 United States
Code sections 1981 and 1983 by (1) terminating her employment on account of
her sex and ethnic origin, (2) terminating her employment on the basis of the
impermissibly vague requirement that she maintain a suitable learning
environment in her classroom, and (3) employing methods of evaluating her job
performance that were different from those employed to evaluate the
performance of others similarly situated.

That court characterized plaintiff’s first action as an action based on the

invasion of her contractual right to employment by the district. It then
determined that the identical primary right, the contractual right to employment,
was at stake both in the first action and in the federal court case. Quoting from
Agarwal v. Johnson, supra, 25 Cal. 3d 932, 955, the court noted that in
determining the primary right at stake, “‘the significant factor is the harm
suffered.’” (Takahashi v. Bd. of Trustees of Livingston, supra , 783 F.2d at p.
851). The court went on to say, “Absent termination of her employment contract,
Takahashi suffered no harm. Takahashi’s allegations of mental distress caused
as a result of her dismissal do not present a separate injury. Rather, any such
distress would be a consequence of the District’s violation a [sic] Takahashi’s
primary contractual right. Consequential damages cannot support a separate
cause of action.” (Ibid., fn. omitted).

Plaintiff has again cited Agarwal as support for her position that separate
primary rights are involved. Agarwal does appear to support plaintiff’s
position, but it is distinguishable. In that case, the plaintiff was terminated from
private employment without notice. He was notified on September 25 that he
had been terminated on September 17, 1970, for insubordination. He was not
able to find work for 13 months. The plaintiff’s former employer made
unfavorable statements about him to prospective employers. Agarwal then sued
his employer for defamation and emotional distress. Before the state court case
came to trial, a federal court action on the individual and class claims of
discrimination under title VII of the Civil Rights Act of 1964 (42 U.S.C. §
2000(e) et seq.) was concluded.

The California Supreme Court concluded in Agarwal that the federal court’s
determination of the claims under title VII of the Civil Rights Act of 1964 was
not res judicata as to the issues raised in the state court proceeding because the
harm for which Agarwal recovered damages in the state court action was
different. It pointed out: “Our review of the district court’s findings of fact
discloses that its attention was primarily directed to McKee’s [the defendant’s]
employment practices [493/494]and the corresponding impact on racial minorities,
and to statistical analyses of the McKee employee population. Although
Agarwal’s state court claims for defamation and intentional infliction of
emotional distress arose in conjunction with the alleged violation of title VII,
the fact remains that in the present action he was awarded damages for harm
distinct from employment discrimination.”

All of plaintiff’s alleged causes of action in this consolidated action arise in

conjunction with or as a result of the alleged wrongful termination of her
employment. Indeed, plaintiff specifically alleges that each act complained of
caused the dismissal (wrongful discharge, conspiracy, unconstitutional
discharge, discharge in violation of state civil rights) or was a consequence of
the termination (emotional distress, damages), part and parcel of the violation of
the single primary right, the single harm suffered. Plaintiff’s allegations of
consequential injuries are not based upon infringement of a separate primary
right.

Plaintiff has further argued that even if the same primary right is involved, the
Commission could not have awarded punitive damages and she should therefore
be able to bring a separate suit for punitive damages.

We agree that the Commission did not have jurisdiction to award damages,
either consequential or punitive. * * * However, we disagree that the
Commission’s lack of authority to award damages somehow excuses plaintiff’s
failure to present her defenses to the district’s charges of incompetency at the
termination hearing. There can hardly be justification for such a position.
Government Code sections 11505 and 11506 give the plaintiff the right to
interpose any defense, and the Commission is required to make findings of fact
and determination of issues. Right of discovery is the same in proceedings
before the Commission as in civil lawsuits and continuances may be had.

If violation of constitutional and civil rights had been alleged and proved in
proceedings before the Commission to determine whether the district had cause
to terminate plaintiff for incompetency, such violation would have made the
termination wrongful. Plaintiff would then have been in a position to bring a
lawsuit against defendants based on violation of her constitutional rights
alleging the damages she suffered thereby, supported by the findings of the
Commission. She would also have retained her position and mitigated any
possible damages.

B. The district’s employees may assert the first action as a bar to plaintiff’s
causes of action in this consolidated action even though they were not parties
to the first action.

Plaintiff has additionally contended that even if the doctrine of res judicata or
collateral estoppel bars her causes of action against the district in these
proceedings, her causes of action against the individually named defendants
who were not defendants in the first action are not similarly barred. However,
since Bernhard v. Bank of America (1942) 19 Cal. 2d 807 [122 P.2d 892] ,
mutuality has not been a prerequisite to asserting the defense of res judicata in
California. One not a party to a prior suit may successfully assert collateral
estoppel as a defense if: (1) the issue decided in the prior action is identical to
the one presented in the action in which the defense is asserted; (2) a final
judgment has been entered in the prior [494/495]action on the merits; and (3) the
party against whom the defense is asserted was a party to the prior adjudication.
(Id. at p. 812; …). Here, all three of the individually named defendants were
employees of the district and were acting within the course and scope of their
employment in terminating plaintiff from her teaching position. They are sued
solely because of their involvement in the termination process. The party against
whom the bar is being asserted is identical to the one in the prior lawsuit. Since
all of the prerequisites to asserting the defense of res judicata or collateral
estoppel as stated in Bernhard v. Bank of America, supra, are satisfied, the
district’s employees are entitled to assert the decision in the first action as a bar
to these consolidated actions. * * *

Clearly what plaintiff was doing in the termination hearing and the first action
was defending her dismissal only on the ground that the Commission lacked
jurisdiction to proceed against her since the district had not adopted uniform
standards pursuant to the Stull Act. Having chosen to “put all her eggs in one
basket,” she cannot come back years later and add others.

D. The final judgment in the first action is res judicata as to all issues that
were or could have been litigated in that action.

It is axiomatic that a final judgment serves as a bar not only to the issues
litigated but to those that could have been litigated at the same time. In Sutphin
v. Speik (1940) 15 Cal. 2d 195, 202 [99 P.2d 652] , the California Supreme
Court stated the California rule regarding the scope of res judicata as follows:
“If the matter was within the scope of the action, related to the subject matter
and relevant to the issues, so that it could have been raised, the judgment is
conclusive on it despite the fact that it was not in fact expressly pleaded or
otherwise urged. [Italics in original.] The reason for this is manifest. A party
cannot by negligence or design withhold issues and litigate them in consecutive
actions. Hence the rule is that the prior judgment is res judicata on matters
which were raised or could have been raised, on matters litigated or litigatable.
[Citations] … ‘This principle also operates to demand of a defendant that all of
its defenses to the cause of action urged by the plaintiff be asserted under the
penalty of forever losing the right to thereafter so urge them.’” * * *

Plaintiff’s common law case is based on breach of the employment contract,

conspiracy, and negligent and intentional infliction of emotional distress based
on the alleged breach of contract; the civil rights case is based on plaintiff’s
wrongful treatment in the terms and conditions of employment because of her
age, sex or race. This is all superimposed on a final state court determination
that she was terminated from her employment for incompetency. Simply put,
plaintiff cannot prevail against defendants on the basis that their conduct toward
her that caused her termination was wrongful in the face of a final state court
determination in the first action that the district had the right to terminate her for
incompetency. That plaintiff elected not to litigate at the hearing before the
Commission her claims that she was discriminated against in violation of her
constitutional and civil rights does not detract from the finding by the
Commission, and independently by the superior court, that the district had cause
to dismiss her. * * *

[495/496]

F. The federal decision is res judicata.

As we have seen, the United States Court of Appeals, Ninth Circuit, in

Takahashi v. Bd. of Trustees of Livingston, supra, 783 F.2d 848 concluded that
plaintiff’s federal court action was barred by the res judicata effect of the prior
state court judgment in the first action.

Plaintiff [asserts] that the court’s acceptance of the res judicata defense in the
federal court case does not compel the striking of her [state] causes of action in
this consolidated action on the basis of res judicata.

* * * [However,] the summary judgment in her federal court action was based
precisely on the preclusive effect of the prior state judgment in the first action
on the same cause of action. It would be absurd to say that the federal court
should have granted summary judgment and dismissed the state claims for
adjudication in state court when the dismissal of the federal claims was based
on the preclusive effect of the existing state court final judgment in the first
action. However, we do not need to decide whether the federal court judgment
is res judicata since we have concluded that the state court’s denial of plaintiff’s
petition for writ of mandate in the first action does bar these consolidated
actions.

The judgment is affirmed. Defendants are awarded their costs on appeal.

 NOTES AND QUESTIONS REGARDING TAKAHASHI v. BOARD OF
EDUCATION AND PRIMARY RIGHTS

(1) Do you agree with the Court of Appeal’s conclusion that the prior
mandamus action and the present wrongful discharge action involved the same
primary right? Could the court have reasonably concluded that at least two
primary rights were allegedly invaded: one primary right to permanent
employment if competent (pursuant to the Education Code), and a second right to
employment without discrimination (pursuant to various state and federal anti-
discrimination laws)? Would such a conclusion — two primary rights instead of
only one — be inconsistent with the traditional definitions of the primary rights
doctrine? If either interpretation is arguably consistent with the primary rights
theory, why do you think the court in Takahashi choose to find only one primary
right instead of two?

(2) The Court of Appeal distinguished Agarwal v. Johnson by concluding

that, unlike Agarwal, plaintiff Takahashi suffered a “single harm” as a result of
her alleged wrongful termination. Do you agree that Agarwal is distinguishable?
Do you agree that the “same harm” was alleged by plaintiff Takahashi in her
prior and present state actions? Assume that the plaintiff had won her prior
mandamus action and was reinstated as a teacher. She then files a separate
action against the school board for emotional distress and punitive damages,
alleging that the defendant singled her out for dismissal because of her race and
sex. Under the Court of Appeal’s reasoning, would the favorable mandamus
judgment bar this second employment discrimination action? Should it, under the
“same harm” rationale of the primary rights theory?

(3) Did the federal and state courts in the Takahashi litigation take a broad or
a narrow view of what constitutes a single primary right? Did these courts in
reality [496/497]take a “transactional,” as opposed to “primary rights,” view of
res judicata? In Nakash v. Superior Court, 196 Cal. App. 3d 59, 68, 241 Cal.
Rptr. 578 (1987), the court suggested that in determining what constitutes the
“same controversy” for purposes of res judicata, “[a]nalysis has shifted from
identification of a primary right upon which only one claim is allowed to
determination of the existence of a transaction involving a nucleus of facts upon
which only one claim is allowed.” Is this an accurate characterization of the
court’s analysis in Takahashi? Is it consistent with controlling Supreme Court
authority?
 (4) The Court of Appeal in Takahashi held that the first mandamus judgment
barred the subsequent state actions. The court did not base its holding on the
preclusive effect of the prior federal judgment. Could it have? What is the res
judicata effect of this prior federal judgment on the current state proceedings?

(5) In Mata v. City of Los Angeles, 20 Cal. App. 4th 141, 24 Cal. Rptr. 2d
314 (1993), a terminated police officer sought and obtained a writ of mandate
directing the defendant city to reinstate him. In the same action, plaintiff also
sought compensatory damages for violation of his civil rights pursuant to 42
U.S.C. § 1983. The superior court granted the defendant city summary judgment
as to the civil rights claim on the ground that it was barred by the relief granted
in the mandamus proceeding, and plaintiff appealed. Did the trial court correctly
decide that plaintiff’s § 1983 claim was barred by res judicata? That the writ
proceeding involved the same primary right as the civil rights claims? Does
Takahashi control here? See id. at 149–51.

(6) Craig v. County of Los Angeles, 221 Cal. App. 3d 1294, 271 Cal. Rptr.
82 (1990). The court in Craig v. County of Los Angeles relied on Agarwal to
find two primary rights involved in a similar factual situation. Plaintiff Craig
sought employment as a harbor patrol officer with the Los Angeles County
Sheriff’s Department, but was denied the appointment for improper reasons.
Craig filed a writ of mandate to enforce a Civil Service Commission
recommendation that he be appointed, which resulted in a court order that Craig
be hired by defendant. Craig then filed an action in federal court against
defendant, alleging his job denial constituted employment discrimination in
violation of federal statutes. The federal court held that these federal claims
were barred by res judicata based upon the prior state mandate proceedings.

Craig then filed a third action, in state court, this time seeking damages
against defendant for intentional infliction of emotional distress and fraud.
Defendant demurred based on res judicata, and the trial court dismissed the
complaint. The Court of Appeal reversed, holding that this damage action
involves a different primary right than was involved in the prior mandate
proceeding and federal action, and was not barred by res judicata. The court,
Craig, 221 Cal. App. 3d at 1302–03, relying on Agarwal, reasoned as follows:

The mandate proceedings were instituted to enforce appellant’s right

to employment as a harbor patrol officer. The issue of past salary or
damages was not tendered or considered in that action. Only now, when
appellant seeks recovery for the harm which resulted in the respondents’
 wrongful conduct, are these issues raised.

[497/498]

Further, the type of harm involved in the mandate proceedings are

different than the type of wrong in the present case. In the mandate actions,
the harm suffered was the denial of the harbor patrol position despite the
Commission’s order that he be hired. In this action, the harm suffered
included the emotional distress which resulted from respondents’ wrongful
conduct. The Supreme Court explained this difference in Agarwal v.
Johnson, supra, 25 Cal. 3d 932. * * *

Since appellant here is seeking to recover damages for harm distinct

from his action to compel enforcement of the Commission’s order, there
are different primary rights involved. Accordingly, the mandate actions
cannot bar this action.

I s Craig consistent with Takahashi? Can these two cases be reconciled?

Which case is better reasoned? Why?

(7) Compare the reasoning of Takahashi and Craig with that of People v.
Damon, 51 Cal. App. 4th 958, 59 Cal. Rptr. 2d 504 (1996) , in which the court
concluded that the rule against splitting a cause of action was inapplicable
because the plaintiff was statutorily prohibited from seeking cumulative
remedies in one proceeding. In Damon, the first proceeding initiated by the
plaintiff was an administrative proceeding to suspend the license of the
defendant automotive repair business for violation of the state Automotive
Repair Act. The administrative tribunal found the defendant had violated the Act
and placed him on probation, but the tribunal had no authority to afford the
plaintiff a damage remedy. The plaintiff then commenced a separate action in
court seeking monetary civil penalties authorized by the Act. The superior court
rejected defendant’s res judicata defense, found defendant liable on the merits,
and assessed $3000 in civil penalties. The superior court’s res judicata
determination was affirmed on appeal.

The Court of Appeal in Damon ruled that res judicata was inapplicable
because the administrative proceeding was one at which the civil penalty
remedy could not have been sought because of limitations on the jurisdiction of
the administrative tribunal, and therefore it was not possible for plaintiff to seek
all the remedies in one proceeding. People v. Damon, 51 Cal. App. 4th 958,
969–75. The court first stated the general rule against splitting a cause of action.
It also explained at length the reasons for this rule, quoting from Wulfjen v.
Dolton, 24 Cal. 2d 891, 894–895, 151 P.2d 846 (1944) [People v. Damon,
supra, 51 Cal. App. 4th at 974]:

The rule against splitting a cause of action is based upon two reasons:
(1) That the defendant should be protected against vexatious litigation; and
(2) that it is against public policy to permit litigants to consume the time of
the courts by relitigating matters already judicially determined, or by
asserting claims which properly should have been settled in some prior
action.

The court then concluded that the rule against splitting a cause of action does not
apply because: “Here, the two actions were neither vexatious nor time-
consuming because the two remedies could not have both been sought in one
action.” People v. Damon, supra, 51 Cal. App. 4th at 975.

Do you agree with the Damon court’s reasoning? Would this reasoning have
been helpful to the plaintiff in Takahashi? Is the Damon court’s reasoning
preferable to [498/499]the two-primary-rights reasoning employed by the court in
Craig v. County of Los Angeles, summarized supra? How so?

[7] The Declaratory Judgment Exception to Primary Rights Doctrine

Under the Declaratory Judgment Act, a party may ask the court for a binding
declaration of rights and duties. CCP § 1060. This Act also provides an
exception from the bar of res judicata (claim preclusion) for declaratory
judgments, stating “no judgment under this chapter shall preclude any party from
obtaining additional relief based on the same facts.” CCP § 1062. In Mycogen
Co. v. Monsanto Co., 28 Cal. 4th 888, 123 Cal. Rptr. 2d 432, 51 P.3d 297
(2002), the Supreme Court construed the Declaratory Judgment Act’s exception
to claim preclusion as applicable only where the plaintiff’s initial action seeks
pure declaratory relief, and not where the action seeks both declaratory relief
and additional coercive relief such as damages, specific performance, or an
injunction. Id. at 897–902. Because plaintiff Mycogen sought and received both
declaratory and coercive relief in the form of specific performance in its prior
breach of contract action, res judicata precluded Mycogen from seeking
additional relief in the form of damages for the same breach of contract in a
subsequent action. Id. at 903–904.

The practical effect of the Mycogen holding is that a plaintiff seeking to

remedy a breach of contract must either seek solely declaratory relief or must
seek declaratory relief plus all possible coercive relief, no matter how
speculative the damages might be at the time of the breach. Is this a good rule
from the standpoint of judicial economy? Even though a plaintiff seeks solely
declaratory relief, a court on its own initiative may exercise its equitable
jurisdiction and grant specific performance in addition to declaratory relief.
Should the Act’s res judicata exception apply in such cases where the coercive
relief was awarded on the court’s own initiative? The Supreme Court declined
to answer this question in the abstract. See Mycogen, supra, 28 Cal. 4th at 902-
903 & n. 9.

What is the preclusive effect of a pure declaratory judgment? According to

Aerojet-General Corp. v. American Excess Ins. Co., 97 Cal. App. 4th 387, 117
Cal. Rptr. 2d 427 (2002), the application of the doctrine of res judicata (claim
preclusion), while more narrow than for other judgments, nonetheless extends to
matters expressly and unambiguously declared on the face of the judgment. A
party who wishes to challenge the scope of a declaratory judgment — that its
breadth encompasses matters not actually litigated in the action — must do so
via appeal. The scope of an unambiguous declaratory judgment cannot be
collaterally attacked for a nonjurisdictional error in a subsequent lawsuit.
Aerojet-General, 97 Cal. App. 4th at 398–402.

[499/500]

[B] Conduct Which Violates Both State and Federal Laws

[1] Introductory Note

The question of whether there are two primary rights, or only one primary
right with two theories of recovery, arises in cases where the defendant’s
conduct potentially violates both federal and state laws. If the defendant’s
conduct does violate both federal and state laws, does it therefore automatically
violate two primary rights — one based on federal law, a second based on state
law? How did Takahashi resolve this question?

The Supreme Court’s decision in Agarwal v. Johnson, 25 Cal. 3d 932, 160

Cal. Rptr. 141, 603 P.2d 58 (1979) , whose opinion is summarized in
Takahashi, is sometimes cited for the proposition that conduct which violates
both federal and state laws invades two separate primary rights. See, e.g.,
Sawyer v. First City Financial Corp., supra. Is this a correct interpretation of
Agarwal? What did the Agarwal court find significant in determining that the
defendant invaded two primary rights?

[2] One or Two Primary Rights?

Several cases have explicitly ruled on the question of whether conduct which
violates both federal and state law necessarily invades two separate primary
rights.

These courts all agree that where both laws are intended to redress the same
harm, only one primary right is involved. E.g., Mattson v. City of Costa Mesa,
106 Cal. App. 3d 441, 447–48, 164 Cal. Rptr. 913 (1980) (plaintiff’s state
court action seeking damages for unlawful arrest based on state negligence law
involves same primary right as plaintiff’s claim for damages under federal civil
rights statute unfavorably determined by prior federal court jury verdict); City
of Los Angeles v. Superior Court (Levy), 85 Cal. App. 3d 143, 153, 149 Cal.
Rptr. 320 (1978) (plaintiff’s state court action on state law grounds against
defendant officials seeking damages for unlawful seizure and loss of property
involved same primary right as in earlier federal civil rights action seeking
damages for same seizure of property).

In Johnson v. American Airlines, Inc., 157 Cal. App. 3d 427, 203 Cal. Rptr.
638 (1984), for example, plaintiff commenced an action in state court
challenging defendant’s mandatory maternity leave-without-pay policy under
California’s Fair Employment Practices Act. The Court of Appeal held that
plaintiff’s state action was barred by the consent decree in a prior federal class
action which also challenged defendant’s maternity leave policy, but under Title
VII of the Federal Civil Rights Act. Plaintiff was a member of the federal class,
but was not a named party. The court concluded that the “primary right” alleged
in the state lawsuit is the same as that asserted in the earlier federal class action,
i.e., the right to be free from employment discrimination based on sex in the
specific area of involuntary maternity leave. Johnson, 157 Cal. App. 3d at 432–
33. The court flatly rejected plaintiff’s argument that the state cause of action
was different from, or broader than, the federal Title VII cause of action
litigated in the prior federal class action. Id.
 [500/501]

Relying on Johnson v. American Airlines, Inc., supra, the court in Acuna v.

Regents of Univ. of California, 56 Cal. App. 4th 639, 649-50, 65 Cal. Rptr. 2d
388 (1997), observed that plaintiff’s racial discrimination claims, whether
brought under the federal Title VII of the Civil Rights Act of 1964 or the state
Fair Employment and Housing Act (FEHA), arose from the same primary right:
the right to be free of invidious employment discrimination. The court concluded
that plaintiff’s favorable prior federal court judgment on the Title VII claims
barred the state court action for FEHA damages, even though FEHA provided
different remedies that its federal counterpart. See also City of Simi Valley v.
Superior Court, 111 Cal. App. 4th 1077, 1083–84, 4 Cal. Rptr. 3d 468 (2003)
(applying Acuna and holding federal civil rights claim and state wrongful death
cause of action constitute one primary right).

[C] Res Judicata and Pendent Claims

[1] Introductory Note

One particularly troublesome application of res judicata involves the

preclusive effect of a prior federal court judgment on related state law claims
that were or could have been raised in the federal court action based on pendent
jurisdiction. If the federal court extended pendent jurisdiction over state law
claims and resolved these claims on the merits, then obviously the federal court
judgment will preclude relitigation of these state law claims in state court. But
what is the preclusive effect on state law claims that a plaintiff could have
asserted in the federal court action as pendent claims, but chose not to raise?
And what preclusive effect does a federal court judgment have on state law
claims that were raised, but over which the federal court declined to assert
pendent jurisdiction?

KOCH v. HANKINS
COURT OF APPEAL OF CALIFORNIA,
FIRST APPELLATE DISTRICT
223 Cal. App. 3d 1599, 273 Cal. Rptr. 442 (1990)

White, Presiding Justice.

 In this action we consider whether the dismissal of a federal securities fraud
action, on the basis that the investments were not securities, bars a subsequent
state court action for common law fraud and legal malpractice. We hold that the
federal court’s summary adjudication did not bar the state claims.

PROCEDURAL HISTORY

On May 20, 1988, plaintiffs filed a complaint in the United States District
Court, Northern District of California. The allegations of the complaint were
based on a nucleus of facts involving the fraudulent acquisition, subdivision and
resale of property in Arizona to plaintiffs. The federal action alleged that the
sales of partnership interests to plaintiffs violated section 10(b) of the
Securities and Exchange Act of 1934 and rule 10b-5 thereunder. Plaintiffs also
asked the court to [501/502]exercise pendent jurisdiction over various state law
claims.

On August 22, 1988, the federal court dismissed plaintiffs’ pendent claims
without prejudice to their being refiled in state court. The court retained
jurisdiction over the claim predicated on federal securities law.

Plaintiffs filed the present case in state court against some of the defendants
who were named in the federal action. The complaint alleged causes of action
for fraud and legal malpractice against defendants, all of whom had been named
defendants in the federal action.

Sometime thereafter, the United States District Court granted summary

judgment in favor of defendants on the grounds that plaintiffs had not purchased
securities. Defendants demurred to plaintiffs’ first amended complaint in state
court on the grounds that all plaintiffs’ causes of action were conclusively
barred by the doctrine of res judicata. The court sustained defendants’ demurrer,
based on the federal court’s summary judgment. * * * This appeal followed.

DISCUSSION

The basic res judicata principles pertinent to this appeal are set forth in
Merry v. Coast Community College Dist. (1979) 97 Cal. App. 3d 214 [158
Cal. Rptr. 603]: “The two aspects of the res judicata effect of a final judgment
on the merits are: (1) The judgment bars the parties (or those in privity with
them) from litigating the same cause of action in a subsequent proceeding and
(2) the parties (or those in privity with them) are collaterally estopped from
litigating in a subsequent proceeding on a different cause of action any issue
actually litigated and determined in the former proceeding. [Citations]. The res
judicata aspect which bars relitigation of the same cause of action precludes
piecemeal litigation by splitting a single cause of action. [Citations]. It also
precludes relitigation of the same cause of action on a different legal theory or
for different relief. [Citations]. The prior final judgment on the merits settles
issues which were not only actually litigated but every issue that might have
been raised and litigated in the first action. [Citations.]” (Id., at pp. 221–222).

When a prior judgment is rendered by a federal court, it must be given the

same effect by state courts that it would have in federal court. (Merry, supra, 97
Cal. App. 3d at p. 222). In addition, principles governing the federal court’s
power over nonfederal claims come into play in determining the preclusive
effect of the judgment in a subsequent state court action on the state claims.
(Ibid.)

“A federal court has the power to exercise pendent jurisdiction over state
claims where the federal claim is sufficient to confer subject matter jurisdiction
and the state and federal claims ‘derive from a common nucleus of operative
fact.’ [Citation]. If, disregarding their federal or state character, ‘plaintiff’s
claims are such that he would ordinarily be expected to try them all in one
judicial proceeding, then, assuming substantiality of the federal issues there is
power in federal courts to hear the whole.’ [Citation]. Exercise of pendent
jurisdiction, however, is not a matter of plaintiff’s right; it rests in the discretion
of the court. [Citation]. [Mine Workers v. Gibbs (1966) 383 U.S. 715, 726–727
[86 S. Ct. 1130, 16 L. Ed. 2d 218, 228]] cautioned: ‘Needless decisions of state
law should be avoided both as a matter of comity and [502/503]to promote justice
between the parties, by procuring for them a surer-footed reading of applicable
law. Certainly, if the federal claims are dismissed before trial, even though not
insubstantial in a jurisdictional sense, the state claims should be dismissed as
well. Similarly, if it appears that the state issues substantially predominate,
whether in terms of proof, of the scope of the issues raised, or of the
comprehensiveness of the remedy sought, the state claims may be dismissed
without prejudice and left for resolution to state tribunals.’ [Citation].” (Merry,
supra, 97 Cal. App. 3d at pp. 222–223, italics in original, fn. omitted).

In Merry, the plaintiff filed an action in federal court under the Civil Rights
Act, the Fifth and Fourteenth Amendments and article I, section 8, clause 8 of
the United States Constitution. A summary judgment was granted in favor of the
defendants, the court finding no genuine issues of material fact and concluding
that the complaint did not state a federal cause of action. During the pendency of
the federal action, the plaintiff had filed an action in state court, alleging
substantially the same facts alleged in the federal action. The trial court
sustained the defendants’ demurrer on the grounds that the action was barred
under the doctrine of res judicata by reason of the judgment in federal court.

The Court of Appeal reversed. The court reasoned that if the plaintiff had
raised his state claims in the federal action, they would clearly have been
dismissed without prejudice. Since the federal claim was insubstantial and
called for a summary pretrial disposition, a subsequent trial on the state claims
was not barred by the judgment. (Merry, supra, 97 Cal. App. 3d at pp. 225–
231).

Mattson v. City of Costa Mesa (1980) 106 Cal. App. 3d 441 [164 Cal. Rptr.
913], the case on which the trial court principally relied in reaching its
decision, involved a different procedural history. In Mattson, the plaintiff filed
a complaint in federal court, averring violation of his civil rights. The complaint
also requested the federal court to take pendent jurisdiction of a nonfederal
claim of negligence based on the same facts. After the federal court denied the
plaintiff’s request to take pendent jurisdiction of the state law claim, the plaintiff
filed a complaint in state court, alleging the same facts as he had alleged in the
federal action. However, the state complaint was not served on the defendants
for two years. Following an adverse jury verdict in the federal action, the
plaintiff served the defendants in the state action. The defendants’ demurrer on
the ground that the state action was barred by res judicata was sustained by the
trial court and a judgment of dismissal was entered.

On appeal the judgment was affirmed. The court reasoned that, “[t]he initial
choice by the plaintiff to file suit in federal court will not necessarily result in
splitting his cause of action, because the federal court may well exercise
pendent jurisdiction over the nonfederal claim. However, when the federal court
has been requested to and has declined to exercise pendent jurisdiction over the
nonfederal claim, the plaintiff is presented with a new choice. He may proceed
to trial on the federal claim or, usually, he may elect to dismiss the federal claim
without prejudice [citation] and litigate both claims in the state court [citations].
Once it is known that the federal court will not exercise pendent jurisdiction
over the state claim, plaintiff’s proceeding to trial in the federal court on the
federal claim alone will [503/504]necessarily result in splitting the plaintiff’s
cause of action, and that fact should be apparent to the plaintiff.

“In such circumstances the rule that would best accommodate the rights of the
plaintiff to fully litigate his claim and to invoke the jurisdiction of the federal
court and the right of the defendant, the courts and the public to be free of
multiple litigation of the same cause of action, is that once the federal court has
declined to exercise pendent jurisdiction over the state claim, if the plaintiff
then elects to proceed to trial and judgment in the federal court, his entire cause
of action is either merged in or barred by the federal court judgment so that he
may not thereafter maintain a second suit on the same cause of action in a state
court.” (Mattson, supra, 106 Cal. App. 3d at pp. 454–455).

Mattson differs from the instant action in two significant ways. First, the
federal claim was fully adjudicated in trial. The Mattson court explicitly
distinguished that case from Merry where, as here, there was merely a summary
judgment in federal court. (See Mattson, supra, 106 Cal. App. 3d at pp. 453–
454; see also Craig v. County of Los Angeles (1990) 221 Cal. App. 3d 1294,
1299–1301 [271 Cal. Rptr. 82] [federal court’s summary adjudication plus
refusal to exercise pendent jurisdiction does not bar state claims]). Second, in
contrast to Mattson, where the federal civil rights claim could be brought in
state court, plaintiffs were unable to bring a claim under section 10(b) of the
Securities and Exchange Act of 1934 in state court, since federal courts have
exclusive jurisdiction over that claim. (15 U.S.C. § 78aa).

In resolving the present dispute we look to the Restatement Second of

Judgments section 25, comment e for guidance: “A given claim may find support
in theories or grounds arising from both state and federal law. When the plaintiff
brings an action on the claim in a court, either state or federal, in which there is
no jurisdictional obstacle to his advancing both theories or grounds, but he
presents only one of them, and judgment is entered with respect to it, he may not
maintain a second action in which he tenders the other theory or ground. If
however, the court in the first action would clearly not have had jurisdiction to
entertain the omitted theory or ground (or, having jurisdiction, would clearly
have declined to exercise it as a matter of discretion), then a second action in a
competent court presenting the omitted theory or ground should be held not
precluded.”

Here, plaintiffs could not bring their 10b-5 action in state court, since that
court lacked jurisdiction to hear the claim.5 Thus, they filed their claim in
federal court and asked the federal court to exercise pendent jurisdiction over
the state law claims. After the federal court declined to exercise pendent
jurisdiction, trial of the state claims in a state court was not precluded.

Had dispositive factual questions actually been litigated in the federal

securities action, plaintiffs would be collaterally estopped from relitigating
those questions in a subsequent state action. (Mattson, supra, 106 Cal. App. 3d
at p. 445; Merry, supra, 97 Cal. App. 3d at p. 221). However, since the federal
court merely determined that plaintiffs’ partnership interests were not securities
under the [504/505]Securities and Exchange Act, the federal judgment is not res
judicata of plaintiffs’ state claims.

The judgment is reversed. Costs are awarded to plaintiffs.

NOTES AND QUESTIONS REGARDING PENDANT CLAIMS

(1) Mattson v. City of Costa Mesa, 106 Cal. App. 3d 441, 164 Cal. Rptr.
913 (1980), quoted by the court in Koch, sets forth the traditional California
rule on the preclusive effect of a prior federal court judgment which involved a
pendent state claim. What is the impact of the Mattson holding on the right to
utilize the federal courts to pursue federal civil rights claims? Is the Mattson
holding consistent with the position taken by the Second Restatement? See § 25,
comment e, and § 26(c), comment c, Restatement (Second) of Judgments (1982).
I f Mattson is inconsistent with the Restatement view, is Mattson decided
improperly? In addition to its concern over claim splitting, the court in Mattson
noted that a contrary rule would invite manipulation by a plaintiff. What type of
manipulation worried the court? See Mattson, 106 Cal. App. 3d at 455. Is this
concern well-founded?

(2) There are some practical problems with the approach suggested by
Mattson. Assume that a plaintiff alleges both a federal and a state claim in a
federal lawsuit, but the federal court declines to exercise pendant jurisdiction
over the state law claim. Following the advice of Mattson, the plaintiff then
voluntarily dismisses the remaining federal claim from federal court and refiles
both claims — federal and state — in a California state court. Will the plaintiff
potentially have problems with applicable statutes of limitation? See 28 U.S.C.
§ 1367(d). Once the plaintiff commences the action in state court, is there
anything to prevent the defendant from removing the entire action to federal
court pursuant to 28 U.S.C. § 1441(a)? If the defendant does remove, must the
federal court also hear the state law claim? If the federal court again declines to
assert pendant jurisdiction over the state claim, is the plaintiff right back where
she started with respect to Mattson? Is there any way to break this infinite
procedural loop? See 28 U.S.C. § 1441(c); see also Walton v. UTV of San
Francisco, Inc., 776 F. Supp. 1399 (N.D. Cal. 1991).

(3) In several recent cases, the courts have taken different positions on
whether to follow Mattson, creating some uncertainty as to the current
California rule on the preclusive effect of a prior federal court judgment which
involved a pendant state claim:

(a) In Acuna v. Regents of Univ. of California, 56 Cal. App. 4th 639, 650-
52, 65 Cal. Rptr. 2d 388 (1997), the court followed the Mattson doctrine and
concluded that a prior federal court judgment adjudicating federal claims barred
plaintiff’s subsequent state court action raising state claims. In the prior federal
action, plaintiff sought damages for employment discrimination under various
federal anti-discrimination statutes, as well as under the state Fair Employment
and Housing Act (FEHA). The federal court declined to exercise pendent
jurisdiction over the state FEHA claims and, after a subsequent trial, awarded
plaintiff substantial compensatory damages on the federal statutory claims.
Plaintiff then commenced an action in state court seeking general and punitive
damages under the state FEHA, remedies not available under the federal
statutes.

[505/506]

The court in Acuna concluded that the Mattson principle controlled. Having
adjudicated the federal statutory claims in federal court, res judicata barred
plaintiff from relitigating the same claims under the state FEHA even though
FEHA provided different remedies than its federal counterparts. The court also
distinguished Merry and Craig, as cases in which the state and federal claims
did not involve the same primary right and the plaintiff in each case abandoned
the federal lawsuit after the federal court declined to hear the state law claims.
Acuna, 56 Cal. App. 4th at 650.

(b) However, in other recent cases, the courts have declined to follow the
Mattson doctrine, and have instead applied the Restatement (Second) of
Judgments, § 25, comment e. See Harris v. Grimes, 104 Cal. App. 4th 180,
187–89, 127 Cal. Rptr. 2d 791 (2002); Lucas v. County of Los Angeles, 47 Cal.
App. 4th 277, 286–87, 54 Cal. Rptr. 2d 655 (1996); see also City of Simi
Valley v. Superior Court , 111 Cal. App. 4th 1077, 1084, 4 Cal. Rptr. 3d 468
(2003) (indicating Harris and Lucas state the general rule). These cases
distinguish between a plaintiff’s splitting of a cause of action and a federal
court’s doing the same thing. Harris, supra, 104 Cal. App. 4th at 188; Lucas, 47
Cal. App. 4th at 286.

For example, in Harris v. Grimes, supra, the plaintiff filed a wrongful death
action in federal court against a police officer, alleging negligence under state
law and civil rights violations under federal law. Plaintiff’s federal civil rights
claim went to trial, but the federal court declined to exercise pendant
jurisdiction over the negligence claim because it feared that trying both claims
together would confuse the jury. After a defense verdict, the federal court
entered judgment for the police officer on the civil rights claim but dismissed
the negligence claim without prejudice to plaintiff’s refiling it in state court.
Plaintiff then commenced her negligence action in superior court, which was
subsequently dismissed.

The question for the Harris court was whether plaintiff’s state court action
was barred by the prior federal judgment. Relying on Mattson, the defendant
contended that the plaintiff impermissibly split her cause of action when she
proceeded solely on her federal civil rights claim after the federal court
declined to exercise pendant jurisdiction over her negligence claim. However,
the court viewed this contention as not reflecting the current state of the law
“when, as here, a federal court, instead of a party, splits a cause of action.”
Harris, 104 Cal. App. 4th at 188. Instead, the court followed Lucas v. County
of Los Angeles, supra, which it viewed as consistent with the Second
Restatement’s expression of widely held legal principles, and concluded: “A
federal court’s discretionary refusal to exercise pendant jurisdiction over a state
claim does not bar further litigation of the state claim in state court.” Harris,
104 Cal. App. 4th at 188 (quoting Lucas, supra, 47 Cal. App. 4th at 286).

T he Harris court acknowledged that Mattson supported the defendant’s

contention, but declined to follow Mattson “because Lucas is a more recent
and, as reflected by the Restatement, widely endorsed pronouncement of the
law.” Id. at 188–89. “Moreover,” the court reasoned, “Mattson’s holding was
partly based upon its concern that a different rule would invite gamesmanship by
plaintiffs,” such as a half-hearted request to the federal court to exercise pendent
jurisdiction with the hope the court would decline and thereby reserve to the
plaintiff a second chance to [506/507]prevail in state court. Id. at 189. The court
found no evidence to support such concern here. Id.

(c) Which rule — the Mattson doctrine or the Second Restatement view —
is the better one? Why? Is there any way these two rules can be reconciled
based on the timing of a federal court’s decision to decline to exercise pendant
jurisdiction? Based on evidence of a plaintiff’s manipulation? Would such a
case-by-case determination be preferable to either Mattson or the Restatement
rule?

Footnotes:

5 Consequently, a state judgment would not have a preclusive effect on a federal securities claim. (See,
e.g., Marrese v. American Academy of Ortho. Surgeons (1985) 470 U.S. 373, 382 [105 S. Ct. 1327, 84
L. Ed. 2d 274, 282–283]; Eichman v. Fotomat Corp. (9th Cir. 1985) 759 F.2d 1434, 1437).

[2] State Claim Not Raised

In both Koch v. Hankins and Mattson, the plaintiff raised the state law claim
in federal court, but the court exercising its discretion declined to extend
pendent jurisdiction. What is the preclusive effect of a federal judgment where a
plaintiff never even raises the potentially pendent state claim in federal court,
but pursues it in a state court action after an unfavorable federal judgment? This
was the problem resolved in City of Los Angeles v. Superior Court, 85 Cal.
App. 3d 143, 149 Cal. Rptr. 320 (1978). Plaintiff Levy brought a civil rights
action in federal court against defendant officials for the value of property
unlawfully seized from him, based solely on 42 U.S.C. § 1983. A jury trial
resulted in a verdict for defendants. Plaintiff then filed an action in state court
seeking damages against defendants for the seizure and loss of the same
property, based on state conversion law. The trial court sustained a demurrer on
ground of res judicata, and plaintiff appealed. The Court of Appeal eventually
held that the state complaint attempted to vindicate the same primary right —
plaintiff’s interest in the seized property — as the prior federal lawsuit. Before
reaching this conclusion, the court considered the consequence of plaintiff’s
failure to raise the state claims in the prior federal proceeding [85 Cal. App. 3d
at 150–51]:

Before we reach the question whether the conversion counts pursued

in [Levy’s state lawsuit] form part of the cause of action submitted to the
 court in [Levy’s federal lawsuit], we should discuss whether it matters that
[Levy’s federal lawsuit] was a federal action, based on a federal statute,
brought in a federal court.

There are at least three separate reasons for ignoring the state-federal
distinction. First: if the facts alleged in [Levy’s two lawsuits] derived
“from a common nucleus of operative fact …” (United Mine Workers v.
Gibbs (1966) 383 U.S. 715, 725, 86 S. Ct. 1130, 1138, 16 L. Ed. 2d 218),
the conversion counts could have been tried in the United States District
Court under that court’s “pendent jurisdiction.” The “common nucleus”
requirement is obviously satisfied here. Second: no one compelled Levy to
file his civil rights action in the federal court. He could have sued in the
state court …, where his power to join the conversion counts with his civil
rights grievances would have been unquestioned. (Code Civ. Proc., §
427.10.) Third: it appears to be the law that a litigant cannot avoid the
impact of the rule against splitting causes of action by choosing for his first
foray a tribunal of limited jurisdiction. (Rest., Judgments, § 62, comm. j;
cf., Zirker v. Hughes (1888) 77 Cal. 235, 19 P. 423.)

[507/508]

In any event, it is clear that the rule against splitting a cause of action
and the fatal consequences for violating it are the same — other things
being equal — even if one aspect of the cause of action twice pursued is
based on a federal, statutory right.

The court in City of Los Angeles v. Superior Court (Levy), supra, applied the
primary rights doctrine to determine the res judicata effect of a prior federal
judgment. Was this the proper doctrine to apply? Would the result have been the
same if the court had applied the Second Restatement?

[D] Primary Rights vs. Restatement Doctrine

[1] Introductory Note

The general Restatement doctrine of claim preclusion set forth in Section 17,
Restatement (Second) of Judgments (1982), supra, appears identical to
California’s primary rights doctrine. Also similar is the Second Restatement’s
general rule prohibiting “claim splitting,” Section 25:
 The rule of claim preclusion applies to extinguish a claim by the
plaintiff against the defendant even though the plaintiff is prepared in the
second action:

(1) To present evidence or grounds or theories of the case not

presented in the first action, or

(2) To seek remedies or forms of relief not demanded in the first

action.

California courts often quote extensively from sections and comments of the
Restatement as part of their analysis. E.g., Mattson v. City of Costa Mesa, 106
Cal. App. 3d 441, 164 Cal. Rptr. 913 (1980) . However, despite these general
similarities, there remains a major difference between the Restatement view and
the primary rights view of claim preclusion. Both doctrines prohibit claim
splitting and preclude parties from relitigating a claim or cause of action
already adjudicated in a prior action between them. But the Second Restatement,
§ 24, defines a “claim” as follows:

(1) When a valid and final judgment rendered in an action

extinguishes the plaintiff’s claim pursuant to the rules of merger or bar …,
the claim extinguished includes all rights of the plaintiff to remedies
against the defendant with respect to all or any part of the transaction, or
series of connected transactions, out of which the action arose.

(2) What factual grouping constitutes a “transaction,” and what

groupings constitute a “series,” are to be determined pragmatically, giving
weight to such considerations as whether the facts are related in time,
space, origin, or motivation, whether they form a convenient trial unit, and
whether their treatment as a unit conforms to the parties’ expectations or
business understanding usage.

How is the Restatement’s “same transaction” approach different from

California’s “primary rights” doctrine? If California followed the Restatement’s
transactional [508/509]approach, would Sawyer v. First City Financial Corp.,
supra, have been decided differently? Slater? Holmes? Takahashi? The
Restatement approach is sometimes said to preclude relitigation of not only
those claims actually raised by the plaintiff in a prior lawsuit, but also all
claims that could have been raised. See, e.g., Federated Dept. Stores, Inc. v.
Moitie, 452 U.S. 394, 101 S. Ct. 2424, 69 L. Ed. 2d 103 (1981). Why does
Section 24 of the Second Restatement lead to this result?

Which approach — “primary rights” or “same transaction” — better serves

the goals of judicial economy and finality of judgments? Which approach is less
ambiguous in guiding litigants and courts as to claim preclusion determinations?
For thoughtful criticisms of the California primary rights doctrine, see Walter
W. Heiser, California’s Unpredictable Res Judicata (Claim Preclusion)
Doctrine, 35 San Diego L. Rev. 559 (1998) (arguing that California’s primary
rights doctrine is substantively inefficient and unpredictable in application), and
Robin James, Note, Res Judicata: Should California Abandon Primary
Rights? , 23 Loy. L.A. L. Rev. 351 (1989) . Both authors conclude that the
California courts should abandon the primary rights doctrine and adopt the
Restatement’s transactional approach. Heiser, Unpredictable Res Judicata,
supra at 602–617; James, Res Judicata, supra at 411–14.

California’s primary rights theory is mostly judge-made doctrine which could

be changed or eliminated by the Supreme Court. The Supreme Court has not
recently indicated any desire to do so. See Slater, supra; Heiser, Unpredictable
Res Judicata, supra. What reasons are there for continuing with the primary
rights theory of claim preclusion in California? Note that the Restatement’s
transactional approach has been adopted by a majority of states, as well as by
the federal court when applying federal res judicata law. See Heiser,
Unpredictable Res Judicata, supra at 569, n. 27. The primary rights doctrine is
distinctly a minority view. Id.

California’s primary rights doctrine is clearly quite different from the

Restatement’s transactional approach to claim preclusion. Less clear is whether
California’s res judicata doctrine as a whole results in a significantly different
outcome than the Restatement approach when both claim and issue preclusion
are applied together. The answer to this question should be postponed until after
an examination of the California doctrines of issue preclusion and compulsory
cross-complaints, discussed infra.

[2] Federal-State Recognition of Judgments

One question that had troubled federal courts for several years is which
doctrine of res judicata — federal or state — must be applied by a federal court
in determining the preclusive effect of a prior state court judgment?

[a] Prior State Judgment in Federal Courts

A series of U.S. Supreme Court cases construing the Full Faith and Credit
Act, 28 U.S.C. § 1738, have definitively answered this question. E.g., Marrese
v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 105 S. Ct. 1327,
84 L. Ed. 2d 274 (1985); Parsons Steel, Inc. v. First Alabama Bank, 474 U.S.
518, 106 S. Ct. 768, 88 L. Ed. 2d 877 (1986); Migra v. Warren City School
Dist. Bd. of Ed., 465 U.S. 75, 104 S. Ct. 892, 79 L. Ed. 2d 56 (1984).
[509/510]Section 1738 requires a federal court to give a prior state court judgment
the same preclusive effect in federal court as another court of that state would
give it. In other words, a federal court must apply the preclusion law of the state
which rendered the prior judgment. Consequently, the federal courts must apply
the primary rights doctrine when determining the preclusive effect of a prior
California state court judgment. E.g., Takahashi v. Bd. of Trustees of
Livingston, 783 F.2d 848 (9th Cir. 1986) , cert. denied, 476 U.S. 1182 (1986);
Los Angeles Branch NAACP v. Los Angeles Unified School Dist., 750 F.2d 731
(9th Cir. 1984) (en banc).

[b] Prior Federal Judgment in California Courts

The converse question is what law — state or federal — determines the

preclusive effect given a prior federal court judgment in a subsequent California
state court proceeding. The United States Supreme Court recently answered this
question where subject matter jurisdiction in the prior federal action was based
on diversity of citizenship under 28 U.S.C § 1332. See Semtek International,
Inc. v. Lockheed Martin Corp., 531 U.S. 497, 121 S. Ct. 1021, 149 L. Ed. 2d
32 (2001). The Supreme Court held that, as a matter of federal common law, the
claim-preclusive effect of a judgment by a federal court sitting in diversity
should be determined by the claim preclusion law of the state in which the
federal diversity court sits (which, coincidentally, was California in Semtek).
Semtek, supra, 531 U.S. at 507-509.

The U.S. Supreme Court in Semtek did not address the question of whether
state or federal law determines the preclusive effect of a prior federal court
judgment in state court where the prior federal action was based on federal
question jurisdiction. Recent decisions suggest that the California courts remain
divided on the proper resolution of this question. See City of Simi Valley v.
Superior Court, 111 Cal. App. 4th 1077, 1082-84, 4 Cal. Rptr. 3d 468 (2003)
(California law will determine the res judicata effect of a prior federal court §
1983 judgment on the basis of whether the federal and state actions invoke the
same primary right); Balasubramanian v. San Diego Community College Dist.,
80 Cal. App. 4th 977, 95 Cal. Rptr. 2d 837 (2000) (California law will
determine the preclusive effect of a prior federal court judgment based on
federal question jurisdiction); Gamble v. General Foods Corp., 229 Cal. App.
3d 893, 280 Cal. Rptr. 457 (1991) (California’s primary rights doctrine
applies); but see Butcher v. Truck Ins. Exchange , 77 Cal. App. 4th 1442, 92
Cal. Rptr. 2d 521 (2000) (California follows the rule that the preclusive effect
of a prior judgment of a federal court is determined by federal law where the
prior judgment was on the basis of federal question jurisdiction); Louie v. BFS
Retail & Commercial Operations, LLC, 178 Cal. App. 4th 1544, 1553–54, 101
Cal. Rptr. 3d 441 (2009) (same).

[E] Compulsory Cross-Complaints and Res Judicata

[1] The Compulsory Cross-Complaint Statutes

Code of Civil Procedure §§ 426.10 and 426.30 set forth the general
preclusion rules for failure to plead a compulsory cross-complaint. Section
426.30(a) states:

[510/511]

Except as otherwise provided by statute, if a party against whom a

complaint has been filed and served fails to allege in a cross-complaint
any related cause of action which (at the time of serving his answer to the
complaint) he has against the plaintiff, such party may not thereafter in any
other action assert against the plaintiff the related cause of action not
pleaded.

Section 426.10(a) defines “complaint” to mean a complaint or cross-complaint;

§ 426.10(b) defines “plaintiff” to mean a person who files a complaint or a
cross-complaint. Section 426.10(c) then provides:

“Related cause of action” means a cause of action which arises out of

the same transaction, occurrences, or series of transactions or occurrences
as the cause of action which the plaintiff alleges in his complaint.
 [2] Transactional Standard

Section 426.10(c) utilizes the same type of “transactional” standard in

defining a compulsory cross-complaint as is utilized by Rule 13(a), F.R.C.P. , in
defining a compulsory counterclaim, as well as by § 24 of the Restatement
(Second) of Judgments (1982) in defining the scope of the claim extinguished by
res judicata.

[a] Impact on Primary Rights Doctrine?

What impact does California’s compulsory cross-complaint standard have on

the primary rights approach to res judicata? Consider the following
hypotheticals:

Carry’s car collides with Van’s van on California Highway 395. Both
parties suffer serious injuries, and both vehicles are destroyed. Carry,
relying on established primary rights precedent, decides to first sue Van in
Superior Court for her personal injuries, and to later sue him in a separate
lawsuit for the property damage to her car.

(1) Carry sues Van for personal injury damages, alleging her injuries
were caused by Van’s negligence. Defendant Van files an answer denying
liability. The jury finds that plaintiff Carry was 100% negligent, and
defendant Van was not negligent, and awards no damages to Carry. Van
then files an action against Carry seeking damages for both his personal
injuries and for the injuries to his van. Van moves for summary judgment
on the issue of liability, based on collateral estoppel. Carry also moves for
summary judgment, seeking dismissal of Van’s complaint based on CCP §§
426.10 and 426.30. What are the appropriate rulings on these motions?

(2) Assume in Carry’s first action against Van for her personal injury
damages, that defendant Van not only filed an answer but also a cross-
complaint. Van’s cross-complaint seeks damages for his personal injuries,
alleging that his injuries were caused by Carry’s negligence. The jury finds
that plaintiff Carry was 30% negligent and defendant Van was 70%
negligent, and awards appropriate damages. Carry then files a second
lawsuit against Van seeking damages for destruction of her car. Defendant
Van cross-complains for the damage to his van. What is the preclusive
effect [511/512]of Carry’s first judgment on this second lawsuit?
 [b] Should California Abandon Primary Rights?

The typical automobile crash case usually involves two primary rights and
therefore two causes of action, one for personal injury and one for property
damage. Also, because there usually are injuries to both parties and to their
vehicles, the typical case often involves compulsory cross-complaints. Does the
net practical effect of this mean that the “transactional” approach is usually
applicable and not the “primary rights” approach in determining what claims
must be litigated in the typical automobile negligence case? If so, isn’t it
misleading to view California as following a “primary rights” theory which
permits separate lawsuits for different causes of action in such cases? Is this
practical effect a sufficient reason for the Supreme Court to overrule the primary
rights precedent and adopt a transactional approach to res judicata? See Robin
James, Note, Res Judicata: Should California Abandon Primary Rights, 23
Loy. L.A. L. Rev. 351, 403, 413–14 (1989) . Has the Legislature in effect
already accomplished this for a large category of typical cases likely to involve
more than one primary right? See Walter W. Heiser, California’s
Unpredictable Res Judicata (Claim Preclusion) Doctrine , 35 San Diego L.
Rev. 559, 601 (1998).
 [F] The Requirement of Final Judgment on the Merits

[1] Final Judgment, California Rule

The doctrine of res judicata applies only to “final” judgments and orders.
American Enterprise, Inc. v. Van Winkle , 39 Cal. 2d 210, 218, 246 P.2d 935
(1952); § 13, Restatement (Second) of Judgments (1982). What constitutes a
final judgment under the California doctrine? The California rule is that a
judgment is not final for purposes of res judicata if it is still open to direct
attack by appeal or otherwise. E.g., Agarwal v. Johnson, 25 Cal. 3d 932, 954,
n.11, 160 Cal. Rptr. 141, 603 P.2d 58 (1979) ; National Union Fire Ins. Co. v.
Stites Professional Law Corp., 235 Cal. App. 3d 1718, 1726, 1 Cal. Rptr. 2d
570 (1991). Consequently, an order or judgment is not final under the California
rule for res judicata purposes during the pendency of an appeal; and, even
though no appeal has yet been taken, until the time for appeal has expired. See
Agarwal v. Johnson, supra, CCP § 1049.

[2] Final Judgment, Federal Rule

The federal courts and a majority of state courts follow a rule different than
California’s as to when a judgment is final for res judicata purposes: A
judgment once rendered is final for claim preclusion purposes until reversed on
appeal, modified or set aside. See Joseph Shemaria, Comment, Res Judicata
and the Bifurcated Negligence Trial , 16 UCLA L. Rev. 203, 209–10, n.23
(1969); Calhoun v. Franchise Tax Bd. , 20 Cal. 3d 881, 887, 143 Cal. Rptr.
692, 574 P.2d 763 (1978) . The pendency of an appeal does not suspend the
operation of an otherwise final judgment as res judicata. What are the benefits
of the federal rule? The California rule? Which rule best promotes the policies
of res judicata? What final judgment rule — California or federal — should a
California court apply in determining the [512/513]res judicata effect of a prior
federal court judgment pending appeal? See Calhoun v. Franchise Tax Board,
supra.

[3] California Interpretations of Final Judgment

[a] Claim vs. Issue Preclusion

The California rule on what constitutes a final judgment is interpreted strictly

when considered for purposes of claim preclusion, but less so when applied for
purposes of issue preclusion. Sandoval v. Superior Court, 140 Cal. App. 3d
932, 936–40, 190 Cal. Rptr. 29 (1983); see Producers Dairy Delivery Co. v.
Sentry Ins. Co., 41 Cal. 3d 903, 226 Cal. Rptr. 558, 718 P.2d 920 (1986) ; see
also Collateral Estoppel discussion, infra. Why this more liberal treatment for
issue preclusion than for claim preclusion? See § 13, Restatement (Second) of
Judgments (1982), comments b and g.

[b] Final Interlocutory Judgment

An order may be final for res judicata purposes even though the order itself is
characterized as “interlocutory.” If an interlocutory order is appealable but no
appeal is taken, the order may become final for res judicata purposes once the
time for appeal has expired. E.g., Peck v. Hagen, 215 Cal. App. 3d 602, 263
Cal. Rptr. 198 (1989) (prejudgment attachment order under the Attachment Law
was immediately appealable, and became final when no interlocutory appeal
taken); Hanley v. Hanley, 199 Cal. App. 3d 1109, 1118, 245 Cal. Rptr. 441
(1988) (prior to 1984, an interlocutory degree of dissolution of marriage was
immediately appealable, and had a res judicata effect when it became final in
the sense that it was no longer subject to appeal). Note also that a “final
judgment” for purposes of res judicata is not the same as one for purposes of
appeal. See Chapter 15, Appeals and Writs, infra.

[c] Successive Judgments

Where two successive actions are pending which involve the same
controversy, res judicata attaches to the first judgment which becomes final. See
Busick v. Workmen’s Comp. Appeals Bd. , 7 Cal. 3d 967, 977, 104 Cal. Rptr.
42, 500 P.2d 1386 (1972) ; First N.B.S. Corp. v. Gabrielsen, 179 Cal. App. 3d
1189, 1195, 225 Cal. Rptr. 254 (1986) (“When there are two separate actions
involving the same issues and same parties in different courts, it is the first final
judgment, even though rendered in the second action, that renders the issue res
judicata in the other action.”). What procedural devices are available to assure
that the first court to take jurisdiction of a controversy will also be the first one
to render a final judgment? See, e.g., CCP §§ 597, 526(b)(1), 430.10(c).

[d] Inconsistent Judgments

Which judgment should be conclusive for res judicata purposes where a prior
final judgment is not asserted as a bar in a second action involving the same
controversy and the second action results in an inconsistent judgment? In Hanley
v. Hanley, 199 Cal. App. 3d 1109, 1117, 245 Cal. Rptr. 441 (1988) , [513/514]the
court stated the general rule, relying on § 15 of Restatement (Second) of
Judgments (1982), that when inconsistent final judgments are rendered in two
actions “it is the later, not the earlier, judgment that is accorded conclusive
effect in a third action under the rules of res judicata.” The court repeated this
general rule in Stuart v. Lilves, 210 Cal. App. 3d 1215, 258 Cal. Rptr. 780
(1989), but noted an exception where the first of the inconsistent judgments was
rendered in the state where the third action is pending: “[W]hen one of the
conflicting decisions was entered by a court of the state in which the current
action is pending, that decision takes precedence over the court of a sister
state.” Stuart, 210 Cal. App. 3d at 1220. The court also held that application of
this exception is consistent with the Full Faith and Credit Clause. Id. at 1220–
21. Do you agree? See Parsons Steel, Inc. v. First Alabama Bank, 474 U.S.
518, 106 S. Ct. 768, 88 L. Ed. 2d 877 (1986).

[4] Decision on the Merits

In order to have a res judicata (claim preclusion) effect, a judgment must not
only be final but must also be rendered “on the merits.” Wilson v. Bittick , 63
Cal. 2d 30, 35, 45 Cal. Rptr. 31, 403 P.2d 159 (1965) ; § 19, Restatement
(Second) of Judgments (1982). The paradigm “judgment on the merits” is one
entered after a full trial of the issues of fact and law, rendered by a judge or
jury. § 19, Restatement, supra, comment a. This includes a judgment rendered
on a directed verdict and a judgment notwithstanding the verdict. Id., comment
h.

When a judgment is rendered without a full trial on the facts, the question of
whether it is on the merits becomes a little more complicated. When not dealing
with the paradigm, a particular judgment must be closely scrutinized to
determine whether it is or is not an adjudication on the merits. Which of the
following judgments are on the merits:

[a] Default Judgment?

Generally speaking, a judgment by default is “on the merits” and is

conclusive as to all issues pleaded in the complaint. E.g., English v. English, 9
Cal. 2d 358, 70 P.2d 625 (1937) ; see § 19, Restatement (Second) Judgments
(1982), comment c. On what grounds may a defendant challenge the res judicata
effect of a prior default judgment by a collateral attack? See, e.g., Marriage of
Nosbisch, 5 Cal. App. 4th 629, 635, 6 Cal. Rptr. 2d 817 (1992) ; Pennoyer v.
Neff, 95 U.S. 714, 24 L. Ed. 565 (1877).

[b] Summary Judgment?

Compare Stuart v. Lilves, 210 Cal. App. 3d 1215, 1218, 258 Cal. Rptr. 780
(1989) (“A judgment entered upon a motion for summary judgment is a
determination that there is no factual dispute and one party is entitled to
judgment as a matter of law …. Such a judgment is as final and conclusive a
determination of the merits as a judgment after trial.”), with Koch v. Rodlin
Enterprises, Inc., 223 Cal. App. 3d 1591, 1595-97, 273 Cal. Rptr. 438 (1990)
(summary judgment for defendant in prior action not on the merits where former
judgment based on statute of limitations, noting that broad assertion that a
summary judgment is as final and conclusive a [514/515]determination of the
merits as a judgment after trial “is not universally true.”)

[c] General Demurrer?

Is a demurrer granted for failure to state facts sufficient to constitute a cause

of action, pursuant to CCP § 430.10(c), always a judgment on the merits?
Compare Goddard v. Security Title Ins. & Guarantee Co. , 14 Cal. 2d 47, 52,
92 P.2d 804 (1939) (even a judgment on general demurrer may not be on the
merits for the defects may be technical or formal, and plaintiff may be able to
correct the pleadings to state a cause of action) with See v. Joughin, 18 Cal. 2d
603, 607, 116 P.2d 777 (1941) (General demurrer in prior action barred present
action where substantially same facts plead in both cases). How about a special
demurrer, granted pursuant to CCP § 430.10(a)-(d) or (f)-(h)? See Goddard,
supra, 14 Cal. 2d at 51.

[d] Stipulated Judgments and Consent Judgments?

Compare Gates v. Superior Court, 178 Cal. App. 3d 301, 308, 311, 223 Cal.
Rptr. 678 (1986) (compromise settlement of a lawsuit and entry of consent
judgment given res judicata effect in subsequent action, barring not only the
reopening of the original controversy but also subsequent litigation of all issues
which were or could have been raised in the original suit), with California
State Auto. Assn. Inter-Ins. Bureau v. Superior Court , 50 Cal. 3d 658, n. 2,
268 Cal. Rptr. 284, 788, P.2d 1156 (1990) (noting split of authority on extent of
preclusive effect of stipulated judgments, at least as to collateral estoppel); see
also Smith v. State Farm Mut. Auto. Ins. Co., 5 Cal. App. 4th 1104, 1114–15, 7
Cal. Rptr. 2d 131 (1992) (stipulated judgments and consent judgments have a
res judicata effect on subsequent proceedings between the parties or their
privies, but will not bind nonparties whose interests were not represented).

Does a judgment on an offer to compromise, pursuant to CCP § 998, have a

res judicata effect? A collateral estoppel effect? What is the meaning of §
998(f), which states: “Any judgment entered pursuant to this section shall be
deemed to be a compromise settlement”? See California State Auto. Assn.
Inter-Ins. Bureau, supra, 50 Cal. 3d 658, 665, n.3 (court distinguished
stipulated judgments entered pursuant to CCP § 664.6 from compromise
settlements entered in accordance with CCP § 998).

[e] Voluntary Dismissal?

What is the res judicata effect of a voluntary dismissal made pursuant to CCP
§ 581? A voluntary dismissal with prejudice constitutes a determination on the
merits, and bars any future action on the same cause of action. Boeken v. Philip
Morris USA, Inc., 48 Cal. 4th 788, 793, 108 Cal. Rptr. 3d 806, 230 P.3d 342
(2010); Torrey Pines Bank v. Superior Court , 216 Cal. App. 3d 813, 820–21,
265 Cal. Rptr. 217 (1989). This is referred to as a “retraxit” at common law,
and is equivalent to a judgment on the merits. Gates v. Superior Court, 178 Cal.
App. 3d 301, 311, 223 Cal. Rptr. 678 (1988) . The determination of whether a
voluntary dismissal with prejudice bars subsequent litigation must be analyzed
under principles of res judicata and collateral estoppel. E.g., Le Parc
Community Assn. v. Workers’ Comp. Appeals Bd ., 110 Cal. App. 4th 1161,
1169, 2 Cal. Rptr. 3d 408 (2003) ; [515/516]Morris v. Blank, 94 Cal. App. 4th
823, 829–30, 114 Cal. Rptr. 2d 672 (2001).

[6] Claim Preclusive Effect of Non-Judicial Tribunal Decision

[a] Administrative Agency Decisions

Generally speaking, the final administrative determination of an

administrative agency acting in a judicial or quasi-judicial capacity will be res
judicata in any subsequent court proceeding. See, e.g., Hollywood Circle, Inc.
v. Dept. of Alcoholic Beverage Control , 55 Cal. 2d 728, 732–33, 13 Cal. Rptr.
104, 361 P.2d 712 (1961) ; Johnson v. Superior Court, 24 Cal. 4th 61, 69–76,
99 Cal. Rptr. 2d 316, 5 P.3d 874 (2000) . An administrative agency acts in a
judicial capacity when it resolves disputed issues of fact properly before it and
provides the parties with an opportunity to present evidence and fully litigate
the issues. Rymer v. Hagler, 211 Cal. App. 3d 1171, 1178, 260 Cal. Rptr. 76
(1989). Although the res judicata rules are generally applicable to
administrative decisions, their enforcement is more flexible than when applied
to judicial decisions. E.g., George Arakelian Farms, Inc. v. A.L.R.B., 49 Cal.
3d 1279, 1290–91, 265 Cal. Rptr. 162, 783 P.2d 749 (1989) . The collateral
estoppel effect of administrative determinations is discussed infra.

When is an administrative adjudication final for purposes of res judicata? A

decision of an administrative agency is not considered final for res judicata
purposes while subject to direct review in court. See George Arakelian Farms,
supra, 49 Cal. 3d at 1290; Long Beach Unified Sch. Dist. v. California, 225
Cal. App. 3d 155, 169–71, 275 Cal. Rptr. 449 (1990) (an administrative
decision held not final if an appeal was taken or if the time for appeal has not
lapsed). The agency must also consider the order as its final administrative
decision on the claim. George Arakelian Farms, supra, 49 Cal. 3d at 1290–91.

Even if an administrative order is final, the Legislature may intend that the
decision not have a res judicata effect. See, e.g., Mahon v. Safeco Title Ins.
Co., 199 Cal. App. 3d 616, 245 Cal. Rptr. 103 (1988) (Unemployment
Insurance Code § 1960 prohibits any res judicata use of judgments of the
Unemployment Insurance Appeals Board); University of Tennessee v. Elliott ,
478 U.S. 788, 106 S. Ct. 3220, 92 L. Ed. 2d 635 (1986) (unreviewed decision
of state administrative agency may have preclusive effect on 42 U.S.C. § 1983
claim filed in federal court, but not on Title VII employment discrimination
claim because such preclusion would be contrary to Congress’ intent in enacting
Title VII).

[b] Contractual Arbitration

Parties may contractually agree to submit certain disputes to arbitration, and

not to the judicial system, for resolution. CCP § 1280 et seq. A valid award by
an arbitrator is res judicata as to all matters within the scope of the award.
Thibodeau v. Crum, 4 Cal. App. 4th 749, 755, 6 Cal. Rptr. 2d 27 (1992)
(confirmed private arbitration award between homeowner and general
contractor is res judicata barring homeowner’s identical claim against
subcontractor); Sartor v. Superior Court, 136 Cal. App. 3d 322, 327–28, 187
Cal. Rptr. 247 (1982) (confirmed private [516/517]arbitration award in favor of
architectural firm is res judicata barring homeowner’s identical cause of action
against firm’s employees); see also Vandenberg v. Superior Court , 21 Cal. 4th
815, 824, n. 2, 88 Cal. Rptr. 2d 366, 982 P.2d 229 (1999) (citing Thibodeau
a nd Sarter with apparent approval). The collateral estoppel effect of an
arbitration award is discussed infra.

[c] Judicial Arbitration

CCP § 1141.10 et seq. provides a system of nonbinding “judicial arbitration”

of certain at-issue civil actions. Court-ordered arbitration is mandatory in
certain actions in which the amount in controversy does not exceed a specified
amount. CCP § 1141.11. Such arbitration may also be elected by stipulation
regardless of amount in controversy, or unilaterally by the plaintiff if the
plaintiff agrees that any award shall not exceed the statutory maximum. CCP §
1141.12.

Unlike contractual or “true” arbitration (e.g., commercial arbitration),

judicial arbitration is not necessarily binding on the parties. Any party
dissatisfied with an award may request a trial de novo. CCP § 1141.20. As a
disincentive to trial de novo, if the requesting party does not obtain a more
favorable judgment at trial, that party is liable for significant costs and fees. §
1141.21. If a party does not request trial de novo within the statutory time limit,
a judicial arbitration award becomes final and is not subject to appeal. §
1141.23. Code of Civil Procedure § 1141.23 provides that such a final award
“shall have the same force and effect as a judgment in any civil action or
proceeding.”

What is the res judicata (claim preclusive) effect of a final judicial

arbitration award? “[A] final judicial arbitration award, if clear and
unambiguous, is res judicata in any subsequent proceeding on the same cause of
action.” Flynn v. Gorton, 207 Cal. App. 3d 1550, 1555, 255 Cal. Rptr. 768
(1989); see State Farm Mut. Auto. Ins. Co. v. Superior Court, 211 Cal. App.
3d 5, 259 Cal. Rptr. 50 (1989). What is the collateral estoppel (issue
preclusion) effect? See Collateral Estoppel discussion infra.

[7] Sister State Judgments

[a] Res Judicata Effect

A judgment rendered by a court of a sister state is entitled to the same res

judicata effect in California courts as it would have in the courts of the
rendering state. Underwriters Nat. Assurance Co. v. North Carolina Guaranty
Assn., 455 U.S. 691, 705, 102 S. Ct. 1357, 71 L. Ed. 2d 558 (1982); Durfee v.
Duke, 375 U.S. 106, 109–11, 84 S. Ct. 242, 11 L. Ed. 2d 186 (1963) ; St. Sava
Mission Corp. v. Serbian Eastern Orthodox Diocese, 223 Cal. App. 3d 1354,
1364, 273 Cal. Rptr. 340 (1990). This treatment is mandated by The Full Faith
and Credit Clause of the United States Constitution, Art. IV, § 1 ; and by the Full
Faith and Credit Act, 28 U.S.C. § 1738; as well as by CCP § 1913. Any
challenge to according full faith and credit to a sister state judgment is limited to
a determination of whether the rendering court had fundamental jurisdiction of
the case. Durfee v. Duke, supra; St. Sava Mission Corp. v. Serbian Eastern
Orthodox Diocese, supra; World Wide Imports, Inc. v. Bartel , 145 Cal. App.
3d 1006, 1010, 193 Cal. Rptr. 830 (1983); CCP § 1916.
 [517/518]

Under the Full Faith and Credit Clause, full res judicata effect attaches to a
sister state’s judgment where the party sought to be bound by the judgment
participated in the litigation and had a full opportunity to contest the sister
state’s jurisdiction. Durfee v. Duke, supra; Tyus v. Tyus, 160 Cal. App. 3d 789,
792–94, 206 Cal. Rptr. 817 (1984). Full Faith and Credit requires California
courts to recognize a judgment of a sister state, according it a res judicata effect,
even though the judgment is erroneously decided or is in conflict with a strong
public policy of California. Tyus, supra; World Wide Imports, supra ; see
Underwriters Nat. Assurance Co., supra.

[b] Enforcement of Sister State Judgments

Full Faith and Credit requires recognition of sister state judgments for
purposes of enforcement, as well as for res judicata purposes. E.g., Medical
Legal Consulting Services, Inc. v. Covarrubias, 234 Cal. App. 3d 80, 285 Cal.
Rptr. 559 (1991). Enforcement of sister state money judgments in California is
governed by The Sister State and Foreign Money Judgments Act, CCP §§
1710.10-1710.65, which is discussed in more detail in Chapter 14, Judgments
and Enforcement of Judgments, infra.

[8] Pleading, Proof, and Waiver of Res Judicata

[a] Raising Claim Preclusion

Res judicata must be properly pleaded or proved at trial, or it is waived. See,

e.g., Wolfsen v. Hathaway , 32 Cal. 2d 632, 638, 198 P.2d 1 (1948) ; Road
Sprinkler Filters Local Union No. 669 v. G & G Fire Sprinklers , 102 Cal.
App. 4th 765, 772, n.6, 125 Cal. Rptr. 2d 804 (2002); Parker v. Walker , 5 Cal.
App. 4th 1173, 1191, 6 Cal. Rptr. 2d 908 (1992) ; see also CCP §§ 456, 1908.5.
The normal and appropriate method of raising res judicata is by an affirmative
defense. See, e.g., Parker v. Walker, supra . However, res judicata can be
raised by a general demurrer where the complaint pleads the former judgment.
E.g., Weil v. Barthel , 45 Cal. 2d 835, 837, 291 P.2d 30 (1955) . And even
though a complaint does not plead the prior judgment, the court may take
judicial notice of the prior judgment and grant a demurrer based on res judicata.
E.g., Flores v. Arroyo , 56 Cal. 2d 492, 496–97, 15 Cal. Rptr. 87, 364 P.2d 263
(1961); Carroll v. Puritan Leasing Co., 77 Cal. App. 3d 481, 486, 143 Cal.
Rptr. 772 (1978) (“In analyzing a demurrer based on res judicata the court will
take judicial notice of a prior judgment, whether or not pleaded, provided only
that (1) the court has been correctly apprised of the judgment, and (2) the
plaintiff is given adequate notice and opportunity to be heard as to the effect of
the judgment,” citing Flores and Evid. Code §§ 452(d) and 453).

[b] Raising Issue Preclusion

Unlike res judicata (claim preclusion), no special plea is required to raise

collateral estoppel because it merely involves conclusive evidence of a fact in
issue as opposed to a complete defense. Dakins v. Bd. of Pension
Commissioners, 134 Cal. App. 3d 374, 387, 184 Cal. Rptr. 576 (1982) ; Solari
v. Atlas-Universal Services, Inc., 215 Cal. App. 2d 587, 592–93, 30 Cal. Rptr.
407 (1963). Even if not raised by [518/519]pleadings or during pretrial
proceedings, collateral estoppel can be raised for the first time at trial. Or, in
some situations, collateral estoppel can be raised for the first time in a motion to
set aside a judgment after trial. E.g., Ponce v. Tractor Supply Co., 29 Cal. App.
3d 500, 507, 105 Cal. Rptr. 628 (1972) (trial court should take judicial notice
of earlier judgment for collateral estoppel purposes, if raised before judgment
becomes final). Can collateral estoppel be raised for the first time on appeal?
Can collateral estoppel ever be waived by failure to raise it during trial? See
Ponce v. Tractor Supply Co., supra.

[c] Raising Res Judicata in Appellate Court

Although normally the res judicata effect of a prior judgment must be pleaded
and proven at trial, when the prior judgment becomes final during the pendency
of the appeal in the instant action, the first final judgment may be raised in the
appellate court in which the appeal is pending and be relied on as res judicata.
See, e.g., Busick v. Workmen’s Comp. Appeals Bd. , 7 Cal. 3d 967, 977, 104
Cal. Rptr. 42, 500 P.2d 1386 (1972) ; First N.B.S. Corp. v. Gabrielsen, 179
Cal. App. 3d 1189, 1195, 225 Cal. Rptr. 254 (1986) . The same rule applies in
cases involving the doctrine of collateral estoppel. Busick, supra.

[d] Raising Failure to Plead Compulsory Cross-Complaint

The court in Hulsey v. Koehler, 218 Cal. App. 3d 1150, 1153, 1158, 267
Cal. Rptr. 523 (1990), held that CCP § 426.30, which bars a claim not asserted
as a cross-complaint in a prior action, is analogous to the doctrine of res
judicata and must be pleaded as an affirmative defense in the subsequent action.
Failure to so plead § 426.30 constitutes a waiver of this defense. The Court of
Appeal held that the trial court did not abuse discretion when it denied as
untimely defendant’s attempt to amend the answer at trial and raise this defense.
Id.

[e] Proof of Res Judicata

A former judgment may be proved by introducing a certified copy of the

judgment, Evidence Code §§ 1530-1532; and by judicial notice, Evidence Code
§§ 452(d), 453. Questions as to the nature of the claims involved in the prior
judgment may be proved by introduction of the judgment roll, other parts of the
record, and, if necessary, by extrinsic evidence. See, e.g., McClain v. Rush, 216
Cal. App. 3d 18, 28, 264 Cal. Rptr. 563 (1989) ; Southwell v. Mallery, Stern &
Warford, 194 Cal. App. 3d 140, 144, 239 Cal. Rptr. 371 (1987).

[f] Estopped to Assert Res Judicata

A party’s conduct in a prior action may estop that party from asserting res
judicata in a subsequent proceeding. See, e.g., Barragan v. Banco BCH, 188
Cal. App. 3d 283, 296–97, 232 Cal. Rptr. 758 (1986) (party’s conduct in
successfully opposing leave to file claim as cross-complaint in prior action
estopped it from then asserting same claim was barred by res judicata in present
action); Union Bank & Trust Co. v. Hunt , 1 Cal. 2d 340, 34 P.2d 1001 (1934) ;
but see Sawyer v. First City Financial Corp., 124 Cal. App. 3d 390, 403–04,
410–12 (1981), [519/520]reproduced supra.

[g] Special Trial of Res Judicata Defense

When an answer pleads that an action is barred by a prior judgment, CCP §

597 authorizes the trial court to proceed to trial on this defense before the trial
of any other issue in the case. See, e.g., Davies v. Krasna, 12 Cal. App. 3d
1049, 1056, 91 Cal. Rptr. 250 (1970).

[G] Another Action Pending

The doctrines of res judicata, collateral estoppel, and compulsory cross-

complaint are devices which determine the preclusive effect of a prior final
judgment on subsequent litigation. Are there any devices which preclude
litigation of a second lawsuit between the same parties which involves the same
subject matter that is still pending in the first lawsuit? There are several in
California, although they are quite similar and substantially overlap.
 [1] Plea in Abatement

One such device is a “plea in abatement” which, pursuant to CCP §

430.10(c), may be made by demurrer or answer when “[t]here is another action
pending between the same parties on the same cause of action.” The general rule
appears to be that this plea may be maintained only where a judgment in the first
action would be a complete bar (res judicata) to the second action. Lord v.
Garland, 27 Cal. 2d 840, 848, 168 P.2d 5 (1946) ; Plant Insulation Co. v.
Fibreboard Corp., 224 Cal. App. 3d 781, 788, 274 Cal. Rptr. 147 (1990) . A
party may not split up a single cause of action and make it the basis of separate
suits; the first action may be pleaded in abatement of any subsequent suit on the
same claim. Wulfjen v. Dolton, 24 Cal. 2d 891, 894, 151 P.2d 846 (1944) . The
courts narrowly construe the circumstances under which a statutory plea of
abatement will apply. Usually the courts require absolute identity of parties,
causes of action, and remedies sought in the initial and subsequent actions. See
Plant Insulation Co. v. Fibreboard Corp., supra.

Where a demurrer is sustained on the ground of another action pending, the

proper order is not a dismissal but an abatement of the second proceeding
pending termination of the first action, pursuant to CCP § 597. Lawyers Title
Ins. Corp. v. Superior Court, 151 Cal. App. 3d 455, 459, 199 Cal. Rptr. 1
(1984); see Leadford v. Leadford , 6 Cal. App. 4th 571, 574, 8 Cal. Rptr. 2d 9
(1992) (abatement required only where multiple actions are pending in courts of
the same state; where actions are pending in courts of different states, the
determination of whether to stay is discretionary, not mandatory, and should be
raised by motion, not demurrer).

[2] Exclusive Concurrent Jurisdiction

A more liberal device, similar to a statutory plea of abatement, is a stay

based on the rule of “exclusive concurrent jurisdiction.” Under this rule, when
two courts have concurrent jurisdiction over the subject matter and parties
involved in litigation, the first to assume jurisdiction has exclusive and
continuing jurisdiction until such time as all necessarily related matters are
resolved. See, e.g., Marriage of Orchard, 224 Cal. App. 3d 155, 159–60, 273
Cal. Rptr. 499 (1990); [520/521]California Union Ins. Co. v. Trinity River Land
Co., 105 Cal. App. 3d 104, 109, 163 Cal. Rptr. 802 (1980) . Priority of
jurisdiction resides in the tribunal where process is first served. The rule is
based on the need (1) to prevent vexatious litigation and multiplicity of suits,
and (2) to avoid conflict of jurisdiction, confusion and delay in the
administration of justice.
 Unlike the statutory plea of abatement, the rule of exclusive concurrent
jurisdiction does not require absolute identity of parties, causes of action or
remedies sought in the initial and subsequent actions. Plant Insulation Co. v.
Fibreboard Corp., supra, 224 Cal. App. 3d at 788. The parties need not be
identical, so long as the court exercising original jurisdiction has the power to
bring before it all necessary parties; and the remedies sought need not be the
same in both actions so long as the first court has power to litigate all issues and
grant all the relief sought in the second. Id. Recent cases applying the rule do not
require that the first suit would be res judicata in the second suit. Id. Instead,
these cases have adopted a more expansive subject matter test which considers
whether the first and second actions arise from the “same transaction.” Plant
Insulation Co., 224 Cal. App. 3d at 789 (and cases cited therein).

The proper relief under exclusive concurrent jurisdiction is a stay of the

second action, not a dismissal. Plant Insulation Co., 224 Cal. App. 3d at 791–
92. As with a statutory plea of abatement, the second court should enter on
interlocutory judgment pursuant to CCP § 597 to permit that court to retain
jurisdiction over the subsequent action so that the court will be empowered to
determine any remaining issues after final determination is made in the prior
pending action. Id. A writ of prohibition is an appropriate remedy when the
second court refuses to recognize the exclusive jurisdiction of the first court.
Lawyers Title Ins. Corp. v. Superior Court, supra, 151 Cal. App. 3d at 460.

[3] Anti-Suit Injunctions

Civil Code § 3423 authorizes a California court to restrain a party subject to

its jurisdiction from proceeding in another action involving the same subject
matter or the same facts when “necessary to prevent a multiplicity of
proceedings.” Likewise, the “first filed rule” in California means that when two
courts of the same sovereignty have concurrent jurisdiction, the first to assume
jurisdiction over a particular subject matter of a particular controversy takes it
exclusively, and the second court should not thereafter assert control over that
subject matter. Advanced Bionics Corp. v. Medtronic, Inc ., 29 Cal. 4th 697,
128 Cal. Rptr. 2d 172, 179, 59 P.3d 231 (2002) . See also Franklin & Franklin
v. 7-Eleven Owners for Fair Franchising, 85 Cal. App. 4th 1168, 1175–78,
102 Cal. Rptr. 2d 770 (2000) (applying the exclusive concurrent jurisdiction
rule and upholding trial court’s postjudgment enjoining of subsequent trials of
identical actions in another superior court, pending appeal of first action);
Rynsburger v. Dairymen’s Fertilizer Coop., Inc ., 266 Cal. App. 2d 269, 72
Cal. Rptr. 102 (1968) (issuing an injunction to prevent a multiplicity of judicial
proceedings, pursuant to CCP § 526(b0(1)).

[521/522]

§ 8.03 COLLATERAL ESTOPPEL (ISSUE

PRECLUSION)
[A] Introductory Note

The collateral estoppel or issue preclusion aspect of res judicata bars a party
from relitigating an issue of fact or of law if that issue was actually litigated and
determined by a valid and final judgment in a previous proceeding. The prior
determination of the issue is conclusive in a subsequent action between the
parties or their privies, whether dealing with the same or a different cause of
action. See, e.g., George Arakelian Farms, Inc. v. Agricultural Labor
Relations Bd., 49 Cal. 3d 1279, 265 Cal. Rptr. 162, 783 P.2d 749 (1989)
(citing § 27, Restatement Second of Judgments (1982)). Consequently, issue
preclusion may be applicable in a subsequent action even though claim
preclusion is unavailable.

[B] The California Collateral Estoppel Doctrine

SUTPHIN v. SPEIK
SUPREME COURT OF CALIFORNIA
15 Cal. 2d 195, 99 P.2d 652 (1940)

Gibson, Justice.

This is an action to recover royalties due under an assignment of a

participating royalty interest in an oil and gas lease. As will presently appear, a
judgment entered in a prior action between the same parties has determined the
issues involved in this case.

In 1926 the California Petroleum Corporation leased property consisting of

two small lots in Huntington Beach, California (designated as lots 12 and 14), to
C.K. Cole as lessee, reserving a royalty of 17 1/2 per cent. Cole assigned the
lease to his wife, who on January 7, 1927, assigned to plaintiff Sutphin a royalty
interest described as: “A participating royalty interest of Five per cent (5%) of
the gross total production of all oil, gas and other hydrocarbons produced,
saved and sold from said well on said premises, or any substitute well therefore
…” Subsequently, in June, 1928, the Coles assigned the entire lessee’s interest
to defendant Speik, excepting therefrom landowner’s royalty, and royalties
theretofore sold.

At the time the assignment to plaintiff was made, a well, designated as

number 3, was being drilled, which later went into production. In October,
1932, well number 3 and its equipment were destroyed by fire, and defendant
drilled another well in its place, using part of the original hole and casing. This
well was numbered 3A and went into production in August, 1933. In October,
1933, well number 4, located some fifty feet from number 3A, was completed,
and both wells are now producing.

Plaintiff Sutphin brought his first action against the defendant Speik on
October 27, 1933, to recover royalties then due under his 5 per cent
participating royalty interest. Judgment was rendered in plaintiff’s favor on
April 5, 1934, in the sum of $6,388.82 and interest. Appended as an exhibit to
the complaint in the present suit [522/523]are the findings and judgment of the court
in the original action. The material findings are as follows:

That plaintiff by written assignment for valuable consideration

acquired a 5 per cent interest in the total production of oil and gas from
lots 12 and 14 under the oil lease between the California Petroleum
Corporation and Cole.

That at the time defendant received his assignment of the lease he had
knowledge of the 5 per cent interest previously assigned to plaintiff.

That the last well (number 4) “produces from the same zone and pool
as said redrilled well number 3.”

That “The plaintiff is now and ever since the 7th day of January,
1927, has been the owner of said five per cent of the total production of
oil, gas and other hydrocarbons produced, saved or sold from said
premises, and of the moneys derived from the sale of said five per cent of
 said total production.”

In its conclusion of law the court declared, among other things, that “plaintiff
is entitled to judgment declaring him the owner of five per cent of the total
production of oil, gas and other hydrocarbons produced, saved or sold from lots
12 and 14 … whether or not same is produced from one or more wells upon
said premises.”

The court adjudged plaintiff to be the owner of 5 per cent of the total
production of oil and gas from said lots 12 and 14, “whether same is produced
from one or more wells upon said premises, and as such owner plaintiff is
entitled to receive all moneys derived from the sale of said five per cent of the
total production … from said lots 12 and 14.”

Defendant Speik appealed. The judgment was affirmed by the District Court
of Appeal, Second Appellate District, Division One, and a hearing was denied
by this court. The judgment became final and was satisfied as to the royalties
then adjudged to be due. In affirming the judgment, the opinion of the District
Court of Appeal, after summarizing the facts, stated that it was the defendant
Speik’s contention that the evidence was insufficient to support the finding of
indebtedness, the finding that plaintiff was the owner of a 5 per cent interest in
the total production from the property, and the finding that well number 4
produced from the same zone and pool as well number 3. The court rejected this
contention, and upheld the judgment.

The present action was filed October 29, 1936, to recover royalties accruing
after the entry of the judgment, and was grounded on the rights adjudicated by
that judgment. Defendant pleaded as his chief defense that well number 4 does
not produce from any sand or oil deposit underlying the property but was drilled
as a “whipstock well” diagonally into oil producing sand under the Pacific
Ocean, more than 2,000 feet from the property, and that well number 4 therefore
produces from sands and oil deposits which do not extend beneath these lots.

At the trial defendant made an offer to prove that a royalty was being paid to
the State of California from the production of wells number 3A and 4 by virtue
of an [523/524]agreement permitting production from state land under the ocean.
The court excluded the offered evidence.
 Counsel for plaintiff offered in evidence, among other things, Speik’s opening
brief and petition for hearing in the first case, and these were admitted for the
limited purpose of showing similarity of contentions raised in the two actions.

It was stipulated by defendant that it was the contention of defendant in the

former trial that plaintiff Sutphin had no interest in either well number 3A or 4.

The trial court in the present action made findings which reviewed the prior
proceeding, and then found as follows:

That plaintiff has not received his 5 per cent royalty on oil and gas
produced from wells 3A and 4 since entry of the former judgment.

That no wells other than 3A and 4 have been drilled and that “the
location of said wells both above and below the surface of the ground is
the same at this time as at the time the trial was had in said action and both
are producing from the same sand as at the time of said former trial.”

That wells 3A and 4 produce from the same zone and pool.

That it is immaterial whether they are “whipstock wells” because of

the doctrine of res judicata and that all of the defenses here urged existed at
the time of the former trial.

Judgment accordingly went for the plaintiff in the sum of $31,932.54 together
with interest. Defendant Speik brought this appeal. * * *

This brings us to a consideration of the issues on this appeal. The lower court
decided the case on the theory that the prior judgment was res judicata. If this
conclusion is correct, the judgment must be affirmed on that ground alone and it
is neither necessary nor proper to reexamine on their merits the various defenses
urged by appellant. The prior judgment, as will be seen from an examination of
its provisions and of the foregoing excerpts from the findings and conclusions,
determined that plaintiff was the owner of 5 per cent of the total production of
the two wells. This determination in the prior judgment necessarily establishes
plaintiff’s right in this action to recover royalties based on subsequent
production of wells 3A and 4, unless defendant’s attack on the applicability of
the doctrine of res judicata is successful.

The contentions of defendant in this connection are as follows: (a) The causes
of action in the two suits are different, and the judgment in the first is not res
judicata in the second. (b) The issue of ownership of oil or rights therein
produced from state lands by a “whipstock well” was not raised or decided in
the first action, and is not res judicata. * * *

All of these contentions merely represent different methods of expressing the

single defense that the assignment to plaintiff and the prior judgment in his favor
were only intended to give to plaintiff a right in oil produced from a particular
well or any “substitute therefor” drawing oil from strata directly underlying the
leased premises; and that neither was intended, nor could be construed to
establish in plaintiff any right to oil drawn through that well or any other well
where the oil [524/525]itself came from strata not underlying these lots.

The argument of defendant is, in substance, an attack upon the findings and
judgment in the prior action, the undoubted purpose of which is to avoid the
broad determination of the issues therein made. The assignment upon which
plaintiff relies covered the original well number 3 (subsequently destroyed by
fire) or any “substitute therefor.” It was entirely within the issues of the first
action for the court to determine whether wells number 3A or 4 or any other
wells then on the premises were substitutes for the original and destroyed well
number 3. It is clear from an examination of the findings and judgment therein
that plaintiff was adjudged in the prior action to be entitled to his percentage of
the production of any wells then drilled on the particular premises regardless of
where the wells were bottomed, or the source of the oil delivered by them. The
suggestion made by defendant that the “judgment alone should be considered and
the findings disregarded if outside the scope of the judgment” can have no force
in view of the settled rule that the findings constitute the decision of the court. *
**

As already indicated, defendant’s contention that the doctrine of res judicata

is not applicable here is grounded upon the proposition that the causes of action
involved in the prior and present suit are different, and that the defenses that title
had been acquired from the state, and that the oil was being taken from lands
outside the boundaries of the lots, were not raised in the prior action. A
complete answer to this contention may be found in an examination of the scope
of the doctrine of res judicata, which has been fully considered by this court in
recent cases.
 First, where the causes of action and the parties are the same, a prior
judgment is a complete bar in the second action. This is fundamental and is
everywhere conceded.

Second, where the causes of action are different but the parties are the same,
the doctrine applies so as to render conclusive matters which were decided by
the first judgment. As this court said in Todhunter v. Smith , 219 Cal. 690, 695
[28 Pac. (2d) 916]: “A prior judgment operates as a bar against a second action
upon the same cause, but in a later action upon a different claim or cause of
action, it operates as an estoppel or conclusive adjudication as to such issues in
the second action as were actually litigated and determined in the first action.”
In the instant case, for example, the severable installments of royalties due gave
rise to separate causes of action; but a determination of a particular issue in the
prior action is res judicata in the second action.

Next is the question, under what circumstances is a matter to be deemed

decided by the prior judgment? Obviously, if it is actually raised by proper
pleadings and treated as an issue in the cause, it is conclusively determined by
the first judgment. But the rule goes further. If the matter was within the scope of
the action, related to the subject-matter and relevant to the issues, so that it
could have been raised, the judgment is conclusive on it despite the fact that it
was not in fact expressly pleaded or otherwise urged. The reason for this is
manifest. A party cannot by negligence or design withhold issues and litigate
them in consecutive actions. Hence the rule is that the prior judgment is res
judicata on matters which were raised or could have been raised, on matters
litigated or litigable. In Price v. Sixth District, 201 Cal. 502, 511 [258 Pac.
387], [525/526]this court said: “But an issue may not be thus split into pieces. If it
has been determined in a former action, it is binding notwithstanding the parties
litigant may have omitted to urge for or against it matters which, if urged, would
have produced an opposite result … This principle also operates to demand of a
defendant that all of its defenses to the cause of action urged by the plaintiff be
asserted under the penalty of forever losing the right to thereafter so urge them.”

Defendant relies on English v. English, 9 Cal. (2d) 358 [70 Pac. (2d) 625].
In that action, plaintiff sued to rescind a separation agreement in which he had
promised to pay his wife $200 per month until a total of $10,000 had been paid.
He alleged that the agreement was obtained by fraud and duress. The wife
contended that the validity of the agreement had been established by a default
judgment in her favor in a suit to recover installments due under the contract,
and that the issue was therefore res judicata. The court held that although a
default judgment is conclusive as to facts necessary to uphold that particular
judgment, it is not conclusive in a subsequent suit on a different cause of action
against any defenses which defendant has, because the issues raised by these
defenses were not tried and cannot be deemed adjudicated. This case states an
exception to the normal rule of res judicata, limited to default judgments, and
has no bearing on the situation before us.

It remains only to see whether the defense now raised by defendant, that the
wells bottomed on state land, could have been raised in the first action. If so, the
defense of res judicata applies. The answer seems entirely clear. At the time of
the first action, wells number 3A and 4 were drilled and producing. Defendant
knew or should have known of the source of the oil therefrom. If the asserted
defense has merit, it was as good and available then as now. This being so, it
can make no difference whether it was actually pleaded, or whether evidence
was introduced thereon or not. We are not impressed by defendant’s assertion
that he could not have raised the defense in the first action because it would
amount to an admission of trespassing on state land. The defense might have
been weak, embarrassing, or dangerous to the defendant; and he may have
chosen to refrain from presenting it for reasons important to himself; but this can
have no present effect upon the conclusiveness of the determination in the
plaintiff’s favor. When we say that the issue could have been raised, we mean
that it was relevant to or within the scope of the action, and not that it was at the
time a defense upon which the defendant might prevail. * * *

It follows therefore from a consideration of the former judgment, in the light

of these rules, that plaintiff is entitled to his present judgment without any further
consideration of the merits. Accordingly, we have made no attempt to discuss
the conflicting evidence on such matters as the purpose of the assignment, the
source of the oil, or other points previously determined.

The judgment is affirmed.

__________

A petition for a rehearing was denied on March 29, 1940, and the following
opinion then rendered thereon:
 [526/527]

The Court. — Defendant in his petition for rehearing challenges

certain portions of our opinion, which he interprets as meaning that in a
second suit on a different cause of action, any issue which could have been
raised in the first suit is res judicata in the second, even though not actually
determined in the first. This is not our holding, and the opinion must be
read in connection with the facts of this case, and with and understanding
of the issue which was, in fact, decided in the former action.

The judgment in that action awarded plaintiff 5 percent of the total

production from the lots in question whether produced from one or more
wells. That judgment, correctly or incorrectly, did not limit the right of
plaintiff to production from wells which bottomed under the land. After
that judgment became final, plaintiff’s right to a portion of the production
from those wells was conclusive as between the parties, even in the
present suit on a different cause of action, because the basic issue thus
decided in the first case is identical with that in the present case.
Defendant, in his petition, has again urged that the former judgment cannot
be res judicata as to the new issue of the title to oil from wells bottomed
on state land, which title was acquired after the conclusion of the first
action.

The difficulty with this argument is that the asserted “new issue” is
not such in fact. Defendant has simply offered another legal theory by
which the same issue might be differently decided. If he may have a new
trial of the issue of right to the production of the oil from these wells
because of the new argument that the source of the oil must be considered,
then it would seem that in subsequent actions he can raise a “new issue” as
to the title of A, B, C, or other possible claimants in addition to the state. In
short, defendant’s contention is that though the prior judgment determined
that plaintiff had a right to a specified percentage of the production of oil
from any wells on certain land, plaintiff may be compelled to relitigate that
right whenever defendant can discover a new theory upon which to attack
it. This proposition is without support in principle or authority.

FROMMHAGEN v. BOARD OF SUPERVISORS

COURT OF APPEAL OF CALIFORNIA,
SIXTH APPELLATE DISTRICT
197 Cal. App. 3d 1292, 243 Cal. Rptr. 390 (1987)
Stone, Justice.

Appellant Laurence H. Frommhagen appeals from a judgment of dismissal

entered after the trial court sustained without leave to amend the demurrer filed
by respondents Santa Cruz County Board of Supervisors and the County of Santa
Cruz. We conclude that the trial court properly sustained the demurrer with
respect to the bulk of appellant’s action, but erred in sustaining the demurrer as
to two of the allegations in the complaint. Consequently, we reverse the
judgment and remand to the trial court for further proceedings on those two
allegations only.

[527/528]

I. FACTS

In June of 1984, appellant filed an in pro. per. suit against respondents to

invalidate service charges levied by respondents in a number of “county service
areas” for the 1984–1985 fiscal year. The county service area law gives
counties an alternative method of providing services to unincorporated areas by
allowing the counties to create special county service areas for the provision of
services such as road maintenance, sewers, and other county services. For the
types of services at issue in this case, a county may determine the charge to be
levied on each parcel in the service area by apportioning the total cost of the
service to each parcel therein in proportion to the estimated benefits from such
service to be received by each parcel. [Government Code] Section 25210.77a,
subdivisions (a), (b), and (c), also provide that each year a county must
calculate the charges to be assessed to a parcel for the service, and, after a
public hearing, the board of supervisors must confirm the charges. * * *

Appellant’s 1984 complaint alleged that the 1984-1985 charges were invalid
on a number of grounds: First, the complaint attacked 33 service areas
established to provide road maintenance on the ground that the areas improperly
provided maintenance for private roads. Second, appellant complained that
respondents violated section 25210.77a and Santa Cruz County Ordinance No.
3406 in establishing the county service area rates for 1984-1985. * * * Third,
appellant alleged that, for various reasons, some (particularly County Service
Areas Nos. 9, 9A, and 9D) if not all county service areas are special taxing
districts which require voter approval under article 13A, section 4 of the
California Constitution. Fourth, the imposition of a service charge in County
Service Area No. 9C for operation of county refuse disposal sites violated
section 25210.77f, which (according to appellant) allows for special
assessments for refuse disposal only after direct billings for that service are
unpaid for one year. Finally, the complaint alleged that the respondents failed to
use the appropriate method to determine the benefits conferred on a particular
parcel in order to calculate the fee for service owed by that parcel.

Following a two-day trial, the superior court issued its statement of decision
rejecting each of appellant’s contentions. * * * Appellant’s appeal in this first
action was dismissed on September 5, 1985, and the judgment is now final.

Undaunted by this setback, on November 20, 1985, appellant filed a

subsequent complaint attacking the county service area charges established for
the 1985-1986 fiscal year pursuant to section 25210.77a. As appellant himself
has admitted, the allegations in this second complaint are, with three exceptions,
identical in substance to those alleged in the previous complaint attacking the
1984-1985 charges. In response to this second complaint, respondents filed a
demurrer alleging that the suit was barred by res judicata and the statute of
limitations, and that appellant had no standing to bring the suit since he had not
alleged he owned property within any of the county service areas attacked in the
suit. In addition, the demurrer alleged that an admittedly new allegation stated in
paragraph X of the complaint failed to state a cause of action. Appellant filed
opposition to the demurrer.

On February 19, 1986, the superior court sustained the demurrer without
leave to amend on the ground that the bulk of the complaint was barred by res
judicata, [528/529]and paragraph X failed to state a cause of action. Appellant was
not afforded an opportunity to speak at the hearing.

Thereafter, a judgment of dismissal was entered in this second action and,

once again, appellant appealed.

II. DISCUSSION

A. Res Judicata/Collateral Estoppel

 Appellant contends that his second complaint is not barred by res judicata or
collateral estoppel. Although we agree with appellant with respect to certain
limited issues, we nevertheless find that the bulk of his complaint is barred by
collateral estoppel.

Appellant points to three differences between the 1984 and 1985 complaints
which he claims defeat the defense of collateral estoppel. First, in his 1985
complaint he claims that an amendment to section 25210.4a (eff. Jan. 1, 1985)
now restricts road maintenance by the county to streets and highways owned by
or dedicated to the county and maintained by the general public. Second, he
points out that the 1984 complaint attacked the charges assessed for the 1984-
1985 fiscal year, while the second complaint attacks the 1985-1986 charges.
Third, he points out that the second complaint contains an allegation (in para. X)
of misappropriation of surplus road resurfacing funds which was not made in
the first complaint. We discuss each argument separately below.

1. The Legal Standards

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. (Carroll v. Puritan Leasing Co. (1978) 77 Cal.
App. 3d 481, 485 [143 Cal. Rptr. 772].) In ruling on a demurrer based on res
judicata, a court may take judicial notice of the official acts or records of any
court in this state. (Id. at p. 481; Safeco Insurance Co. v. Tholen (1981) 117
Cal. App. 3d 685, 696 [173 Cal. Rptr. 23]; Evid. Code, § 452).

The doctrine of res judicata has a double aspect. First, it precludes parties or
their privies from relitigating the same cause of action that has been finally
determined by a court of competent jurisdiction. Second, although a second suit
between the same parties on a different cause of action is not precluded by a
prior judgment, the first judgment operates as an estoppel or conclusive
adjudication as to such issues in the second action as were actually litigated and
determined in the first action. This second aspect of res judicata is commonly
referred to as collateral estoppel.

2. Appellant’s First Action Is Not A Complete Bar To His Second Action

Respondents contend that appellant’s second action is barred completely by

the first aspect of res judicata; that is, respondents claim appellant is attempting
to [529/530]litigate the same cause of action in this second suit as he did in the
first. We disagree.

California has consistently applied the “primary rights” theory in defining a

cause of action. Under this theory, the invasion of one “primary right” gives rise
to a single cause of action, even though several remedies may be available to
protect the primary right. (Slater v. Blackwood (1975) 15 Cal. 3d 791, 795 [126
Cal. Rptr. 225, 543 P.2d 593] ; …) Although this theory is well developed in
such areas as personal injury and injuries to property, our research has failed to
uncover a California case applying the theory to suits brought to attack taxes or
charges levied in different years.

Nevertheless, federal authority addressing an analogous issue convinces us

that appellant’s suit attacking the 1985-1986 charges is not based on the same
cause of action as the suit attacking the 1984-1985 charges. In Commissioner v.
Sunnen, supra, 333 U.S. 591, the United States Supreme Court considered
whether litigation of certain issues in an income tax suit involving one tax year
would act as a complete bar (under the first aspect of res judicata) to a suit
brought on similar or identical issues but in a later tax year. The court held:
“Income taxes are levied on an annual basis. Each year is the origin of a new
liability and of a separate cause of action. Thus if a claim of liability or non-
liability relating to a particular tax year is litigated, a judgment on the merits is
res judicata as to any subsequent proceeding involving the same claim and the
same tax year. But if the later proceeding is concerned with a similar or unlike
claim relating to a different tax year, the prior judgment acts as collateral
estoppel only as to those matters in the second proceeding which were actually
presented and determined in the first suit.” (Id. at p. 598 [92 L. Ed. at p. 906]
…).

Similarly, in this case the service area charges are calculated each year under
the procedure outlined in section 25210.77a. Thus, each year is the origin of a
new charge fixing procedure, new charge liability, and, we believe, a new
cause of action. In the parlance of the “primary right theory,” those paying
charges have a primary right to have the charges properly calculated and
imposed each year. Consequently, we believe appellant’s second complaint
attacking the 1985-1986 charges is not based on the same cause of action as that
underlying his first complaint. It follows that appellant’s first action is not a
complete bar to his second action.
 3. Collateral Estoppel

Although appellant’s suit is not barred in its entirety by the first aspect of res
judicata, we believe that much of it is barred by collateral estoppel.

“The collateral estoppel aspect of res judicata will apply as to all

issues which were involved in the prior case even though some factual
matters or legal arguments which could have been presented in the prior
case in support of such issues were not presented. Thus, where two
lawsuits are brought and they arise out of the same alleged factual
situation, and although the causes of action or forms of relief may be
different, the prior determination of an issue in the first lawsuit becomes
conclusive in the subsequent lawsuit between the same parties with respect
to that issue and [530/531]also with respect to every matter which might have
been urged to sustain or defeat its determination. (Pacific Mut. Life Ins.
Co. v. McConnell (1955) 44 Cal. 2d 715, 724–725 [285 P.2d 636] .) If the
legal principle were otherwise, litigation would end finally only when a
party could no longer find counsel whose knowledge and imagination
could conceive of different theories of relief based upon the same factual
background.” (Safeco Insurance Co. v. Tholen, supra, 117 Cal. App. 3d at
p. 697.)

Appellant concedes that with three exceptions, the issues and allegations in
his second complaint are the same as those in his first. We have examined the
complaints and believe this concession is correct. All of the issues and
allegations alleged in the first complaint were actually and necessarily decided
by the trial court in the first action. Consequently, if appellant is to avoid
collateral estoppel, he must do so by relying on the differences he has identified
between the complaints. We discuss these differences below. * * *

First, in his second complaint appellant contends that an amendment to

section 25210.4a (which did not become effective until after his first suit was
final) now clearly “restricts road maintainence [sic] by the County in County
Service Areas to streets and highways owned by the County or dedicated to the
County and maintained by the general public.” He claims this amendment is
relevant to his contention that 33 county service areas improperly provide
maintenance for private roads. Although an intervening change in law might
arguably defeat a claim of collateral estoppel, appellant has failed to delineate
what language in the amendment he is relying on, or to explain how it changes
previous law. * * * We have examined the cited portion of the Public Contracts
Code and find nothing there to support appellant’s position. Appellant has lent
scant assistance to this endeavor. Consequently, we conclude he has failed to
carry his burden on appeal to show that the amendment to section 25210.4a has
defeated respondents’ claim of res judicata.

Secondly, appellant contends that collateral estoppel does not bar the present
action because his second complaint attacks charges for a year different from
those attacked in his first complaint. With two narrow exceptions noted below,
we disagree.

The great bulk of the allegations in appellant’s two complaints are not
affected by the fact that they attack charges levied in different years. For
example, appellant’s contention that respondents may not use service area funds
to maintain “private” roads is not affected by the change in year. Similarly, we
cannot see how the change in year affects appellant’s contention (stated in
essentially identical language in both complaints) that respondents employed an
improper method to calculate or apportion benefit — at least where there is no
allegation that the method changed from one year to the next. Further, appellant
has not suggested how the change in year affected his earlier allegations that
certain county service area charges are “special taxes” within the meaning of
article XIII A, section 4 of the California Constitution, or that the service area
assessments for refuse disposal are improper.

After carefully examining the two complaints and the trial court’s tentative
decision and statement of decision in the first action, we conclude that only two
allegations in the second complaint are not barred by collateral estoppel. These
allegations are: (1) “The staff of defendant Board of Supervisors did not file
with the [531/532]Clerk of the Board a list of each and every parcel in each of the
CSA’s [sic] showing the service charge based upon an apportionment of cost to
benefit … as required by Section 25210.77a … and Santa Cruz County
Ordinance No. 3406”; and (2) “Defendant Board did not hold a public hearing
at which parcel owners and members of the public might protest the service
charges based upon an apportionment of cost to benefit (market value Increase),
as required by Section 25210.77a … and Ordinance No. 3406 ….”

We find that these allegations are not barred by collateral estoppel because
respondents have a duty to file a list of parcel charges and hold a hearing on
those charges each year. Consequently, the trial court’s finding that respondents
satisfied these requirements with respect to the 1984-1985 charges does not
mean that respondents met these procedural requirements for the 1985-1986
charges. We therefore reverse the order of dismissal with respect to these
allegations only.4 * * *

B. Paragraph X In Appellant’s Second Complaint

Does Not State A Cause of Action

Appellant made the following allegation in paragraph X of his second

complaint: “In CSA No. 9D (resurfacing of county roads) the cost of the
resurfacing fell significantly short of the cost estimated for that work at the time
of the creation of CSA No. 9D, and defendant County has diverted that surplus
into other projects not specified in the ordinance establishing CSA No. 9D.
Furthermore, the Federal Emergency Management Agency (FEMA) and the
federal government [have] rebated to defendant County a portion of that cost. [¶]
Under the law of assessment in California defendant County may not divert
those excess monies into other projects and must return those monies to the
owners of parcels assessed in CSA No. 9D.”

Respondents concede that this allegation is not barred by collateral estoppel

since it was not raised in the first action. However, they argued successfully
below that the allegation does not state a cause of action. We agree with this
conclusion. * * *

The judgment of dismissal and order sustaining demurrer without leave to

amend are reversed as to paragraphs V.3 and V.4 of the complaint only. In all
other respects, the judgment and orders appealed from are affirmed. Appellant’s
motion to strike statements from the respondents’ brief is denied. The parties
shall each bear their own costs on appeal. (Cal. Rules of Court, rule 26(a)).

Footnotes:

4 We note that the trial court found these same allegations completely groundless in appellant’s suit
attacking the 1984-1985 charges. Consequently, these allegations might be most expediently disposed of by
a motion for summary judgment, rather than a full trial.

[1] Collateral Estoppel Doctrine, Generally

The California courts usually follow the Restatement (Second) of Judgments

when deciding questions of issue preclusion. Court opinions often quote
extensively from relevant sections of the Restatement, as well as from the
explanations [532/533]contained in the various section “comments.” E.g., Lucido
v. Superior Court, 51 Cal. 3d 335, 272 Cal. Rptr. 767, 795 P.2d 1223 (1990) ;
Perez v. City of San Bruno, 27 Cal. 3d 875, 168 Cal. Rptr. 114, 616 P.2d 1287
(1980); In re Nathaniel P. , 211 Cal. App. 3d 660, 259 Cal. Rptr. 555 (1989)
(quoting § 28(4)); Barker v. Hull, 191 Cal. App. 3d 221, 226, 236 Cal. Rptr.
285 (1987) (quoting § 27, comment d); Sandoval v. Superior Court, 140 Cal.
App. 3d 932, 190 Cal. Rptr. 29 (1983) (relying on § 29 of Second Restatement,
and comments thereunder).

Section 27 of the Restatement (Second) of Judgments states the general rule of

issue preclusion as follows:

When an issue of fact or law is actually litigated and determined by a

valid and final judgment, and the determination is essential to the judgment,
the determination is conclusive in a subsequent action between the parties,
whether on the same or a different claim.

Section 28 provides exceptions to this general rule, most of which have been
adopted by the California courts:

Although an issue is actually litigated and determined by a valid and

final judgment, and the determination is essential to the judgment,
relitigation of the issue in a subsequent action between the parties is not
precluded in the following circumstances:

(1) The party against whom preclusion is sought could not, as a matter
of law, have obtained review of the judgment in the initial action; or

(2) The issue is one of law and (a) the two actions involve claims that
are substantially unrelated, or (b) a new determination is warranted in
order to take account of an intervening change in the applicable legal
context or otherwise to avoid inequitable administration of the laws; or

(3) A new determination of the issue is warranted by differences in

the quality or extensiveness of the procedures followed in the two courts or
 by factors relating to the allocation of jurisdiction between them; or

(4) The party against whom preclusion is sought had a significantly

heavier burden of persuasion with respect to the issue in the initial action
than in the subsequent action; the burden has shifted to his adversary; or the
adversary has a significantly heavier burden than he had in the first action;
or

(5) There is a clear and convincing need for a new determination of

the issue (a) because of the potential adverse impact of the determination
on the public interest or the interests of persons not themselves parties in
the initial action, (b) because it was not sufficiently foreseeable at the time
of the initial action that the issue would arise in the context of a subsequent
action, or (c) because the party sought to be precluded, as a result of the
conduct of his adversary or other special circumstances, did not have an
adequate opportunity or incentive to obtain a full and fair adjudication in
the initial action.

[533/534]

[a] The Basic California Prerequisites

Although California courts do generally rely on the Restatement definitions in

resolving collateral estoppel questions, the most common general statement of
the California doctrine is as follows:

The doctrine of collateral estoppel precludes relitigation of an issue

previously adjudicated if: (1) the issue necessarily decided in the previous
suit is identical to the issue sought to be relitigated; (2) there was a final
judgment on the merits of the previous suit; and (3) the party against whom
the plea is asserted was a party, or in privity with a party, to the previous
suit. Producers Dairy Delivery Co. v. Sentry Ins. Co. 41 Cal. 3d 903, 910,
226 Cal. Rptr. 558, 718 P.2d 920 (1986) ; Bernhard v. Bank of America,
19 Cal. 2d 807, 122 P.2d 892 (1942).

[b] Public Policy Considerations

The California Supreme Court restated these basic prerequisites, and

distinguished between the “threshold requirements” and the public policy
considerations of collateral estoppel, in Lucido v. Superior Court, 51 Cal. 3d
335, 341–43, 272 Cal. Rptr. 767, 795 P.2d 1223 (1990):

Collateral estoppel precludes relitigation of issues argued and

decided in prior proceedings. * * * 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.
***

Even assuming all the threshold requirements are satisfied, however,

our analysis is not at an end. We have repeatedly looked to the public
policies underlying the doctrine before concluding that collateral estoppel
should be applied in a particular setting. * * * Accordingly, the public
policies underlying collateral estoppel — preservation of the integrity of
the judicial system, promotion of judicial economy, and protection of
litigants from harassment by vexatious litigation — strongly influence
whether its application in a particular circumstance would be fair to the
parties and constitutes sound judicial policy.

I n Lucido, the Supreme Court refused to apply collateral estoppel even

though the threshold requirements were satisfied, because to do so would be
inconsistent with these public policies. The Lucido court therefore held that an
issue determination favorable to the defendant in a probation revocation hearing
did not collaterally estop the prosecution from relitigating the identical issue in
a subsequent criminal prosecution. Id. at 347–61.

[534/535]

[c] The “Public Interest” Exception

California courts have long recognized a “public interest” exception to the

doctrine of collateral estoppel. Even if the formal prerequisites to collateral
estoppel are present, an important public interest may permit relitigation of
issues determined in a prior judgment. Cases applying this exception usually
find the requisite overriding public interest in statutes designed to protect the
public. E.g., Chern v. Bank of America, 15 Cal. 3d 866, 872, 127 Cal. Rptr.
110, 544 P.2d 1310 (1978) (exception applied to permit relitigation of certain
banking practices issues based on strong public interest to regulate banking
evidenced by applicable federal and state statutes). These cases often involve a
government entity as the party in whose favor the exception is applied. E.g.,
Arcadia Unified Sch. Dist. v. State Dept. of Ed., 2 Cal. 4th 251, 257–59, 5 Cal.
Rptr. 2d 545, 825 P.2d 438 (1992) (State Department of Education not
collaterally estopped from relitigating constitutionality of statute authorizing
school districts to charge fees for pupil transportation); City of Sacramento v.
State of California, 50 Cal. 3d 51, 64–65, 266 Cal. Rptr. 139, 785 P.2d 522
(1990) (state not collaterally estopped from relitigating issue of whether the
state is required to reimburse local governments for certain unemployment
insurance expenses under California Constitution, even though issue determined
adversely to State in prior lawsuit).

Did the Supreme Court in Lucido rely on this public interest exception to
collateral esoppel? Do public policies of the doctrine of collateral estoppel, as
indentified in Lucido, address the same concerns as the “public interest”
exception? How do these concerns differ? Is it more accurate to view the
Supreme Court’s policy analysis in Lucido as an application of the “public
interest” exception rather than of the public policies underlying collateral
estoppel?

[2] What is an “Identical Issue” for Purposes of Collateral Estoppel?

Collateral estoppel, as traditionally defined by the courts in California, bars

relitigation of an issue decided at a previous proceeding if the issue is
“identical” to the issue sought to be relitigated. One difficulty in applying this
requirement is that issues may not be totally identical in the literal sense of same
time, place, and occurrence; nor in the sense of precisely the same legal context.
How would you define “identical issue” in light of the opinion in Frommhagen
v. Bd. of Supervisors, reproduced supra?

Comment c to Section 27, Restatement (Second) of Judgments (1982), offers

some guidance on this problem of “identical issue”:

c. Dimensions of an issue. One of the most difficult problems in the

application of the rule of this Section is to delineate the issue on which
litigation is, or is not, foreclosed by the prior judgment. The problem
involves a balancing of important interests: on the one hand, a desire not to
deprive a litigant of an adequate day in court; on the other hand, a desire to
prevent repetitious litigation of what is essentially the same dispute. When
there is a lack of total identity between the particular matter presented in
the second action and that presented in the first, there are [535/536]several
factors that should be considered in deciding whether for purposes of the
rule of this Section the “issue” in the two proceedings is the same, for
example: Is there a substantial overlap between the evidence or argument
to be advanced in the second proceeding and that advanced in the first?
Does the new evidence or argument involve application of the same rule of
law as that involved in the prior proceeding? Could pretrial preparation
and discovery relating to the matter presented in the first action reasonably
be expected to have embraced the matter sought to be presented in the
second? How closely related are the claims involved in the two
proceedings?

Sometimes, there is a lack of total identity between the matters

involved in the two proceedings because the events in suit took place at
different times. In some such instances, the overlap is so substantial that
preclusion is plainly appropriate. * * * Preclusion ordinarily is proper if
the question is one of the legal effect of a document identical in all relevant
respects to another document whose effect was adjudicated in a prior
action. And, in the absence of a showing of changed circumstances, a
determination that, for example, a person was disabled, or a nonresident of
the state, in one year will be conclusive with respect to the next as well. In
other instances the burden of showing changed or different circumstances
should be placed on the party against whom the prior judgment is asserted.
* * * In still other instances, the bearing of the first determination is so
marginal because of the separation in time and other factors negating any
similarity that the first judgment may properly be given no effect.

An issue on which relitigation is foreclosed may be one of evidentiary

fact, of “ultimate fact” (i.e., the application of law to fact), or of law. * * *
Thus, for example, if the party against whom preclusion is sought did in
fact litigate an issue of ultimate fact and suffered an adverse determination,
new evidentiary facts may not be brought forward to obtain a different
determination of that ultimate fact. * * *

And similarly if the issue was one of law, new arguments may not be
presented to obtain a different determination of that issue. * * *
 [a] Identical Issues: “Issue” vs. “Legal Theory”

The word “issue” has no universally agreed upon core meaning. In a typical
automobile crash case there may be “issues” of injury, causation, wrongful
conduct and the like. But each of these “issues” may be comprised of several
other “issues” (or “sub-issues”). The issue of wrongful conduct, for example,
may include the following “sub-issues”: Was the collision the result of negligent
conduct by the defendant? Or, did the defendant intentionally cause the collision
(following an argument which, undoubtedly, involved certain hand gestures)?
And the issue of negligent conduct may, in turn, include numerous possible “sub-
issues,” such as: Was the defendant driving too fast for road conditions? Tail-
gating? Was the defendant paying attention? Was the defendant intoxicated? Was
the defendant’s automobile poorly maintained? Etc. And each of these “sub-
issues” may include several other “issues” (or “sub-sub-issues”). For example,
the question of whether or not the defendant driver was paying attention may
include the following “sub-sub-issue”: [536/537]Was the driver looking at a
billboard? Was the driver disciplining his children? Was the driver reading a
map? A magazine? Talking on a cellphone while using a laptop computer and
shaving? (This is California, after all!)

One of the difficulties confronting a court in applying collateral estoppel

doctrine is to determine at what level of generality a prior finding on one
question forecloses relitigation of another question. Assume that plaintiff driver
A sues defendant driver B for property damage to A’s car resulting from an
automobile crash, alleging negligence by defendant B in not paying attention
because B was reading a magazine while driving. After trial, the court rules for
defendant B, finding he was not reading a magazine while driving. A then sues B
in a second action, this time for personal injuries suffered in the crash, alleging
in two alternative counts: (1) negligence by B for failure to pay attention
because B was disciplining his children; and, (2) battery by B for intentionally
bumping into A’s car after an argument. Do these two cases involve identical
issues? This depends on how broadly or narrowly the concept of “issue” is
defined. How broadly should “issue” be defined? What are the consequences of
a broad definition vs. a narrow one?

[b] Different Historical Transaction

In Chern v. Bank of America, 15 Cal. 3d 866, 127 Cal. Rptr. 110, 544 P.2d
1310 (1976), the Supreme Court suggested that collateral estoppel does not
apply in a subsequent action involving parallel facts but concerning a “different
historical transaction.” Chern, 15 Cal. 3d at 871. The plaintiff sued defendant
Bank of America over the allegedly misleading manner by which the Bank
computed loan interest rates. The defendant bank asserted that plaintiff was
collaterally estopped to pursue this issue because she lost a summary judgment
in a prior suit raising the same interest rate computation issue brought against a
different bank. Although the court found collateral estoppel inapplicable on
other grounds, it also stated that collateral estoppel does not apply in a
subsequent action involving parallel facts but concerning a “different historical
transaction.” Id. at 871. Is this statement in Chern consistent with the
Restatement view expressed in comment c to Section 27, supra?

More recently in County of Los Angeles v. County of Los Angeles

Assessment Appeals Board, 13 Cal. App. 4th 102, 16 Cal. Rptr. 2d 479 (1993) ,
the court considered the “different historical transaction” question in an action
brought by the County challenging the propriety of an administrative
determination by its Assessment Appeals Board as to the extent of the taxable
possessory interests of several car rental companies at LAX with respect to tax
years 1983-1987. The Board had rejected the County’s contention that the
companies’ possessory interests extended to the use of the airport generally, and
instead determined that the companies’ possessory interests extended only to
their exclusive counter spaces. The County’s method of assessment had greatly
multiplied the appraised value of their interests, with corresponding increases
in taxes. By disapproving the County’s approach, the Appeals Board reduced
the appraisals for tax years 1983-1987 and awarded the car rental companies
tax refunds. The County then commenced a mandamus action in superior court
seeking reversal of the Board’s administrative decision. The car rental
companies, as the real parties in interest, invoked collateral estoppel based on a
1986 judgment in which the court had found [537/538]that the same companies’
possessory interest for assessment purposes at LAX included only their counter
spaces and that the County’s method of valuation was invalid. The County
argued that collateral estoppel did not apply because the prior litigation
involved different tax years (1982 vs. 1983-87) and different (although
materially identical) concession agreements at LAX. The superior court denied
the mandamus petition, and the County appealed.

The Court of Appeal concluded that the County was foreclosed by collateral
estoppel from relitigating the assessment method issue with respect to the
possessory interests of these car rental companies at LAX. The court found the
issue was identical to the one resolved in the 1986 judgment. The fact that the
present case involved later tax years than the prior litigation did not, according
to the court, “separate the issues or render them nonidentical.” Id. at 109. Do
you agree? Can this case be distinguished from the facts in Chern? If not, which
decision is better reasoned? Why?
 [c] Change in Factual Circumstance

Under what circumstances will a change in the facts between the first and
second actions alter the legal relations between the same parties, such that
collateral estoppel is inapplicable because the issues are no longer identical? In
Evans v. Celotex Corp., 194 Cal. App. 3d 741, 238 Cal. Rptr. 259 (1987) , the
plaintiffs, the widow and children of the deceased Evans, appealed from a
dismissal of their wrongful death complaint against defendant Celotex.
Plaintiffs’ complaint alleged that Evan’s death was caused by exposure to
asbestos products made by defendant. The trial court dismissed the wrongful
death action, finding that plaintiffs were collaterally estopped from proceeding
because of an adverse judgment in a prior personal injury action.

In the prior personal injury action, Evans sued Celotex, claiming that he
developed asbestosis as a result of occupational exposure to asbestos products
manufactured by defendant. A jury returned a general verdict for the defendant.
Evans died two days later. The plaintiffs subsequently filed their wrongful death
action, which was dismissed. Plaintiffs then appealed.

The Court of Appeal found that the identical issues of causation and liability
were raised in the wrongful death action as were raised in the previous personal
injury action, and that the general verdict implied the existence of every fact
essential to support the verdict. Next, the court found that the plaintiffs were in
privity with the deceased Evans, even though the prior personal injury action
was a different cause of action from the wrongful death action. The court,
Evans, supra, 194 Cal. App. 3d at 747–48, then considered plaintiff’s argument
that the issues in the two actions were not identical because of a change in
factual circumstances:

Plaintiffs argue that collateral estoppel cannot be applied if new facts

have occurred since the judgment on the prior hearing. They claim that a
lung biopsy could not be performed while the deceased was alive and that
a pathological diagnosis of lung tissue was performed only after his death.
Plaintiffs contend that based on the evidence available at the trial of the
personal injury action, the jury concluded that the deceased’s progressive
[538/539]deterioration was not from asbestosis but from another disease; that
as a result of the better diagnostic evaluation following the autopsy,
asbestosis could be proved to be the proximate cause of his death.
Plaintiffs have not indicated what this biopsy showed and how it differed,
if at all, from the evidence adduced at the personal injury trial.

I n Melendres v. City of Los Angeles (1974) 40 Cal. App. 3d 718

[115 Cal. Rptr. 409] , members of the police and fire departments sued the
city council to make increased salary adjustments that reflected prevailing
wages in private industry as provided by the city charter. In a prior action
involving the same parties 10 years earlier, the appellate court affirmed the
council’s finding that the charter provision did not apply because there was
no corresponding job classification in private industry. At the time of the
second suit, the city had adopted a plan (the Jacobs plan) of a consultant
firm which created a method to enable the city to ascertain wages for
sworn personnel corresponding to the prevailing wages paid to civilian
employees with private industry job counterparts. (Id., at p.724) Citing the
prior litigation, the city argued that plaintiffs were collaterally estopped
from requesting the city to pay prevailing wages as performed by persons
in private industry. The trial court and reviewing court disagreed, holding
that collateral estoppel does not bar a later suit if new facts of changed
circumstances have occurred since the prior decision. (Id., at p.730) The
presence of the Jacobs plan, which did not exist at the time of the prior
litigation, was deemed a sufficient change of circumstance to bar the
application of collateral estoppel.

Res judicata or collateral estoppel “was never intended to operate so

as to prevent a re-examination of the same question between the same
parties where, in the interval between the first and second actions, the facts
have materially changed or new facts have occurred which may have
altered the legal rights or relations of the litigants.” (Hurd v. Albert (1931)
214 Cal. 15, 26 [3 P.2d 545, 76 A.L.R. 1348] .) Unlike the situation in
Melendres, here, no new facts or issues came to light since the prior
litigation. The legal relationship of the deceased vis-a-vis Celotex had not
changed and there were no new events or conditions which altered the
respective rights of the parties or caused a different legal doctrine to be
applied. (Compare Hurd v. Albert, supra, at pp. 26–27 [facts changed
since the prior litigation to make the enforcement of a restrictive covenant
on property unenforceable] …. Here, the additional test performed during
the autopsy simply goes to the weight of the evidence against Celotex; i.e.,
this evidence did not establish a previously undiscovered theory of
liability nor did it denote a change in the parties’ legal rights. An exception
to collateral estoppel cannot be grounded on the alleged discovery of more
persuasive evidence. Otherwise, there would be no end to litigation.
Accordingly, we hold that the results from the lung biopsy do not operate to
 prevent the application of collateral estoppel.

The judgment of dismissal is affirmed.

Do you agree with the Court of Appeal that no new facts came to light since
the [539/540]personal injury judgment which altered the legal relationship between
the parties? Do you agree that the situation in Melendres is different from that in
Evans v. Celotex? Is Evans consistent with comment c to § 27 of the
Restatement? Is Melendres? Was Evans correctly decided? See Smith v.
ExxonMobil Oil Corp., 153 Cal. App. 4th 1407, 1419, n. 7, 64 Cal. Rptr. 3d 69
(2007) (noting the Evans court’s conclusion can only be justified if the plaintiffs
were previously able to obtain and present evidence that death was caused by
asbestos, and the biopsy did not provide substantially stronger evidence).

[d] Scrutiny of Facts Necessary

Sometimes the determination of whether issues are identical depends on the

court’s willingness to engage in a detailed examination of the facts. Consider the
following cases:

(1) Oro Fino Gold Mining Corp. v. County of El Dorado, 225 Cal. App. 3d
872, 274 Cal. Rptr. 720 (1990). The petitioner mining company appealed the
county’s denial of a special use permit for a mineral exploration project. The
County had determined that before Oro’s permit application could be
reconsidered, an environmental impact report (EIR) would have to be drafted.
Oro contended that the county is collaterally estopped from litigating the issue
of whether an EIR is required because that issue was judicially determined
adversely to the County in a prior case. The prior case involved judicial
approval of a special use permit granted without the requirement of an EIR for a
much larger mineral exploration project on land adjacent to the proposed Oro
project.

Noting that Oro’s argument had a certain appeal on the surface, the court
decided to “dig a bit deeper.” The court then analyzed differences in the two
drilling sites in relation to residential impact, the drilling methods, and the
limitations imposed on the prior project’s permit. The court found significant
distinctions in the two projects, and therefore that collateral estoppel did not
apply because the EIR issue was not “identical” in the two lawsuits.
 (2) Amador v. Unemployment Ins. Appeals Bd., 35 Cal. 3d 671, 200 Cal.
Rptr. 298, 677 P.2d 224 (1984) . The Supreme Court refused to collaterally
estop the petitioner from litigating the issue of “misconduct” in her appeal from
denial of unemployment insurance compensation benefits before the
Unemployment Insurance Appeals Board, despite an earlier finding by the
County Civil Service Commission that she could be discharged for
“insubordination.” The Supreme Court concluded that the two issues were not
identical because the issue of “insubordination” under the county civil service
rules only requires a finding that an employee has willfully failed to perform a
reasonable act, whereas the issue of “misconduct” under the Unemployment
Insurance Code requires a finding of bad faith insubordination “without good
cause.”

(3) Bianchi v. City of San Diego, 214 Cal. App. 3d 563, 262 Cal. Rptr. 566
(1989). The court declined to give a collateral estoppel effect to a Workers’
Compensation Appeals Board finding of a policeman’s “permanent disability”
in a subsequent City Retirement Board hearing determining whether the
policeman was permanently incapacitated from performing his job. The court
held that the issues in the two proceedings were not identical. The workers’
compensation proceeding decided [540/541]whether the employee suffered any
job-related injury; if that injury resulted in some permanent (although partial)
residual loss, the board awards a permanent disability rating. In contrast, the
Retirement Board focuses on a different issue: Whether the employee has
suffered an injury of such magnitude that he is incapacitated from substantially
performing his job responsibilities. Does this mean that a finding of permanent
disability by a Workers Compensation Board can never have a collateral
estoppel effect on a subsequent Retirement Board proceeding?

[e] Different Legal Context

Collateral estoppel may not apply where the same issue arises in different
legal contexts. For example, in Ruffalo v. Patterson, 234 Cal. App. 3d 341, 285
Cal. Rptr. 647 (1991), the plaintiff sued her former attorney for malpractice,
alleging that he negligently instructed her to characterize certain property as
community property in her prior dissolution of marriage action. Defendant
attorney argued that plaintiff was collaterally estopped by the dissolution
court’s determination from raising issues with respect to the community or
separate character of plaintiff’s property in this malpractice action. The Court of
Appeal disagreed, noting that plaintiff does not seek a redetermination as to the
character of her property but seeks to recover for alleged negligence in
instructing her to characterize the property as community property. Therefore,
the court concluded that the doctrine of collateral estoppel does not apply.
 Do you agree with the court’s reasoning in Ruffalo? Doesn’t the court
necessarily have to determine that the property was plaintiff’s separate property
in order to find that defendant committed malpractice? Doesn’t this constitute a
relitigation of the identical property issue determined in the prior dissolution
proceeding? The court in an earlier case thought so, and on facts almost
identical to those in Ruffalo concluded that the malpractice action was barred
by collateral estoppel. See Wall v. Donovan , 113 Cal. App. 3d 122, 169 Cal.
Rptr. 644 (1980). What policy considerations support the holding in Ruffalo,
and make the conclusion in Wall v. Donovan very unattractive?

Does the resolution of an issue by a sister state court applying that state’s law
preclude relitigation of that issue by a California court applying California law,
under the identical facts, in a subsequent cause of action between the same
parties? See American Continental Ins. Co. v. American Casualty Co., 86 Cal.
App. 4th 929, 103 Cal. Rptr. 2d 632 (2001), holding that an Arizona court’s
resolution of an issue of equitable contribution between two insurance
companies under Arizona law did not preclude relitigation of that issue by a
California court under California law is a subsequent action between the same
parties because the “same issue” was not actually litigated and determined in
the prior litigation. Would the holding be the same if the Arizona court had
applied California law to this issue? If the Arizona law was the same as the
California law on this issue?

[541/542]

[f] Different Standards of Proof

Collateral estoppel will not bar relitigation of an issue where the adversary
in the second action has a significantly heavier burden of proof that he had in the
first action. See, e.g., In re Nathaniel P. , 211 Cal. App. 3d 660, 259 Cal. Rptr.
555 (1989) (a finding in a dependency proceeding that a father physically and
sexually abused his children under a preponderance of the evidence standard
did not preclude relitigation of the same issue by the father in a subsequent
action to terminate his parental rights, where the standard is clear and
convincing evidence); see also People v. Sims, 32 Cal. 3d 468, 485, 186 Cal.
Rptr. 77, 651 P.2d 321 (1982) . Does prior acquittal in a criminal action bar
relitigation of the same issues by the state against the defendant in a subsequent
civil action? See In re Couglin, 16 Cal. 3d 52, 58–59, 127 Cal. Rptr. 337, 545
P.2d 249 (1976) ; § 28(4), Restatement (Second) of Judgments (1982). Does a
finding for the state in a civil action preclude relitigation of the same issues by
the defendant in a related subsequent criminal action? Does a finding for the
defendant and against the plaintiff state in a civil action bar the state from
prosecuting the same issue in a subsequent criminal proceeding? See People v.
Sims, supra.

What is the collateral estoppel effect of a criminal conviction on litigation of

the same issues against the defendant in a subsequent civil action? See
Teitelbaum Furs, Inc. v. Dominion Ins. Co ., 58 Cal. 2d 601, 25 Cal. Rptr. 559,
375 P.2d 439 (1962) . Where the prior criminal conviction was the result of a
guilty plea? See id.; Pease v. Pease, 201 Cal. App. 3d 29, 246 Cal. Rptr. 762
(1988) (collecting cases).

[3] Issues Actually Litigated and Determined

One of the most troublesome requirements of the California collateral

estoppel doctrine is that issues be “actually litigated and determined” in the
prior action. This prerequisite has several problematic aspects.

[a] “Issues” vs. “Theories”

California courts often describe the collateral estoppel effect of a prior

judgment as precluding relitigation of “matters which were raised or could have
been raised, or matters litigated or litigable,” quoting Sutphin v. Speik, supra,
15 Cal. 2d at 202. See, e.g., Tensor Group v. City of Glendale , 14 Cal. App.
4th 154, 160, 17 Cal. Rptr. 2d 639 (1993); Interinsurance Exchange of the
Auto. Club v. Superior Court, 209 Cal. App. 3d 177, 182, 257 Cal. Rptr. 37
(1989). Does this mean that collateral estoppel precludes litigation of not only
issues that were actually litigated and determined in a prior case on a different
cause of action, but also issues that could have been litigated but were not? Is
this what the Supreme Court meant in Sutphin v. Speik? Defendant Speik thought
so, and petitioned the court for a rehearing. Does the opinion accompanying the
rehearing denial clarify the Supreme Court’s position?

(1) Restatement View. Section 27 of the Restatement (Second) of Judgments,

comment c, notes: “A judgment is not conclusive in a subsequent action as to
issues which might have been but were not litigated and determined in the prior
action.” Is Sutphin inconsistent with the Restatement? Is there any way to
reconcile [542/543]Sutphin and its progeny with the view expressed by the
Restatement in comment c? Is this another example of inadequate terminology
employed by the courts in discussing res judicata/collateral estoppel questions?
Or is the difference between Sutphin and the Restatement view much deeper
than merely sloppy use of nomenclature? Would it help if the California courts
clearly distinguished the concepts of “issues” versus “theories,” and then
consistently used these terms in their analyses? Or do these concepts and terms
simply create a new problem of classification?

(2) Is a Consistent Rule Possible? At the end of its opinion in Frommhagen,

the Court of Appeal noted that the allegation in Paragraph X of the second
complaint was not barred by collateral estoppel “since it was not raised in the
first action.” Is this holding consistent with Sutphin? Based on Sutphin and
Frommhagen, how would you state the doctrinal rules which define the
requirement that only issues “actually litigated and determined” in a prior action
are precluded?

(3) Different Rule for Defenses? In Sutphin, the court precluded litigation of
matters that were available to the defendant as defenses in the prior action, but
were not actually raised or determined. Comment e, Section 27 of the
Restatement (Second) of Judgments explains when an issue is not actually
litigated as follows: “An issue is not actually litigated if the defendant might
have interposed it as an affirmative defense but failed to do so ….” Is there any
way to reconcile the holding in Sutphin with the Restatement view? What policy
considerations underlie the Restatement view? See comment e, supra. The
California view? In light of these policy considerations, should the Sutphin
rationale be limited only to matters raised by plaintiffs, and not to defenses that
could have been raised by defendants in a prior proceeding?

(4) The lower courts continue to struggle with the distinction between
“issues” and “theories” made by the California Supreme Court in the
Supplemental Opinion in Sutphin v. Speik, 15 Cal. 2d at 204, reproduced supra.
See, e.g, Wimsatt v. Beverly Hills Weight Loss Clinics Intl., Inc ., 32 Cal. App.
4th 1511, 38 Cal. Rptr. 2d 612 (1995) (observing that the distinction between
“issues” and “theories” is not always easy); Marriage of Mason, 46 Cal. App.
4th 1025, 54 Cal. Rptr. 2d 263 (1996).

In Marriage of Mason, supra, Marjorie and Raymond Mason’s marriage was

dissolved by a judgment entered in 1993. Prior to this judgment, Majorie had
operated a residential care facility at home and closed the business due to ill
health. The dissolution judgment allocated various amounts of marital property
to the parties, as well as spousal support. Subsequently, Raymond commenced
an attack on the prior judgment, claiming that the goodwill component of the
business was an “omitted asset” and worth $157,000. The superior court
rejected Raymond’s claim on the ground that the business was a known asset
that was divided by the prior judgment, and commented that “if [husband] …
didn’t raise the goodwill issue that is his tough luck.” Marriage of Mason,
supra, 46 Cal. App. 4th at 1028. The Court of Appeal affirmed. The court
observed that a “party cannot by negligence or design withhold issues and
litigate them in consecutive actions.” 46 Cal. App. 4th at 1028. The court
continued by quoting language from Sutphin v. Speik: “Hence the rule is that the
prior judgment is res judicata on matters which [543/544]were raised or could
have been raised, on matters litigated or litigable.” Marriage of Mason, supra,
46 Cal. App. 4th at 1028.

The holding in Marriage of Mason seems to conflict with the holding in

Henn v. Henn, 26 Cal. 3d 323, 161 Cal. Rptr. 502, 605 P.2d 10 (1980) , in
which the California Supreme Court considered the collateral estoppel effect of
a prior dissolution of marriage judgment on a subsequent action to establish
community property interest in a pension which was not specifically adjudicated
in the final decree of dissolution. A superior court had entered a final judgment
in 1971 that awarded Henry and Helen Henn specific items of marital property
as their separate property. Neither the pleadings nor the judgment made any
mention of Henry’s retirement pension. Although both parties were fully aware
of its existence at the time of the dissolution proceedings, the parties did not
seek, and the court did not determine, the community property rights with
respect to the pension. In 1973, Helen filed a second action to establish her
community property rights in her ex-husband’s pension. Defendant Henry raised
the defense of res judicata. The Supreme Court ruled that the claim preclusion
aspect did not completely bar Helen’s action, and then considered the effect of
the issue preclusion aspect.

Defendant Henry Henn argued that the issue of Helen’s entitlement to the
assets of the community had been “actually litigated and determined” by the
prior judgment. Helen argued that the prior judgment had not adjudicated the
specific issue of her community property interest in the pension. The California
Supreme Court determined that the “doctrine of collateral estoppel cannot be
stretched to compel” the result urged by Henry. The Court explained that “the
rule prohibiting the raising of any factual or legal contentions which were not
actually asserted but which were within the scope of the prior action” does not
mean “that issues not litigated and determined are binding in a subsequent
proceeding on a new cause of action.” Henn, supra, 26 Cal. 3d at 331.
“Rather,” the court continued, “it means that once an issue is litigated and
determined, it is binding in a subsequent action notwithstanding that a party may
have omitted to raise matters for or against it which if asserted may have
produced a different outcome.” Id. The Court therefore concluded that the
doctrine of collateral estoppel was not applicable because “Henry failed to
demonstrate that Helen is relying upon some specific factual or legal contention
which could have been relevant to the property distributed in the 1971 decree if
it had been raised.” Id. In other words, the specific issue of Helen’s interest in
the pension was not “actually litigated and determined” by the prior
adjudication of the parties’ community property rights generally.

The Court in Henn v. Henn choose to define the “issue” actually litigated and
determined in the prior dissolution judgment in a narrow manner so as not to
include the parties’ community property rights in the pension. The court in
Marriage of Mason choose to define the “issue” determined more broadly, and
viewed the goodwill of the wife’s business as merely a component or sub-issue
of the property already distributed by the prior dissolution judgment. Which
definition of the “issue” determined is the proper one? Which one is
incompatible with the Court’s reasoning in Sutphin? If neither definition
appears clearly incompatible with the reasoning in Sutphin, is there a problem
with Sutphin’s definition of the “issue” foreclosed by collateral estoppel?

[544/545]

(5) In Murray v. Alaska Airlines, Inc., 50 Cal. 4th 860, 114 Cal. Rptr. 3d
241, 237 P.3d 565 (2010) , the Supreme Court considered the issue-preclusive
effect of a prior federal agency’s investigative findings. The plaintiff, a quality
assurance auditor for the defendant airline, lost his job after he brought safety
concerns to the attention of the FAA. He subsequently filed an administrative
complaint with the U.S. Secretary of Labor under the federal whistleblower
statute, invoking a federal administrative process that was voluntary and
optional. The Secretary of Labor conducted an investigation during which the
defendant airline submitted documents and testimony, but the Secretary never
contacted the plaintiff.

Upon completion of this one-sided investigation, the Secretary determined

that the record filed to establish any causal connection between the plaintiff’s
termination and his whistleblower activity. The plaintiff did not file objections
to the Secretary’s findings and did not request a formal adjudicatory hearing to
determine the contested issues de novo, both options available to him under the
federal administrative process. Consequently, pursuant to the federal
whistleblower statute, the Secretary’s findings became final and unappealable.

Plaintiff then commenced a court action against the defendant airline, alleging
wrongful termination and retaliation for whistle-blowing in violation of the
public policy of California. The trial court granted summary judgment for the
defendant based on collateral estoppel. A majority of the Supreme Court
concluded because the plaintiff had an opportunity to fully contest the
Secretary’s determination through a judicial-like administrative procedure but
chose not to do so, the dispositive issue of causation was “actually litigated” for
purposes of collateral estoppel, even though the administrative complaint
procedure was voluntary and optional and not a prerequisite to filing the state
court wrongful termination action. Murray, supra, 50 Cal. 4th 877–78. The
dissent strongly disagreed, reasoning that the Secretary’s findings on causation
should not have an issue-preclusive effect because these findings were rendered
without any prior opportunity for a hearing, the submission of evidence, the
confrontation of witnesses, or the presentation of argument. Murray, 50 Cal. 4th
883–89 (Werdegar, J., dissenting).

Do you agree with the majority or the dissent in Murray? Why? Is the
majority in Murray in effect imposing collateral estoppel as a sanction for
failing to exhaust the federal administrative process even though that process
was voluntary, optional, and not a prerequisite to suit?

[b] Identifying Issues “Actually Litigated and Determined”

A second troublesome problem is the identification of the issues that were

actually litigated and determined by a prior judgment. This process is not
difficult where the court has entered detailed findings of fact and conclusions of
law, but can be problematic where there is only a general verdict or judgment.
See Harris v. Grimes, 104 Cal. App. 4th 180, 187, 127 Cal. Rptr. 2d 791
(2002) (no collateral estoppel effect where jury rendered a general verdict
without special findings). In such circumstances, how does a subsequent court
determine which issues were “actually litigated” by the prior judgment?

[545/546]

The party asserting collateral estoppel has the burden of proving that the issue
was “raised, actually submitted for determination and determined.” Barker v.
Hull, 191 Cal. App. 3d 221, 236 Cal. Rptr. 285 (1987) . An issue is actually
litigated only when it is raised by the pleadings and factually resolved either by
proof or by failure of proof. Betyar v. Pierce , 205 Cal. App. 3d 1250, 1254,
252 Cal. Rptr. 907 (1988). “For purposes of applying collateral estoppel,
evidence extrinsic to the judgment roll may be used to ascertain what issues
were determined in the former action.” Southwell v. Mallery, Stern & Warford ,
194 Cal. App. 3d 140, 144, 239 Cal. Rptr. 371 (1987) ; see also Bronco Wine
Co. v. Frank A. Logoluso Farms, 214 Cal. App. 3d 699, 709, 262 Cal. Rptr.
899 (1989).

Consequently, in addition to the pleadings and the judgment in the prior

proceeding, a court may examine the reporter’s transcript, Southwell v.
Mallery, Stern & Warford, supra; the minute order or opinion of the trial judge,
McClain v. Rush, 216 Cal. App. 3d 18, 264 Cal. Rptr. 563 (1989) ; or even the
appellate opinion in the prior proceeding, see Rutherford v. State of
California, 188 Cal. App. 3d 1267, 233 Cal. Rptr. 781 (1987) . But where it is
not possible to ascertain from the record what issue was determined in a prior
court’s ruling, that court’s decision will not have a collateral estoppel effect
even though certain issues were raised and could have been the basis for the
prior court’s action. Henn v. Henn, supra, 26 Cal. 3d at 331–32.

A court may take judicial notice of the entire file in a prior action. Evidence
Code §§ 452(d), 459. May a court also consider declarations submitted by the
attorneys as to what was actually presented for determination in the prior case?
See Barker v. Hull, supra. May it consider declarations of an arbitrator as to
what issues were submitted for decision and determined in making an
arbitration award? See Sartor v. Superior Court, 136 Cal. App. 3d 322, 327,
187 Cal. Rptr. 247 (1982).

The party asserting collateral estoppel must not only prove that an issue was
actually determined in the prior action, but also that the resisting party had a full
opportunity to present the issue during the prior proceeding. Does this mean that
an exhaustive adversarial hearing with oral testimony must have been held on
each such issue? Or may the court restrict the presentation of an issue to
declarations when, for example, the prior case was resolved through a motion to
vacate a default judgment? See Barker v. Hull, supra (and cases discussed
therein); Groves v. Peterson, 100 Cal. App. 4th 659, 667–69, 123 Cal. Rptr. 2d
164 (2002) (collecting cares).

[c] Collateral Estoppel Effect of Default Judgment

A default judgment constitutes a judgment on the merits and, as such, will

have a res judicata (claim preclusion) effect on subsequent actions, so long as
the default is a valid judgment. See discussion of Res Judicata and Default
Judgments, § 8.02[F][4][a] supra. However, does a default judgment also have
a collateral estoppel (issue preclusion) effect?

The Restatement (Second) of Judgments, Section 27, comment e, states that in

the case of a judgment entered by default, none of the issues are actually
litigated. Consequently, the Restatement view is that a default judgment has no
collateral [546/547]estoppel effect with respect to any issue raised in a subsequent
action. Do the California courts follow the Restatement view? Apparently not.
See, e.g., Mitchell v. Jones, 172 Cal. App. 2d 580, 586, 342 P.2d 603 (1959)
(“[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.”). For example, in County of San Diego v. Hotz, 168
Cal. App. 3d 605, 214 Cal. Rptr. 658 (1985) , the court held that an Iowa
dissolution degree entered by default which contained express findings that Hotz
was the father of a child collaterally estopped defendant Hotz from contesting
the issue of paternity in a subsequent action by the County of San Diego for
support and reimbursement of welfare given the child.

A default judgment will have a collateral estoppel effect only as to material

issues actually raised in the pleadings. English v. English, 9 Cal. 2d 358, 70
P.2d 625 (1937) ; Four Star Electric Inc. v. Feh Construction, 7 Cal. App. 4th
1375, 10 Cal. Rptr. 2d 1 (1992); see Murray v. Alaska Airlines, Inc., 50 Cal.
4th 860, 871, 114 Cal. Rptr. 3d 241, 237 P.3d 565 (2010) (indicating in dicta
that a default judgment is res judicata as to all issues aptly pleaded in the
complaint and the defendant is estopped from denying in a subsequent action any
allegations contained in the former complaint). Collateral estoppel will not,
however, preclude litigation of available defenses not raised by the defendant in
the prior default judgment but sought to be raised by defendant in a later suit on
a different cause of action. English v. English, supra, 9 Cal. 2d at 363. Is there
any reason to distinguish between cases where a defense is not raised due to a
default judgment, and where, as in Sutphin v. Speik, supra, a defense is neither
raised nor litigated although the merits are contested? For a critical analysis of
this distinction, see Arlo E. Smith, Comment, Res Judicata in California, 40
Cal. L. Rev. 412, 421–23 (1952).

[d] Retraxit
 A voluntary dismissal with prejudice, referred to as a “retraxit” at common
law, constitutes a determination on the merits and has a res judicata (claim
preclusion) effect. See Res Judicata discussion, § 8.02[F][5][e] supra. Does a
dismissal with prejudice also have a collateral estoppel effect which precludes
litigation of issues in a separate lawsuit? The court in Torrey Pines Bank v.
Superior Court, 216 Cal. App. 3d 813, 820–24, 265 Cal. Rptr. 217 (1989) ,
concluded that a voluntary dismissal with prejudice of a prior action barred the
assertion of affirmative defenses which raised the same issues in a subsequent
action. One justice dissented, reasoning that since no issues were “actually
litigated” by the prior voluntary dismissal, this retraxit can have no issue
preclusive effect. Id. at 825–29. Do you agree with the majority or dissent in
Torrey Pines Bank ? Why? Several recent decisions have adopted the dissent’s
view. E.g., Le Parc Community Assn. v. Workers’ Comp. Appeals Bd ., 110
Cal. App. 4th 1161, 1174–75, 2 Cal. Rptr. 3d 408 (2003) (even though a
dismissal with prejudice is “on the merits,” because the case was voluntarily
dismissed pursuant to the parties’ settlement agreement, nothing was “actually
litigated” or necessarily decided in that action); Rice v. Crow, 81 Cal. App. 4th
725, 97 Cal. Rptr. 2d 110 (2000) (a voluntary dismissal with prejudice pursuant
[547/548]to a settlement does not have an issue preclusion effect because no issues
have been actually litigated by the settlement). However, another recent
decision disagreed with the dissent in Torrey Pines and followed the majority
opinion. Alpha Mechanical, Heating & Air Conditioning, Inc. v. Travelers
Cas. & Surety Co., 133 Cal. App. 4th 1319, 35 Cal. Rptr. 3d 496 (2005).

[e] Stipulated Judgments

What is the issue preclusive effect of a prior stipulated judgment? Several

courts have applied the “raised or could have been raised” rationale of Sutphin
v. Speik to justify the extension of collateral estoppel to a stipulated judgment.
See, e.g., California State Auto. Assn. Interinsurance Bureau v. Superior
Court, 50 Cal. 3d 658, 664–65, n.2, 667, 268 Cal. Rptr. 284, 788 P.2d 1156
(1990) (collecting cases and ruling that a stipulated judgment may properly be
given a collateral estoppel effect as to all issues of liability, unless the scope of
such issue preclusion is restricted by the parties); Wittman v. Chrysler Corp.,
199 Cal. App. 3d 586, 591–593, 245 Cal. Rptr. 20 (1988) (ruling that a consent
judgment had a collateral estoppel effect on issues raised in the pleadings
although abandoned by a party); Marriage of Buckley, 133 Cal. App. 3d 927,
935, 184 Cal. Rptr. 290 (1982) (ruling that a stipulated judgment determines all
matters put into issue by the pleadings, and has a collateral estoppel effect on
such issues unless the parties agree otherwise); but see Landeros v. Pankey , 39
Cal. App. 4th 1167, 46 Cal. Rptr. 2d 165 (1995) (relying on comment (e) to §
27 of the second Restatement and holding that a stipulated judgment in a prior
unlawful detainer action did not preclude litigation of a habitability issue in the
instant action because the stipulated judgment contained no express language
manifesting an intention of the parties to preclude litigation of this issue).

[f] Need for Clearer Collateral Estoppel Guidelines

As the cases in the preceding paragraph indicate, the California courts

sometimes have taken contradictory approaches to the “actually litigated and
determined” requirement, thereby introducing uncertainty and unpredictability
into the issue preclusion analysis. For a thorough discussion of these and other
problems associated with California’s current issue preclusion doctrine, see
Walter W. Heiser, California’s Confusing Collateral Estoppel (Issue
Preclusion) Doctrine, 35 San Diego L. Rev. 509 (1998). Professor Heiser
argues that the “actually litigated and determined” requirement should be
applied in an underinclusive manner. In other words, whenever the proper
application of this requirement is in doubt, the court should err on the side of
underinclusion and find issue preclusion inappropriate. Professor Heiser also
recommends that the California Supreme Court should disapprove of the overly
broad language in Sutphin, and should adhere more faithfully to the issue
preclusion standards of the Restatement (Second) of Judgments.

[548/549]

[4] Issue “Necessarily Decided” in Prior Proceeding

[a] The “Necessary” Requirement, Generally

Collateral estoppel bars relitigation of an issue determined in a prior

proceeding, but only if resolution of that issue was necessary to the prior
judgment. See, e.g., Bronco Wine Co v. Frank A. Logoluso Farms , 214 Cal.
App. 3d 699, 262 Cal. Rptr. 899 (1989) (finding by court as to amount of
contract damages in upholding administrative suspension of defendant’s wine
producer’s license did not preclude court from determining amount of contract
damages in subsequent breach of contract action by growers against defendant
because finding in first proceeding was unnecessary to that judgment); Marriage
of Rabkin, 179 Cal. App. 3d 1071, 225 Cal. Rptr. 219 (1986) (statement by trial
court in order granting temporary increase in spousal support because marital
residence not yet sold — that such sale would constitute a change in
circumstances justifying a future modification in spousal support — was
unnecessary to that court’s decision, so given no collateral estoppel effect). In
Lucido v. Superior Court, 51 Cal. 3d 335, 342, 272 Cal. Rptr. 767, 795 P.2d
1223 (1990), the Supreme Court construed this requirement to mean that the
issue must not have been “entirely unnecessary” to the judgment in the prior
proceeding.

What are the policy reasons for this “necessary” requirement? Should it apply
where the parties have thoroughly litigated, and the court has actually
determined, an issue in the mistaken belief that resolution of the issue was
“necessary” to the previous judgment?

[b] The Alternative Grounds Rule

An interesting application of this “necessary” requirement is where a

judgment is based on two or more alternative grounds and either ground,
standing alone, could support the judgment. Early California decisions, such as
Wall v. Donovan, 113 Cal. App. 3d 122, 169 Cal. Rptr. 644 (1980) , applied the
First Restatement of Judgments (adopted 1946) Section 68, comment (n), which
the Wall court considered to be the California rule: “Where the judgment is
based upon the matters litigated as alternative grounds, the judgment is
determinative on both grounds, although either would have been sufficient to
support the judgment.”

What is the rationale behind this alternative grounds rule? How can an issue
be “necessary” to a judgment where there is another independent issue on which
to base the judgment? Note that the Restatement (Second) of Judgments, adopted
in 1982, changed the rule stated in the First Restatement. The Second
Restatement, Section 27, comment i, now provides: “If a judgment of a court of
first instance is based on determinations of two issues, either of which standing
independently would be sufficient to support the result, the judgment is not
conclusive with respect to either issue standing alone.” But if one or both of the
alternative determinations is affirmed on appeal, the prior judgment is
conclusive as to any such affirmed determination. Section 27, Restatement
(Second) of Judgments (1982), comment (o).

More recently, the California courts have adopted the Second Restatement
[549/550]approach and announced the following rule: Where a trial court decides
a case on two alternative grounds and the reviewing court affirms based on one
of those grounds, declining to consider the other, the judgment is binding for
purposes of collateral estoppel only on the ground addressed by the appellate
court. E.g., Newport Beach Country Club, Inc. v. Founding Members of the
Newport Beach Country Club, 140 Cal. App. 4th 1120, 45 Cal. Rptr. 3d 207
(2006); Zevnik v. Superior Court, 159 Cal. App. 4th 76, 70 Cal. Rptr. 3d 817
(2008); Butcher v. Truck Ins. Exchange , 77 Cal. App. 4th 1442, 1460, 92 Cal.
Rptr. 2d 521 (2000).

Which rule makes more sense, in light of the policies behind collateral
estoppel? For a spirited defense of the old Restatement rule applied in Wall v.
Donovan, see Adam Siegler, Alternative Grounds In Collateral Estoppel, 17
Loy. L.A. L. Rev. 1085 (1984).

[5] Issues of Law

Collateral estoppel precludes relitigation of issues of law actually litigated

and determined between the parties in a previous action on a different cause of
action, as well as issues of fact. But the doctrine is much more flexible when
applied to issues of law. See, e.g., City of Sacramento v. State of California,
50 Cal. 3d 51, 64, 266 Cal. Rptr. 139, 785 P.2d 522 (1990) (public interest
exception permitted state, which lost issue of law in prior action of whether
state must reimburse local agencies for certain unemployment insurance
expenditure, to relitigate same issue in current class action); Rutherford v. State
of California, 188 Cal. App. 3d 1267, 1283–84, 233 Cal. Rptr. 781 (1987)
(Department of Fish and Game not collaterally estopped from relitigating
constitutionality of Section 1603 of Fish and Game Code, despite apparent
ruling in prior criminal case involving same private parties that the section is
unconstitutional, based on public interest exception).

[C] Collateral Estoppel and Mutuality

[1] Introductory Note on Mutuality

Assume the following facts: Mrs. Clara Sather, an elderly woman, lived with
Mr. and Mrs. Charles Cook. Mr. Cook opened an account with Bank of America
in the name of Mrs. Sather, and deposited monies in it from Sather’s other
accounts. Cook used this account to write checks to cover Sather’s expenses.
Sather agreed to transfer all her funds to this Bank of America account. Mr.
Cook eventually withdrew the entire balance and deposited it in his own
personal bank account.

Mrs. Sather died shortly thereafter, and Cook became the executor of her
estate. After several years, Cook filed an accounting with the Probate Court,
along with his resignation. Several beneficiaries under Sather’s will objected to
the accounting because Cook failed to include the funds transferred by Sather to
the Bank of America account. The Probate Court rejected these objections and
settled the accounting, finding that during her lifetime, Mrs. Sather made a gift to
Cook of the amount of the deposit in question.

After Cook’s discharge, one of the beneficiaries, Helen Bernhard, was

appointed administratrix. She initiated an action against Bank of America
seeking to recover [550/551]the deposit on the grounds that the Bank was indebted
to the estate for this amount because Sather never authorized its withdrawal.
Defendant Bank pleaded an affirmative defense of collateral estoppel based on
the prior finding that Sather had made a gift of the money in question. Plaintiff
Bernhard contended that the doctrine of collateral estoppel did not apply
because the defendant Bank, which was asserting the defense, was not a party to
the previous action and therefore there was no mutuality of estoppel. Does
collateral estoppel apply?

For many years, California courts and those of all other states would not have
collaterally estopped the plaintiff administratrix from relitigating the issue of the
propriety of the deposit withdrawal because of a lack of “mutuality.” See
generally E.H. Schopler, Annotation, Mutuality of Estoppel As Prerequisite of
Availability of Doctrine of Collateral Estoppel to a Stranger to the Judgment,
31 A.L.R.3d 1044–99 (1970) (collecting cases). The concept of “mutuality” had
many complicated niceties, but in essence, the doctrine required that a party
asserting collateral estoppel in a present proceeding must have been the same
party, or in privity with a party, in the previous litigation. Id.

[2] Mutuality Doctrine Rejected

The California Supreme Court rejected the mutuality doctrine in the landmark
case of Bernhard v. Bank of America, 19 Cal. 2d 807, 122 P.2d 892 (1942) ,
whose facts are summarized above. The court noted that the criteria for
determining who may assert collateral estoppel differ fundamentally from the
criteria for determining against whom a plea of collateral estoppel may be
asserted. Bernhard, 19 Cal. 2d at 811, 812. “There is no compelling reason …
for requiring that a party asserting a plea of [collateral estoppel] must have been
a party, or in privity with a party, to the earlier litigation.” Id. at 812. The court
then articulated the now familiar inquiries for application of collateral estoppel:
“Was the issue decided in the prior adjudication identical with the one
presented in the action in question? Was there a final judgment on the merits?
Was the party against whom the plea is asserted a party or in privity with a
party to the prior adjudication?” Id. at 813.
 The Bernhard decision had an impact far beyond California. The federal
courts and most state courts have eliminated the mutuality requirement,
especially where, as in Bernhard, the prior judgment is invoked defensively in
a second action against a plaintiff bringing suit on an issue that plaintiff litigated
and lost as plaintiff against a different defendant in a prior action. E.g.,
Blonder-Tongue Laboratories v. University of Illinois Foundation , 402 U.S.
313, 91 S. Ct. 1434, 28 L. Ed. 2d 788 (1971); § 29, Restatement (Second) of
Judgments (1982); see generally Schopler, Mutuality of Estoppel, supra.

[3] Offensive Nonmutual Collateral Estoppel

The California courts also recognize the offensive use of nonmutual collateral
estoppel, i.e., where a plaintiff is seeking to estop a defendant from relitigating
the issues which the defendant previously litigated and lost against another
plaintiff. See, e.g., Imen v. Glassford, 201 Cal. App. 3d 898, 247 Cal. Rptr. 514
(1988); Sandoval v. Superior Court, 140 Cal. App. 3d 932, 190 Cal. Rptr. 29
(1983). These courts apply the doctrine adopted by the U.S. Supreme Court in
Parklane Hosiery Co. v. Shore , 439 U.S. 322, 99 S. Ct. 645, 58 L. Ed. 2d 552
(1979), [551/552]for use in the federal courts.

For example, in Imen v. Glassford, supra, the plaintiffs, the Imens,

commenced an action for fraud against defendant Glassford, a licensed real
estate salesman, for inducing plaintiffs to sell their property on terms which
Glassford had no intention of performing. In a prior proceeding, the California
Real Estate Commissioner, also concerned with Glassford’s allegedly improper
conduct, accused Glassford of violating his statutory duties. After a hearing, an
administrative law judge found Glassford acted fraudulently — entering into a
real estate contract with clients (the Imens) having no intention of performing his
written promises. The Real Estate Commissioner adopted these findings and
revoked Glassford’s license as a real estate salesman and broker. The Imens
relied on the Commissioner’s decision in successfully moving for summary
adjudication on the issue of Glassford’s fraud. After an evidentiary proceeding,
the trial court awarded the Imens substantial compensatory and punitive
damages. Defendant Glassford appealed. In affirming the trial court’s use of
offensive nonmutual collateral estoppel, the court explained that doctrine as
follows:

In Parklane Hosiery Co. v. Shore, supra, 439 U.S. 322, the United
States Supreme Court emphasized that courts must go through a careful
 weighing process to determine the fairness of applying the doctrine of
collateral estoppel. In explaining the problems associated with the
offensive use of collateral estoppel contrasted with its defensive use,
Parklane cautioned that offensive use may be both inefficient and unfair to
a defendant.

“If a defendant in the first action is sued for small or nominal

damages, he may have little incentive to defend vigorously, particularly if
future suits are not foreseeable. [Citations]. Allowing offensive collateral
estoppel may also be unfair to a defendant if the judgment relied upon as a
basis for the estoppel is itself inconsistent with one or more previous
judgments in favor of the defendant. Still another situation where it might
be unfair to apply offensive estoppel is where the second action affords the
defendant procedural opportunities unavailable in the first action that could
readily cause a different result.” ([Parklane,] at pp. 330–331.)

Parklane nonetheless held that the offensive use of collateral estoppel

was permitted in the broad discretion of the trial court except in certain
circumstances including the situation when its application “would be
unfair to a defendant.” (Ibid.; italics added.)

Imen, supra, 201 Cal. App. 3d at 906. Because offensive use of nonmutual
collateral estoppels encourages a plaintiff to adopt a “wait and see” attitude in
hope that the first action by another plaintiff will result in a favorable judgment,
the Imen court summarized the doctrine by quoting again from Parklane, 439 U.
S. at 331:

The general rule should be that in cases where a plaintiff could easily
have joined in the earlier action or where, either for the reasons discussed
above or for other reasons, the application of offensive estoppel would be
unfair to a defendant, a trial judge should not allow the use of offensive
collateral estoppel.

[552/553]

Imen, supra, 201 Cal. App. 3d at 910–11 (Benke, J., dissenting).

The California courts recognize the need for leeway in applying nonmutual
collateral estoppel so as to accord basic fairness to the parties. For example, in
Sandoval v. Superior Court, 140 Cal. App. 3d 932, 190 Cal. Rptr. 29 (1983) ,
the court refused to extend offensive nonmutual collateral estoppel to a prior
judgment against the defendant because that judgment was inconsistent with
another determination of the same issue. In a 1980 wrongful death (Demanes v.
John Deere Co.) judgment, a special jury verdict found that defendant Deere’s
cotton picking machine was defective in design because of the placement of the
emergency shut-off switch. Relying on this finding, plaintiff Sandoval in June,
1982 moved for summary judgment in his personal injury action, asserting that
defendant Deere was collaterally estopped from contesting the design defect
issue due to the 1980 verdict. The trial court declined to enter summary
judgment, and the plaintiff sought a writ of mandate.

The Court of Appeal refused to preclude relitigation of the design defect

issue because a jury in a third case (Smith v. John Deere Co.) returned a
defense verdict, apparently finding that the shut-off switch design was not
defective. The court, relying on Section 29(4) of the Second Restatement and
Parklane Hosiery Co. v. Shore , 439 U.S. 322, 324–37, 99 S. Ct. 645, 58 L. Ed.
2d 552 (1979), concluded that to allow the use of collateral estoppel where
there are inconsistent prior verdicts on an identical issue would be arbitrary and
unfair. Sandoval, supra, 140 Cal. App. 3d at 941–44. Is this “inconsistent
judgments” exception applicable only to the offensive use of non-mutual
collateral estoppel, or is it equally applicable to the defensive use as well? See
Section 29(4), Restatement (Second) of Judgments, comment f (1982).

California courts continue to scrutinize more closely the offensive use of

nonmutual collateral estoppel than the defensive use. See, e.g., Smith v.
ExxonMobil Oil Corp., 153 Cal. App. 4th 1407, 64 Cal. Rptr. 3d 69 (2007)
(application of collateral estoppel was unfair to defendant company because,
through no fault of its own, it was unable at the prior adjudication to obtain
expert testimony crucial to it defense on the issue of liability); White Motor
Corp. v. Teresinski , 214 Cal. App. 3d 754, 763–64, 263 Cal. Rptr. 26 (1989)
(application of offensive collateral estoppel unfair even though all basic
requirements of doctrine met). This is because, as the court in Imen observed,
the offensive use may be both inefficient and unfair. The “inefficiency” concerns
identified for the offensive use of nonmutual collateral estoppel do not apply to
the defensive use. Why not? Are the “unfairness” concerns identified for the
offensive use also inapplicable to the defensive use? See § 29, Restatement
(Second) of Judgments (1982), comment d.
 Although the California Supreme Court has discarded the doctrine of
mutuality, the Legislature has prohibited nonmutual collateral estoppel in some
specific instances. For example, CCP § 99 apparently directs that a judgment in
a limited civil case is conclusive only between the parties and their successors
in interest, but does not operate as collateral estoppel by other persons. See also
Vehicle Code § 40834 (Conviction for violation of Vehicle Code shall not have
res judicata or collateral estoppel effect in any subsequent civil action). Why
would the Legislature retain the mutuality requirements for such judgments?

[553/554]

[4] Collateral Estoppel Effect of Noncourt Proceedings

[a] Administrative Agency Decisions

In People v. Sims, 32 Cal. 3d 468, 186 Cal. Rptr. 77, 651 P.2d 321 (1982) ,
the Supreme Court held that collateral estoppel may be applied to decisions
made by administrative agencies when the agency was acting in a “judicial
capacity” and resolved disputed issues of fact properly before it which the
parties have had an adequate opportunity to litigate. The court in Sims found that
an administrative fair hearing conducted by the state welfare department was a
judicial-like adversary proceeding, and its determinations should be given a
collateral estoppel effect. Sims, 651 P.2d at 328–29. See People v. Garcia, 39
Cal. 4th 1070, 48 Cal. Rptr. 3d 75, 141 P.3d 197 (2006) (declining to
reconsider the decision in Sims and again holding that the doctrine of collateral
estoppel precluded the People from prosecuting for welfare fraud a welfare
recipient who had been exonerated at an administrative hearing conducted by
the county).

In Pacific Lumber Co. v. State Water Resources Control Bd. , 37 Cal. 4th
921, 38 Cal. Rptr. 3d 220. 126 P.3d 1040 (2006) , the Supreme Court again
recognized that collateral estoppel may be applied to a decision made by an
administrative agency, based on the following factors:

For an administrative decision to have collateral estoppel effect, it

and its prior proceedings must possess a judicial character. Indicia of
proceedings undertaken in a judicial capacity include a hearing before an
impartial decision maker; testimony given under oath or affirmation; a
party’s ability to subpoena, call, examine, and cross-examine witnesses, to
introduce documentary evidence, and to make oral and written argument;
 the taking of a record of the proceeding; and a written statement of reasons
for the decision.

Pacific Lumber, supra, 37 Cal. 4th at 944. Another relevant, but not conclusive,
factor is whether the administrative decision is subject to writ review by
administrative mandamus under CCP § 1094.5. Id., at n. 12. Why is this factor
relevant?

Administrative hearings are often not conducted according to the rules of

evidence applicable to judicial trials. Should this difference automatically
preclude a finding that the agency was acting in a “judicial capacity”? If not,
when should a different standard for admitting evidence preclude such a
finding? See People v. Sims, supra, 32 Cal. 3d at 480; Lucido, supra, 51 Cal.
3d at 345, n.6.

Does a determination by an administrator of a dispositive issue after a one-

sided investigation have a collateral estoppel effect on a plaintiff in a
subsequent state court action, where the plaintiff did not file objections to the
administrator’s findings and did not request a formal adjudicatory hearing to
determine the contested issues de novo, both options available to him under the
administrative process? See Murray v. Alaska Airlines, Inc., 50 Cal. 4th 860,
114 Cal. Rptr. 3d 241, 237 P.3d 565 (2010) (because the plaintiff had an
opportunity to fully contest the administrator’s determination through a judicial-
like administrative procedure but chose not to do so, the dispositive issue was
“actually litigated” for purposes of collateral estoppel, even though the
administrative complaint procedure was voluntary and optional and [554/555]not a
prerequisite to filing the state court action). However, an unreviewed
administrative finding will not be given preclusive effect in a later judicial
proceeding where the Legislature did not intend the agency’s findings to have a
res judicata or collateral estoppel effect in a subsequent superior court damages
action. See Runyon v. Bd. of Trustees , 48 Cal. 4th 760, 108 Cal. Rptr. 3d 557,
229 P.3d 985 (2010) (discussing various cases).

One legislative response to People v. Sims is Section 1960 of the

Unemployment Insurance Code, enacted in 1986, which provides that a finding
by the Unemployment Insurance Appeals Board “shall not be conclusive or
binding in any separate or subsequent action or proceeding.” What policy is
Section 1960 designed to further? See Thomas F. Crosby, Administrative
Collateral Estoppel in California: A Critical Evaluation of People v. Sims, 40
Hastings L.J. 907, 947–50 (1989). Another legislative response is Vehicle Code
§ 13353.2(e), which provides that a DMV determination with respect to the
suspension of a driver’s license for driving while intoxicated shall have no
collateral estoppel effect on a subsequent criminal prosecution; but that the
DMV must immediately reinstate a suspended driver’s license if a person is
acquitted of criminal charges. What policy considerations are reflected in these
Vehicle Code provisions? See Gikas v. Zolin, 6 Cal. 4th 841, 25 Cal. Rptr. 2d
500, 863 P.2d 745 (1993) (noting that the Legislature made a policy decision
that administrative proceedings before the DMV will not have a preclusive
effect on related criminal proceedings).

[b] Contractual Arbitration

A more difficult problem is the collateral estoppel effect, if any, to be given a

contractual (e.g., commercial) arbitration decision. Generally, arbitration is
voluntary in the sense that it is agreed to by parties as the method of resolving
anticipated disputes. Typically, such arbitration proceedings are informal, do
not follow formal rules of evidence, and do not include a formal record of
testimony. Moreover, although arbitration awards generally are in writing, the
awards need not (and often do not) state any reasons or findings in support of
the decision. See G. Richard Shell, Res Judicata and Collateral Estoppel
Effects of Commercial Arbitration, 35 UCLA L. Rev. 623, 628–33 (1988) .
Although California courts may give arbitration decisions a res judicata (claim
preclusion) effect, see discussion § 8.02[F][4][e] supra, should they also give
them a collateral estoppel (issue preclusion) effect? See Sartor v. Superior
Court, 136 Cal. App. 3d 322, 187 Cal. Rptr. 247 (1982) ; Shell, Res Judicata
and Collateral Estoppel Effects, supra, pp. 647–54 and 667–69. What
considerations are involved here that are not involved in judicial proceedings?
Why is it more problematic to give a collateral estoppel effect to an arbitration
decision than to give a res judicata effect? See Shell, Res Judicata and
Collateral Estoppel Effects, supra.

The Supreme Court has adopted, for California purposes, the rule that a
contractual arbitration award cannot have a nonmutual collateral estoppel effect
unless the arbitral parties so agree. See Vandenberg v. Superior Court , 21 Cal.
4th 815, 88 Cal. Rptr. 2d 366, 982 P.2d 229 (1999) . Declining to follow the
predominant view of other jurisdictions, the Vandenberg court concluded that a
private arbitration award, even if judicially confirmed, can have no collateral
estoppel effect in favor of third persons unless the arbitral parties agreed, in the
particular [555/556]case, that such a consequence should apply. The Supreme
Court rejected the predominant view because its rationales gave insufficient
consideration and weight to the voluntary, contractual, and informal nature of
private arbitration; and to the consequent reasonable expectations of the arbitral
parties. Vandenberg, 21 Cal. 4th at 834–37.

The Vandenberg court declined to address the circumstances, if any, in which

a private arbitration award may have issue preclusive effect in subsequent
litigation between the same parties on different causes of action. Id. at 824, n.
2. The Vandenberg court noted, however, that its holding did not impose or
imply any limitations on the claim preclusive effect of a California private
arbitration award. Id.

[5] Final Judgment for Purposes of Collateral Estoppel

One of the requirements for collateral estoppel is that there must be a “final”
judgment on the merits in the previous suit. To be “final,” a judgment must be a
firm and stable one, the last word of the rendering court. Producers Dairy
Delivery Co. v. Sentry Ins. Co., 41 Cal. 3d 903, 911, 226 Cal. Rptr. 558, 718
P.2d 920 (1986) (agreeing with Sandoval v. Superior Court, 140 Cal. App. 3d
932, 936, 190 Cal. Rptr. 29 (1983), which in turn relied upon § 13, comment b,
Restatement (Second) of Judgments (1982)). A tentative or interlocutory order
will not be given a preclusive effect. E.g., George Arakelian Farms, Inc. v.
Agricultural Labor Relations Bd., 49 Cal. 3d 1279, 1289–91, 265 Cal. Rptr.
162, 783 P.2d 749 (1989) (make-whole order issued by administrative agency
was an interlocutory judgment with no collateral estoppel effect, even though
sufficiently final to permit appellate review).

[a] Settlement Pending Appeal

A typical application of this final judgment requirement occurs when a party

obtains a judgment which is then appealed, and the case is settled prior to final
resolution of the appeal. For example, in Sandoval v. Superior Court, supra,
another plaintiff (Demanes) in a prior action had obtained a jury award of
$262,500 against the defendant for wrongful death caused by defendant’s
defective product. Defendant appealed, and during the pendency of the appeal,
the parties reached a settlement agreement. The agreement provided that
defendant disclaimed any liability, and would dismiss the appeal; that Demanes
would receive $218,837, and would dismiss the action against defendant with
prejudice. Plaintiff Sandoval then filed his action against defendant, alleging
injuries caused by the same design defect in defendant’s product. Plaintiff
sought to collaterally estop the defendant from litigating the design defect issue
based on the jury finding in the prior wrongful death lawsuit. The defendant
argued that collateral estoppel did not apply because the prior judgment was
never a “final” one against defendant — it was appealed then dismissed with
prejudice following the settlement. Defendant further argued that the dismissal
with prejudice actually constituted a judgment for defendant.

The Court of Appeal first ruled that a dismissal with prejudice which was
part of a substantial settlement in plaintiff’s favor and followed a trial verdict
for plaintiff [556/557]could not fairly be construed as a judgment for defendant.
Next, the court held that although the appeal was dismissed pursuant to plaintiff
Demares’ favorable settlement, “The Restatement analysis and reason itself
dictate that the trial court judgment reemerges with sufficient finality to permit
the application of collateral estoppel.” Sandoval, 140 Cal. App. 3d at 937. The
Supreme Court has specifically approved of the Sandoval reasoning and holding
in Producers Dairy Delivery Co., supra, 41 Cal. 3d at 911.

[b] Administrative Agency Decisions

When is the decision of an administrative agency considered “final” for

purposes of collateral estoppel? When the agency decision becomes final for
purposes of judicial review? When the agency decision becomes final for
purposes of administrative implementation? When the time for judicial review
of the agency decision has expired? See People v. Sims, supra, 32 Cal. 3d at
485–86; Long Beach Unified Sch. Dist. v. State of California, 225 Cal. App.
3d 155, 168–69, 275 Cal. Rptr. 449 (1990) (“Finality for the purpose of
administrative collateral estoppel may be understood as a two-step process: (1)
the decision must be final with respect to action by the administrative agency …
and (2) the decision must have conclusive effect …. In other words, the decision
must be free from direct attack …. A direct attack on an administrative decision
may be made by appeal to the superior court for review by petition for
administrative mandamus. (Code Civ. Proc., § 1094.5)”); See also Eric N.
Macey, Note, The Collateral Estoppel Effect of Administrative Agency Actions
in Federal Civil Litigation, 46 Geo. Wash. L. Rev. 65, 73–77 (1977).
§ 8.04 PRIVITY
DYSON v. STATE PERSONNEL BOARD
COURT OF APPEAL OF CALIFORNIA,
THIRD APPELLATE DISTRICT
213 Cal. App. 3d 711, 262 Cal. Rptr. 112 (1989)

Blease, Acting Presiding Justice.

In this appeal Monroe Dyson challenges the affirmance of his dismissal as a

youth counselor with the Department of Youth Authority’s Preston School of
Industry (Preston or the agency) by the State Personnel Board (Board). The
dismissal is predicated solely upon the admission in the administrative
disciplinary proceeding of evidence seized by the agency from Dyson’s home,
consisting of nine T-shirts and two intercoms belonging to Preston. The question
we resolve is whether this evidence should have been excluded from the
administrative proceedings.

The items were seized from Dyson’s home and held by the agency pursuant to
a search for evidence that Dyson had committed the crime of theft. The search
was initiated, directed and participated in by Thomas Gold, the Preston Chief of
Security, acting under his authority as a peace officer. The evidence was turned
over [557/558]by the agency to police authorities for use in a criminal proceeding
initiated on the complaint of the agency. The evidence was there excluded and
the criminal prosecution dismissed on grounds that the search violated Dyson’s
constitutional rights to privacy.

We will conclude that the Board is collaterally estopped to deny the

constitutional invalidity of the search, as determined in the criminal proceeding.
In the circumstances of this case the unconstitutionally seized evidence should
have been excluded in the succeeding administrative proceeding conducted by
the Board.

Facts And Procedural Background

Dyson was afforded a hearing before an administrative law judge appointed

by the Board. He made a timely objection to the introduction of the evidence
seized in the search of his home. The following facts, read most favorably to the
agency, are taken from the record of the administrative hearing. However, the
facts presented here do not bear on the issue of consent to search Dyson’s home,
an issue resolved adversely to the agency in the criminal proceeding which
preceded the administrative disciplinary proceeding. Rather the facts bear on
the question whether the agency was so involved in the search as to justify an
exclusionary remedy to deter agency invasion of its employees’ constitutional
rights.

Mr. Dyson was dismissed from his employment as a youth counselor with the
Preston School of Industry. The principal actor in the search was Tom Gold,
Preston’s Chief Security Officer. Gold was present in the office of Preston
Superintendent Richard Colsey on June 12, 1984, when Renate Dyson, Dyson’s
estranged wife, called to report that Dyson had been stealing items from
Preston. Colsey testified that Renate told him that “her husband was bringing
things home she thought were State property and she thought he was stealing”
and that the subject matters were “video materials, clothing, a telephone, and
some other electronic equipment.” Colsey assigned Gold to investigate the
report.

Gold is a peace officer and pursued the investigation and search acting under
that authority. In his view his jurisdiction extends “beyond the Walls of Preston
when … on duty.” (See Pen. Code, § 830.5, subd. (b)). He understood his peace
officer status to “include[] any activity in the service of the Youth Authority
outside the walls of Preston.” During the investigation and search of Dyson’s
house he was acting in that capacity.

***

After calling and arranging for the sheriff’s officers to meet him at the Dyson
house on Craft Drive, Gold went there with Mrs. Dyson, a trip of some miles.
When asked why he called in the sheriff’s office, Gold said: “I just wanted an
assistant in going into the house as I don’t have the necessary papers for
someone to go in to search a house, which they said they would have her sign
the day prior. If they got the consent they would have her sign the papers to
search the home, …. I don’t know really how far my Peace Officer’s
jurisdiction really does go as to what I can do with it ….”

On getting into the house Gold testified: “Q: How did you get into the house?
 [558/559]

“A. One of the Officers asked Renate if she had a key. She said no … and she
says that the window was broke out and there was a door over the window by
the doorknob. He asked if he could push it open. She said yes, he did open the
door on the inside, and on entry said, ‘It’s a Sac SO. Is anyone home?’ And
upon no answer, we entered the house.”

According to Gold, inside the house Renate led Gold through the house,
identifying things as taken from Preston. Gold made notes of identification and
seized the items. He took one of the intercoms “just sitting on the nightstand” in
the master bedroom and the other was found in the second bedroom. The T-
shirts were found by Gold in the closet of the master bedroom where he seized
them.

Gold “gathered the material or the property belonging to Preston” and put “it
in the trunk of my car” and then dropped Renate off at her house and “then came
back to the institution and talked with our Superintendent Richard Colsey.”
Thereafter (the following day), pursuant to his superior’s directions, he took it
to the Ione Police Department and logged it in.

The administrative law judge rendered a decision concluding that the nine T-
shirts and two intercoms seized at Dyson’s house were the property of the
Preston School. The judge found that it could not be established that the 11
video tapes were similarly the property of the school. He also found that
although a book given Mrs. Dyson by Dyson was the property of the school that
Dyson intended to return it and other Preston books to the school. The judge
concluded Dyson “did steal State property,” to wit, the items seized from
Dyson’s house.

The findings of fact and proposed decision of the administrative law judge
were adopted by the Board. It is that decision which we are asked to review.

Discussion

The evidence necessary to support the discipline imposed on Dyson is that

seized during the search of his house. The search was initiated and directed by
the agency; the evidence was seized and held by the agency, turned over by it to
a prosecutorial authority for use in a criminal action, retrieved following its
suppression by the court in that proceeding, and introduced in evidence in
Dyson’s administrative disciplinary hearing.

The dispositive issue is the admissibility of the evidence in the administrative

proceeding. That turns, first, on the applicability of an exclusionary rule to the
administrative proceeding and, second, on the collateral effect to be given the
exclusion of the evidence in the criminal proceeding. We consider these issues
seriatim.

***

We are persuaded by our reasoning previously related and by the foregoing

cases that the exclusionary rule is available in the circumstances of this case.
The unconstitutional search could not have a tighter nexus with the agency that
seeks to [559/560]profit from it. The policy that led to the exclusion of the
evidence in the related criminal proceeding fits foursquare with exclusion in the
administrative proceedings we review. * * *

Because of the particular nature of the investigation of this case and the extent
of agency involvement we conclude that the exclusionary rule applies to remedy
the agency invasion of its employee’s constitutional rights. The same policy of
deterrence would be served by the application of an exclusionary rule in
circumstances such as those present here as is served in the application of the
rule in criminal proceedings. The Board erred in refusing to consider the
application of the exclusionary rule to the administrative disciplinary
proceedings. That leads us to consider the collateral effect of the decision in the
criminal proceeding to exclude the evidence made the basis of the
administrative discipline.

II

In the criminal proceeding, which was initiated on the complaint of the

agency on the basis of evidence provided by the agency, the court determined
that the evidence was invalidly seized and therefore should be suppressed. The
determination of that issue turned on the question of the consent to search
allegedly given by Dyson’s wife. The prosecution had the burden of proving
consent by the preponderance of the evidence. It failed to meet that burden. The
criminal charges were subsequently dismissed. We conclude that the agency is
bound by that determination of the invalidity of the search and seizure.

Collateral estoppel has traditionally been found to bar relitigation of an issue

decided at a previous court proceeding “if (1) the issue necessarily decided at
the previous [proceeding] is identical to the one which is sought to be
relitigated; if (2) the previous [proceeding] resulted in a final judgment on the
merits; and if (3) the party against whom collateral estoppel is asserted was a
party or in privity with a party at the prior [proceeding].”2 (People v. Taylor
(1974) 12 Cal. 3d 686, 691 [117 Cal. Rptr. 70, 527 P.2d 622] ; see also
Bernhard v. Bank of America (1942) 19 Cal. 2d 807, 813 [122 P.2d 892]).

The first two prongs are clearly met in this case. At issue in both the criminal
trial and the administrative hearing was the validity of the search and seizure.
The criminal proceeding was dismissed after the issue of the validity of the
search was fully litigated, and the court ruled the evidence seized was
inadmissible. We turn to the third prerequisite for the application of the
collateral estoppel doctrine, i.e., privity between the party to be estopped and
the unsuccessful party in the prior litigation.

The privity requirement has undergone an evolution in the law. “Traditionally

it has been held to refer to an interest in the subject matter of litigation acquired
after rendition of the judgment through or under one of the parties, as by
inheritance, succession or purchase. (Bernhard, supra, 19 Cal. 2d at p. 811).
The concept has also [560/561]been expanded to refer to a mutual or successive
relationship to the same rights of property, or to such an identification in interest
of one person with another as to represent the same legal rights and, more
recently, to a relationship between the party to be estopped and the unsuccessful
party in the prior litigation which is ‘sufficiently close’ so as to justify
application of the doctrine of collateral estoppel” (Clemmer v. Hartford Ins.
Co. (1978) 22 Cal. 3d 865, 875 [151 Cal. Rptr. 285, 587 P.2d 1098] ).4 Three
reasons cited in support of the application of the doctrine beyond that of the
identity of the parties are protection against vexatious litigation, achievement of
finality of litigation in which public interests are involved, and promotion of the
stability of adjudications in prior criminal actions. * * *
 As one commentator has noted, the determination whether a party is in privity
with another for purposes of collateral estoppel is a policy decision. “[T]he
term ‘privity’ in itself does not state a reason for either including or excluding a
person from the binding effect of a prior judgment, but rather it represents a
legal conclusion that the relationship between the one who is a party on the
record and the non-party is sufficiently close to afford application of the
principle of preclusion. The emphasis in the analysis is upon the policy of
ending litigation where there has been a fair trial of one’s interests, as it has
been observed that ‘the doctrine of res judicata is primarily one of public policy
and only secondarily of private benefit to individual litigants.’” (Vestal,
Preclusion/Res Judicata Variables: Parties (1964) 50 Iowa L. Rev. 27, 45, fn.
omitted ….)

However, the expanded notions of privity notwithstanding, collateral

estoppel may be applied only if the requirements of due process are satisfied.
(Clemmer v. Hartford Ins . , supra, 22 Cal. 3d at p. 875.) “In the context of
collateral estoppel, due process requires that the party to be estopped must have
had an identity or community of interest with, and adequate representation by,
the losing party in the first action as well as that the circumstances must have
been such that the party to be estopped should reasonably have expected to be
bound by the prior adjudication. [Citation.] Thus, in deciding whether to apply
collateral estoppel, the court must balance the rights of the party to be estopped
against the need for applying collateral estoppel in the particular case, in order
to promote judicial economy by minimizing repetitive litigation, to prevent
inconsistent judgments which undermine the integrity of the judicial system, or
to protect against vexatious litigation. [Citations.]” (Ibid.)

In People v. Sims (1982) 32 Cal. 3d 468 [186 Cal. Rptr. 77, 651 P.2d 321] ,
the [561/562]Supreme Court held that the administrative decision exonerating a
welfare recipient of welfare fraud precluded the district attorney from pursuing
a criminal action against the recipient for the same alleged misconduct. The
administrative agency involved in the first action, a “fair hearing” action, was
the Social Services Department of Sonoma County. The district attorney’s claim
that it was not bound by the previous administrative determination on the ground
that the county and the district attorney are not in privity with each other was
rejected by the court. The court asserted “‘Privity is essentially a shorthand
statement that collateral estoppel is to be applied in a given case; there is no
universally applicable definition of privity.’ [Citation.] The concept refers ‘to a
relationship between the party to be estopped and the unsuccessful party in the
prior litigation which is “sufficiently close” so as to justify application of the
doctrine of collateral estoppel.’ [Citations.]” (Id., at pp. 486–487.)

The Sims court went on to find that the office of the district attorney and the
county were “sufficiently close” to warrant application of the doctrine. “Both
entities are county agencies that represented the interests of the State of
California at the respective proceedings. The district attorney’s office
represents the State of California in the name of the ‘People’ at criminal
prosecutions …. At fair hearings, the county welfare department acts as the
‘agent’ of the State. [T]he courts have held that the agents of the same
government are in privity with each other, since they represent not their own
rights but the right of the government. (Fn. omitted.) [Citations.]” (Sims, supra,
32 Cal. 3d at p. 487; see also Lerner v. Los Angeles City Board of Education
(1963) 59 Cal. 2d 382, 396–399 [29 Cal. Rptr. 657, 380 P.2d 97] [city board of
education bound by waiver of State Board of Education in part because city
board serves as an agency of the state].) The court further noted that the close
association between the county and the district attorney’s office could be seen
from the fact that the agencies operate jointly in investigating and controlling
welfare fraud. Information gathered by the county is also used by the district
attorney; if fraud evidence is uncovered by the county, it must request issuance
of criminal complaint from the district attorney. The court also noted that, upon
request, the “County must provide documentary evidence to the district attorney
and ensure the appearances of investigators and other county officials at
hearings and trials” (32 Cal. 3d at p. 488) and that in that particular case “both
the criminal complaint charging respondent with fraud and the declaration filed
in support of the complaint were signed by personnel of the [County Department
of Social Services].” (Id., at p. 488, fn. 17.)

Relying on Sims, this court in Buttimer v. Alexis (1983) 146 Cal. App. 3d
754 [194 Cal. Rptr. 603] held that the Department of Motor Vehicles was
collaterally estopped from relitigating the lawfulness of the petitioner’s arrest
after a criminal court in connection with a Penal Code section 1538.5
suppression motion had ruled the arrest unlawful. The judgment commanding the
DMV to set aside its order of suspension of the petitioner’s drivers license for
refusing to submit to a chemical test was affirmed on appeal. This court asserted
that although “DMV may have no control over the actions of the District
Attorney, however, the district attorney represents the State of California in
criminal matters, and DMV represents the interests of the State of California in
its hearings.” (Id., at p. 760.) We thus concluded that the State of California was
the real party in interest in both [562/563]proceedings and that therefore the
requirements of privity for the application of collateral estoppel were satisfied.
(Accord Shackelton v. Department of Motor Vehicles (1975) 46 Cal. App. 3d
327 [119 Cal. Rptr. 921] ; contra Pawlowski v. Pierce (1988) 202 Cal. App. 3d
692 [249 Cal. Rptr. 49]; see also Carmel Valley Fire Protection Dist. v. State
of California (1987) 190 Cal. App. 3d 521, 534–537 [234 Cal. Rptr. 795]
[State Board of Control’s determination that county was entitled to
reimbursement from state for certain expenditures on ground they were state
mandated was binding on defendants state, State Department of Finance, State
Department of Industrial Relations, State Board of Control, State Controller,
State Treasurer and Los Angeles County Auditor Controller in an action by
other counties for reimbursement: “Each of these defendants is an agent of the
State of California[,] had a mutual interest in the Board proceedings [and] …
are thus in privity with those state agencies which did participate below ….”
(Id., at p. 536.)

We turn to the circumstances of this case. Here, Dyson is seeking the benefit
of the trial court’s ruling on the search and seizure issue he litigated below and
is attempting to preclude the agency from relitigating the issue. The agency was
not a party in the criminal action. However, we consider whether the agency had
a “sufficiently close” relationship with the district attorney to warrant
application of the collateral estoppel doctrine.

We note initially that the agency (Youth Authority) is a state agency. (Welf. &
Inst. Code, § 1700 et seq.). It was represented at the administrative hearing by
the state Attorney General. 5 The criminal action was prosecuted by the district
attorney, representing the People of the State of California. Under some of the
cases cited above, the fact that the “State” was involved in both actions might be
considered sufficient justification to preclude the agency from relitigating the
search and seizure issue. However, we do not rely on the mere characterization
of both entities as agents of the “State” to find the application of collateral
estoppel justified here.

The circumstances of this case reveal a “close relationship” between the

significant actors in both proceedings from the very inception of the search. The
search was initiated by Gold, an agent of the Youth Authority, who called in the
sheriff’s department for assistance. The sheriff’s department serves as the
investigative arm for the district attorney. Manifestly, Gold was conscious of the
criminal law overlap. From the very start, a convergence between the
disciplinary interests and the penal interests was evident. Evidence seized was
originally retained by Gold and then later turned over to the sheriff’s
department. The criminal action was initiated on the complaint of Preston (the
Youth Authority). Gold presumably testified at the criminal suppression motion,
presenting evidence relating to the validity of the search. As a witness, he had
every incentive to accurately portray the sequence of events leading up to the
search.6 Because a criminal conviction of theft [563/564]would have constituted
cause for the discipline of Dyson under the civil service laws (Gov. Code, §
19572, subd. (k), the agency’s disciplinary interest in the criminal proceeding
was direct. The district attorney had every incentive to vigorously litigate the
issue of the legality of the search. The agency (through its agents) was the chief
“accuser” at the criminal proceeding. Its role at the disciplinary hearing was the
same. The litigation objectives of the district attorney and the Attorney General
in their respective proceedings were identical.

Given the purposes of the doctrine of collateral estoppel, i.e., to promote

judicial economy by minimizing repetitive litigation and to prevent inconsistent
judgments which undermine the integrity of the judicial system (People v.
Taylor, supra, 12 Cal. 3d at p. 695), we see no reason why the doctrine should
not be applied here. The agency should not be given the opportunity to relitigate
the validity of the search and seizure. The relationship between the district
attorney in the criminal proceeding and the agency was sufficiently close to
warrant preclusion of the relitigation of the issue in the disciplinary hearing.

For these reasons we conclude that the agency is collaterally estopped to

deny the invalidity of the search for and seizure of this evidence.

Disposition

The judgment is reversed. The case is remanded to the trial court with the
direction to issue a peremptory writ of mandate compelling the State Personnel
Board to set aside Dyson’s dismissal as an employee of the Department of
Youth Authority’s Preston School of Industry. Appellant shall recover his costs
on appeal.

NOTES AND QUESTIONS REGARDING PRIVITY

(1) Privity, Generally. Generally speaking, issue and claim preclusion can
only be applied against parties to a prior action. Code of Civil Procedure §
1910 provides, in defining what parties are to be deemed the same: “The parties
are deemed to be the same when those between whom the evidence is offered
were on opposite sides in the former case ….” But as our principle cases
illustrate, the requirement of a “same party” is not taken literally. Not only are
actual parties bound by a prior judgment, but also nonparties who are “in
privity” with the actual parties. How does a California court determine whether
a person is “in privity” with a party?

(2) Modern California Privity Doctrine. “Privity is a concept not readily

susceptible of uniform definition.” Clemmer v. Hartford Ins. Co., 22 Cal. 3d
865, 875, 151 Cal. Rptr. 285, 587 P.2d 1098 (1978) . Although traditional
applications of privity were quite limited, as the Dyson opinion indicates, the
modern California doctrine is much broader. Privity now extends to any
relationship between the party to be estopped and the unsuccessful party in the
prior litigation which is “sufficiently close” so as to justify application of the
doctrine of res judicata or collateral estoppel. See Clemmer v. Hartford Ins.
Co., supra. What guidance does this statement of the privity doctrine give to
litigants and courts? Is “sufficiently close” a workable test, or simply a
conclusion? How is “sufficiently close” defined? This is a very flexible
standard which is, however, limited by the requirements of due [564/565]process.
What are these requirements? Do the due process requirements provide a
clearer definition of “sufficiently close?”

( 3) Policy Considerations. The Dyson opinion astutely observes that the

determination of whether a party is in privity with another for purposes of res
judicata is a policy decision. What considerations does this policy decision
encompass? See Clemmer v. Hartford Ins. Co., supra. Is this the type of policy
decision a court should be permitted to make based on vague concepts like
“sufficiently close”? Or is this the type of policy decision more appropriate for
a state legislature?

( 4) Policy Considerations Applied in Close Cases. The policy concerns

underlying the modern definition of privity may determine whether privity exists
in close cases. For example, in Ceresino v. Fire Ins. Exchange , 215 Cal. App.
3d 814, 264 Cal. Rptr. 30 (1989), the court found plaintiff to be in privity with
his insurance company, in part because this would further the policy of
preventing inconsistent judgments. Ceresino and one McCulloch got into a fight
at a restaurant over the affections of a young lady. McCulloch suffered serious
injuries, and sued Ceresino for assault and battery as well as negligent infliction
of the injuries. Ceresino was secondarily insured by Farmers Insurance Group,
but his policy excluded coverage for any intentionally inflicted injury.
 Ceresino compromised and settled the claims by McCulloch, and entered a
stipulated judgment of $300,000 based solely on the negligence cause of action.
McCulloch collected part of this stipulated judgment from Ceresino’s primary
insurer, and then McCulloch sued Farmers to recover the balance of the
judgment. The trial court ruled that Ceresino’s act of beating McCulloch was
intentional conduct and therefore excluded from coverage under Farmer’s
policy.

Ceresino then filed an action against Farmers for breach of contract. The trial
court ruled that Ceresino, although not a party to the McCulloch v. Farmers
litigation, was collaterally estopped by that judgment from relitigating the issue
of whether Ceresino’s conduct was intentional and therefore excluded from
coverage. The trial court also ruled that Farmers was not bound by the earlier
stipulated judgment based on negligence in the initial McCulloch v. Ceresino
litigation. Ceresino appealed.

The Court of Appeal affirmed. The court concluded that Ceresino was bound
by the McCulloch v. Farmers judgment because he was in privity with
McCulloch in that litigation. The court found that Ceresino knew about the
McCulloch v. Farmers suit, had a financial interest in it, and exercised some
control over it through the terms of his stipulated judgment with McCulloch.
Also, the court noted that Ceresino was a witness for McCulloch, and was
vitally interested in the policy coverage question before the court in the
McCulloch v. Farmers action. Moreover, the court noted that if collateral
estoppel did not preclude Ceresino from relitigating the policy coverage issue
and he somehow won on this issue against Farmers, such a judgment would be
inconsistent with the judgment in McCulloch v. Farmers. “This is the very
situation sought to be avoided by the expanded definitions of privity.
Consequently, collateral preclusion, in this instance, must be affirmed to
discourage repetitive litigation, to prevent inconsistent judgments, and to
discourage vexatious litigation.” Ceresino, supra, 215 Cal. App. 3d at 822.

[565/566]

(a) How useful is this policy consideration “to prevent inconsistent

judgments” in determining whether parties are in privity? Should not the policy
really be “to prevent inconsistent judgments when the parties are the same or in
privity”? Otherwise, the policy would always be a reason for concluding that
parties are in privity, would it not? Are these policy considerations, as
identified in Dyson and Ceresino, really nothing more than privity conclusions
masquerading as analytical doctrine? Or do they simply send a general message
to the courts: in close cases, resolve doubts in favor of a finding of privity!

(b) Note that the finding of privity between Ceresino and McCulloch means
that they are viewed as representing the same interest in the McCulloch v.
Farmers litigation. Is this view consistent with due process in light of the fact
that Ceresino and McCulloch were adversaries in the initial personal injury
action? The Court of Appeal also held that the stipulated judgment of negligence
in the original McCulloch v. Ceresino action did not preclude Farmers from
litigating the issue of whether Ceresino’s conduct was intentional in the
McCulloch v. Farmers litigation. In other words, Farmers was not bound by
this stipulated judgment even though Ceresino was insured by Farmers. Why
would the court not find Farmers to be in privity with its insured in the initial
action? Is this consistent with the policy to prevent inconsistent judgments?

( 5 ) Privity Statutes. The California Legislature has delineated some

categories of nonparties who are bound by a prior judgment. Code of Civil
Procedure § 1908 states:

(a) The effect of a judgment or final order in an action or special

proceeding before a court or judge of this state, or of the United States,
having jurisdiction to pronounce the judgment or order, is as follows:

(2) … [T]he judgment or order is, in respect to the matter

directly adjudged, conclusive between the parties and their successors in
interest by title subsequent to the commencement of the action or special
proceeding, litigating for the same thing under the same title and in the
same capacity, provided they have notice, actual or constructive, of the
pendency of the action or proceeding.

(b) A person who is not a party but who controls an action,

individually or in cooperation with others, is bound by the adjudications of
litigated matters as if he were a party if he has a proprietary or financial
interest in the judgment or in the determination of a question of fact or of a
question of law with reference to the same subject matter or transaction; if
the other party has notice of his participation, the other party is equally
bound. * * *
 ( 6 ) Privity Examples. California courts have found privity to exist in a
variety of relationships, such as:

(a) Successors in interest. See, e.g., Brown v. Rahman, 231 Cal. App. 3d
1458, 282 Cal. Rptr. 815 (1991) (heirs of deceased in wrongful death action
held in privity with deceased who, in earlier personal injury action prior to
death, lost on issues of causation and liability against same defendant); Garcia
v. Rehrig Intl., Inc., 99 Cal. App. 4th 869, 877-79, 121 Cal. Rptr. 2d 723
(2002); Evans v. Celotex Corp., 194 Cal. App. 3d 741,745-46, 238 Cal. Rptr.
259 (1987); contra Kaiser Foundation Hospitals v. Superior Court, 254 Cal.
App. 2d 327, 62 Cal. Rptr. 330 (1967); [566/567]Elizabeth A. West, Comment,
Does an Adverse Judgment in a Personal Injury Action Bar a Subsequent
Wrongful Death Action?, 20 Pac. L.J. 221 (1988).

(b) Persons represented by a fiduciary. E.g., Armstrong v. Armstrong , 15

Cal. 3d 942, 951, 126 Cal. Rptr. 805, 544 P.2d 941 (1976).

(c) Persons who have a proprietary or financial interest in and control the
conduct of a lawsuit may be bound by the result even though not a party. E.g.,
George F. Hillenbrand, Inc. v. Ins. Co. of North America , 104 Cal. App. 4th
784, 824–27, 128 Cal. Rptr. 2d 586 (2002); Aronow v. La Croix, 219 Cal. App.
3d 1039, 1050–52, 268 Cal. Rptr. 866 (1990), cert. denied, 498 U.S. 1105, 111
S. Ct. 1009, 112 L. Ed. 2d 1091 (1991) (plaintiff, an attorney who served as co-
counsel and a witness for a physician in a prior unsuccessful malicious
prosecution action, had sufficient interest in and control of prior action to be in
privity with respect to plaintiff’s identical malicious prosecution claim against
same defendants).

(d) Individual members of a homeowner association may be in privity with

the association. Kirkpatrick v. City of Oceanside, 232 Cal. App. 3d 267, 280-
81, 283 Cal. Rptr. 191 (1991).

(e) A Governmental entity may be in privity with the individual claimants

it represents. See, e.g., Rynsburger v. Dairymen’s Fertilizer Coop., Inc. , 266
Cal. App. 2d 269, 72 Cal. Rptr. 102 (1968) (property owner residents held
bound by adverse judgment against city which represented their interests);
Citizens For Open Access to Sand and Tide, Inc. v. Seadrift Assn., 60 Cal.
App. 4th 1053, 1069–74, 71 Cal. Rptr. 2d 77 (1998) (private public interest
group concerned with the recreational access to beaches was in privity with
state agencies in prior lawsuit and therefore bound by a settlement agreement
reached between the state agencies and various beachfront homeowners); but
see Payne v. National Collection Systems, Inc., 91 Cal. App. 4th 1037, 111
Cal. Rptr. 2d 260 (2001) (judgment in an action brought by the Attorney General
on behalf of the People of the State of California against the defendants under
the same law by individuals who did not receive restitution as a result of the
Attorney General’s litigation); Victa v. Merle Norman Cosmetics, Inc., 19 Cal.
App. 4th 454, 24 Cal. Rptr. 2d 117 (1993) (EEOC represented public interest
rather than individual’s in prior age discrimination action and was not in privity
with individual plaintiff; injunctive consent decree in prior EEOC action
therefore did not preclude individual plaintiff’s age discrimination action
against same defendant).

(7) Modern Privity Doctrine. The modern doctrine of privity is set forth in
the landmark case of Clemmer v. Hartford Ins. Co., supra, which expanded the
concept of privity to a relationship between the party to be estopped and the
unsuccessful party in prior litigation which is “sufficiently close” so as to justify
the application of the doctrine of res judicata. 22 Cal. 3d at 875. Decisions
prior to Clemmer (1978) may not reflect this conceptual expansion, and may be
suspect where they decline to find privity. See Aguilar v. Los Angeles County,
751 F.2d 1089, 1093 (9th Cir. 1985).

(8) Class Actions. A judgment on the merits in a properly certified class

action is res judicata as to the absent class members as well as to the named
parties. See, [567/568]e.g., Frazier v. City of Richmond, 184 Cal. App. 3d 1491,
228 Cal. Rptr. 376 (1986) (declaratory judgment in prior class action on behalf
of all members of city police and firemen’s pension fund barred current action
by fund beneficiaries because plaintiffs were members of the prior class and
raised the same issues determined adversely to them in the prior class action);
Louie v. BFS Retail & Commercial Operations, LLC, 178 Cal. App. 4th 1544,
1555, 101 Cal. Rptr. 3d 441 (2009) (collecting cases). The absent class
members are in privity with the named plaintiffs and are bound by the class
judgment so long as their interests were adequately protected. Frazier, supra;
Louie, supra.

Does the denial of class action certification in a previous action in which

interested parties, their claims, and their counsel were the same as the current
action, but the name of the representative plaintiff was different, preclude
relitigation of the class certification issue in the current action by a new
representative plaintiff? See Alvarez v. May Dept. Stores Co. , 143 Cal. App.
4th 1223, 49 Cal. Rptr. 3d 892 (2006) (collateral estoppel barred relitigation of
the class certification issue because the plaintiffs in prior action were the virtual
representatives of the plaintiffs in current action, and the issues were identical);
Bufil v. Dollar Financial Group, Inc., 162 Cal. App. 4th 1193, 76 Cal. Rptr. 3d
804 (2008) (class certification improperly denied where the classes in the two
cases are not the same and thus the issues are different).

( 9) Privity Between Government Agencies. One of the more problematic

applications of the privity doctrine concerns the relationship between different
agencies or branches of a governmental entity, as is illustrated by Dyson v.
California State Personnel Bd. and the various cases discussed therein. See
also People v. Sims, supra (county district attorney in privity with county
welfare department regarding welfare fraud proceedings against defendant).
What factors did the court in Dyson find significant in concluding that the
California State Personnel Board was in privity with the District Attorney in the
prior criminal proceeding? Does Dyson stand for the proposition that two
public agencies will automatically be considered in privity where they are
branches of the same governmental entity, such as the same county or the state?
Must some additional relationship be shown to find that they are “sufficiently
close”? Or are agents of the same government always in privity with each other
because they represent not their own rights, but rights of the government? See
People v. Sims, supra, 32 Cal. 3d at 486.

(10) Privity Between Prosecutor and DMV.

( a ) Conflicting Judicial Determinations. The Courts of Appeal are

divided on the question of whether the DMV in a license revocation
administrative hearing is in privity with the prosecuting attorney in a prior
criminal DUI proceeding involving the same incident. Some courts have
concluded that the relationship between the DMV and the district attorney was
“sufficiently close” to support a finding of privity, since both agencies represent
the state and have the same interest in protecting the public. Therefore, for
example, where the defendant is charged with refusal to complete a chemical
test, a determination by the court that the defendant’s arrest was without
probable cause in the DUI action collaterally estopped the DMV from
relitigating the issue of the validity of the defendant’s [568/569]arrest in a
subsequent license revocation hearing (the Vehicle Code requires as a
prerequisite to such revocation that the driver be lawfully arrested). See, e.g.,
Zapata v. Dept. of Motor Vehicles , 2 Cal. App. 4th 108, 2 Cal. Rptr. 2d 855
(1991); Buttimer v. Alexis, 146 Cal. App. 3d 754, 760, 194 Cal. Rptr. 603
(1983); Shackelton v. Dept. of Motor Vehicles , 46 Cal. App. 3d 327, 330, 119
Cal. Rptr. 921 (1975). However, other court have reached the opposite
conclusion in identical circumstances and found the DMV not in privity with the
district attorney. See Pawlowski v. Pierce, 202 Cal. App. 3d 692, 698, 249 Cal.
Rptr. 49 (1981); Lofthouse v. Dept. of Motor Vehicles , 124 Cal. App. 3d 730,
736–38, 177 Cal. Rptr. 601 (1981). In light of People v. Sims, supra, which of
these privity conclusions is the better one? What impact will the policy
considerations of Lucido v. Superior Court, supra, 51 Cal. 3d at 343, have on
the ultimate resolution of the collateral estoppel question?

(b) Legislative Resolution. The California Supreme Court considered this

question of whether the DMV is in privity with the prosecution in Gikas v.
Zolin, 6 Cal. 4th 841, 25 Cal. Rptr. 2d 500, 863 P.2d 745 (1993) . The court
acknowledged the conflicting lower court conclusions, but found the privity
question now governed by Vehicle Code § 13353.2(e) as amended effective
1990. “[W]hatever similarities there may or may not be between this situation
and that of People v. Sims,” the court observed, “[t]he Legislature [has now]
made the policy decision that … administrative proceedings before the DMV
will not have a preclusive effect on related criminal proceedings.” Id. at 851.
The Legislature also specified in § 13353.2(e) exactly what preclusive effect
the criminal proceeding has on the administrative: an acquittal on the criminal
charges precludes DMV proceedings to suspend a license. Id. at 852. The court
then construed § 13353.2(e) to intend that only a criminal “acquittal” on the
merits will affect the DMV administrative proceedings; a dismissal of the
criminal charges based on unlawful arrest does not preclude relitigation of that
issue in a DMV license suspension proceeding. Id. at 852–57.

By enacting Vehicle Code § 13353.2(e), how did the Legislature resolve the
conflict within the Courts of Appeal as to whether the DMV is in privity with
the prosecution? Did the Legislature do more than merely address the privity
issue — did it otherwise alter other aspects of the judge-made doctrine of
collateral estoppel in driving-under-the-influence cases? How so? What policy
considerations are reflected in § 13353.2(e)?

( 1 1 ) No Privity When Distinct Government Agencies. Where two

governmental agencies have distinct identities, constituencies and interests, they
may not be considered in privity even where they are branches of the same
government. In Traub v. Bd. of Retirement , 34 Cal. 3d 793, 195 Cal. Rptr. 681,
670 P.2d 335 (1983) , the plaintiff, an injured county employee, was awarded
benefits against the County of Los Angeles by a decision of the Workers’
Compensation Appeals Board (WCAB). The WCAB found that plaintiff’s
disability was due to an employment-connected injury. Plaintiff then applied for
a service-connected disability pension with the Los Angeles County Board of
Retirement. The Retirement Board denied plaintiff a full pension, finding that
his disability was not service-connected. Plaintiff sought judicial review, and
argued that the County Retirement Board was collaterally estopped from
redetermining the issue of whether his disability was employment-connected.
Plaintiff argued that the decision of the WCAB was conclusive on this
[569/570]issue, and that the Retirement Board was in privity with the county in the
WCAB proceeding.

The Supreme Court concluded that there was no privity between the County,
against which the WCAB award was made, and the County Retirement Board.
The court found that the County Retirement Board did not act as a mere agent of
the County, but instead was an independent administrator of an entity distinct
and separate from the County. The court noted that the retirement system was
distinct and independent of the County, that the constituency of that system was
not limited to County employees, and that funding for the system was not limited
to county employees. Consequently, the distinctive identity, constituency and
interests of the County Retirement Board did not support privity between it and
the County of Los Angeles. Traub, 34 Cal. 3d at 798–99.

(a) Is the reasoning and conclusion in Traub consistent with the policy
considerations which comprise the doctrine of privity? In what way is the
interest of the County in resisting a workers’ compensation claim any different
than the County Retirement Board’s scrutiny of a claim for a service-connected
disability allowance? Is not the relationship between the County and the County
Retirement Board “sufficiently close” with respect to the issue of whether the
employee’s disability was employment-connected?

(b) The Traub reasoning has been followed by other courts. E.g.,
Geoghegan v. Retirement Bd., 222 Cal. App. 3d 1525, 1531–34, 272 Cal. Rptr.
419 (1990); Bianchi v. City of San Diego, 214 Cal. App. 3d 563, 569–72, 262
Cal. Rptr. 566 (1989) (City of San Diego not in privity with City Retirement
Board); City of Gilroy v. State Bd of Equalization, 212 Cal. App. 3d 589, 605–
607, 260 Cal. Rptr. 723 (1989) (City not in privity with State Board of
Equalization with respect to tax refund issue). However, where a retirement
board does act as the agent for city or county, the requisite privity will be found.
See French v. Rishell, 40 Cal. 2d 477, 254 P.2d 26 (1953).
 (12) Stranger Not Bound by Prior Judgment. Generally, a person who is not
a party or in privity with a party is a “stranger” to an action, and is not bound by
the judgment. See, e.g., Traub v. Bd. of Retirement, supra . This is, of course, a
due process requirement which ensures that every person is entitled to an
opportunity for her own day in court prior to deprivation of property, or at least
the functional equivalent when in privity. Clemmer v. Hartford Ins. Co., supra,
22 Cal. 3d at 875; Courtney v. Waring , 191 Cal. App. 3d 1434, 237 Cal. Rptr.
233 (1987).

(a) To what extent should a nonparty be bound by a prior judgment where

the nonparty has interests identical to a party in the action, knew of the litigation,
and easily could have intervened and became a party? This was one of the
questions discussed by the court in Lewis v. County of Sacramento, 218 Cal.
App. 3d 214, 266 Cal. Rptr. 678 (1990). Plaintiff Lewis, an FAA safety
inspector, sued the County of Sacramento for personal injuries suffered while
plaintiff was administering a helicopter test flight to a County deputy sheriff.
While this state court action was pending, the County sued the United States in
federal court for property damage to the County’s helicopter. The federal court
concluded that the helicopter crash was caused solely by the negligence of
Lewis, while acting in the scope of his employment for the FAA.

[570/571]

The court held that plaintiff Lewis was in privity with the United States in the
prior federal action, and was therefore collaterally estopped from relitigating
the issue of his negligence in his state action against the County. The court found
that there was an identity of interest between the U.S. and plaintiff Lewis, and
that the U.S. adequately represented Lewis’ interests in the federal litigation.
And although plaintiff Lewis did not control the federal suit, he knew of the
federal action’s existence from its inception and easily could have intervened as
a party pursuant to Rule 24, F.R.C.P. The court then concluded that plaintiff
Lewis had a full and fair opportunity to pursue his claim in the federal action;
therefore, collaterally estopping him from relitigating the negligence issue did
not violate his due process rights.

(b) Do you agree with the court’s conclusion in Lewis? Is it consistent with
due process to bind a nonparty because a party to the litigation has the same
interests as the nonparty, and, although not formally representing the nonparty’s
interests, in fact fully (albeit unsuccessfully) defends that interest? In what sense
has that nonparty had his own day in court? Does the nonparty have an
obligation to become a party when he knows of the litigation and could easily
intervene? Does the nonparty’s failure to intervene mean that his due process
rights have been vindicated because he had a fair opportunity to have his own
day in court but chose to waive it? In Martin v. Wilks , 490 U.S. 755, 765, 109
S. Ct. 2180, 104 L. Ed 2d 835 (1989), the U.S. Supreme Court held: “Joinder as
a party, rather than knowledge of a lawsuit and an opportunity to intervene, is
the method by which potential parties are subjected to the jurisdiction of the
court and bound by a judgment or decree. The parties to a lawsuit presumably
know better than anyone else the nature and scope of relief sought in the action,
and at whose expense such relief might be granted. It makes sense, therefore, to
place on them a burden of bringing in additional parties where such a step is
indicated, rather than placing on potential additional parties a duty to intervene
when they acquire knowledge of the lawsuit.” Is Lewis consistent with Martin
v. Wilks?

(c) In Rodgers v. Sargent Controls & Aerospace, 136 Cal. App. 4th 82, 38
Cal. Rptr. 3d 528 (2006), the plaintiff worker sued the defendant company for
personal injuries caused by asbestos exposure. The plaintiff alleged that the
defendant was the successor entity of the source of his exposure to asbestos. The
issue of successor liability had been litigated and resolved in favor of the
defendant in two prior actions, in which the other plaintiffs were represented by
the same attorneys as the plaintiff in Rodgers. The superior court found the
plaintiff was collaterally estopped from claiming that the defendant was a
corporate successor, and entered summary judgment for defendant.

The Court of Appeal reversed, ruling that the plaintiff was not in privity with
the other workers in the prior lawsuits and therefore collateral estoppel cannot
be applied. The Rodgers court concluded that the application of collateral
estoppel would violate due process even though imposing issue preclusion
would further the cognizable interests of avoiding harassment of the defendant
with repeated litigation, reduce the possibility of inconsistent judgments, and
promoting judicial economy. Rodgers, 136 Cal. App. 4th at 91–94. Although the
plaintiff had a theoretical interest in the resolution of the successor liability
issue in the prior cases, he had no proprietary interest in those cases. Moreover,
the plaintiff had no [571/572]control over the plaintiffs in the other proceedings
and did not stand in a close relationship with them, nor did those plaintiffs act
as his representative. The fact that the plaintiff was represented by the same
counsel did not justify a finding of privity, at least without evidence that through
his attorney, the plaintiff participated in or controlled the adjudication of the
successor liability issue in the prior actions. Rodgers, 136 Cal. App. 4th at 92–
94.
 (13) Adequate Representation. In the context of collateral estoppel and the
privity doctrine, due process requires that the party to be estopped must be have
an identity of interests with the losing party in the prior litigation and that
interest must have been adequately represented in the prior litigation. Did the
losing party in a prior action “adequately represent” the interests of the plaintiff
in the current action where the current plaintiff identifies additional evidence
and legal arguments not presented in the prior action? In Mooney v. Caspari,
138 Cal. App. 4th 704, 41 Cal. Rptr. 3d 728 (2006) , the court ruled that a
finding of privity does not depend upon an identity of evidence or arguments
presented, nor upon the result obtained. According to the court, the doctrine of
privity does “not require an assessment of the quality or competence of the prior
legal representation provided.” Mooney, supra, 138 Cal. App. 4th at 721. Do
you agree with the Mooney court’s reasoning? Does Mooney mean a
representative party’s conduct that shows a lack of incentive or resources to
litigate a common interest is irrelevant to a privity determination? See Planning
& Conservation League v. Castaic Lake Water Agency , 180 Cal. App. 4th 210,
103 Cal. Rptr. 3d 124 (2009) (a party may not expressly abandon its role as
representative while preserving privity);

(14) Federal Privity Doctrine Compared. In Taylor v. Sturgell , 553 U. S.

880, 128 S. Ct. 2161, 171 L. Ed. 2d 155 (2008), the U.S. Supreme Court
discussed the federal common law doctrine of privity applicable when
determining the preclusive effect of a prior federal court judgment in federal
question cases. The Supreme Court carefully delineated six categories of
recognized exceptions to the general rule against nonparty preclusion, but
specifically rejected the “virtual representation” or “close enough” exception
because it is based an amorphous balancing test, has unclear standards, and
does not sufficiently require adequate representation of a nonparty. Taylor, 553
U.S. at 898–902.

Footnotes:

2 Because mutuality of estoppel is no longer a requirement for the application of the doctrine (see
Bernhard v. Bank of America , (1942) 19 Cal. 2d 807, 813 [122 P.2d 892] ).), privity is a concern with
respect to the party against whom the doctrine is asserted.

4 In Clemmer v. Hartford Ins. Co ., supra, 22 Cal. 3d 865, following a second degree murder verdict
against a defendant in a criminal trial, the victim’s family filed a wrongful death suit seeking recovery from
defendant’s liability insurer. The insurance company defended the action on the ground the killing was a
willful act and thus excluded from coverage. The insurance company claimed that the victims were
collaterally estopped by defendant’s second degree murder conviction from contending the killing was not
willful; their claim was that the victim’s family was in privity with the defendant because their rights derived
from defendant’s insurance policy. The court rejected the collateral estoppel claim and concluded that the
requisite privity did not exist because the victim’s family’s interests in litigating the willfulness issue differed
from those of the defendant at the criminal trial. The court, noting that at conclusion of the guilt phase of the
criminal trial the defendant withdrew his previous plea of not guilty by reason of insanity, asserted that the
withdrawal of the plea may have been a result of defendant’s determination that the sentence to be served
by him under a second degree murder conviction would be preferable to the possible consequence of his
prevailing on an insanity plea, i.e., a state mental hospital commitment.

5 We recognize that the Attorney General wears many hats and was not functioning in a criminal
prosecutorial role when representing the agency in this disciplinary action.

6 We recognize that the fact that an individual appears as a witness in an action does not in and of itself
support a finding of privity with a party in that action for purposes of the application of collateral estoppel in
a subsequent proceeding. (Minton v. Cavaney (1961) 56 Cal. 2d 576, 581 [15 Cal. Rptr. 641, 364 P.2d
473].)

§ 8.05 LAW OF THE CASE; JUDICIAL ESTOPPEL

[A] Law of the Case Doctrine

CLEMENTE v. STATE OF CALIFORNIA

SUPREME COURT OF CALIFORNIA
40 Cal. 3d 202, 219 Cal. Rptr. 445, 707 P.2d 818 (1985)

Broussard, Justice.

This case presents a unique cause of action as well as a somewhat

complicated procedural history. Plaintiff Jose Clemente was severely injured
when he was struck by a motorcycle while attempting to cross a street. The
motorcyclist was [572/573]never apprehended. Clemente brought suit against the
State of California and Highway Patrol Officer Arthur Loxsom, alleging that
Loxsom was negligent in failing to ascertain the identity of the motorcyclist.

After the trial court sustained defendants’ demurrer to the complaint, the
Court of Appeal reversed and remanded, holding that plaintiff could state a
cause of action against Loxsom and the state. (Clemente v. State of California
(1980) 101 Cal. App. 3d 374, 379–380 [161 Cal. Rptr. 799] , hereinafter
Clemente I.) After amending his complaint in conformity with Clemente I,
plaintiff proceeded to trial and obtained a $2,150,000.21 judgment. Defendants
appeal.

I. FACTS

On January 27, 1975, plaintiff was struck by a motorcycle while attempting to

cross at an intersection. Officer Arthur Loxsom of the California Highway
Patrol was on his way to freeway patrol when he was hailed by a passing
motorist and directed to the scene of the accident. When Loxsom arrived at the
scene, plaintiff was attempting to crawl out of the crosswalk and onto the
sidewalk. He was being assisted by a group of bystanders. A man was pushing a
motorcycle out of the street. Loxsom turned on his flashers in order to indicate
that an accident had occurred. Several people came up to him in order to tell
him how the accident had happened. He called an ambulance and the Los
Angeles Police Department (LAPD). He may have also directed traffic around
the intersection.

The motorcyclist, along with a van driver who had been in the lane next to the
motorcycle, also approached Loxsom. The van driver told Loxsom that he had
stopped to allow plaintiff to cross but that the motorcyclist had not done so and
had struck him. The motorcyclist admitted that he had hit plaintiff, explaining
that he had not seen him. He asked Loxsom what he should do with the
motorcycle, and Loxsom directed him to move it out of the street and place it
near the curb. Loxsom told the motorcyclist not to leave the scene and to await
the arrival of LAPD. Loxsom left before either the ambulance or LAPD arrived.
He did not obtain the name or license of the motorcyclist or the license number
of the motorcycle. He also did not get any identification from the van driver.
The motorcyclist and the van driver left before LAPD arrived. Despite later
efforts they were never found.

Loxsom never spoke to plaintiff or examined him to ascertain whether he was

seriously injured. By the time he was taken to the hospital plaintiff had lapsed
into a coma and was in critical condition. He suffered severe brain damage, and
is paralyzed, unable to speak, incontinent and must depend upon others to attend
to his daily needs.
 II. LAW OF THE CASE

Defendants contend that Clemente I was erroneously decided relying upon

our subsequent decision in Williams v. State of California (1983) 34 Cal. 3d 18
[192 Cal. Rptr. 233, 664 P.2d 137] and other decisions and that Loxsom did not
owe a duty to plaintiff to exercise due care in his investigation. We have
concluded that the decision in Clemente I is law of the case, establishing
Loxsom’s duty to exercise due care.

[573/574]

In Clemente I, the court concluded that plaintiff could state a cause of action
for negligent breach of a duty to exercise due care in the conduct of the
investigation undertaken by Loxsom. The court stated:

“The injury plaintiff alleged in this third amended complaint was the
virtual destruction of any opportunity on his part to obtain compensation
for his physical injuries from the apparent tortfeasor, the motorcyclist, by
reason of the officer’s negligence in the conduct of his investigation of the
traffic accident in failing to obtain the motorcyclist’s identity. What is
involved under these allegations is not the discretion of Officer Loxsom in
deciding whether to investigate the traffic accident, pursuant to the
discretionary authority vested in him by Vehicle Code section 2412, but
instead only his negligence in his conduct of the discretionary
investigation. Neither the discretionary immunity of Government Code
section 820.2, nor the more specific discretionary immunity of failure to
enforce a statute (Gov. Code, §§ 821, 818.2) immunizes the officer and the
state from the legal consequences of this negligence. Government, through
its agents, is held to the same standard of care the law requires of private
citizens in the performance of duties imposed or assumed.

“We think that possible liability of the officer and the state in this case
is indicated by our reasoning in the aforementioned decision of this panel,
Mann v. State of California, supra, [1977] 70 Cal. App. 3d 773 [139 Cal.
Rptr. 82]. There, we said that the lack of police protection immunity
granted by Government Code section 845, extends essentially only to
protection against crime and to that resulting from budgetary neglect. It
does not extend to negligence as such. There, we also said that a special
relationship in tort law obtained between the California highway patrol
 officer there involved and the stranded motorists by reason of their
dependence on his expertise. Here, the completely disabled and apparently
incompetent plaintiff was likewise completely dependent on Officer
Loxsom following the traffic accident.” (101 Cal. App. 3d at pp. 379–
380).

In People v. Shuey (1975) 13 Cal. 3d 835, 841 [120 Cal. Rptr. 83, 533 P.2d
211], we explained the doctrine of the law of the case in this manner: “‘The
doctrine of the law of the case is this: That where, upon an appeal, the supreme
court, in deciding the appeal, states in its opinion a principle or rule of law
necessary to the decision, that principle or rule becomes the law of the case and
must be adhered to throughout its subsequent progress, both in the lower court
and upon subsequent appeal, and, as here assumed, in any subsequent suit for the
same cause of action, and this although in its subsequent consideration this court
may be clearly of the opinion that the former decision is erroneous in that
particular.’”

“The principle applies to criminal as well as civil matters, and to decisions

of intermediate appellate courts as well as courts of last resort. ‘Where a
decision upon appeal has been rendered by a District Court of Appeal and the
case is returned upon a reversal, and a second appeal comes to this court
directly or intermediately, for reasons of policy and convenience, this court
generally will not inquire into the merits of said first decision, but will regard it
as the law of the case.’”

However, the doctrine of law of the case which has been recognized as being
[574/575]harsh is merely a rule of procedure and does not go to the power of the
court. It will not be adhered to where its application will result in an unjust
decision. The principal ground for making an exception to the doctrine of law of
the case is an intervening or contemporaneous change in the law.

Defendants contend that the exception is applicable here claiming that an

intervening change in the law has occurred. They rely on Williams v. State of
California (1983) 34 Cal. 3d 18 [192 Cal. Rptr. 233, 664 P.2d 137].

In Williams, plaintiff was injured when a piece of a heated brake drum from a
passing truck was propelled through her windshield. Highway patrolmen
arrived within a few minutes of the accident. Plaintiff claimed that the patrolmen
were negligent in failing to test for the heat of the object which struck her, to
secure the names of witnesses, and to attempt investigation or pursuit of the
owner or driver of the truck.

The court concluded that the complaint did not state a cause of action. It was
pointed out that in the absence of a special relationship, a person who has not
created a peril has no duty to come to the aid of another and that the State
Highway Patrol has the right but not the duty to investigate accidents. It was also
pointed out that cases had denied recovery for injuries caused by the failure of
police personnel to respond to requests for assistance, to investigate properly or
to investigate at all when the police had not induced reliance on a promise,
express or implied, that they would provide protection. The court rejected
Clemente I stating that the duty to obtain the motorcyclist’s name as pleaded in
that case was “based solely” on the fact of dependence. (34 Cal. 3d at pp. 23–
27).

The court also concluded that under the good Samaritan doctrine the Highway
Patrol may have a duty to members of the public to exercise due care when the
patrol voluntarily assumes a protective duty toward a certain member of the
public and undertakes action on behalf of that member thereby inducing reliance,
when an express promise to warn of a danger has induced reliance, or when the
actions of the patrol place a person in peril or increase the risk of harm. The
court specifically recognized that a duty of care may arise when the conduct of a
patrolman in a situation of dependency results in detrimental reliance on him for
protection. (34 Cal. 3d at pp. 23–25.) The court discussed Mann v. State of
California, supra, 70 Cal. App. 3d 773 (34 Cal. 3d at p. 25) which was, as we
have seen, the case relied upon in Clemente I. Mann was characterized as a
case where the officers took “affirmative steps to provide assistance, lulling the
injured parties into a false sense of security and perhaps preventing other
assistance from being sought.” (34 Cal. 3d at p. 25.)

Although Williams rejected Clemente I, it does not establish that Officer

Loxsom did not have a duty to exercise care in his investigation to protect
plaintiff. To the contrary, Williams held that the conduct of a patrolman in a
situation of dependency resulting in detrimental reliance may give rise to a duty
of care and recognized that there may be a duty to refrain from conduct which
prevents others from giving assistance. The record herein shows that the officer
spoke to the drivers of the van and motorcycle and that there were a number of
bystanders assisting plaintiff after the accident who could have obtained the
drivers’ names and license numbers. Williams does not preclude liability where
the officer’s conduct prevents [575/576]other assistance, and thus it does not
constitute a change in the law warranting rejection of the law of the case that
Officer Loxsom could have a duty to exercise care.

In the circumstances of the instant case, it has not been shown that application
of the doctrine of law of the case will result in an unjust decision. First, the
parties went to trial prior to Williams and presented evidence with the
understanding that the officer’s liability would be governed by the standard set
forth in Clemente I. Secondly, Clemente I did not misapply prior law in a way
which resulted in “substantial injustice.” Although Williams served to clarify
what the duties of a highway patrol officer were under a given set of
circumstances, our opinion in that case recognized the possibility that such an
officer might owe a member of the public a duty of care based on conduct like
that shown here. * * *

The judgment is affirmed.

Bird, Chief Justice, and Mosk and Reynoso, Justices, concurred.

Kaus, Justice, Concurring.

I concur in the result and in all parts of the court’s opinion, except — if I read
it correctly — its view of the impact of Williams v. State of California (1983)
34 Cal. 3d 18 [192 Cal. Rptr. 233, 664 P.2d 137] , on the law of the case as laid
down in Clemente I. The court makes a valiant effort to reconcile the two
decisions but, with all respect, it does not quite work. Of course Williams does
not preclude liability where the officer’s conduct prevents other assistance, but
there is no evidence here that this was the case. At most, the situation was such
that had trial counsel known that such proof was essential, he might have been
able to produce it. The real — and only — point is that Clemente I did not
require such proof and Williams was not decided until after the trial of this
case. Under such circumstances, refusal to apply the doctrine of the law of the
case would be most unfair. Just as that doctrine will not be adhered to “where
its application will result in an unjust decision” (DiGenova v. State Board of
Education (1962) 57 Cal. 2d 167, 179 [18 Cal. Rptr. 369, 367 P.2d 865] ), it
should not be laid aside where to do so would be manifestly wrong.
Grodin, Justice, concurred.

Lucas, Justice, dissenting.

I respectfully dissent. The majority, after correctly describing the doctrine of

“law of the case” and the exceptions thereto, promptly ignores its own
description. When law of the case might apply, “[the] principal ground for
making an exception to the doctrine … is an intervening or contemporaneous
change in the law. [Citations.]” What could be a clearer intervening change in
the law than a Supreme Court decision expressly disapproving the prior Court
of Appeal holding in the same case on the same issue?

In Williams v. State of California (1983) 34 Cal. 3d 18 [192 Cal. Rptr. 233,

664 P.2d 137] , we summarized the decision in Clemente v. State of California
(1980) 101 Cal. App. 3d 274 [161 Cal. Rptr. 799] [576/577](hereinafter Clemente
I) as one in which the Court of Appeal had found liability even in the absence of
an allegation that “the officer’s investigation caused plaintiff not to undertake
one of his own.” (Williams, 34 Cal. 3d at p. 26.) That holding followed the
finding that the pedestrian was “dependent on the highway patrolman.” (Ibid.,
italics in original.)

Our analysis in Williams concluded that more was required before a cause of
action could be stated against a police official and we, therefore, expressly
disapproved Clemente I to the extent it was inconsistent with our reasoning. (34
Cal. 3d at p. 28, fn. 9.) We concluded instead that the general rule that “one has
no duty to come to the aid of another” generally applied. (Id., at p. 23.) Only
when a “special relationship arises” may liability be imposed. (Id., at p. 24.)
Thus, “when the state, through its agents, voluntarily assumes a protective duty
toward a certain member of the public and undertakes action on behalf of that
member, thereby inducing reliance, it is held to the same standard of care as a
private person or organization. [Citations.]” (Ibid.) However, where allegations
amount only to nonfeasance without assertions that the officer in some manner
promised to undertake the tasks left undone or otherwise induced reliance on the
part of the plaintiff who was in any manner prevented from acting, no duty exists
and no liability will be imposed.

In other words, dependency alone does not create a relationship which gives
rise to a duty to assist or protect the injured person. In Williams, the defendant
had not alleged that “the officers assured her, either expressly or impliedly that
they would do any of the acts she faults them for not doing, [nor were there]
allegations that they conducted themselves in such a manner as to warrant
reliance upon them to do the acts which the plaintiff alleges they should have
done, nor finally is there any hint that they prevented plaintiff from conducting
an investigation of her own.” (34 Cal. 3d at p. 27, fn. omitted.) Similarly, in this
case no such assertions were made.

In his petition before this court, plaintiff stated that because this case had
been tried under the authority of Clemente I, “there was no need to plead or
prove that the officer’s conduct prevented other assistance from being sought, or
caused plaintiff (or someone acting on his behalf) not to undertake an
investigation of his own. [¶] That issue was not present either at the trial or
appellate level in this proceeding.” He then went on to ask us nonetheless to
match the facts adduced against the Williams standard and to conclude that the
facts were sufficient to permit him an opportunity to amend and retry the case
which had not previously addressed this aspect of the officer’s conduct.

The parties proceeded in the belief that Clemente I stated the applicable law.
Even under that approach, evidence regarding the effects of the officer’s conduct
as are asserted here would have been relevant and of assistance to the plaintiff.
As the Court of Appeal in the instant case stated, unlike the situation in
Williams, “plaintiff in the present case has filed four amended complaints, had a
jury trial on the merits, and has still been unable to establish any of the required
elements necessary to establish a duty of care owed by defendant State. Clearly,
further action would be futile.” Accordingly, I would reverse the judgment.

[577/578]

NOTES AND QUESTIONS REGARDING LAW OF THE CASE

(1) Law of the Case, Generally. The doctrine of law of the case is related to
the doctrine of res judicata/collateral estoppel, but the two doctrines apply to
different circumstances. What is their basic difference in application? The
doctrine of law of the case is also recognized by the court as “being harsh” and
as “merely a rule of procedure.” What is meant by this recognition? What
appears to be the consequence of this recognition? Is not res judicata/collateral
estoppel also a “rule of procedure,” and does it not also produce some “harsh”
results? Which doctrine do you think is viewed less favorably by the courts,
and, consequently, is applied with more flexibly? Why?

( 2 ) Exception: Intervening Change in Law. As Clemente v. State of

California indicates, the courts have fashioned a number of exceptions to the
doctrine. The most common exception is when there has been an intervening
change in the law since the prior appellate decision. See, e.g., People v. Whitt,
51 Cal. 3d 620, 638–39, 274 Cal. Rptr. 252, 798 P.2d 849 (1990) ; Subsequent
Injuries Fund v. Industrial Accident Comm’n, 53 Cal. 2d 392, 395, 1 Cal.
Rptr. 833, 348 P.2d 193 (1960) . But, as Clemente illustrates, not all changes in
the law will justify disregarding the established law of the case. The change
must be in the controlling rule of law. See George Arakelian Farms, Inc. v.
Agricultural Labor Relations Bd., 49 Cal. 3d 1279, 1292, n.9, 265 Cal. Rptr.
162, 783 P.2d 749 (1989) . If there is an intervening change in a controlling rule
of law, does this exception automatically apply? What position did Justice Kaus
take in his concurring opinion? See also George Arakelian Farms, supra, 49
Cal. 3d at 1291 (“judicial economy demands that [appellant] demonstrate that
failure to apply [an intervening change in case law] would be a manifest
misapplication of existing legal principles and would result in a substantial
injustice”); but see DiGenova v. State Bd. of Ed., 57 Cal. 2d 167, 179–80, 18
Cal. Rptr. 369, 367 P.2d 865 (1962) (application of doctrine would obviously
result in manifest injustice where law clarified by intervening appellate
decision).

(3) Exception: Manifest Injustice. Another general exception to law of the

case is where application of the doctrine will result in a “manifest injustice” or
an “unjust decision.” Yu v. Signet Bank Virginia , 103 Cal. App. 4th 298, 311,
126 Cal. Rptr. 2d 516 (2002). Under what circumstances would there be a
“manifest injustice” to apply law of the case when there has been no intervening
change in controlling law? See Searle v. Allstate Life Insurance Co., 38 Cal. 3d
425, 212 Cal. Rptr. 466, 696 P.2d 1308 (1985) (Supreme Court refused to
follow rule of law established by Court of Appeal during prior appeal because
to do so would constitute a manifest misapplication of existing principles
resulting in substantial injustice).

In Searle, the Supreme Court also viewed itself as not bound by law of the
case rule because the Court determined that there should be a reversal of the
current appeal on a ground that was not considered on the prior appeal, and that
therefore the “reason for the rule is inoperative.” Id. at 435–36. What is the
primary purpose served by the law of the case doctrine? Why is that reason for
the doctrine inoperative in circumstances such as those in Searle?
 ( 4) Exception: Unpresented Issues. The doctrine also does not apply to
issues of law that might have been, but were not, presented and determined on a
prior appeal. DiGenova v. State Bd. of Ed., supra, 57 Cal. 2d at 179; George
Arakelian Farms, supra, 49 Cal. 3d at 1291. [578/579]Why not?

( 5) Issues of Law. As the name of the doctrine implies, law of the case
applies to issues of law and not to issues of fact. This distinction is not always
easy to determine. See People v. Shuey, 13 Cal. 3d 835, 842–43, 120 Cal. Rptr.
83, 533 P.2d 211 (1975) (and cases cited therein). If a party wishes to challenge
a ruling made by an appellate court during a prior appeal, is it more
advantageous to argue that the ruling was on an issue of law or of fact? If the
court in the subsequent appeal determines that the prior ruling was on an issue
of law, the law of the case doctrine will apply. What doctrine applies if the
court determines that the prior ruling was on an issue of fact?

(6) Extraordinary Writs . Law of the case can apply to pretrial extraordinary
writ proceedings. See Kowis v. Howard, 3 Cal. 4th 888, 894, 12 Cal. Rptr. 2d
728, 838 P.2d 250 (1992) . When an appellate court issues an alternative writ,
the matter is fully briefed, there is an opportunity for oral argument, and the
cause is decided by a written opinion; the resultant holding establishes law of
the case upon a later appeal from the final judgment. Id. However, the Supreme
Court recently held on policy grounds that a summary denial of an extraordinary
writ petition does not establish law of the case, even though the sole possible
ground for the denial was that the court acted on the merits. Kowis v. Howard,
supra, 3 Cal. 4th at 897–901. Likewise, the Court ruled, for the same policy
reasons, that an appellate court’s summary denial of a motion to dismiss on
appeal should not preclude later consideration of the issue after full review of
the entire case. Id. What policy reasons led the Supreme Court to these rulings?

[B] Judicial Estoppel Doctrine

Several recent decisions have invoked the doctrine of judicial estoppel,

which prevents a party from asserting a position in a legal proceeding that is
contrary to a position previously taken in the same or some earlier proceeding.
See, e.g., Blix Street Records, Inc. v. Cassidy , 191 Cal. App. 4th 39, 47-51,119
Cal. Rptr. 3d 574 (2010) (even if the settlement agreement was not actually
enforceable, plaintiffs judicially estopped from denying its enforceability
because they represented to the trial court that the case had settled and the trial
court terminated the trial and discharged the jury in reliance on plaintiffs’
representation); Levin v. Ligon, 140 Cal. App. 4th 1456, 45 Cal. Rptr. 3d 560
(2006) (ex-husband’s prior legal malpractice action in England, which he
settled after asserting that he lost his right to any interest in the financial assets
held by his former wife and accumulated during their marriage, estopped him
from claiming a community property interest in these same assets); Jackson v.
County of Los Angeles, 60 Cal. App. 4th 171, 70 Cal. Rptr. 2d 96 (1997)
(judicial estoppel barred plaintiff’s action alleging defendant County violated
the Americans with Disability Act by refusing to reinstate plaintiff as a safety
police officer, the only job plaintiff wanted and a job whose duties plaintiff
admitted involved substantial stress, because plaintiff had previously received a
stipulated workers’ compensation award based on an agreed finding that he
needed a stress-free job).

The judicial estoppel doctrine applies when:

[579/580]

(1) [T]he same party has taken two positions; (2) the positions were
taken in judicial or quasi-judicial administrative proceedings; (3) the party
was successful in asserting the first position (i.e., the tribunal adopted the
position or accepted is as true); and (4) the two positions are totally
inconsistent; and (5) the first position was not taken as a result of
ignorance, fraud, or mistake.

Aguilar v. Lerner, 32 Cal. 4th 974, 986-87, 12 Cal. Rptr. 3d 287, 88 P.3d 24
(2004) (quoting Jackson, supra, 60 Cal. App. 4th at 183).

Because judicial estoppel is an equitable doctrine, its application is

discretionary even where all necessary elements are present. For example, a
party cannot invoke judicial estoppel where its application would contravene a
strong and clear statutory mandate. MW Erectors, Inc. v. Niederhauser
Ornamental & Metal Works Co., 36 Cal. 4th 412, 421–25, 30 Cal. Rptr. 3d
755, 115 P.3d 41 (2005) (judicial estoppel does not bar defendant contractor,
by virtue of allegedly inconsistent positions it took in related litigation, from
asserting the defense that plaintiff subcontractor was unlicensed and therefore
barred from recovery under Bus. & Prof. Code § 7031). However, because
judicial estoppel is an equitable doctrine designed to protect the integrity of the
judiciary, the doctrine may apply even in circumstances where the earlier
position was not adopted by the tribunal. See, e.g., Drain v. Betz Lab., Inc., 69
Cal. App. 4th 950, 957–60, 81 Cal. Rptr. 2d 864 (1999) ; Thomas v. Gordon, 85
Cal. App. 4th 113, 118–120, 102 Cal. Rptr. 2d 28 (2000) ; Jackson, supra, 60
Cal. App. 4th at 183–84, n. 8; but see Jogani v. Jogani, 141 Cal. App. 4th 158,
45 Cal. Rptr. 3d 792 (2006) (judicial estoppel inapplicable because court in
prior proceeding did not adopt or accept the truth of the plaintiff’s inconsistent
position, eliminating any threat to judicial integrity); Gottlieb v. Kest, 141 Cal.
App. 4th 110, 46 Cal. Rptr. 3d 7 (2006) (same).

How does judicial estoppel differ from collateral estoppel? Equitable

estoppel? See Jackson, supra, 60 Cal. App. 4th at 182–83 (distinguishing
judicial estoppel from collateral estoppel and equitable estoppel). Law of the
case?
[581/582]
Chapter 9

STATING CLAIMS AND DEFENSES: PLEADINGS

§ 9.01 INTRODUCTORY NOTE

California’s pleading system derives from the Field Code reforms of the mid-
19th century. New York’s adoption of a Code of Civil Procedure followed
closely upon the 1848 Report of the Commissioners on Practice and Pleadings
of New York and its head, David Dudley Field. California, which joined the
Union in 1850, chose the “modern” system of the time for its pleading model.
The Field Code abolished the common law forms of action, merged law and
equity, limited the types of pleadings, limited the effects of technical errors, and
required pleading only the “facts constituting the cause of action.” See CCP §§
307, 422.10, 425.10, and 475.

California remains nominally a “code pleading” state. It has declined to

follow the notice pleading model of the federal rules. Section 425.10(a) still
requires the complaint to contain “a statement of the facts constituting the cause
of action, in ordinary and concise language.” However, California has
liberalized the code pleading requirements. Case law reflects a reduced concern
with pleading ultimate facts in precisely the correct format. Pleading of common
causes of action, such as negligence, deviates considerably from the code
pleading model. The theory of the pleadings has been abandoned. Although the
elements of a cause of action must be present in a pleading, if the allegations
give sufficient notice of plaintiff’s factual theory, this is usually sufficient.
Alternative and inconsistent theories may be asserted. Joinder of claims and
parties has been liberalized by adopting rules similar to (and in many cases
identical to) the federal rules. Amendment is liberally allowed through trial.
The Judicial Council has also adopted Official Form pleadings — complaints,
cross-complaints and answers — for several basic types of claims and causes
of action. See CCP § 425.12. Identifying California as a code pleading state is
thus both misleading and an oversimplification.

Section 422.10 lists the pleadings in California courts: “The pleadings

allowed in civil actions are complaints, demurrers, answers and cross-
complaints.”

[582/583]

§ 9.02 THE COMPLAINT

[A] Pleading Ultimate Facts

SEMOLE v. SANSOUCIE
COURT OF APPEAL OF CALIFORNIA,
SECOND APPELLATE DISTRICT

28 Cal. App. 3d 714, 104 Cal. Rptr. 897 (1972)

Herndon, Acting Presiding Judge.

Plaintiffs (appellants) appeal from the order dismissing this action brought
against defendant to recover damages for wrongful death. The dismissal was
entered after defendant’s demurrer to plaintiffs’ second amended complaint had
been sustained without leave to amend on the ground that no cause of action had
been stated.

The original complaint, filed on July 11, 1966, alleges that on May 9, 1966,
plaintiffs’ son, John Semole, was fatally injured while loading piggyback
trailers onto railroad flatcars. It named as defendants the decedent’s employer,
Pacific Motor Trucking Company, and a fellow employee, Robert J. Sansoucie,
and 10 Does.

On December 11, 1970, the court below granted the motion of Pacific Motor
Trucking Company for summary judgment and dismissed the action as to that
defendant on the ground that the action against decedent’s employer was barred
by Labor Code section 3601 which, with inapplicable exceptions, limits the
remedy to the recovery of workmen’s compensation. Appellants took no appeal
from that judgment but have sought to maintain the action against Sansoucie,
decedent’s fellow employee, by invoking Labor Code section 3601, subdivision
(a)(3) which read at that time as follows:

“(a) Where the conditions of compensation exist, the right to recover

such compensation, pursuant to the provisions of this division is, except as
provided in Section 3706, the exclusive remedy for injury or death of an
employee against the employer or against any other employee of the
employer acting within the scope of his employment, except that an
employee, or his dependents in the event of his death, shall, in addition to
the right to compensation against the employer, have a right to bring an
action at law for damages against such other employee, as if this division
did not apply, in the following cases:

“(3) When the injury or death is proximately caused by an act of such

other employee which evinces a reckless disregard for the safety of the
employee injured, and a calculated and conscious willingness to permit
injury or death to such employee.”

… Sansoucie filed a general demurrer to the complaint and sought a dismissal

of the action on the grounds: (1) that summons was not served upon him within
the three-year period as provided in Code of Civil Procedure section 581a; and
(2) that the action was barred by Labor Code section 3601.

[583/584]

[The trial court refused to dismiss the action on the first ground but sustained
the demurrer, with leave to amend, on the ground that the complaint did not
allege facts sufficient to state a cause of action under Labor Code section 3601,
subdivision (a)(3). Plaintiffs filed a first and second amended complaint. In
each case, defendant demurred on the ground that a cause of action under Labor
Code section 3601, subdivision (a)(3) had still not been stated. The last
demurrer was sustained] without leave to amend, “pursuant to points and
authorities filed.” Thus, the first issue presented is whether or not the second
amended complaint alleges facts sufficient to state a cause of action.

The Complaint Does Set Forth Facts

Sufficient to State a Cause of Action.

The earlier versions of the complaint charged respondent with negligence and
reckless disregard for the safety of others. Since this action is subject to the
provisions of Labor Code section 3601, above quoted, they were manifestly
insufficient to state a claim, for they failed to allege the “calculated and
conscious willingness to permit injury or death” required by the statute.

In an effort to remedy the indicated deficiency, the second amended

complaint, the charging allegations of which are set forth in full in the margin,1
included an allegation cast in the words of the statute. Citing the rule that
allegations of “wilful misconduct” require that the facts must be stated more
fully than in ordinary negligence cases (Snider v. Whitson, 184 Cal. App. 2d
211 [7 Cal. Rptr. 353] ), respondent contends that the complaint must be held
inadequate. * * *

It is well settled that “[in] considering the sufficiency of a pleading, we are

bound by the rule that on appeal from a judgment entered on demurrer, the
allegations of the complaint must be liberally construed with a view to attaining
substantial justice among the parties. (Code Civ. Proc., § 452.)” (Youngman v.
Nevada Irrigation Dist., 70 Cal. 2d 240, 244–245 [74 Cal. Rptr. 398, 449 P.2d
462].) Obviously, the complaint must be read as a whole, and each part must be
given the meaning it derives from the total context wherein it appears.

The Supreme Court has consistently stated the guideline that “a plaintiff is
required only to set forth the essential facts of his case with reasonable
precision and with particularity sufficient to acquaint a defendant with the
nature, source and extent of his cause of action.” (Youngman v. Nevada
Irrigation Dist., supra, 70 Cal. 2d at p. 245; Smith v. Kern County Land Co.,
supra, [(1958)], 51 Cal. 2d [205] at p. 209.) It has also been stated that “[t]he
particularity required in pleading facts [584/585]depends on the extent to which the
defendant in fairness needs detailed information that can be conveniently
provided by the plaintiff; less particularity is required where the defendant may
be assumed to have knowledge of the facts equal to that possessed by the
plaintiff.” (Jackson v. Pasadena City School Dist., 59 Cal. 2d 876, 879 [31
Cal. Rptr. 606, 382 P.2d 878] ; Burks v. Poppy Construction Co., 57 Cal. 2d
463, 474 [20 Cal. Rptr. 609, 370 P.2d 313].) This seems particularly applicable
to a wrongful death action where none of the plaintiff-heirs was present at the
site of the fatal injury.

Finally, it must be noted that the modern discovery procedures necessarily

affect the amount of detail that should be required in a pleading.
 Applying these principles to the case at bar, we hold that the complaint,
though hardly a model of pleading, stated a cause of action. The statutory
requirement is that the death be caused by a fellow-employee’s act “which
evinces a reckless disregard for the safety of the employee injured, and a
calculated and conscious willingness to permit injury or death to such
employee.” (Lab. Code, § 3601, subd. (a)(3).) In substance, the complaint
alleges that respondent failed to inspect the area into which he was backing and
that he acted with the state of mind required by the statute. * * *

Respondent contends that paragraph X of the complaint is only a

characterization — a conclusion of law — with no additional factual support.
“The distinction between conclusions of law and ultimate facts is not at all clear
and involves at most a matter of degree. [Citations.] For example, the courts
have permitted allegations which obviously included conclusions of law and
have termed them ‘ultimate facts’ or ‘conclusions of fact.’” (Burks v. Poppy
Construction Co., supra, 57 Cal. 2d at p. 473.)

I n Smith v. Kern County Land Co., supra, 51 Cal. 2d 205, the issue was
whether an allegation that defendant “desired and wished” that plaintiff come
onto his land to remove tree stumps and roots was a sufficient averment of
plaintiff’s status as an invitee, not a licensee. The Supreme Court ruled, at page
208: “This allegation is not, as defendant contends, a mere conclusion of law.
The cases it relies on are readily distinguishable. Wheeler v. Oppenheimer, 140
Cal. App. 2d 497 [295 P.2d 128] , held only that the technical term ‘bad faith’
was a conclusion of law. Faulkner v. California Toll Bridge Authority , 40 Cal.
2d 317 [253 P.2d 659] , held to be legal conclusions the allegations that an
investigation was ‘insufficient’ and that acts were ‘arbitrary capricious,
fraudulent, wrongful and unlawful.’ The applicability of each of these words
depends on more than, as in the case at bar, the mere presence of a state of
mind.”

The pleading in the case at bar is not as clearly susceptible to that distinction
as the pleading in Smith. But we do feel that the allegation here possesses
enough of a factual thrust that we cannot agree with respondent’s contention that
it is only a characterization that adds no additional factual support.

In Jones v. Oxnard School Dist., 270 Cal. App. 2d 587, 593 [75 Cal. Rptr.
836], the court stated: “The applicable principle is that the ‘conclusion of law-
ultimate fact’ dichotomy is not an absolute but that the fair import of language
used in the pleading must be received to determine whether the adversary has
been fairly [585/586]apprised of the factual basis of the claim against him.” That,
we think, places the dichotomy in its proper perspective.

NOTES AND QUESTIONS ON THE

SUFFICIENCY OF THE COMPLAINT

(1) Semole illustrates the two issues present in evaluating the sufficiency of a
complaint, and by analogy any pleading in the code pleading system. Since the
complaint must contain “a statement of the facts constituting the cause of
action,” it must be both formally sufficient — the “facts” must be in the
appropriate style of “ultimate facts” — and these facts must present each of the
elements of one or more “cause[s] of action.” In Semole, there was no question
that the elements necessary to recover under the statute were clearly present —
plaintiff used the very words of the statute, “calculated and conscious
willingness to permit injury or death,” in the complaint. Defendant objected that
the allegation required more factual content and that it should be disregarded as
merely a “conclusion of law.”

( 2 ) Federal Court Pleading Standard Compared. For several decades,

pleading a fact-based cause of action was not necessary in federal court as long
as the pleading gives the defendant “fair notice of what the plaintiff’s claim is
and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47, 78 S.
Ct. 99, 2 L. Ed. 2d 80 (1957). However, two recent U.S. Supreme Court
decisions construing federal Rule 8(a)(2), Bell Atlantic Corp. v. Twombly , 550
U.S. 544, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007) and Ashcroft v. Iqbal , 556
U.S. 662, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009), disapproved of this
traditional “notice” pleading approach. Instead, the Supreme Court adopted the
following new standard for federal courts:

To survive a motion to dismiss, a complaint must contain sufficient

factual matter, accepted as true, to “state a claim to relief that is plausible
on its face.” [Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570 (2007).]
A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged. Id., at 556. * * *

Two working principles underlie our decision in Twombly. First, the

tenet that a court must accept as true all of the allegations contained in a
complaint is inapplicable to legal conclusions. Threadbare recitals of the
 elements of a cause of action, supported by mere conclusory statements, do
not suffice. Id., at 555 (Although for the purposes of a motion to dismiss
we must take all of the factual allegations in the complaint as true, we “are
not bound to accept as true a legal conclusion couched as a factual
allegation”). Rule 8 marks a notable and generous departure from the
hyper-technical, code-pleading regime of a prior era, but it does not unlock
the doors of discovery for a plaintiff armed with nothing more than
conclusions. Second, only a complaint that states a plausible claim for
relief survives a motion to dismiss. Id., at 556. Determining whether a
complaint states a plausible claim for relief will … be a context-specific
task that requires the reviewing court to draw on its judicial experience
and common sense. But where the well-pleaded facts do not permit the
court to infer more than the [586/587]mere possibility of misconduct, the
complaint has alleged — but it has not “show[n]” — “that the pleader is
entitled to relief.” Fed. Rule Civ. Proc. 8(a)(2).

In keeping with these principles a court considering a motion to

dismiss can choose to begin by identifying pleadings that, because they are
no more than conclusions, are not entitled to the assumption of truth. While
legal conclusions can provide the framework of a complaint, they must be
supported by factual allegations. When there are well-pleaded factual
allegations, a court should assume their veracity and then determine
whether they plausibly give rise to an entitlement to relief.

Ashcroft v. Iqbal, supra, 129 S. Ct. at 1949–50.

How does the new federal pleading standard compare with the standard
endorsed in Semole? Does the new federal standard require more or less fact-
based pleading than the Semole standard? Would the complaint in Semole have
survived a demurrer (i.e., a motion to dismiss for failure to state a claim) if the
California court had applied the new federal standard? In your opinion, which
of these two standards represents the better approach to pleading? Why?

(3) Under code pleading, the pleader can err by being either too general —
using conclusions of law — or too specific — pleading evidence. The
plaintiffs’ complaint in Careau & Co. v. Security Pac. Business Credit, Inc. ,
222 Cal. App. 3d 1371, 272 Cal. Rptr. 387 (1990) , contained both types of
defects. In Careau, the court considered the sufficiency of the part of the
plaintiffs’ complaint which alleged breach of contractual commitment to
provide loans. Id. at 1388–91. The court ruled that the plaintiffs failed to
adequately allege due satisfaction of several conditions precedent to the
formation of a binding contract. The court first found that the plaintiffs alleged
only general conclusions, and not the specific allegations of performance
required when the condition is an event as distinguished from an act to be
performed by the plaintiff. The plaintiffs then relied on their allegations of
certain oral statements of the defendant bank’s loan officer to show due
performance. The court rejected these statements as insufficient: “While those
statements may be some evidence that one or more conditions were satisfied,
they do not constitute the direct, specific allegation of performance which is
required. A complaint must allege the ultimate facts necessary to the statement
of an actionable claim. It is both improper and insufficient for a plaintiff to
simply plead the evidence by which he hopes to prove such ultimate facts.” Id.
at 1387.

(4) The Semole case also illustrate the generous standard employed by both
the trial court and a reviewing court in evaluating the allegations of a complaint
to determine if plaintiff states a proper cause of action: “[U]nder settled law,
we assume the truth of all properly pleaded material allegations of the
complaint [citations] and give it a reasonable interpretation by reading it as a
whole and its parts in their context. [Citation.]” Phillips v. Desert Hosp. Dist.,
49 Cal. 3d 699, 702, 263 Cal. Rptr. 119, 780 P.2d 349 (1989) . The appellate
court should not consider a party’s possible difficulty or inability to prove
allegations, as long as on their face they show the pleader would be entitled to
some relief. Rader Co. v. Stone, 178 Cal. App. 3d 10, 223 Cal. Rptr. 806
(1986).

[587/588]

There are, however, limits to these rules. In Beck v. American Health Group
Intl., Inc., 211 Cal. App. 3d 1555, 260 Cal. Rptr. 237 (1989) , for example, the
plaintiff alleged breach of contract and incorporated by reference a document
that showed on its face that it was mere preparations for a contract. The Court of
Appeal found this inadequate to show there was a contract, and therefore upheld
a demurrer without leave to amend. If the pleader incorporates documents by
reference, the pleader must also allege the meaning to be ascribed to any
ambiguous aspects of the document. Otherwise the document will be taken at
face value. Id. at 1561.

(5) A failure to “plead around” an affirmative defense that is otherwise

apparent on the face of the complaint is also a failure to state a valid cause of
action. In CAMSI IV v. Hunter Technology Corp. , 230 Cal. App. 3d 1525,
1536–38, 282 Cal. Rptr. 80 (1991), for example, the court upheld a demurrer
without leave to amend where the complaint revealed that the statute of
limitations had run, and the plaintiff had failed to anticipate this defense and
plead facts establishing the elements of the delayed discovery rule. See also
County of Alameda v. Superior Court, 195 Cal. App. 3d 1283, 1286, 241 Cal.
Rptr. 312 (1987) (where a complaint shows on its face that the cause of action
is apparently barred, the plaintiff must plead facts showing ground for
suspension, delayed accrual, or application of another theory for avoidance of
the statute of limitations); Kunstman v. Mirizzi, 234 Cal. App. 2d 753, 44 Cal.
Rptr. 707 (1965) (demurrer sustained where plaintiff failed to anticipate statute
of limitations defense and to plead estoppel due to misrepresentation by
defendant).

(6) Form of Complaint. Rules 2.100-2.119 of the California Rules of Court

set forth detailed requirements for the form and format of papers presented for
filing, including complaints. Rule 2.118(a) directs the clerk of court to not
accept for filing any papers which do not comply with these requirements. May
a local superior court condition the filing of a complaint on local rule
requirements in addition to those set forth in Rules 2.100-2.119? See Mito v.
Temple Recycling Center Corp., 187 Cal. App. 4th 276, 113 Cal. Rptr. 3d 445
(2010) (complaint was timely filed on date first transmitted because state Rule
3.220(c) mandated the court clerk to file the complaint on that date even though
it lacked the cover sheet required by local rule); Carlson v. Dept. of Fish and
Game, 68 Cal. App. 4th 1268, 80 Cal. Rptr. 2d 601 (1998) (So long as a
complaint complies with the state requirements, the clerk has a ministerial duty
to file it); Rojas v. Cutsforth, 67 Cal. App. 4th 774, 79 Cal. Rptr. 2d 292
(1998) (clerk has no authority to reject otherwise proper complaint where
plaintiff violated local rule by failing to also file signed court assignment form);
but see Hu v. Silgan Containers Corp., 70 Cal. App. 4th 1261, 83 Cal. Rptr. 2d
333 (1999) (clerk properly voided complaint due to failure to pay filing fee,
pursuant to CCP § 411.20). Rule 3.20 provides that the state rules preempt local
court rules relating to pleadings, other pretrial papers, and the form and format
of papers, but excepts “local court rules adopted under the Trial Court Delay
Reduction Act.” Rule 3.20(b)(4).

Footnotes:

1 “VII. That this action is brought pursuant to Section 3601(a)(3) of the Labor Code of the State of
California.
 “VIII. That on or about the 9th day of May, 1966, at about 4:00 P.M. the defendant Robert J. Sansoucie
among other things backed the aforementioned tractor and trailer into an area without first inspecting
whether the area was safe and without looking into the area he was backing into.

“IX. That said conduct is prohibited by the Vehicle Code of the State of California and the Rules and
Regulations governing the operation of motor vehicles by Pacific Motor Trucking Company.

“X. That the defendants further operated the vehicle in reckless disregard for the safety and calculated
and conscious willingness to permit injury or death to such fellow employees.”

[B] Heightened Specificity Requirements in Pleading

In addition to its generally higher standard of factual specificity, code

pleading, like notice pleading, requires heightened specificity in selected types
of cases.

[588/589]

[1] Pleading Fraud

Causes of action based on fraud must be specifically pleaded; a general

pleading of the legal conclusion of fraud is insufficient. Stansfield v. Starkey,
220 Cal. App. 3d 59, 269 Cal. Rptr. 337 (1990) . Each of the elements of fraud
— false representation of a material fact; knowledge of its falsity; intent to
defraud; justifiable reliance; and resulting damage — must be alleged in full,
factually and specifically. See id.; Small v. Fritz Companies, Inc., 30 Cal. 4th
167, 183–85, 132 Cal. Rptr. 2d 490, 65 P.3d 1255 (2003) ; Nagy v. Nagy, 210
Cal. App. 3d 1262, 1268–69, 258 Cal. Rptr. 787 (1989) (complaint which
lacked an allegation of a definite amount of damage held not to state a cause of
action for fraud); Wilhelm v. Pray, Price, Williams & Russell , 186 Cal. App.
3d 1324, 231 Cal. Rptr. 355 (1986) (complaint which failed to specifically
plead factual basis for knowledge of falsity and justifiable reliance held not to
state fraud cause of action); but see Furia v. Helm, 111 Cal. App. 4th 945, 956–
57, 4 Cal. Rptr. 3d 357 (2003) (failure to allege a specific dollar amount of
fraud damages not fatal so long as the pleaded facts entitle plaintiff to relief).
What are the reasons for the requirement of heightened specificity in pleading
fraud causes of action?
 What does specificity mean? The courts concentrate on factual specifics. In
alleging fraud against a corporation, plaintiff must allege “the names of the
persons who made the allegedly fraudulent representations, their authority to
speak, to whom they spoke, what they said or wrote, and when it was said or
written.” Tarmann v. State Farm Mut. Auto. Ins. Co. , 2 Cal. App. 4th 153, 157,
2 Cal. Rptr. 2d 861 (1991). In other words, the familiar “who, what, where,
when, and how.” Less specificity is required where the allegations show
defendant must necessarily possess full information concerning the facts of the
controversy (a circumstance not found in Tarmann) . Id. at 158; but see
Goldrich v. Natural Y Surgical Specialties, Inc., 25 Cal. App. 4th 772, 782–
83, 31 Cal. Rptr. 2d 162 (1994) (plaintiff’s contention that defendant
manufacturers’ knowledge of their own communications of allegedly fraudulent
information regarding the safety of their breast implants did not relieve plaintiff
of her obligation to provide any factual averments at all); McCann v. Bank of
America, 191 Cal. App. 4th 897, 120 Cal. Rptr. 3d 204 (2011) (because qui tam
actions under the False Claims Act are meant to encourage private
whistleblowers, uniquely armed with information about false claims, to come
forward, these insiders should have adequate knowledge of the fraudulent acts
to comply with the heightened pleading requirements).

Other circumstances in which less specificity is required when pleading fraud

include:

(a) Committee on Children’s Television, Inc. v. General Foods Corp. , 35

Cal. 3d 197, 197 Cal. Rptr. 783, 673 P.2d 660 (1983) . This was a class action
alleging fraudulent, misleading, and deceptive advertising with respect to
sugared breakfast cereals or “candy breakfasts.” The California Supreme Court
held the complaint sufficiently specific because defendants had more ready
access to the information (the actual broadcast advertisements) and pleading
complete details of each advertisement, the identity of the speaker and listener,
and specifying its time, place, and medium would be impractical.

(b) People v. Highland Fed. Savings & Loan, 14 Cal. App. 4th 1692, 19 Cal.
Rptr. 2d 555 (1993). Plaintiffs’ complaint alleged fraudulent loans made to
owners of [589/590]slum housing. The court followed Committee on Children’s
Television and found the complaint was sufficiently specific in that it alleged
the identities of the title holders, plaintiffs’ identities and capacities, and the
time frame in which the alleged misrepresentations were made. Further details
were properly the subject of discovery instead of the pleadings. Id. at 1718.
 [2] Pleading Other Disfavored Causes of Action

Although fraud is the prominent instance of heightened pleading specificity,

the requirement can be found in connection with other disfavored causes of
action. These include products liability for exposure to toxins, Bockrath v.
Aldrich Chem. Co., Inc., 21 Cal. 4th 71, 86 Cal. Rptr. 2d 846, 980 P.2d 398
(1999) (in a products liability suit where the plaintiff alleges long-term
exposure to multiple toxins produced by multiple defendants, the plaintiff must
plead specific facts explaining how a specific illness was caused by an
identified product manufactured by a named defendant); tortious breach of
contract, tortious interference with business relations, and unfair business
practices, Khoury v. Maly’s of Cal., Inc. , 14 Cal. App. 4th 612, 17 Cal. Rptr.
2d 708 (1993); civil conspiracy, Wise v. Southern Pac. Co., 223 Cal. App. 2d
50, 35 Cal. Rptr. 652 (1963); Chicago Title Ins. Co. v. Great Western Fin.
Corp., 69 Cal. 2d 305, 70 Cal. Rptr. 849, 444 P.2d 481 (1968) (applying
heightened pleading rule for civil conspiracy to statutory Cartwright Act
antitrust conspiracies); and certain civil actions against public officers,
Government Code § 951.

[C] Inconsistent and Alternative Pleading

SHEPARD & MORGAN v. LEE & DANIEL, INC.

SUPREME COURT OF CALIFORNIA
31 Cal. 3d 256, 182 Cal. Rptr. 351, 643 P.2d 968 (1982)

Richardson, Justice.

A general contractor, when named as a defendant in a personal injury action

which alleged job-site injuries to a construction carpenter, filed a cross-
complaint charging a subcontractor with responsibility for plaintiff’s injuries.
The issue is whether answers made in defendant’s responses to plaintiff’s
request for admissions regarding the cause of the accident are binding upon
defendant contractor in its cross-action against the subcontractor. We conclude
that, under the circumstances in this case, defendant’s admissions to plaintiff are
not binding in the cross-action. We further conclude that defendant was entitled
to take seemingly inconsistent positions on the cause of plaintiff’s injury by (1)
defending plaintiff’s action on the theory that no job-site hazards existed, but (2)
prosecuting its cross-complaint on an alternative theory that any such hazard
was caused by the cross-defendant subcontractor.
 Plaintiff Terry Cole, a carpenter, was employed by R.M. Stowall (Stowall), a
framing subcontractor. While securing wooden ceiling joists on a construction
project in Los Angeles, plaintiff fell 20 feet to a concrete floor and was injured.
Each [590/591]joist was fitted into a strap-like hanger which, at two-foot intervals,
had been welded to I-beams. When he fell, plaintiff had been standing with each
foot on a 2-inch by 12-inch joist while nailing a spreader block between the
joists.

As a result of the accident and resulting injuries, plaintiff sued both defendant
general contractor, Shepard & Morgan (Shepard) and codefendant manufacturer
of the joists and hanger, Simpson Company (Simpson). Shepard in turn filed a
cross-complaint for indemnity against Stowall, Simpson and the subcontractor
who supplied the joists and hanger, Lee & Daniel, Inc. (Lee).

[The court first held that Shepard’s admission to plaintiff of its contention
regarding causation was not binding upon Shepard in its cross-complaint against
Lee. It pointed to the language of the request for admissions statute, Code of
Civil Procedure § 2033, and fairness considerations, and noted that “no
compelling reason exists for requiring Shepard to elect at its peril, and before
trial, among possible alternative theories of causation.”]

The foregoing reasoning is reinforced by our own prior cases which confirm
that the plaintiff in a civil action cannot be forced to choose between two or
more inconsistent causes of action. Instead, the plaintiff is entitled to introduce
evidence upon all such causes and submit to the trier of fact the question as to
which, if any, counts are sustained by the proof. (Grudt v. City of Los Angeles
(1970) 2 Cal. 3d 575, 586 [86 Cal. Rptr. 465, 468 P.2d 825] ; Tanforan v.
Tanforan (1916) 173 Cal. 270, 274 [159 P. 709] ; 3 Witkin, Cal. Procedure,
supra, § 294, at p. 1968.) By similar reasoning and on principle, the defendant
should not be forced to select one theory of defense at the risk of losing a right
of indemnity from third persons. * * *

The judgment of nonsuit is reversed.

NOTES AND QUESTIONS ON

INCONSISTENT PLEADING ALLEGATIONS
 (1) As the main case implicitly acknowledges, generally, any pleader may
assert inconsistent allegations subject to certain good faith limitations. Where
the exact nature of the facts is in doubt, or where the exact legal nature of the
plaintiff’s right and defendant’s liability depend on facts not well known to
plaintiff, the pleadings may properly set forth alternative theories in varied and
inconsistent counts. Rader Co. v. Stone, 178 Cal. App. 3d 10, 223 Cal. Rptr.
806 (1986) (plaintiff not precluded from alleging in one cause of action the
breach of a contract and an inconsistent theory of recovery in another case of
action). However, a party cannot both assert and deny a fact that that party must
know. See, e.g., Careau & Co. v. Security Pac., 222 Cal. App. 3d 1371, 272
Cal. Rptr. 387 (1990) (breach of contract action not properly pleaded where
plaintiff generally alleged satisfaction of conditions precedent but also alleged
facts which demonstrated conditions not fully performed). A demurrer may be
sustained even when plaintiff pleads alternative and inconsistent allegations if
exhibits attached to the pleading demonstrate the absence of a cause of action.
See, e.g., Dodd v. Citizens Bank of Costa Mesa, 222 Cal. App. 3d 1624, 272
Cal. Rptr. 623 (1990) (negligence action against bank properly dismissed where
signature cards attached as exhibit revealed that, contrary to plaintiff’s
allegations, plaintiff not a customer of defendant bank).

[591/592]

(2) Rule 8(d)(2) & (3) of the Federal Rules of Civil Procedure permits a
party in federal court to “set forth two or more statements of a claim or defense
alternately or hypothetically,” and to state “as many separate claims or defenses
as it has, regardless of consistency.” Is the federal rule the same as the
California doctrine? As extensive?

[D] Prayer for Relief

[1] In General

A defective prayer for relief, or even the entire lack of a prayer, does not
make a complaint subject to demurrer so long as the averments in the complaint
state a cause of action. Miller v. Superior Court, 59 Cal. App. 334, 338–39,
210 P. 832 (1922). Likewise, the averments contained in the pleading determine
the maximum sum which may be awarded the plaintiff in a contested cause; the
prayer of the pleading is not controlling. For example, in Castaic Clay Mfg. Co.
v. Dedes, 195 Cal. App. 3d 444, 240 Cal. Rptr. 652 (1987) , the plaintiff was
awarded compensatory damages in excess of those requested in the prayer for
relief, and the complaint was never amended to conform to the proof offered at
trial. The parties actually tried issues of damages in amounts beyond those
stated in the complaint. The Court of Appeal held that the relief granted was
consistent with the issues made by the complaint and voluntarily tried by the
parties. Id. at 449–50.

[2] Statement of Damages

Code of Civil Procedure § 425.10(b) provides that in superior court actions

to recover actual or punitive damages for personal injury or wrongful death, the
amount sought is not to be stated in the complaint. Apparently passed to avoid
publicizing inflated claims against individuals and particularly health care
providers, section 425.10(b) must be read with section 425.11 that gives a
defending party the right at any time to request “a statement setting forth the
nature and amount of damages being sought.” See also CCP § 425.115
(statement preserving right to seek punitive damages). Even if not demanded, the
statement must be filed before a default may be taken. See, e.g. , Schwab v.
Rondel Homes, Inc., 53 Cal. 3d 428, 280 Cal. Rptr. 83, 808 P.2d 226 (1991)
(vacating default judgment for $200,000 because plaintiff did not serve
defendant with a § 425.11 statement of damages); Debbie S. v. Ray, 16 Cal.
App. 4th 193, 19 Cal. Rptr. 2d 814 (1993) (vacating default judgment after
defendant failed to appear at trial because plaintiff failed to serve a statement of
damages within 60 days of trial as required by § 425.11).

[3] Special Pleading Rules for Punitive Damages

As discussed previously, by judicial decision or statute, disfavored claims

often must meet more stringent pleading rules. Frequently under attack,
especially by manufacturers and business groups, are claims for punitive
damages. The United States Supreme Court has endorsed procedural and
substantive constitutional limitations on punitive damages awards. E.g., BMW
of North America, Inc. v. Gore , 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d
809 (1996) (Due Process Clause prohibits the imposition of excessive or
arbitrary punishments on tortfeasors); [592/593]Pacific Mut. Life Ins. Co. v.
Haslip, 499 U.S. 1, 111 S. Ct. 1032, 113 L. Ed. 2d 1 (1991) (Due Process
Clause requires certain meaningful constraints on the discretion of fact finders
in assessing punitive damages). California’s courts and legislature have
imposed additional restrictions, including special rules barring the pleading of
certain punitive damages claims without court order. California has statutory
protections for negligence actions against health care providers, CCP § 425.13;
and for claims against religious corporations, CCP § 425.14. Related
requirements include prior screening for probable cause or other evidence
substantiating claims against officers and directors of nonprofit corporations,
CCP § 425.15; certain “SLAPP” suits, CCP §§ 425.16, 425.17; and special
certification requirements for malpractice actions against architects, engineers,
and surveyors, CCP § 411.35.

[a] Prepleading Requirements: “Substantial Probability that the Plaintiff will Prevail”

Code of Civil Procedure § 425.13 imposes a prepleading requirement when a

plaintiff seeks to plead a punitive damages claim in a malpractice action against
a health care provider. Section 425.13(a) provides:

In any action for damages arising out of the professional negligence of

a health care provider, no claim for punitive damages shall be included in
a complaint or other pleading unless the court enters an order allowing an
amended pleading that includes a claim for punitive damages to be filed.
The court may allow the filing of an amended pleading claiming punitive
damages on a motion by the party seeking the amended pleading and on
the basis of the supporting and opposing affidavits presented that the
plaintiff has established that there is a substantial probability that the
plaintiff will prevail on the [punitive damages] claim pursuant to
Section 3294 of the Civil Code …. (Italics added.)

The Supreme Court construed section 425.13(a)’s “substantial probability”

requirement in College Hospital, Inc. v. Superior Court, 8 Cal. 4th 704, 34
Cal. Rptr. 2d 898, 882 P.2d 894 (1994) , where the plaintiffs alleged a cause of
action for professional negligence against the defendant hospital. Plaintiffs
timely moved under CCP § 425.13(a) for an order allowing them to amend the
complaint to state a punitive damages claim, supported by declarations and
depositions. The defendant opposed the motion, and also submitted various
declarations. The trial granted the motion and allowed plaintiffs to amend their
complaint to state a punitive damages claim against the defendant hospital. The
defendant petitioned for a writ of mandate to set aside the ruling. After the Court
of Appeal denied defendants’ petition, the Supreme Court granted review.

The defendant hospital argued that CCP § 425.13(a) contains a rigorous

“weighing” test and that the statute not only disallows punitive damage claims
that obviously lack merit, but also requires the trial court to assess the relative
merits of a claim and to bar any punitive damages claim that does not appear
highly likely to succeed at trial. The Supreme Court rejected defendant’s
argument with the following explanation:

[593/594]

A superficial reading of the statute might support this view. Section

425.13(a) speaks in terms of “a substantial probability” that the punitive
damages claim “will prevail” under Civil Code section 3294. The noun
“probability” commonly suggests a relative likelihood that a particular
outcome will occur. By referring to whether the claim “will prevail,” the
statute might be read to require an assessment of the plaintiff’s chances of
recovering punitive damages at trial. Further narrowing of the class of
permissible claims might be inferred from use of the adjective
“substantial” to qualify “probability.”

Read in context, however, the statutory language hardly compels this

unusual interpretation. Section 425.13(a) does not expressly instruct the
trial court to “weigh” evidence or make an “independent” assessment of its
relative strength. The “affidavit” format described by the statute is a
truncated one, reminiscent of summary judgment procedure. It is not well
suited to predicting how the jury would react to a full-blown case at trial. *
**

Nothing in the [legislative history] indicates that under statutes like

section 425.13(a), trial courts are authorized to weigh the merits of the
claim or consider its likely outcome at trial. Although such terms as
“frivolous” and “meritless” are not explicitly defined, the tone and
substance of the debate strongly suggest that the motion required by such
statutes operates like a demurrer or motion for summary judgment in
“reverse.” Rather than requiring the defendant to defeat the plaintiff’s
pleading by showing it is legally or factually meritless, the motion requires
the plaintiff to demonstrate that he possesses a legally sufficient claim
which is “substantiated,” that is, supported by competent, admissible
evidence.

Indeed, the Hospital’s contrary interpretation of section 425.13(a) has

grave implications. As we understand this view, a legally sufficient,
factually supported punitive damages claim could be withheld from
consideration by the trier of fact if the court independently concluded that
the probability the claim would succeed at trial was not sufficiently high.
We know of no other provision of law that empowers trial courts to
“trump” the fact-finding process in this manner. If such an unusual and
drastic result was intended by section 425.13(a), we would expect the
Legislature to make that purpose abundantly clear. It did not do so.

Thus, the gravamen of section 425.13(a) is that the plaintiff may not
amend the complaint to include a punitive damages claim unless he both
states and substantiates a legally sufficient claim. In other words, the court
must deny the section 425.13(a) motion where the facts asserted in the
proposed amended complaint are legally insufficient to support a punitive
damages claim. (See §§ 430.10, 436–437.) The court also must deny the
motion where the evidence provided in the “supporting and opposing
affidavits” either negates or fails to reveal the actual existence of a triable
claim. (See § 437c, subd. (c).) The section 425.13(a) motion may be
granted [594/595]only where the plaintiff demonstrates that both requirements
are met. * * *

Moreover, in light of the “affidavit” requirement and by analogy to

summary judgment practice, substantiation of a proposed punitive damages
claim occurs only where the factual recitals are made under penalty of
perjury and set forth competent admissible evidence within the personal
knowledge of the declarant. (See §§ 437c, subds. (b) & (d), 2015.5.)
Consistent with the legislative intent to protect health care defendants from
the drastic effects of unwarranted punitive damage claims, the entire
package of materials submitted in support of the section 425.13(a) motion
should be carefully reviewed to ensure that a genuine contestable claim is
indeed proposed. * * *

The next question is whether plaintiffs have stated and demonstrated a

triable punitive damages claim under section 425.13(a). The basic
elements of such claims are set forth in Civil Code section 3294. [T]here
must be proof of “oppression, fraud, or malice.” (Id., subd. (a).)
Moreover, the punishable acts which fall into these categories are strictly
defined. Each involves “intentional,” “willful,” or “conscious”
wrongdoing of a “despicable” or “injur[ious]” nature. (Id., subd. (c).) * * *

We will independently review the proposed amended complaint and

the evidence submitted in support of and opposition to the motion under
section 425.13(a) to determine whether plaintiffs have stated and
substantiated a legally sufficient punitive damages claim against the
 Hospital. Even if we view the evidence in a light most favorable to
plaintiffs, it is clear they have not met the requirements of section
425.13(a).

College Hospital, supra, 8 Cal. 4th at 715–22. After examining the facts alleged
in the amended complaint and the evidence — primarily from plaintiffs’
declarations and deposition testimony submitted in support of these allegations
pursuant to section 425.13(a) — the Supreme Court concluded that no basis
appears for assessing punitive damages against the defendant hospital, and that
the plaintiffs failed to satisfy the requirements of section 425.13(a) when they
sought to plead a punitive damages claim against the hospital.

[b] Are Prepleading Requirements Necessary?

As the College Hospital court notes, prepleading hurdle statutes such as CCP
§ 425.13 operate much like a summary judgment in reverse, placing the burden
on the plaintiff to present a “legally sufficient” claim and undergo an affidavit
procedure like the one employed in the determination of a motion for summary
judgment. Why is this additional procedural obstacle to punitive damages
allegations by a plaintiff even necessary? Cannot the same screening goal be
achieved by defendant’s early use of the summary judgment procedure in CCP §
437c(f), which authorizes a party to move for summary adjudication as to a
claim for damages? By requiring the plaintiff to plead the substantive elements
of punitive damages with specificity and in a verified complaint? By rigorous
enforcement of the duty imposed by CCP § 128.7 to only plead allegations
which have evidentiary support?

[595/596]

Prepleading hurdle statutes like CCP § 425.13 reflect obvious legislative

disfavor of punitive damages claims. Are such statutes effective vehicles for the
early screening out of frivolous or unsubstantiated punitive damage claims? Is
the efficacy of such screening devices sufficient to justify the increased
procedural costs?

Despite the apparent limitation to actions “arising out of the professional

negligence of a health care provider,” the Supreme Court in the Central
Pathology Service Medical Clinic, Inc. v. Superior Court, 3 Cal. 4th 181, 10
Cal. Rptr. 2d 208, 832 P.2d 924 (1992) , construed this language in CCP §
425.13 to also apply to causes of action based on intentional tort theories.
Accordingly, the Central Pathology court directed the trial court to conduct §
425.13 proceedings to determine whether to permit the plaintiffs to amend their
medical negligence complaint and assert punitive damage claims based on fraud
and intentional infliction of emotional distress. Regardless of whether a
complaint purports to state a single cause of action for an intentional tort or also
states a cause of action for professional negligence, the court construed § 425.13
as applicable based on its language and purpose. Central Pathology, 3 Cal. 4th
at 192; see Aquino v. Superior Court, 21 Cal. App. 4th 847, 26 Cal. Rptr. 2d
477 (1993) (plaintiffs made insufficient showing of their prima facie entitlement
to punitive damages under § 425.13 in action against doctors for intentional
infliction of mental distress).

What if a plaintiff alleges a claim for punitive damages against a health care
professional in the original complaint? The plaintiffs in College Hospital
included punitive damages allegations in their original complaint. The defendant
hospital moved to strike the punitive damages allegations because plaintiffs had
not complied with § 425.13. This motion was granted by the trial court. How
would that case have proceeded if the defendant instead had simply answered
the complaint? In Vallbona v. Springer, 43 Cal. App. 4th 1525, 51 Cal. Rptr. 2d
311 (1996), the court concluded that § 425.13’s requirement of a court order as
a condition precedent to including a claim for punitive damages arising out of
the professional negligence of a health care provider is not jurisdictional, and
absent timely objection to a complaint’s inclusion of punitive damages without
court permission, the protection conferred by § 425.13 is waived. By answering
and not moving to strike the punitive damages allegations, the defendants
waived any rights they might have under the statute at the time of trial.

§ 9.03 AMENDMENTS
[A] Introductory Note

Dating from its adoption of the Field Code, California has liberally allowed
amendment of pleadings. Code of Civil Procedure sections 469 and 470, carried
over from the original Field Code, allow pleadings to be amended “upon such
terms as may be just” to avoid variance between allegations in pleadings and
proof at trial. Section 472 permits any pleading to be amended once as a matter
“of course, and without costs, at any time before the answer or demurrer is filed
….” Section 473 permits the court, “in furtherance of justice, and on any terms
as may be proper,” to allow parties to amend to correct mistakes; and with
notice to allow [596/597]“on any terms as may be just, an amendment to any
pleading or proceedings in other particulars ….” Case law supports these
statutory directives to the courts to allow amendment except when substantial
and uncorrectable prejudice can be shown by the party opposing the amendment.

[B] Amended Complaints and the Relation Back Doctrine

HONIG v. FINANCIAL CORPORATION OF AMERICA

COURT OF APPEAL OF CALIFORNIA,
SECOND APPELLATE DISTRICT
6 Cal. App. 4th 960, 7 Cal. Rptr. 2d 922 (1992)

Ashby, Justice.

Appellant and plaintiff Stephen N. Honig filed a multicount civil suit against
respondent and defendant New West Federal Savings and Loan Association.
Also named in the suit were five employees of respondent New West,
respondents and defendants Robert Blain, Thomas Kennett, Sheila Wilson, John
Hamilton and Michael Fleutsch. The trial court denied appellant’s motion to
amend his complaint and at the same hearing granted respondents’ summary
judgment motions. We reverse, finding the trial court abused its discretion in
refusing to permit the amendment.

FACTS

Appellant filed his complaint on February 5, 1988. In the complaint appellant

alleged he began his employment with respondent New West in June 1982 with
the responsibility of developing and maintaining “Jumbo” certificates of
deposits. Further, appellant stated that on numerous occasions respondent New
West represented to him he would be continuously employed as long as he
performed satisfactorily. Appellant alleged that in contravention of public
policy appellant was forced to commit illegal acts, fraud and misrepresentation
in the manner in which he was directed to offer the certificates of deposits and
appellant was required to decline to reveal material facts to investors.
Appellant asserted that beginning in January 1987, respondents commenced a
“campaign of harassment, threats, humiliation, debasement and intimidation
against” appellant. The complaint asserted causes of action for (1) attempted
constructive termination/breach of public policy, (2) intentional fraud and
deceit, (3) negligent fraud and deceit, (4) breach of covenant of good faith and
fair dealing, (5) breach of contract, (6) conspiracy, (7) intentional infliction of
emotional distress, and (8) interference with prospective economic advantage.
At the time the complaint was filed, appellant had not left respondent New
West’s employment. A fellow employee had been discharged in August 1987,
and six others discharged in October 1987. Appellant contended he filed his suit
as a preventative measure fearing his discharge was imminent.

According to appellant, after the initial complaint was filed, respondent New
West demanded appellant attend a meeting of its ethics committee. Appellant’s
request that his counsel be allowed to attend the meeting was refused. Appellant
[597/598]submitted to respondent New West a four-page written statement in
which he explained his position that he would not discuss the pending lawsuit
with them. Appellant’s requests that all inquiries be directed to him in writing
so he could consult counsel were also refused. Additional communications
passed between the parties in which appellant contended that he was entitled to
counsel, that “trumped up” charges had been created, that the ethics committee’s
actions were in retaliation for the filing of his lawsuit and that he was acting
under advice of counsel. On April 15, 1988, respondent New West discharged
appellant stating he was being fired for insubordination. At the time, appellant
was earning approximately $108,000.

The matter was assigned to a fast track court, a court under the Trial Court
Delay Reduction Act. (Gov. Code, § 68600 et seq.) Extensive discovery was
conducted, including seven days of deposing appellant. Respondents thoroughly
deposed appellant on the events which occurred subsequent to the filing of the
initial complaint. Extensive inquiry was made of the events surrounding the
ethics committee and appellant’s discharge on April 15, 1988. Additionally,
questions were asked relating to his search for employment after being fired.
During the deposition, appellant explained that he thought he had difficulty
finding employment because he was blackballed and because he told
prospective employers he had been fired.

On September 4, 1990, approximately two months before the scheduled trial,

respondents filed summary judgment motions. On October 4, 1990, appellant
filed an opposition to the motions as well as a motion to amend his complaint.
The proposed amendment added facts which occurred after the initial complaint.
It asserted a cause of action for wrongful discharge in violation of public policy
contending he could not be fired for requesting advice of counsel. Additionally,
it was contended the charge of insubordination was created as a pretext for the
termination. The amended complaint also pled a cause of action for defamation
asserting that after the termination the false reason for the discharge (gross
insubordination) was repeated to others and that appellant was forced to reveal
the false reason to prospective employers.

The court granted the summary judgment motions and denied appellant’s
motion to amend. Finding the court abused its discretion in refusing the
amendment, we reverse.

DISCUSSION

[The court first concluded that the California courts have jurisdiction to hear
the matter.]

AMENDMENT

We are persuaded by appellant’s contention that the trial court abused its
discretion in refusing him the right to amend his complaint.

In the furtherance of justice, trial courts may allow amendments to pleadings

and if necessary, postpone trial. (Code Civ. Proc. § 473.) Motions to amend are
appropriately granted as late as the first day of trial (e.g., Higgins v. Del Faro
(1981) 123 Cal. App. 3d 558 [176 Cal. Rptr. 704] ) [598/599]or even during trial
(Rainer v. Community Memorial Hosp. (1971) 18 Cal. App. 3d 240, 251–56
[95 Cal. Rptr. 901]) if the defendant is alerted to the charges by the factual
allegations, no matter how framed (Hirsa v. Superior Court (1981) 118 Cal.
App. 3d 486, 489 [173 Cal. Rptr. 418]) and the defendant will not be
prejudiced. “When a request to amend has been denied, an appellate court is
confronted by two conflicting policies. On the one hand, the trial court’s
discretion should not be disturbed unless it has been clearly abused; on the
other, there is a strong policy in favor of liberal allowance of amendments. This
conflict ‘is often resolved in favor of the privilege of amending, and reversals
are common where the appellant makes a reasonable showing of prejudice from
the ruling.’” (Mesler v. Bragg Management Co. (1985) 39 Cal. 3d 290, 296–
297 [216 Cal. Rptr. 443, 702 P.2d 601] .) If the original pleading has not framed
the issues in an articulate and precise manner, a plaintiff should not be
precluded from having a trial on the merits.
 Appellant’s complaint was filed in February 1988. The matter was on the fast
track calendar, extensive discovery was conducted, and trial was set for
November 13, 1990. Respondents filed their summary judgment motions in
September 1990. When appellant filed his opposition to the motions, he also
filed a motion to amend. The amended complaint contained additional
paragraphs relating to the claim for wrongful termination based upon the April
8, 1988, termination and the facts leading up to that discharge. Additionally, the
proposed amended complaint added a charge of defamation based upon
spreading to others the reason for the discharge and for the publication
occurring when appellant was forced to explain to prospective employers he
had been fired.

The proposed amendments finished telling the story begun in the original
complaint. The added assertions described the continuation of the events
asserted in the initial pleading. The parties were fully aware of the events which
occurred subsequent to the original charges, including the April 8, 1988,
termination and the facts which preceded the actual discharge. Additionally,
respondents were fully aware of appellant’s claim that he had been blackballed
and that he was unable to find new employment because he told prospective
employers he had been fired. Appellant was fully deposed on these issues.
Thus, no prejudice would have resulted had the amendments been permitted.2

Respondents also contend it was improper to allow the amendments because

the statute of limitations on the two additional causes of action would have run
and that the relation back doctrine would not be applicable. We are not
persuaded by this analysis.

“An amended complaint relates back to the original complaint, and thus
avoids the statute of limitations as a bar … if it: (1) rests on the same general
set of facts as the original complaint; and (2) refers to the same accident and
same injuries as the original complaint.” (Barrington v. A. H. Robins Co.
(1985) 39 Cal. 3d 146, 151 [216 Cal. Rptr. 405, 702 P.2d 563] ; Smeltzley v.
Nicholson Mfg. Co. (1977) 18 Cal. 3d 932, 934 [136 Cal. Rptr. 269, 559 P.2d
624, 85 A.L.R.3d 121].) [599/600]The same general set of facts includes the same
operative facts; a change in legal theory is permissible. (Goldman v. Wilsey
Foods, Inc. (1989) 216 Cal. App. 3d 1085, 1094–95 [265 Cal. Rptr. 294] .) A
claim for different damages does not indicate there are different injuries. Rather,
injuries may encompass the same primary rights. (Rowland v. Superior Court
(Zappia) (1985) 171 Cal. App. 3d 1214, 1217–1218 [217 Cal. Rptr. 786].)
 Here, the facts alleged in the complaint as well as the amended complaint all
related to appellant’s discharge. (Goldman v. Wilsey Foods, supra, 216 Cal.
App. 3d 1085 [statutory civil rights claim for emotional distress related back to
common law claim, as both based upon abusive language, religious harassment
and discrimination].) Thus, as shown above, the amended complaint related to
the same general set of facts and the same accident. They were in the chain of
events which were originally pled.

Additionally, all injuries were those which were expected from a wrongful
discharge, including those asserted in the defamation cause of action. It is
expected that fired employees may have difficulty in obtaining new employment
and that allegations surrounding their discharge may be spread to others. When
an employer discharges an employee it is not unusual for the employer to defend
the termination by reasserting the stated reasons for it. The claims of wrongful
termination and defamation are inextricably intertwined in these circumstances.
Thus, although appellant’s amended complaint asserted two additional causes of
action, they related back to the original complaint. While reframing appellant’s
claims, the proposed amendments did not significantly add new dimensions to
the suit.

In finding that the amendment should have been allowed, we are well aware
of the purposes behind fast track, which we support. Matters should be promptly
resolved. However, if an amendment is appropriate the trial court should
continue the trial if necessary, even if the matter is on fast track.

The judgment is reversed. Costs on appeal are awarded to appellant.

Footnotes:

2 Respondent New West argues it was prejudiced because some of the employees who had information
relevant to the later circumstances were no longer employed. This, however, does not necessarily mean
these persons could not be found. Thus, New West’s assertion of prejudice is speculative. * * *

[1] Liberal Amendment Policy

As our principal case illustrates, the California courts will ordinarily

exercise liberality in permitting amendments to pleadings at any stage of the
proceedings. E.g., Hulsey v. Koehler, 218 Cal. App. 3d 1150, 1159, 267 Cal.
Rptr. 523 (1990); California Casualty Gen. Ins. Co. v. Superior Court, 173
Cal. App. 3d 274, 279, 218 Cal. Rptr. 817 (1985).

[a] Amended Pleadings, Generally

Code of Civil Procedure § 473 provides that “in furtherance of justice” a trial
court may allow a party to amend its pleadings. Whether an amendment should
be allowed rests in the sound discretion of the trial court. Klopstock v. Superior
Court, 17 Cal. 2d 13, 19, 108 P.2d 906 (1941) ; Hulsey v. Koehler, supra . As
t h e Honig decision indicates, two primary factors are relevant to the
determination of whether to permit an amended complaint: whether the plaintiff
has unreasonably delayed the presentation of the motion to amend, and whether
this delay has [600/601]resulted in substantial prejudice to the defendant. See
Walter W. Heiser, Relation Back of Amended Complaints: The California
Courts Should Adopt a More Pragmatic Approach, 44 Santa Clara L. Rev.
643, 647–60 (2004) (discussing numerous cases). Some courts, like Honig,
apply these factors in a pragmatic manner designed to permit an amendment
unless it will unfairly surprise, and thereby unduly prejudice, the defendant in
preparation for trial. See, e.g., Mesler v. Bragg Mgmt. Co., 39 Cal. 3d 290,
297, 216 Cal. Rptr. 443, 702 P.2d 601(1985) ; Redevelopment Agency v.
Herrold, 86 Cal. App. 3d 1024, 1032, 150 Cal. Rptr. 556, 560 (1978) ; see also
Heiser, Back of Amended Complaints, supra at 650–56 (collecting cases). The
most important inquiry to these courts is whether the defendant as a result of
pretrial discovery is already prepared to respond to the new allegations in the
proposed amendment. See Heiser, Relation Back of Amended Complaints,
supra.

These same factors, unreasonable delay and prejudice to the other party,
inform a trial court’s discretion to allow an amended answer. Hulsely v.
Koehler, supra. Delay is more likely to produce prejudice where the proposed
amendment sets forth a new affirmative defense. See, e.g, Hulsey v. Koehler,
supra (no abuse of discretion where trial court denied motion to amend answer
two days before trial to assert res judicata defense; plaintiff has right to know
his risks and weigh his exposure prior to trial); California Casualty General
Ins. Co. v. Superior Court, 173 Cal. App. 3d 274, 279, 218 Cal. Rtpr. 817
(1985) (trial court properly denied motion to amend answer to add affirmative
defense filed three years after original answer where plaintiff prejudiced in its
attachment strategy by the delay).

A motion to amend a pleading before trial must now be accompanied by a

separate declaration which specifies: (1) The effect of the amendment, (2) why
the amendment is necessary and proper, (3) when the facts giving rise to the
amended allegations were discovered, and (4) the reasons why the request for
amendment was not made earlier. Rule 3.1324(b), Cal. Rules of Court.

[b] Amendments to Conform to Proof

As discussed in Walker v. Belvedere , 16 Cal. App. 4th 1663, 20 Cal. Rptr.

2d 773 (1993), the decisional and statutory law on the subject of variances is
extremely liberal in allowing amendments to conform to proof (id. at 1670):

“It is a fundamental principle of pleading that ‘a plaintiff must

recover, if at all, upon the cause of action set out in the complaint, and not
upon some other which may be developed by the proofs.’ [Citations.]”
Lavely v. Nonemaker 1931) (212 Cal. 380, 385 [298 P. 976] .) However,
“[n]o variance between the allegation in a pleading and the proof is to be
deemed material, unless it has actually misled the adverse party to his
prejudice in maintaining his action or defense upon the merits. Whenever it
appears that a party has been so misled, the Court may order the pleading
to be amended upon such terms as may be just.” (Code Civ. Proc., § 469.)
“Where the variance is not material … the court may direct the fact to be
found according to the evidence, or may order an immediate amendment,
without costs.” (Code Civ. Proc., § 470.)

The objective is to avoid the use of technicalities to defeat recovery by a

plaintiff [601/602]who has pleaded, no matter how unskillfully, sufficient facts to
warrant recovery from a defendant. General Credit Corp. v. Pichel , 44 Cal.
App. 3d 844, 849, 118 Cal. Rptr. 913 (1975) . Where recovery is sought “on the
same general set of facts” as pled in the complaint, and there is no prejudice to
opposing party, an amendment to conform to the evidence will be granted even
though the amendment gives rise to a separate and distinct cause of action. See
id. at 850 (citing cases). However, where a party alleges facts amounting to a
certain cause of action and the evidence sets forth an entirely separate set of
facts constituting an entirely different cause of action from the one pled, the
result is not an immaterial variance but a failure of proof. See, e.g., Fineberg v.
Niekerk, 175 Cal. App. 3d 935, 939, 221 Cal. Rptr. 106 (1985) (causes of
action for breach of contract stated in pleading and declaratory relief sought at
trial held not so different that the court cannot grant the latter relief based on the
evidence actually produced at trial); Johnson v. DeWaard , 113 Cal. App. 417,
298 P. 92 (1931) (when a cause of action is based on one contract and the proof
establishes an entirely different contract, the case is one of failure of proof; but
where the written contract pleaded and the oral contract proved are essentially
the same, the judgment will stand).

[c] Amendment After Demurrer Sustained

When a trial court sustains a demurrer, the court determines that the complaint
does not state facts sufficient to constitute a cause of action. Denial of leave to
amend is an abuse of discretion, however, if there is any reasonable possibility
that the plaintiff can amend the complaint to cure its defects. See Blank v.
Kirwan, 39 Cal. 3d 311, 318, 216 Cal. Rptr. 718, 703 P.2d 58 (1985) ; Careau
Co. v. Security Pac. Business Credit, Inc., 222 Cal. App. 3d 1371, 1386, 272
Cal. Rptr. 387 (1990), reproduced infra.

An amended pleading supersedes the original one, which ceases to perform

any function as a pleading. See Foreman & Clark Corp. v. Fallon, 3 Cal. 3d
875, 884, 92 Cal. Rptr. 162, 479 P.2d 362 (1971) . Although ordinarily an
appellate court will not consider the allegations of a superseded complaint, that
rule does not apply when the trial court denied the plaintiff leave to include
those allegations in an amended complaint. See Committee on Children’s
Television, Inc. v. General Foods Corp. , 35 Cal. 3d 197, 209, 197 Cal. Rptr.
783, 673 P.2d 660 (1983) . Another exception is where the allegations in the
original complaint which made it vulnerable to demurrer are omitted in the
amended complaint without a valid explanation. See Amarel v. Connell , 202
Cal. App. 3d 137, 248 Cal. Rptr. 276 (1988) . The appellate court will consider
the sufficiency of the superseded complaint in such circumstances, unless the
omissions themselves redefine the causes of action stated without impugning
their truthfulness. See id. at 144–45 (trial court erred in sustaining demurrer to
amended complaint on ground of federal preemption where amended complaint
simply omitted federal, but not state, causes of action).

[602/603]

[2] The Relation Back Doctrine

[a] New Cause of Action Permitted

The Honig decision illustrates a typical application of the traditional relation

back doctrine, which permits an amended complaint to relate back to the
original complaint and thereby avoid a statute of limitations bar. “The ‘relation
back’ doctrine focuses on factual similarity rather than rights or obligations
arising from the facts, and permits added causes of action to relate back to the
initial complaint so long as they arise factually from the same injury.” Goldman
v. Wiley Foods, Inc., 216 Cal. App. 3d 1085, 1094, 265 Cal. Rptr. 294 (1989)
(statutory civil rights claim for emotional distress related back to common law
claim as both based upon defendant’s religious harassment and discrimination,
and therefore not barred by statute of limitations). Consequently, the fact that a
plaintiff’s amended complaint rests on a different legal theory and states a
different cause of action is irrelevant if the two complaints relate to the same
general set of facts. See, e.g., Austin v. Massachusetts Bonding and Ins. Co.,
56 Cal. 2d 596, 15 Cal. Rptr. 817, 364 P.2d 681 (1961) (adopting the modern
relation back rule); Smeltzley v. Nicholson Mfg. Co., 18 Cal. 3d 932, 136 Cal.
Rptr. 269, 559 P.2d 624 (1977) (tracing development of modern relation back
doctrine).

For example, in Grudt v. City of Los Angeles, 2 Cal. 3d 575, 86 Cal. Rptr.
465, 468 P.2d 825 (1970) , the initial complaint alleged that plaintiff’s husband
was wrongfully killed by the city police, and pleaded liability of the city on a
theory of respondeat superior. The amended complaint alleged an additional
theory of active negligence by the city in retaining employees known to be
dangerous. The amended complaint was held to relate back to the filing of the
original complaint because the underlying cause of death was always the
conduct of the police officers in the same shooting incident. Id. at 583–85. By
contrast, the amended complaint in Coronet Mfg. Co. v. Superior Court , 90
Cal. App. 3d 342, 153 Cal. Rptr. 366 (1979) , a wrongful death action, did not
relate back and was barred by the applicable statute of limitations. The original
complaint alleged death from electrocution by a hairdryer. The amended
complaint changed the cause of death to electrocution by a table lamp. The court
concluded that although both pleadings related to a single death and at a single
location, they alleged different accidents and involved different
instrumentalities. Id. at 347. Do you agree with the holding in Grudt? With the
holding in Coronet? Why?

[b] The “Same General Set of Facts” Requirement

For the relation back doctrine to apply, the amended complaint must allege
“the same general set of facts as the original complaint.” Austin, supra, 56 Cal.
2d at 600; Barrington v. A.H. Robins Co., 39 Cal. 3d 146, 151, 216 Cal. Rptr.
405, 702 P.2d 563 (1985) ; see Pointe San Diego Residential Community v.
Procopio, Cory, Hargreaves & Savitch, LLP , 195 Cal. App. 4th 265, 125 Cal.
Rptr. 3d 540 (2011) (“In determining whether the amended complaint alleges
facts that are sufficiently similar to those alleged in the original complaint, the
critical inquiry is whether the defendant had adequate notice of the claim based
on the original pleading”). Do you agree with the Honig court’s conclusion that
plaintiff Honig’s amended [603/604]complaint alleging wrongful termination and
defamation related to the same general set of facts pleaded in the original
complaint, which alleged harassment and intimidation? The court in Lee v. Bank
of America, 27 Cal. App. 4th 197, 32 Cal. Rptr. 2d 388 (1994) , expressly
disagreed with this relation back conclusion of Honig.

The plaintiff in Lee was a branch manager for the defendant bank. After
complaining to her superior about various safety hazards at the branch, she was
demoted in 1988. While still employed by defendant, plaintiff Lee filed a timely
complaint in 1989 alleging wrongful demotion. The defendant bank then fired
Lee in April, 1989 — more than a month after she filed suit. Plaintiff amended
her complaint in 1991 to allege wrongful termination; all causes of action in her
amended complaint were based on the April, 1989 termination. Defendant
moved for summary judgment, which the trial court granted on statute of
limitations grounds. Plaintiff appealed, and contended that her amended
complaint related back to her earlier one.

The Court of Appeal first found the Honig facts indistinguishable, and then
declined to follow Honig. The court reviewed the “same general set of facts”
test as construed in Barrington and numerous other decisions, and concluded
that “Honig did not grapple with the facts in any previous decision, nor attempt
to address the problem of distinct wrongful acts. Its continuation-of-the-story
rationale is contrary to Barrington …. * * * Honig simply concluded that
because it was not ‘unusual’ for an employer to restate reasons for termination
in the process of defending it, the amended complaint for defamation related
back to the original complaint filed prior to termination. * * * Honig is not
persuasive and we will not follow it.” Lee, 27 Cal. App. 4th at 212.

The court then concluded that plaintiff Lee’s amended complaint was not
based on substantially the same general facts as her original complaint because
the two pleadings were based on different wrongful conduct — wrongful
demotion versus subsequent wrongful termination. The court found that “a
common motive — to retaliate against an employee for complaining about
wrongdoing — is hardly sufficient to fuse the demotion to the termination.” Id.
at 214. Her amended complaint therefore did not relate back, and was barred by
the applicable statute of limitations. And because plaintiff’s amended complaint
superseded her original complaint, any causes of action for wrongful demotion
were also barred.

Which construction of the “same general set of facts” test do you find more
persuasive — that applied by the court in Honig or in Lee? Which is more
consistent with the various policies underlying amended complaints and statutes
of limitations? Why? Which construction is more like the federal relation back
standard in Rule 15(c), F.R.C.P. , reproduced in § 9.04, infra. The construction
of the “same general set of facts” test adopted by the court in Lee was employed
i n McCauley v. Howard Jarvis Taxpayers Assn. , 68 Cal. App. 4th 1255, 80
Cal. Rptr. 2d 900 (1998), where the court declined to follow the “continuation-
of-the-story” or “bad egg” approach to the relation back doctrine.

[604/605]

[c] Fictitious Defendants

The relation back doctrine often applies to amended complaints which not
only allege new causes of action, but also substitute new defendants for ones
named fictitiously in the original complaint. E.g., Smeltzley v. Nicholson
Manufacturing Co., supra. Such use of the relation back doctrine to extend
applicable statutes of limitations is discussed in detail in § 9.04, California’s
Fictitious Defendant (“Doe”) Practice, infra.

[d] Should the California Court Adopt a More Pragmatic Approach?

California courts typically state the current relation back doctrine as requiring
that the amended complaint not only must rest on the “same general set of facts,”
but also must involve the “same accident and same injuries” and refer to the
“same offending instrumentality” as the original complaint. See, e.g.,
Barrington v. A.H. Robins Co., 39 Cal. 3d 146, 151, 216 Cal. Rptr. 405, 702
P.2d 563 (1985) ; Smetlzley, supra, 18 Cal. 3d at 934; Coronet, supra, 90 Cal.
App. 3d at 347. For criticisms of these additional restrictions on the basic
“same general set of facts” standard, see Walter W. Heiser, Relation Back of
Amended Complaints: The California Courts Should Adopt a More Pragmatic
Approach, 44 Santa Clara L. Rev. 643 (2004).

The author explains why the use of the “same accident,” “same injury,” and
“same instrumentality” tests as prerequisites to relation back is inconsistent with
the modern view of civil litigation where discovery and pretrial orders, not
pleadings, define the issues for trial. Heiser, Relation Back, supra, at 660–72,
695–97. He argues that the “same general set of facts” standard should be
applied in a pragmatic manner, which would focus on whether the defendant
will be unfairly surprised and therefore unduly prejudiced by the amended
complaint. Id. at 687–695. The key inquiry is whether, during the course of
pretrial discovery, the defendant was already made aware of, and already has
gathered facts responding to, the new allegations in the amendment. Id. Do you
agree with these arguments? What problems do you see with such a pragmatic
approach?

[e] New Plaintiffs

Does the relation back doctrine apply when the plaintiff amends the original
complaint, after the statute of limitations has expired, to add an additional
plaintiff who alleges the same basic set of facts? Compare Garnison v. Bd. of
Dir. of the United Water Conservation Dist. , 36 Cal. App. 4th 1670, 43 Cal.
Rptr. 2d 214 (1995) (relation back doctrine applied where an individual
plaintiff sought to amend a petition to allege that the plaintiff was also suing in
his representative capacity on behalf of an unincorporated association), and
Haley v. Dow Lewis Motors, Inc., 72 Cal. App. 4th 497, 85 Cal. Rptr. 2d 352
(1999) (trial court abused its discretion when it denied plaintiff leave to amend
to substitute in the real party in interest, the trustee in bankruptcy, and that such
an amendment would relate back to the date of the original complaint), with
Bartalo v. Superior Court, 51 Cal. App. 3d 526, 124 Cal. Rptr. 370 (1975)
(amended complaint adding a husband as an additional plaintiff and alleging a
new cause of action for loss of consortium did not relate back to the wife’s
original personal injury negligence complaint), and San Diego Gas & Electric
Co. v. Superior Court, 146 Cal. App. 4th 1545, 53 Cal. Rptr. 3d 722 (2007)
[605/606](because each wrongful death claimant must show the nature of her loss
as the result of the decedent’s death, the addition of an omitted heir as a new
plaintiff necessarily inserts a new cause of action that seeks to enforce an
independent right and, consequently, the relation back doctrine does not apply).

[3] Amendments to Correct Naming Mistakes

Whether an amendment to change the name of a party will be allowed and

will relate back to avoid the statute of limitations depends on whether the
mistake is merely a misnomer in the description of the party or “a substitution or
entire change of parties.” Thompson v. Palmer Corp., 138 Cal. App. 2d 387,
390, 291 P.2d 995 (1956). For example, in Diliberti v. Stage Call Corp., 4 Cal.
App. 4th 1468, 6 Cal. Rptr. 2d 563 (1992), the court considered whether a new
plaintiff may be substituted for the wrong person named as the plaintiff named in
the original complaint, after the statute of limitations has expired. In Dilberti,
Francine Dilberti and her sister Mary Jo Dilberti were involved in an
automobile collision. Francine, the driver, was not injured at all, but Mary Jo,
the passenger, was and she retained an attorney to represent her. A timely
personal injury complaint was filed, but it named the wrong sister (Francine) as
the plaintiff and did not mention Mary Jo or even the fact that there was a
passenger in the car. More than a year later, Mary Jo’s attorney realized his
mistake and filed a motion to amend the complaint and substitute Mary Jo for
Francine as plaintiff. That motion was denied, and Mary Jo appealed.

The Court of Appeal relied on the rule stated in Bartalo v. Superior Court,
51 Cal. App. 3d 526, 124 Cal. Rptr. 370 (1975):

The general rule governing the permissibility of the bringing in of

additional plaintiffs after the period of the statute of limitations has elapsed
… is that where the additional party plaintiff, joining in a suit brought
before the statute of limitations has run against the original plaintiff, seeks
to enforce an independent right, the amended pleading does not relate
back, so as to render substitution permissible ….

Dilberti, 4 Cal. App. 4th at 1471 (citing Bartalo, 51 Cal. App. 3d at 533)
(italics in original). Applying this rule, the Dilberti court concluded that the
case was not one of misnomer but was a failure to name the right party as
plaintiff, and affirmed the denial of the motion to amend and substitute Mary Jo
for Franchine.

In Mayberry v. Coca Cola Bottling Co., 244 Cal. App. 2d 350, 53 Cal. Rptr.
317 (1966), the court allowed an amended complaint to correct a naming
mistake after the statute of limitations had expired. The original complaint
sought damages caused by drinking a bottle of contaminated soda, and named a
corporation called “Coca Cola Bottling Company of Sacramento, Ltd.” as
defendant. The amended complaint sought to name the correct defendant, a
partnership called “Coca Cola Bottling Company of Sacramento.” The court
differentiated between a misnomer or erroneous description and a change of
identity, and held that the amended complaint merely corrected an excusable
mistake attributable to the substantial identity of the dual identities. Id. at 353–
54. Do you agree? Is Mayberry distinguishable from Diliberti? How so? Might
the doctrine of equitable estoppel apply in circumstances like Mayberry where
the (mistakenly) named defendant and [606/607]the correct defendant have
strikingly similar business names, and the named defendant conducts itself as
though it were properly named as defendant? See Cuadros v. Superior Court , 6
Cal. App. 4th 671, 8 Cal. Rptr. 2d 18 (1992) (plaintiff’s amended complaint not
barred by statute of limitations where both the right (Budget Rent-A-Car of
Westwood) and the wrong (Budget Rent-A-Car, Inc.) defendant were owned by
the same persons, and the wrong defendant took willful affirmative action in the
litigation to mask the error from plaintiff).

In Plumlee v. Poag, 150 Cal. App. 3d 541, 198 Cal. Rptr. 66 (1984) , the
plaintiff sued a decedent’s estate for breach of contract, and named the
executors and administrators as defendants individually. The trial court
sustained a demurrer without leave to amend on the ground that the complaint
named the defendants individually and not in their representative capacities, and
therefore plaintiffs failed to bring an action against the executor or administrator
within the three-month Probate Code limitation. The Court of Appeal reversed.
The court found that the plaintiff was entitled to cure this technical defect by
amendment correctly setting forth the representative capacities in which the
defendants are being sued, and that such amendment would relate back to the
original complaint: “Where full notice is given and a reasonably prudent person
would realize that he is the party intended to be named as the defendant, the
court should treat the mistake as harmless misnomer in order to promote
substantive rights.” Pumlee, at 150 Cal. App. 3d 547. Would the court’s
reasoning in Plumlee have helped the plaintiff in Diliberti?

The plaintiff doctor in Pasadena Hospital Assn., Ltd. v. Superior Court, 204
Cal. App. 3d 1031, 251 Cal. Rptr. 686 (1988) , brought a defamation suit against
the defendant hospital. The plaintiff sought to amend his complaint after
expiration of the statute of limitations to also name the plaintiff’s professional
corporation as a new party plaintiff. The court, concluding that the amendment
related back to the original complaint, stated (id. at 1037):

By adding [plaintiff’s] professional corporation, the substantive basis

of the cause of action was not changed. No different underlying obligation
on the part of Hospital has been created. No new facts are alleged as a
basis for recovery, the only change being the addition of plaintiff[’s]
professional corporation of which he is the sole shareholder. In this
instance, no reasonable purpose would be served by preventing the filing
of the first amended complaint naming corporation as a plaintiff. No
possible prejudice to Hospital will result. The change effected by the
amendment is one of form rather than of substance, and in the interests of
justice should be treated as such. The trial court properly allowed the
amendment to relate back to the original complaint.

Do you agree with the holding in Pasadena Hospital? In what ways are the
facts here different from those in Diliberti?
 [607/608]

§ 9.04 CALIFORNIA’S FICTITIOUS (“DOE”)

DEFENDANT PRACTICE
[A] Introductory Note

Practice under the Federal Rules and in many states allows plaintiffs to
designate unidentified party-defendants by the use of fictitious names. At the
time plaintiff files her initial complaint, she may not be aware of the correct
names, or even the identities of certain defendants. Moreover, the plaintiff may
need to file suit promptly to avoid the statute of limitations bar. In these
circumstances, it is common for the plaintiff to designate the unidentified
defendants as “Doe One,” “Doe I” or some other variant that is an obvious
fiction. When the correct name or identity of the actual defendant is determined
through discovery, the complaint can be amended to substitute the actual
defendant for one of the “Doe” defendants.

Even when this initial fiction is used, however, the plaintiff faces a second
hurdle if she wants the amendment to relate back to the date the complaint was
initially filed in order to avoid the statute of limitation bar. Most states permit a
cause of action alleged against a newly named defendant in the amended
complaint to relate back to the date of the original complaint, but in a limited set
of circumstances. Generally speaking, the relation back scheme in effect in most
states is similar to the pre-1991 version of Rule 15(c) of the Federal Rules of
Civil Procedure. See generally Joel E. Smith, Annotation, Relation Back of
Amended Pleading Substituting True Name of Defendant for Fictitious Name
Used in Earlier Pleading So as to Avoid Bar of Limitations, 85 A.L.R.3d 130–
57 (1978 & 1999 Supp.). As interpreted by the U.S. Supreme Court in
Schiavone v. Fortune, 477 U.S. 21, 106 S. Ct. 2379, 91 L. Ed. 2d 18 (1986),
the pre-1991 Rule 15(c) provided plaintiffs a sharply limited opportunity to add
new parties after the statute of limitations has run. The new party must have
received the notice required by the then-existing Rule 15(c)(1)-(2) before the
end of the limitations period. Thus newly-identified parties could not be added
after the limitations period, under the old rule 15(c).

[1] Federal Rule 15(c)

Federal Rule 15(c) was amended in 1991 to specifically change the result in
Schiavone v. Fortune, supra, with respect to the problem of a misnamed
defendant. See Notes of Advisory Committee on 1991 Amendment to Rule
15(c). Rule 15(c), after a technical amendment in 1993 and subsequently, now
provides:

(c) Relation Back of Amendments.

(1) When an Amendment Relates Back. An amendment to a pleading relates

back to the date of the original pleading when:

(A) the law that provides the applicable statute of limitations allows
relation back;

(B) the amendment asserts a claim or defense that arose out of the
conduct, transaction, or occurrence set out — or attempted to be set out —
in the original pleading, or

[608/609]

(C) the amendment changes the party or the naming of the party against whom
a claim is asserted, if Rule 15(c)(1)(B) is satisfied and if, within the period
provided by Rule 4(m) for service of the summons and complaint, the party to
be brought in by amendment:

(i) received such notice of the action that it will not be prejudiced in
defending the merits; and

(ii) knew or should have known that the action would have been brought
against it, but for a mistake concerning the proper party’s identity.

______

Under new federal Rule 15(1)(C), an amended complaint which changes the
naming of a party relates back when the notice requirement of Rule 15(c)(1)(B)
is satisfied within the period provided by Rule 4(m) for service of the summons
and complaint. Rule 4(m) allows 120 days for such service, plus any court-
granted extensions for good cause. Rule 15(c)(1)(A) requires a federal court to
apply a more liberal state relation back doctrine where that state’s statute of
limitations is applicable to the cause of action. For a discussion of when a state
statute of limitations governs in federal court, see Chapter 4, Statutes of
Limitations, Laches and Related Doctrines, supra.

[2] California’s Doe Defendant Practice

California’s unique “Doe defendant practice” is significantly broader than

that recognized in other jurisdictions and in federal practice. See James E.
Hogan, California’s Unique Doe Defendant Practice: A Fiction Stranger
Than Truth, 30 Stan. L. Rev. 51, 88-101 (1977). California allows plaintiffs to
name as Doe defendants parties whom the plaintiff has no reason to believe
even exist solely as insurance against the statute of limitations bar. California
practice is also far more liberal in allowing relation back than Rule 15(c)(1)
and its equivalent elsewhere. Designed to mitigate the harsh effects of
California’s short statutes of limitations, particularly in personal injury actions,
California’s “Doe defendant practice” permits relation back to the date of the
original pleading in a broad variety of circumstances unknown to the federal
courts under old Rule 15(c) or new Rule 15(c)(1)(C). Ordinarily, relation back
is allowed by the simple expedient of substituting the new defendant for one of
the Does.

[3] Evolution of the California Doctrine

California’s “Doe defendant practice” has evolved through case law

interpreting three rather innocent looking statutes: Sections 474, 350, and
583.210 of the California Code of Civil Procedure. These statutes have existed
in some form or other since the original Practice Act of 1851. Section 474 is the
legislative centerpiece of the fictitious defendant practice, providing in pertinent
part:

When the plaintiff is ignorant of the name of a defendant, he must state

that fact in the complaint, … and such defendant may be designated in any
pleading or proceeding by any name, and when his true name is
discovered, the pleading or proceeding must be amended accordingly;
[609/610]….

As will be discussed in Streicher v. Tommy’s Electric Co., infra , the

California courts have construed § 474 to include a relation back concept.

Section 350 states that an action is “commenced” for purposes of satisfying

the statute of limitations “when the complaint is filed.” And Section 583.210
states:

(a) The summons and complaint shall be served upon a defendant

within three years after the action is commenced against the defendant. For
the purpose of this subdivision an action is commenced at the time the
complaint is filed.

(b) Return of summons or other proof of service shall be made within

60 days after the time the summons and complaint must be served upon a
defendant.

How do these three sections work together? The fictitious defendant doctrine
is not obvious from the text of the statutes. But when infused with some creative
common law interpretations, these sections provide the basis for a unique
method of extending the statute of limitations.

STREICHER v. TOMMY’S ELECTRIC CO.

COURT OF APPEAL OF CALIFORNIA,
SIXTH APPELLATE DISTRICT
164 Cal. App. 3d 876, 211 Cal. Rptr. 22 (1985)

Panelli, Presiding Justice.

Plaintiff appeals from a judgment of dismissal entered after defendants’

demurrer to an amended complaint was sustained without leave to amend on the
ground the statute of limitations barred the action. We reverse.

Facts

On October 4, 1979, plaintiff Frank Streicher filed a complaint for personal

injuries sustained on July 16, 1979, at a construction site when certain radio-
controlled overhead garage doors opened causing him to fall from the
scaffolding upon which he was working. The complaint named as defendants
Shippers Development Company (general contractor), Salinas Steel Builders,
Inc. (subcontractor), Jack’s Overhead Door Company, Inc. and John Hendrix
(independent contractors and installers of the electronic doors), as well as four
fictitious business entities (Black, White, Blue, and Grey Companies), three
fictitious individuals comprising Grey Company as a partnership (Does One,
Two, and Three), and ninety-seven additional fictitious defendants (Does Four
through One Hundred).

The first paragraph of the complaint alleged that the true names and capacities
of the fictitious defendants were unknown to plaintiff, but stated that when these
were ascertained plaintiff would move to amend the complaint accordingly.
Paragraph six alleged a cause of action for negligence, charging that defendants
owned, [610/611]possessed and controlled the construction site, that they had
provided an unsafe workplace through their failure, among other things, to
“supervise and control the installation and operation of radio-controlled
overhead garage doors” on the worksite, and that such negligence resulted in
plaintiff’s injuries.

On May 18, 1982, two years and ten months after the accident, and after
settlement was obtained with the named defendants, Streicher filed a first
amended complaint against respondents Tommy’s Electric Company and Shima
American Corporation and Does Four through One Hundred. It alleged
respondents designed, manufactured, marketed and sold the radio-controlled
overhead door openers involved in the accident and that these openers had been
defectively designed and would malfunction without human intervention. The
amended complaint stated causes of action for negligence, breach of express and
implied warranty, and strict products liability.1

On June 17, 1982, respondents demurred to the first amended complaint on

the ground that the claim was barred by the one-year statute of limitations (Code
Civ. Proc., § 340, subd. (3)). Respondents also moved the court to judicially
notice, pursuant to Evidence Code sections 452 and 453, all the pleadings and
records in its file on this case including a cross-complaint filed by Jack’s
Overhead Doors (one of the named defendants) and a complaint in intervention
filed by Industrial Indemnity Co. (plaintiff’s employer’s workers’ compensation
carrier), both filed in February of 1980, which included respondents among the
named defendants and alleged causes of action for indemnity based on a
products liability theory.

Respondents argued in their moving papers that since plaintiff’s amended

complaint did not substitute respondents for any of the fictitiously named
defendants in his original complaint, the amended complaint was in fact adding
new defendants to the action and that this was not permissible after the running
of the one-year statute of limitations. Respondents further argued that even if
plaintiff’s defective substitution of fictitious defendants was cured, the
provisions of Code of Civil Procedure section 474,2 allowing the amendment to
relate back to the filing of the original complaint, did not apply because in
February of 1980 plaintiff had notice of respondents’ identity through the filing
of the cross-complaint and intervention pleadings, yet he had nevertheless failed
to exercise due diligence in amending his complaint before the expiration of the
statute of limitations in July 1980.

Streicher opposed respondents’ demurrer and moved for leave to amend his
[611/612]complaint in order to properly substitute respondents for specifically
named fictitious defendants, arguing his failure to do so constituted a procedural
error which could be easily cured. Streicher also argued the benefits afforded
by section 474 should apply because he was not aware of any facts constituting
the basis for a products liability cause of action against respondents until March
30, 1982, when an electronics expert indicated that the electronic door
controllers involved in the accident were defective.

The court sustained respondents’ demurrer without leave to amend on the

ground the statute of limitations barred the action. The court’s minute order also
noted that plaintiff’s early pleadings were consistent with his belief that “before
March 30, 1982 … [he] had no basis for an action against the two defendants.”
This appeal followed.

Discussion

On appeal, Streicher contends the trial court erroneously sustained the

demurrer and abused its discretion in denying him leave to amend the complaint
to cure his failure to specifically substitute respondents for fictitious defendants
named in the original complaint. We find these contentions meritorious.

Preliminarily we must determine whether Streicher’s first amended

complaint, absent his defective substitution of respondents for the fictitiously
named defendants, relates back to the filing date of the original complaint under
section 474, thus defeating the bar of the statute of limitations.

“The purpose of … section 474 is to enable a plaintiff who is ignorant of the

identity of the defendant to file his complaint before his claim is barred by the
statute of limitations. There is a strong policy in favor of litigating cases on their
merits, and the California courts have been very liberal in permitting the
amendment of pleadings to bring in a defendant previously sued by fictitious
name.” (Barrows v. American Motors Corp. (1983) 144 Cal. App. 3d 1, 7 [192
Cal. Rptr. 380], citing Austin v. Massachusetts Bonding & Insurance Co.
(1961) 56 Cal. 2d 596, 600, 602, 603 [15 Cal. Rptr. 817, 364 P.2d 681] ; …). It
is also well settled that the amended pleading will relate back to the date of
filing of the original complaint provided it seeks recovery on the same general
set of facts as alleged in the original complaint. (Austin v. Massachusetts
Bonding & Insurance Co., supra, 56 Cal. 2d at p. 600; Smeltzley v. Nicholson
Mfg. Co. (1977) 18 Cal. 3d 932, 937 [136 Cal. Rptr. 269, 559 P.2d 624, 85
A.L.R.3d 121]; Barrows v. American Motors Corp., supra, 144 Cal. App. 3d at
p. 7). Moreover, it is clear that where the original complaint contains standard
Doe allegations alleging negligence theories, it is proper to amend the complaint
to bring in other defendants on warranty and products liability; since the
amendment involves the same accident and injury, the amendment relates back
to satisfy the statute of limitations. (Barrows v. American Motors Corp., supra,
144 Cal. App. 3d at p. 7; Garrett v. Crown Coach Corp. (1968) 259 Cal. App.
2d 647 [66 Cal. Rptr. 590].)

However, in order to claim the benefits of section 474, plaintiff’s ignorance

of defendant’s true name must be genuine and not feigned. We must therefore
look to see whether plaintiff knew defendant’s true name at the time he filed his
original [612/613]complaint. Plaintiff’s requisite ignorance of defendant’s name
under section 474 has been expansively interpreted by the courts to encompass
situations where “‘he knew the identity of the person but was ignorant of the
facts giving him a cause of action against the person [citations], or knew the
name and all the facts but was unaware that the law gave him a cause of action
against the fictitiously named defendant and discovered that right by reason of
decisions rendered after the commencement of the action. [Citations].’”
(Marasco v. Wadsworth (1978) 21 Cal. 3d 82, 88 [145 Cal. Rptr. 843, 578
P.2d 90] , quoting with approval Barnes v. Wilson [(1974)] 40 Cal. App. 3d
[199] at p. 205). Moreover, section 474’s ignorance requirement “is restricted
to the knowledge of the plaintiff at the time of filing of the complaint” (Munoz
v. Purdy (1979) 91 Cal. App. 3d 942, 947 [154 Cal. Rptr. 472] , italics added;
… “and does not relate to steps that should be taken after the filing of the
action.” (91 Cal. App. 3d at p. 947).

Guided by the foregoing principles we turn to the case at bar. Streicher’s

original complaint contained standard “Doe” allegations against fictitious
defendants then unknown, as required by section 474. Although the original
complaint alleged a cause of action for negligence against all defendants for
failing to provide a safe place to work, it was proper to amend the complaint to
bring in the defectively substituted defendants on the additional warranty and
products liability theories of recovery since the amendment involved the same
accident and injury alleged in the original complaint. (See Smeltzley v.
Nicholson Mfg. Co., supra, 18 Cal. 3d at p. 937). It is undisputed that at the
time Streicher’s original complaint was filed he was ignorant of respondents’
identity or of their participation in designing, manufacturing or selling the
electronic door openers involved in the accident. Likewise Streicher did not
know at this time any facts which would indicate the possibility the door
openers were defectively designed as such flaw in design was not externally
visible.

Respondents contend, nevertheless, that Streicher did not “in good faith”
avail himself of the provisions of section 474 because four months after his
original complaint was filed he was alerted, through the filing of cross-
complaint and intervention pleadings, of respondents’ role in manufacturing and
distributing the electronic door devices and of the possibility they could be sued
under a products liability theory of recovery. As pointed out above, plaintiff’s
actual knowledge at the time the suit is filed is dispositive in triggering the
application of section 474’s fictitious defendant provisions. Further, it remains
undisputed that at the time of the filing of the original complaint Streicher was
ignorant of respondents’ identity or of their status as manufacturers and
distributors of the defective door openers. Moreover, there is no requirement
under section 474 that plaintiff exercise reasonable diligence in discovering
either the true identity of fictitious defendants or the facts giving him a cause of
action against such persons after the filing of a complaint and up to the
expiration of the applicable limitation period. (Munoz v. Purdy, supra , 91 Cal.
App. 3d at pp. 947–948; Barrows v. American Motors Corp., supra, 144 Cal.
App. 3d at p. 10, fn. 4). As aptly stated by the court in Munoz, supra, “the
interjection of a discovery standard into section 474 would lead to the harmful
practice in all litigation of requiring that all persons who might conceivably
have some connection with the lawsuit be specifically named in order to avoid
the [613/614]sanctions of the failure to comply with the inquiry requirements of
section 474.” (91 Cal. App. 3d at pp. 947–948).

Respondent also argues that, irrespective of appellant’s lack of knowledge of

the true identity of the fictitiously named defendants at the time he filed the
original complaint, he was nonetheless “dilatory” in filing the amended
complaint once he acquired knowledge of the true identity of those defendants
fictitiously named. Respondent contends that unreasonable delay in filing the
amendment after actual discovery of the true identity of a fictitiously named
defendant can bar a plaintiff’s resort to the fictitious name procedure. Some
authority for this proposition can be found in Barrows v. American Motor
Corp., supra, 144 Cal. App. 3d at pages 8–9, and in Barnes v. Wilson, supra,
40 Cal. App. 3d 199 at page 206. Here, however the trial court was only
dealing with a demurrer to the amended complaint. “Defendant’s demurrer,
however, tests only the sufficiency of the pleadings. Nothing in the pleadings
suggests that plaintiff, after learning of his cause of action against defendant,
was dilatory in amending his complaint, or that defendant suffered prejudice
from such delay. [citation].” (Smeltzley v. Nicholson Mfg. Co., supra, 18 Cal.
3d 932, at p. 939, fns. omitted). Nothing in this record suggests appellant was
dilatory in amending his complaint. In fact, the trial court’s order states that
before March 30, 1982, “[appellant] had no basis for an action against the two
defendants.” Once he learned the facts giving him a cause of action against
respondents on March 30, 1982, his first amended complaint naming
respondents as defendants was promptly filed on May 18, 1982, within two
months of discovery.

We conclude that, absent Streicher’s defective substitution of respondents for

the fictitiously named defendants, his first amended complaint relates back to the
filing date of the original complaint under section 474, thus defeating the bar of
the statute of limitations.

The issue remains whether the court abused its discretion in denying Streicher
leave to amend the complaint to cure his failure to properly allege that
respondents were being substituted for some of the fictitiously named defendants
in the original complaint. Streicher argues this omission constituted a
procedural error which was easily curable through amendment. We agree.

“It is axiomatic that if there is a reasonable possibility that a defect in the

complaint can be cured by amendment or that the pleading liberally construed
can state a cause of action, a demurrer should not be sustained without leave to
amend. [Citations.]” (Minsky v. City of Los Angeles (1974) 11 Cal. 3d 113,
118–119 [113 Cal. Rptr. 102, 520 P.2d 726] ). We are satisfied the amended
complaint’s allegations sufficiently state a cause of action for products liability
against respondents. Moreover, “[an] amendment substituting the true names of
fictitious defendants is not a matter of substance because it does not change the
cause of action nor affect the issues raised by the pleadings. [Citation].”
(Vincent v. Grayson (1973) 30 Cal. App. 3d 899, 905, fn. 2 [106 Cal. Rptr.
733]). Since the defect in the complaint does not affect the substance of its
allegations and it is reasonably possible the defect can be cured by amendment,
we conclude the trial court abused its discretion in dismissing the action without
giving Streicher the opportunity to amend.

The judgment of dismissal is reversed.

[614/615]

GENERAL MOTORS CORP. v. SUPERIOR COURT

COURT OF APPEAL OF CALIFORNIA,
FOURTH APPELLATE DISTRICT
48 Cal. App. 4th 580, 55 Cal. Rptr. 2d 871 (1996)

Vogel (Miriam A.), Justice.

A driver wearing her seat belt is stopped in traffic. Her car is rear-ended.
Although her seat belt remains fastened and does not break, her head strikes the
steering wheel and she later mentions to a doctor that “the seat belt didn’t hold
[her].” Within one year, she sues the driver of the other car and 20 Doe
defendants. More than two years after the accident, she substitutes the
manufacturer of her car for a Doe defendant and adds allegations that the seat
belt was defective. The manufacturer cries foul, claiming the driver knew there
was a problem with the seat belt and knew the identity of the manufacturer of
her car, and thus was not “ignorant” of its identity within the meaning of section
474 of the Code of Civil Procedure.1 The driver disagrees, claiming the mere
fact that the seat belt did not secure her tightly to the seat did not make her
suspect that the belt’s “comfort feature” (which permits it to spool out when the
driver leans forward) was defective in that it allowed “the inadvertent
introduction of slack.” The trial court agreed with the driver and so do we.

FACTS

On November 5, 1992, Susanna Jeffrey’s 1986 Chevrolet Blazer was rear-

ended by a car driven by David Katsuro Akazawa. Jeffrey’s face hit the steering
wheel and she suffered facial injuries, including “traumatic brain injury,” a
broken nose and broken teeth. Jeffrey hired a lawyer (Philip Dunn) and he sent
Jeffrey to Charles Furst, Ph.D. (a clinical neuropsychologist), for an evaluation.
On April 27, 1993, Dr. Furst interviewed and examined Jeffrey, who told him
that she had struck her nose and abdomen on the steering wheel because “the
seat belt didn’t hold [her]” or because the “seat belt failed.”2 On July 6, Dr.
Furst forwarded a report to Dunn, reciting Jeffrey’s history and expressing his
opinion of her condition. Included in Dr. Furst’s description of the accident is
this statement: “She was stopped on the freeway in traffic when she was rear-
ended. She experienced whiplash and she struck her nose on the steering wheel,
after her seat belt failed, and additionally she struck her abdomen on the wheel
also.” On October 7, Jeffrey sued Akazawa and Does 1 through 20, claiming
damages for personal injuries and property damage caused by Akazawa’s
negligent driving.

In March 1995, following a non-binding arbitration award against Akazawa

for [615/616]more than $500,000, Dunn associated “more experienced” counsel,
John D. Rowell and his firm, Rowell & Tessier. In April, Jeffrey filed a
standard-form “Amendment to Complaint” adding General Motors Corporation
as Doe 1. On May 19 (two and one-half years after the accident), Jeffrey filed a
first amended complaint adding a products liability claim against GM, alleging
that the Blazer’s seat belt restraint system was defectively designed, and that
GM knew it was defective but did nothing about it. A claim for punitive
damages was also added.

In August, GM (then unaware of Dr. Furst’s notes) moved to quash service of

Jeffrey’s first amended complaint on the ground that Jeffrey must have known
she had a potential claim against GM when the original complaint was filed
because “a seat belt either restrains a person or it does not and this fact is
known immediately after” an automobile accident. Jeffrey opposed the motion,
explaining in her declaration that although she obviously knew the name of the
manufacturer of her car at the time she filed her original complaint, she “had no
knowledge of any defect in the vehicle or the seat belt system of the vehicle.”
Since that time, however, she “learned that the injury [she] suffered was an
injury which was most likely suffered as a result of a defect in the design of the
seat belt.” She learned of this defect when Rowell (her new attorney) explained
it to her and identified a “so-called ‘comfort feature’ in the seat belt” which
allows “the belt to remain in a spooled out position whenever a driver leans
forward, for example, to adjust the radio or to turn on the ignition.” Once the
driver leans forward the belt will not retract into a snug position when the
driver “leans back.” She had “never noticed this condition prior to discussing
this matter” with Rowell but, since that time, had become aware of it when she
drove the Blazer.
 Jeffrey’s opposition was also supported by a declaration from Dunn
explaining that he had examined the Blazer when he was first consulted by
Jeffrey and that, to him, “there did not appear to be anything wrong with the
passenger restraint system. Up until the time [he] discussed this matter with Mr.
Rowell[, Dunn] was unaware of GM’s ‘comfort feature’ and was completely
unaware that this particular design could cause injuries such as occurred to Mrs.
Jeffrey.” A declaration by Rowell explained that he was involved in an
unrelated matter involving “a claim that the identical ‘comfort feature’” on a
GM vehicle caused “head injuries in a similar manner to the allegations in this
case.” He had conducted substantial discovery in the other case and had learned
of eight additional “comfort feature” cases pending against GM, all of which
were subject to protective orders prohibiting disclosure of information about the
alleged defects in GM’s seat belt system. As a result, it “would be quite unusual
for someone such as Mr. Dunn, who does not specialize in the products liability
area, to have become aware of the problems associated with the use of the
‘comfort feature’ design” in Jeffrey’s vehicle. Implicit in Rowell’s declaration
is the conclusion that the average driver would be totally unaware of this
problem.5

[616/617]

GM’s motion to quash was denied, the court finding that Jeffrey was “not
aware of any defect, design or otherwise, in the … occupant restraint system.”
GM then answered and conducted discovery, at which time it learned of Dr.
Furst’s examination of Jeffrey and the note in Dr. Furst’s file about the seat belt
“failure.” GM asked Rowell to dismiss Jeffrey’s case against GM in exchange
for a waiver of costs and a release of GM’s malicious prosecution claims.
When Rowell refused, GM moved for summary judgment, contending Jeffrey’s
claims were barred because, at the time she filed her original complaint, Jeffrey
and Dunn knew there was a problem with the seat belt and knew the identity of
the car’s manufacturer, and thus Jeffrey was not ignorant of GM’s identity within
the meaning of section 474. GM supported its motion with Dr. Furst’s
deposition testimony, his handwritten notes, and his report to Dunn. Jeffrey
opposed the motion, relying on the declarations she had filed in opposition to
GM’s motion to quash and contending, again, that she was ignorant within the
meaning of section 474 because she did not know the seat belt system was
defective.6 As Jeffrey explained to the trial court, her claims against GM are not
based on an allegation of a mechanical failure but rather on the allegedly
defective design of the restraint system. The trial court denied GM’s motion.
 GM then filed a petition for a writ of mandate, asking us to compel the trial
court to grant summary judgment and framing the issues as (1) whether a
plaintiff may rely upon the subsequent association of more experienced counsel
to bring in a new defendant under section 474 notwithstanding that “there has
been no discovery of new facts” as required by section 474; (2) whether “the
inexperience and malpractice” of Jeffrey’s first lawyer, “who effectively
violate[d] [his] ethical obligation to not take cases [he was] unqualified to
handle,” is a legally justifiable excuse to avoid the requirements of section
474;8 and (3) whether a Doe amendment can relate back [617/618]to the date of the
original complaint when it is “admittedly based upon the same basic facts (i.e.,
seat belt failure) which were admittedly known when the original complaint
was filed.” We issued an order to show cause, received opposition from
Jeffrey, and heard argument (at which time we invited and later received further
briefing). We now deny the petition.

DISCUSSION

When a lawsuit is first initiated after the applicable period of limitations has
expired and the plaintiff is entitled to claim the benefit of a delayed discovery
rule (that is, when for one reason or another the plaintiff is granted an extended
period within which to file suit), the relevant inquiry is what the plaintiff knew
or, through the exercise of due diligence, reasonably could have discovered at
an earlier date. (See part I, post.)

But where, as here, a lawsuit is initiated within the applicable period of

limitations against someone (that is, almost anyone at all) and the plaintiff has
complied with section 474 by alleging the existence of unknown additional
defendants, the relevant inquiry when the plaintiff seeks to substitute a real
defendant for one sued fictitiously is what facts the plaintiff actually knew at
the time the original complaint was filed. (See part II, post.)

In the trial court and here, GM talks in terms of what Jeffrey should have
known at the time she filed her original complaint. As we will explain, that
question is immaterial in this context and the only relevant inquiry is whether
Jeffrey had actual knowledge of the basic facts giving rise to her claim against
GM.
 I. The Delayed Discovery Rule

We begin by stating the delayed discovery rule GM asks us to apply in this

case. Where no one related to the same injury has been sued within the
applicable period of limitations (for example, where the plaintiff knows she has
a medical problem but does not know her condition was caused by a defective
drug), the statute of limitations begins to run “when the plaintiff suspects or
should suspect that her injury was caused by wrongdoing, that someone has done
something wrong to her.” (Jolly v. Eli Lilly & Co. (1988) 44 Cal. 3d 1103,
1110 [245 Cal. Rptr. 658, 751 P.2d 923] .) Stated otherwise, the limitations
period begins once the plaintiff has notice or information of circumstances about
her injury and its negligent cause such as would put a reasonable person on
inquiry. (Id. at p. 1109; Gutierrez v. Mofid, supra, 39 Cal. 3d at pp. 896–897;
Sanchez v. South Hoover Hospital (1976) 18 Cal. 3d 93, 101 [132 Cal. Rptr.
657, 553 P.2d 1129].)

In the delayed discovery context, a “plaintiff need not be aware of the

specific ‘facts’ necessary to establish the claim; that is a process contemplated
by pretrial discovery. Once the plaintiff has a suspicion of wrongdoing, and
therefore an incentive to sue, she must decide whether to file suit or sit on her
rights. So long as [618/619]a suspicion exists, it is clear that the plaintiff must
go find the facts; she cannot wait for the facts to find her.” (Jolly v. Eli Lilly
& Co., supra, 44 Cal. 3d at p. 1111 , italics added; see also Miller v. Bechtel
Corp., supra, 33 Cal. 3d at p. 875; Graham v. Hansen (1982) 128 Cal. App. 3d
965, 972–973 [180 Cal. Rptr. 604] [if a plaintiff believes because of injuries
she has suffered that someone has done something wrong, the statutory period
begins].)

The problem with GM’s reliance on these cases is that they have nothing to
do with section 474.

II. The Section 474 Rules

A. The Statute

Section 474 was enacted in 1872 to replace a virtually identical provision

enacted in 1851 as section 69 of the Practice Act (Hogan, California’s Unique
Doe Defendant Practice: A Fiction Stranger Than Truth (1977) 30
Stan.L.Rev. 51, 57, fn. 18, henceforth cited as Doe Defendant Practice). As
enacted, section 474 provided: “‘When the plaintiff is ignorant of the name of
the defendant, he must state that fact in the complaint, and such defendant may be
designated in any pleading or proceeding by any name, and when his true name
is discovered, the pleading or proceeding must be amended accordingly.’” (Doe
Defendant Practice, supra, at p. 57, fn. 18; …) In 1953, an amendment added
special notice requirements relevant only to default judgments, and a 1955
amendment made the statute applicable to proceedings commenced by affidavit
as well as those commenced by a complaint. There have been no other
amendments, which means that, for our purposes, the statute is the same now as
it was in 1851.

Today, it is generally understood that when a complaint sets forth a cause of

action against a defendant designated by a fictitious name because the plaintiff is
genuinely ignorant of his name or identity, and his true name thereafter is
discovered and substituted by amendment, he is considered a party to the action
from its commencement so that the statute of limitations stops running as of the
date the original complaint was filed. (Optical Surplus, Inc. v. Superior Court
(1991) 228 Cal. App. 3d 776, 783 [279 Cal. Rptr. 194].)10

[619/620]

B. The Supreme Court’s Early Views

In 1871, the Supreme Court decided Rosencrantz v. Rogers, supra, [(1871)],

40 Cal. 489. * * * The Supreme Court [in Rosencrantz] quoted section 69 of the
Practice Act, then added: “This ignorance of the name must, of course, be real,
and not feigned; it must not be willful ignorance, or such as might be removed
by mere inquiry or a resort to means of information easily accessible ….” * * *

Fifteen years later, the Supreme Court decided Irving v. Carpentier (1886)
70 Cal. 23 [11 P. 391] …. [Contrasting the statutory rule of section 474 to the
delayed discovery rule, the Court in Irving concluded]: “But the rule
prescribed by the statute in this case is entirely different. It is when he is
actually ignorant of a certain fact, not when he might by the use of
reasonable diligence have discovered it. Whether his ignorance is from
misfortune or negligence, he is alike ignorant, and this is all the statute
requires. This is the true meaning of the statute. We adopt it the more readily
because the party thus brought in as a defendant loses no rights by it.”
(Irving v. Carpentier, supra, 70 Cal. at pp. 25–27, italics added.)

* * * [I]t is clear that, by the time Irving was decided, the Supreme Court no
longer cared for the language it had used in Rosencrantz — that the “ignorance”
must not only be real and not feigned but must also not “be willful ignorance, or
such as might be removed by mere inquiry or a resort to means of information
easily accessible.” (Rosencrantz v. Rogers, supra, 40 Cal. at p. 491.) In our
view, Rosencrantz suggests a duty of inquiry that is flatly rejected by Irving.
(Irving v. Carpentier, supra , 70 Cal. at pp. 25-26 [“[w]hether his ignorance is
from misfortune or negligence, he is alike ignorant, and this is all the statute
requires”].) Be that as it may, it is Irving, not Rosencrantz, that has been
followed for over 100 years.

C. The Current View Is One of Liberal Construction

Whatever the judicial attitude toward section 474 might have been in the 19th
Century, the Supreme Court and the Courts of Appeal of the 20th Century are
uniform in their view that section 474 is to be liberally construed. (Austin v.
Massachusetts Bonding & Insurance Co. (1961) 56 Cal. 2d 596, 602–603 [15
Cal. Rptr. 817, 364 P.2d 681] ; Motor City Sales v. Superior Court (1973) 31
Cal. App. 3d 342, 345 [107 Cal. Rptr. 280] ; Barnes v. Wilson (1974) 40 Cal.
App. 3d 199, 203 [114 Cal. Rptr. 839] [the purpose of section 474 is to enable
a plaintiff to commence suit in time to avoid the bar of limitations where he is
ignorant of the identity of the defendant and the statute should be liberally
construed to accomplish that purpose]; Streicher v. Tommy’s Electric Co.
(1985) 164 Cal. App. 3d 876, 882 [211 Cal. Rptr. 22] ; Barrows v. American
Motors Corp. (1983) 144 Cal. App. 3d 1, 7 [192 Cal. Rptr. 380] [“the
California courts have been very liberal in permitting the amendment of
pleadings to bring in a defendant previously sued by fictitious name”].)

In keeping with this liberal interpretation of section 474, it is now well

established that even though the plaintiff knows of the existence of the defendant
sued by a fictitious name, and even though the plaintiff knows the defendant’s
actual [620/621]identity (that is, his name), the plaintiff is “ignorant” within the
meaning of the statute if he lacks knowledge of that person’s connection with the
case or with his injuries. (Wallis v. Southern Pac. Transportation Co. (1976)
61 Cal. App. 3d 782, 786 [132 Cal. Rptr. 631] ; Oakes v. McCarthy Co. (1968)
267 Cal. App. 2d 231, 253 [73 Cal. Rptr. 127] [plaintiff knew soils engineer
was involved but did not know his connection to earth compacting operation];
Parker v. Robert E. McKee, Inc. (1992) 3 Cal. App. 4th 512, 518 [4 Cal. Rptr.
2d 347] [even where the defendant is named in the original complaint by his true
name, then dismissed because the plaintiff believed his capacity relieved him of
liability, he may later be added (returned to the action) as a Doe defendant
based on the plaintiff’s discovery that he occupied different legal capacity].)13
The fact that the plaintiff had the means to obtain knowledge is irrelevant.

D. To Defeat a Claim of Ignorance, It Must Be Shown That

the Plaintiff Had Actual Knowledge of the Basic Facts

Ignorance of the facts giving rise to a cause of action is the “ignorance”

required by section 474, and the pivotal question is, “‘did plaintiff know facts?’
not ‘did plaintiff know or believe that she had a cause of action based on those
facts?’” (Scherer v. Mark (1976) 64 Cal. App. 3d 834, 841 [135 Cal. Rptr. 90] ;
Hazel v. Hewlett (1988) 201 Cal. App. 3d 1458, 1465 [247 Cal. Rptr. 723] .)
Although it is true that a plaintiff’s ignorance of the defendant’s name must be
genuine (in good faith) and not feigned (Streicher v. Tommy’s Electric Co.,
supra, 164 Cal. App. 3d at p. 882; …) and that a plaintiff need not be aware of
each and every detail concerning a person’s involvement before the plaintiff
loses his ignorance (Dover v. Sadowinski (1983) 147 Cal. App. 3d 113, 117–
118 [194 Cal. Rptr. 866] ; Optical Surplus, Inc. v. Superior Court, supra, 228
Cal. App. 3d at p. 784), it is equally true that the plaintiff does not relinquish
her rights under section 474 simply because she has a suspicion of wrongdoing
arising from one or more facts she does know. (Garrett v. Crown Coach Corp.,
supra, 259 Cal. App. 2d at p. 650; Breceda v. Gamsby (1968) 267 Cal. App. 2d
167, 175–176 [72 Cal. Rptr. 832] [a plaintiff is entitled to the benefits of
section 474 unless substantial evidence shows she was not ignorant of the facts
she needed to know].)

The distinction between “actual facts” and “mere suspicion” was addressed
in Dieckmann v. Superior Court (1985) 175 Cal. App. 3d 345 [220 Cal. Rptr.
602]: “Section 474 allows a plaintiff in good faith to delay suing particular
persons as named defendants until he has knowledge of sufficient facts to
cause a reasonable person to believe liability is probable . The distinction
between a suspicion that some [621/622]cause could exist and a factual basis to
believe a cause exists is critical in the operation of section 474. The former is
one reason attorneys include general charging allegations against fictitiously
named defendants; the latter requires substitution of the defendant’s true name.
[The late named defendant’s] present urging that its ostensible liability was
always obvious to plaintiff confuses these two standards of knowledge and is
based upon hindsight.” (Dieckmann v. Superior Court, supra, 175 Cal. App. 3d
at p. 363, italics added.)14

Thus, for example, in Streicher v. Tommy’s Electric Co., supra , 164 Cal.
App. 3d 876, a plaintiff sued the general contractor, a subcontractor and several
fictitiously named defendants for negligently causing the injuries he sustained
when a radio-controlled overhead garage door opened unexpectedly, causing
him to fall from scaffolding where he was working. (Id. at pp. 879–880.) Two
years and ten months later, the plaintiff amended his complaint to add the
manufacturer of the door opener and allegations that the opener was defectively
designed. Although the plaintiff knew the door had opened and knew it was
radio-controlled, his amendment was proper because he “did not know at [the
time he filed his original complaint] any facts which would indicate the
possibility that the door openers were defectively designed as such flaw in
design was not externally visible.” (Id. at p. 883, italics added.)

In short, section 474 does not impose upon the plaintiff a duty to go in search
of facts she does not actually have at the time she files her original pleading.15
(Munoz v. Purdy, supra , 91 Cal. App. 3d at pp. 947–948 [“the interjection of a
discovery standard into section 474 would lead to the harmful practice in all
litigation of [622/623]requiring that all persons who might conceivably have some
connection with the lawsuit be specifically named in order to avoid the
sanctions of the failure to comply with the inquiry requirements of section
474”].)

III.

Construed in GM’s favor, the evidence is that Jeffrey “knew” the seat belt
“failed” and “knew” she hit her head on the steering wheel. Construed in
Jeffrey’s favor, the evidence is that she gave no thought at all to the seat belt
(except for her knowledge that she was wearing it at the time of the collision
and that it did not break or come undone) but she did “know” that her head hit
the steering wheel. As noted above (fn. 6, ante), the focus on whether she knew
the belt “failed” is a red herring. Given a driver wearing a seat belt when her
car is rear-ended by another car traveling at low or moderate speed, given the
fact that the seat belt did not break or come undone, and given the fact that the
driver hit her head on the steering wheel, the ultimate issue is whether Jeffrey
had actual knowledge of the basic facts giving her a claim against GM. Our
resolution of this issue in favor of Jeffrey is based on the following analysis.
 First, we begin by identifying the theory of Jeffrey’s claim against GM as one
for products liability. (Breceda v. Gamsby, supra , 267 Cal. App. 2d at p. 177
[for purposes of section 474, the plaintiff’s knowledge must be tested in the
context of the theory of her claim against the new defendant].)

Second, we consider what facts Jeffrey must show to have a viable products
liability claim against GM (Dieckmann v. Superior Court, supra, 175 Cal.
App. 3d at p. 363 [under section 474, a plaintiff is not required to sue “until
[s]he has knowledge of sufficient facts to cause a reasonable person to believe
liability is probable”]), and note that, to prevail, she ultimately will have to
prove that (a) GM was the manufacturer, (b) the seat belt system possessed a
defect in design, (c) the defective design existed at the time the car left GM’s
possession, and (d) the defective design was a cause of her injury or enhanced
the injury caused by the collision. (BAJI No. 9.00.5; Soule v. General Motors
Corp. (1994) 8 Cal. 4th 548, 560 [34 Cal. Rptr. 2d 607, 882 P.2d 298].)

Third, we consider the means by which Jeffrey would prove her products
liability claim against GM. In this regard, the essence of GM’s position is that
“a seat belt either restrains a person or it does not and this fact is known
immediately after” an automobile accident, an argument we understand to mean
that the seat belt’s alleged failure is a matter so “commonly understood” by
those who use it that a jury could decide this case without benefit of expert
testimony. We flatly reject GM’s “commonly understood” argument. Whatever
merit there might be to GM’s position in a case where a passenger is not
wearing a seat belt, we cannot agree that it is “commonly understood” that a
driver wearing a seat belt will hit her head on the steering wheel when her car
is rear-ended only if there was something wrong with the seat belt. To the
contrary, we believe that where, as here, the alleged defect “was not externally
visible” (Streicher v. Tommy’s Electric Co., supra , 164 Cal. App. 3d at p.
883), it cannot be said that Jeffrey had actual knowledge of any fact or
circumstance suggesting a defect in the manner in which the belt was designed. *
* * Whatever merit there may be to a claim that someone who is not wearing a
[623/624]seat belt knows, as a matter of “common knowledge,” that her conduct
contributed to her injuries, that is not what happened here.16

Fourth, GM’s own expert has testified that a properly operating seat belt
(one with “no slack”) would not have prevented Jeffrey from striking her head
on the steering wheel. The way we understand the evidence in the record now
before us, the purpose of a seat belt is to reduce (not eliminate) the number of
accidents in which a driver’s or passenger’s head strikes the interior of the
vehicle by reducing the speed of head travel and the corresponding severity of
head impact.

Based upon the testimony of GM’s expert and on our conclusion that such
matters are not within the average driver’s “common knowledge,” we hold that
a driver who is injured in an automobile accident when she is wearing a seat
belt which appears to the naked eye to have operated in its intended fashion
does not know the basic facts she needs to plead a products liability claim
against the manufacturer of the seat belt. (Evid. Code, § 452, subd. (g) [judicial
notice may be taken only of those “[f]acts and propositions that are of such
common knowledge within the territorial jurisdiction of the court that they
cannot reasonably be the subject of dispute”]; Dieckmann v. Superior Court,
supra, 175 Cal. App. 3d at p. 362 [plaintiff’s knowledge of (a) the identity of a
truck’s manufacturer and (b) the fact that, for no apparent reason, the truck’s
driveshaft dislodged while the truck was moving does not constitute sufficient
cause to require plaintiff to sue the truck’s manufacturer in his original
complaint].) It follows that when she subsequently learns that the seat belt may
have been defectively designed, she is entitled to claim the benefits of section
474.

DISPOSITION

The orders to show cause are discharged and the petitions are denied.

A petition for a rehearing was denied September 5, 1996, and the opinion
was modified to read as printed. Petitioner’s application for review by the
Supreme Court was denied November 13, 1996.

NOTES AND QUESTIONS

(1) What are the policy reasons for interpreting CCP § 474’s Doe defendant
practice as not imposing upon the plaintiff a duty to exercise reasonable
diligence prior to filing the original complaint to discover the defendant’s
identity or the facts giving rise to a cause of action? Why would the injection of
such a discovery standard into § 474 be considered a “harmful practice”?

[624/625]
 (2) The General Motor court’s ruling that the duty to investigate considered
in determining whether an initial complaint is timely is not a relevant inquiry in
determining whether a Doe amendment is timely was followed and applied in
Fuller v. Tucker , 84 Cal. App. 4th 1163, 101 Cal. Rptr. 2d 776 (2000) (trial
court erred in finding that a medical malpractice plaintiff, who had failed to
conduct a reasonable investigation to discover an anesthesiologist’s name prior
to filing the original complaint, was barred by the statute of limitations from
amending the complaint to substitute the anesthesiologist for a Doe defendant),
and in McOwen v. Grossman, 153 Cal. App. 4th 937, 63 Cal. Rptr. 3d 615
(2007) (applying General Motors and Fuller in a medical malpractice action).

Footnotes:

1 On April 29, 1982, prior to the filing of his amended complaint, Streicher served upon Shima American
Corporation (Shima) a summons and a copy of the original complaint. The proof of service indicated Shima
had been served as fictitious defendant “Doe Five,” but the summons accompanying the complaint did not
so indicate. On May 17, 1982 plaintiff and respondents stipulated to plaintiff’s filing of the amended
complaint, but the stipulation also indicated it did not constitute a waiver by respondents “to answer or
otherwise plead” to the amended complaint.

2 Unless otherwise indicated, further statutory references are to the Code of Civil Procedure. Section
474 provides in pertinent part: “When the plaintiff is ignorant of the name of a defendant, he must state that
fact in the complaint, … and such defendant may be designated in any pleading or proceeding by any name,
and when his true name is discovered, the pleading or proceeding must be amended accordingly ….”

1 Unless otherwise stated, all section references are to the Code of Civil Procedure. Under section 474,
discussed at length below, a plaintiff who is ignorant of the name of a defendant may designate that
defendant by a fictitious name and then amend when the defendant’s true name is discovered.

2 Dr. Furst’s entry in Jeffrey’s file is that she struck the wheel “after seat belt failed.” At his deposition,
he testified that he could not remember whether those were her words or his, that the word “failed” might
have been his and not hers, and that she might have said “the seat belt didn’t hold [her]” or used some other
words to the same effect. * * *

5 In general terms, this is the way Rowell describes the problem with the seat belt: “The shoulder belt
incorporated a load limiter, known as a ‘windowshade’ device, or comfort feature, which allowed intentional
or inadvertent introduction of slack into the seat belt. [GM] has never publicized this design problem with
this system, nor did it ever recall the vehicle or request that owners, such as [Jeffrey], modify or change the
belt. However, the comfort feature was removed from the design of subsequent models.” * * * It appears
to us that the (alleged) problem is this: When the driver gets into the car, slack is present in the shoulder belt
due to the absence of an automatic cancellation feature (the purpose of which is to automatically cancel
whatever slack was in the belt before the driver entered the car). When the driver buckles herself into her
seat, her movement causes the “windowshade” (comfort feature) to inadvertently set excess slack. Upon
impact, the driver’s upper torso is flung forward and the shoulder belt retractor fails to timely lock up,
causing additional seat belt webbing to extend and cause more forward movement to the driver’s head. We
emphasize that these are allegations, not established facts.

6 Jeffrey did not file a supplemental declaration denying that she said anything to Dr. Furst about the
seat belt. * * * For purposes of this opinion, however, we are assuming that she did say something to the
effect that the shoulder strap did not hold her as tight as she would have thought it would. Otherwise, as
Jeffrey pointed out in the trial court, the dispute about that foundational fact would by itself mean GM was
not entitled to summary judgment. (§ 437c, subd. (c).) Given the facts of this case (a low to medium speed
rear-end impact and a seat belt that did not break or come undone), we do not believe much is added by
Jeffrey’s alleged statement to Dr. Furst. In our view, the issue is whether a driver who is dutifully wearing a
seat belt and nevertheless strikes her head against the steering wheel is to be charged with actual
knowledge of the basic facts of a products liability claim based on a latent defect in the design of the
restraint system. Whether she stated her subjective belief is immaterial, as is the fact that she might have
been suspicious.

8 This pejorative attack on Dunn is uncalled for. We find nothing in the record contradicting Rowell’s
assertion that the alleged defects in GM’s seat belt system are known to only a few lawyers. It is one thing
to state the well established rule that an attorney’s mistake about the statute of limitations will not save his
client’s case (Gutierrez v. Mofid (1985) 39 Cal. 3d 892, 898 [218 Cal. Rptr. 313, 705 P.2d 886] ; Miller v.
Bechtel Corp. (1983) 33 Cal. 3d 868, 875 [191 Cal. Rptr. 619, 663 P.2d 177] ), quite another to launch an ad
hominem attack accusing an attorney of malpractice or unethical conduct by not knowing that which is
unknowable by reason of protective orders obtained by GM. In a duty to discover case, there might be an
argument that, upon receipt of Dr. Furst’s report and its mention of the seat belt, Dunn should have retained
an expert to examine the seat belt. Since this is not such a case, we will have no more to say about this
purported issue. As we view this case, the only issue is whether, at the time she filed her original complaint,
Jeffrey was ignorant of the facts giving her a cause of action against GM.

10 Although it may appear at first blush that section 474 gives a plaintiff greater rights than she would
have if, in the first instance, she had failed to sue anyone, that is not necessarily so. A plaintiff who defers
suit altogether may (under certain circumstances and subject to various outside limitations imposed by
statute) wait years after the causative event to initiate her litigation. (See e.g., Rose v. Fife (1989) 207 Cal.
App. 3d 760, 768 [255 Cal. Rptr. 440].) In the section 474 context, however, once one defendant is sued,
all fictitiously named defendants must be brought in within a maximum period of three years — because
summons must be returned within three years of its issuance. (§ 583.210.) Moreover, as a result of various
trial delay reduction programs and their enabling rules, the traditional three-year period of section 583.210 is
little more than a fading memory — under current rules of practice, the plaintiff must return summons and
dismiss all fictitiously served defendants within six months to one year (or at least show good cause why a
little more time ought to be allowed to locate another defendant). As a practical matter, therefore, section
474 gives the plaintiff about one extra year, not the unlimited open-ended period of time GM (and the
defendants in the reported cases) seem to think is an eternity or longer. (See Munoz v. Purdy (1979) 91
Cal. App. 3d 942, 947 [154 Cal. Rptr. 472] [the statutory scheme involving sections 474 and 583.210 “has
been a satisfactory compromise between the harsh effect on a plaintiff of the statute of limitations and the
unfairness to a defendant of attempting to litigate a stale claim”].)

13 Professor Hogan describes a similar case (Johnson v. Goodyear Tire & Rubber Co. (1963) 216
Cal. App. 2d 133 [30 Cal. Rptr. 650] [where the manufacturer of parts of the car the plaintiff was driving at
the time of an accident were added as Doe defendants after the Supreme Court “swept aside the
metaphysics of the ‘privity’ concept and adopted strict liability for product injuries” in Greenman v. Yuba
Power Products, Inc. (1963) 59 Cal. 2d 57 (27 Cal. Rptr. 697, 377 P.2d 897 )]) in Doe Defendant
Practice, supra, Pages 67–69: “It is difficult to imagine a relation-back situation more extreme than that
present in Johnson. Plaintiff knew the new parties’ existence, conduct, identities, names, and whereabouts
long before limitations expired. Yet the combination of plaintiff’s ignorance that the law gave rise to a cause
of action against these known parties for this known conduct and the fortuity of his timely suit against
someone else enabled him to outflank their defense of limitations.”

14 We note that a plaintiff bringing in a new defendant after the statute of limitations has run must, at
the same time she is required to show her ignorance, also show that her new claim is based on “the same
general set of facts” as alleged in the original complaint — or risk a pyrrhic victory where she gets to bring
in her new defendant but loses her right to have her claim relate back to the time the original complaint was
filed. In a case before us, there is no relation back problem. (Barrows v. American Motors Corp., supra ,
144 Cal. App. 3d at p. 7 [when standard Doe allegations are included in complaint against the driver of a
vehicle, a product liability claim against the manufacturer of a vehicle involved in the same accident relates
back because it is based on the same accident and the same injury]; …)

15 We are not the first court to refuse to impose a duty of inquiry under section 474. (See Streicher v.
Tommy’s Electric Co., supra , 164 Cal. App. 3d at p. 883; Garrett v. Crown Coach Corp., supra , 259
Cal. App. 2d at p. 650; Breceda v. Gamsby, supra , 267 Cal. App. 2d at p. 174 [the fact that the plaintiff
had the means of ascertaining the needed facts earlier is not a bar to the application of section 474];
Mishalow v. Horwald (1964) 231 Cal. App. 2d 517, 523–524 [41 Cal. Rptr. 895] [“whether plaintiffs could
or could not have ascertained the [necessary facts] before suit was filed is immaterial”]; Marasco v.
Wadsworth (1978) 21 Cal. 3d 82, 88 [145 Cal. Rptr. 843, 578 P.2d 90] ; Snoke v. Bolen (1991) 235 Cal.
App. 3d 1427, 1432 [1 Cal. Rptr. 2d 492] [the plaintiff is not required to exercise reasonable diligence prior
to filing the complaint to discover the defendant’s identity or the facts giving rise to a cause of action]; …;
Balon v. Drost (1993) 20 Cal. App. 4th 483, 490 [25 Cal. Rptr. 2d 12] [even where it was known to the
plaintiff that the driver was not the owner of the car and the driver gave the plaintiff the owner’s name
immediately after the accident, the fact that the plaintiff forgot the name because she was dazed means she
was ignorant of the name of the owner because these facts simply “demonstrate[] carelessness, not a willful
misuse of section 474”]; Sobeck & Associates, Inc. v. B & R Investments No. 24 (1989) 215 Cal. App. 3d
861, 867 [264 Cal. Rptr. 156] [there is no requirement that the plaintiff exercise diligence to discover the
identity of the defendant after filing the complaint]; Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal. App.
3d 369, 376 [228 Cal. Rptr. 878] [there is no requirement that a plaintiff exercise reasonable diligence in
discovering either the true identity of fictitious defendants or the facts giving him a cause of action against
such persons].)

16 In spite of its “commonly understood” argument, GM contends it is irrelevant that Jeffrey would need
an expert to prove at least two elements of her claim (that the design is, in fact, defective, and that, if it is,
the defect enhanced her injuries). This is so, according to GM, because a plaintiff in a medical malpractice
action may be charged with knowledge for section 474 purposes notwithstanding the need for expert
testimony to prove professional negligence. (Dover v. Sadowinski, supra, 147 Cal. App. 3d 113; Hazel v.
Hewlett, supra, 201 Cal. App. 3d 1458; Scherer v. Mark, supra , 64 Cal. App. 3d 834.) The medical
malpractice cases in which a plaintiff has been charged with knowledge of facts sufficient to defeat reliance
on section 474 all involve facts akin to the no-seat-belt cases (a patent problem), not this case (a latent
problem).
 [B] Requirements for the Use of California’s Doe Defendant
Practice

As our principal cases indicate, CCP § 474, when properly used with § 350
and § 583.210, extends the statute of limitations for three years after the original
complaint is filed. To fully appreciate the parameters of California’s Doe
defendant practice, consider the notes and questions below.

Sections 474 and 583.210 and the cases construing them set forth five
requirements for the successful use of Doe defendant practice. See James E.
Hogan, California’s Unique Doe Defendant Practice: A Fiction Stranger
Than Truth, 30 Stan. L. Rev. 51 (1977). First, the plaintiff must file the original
complaint before the applicable statute of limitations has expired. Second, the
plaintiff must be “ignorant of the name” of any defendant designated by a
fictitious name in the original complaint. Third, the plaintiff must plead this
ignorance in the original complaint. Fourth, the plaintiff must allege a cause of
action against the fictitious defendants in the original complaint based on the
same general set of facts as the cause of action later asserted against the actually
named defendants in the amended complaint. Fifth, the plaintiff must serve the
amended complaint naming the actual defendants within three years of filing of
the original complaint, and make return of service within 60 days after service
of the complaint and summons.

[1] Timely Filed Original Complaint

A fundamental prerequisite to Doe defendant practice is that the plaintiff must

file the original complaint before the relevant statute of limitations has expired.
In a personal injury action, for example, the plaintiff must file the complaint
within two years of the accrual of the cause of action. CCP § 335.1. See Chapter
4, Statutes of Limitations, Laches, and Related Doctrines, supra, for discussion
of accrual, discovery, and other statute of limitations issues.

The complaint must not only be timely filed, but must contain appropriate
references to any known and any fictitious defendants. As the Streicher opinion
suggests, any fictitious name can be used, although “Doe” is the most common.
But the complaint must designate these defendants as fictitiously named
defendants. Simply alleging “Doe” defendants without clearly stating that they
are being sued as fictitious defendants may preclude use of § 474. See Kerr-
McGee Chemical Corp. v. Superior Court, 160 Cal. App. 3d 594, 206 Cal.
Rptr. 654 (1984) (unless the [625/626]pleading requirements of § 474 are met, a
plaintiff may not take advantage of the fictitious defendant practice).

[2] Ignorance of the Defendant’s “Name”

Section 474 specifies that the plaintiff must be “ignorant of the name” of any
defendant designated in the complaint by a fictitious name. If the plaintiff does
not possess the requisite ignorance when the original complaint is filed, the Doe
defendant doctrine of § 474 does not apply. What does “ignorance” mean here?
The words “ignorant of the name” in § 474 have not been construed literally. A
hypothetical may help illustrate their various possible meanings.

[a] Ignorance of the Defendant’s Actual Name

Assume a simple automobile accident where plaintiff, Pam Passenger, a

passenger in a car driven by Dirk Driver, crashes into the rear of a minivan
while on the San Diego freeway. After exchanging appropriate epithets, the
driver of the minivan speeds off without leaving his name. Pam Passenger is
seriously injured, and seeks to sue both Dirk Driver and the minivan driver for
negligently causing her injuries.

Pam Passenger knows that the minivan driver exists and knows his general
identity, but does not know his name. Pam is clearly “ignorant of the name” of
the minivan driver within the meaning of § 474, and can sue him as a Doe
defendant. See Hoffman v. Keeton, 132 Cal. 195, 64 P. 264 (1901) . Likewise,
Section 474 would be applicable even if Pam only knows that the minivan
driver exists, but does not know his name or even his general identity because
she never saw him before he sped off. Gale v. McDaniel, 72 Cal. 334, 13 P.
871 (1887). Such limited use of fictitious defendant pleading is typical of its use
in many other states, as well as under Rule 15(c), F.R.C.P.

[b] Ignorance of the Facts Giving Rise to the Cause of Action

Let’s add some additional facts to our hypothetical. Pam Passenger was
riding in Dirk Driver’s new Lexus sedan when the collision occurred. Pam
knows the car is a Lexus, manufactured by Toyota, Inc., because Dirk had told
her all about it before the collision. A week before the statute of limitations is to
expire, Pam files her complaint naming Dirk Driver as a defendant and the
driver of the minivan as a fictitious defendant. She is not sure whether anyone
else may be liable for her injuries, but names several other Doe defendants in
her complaint as a precaution.
 After months of discovery, Pam learns facts that lead her to believe that the
collision may have been partially caused by a failure in the anti-lock braking
system in Dirk’s car. Further investigation uncovers evidence of a design defect
in the Lexus’ braking system. Pam now wishes to amend her original complaint
and substitute Toyota, Inc. for one of the Doe defendants. Can Pam use CCP §
474 here, or is she precluded from doing so because she knew Toyota’s name
and identity at the time of the original complaint was filed?

The court in Larson v. Barnett, 101 Cal. App. 2d 282, 225 P.2d 297 (1950) ,
ruled [626/627]that a plaintiff can still utilize CCP § 474 even when the plaintiff
knew the individual’s name and identity at the time the original complaint was
filed. The court stated, as have numerous courts since then, that it is sufficient
for purposes of § 474 that the plaintiff was ignorant of the facts giving plaintiff a
cause of action against the individual at the time the original complaint was
filed. In Barrows v. American Motors Corp., 144 Cal. App. 3d 1, 192 Cal.
Rptr. 380 (1983), the court reached the same conclusion with respect to facts
very similar to our hypothetical.

Now back to our hypothetical. Pam’s original complaint names Dirk Driver
as defendant, and several fictitious Doe defendants as a precautionary measure.
As a result of investigation and discovery, Pam learns the name of the minivan
driver and that he was driving the minivan in the course of his employment by
the Checkers Pizza Co. at the time of the accident. Pam now wishes to amend
her complaint and substitute Checkers Pizza Co. for one of the Doe defendants.
Can Pam utilize CCP § 474 here? Or is this simply too much ignorance because
she knew neither the name, identity, and existence of this employer nor the facts
giving rise to her respondent superior cause of action, at the time she filed her
original complaint?

In Day v. Western Loan & Building Co. , 42 Cal. App. 2d 226, 108 P.2d 702
(1940), the court was faced with facts almost identical to our hypothetical. The
court stated that CCP § 474 does not require a plaintiff, when suing a fictitious
defendant, to plead a description identifying the person intended to be sued. The
court also rejected the theory that only names, and not defendants, may be
fictitious. The court concluded that § 474 was applicable even though the
plaintiff admittedly did not know the employer’s name, identity, or existence
when the original complaint was filed. As the Streicher decision indicates, this
broad use of “ignorance” is now established practice.

[c] Ignorance That the Law Provides a Cause of Action

 Back to our hypothetical once again. Assume that the accident took place in
1971. Pam Passenger wishes to sue Dirk Driver because she thinks his
negligence contributed to the accident. He was tailgating the minivan and could
not stop in time. Pam’s attorney did some research and found the then-valid
California guest statute, which prohibited negligence actions by passengers
against non-commercial drivers. Pam filed a timely complaint in 1972 which
included Doe defendants, but did not name Dirk Driver as a defendant because
of the guest statute. In 1973, the California Supreme Court held the guest statute
unconstitutional, thereby permitting a cause of action by passengers against
drivers.

Can Pam amend her complaint in 1973 and substitute Dirk Driver for one of
the Doe defendants? At the time she filed her original complaint she knew
Driver’s name and identity, and the operative facts regarding Driver’s potential
liability. How can she possibly be “ignorant of his name” within the meaning of
§ 474?

In Marasco v. Wadsworth , 21 Cal. 3d 82, 145 Cal. Rptr. 843, 578 P.2d 90
(1978), the California Supreme Court considered whether a passenger’s
amended complaint naming the driver related back to the original complaint, in
circumstances almost identical to our hypothetical. The court held that the
amended complaint did relate back pursuant to § 474. Plaintiff was deemed
[627/628]“ignorant of the name” of the defendant if she knew the defendant’s name
and all the facts but was unaware the law gave her a cause of action against the
fictitiously named defendant and discovered that right by reason of decisions
rendered after the commencement of the action.

[d] The Requirement of Actual Ignorance

As the above discussion indicates, CCP § 474 has been construed quite
broadly with respect to the requisite ignorance. As noted in Streicher and
General Motors, however, the ignorance must be genuine and not feigned. The
plaintiff must actually be “ignorant” of the defendant’s true name when the
original complaint is filed. See, e.g., Munoz v. Purdy, 91 Cal. App. 3d 942, 154
Cal. Rptr. 472 (1979) (A plaintiff must actually be ignorant of the facts giving
him a cause of action against a defendant, at the time of filing of the complaint).

Is this requirement of actual ignorance based on a subjective or objective

standard? Can a plaintiff be “ignorant” when a reasonable plaintiff would have
easily determined the defendant’s true name? Where the plaintiff has taken no
steps to determine the defendant’s true identity before filing the complaint? For
example, in our car crash hypothetical, assume that this message was stenciled
on the back of the minivan: “For pizza delivery call 555-4691.” Pam Passenger
wrote down this phone number before the minivan sped away. However, neither
Pam nor her attorney made any attempt to call the number and find out the name
of the pizza company and the driver before filing the original complaint. Can she
properly sue the minivan driver and the pizza company as Doe defendants,
alleging that she is ignorant of their true names? Consider the following cases:

(1) In Irving v. Carpentier, 70 Cal. 23, 11 P. 391 (1886) , the plaintiff filed a
quiet title action against certain named defendants and several fictitious
defendants who claimed an interest in disputed land. After the statute of
limitations had run, plaintiff sought to amend the complaint to substitute the
Pacific Improvement Company for one of the fictitious defendants. The
defendant Company moved to dismiss the amended complaint on the grounds
that plaintiff could have easily ascertained the company’s name and existence
before the original complaint was filed. If the plaintiff had searched the public
records at the County Recorder’s Office he would have readily found that the
company claimed an interest in the disputed land. The Supreme Court rejected
defendant’s argument and allowed the amendment to relate back, stating that
Section 474 applies when the plaintiff is actually ignorant of a certain fact,
noting that “whether his ignorance is from misfortune or negligence, he is alike
ignorant, and that is all the statute requires.” Irving, 70 Cal. at 26.

(2) In Wallis v. Southern Pacific Transportation Co. , 61 Cal. App. 3d 782,

132 Cal. Rptr. 631 (1976), plaintiff Wallis was injured while operating a door
on a railroad car. His original complaint named several Doe defendants, and
alleged that his injuries were caused by their negligent manufacture, operation,
and maintenance of the box car. After the statute of limitations had apparently
expired, plaintiff sought to amend his complaint to substitute the Transportation
Company for a Doe defendant. Defendant Transportation Company moved to
strike the amendment on the grounds that Wallis knew of defendant’s existence
when he filed [628/629]the original complaint. The court rejected defendant’s
argument, stating that the fact that Wallis knew of the defendant’s existence “at
the time of the commencement of the action is not controlling …. The question is
whether he knew or reasonably should have known that he had a cause of action
against respondent.” “The question as to whether the plaintiff has acted in good
faith in his use of section 474 rests primarily with the trial court.” Wallis, 61
Cal. App. 3d at 786.
 (3) More recently in Parker v. Robert McKee, Inc., 3 Cal. App. 4th 512, 4
Cal. Rptr. 2d 347 (1992), the court considered the issue of whether § 474 is
applicable where plaintiff knew the defendant’s name and identity, but not the
capacity in which the defendant acted. Plaintiff, a security guard, suffered
personal injuries allegedly due to negligent accumulation of debris on stairs in a
building being remodeled. Plaintiff timely filed a Judicial Council form
complaint for general negligence and premises liability which named several
contractors, including McKee, as defendants. Unable to locate McKee for
service of process, plaintiff voluntarily dismissed McKee as a defendant. Two
years later, plaintiff discovered that McKee was not simply one of the
contractors involved in the remodeling, but was the general contractor on the
project.

Plaintiff then filed an amended complaint pursuant to § 474, inserting McKee

as a defendant in substitution for “Doe I.” McKee demurred, contending that the
amended complaint was barred by the one-year statute of limitation and that §
474 was inapplicable because the original complaint showed on its face that
plaintiff was not ignorant of defendant McKee’s name. The trial court sustained
the demurrer, but the Court of Appeal reversed. The appellate court reasoned
that the original complaint showed plaintiff was unaware defendant McKee was
the general contractor rather than merely one of numerous subcontractors. The
court then concluded that the previously unknown fact that defendant was the
general contractor provides a proper new factual basis for a cause of action,
and for use of § 474. The court viewed plaintiff’s belated discovery that
defendant was the general contractor as analogous to several cases, such as
Wallis and Barrows, where the plaintiff knew the defendant’s identity but later
learned the defendant acted in a different capacity than plaintiff knew at the time
of filing the original complaint. Parker, 3 Cal. App 4th at 516-18.

Is the plaintiff’s “ignorance” in Parker the same type of “ignorance” found in

Wallis? Is Parker simply another application of the ignorance standard stated in
Wallis, or something different? Is Parker consistent with Wallis? How can a
plaintiff be “ignorant of the name of a defendant,” where the plaintiff knows the
defendant’s identity and believes the defendant is a cause of plaintiff’s injuries,
and actually names that defendant in the original complaint?!? Is Parker an
inappropriate extension of § 474? If plaintiff had not voluntarily dismissed
McKee from the original complaint, would his amended complaint adding a
cause of action against McKee as a general contractor be barred by the statute of
limitation?
 (4) What if the plaintiff’s ignorance is due to her own negligence? Assume in
our hypothetical, for example, that the minivan driver did stop after the collision
and exchanged information with Pam Passenger. The minivan driver gave Pam a
piece of paper with his name and other information on it. Pam, however, felt
dazed from [629/630]the collision and subsequently forgot about the slip of paper
and the minivan driver’s identity. Pam makes no effort to obtain the identity
from the police report or Dirk’s insurance company prior to her subsequent
lawsuit. In her complaint, Pam refers to the minivan driver as a “Doe”
defendant. Is Pam “ignorant” of the minivan driver’s name within the meaning of
§ 474?

I n Balon v. Drost , 20 Cal. App. 4th 483, 25 Cal. Rptr. 2d 12 (1993) , a

divided court considered the plaintiff’s forgetting of a defendant’s previously
known identity with no effort to refresh memory to be negligent ignorance, and
held that negligent ignorance of the defendant’s identity did not preclude adding
that defendant under CCP § 474 after the statute of limitations expired.
However, the court in Woo v. Superior Court , 75 Cal. App. 4th 169, 89 Cal.
Rptr. 2d 20 (1999), disagreed with Balon’s rule because it relieves forgetful
plaintiffs of any obligation to refresh their memory with readily available
information. Instead, the Woo court set forth what it perceived to be the better
rule: If the plaintiff knows the defendant’s identity and then forgets it at the time
the complaint is filed, to use the § 474 relation-back doctrine to avoid the bar of
the statute of limitations, the plaintiff must have at least reviewed readily
available information likely to refresh his or her memory. Woo, supra, 75 Cal.
App. 4th at 180. Do you agree that the Woo court’s rule is the better rule? Why?

(5) The California courts have to date construed the requisite “ignorance”
very liberally. Undoubtedly, many attorneys are comforted by the notion that at
times true ignorance is actually rewarded! How far can this concept be
stretched? Consider the following facts in our car crash hypothetical.

Assume the car crash took place long after the California Supreme Court
overturned the California guest statute. Pam Passenger’s attorney conducted
extensive legal research before filing the original complaint. However, due to
poor research by his law clerk, Pam’s attorney found the California guest statute
but not the Supreme Court decision declaring it unconstitutional. Believing there
was no cause of action against Dirk Driver, Pam filed a timely complaint which
did not name Dirk but did allege negligence by several Doe defendants.

Two and one-half years later, Pam’s attorney discovered the Supreme Court
case overturning the guest statute. Pam now seeks to amend her original
complaint to substitute Dirk Driver for one of the Doe defendants. Driver
opposes the amended complaint, arguing it is barred by the statute of limitations.
In support of the amended complaint’s relation back, Pam’s attorney argues that
the failure to discover the cause of action against Dirk Driver was due to
negligence, but that Pam and he were actually “ignorant of the name” of the
defendant at the time the original complaint was filed. Pam’s attorney argues
that § 474 is therefore applicable, citing Irving, Wallis, Parker , and Marasco,
supra. How should the trial court rule on this issue? Does Section 474
encompass this type of ignorance? See, e.g., Von Gibson v. Estate of Lynch ,
197 Cal. App. 3d 725, 730, 243 Cal. Rptr. 50 (1988) (Section 474 unavailable
where proclaimed ignorance is that of law, not of fact).

(6) Believe it or not, there are some limits as to how “ignorant” a plaintiff
can be and still use § 474:

[630/631]

(a) In Beresford v. City of San Mateo, 207 Cal. App. 3d 1180, 255 Cal. Rptr.
434 (1989), an action to stop the development of a housing project, the plaintiff
was not permitted to use Section 474 to amend a prior complaint and substitute
a developer for a Doe defendant. Although the original complaint properly pled
ignorance and named fictitious defendants, it also included minutes of city
council meetings that disclosed the developer’s identity.

(b) In Hazel v. Hewlett, 201 Cal. App. 3d 1458, 247 Cal. Rptr. 723 (1988) ,
the court upheld a trial court’s determination that plaintiff did not possess good
faith actual ignorance of a defendant’s name when he filed the original
complaint. The original complaint alleged personal injuries caused by
negligence during tooth extractions by two associated dentists, naming one
dentist (Stasiewitz) but suing the other (Hewlett) as a Doe defendant. The court
did not permit an amendment substituting in Hewlett to relate back because the
defendant showed that plaintiff knew Hewlett’s name and association with
Stasiewitz at the time the extractions took place. The court reached the same
conclusion on similar facts in Snoke v. Bolen, 235 Cal. App. 3d 1427, 1 Cal.
Rptr. 2d 492 (1991).

(c) In Optical Surplus, Inc. v. Superior Court, 228 Cal. App. 3d 776, 279
Cal. Rptr. 194 (1991), the court held that plaintiff could not utilize § 474 to
substitute in Optical for a Doe defendant because plaintiff lacked the requisite
ignorance when it filed the original complaint. Plaintiff believed that various
companies were distributing eyeglass frames in California in violation of an
exclusive distribution agreement plaintiff had with the manufacturer. Four
months prior to initiating litigation, plaintiff’s counsel mailed a formal legal
demand letter to these companies including Optical. Optical’s Vice President
replied, vigorously denying that Optical was engaged in the sale of the eyeglass
frames. Relying on this reply, plaintiff’s original complaint did not name
Optical as a defendant, although it did contain fictitious defendant allegations.
Plaintiff then learned through discovery that Optical was selling the frames in
question, and sought to substitute Optical in for a Doe defendant. The trial court
permitted the amended complaint, but the Court of Appeal reversed.

The Court of Appeal ruled that plaintiff’s demand letter clearly indicated that
plaintiff knew Optical’s identity as well as its alleged actionable activity and
that, despite Optical’s reply letter, plaintiff was not ignorant of Optical’s
identity or the necessary facts when plaintiff filed the original complaint. The
court therefore concluded, relying on Hazel v. Hewlett, supra, that plaintiff
could not utilize § 474’s fictitious defendant practice to substitute Optical in
after the statute of limitations had expired.

Do you agree with the Court of Appeal’s conclusion? Did plaintiff have a
good faith basis upon which to sue Optical at the time of the original complaint?
Does that matter? Should it? By relying on Optical’s reply letter, was not
plaintiff ignorant of the facts due to misinformation or negligence, and therefore
“ignorant” within the meaning of § 474? What policy considerations support the
court’s conclusion?

(d) In Miller v. Thomas, 121 Cal. App. 3d 440, 175 Cal. Rptr. 327 (1981) ,
the court rejected an amendment after the statute of limitations had expired.
Plaintiff was injured in an automobile collision with a auto driven by one
Thomas, who [631/632]identified himself by name to plaintiff and informed
plaintiff that he was an undercover narcotics officer for the City of Los Angeles.
The parties exchanged license numbers, and talked by phone the next day.

Plaintiff Miller’s subsequent negligence action named only the City of Los
Angeles as defendant, and various Doe defendants. By answer and through
discovery, the City denied liability, contending that Thomas was outside the
scope of his employment when the accident occurred. Plaintiff’s attorney then
sought to amend the complaint and substitute Thomas for one of the Doe
defendants. Thomas opposed the amendment because it was filed after the
statute of limitations had expired. In support of the amendment, Miller herself
stated that she was ignorant of Thomas’ liability when the original complaint
was filed because her prior attorney had advised her that the City was ultimately
liable for Miller’s injuries. Miller’s prior attorney also stated that it was his
opinion at the time the lawsuit was filed that the officer was acting in the course
of his City employment at the time of the accident.

The Court held that plaintiff was not “ignorant of the name” of defendant
Thomas within the meaning of § 474. The plaintiff knew of Thomas’ identity and
his connection with the accident prior to the lawsuit. Plaintiff’s decision not to
name Thomas in the original complaint was simply a tactical choice to proceed
only against the City, and was not due to any lack of knowledge regarding
Thomas’ liability.

Is the Miller holding consistent with Parker, Irving, Wallis, and Marasco?

(7) There is no requirement in using § 474 that a plaintiff must exercise

reasonable diligence in discovering either the true identity of fictitious
defendants or facts giving rise to a cause of action against such persons. Joslin
v. H.A.S. Ins. Broker , 184 Cal. App. 3d 369, 228 Cal. Rptr. 878 (1986) ; Munoz
v. Purdy , 91 Cal. App. 3d 942, 154 Cal. Rptr. 472 (1979) . There is no such
requirement before the original complaint is filed, nor after the original
complaint is filed. See Streicher v. Tommy’s Electric Co., supra ; General
Motors Corp. v. Superior Court, supra.

(a) However, as recognized in the Streicher opinion, there is authority for the
proposition that a plaintiff must not unreasonably delay the filing of the amended
complaint after the plaintiff actually discovers the true identity of the defendant
who was fictitiously named in the original complaint. The court in Streicher
stated that this determination could not be made on defendant’s demurrer. Why
not? What procedural device should defendant have utilized to properly raise
this unreasonable delay issue?

(b) In Barrows v. American Motors Corp., 144 Cal. App. 3d 1, 192 Cal.
Rptr. 380 (1983), the plaintiffs moved for leave to amend their complaint to
substitute the defendant American Motors for a Doe defendant. The defendant
contended that plaintiffs should be barred from invoking § 474 because the
delay between acquisition of defendant’s true identify and the filing of the first
amended complaint was unreasonable. The court ruled that unreasonable delay
in filing an amendment after acquiring such knowledge can bar a plaintiff’s
resort to the fictitious name procedure. But the defendant must show not only
that the plaintiff was dilatory but also that defendant suffered prejudice from the
delay. Moreover, defendant must [632/633]show “specific prejudice” to defendant
due to the delay, and not simply the prejudice generally presumed from the
policy of the statute of limitations. Id. at 9; see also Sobeck & Assoc., Inc. v.
B&R InvestmentsNo. 24, 215 Cal. App. 3d 861, 264 Cal. Rptr. 156 (1989) (the
amendment will relate back if made within three years of filing the original
complaint, unless there is evidence of unreasonable delay by the plaintiff or
specific prejudice to the defendant). What might be some examples of “specific
prejudice” in this context? See A.N. v. County of Los Angeles, 171 Cal. App.
4th 1058, 90 Cal. Rptr. 3d 293 (2009) (plaintiff, who had waited two years
after learning the defendant’s identity to file an amended complaint, had
unreasonably delayed the filing of the Doe amendment; specific prejudice found
based on the fact that the new defendant was brought into the case one month
before trial and would have difficulties in preparing a defense on such short
order).

[3] Pleading “Ignorance”

[a] Ignorance Must Be Pleaded in Original Complaint

Section 474 requires not only that plaintiff be actually ignorant of the
fictitious defendant’s true name, but also that this ignorance be pleaded in the
timely original complaint. This simple pleading requirement is essential to a
later effort to utilize the fictitious defendant process in an amended complaint.
The allegation need not be fancy. All that need be alleged is something like:
“Plaintiff does not know the true names of defendants sued herein as Doe 1
through Doe 20.” See CEB California Civil Procedure Before Trial , § 14.14
(4th ed. 2011). The Judicial Council’s Form Complaint for Personal Injury,
Property Damage, Wrongful Death contains a similar allegation. See Forms
PLD-PL-001, ¶ 6, PLD-PL-OO1(1)-(6). Failure to include this essential
allegation may indicate that the plaintiff did not intend to utilize § 474. See
Nissan v. Barton, 4 Cal. App. 3d 76, 84 Cal. Rptr. 36 (1970).

[b] Is Failure to Plead “Ignorance” Curable by Amendment?

In Dieckmann v. Superior Court, 175 Cal. App. 3d 345, 220 Cal. Rptr. 602
(1986), however, the Court of Appeal viewed this particular pleading
requirement as merely technical, and curable by amendment after the limitation
period had expired. The plaintiff’s original complaint listed several fictitious
defendants, and inartfully alleged that “the true names and capacities of the DOE
defendants, whether individual, corporate or otherwise … are sued as fictitious
persons.” The court concluded that plaintiff could still utilize § 474, and could
correct this pleading omission by including the required allegations of ignorance
in the same amended complaint that substitutes in the actual defendant.
Recognizing that the defendant may only be served with the amended complaint,
the court observed that “a defendant sued originally by a fictitious name and
later sued by substitution of his true name is in no worse position if the plaintiff,
who was actually ignorant of the true name when the complaint was filed, is
permitted also to add an omitted allegation of such ignorance.” Id. at 359.

Should this same reasoning used by the court in Dieckmann permit a plaintiff
to [633/634]utilize § 474 even though plaintiff makes absolutely no reference to
fictitious defendants in the original complaint? Because a Doe defendant is not
served with the original complaint, how is a defendant prejudiced if the
amended complaint adds both previously omitted Doe allegations and
substitutes the actual defendant for one of these Doe defendants? Are there other
considerations here in addition to prejudice to the defendant?

A s Streicher v. Tommy’s Electric Co., supra , illustrates, the courts also

consider noncompliance with the party substitution requirements of CCP § 474
as a procedural defect that can be cured. See Woo v. Superior Court , 75 Cal.
App 4th 169, 176-77, 89 Cal. Rptr. 2d 20 (1999) (plaintiff not foreclosed from
using § 474 relation-back even though plaintiff’s amended complaint did not
identify the newly named defendant as a substitute for a previously named
fictitious defendant and the summons served did not identify the individual
defendant as a defendant previously sue under a fictitious name); but see Carol
Gilbert, Inc. v. Haller, 179 Cal. App. 4th 852, 101 Cal. Rptr. 3d 843 (2009)
(plaintiff must comply with the requirement of § 474 that a summons notify the
recipient that he is being sued as a fictitiously named defendant).

[4] The Relation Back Doctrine

Section 474 provides the legislative basis for California’s fictitious

defendant practice. However, CCP § 474 gives no hint of how this practice may
be used to extend a statute of limitations. This essential ingredient of the
practice is provided by the common law doctrine of relation back.

[a] Requirements
 The California Supreme Court in Austin v. Massachusetts Bonding & Ins.
Co., 56 Cal. 2d 596, 15 Cal. Rptr. 817, 364 P.2d 681 (1961) , succinctly stated
the relation back doctrine as follows: “Where a complaint sets forth, or attempts
to set forth, a cause of action against a defendant designated by fictitious name
and his true name is thereafter discovered and substituted by amendment, he is
considered a party to the action from its commencement so that the statute of
limitations stops running as of the date of the earlier pleading.” Austin, 56 Cal.
2d at 599.

Thus if the original complaint naming Doe defendants is filed within the
applicable statute of limitations, the amended complaint substituting in an actual
defendant will relate back and be considered timely filed against the actual
defendant!

One rather technical but important requirement is that the original complaint
must allege a cause of action against the fictitious defendants as well as against
any known defendants. Such charging allegations against fictitious defendants
permit the fiction that the amended pleading relates back to something already
existing in the original pleading. Without such charging allegations, the amended
pleading would be viewed as stating for the first time a cause of action against a
newly named defendant. The amended pleading would then initiate a wholly
new cause of action instead of amending an existing one, and its timeliness for
limitations purpose would be computed from the date the amended pleading was
filed and not [634/635]from the date the original pleading was filed.

The requirement that the original pleading must contain charging allegations
against the fictitious defendants is therefore an essential basic rule of the
relation back doctrine. How difficult is it to comply with this rule? Not very.
All a plaintiff must do is add an “s” to “defendant” in the charging allegations,
and be sure that the complaint does not limit the word “defendants” to those
sued by their correct names. See, e.g., Judicial Council Pleading Forms PLD-
PL-001(1)-(6).

[b] New Causes of Action

As the Streicher and General Motors opinions demonstrates, the amended

complaint relates back to the date of filing the original complaint as to the newly
substituted actual defendant. In addition, the amended complaint can include any
new cause of action against the defendant not alleged in the original complaint
to the extent that it seeks recovery on the same general facts as the original
complaint, and refers to the same accident and same injuries as the original
complaint. Barrington v. A. H. Robins Co., 39 Cal. 3d 146, 216 Cal. Rptr. 405,
702 P.2d 563 (1985) . California’s relation back doctrine is discussed in more
detail supra in § 9.03[B][2]. See also Walter W. Heiser, Relation Back of
Amended Complaints: The California Courts Should Adopt a More Pragmatic
Approach, 44 Santa Clara L. Rev. 643, 647-60 (2004).

[5] Service Within Three Years

Code of Civil Procedure Section 583.210, which amended former CCP §

581a, requires that the summons and complaint must be served upon a defendant
within three years of filing the complaint, and return of service must be made
within sixty days of such service. With respect to fictitious defendants, this
means that a plaintiff must serve the amended complaint and summons on the
Doe defendant within three years after the filing of the original complaint, in
situations where the amended complaint relates back. Thus, CCP § 583.210
imposes a three-year limit on the relation back aspect of the fictitious defendant
practice.

[a] Mandatory Dismissal

If not served within three years, the complaint must be dismissed for lack of
jurisdiction as to the unserved defendants. CCP § 583.250. There are some
exceptions to this three-year service rule such as where the defendant was not
amenable to the process of the court; or where service for any other reason was
impossible, impracticable, or futile due to causes beyond plaintiff’s control.
CCP § 583.240. However, failure to discover relevant facts or evidence is
expressly not a cause beyond the plaintiff’s control. CCP § 583.240(d).

[b] Discretionary Dismissal

Even though a proper Doe defendant complaint has been filed within the
applicable statute of limitations, it is not a good idea for a plaintiff to wait until
the end of the three-year period to discover and serve the actual defendant. In
Clark v. Stabond Corp., 197 Cal. App. 3d 50, 242 Cal. Rptr. 676 (1987) , for
example, the [635/636]Court of Appeal upheld the discretionary dismissal of a
complaint naming a Doe defendant which was not served on the true defendant
within two years of the filing of the original complaint. The court held that CCP
§ 474 and § 583.210, which allow up to three years to serve a fictitious
defendant, do not preclude discretionary dismissal for failure to effect service
within two years pursuant to CCP § 583.420(a)(1).
 (1) What factors should a trial court consider in deciding whether to grant a
discretionary dismissal motion as to a fictitious defendant under CCP §
583.420(a)(1)? Rule 3.1342(e), Cal. Rules of Ct., sets forth the relevant factors
to be considered by a court in determining a § 583.420 motion. See Chapter 12,
Resolution of Cases Before Trial, infra. These factors include the diligence of
the parties in seeking discovery and in seeking to effect service of process. The
court in Clark ruled that these factors apply to require reasonable diligence in
discovering the true identity of, and in serving, actual defendants named as
fictitious defendants in the complaint.

(2) How is this consistent with the often-quoted language in Streicher v.

Tommy’s Electric Co ., supra, that “there is no requirement under section 474
that plaintiff exercise reasonable diligence in discovering the true identity of
fictitious defendants … after the filing of a complaint …?”

[6] Other Limitations on Section 474

The Doe defendant practice of Sections 474 and 583.210 may be subject to a
form of pre-emption when other specific statutory schemes mandate that the
actual defendant be sued within a specified period of time.

[a] Government Claim Act

Most notable of these is the California Government Claims Act which

requires that a suit against a public entity, on a cause of action for which a claim
is required to be filed, must be commenced within six months of service of
notice of rejection of the claim. Government Code § 945.6. This six-month
period of limitations has been held to be mandatory and must be strictly
followed, and ordinarily cannot be extended by use of the fictitious defendant
practice. See Chase v. State of Cal., 67 Cal. App. 3d 808, 136 Cal. Rptr. 833
(1977).

However, this limitation on the use of CCP § 474 has been held to apply only
to public entities, and not to public employees of the entity. Olden v. Hatchell,
154 Cal. App. 3d 1032, 201 Cal. Rptr. 715 (1984) . Consequently, an amended
complaint substituting a public employee for a Doe defendant will relate back
so long as the original complaint was filed within the six-month limitation
period applicable to public entities. Id. Why are public entities treated
differently than public employees? What aspect of the claims presentation
prerequisite makes it unlikely that a plaintiff could ever effectively utilize the
fictitious defendant practice to substitute in a public entity defendant? Are there
any narrow circumstances under which a plaintiff could appropriately utilize the
Doe defendant practice to bring in a public entity, consistent with the claims
presentation statutes? See Carlino v. Los Angeles Cnty. Flood Control Dist., 10
Cal. App. 4th 1526, 13 Cal. Rptr. 2d 437 (1992).

[636/637]

[b] Fast Track and Fictitious Defendant Practice

The Trial Court Delay Reduction Act of 1986, and the various local “fast
track” rules adopted thereunder, did not deal directly with fictitious defendant
practice. Many local rules did, however, appear to impact the practice. For
example, a typical fast track requirement is that the complaint must be served
within 60 days of its filing, unless a certificate of progress is filed indicating
why service has not been effected and what is being done to effect service. See,
e.g., San Diego County Superior Court Rule 2.1.5; Sacramento County Superior
Court Rule 11.03. See also Rule 3.110, Cal. Rules of Ct. Such requirements, as
well as the various other time limitation goals of each fast track program,
frequently meant that judges would dismiss unnamed Doe defendants as early as
six months after an action was filed. See Peter J. Hinton, California’s Trip on
the Fast Track: Where Can It Take Us ?, 11 CEB Civ. Lit. Rep. 243, 246 (Sept.
1989).

The original 1986 Act was repealed in 1990, and a new set of statutory
provisions enacted. Government Code § 68600 et seq. Under the present Act,
Doe defendants may not be dismissed prior to the conclusion of the introduction
of evidence at trial, except on stipulation or motion of the parties. Gov. Code §
68616(h). What effect will this new provision have on the fictitious defendant
practice? See General Motors Corp. v. Superior Court, supra, 48 Cal. App.
4th at 589, n.10.

[7] Practical Considerations

It is somewhat of a misnomer to call California’s fictitious defendant practice

“Doe” defendant practice. Any fictitious name can be used. However, it is
probably not a good idea to use esoteric fictitious names, such as “Bambi I
through X,” because courts expect “Does” and may become confused. Most of
the mystery of pleading fictitious defendants has been eliminated by various
Judicial Council Summons and Complaint forms. See Forms PLD-PL-001, ¶ 6,
PLD-PL-001 (1)-(6) Samples of these pleading forms are set forth below:

[637/638]

JUDICIAL COUNCIL FORMS PLD-PL-001 & PLD-PL-001(1)

COMPLAINT — Personal Injury, Property Damage, Wrongful Death

[638/639]
[639/640]
[640/641]
 [641/642]

[C] Federal Rule 15(c) Compared

[1] Federal Rule 15(c)(1)(C)

As discussed in the Introductory Note, § 9.04[A], supra, Federal Rule 15(c)

was amended in 1991 to remove the restrictive construction imposed by
Schiavone v. Fortune, 477 U.S. 21, 106 S. Ct. 2379, 91 L. Ed. 2d 18 (1986).
Was the amendment to Rule 15(c) a significant expansion of the federal relation
back doctrine with respect to adding new parties? Why not? Under amended
Rule 15(c)(1)(C), an amended complaint adding a new party may relate back
only if the newly named defendant had timely notice of the original complaint
and knows his omission from the original complaint was due to a naming
mistake by the plaintiff. See Krupski v. Costa Crociere , ___ U. S. ___, 130 S.
Ct. 2485, 177 L. Ed. 2d 48 (2010) (relation back under federal Rule 15(c)(1)
(C) depends on whether the defendant to be added knew or should have known
during the Rule 4(m) period that, absent some mistake, the action would have
been brought against him or her, and not on whether the plaintiff knew or should
have known that defendant’s identity as the proper defendant). How does Rule
15(c)(1)(C) differ from California’s fictitious defendant practice? For a
discussion of these differences, see Walter W. Heiser, Relation Back of
Amended Complaints: The California Courts Should Adopt a More Pragmatic
Approach, 44 Santa Clara L. Rev. 643, 678-83 (2004).
 [2] Federal Rule 15(c)(1)(A)

Federal Rule 15(c)(1)(A), added in 1991, is an entirely new provision which

authorizes relation back of amendments when permitted by “the law that
provides the applicable statute of limitations.” Essentially, if state law provides
the controlling statute of limitations and affords a more forgiving principle of
relation back than is provided by Rule 15(c)(1)(B) and (C), the state doctrine
should be available to save the cause of action. See Notes of Advisory
Committee on 1991 Amendment to Rule 15(c)(1). This apparently means that
where California law provides the statute of limitations applicable to a cause of
action in federal court, the California fictitious defendant doctrine is authorized
for that action. See David D. Siegel, The Recent (Dec. 1, 1991) Changes in the
Federal Rules of Civil Procedure , 142 F.R.D. 359, 362-66 (1992) . For a
discussion of when state statutes of limitations are applicable to claims in
federal court, see Chapter 4, Statutes of Limitations, Laches, and Related
Doctrines, supra.

Rule 15(c)(1)(A) is a revolutionary departure from the strictness and

uniformity of former Rule 15(c). However, it existence is not totally unexpected.
In Lindley v. General Electric Co., 780 F.2d 797 (9th Cir. 1986) , cert. denied,
476 U.S. 1186 (1986), the Ninth Circuit Court of Appeals had already held that
California’s fictitious defendant practice embodied in CCP § 474 applied to
extend the applicable statute of limitations in diversity cases in federal court,
and was not limited by the pre-1991 version of Rule 15(c). Why did the Lindley
court reach this conclusion? Did it have anything to do with the Erie doctrine?
Does Lindley apply to non-diversity cases in federal court, when California law
provides the statute of limitations? See Cabrales v. County of Los Angeles, 864
F.2d 1454 (9th Cir. 1988) (§ 1983 action).

[642/643]

The consequence of new Rule 15(c)(1)(A) is that you may be able to utilize
California’s Doe defendant practice in certain federal court actions, as well as
in California state court litigation! See, e.g., Kreines v. United States , 959 F.2d
834, 836-38 (9th Cir. 1992) (court applied California Doe defendant practice of
CCP § 474 to allow relation back of amended complaint substituting in named
federal agents in Bivens claim based on Fourth Amendment) ; Motley v. Parks,
198 F.R.D. 532 (C.D. Cal. 2000) (applying California’s doe defendant practice
in a § 1983 action). The precise meaning of new Rule 15(c)(1), and its
relationship to the remainder of Rule 15(c), will undoubtedly be clarified
through case law. Reading Rule 15(c)(1) and (2) together, do you see an
argument that the California fictitious defendant relation back doctrine will be
even more expansive when applied in a federal court than when applied in a
California court?

§ 9.05 THE DEMURRER

[A] Introductory Note

[1] General and Special Demurrers

A demurrer presents an objection to a complaint, cross-complaint, or answer

when the ground for objection appears on the face of such pleading, and from
any matter of which the court may take judicial notice. CCP § 430.30(a). When
any ground for objection to a complaint or cross-complaint does not appear on
the face of the pleading, the objection may be taken by answer. CCP §
430.30(b). A party objecting to a complaint or cross-complaint may demur and
answer at the same time. § 430.30(c).

The grounds for objection to a complaint or cross-complaint are set forth in

CCP § 430.10, which provides:

The party against whom a complaint or cross-complaint has been filed

may object, by demurrer or answer as provided in Section 430.30, to the
pleading 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 the 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
 (e) The pleading does not state facts sufficient to constitute a cause
of action.

(f) The pleading is uncertain. As used in this subdivision,

“uncertain” includes ambiguous and unintelligible.

[643/644]

(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 Section 411.35

[Malpractice action against architect or engineer].

(i) No certificate was filed as required by Section 411.36

[Association action for negligence against licensed contractor].

The grounds for objection to an answer are contained in CCP § 430.20.

The statutes do not distinguish between “general” and “special” demurrers,

but courts and attorneys usually do. See, e.g., 5 Witkin, California Procedure,
Pleading §§ 951-953 (5th ed. 2008) (citing cases). A demurrer on the ground
that the pleading does not state facts sufficient to constitute a cause of action,
CCP § 430.10(e), is typically referred to as a “general demurrer”; one based on
any other ground stated in CCP § 430.10 as a “special demurrer.” Courts
sometimes describe a general demurrer as attacking the substantive sufficiency
of a pleading, whereas a special demurrer merely attacks the form. See Witkin,
California Procedure, supra. This description of the distinction is of dubious
accuracy and utility, but nevertheless persists. Id.

The discussion below will focus primarily on general demurrers. For

discussion of the various grounds and standards for special demurrers, see 5
Witkin, California Procedure, Pleading §§ 968-978 (5th ed. 2008).

[2] Procedures
 Although technically considered a pleading, the procedural rules generally
treat a demurrer like a motion. See Rules 3.1103(c) and 3.1320, Cal. Rules of
Ct. A demurrer may be taken to the whole complaint or cross-complaint, or to
any causes of action stated therein. CCP § 430.50. Each ground of demurrer
must be distinctly specified, and must state whether it applies to the entire
pleading or specified causes of action or defenses. CCP § 430.60; Rule 325(a).
Additional procedural requirements for the notice and hearing are set forth in
Rule 31320.

A party must demur to a complaint or cross-complaint within 30 days after

service, and to an answer within 10 days. CCP § 430.40. Failure to timely
object to a pleading by demurrer or answer constitutes a waiver of all grounds
for objection except an objection that the court lacks subject matter jurisdiction
or that the pleading does not state facts sufficient to constitute a cause of action
or a defense. CCP § 430.80; see Collins v. Rocha, 7 Cal. 3d 232, 239, 102 Cal.
Rptr. 1, 497 P.2d 225 (1972) (defendant’s failure to raise uncertainty of
complaint by a timely special demurrer deemed a waiver of such pleading
defect).

When a demurrer is sustained, the court must state in the order the specific
grounds upon which the decision is based. CCP § 472d. However, if such
statement of grounds is not requested by the party against whom the demurrer
was sustained, this requirement is waived. See CCP § 472d; Krawitz v. Rusch,
209 Cal. App. 3d 957, 962, 257 Cal. Rptr. 610 (1989).

[644/645]

[3] Federal Rules Compared

Federal Rule 7(c) abolished the use of demurrers in federal courts, although
other federal rules authorize various motions which perform similar functions.
Rules 12(b)(1), 12(b)(7), and 12(e), for example, provide grounds for dismissal
nearly identical to a special demurrer for lack of subject matter jurisdiction,
misjoinder of parties, and uncertain pleading, respectively. And Rule 12(b)(6),
which authorizes a motion to dismiss for failure to state a claim upon which
relief can be granted, corresponds to a general demurrer.

[B] Standards for General Demurrers

 [1] General Demurrer Assumes Truth of Allegations

A demurrer does not test the truth of the allegations in a pleading, only the
legal sufficiency of the pleading. See Committee on Children’s Television, Inc.
v. General Foods Corp., 35 Cal. 3d 197, 197 Cal. Rptr. 783, 673 P.2d 660
(1983). The court must “assume the truth of all properly pleaded material
allegations of the complaint and give it a reasonable interpretation by reading it
as a whole and its parts in their context.” Phillips v. Desert Hospital Dist., 49
Cal. 3d 699, 702, 263 Cal. Rptr. 119, 780 P.2d 349 (1989) . Consequently, a
demurrer must be denied where the factual allegations state a cause of action but
the defendant contests their accuracy. See, e.g., Committee on Children’s
Television, supra (defendants’ contention that the words and images of their
television commercials were not misrepresentations, as plaintiffs had alleged in
the complaint, framed a factual issue for resolution by trial, not demurrer);
Selleck v. Globe Intl., Inc., 166 Cal. App. 3d 1123, 212 Cal. Rptr. 838 (1985)
(Trial court erred in sustaining demurrer where the complaint stated the contents
of the article and alleged that the article was libelous on its face because the
article was reasonably susceptible of a defamatory meaning on its face and
therefore is libelous per se).

I n Aragon-Haas v. Family Security Ins. Services, Inc., 231 Cal. App. 3d

232, 282 Cal. Rptr. 233 (1991), the plaintiff sued her former employer, seeking
damages for wrongful discharge. Plaintiff alleged breach of a written
employment contract, a copy of which she attached to her complaint. The trial
court sustained defendant’s demurrer on the ground that the contract gave
defendant the right to fire plaintiff without cause after the first year of
employment. The Court of Appeal found the contract ambiguous, and reversed
(id. at 239):

Where a complaint is based on a written contract which it sets out in

full, a general demurrer to the complaint admits not only the contents of the
instrument but also any pleaded meaning to which the instrument is
reasonably susceptible. While plaintiff’s interpretation of the contract
ultimately may prove invalid, it was improper to resolve the issue against
her solely on her own pleading. “In ruling on a demurrer, the likelihood
that the pleader will be able to prove his allegations is not the question.”
[Citation.]

[645/646]
 [2] Judicial Notice

DRYDEN v. TRI-VALLEY GROWERS

COURT OF APPEAL OF CALIFORNIA,
FIRST APPELLATE DISTRICT
65 Cal. App. 3d 990, 135 Cal. Rptr. 720 (1977)

Kane, Justice.

Plaintiffs, James Dryden, individually, and with Paul R. Minasian and

Malcolm R. Minasian acting as a partnership of Dryden, Minasian & Minasian,
appeal from the trial court’s judgment dismissing the action against respondent
Tri-Valley Growers after the demurrer to the third, fourth, fifth and sixth causes
of action of the first amended complaint (complaint) was sustained without
leave to amend.

The background facts appearing in the complaint reveal that commencing in

1970 appellants entered into a series of contracts with Henry and Margaret
Irving (Irvings), the owners of Villa D’Oro Olive Oil Company, an olive oil
processing plant located in Butte County, California. The contracts, which by
incorporation became a part of the complaint, provided for the sale of certain
waste products of olive oil production, including cracked, dried and de-oiled
olive pits, olive pumice (the skin and meat of the olive), and olive oil soap
stock (hereinafter: by-products or materials) to appellants. For the purpose of
utilizing and selling such materials, appellants installed conveyors, wooden
sideboards and building supports on the premises of Villa D’Oro. While some
of the materials were subject to immediate sale and delivery, others were to be
produced and delivered in the future. With regard to the purchase of future
products, appellants were granted a right of option extending until July 15,
1982. The contracts provided that the provisions contained therein would bind
not only Irvings, the original sellers, but also the successor owners of the Villa
D’Oro Olive Oil Company.

The facts further disclose that following the execution of the subject contracts
a legal dispute arose between the parties. As a result, in letters dated June 16
and September 11, 1973, the Irvings advised appellants that they intended to
rescind and cancel the subject contracts on grounds of material breach and
fraudulent representations on the part of appellants. An action filed in Butte
County followed, in which appellants sought declaratory and related relief
against the Irvings.

While the Butte County action was pending, by a contract concluded on or

about May 23, 1974, the Irvings transferred the ownership of the plant to
respondent Tri-Valley Growers. Thereupon, appellants brought the present
action against respondent and several unnamed persons. The complaint
purported to state causes of action on tort theories of intentional interference
with contractual and/or advantageous economic and business relationships.
General damages were sought in the sum of $1,000,000; special damages in the
sum of $1,000,000; and exemplary damages in the sum of $5,000,000.
Respondent filed a general demurrer to the original complaint which was
sustained with leave to amend. Upon the filing of the first amended complaint,
respondent again demurred, claiming that the third, fourth, fifth and sixth causes
of action failed to state facts sufficient to constitute a [646/647]cause of action.
This time the trial court sustained the demurrer without leave to amend and
dismissed the case against respondent.

Appellants insist that the facts stated in the third, fourth, fifth and sixth counts
of the complaint are sufficient to support a cause of action based on the tort
theory of intentional interference with contractual relations and/or on the
broader concept of interference with prospective economic advantage. A
review of the governing legal principles along with an examination of the
factual allegations of the complaint has led us to the conclusion that the judgment
of the trial court must be affirmed. * * *

In proceeding to analyze the precise issue presented for determination, we

initially observe that despite the broad language of the complaint purporting to
state a cause of action for interference with “advantageous relationships,
procedures and business,” the gist of appellants’ grievance is that, by buying the
Villa D’Oro Olive Oil Plant from Irvings, respondent unjustifiably interfered
with and induced the breach of the existing contracts between appellants and
Irvings. The vital issue awaiting adjudication, therefore, is whether the disputed
counts stated sufficient facts to support a cause of action under the theory of
interference with contractual relations.

The elements of a cause of action predicated on interference with contract are

well defined. Accordingly, in order to plead an actionable wrong under this
theory, plaintiff must allege that (1) he had a valid and existing contract; (2) the
defendant had knowledge of the contract and intended to induce its breach;
(3) the contract was in fact breached by the contracting party; (4) the breach
was caused by the defendant’s unjustified or wrongful conduct ; and (5) the
plaintiff has suffered damage.

When tested by the foregoing standards, the challenged causes of action

display blatant deficiencies on their face, rendering them vulnerable to a general
demurrer.

Thus, the third and fifth causes of action allege that respondent acquired
knowledge of the contracts entered into between appellants and Irvings only on
May 24, 1974, one day after the execution of the purchase contract with the
Irvings. It is elementary that interference with contractual rights and economic
advantage is an intentional tort. Accordingly, it has been held that an action for
interference with contractual rights lies only if the defendant’s act induced the
breach of contract between the plaintiff and the third party or if the defendant
purposely caused a third person not to perform the contract with another. Since
the third and fifth causes of action not only fail to indicate that respondent
induced or otherwise purposely caused the breach of the contract, but also fail
to allege that at the time of purchasing the plant respondent was even aware of
the existence of previous contracts between appellants and Irvings, such causes
of action are fatally defective.

***

Turning to the fourth and sixth causes of action, we observe that they contain
alternative allegations that the olive oil processing plant was obtained by
respondent with prior knowledge of the contracts between appellants and
Irvings. Furthermore, it is alleged that respondent interfered with said contracts
b y [647/648]inducing the Irvings to sell the plant and by refusing thereafter to
perform the terms and provisions of the contracts; that said acts of respondent
were undertaken knowingly and intentionally for the purpose of preventing the
performance of said contracts and that as a direct result of respondent’s conduct
appellants incurred sizeable damages. While the aforestated allegations
seemingly support a cause of action based on interference with contractual
rights, when read in light of the record as a whole, they too fail to withstand an
attack by demurrer.

It is axiomatic that a general demurrer may consider not only the facts
appearing upon the face of the complaint but also any matter of which the court
is required to, or may, take judicial notice (Code Civ. Proc., § 430.30; Hinckley
v. Bechtel Corp. (1974) 41 Cal. App. 3d 206 [116 Cal. Rptr. 33] ; Legg v.
Mutual Benefit Health & Accident Assn. (1960) 184 Cal. App. 2d 482 [7 Cal.
Rptr. 595]; 3 Witkin, Cal. Procedure (2d ed. 1971) § 798, p. 2412). In the case
at bench the record shows that the trial court took judicial notice of two letters
incorporated in the second amended complaint filed by appellants against the
Irvings in the Butte County Superior Court action. As indicated before, in said
letters, dated June 16 and September 11, 1973, respectively, appellants were
notified that due to a number of reasons, including material breach of contract,
fraudulent inducement to enter into contracts, fraudulent representations made by
appellants, the Irvings elected to cancel and rescind the contracts relative to the
sale of olive oil by-products.

The purported cancellation and rescission of the contracts at issue prior to the
sale of the plant to respondent bears special significance with regard to the
determination of this case.

It has been repeatedly held that a plaintiff, seeking to hold one liable for
unjustifiably inducing another to breach a contract, must allege that the contract
would otherwise have been performed, and that it was breached and abandoned
by reason of the defendant’s wrongful act and that such act was the moving
cause thereof. [Citations omitted.]

The allegations of the fourth and sixth causes of action in conjunction with the
matters judicially noticed conclusively demonstrate that the performance of the
disputed contracts had been abandoned and discontinued by the Irvings many
months prior to the transfer of the plant to respondent. Under these
circumstances, proximate causation, a vital element of the cause of action, was
lacking as a matter of law. It goes without saying that in the absence of a
showing that respondent’s act was the proximate cause of the injury, appellants
failed to allege a valid cause of action based on interference with contractual
relations.

[Here the court discusses an additional, alternate reason why the demurrer
must be upheld.]

The judgment is affirmed.

[a] Mandatory Judicial Notice

 Evidence Code Section 451 requires a court to take judicial notice of certain
specified California and federal laws, as well as “[f]acts and propositions of
generalized knowledge that are so universally known that they cannot
reasonably be the subject of dispute.” What facts are “universally known”? See
1 Witkin, [648/649]California Evidence, Judicial Notice §§ 30-35 (4th ed. 2000).

[b] Permissive Judicial Notice

A court may also take judicial notice of a variety of other laws such as local
and federal rules, foreign state rules and acts, and federal regulations; as well as
“[f]acts and propositions that are not reasonably subject to dispute and are
capable of immediate and accurate determination by resort to sources of
reasonably indisputable accuracy.” Evidence Code § 452; see, e.g., Arce v.
Kaiser Found. Health Plan, Inc., 181 Cal. App. 4th 471, 482-85,104 Cal. Rptr.
3d 545 (2010) (court took judicial notice of pleadings filed in other cases and
of a report of a legislative commission, but not of a transcript and videotaped
recording of a television interview); Carleton v. Tortosa, 14 Cal. App. 4th 745,
753, n.1, 17 Cal. Rptr. 2d 734 (1993) (brochures and summaries by private
corporations not properly subjects of judicial notice, but official publications
and bulletin of California Department of Real Estate are not reasonably subject
to dispute); Ross v. Creel Printing & Publishing Co., 100 Cal. App. 4th 736,
743-44, 122 Cal. Rptr. 2d 787 (2002) (court declined to take judicial notice of
district attorney handbook where defendant provided no information about the
handbook’s source, purpose, or official ratification).

Such use of judicial notice may permit the court to consider dispositive
matter not alleged in the complaint. See, e.g., Beresford Neighborhood Assn. v.
City of San Mateo, 207 Cal. App. 3d 1180, 1191, 255 Cal. Rptr. 434 (1989)
(trial court properly took judicial notice of city municipal code governing
bidding procedures when considering demurrer); but see Gould v. Maryland
Sound Indus., Inc., 31 Cal. App. 4th 1137, 37 Cal. Rptr. 2d 718 (1995)
(because the issue of whether plaintiff was employed under a written or oral
contract was the “fact” in dispute, the trial court erred in taking judicial notice
of a written employment contract between the parties submitted by the defendant
as an attachment to its points and authorities at demurrer stage, and therefore
improperly sustained demurrer to plaintiff’s breach of oral contract claims).

[c] Judicial Notice of Court Records

In ruling on a demurrer, a court may take judicial notice of court records in

the same or any other action. Evidence Code § 452(d); Sirott v. Latts , 6 Cal.
App. 4th 923, 8 Cal. Rptr. 2d 206 (1992) (superior court took judicial notice of
court and arbitration records in sustaining demurrer on ground that legal
malpractice complaint barred by statute of limitations); Fowler v. Howell, 42
Cal. App. 4th 1746, 50 Cal. Rptr. 2d 484 (1996) (taking judicial notice of
existence of records and files of a state administrative board).

Although judicial notice is appropriate to establish the existence of the

material in court records, judicial notice of the content of these records for the
purpose of establishing truth of the content is improper. See, e.g., Kilroy v. State
of Cal., 119 Cal. App. 4th 140, 14 Cal. Rptr. 3d 109 (2004) (factual finding in a
prior judicial decision may not establish the truth of that fact for purposes of
judicial notice; however a factual finding in a prior judicial opinion may be the
proper subject of judicial notice if it has a res judicata or collateral estoppel
effect in a subsequent [649/650]action); Sosinsky v. Grant, 6 Cal. App. 4th 1548,
1560-70, 8 Cal. Rptr. 2d 552 (1992) (trial court properly refused to consider
facts in court documents from a prior action; the court may take judicial notice
of the existence of each document in a court file, but cannot take judicial notice
of the truth of the facts asserted in findings of fact); but see Lockley v. Law
Office of Cantrell, Green, Pekich, Cruz & McCort , 91 Cal App. 4th 875, 110
Cal. Rptr. 2d 877 (2001) (trial court may take judicial notice that a court of
appeal has made factual findings in another case involving the same parties, but
may not take judicial notice of the truth of such factual findings unless they are
the product of an adversary hearing which involved the question of their
existence or nonexistence and are supported by substantial evidence).

In Columbia Casualty Co. v. Northwestern National Ins. Co., 231 Cal. App.
3d 457, 473, 282 Cal. Rptr. 389 (1991), the court explained the reason for this
distinction:

While judicial notice is appropriate to establish the existence of the

material in court records, judicial notice of the content of these records for
the purpose of establishing truth of the content is distinctly improper.

Judicial notice of the truth of the content of court records is

appropriate only when the existence of the record itself precludes
contravention of that which is recited in it, for example where findings of
fact, conclusions of law or judgments bind a party for purposes of res
judicata or collateral estoppel. (2 Jefferson, Cal. Evidence Benchbook,
supra, Judicial Notice, § 47.2, pp. 1757-58; In re Tanya F. (1980) 111
Cal. App. 3d 436, 440 [168 Cal. Rptr. 713] .) Otherwise judicial notice for
 the truth of the content of court records is not appropriate either because
the truth of the content is reasonably subject to dispute, or because the
content is hearsay.

Did the court in Dryden honor this distinction?

[3] Judicial Council Form Complaints

The California Judicial Council has approved numerous form complaints and
cross-complaints for many typical causes of action. See Rule 1.45, Cal. Rules of
Ct. Through a combination of boxes to be checked and blanks to be filled in,
these forms guide the preparer through all the steps necessary to plead the
essential elements of the relevant cause of action.

Is a Judicial Council form complaint immune from attack by way of

demurrer? No, according to the court in People ex rel. Dept. of Transp. v.
Superior Court, 5 Cal. App. 4th 1480, 7 Cal. Rptr. 2d 498 (1992) , where the
plaintiff used a form complaint for personal injury to sue Caltrans for allegedly
maintaining public property in a dangerous condition. Defendant Caltrans
demurred on the ground that the complaint did not adequately, nor with the
requisite specificity, allege the elements of this cause of action against a
government entity. The trial court stated that a Judicial Council form is
nondemurrable, and overruled the demurrer. The Court of Appeal directed the
trial court to sustain the demurrer with leave to amend and observed (id. at
1485):

[650/651]

In some cases, merely checking a box on a Judicial Council form

complaint will be sufficient. In other cases, such as this one, where
specific allegations need to be alleged, the form complaint is like a
partially completed painting. It is up to the pleader to add the details that
complete the picture. The form complaint here, standing alone, is no more
immune to demurrer than any other complaint that fails to meet essential
pleading requirements to state a cause of action.

[4] Demurrer vs. Answer

Objections to a complaint which may be properly raised by demurrer may

also be raised by answer, or by both if filed at the same time. CCP §§ 430.10,
430.30, 472a(a). However, an objection whose resolution requires
consideration of new or additional information — facts not appearing on the
face of the complaint or judicially noticeable — must be raised by an answer.
See, e.g., Cravens v. Coghlan, 154 Cal. App. 2d 215, 315 P.2d 910 (1957)
(defendant cannot raise plaintiff’s lack of capacity to sue in a demurrer because
that objection required proof of facts extrinsic to the complaint; such new
information must be raised in an answer). Why not by demurrer?

When a demurrer to a complaint or cross-complaint is overruled and no

answer is yet filed, unless otherwise ordered, an answer must then be filed
within 10 days. CCP § 472a(b); Rule 3.1320(j), Cal. Rules of Ct. (5 days in
unlawful detainer actions).

[C] Amendment After Sustained Demurrer

CAREAU & CO. v. SECURITY PACIFIC

BUSINESS CREDIT, INC.
COURT OF APPEAL OF CALIFORNIA,
SECOND APPELLATE DISTRICT
222 Cal. App. 3d 1371, 272 Cal. Rptr. 387 (1990)

Croskey, Justice.

***

Plaintiffs appeal from a judgment which was based upon an order sustaining
demurrers without leave to amend and an order granting defendants’ motion for
judgment on the pleadings. In this appeal we are asked to decide the propriety of
such orders as well as the trial court’s denial of a motion for reconsideration of
the order sustaining the demurrers. * * *

FACTUAL BACKGROUND

At the heart of these consolidated actions is the effort to finance the purchase
of an egg production facility in Moorpark, California, known as Julius
Goldman’s Egg City (Egg City). Plaintiffs, or at least one of the plaintiffs,
sought to purchase Egg [651/652]City and sought funding of $13 million from
defendants. This financing never materialized and plaintiffs were allegedly
unable to make the purchase until a new lender was found. They eventually
obtained the necessary funding elsewhere, but on less desirable terms. Plaintiffs
filed these actions, contending, inter alia, that defendants (1) breached oral and
written contracts, (2) breached the implied covenant of good faith and fair
dealing, (3) denied in bad faith the contract’s existence, (4) engaged in fraud
and negligent misrepresentations, and (5) interfered with plaintiffs’ contractual
and business relationships and prospective economic advantages. * * *

DISCUSSION

***

On appeal, plaintiffs challenge only the fact that the trial court sustained
demurrers to the first amended complaints without leave to amend and then, in
spite of the allegations in the proposed second amended complaints, refused to
reconsider that order. We therefore presume that the demurrers to their first
amended complaints were properly sustained.

As we already have noted, it is an abuse of discretion to sustain demurrers

without leave to amend if there is a reasonable possibility that the plaintiff can
amend the complaint to cure its defects. (Cooper v. Leslie Salt Co. (1969) 70
Cal. 2d 627, 636 [75 Cal. Rptr. 766, 451 P.2d 406] ; Goodman v. Kennedy
(1976) 18 Cal. 3d 335, 349 [75 Cal. Rptr. 766, 451 P.2d 406] ). To meet the
plaintiff’s burden of showing abuse of discretion, the plaintiff must show how
the complaint can be amended to state a cause of action. (Goodman v. Kennedy,
supra, 18 Cal. 3d at p. 349.) However, such a showing need not be made in the
trial court so long as it is made to the reviewing court. (Code Civ. Proc. § 472c;
Nestle v. City of Santa Monica (1972) 6 Cal. 3d 920, 939 [101 Cal. Rptr. 568,
496 P.2d 480]; …). * * *

Plaintiffs argue that the second amended complaints do allege viable causes
of action but, even if we also find them deficient, they have a right to the
opportunity of further amendment. The general rule is that allegations of a
complaint are to be liberally construed with a view to substantive justice
between the parties. (King v. Central Bank (1977) 18 Cal. 3d 840, 843 [135
Cal. Rptr. 771, 558 P.2d 857] .) An order sustaining a demurrer without leave to
amend will constitute an abuse of discretion if there is any reasonable
possibility that the defect can be cured by an amendment. This rule is liberally
applied to permit further amendment not only where the defect is one of form but
also where it is one of substance, provided the pleader did not have “‘a fair
prior opportunity to correct the substantive defect.’” (Leach v. Drummond
Medical Group, Inc. (1983) 144 Cal. App. 3d 362, 368 [192 Cal. Rptr. 650] ,
quoting Larwin-Southern California, Inc. v. JGB Investment Co. (1979) 101
Cal. App. 3d 626, 635 [162 Cal. Rptr. 52].)

On the other hand, there is nothing in the general rule of liberal allowance of
pleading amendment which “requires an appellate court to hold that the trial
judge has abused his discretion if on appeal the plaintiffs can suggest no legal
theory or state of facts which they wish to add by way of amendment.” (HFH,
Ltd. v. Superior Court (1975) 15 Cal. 3d 508, 513, fn. 3 [125 Cal. Rptr. 365,
542 P.2d 237] .) The burden [652/653]is on the plaintiffs to demonstrate that the
trial court abused its discretion and to show in what manner the pleadings can
be amended and how such amendments will change the legal effect of their
pleadings. (Goodman v. Kennedy, supra, 18 Cal. 3d 335, 349 …).

With such general principles in mind we will examine each of the causes of
action alleged by the plaintiffs.

3. Whether the Complaints Plead Sufficient Facts to State a Cause of Action

on Any Theory

a. Claims Based on Contract

[The court examined the various contract causes of action alleged by the
plaintiffs and concluded they did not state a cause of action. The court found the
plaintiffs’ allegations as to satisfaction of certain conditions precedent were
insufficient to demonstrate the existence of a binding contract.]

These pleading defects are at once matters of both form and substance.
However, we cannot conclude, without effectively resolving a factual issue, that
there is no reasonable possibility of plaintiffs making the direct allegations
necessary to demonstrate the existence of a binding contract. Therefore, it is
appropriate that plaintiffs be given the opportunity to correct the specific
pleading errors we have described. It was therefore error to sustain a demurrer
to these contract counts without leave to amend. * * *

c. Tort Claims Based on Alleged Bad Faith

Plaintiffs attempt to assert two separate causes of action based upon a claim
of bad faith. Each necessarily depends upon the existence of a valid and existing
contractual relationship. As we have already concluded that plaintiffs have
failed to plead the existence of a contract we could dispose of these counts
summarily. However, there are significant additional reasons upon which we
rely to support our view that plaintiffs have not alleged a basis for relief on
either theory. In addition, plaintiffs will be given a further opportunity to plead
the existence of a contract. We therefore deal with these two claims in some
detail.

(1) Tortious Breach of Implied Covenant of Good Faith and Fair Dealing

Arguing that it is “settled” that there is a “special relationship” between a

bank and its customers, plaintiffs contend that defendants have tortiously
breached the covenant of good faith implied in their contractual relationship.
Pleading in conclusory language that defendants “exercised great bargaining
power” over them and that the circumstances of the transaction created “a
special confidential and fiduciary duty” to them, plaintiffs allege that such
breach resulted from (1) the refusal to provide the financing described in the
[bank’s letter of intent to loan], (2) a “deceitful and pretextual” explanation for
such refusal and (3) the disclosure of confidential financial information to third
parties.

[653/654]

Although plaintiffs have characterized this count as the tortious breach of the
implied covenant, it is obviously possible to state a cause of action for a breach
of such covenant even though no basis for a tort recovery exists. Thus, we must
consider if a cause of action has been stated on any theory, irrespective of the
label attached by the pleader. After a review of the applicable law, we will
conclude that plaintiffs’ allegations are not sufficient to state any cause of action
for a breach of the implied covenant of good faith, irrespective of the remedy
sought. * * *
 A “‘breach of the implied covenant of good faith and fair dealing involves
something beyond breach of the contractual duty itself’ and it has been held that
‘[b]ad faith implies unfair dealing rather than mistaken judgment …. [Citation.]’
[Citation.]” (Congleton v. National Union Fire Ins. Co. (1987) 189 Cal. App.
3d 51, 59 [234 Cal. Rptr. 218].) * * *

In insurance cases there is a well-developed history recognizing a tort

remedy for a breach of the implied covenant. (Foley v. Interactive Data Corp.
(1988), 47 Cal. 3d 654, 684 [254 Cal. Rptr. 211, 765 P.2d 373] .) A review of
those cases demonstrates that the existence of this remedy has been justified by
the “special relationship” existing between insurer and insured, which is
characterized by elements of public interest, adhesion and fiduciary
responsibility. In addition, it is essential to a recovery in tort that the insurer, in
breaching the implied covenant, have acted unreasonably.

However, whether such a concept has any application in noninsurance cases

appears to be increasingly problematic. Indeed, the proposition that tort
damages might be allowed for a breach of the implied covenant in noninsurance
cases is barely 10 years old and is based entirely on dicta from 2 earlier
opinions which the Supreme Court has recently questioned. To appreciate just
how difficult it is to assert such a claim, a short historical review is
appropriate.

[The court discusses Tameny v. Atlantic Richfield Co. (1980) 27 Cal. 3d 167
[164 Cal. Rptr. 839, 610 P.2d 1330] and Seaman’s Direct Buying Service, Inc.
v. Standard Oil Co., supra, [(1984) 36 Cal.3d 752, 768 [206 Cal.Rptr. 354,
686 P.2d 1158]] which cast doubt on the extension of the “special relationship”
tort concept beyond the insurer/insured relationship.]

In Wallis v. Superior Court (1984) 160 Cal. App. 3d 1109 [207 Cal. Rptr.
123] (Wallis), the court announced a five-part description of the characteristics
of the “special relationship” which must be present in a noninsurance
contractual dispute in order to justify tort recovery for a breach of the implied
covenant. However, in its most recent discussion of this issue, the Supreme
Court refused to apply this approach to employment cases.

I n Foley, the court held that it was “not convinced that a ‘special
relationship’ analogous to that between insurer and insured” existed in the usual
employment relationship so as to justify recognition of a tort remedy for a
breach of the implied covenant. (47 Cal. 3d at p. 692.) Indeed, the court even
suggested that any extension of tort remedies to noninsurance cases is not
justified given (1) the limited purpose and scope of contract damages, (2) the
strong need in our commercial system for predictability of the cost of
contractual relationships and (3) the difficulty of formulating a workable test for
distinguishing between a simple breach of contract [654/655]and a “tortious”
breach of the implied covenant. (Id., at pp. 683, 699-700.) Nonetheless, the
Foley court did limit its holding to the employer-employee relationship and did
not expressly reject the Wallis definitional efforts; however, it did suggest that it
is still an open question as to whether “the special relationship model is an
appropriate one to follow in determining whether to expand tort recovery.” (Id.,
at p. 692.)

From this history, it seems clear to us that the recognition of a tort remedy for
a breach of the implied covenant in a noninsurance contract has little
authoritative support. In fact, with but one arguable exception and apart from
decisions disapproved by Foley, every case which has considered the issue has
rejected the recognition of a special relationship between specific contracting
parties. However, as the Foley court did not see fit to specifically reject the …
consideration of the noninsurance special relationship, or the Wallis criteria for
determining its existence, we decline to do so. Indeed, the Foley court’s
discussion of why the employment relationship was dissimilar to that of insurer
and insured essentially relied upon a Wallis analysis. (Foley, supra, 47 Cal. 3d
at p. 692.)

More recently, in Mitsui Manufacturers Bank v. Superior Court, supra, 212

Cal. App. 3d 726, 733, the court discussed similar criteria in concluding that a
lender and commercial borrower did not share a special relationship sufficient
to justify a tort claim. The court restated the standard to be applied in terms very
similar to those used by Wallis. “It is the nature of the contract that is critical,
whether it reflects unequal bargaining strength between the parties, an
inadequacy of ordinary contract damages or other remedies, adhesiveness of
contract provisions adversely impacting the damaged party which are either
neutral toward or benefit the other, public concerns that parties to certain types
of contracts conduct themselves in a particular manner, the reasonable
expectations of the parties or a fiduciary relationship in which the financial
dependence or personal security by the damaged party has been entrusted to the
other. There are undoubtedly other significant factors and it may be that not all
must be present in every case which might give rise to tort damages.” (Id. at p.
731.) Whatever the present efficacy of this analytical restatement, we find that
plaintiffs here have failed to allege sufficient facts to demonstrate that they
satisfy the requirements set forth in either Wallis or Mitsui.

This case presents a rather common commercial banking transaction. The

plaintiffs, seeking to make a profit motivated investment in the form of a
leveraged buyout of a going business, entered into arms length negotiations with
a unit of a major lending institution. There were no indicia of unequal
bargaining here, no adhesive agreements, no indication that one party had any
particular advantage over the other. Indeed, it appears that the terms of the
central document, the [letter of intent to loan], was the product of meaningful
negotiations between the parties. Moreover, it does not appear that plaintiffs
were neither in a particularly vulnerable position nor in need of any special
protection. Finally, ordinary contract damages are obviously adequate to make
plaintiffs whole for any compensable misconduct on the part of the defendants.

Under no reasonable perspective of the facts in this case would the

Wallis/Mitsui standards be satisfied. Given the allegations set out in plaintiffs’
second amended pleadings, the “transaction involved here is the quintessentially
ordinary arms-length [655/656]commercial transaction between two parties of
equal bargaining strength, breaches of which are adequately remedied by
ordinary contract damages.” (Mitsui Manufacturers Bank v. Superior Court,
supra, 212 Cal. App. 3d at p. 731.) Whatever may be the viability of the
proposition that a bank can have a special relationship with a depositor so as to
justify a tort recovery for breach of the implied covenant, there is neither
authority nor reason for according such characterization to the relationship
between a bank and a commercial borrower.

Therefore, since it is patently clear that no “special relationship” exists

sufficient to support a tort recovery for an alleged breach of the implied
covenant of good faith, plaintiffs can state no basis for recovery in tort.
Moreover, as they have alleged nothing more than a duplicative claim for
contract damages, the trial court was correct in sustaining a demurrer to this
count without leave to amend. * * *

NOTES AND QUESTIONS REGARDING SUSTAINED DEMURRER

AND LEAVE TO AMEND

(1) The trial court in Careau sustained the demurrers without leave to amend.
Why did the Court of Appeal hold that the trial court erred in sustaining the
demurrers to the contract counts without leave to amend, but affirmed the
sustaining of the demurrer to the bad faith tort count without leave to amend?
Could the plaintiffs amend their complaint to allege facts which stated a
“special relationship” under the Wallis/Mitsui standards? Why not?

(2) The Careau opinion sets forth the abuse of discretion standard generally
applied by appellate courts when reviewing a demurrer sustained without leave
to amend. See Blank v. Kirwan, supra, 39 Cal. 3d at 318. What a plaintiff must
demonstrate to establish abuse of discretion will vary with the ground for the
demurrer. Compare Careau with Sirott v. Latts , 6 Cal. App. 4th 923, 8 Cal.
Rptr. 2d 206 (1992) (special demurrer sustained without leave to amend
affirmed where matters subject to judicial notice showed complaint cannot be
amended to overcome statute of limitations bar); see also Gonzales v. State of
Cal., 68 Cal. App. 3d 621, 137 Cal. Rptr. 681 (1977) (discussing standards of
review of special demurrer sustained on grounds of misjoinder of parties as a
class action, government claim statute of limitations, and uncertainty of
pleading); 5 Witkin, California Procedure, Pleading §§ 991-996 (5th ed.
2008).

(3) Should an appellate court more readily find an abuse of discretion where
a general demurrer is sustained without leave to amend as to an initial, as
opposed to a previously amended, complaint? See 1119 Delaware v.
Continental Land Title Co., 16 Cal. App. 4th 992, 998, 20 Cal. Rptr. 2d 438
(1993) (demurrer sustained without leave to amend constituted abuse of
discretion where original complaint did not show on its face it was incapable of
stating cause of action upon amendment).

(4) When a demurrer is sustained, CCP § 472d requires the trial court to
include in its order a statement of the specific grounds upon which the decision
is based. This section has been interpreted, however, to require affirmance of
the trial court’s order on appeal if any of the grounds raised by the defendant
require the sustaining of the demurrer, whether or not the court specifies all such
grounds. See, e.g., Gonzales v. State of Cal., 68 Cal. App. 3d 621, 627, 137
Cal. Rptr. 681 (1977) (the [656/657]validity of the trial court’s action in sustaining
the demurrer is reviewed, not the court’s statement of reasons for its action).
What, then, is the purpose of the statement of reasons required by CCP § 472d?

(5) A special demurrer for uncertainty will be sustained only where the
uncertainty is with respect to essential elements of the pleading, but not where
the ambiguous facts alleged are presumptively within the knowledge of the
demurring party. See, e.g., Gonzales, supra, 68 Cal. App. 3d at 631 (a special
demurrer should not be sustained if the allegations of the complaint are
sufficiently clear to apprise the defendant of the issues that must be met); Bacon
v. Wahrhaftig , 97 Cal. App. 2d 599, 218 P.2d 144 (1950) (demurrer for
uncertainty not appropriate where ambiguous allegations refer to immaterial
matter). Does a trial court automatically abuse its discretion when it sustains
such a special demurrer without leave to amend?

(6) If a trial court sustained a demurrer with leave to amend a complaint and
the plaintiff fails to do so, the court must enter a judgment of dismissal upon
motion by either party. CCP § 581(f)(2). If the dismissal is appealed, the
appellate court must strictly construe the complaint and presume that the plaintiff
has stated as strong a case as she can. Gonzales, supra, 68 Cal. App. 3d at 635.
Why would a plaintiff not amend her complaint after a demurrer was sustained
with leave to amend? Why would a plaintiff then move for dismissal?

(7) When the trial court makes an order sustaining a demurrer without leave
to amend, the question of whether the court abused its discretion in making this
order is open on appeal even though no request to amend the pleading was
made. CCP § 472c(a). If the demurrer is sustained as to fewer than all causes of
action within a complaint or cross-complaint, or as to an affirmative defense but
not an entire answer, the aggrieved party may claim the trial court’s order as
error in an appeal from the final judgment in the action. CCP § 472c(b).

§ 9.06 MOTIONS RELATED TO PLEADINGS

[A] Motion to Strike

[1] Grounds

A trial court may, upon motion made pursuant to CCP § 435 or at any time in
its discretion, strike out any irrelevant, false, or improper matter inserted in any
pleading; or any part of a pleading not filed in conformity with court rules,
order, or other laws. CCP § 436(a) & (b). A motion to strike is generally used
to reach defects in a pleading which are not subject to demurrer. Pierson v.
Sharp Mem. Hosp., Inc., 216 Cal. App. 3d 340, 342, 264 Cal. Rptr. 673
(1989). For example, a motion to strike does not lie to attack a complaint for
insufficiency of allegations to justify relief; that is a ground for general
demurrer. See id. (motion to strike may be treated as a motion for judgment on
the pleadings if complaint clearly deficient); Warren v. Atchison, Topeka &
Santa Fe Ry., 19 Cal. App. 3d 24, 41, 96 Cal. Rptr. 317 (1971) (improper
motion to strike should be treated as a demurrer).

A common use of the motion is to strike punitive damage allegations from a

medical malpractice complaint because the plaintiff failed to comply with the
[657/658]pre-pleading requirements of CCP § 425.13, see, e.g., Looney v.
Superior Court, 16 Cal. App. 4th 521, 20 Cal. Rptr. 2d 182 (1993) ; Cummings
Med. Corp. v. Occupational Med. Corp., 10 Cal. App. 4th 1291, 1298, 13 Cal.
Rptr. 2d 585 (1992); or to strike an amount of personal injury or punitive
damages alleged in a complaint, see CCP § 425.10(b), Civil Code § 3295(e).
What are some other common examples of the proper use of a motion to strike?
See 2 CEB, California Civil Procedure Before Trial, Motions to Strike §§
24.3-24.6 (4th ed. 2011).

[2] Procedures

A motion to strike must be filed “within the time allowed to respond to a

pleading.” CCP § 435(b)(1); but see CCP § 435(e) & 438(i)(1)(A) (motion to
strike certain late filed amended pleadings). Pleading subject to motions to
strike include demurrers, answers, complaints, and cross-complaints. CCP §
435(a). The grounds for a motion to strike must appear on the face of the
challenged pleading or in matter which the court may judicially notice. CCP §
437(a). A motion to strike which is based on more than the pleadings may be
treated as a motion for summary judgment. See, e.g., City and County of San
Francisco v. Strahlendorf, 7 Cal. App. 4th 1911, 1913-14, 9 Cal. Rptr. 2d 817
(1992).

[3] Motion to Strike Pursuant to “Anti-SLAPP” Statute

Code of Civil Procedure § 425.16 (the anti-SLAPP statute) authorizes a

special type of motion to strike by which a defendant may obtain a dismissal of
strategic lawsuit against public participation (SLAPP), i.e., “a cause of action
against a person arising from any act of that person in furtherance of the
person’s right of petition or free speech under the United States or California
Constitution in connection with a public issue.” CCP § 425.16(b)(1). In ruling
on an anti-SLAPP motion to strike, the court must first decide whether the
defendant has made a threshold showing that the challenged cause of action is
one arising from protected free speech activity, as defined in the statute (CCP §§
425.16(b)(1), 725.17). See, e.g. , Flatley v. Mauro, 39 Cal. 4th 299, 46 Cal.
Rptr. 3d 606, 139 P.3d 2 (2006) (a defendant whose assertedly protected
speech was illegal as a matter of law — such as communications that
constituted criminal extortion — and therefore unprotected by constitutional
guarantees of free speech, cannot use the anti-SLAPP statute to strike a
plaintiff’s complaint); Oasis West Realty v. Goldman, 51 Cal. 4th 811, 124 Cal.
Rptr. 3d 256, 250 P.3d 1115 (2011) (special motion to strike properly denied in
action against client’s former attorney alleging misuse of client’s confidential
information because such misuse is not protected free speech). If the court finds
such a showing has been made, it must then determine whether the plaintiff has
demonstrated a probability of prevailing on the claim. CCP § 425.16(b)(1). See,
e.g., Taus v. Loftus , 40 Cal. 4th 683, 54 Cal. Rptr. 3d 775, 151 P.3d 1185
(2007) (striking most of plaintiff’s invasion of privacy claims that alleged
defendants, authors and publishers of two scholarly articles, had disclosed
information about plaintiff’s private life); Jarrow Formulas, Inc. v. LaMarche ,
31 Cal. 4th 728, 3 Cal. Rptr. 3d 636, 74 P.3d 737 (2003) (anti-SLAPP statute
applies to malicious prosecution actions).

[658/659]

In order to establish the requisite probability of prevailing and thereby defeat

the anti-SLAPP motion to strike, the plaintiff “must demonstrate that the
complaint is both legally sufficient and supported by a sufficient prima facie
showing of facts to sustain a favorable judgment if the evidence submitted by the
plaintiff is credited.” Navellier v. Sletten, 29 Cal. 4th 82, 88-89, 124 Cal. Rptr.
2d 530, 52 P.3d 703 (2002) . Under CCP § 425.16(b)(2), the trial court in
making these determinations considers “the pleadings, and supporting and
opposing affidavits stating the facts upon which the liability or defense is
based.” How does this special anti-SLAPP motion to strike differ from the
ordinary motion to strike authorized by CCP 435? From a motion for summary
judgment? From a motion for an order allowing a plaintiff to allege a punitive
damages claim against a health care provider, pursuant to CCP § 425.13? See
College Hosp., Inc. v. Superior Court, 8 Cal. 4th 704, 34 Cal. Rptr. 2d 898,
882 P.2d 894 (1994), discussed supra.

In 2005, the Legislature enacted CCP § 425.18 and thereby added another
twist to anti-SLAPP law — the SLAPPback. CCP § 425.18(b)(1) defines a
“SLAPPback” as any cause of action for malicious prosecution or abuse of
process arising from the filing or maintenance of a prior cause of action that has
been dismissed pursuant to a special motion to strike under CCP § 425.16. CCP
§ 425.18 treats SLAPPbacks differently from ordinary malicious prosecution
actions in two ways. First, it makes certain favorable procedures available to a
SLAPPback plaintiff when confronted with an anti-SLAPP motion to strike.
CCP §§ 425.18(c)-(g). Second, it exempts a SLAPPback from an anti-SLAPP
motion to strike when that motion is brought by a party whose filing or
maintenance of the prior cause of action from which the SLAPPback arises was
illegal as a matter of law. CCP § 425.18(h). For a discussion of these various
statutory provisions, see Soukup v. Law Offices of Herbert Hafif, 39 Cal. 4th
260, 46 Cal. Rptr. 3d 638, 139 P.3d 30 (2006).

[B] Motion for Judgment on the Pleadings

[1] Grounds

The grounds for a motion for judgment on the pleadings are limited by statute
to either failure of a pleading to state facts sufficient to constitute a cause of
action or a defense, or lack of subject matter jurisdiction. CCP §§ 438(a)-(c).
The grounds for the motion must appear on the face of the challenged pleading
or from matters judicially noticed. CCP § 438(d); see, e.g., Evans v. Cal.
Trailer Court, Inc., 28 Cal. App. 4th 540, 33 Cal. Rptr. 2d 646 (1994) (trial
court properly considered facts alleged in complaint plus judicially noticed
recorded deed); Harris v. Grimes, 104 Cal. App. 4th 180, 186, n.4, 127 Cal.
Rptr. 2d 791 (2004) (judgment on the pleadings may rely on evidence outside
the pleadings if no objection made). In an appeal from a motion granting
judgment on the pleadings, the appellate court accepts as true the facts alleged in
the complaint and reviews the legal issues de novo. Angelucci v. Century Super
Club, 41 Cal. 4th 160, 166, 59 Cal. Rptr. 3d 142, 158 P.3d 718 (2007).

Unlike a demurrer, a motion for judgment on the pleadings may be asserted at

any time after all the pleadings are filed, although court permission is necessary
to make the motion during trial. CCP § 438(e). The motion may be made even
though the moving party did not demur to the complaint or answer. CCP §
438(g)(2). Unless [659/660]there is a material change in applicable case law or
statute, however, a moving party may not make the motion on the same grounds
as was the basis for an overruled demurrer. CCP § 438(g)(1). Why this
limitation?

[2] Judgment on the Pleadings and Summary Judgment

The standard governing a trial court’s determination of a motion for judgment

on the pleadings is quite different from the standard governing consideration of
a motion for summary judgment. The court in Columbia Casualty v.
Northwestern Nat. Ins., 231 Cal. App. 3d 457, 282 Cal. Rptr. 389 (1991) ,
explained the differences in the standards for these two motions as follows (id.
at 468-69):

A defendant’s (or cross-defendant’s) motion for summary judgment

tests the existence of evidence to support the complaint’s (or cross-
complaint’s) allegations. Once the movant has [satisfied its initial burden
to] defeat the complaint’s (or cross-complaint’s) allegations it becomes the
responding plaintiff’s (or cross-complainant’s) burden to come forward in
a similar fashion with facts which support the allegations attacked by the
movant. If movant sustains its initial burden, and the responding party fails
to sustain the burden thus thrust on it, the motion for summary judgment
must be granted.

In contrast, a motion for judgment on the pleadings is the equivalent of

a general demurrer. This motion tests whether the allegations of the
pleading under attack support the pleader’s cause if they are true. Where
written instruments are the foundation of a claim or defense and are
incorporated in a pleading, the recitals of the instruments take precedence
over allegations in the pleading itself unless the incorporated instruments
are susceptible to more than one interpretation.

In a motion for summary judgment, judicial notice or an evidentiary

admission or concession by the pleader/adversary can support the motion
and thrust the burden on the pleader to come forward with facts in rebuttal.
In contrast, in order for judicial notice to support a motion for judgment on
the pleadings by negating an express allegation of the pleading, the notice
must be of something that cannot reasonably be controverted. The same is
true of evidentiary admissions or concessions. * * *

This process recognizes that there may in fact be evidence which

challenges the truth of the allegations of the pleading under attack but
defers the challenge until a motion for summary judgment or a trial. There
are, however, some few cases where whatever evidence is produced in
support of the pleading, the pleader’s cause if inevitably destined to fail.
The terms of a writing incorporated by reference which rebut an allegation
of the pleading may conceivably be so clear and simple that parol evidence
will be inadmissible to refute them. Judicial notice may conclusively
defeat the pleading as where it establishes res judicata or collateral
estoppel. The pleader’s own concession may have this same conclusive
effect.
 In these limited situations, the court, in ruling on a motion for
judgment on the pleadings, properly looks beyond the pleadings. But it
does so only [660/661]because the party whose pleading is attacked will as a
matter of law, or law’s equivalent of judicial notice of a fact not
reasonably subject to contradiction, fail in the litigation. Where the
significant issue is one of fact and not of law this process is inappropriate.

As Columbia Casualty indicates, the motion for judgment on the pleadings

performs the function of a general demurrer. See Evans v. Cal. Trailer Court,
Inc., supra, 28 Cal. 4th at 548 (rules governing demurrers applied); Barker v.
Hull, 191 Cal. App. 3d 221, 224, 236 Cal. Rptr. 285 (1987) (Same standards
held applicable); Ludgate Ins. Co. v. Lockheed Martin Corp., 82 Cal. App. 4th
592, 601-10, 98 Cal. Rptr. 2d 277 (2000) (all facts in complaint are deemed
admitted). Columbia Casualty also explains the standards applicable to a
motion for judgment on the pleadings as distinguished from a motion for
summary judgment. How does this difference affect the burden on the moving
and responding parties? The facts that may be considered by the judge? The role
of the judge in determining the motion?

[3] Partial Judgment on the Pleadings

Partial judgment on the pleadings is available, although not expressly

authorized by CCP § 438. See, e.g., Uptain v. Duarte, 206 Cal. App. 3d 1258,
254 Cal. Rptr. 150 (1988) (partial judgment on the pleadings granted with
respect to bad faith and punitive damage claim in contract dispute). Like a
demurrer, the motion may be addressed to the pleadings as a whole or to
separate counts. Heredia v. Farmers Ins. Exchange , 228 Cal. App. 3d 1345,
1358, 279 Cal. Rptr. 511 (1991) . If addressed to the pleadings as a whole, the
motion must be denied if even one count is good. Id. If addressed to separate
counts, the motion may be granted as to some counts and denied as to others. Id.

Unlike a demurrer, the court may grant a motion for judgment on the pleadings
on its own motion. CCP § 438(b)(2) & (c)(3). May the court therefore grant a
partial judgment even though the party’s motion addressed the pleading as a
whole?

[4] Leave to Amend

 As with a sustained demurrer, a judgment on the pleadings should be granted
with leave to amend if there is any reasonable possibility that the plaintiff can
amend the complaint and state a good cause of action. See, e.g., Virginia G. v.
ABC Unified Sch. Dist., 15 Cal. App. 4th 1848, 1852, 19 Cal. Rptr. 2d 671
(1993); La Jolla Village Homeowners’ Assn. v. Superior Court , 212 Cal. App.
3d 1131, 1141, 261 Cal. Rptr. 146 (1989) . Where a motion for judgment on the
pleadings is granted as to the original complaint, denial of leave to amend
constitutes an abuse of discretion unless the pleading shows on its face that it is
incapable of curative amendment. See Virginia G. v. ABC Unified Sch. Dist.,
supra (trial court erred in granting motion for judgment on the pleadings where
complaint by student against school district alleging sexual molestation by
teacher could be amended to properly allege negligent hiring and supervision of
the teacher).

When the motion is granted with leave to amend, the amended complaint or
answer must be filed within 30 days. CCP § 438(h)(2). If no amended pleading
is filed, the moving party must move for entry of judgment in its favor. CCP
[661/662]§ 438(i)(1)(B). If an amended pleading is filed after the time for
amendment has expired, the moving party must move to strike the pleading and
enter judgment in its favor. CCP § 438(h)(4) & (i)(1)(A).

§ 9.07 THE ANSWER

[A] Introductory Note

A defendant served with a complaint has three principal choices: (1) do

nothing and risk entry of default and a default judgment; (2) attack the complaint
and seek a partial or complete dismissal of the action through use of the
demurrer and other related motions; or (3) respond to the complaint on its own
terms through the answer. This section takes up the third of the options.
Conceptually, preparing and filing an answer is the normal procedural response;
whether in practice it is the most common response is not at all clear. The
answer is a pleading, just like the complaint, that responds to the allegations in
the complaint. Except in those few instances where a defending party can file a
general denial (see CCP § 431.40(a)), answers contain three types of responses.
First, portions of the complaint may be admitted, either by express admission or
by failure to deny. See CCP §§ 431.30(f), 431.20(a). Second, allegations in the
complaint may be controverted by general or specific denials (§ 431.30(b)(1)),
on the basis of information or belief (§ 431.30(d) & (f)), or on the ground of
lack of information or belief (§ 431.30(d) & (e)). Third, the answer may
respond by stating defenses (usually called “affirmative defenses”) that provide
a defense to the complaint even if its allegations are true. See CCP § 431.30(b)
(2) & (g).

If the defending party seeks affirmative relief against the party filing the
complaint, the defending party must proceed by separate cross-complaint. CCP
§ 431.30(c); see § 9.08, infra. The requirement of a separate cross-complaint
differs from the federal practice that combines answers and counterclaims (but
not third-party complaints, also called cross-complaints under California law)
in the same pleading. See Rules 13 and 14, Federal Rules of Civil Procedure.
As in the case of complaints, the California Judicial Council has provided
Official Form answers. See, e.g., Form PLD-PL-003 (Answer-Personal Injury);
Form PLD-C-010 (Answer-Contract).

[B] Denials

[1] Failure to Deny Constitutes an Admission

“Every material allegation of the complaint or cross-complaint, not

controverted by the answer, shall, for purposes of the action, be taken as true.”
CCP § 431.20(a). Failure to properly deny a material allegation therefore
constitutes an admission. Valerio v. Andrew Youngquist Constr. , 103 Cal. App.
4th 1264, 1271-72, 127 Cal. Rptr. 2d 436 (2002) (an admission in a pleading is
conclusive on the pleader). In Hennefer v. Butcher, 182 Cal. App. 3d 492, 227
Cal. Rptr. 318 (1986), for example, the plaintiff buyers sued the defendant seller
for specific performance of a real property sales agreement. The seller argued
that specific performance was [662/663]inappropriate because the plaintiff did not
prove the requisite reasonableness and adequacy of consideration. The court
held that the fairness and reasonableness of the contract was not a possible issue
because the defendant seller failed to deny the buyers’ allegations in their
complaint that the consideration named in the contract was the “fair and
reasonable value” of the property. Hennefer, 182 Cal. App. 3d at 504.

[2] General vs. Specific Denials

The pleading statutes require specific and positive denials when answering a
verified complaint, CCP § 431.30(b), but permit a general denial in lieu of an
answer when the complaint is not verified, in a limited civil case, or the amount
sought in the complaint does not exceed $1,000, CCP §§ 431.30(d), 431.40. See,
e. g., Conley v. Lieber, 97 Cal. App. 3d 646, 158 Cal. Rptr. 770 (1979) (in light
of the liberality afforded answers under § 431.30, defendant’s answer, which
denied “generally and specifically each and every allegation contained” in the
complaint, effectively denied plaintiff’s allegations regarding causation and
damages). A general denial simply states: “Defendant denies each and every
allegation in plaintiff’s complaint.” See California Judicial Council Form PLD-
050.

What are the advantages and disadvantages of the general denial? Why might
a defendant not use the general denial even when authorized to do so? What
should a plaintiff do to prevent a defendant’s use of the general denial?

[3] Functions of the Answer

An answer delineates the contested issues of fact through admissions and

denials, and requires the plaintiff to prove all material allegations in the
complaint controverted by the answer. CCP § 590. A timely filed answer also
prevents the plaintiff from obtaining a default judgment from the answering
defendant. See CCP § 585. Generally, a defendant must file an answer within 30
days after service of a complaint or cross-complaint, unless the defendant
obtains an extension or files a demurrer, motion to quash, or some other
responsive motion. See, e.g., CCP §§ 418.10(a)(1) (motion to quash), 418.10(a)
(2) (motion on ground of inconvenient forum), 396b (motion to transfer), 435
(motion to strike), 472b (demurrer). The answer also provides the vehicle for
raising objections to pleadings that cannot be taken by demurrer because the
ground does not appear on the face of the pleading, CCP §§ 430.10, 430.30(b);
and for stating defenses, CCP §§ 431.30(b), 590. The filing of an answer also
constitutes a general appearance. CCP § 1014. What other purposes do answers
serve?

[C] Raising “New Matter”

An answer must contain a statement of any “new matter” constituting a

defense. CCP § 431.30(b)(2). Each defense must be separately stated and
separately numbered. CCP § 431.30(g).

[663/664]

HULSEY v. KOEHLER
COURT OF APPEAL OF CALIFORNIA,
 THIRD APPELLATE DISTRICT
218 Cal. App. 3d 1150, 267 Cal. Rptr. 523 (1990)

Scotland, Justice.

Defendant, Dr. Judith P. Koehler (hereinafter Koehler) appeals from a

judgment entered in favor of plaintiffs, John and June Hulsey (hereinafter the
Hulseys) granting declaratory relief and reformation of a promissory note
executed in connection with the Hulseys’ sale of a mobilehome park to Koehler
in 1980.

At trial, Koehler moved to amend her answer to assert Code of Civil

Procedure section 426.301 as an affirmative defense, alleging that the cause of
action for reformation was barred because the Hulseys had failed to seek
reformation by cross-complaint in an earlier lawsuit Koehler had filed against
the Hulseys for claims arising from the sale of the mobilehome park. Section
426.30 is California’s compulsory cross-complaint statute which bars claims
that could have been raised by cross-complaint in a prior action between the
parties. The trial court denied the motion as untimely.

On appeal, Koehler contends that the trial court abused its discretion in
denying her motion to amend. In addition, Koehler claims that she was entitled
to assert section 426.30 as a defense even without amending her answer,
because it need not be specially pleaded as an affirmative defense. We disagree
with both contentions and shall affirm the judgment.

FACTS

On January 26, 1980, the parties executed a Commercial Purchase Agreement

and Deposit Receipt (deposit receipt) in which Koehler agreed to purchase the
Golden Oaks Mobile Estates in Oroville for the sum of $372,000, with the
Hulseys carrying back a note secured by a deed of trust on the property. Among
other things, the deposit receipt required Koehler to make a $60,000 down
payment in two installments, $30,000 at close of escrow and $30,000 on
September 15, 1980. The deposit receipt also stated, “Principle [sic] reductions
of $30,000 (thirty-thousand) to be made 12 months and 24 months from close of
escrow. Balance to be due & payable 7 years from close of escrow.”
 The escrow instructions prepared by the title company differed from the terms
of the deposit receipt. The instructions provided for “a principal payment of
$30,000.00 due on or before September 15, 1980, and … an additional
principal payment of $30,000.00 due between the end of the 12th month and the
end of the 24th month after close of escrow.”

Upon reviewing the escrow instructions, the Hulseys did not observe this
change in language, which, as the trial court noted, “in effect meant that [they
were] signing away one of the $30,000.00 principal reductions previously
agreed to by the parties.” [664/665]Koehler did recognize the discrepancy but did
not point it out to either the escrow officer or the Hulseys as they sat in the title
company reviewing the documents.

The parties signed the instructions without modification and, when escrow
closed on June 1, 1980, the title company prepared a promissory note consistent
with the escrow instructions rather than the deposit receipt. The note was
executed by Koehler and mailed to the Hulseys.

The Hulseys first discovered the disparity in terms when they reviewed the
promissory note upon returning from vacation in September 1980. They
immediately contacted the title company and requested an amended escrow
instruction together with a new promissory note. These were prepared and
forwarded to Koehler, who refused to sign them.

In October 1980, Koehler filed a lawsuit against the Hulseys, alleging that
she was the victim of fraud and misrepresentation in the sale of the mobilehome
park. A jury returned a unanimous verdict in favor of the Hulseys.

Thereafter, when Koehler failed to pay the second $30,000 principal

reduction, the Hulseys commenced this litigation. Following a trial without jury,
the court found that, because of a mistake of fact, the note drafted by the title
company failed to reflect the true intention of the parties. * * * The trial court …
awarded the Hulseys a judgment in the amount of $97,528.48.

DISCUSSION
 The following facts and procedural background are pertinent to Koehler’s
contention that the trial court erred in precluding her from raising section 426.30
as a defense:

As previously indicated, this action was preceded by a lawsuit filed by

Koehler alleging fraud, misrepresentation, and breach of contract in the sale of
the mobilehome park. Koehler asserted that the Hulseys and their realtor
misrepresented both the amount of income generated by the park and its capacity
for recreational vehicles and mobilehomes. The Hulseys cross-complained for
intentional interference with business relations, alleging that Koehler interfered
with the sale of two mobilehome units which the Hulseys maintained at the park.
Although by then they were aware of the discrepancy between the deposit
receipt and the promissory note, the Hulseys did not assert by cross-complaint a
request for reformation of the note. Jury verdicts were entered for the Hulseys
on Koehler’s complaint and for Koehler on the Hulseys’ cross-complaint.

When Koehler later failed to pay the second $30,000 principal reduction, the
Hulseys commenced this litigation seeking declaratory relief, reformation,
specific performance of the default provisions of the deed of trust, and
appointment of a receiver. In her answer, Koehler asserted two affirmative
defenses: failure to state a cause of action and full performance of the terms of
the promissory note.

At trial, Koehler moved to amend her answer to conform to proof by asserting

section 426.30 as an affirmative defense. Koehler’s counsel explained that he
did not raise section 426.30 earlier, because he first discovered it as a potential
defense two days before trial while reading the deposition testimony of Mrs.
Hulsey. At that [665/666]time, he learned the Hulseys were aware of the
discrepancy in the promissory note before they answered the complaint in the
prior litigation and, therefore, should be barred from seeking reformation in this
case, because they could have requested it by cross-complaint in the prior
action. The trial court denied the motion to amend as untimely.

Koehler contends that the trial court erred in not allowing her to raise section
426.30 as a defense because it need not be specially pleaded. Koehler likens
this statutory defense to the doctrine of collateral estoppel, which requires no
special pleading.

While we agree that a party is not required to specially allege collateral

estoppel as a defense (Dakins v. Board of Pension Commissioners (1982) 134
Cal. App. 3d 374, 387 [184 Cal. Rptr. 576] ; 5 Witkin, Cal. Procedure (3d ed.
1985) Pleading, § 1050, p. 466), contrary to Koehler’s claim, the compulsory
cross-complaint rule of section 426.30 is not an extension of this doctrine.

Collateral estoppel precludes parties from litigating an issue previously

determined in another cause of action between them or their privities. As a
prerequisite for asserting this doctrine, it must be shown that the issue was, in
fact, litigated and decided in the prior action. * * *

Since section 426.30 bars claims which the party failed to assert by cross-
complaint in a previous action arising from the same occurrence, it necessarily
bars issues which were never litigated and never actually decided. Thus, the
scope and effect of section 426.30 is analogous to that of res judicata rather than
collateral estoppel. * * * [R]es judicata precludes parties from splitting a cause
of action into a series of suits in piecemeal litigation, since it operates as a bar
not only when the grounds for recovery in the second action are identical to
those pleaded in the first but also where a different theory or request for relief is
asserted.

Section 426.30 serves the same purpose as the doctrine of res judicata by
requiring the settlement in a single action of all conflicting claims between the
parties arising from the same transaction. As Koehler recognizes, the public
policy served by the enactment of section 426.30 is the law’s abhorrence of a
multiplicity of lawsuits.

We discern no difference between the operation of section 426.30 and the

doctrine of res judicata. * * * Just as a plaintiff cannot split a cause of action by
failing to assert all claims against the defendant arising from a transaction,
neither can a defendant split a cause of action by failing to assert by cross-
complaint all the claims against the plaintiff arising from the same transaction.

Unlike collateral estoppel, an objection based on the doctrine of res judicata

must be specially pleaded or it is waived. (7 Witkin, Cal. Procedure (3d ed.
1985) Judgment, § 198, pp. 636-637.) The reason for this distinction is that res
judicata results in a complete defense whereas collateral estoppel “merely
involves conclusive evidence of a fact in issue.” (Solari v. Atlas-Universal
Service, Inc. (1963) 215 Cal. App. 2d 587, 592-593 [30 Cal. Rptr. 407].)
 Likewise, as a statutory bar to splitting a cause of action, section 426.30 must
be specially pleaded. It is well established that a rule against splitting of actions
is for [666/667]the benefit of the defendant and is waived by the failure to
specifically plead the defense. (Williams v. Krumsiek (1952) 109 Cal. App. 2d
456, 460 [241 P.2d 40] ; 4 Witkin, Cal. Procedure (3d ed. 1985) Pleading § 36,
p. 78.) In this regard, we find noteworthy the statement by the court in Datta v.
Staab (1959) 173 Cal. App. 2d 613, 619 [343 P.2d 977] that a defense based on
the statutory predecessor to section 426.30 must be “seasonably and properly
raised.” * * *

Since we find that a defense based on section 426.30 must be specially

pleaded, we reject Koehler’s contention that her affirmative defense of failure
to state facts sufficient to constitute a cause of action effectively incorporated
the section 426.30 defense and was sufficient to raise it.

Lastly, we consider whether the trial court erred in denying Koehler’s motion
to amend her answer to assert section 426.30 as a defense.

Section 473 permits the trial court in its discretion to allow amendments to
pleadings in the furtherance of justice. Ordinarily, courts should “exercise
liberality” in permitting amendments at any stage of the proceeding. (Permalab-
Metalab Equipment Corp. v. Maryland Cas. Co. (1972) 25 Cal. App. 3d 465,
472 [102 Cal. Rptr. 26]; 5 Witkin, Cal. Procedure (3d. ed. 1985) Pleading, §
1121, p. 537.) In particular, liberality should be displayed in allowing
amendments to answers, for a defendant denied leave to amend is permanently
deprived of a defense.

“[N]evertheless, whether such an amendment shall be allowed rests in the

sound discretion of the trial court. [Citations.] And courts are much more
critical of proposed amendments to answers when offered after long
unexplained delay or on the eve of trial [citations], or where there is a lack of
diligence, or there is prejudice to the other party (citations).” (Permalab-
Metalab Equipment Corp. v. Maryland Cas. Co., supra, 25 Cal. App. 3d at p.
472.)

Here, Koehler moved to amend at trial to conform to proof more than three
years after she answered the Hulseys’ amended complaint. Defense counsel’s
excuse for this delay was simply that he discovered section 426.30 as a
potential defense only two days before trial while reading the transcript of Mrs.
Hulsey’s deposition. In denying the motion as untimely, the trial court impliedly
found an unreasonable lack of diligence in the belated assertion of this defense.
Moreover, the trial court noted that the delay had prejudiced the Hulseys: “I
think that’s particularly true in this case, wherein we have an attorney’s fee
provision. [¶] And I think the plaintiff has a right to know his risk and weighs
his exposure prior to trial. And I think very arguably prior to trial preparation.
But certainly prior to the time that he puts on his evidence.”

On the facts before it, the trial court did not abuse its discretion in denying the
motion to amend.

The judgment is affirmed.

Footnotes:

1 Further statutory references are to the Code of Civil Procedure unless otherwise specified.

[1] Affirmative Defenses

New matter constituting an affirmative defense must be stated in the answer.

A s Hulsey illustrates, failure to plead an affirmative defense waives that
defense. See, e.g., California Academy of Sciences v. County of Fresno, 192
Cal. App. 3d 1436, 1442, 238 Cal. Rptr. 154 (1987) [667/668](defendant’s waiver
and estoppel arguments rejected because defendant failed to raise them as
affirmative defenses in its answer); Carranza v. Noroian, 240 Cal. App. 2d
481, 488, 49 Cal. Rptr. 629 (1966) (general denial constituted waiver of
defendant’s right to prove setoff based on independent and different contract);
Minton v. Cavaney, 56 Cal. 2d 576, 581, 15 Cal. Rptr. 641, 364 P.2d 473
(1961) (defendant waived statute of limitations defense by failing to plead that
defense in the answer or by demurrer); see generally 2 CEB, California Civil
Procedure Before Trial, Answers § 25.32 (4th ed. 2011); 5 Witkin, California
Procedure, Pleading §§ 1081-1128 (5th ed. 2008).

A plaintiff need not answer affirmative defenses raised in defendant’s answer

to the complaint; affirmative defenses are deemed controverted and a plaintiff
may introduce evidence on the issue at trial. CCP § 431.20(b); see, e.g., Aerojet
General Corp. v. Superior Court, 177 Cal. App. 3d 950, 953, 233 Cal. Rptr.
249 (1986) (plaintiff need not answer affirmative defense of statute of
limitations raised in defendant’s answer in order to contest this defense at trial).

[2] What Constitutes “New Matter”?

Under CCP § 431.30(b)(2), the answer to a complaint must include “[a]

statement of any new matter constituting a defense.” The phrase “new matter”
refers to something relied on by a defendant which is not put in issue by the
plaintiff. State Farm Mutual Auto Ins. Co. v. Superior Court, 228 Cal. App. 3d
721, 725, 279 Cal. Rptr. 116 (1991) . Thus, where matters are not responsive to
allegations of the complaint, they must be raised in the answer as “new matter.”
Id. Where, however, the answer sets forth facts showing some essential
allegation of the complaint is not true, such facts are not “new matter” but only a
traverse. Id. Accordingly, what is put in issue by a denial is limited to the
allegations of the complaint. Consider the following cases.

In State Farm Mutual Auto Ins. Co. v. Superior Court, supra, the plaintiffs-
insureds alleged the cause of action of bad faith handling of an insurance claim.
The defendant State Farm filed a general denial to the complaint. Subsequently
at trial, the defendant insurer sought to introduce evidence to establish the
defense of reliance on advice of counsel in its claims handling. The trial court
excluded the evidence on the ground that State Farm had failed to specifically
plead advice of counsel as a defense in its answer. The Court of Appeal
directed the trial court to permit State Farm to offer this evidence (State Farm.
228 Cal. App. 3d at 726):

State Farm contends the defense of advice of counsel is not “new

matter” and thus it need not be specifically pleaded in the answer. We
agree. In response to a plaintiff’s allegations of bad faith and malice, a
defendant is entitled to show it acted reasonably and with proper cause
based on the advice of its counsel. Good faith reliance on counsel’s advice
simply negates allegations of bad faith and malice as it tends to show the
insurer had proper cause for its actions. Because advice of counsel is
directed to an essential element of a plaintiff’s cause of action, it does not
constitute new matter and need not be specifically alleged.

I n FPI Development, Inc. v. Nakashima, 231 Cal. App. 3d 367, 282 Cal.
Rptr. 508 (1991), plaintiffs’ complaint pled a cause of action on a promissory
note. Defendants’ [668/669]answer contained a general denial. The court held that
the denial put in issue all material allegations of the complaint which comprise
the essential elements of plaintiffs’ cause of action. This encompasses such
defenses as the contract is wholly void, the note was not executed, and the
defendants paid in accordance with its terms. However, the court viewed the
denial as not putting in issue the defense that the note was a sham transaction
(id. at 403):

[T]he facts necessary to show that the transaction was a sham are
matters not encompassed in the denial of the ultimate fact of execution
alleged in the complaint. The defense is in the nature of “Yes — the facts
alleged are true” — but they do not render us liable because of additional
facts, i.e., those about the sham. Where a party participates in a sham the
intention is that the note not be taken as a jural act by the one upon whom
the sham is perpetrated. It will not lie in the mouth of the participant to say
there was no execution of the note. The defense, if any, is that there was an
execution but that the plaintiff cannot take advantage of it. For that reason a
denial of execution does not put such a theory in issue.

Do you agree with the holding in State Farm Mutual? In FPI Development?
Are the two holdings consistent with each other? Distinguishable? How so?

[D] Verification of the Answer

When the complaint is verified, the answer must also be verified. CCP § 446.
However, a plaintiff must raise the failure to verify the answer prior to
commencement of trial. When the plaintiff proceeds to trial without objecting to
the lack of verification, she waives any right to object to defendant’s pleading
error. See, e.g., Zavala v. Bd. of Trustees, 16 Cal. App. 4th 1755, 1761, 20 Cal.
Rptr. 2d 768 (1993) (trial court properly denied plaintiff’s motion for judgment
on the pleadings during trial based on defendants’ failure to verify their
answer). What is the purpose of the requirement of a verified answer? Section
446 permits an attorney to verify an answer for a party absent from the county,
or when the attorney is an officer of a corporate party. Does verification
constitute a waiver of the attorney-client privilege as to matters admitted or
denied in the answer? See Alpha Beta Co. v. Superior Court, 157 Cal. App. 3d
818, 829-31, 203 Cal. Rptr. 752 (1984) (vague and conclusory disclosures in an
answer verified by general counsel for defendant corporation did not constitute
a waiver of the attorney-client privilege).

§ 9.08 CROSS-COMPLAINTS
 [A] Introductory Note

The California cross-complaint is a multi-purpose pleading device which

permits a party defending against a cause of action to assert her own affirmative
cause of action against an opposing party, a co-party, or some other person not
already a party to the action. CCP §§ 428.10-428.80. The California cross-
complaint serves the same functions as the familiar counterclaim, cross-claim,
and third-party impleader in federal court. See Rules 13 and 14, Federal Rules
of Civil Procedure. The California Legislature opted for the “one-term-fits-all”
approach in 1971 when [669/670]it eliminated technical limitations of prior
methods of countersuits and replaced them with a single form of pleading. See,
e.g., CCP § 428.80 (counterclaims abolished and deemed cross-complaints);
Jack H. Friedenthal, Joinder of Claims, Counterclaims, and Cross-
Complaints: Suggested Revisions of the California Provisions, 23 Stan. L.
Rev. 1, 17-39 (1970); 1970 Law Revision Commission Report, pp. 518-51.

The cross-complaint is one of the four types of pleadings allowed in civil

actions, CCP § 422.10; and is the only pleading other than a complaint that can
demand affirmative relief. 2 CEB, Civil Procedure Before Trial, Cross-
Complaints § 26.3 (4th ed. 2011); see CCP § 431.30(c) (affirmative relief
cannot be claimed in an answer). A cross-complaint must be filed and served as
a separate document, and must comply with the same form and content rules
applicable to a complaint. Civil Procedure Before Trial, supra at §§ 26.44,
26.50-26.52; see CCP §§ 425.10, 428.40-428.60. A cross-complaint must,
within 30 days after service, be responded to in the same manner as an original
complaint. CCP § 432.10. Dismissal of the underlying complaint does not
constitute a dismissal of a cross-complaint. See CCP § 581(i).

[B] Compulsory and Permissive Cross-Complaints

CURRIE MEDICAL SPECIALTIES, INC. v.

NEWELL BOWEN
COURT OF APPEAL OF CALIFORNIA,
FOURTH APPELLATE DISTRICT
136 Cal. App. 3d 774, 186 Cal. Rptr. 543 (1982)

Brown (Gerald), Presiding Justice.

 Currie Medical Specialties, Inc. sued Newell Bowen for breach of contract,
fraud, negligent misrepresentation, intentional interference with prospective
business advantage and unfair competition. Bowen’s motion for summary
judgment based on Currie’s failure to comply with Code of Civil Procedure
section 426.30 was granted. Currie appeals the judgment.

This is the second action between these parties. In 1979, Bowen sued Currie
in the federal court for violating the Lanham Act (15 U.S.C. § 1051 et seq.) and
unfair competition. Currie answered but made no counterclaim. Four months
after Currie answered, the suit was dismissed with prejudice by stipulation of
the parties.

The superior court found the claim made by Currie in the current action was a
compulsory counterclaim in the earlier case and is barred by section 426.30.

Currie and Bowen sell labels to hospitals. In 1978, the parties orally
contracted for Currie to stop selling its labels and become a distributor of
Bowen’s labels. In this action, Currie alleges Bowen breached the agreement
and was guilty of fraud in its formation. In the earlier federal action Bowen
alleged Currie usurped Bowen’s customer lists, sales manuals and style of label
while distributing for Bowen and then, after the contractual relationship was
terminated, entered into unfair competition with Bowen.

[670/671]

The sole issue here is whether Currie’s claim based on termination of the
contract was a compulsory counterclaim in the earlier action under section
426.30. That section reads: “Except as otherwise provided by statute, if a party
against whom a complaint has been filed and served fails to allege in a cross-
complaint any related cause of action which (at the time of serving his answer to
the complaint) he has against the plaintiff, such party may not thereafter in any
other action assert against the plaintiff the related cause of action not pleaded.”
This section, however, does not apply where: “Both the court in which the
action is pending and any other court to which the action is transferrable
pursuant to Section 396 are prohibited by the federal or state constitution or by a
statute from entertaining the cause of action not pleaded.” (Code Civ. Proc., §
426.40.) The question becomes whether the federal district court had
jurisdiction to hear Currie’s claim.
 The parties agree there was no diversity or federal question jurisdiction
applicable to Currie’s claim. The dispute focuses on whether the federal court
could have heard the claim under its ancillary jurisdiction. If Currie’s claim
arose out of the same transaction or occurrence which was the basis of Bowen’s
complaint, it was covered by ancillary jurisdiction and was a compulsory
counterclaim (Fed. Rules Civ. Proc., rule 13(a), 28 U.S.C.; Albright v. Gates
(9th Cir. 1966) 362 F.2d 928 ). The transaction or occurrence test is dispositive
of this entire action because it settles the ancillary jurisdiction question and
defines “related cause of action” as it is used in section 426.30. (See Code Civ.
Proc., § 426.10.)

Albright v. Gates, supra, cites United Artists Corp. v. Masterpiece

Productions (2d Cir. 1955) 221 F.2d 213 , as providing the controlling
interpretation of the transaction or occurrence test. United Artists holds the test
requires “not an absolute identity of factual backgrounds for the two claims, but
only a logical relationship between them.” (Id. at p. 216.) This logical
relationship approach is the majority rule among the federal courts (Wright &
Miller, Federal Practice and Procedure: Civil (1971) § 1410). At the heart of
the approach is the question of duplication of time and effort; i.e., are any
factual or legal issues relevant to both claims?

The claims of Bowen and Currie involve common issues of law and fact. The
nature of the contractual relationship is central to Currie’s claim; it is likewise
relevant to Bowen’s claim because of the allegation Currie usurped Bowen’s
business properties during the relationship. Currie’s answer to Bowen’s
complaint in federal court argued for estoppel based on Bowen’s previous
actions; those actions were the same as those which are the basis of Currie’s
current complaint. This overlap of issues satisfies the logical relation approach
to the transaction or occurrence test. This common transaction, in turn, creates
ancillary jurisdiction. Therefore, the exception to section 426.30 found in
section 426.40 is not applicable.

The transaction common to both claims also triggers application of section

426.30. Saunders v. New Capital for Small Businesses, Inc. (1964) 231 Cal.
App. 2d 324 [41 Cal. Rptr. 703] holds section 426.30 is a parallel provision to
federal rule 13(a); it is the presence of a common transaction which renders the
counterclaim compulsory. The California courts have also adopted the
expansive logical relation test of United Artists (Ranchers Bank v. Pressman
(1971) 19 Cal. App. 3d 612 [97 Cal. Rptr. 78] ; Saunders v. New Capital for
Small Businesses, Inc., supra, 231 Cal. App. 2d 324). [671/672]The presence of
issues common to the claims of Bowen and Currie creates ancillary jurisdiction
at the same time it requires section 426.30 be applied.

Currie contends the logical relation test is improperly broad when it is used
to bar a claim; the policy in favor of giving each person a day in court is
stressed. The case law does not support Currie. The waiver provision of section
426.30 is mandatory, the policy in favor of hearing all related claims in a single
action controlling (Sylvester v. Soulsburg (1967) 252 Cal. App. 2d 185 [60
Cal. Rptr. 218]; Brenner v. Mitchum, Jones & Templeton, Inc. (9th Cir. 1974)
494 F.2d 881). The 1979 federal action was the proper time and place for
Currie’s claim.

Judgment affirmed.

CROCKER NATIONAL BANK v. EMERALD

COURT OF APPEAL OF CALIFORNIA,
THIRD APPELLATE DISTRICT
221 Cal. App. 3d 852, 270 Cal. Rptr. 699 (1990)

DeCristoforo, Justice.

Defendant, Robert M. Emerald, proceeding inpropria persona, appeals from a

judgment granting plaintiff Crocker National Bank’s motion for summary
judgment. Crocker’s motion for summary judgment stems from a collection
action brought by Crocker against Emerald for nonpayment on a promissory
note. Emerald appeals from the judgment of dismissal following the order
granting summary judgment, contending triable issues of fact exist as to whether
Crocker has complied with California Uniform Commercial Code section 9504
subdivision (3) which requires the sale of collateral to be conducted in a
commercially reasonable manner. Emerald also … contends the trial court
abused its discretion in denying him leave to file a cross-complaint. * * * We
shall reverse the order granting summary judgment … and affirm the trial court’s
denial of leave to file a cross-complaint.

FACTUAL AND PROCEDURAL BACKGROUND

This dispute between Crocker and Emerald has stretched on for nine years. It
began when Emerald, the owner of a logging business, signed a promissory note
with Crocker in the principal sum of $430,962.30. The note was payable in 30
monthly installments of $14,365.41, with the unpaid balance due and payable on
December 15, 1978. An agreement giving Crocker a security interest in 52 items
of equipment owned by Emerald’s logging business secured the payment
obligation.

Emerald’s business experienced financial difficulties caused by the 1975

recession in the logging industry. Emerald realized he would be unable to make
the series of payments due on May 15, 1976, and monthly thereafter. He failed
to make the installment payment due May 15, 1976. Pursuant to the terms of the
promissory note, Crocker elected to declare the entire unpaid balance to be due
after the May 15, 1976, default, and made demand on Emerald for payment. In
April 1976, with Crocker’s consent, Emerald decided to sell some of the
equipment securing the [672/673]promissory note and to apply the proceeds to the
balance due.

With Crocker’s consent, Emerald sold 18 items of equipment, and the

proceeds of the sale were credited to the balance due on the promissory note,
reducing the balance to $128,966.86.

Crocker filed suit against Emerald to recover the balance due on the
promissory note, plus collection charges, interest and attorney’s fees. Emerald
answered the complaint and filed a cross-complaint against Crocker alleging
breach of fiduciary duty and violation of the Unruh Act. The trial court sustained
Crocker’s demurrer and granted Emerald leave to amend. Emerald amended his
cross-complaint four times, each time the trial court sustained Crocker’s
demurrer, on the final occasion without leave to amend. * * *

In December of 1987, Crocker filed a … summary judgment motion, which

forms the basis of this appeal. In its motion, Crocker attempted to comply with
California Uniform Commercial Code section 9504 by adopting Emerald’s own
valuation of … 13 items of collateral left in issue …. Crocker used the values
Emerald had assigned to each piece of equipment in his declarations and
deposition testimony, and offered to give Emerald “credit” and reduce his debt
by these amounts. Therefore, according to Crocker, since Emerald had been
credited with the amount he believed the equipment was worth, the question of
whether the sale of the collateral was commercially reasonable became moot.
 In response, Emerald filed a motion for leave to file a cross-complaint and an
amended answer. The trial court granted Emerald’s motion for leave to file an
amended answer, but denied leave to file a cross-complaint.

Following oral argument, the court granted Crocker’s motion for summary
judgment. Following entry of judgment, Emerald filed a timely notice of appeal.
***

II. Commercially Reasonable Sale of Collateral

At the core of this controversy is California Uniform Commercial Code

section 9504. Section 9504 provides that, in the event of default by the debtor,
the secured party may liquidate the security and apply the proceeds to the unpaid
balance of the debt. If there remains a deficiency, the debtor is liable for the
balance. Subdivision 3 of section 9504 imposes upon the secured party the duty
to conduct the sale of the collateral in a commercially reasonable manner, and to
provide timely notice of the sale to the debtor. * * *

We find that a secured creditor cannot by unilateral action after nine years of
litigation, suddenly accept the debtor’s earlier estimate of the fair market value
of the collateral, and thereby deny the debtor the opportunity to challenge the
commercial reasonableness of the sale. “Whether a sale is conducted in a
commercially reasonable manner is a question of fact and the answer depends
on all of the circumstances existing at the time of the sale.” (Clark Equipment
Co. v. Mastelotto, Inc. (1978) 87 Cal. App. 3d 88, 96 [150 Cal. Rptr. 797] .)
Therefore, we reverse the trial court’s order granting summary judgment.

[673/674]

III. Denial of Leave to File Cross-Complaint

Emerald claims the trial court erred in denying him leave to file a cross-
complaint. He argues his proposed cross-complaint is a compulsory cross-
complaint under Code of Civil Procedure section 426.30. As a compulsory
cross-complaint, Emerald asserts his complaint is governed by Code of Civil
Procedure section 426.50, which makes permission to assert an unpleaded
cause of action mandatory.
 Code of Civil Procedure section 426.30, subdivision (a), which defines
compulsory cross-complaints, states: “Except as otherwise provided by statute,
if a party against whom a complaint has been filed and served fails to allege in a
cross-complaint any related cause of action which (at the time of serving his
answer to the complaint) he has against the plaintiff, such party may not
thereafter in any other action assert against the plaintiff the related cause of
action not pleaded.” “Related cause of action” is defined in Code of Civil
Procedure section 426.10, subdivision (c) as “a cause of action which arises out
of the same transaction, occurrence or series of transactions or occurrences as
the cause of action which the plaintiff alleges in his complaint.”

Code of Civil Procedure section 426.50 authorizes relief from excusable

failure to plead: “A party who fails to plead a cause of action subject to the
requirements of this article, whether through oversight, inadvertence, mistake,
neglect, or other cause, may apply to the court for leave to amend his pleading,
or to file a cross-complaint, to assert such cause at any time during the course of
the action. The court, after notice to the adverse party, shall grant, upon such
terms as may be just to the parties, leave to amend the pleading, or to file the
cross-complaint, to assert such cause if the party who failed to plead the cause
acted in good faith. This subdivision shall be liberally construed to avoid
forfeiture of causes of action.” (Italics added.)

Emerald’s proposed cross-complaint alleges (1) gross negligence; (2) fraud,

deceit, and menace; and (3) intentional infliction of emotional distress.

Emerald bases his claim of gross negligence on Crocker’s alleged failure to

dispose of the 13 remaining items of collateral in a commercially reasonable
manner pursuant to section 9504. Emerald attempted to cross-complaint based
on this same alleged conduct in five previous cross-complaints, to each of
which Crocker successfully demurred. Thus, Emerald has not “failed” to plead
a related cause of action in the past, as required by Code of Civil Procedure
section 426.50. Instead, he has attempted to plead a cause of action, based on
Crocker’s alleged misconduct, on five separate occasions. His final effort was
met with a demurrer which the trial court sustained without leave to amend.

Moreover, Emerald’s proposed second and third causes of action for fraud,
deceit, menace and intentional infliction of emotional distress, are based on
Crocker’s actions which allegedly took place in February 1982. Emerald
contends Crocker engaged in “a campaign of fraud, deceit and unfair practices
against cross-complainant, calculated and conceived to usurp” his property
beginning in February 1982. These actions, Emerald claims, caused him severe
emotional distress.

To be considered a compulsory cross-complaint, a related cause of action

must [674/675]have existed at the time of the service of Emerald’s answer to
Crocker’s complaint. (Code Civ. Proc., § 426.30, subd. (a).) Emerald filed his
answer in August 1980, and the second and third causes of action are based on
actions which allegedly took place in February 1982. Therefore, Emerald’s
second and third causes of action are not compulsory cross-complaints, and are
not governed by Code of Civil Procedure section 426.50.

Instead, Emerald’s proposed cross-complaint is a permissive cross-

complaint, governed by Code of Civil Procedure section 428.50, subdivision
(c) which states: “A party shall obtain leave of court to file any cross-complaint
except one filed within the time specified in subdivision (a) or (b). Leave may
be granted in the interest of justice at any time during the course of the action.”
Permission to file a permissive cross-complaint is solely within the trial court’s
discretion. (Orient Handel v. United States Fid. and Guar. Co. (1987) 192
Cal. App. 3d 684, 701 [237 Cal. Rptr. 667].)

We find the trial court did not abuse its discretion in refusing Emerald leave
to file the cross-complaint. Emerald sought leave to file his cross-complaint
seven years after the onset of litigation, and five years after a demurrer was
sustained to Emerald’s fifth amended cross-complaint without leave to amend.
Moreover, Emerald’s motion for leave to file a cross-complaint was filed only
five months before the trial date.

Emerald provides no explanation for his delay in seeking the court’s

permission to file his proposed cross-complaint. Emerald knew of the facts
upon which he based his first cause of action for gross negligence since at least
August 1980, when he filed his first proposed cross-complaint. In addition, the
facts upon which he based his second and third causes of action were known to
him since 1986. Emerald’s declaration in support of his motion for
reconsideration, following the trial court’s order granting Crocker’s motion for
extension of a writ of attachment, contains the same allegations as his proposed
cross-complaint.

Given Emerald’s lack of explanation concerning his failure to seek leave of

the court between 1986 and 1988, we find the trial court acted within its
discretion in denying Emerald leave to file his cross-complaint.

***

We reverse the order granting summary judgment and judgment thereon, and
remand for further proceedings consistent with this opinion. We affirm the trial
court’s denial of Emerald’s motion for leave to file a cross-complaint. Emerald
shall recover costs on appeal.

[1] Compulsory Cross-Complaint

As our principal cases illustrate, a “related cause of action” is subject to

forfeiture if not alleged in a cross-complaint. CCP § 426.30. There are some
statutory exceptions to this compulsory cross-complaint requirement, such as
those discussed in our principal cases. In addition, the compulsory cross-
complaint waiver rule does not apply where the court lacked personal
jurisdiction over the person who failed to plead the related cause of action,
where the person who failed to plead did not file an answer, and where the
cause of action not pleaded required [675/676]the presence of additional parties
over whom the court cannot acquire jurisdiction. CCP §§ 426.30(b); 426.40.

[a] “Related Cause of Action”

A s Currie Medical Specialties illustrates, the courts broadly construe the

statutory definition of “related cause of action” to encompass any affirmative
claim for relief which evolved from a series of logically interrelated acts or
occurrences. See also Align Technology, Inc. v. Tran , 179 Cal. App. 4th 949,
959-68, 102 Cal. Rptr. 3d 343 (2009); Silver Organizations Ltd. v. Frank , 217
Cal. App. 3d 94, 101, 265 Cal. Rptr. 681 (1990) . This transactional standard is
expansive and ambiguous, but informs a party to err on the side of pleading an
arguably related cause of action.

The federal courts utilize a similar logical relation test when applying the
compulsory counterclaim standard of Federal Rule 13(a). See, e.g., Burlington
Northern R.R. Co. v. Strong, 907 F.2d 707, 711 (7th Cir. 1990) ; Maddox v.
Kentucky Finance Co., Inc., 736 F.2d 380, 382 (6th Cir. 1984) ; United States
v. Heyward-Robinson Co., 430 F.2d 1077 (2d Cir. 1970) . The federal ancillary
jurisdiction issue discussed in Currie Medical Specialties is now governed by
the federal supplemental jurisdiction statute, 28 U.S.C. § 1367, which
apparently codified prior federal case law on this point. See, e.g., Unique
Concepts, Inc. v. Manuel, 930 F.2d 573, 574-75 (7th Cir. 1991) ; Shay S. Scott,
Comment, Supplemental Jurisdiction Under 28 U.S.C. § 1367, 72 Or. L. Rev.
695 (1993).

[b] Time For Filing

Normally, a party must file a cross-complaint against any party who filed a
complaint or cross-complaint against her before or at the same time as the
answer. CCP § 428.50(a). Other cross-complaints (third-party, etc.) may be
filed at any time before the court has set a date for trial. CCP § 428.50(b). A
party must obtain leave of court to file a cross-complaint at some later time.
CCP § 428.50(c).

Section 426.50 authorizes relief from an excusable failure to timely plead a

cross-complaint, and directs that such authority “shall be liberally construed to
avoid forfeiture of causes of action.” Absent a finding of bad faith, CCP §
426.50 does not permit a trial court to deny a motion to file a late compulsory
cross-complaint. See, e.g., Silver Organizations Ltd. v. Frank , 217 Cal. App.
3d 94, 265 Cal. Rptr. 681 (1990) (trial court erred in denying defendant’s
motion to file compulsory cross-complaint on eve of trial where insufficient
evidence of bad faith). If the cross-complaint in Crocker had been a compulsory
one, would the trial court’s denial of leave to file still be proper?

[c] Res Judicata Compared

Recall the discussion of res judicata (claim preclusion) in Chapter 8,

Preclusive Effects of Prior Judgments, supra. The California courts follow the
primary rights doctrine of res judicata and permit a plaintiff to bring a separate
lawsuit against the same defendant for violation of each separate primary right.
See, e.g., Slater v. Blackwood, 15 Cal. 3d 791, 126 Cal. Rptr. 225, 543 P.2d
593 (1975); Holmes v. David H. Bricker, Inc. , 70 Cal. 2d 786, 76 Cal. Rptr.
431, 452 P.2d 647 (1969) . [676/677]A valid final judgment on the merits in favor
of a defendant does, however, serve as a complete bar to further litigation on the
same cause of action. Slater, supra, 15 Cal. 3d at 795. But a “cause of action”
is defined as the remedial right in favor of a plaintiff for the violation of one
“primary right.” Id.

A factual transaction may give rise to the violation of more than one primary
right, and therefore give a plaintiff the potential of two separate lawsuits against
a single defendant. Under established primary rights precedent, for example, one
tortious act may violate two primary rights and create two separate causes of
action: one for injury to person and a second for damages to property. See
Slater, supra; Holmes, supra. A typical example is negligence litigation arising
out of the crash of two cars, where one driver sues the other. The resulting
personal injury to the plaintiff driver is a separate cause of action from the
property damage to plaintiff’s car, and may be pursued in two separate lawsuits.

The cross-complaint statutes utilize a “transactional” standard — not a

primary rights standard — in defining compulsory cross-complaints. CCP §§
426.30(a), 426.10(c). What impact does this transactional cross-complaint
standard have on the primary rights approach to res judicata? Consider the
following typical occurrence. Sam Saguaro’s car collided with Laura Lorry’s
truck. Both parties suffered personal injuries, and both vehicles were totalled.
Plaintiff Saguaro sued defendant Lorry in superior court for personal injury
damages, alleging his injuries were caused by defendant’s negligence.
Defendant answered and cross-complained against plaintiff. Defendant Lorry’s
cross-complaint sought damages for her own personal injuries, alleging they
were caused by plaintiff’s negligence. The jury found plaintiff Saguaro 5%
negligent and defendant Lorry 95% negligent, and awarded appropriate
damages.

Plaintiff Saguaro filed a subsequent lawsuit against defendant Lorry seeking

damages for the destruction of his car. Because plaintiff’s second suit is based
on a separate primary right, his cause of action is not barred by res judicata. Is
plaintiff’s second action barred by CCP § 426.10(c) and § 426.30(a)? Why? If
defendant Lorry had won the first lawsuit, would her subsequent suit against
Sam Saguaro for property damage to her truck be barred? Why? The compulsory
cross-complaint statutes effectively replace the primary rights approach with a
transactional standard in such typical cases, do they not?

[2] Cross-Complaint vs. Affirmative Defense

[a] General Distinctions

A cross-complaint shares some of the attributes of an affirmative defense, but

the two are quite distinct devices. An affirmative defense may provide a partial
or complete bar to recovery on an opposing party’s complaint or cross-
complaint. In contrast, a cross-complaint permits the pleader to obtain relief
regardless of the opposing party’s recovery, and that relief may be different
than, or in excess of, the opposing party’s recovery. A cross-complaint is not
limited to seeking relief from an opposing party, but may assert a cause of action
against a co-party or a wholly new party. CCP § 428.10(b).

[677/678]

[b] Setoff

In situations where persons have cross-demands for money against each other
and an action is commenced by one such person, CCP § 431.70 provides “the
other person may assert in the answer the defense of payment in that the two
demands are compensated so far as they equal each other.” Is this setoff the
same as an affirmative defense? If the defendant’s demand exceeds the
plaintiff’s, why would the defendant utilize a setoff and not a cross-complaint?
See CCP § 431.70. Is a setoff barred if it should have been asserted as a
compulsory cross-complaint in an earlier action? See id.

[c] Equitable Indemnity

A typical use of the cross-complaint device is to seek equitable indemnity

from a joint tortfeasor. Such a cross-complaint must be permitted unless it
would operate against public policy. See, e.g., Platt v. Coldwell Banker
Residential Real Estate Services, 217 Cal. App. 3d 1439, 266 Cal. Rptr. 601
(1990) (new party cross-complaint for equitable indemnity must be permitted
even though liability will be apportioned in the underlying comparative
negligence action); Daon Corp. v. Place Homeowners Assn., 207 Cal. App. 3d
1449, 1454-55, 255 Cal. Rptr. 448 (1989) (a defendant may file a cross-
complaint against any person from whom the defendant seeks total or partial
indemnity on the basis of comparative fault); but see, e.g., Jaffe v. Huxley
Architecture, 200 Cal. App. 3d 1188, 246 Cal. Rptr. 432 (1988) (developer
sued by homeowners association for construction defects not permitted to cross-
complaint for equitable indemnity against association’s board of directors for
their conduct which contributed to the damages arising from the original
defects).

[d] Statutes of Limitations

Ordinarily, statutes of limitations will apply to a cross-complaint in the same

fashion as they apply to an independent action. Liberty Mut. Ins. Co. v. Fales, 8
Cal. 3d 712, 715, note 4, 106 Cal. Rptr. 21, 505 P.2d 213 (1973) . When an
original complaint was filed before the statute of limitations on a cross-
complaint had elapsed, however, the cross-complaint will relate back to the
date of the complaint for statute of limitation purposes. See, e.g., Sidney v.
Superior Court, 198 Cal. App. 3d 710, 244 Cal. Rptr. 31 (1988) . This relation-
back rule applies only to a related cause of action — one which arises out of the
same transaction or occurrence alleged in the complaint. Id. Even where a
cross-complaint is barred, a defendant may be able to assert a cross-demand as
a setoff. See CCP § 431.70.
[679/680]
Chapter 10

JOINDER OF PARTIES AND CLAIMS

§ 10.01 PERMISSIVE JOINDER OF PARTIES AND

CLAIMS
[A] Permissive Joinder of Plaintiffs

Code of Civil Procedure Section 378 permits joinder of plaintiffs if they

assert any right to relief “arising out of the same transaction, occurrence, or
series of transactions or occurrences and if any question of law or fact common
to all these persons will arise in the action ….” The courts liberally construe
this statutory standard so as to permit joinder of plaintiffs. In Anaya v. Superior
Court, 160 Cal. App. 3d 228, 206 Cal. Rptr. 520 (1984) , for example,
numerous employees of the Occidental Petroleum Corporation joined in one
lawsuit seeking damages for exposure to certain toxic chemicals over the course
of 20-30 years. Defendant demurred, contending that each plaintiff’s claim was
based on facts entirely different from the transactions giving rise to the causes of
action of the other plaintiffs. The trial court ruled that plaintiffs were misjoined
and must file separate complaints. The Court of Appeal issued a writ of mandate
directing the trial court to vacate the decision sustaining the demurrer. After
analyzing various cases applying CCP § 378, the Court of Appeal found no
misjoinder of the plaintiffs (Anaya, 160 Cal. App. 3d at 233):

The employees are said to have been exposed to harmful chemicals at

one location over a period of many years by inhalation, drinking of water,
and physical contact. Thus, they were all involved in the same series of
transactions of occurrences and assert rights to relief therefrom. The fact
that each employee was not exposed on every occasion any other employee
was exposed does not destroy the community of interest linking these
petitioners.

In State Farm Fire & Cas. Co. v. Superior Court , 45 Cal. App. 4th 1093,
1112-14, 53 Cal. Rptr. 2d 229 (1996) , the court held that a Group of insured
homeowners, whose homes were destroyed by an earthquake, were properly
joined as plaintiffs under CCP § 378. Plaintiffs’ complaint alleged that the
defendant insurer had defrauded them by reducing their earthquake coverage
without adequate notice, and also alleged systematic claims handling practices
which invaded the rights of plaintiffs as insureds. The court found that the
allegations of inadequate notice clearly reflected a claim containing common
facts central to the alleged deception. State Farm, 45 Cal. App. 4th at 1113 . As
to the allegations of systematic claims handling practices, the court ruled that
“[w]hile not every plaintiff … may have been victimized by the same claims
handling practice, that is a matter which can be [680/681]resolved by discovery;
and the trial court will always retain the right to sever the claims of particular
plaintiffs in order to prevent prejudice to State Farm.” State Farm, 45 Cal. App.
4th at 1113-14.

[B] Permissive Joinder of Defendants

FARMERS INSURANCE EXCHANGE v. ADAMS

COURT OF APPEAL OF CALIFORNIA,
FIRST APPELLATE DISTRICT
170 Cal. App. 3d 712, 216 Cal. Rptr. 287 (1985)

Merrill, Justice.

The appellants in this action, Farmers Insurance Exchange, Fire Insurance

Exchange, Truck Insurance Exchange and Mid-Century Insurance Company
(Farmers) filed a complaint for declaratory relief in Marin County against over
300 named defendants (Insureds) and 5,000 Doe defendants. The complaint was
later amended to name further defendants. Two demurrers and motions to
dismiss were filed by Insureds; one by Christopher and Judith Bryant and one by
Richard J. and Patricia Daly. The trial court sustained the demurrers without
leave to amend and dismissed the amended complaint. Judgment was entered
accordingly. This appeal followed.

In our review of the judgment entered pursuant to the order sustaining the
general demurrer, we must accept the material facts alleged in the complaint as
true. The following are the material facts set forth in Farmers’ amended
complaint.

Northern California experienced a heavy storm in early January of 1982.

Many homeowners experienced damage to their real and/or personal property
because of subsurface and ground water and earth movement conditions.

Each of the more than 300 named defendants was insured at the time of the
storm by one of six types of Farmers’ homeowners policies. These policies are
“all risk” policies which enumerate various exclusions from coverage,
including “losses caused by, resulting from, contributed to, aggravated by, or
caused indirectly or directly by any earth movement, water damage, or
enforcement of ordinance or law.” Each of the named Insureds has reported
damage to property arising out of conditions created by the January storm, and
has submitted a claim under one of the policies issued by Farmers. Insureds
reside in communities throughout Northern California from Yuba City to Moss
Beach. Farmers denied the claims on the ground that the “efficient proximate
cause” of Insureds’ losses are excluded perils. The Insureds, on the other hand,
contend that included risks were contributing causes of their losses giving rise
to coverage under their policies.

By their amended complaint, Farmers sought the following declaration:

“[That] because of the exclusions and exceptions set forth in the various
property insurance policies issued by plaintiffs to defendants, that said policies
do not provide coverage [681/682]for damage or losses arising out of the January
storm because the efficient proximate cause of the damage or loss claimed was
an excluded cause, notwithstanding that one or more intermediate causes may
have contributed to the loss or damage.”

II

[In part II, the court concludes that the trial court correctly sustained the
demurrer for failure to state a cause of action. After reviewing conflicting case
law, the court held that where a loss is caused concurrently by both an included
and an excluded peril, there may be insurance coverage without establishing that
the included peril was the efficient proximate cause (the cause that sets other
causes in motion).]
 III

The trial court’s second basis for sustaining the demurrer to Farmers’
complaint was misjoinder of the various defendant Insureds, because of the need
to individually analyze the causation question with regard to each insured.
Appellants contend that joinder was appropriate in this case.

Permissive joinder of defendants in a civil action is proper where the

complaint asserts against them any right to relief arising out of the same
transaction, occurrence, or series of transactions or occurrences and if any
question of law or fact common to all defendants will arise in the action. (Code
Civ. Proc., § 379.)

In the instant case, joinder is inappropriate because Farmers’ alleged right to

declaratory relief against the numerous Insureds did not arise out of the same
transaction or occurrence. Although it is true that the January 1982 storm played
a role in the damage to Insureds’ property, it cannot be said that all the claims of
the Insureds arose out of the same transaction or occurrence …. While it may be
possible to join certain of the Insureds upon more specific factual allegations,
we find it improper to label the damage herein to innumerable types of
structures, occurring at widely separated locations within the state, resulting
from a myriad of causes, and under various conditions as the “same transaction
or occurrence” within the meaning of Code of Civil Procedure section 379. The
requirement of same transaction or occurrence has not been met and joinder may
not be had. The trial court properly sustained the demurrer on this ground. (See
Code Civ. Proc., § 430.10, subd. (d).) * * *

The order sustaining the demurrers without leave to amend, the order granting
the motions to dismiss and the judgment are affirmed.

NOTES AND QUESTIONS REGARDING

PERMISSIVE JOINDER

(1) In Garvey v. State Farm Fire and Cas. Co., 48 Cal. 3d 395, 257 Cal.
Rptr. 292, 770 P.2d 704 (1989) , the California Supreme Court held that in first-
party insurance claims, coverage exists only if the covered concurrent cause is
the [682/683]efficient proximate cause, a predominant cause, of the loss. In so
ruling, the Supreme Court specifically disapproved of Farmers Insurance
Exchange v. Adams, reproduced supra, on this substantive first-party property
insurance coverage issue (as opposed to a third-party liability coverage issue).

Assume that the complaint in Farmers Insurance Exchange v. Adams, supra,

had been filed after the Supreme Court’s decision in Garvey. The Court of
Appeal in Farmers would not have affirmed the order sustaining the demurrer
on the substantive “efficient proximate cause” question. Would the court have
also reached a different conclusion on the procedural misjoinder of defendants’
issue? Why?

(2) Contrast the Farmers holding on misjoinder with that in Colusa Air
Pollution Control Dist. v. Superior Court , 226 Cal. App. 3d 880, 277 Cal.
Rptr. 110 (1991). In Colusa, the plaintiffs were several manufacturers, retailers,
and contractors who did business throughout California; and the defendants
were two statewide public agencies and six regional district air pollution
control agencies. The plaintiffs sought to maintain their right to make, sell, and
apply various architectural coatings which would be effectively banned under
recent amendments to defendants’ air pollution regulations.

The district agency defendants asserted that they were improperly joined
under CCP § 379 because they are different entities which enforce regulations
only within their regions, and that they each adopted local regulation
amendments that were in some ways different and imposed different standards
on plaintiffs’ products. Therefore they argued that the adoption of the local
amendments was not the same “transaction or occurrence” within the meaning of
§ 379.

The Court of Appeal held that joinder of the regional defendant agencies was
proper under CCP § 379. The court reasoned that the adoption of local
amendments by each district defendant constituted a series of occurrences, each
of which was substantially the same; and that the plaintiff’s claims arise from
the same series of facts: the initial proposal of amendments to air pollution
standards by the statewide defendants and the adoption of those proposals in
substantially the same form in local amendments by the several district
defendants.

Do you agree with the court’s reasoning and holding in Colusa? Is Colusa
consistent with Farmers?
 (3) There are important advantages to joining all co-defendants in one lawsuit
where each defendant blames another defendant for the plaintiff’s injuries. A
typical example is a tort case where each defendant denies negligence, but
argues that the plaintiff’s injuries were caused by another defendant’s
negligence. If the plaintiff pursues separate actions against each defendant, there
is a risk that the plaintiff will recover nothing even though the jury finds that her
injuries were caused by some defendant’s negligence. How so? What are the
other advantages of joining several co-defendants into one action? What are the
disadvantages?

(4) Misjoinder of parties may be raised by demurrer or by answer. CCP §

430.10(d). Misjoinder is not a jurisdictional defect; so the objection is waived
if not raised. CCP § 430.80. Which party is entitled to raise this objection?

[683/684]

(5) A few special statutes preclude joinder of certain parties even though the
requirements of CCP § 378 or § 379 are satisfied. For example, Insurance Code
§ 11580(b)(2) prohibits joinder of an insurance company in an action against its
insured; and under Corporations Code § 15526, generally a limited partner is
not a proper party to proceedings by or against a partnership. What are the
policy reasons for such limitations on joinder? Other special statutes require
joinder of parties in certain circumstances. E.g., Vehicle Code § 17152 (in
negligence action against owner of vehicle, the driver shall be made a party
defendant); Family Code § &§ 2060-2065 (employee pension benefit plan shall
be joined as party in dissolution of marriage proceeding in which either party
claims an interest); CCP § 762.030(a) (if person required to be named as a
defendant is dead, the plaintiff shall join the personal representative as a
defendant). What are the policy reasons for such compulsory joinder?

(6) The broad permissive joinder test of CCP § 378 and § 379 is essentially
the same as that of Rule 20(a) of the Federal Rules of Civil Procedure. See Cal.
Law Revision Comm’n Comments — 1971 Amendments.

[C] Permissive Joinder of Claims

Code of Civil Procedure § 427.10 provides that a plaintiff who alleges a

cause of action against one or more defendants “may unite with such cause any
other causes which he has … against any such defendants.” This provision
effectively eliminates misjoinder of claims as a defense so long as joinder of
parties is proper, does it not? See Landau v. Salam, 4 Cal. 3d 901, 905, 95 Cal.
Rptr. 46, 484 P.2d 1390 (1971).

§ 10.02 COMPULSORY JOINDER OF PARTIES

SIERRA CLUB, INC. v. CALIFORNIA
COASTAL COMMISSION
COURT OF APPEAL OF CALIFORNIA,
FIRST APPELLATE DISTRICT
95 Cal. App. 3d 495, 157 Cal. Rptr. 190 (1979)

Rouse, Justice.

Plaintiff, Sierra Club, Inc., appeals from an adverse judgment in favor of

William Moores, doing business as Moores Associates (Moores), the
California Coastal Commission (Commission) and the North Coast Regional
Commission (regional commission). The primary issue presented is whether the
developer of a real estate project is an indispensable party to an action brought
by a third party to set aside a permit authorizing the project.

The record reveals that on January 26, 1978, plaintiff, Sierra Club, Inc.,
commenced this action by filing a petition for a writ of mandate against the
regional commission and the commission. The petition alleged that on
November 13, 1977, the regional commission granted to Moores a permit
authorizing a 42-lot subdivision [684/685]and the construction of 16 condominium
units in a scenic area of the coast; that plaintiff had objected to the granting of
the permit and thereafter appealed the regional commission’s decision to the
commission; and that on November 29 or 30, 1977, the commission voted to
decline to hear plaintiff’s appeal on the ground that it raised no substantial
issue. Plaintiff alleged that the regional commission’s finding and declaration
that the proposed development conformed to section 30250 of the Public
Resources Code were unsupported by substantial evidence and contrary to law
and that the commission had abused its discretion in concluding that plaintiff’s
appeal had raised no substantial issue. Plaintiff sought a writ of mandate setting
aside the decisions by both the regional commission and the commission.
 On March 7, 1978, plaintiff filed an amended petition which differed from the
original petition only in that it named Moores, the developer of the project, as
the real party in interest.

On March 20, 1978, Moores moved for judgment on the pleadings and for
dismissal of the action. This motion was based upon the ground that any cause of
action against Moores was barred by section 30801 of the Public Resources
Code, since it had not been commenced within 60 days of the commission’s
decision. It was also alleged that Moores was an indispensable party to the
action and that dismissal should therefore be granted in favor of the regional
commission and the commission as well as Moores.

Following the filing of extensive points and authorities by the parties, the
court granted the motion, rendered judgment on the pleadings in favor of Moores
and granted a dismissal without prejudice in favor of Moores, the regional
commission and the commission. Plaintiff filed a timely notice of appeal from
the judgment.

Section 30801 of the Public Resources Code provides that any aggrieved
person may obtain review of a decision by a regional commission or by the
commission by filing a mandamus action, pursuant to section 1094.5 of the Code
of Civil Procedure, within 60 days after such decision has become final.

In this instance, plaintiff commenced its action against the regional

commission and the commission within the required 60-day period, but failed to
include the developer, Moores, as a party to the action until well after the 60
days had expired. This raises the question whether such omission constituted a
sufficient basis for dismissal of the action.

Plaintiff’s first contention on appeal is that dismissal of the action was

improper because Moores was not an indispensable party; further, that even if
Moores was an indispensable party, the court was in error in determining that
plaintiff’s failure to make Moores a party within the required 60-day period
deprived the court of subject matter jurisdiction.

This latter argument is somewhat misleading, since it presupposes that the

trial court dismissed the action on the basis that plaintiff’s failure to join
Moores in a timely fashion deprived the court of subject matter jurisdiction.
There is nothing in the record to support such assertion. An examination of the
memorandum of points and authorities filed in the trial court demonstrates that
Moores has never claimed a lack of subject matter jurisdiction, but merely
asked that the trial court dismiss the action as an “exercise of discretion.”

[685/686]

Section 389 of the Code of Civil Procedure, which sets forth the rules
governing the compulsory joinder of parties, requires the joinder of “(a) A
person who is subject to service of process and whose joinder will not deprive
the court of jurisdiction over the subject matter of the action … if (1) in his
absence complete relief cannot be accorded among those already parties or (2)
he claims an interest relating to the subject of the action and is so situated that
the disposition of the action in his absence may (i) as a practical matter impair
or impede his ability to protect that interest or (ii) leave any of the persons
already parties subject to a substantial risk of incurring double, multiple, or
otherwise inconsistent obligations by reason of his claimed interest ….”

Subdivision (b) of that statute provides that “If a person as described in

paragraph (1) or (2) of subdivision (a) cannot be made a party, the court shall
determine whether in equity and good conscience the action should proceed
among the parties before it, or should be dismissed without prejudice, the absent
person being thus regarded as indispensable. The factors to be considered by
the court include: (1) to what extent a judgment rendered in the person’s absence
might be prejudicial to him or those already parties; (2) the extent to which, by
protective provisions in the judgment, by the shaping of relief, or other
measures, the prejudice can be lessened or avoided; (3) whether a judgment
rendered in the person’s absence will be adequate; (4) whether the plaintiff or
cross-complainant will have an adequate remedy if the action is dismissed for
nonjoinder.”

Failure to join an “indispensable” party is not “a jurisdictional defect” in the

fundamental sense; even in the absence of an “indispensable” party, the court
still has the power to render a decision as to the parties before it which will
stand. It is for reasons of equity and convenience, and not because it is without
power to proceed, that the court should not proceed with a case where it
determines that an “indispensable” party is absent and cannot be joined. (Kraus
v. Willow Park Public Golf Course (1977) 73 Cal. App. 3d 354, 364 [140 Cal.
Rptr. 744].)
 The Kraus court expressed the view that section 389 of the Code of Civil
Procedure, even before it was amended to its present form in 1971, had never
provided that the absence of an indispensable party deprived a court of subject
matter jurisdiction. The court further observed that any possible doubts on that
subject had been eliminated in 1971 when the statute was amended to conform
t o rule 19, Federal Rules of Civil Procedure. The court noted that the cases
construing the federal rule had consistently held that it was for discretionary and
equitable reasons, and not for any lack of jurisdiction, that the court may decline
to proceed in the absence of an indispensable party.

We concur with the conclusion of the Kraus court that section 389 does not
now provide, and never has provided, that the absence of an indispensable party
deprives a court of subject matter jurisdiction. Rather, the decision whether to
proceed with the action in the absence of a particular party is one within the
court’s discretion, as governed by the various factors enumerated in subdivision
(b) of section 389, Code of Civil Procedure.

Where the plaintiff seeks some type of affirmative relief which, if granted,
would injure or affect the interest of a third person not joined, that third person
is an indispensable party. * * *

[686/687]

Looking to the language of section 389 of the Code of Civil Procedure, we

conclude that Moores fulfilled the requirements of both paragraphs (1) and (2)
of subdivision (a). Moores was a party in whose absence complete relief could
not be accorded to those already parties, within the meaning of paragraph (1),
since Moores would not be bound by any judgment adversely affecting his
permit and would be free to collaterally attack any such judgment. Likewise,
Moores met the requirements of paragraph (2), since he claimed an interest
relating to the subject of the action and was so situated that the disposition of the
action in his absence might impair his ability to protect that interest or leave any
of the persons already parties (the regional commission and the commission)
subject to a substantial risk of incurring inconsistent obligations by reason of
Moores’ claimed interest. The requisite factors enumerated in subdivision (b) of
the statute were also present, since it is evident that a judgment in favor of
plaintiff would be prejudicial to Moores and that such a judgment might well be
inadequate since subject to collateral attack by Moores. Accordingly, we
conclude that the trial court was correct in determining that Moores was an
indispensable party within the meaning of section 389 of the Code of Civil
Procedure, and that dismissal of the action was the appropriate procedure. * * *

Subdivision (b) of section 389, Code of Civil Procedure, authorizes

dismissal of an action where a person determined to be indispensable “cannot
be made a party.” We have already concluded that Moores was properly found
to be an indispensable party. Obviously, Moores could not be made a party to
the action, since the statute of limitations had run and Moores was unwilling to
waive that defense. * * *

We note, also, that plaintiff has not complied with the provisions of
subdivision (c) of section 389, Code of Civil Procedure, which requires that “A
complaint … shall state the names, if known to the pleader, of any persons as
described in paragraph (1) or (2) of subdivision (a) who are not joined, and the
reasons why they are not joined.” (Italics supplied.) Although Moores was
clearly such a party, it appears that no attempt was made to explain plaintiff’s
failure to join him. * * *

The judgment is affirmed.

NOTES AND QUESTIONS REGARDING

COMPULSORY JOINDER

(1) As Sierra Club illustrates, CCP § 389 requires joinder of any person who
is subject to service of process and whose joinder will not deprive the court of
subject matter jurisdiction, and who meets one of the criteria stated in § 389(a).
In such circumstances, the trial court should not dismiss, but should order
joinder of the missing person. See, e.g., Conrad v. Unemployment Ins. Appeals
Bd., 47 Cal. App. 3d 237, 241, 120 Cal. Rptr. 803 (1975) ; Deltakeeper v.
Oakdale Irrigation Dist., 94 Cal. App. 4th 1092, 1100-1105, 115 Cal. Rptr. 2d
244 (2001). If joinder is not possible, then the trial court must consider factors
such as those contained in § 389(b) to determine whether, as an exercise of
equitable discretion, the action should proceed with the existing parties or
should be dismissed. See, e.g., County of Imperial v. Superior Court, 152 Cal.
App. 4th 13, 25-41, 61 Cal. Rptr. 3d 145 (2007); Tracy Press, Inc. v. Superior
Court, 164 Cal. App. 4th 1290, 1297-1302, 80 Cal. Rptr. 3d 464 (2008) .
[687/688]Only if the trial court determines dismissal appropriate is the absent
person regarded as “indispensable.”
 Several recent cases have extensively evaluated the CCP § 389(b) factors in
determining whether to dismiss or proceed in the absence of a person who
should be joined under § 389(a). See, e.g., Deltakeeper, supra, 94 Cal. App.
4th at 1105-1109 (in a writ proceeding challenging an environmental impact
report for a project involving a joint district water purchase agreement, trial
court erred in dismissing the writ petition for failure to join all of the water
purchasers as indispensable parties because the nonjoined parties’ interests
were adequately represented by the existing parties and there was no adequate
remedy if the action is dismissed as the statute of limitations had run for joining
more parties); People ex rel. Lungren v. Community Redevelopment Agency ,
56 Cal. App. 4th 868, 65 Cal. Rptr. 2d 786 (1997) (trial court abused its
discretion in dismissing a complaint filed by the Attorney General against a
city’s community redevelopment agency to set aside a contract between the
agency and an American Indian tribe under which the agency would transfer real
property to the tribe for development of a gaming casino, where the tribe could
not be joined because of its sovereign immunity); Save Our Bay, Inc. v. San
Diego Unified Port Dist., 42 Cal. App. 4th 686, 49 Cal. Rptr. 2d 847 (1996)
(affirming dismissal of a mandate proceeding brought by an environmental
organization challenging the adequacy of an environmental impact report for a
marine project where the landowner, whose land had to be acquired to complete
the project, was an indispensable party who could not be joined because a
statutory 30-day limitation period for joining the landowner had expired).

(2) Do you understand why the term “indispensable party” is conclusory, and
is of little analytical value in applying § 389? See, e.g., Marriage of Mena, 212
Cal. App. 3d 12, 18, n.5, 260 Cal. Rptr. 314 (1989).

(3) Is it accurate for the court in Sierra Club to state that “even in the absence
of an ‘indispensable’ party, the court has the power to render a decision as to
the parties before it?” See also McKeon v. Hastings College, 185 Cal. App. 3d
877, 890, 230 Cal. Rptr. 176 (1986). Or to state that “[w]here the plaintiff seeks
some type of affirmative relief which, if granted, would injure or affect the
interest of a third person not joined, that third person is an indispensable party?”
Or that “[a]n indispensable party is not bound by a judgment in an action in
which he was not joined?” Inland Counties Regl. Center, Inc. v. Office of
Admin. Hearings, 193 Cal. App. 3d 700, 706, 238 Cal. Rptr. 422 (1987) . These
statements would be correct if the phrase “person who should be joined
pursuant to § 389(a)” were substituted for “indispensable party.” Why?

(4) Some special statutes provide for mandatory joinder of certain parties.
E.g., Vehicle Code § 17152 (in negligence action against owner of vehicle, the
driver shall be made a party defendant); Family Code §§ 2060-2065 (employee
pension benefit plan shall be joined as party in dissolution of marriage
proceeding in which either party claims an interest); CCP § 762.030(a) (if
person required to be named as a defendant is dead, the plaintiff shall join the
personal representative as a defendant). Several others explicitly provide that
particular persons need not be joined. E.g., CCP § 369 (executor, administrator,
or trustee may sue without joining [688/689]persons for whose benefit the action is
prosecuted); CCP § 370 (married person may sue or be sued without joining
spouse).

(5) A number of prior court decisions provide useful precedents as to

whether certain categories of persons must be joined under § 389. For example,
all persons with an interest in real property at the time suit is brought to enforce
a mechanic’s lien on that property must be made parties. Monterey S.P.
Partnership v. W.L. Bangham, Inc ., 49 Cal. 3d 454, 459, 261 Cal. Rptr. 587,
777 P.2d 623 (1989) (if not made parties, they are in no way bound by the
proceedings). All beneficiaries of a trust must be joined where their relative
interests are contested, but are not indispensable parties to an action against
trustees for an accounting or for breach of fiduciary duty. See Copley v. Copley,
126 Cal. App. 3d 248, 297-98, 178 Cal. Rptr. 842 (1981) . Normally, all
partners are regarded as indispensable parties in an action for dissolution of a
partnership; see Kraus v. Willow Park Public Golf Course , 73 Cal. App. 3d
354, 369, 140 Cal. Rptr. 744 (1977); and a corporation is an indispensable
party in a stockholder derivative action. Stockton v. Ortiz, 47 Cal. App. 3d 183,
191-92, 120 Cal. Rptr. 456 (1975).

A s Sierra Club illustrates, where litigation challenges the propriety of

government action which confers a benefit on a third person, that person has
been considered an indispensable party. Beresford Neighborhood Assn. v. City
of San Mateo, 207 Cal. App. 3d 1180, 1189, 255 Cal. Rptr. 434 (1989)
(following Sierra Club’s reasoning, but noting that joinder not necessary when
challenge is to a general plan which applies equally to all developments in the
area); see also Marriage of Mena, 212 Cal. App. 3d 12, 260 Cal. Rptr. 314
(1989) (county may be indispensable party in family law action determining
child support payments where children receiving welfare assistance).

(6) In an action seeking either to enforce or set aside a contract, all

contracting parties generally must be joined. See, e.g. , Vanoni v. County of
Sonoma, 40 Cal. App. 3d 743, 746-47, 115 Cal. Rptr. 485 (1974) ; Northrop
Corp. v. McDonnell Douglas Corp., 705 F.2d 1030, 1042-46 (9th Cir. 1983) ,
cert. denied, 464 U.S. 849 (1983). If all such contracting parties cannot be
joined, must the court regard them as indispensable parties and dismiss? See,
e.g., CCP § 410.70.

(7) May a plaintiff proceed against only one tortfeasor, or does § 389(a)
require joinder of all tortfeasors in one action? See, e.g., Country Wide Home
Loans v. Superior Court, 69 Cal. App. 4th 785, 82 Cal. Rptr. 2d 63 (1999) ;
Stambaugh v. Superior Court, 62 Cal. App. 3d 231, 132 Cal. Rptr. 843 (1976) ;
Temple v. Synthes Corp. , 498 U.S. 5, 7, 111. S. Ct. 315, 316, 112 L. Ed 2d 263
(1990) (under federal Rule 19(a), not necessary to join all joint tortfeasors as
defendants in a single lawsuit). Why would a plaintiff not want to join all
tortfeasors as defendants? Why would a defendant want to force joinder of other
tortfeasors?

(8) Federal Rule 19. Code of Civil Procedure § 389 conforms substantially
t o Rule 19 of the Federal Rules of Civil Procedure; and federal cases
interpreting the federal rule may be relevant. See, e.g., Copley v. Copley, 126
Cal. App. 3d 248, 296, 178 Cal. Rptr. 842 (1981) ; Kraus v. Willow Park
Public Golf Course, 73 Cal. App. 3d 354, 368, n.9, 140 Cal. Rptr. 744 (1977) .
For example, in Union Carbide Corp. v. Superior Court, 36 Cal. 3d 15, 201
Cal. Rptr. 580, 679 P.2d 14 (1984) , an anti-trust defendant argued that unless
other potential claimants were joined defendant [689/690]would be subject to a
“substantial risk” of multiple liability within the meaning of § 389(a). The
California Supreme Court, by reference to federal cases applying Rule 19(a)(1)
(B)(ii), construed “substantial risk” to mean more than a theoretical possibility
that an absent party might assert or claim for the same loss. “The risk must be
substantial as a practical matter.” Id. at 21.

(9) Which of the factors identified in subdivision (b) of § 389 is the most
important in influencing a trial court to proceed with only the parties already
before it as opposed to dismissal of the action? Why? What principles underlie
the rules requiring joinder of indispensable parties? Are they related to those
which underlie the doctrine of standing? See County of Alameda v. State Bd. of
Control, 14 Cal. App. 4th 1096, 1105, 18 Cal. Rptr. 2d 487 (1993).

(10) The defense of nonjoinder of parties is usually raised by demurrer or by

answer. CCP § 430.10(d). The trial court may raise failure to join on its own
motion in certain circumstances, see Howard v. Data Storage Assoc., Inc ., 125
Cal. App. 3d 689, 697, 178 Cal. Rptr. 269 (1981) ; and the absent person may
even apply to be made a party in actions involving real or personal property,
CCP § 389.5. The issue of nonjoinder may be raised for the first time on appeal,
but is properly limited to the argument that the absence of a party precluded the
trial court from rendering any effective judgment between the parties before it.
See, e.g., County of Alameda, supra, 14 Cal. App. 4th at 1105, n.5 (failure to
join indispensable party may be raised for first time on appeal only where the
trial court was unable to render effective judgment between the parties before
it); Jermstad v. McNelis, 210 Cal. App. 3d 528, 538, 258 Cal. Rptr. 519 (1989)
(claim of error in failing to join absent party is not recognizable on appeal
unless appropriately raised in the trial court or there is some compelling reason
of equity or policy which warrants belated consideration).

(11) Pursuant to the authority of Family Code §§ 211, 2021 & 2060-2074, the
Judicial Council has promulgated special rules governing the joinder of parties
in proceedings under the Family Law Act. Rules 5.150-5.162, Cal. Rules of Ct.

§ 10.03 INTERPLEADER
[A] California Interpleader Requirements and Procedures

Interpleader is a device which permits the stakeholder, who may be liable to

several claimants but does not know which ones, to join all claimants in a single
action and require them to litigate their respective claims to property or funds
held by the stakeholder. See CCP § 386(b). Classic interpleader occurs where
the stakeholder has no interest in the property or fund sought to be interpleaded,
and seeks joinder of all adverse claimants to force them to litigate their claims
among themselves. See, e.g., Pacific Loan Mgmt. Corp. v. Superior Court, 196
Cal. App. 3d 1485, 242 Cal. Rptr. 547 (1987) (“The true test of suitability for
interpleader is the stakeholder’s disavowal of interest in the property sought to
be interpleaded, coupled with the perceived ability of the court to resolve the
entire controversy as to entitlement to that property without need for the
stakeholder to be a party to the suit”); Dial 800 v. Fesbinder, 118 Cal. App. 4th
32, 12 Cal. Rptr. 3d 711 (2004) (interpleader action by companies against
individuals claiming ownership interest [690/691]in companies’ shares was
proper where companies were disinterested stakeholders). Once the court
determines that interpleader is proper and the stakeholder deposits the property
or funds with the clerk, the court may discharge the disinterested stakeholder
from liability to any of the claimants. CCP § 386(a) & (b).

Is interpleader unavailable in California where the stakeholder claims an

interest in all or a portion of the deposited property? Does CCP § 386(a) & (b)
appear to authorize interpleader in such circumstances? See Note, Civil
Procedure: Interpleader, 7 Pac. L.J. 316 (1976).

What is the purpose of joinder by interpleader? See City of Morgan Hill v.

Brown, 71 Cal. App. 4th 1114, 1122-1126, 84 Cal. Rptr. 2d 361 (1999)
(discussing the purposes of interpleader and the requirement that each of the
defendants assert claims to the same thing, debt, or duty). Who is interpleader
designed to protect? Why? In what typical factual situations is interpleader
appropriate? Is interpleader available only to a plaintiff who files a separate
interpleader action or may a defendant utilize interpleader in certain
circumstances? See, e.g. , Surety Co. of the Pac. v. Piver , 149 Cal. App. 3d
Supp. 29, 197 Cal. Rptr. 531 (1983). What options does a defendant have with
respect to utilization of interpleader? See CCP §§ 386(a) & (b); 386.6.

Does the stakeholder have an obligation to monitor the action and dismiss
parties who assert no claim to the stake? What obligation does an interpleader
action impose on the claimants? As between the plaintiff-stakeholder and the
defendants-claimants, is a classic interpleader action adversarial? See Cantu v.
Resolution Trust Corp., 4 Cal. App. 4th 857, 6 Cal. Rptr. 2d 151 (1992) . When
the stakeholder deposits funds with the clerk in an interpleader action, any
obligation for interest on the part of the stakeholder ceases to accrue. CCP §
386(c). Upon application, the court must order such deposit invested in an
interest-bearing account. CCP § 386.1. The court may also award the
stakeholder costs and attorney fees. CCP § 386.6.

The trial court may restrain all parties to an interpleader action from
instituting or further prosecuting any other proceedings in any California court
which may affect the rights or obligations of parties to the interpleader. CCP §
386(f). Does this mean that a court exercising interpleader jurisdiction may
enjoin the enforcement of a prior judgment which may affect interpleaded
property or funds? See, e.g., Surety Co. of the Pac. v. Piver, supra , 149 Cal.
App. 3d at Supp. 31 (various claimants to a particular fund or property should
be permitted to proceed to judgments in a proper forum of their choice, but may
be restrained in the interpleader action as to enforcement of those judgments).

[B] Federal Interpleader

Interpleader is available in federal court, either by federal statute or by

federal rule, in situations nearly identical to those contained in CCP. § 386, with
even clearer indication that a stakeholder need not be disinterested. 28 U.S.C. §
1335; Rule 22, F.R.C.P. Federal statutory interpleader pursuant to 28 U.S.C. §
1335 provides federal court jurisdiction over interpleader actions involving
$500 or more [691/692]in controversy based on “minimal diversity” between
claimants (i.e., only one claimant must be a citizen of a state different from that
of the other claimants). State Farm Fire & Cas. Co. v. Tashire , 386 U.S. 523,
87 S. Ct. 1199, 18 L. Ed. 2d 270 (1967). To facilitate use of federal statutory
interpleader, 28 U.S.C. § 2361 authorizes nationwide service of process on all
claimants, and 28 U.S.C. § 1397 allows venue in a judicial district where any
claimant resides. And, arguably, the requirements for personal jurisdiction are
much relaxed. See Wright, Miller & Kane, Federal Practice and Procedure:
Civil 3d § 1711 (West 2001); see also Herbert Hovenkamp, Personal
Jurisdiction and Venue in the Federal Courts: A Policy Analysis , 67 Iowa L.
Rev. 485 (1982).

There are many advantages to proceeding under the liberal federal

interpleader statutes in federal court as opposed to proceeding under CCP § 386
in California state court, are there not? What are they? Under what
circumstances would you advise a stakeholder to utilize § 386 in state court?
Under what circumstances must a stakeholder proceed with interpleader in state
court?

§ 10.04 NEW PARTY CROSS-COMPLAINTS AND

EQUITABLE INDEMNITY
[A] Cross-Complaints Adding New Parties

AMERICAN MOTORCYCLE ASSN. v. SUPERIOR COURT

SUPREME COURT OF CALIFORNIA
20 Cal. 3d 578, 146 Cal. Rptr. 182, 578 P.2d 899 (1978)

Tobriner, Justice.

Three years ago, in Li v. Yellow Cab Co. (1975) 13 Cal. 3d 804 [119 Cal.
Rptr. 858, 532 P.2d 1226] , we concluded that the harsh and much criticized
contributory negligence doctrine, which totally barred an injured person from
recovering damages whenever his own negligence had contributed in any degree
to the injury, should be replaced in this state by a rule of comparative
negligence, under which an injured individual’s recovery is simply
proportionately diminished, rather than completely eliminated, when he is
partially responsible for the injury. In reaching the conclusion to adopt
comparative negligence in Li, we explicitly recognized that our innovation
inevitably raised numerous collateral issues, “[the] most serious [of which] are
those attendant upon the administration of a rule of comparative negligence in
cases involving multiple parties.” (13 Cal. 3d at p. 823.) * * *

For the reasons explained below, we have reached the following conclusions
with respect to the multiple party issues presented by this case. First, we
conclude that our adoption of comparative negligence to ameliorate the
inequitable consequences of the contributory negligence rule does not warrant
the abolition or contraction of the established “joint and several liability”
doctrine; each tortfeasor whose negligence is a proximate cause of an
indivisible injury remains individually liable for all compensable damages
attributable to that injury. * * *

[692/693]

Second, although we have determined that Li does not mandate a diminution

of the rights of injured persons through the elimination of the joint and several
liability rule, we conclude that the general principles embodied in Li do warrant
a reevaluation of the common law equitable indemnity doctrine, which relates to
the allocation of loss among multiple tortfeasors. As we explain, California
decisions have long invoked the equitable indemnity doctrine in numerous
situations to permit a “passively” or “secondarily” negligent tortfeasor to shift
his liability completely to a more directly culpable party. While the doctrine has
frequently prevented a more culpable tortfeasor from completely escaping
liability, the rule has fallen short of its equitable heritage because, like the
discarded contributory negligence doctrine, it has worked in an “all-or-nothing”
fashion, imposing liability on the more culpable tortfeasor only at the price of
removing liability altogether from another responsible, albeit less culpable,
party.

Prior to Li, of course, the notion of apportioning liability on the basis of

comparative fault was completely alien to California common law. In light of
Li, however, we think that the long-recognized common law equitable indemnity
doctrine should be modified to permit, in appropriate cases, a right of partial
indemnity, under which liability among multiple tortfeasors may be apportioned
on a comparative negligence basis. * * *
 Third, we conclude that California’s current contribution statutes do not
preclude our court from evolving this common law right of comparative
indemnity. * * *

Fourth, and finally, we explain that under the governing provisions of the
Code of Civil Procedure, a named defendant is authorized to file a cross-
complaint against any person, whether already a party to the action or not, from
whom the named defendant seeks to obtain total or partial indemnity. Although
the trial court retains the authority to postpone the trial of the indemnity question
if it believes such action is appropriate to avoid unduly complicating the
plaintiff’s suit, the court may not preclude the filing of such a cross-complaint
altogether.

In light of these determinations, we conclude that a writ of mandate should

issue, directing the trial court to permit petitioner-defendant to file a cross-
complaint for partial indemnity against previously unjoined alleged concurrent
tortfeasors.

1. The facts

In the underlying action in this case, plaintiff Glen Gregos, a teenage boy,
seeks to recover damages for serious injuries which he incurred while
participating in a cross-country motorcycle race for novices. Glen’s second
amended complaint alleges, in relevant part, that defendants American
Motorcycle Association (AMA) and the Viking Motorcycle Club (Viking) —
the organizations that sponsored and collected the entry fee for the race —
negligently designed, managed, supervised and administered the race, and
negligently solicited the entrants for the race. The second amended complaint
further alleges that as a direct and proximate cause of such negligence, Glen
suffered a crushing of his spine, resulting in the permanent loss of the use of his
legs and his permanent inability to perform sexual functions. Although the
negligence count of the complaint does not identify the specific acts or
omissions of which plaintiff complains, additional allegations in the complaint
assert, [693/694]inter alia, that defendants failed to give the novice participants
reasonable instructions that were necessary for their safety, failed to segregate
the entrants into reasonable classes of equivalently skilled participants, and
failed to limit the entry of participants to prevent the racecourse from becoming
overcrowded and hazardous.
 AMA filed an answer to the complaint, denying the charging allegations and
asserting a number of affirmative defenses, including a claim that Glen’s own
negligence was a proximate cause of his injuries. Thereafter, AMA sought leave
of court to file a cross-complaint, which purported to state two causes of action
against Glen’s parents. The first cause of action alleges that at all relevant times
Glen’s parents (1) knew that motorcycle racing is a dangerous sport, (2) were
“knowledgeable and fully cognizant” of the training and instruction which Glen
had received on the handling and operation of his motorcycle, and (3) directly
participated in Glen’s decision to enter the race by signing a parental consent
form. This initial cause of action asserts that in permitting Glen’s entry into the
race, his parents negligently failed to exercise their power of supervision over
their minor child; moreover, the cross-complaint asserts that while AMA’s
negligence, if any, was “passive,” that of Glen’s parents was “active.” On the
basis of these allegations, the first cause of action seeks indemnity from Glen’s
parents if AMA is found liable to Glen.

In the second cause of action of its proposed cross-complaint, AMA seeks

declaratory relief. It reasserts Glen’s parents’ negligence, declares that Glen has
failed to join his parents in the action, and asks for a declaration of the
“allocable negligence” of Glen’s parents so that “the damages awarded [against
AMA], if any, [may] be reduced by the percentage of damages allocable to
cross-defendants’ negligence.” [T]his second cause of action is based on an
implicit assumption that the Li decision abrogates the rule of joint and several
liability of concurrent tortfeasors and establishes in its stead a new rule of
“proportionate liability,” under which each concurrent tortfeasor who has
proximately caused an indivisible harm may be held liable only for a portion of
plaintiff’s recovery, determined on a comparative fault basis.

The trial court, though candidly critical of the current state of the law,
concluded that existing legal doctrines did not support AMA’s proposed cross-
complaint, and accordingly denied AMA’s motion for leave to file the cross-
complaint. AMA petitioned the Court of Appeal for a writ of mandate to compel
the trial court to grant its motion, and the Court of Appeal, recognizing the
recurrent nature of the issues presented and the need for a speedy resolution of
these multiple party questions, issued an alternative writ; ultimately, the court
granted a peremptory writ of mandate. In view of the obvious statewide
importance of the questions at issue, we ordered a hearing in this case on our
own motion. All parties concede that the case is properly before us.
 [694/695]

2 . The adoption of comparative negligence in Li does not warrant the

abolition of joint and several liability of concurrent tortfeasors.

***

In cases involving multiple tortfeasors, the principle that each tortfeasor is

personally liable for any indivisible injury of which his negligence is a
proximate cause has commonly been expressed in terms of “joint and several
liability.” * * *

In the concurrent tortfeasor context, however, the “joint and several liability”
label does not express the imposition of any form of vicarious liability, but
instead simply embodies the general common law principle, noted above, that a
tortfeasor is liable for any injury of which his negligence is a proximate cause.
Liability attaches to a concurrent tortfeasor in this situation not because he is
responsible for the acts of other independent tortfeasors who may also have
caused the injury, but because he is responsible for all damage of which his own
negligence was a proximate cause. When independent negligent actions of a
number of tortfeasors are each a proximate cause of a single injury, each
tortfeasor is thus personally liable for the damage sustained, and the injured
person may sue one or all of the tortfeasors to obtain a recovery for his injuries;
the fact that one of the tortfeasors is impecunious or otherwise immune from suit
does not relieve another tortfeasor of his liability for damage which he himself
has proximately caused. * * *

In the instant case AMA argues that the Li decision, by repudiating the all-or-
nothing contributory negligence rule and replacing it by a rule which simply
diminishes an injured party’s recovery on the basis of his comparative fault, in
effect undermined the fundamental rationale of the entire joint and several
liability doctrine as applied to concurrent tortfeasors. * * * As we explain, for a
number of reasons we cannot accept AMA’s argument.

First, the simple feasibility of apportioning fault on a comparative negligence

basis does not render an indivisible injury “divisible” for purposes of the joint
and several liability rule. As we have already explained, a concurrent tortfeasor
is liable for the whole of an indivisible injury whenever his negligence is a
proximate cause of that injury. * * * [T]he mere fact that it may be possible to
assign some percentage figure to the relative culpability of one negligent
defendant as compared to another does not in any way suggest that each
defendant’s negligence is not a proximate cause of the entire indivisible injury.

Second, abandonment of the joint and several liability rule is not warranted
by AMA’s claim that, after Li, a plaintiff is no longer “innocent.” Initially, of
course, it is by no means invariably true that after Li injured plaintiffs will be
guilty of negligence. * * * Although we recognized in Li that a plaintiff’s self-
directed negligence would justify reducing his recovery in proportion to his
degree of fault for the accident,2 the fact remains that insofar as the plaintiff’s
conduct creates only [695/696]a risk of self-injury, such conduct, unlike that of a
negligent defendant, is not tortious.

Finally, from a realistic standpoint, we think that AMA’s suggested

abandonment of the joint and several liability rule would work a serious and
unwarranted deleterious effect on the practical ability of negligently injured
persons to receive adequate compensation for their injuries. One of the
principal by-products of the joint and several liability rule is that it frequently
permits an injured person to obtain full recovery for his injuries even when one
or more of the responsible parties do not have the financial resources to cover
their liability. In such a case the rule recognizes that fairness dictates that the
“wronged party should not be deprived of his right to redress,” but that “[the]
wrongdoers should be left to work out between themselves any apportionment.”
(Summers v. Tice (1948) 33 Cal. 2d 80, 88 [199 P.2d 1, 5 A.L.R.2d 91] .) The
Li decision does not detract in the slightest from this pragmatic policy
determination.

For all of the foregoing reasons, we reject AMA’s suggestion that our
adoption of comparative negligence logically compels the abolition of joint and
several liability of concurrent tortfeasors. * * * [W]e hold that after Li, a
concurrent tortfeasor whose negligence is a proximate cause of an indivisible
injury remains liable for the total amount of damages, diminished only “in
proportion to the amount of negligence attributable to the person recovering.”
(13 Cal. 3d at p. 829.)

3. Upon reexamination of the common law equitable indemnity doctrine in

light of the principles underlying Li, we conclude that the doctrine should be
modified to permit partial indemnity among concurrent tortfeasors on a
comparative fault basis.
 Although, as discussed above, we are not persuaded that our decision in Li
calls for a fundamental alteration of the rights of injured plaintiffs vis-a-vis
concurrent tortfeasors through the abolition of joint and several liability, the
question remains whether the broad principles underlying Li warrant any
modification of this state’s common law rules governing the allocation of loss
among multiple tortfeasors. * * * Taking our cue from a recent decision of the
highest court of one of our sister states, we conclude — in line with Li’s
objectives — that the California common law equitable indemnity doctrine
should be modified to permit a concurrent tortfeasor to obtain partial indemnity
from other concurrent tortfeasors on a comparative fault basis.

[696/697]

***

I n Li, after concluding “that logic, practical experience, and fundamental

justice counsel against the retention of the doctrine rendering contributory
negligence a complete bar to recovery” (13 Cal. 3d at pp. 812-813), we made
clear our conviction that the discarded doctrine “should be replaced in this state
by a system under which liability for damage will be borne by those whose
negligence caused it in direct proportion to their respective fault. ” (Italics
added.) (Id., at p. 813.)

In order to attain such a system, in which liability for an indivisible injury

caused by concurrent tortfeasors will be borne by each individual tortfeasor “in
direct proportion to [his] respective fault,” we conclude that the current
equitable indemnity rule should be modified to permit a concurrent tortfeasor to
obtain partial indemnity from other concurrent tortfeasors on a comparative fault
basis. * * *

4 . California’s contribution statutes do not preclude this court from

adopting comparative partial indemnity as a modification of the common law
equitable indemnity doctrine.

None of the parties to the instant proceeding, and none of the numerous amici
who have filed briefs, seriously takes issue with our conclusion that a rule of
comparative partial indemnity is more consistent with the principles underlying
Li than the prior “all-or-nothing” indemnity doctrine. The principal argument
raised in opposition to the recognition of a common law comparative indemnity
rule is the claim that California’s existing contribution statutes, section 875 et
seq. of the Code of Civil Procedure,3 preclude such a judicial development ….
[W]e reject th[is] [697/698]contention ….

[I]n enacting the 1957 contribution legislation the Legislature did not intend to
prevent the judiciary from expanding the common law equitable indemnity
doctrine in the manner described above …. [S]ince 1957 the equitable
indemnity doctrine has undergone considerable judicial development in this
state, and yet it has never been thought that such growth in the common law was
barred by the contribution statute.

Several amici argue alternatively that even if the contribution statute was not
intended to preclude the development of a common law comparative indemnity
doctrine, our court should decline to adopt such a doctrine because it would
assertedly undermine the strong public policy in favor of encouraging settlement
of litigation embodied in section 877 of the Code of Civil Procedure, one of the
provisions of the current statutory contribution scheme. As amici point out,
section 877 creates significant incentives for both tortfeasors and injured
plaintiffs to settle lawsuits: the tortfeasor who enters into a good faith settlement
is discharged from any liability for contribution to any other tortfeasor, and the
plaintiff’s ultimate award against any other tortfeasor is diminished only by the
actual amount of the settlement rather than by the settling tortfeasor’s pro rata
share of the judgment. Amici suggest that these incentives will be lost by the
recognition of a partial indemnity doctrine.

Although section 877 reflects a strong public policy in favor of settlement,

this statutory policy does not in any way conflict with the recognition of a
common law partial indemnity doctrine but rather can, and should, be preserved
as an integral part of the partial indemnity doctrine that we adopt today. Thus,
while we recognize that section 877, by its terms, releases a settling tortfeasor
only from liability for contribution and not partial indemnity, we conclude that
from a realistic perspective the legislative policy underlying the provision
dictates that a tortfeasor who has entered into a “good faith” settlement with the
plaintiff must also be discharged from any claim for partial or comparative
indemnity that may be pressed by a concurrent tortfeasor. * * * Moreover, to
preserve the incentive to settle which section 877 provides to injured plaintiffs,
we conclude that a plaintiff’s recovery from nonsettling tortfeasors should be
diminished only by the amount that the plaintiff has actually recovered in a good
faith settlement, rather than by an amount measured by the settling tortfeasor’s
proportionate responsibility for the injury.

[698/699]

Accordingly, we conclude that Code of Civil Procedure section 875 et seq.

do not preclude the development of new common law principles in this area,
and we hold that under the common law of this state a concurrent tortfeasor may
seek partial indemnity from another concurrent tortfeasor on a comparative fault
basis.

5. Under the allegations of the cross-complaint, AMA may be entitled to

obtain partial indemnification from Glen’s parents, and thus the trial court,
pursuant to Code of Civil Procedure section 428.10 et seq., should have
granted AMA leave to file the cross-complaint.

Having concluded that a concurrent tortfeasor enjoys a common law right to

obtain partial indemnification from other concurrent tortfeasors on a
comparative fault basis, we must finally determine whether, in the instant case,
AMA may properly assert that right by cross-complaint against Glen’s parents,
who were not named as codefendants in Glen’s amended complaint. As we
explain, the governing provisions of the Code of Civil Procedure clearly
authorize AMA to seek indemnification from a previously unnamed party
through such a cross-complaint. Accordingly, we conclude that the trial court
erred in denying AMA leave to file its pleading. * * *

Section 428.10 provides in relevant part: “A party against whom a cause of

action has been asserted … may file a cross-complaint setting forth … (b) Any
cause of action he has against a person alleged to be liable thereon, whether or
not such person is already a party to the action, if the cause of action asserted
in his cross-complaint (1) arises out of the same transaction [or] occurrence …
as the cause brought against him or (2) asserts a claim, right or interest in the …
controversy which is the subject of the cause brought against him.” (Italics
added.)

Section 428.20 reiterates the propriety of filing such a cross-complaint

against a previously unnamed party, and section 428.70 explicitly confirms the
fact that a cross-complaint may be founded on a claim of total or partial
indemnity by defining a “third-party plaintiff” as one who files a cross-
complaint claiming “the right to recover all or part of any amount for which he
may be held liable” on the original complaint. The history of the legislation
leaves no doubt but that these provisions authorize a defendant to file a cross-
complaint against a person, not named in the original complaint, from whom he
claims he is entitled to indemnity. (See Recommendation and Study Relating to
Counterclaims and Cross Complaints, Joinder of Causes of Action and Related
Provisions (1970) 10 Cal. Law Revision Com. Rep. pp. 551-555.)

Although real parties in interest claim that the effect of permitting a defendant
to bring in parties whom the plaintiff has declined to join will have the
undesirable effect of greatly complicating personal injury litigation and will
deprive the plaintiff of the asserted “right” to control the size and scope of the
proceeding, as our court observed in Roylance [v. Doelger (1962)] (57 Cal. 2d
at pp. 261-262, [19 Cal. Rptr. 7, 368 P.2d 535] ) to the extent that such claims
are legitimate the problem may be partially obviated by the trial court’s
judicious use of the authority afforded by Code of Civil Procedure section 1048.
Section 1048, subdivision (b) currently provides: “The court, in furtherance of
convenience or to avoid prejudice, or when separate trials will be conducive to
expedition and economy, may order a separate trial of any [699/700]cause of
action, including a cause of action asserted in a cross-complaint, or of any
separate issue or any number of causes of action or issues, preserving the right
of trial by jury required by the Constitution or a statute of this state or of the
United States.”

In this context, of course, a trial court, in determining whether to sever a

comparative indemnity claim, will have to take into consideration the fact that
when the plaintiff is alleged to have been partially at fault for the injury, each of
the third party defendants will have the right to litigate the question of the
plaintiff’s proportionate fault for the accident; as a consequence, we recognize
that in this context severance may at times not be an attractive alternative.
Nonetheless, having already noted that under the comparative negligence
doctrine a plaintiff’s recovery should be diminished only by that proportion
which the plaintiff’s negligence bears to that of all tortfeasors (see fn. 2, ante),
we think it only fair that a defendant who may be jointly and severally liable for
all of the plaintiff’s damages be permitted to bring other concurrent tortfeasors
into the suit. Thus, we conclude that the interaction of the partial indemnity
doctrine with California’s existing cross-complaint procedures works no undue
prejudice to the rights of plaintiffs.
 Accordingly, we conclude that under the governing statutory provisions a
defendant is generally authorized to file a cross-complaint against a concurrent
tortfeasor for partial indemnity on a comparative fault basis, even when such
concurrent tortfeasor has not been named a defendant in the original complaint.
In the instant case, the allegations of AMA’s cross-complaint are sufficient to
suggest that Glen’s parents’ negligence may possibly have been a concurrent
cause of Glen’s injuries. While we, of course, intimate absolutely no opinion as
to the merits of the claim, if it is established that the parents were indeed
negligent in supervising their son and that such negligence was a proximate
cause of injury, under the governing California common law rule Glen’s parents
could be held liable for the resulting damages. Thus, we believe that AMA’s
cross-complaint states a cause of action for comparative indemnity and that the
trial court should have permitted its filing.

***

NOTES AND QUESTIONS REGARDING

NEW PARTY CROSS-COMPLAINTS

(1) New Party Cross-Complaints, Generally. CCP § 428.10 and § 428.20

authorize cross-complaints which add new parties, so long as they satisfy the
“same transaction or occurrence” test of § 428.10(b). The cross-complainant
may join any person as cross-complainant or cross-defendant, subject only to
the liberal permissive party joinder standards of CCP § 378 and § 379.
Moreover, the cross-complainant may join any other cause of action he has
against any cross-defendants, except in an eminent domain proceeding. CCP §
428.30.

(2) New Party Cross-Complaints for Indemnity. CCP § 428.70 specifically

applies to those new party cross-complaints which include claims for indemnity
or contribution, such as those in American Motorcycle. The person asserting
such claims by cross-complaint is defined as the “third-party plaintiff”; the
person [700/701]alleged in the cross-complaint to be liable to the third-party
plaintiff is defined as the “third-party defendant.”

Section 428.70(b) then authorizes the third-party defendant to file as a

separate document a “special answer alleging against the person who asserted
the cause of action against the third-party plaintiff any defenses which a third-
party plaintiff has to such cause of action.” What problem is the “special
answer” designed to avoid? See 10 Cal. Law Division Comm’n Report (1971),
p. 555. Consider the following scenario: Plaintiff P sues defendant D for breach
of contract. Defendant answers, but fails to raise the defense that P’s action is
barred by the applicable statute of limitation. Defendant D also files a cross-
complaint against new party NP, alleging that NP had agreed to indemnify D for
any judgment in favor of P entered against D. Third-party defendant NP answers
D’s cross-complaint, and also files a “special answer” alleging that plaintiff P’s
complaint against D is barred by the applicable statute of limitation. P moves to
strike NP’s special answer, arguing that this defense was waived by defendant
D and therefore is not available to NP. Should the court grant this motion? Why?
See Administrative Mgmt. Services, Inc. v. Fidelity & Deposit Co., 129 Cal.
App. 3d 484, 181 Cal. Rptr. 141 (1982).

(3) Federal Third-Party Practice. Rule 14(a), F.R.C.P. , authorizes a third-

party impleader practice virtually identical to the new party cross-complaint
practice set forth in CCP §§ 428.10, .20 & .70, although Federal Rule 14(a) is
limited to assertion of third-party claims where liability is in some way
dependent on the outcome of the main claim and is secondary or derivative
thereto, e.g., Stewart v. American Intl. Oil & Gas Co., 845 F.2d 196, 199-200
(9th Cir. 1988); and Rule 13(h) authorizes joinder of new parties in
circumstances analogous to that of CCP § 428.30. A federal court must, of
course, have original or supplemental subject matter jurisdiction over such
third-party claims in order to consider them. See, e.g., 28 U.S.C. § 1332 and §
1367(b).

Footnotes:

2 A question has arisen as to whether our Li opinion, in mandating that a plaintiff’s recovery be
diminished in proportion to the plaintiff’s negligence, intended that the plaintiff’s conduct be compared with
each individual tortfeasor’s negligence, with the cumulative negligence of all named defendants or with all
other negligent conduct that contributed to the injury. The California BAJI Committee, which specifically
addressed this issue after Li, concluded that “the contributory negligence of the plaintiff must be
proportioned to the combined negligence of plaintiff and of all the tort-feasors, whether or not joined as
parties … whose negligence proximately caused or contributed to plaintiff’s injury.” (Use note, BAJI No.
14.90 (5th ed. 1975 pocket pt.) p. 152.)

We agree with this conclusion, … In determining to what degree the injury was due to the fault of the
plaintiff, it is logically essential that the plaintiff’s negligence be weighed against the combined total of all
other causative negligence; moreover, inasmuch as a plaintiff’s actual damages do not vary by virtue of the
particular defendants who happen to be before the court, we do not think that the damages which a plaintiff
may recover against defendants who are joint and severally liable should fluctuate in such a manner.
 3 Sections 875 to 879 provide in full:

Section 875:

“(a) Where a money judgment has been rendered jointly against two or more defendants in a
tort action there shall be a right of contribution among them as hereinafter provided.

“(b) Such right of contribution shall be administered in accordance with the principles of
equity.

“(c) Such right of contribution may be enforced only after one tortfeasor has, by payment,
discharged the joint judgment or has paid more than his pro rata share thereof. It shall be limited to
the excess so paid over the pro rata share of the person so paying and in no event shall any tortfeasor
be compelled to make contribution beyond his own pro rata share of the entire judgment.

“(d) There shall be no right of contribution in favor of any tortfeasor who has intentionally
injured the injured person.

“(e) A liability insurer who by payment has discharged the liability of a tortfeasor judgment
debtor shall be subrogated to his right of contribution.

“(f) This title shall not impair any right of indemnity under existing law, and where one
tortfeasor judgment debtor is entitled to indemnity from another there shall be no right of contribution
between them.

“(g) This title shall not impair the right of a plaintiff to satisfy a judgment in full as against any
tortfeasor judgment debtor.”

Section 876:

“(a) The pro rata share of each tortfeasor judgment debtor shall be determined by dividing the
entire judgment equally among all of them.

“(b) Where one or more persons are held liable solely for the tort of one of them or of another,
as in the case of the liability of a master for the tort of his servant, they shall contribute a single pro
rata share, as to which there may be indemnity between them.”

Section 877:
 “Where a release, dismissal with or without prejudice, or a covenant not to sue or not to
enforce judgment is given in good faith before verdict or judgment to one or more of a number of
tortfeasors claimed to be liable for the same tort —

“(a) It shall not discharge any other such tortfeasor from liability unless its terms so provide,
but it shall reduce the claims against the others in the amount stipulated by the release, the dismissal
or the covenant, or in the amount of the consideration paid for it whichever is the greater; and

“(b) It shall discharge the tortfeasor to whom it is given from all liability for any contribution to
any other tortfeasors.”

***

[B] Equitable Indemnity

[1] Introductory Note

In addition to the procedural holding on new party cross-complaints, the

Supreme Court opinion in American Motorcycle contains several important
substantive law rulings concerning comparative liability, contribution and
indemnity, and “good faith” settlements. What are these rulings? Why are they
significant to tortfeasor-defendants? What effect do these rulings have on
plaintiffs? Is the effect beneficial or not as to plaintiffs? Why? How is equitable
indemnity calculated when one of the defendant joint tortfeasors is insolvent?
When the plaintiff settles with fewer than all of the joint tortfeasors? Does
American Motorcycle state a broad or narrow definition of “joint tortfeasor?”
See Turcon Constr., Inc. v. Norton-Villiers, Ltd ., 139 Cal. App. 3d 280, 283,
188 Cal. Rptr. 580 (1983). Do any statutes modify these American Motorcycle
rulings?

[701/702]

BRACKET v. STATE OF CALIFORNIA

COURT OF APPEAL OF CALIFORNIA,
FIRST APPELLATE DISTRICT
180 Cal. App. 3d 1171, 226 Cal. Rptr. 1 (1986)

Newsom, Justice.
 The instant appeal is from judgment in an action for comparative equitable
indemnity. The factual background may be summarized as follows.

Larry Edward Spencer sustained serious injuries when a motor vehicle which
he was driving on State Route 17 in Santa Clara County collided head-on with a
truck driven by James Gardner. The accident was precipitated by an unsafe lane
change made by respondent George Bracket, who at the time was driving a
vehicle owned by respondent House of Lamps, which caused Gardner to swerve
his truck across the center line of the highway and collide with Spencer’s
oncoming car.

Spencer filed suit for his personal injuries against Gardner and respondents.
Gardner settled with Spencer before trial for the full amount of his insurance
coverage, $350,000. The action then proceeded to trial, and the jury awarded
Spencer $2.5 million. Respondents satisfied the remainder of the judgment by
paying Spencer $2.15 million. Appellant was not a party to Spencer’s action for
personal injuries.

Respondents subsequently commenced an action against the State of

California (hereafter the state or appellant) for comparative equitable
indemnity, alleging that Spencer’s injuries were primarily caused by the state’s
failure to provide a median barrier separating the northbound and southbound
directions of traffic on State Route 17. The issues of liability and damages were
severed for trial. The jury found that the state’s failure to remedy the dangerous
condition of State Route 17 was a cause of Spencer’s injuries, and apportioned
the comparative responsibility of the parties as follows: 85 percent to
respondents; 10 percent to appellant; and 5 percent to Gardner. Thereafter, the
trial court entered judgment for respondents against the state for $226,315.66,
computed according to the following formula: “$2,500,000 less $350,000 credit
times 10/95.” In so doing, the trial court essentially determined that, after
subtracting the full amount of Gardner’s contribution to the judgment,
respondents and appellants should share in the judgment in proportion to their
fault as found by the jury.

Appellant does not challenge the allocation of fault made by the jury, but
objects to the trial court’s apportionment and award of damages. In appellant’s
view the trial court erred in crediting respondents with the payment made by
James Gardner before apportioning damages in accordance with the relative
fault of the parties as determined by the jury. According to appellant, the proper
measure of damages to respondents in this indemnity action was $25,000: an
amount representing the contribution made by respondents “in excess of their
proportionate share of the $2,500,000 judgment recovered by Larry Edward
Spencer.” Appellant submits that such an award fairly compensates respondents
for their loss, and asks us to modify the judgment accordingly.

[702/703]

The issue may be stated as follows: where a joint tortfeasor settles with the
plaintiff before trial for an amount later determined to be an overpayment, as did
Gardner, should the remainder of the plaintiff’s judgment, after deduction of the
overpayment, be allocated among the nonsettling joint tortfeasors in accordance
with their proportionate share of fault; or, instead, is it proper to limit a
nonsettling joint tortfeasor’s recovery in an indemnity action to that amount paid
the plaintiff by the party seeking indemnity which exceeds its comparative share
of fault, without first deducting the overpayment from the total judgment for
respondent? In the case before us, the difference in the two measures of damages
is $201,315.66 — that is, the difference between $226,315.66, which sum was
arrived at by subtracting Gardner’s contribution to the judgment ($350,000) then
multiplying the remainder, $2.15 million, by appellant’s comparative fault,
10/95ths, and $25,000, which represents the sum due respondents were we
merely to award indemnification for the amount they paid Spencer in excess of
their total proportionate share of the liability.

Our high court’s decision in American Motorcycle Assn. v. Superior Court

(1978) 20 Cal. 3d 578 [146 Cal. Rptr. 182, 578 P.2d 899] , serves as the
foundation for our inquiry. In American Motorcycle, the court declared that the
“equitable indemnity rule should be modified to permit a concurrent tortfeasor
to obtain partial indemnity from other concurrent tortfeasors on a comparative
fault basis.” (Id., at p. 598; …) “This change in the law was a response to
California’s adoption in 1975 of the system of comparative fault where
‘liability for damage [would] be borne by those whose negligence caused it in
direct proportion to their respective fault.’ (Li v. Yellow Cab Co . (1975) 13
Cal. 3d 804, 813 …, fn. omitted.)” Thus, American Motorcycle Assn. calls for
“apportionment of loss between the wrongdoers in proportion to their relative
culpability” (id., at p. 595), so as to “permit the equitable sharing of loss
between multiple tortfeasors” (id., at p. 597) rather than the imposition of the
loss upon one or the other tortfeasor.
 The very cornerstone of the equitable indemnity doctrine outlined in
American Motorcycle is a fair distribution of loss among joint tortfeasors in
proportion to fault. Such is the general nature of indemnity, which seeks as a
matter of fairness to have one party “‘make good a loss or damage another
[party] has incurred.’” (Valley Circle Estates v. VTN Consolidated, Inc. (1983)
33 Cal. 3d 604, 614 [189 Cal. Rptr. 871, 659 P.2d 1160] .) Thus, in determining
the effect of an overpayment by a settling joint tortfeasor upon the competing
rights of the remaining joint tortfeasors to indemnification, we seek to further the
goal of equitable indemnity in order to effectuate a fair apportionment of loss
according to relative culpability. (American Motorcycle Assn., supra, 20 Cal.
3d at p. 595.)

The formula proposed by the state, however, fails to comport with the
American Motorcycle apportionment of loss standard. Were we to limit
respondents’ recovery in the instant indemnity action to the amount they paid to
Spencer which was in excess of their subsequently determined comparative
fault, i.e., $25,000, appellant would receive the entire benefit of Gardner’s
overpayment while ultimately contributing a much smaller percentage — 1
percent, in fact — than the 10 percent relative culpability found attributable to
them by the jury. In contrast, respondents would not share in the overpayment,
but would continue to be liable for a full 85 percent share of the loss despite the
“windfall” created by Gardner’s excessively [703/704]generous contribution to
plaintiff’s judgment. The inequity of such an apportionment is palpable.

Several recent cases have confronted the problem of apportionment of

damages where one of several joint tortfeasors is judgment proof as a result of
insolvency or settlement with a plaintiff for less than the subsequently decreed
comparative responsibility of that party. 1 (Ambriz v. Kress (1983) 148 Cal.
App. 3d 963 [196 Cal. Rptr. 417]; Lyly & Sons Trucking Co. v. State of
California (1983) 147 Cal. App. 3d 353 [195 Cal. Rptr. 116] ; Paradise Valley
Hospital v. Schlossman (1983) 143 Cal. App. 3d 87 [191 Cal. Rptr. 531] .) In
each of such cases there has been an underpayment, or shortfall, and the
remaining joint tortfeasors in an indemnity action have sought to avoid liability
for the additional loss caused thereby.

The rule which has emerged is that solvent tortfeasors in an indemnity action
must share in direct proportion to their respective degree of fault the liability of
their judgment-proof co-actors, with the apportionment made as though the
judgment-proof tortfeasors had not been involved in the accident. “[The] sharing
must be proportional to the remaining tortfeasors’ degree of comparative fault.”
(Sagadin v. Ripper, supra , 175 Cal. App. 3d 1141, 1174 .) In Ambriz, supra, at
pages 968-969, the court explained its conclusion, quoting Paradise Valley,
supra, at page 93, as follows: “In American Motorcycle, joint and several
liability principles are conjoined with the concept of liability governed by
proportionate fault to which is added the right of equitable contribution. These
premises, so constellated, give form and outline for the next logical extension
and application of these rules. An insolvent defendant’s shortfall should be
shared proportionally by the solvent defendants as though the insolvent or absent
person had originally not participated.” In Paradise Valley, supra , the court
also observed that as the plaintiff receives reimbursement for his injuries from
joint tortfeasors, the rights and liabilities of the parties must continually be
adjusted in accordance with the concept of proportionate fault.

Appellant’s proffered readjustment of liability neither accounts for the

comparative fault of the parties nor results in an equitable sharing of the
overpayment in proportion to the relative culpability of the parties. It disregards
the comparative equitable indemnity principles of American Motorcycle,
arbitrarily placing the burden of additional liability upon the party picked by
plaintiff to be the named defendant. As noted in Lyly & Sons Trucking Co. v.
State of California, supra, 147 Cal. App. 3d 353, 358: “Caprice is not often
justice.”

We find the method of calculating damages employed by the trial court to be

both equitable and faithful to the purpose of indemnity actions “to allow an
equitable balancing of the books among those liable for the injury.” (Lyly &
Sons Trucking Co. v. State of California, supra, 147 Cal. App. 3d 353, 357.)
By crediting both appellants and respondents with the overpayment, then
apportioning the remainder of the judgment according to the comparative fault of
the parties as found by the jury, the trial court followed the directive of
American Motorcycle to achieve wherever possible an equitable sharing of the
loss among joint tortfeasors on a [704/705]comparative fault basis: an adjustment
has been made following the overpayment by Gardner so that the remaining joint
tortfeasors share the loss in direct proportion to their respective degree of
fault.2

Finally, the state submits that by awarding respondents more than their actual
loss the trial court violated section 875, subdivision (c) of the Code of Civil
Procedure, which provides that the right of contribution of a joint tortfeasor who
has discharged the joint judgment is limited “to the excess so paid over the pro
rata share of the person so paying ….”3 But, in American Motorcycle, the court
explained that section 875 and its companion statutes do not preclude partial
indemnity from a concurrent tortfeasor on a comparative fault basis. Neither,
then, does this legislation interdict the extension of this sound doctrine to direct
the apportionment of loss in the event of an overpayment by a joint tortfeasor.
Respondents, who paid Spencer’s damages less the settlement by Gardner, are
permitted to collect the excess they paid over their pro rata share of the loss.
We therefore conclude that the trial court’s award was proper.

The judgment is modified to award respondents the amount of $226,315.78,

and as so modified is affirmed.

ABBOTT FORD, INC. v. SUPERIOR COURT

SUPREME COURT OF CALIFORNIA
43 Cal. 3d 858, 239 Cal. Rptr. 626, 741 P.2d 124 (1987)

Panelli, Justice.

The issue presented here is whether a “sliding scale recovery agreement,”1

entered into by plaintiffs and one of several defendants in a personal injury
action, [705/706]represents a “good faith” settlement within the meaning of
sections 877 and 877.6 of the Code of Civil Procedure,2 so as to relieve the
settling defendant of any liability for contribution or equitable comparative
indemnity to other defendants in the action. The trial court concluded that the
agreement in question was not a good faith settlement and denied the settling
defendant’s motion to bar cross-complaints by the remaining defendants. The
settling defendant then sought review by writ of mandate, and ultimately the
Court of Appeal — after remand by this court — concluded that while the “good
faith” of such a sliding scale agreement must properly be measured by the
standard set forth in our recent decision in Tech-Bilt, Inc. v. Woodward-Clyde
& Associates (1985) 38 Cal. 3d 488 [213 Cal. Rptr. 256, 698 P.2d 159] , the
agreement at issue here satisfied that standard as a matter of law. We granted
review to consider the question of the appropriate application of the statutory
“good faith” requirement in the context of sliding scale agreements.

To place the issue in perspective, we review the facts and the litigation
background as revealed by the declarations and other materials that were
presented to the trial court in connection with its hearing on the good faith
settlement question.

The underlying personal injury action in this case arose out of a somewhat
unusual automobile accident that occurred on September 10, 1981. At the time
of the accident, Ramsey Sneed was driving a used 1979 Ford Econoline van that
he had purchased from Abbott Ford, Inc. (Abbott). As Sneed was driving, the
left rear wheel came off the van and crashed into the windshield of an on-
coming car, a 1965 Mercury station wagon driven by Phyllis Smith. The
windshield shattered and Smith suffered serious injuries, including the loss of
sight in both eyes and the loss of her sense of smell.

Thereafter, Smith and her husband (hereafter plaintiffs) filed the underlying
lawsuit against four defendants — (1) Sneed, (2) Abbott, (3) Ford Motor
Company (Ford) and (4) Sears, Roebuck & Co. (Sears) — seeking recovery on
a variety of theories. Plaintiffs’ mandatory settlement conference statement —
prepared after considerable discovery — summarized the case against each
defendant as follows:

(1) With regard to Sneed, plaintiffs claimed that he had been negligent in the
maintenance and operation of his van, and had continued to drive the vehicle
after hearing sounds indicating that there might be some difficulty with the
wheels.

(2) With regard to Abbott — a car dealer which had purchased the van used,
had “customized” it by replacing the original wheels and tires with “deep dish
mag wheels” and oversized tires, and had then resold it to Sneed — plaintiffs
sought recovery on both negligence and strict liability theories. With regard to
the negligence claim, discovery revealed that Ford, the manufacturer of the van,
had provided a warning in its owner’s manual — which Abbott received —
cautioning [706/707]against the installation of “aftermarket wheel assemblies,”
like the “deep dish mag wheels,” on the van. Despite the warning, Abbott had
installed the customized wheel assembly, had failed to give the owner’s manual
or provide any other warning to Sneed, and had failed to advise Sneed of the
need to retighten the lug nuts on the wheel assembly periodically because of
their tendency to become loose.

(3) With regard to Ford — which had manufactured both the van and the
station wagon involved in the accident — plaintiffs claimed that liability could
be posited on the basis of Ford’s relationship with each vehicle. With respect to
the van, plaintiffs relied on both strict liability and negligence theories,
suggesting that, notwithstanding the warning provided in its owner’s manual,
Ford should have reasonably foreseen that potentially dangerous aftermarket
wheel assemblies would be installed and should have taken further steps —
such as attaching a warning against such installation to the vehicle itself — to
minimize the problem. With respect to the station wagon, plaintiffs alleged that a
defect in the design of the windshield led it to shatter on impact by the wheel
and tire, aggravating plaintiffs’ injuries.

(4) Finally, with regard to Sears — which had serviced the van three months
before the accident — plaintiffs claimed that while Sears’ service records
indicated that Sneed had neither requested nor been charged for a brake check,
Sneed had in fact requested such a check and Sears’ employees had either
negligently replaced the wheels on the van or had negligently failed to conduct
an inspection which would have revealed the looseness of the lug nuts. * * *

With the case in this posture, a mandatory settlement conference was set for
March 26, 1984. In anticipation of that conference, representatives of Abbott,
Ford and Sears met on March 14, 1984. At that meeting, Abbott’s counsel stated
that he believed a reasonable settlement value for the case was $2.5 million and
that Abbott was willing to contribute 70 percent of that sum. 5 Counsel for Ford
and Sears, however, maintained that their clients had only minimal, if any,
responsibility for the accident and were unwilling to bear 30 percent —
$750,000 — of such a settlement.

At about the same time, plaintiffs offered to settle with Ford or Sears if they
would enter into a sliding scale agreement guaranteeing plaintiffs $1.5 million.
Both Ford and Sears declined the offer.

On March 23, 1984, three days before the settlement conference, plaintiffs
filed their “mandatory settlement conference statement” setting forth the facts of
the case, their theories of liability against all parties, and their expected
recovery. With respect to liability, the statement concluded: “The liability of
Abbott Ford in this case is clear on either a products liability theory or on a
negligence theory because Abbott Ford modified the van with unsafe, defective
after-market wheels and tires notwithstanding Ford’s warning to the contrary.
Ford’s and Sears’ liability is not as clear as Abbott Ford’s, but it is for the jury
to decide whether they should be held accountable for this accident. The
liability of Sneed is also clear because he had the last opportunity to avoid the
accident.” With respect to damages, the statement declared that — on the basis
of a detailed review of damage awards in numerous [707/708]cases involving
similar injuries — “[p]laintiffs expect a favorable verdict in this case in an
amount not less than $3,000,000.”

Three days later, at the mandatory settlement conference, Abbott’s insurer

announced that it had agreed in principle to enter into a sliding scale agreement
with plaintiffs, guaranteeing plaintiffs a recovery of $3 million. Several months
later, plaintiffs and Abbott’s insurer formally entered into the sliding scale
agreement that is the focus of the present proceeding.

The agreement — which took the form of two separate contracts, one with
each plaintiff, twenty-two and twenty pages in length respectively — contained
three key and interrelated elements:

(1) Abbott’s insurer guaranteed Phyllis Smith an ultimate recovery of $2.9

million, and her husband an ultimate recovery of $100,000; if, at the conclusion
of the lawsuit, plaintiffs had not collected the guaranteed amounts from the
remaining defendants, Abbott’s insurer would pay the balance up to the
guaranteed sum. Thus, if plaintiffs recovered $3 million or more from Ford and
Sears, Abbott would not bear any ultimate liability to plaintiffs; if plaintiffs
recovered less than $3 million from Ford and Sears, Abbott would be obligated
to pay plaintiffs the difference. In return for these guaranties, plaintiffs agreed
(a) to dismiss all of their actions against Abbott and (b) to continue to prosecute
their action against Ford and Sears6 in the same way that they would have in the
absence of the agreement — through appeal, if necessary — “except that
[plaintiffs] shall not settle all or any portion of this litigation with defendants
Ford and Sears Roebuck for less than the amount of [their] guaranty, without the
express written consent of” Abbott’s insurer.

(2) In addition to providing the guaranties, Abbott’s insurer agreed to make

substantial, periodic no-interest loans to plaintiffs and their attorneys during the
course of the litigation. Under the agreement, a total of $390,000 in interest-free
loans had been made to plaintiffs and their attorneys by January 1986, and
Abbott’s insurer was obligated to pay plaintiffs and attorneys the full $3 million
— in the form of a loan — by July 1, 1987, if plaintiffs’ action had not been
terminated by then. The agreement provided that the loan payments would serve
as credits for the insurer’s obligations under the guaranty provision; if plaintiffs
collected $3 million or more from Ford and Sears, plaintiffs were obligated to
repay the loans in full — but without interest — to Abbott’s insurer.

(3) Finally, the agreement contained an additional provision under which the
insurer agreed to pay plaintiffs the full $3 million outright if the agreements
were found to be invalid or not in good faith.

On August 30, 1984, a few months after the sliding scale agreement was
signed, Abbott moved in the trial court pursuant to section 877.6 for an order
declaring the agreement to be in good faith and dismissing all claims against
Abbott for contribution or comparative indemnity. Both Ford and Sears opposed
the motion, arguing, inter alia, (1) that sliding scale agreements, by their nature,
cannot constitute good faith settlements within the meaning of the relevant
statutes, and [708/709](2) that, in any event, the settlement agreement at issue here
was not a good faith settlement because “the settlement price is potentially
grossly disproportionate to Abbott Ford’s fair share of the damages.”

On September 10, 1984, the trial court held a hearing on Abbott’s section
877.6 motion. At the conclusion of the hearing, the court entered a minute order
denying Abbott’s request to have the agreement declared a good faith settlement
so as to bar Ford’s and Sears’ indemnity cross-complaints against it. The
court’s order stated that its determination was based “on the fact that Abbott
Ford has not paid any amount in settlement and that the guarantee agreement
does not constitute a settlement, but rather constitutes a gambling transaction.”

Abbott thereafter sought review of the trial court’s order in the present writ
proceeding, as authorized by section 877.6, subdivision (e). * * * [T]he Court of
Appeal concluded that the “good faith” standard embodied in Tech-Bilt does
apply to sliding scale agreements. Nonetheless, the court found that even under
the Tech-Bilt standard the agreement at issue here constituted a good faith
settlement as a matter of law. We again granted review to consider the important
and difficult issues presented by the case.

II

As Ford and Sears point out, sliding scale — or, as they are more commonly
known throughout the country, “Mary Carter” 9 — agreements have engendered a
considerable body of academic commentary, much quite critical of this genre of
settlement agreements. Relying on this literature, and a few out-of-state cases,
Ford and Sears urge us to hold all such agreements contrary to public policy and
invalid as a matter of law.

The majority of out-of-state decisions have, however, declined either to

condemn or condone such agreements categorically (see, e.g., Vermont Union
School v. H.P. Cummings Const. (1983) 143 Vt. 416 [469 A.2d 742, 749-750],
and cases cited) and … we believe such a cautious approach to the problems
posed by sliding scale agreements is appropriate. * * *

In the present case, the question before us is not the broad one of the validity
of sliding scale agreements in general, but the more limited question of whether
the sliding scale agreement at issue here should properly be considered a “good
faith” settlement under the relevant statutory provisions so as to absolve Abbott
from any liability for contribution or indemnity to the remaining codefendants,
Ford and [709/710]Sears. As we shall see, that issue in itself raises a number of
complex questions.

III

As we explained in our recent decision in Tech-Bilt, the provisions of

sections 877 and 877.614 — governing the effect that a settlement agreement has
on a settling defendant’s potential liability to other defendants for contribution
or comparative indemnity — have two major goals: the equitable sharing of
costs among the parties at fault and the encouragement of settlements. (38 Cal.
3d at pp. 494-496.) The provisions of section 877 make it quite clear that the
two goals are inextricably linked. Section 877 establishes that a good faith
settlement bars other defendants from seeking contribution from the settling
defendant (§ 877, subd. (b)), but at the same time provides that the plaintiff’s
claims against the other defendants are to be reduced by “the amount of
consideration paid for” the settlement (§ 877, subd. (a)). Thus, while a good
faith settlement cuts off the right of other defendants to seek contribution or
comparative indemnity from the settling defendant, the nonsettling defendants
obtain in return a reduction in their ultimate liability to the plaintiff.

Tech-Bilt recognized that the “good faith” requirement of sections 877 and
877.6 is the key to the harmonization of the twin statutory objectives. “The good
faith provision of section 877 mandates that the courts review agreements
purportedly made under its aegis to insure that such settlements appropriately
balance the contribution statute’s dual objectives.” (38 Cal. 3d at p. 494, fn.
omitted.) At the same [710/711]time, we explained that the “good faith” concept
cannot be captured in a simple formula. “‘Lack of good faith encompasses many
kinds of behavior. It may characterize one or both sides to a settlement. When
profit is involved, the ingenuity of man spawns limitless varieties of unfairness.
Thus, formulation of a precise definition of good faith is neither possible nor
practicable. The Legislature has here incorporated by reference the general
equitable principle of contribution law which frowns on unfair settlements,
including those which are so poorly related to the value of the case as to
impose a potentially disproportionate cost on the defendant ultimately
selected for suit.’” (Id., at pp. 494-495, italics added in Tech-Bilt].)

Rejecting the line of cases — beginning with Dompeling v. Superior Court

(1981) 117 Cal. App. 3d 798 [173 Cal. Rptr.] 38 which had indicated that
settling parties were free “to further their respective interests without regard to
the effect of their settlement upon other defendants” (id., at pp. 809-810) so long
as they refrained “from tortious or other wrongful conduct” (ibid.), we
concluded in Tech-Bilt that “[a] more appropriate definition of ‘good faith,’ in
keeping with the policies of American Motorcycle Assn. v. Superior Court ,
(1978) 20 Cal. 3d 578] and the statute, would enable the trial court to inquire,
among other things, whether the amount of the settlement is within the
reasonable range of the settling tortfeasor’s proportional share of
comparative liability for the plaintiff ’s injuries.” (38 Cal. 3d at p. 499, italics
added.)16

Elaborating on the parameters of the good faith concept, we observed that

“the intent and policies underlying section 877.6 require that a number of factors
be taken into account including a rough approximation of plaintiffs’ total
recovery and the settlor’s proportionate liability, the amount paid in settlement,
the allocation of settlement proceeds among plaintiffs, and a recognition that a
settlor should pay less in settlement than he would if he were found liable after
a trial. Other relevant considerations include the financial conditions and
insurance policy limits of settling defendants, as well as the existence of
collusion, fraud or tortious conduct aimed to injure the interests of nonsettling
defendants. [Citation.] Finally, practical considerations obviously require that
the evaluation be made on the basis of information available at the time of
settlement. ‘[A] defendant’s settlement figure must not be grossly
disproportionate to what a reasonable person, at the time of the settlement,
would estimate the settling defendant’s liability to be.’ (Torres v. Union Pacific
R.R. Co. (1984) 157 Cal. App. 3d 499, 509 [203 Cal. Rptr 825].) The party
asserting the lack of good faith, who has the burden of proof on that issue
[citation], should be permitted to demonstrate, if he can, that the settlement
is so far ‘out of the ballpark’ in relation to these factors as to be inconsistent
with the equitable objectives of the statute. Such a demonstration would
establish that the proposed settlement was not a ‘settlement made in good
faith’ within the terms of section 877.6.” (Id., at pp. 499-500, italics added, fn.
omitted.)

[711/712]

By requiring a settling defendant to settle “in the ballpark” in order to gain

immunity from contribution or comparative indemnity, the good faith
requirement of sections 877 and 877.6 assures that — by virtue of the “set-off”
embodied in section 877, subdivision (a) — the nonsettling defendants’ liability
to the plaintiff will be reduced by a sum that is not “grossly disproportionate” to
the settling defendant’s share of liability, thus providing at least some rough
measure of fair apportionment of loss between the settling and nonsettling
defendants.

As Tech-Bilt emphasizes, of course, a “good faith” settlement does not call

for perfect or even nearly perfect apportionment of liability. In order to
encourage settlement, it is quite proper for a settling defendant to pay less than
his proportionate share of the anticipated damages. What is required is simply
that the settlement not be grossly disproportionate to the settlor’s fair share. As
the Court of Appeal observed in Torres v. Union Pacific R.R. Co ., supra, 157
Cal. App. 3d 499, 507: “If [a settling] codefendant wishes to enjoy the section
877 bar against indemnity, he must make some attempt to place the price of his
settlement within a reasonable range of his relative share of the liability.”

As noted above, the Court of Appeal — after remand from this court —
concluded that the “good faith” standard articulated in Tech-Bilt applies to
sliding scale agreements. Abbott has not challenged that conclusion here and, in
any event, we agree with the Court of Appeal’s conclusion on this point. Neither
section 877 nor section 877.6 exempts sliding scale agreements from its “good
faith” requirement, and nothing in section 877.518 — a provision which was
enacted to protect against the unfair consequences that may flow from
undisclosed sliding scale agreements — indicates that such agreements need not
meet the generally applicable good faith standard. Indeed, the legislative history
of section 877.5 suggests that the Legislature contemplated that a broad good
faith standard … would apply to such agreements.
 The crucial question presented by this case is how Tech-Bilt’s good faith
standard should apply to sliding scale agreements. Ford and Sears claim
broadly that sliding scale agreements can never satisfy the good faith standard of
Tech-Bilt, asserting that such agreements, by their very nature, irreconcilably
conflict with both goals — fair apportionment of loss and encouragement of
settlement — sought to be advanced by the statutory scheme. In addition, they
argue that even if some sliding scale agreements may properly be found to be
good faith settlements, the [712/713]agreements at issue here clearly cannot. We
first consider the claims with respect to apportionment of loss.

Ford and Sears argue initially that sliding scale agreements inevitably thwart
the goal of a fair apportionment of loss among responsible tortfeasors. Because,
by definition, such an agreement is one in which the settling defendant’s final
out-of-pocket payment to the plaintiff is dependent on the amount which the
plaintiff ultimately recovers from the remaining defendants, Ford and Sears
insist that such an agreement always has the effect of improperly shifting the
settling defendant’s share of liability onto the nonsettling defendants, thus
undermining equitable apportionment. To support their claim, Ford and Sears
note that under the sliding scale agreement at issue here, if a jury were to assess
plaintiffs’ damages from the accident at $3 million or more and to find that Ford
or Sears was in any degree responsible for the injury, Ford or Sears would
ostensibly be required to bear all of the damages, and Abbott — the party who,
by all appearances, is the most culpable tortfeasor20 — would escape any
ultimate out-of-pocket loss whatsoever. Ford and Sears argue that such a result
cannot be squared with the statutory goal of fairly apportioning loss among the
responsible tortfeasors.

***

In analyzing the apportionment problem, it is important to keep in mind that,

under the terms of section 877, a settlement — if found to be in “good faith” —
has two interrelated consequences: (1) it discharges the settling tortfeasor from
all liability to other defendants for contribution or indemnity, and (2) it reduces
the plaintiff’s claims against the other defendants by “the amount of
consideration paid for it.” Although past cases have often overlooked the
interrelationship of these two features in our view the ultimate analysis of the
effect of the sliding scale agreement resolves itself to a consideration of fairness
to the nonsettling defendants. If a court finds that a settling defendant, by entering
into a sliding scale agreement, has realistically paid a “consideration” that is
within its Tech-Bilt “ballpark,” and if the nonsettling defendants obtain a
reduction in the plaintiff’s claims against them in an amount equal to that
consideration, the statutory fair apportionment objective should be satisfied.
Accordingly, the analysis of whether a sliding scale agreement conflicts with the
fair apportionment objective lies in “the amount of consideration” which is
attributed to the settling defendant as the “payment” for his release from liability
by entering into the sliding scale agreement. Since the sliding scale agreement is
given by the settling defendant in exchange for the plaintiff’s release and the
immunity from contribution or indemnity from the claims of the nonsettling
cotortfeasors, we should assume the exchange is of equivalents. If we focus,
then, not on what the settling defendant gave up, but rather what he received,
then we have a simple application of the Tech-Bilt rules. This is so because one
of the [713/714]principal difficulties in this area has been the attempt to arrive at
an accurate evaluation of the “price” or “consideration” which has been paid by
a settling defendant who enters into a sliding scale arrangement.

Unlike an ordinary settlement agreement in which the amount the settling

defendant has paid — and correspondingly the amount to be deducted from the
plaintiff’s claims against the remaining defendants — is typically easy to
identify, the contingent nature of a sliding scale obligation has created
considerable confusion as to the proper valuation of such an agreement.

The parties are in sharp disagreement on this point. Ford and Sears argue that
the “consideration paid” should be calculated solely by reference to the amount
of any noncontingent payment which the settling defendant has made to the
plaintiff under the agreement; in this case, where Abbott has made no
noncontingent payment, they suggest that the “consideration” or cost paid by
Abbott should be valued at zero. Abbott, on the other hand, points to the fact that
it has guaranteed plaintiffs a $3 million recovery, and argues the consideration
which it has paid should be fixed at its possible maximum payment, $3 million.

The economic reality, we believe, lies between these two extreme positions.
Contrary to the arguments of Ford and Sears, a guaranty agreement, even if
totally contingent, is not completely cost-free from the point of view of the
guarantor. At the same time and contrary to the position of Abbott, however, the
“cost” or “price” of such an agreement is not equal to the maximum amount that
the guarantor may possibly be required to pay under the agreement.
Accordingly, given the nature of sliding scale agreements, we believe the court
should not be burdened with the obligation to determine the actual value of such
an agreement by the use of actuarial or other valuation methods. Rather, the
parties to such an agreement, since they are in the best position to place a
monetary figure on its value, should have the burden of establishing the
monetary value of the sliding scale agreement.

In many cases, negotiations between the parties will have included a

traditional “straight” settlement as an alternative to the sliding scale agreement,
and this background will give the settling parties a vantage point in declaring the
agreement’s value. In addition, since the plaintiff and the settling defendant are
likely to have somewhat different, and somewhat conflicting interests in placing
a value on the agreement — the plaintiff would prefer the value to be on the low
side to reduce the amount that its claims against other defendants will be
reduced; the settling defendant will want the value to be high enough to assure
that the agreement is found to be within its Tech-Bilt “ballpark” so as to relieve
it of liability for comparative indemnity or contribution — requiring a joint
valuation by the plaintiff and the settling defendant should generally produce a
reasonable valuation. (See Comment, California Code of Civil Procedure
Sections 877, 877.5, and 877.6: The Settlement Game in the Ballpark that
Tech-Bilt (1986) 13 Pepperdine L. Rev. 823, 857.)

Once the parties to the agreement have declared its value, a nonsettling
defendant either (1) can accept that value and attempt to show that the settlement
is not in good faith because the assigned value is not within the settling
defendant’s Tech-Bilt ballpark, or (2) can attempt to prove that the parties’
assigned value is too [714/715]low and that a greater reduction in plaintiff’s
claims against the remaining defendants is actually warranted.

***

In addition to the fair apportionment issue, Ford and Sears contend that
sliding scale agreements in general, and the agreement in this case in particular,
should be found not in “good faith” because such agreements improperly impede
the full settlement of the case. We pointed out in Tech-Bilt that “from the
standpoint of the public interest and the legal process, a prime value in
encouraging settlement lies in ‘[removing] [the case] from the judicial system,
and this occurs only when all claims relating to the loss are settled.’” (38 Cal.
3d at p. 500.) * * *
 In some circumstances, the availability of sliding scale agreements can
facilitate the settlement process; at the same time, particular sliding scale
agreements may operate to thwart or impair the full settlement of the case. Our
task is to attempt to identify the different situations, and to regulate the use of
sliding scale agreements so as to further the state interest in fostering the full
settlement of litigation. * * *

Ford and Sears contend … that even if the potential availability of a sliding
scale agreement may be a valuable tool for encouraging settlement in some
instances, once a sliding scale agreement is actually entered into, the agreement
invariably interferes with the ability of the nonparticipating defendants to settle
the remainder of the litigation. Ford and Sears argue that because sliding scale
agreements necessarily have this antisettlement effect, we should find that such
agreements are not compatible with the purposes of sections 877 and 877.6 and
should never be accorded “good faith” settlement status under those provisions.
As we explain, while the potential antisettlement effect of a consummated
sliding scale agreement is a legitimate cause for inquiry and concern, we
believe that the problem can be met by a remedy less sweeping than the
condemnation of all sliding scale agreements.

As Ford and Sears point out, the most obvious conflict between sliding scale
agreements and a subsequent settlement of the balance of the lawsuit is posed by
explicit provisions contained in most sliding scale agreements which purport to
grant the settling defendant a “veto power” over any subsequent settlement
which would affect the settling defendant’s ultimate out-of-pocket costs under
the guaranty agreement. The provision contained in the agreement in the present
case is fairly typical in this regard, providing that “[plaintiffs] shall not settle all
or any portion of this litigation with defendants Ford and Sears Roebuck for less
than the amount of [their] [guaranteed recovery], without the express written
consent of [Abbott’s insurer].” (Italics added.)

The reason for the inclusion of some such “veto” provision in a sliding scale
agreement is, of course, readily apparent. Because the settling defendant has
agreed to guarantee that the plaintiff ultimately recovers some minimum amount,
it “has an obvious and legitimate interest in ensuring that the plaintiff diligently
[715/716]prosecutes its claims against the remaining defendants.” While it may be
reasonable for the earlier settling defendant to reserve the right to veto
subsequent settlements which are unfairly low and which would result in its
bearing an ultimate out-of-pocket cost higher than its fair share of the plaintiff’s
damages, there is no similar compelling justification for permitting that
defendant to bar the remaining defendants from settling with the plaintiff for an
amount that is sufficiently high that it would not have such an unfair effect. An
open-ended veto provision conflicts with the public policy which favors the full
settlement of litigation and may frequently result in unnecessary trials.
Accordingly, we conclude that to be valid and enforceable, such a veto
provision must, by its terms, be confined only to those subsequent settlements
that will require the earlier settling defendant to bear more than its fair
“ballpark” share of damages.25 * * *

IV

As discussed above, Abbott maintains that the sliding scale agreement in this
case is not disproportionate to its fair share of liability and does not improperly
impair full settlement of the action. It also apparently contends, however, that
even if the agreement were found to be flawed in those respects, the agreement
should nonetheless be found to be a good faith settlement within the meaning of
sections 877 and 877.6 because of two additional considerations. We discuss
each in turn.

Abbott first emphasizes that sliding scale agreements like those at issue here
— and, in particular, the no-interest loan provisions of the agreement —
provide injured victims with a speedy source of revenue which enables such
victims both to support themselves immediately and to litigate their claims
against other defendants. It points out that a number of courts and commentators
have taken note of these beneficial aspects of such agreements.

We agree that affording an injured person prompt payment of funds for his
losses serves a very important state interest. But nothing we have said above is
inconsistent with that purpose. We have not suggested that it is improper for a
settlement agreement to take the form of a noninterest loan from the settling
defendant to the plaintiff, repayable out of the proceeds of any recovery;26
rather, [716/717]we simply note that the value of such a loan will realistically be
considered by the parties to the agreement in arriving at the agreement’s value.
Of course, if a plaintiff chooses to release his or her claims against a defendant
for less than that defendant’s “ballpark” figure, the plaintiff remains free to do
so; if, however, the settling defendant wishes to obtain immunity from potential
claims for comparative indemnity or contribution under sections 877 and 877.6,
(1) the “consideration” paid by it must not be grossly disproportionate to its fair
share of responsibility and (2) the remaining defendants are entitled to have the
plaintiff’s claims against them reduced by the amount of the consideration paid.
Although plaintiffs may be less willing to enter into such agreements once they
recognize that their claims against the nonsettling defendants will be reduced by
the value of the agreement,27 we do not believe that consequence can itself
justify a contrary result. Offsets have been routinely required in normal
settlement agreements since the inception of section 877, and we can find no
justification for exempting the more questionable sliding scale agreements from
similar treatment. * * *

In sum, we conclude: (1) that Tech-Bilt’s good faith standard applies to

sliding scale agreements, (2) that to satisfy the statutory objective of a fair
apportionment of loss (i) the “consideration” paid by a defendant who enters
into a sliding scale agreement must fall within the Tech-Bilt “ballpark” and (ii)
the plaintiffs’ claims against the remaining defendants must be reduced by the
amount of the “consideration paid” by the settling defendant, (3) that any
unreasonable or bad faith conduct of the nonsettling defendants which impeded
the settlement process and led to the sliding scale agreement may be taken into
account in determining whether the agreement satisfies the “ballpark” standard,
and (4) that any provision which purports to give a settling defendant a “veto”
over subsequent settlements is valid only if it is limited to settlements which
would leave the earlier settling defendant to bear more than its fair share of
liability for the plaintiff’s damages.

[717/718]

***

Footnotes:

1 A tortfeasor who enters into a good faith settlement with plaintiff, such as Gardner, is discharged from
any claim of partial or comparative indemnity that may be pressed by a concurrent tortfeasor. (Code Civ.
Proc., § 877.6, subd. (c); American Motorcycle Assn., supra, 20 Cal. 3d at p. 604; …)

2 That this is so is borne out by the fact that the same indemnification figure, $226,315.78, arrived at by
way of the trial court’s measure of damages, is also obtained by using the more complex formula of
crediting appellant and respondent with their proportionate share of Gardner’s overpayment of $225,000
($23,684.22 or 10/95ths, for appellant, and $201,315.78, or 85/95ths for respondents then subtracting this
proportionate share of the overpayment of each from the amounts they should have paid had Gardner
settled for his proper 5 percent share. We note, however, that the trial court’s calculation using this (proper)
formula was very slightly in error, the correct measure of damage being $226,315.78 rather than
$226,315.66.

3 In full, subdivision (c) of section 875 reads: “Such right of contribution may be enforced only after one
tortfeasor has, by payment, discharged the joint judgment or has paid more than his pro rata share thereof. It
shall be limited to the excess so paid over the pro rata share of the person so paying and in no event shall
any tortfeasor be compelled to make contribution beyond his own pro rata share of the entire judgment.”
(Italics added.)

1 Section 877.5, subdivision (b) of the Code of Civil Procedure defines “sliding scale recovery
agreement” for purposes of that section as “an agreement or covenant between a plaintiff or plaintiffs and
one or more, but not all, alleged tortfeasor defendants, where the agreement limits the liability of the
agreeing tortfeasor defendants to an amount which is dependent upon the amount of recovery which the
plaintiff is able to recover from the non-agreeing defendant or defendants. This includes, but is not limited to,
agreements within the scope of Section 877, and agreements in the form of a loan from the agreeing
tortfeasor defendant to the plaintiff or plaintiffs which is repayable in whole or in part from the recovery
against the non agreeing tortfeasor defendant.”

As noted below, in the legal literature and in other jurisdictions such agreements are commonly known as
“Mary Carter” agreements. For convenience, we shall generally refer to such agreements simply as sliding
scale agreements.

2 Unless otherwise noted, all section references are to the Code of Civil Procedure.

5 Abbott’s liability insurance policy provided coverage of $3.25 million.

6 The settlement agreements disclose that plaintiffs had previously settled their case against Sneed for
$25,000, the amount of Sneed’s liability insurance.

9 The term “Mary Carter” agreement is derived from the name of one of the earliest cases involving
such an agreement, Booth v. Mary Carter Paint Company (Fla. App. 1967) 202 So. 2d 8. * * * Such
agreements are also occasionally referred to by other terms. In Arizona, this type of agreement is generally
known as a “Gallagher covenant,” from the case of City of Tucson v. Gallagher (1971) 14 Ariz. App. 385
[483 P.2d 798] which dealt with such an agreement. At least one commentator has referred to such an
agreement as a “guaranteed verdict agreement.” (Bodine, The Case Against Guaranteed Verdict
Agreements (1980) 29 Def. L.J. 233.) Where the agreement takes the form of a loan, it is sometimes called
a “loan receipt agreement” (McKay, Loan Agreement: A Settlement Device that Deserves Close
Scrutiny (1976) 10 Val. U.L. Rev. 231 ), though the “loan receipt” terminology derives from a distinct
device developed in the admiralty insurance field.
 14 Section 877 provides in full: “Where a release, dismissal with or without prejudice, or a covenant not
to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a
number of tortfeasors claimed to be liable for the same tort — [¶] (a) It shall not discharge any other such
tortfeasor from liability unless its terms so provide, but it shall reduce the claims against the others in the
amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for
it whichever is the greater; and [¶] (b) It shall discharge the tortfeasor to whom it is given from all liability
for any contribution to any other tortfeasors.”

Section 877.6 provides in full:

“(a) Any party to an action wherein it is alleged that two or more parties are joint tortfeasors
shall be entitled to a hearing on the issue of the good faith of a settlement entered into by the plaintiff
or other claimant and one or more alleged tortfeasors, upon giving notice thereof in the manner
provided in Sections 1010 and 1011 at least 20 days before the hearing.

***

“(b) The issue of the good faith of a settlement may be determined by the court on the basis of
affidavits served with the notice of hearing, and any counteraffidavits filed in response thereto, or the
court may, in its discretion, receive other evidence at the hearing.

“(c) A determination by the court that the settlement was made in good faith shall bar any
other joint tortfeasor from any further claims against the settling tortfeasor for equitable comparative
contribution, or partial or comparative indemnity, based on comparative negligence or comparative
fault.

“(d) The party asserting the lack of good faith shall have the burden of proof on that issue.

“(e) When a determination of good faith or lack of good faith of a settlement is made, any
party aggrieved by the determination may petition the proper court to review the determination by
writ of mandate. The petition for writ of mandate shall be filed within 20 days after service of written
notice of the determination, or within such additional time not exceeding 20 days as the trial court
may allow. * * *

“The running of any period of time after which an action would be subject to dismissal
pursuant to Section 583 shall be tolled during the period of review of a determination pursuant to this
subdivision.”

16 The dissent takes issue with our interpretation of the term “good faith” as it is used in section 877.
According to the dissent, “good faith” under section 877 “simply requires noncollusive conduct” on the part
of the settling parties. However, as noted above, we considered and rejected that very contention in our
recent decision in Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal. 3d 488 [213 Cal. Rptr.
256, 698 P.2d 159] . We find no compelling reason to reexamine or overturn the conclusions reached in
Tech-Bilt.

18 Section 877.5, subdivision (a) provides: “(a) Where an agreement or covenant is made which
provides for a sliding scale recovery agreement between one or more, but not all, alleged defendant
tortfeasors and the plaintiff or plaintiffs: [¶] (1) The parties entering into any such agreement or covenant
shall promptly inform the court in which the action is pending of the existence of the agreement or covenant
and its terms and provisions; and [¶] (2) If the action is tried before a jury, and a defendant party to the
agreement is a witness, the court shall, upon motion of a party, disclose to the jury the existence and content
of the agreement or covenant, unless the court finds that such disclosure will create substantial danger of
undue prejudice, of confusing the issues, or of misleading the jury. [¶] The jury disclosure herein required
shall be no more than necessary to be sure that the jury understands (1) the essential nature of the
agreement, but not including the amount paid, or any contingency, and (2) the possibility that the agreement
may bias the testimony of the alleged tortfeasor or tortfeasors who entered into the agreement.” Section
877.5, subdivision (b), which defines “sliding scale recovery agreement” for purposes of the provision, is
quoted in full in footnote 1, ante.

20 During settlement negotiations, it will be recalled, Abbott agreed to bear 70 percent of its proposed
$2.5 million settlement, and plaintiffs’ settlement conference memorandum clearly designated Abbott as the
principal tortfeasor.

25 That “ballpark” figure may or may not be the same as the “value” of the sliding scale agreement,
depending on the specifics of the sliding scale agreement and the facts of the particular case. Although —
as we have explained above — the consideration which a settling defendant pays by entering into a sliding
scale agreement must at a minimum fall within the “ballpark” of its fair share of comparative liability if the
settling defendant is to gain immunity from its codefendants’ claims for comparative indemnity, in some
cases the plaintiff may be unwilling to settle for the settling defendant’s minimum ballpark figure and the
parties may agree to a sliding scale agreement that is more costly to the settling defendant. In those cases,
the “value” of the sliding scale agreement and the settling defendant’s minimum “ballpark” figure will differ,
and a veto provision may be valid even if it is pegged to a figure that differs from the value of the sliding
scale agreement. As noted above, however, a settling defendant may only reserve the right to veto a
subsequent settlement that will result in its bearing an unfair share of the plaintiff’s damages.

26 Some out-of-state decisions have found such loan agreements invalid as violative of the common law
doctrines of champerty and maintenance, which generally preclude a “stranger” to a lawsuit from financing
the litigation in return for a portion of any recovery. California, however, has never adopted the common law
doctrines of champerty and maintenance, and thus the fact that a settlement takes the form of such a loan
does not in itself render the settlement invalid.

27 The rapid increase in the attractiveness of such agreements to plaintiffs in recent years may have
been based, in large part, on the fact that prior decisions have permitted plaintiffs to receive the substantial
benefits of sliding scale agreements without any corresponding reduction in their claims against the
remaining defendants. Moreover, as a result of our resolution of the issues presented in this case,
defendants may also find such agreements less attractive in the future. The result of the offset requirement
will be a reduction in the amount of exposure of a nonsettling defendant to the plaintiff by the amount of the
settling parties’ declaration of value, thereby increasing the odds that the settling defendant will be obligated
to perform under its guaranty agreement with plaintiff. Thus, after trial, the obligation of the settling
defendant to the plaintiff under the sliding scale agreement will now be the difference, if any, between the
amount of total damages awarded against a nonsettling defendant, reduced by the valuation of the sliding
scale agreement, and the guaranteed amount.
 [2] Effect of Good Faith Settlement

What effect does a good faith pretrial settlement have on the settling parties?
On the nonsettling parties? What rights does a settling defendant have with
respect to equitable indemnification from other joint tortfeasors? Calculators
ready? Consider the following examples:

[a] First, an easy hypothetical

Plaintiff sued three joint tortfeasors for injuries caused by their alleged
negligence. Plaintiff settles with defendant A for $50,000 prior to trial, and the
settlement is determined to be in good faith within the meaning of CCP § 877.6.
Defendants file cross-complaints for equitable indemnity against each other.
Following a trial, the jury awards plaintiff $260,000, allocating fault as
follows: Defendant A (10%), defendant B (30%), and defendant C (60%).

If defendant B pays the entire judgment, how much is B entitled to recover

from defendant A? From defendant C? How much is defendant A entitled to
recover from defendant B? From defendant C?

[b] Now for a real case

Plaintiff auto passenger sued defendants auto driver, Truck Company and
country club for injuries suffered in an automobile collision. Defendant Truck
Company filed a new party cross-complaint for equitable indemnity against the
State of California, alleging negligent maintenance of the highway. All
defendants settle with plaintiff for a total of $920,000, with defendant Truck
Company paying $875,000 of this total amount. Defendant Truck Company
proceeds against the State for equitable indemnity, and the court determines that
reasonable damages for plaintiff’s injuries is $875,000 and that the allocation of
fault is: State (10%), Truck Company (40%), and other defendants (50%). The
trial court enters judgment for Truck Company against the State for $87,500. Is
this equitable indemnity judgment for the correct amount? Explain your
calculations. See Lyly & Sons Trucking Co. v. State of California , 147 Cal.
App. 3d 353, 195 Cal. Rptr. 116 (1983).

[c] A more difficult real case

Plaintiff Driver and plaintiff Passenger were seriously injured when Driver’s
Toyota land cruiser rolled over. Driver had purchased the land cruiser from
defendant Dealer. Driver, a teenager, was intoxicated at the time of the crash,
having illegally obtained alcohol first from Friend’s Parents and later from
Wine Store.

(1) Plaintiff Passenger sued joint tortfeasor defendants Driver, Dealer,

Toyota, and Friend’s Parents for negligence. Prior to trial, plaintiff Passenger
settled with all defendants (except for Friend’s Parents) in the amount of
$1,525,173 (of which $200,000 was paid by Toyota and $955,000 by Dealer).
Passenger proceeded to trial [718/719]against Friend’s Parents, and the jury
returned a special verdict of $1,249,136 against Friend’s Parents. Toyota sought
equitable indemnity from the other defendants, particularly Friend’s Parents.
The jury apportioned fault among the defendants as follows: Driver (60%),
Dealer (15%), Toyota (15%), Friend’s Parents (10%). Defendants Dealer and
Toyota filed cross-complaints for equitable indemnity against the other
defendants. How much is Dealer entitled to recover from Friend’s Parents?
From the other defendants? How much is Toyota entitled to recover from
Friend’s Parents? From the other defendants? Explain your calculations. If you
need some help, see Sagadin v. Ripper, 175 Cal. App. 3d 1141, 1174, 221 Cal.
Rptr. 675 (1985).

(2) Plaintiff Driver also sued defendant Co-Driver, Dealer, Toyota, and
Friend’s Parents for personal injury damages. Before trial, plaintiff Driver
settled with Co-Driver in the amount of $334,913; and proceeded to trial against
defendants Dealer, Toyota, and Friend’s Parents. The jury rendered a special
verdict of $1,250,500 against these defendants, apportioning fault as follows:
Plaintiff Driver (60%), Defendant Toyota (15%), Defendant Dealer (15%), and
defendant Friend’s Parents (10%). What is the net amount of the joint and
several judgment entered against these three defendants? See Sagadin v. Ripper,
supra, 175 Cal. App. 3d at 1171. The three defendants also filed cross-
complaints for equitable indemnity against each other. What is the proper
amount of each defendant’s share in these indemnity actions? Explain your
calculations.

[d] The Prejudgment Interest Complication

An award of prejudgment interest may further complicate the calculations. In

Newby v. Vroman , 11 Cal. App. 4th 283, 14 Cal. Rptr. 2d 44 (1992) , for
example, the court held that the prejudgment interest due a plaintiff is first
computed on the judgment without deduction or offset for amounts paid by a
settling joint tortfeasor. “[A] plaintiff who in good faith settles with a joint
tortfeasor before judgment against a nonsettling joint tortfeasor, may thereafter
recover from the nonsettling defendants: (a) prejudgment interest up to the date
of settlement on the total judgment; and (b) prejudgment interest after the date of
settlement only on the balance of the total judgment remaining after its reduction
by the settlement sum paid.” Id. at 288. What are the policy considerations
which support the court’s holding, as opposed to calculating prejudgment
interest only on the amount of the judgment after the settlement is deducted?

[e] Complications in Calculating Offset Credits

What is the proper amount of the offset credit for a good faith settlement
where the settling defendant has not actually paid the settlement amount at the
time judgment is entered against the nonsettling defendants? In Garcia v. Duro
Dyne Corp., 156 Cal. App. 4th 92, 67 Cal. Rptr. 3d 100 (2007) , the plaintiffs
brought a personal injury action against numerous defendants, including
manufacturers, distributors, and general contractors, seeking damages for cancer
allegedly caused by exposure to asbestos-containing products. The plaintiffs
settled with several defendants before trial in the total amount of $925,176, and
proceeded to trial against the nonsettling manufacturer. The jury found the
defendant manufacturer [719/720]was 3% at fault, and returned a verdict of $1.9
million in favor of the plaintiffs. The defendant then asked the court to reduce
the jury’s economic damages award the total amount of the good faith
settlements attributable to economic damages. The trial court denied this request
because, at the time of the trial, $700,000 of the settlement monies remained
unpaid for over six months.

On appeal, the Garcia court held that a nonsettling defendant is not entitled to
an offset for a settlement until the monies have been paid to the plaintiff, but that
the judgment must include a reservation of jurisdiction for the trial court to
calculate and award offset credits to the defendant for any future payments that
are made by the settling defendants. Garcia, 156 Cal. App. 4th at 100-102. Do
you agree with this holding? If the settling defendants never pay the settlement
monies, does this mean the nonsettling defendant receives no offset credit but is
barred from seeking equitable indemnity from the settling defendants? Is that
fair?

[3] Good Faith Settlement Determination

[a] Relevant Factors

The Supreme Court described the factors relevant to a judicial determination

of “good faith” settlement within the meaning of CCP § 877.6 in Tech-Bilt, Inc.
v. Woodward-Clyde & Assoc. , 38 Cal. 3d 488, 494-99, 213 Cal. Rptr. 256, 698
P.2d 159 (1985) , quoted at length in Abbott Ford. Which factors appear to be
the most important? The amount of the settlement in light of the settling
defendant’s likely liability? What other factors are significant? The trial court
has wide discretion, however, in deciding whether a settlement is in good faith
and in arriving at an allocation of valuation of the various interests involved.
See, e.g., North Cnty. Contractors’ Assn. v. Touchstone Ins. Services , 27 Cal.
App. 4th 1085, 1095, 33 Cal. Rptr. 2d 166 (1994) (“An educated guess is the
best a judge can do when deciding whether a settlement is made in good faith”);
Erreca’s v. Superior Court , 19 Cal. App. 4th 1475, 24 Cal. Rptr. 2d 156
(1993) (trial court must be accorded wide discretion to ensure that new forms of
settlements are kept within the bounds of fairness to both settling and nonsettling
parties).

In applying the Tech-Bilt factors to make a “good faith” settlement

determination, a trial court must not only consider whether the settlement amount
is in the ballpark of the settling defendant’s potential liability to the plaintiff but
must also consider the settling defendant’s proportionate share of liability to
other defendants on their claims for equitable indemnity, See, e.g., TSI Seismic
Tenant Space, Inc. v. Superior Court , 149 Cal. App. 4th 159, 56 Cal. Rptr. 3d
751 (2007) (trial court erred in finding the settlement between plaintiff
developer and defendant geotechnical engineering company for $50,000, the
maximum payment under the limitation of liability clause in the contract between
plaintiff and the settling defendant, without also considering defendant’s
proportionate share of culpability and its potential for liability to the nonsettling
defendants for indemnity); Long Beach Mem. Med. Center v. Superior Court,
172 Cal. App. 4th 865, 91 Cal. Rptr. 3d 494 (2009) (good faith settlement
determination in a medical negligence action against the defendant hospital, the
treating physicians, and other [720/721]defendants where the plaintiffs settled with
the defendant hospital and the other defendants, except the physicians, for a total
of $8 million and the physicians subsequently settled with the plaintiffs for
$200,000 vacated because the $200,000 settlement was wholly disproportionate
to the defendant physicians’ share of liability to the plaintiff and also was
disproportionate to the physicians’ potential liability to the defendant hospital).

[b] Valuation Problems

I n County of Los Angeles v. Guerrero , 209 Cal. App. 3d 1149, 257 Cal.
Rptr. 787 (1989), the plaintiff sued defendants Guerrero (driver of other auto)
and County (maintained road) seeking damages in excess of $1 million for
injuries sustained in an auto accident. Prior to commencing litigation, plaintiff
settled with defendant Guerrero for $30,000, the maximum amount of
Guerrero’s insurance coverage. The trial court found a “good faith” settlement
even though Guerrero’s likely fault exceeded 50% and the County’s was less
than 50%. The Court of Appeal, applying the Tech-Bilt factors, upheld the
“good faith” determination. Although the settlement amount was
disproportionately low, the court found it reasonable due to defendant
Guerrero’s limited insurance and relative insolvency. Id. at 1157-58. The court
reached the same conclusion on similar facts in Schmidt v. Superior Court, 205
Cal. App. 3d 1244, 253 Cal. Rptr. 137 (1988) (good faith settlement
determination upheld where defendant settles $500,000 action for $55,000, the
limit of her auto insurance coverage, and has no other assets).

Is a settlement for the amount of a defendant’s maximum insurance coverage

always a “good faith” settlement? Why not? See Florrie Young Roberts, The
Financial Condition and Insurance Policy Limits of a Joint Tortfeasor
Wishing to Settle in Good Faith: Problems of Discovery and Confidentiality ,
26 Santa Clara L. Rev. 63 (1986).

The Supreme Court in Tech-Bilt found a settlement for a waiver of costs did
not constitute a good faith settlement under the circumstances of that case. Tech-
Bilt, supra, 38 Cal. 3d at 501-502. Is a settlement for a waiver of costs always
a “bad faith” settlement? See West v. Superior Court, 27 Cal. App. 4th 1625, 34
Cal. Rptr. 2d 409 (1994).

Valuation of noncash consideration for settlement can be particularly

troublesome. For example, settling defendants may assign to the plaintiff their
indemnity and contribution rights against nonsettling defendants as part of the
settlement package, and these settling parties may attribute a dollar value to
these assignment rights. What criteria should a trial court consider in
determining whether the attributed valuation is appropriate? See, e.g., Regan
Roofing Co. v. Superior Court, 21 Cal. App. 4th 1685, 1710-15, 27 Cal. Rptr.
2d 62 (1994) (information in record held inadequate to support $5,000
valuation for assignment of potential $2 million in indemnity rights); Erreca’s v.
Superior Court, 19 Cal. App. 4th 1475, 1496-99, 24 Cal. Rptr. 2d 156 (1993)
(trial court properly approved $300,000 valuation for assignment rights where
potential recovery could be $1.5 million).

[721/722]

[c] Evidentiary Basis

The settling parties must present a clear and complete description of the
settlement sufficient to permit the trial court to properly apply the Tech-Bilt
factors. “At a minimum, a party seeking confirmation of a settlement must
explain to the court and to all other parties: who has settled with whom, the
dollar amount of each settlement, if any settlement is allocated, how it is
allocated between issues and/or parties, what nonmonetary consideration has
been included, and how the parties to the settlement value the nonmonetary
consideration.” Alcal Roofing & Insulation v. Superior Court, 8 Cal. App. 4th
1121, 1129, 10 Cal. Rptr. 2d 844 (1992) . See Brehm Communities v. Superior
Court, 88 Cal. App. 4th 730, 105 Cal. Rptr. 2d 918 (2001) (ordering trial court
to vacate its order finding settlement to be in good faith because the settling
parties did not present competent evidence of the value of the nonmonetary
consideration to be transferred by them and did not reduce this value by the
value of any consideration passing from the plaintiff to the settling defendants).

[d] Allocation of Settlement Amounts in Complex Litigation

The good faith settlement and subsequent offset determinations can become
very complicated in complex litigation — lawsuits involving multiple plaintiffs
and causes of action with different damages, and numerous defendants, many of
whom may be liable on some but not all claims. A frequently encountered
example is comprehensive construction defects litigation. In such cases, several
homeowners in a subdivision sue a variety of potentially responsible
defendants, including the developer-seller and numerous subcontractors such as
the designers, the graders, soil engineers, drywallers, plumbers, and roofers,
etc. The trial court must require any settling parties, as part of the good faith
settlement determination process, to allocate specific settlement amounts to
certain issues and claims. See, e.g., Regan Roofing Co. v. Superior Court, 21
Cal. App. 4th 1685, 27 Cal. Rptr. 2d 62 (1994) ; Erreca’s v. Superior Court , 19
Cal. App. 4th 1475, 24 Cal. Rptr. 2d 156 (1993).

The trial court’s good faith determination therefore evaluates not only the
valuation of the overall settlement, but also of the allocation of settlement
proceeds as to various issues and parties. See, e.g., Regan Roofing, supra;
Errica’s, supra ; L. C. Rudd & Son, Inc. v. Superior Court, 52 Cal. App. 4th
742, 60 Cal. Rptr. 2d 703 (1997) (trial court ordered to vacate its good faith
settlement determination where the evidence showed that the “soils and
foundations” claims constituted approximately 55.1% to 61.1% of the total cost
of repair, but only $15,000 of the $75,000 allocated to repair liability was
allocated to the grading contractor’s potential liability). Why is a good faith
evaluation necessary with respect to how the overall settlement amount is
divided among issues and parties? Why is this particularly important where the
defendant developer-seller settled with the plaintiffs, but various defendant
subcontractors do not? How should this evaluation be accomplished?

The court in Erreca’s v. Superior Court, supra , 19 Cal. App. 4th at 1495-96,
addressed the evidentiary showing required to support approval of settlement
allocations in complex cases: “To the rules set forth in Alcal [Roofing &
Insulation v. Superior Court, supra] , [722/723]… we add the following
principles: A party seeking confirmation of a settlement must explain to the
court and all other parties … the evidentiary basis for any allocations and
valuations made, and must demonstrate that the allocation was reached in a
sufficiently adversarial manner to justify the presumption that a reasonable
valuation was reached.” Why is such additional evidence essential to the good
faith settlement determination when the valuations and allocations are
challenged by nonsettling defendants? This situation is analogous to cases in
which settlement payments are contingent or where noncash consideration is
paid for settlement, is it not? How so? See Regan Roofing Co. v. Superior
Court, supra, 21 Cal. App. 4th at 1701, 1705. Is the good faith settlement
evaluation process in such complex cases also analogous to that endorsed by the
Abbott Ford court for sliding scale settlements? How so?

[e] Total Equitable Indemnity

Despite some earlier lower court decisions to the contrary, the Supreme
Court in Far West Financial Corp. v. D & S Co., Inc., 46 Cal. 3d 796, 800, 251
Cal. Rptr. 202, 760 P.2d 399 (1988) , held that a “good faith” settlement under
CCP § 877.6 bars not only claims by other joint tortfeasors for partial equitable
indemnity, but also claims for total equitable indemnity.

[f] Rights of Settling Defendant

When a defendant tortfeasor enters into a “good faith” settlement with the
plaintiff, what rights does that defendant have with respect to recovery from
nonsettling joint tortfeasors? See, e.g. , Bolamperti v. Laurco Mftg., 164 Cal.
App. 3d 249, 210 Cal. Rptr. 155 (1985); Sears, Roebuck & Co. v. Intl.
Harvester Co., 82 Cal. App. 3d 492, 497, 147 Cal. Rptr. 262 (1978) . What
rights does a settling defendant have with respect to recovery from other joint
tortfeasor defendants who subsequently also settle with the plaintiff before trial,
but several months after the first defendant’s settlement? See Mill Valley Refuse
Co. v. Superior Court, 108 Cal. App. 3d 707, 166 Cal. Rptr. 687 (1980).

[g] Which Parties Bound?

 A determination of “good faith” binds only those joint tortfeasors who were
parties to the action at the time of the determination and were given an
opportunity to be heard on the good faith of the settlement. Singer Co. v.
Superior Court, 179 Cal. App. 3d 875, 881, 225 Cal. Rptr. 159 (1986) ; see
also CCP § 877.6(a). What constitutional principle is the source of this
limitation? To what extent is an insurer of a tortfeasor bound by a good faith
determination as to the terms of a settlement and stipulated judgment, where the
insurer was not a party to the settled action and did not participate in the
settlement? Compare Pacific Estates, Inc. v. Superior Court, 13 Cal. App. 4th
1561, 17 Cal. Rptr. 2d 434 (1993) (nonparticipating excess insurer not bound
by “good faith” determination of settlement) with Diamond Heights
Homeowners Assn. v. Natl. American Ins. Co., 227 Cal. App. 3d 563, 277 Cal.
Rptr. 906 (1991) (although not a party to the action or settlement, excess insurer
who filed objections to settlement bound by “good faith” determination).

[723/724]

[4] Fair Responsibility Act of 1986

The voter-approved Fair Responsibility Act of 1986 (Prop. 51), Civil Code
§§ 1431-1431.5, modifies the common law rule of joint and several liability by
making each defendant’s liability for “non-economic” damages several and not
joint in comparative fault cases. “Each defendant shall be liable only for the
amount of non-economic damages allocated to that defendant in direct
proportion to that defendant’s percentage of fault.” CC § 1431.2(a). “Non-
economic damages” are defined in CC § 1431.2(b)(2); “economic damages” in
CC § 1431.2(b)(1). How does this Act modify the common law principles
announced in American Motorcycle? How does the Fair Responsibility Act
affect the apportionment calculations in a “good faith” settlement situation?
Consider the following facts:

(1) Plaintiff sues defendants A, B, and C for personal injuries caused by

defendants’ alleged joint negligence. Plaintiff settles with defendant A for
$300,000 before trial. The jury renders a verdict for plaintiff against all
defendants for a total amount of $1 million in economic damages and another $1
million in non-economic damages. The special verdict allocates fault as
follows: defendant A (60%), defendant B (30%), and defendant C (10%).
Defendant B is insolvent. How much is plaintiff entitled to recover from
defendant C?
 (2) Assume the same facts as above, except that defendant A had settled for
$1.5 million ($750,000 designated for economic damages, and $750,000 for
non-economic damages), and that defendant A had filed an action for equitable
indemnity against defendants B and C. How much is defendant A entitled to
recover from defendant B? From defendant C? How much is plaintiff entitled to
recover from defendant C?

(3) Plaintiffs filed a products liability action against defendants Ford Motor
Company (car manufacturer) and Allied-Signal, Inc. (seat belt manufacturer) for
the wrongful death of their daughter, who was killed during a single car
accident. Before trial, plaintiffs reached a good faith settlement with Ford of
$382,500. At trial, plaintiffs and defendant Allied-Signal stipulated that
plaintiffs made no claim for economic loss and any jury award would be
deemed purely non-economic. The jury found damages of $500,000, and
assigned comparative fault 35% to Allied-Signal, 45% to Ford, and 20% to
decedent. The trial court then gave judgment for $175,000 against defendant
Allied-Signal. Allied-Signal appealed, and argued that the judgment against it
should be reduced to $17,500. Did the trial court correctly compute the amount
of the judgment against defendant Allied-Signal? Why? See Hoch v. Allied-
Signal, Inc., 24 Cal. App. 4th 48, 29 Cal. Rptr. 2d 615 (1994).

(4) Apportionment becomes more complicated where the plaintiff is partially

at fault, and a settlement amount paid by a defendant does not differentiate
between economic and non-economic damages.

For example, in Espinoza v. Machonga, 9 Cal. App. 4th 268, 11 Cal. Rptr.
2d 498 (1992), plaintiff Espinoza sued defendants Machonga and Housing
Authority for eye injuries caused by shattered glass from a door. Plaintiff settled
with the defendant Housing Authority for $5,000. The case proceeded to trial,
and the court awarded plaintiff the sums of $6,242.94 for economic damages
(medical expenses) and $15,000 for non-economic damages (general damages).
The trial court apportioned fault as follows: plaintiff Espinoza (10%), defendant
Housing Authority (45%), and defendant [724/725]Machonga (45%). At the
parties’ request, the trial court ruled that the proper portion of the judgment for
which defendant Machonga was liable was $10,900.88. Defendant Machonga
appealed. Were the trial court’s calculations correct when it ruled that
Machonga was liable to Espinoza in the amount of $10,900.88? Why? Explain
your calculations. If you need help, see Espinoza, supra, 9 Cal. App. 4th at 271-
77.
 (a) Several recent decisions have applied Espinoza’s formula for calculating
offsets: The portion of the settlement which may be set off from a judgment of
economic damages is determined by application of the percentage of the
economic damages awarded in relationship to the total award of damages. See,
e.g., Ehret v. Congoleum Corp., 73 Cal. App. 4th 1308, 87 Cal. Rptr. 2d 363
(1999) (in the absence of a court-approved pretrial allocation of a settlement
between economic and noneconomic damages, the trial court must base the
allocation on the percentage reflected in the jury verdict); McComber v. Wells ,
72 Cal. App. 4th 512, 517-18, 85 Cal. Rptr. 2d 376 (1999) (determining the
setoff to which the nonsettling defendants were entitled where the jury found the
settling defendants were not negligent); Hackett v. John Crane, Inc., 98 Cal.
App. 4th 1233, 120 Cal. Rptr. 2d 662 (2002) (applying the Espinoza formula in
a wrongful death action).

(b) What is the impact of the Fair Responsibility Act on a settling tortfeasor’s
right to seek comparative equitable indemnity from a nonsettling concurrent
tortfeasor? In Union Pac. Corp. v. Wengert , 79 Cal. App. 4th 1444, 95 Cal.
Rptr. 2d 68 (2000), the court concluded that comparative equitable indemnity is
available only for that portion of the settlement attributable to economic
damages, because that is the extent of the underlying joint obligation. According
to the court, a defendant has no right to settle the plaintiff’s claim against another
party for noneconomic damages; each defendant is entitled to severally negotiate
or litigate its own several liability. Union Pacific, 79 Cal. App. 4th at 1450-52.
Does the Act so complicate settlement strategies that its unpredictable impact
may actually discourage pretrial settlements? See id at 1451-52.

(c) The Medical Injury Compensation Reform Act (MICRA), Civil Code §
3333.2, limits the total amount of any award of noneconomic damages in an
action against health care providers based on professional negligence to
$250,000. In Mayes v. Bryan, 139 Cal. App. 4th 1075, 44 Cal. Rptr. 3d 14
(2006), the court considered the interplay between the MICRA cap, Proposition
51, and settlements with other tortfeasors who are subject to MICRA. The jury
awarded plaintiff $3 million in noneconomic damages and $1,366,357 in
economic damages, for a total verdict of $4,366,357. The jury determined that
the nonsettling defendants’ proportionate liability was 20 percent, and the
settling parties’ was 80 percent. Plaintiff recovered a total of $650,000 from the
settling defendants. In light of the $250,000 MICRA cap on the total amount of
noneconomic damages the plaintiff can recover from all defendants, how much
is the plaintiff entitled to recover from the nonsettling defendants? See May, 139
Cal. App. 4th at 1098-1102.
 (5) When the plaintiff settles with fewer than all defendants in a Prop. 51
case, the settlement value must be allocated between economic and non-
economic damages to determine liability between the nonsettling defendants and
plaintiff, as well as to determine equitable indemnity among the joint tortfeasor
defendants. [725/726]Why? The plaintiff would want as little as possible of the
settlement amount allocated to economic damages, would she not? Why? In
contrast, a nonsettling defendant would want as much as possible allocated to
economic damages, would it not? Why? And although the settling defendant’s
interest is less obvious, in most circumstances he would also want as much as
possible of the settlement amount allocated to economic damages. Why?

For a good discussion of these competing interests in Prop. 51 case

settlements, see Haning, Flahavan, & Kelly, California Practice Guide:
Personal Injury §§ 4:185.20-.29 (The Rutter Group), quoted with approval in
Espinoza v. Machonga, supra, 9 Cal. App. 4th at 275-76. Should the settling
parties’ express allocation of economic and non-economic damages as part of
the settlement agreement be binding on the trial court? See Jones v. John Crane,
Inc., 132 Cal. App. 4th 990, 1006-11, 35 Cal. Rptr. 3d 144 (2005) (the
allocation of the proceeds that was specified in the settlement agreement but
was never judicially approved must be disregarded; the post-trial allocation of
the prior settlement should mirror the jury’s apportionment of economic and
noneconomic damages); Greathouse v. Amcord, Inc. , 35 Cal. App. 4th 831, 41
Cal. Rptr. 2d 561 (1995) (in a post-trial motion for apportionment of settlement,
the jury’s apportionment of total damages between economic and non-economic
damages held binding on the trial court, not the allocation designated in the pre-
trial agreement between the settling parties). Why not?

(6) The Supreme Court upheld the constitutionality of the Fair Responsibility
Act of 1986 in Evangelatos v. Superior Court, 44 Cal. 3d 1188, 246 Cal. Rptr.
629, 753 P.2d 585 (1988) . In DaFonte v. Up-Right, Inc., 2 Cal. 4th 593, 7 Cal.
Rptr. 2d 238, 828 P.2d 140 (1992) , the court construed Civil Code § 1431.2 to
mean that a defendant’s liability for non-economic damages cannot exceed his
proportionate share of fault as compared to all fault responsible for the
plaintiff’s injuries, not merely that of the defendants present in the lawsuit.
DaFonte, 2 Cal. 4th at 603.

(7) Is an intentional tortfeasor entitled to a reduction or apportionment of

noneconomic damages under the Fair Responsibility Act of 1986 (Prop. 51),
CCP §§ 1431-1431.5? See Thomas v. Duggins Constr. Co. , 139 Cal. App. 4th
1105, 44 Cal. Rptr. 3d 66 (2006) (Prop. 51 does not apply in favor of an
intentional tortfeasor as against a plaintiff or negligent tortfeasor; an intentional
tortfeasor is liable for the entirety of the plaintiff’s damages). Are defendants
entitled to a reduction or apportionment of noneconomic damages under Prop.
51 in a strict liability action? Compare Bostick v. Flex Equip. Co., 147 Cal.
App. 4th 80, 54 Cal. Rptr. 3d 28 (2007) (in a strict products liability action
involving a single defective product where all of the defendants are in the same
chain of distribution, Proposition 51 does not eliminate the liable defendant’s
joint responsibility for noneconomic damages because that defendant’s liability
is not based on fault but rather is imposed by a rule of law as a matter of public
policy), and Wimberly v. Derby Cycle Corp., 56 Cal. App. 4th 618, 65 Cal.
Rptr. 2d 532 (199& (Prop. 51 does not apply in a strict product liability action
involving a single indivisible injury), with Arena v. Owens-Corning Fiberglas
Corp., 63 Cal. App. 4th 1178, 74 Cal. Rptr. 2d 580 (1998) (Prop 51 is
applicable in a strict liability asbestos exposure case where multiple products
manufactured by different defendants caused the plaintiff’s injuries and the
evidence provides a basis to allocate liability for noneconomic damages
between [726/727]defective products), and Wilson v. John Crane, Inc ., 81 Cal.
App. 4th 847, 851-59, 97 Cal. Rptr. 3d 240 (2000) (same).

[5] Statute of Limitations

Generally speaking, a cause of action for equitable indemnity does not accrue
for statute of limitation purposes when the original tort occurs, but instead
accrues at the time the tort defendant pays a judgment or settlement as to which
he is entitled to indemnity. Department of Transp. v. Superior Court , 26 Cal.
3d 744, 163 Cal. Rptr. 585, 608 P.2d 673 (1980) . This accrual rule applies
even though the tort defendant seeks partial comparative equitable indemnity,
and even though the third-party defendant is a government entity covered by the
claim filing requirements of the California Tort Claims Act. Id. at 760-62. A
few special statutes, most notably CCP § 337.15(c) relating to actions against
property developers for latent defects, alter these common law accrual rules for
indemnity actions. See, e.g., Time for Living, Inc. v. Guy Hatfield Homes/All
American Dev. Co., 230 Cal. App. 3d 30, 280 Cal. Rptr. 904 (1991).

[6] Contractual and Statutory Indemnity

[a] Express Contractual Indemnity

A party may agree by express contractual language to indemnify another in

certain circumstances, as specified in the contract. The extent of the
indemnitor’s duty is therefore determined by the express language of the contract
and intent of the parties, not by the doctrine of equitable indemnity. See, e.g.,
E.L. White, Inc. v. City of Huntington Beach, 21 Cal. 3d 497, 506-508, 146
Cal. Rptr. 614, 579 P.2d 505 (1978) (in absence of specific language
establishing duty to indemnify the indemnitee for his own active negligence,
express contractual indemnity provision may only require indemnification
where indemnitee has been no more than passively negligent); Maryland Cas.
Co. v. Bailey & Sons, Inc., 35 Cal. App. 4th 856, 41 Cal. Rptr. 2d 519 (1995)
(discussing principles of interpretation applying specifically to indemnity
agreements). Consequently, an indemnity claim against a co-defendant based on
express contract survives a good faith § 877.6 settlement. Peter Culley & Assoc.
v. Superior Court, 10 Cal. App. 4th 1484, 13 Cal. Rptr. 2d 624 (1992) (CCP §
877.6 does not apply in an action to enforce contractual indemnity; Civil Code §
2778 governs effect of settlement on such actions); C.L. Peck Contractors v.
Superior Court, 159 Cal. App. 3d 828, 205 Cal. Rptr. 754 (1984).

[b] Implied Contractual Indemnity

Occasionally the court may imply a duty of indemnity arising out of

contractual language not specifically dealing with indemnification. E.g.,
Stratton v. Peat, Marwick, Mitchell & Co., 190 Cal. App. 3d 286, 291-92, 235
Cal. Rptr. 374 (1987); IRM Corp. v. Carlson, 179 Cal. App. 3d 94, 224 Cal.
Rptr. 438 (1986). A claim of implied contractual indemnity is considered
merely a form of equitable indemnity subject to the American Motorcycle
guidelines; consequently a good faith settlement under CCP § 877.6(c) will bar
a claim for implied contractual indemnity. [727/728]Bay Dev., Ltd. v. Superior
Court, 50 Cal. 3d 1012, 1032-33, 269 Cal. Rptr. 720, 791 P.2d 290 (1990).

[c] Statutory Indemnity

A few special statutes may require one person to indemnify another under
specified circumstances. E.g., Government Code § 825 (Public entity shall pay
judgment entered against employee for causing injury within scope of
employment). A good faith settlement does not bar such statutory indemnity
claims. See, e.g. , Kantor v. Housing Auth. of Fresno Cnty. , 8 Cal. App. 4th
424, 10 Cal. Rptr. 2d 695 (1992).

[7] Equitable Indemnity in Non-Negligence Actions

[a] Strict Liability and Intentional Torts

Comparative equitable indemnity among joint tortfeasors applies even though

the defendants’ liability to plaintiff is based on strict liability, see, e.g., GEM
Developers v. Hallcraft Homes of San Diego, Inc., 213 Cal. App. 3d 419, 261
Cal. Rptr. 626 (1989); Gentry Constr. Co. v. Superior Court , 212 Cal. App. 3d
177, 260 Cal. Rptr. 421 (1989); or on willful misconduct, see, e.g. , Southern
Pac. Transp. Co. v. State of Cal., 115 Cal. App. 3d 116, 121, 171 Cal. Rptr.
187 (1981). However, contribution pursuant to CCP § 875 is not available
where the tortfeasor has intentionally injured the plaintiff. CCP § 875(d).
Although the Supreme Court has not yet determined whether an intentional
tortfeasor may obtain equitable indemnity from concurrent intentional tortfeasors
on a comparative fault basis, see, e.g., Molko v. Holy Spirit Assn., 46 Cal. 3d
1092, 1127-28, 252 Cal. Rptr. 122, 762 P.2d 46 (1988) , cert. denied, 490 U.S.
1084 (1989); a divided Court of Appeal has concluded the doctrine of equitable
indemnity applies to intentional tortfeasors. Baird v. Jones , 21 Cal. App. 4th
684, 27 Cal. Rptr. 2d 232 (1993).

[b] Contract Actions

The Legislature in 1987 expanded the scope of § 877.6 to include “co-

obligors on a contract debt” as well as “joint tortfeasors.” The purpose of this
1987 amendment was to provide a similarly efficient mechanism to determine
the good faith of any settlement in a multiparty contract action. See Pacific
Estates, Inc. v. Superior Court, 13 Cal. App. 4th 1561, 17 Cal. Rptr. 2d 434
(1993). Does § 877.6 apply when a lawsuit is brought by an insured against
multiple insurers allegedly covering the same loss, one insurer settles with the
insured, and the settling insurer seeks to use the good faith order approving the
settlement to avoid cross-claims for contribution from the other insurers? See
Hartford Accident & Indem. Co. v. Superior Court , 29 Cal. App. 4th 435, 34
Cal. Rptr. 2d 520 (1994) (insurance companies not “co-obligors” under §
877.6; each insurer owed primary coverage responsibilities springing from its
own separate contractual undertaking); Herrick Corp. v. Canadian Ins. Co., 29
Cal. App. 4th 753, 34 Cal. Rptr. 2d 844 (1994) (two primary insurers sharing
same risk were not “co-obligors” on a single contract debt; settlement by
insured tortfeasor does not preclude contribution action between the two
primary insurers); but see Diamond Heights Homeowners Assn. v. Natl.
American Ins. Co., 227 Cal. App. 3d 563, 277 Cal. Rptr. 906 (1991)
[728/729](excess insurer viewed as co-obligor with primary insurer).

[c] Public Policy Limitations

The doctrine of equitable indemnity is not available in cases where it would

operate against public policy. Western Steamship Lines, Inc. v. San Pedro
Peninsula Hosp., 8 Cal. 4th 100, 109-110, 32 Cal. Rptr. 2d 263, 876 P.2d 1062
(1994); Paragon Real Estate Group of San Francisco, Inc. v. Hansen, 178
Cal. App. 4th 177, 187-90, 100 Cal. Rptr. 3d 234 (2009) . One such type of case
is where a predecessor attorney seeks indemnification for malpractice from his
successor attorney. See Western Steamship, supra, 8 Cal. 4th at 110 & n.7;
Musser v. Provencher , 28 Cal. 4th 274, 121 Cal. Rptr. 2d 373, 48 P.3d 408
(2002) (observing that the policies of avoiding conflicts of interest and
protecting confidentiality of attorney-client communications bars
indemnification in predecessor/successor cases). However, these policies do
not preclude concurrent counsel or co-counsel from suing one another for
indemnification of legal malpractice damages. Musser, 28 Cal. 4th at 281-85.
Why are these policy considerations different in these two types of legal
malpractice cases?

[8] Contribution

What purpose does the contribution statutes, CCP §§ 875-876, now serve
after American Motorcycle? A joint tortfeasor may want to utilize statutory
contribution when it is more favorable to apportion liability among all
defendants on a pro rata rather than a comparative fault basis. Why will this
strategy not work when there is a pretrial settlement?

By its terms, CCP § 877 applies only to prejudgment, not postjudgment,

settlements; whereas the contribution statutes expressly apply to “judgments.”
CCP §§ 875, 876. See Jhaveri v. Teitelbaum , 176 Cal. App. 4th 740, 750, 98
Cal. Rptr. 3d 268 (2009); Be v. Western Truck Exch. , 55 Cal. App. 4th 1139,
64 Cal. Rptr. 2d 527 (1997). Consequently, although antiquated as a concept,
pro rata contribution does apply where a defendant seeks post-judgment
contribution (as opposed to pre-judgment equitable indemnity based on
comparative fault) from joint tortfeasors also subject to the judgment. Coca-
Cola Bottling Co. v. Lucky Stores, Inc ., 11 Cal. App. 4th 1372, 14 Cal. Rptr.
2d 673 (1992) (joint tortfeasor entitled to seek statutory contribution even
though claim for equitable indemnity had been previously denied); Lamberton v.
Rhodes-Jamieson, 199 Cal. App. 3d 748, 753-54, 245 Cal. Rptr. 162 (1988).

Because CCP § 877 does not apply where a joint tortfeasor defendant enters
into a post-judgment settlement with the plaintiff, that defendant is still liable for
contribution under CCP § 875 and § 876. What are the policy reasons for the
Legislature not extending the bar of CCP § 877 to post-judgment settlements?
For instead applying the pro rata contribution statutes?
 Do sections 877 and 877.6 apply and bar a cross-complaint for equitable
indemnity where a settlement between the plaintiff and a defendant joint
tortfeasor is reached after the liability phase of a bifurcated trial but before
damages have [729/730]been determined? See Price Pfister, Inc. v. William Lyon
Co., 14 Cal. App. 4th 1643, 18 Cal. Rptr. 2d 437 (1993) ; but see Southern Cal.
White Trucks v. Teresinski , 190 Cal. App. 3d 1393, 236 Cal. Rptr. 159 (1987)
(Sections 877 and 877.6 not applicable where settlement occurred after special
jury verdict against defendant on liability but before amount of damages
calculated based on a credit for previous settlements by plaintiff with other
defendants).

[9] Sliding Scale Agreements and Other Untraditional Settlements

[a] Sliding Scale Agreements

Why may parties view sliding scale (or “Mary Carter”) settlements as more
desirable than traditional fixed-amount settlements? What benefits did the
sliding scale agreement in Abbott Ford confer on the plaintiffs? The Supreme
Court declined to categorically condemn or condone sliding scale settlements.
Abbott Ford, Inc. v. Superior Court, supra, 43 Cal. 3d at 870. Why? Can you
think of some agreement terms which the court would consider contrary to
public policy? Do the various rulings by the court in Abbott Ford make sliding
scale agreements less attractive to plaintiffs? Less attractive to defendants?
Why? See Abbott Ford, supra, 43 Cal. 3d at 885, fn. 27.

CCP § 877.5(a) requires parties entering into a sliding scale recovery

agreement to promptly notify the court of its existence and terms. Why? What
unfair consequences may flow from undisclosed sliding scale settlements? See
Alcala Co. v. Superior Court, 49 Cal. App. 4th 1308, 57 Cal. Rptr. 2d 349
(1996) (mandatory disclosure of sliding scale agreements necessary so that the
factfinder will understand the true alignment of the interests of the litigating
parties and their witness).

Are you persuaded by the court’s reasoning in adopting a joint valuation

approach to sliding scale settlements? What are the alternatives? Realistically,
how can a nonsettling defendant establish that the value assigned is not within
the settling defendant’s Tech-Bilt “ballpark”? Or that the assigned value is too
low? See United Serv. Auto. Assn. v. Superior Court , 93 Cal. App. 4th 633,
113 Cal. Rptr. 2d 328 (2001) (vacating trial court’s good faith settlement
determination where the valuation the settling parties placed on the contingent
loan was not supported by analysis, expert opinion, or substantial evidence). Do
you understand why it is appropriate for a trial court to take into account the
nonsettling defendants’ conduct in determining whether a sliding scale
agreement is in good faith for purposes of CCP § 877 and § 877.6? Abbot, Ford,
supra, 43 Cal. 3d at 881-82.

As Abbott Ford illustrates, a settling defendant as part of the sliding scale

agreement typically retains a “veto power” over subsequent settlements between
plaintiff and other defendants. What purpose does this contractual veto power
serve? An open-ended veto provision violates public policy; a settling
defendant cannot veto a subsequent settlement with another defendant which is
sufficiently high so as to be in the Tech-Bilt “ballpark.” Why? This holding
requires the trial court to determine not only the good faith of any settlements,
but also the good [730/731]faith of any “vetoes,” does it not? There are
considerable costs in judicial economy, are there not?

The Supreme Court in Abbott Ford did not reach the issue of whether a
sliding scale agreement which eliminates a plaintiff’s incentive to settle with
other defendants is, by itself, not a good faith settlement for purposes of §§ 877
and 877.6. Should it be? See Mattco Forge, Inc. v. Arthur Young & Co. , 38
Cal. App. 4th 1337, 1354-55, 45 Cal. Rptr. 2d 581 (1995).

[b] Conditional Settlements

The plaintiff may settle with one of several defendant tortfeasors for a fixed
amount on the condition that this defendant remain in the lawsuit and participate
in the trial. E.g., Everman v. Superior Court, 8 Cal. App. 4th 466, 10 Cal. Rptr.
2d 176 (1992). The plaintiff may want such a condition to protect against
“empty chair” arguments by nonsettling defendants at trial. What does this
mean? In what types of cases should a plaintiff be most concerned about “empty
chair” arguments?

Can such a conditional settlement be considered in “good faith” under §

877.6, or is it subject to disapproval because collusive and inherently unfair to
nonsettling defendants? The court in Everman ruled that such a conditional
settlement, although not a sliding scale agreement governed by § 877.5, will bar
co-defendant equitable indemnity claims if it meets the Tech-Bilt standards.
However, as a general rule the terms of such an agreement should be disclosed
to the jury during trial. Everman, supra, 8 Cal. App. 4th at 473. Why require
this disclosure?
 [c] Structured Settlements

A structured settlement usually includes an up-front lump sum payment plus

installment payments over a period of several years. How should a court
determine the value of a structured settlement for “good faith” purposes? How
about a noncash settlement where the parties agreed to take specified actions
with no amount exchanged? See, e.g. , Arbuthnot v. Relocation Realty Serv.
Corp., 227 Cal. App. 3d 682, 278 Cal. Rptr. 135 (1991).

[10] Good Faith Settlement Procedures

Code of Civil Procedure § 877.6, which codifies American Motorcycle, sets

forth the procedures for a speedy resolution by the trial court of the issue of the
good faith of a settlement. CCP § 877.5 contains additional procedural
requirements applicable to sliding scale settlements. Whenever a court
determines that a settlement is in good faith, the settling defendant may utilize
summary judgment, judgment on the pleadings, demurrer, or motion to dismiss,
as appropriate to effectuate the bar of CCP § 877.6(c). See, e.g. , Shane v.
Superior Court, 160 Cal. App. 3d 1237, 207 Cal. Rptr. 210 (1984).

Any party aggrieved by a trial court’s determination of the good faith or lack
of good faith of a settlement may seek immediate appellate review by writ of
mandate. CCP § 877.6(e); see, e.g. , Toyota Motor Sales U.S.A. v. Superior
Court, 220 Cal. App. 3d 864, 269 Cal. Rptr. 647 (1990) (because the trial court
abused its discretion in finding settlement in good faith, Court of Appeal issued
writ of mandate directing [731/732]trial court to vacate good faith determination
order). May an aggrieved party forgo writ review and instead seek to have the
determination reviewed for the first time on appeal from the final judgment
arising out of the trial of the plaintiff’s claims against the nonsettling
defendants? See Main Fiber Products, Inc. v. Morgan & Franz Ins. Co. , 73
Cal. App. 4th 1130, 87 Cal. Rptr. 2d 108 (1999) (Failure to seek immediate
writ review pursuant to § 877.6(e) precluded appellate review of a good faith
determination by means of an appeal from the final judgment); O’Hearn v.
Hillcrest Gym & Fitness Ctr., Inc ., 115 Cal. App. 4th 491, 9 Cal. Rptr. 3d 342
(2004) (a party wishing to challenge the merits of a “good faith settlement”
determination must do so via a petition for writ of mandate in the manner and
within the time prescribed in CCP § 877.6(e)); Maryland Cas. Co. v. Andreini
& Co., 81 Cal. App. 4th 1413, 97 Cal. Rptr. 2d 752 (2000) (trial court’s good
faith settlement determination is subject to appellate review on appeal from
final judgment where the nonsettling defendant’s timely petition for pretrial writ
review had been summarily denied).
 [11] Indemnity in Federal Courts

In diversity and other cases where federal courts must apply California state
law, the federal courts follow CCP § 877 and § 877.6. E.g. , Slottow v.
American Cas. Co., 10 F.3d 1355 (9th Cir. 1993) (applying California’s Tech-
Bilt standards, federal court determined settlement allocation not made in good
faith); Commercial Union Ins. Co. v. Ford Motor Co ., 640 F.2d 210 (9th Cir.
1981) (federal court properly applied CCP § 877 in indemnity action based on
diversity jurisdiction); Owen v. United States, 713 F.2d 1461 (9th Cir. 1983)
(federal court applied CCP §§ 877 and 877.6 to U.S. claim for partial indemnity
in Federal Torts Claim Act case).

[a] Federal Common Law Doctrine of Contribution

The federal courts must apply federal contribution and indemnity law
wherever such law preempts analogous state law. E.g., Miller v. Christopher,
887 F.2d 902, 905 (9th Cir. 1989) (federal common law of contribution, not
California state law, applied to tort case based on federal admiralty law);
Stewart v. American Intl. Oil & Gas Co., 845 F.2d 196, 200 (9th Cir. 1988)
(contractual indemnity clause invalid because contrary to policy of federal
security laws). In Franklin v. Kaypro Corp., 884 F.2d 1222 (9th Cir. 1989) ,
cert. denied, 498 U.S. 890 (1990), the court ruled that the right of contribution
among tortfeasors in federal securities action is governed by the Federal
Securities Act; and that how this contribution right applies is a matter of federal
common law. The court rejected the California offset approach to calculating
liability of nonsettling defendants, and disparaged the efficacy of the good faith
settlement approach. Franklin, 884 F. 2d at 1230. Instead, the court adopted the
following federal common law (Id. at 1231):

Nonsettling defendants are … barred from further rights of

contribution from the settling defendants. At trial, the jury is asked not only
to determine the total dollar damage amount, but also the percentage of
culpability of each of the settling defendants. Nonsettling defendants as a
whole will then be required to pay the percentage of the total amount for
which they are responsible. The nonsettling defendants will be jointly and
[732/733]severally liable for that percentage, and will continue to have rights
of contribution against one another.

This approach satisfies the statutory goal of punishing each

 wrongdoer. Patently collusive or inadequate settlements are prohibited. * *
*

The goal of equity is also satisfied. Settling defendants pay an amount

to which they voluntarily agree. The bar on further contribution
extinguishes further risk on their part. Nonsettling defendants never pay
more than they would if all parties had gone to trial. This comports with
the equitable purpose of contribution …. Furthermore, this approach leaves
the burden of proof intact, alleviating [a nonsettling defendant’s] complaint
that a good faith hearing under section 877.6 forces the burden of proof
onto the nonsettling defendants. Obviously, there will be a certain amount
of “fingerpointing” at the “empty chair” …. However, settling defendants
will be protected by the bar order, and the financial motives of both
plaintiffs and nonsettling defendants to vigorously press their arguments at
trial will be unchanged.

The United States Supreme Court in McDermott, Inc. v. AmClyde, 511 U.S.
202, 114 S. Ct. 1461, 128 L. Ed. 2d 148 (1994), adopted the Franklin v.
Kaypro federal common law approach to settlement and contribution for
admiralty jurisdiction cases. The Supreme Court rejected the California offset
and good faith settlement approach in favor of a “proportionate share approach”
which involves a credit for the settling defendants’ proportionate share of
responsibility for the total obligation. “Under this approach, no suits for
contribution from the settling defendants are permitted, nor are they necessary,
because the nonsettling defendants pay no more than their share of the
judgment.” McDermott, 511 U.S. at 209. The Supreme Court’s opinion contains
an enlightening comparison of the effect of these various possible approaches on
judicial economy, settlement, and equitable allocation of liability. Id. at 210-
217.

Under what circumstances would the federal common law doctrine of

contribution apply in the California state courts? See Hernandez v. Badger
Constr. Equip. Co., 28 Cal. App. 4th 1791, 1804-10, 34 Cal. Rptr. 2d 732
(1994).

[b] Comparison of Federal and California Approaches

How is the federal common law approach to settlement and indemnity

adopted by the courts in Franklin v. Kaypro and McDermott, Inc. v. AmClyde
different than the California approach? In what ways are they similar? Which
approach better serves the twin goals of equitable sharing of costs among the
parties at fault and the encouragement of settlements? Why? For an excellent
discussion of the effect of these various approaches on settlement, see Lewis A.
Kornhauser & Richard L. Revesz, Settlement Under Joint and Several
Liability, 68 N.Y.U. L. Rev. 427 (1993).

[733/734]

§ 10.05 INTERVENTION
[A] The California Requirements

SIMPSON REDWOOD CO. v. STATE OF CALIFORNIA

COURT OF APPEAL OF CALIFORNIA,
FIRST APPELLATE DISTRICT
196 Cal. App. 3d 1192, 242 Cal. Rptr. 447 (1987)

Newsom, Justice.

Respondent Simpson Lumber Company (hereafter Simpson) initiated this

action by filing a complaint to quiet title and for declaratory relief against the
State of California (hereafter the State), seeking title to specified parcels of real
property located in Humboldt County in Township 12 North, Range 1 East,
Humboldt Meridian. Promptly thereafter, appellant Save-The-Redwoods
League (hereafter appellant or the League) filed a motion for leave to intervene
(Code Civ. Proc., § 387, subd. (a)) in the action, asserting an interest in the old
growth redwood forest sought by Simpson in its complaint. * * *

In 1923, the State began acquiring property for inclusion in the proposed
Prairie Creek Redwoods State Park. Appellant contemporaneously embarked
upon a program of land acquisition in the area for the purpose of eventual
donation to state and federal parks, purchasing property with contributions from
its members and other private donors, who were promised that their
contributions would be used to preserve redwood groves within the state park
system.

The land so acquired by appellant, which includes all of the parcels to which
Simpson claims title in this litigation, was donated to the State in 1932 by way
of grant deeds. * * * With property donated by appellant and acquired through
purchases, the State established Prairie Creek Redwoods State Park (hereafter
the Park) in 1933. * * *

Simpson acquired property contiguous to the Park from its predecessor in

interest, Sage Land and Improvement Company (hereafter Sage). In 1944, Sage
had hired A.B. Bones to determine the precise boundary between its property
and the park. * * * The record shows that in conducting its logging operations,
Simpson thereafter relied upon Bones’s survey, as did the Park. Bones’s survey
also provided the “base” for subsequent surveys in the area.

Then, in 1978, the Bureau of Land Management performed a “dependent

resurvey” of the east boundary of the subject township, and specified adjacent
townships (hereafter the BLM survey) in anticipation of the establishment of the
Redwood National Park in that area. * * * As a result of the BLM survey, the
federal government claimed land for Redwood National Park — in the subject
township — formerly accepted as belonging to Simpson. In response, Simpson
filed a quiet title action against the federal government in 1980 in federal
district court seeking to invalidate the BLM survey. This action was settled by a
stipulated judgment, pursuant to which Simpson acknowledged the validity of
the BLM survey [734/735]in exchange for a conveyance of the land it was already
occupying and using in accordance with the Gilcrest and Bones surveys.

The survey controversy resurfaced in 1984, however, when the federal

government initiated condemnation proceedings against Simpson to acquire
property for construction of a bypass for Highway 101 in Humboldt County.
Suddenly, Simpson found the BLM survey to its liking because the south-
westward shift of boundaries effectuated thereby would result in a claim of
additional acreage for which it would receive compensation in the inverse
condemnation case. Accordingly, Simpson filed the instant quiet title action,
alleging the validity of the BLM survey and resulting entitlement to the small
parcel at issue in the federal inverse condemnation proceeding, and claiming
title to the remaining 160-acre strip of land along the northwest border of the
park. In denying Simpson’s right to the latter parcel of property, the State has
asserted the priority of the … survey — the same survey which Simpson
previously embraced. The estimated current value of the land at issue is $4
million.

Appellant contends that the trial court erred in denying its motion to intervene
in Simpson’s quiet title action under section 387, subdivision (a) of the Code of
Civil Procedure, which,2 in pertinent part, provides: “Upon timely application,
any person, who has an interest in the matter in litigation, or in the success of
either of the parties, or an interest against both, may intervene in the action or
proceeding.” The purpose of allowing intervention is to promote fairness by
involving all parties potentially affected by a judgment. The right to intervene
granted by section 387, subdivision (a), is not absolute, however; intervention is
properly permitted only if the requirements of the statute have been satisfied.
The trial court is vested with discretion to determine whether the standards for
intervention have been met.

Simpson argues that appellant’s interest in the underlying action is indirect

and remote, and so does not justify intervention. It is well settled that the
intervener’s interest in the matter in litigation must be direct, not consequential,
and that it must be an interest which is proper to be determined in the action in
which intervention is sought. The “interest” referred to in section 387,
subdivision (a), “must be of such direct or immediate character, that the
intervener will either gain or lose by the direct legal operation and effect of the
judgment.” (Knight v. Alefosio [(1984)] 158 Cal. App. 3d at p. 721 [205 Cal.
Rptr. 42]; …)

But the nature of the necessary direct interest in the litigation is undescribed
by the statute. Nor is the decisional law helpful. As has been said: “[The] point
at which one’s interest in the success of one of the parties to the action becomes
direct, and not consequential, is not easily fixed. It has been the subject of much
judicial discussion.” (Fireman’s Fund Ins. Co. v. Gerlach (1976) 56 Cal. App.
3d 299, 302 [128 Cal. Rptr. 396].) Whether the intervener’s interest is
sufficiently direct must be decided on the facts of each case. (People ex rel.
Rominger v. County of Trinity (1983) 147 Cal. App. 3d 655, 661 [195 Cal.
Rptr. 186]; …) But it is established that the intervener need neither claim a
pecuniary interest nor a specific legal or equitable interest in the subject matter
of the litigation. And section 387 should be liberally construed in favor of
intervention.

[735/736]

We find in the record ample evidence of appellant’s direct, substantial

interest in the case. Appellant has asserted that its members frequently use the
Park for recreational purposes. We learn too from the record that the League
was instrumental in the establishment of the Park; in fact, all of the parcels in
dispute once belonged to the League, and were donated to the State for the sole
and express purpose of inclusion in the Park. Memorial groves, named after
members of the League, lie within the disputed area and would certainly not be
maintained in their present pristine condition under Simpson’s ownership. The
League has also claimed, without contradiction, that its reputation and integrity
as a conservation organization will suffer if property which it acquired through
donation and targeted for preservation is transferred to private ownership for
exploitation.

That appellant’s members are frequent users of the Park, will not, standing
alone, justify intervention. Intervention cannot be predicated solely on the
League’s contribution to the creation of the Park, and while appellant donated
the land which comprised a part of the park, it no longer claims a legal or
equitable interest in the property in dispute. Moreover, appellant’s support for
the State’s claim to the property is an insufficient basis for intervention. Still,
appellant’s interests in the underlying litigation extend far beyond a general and
historical preference for preservation of the current borders of the Park. The
League was formed and continues to exist for the purpose of conserving lands
such as those in dispute here in their natural state, and has so represented itself
to members and donors. If property acquired by donation in an effort to create
and preserve a park is privately exploited, the impact upon appellant’s
reputation might well translate into loss of future support and contributions.

That appellant will not suffer direct pecuniary harm, and has failed to
establish with absolute certainty the detriment an adverse judgment might cause,
does not defeat its right to intervene. It is not necessary that an intervener’s
interest “‘be such that he will inevitably be affected by the judgment. It is
enough that there be a substantial probability that his interests will be so
affected.’” (People ex rel. Rominger v. County of Trinity, supra, 147 Cal. App.
3d 655, 663; …) Here, we think appellant has demonstrated a cognizable
interest in perpetuating its role and furthering its avowed policies.

Yet another factor which favors a finding of appellant’s direct interest in the
subject litigation is its present right to control development of the property,
which would of course be altered by a judgment in favor of respondent. As one
of the exhibits demonstrate, in donating land to the State the League placed a
recital in the deed specifying that such property be used for “state park
purposes.” “‘It is well settled that where a grant deed is for a specified, limited
and definite purpose, the subject of the grant cannot be used for another and
different purpose.’ [Citations.]” (Big Sur Properties v. Mott (1976) 62 Cal.
App. 3d 99, 103 [132 Cal. Rptr. 835].) Hence, only as long as the State owns
the property in dispute, can appellant rely upon the restrictive language to
prevent an inconsistent use of the donated parcels. For this and the related
reasons earlier described, we conclude that appellant has demonstrated the
requisite specific and direct interest in the outcome of the litigation justifying
intervention, and that the trial court’s contrary finding was error.

[736/737]

We turn next to the issue of potential delay and confusion which arguably
might flow from intervention. Even if otherwise proper, “intervention will not
be allowed when it would retard the principal suit, or require a reopening of the
case for further evidence, or delay the trial of the action, or change the position
of the original parties. [Citation.]” (Sanders v. Pacific Gas & Elec. Co. (1975)
53 Cal. App. 3d 661, 669 [126 Cal. Rptr. 415] ; …) Respondent argues that such
is the case here, in that appellant will raise issues of implied dedication which
have not heretofore been presented by the State as part of its claim to the
disputed property, thereby impermissibly enlarging the scope of the litigation.

While appellant undeniably intends to introduce new causes of action, our

analysis of the nature of such new matters convinces us it will not delay the
litigation, change the position of the parties, or even require introduction of
additional evidence. Thus, appellant will claim that respondent, in law or in
fact, dedicated the land in dispute to the public. Resolution of that issue will
center upon essentially the same facts as those involved in the State’s claims of
adverse possession and agreed boundaries. We perceive no danger that the
dedication issue will prolong, confuse or disrupt the present lawsuit.

Nor do we find that intervention would subvert the salutary purposes of

section 387, subdivision (b), to obviate delays and prevent a multiplicity of
suits arising out of the same facts, while protecting the interests of those affected
by the judgment. On the contrary, were intervention to be denied in the present
case, appellant would be forced to bring a separate action against Simpson.

A final telling factor in our decision is the conviction that appellant’s own
substantial interests probably cannot be adequately served by the State’s sole
participation in the suit, since it here seeks merely to protect its fee interest in
the property, which may turn out to be simply pecuniary in nature. The State
might, for example, choose to settle the case for a monetary consideration in
exchange for relinquishment of its claims of title to the land. But appellant’s
interest in the litigation — to preserve the property in its natural condition — is
singular and indeed unique, and powerfully militates in favor of intervention.

For all of the foregoing reasons we conclude that the trial court’s denial of
the motion to intervene was an abuse of discretion. The judgment is reversed
and the case remanded to the trial court with directions to grant appellant’s
motion to intervene and to conduct further proceedings in accordance with the
views expressed herein. Costs are awarded to appellant Save-The-Redwoods
League.

Footnotes:

2 All further statutory references are to the Code of Civil Procedure unless otherwise indicated.

[1] Permissive Intervention

As Simpson Redwood indicates, the line between a “direct and immediate”

interest which satisfies CCP § 387(a), and an “indirect and consequential” one
which is insufficient for permissive intervention, is not always readily apparent.
Consider the following cases:

[737/738]

[a] Bustop v. Superior Court, 69 Cal. App. 3d 66, 71, 137 Cal. Rptr. 793 (1977)

The Bustop court held that a group of white parents opposed to mandatory
busing of students had sufficient interest “in a sound educational system and in
the operation of that system in accordance with the law” to permit intervention
in an action where a school district was required to formulate a desegregation
plan. Such plan would have a “direct social, educational and economic impact”
on all students and parents in the district. Bustop, supra. Based on this broad
view of “direct and immediate interest,” what other political action groups
could be permitted to intervene in this desegregation litigation? What limitations
are there on intervention by such groups?

After the appellate ruling in Bustop, another organization entitled BEST

(Better Education for Students Today) also sought intervention in the trial court.
BEST’s complaint in intervention disavowed any position toward any
integration plan, but asserted that its members were well-intentioned citizens
who would certainly have developed positions on the issues by the time they got
to court. Should BEST be permitted to intervene? For a criticism of the
reasoning in Bustop as an improper extension of the permissive intervention
statute, see Stephen C. Yeazell, Intervention and the Idea of Litigation: A
Commentary on the Los Angeles School Case, 25 UCLA L. Rev. 244 (1977).

[b] People ex rel. Rominger v. County of Trinity, 147 Cal. App. 3d 655, 195 Cal. Rptr. 186 (1983)

The Court of Appeal found that the trial court abused its discretion in not
permitting the Sierra Club to intervene in litigation between the State of
California and the County of Trinity. The State sought declaratory and injunctive
relief, alleging that the County’s ordinance prohibiting aerial spraying of
phenoxy herbicides was preempted by state law. The Sierra Club sought to
intervene, alleging, among other grounds, that its members would be specifically
harmed if spraying resumed in Trinity County. The Sierra Club asserted that its
members use these forest lands and exposure to these chemicals would harm
them. The Court of Appeal concluded that the Sierra Club, as representative of
its members who use the resources of Trinity County, has a direct and
immediate, rather than consequential and remote, interest in this litigation.
Rominger, 147 Cal. App. 3d at 663.

Would the type of interest alleged by the Sierra Club in Rominger, by itself,
be considered “direct and immediate” under the Simpson Redwood reasoning?
What type of interest alleged by the Save-the-Redwoods League did that court
consider sufficient for permissive intervention? Insufficient? Do you understand
why these distinctions were made?

[738/739]

[c] Mary R. v. B. & R. Corp., 149 Cal. App. 3d 308, 196 Cal. Rptr. 871 (1983)

A teenager brought a civil action against a licensed physician for repeated

sexual molestation. The trial court dismissed that action by stipulation, and
ordered the court records sealed and the parties never to discuss the case with
anyone. Subsequently, the Division of Medical Quality, a state agency statutorily
responsible for prosecution of violations of the Medical Practices Act by
licensed physicians, initiated an investigation into the alleged misconduct.
Because information from the parties and court records were essential to its
investigation, the Division applied to intervene in the civil action to request
modification of the court’s stipulated gag order. The trial court denied the
application, and the Division appealed.

The Court of Appeal first noted that a governmental entity had no greater
authority to intervene in the litigation of others than has any other private party.
The court then determined whether the Division’s interest warranted
intervention. The court viewed the Division’s interest as arising solely from the
overbroad effect of the ancillary order of confidentiality and the sealing of court
records. Therefore, the court held that the trial court properly denied Division’s
request to intervene because it had only a consequential interest in the dismissed
underlying action between the original parties. Do you agree with the court’s
holding? Does not the Division have an interest in the resolution of the civil
action directly affected by the trial court’s judgment? Is the adverse effect on the
Division any less direct than on the League in Simpson Redwood? Although the
Court of Appeal upheld the denial of intervention, it did find that the Division
had standing to collaterally attack the validity of the gag order based on the
Division’s interest in fulfilling its statutory obligations. Can this standing be
distinguished from the Division’s lack of standing to intervene?

[d] Direct Interest?

Which of the following parties assert a direct interest sufficient to permit

intervention under CCP § 387(a)?

(1) A local historic preservation organization which is opposed to the

construction of a proposed apartment complex to be located adjacent to a
single-family residential neighborhood designated an historic district, and seeks
to intervene in litigation between the developer and the city over the right to a
city construction permit? An association of homeowners who reside in the
historic district? The president of the association who, as a taxpayer, seeks to
complain of waste of city funds? And who also resides in the historic district?
See Highland Dev. Co. v. City of L. A., 170 Cal. App. 3d 169, 179-80, 215 Cal.
Rptr. 881 (1985).

(2) A school district, the ultimate beneficiary of a city’s school impact fee
policy, which seeks to intervene in an action brought by subdividers against the
city to declare unconstitutional the city resolution adopting the school impact fee
policy? A legislatively-created Local Agency Formation Commission whose
statutory purpose is to discourage urban sprawl and encourage orderly
development of local governmental agencies, which seeks to intervene in the
same litigation? See [739/740]Timberidge Enter., Inc. v. City of Santa Rosa , 86
Cal. App. 3d 873, 150 Cal. Rptr. 606 (1978).

(3) An automobile insurance company that has paid property damage benefits
to its insured after an auto accident and under the policy is subrogated to its
insured rights, which seeks to intervene as a partial subrogee in a personal
injury and property damage action brought by its insured against the other
driver? See Hausmann v. Farmers Ins. Exch., 213 Cal. App. 2d 611, 29 Cal.
Rptr. 75 (1963). An insurer who denies coverage and refuses to defend its
insured when sued by an injured plaintiff? See Hinton v. Beck, 176 Cal. App.
4th 1378, 98 Cal. Rptr. 3d 612 (2009). An automobile insurer who defends its
insured when sued by an injured plaintiff but reserves the right to contest
coverage, when the insured attempts to settle the case without the participation
of the insurer? See Gray v. Begley, 182 Cal. App. 4th 1509, 106 Cal. Rptr. 3d
729 (2010).

(4) A person claiming a lien on real property who seeks to intervene in a

dissolution of marriage proceeding which will determine the community nature
of the property? Even though the lienholder can protect his interest by bringing a
separate action? See Elms v. Elms, 4 Cal. 2d 681, 52 P.2d 223 (1936) ; but see
Family Code § 2021(a) (authorizing joinder).

(5) Individual investors who seek restitution of their investment funds and
request permission to intervene in a civil action brought by the district attorney
against defendants for investment fraud involving the sale of oil contracts,
where the district attorney and defendants have proposed settlement which
would take much of defendants’ resources for statutory civil penalties. See
People v. Superior Court (Good), 17 Cal. 3d 732, 736-37, 131 Cal. Rptr. 800,
552 P.2d 760 (1976).

[e] Discretion

Granting or denying leave to intervene under § 387(a) is in the discretion of

the trial court. See, e.g., Lincoln Natl. Life Ins. Co. v. State Bd. of
Equalization, 30 Cal. App. 4th 1411, 36 Cal. Rptr. 2d 397 (1994) (unless a
special statute prohibits intervention, the trial court’s discretion to permit
intervention should be liberally construed in favor of intervention); City of
Malibu v. Cal. Coastal Com., 128 Cal. App. 4th 897, 27 Cal. Rptr. 3d 501
(2005) (finding no abuse of discretion and affirming trial court’s denial of
permissive intervention). Even if an applicant establishes the requisite interest
in the litigation, a trial court may deny permissive intervention. What factors did
the court in Simpson Redwood consider in exercising this discretion? How did
it apply these factors?

In Royal Indemnity Co. v. United Enterprises, Inc., 162 Cal. App. 4th 194,
75 Cal. Rptr. 3d 481 (2009), the court outlined the general guidelines for
allowing permissive intervention:

Under section 387, subdivision (a), the trial court in its discretion
may allow a third party to intervene in litigation pending between other
parties if “(1) the proper procedures have been followed; (2) the nonparty
has a direct and immediate interest in the action; (3) the intervention will
not enlarge the issues in the litigation; and (4) the reasons for the
intervention outweigh any opposition by the parties presently in the action.
The [740/741]permissive intervention statute balances the interests of others
who will be affected by the judgment against the interests of the original
parties in pursuing their litigation unburdened by others.”

Royal Indemnity, supra, 162 Cal. App. At 203-204 (quoting City and County
of San Francisco v. State of Cal., 128 Cal. App. 4th 1030, 1036-39, 27 Cal.
Rptr. 3d 722 (2005)).

[2] Intervention of Right

In 1977, the Legislature enacted CCP § 387(b), which added intervention of

right to traditional permissive intervention:

If any provision of law confers an unconditional right to intervene or

if the person seeking intervention claims an interest relating to the property
or transaction which is the subject of the action and that person is so
situated that the disposition of the action may as a practical matter impair
or impede that person’s ability to protect that interest, unless that person’s
interest is adequately represented by existing parties, the court shall, upon
timely application, permit that person to intervene.

CCP § 387(b) is modeled after Rule 24(b), F.R.C.P. See Comment, Civil
Procedure; Intervention, 9 Pac. L.J. 356-58 (1978).
 [a] Statutory Prerequisites of CCP § 387(b)

In the absence of a statute which confers an unconditional right to intervene, a

person seeking leave to intervene of right must demonstrate the satisfaction of
three prerequisites. What are they? Did the Save-the-Redwoods League meet
these criteria in Simpson Redwood? Although numerous federal court decisions
liberally construe federal Rule 24(b), there are very few California appellate
court decisions construing CCP § 387(b). See, e.g., Hodge v. Kirkpatrick Dev.,
Inc., 130 Cal. App. 4th 540, 30 Cal. Rptr. 3d 303 (2005) (an insurance company
has the right to intervene in a construction defect lawsuit brought by insureds
against third party tortfeasors, where the insurance company obtained partial
subrogation rights against the third parties by paying a portion of the insured’s
claims for property damages to their house); California Physicians’ Serv. v.
Superior Court, 102 Cal. App. 3d 91, 162 Cal. Rptr. 266 (1980) (construing
“transaction” and “interest impairment” in § 387). What advantage is there to
pursuing intervention of right as opposed to permissive intervention?

[b] Special Statutes

A number of special statutes confer an unconditional right to intervene within

the meaning of § 387(b), such as CCP § 1250.230 (any person claiming interest
in property subject of eminent domain proceeding), Corporations Code §
1800(c) (a shareholder or creditor of corporation authorized to intervene in
involuntary dissolution proceedings against the corporation), Civil Code §
1781(e)(3) (members of consumer class action authorized to intervene through
counsel), Gov. Code § 12606, Water Code § 2780, and Labor Code § 3853
(employer has unconditional right to intervene in action by an employee, injured
in the course of employment, [741/742]against third party). Code of Civil
Procedure § 389.5 authorizes a party who has an interest in the subject of an
action to recover or claim property to make application to the court to be made
a party. How is this joinder statute different than CCP § 387?

[B] Intervention Procedures

[1] Status of Intervener

An intervener becomes an actual party to the action, either a plaintiff or

defendant (unless adverse to both), with all of the same procedural rights and
remedies of the original parties. See Catello v. I.T.T. Gen. Controls , 152 Cal.
App. 3d 1009, 1013, 200 Cal. Rptr. 4 (1984). Although courts often state that an
intervener “must take the proceedings as it finds them at the time of
intervention,” e.g., Hospital Council of Northern Cal. v. Superior Court, 30
Cal. App. 3d 331, 336, 106 Cal. Rptr. 247 (1973) ; Bustop v. Superior Court,
supra, 69 Cal. App. 3d at 72; an intervener is not limited by every procedural
decision made by the original parties. For example, an intervener may move to
disqualify a judge, even if the parties are content to try the lawsuit in that court;
may object to the jurisdiction of the court or that pleadings do not state a cause
of action; and may not be deprived of its right to jury trial by the parties’
waiver. See, e.g. , Deutschmann v. Sears Roebuck & Co., 132 Cal. App. 3d
912, 916, 183 Cal. Rptr. 573 (1982), and cases cited therein. An intervener may
pursue affirmative relief not sought by the plaintiff, e.g., Belt-Casualty Co. v.
Furman, 218 Cal. 359, 23 P.2d 293 (1933) ; and may appeal an adverse
judgment even where the original party defaults, e.g. , Jade K. v. Viguri , 210
Cal. App. 3d 1459, 1468, 258 Cal. Rptr. 907 (1989).

[a] Costs and Attorney Fees

Parties in intervention may be either entitled to an award of costs or held

liable for costs, pursuant to CCP § 1032, in the same manner as the original
parties; liability for costs will be fixed in any given case by determining the
intervener’s alignment with the original parties and will be limited to those
costs incurred while the intervener was a party to the action. See, e.g., Catello
v. I.T.T. Gen. Controls , 152 Cal. App. 3d 1009, 1015, 200 Cal. Rptr. 4 (1984)
(prevailing party obtained recovery of costs from intervener for costs incurred
during period of intervention); Burrow v. Pike , 190 Cal. App. 3d 384, 400, 235
Cal. Rptr. 408 (1987). An intervener may be entitled to an award of attorney
fees, where such an award is authorized for the original parties. See, e.g.,
Montgomery v. Bio-Med Specialties, Inc., 183 Cal. App. 3d 1292, 228 Cal.
Rptr. 709 (1986).

[b] Statute of Limitations

A complaint in intervention is subject to an affirmative defense of an

applicable statute of limitations if it asserts a new cause of action — it does not
relate back to the date of the original plaintiff’s timely-filed complaint if it seeks
to enforce an independent right. Andersen v. Barton Mem. Hosp., Inc., 166 Cal.
App. 3d 678, 212 Cal. Rptr. 626 (1985) (intervening heir in wrongful death
action has separate cause of action which did not relate back to original
plaintiff’s complaint); see Basin Constr. Corp. v. Dept. of Water & Power , 199
Cal. App. 3d 819, 245 Cal. Rptr. 178 (1988) ; [742/743]cf. Smith v. Parks Manor,
197 Cal. App. 3d 872, 243 Cal. Rptr. 256 (1987) (complaint in intervention by
insurance company based on right of subrogation related back because right
asserted was not independent, but identical and wholly derivative, of right of
original complainant).

However, a special relation back rule applies to certain personal injury

actions which implicate the worker compensation system. Pursuant to Labor
Code § 3853, when an action is brought by either an employer or employee
against a third party who caused injuries to the employee, the other (i.e., the
employer or employee, or the worker compensation insurer) may intervene as a
party plaintiff. Labor Code §§ 3853, 3850(b).

Because Labor Code § 3853 is viewed as providing an unconditional right to

intervene at any time in essentially the same lawsuit, a complaint in intervention
will relate back to the original plaintiff’s complaint. See, e.g., County of San
Diego v. San Fax Corp., 19 Cal. 3d 862, 885, 140 Cal. Rptr. 638, 568 P.2d 363
(1977) (intervention by employer under Labor Code § 3853 allowed after one-
year limitation of CCP § 340(3) had run, where original action timely filed by
employee against third-party tortfeasor).

[c] Diligent Service and Prosecution

Generally, the five-year period for bringing a case to trial under CCP §
583.310 and 583.360 runs from the date of filing of the original plaintiff’s
complaint; the period does not begin anew with the filing of a complaint in
intervention. E.g. , Johnson v. Santos, 148 Cal. App. 3d 566, 571, 196 Cal.
Rptr. 145 (1983); State Comp. Ins. Fund v. Selma Trailer & Mftg. Co., 210
Cal. App. 3d 740, 258 Cal. Rptr. 545 (1989) (same rule applied as to three-year
discretionary dismissal statutes, CCP §§ 583.410, 420; intervening employee
pursuant to Labor Code § 3853 must demonstrate due diligence by plaintiff from
date original complaint filed). However, if the complaint in intervention
contains a “separate cause of action,” a new five-year period commences for
purposes of mandatory dismissal. See Bright v. American Termite Control Co .,
220 Cal. App. 3d 1464, 269 Cal. Rptr. 793 (1990) (complaint in intervention
not separate where intervening insurance company’s property subrogation claim
was essentially same as insured’s cause of action dismissed for lack of diligent
prosecution).

Similar rules apply with respect to an original party’s failure to effect timely
service. Generally, a complaint in intervention cannot save an action dismissed
because the original plaintiff failed to serve the summons and complaint within
three years pursuant to CCP § 583.210. Chambers v. Santa Cruz City Sch.
Dist., 193 Cal. App. 3d 518, 238 Cal. Rptr. 356 (1987) ; see also Duckett v.
Superior Court, 207 Cal. App. 3d 1419, 255 Cal. Rptr. 733 (1989)
(defendant’s answer to complaint in intervention not a general appearance as to
original plaintiff’s complaint, so three-year service requirement still applicable
to plaintiff); Bishop v. Silva, 234 Cal. App. 3d 1317, 285 Cal. Rptr. 910 (1991)
(plaintiff employee can not intervene pursuant to Labor Code § 3853 back into
third-party tort action where plaintiff initiated the litigation but was dismissed
for failure to effect timely service).

However, where the complaint in intervention is filed before dismissal and

sets [743/744]forth an independent cause of action, dismissal of the original
plaintiff’s complaint for failure to serve within three years will not compel
dismissal of a complaint in intervention which was validly filed and served.
See, e.g., Deutschmann v. Sears Roebuck & Co., 132 Cal. App. 3d 912, 918,
183 Cal. Rptr. 573 (1982).

[2] Timely Application

A party seeking intervention, whether permissive or of right, must make a

“timely application” to the court. CCP § 387(a) & (b).

[a] Intervention Possible at Any Time

What constitutes a timely application varies with the circumstances of each

case, and ultimately depends on the court’s discretion. In Mallick v. Superior
Court, 89 Cal. App. 3d 434, 152 Cal. Rptr. 503 (1979) , for example, the court
permitted class members to intervene to remove the class representative, even
though the action was pending on appeal. The court noted that “intervention is
possible, if otherwise appropriate, at any time, even after judgment.” Mallick,
89 Cal. App. 3d at 437.

[b] Aggrieved Person May Intervene and Appeal

A person who is legally aggrieved by a judgment may become a party to the

record and obtain a right to appeal by moving to vacate the judgment, County of
Alameda v. Carleson, 5 Cal. 3d 730, 736-37, 97 Cal. Rptr. 385, 488 P.2d 953
(1971); or by moving for a new trial, Lippman v. City of Los Angeles, 234 Cal.
App. 3d 1630, 286 Cal. Rptr. 406 (1991). The intervenor must have an
“immediate, pecuniary, and substantial” interest in the judgment. County of
Alameda v. Carleson, supra.
 [c] Unreasonable Delay

Intervention may be denied where there is an unreasonable delay after

learning of the action. E.g., Sanders v. Pac. Gas & Elec. Co., 53 Cal. App. 3d
661, 668, 126 Cal. Rptr. 415 (1975). In Northern Cal. Psychiatric Socy. v. City
of Berkeley, 178 Cal. App. 3d 90, 223 Cal. Rptr. 609 (1986) , for example, the
court ruled that a coalition’s motion to intervene was not timely where the
coalition had been involved in the litigation for six months as amicus but did not
seek to intervene until after a summary judgment motion was fully briefed and
argued, and the trial court had already indicated its intention to grant summary
judgment. But in Jade K. v. Viguri , 210 Cal. App. 3d 1459, 1468, 258 Cal.
Rptr. 907 (1989), the court considered timely an insurance company’s complaint
in intervention seeking to vacate and appeal a default entered against its insured
because the insurance company was never notified of the default.

[3] Intervention Application Procedure

An application for intervention is made by a “complaint in intervention”

setting forth the grounds upon which the intervention rests, filed with the court
and served on existing parties. CCP § 387(a). The intervener’s pleading is
entitled “Complaint in Intervention” regardless of whether the intervener seeks
to be regarded as a [744/745]plaintiff or a defendant, or claims adversely to both.
CCP § 387(a), see Timberidge Enter., Inc. v. City of Santa Rosa , 86 Cal. App.
3d 873, 150 Cal. Rptr. 606 (1978). The complaint in intervention must set forth
the grounds upon which intervention rests and otherwise comply with CCP §
387. Bowles v. Superior Court, 44 Cal. 2d 574, 589, 283 P.2d 704 (1955)
(complaint in intervention held defective because it did not allege that
applicants joined with plaintiff or united with defendants, or demanded anything
adverse to both); Sutter Health Uninsured Pricing Cases, 171 Cal. App. 4th
495, 513, 89 Cal. Rptr. 3d 615 (2009) (the failure to tender a proposed
complaint in intervention constitutes a proper basis for denial of a motion to
intervene).

[a] Leave of Court Required

There can be no actual intervention without leave of court. CCP § 387(a);

Lohnes v. Astron Computer Products, 94 Cal. App. 4th 1150, 115 Cal. Rptr. 2d
34 (2001) (whether intervention is permissive or mandatory, a petition to seek
leave to intervene is required; without the permission of the court, a party lacks
any standing to the action). A nonparty may seek leave to intervene by formal
noticed motion, or by informal ex parte application and order. Adoption of
Lenn E., 182 Cal. App. 3d 210, 217, 227 Cal. Rptr. 63 (1986). Which method is
preferable? Why? If the court grants leave ex parte, the existing parties may
challenge the intervention by demurrer or motion to strike. CCP § 387(a);
Timberidge Enter., supra, 86 Cal. App. 3d at 878-79.

[b] Appellate Review

An order denying leave to intervene is immediately appealable. See Bowles,

supra, 44 Cal. 2d at 582; County of Alameda v. Carleson, 5 Cal. 3d 730, 736,
97 Cal. Rptr. 385, 488 P.2d 953 (1971) ; but an order granting leave to intervene
may be reviewed only on appeal from final judgment, see Adoption of Lenn E.,
supra, 182 Cal App. 3d at 217-18. Why? See generally Chapter 15, Appeals
and Writs, infra. Where the question litigated is purely one of law, a person
denied leave to intervene may obtain substantially the same advantage of
intervention by permission to file an amicus brief. See, e.g., Squire v. City and
Cnty. of San Francisco, 12 Cal. App. 3d 974, 979, 91 Cal. Rptr. 347 (1970).

[C] Federal Intervention Rules

Rule 24, F.R.C.P. , contains the general requirements for intervention in

federal court litigation.

[1] Intervention of Right

Rule 24(a) governs intervention of right, and is nearly identical to CCP §

387(b). The federal courts have been quite liberal in finding the requisite
interest, practical impairment, and inadequate representation. See generally
Wright, Miller & Kane, Federal Practice and Procedure: Civil 3d §§ 1904,
1906-1909 (2007). Rule 24(a) clearly does not require that the would-be
intervener will be legally bound to establish that “the disposition of the action
may as a practical matter impair or [745/746]impede” his ability to protect his
interest. Advisory Committee Notes to Rule 24(a)(2), 39 F.R.P. 69, 110 (1966).
Indeed, in proper circumstances, even the stare decisis effect of the judgment in
an action may supply the practical disadvantage which warrants intervention of
right. See, e.g., Atlantis Dev. Corp. v. United States , 379 F.2d 818, 828-29 (5th
Cir. 1967); Corby Recreation, Inc. v. Gen. Elec. Co., 581 F.2d 175, 177 (8th
Cir. 1978); Federal Practice and Procedure, supra, § 1908.2.

[2] Permissive Intervention

Rule 24(b) permits intervention, upon timely application and in the trial
court’s discretion, when an applicant’s claim or defense and the existing action
have “a question of law and fact in common.” This federal permissive
intervention standard is much broader than that of CCP § 387(a). How so? Rule
24(b) does not require that an applicant have any direct personal interest in the
subject of the litigation. See Federal Practice and Procedure, supra, § 1911.
However, the federal justiciability doctrines, particularly the doctrine of
standing, may impose a similar interest requirement. See, e.g., Warth v. Seldin ,
422 U.S. 490, 95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975) (intervening plaintiff
must demonstrate a distinct and palpable injury to itself caused by defendant in
order to satisfy standing doctrine). And, as with all federal joinder devices, a
federal court must have subject matter jurisdiction of persons and claims sought
to be added by Rule 24 intervention. See 28 U.S.C. § 1367.

§ 10.06 CAPACITY, REAL PARTY IN INTEREST

AND STANDING
[A] Capacity

A party who possesses a right under substantive law must have the “capacity”
to sue or be sued. Problems arise in two types of cases: (1) incapacity of a
person due to a disability; and, (2) incapacity of an organization not legally
recognized as an entity for purposes of suit. See generally California Civil
Practice — Procedure §§ 3:7-3:13 (2011); 4 Witkin, California Procedure,
Pleading, §§ 70-119 (5th ed. 2008).

[1] Disability

[a] Minors and Incompetents

The most common form of “disability” for a natural person is infancy or

incompetency. A minor or incompetent person must appear through either a
guardian appointed to represent that person’s interests generally, or by a
guardian ad litem appointed by the court for a specific lawsuit. CCP §§ 372,
373. A guardian ad litem is not a party to the lawsuit but only a representative of
the minor or incompetent. Marriage of Higgason, 10 Cal. 3d 476, 484, 110 Cal.
Rptr. 897, 516 P.2d 289 (1973) ; and has limited power to make procedural
litigation decisions, but has no power to compromise the ward’s substantive
rights without approval by the court. CCP §§ 372, 373.5; see Torres v.
Friedman, 169 Cal. App. 3d 880, 887, 215 Cal. Rptr. 604 (1985) (guardian ad
litem is essentially an agent of the court whose [746/747]duty is to protect rights of
the ward; and cannot prejudice ward’s substantive rights by admissions, waiver,
or stipulations).

Failure to appoint a guardian ad litem for a minor is not a jurisdictional

defect — judgment entered against an unrepresented minor is not void but is
voidable by the minor after she attains majority. E.g., Hughes v. Quackenbush,
1 Cal. App. 2d 349, 362, 37 P.2d 99 (1934) . The procedure for appointment of
a guardian ad litem is governed by CCP § 373. The appointment may properly
be made on an ex parte application. Sarracino v. Superior Court, 13 Cal. 3d 1,
118 Cal. Rptr. 21, 529 P.2d 53 (1974) . A guardian ad litem who is not himself
an attorney must employ one. Torres v. Friedman, supra . Why? See Business &
Professions Code § 6125.

[b] Corporations

A corporation may be “disabled” — incapable of suing or defending in a

particular case — when it has not complied with certain statutory requirements.
E.g., Corporations Code § 2203(c) (foreign corporation must comply with
certain statutory conditions); Revenue & Taxation Code §§ 23301, 23301.5
(failure to pay state franchise taxes may preclude corporation from prosecuting
or defending actions); see Sade Shoe Co. v. Oschin & Snyder, 217 Cal. App. 3d
1509, 266 Cal. Rptr. 619 (1990) (corporation suspended pursuant to Rev. &
Tax Code §§ 23301 & 23301.5 for failure to file tax returns and pay taxes
lacked legal capacity to bring civil action; action will be barred if statute of
limitations runs out before revival of corporation’s powers under § 23305);
Palm Valley Homeowners Assn., Inc. v. Design MTC , 85 Cal. App. 4th 553,
102 Cal. Rptr. 2d 350 (2000) (corporation suspended under the Corporations
Code for failure to file required statements disabled from participating in
litigation activities).

A person or entity transacting business under a fictitious name may not

maintain certain contract actions until proper fictitious name statement filed.
Bus. & Prof. Code § 17918; see Hydrotech Sys., Ltd. v. Oasis Waterpark , 52
Cal. 3d 988, 1001, n.8, 277 Cal. Rptr. 517, 803 P.2d 370 (1991) (§ 17918
designed to ensure that those who do business with fictitious name operators
will know their true identity, but did not extend to one who committed a tort
against a fictitiously named business); United Med. Mgmt. Ltd. v. Gatto, 49
Cal. App. 4th 1732, 57 Cal. Rptr. 2d 600 (1996) (a foreign corporation that
qualified to transact interstate business pursuant to Corp. Code § 2105 after it
entered into a contract with a California corporation but before commencing an
action on the contract, may maintain a breach of contract action without
complying with the various requirements of Corp. Code § 2203(c)).

At common law, a dissolved corporation ceased to exist and could not sue or
be sued. However, under Corporations Code §§ 2010-2011 a party may sue a
dissolved corporation, even though the defendant corporation had already
dissolved prior to the time the action was filed. Penasquitos, Inc. v. Superior
Court, 53 Cal. 3d 1180, 283 Cal. Rptr. 135, 812 P.2d 154 (1991) . What about a
corporation which disappears through merger during a pending action? See
Corp. Code § 1107. Before litigation commences?

[747/748]

[2] Entity Status of Organizations

Natural persons, corporations, and government bodies are generally

considered entities which have the capacity to sue or be sued. Corporations
Code § 207 (“a corporation shall have all of the powers of a natural person in
carrying out its business activities.”); Government Code § 945 (“A public entity
may sue or be sued.”). Under former California common law, and current law in
some other states, an unincorporated association was not considered a legal
entity which had the capacity to sue or be sued.

[a] Partnerships and Other Unincorporated Associations

However, under CCP § 369.5 [formerly § 388] entity status is now conferred
on partnerships and other unincorporated associations such that they may sue or
be sued in their own organizational name. See, e.g., Clean Air Transp. Sys. v.
San Mateo Cnty. Transit District , 198 Cal. App. 3d 576, 243 Cal. Rptr. 799
(1988), cert. denied, 488 U.S. 862 (1988) (unincorporated association has
capacity to sue as a distinct legal entity, but must be represented by counsel in
court); Barr v. United Methodist Church, 90 Cal. App. 3d 259, 266, 153 Cal.
Rptr. 322 (1979) (United Methodist Church may be sued as a legal entity under
former CCP § 388(a); “The criteria applied to determine whether an entity is an
unincorporated association are no more complicated than (1) a group whose
members have a common purpose, and (2) who function under a common name
under circumstances where fairness requires the group be recognized as a legal
entity.” A plaintiff therefore may sue an unincorporated association, its
individual members, or both. CCP § 369.5.)

[b] Estates
 Although an estate is generally not considered a legal entity with capacity to
sue or be sued, an action to establish a decedent’s liability for which the
decedent was protected by insurance may be commenced or continued against
the decedent’s estate without the need to join as a party the decedent’s personal
representative or successor in interest. Probate Code §§ 550-555; see Von
Gibson v. Estate of Lynch, 197 Cal. App. 3d 725, 243 Cal. Rptr. 50 (1988)
(plaintiff in negligence action for personal injuries could sue decedent’s
personal representative pursuant to Prob. Code § 573 [now CCP § 377.42] or
the decedent’s estate pursuant to prob. code § 550, or could pursue both
remedies).

[3] Raising the Capacity Issue

Unless the governing statute states otherwise, a complaint need not allege the
plaintiff’s capacity to sue. Hydrotech Sys., Ltd. v. Oasis Waterpark, supra , 52
Cal. 3d at 994, n.4. The question of capacity may be raised by demurrer or by
answer. CCP §§ 430.10(b), 430.30. If not so raised, the objection of lack of
capacity is waived. CCP § 430.80; see Tinsley v. Palo Alto Unified Sch. Dist.,
91 Cal. App. 3d 871, 883, 154 Cal. Rptr. 591 (1979).

[748/749]

[4] Capacity in Federal Court

Rule 17(b), F.R.C.P. , governs the question of capacity to sue or be sued in

federal court. Rule 17(b) generally requires application of state capacity law.
For example, capacity of an individual shall be determined by the law of the
individual’s domicile, and of a corporation by the law under which it is
organized. See, e.g., Community Electric Serv. v. Nat. Elec. Contractors Assn.,
Inc., 869 F.2d 1235, 1239 (9th Cir. 1989) (capacity of plaintiff corporation
determined by law of California, the state of incorporation, per Rule 17(b);
plaintiff suspended under Cal. Rev. & Tax Code § 23301 for failure to pay state
franchise taxes and therefore lacked capacity to bring federal antitrust suit in
federal court). In all other cases, the law of the state in which the district court
is located applies, except that an unincorporated association may always sue or
be sued in its common name for purposes of asserting a federal constitutional or
statutory right. Rule 17(b). Why this difference for unincorporated associations
asserting federal rights?

[B] Real Party in Interest and Standing

 [1] The General California Doctrine

TINSLEY v. PALO ALTO UNIFIED SCHOOL DISTRICT

COURT OF APPEAL OF CALIFORNIA,
FIRST APPELLATE DISTRICT
91 Cal. App. 3d 871, 154 Cal. Rptr. 591 (1979)

Sims, Justice.

Petitioners, the parents of elementary schoolchildren in various elementary

school districts within the territory embraced within the boundaries of Sequoia
Union High School District and in Palo Alto Unified School District, seek a
writ of mandate to compel the respondent elementary districts and others to
submit to the court a reasonably feasible plan to eliminate or alleviate alleged
racially segregated schools existing within those districts. They have appealed
from a judgment entered following an order sustaining, without leave to amend,
the demurrers to their second amended petition as amended by a third
amendment. It appears from the pleadings that the alleged segregation of which
complaint is made is interdistrict in nature, and allegedly can only be eliminated
or alleviated by an interdistrict plan. The trial court ruled that the petition, as
thrice amended, failed to state a cause of action because it fails to allege any
intentionally segregative acts or omissions requiring interdistrict relief, and,
alternatively, because it fails to allege any acts or omissions, whether
intentionally segregative or not, which require interdistrict relief. * * *

II

In their second amended petition, as amended by the third amendment, 18

petitioners set forth their names and allege, “They are parents of minority,
elementary school age children who do, or are eligible to, attend elementary
schools [749/750]operated by the Ravenswood School District.” There follow the
names and ages of 21 children. The 16 remaining petitioners, likewise named,
allegedly are residents of San Mateo County or Santa Clara County. It is stated
“They are parents of non-minority elementary school age children.” There
follow the names of sixteen children, eight in the Menlo Park district, two in Las
Lomitas district, four in the Portola Valley district and two in the Palo Alto
district. It is further alleged: “Petitioners bring this action on their own behalf
and on behalf of all persons similarly situated.”
 Throughout the proceedings respondent Palo Alto Unified School District has
insisted as one ground of demurrer that petitioners have failed to allege facts
showing a right to sue for the relief they seek. In its order sustaining and
overruling respondents’ demurrers to the petition, as revised by the third
amendment, without leave to amend, the court upheld other grounds discussed
below. It expressly provided “The other grounds of Demurrer by the
Respondents are overruled.” Respondent Palo Alto Unified School District has
cross-appealed from that portion of the ensuing judgment which impliedly
provides that petitioners have standing to sue in this matter.

With exceptions not pertinent here, section 367 of the Code of Civil
Procedure provides: “Every action must be prosecuted in the name of the real
party in interest, …” In Parker v. Bowron (1953) 40 Cal. 2d 344 [254 P.2d 6] ,
the court distinguished between capacity to sue and standing to sue, as follows:
“Insofar as the question of capacity to sue is concerned, not having been raised
by demurrer or answer, it must be deemed to have been waived and cannot now
be urged upon appeal. [Citations.] However, the question of standing to sue is
different from that of capacity. Incapacity is merely a legal disability, such as
infancy or insanity, which deprives a party of the right to come into court. The
right to relief, on the other hand, goes to the existence of a cause of action. It is
not a plea in abatement, as is lack of capacity to sue. Where the complaint states
a cause of action in someone, but not in the plaintiff, a general demurrer for
failure to state a cause of action will be sustained. [Citation.] This objection is
not waived by failure to raise it by demurrer or answer, and may be raised at
any point in the proceedings. [Citation.]” (40 Cal. 2d at p. 351 …). * * *

In this case the gravamen of the petitioners’ complaint is that “petitioner’

[sic] minority and non-minority children are being deprived of equal
opportunities for education and are being denied equal protection and due
process of law.” The state and federal decisions recognize that it is the child’s
right to equal educational opportunities that is protected by the Constitution.
“[It] is the constitutional right to equal treatment for all races that is being
protected.” (Dayton Board of Education v. Brinkman (1977) 433 U.S. 406 at p.
424 [97 S. Ct. 2766, 2777, 53 L. Ed. 2d 851 at p. 866] Brennan, J., conc.) It
would appear that the children, whose constitutional rights are allegedly
violated, are the real parties in interest.

We note, however, that, without objection, parents have themselves alone

sought and obtained relief. (Dayton Board of Education v. Brinkman, supra,
433 U.S. at p. 408, fn. 1 [53 L. Ed. 2d at p. 856, 97 S. Ct. at p. 2769]; and Keyes
v. School District No. 1, Denver, Colo. (1973) 413 U.S. 189, 191 [93 S. Ct.
2686, 37 L. Ed. 2d 548, 553].) In Keyes, Mr. Justice Powell, in dissenting in
part, noted, with respect to the rights [750/751]and duties parents have with
respect to their children, “The law has long recognized the parental duty to
nurture, support, and provide for the welfare of children, including their
education.” (413 U.S. at pp. 246-247) Petitioners contend that a violation of
parents’ fundamental right to educate their children as they choose, gives them a
right to sue.

Although the violations alleged may have a tangential effect on the choices
available to the parents, it is not directly alleged that such parental freedom of
choice has been violated.

In Pasadena City Bd. of Education v. Spangler (1976) 427 U.S. 424 [96 S.
Ct. 2697, 49 L. Ed. 2d 599], the court recognized the derivative nature of any
parent’s right in holding that the action was moot as to the individual
respondents, the original student plaintiffs and their parents, because the
students had all graduated from the school system under attack.

In Serrano v. Priest (1971) 5 Cal. 3d 584 [96 Cal. Rptr. 601, 487 P.2d 1241]
(cert. den., 432 U.S. 907 [97 S. Ct. 2951, 53 L. Ed. 2d 1079]), the action was
brought by the school children and their parents jointly. (Id., at p. 589.) The
right of the children to sue was phrased as follows: “[We] are satisfied that
plaintiff children have alleged facts showing that the public school financing
system denies them equal protection of the laws because it produces substantial
disparities among school districts in the amount of revenue available for
education.” (Id., at p. 618.) The right of the parents to sue was predicated upon
their standing as taxpayers to seek an injunction “to prevent public officers of a
county from acting under an allegedly void law.” (Id., at p. 618.) No such relief
is sought by the parents in this case. * * * These decisions indicate that the
parents may have an interest in the remedy to be granted, but they do not destroy
the principle that a violation of the child’s right must be shown before any
remedy may be invoked.

The allegation “Petitioners bring this action on their own behalf and on behalf
of all persons similarly situated” adds naught to their case. It is established that
in order to sustain a class suit the complainant must be a person who is entitled
to the right asserted. (Parker v. Bowron, supra, 40 Cal. 2d 344.) In Parker the
court stated, “Parker cannot give himself standing to sue by purporting to
represent a class of which he is not a member.” (40 Cal. 2d at p. 353.)
 Appellants also assert that the parents’ right to sue may be predicated on the
principle that the failure of a minor to proceed through a guardian ad litem does
not affect the jurisdiction of the court and may be waived or an amendment
appointing such a guardian may be permitted. That argument misses the mark.
Here the shoe is on the other foot; it is the parent, not the minor, who is
originally before the court.

At oral argument and by supplemental briefs petitioners for the first time
contended that they had standing under the general principle adopted and
endorsed in Bd. of Soc. Welfare v. County of L. A. (1945) 27 Cal. 2d 98 [162
P.2d 627] , reading as follows: “‘[By] the preponderance of authority … where
the question is one of public right and the object of the mandamus is to procure
the enforcement of a public duty, the relator need not show that he has any legal
or special interest in the result, since it is sufficient that he is interested as a
citizen in having the laws executed and the duty in question enforced ….’” (27
Cal. 2d at pp. 100-101, …). [751/752]* * * The parents here are not suing as an
organization to enforce the rights of their own members. Their interest as
parents and members of the public, as we have seen, may make them proper
parties, and justify their intervention in the action. Nevertheless in the face of
proper objection the children should be joined too. As we construe the record
and the order of the lower court, the trial court never did reach the point of
exercising its discretion to permit the parents to sue solely in their own name on
behalf of their children, nor did it determine that there was no need for the
appointment of a guardian ad litem. There is some merit to Palo Alto district’s
contention that a showing of violation of personal rights, asserted by those
allegedly injured, rather than mere public interest, should be a requisite in cases
of this nature so that the rights of the children themselves may be properly
protected. (See Sierra Club v. Morton (1972) 405 U.S. 727 [92 S. Ct. 1361, 31
L. Ed. 2d 636].) There the court stated: “The requirement that a party seeking
review must allege facts showing that he is himself adversely affected does not
insulate executive action from judicial review, nor does it prevent any public
interests from being protected through the judicial process. It does serve at least
as a rough attempt to put the decision as to whether review will be sought in the
hands of those who have a direct stake in the outcome.” (405 U.S. at p. 740)

For the purposes of this case it is unnecessary to consider whether the failure
to join the minor students as plaintiffs requires dismissal of the action, or
whether it is a defect which may be waived. We merely need conclude that in
the face of objection, such as interposed by the Palo Alto district in this case,
the minors should be joined as plaintiffs. The error of the trial court in ruling on
that phase of the Palo Alto district’s demurrer does not require an affirmance of
the judgment. It is analogous to an erroneous ruling on a special demurrer,
which does not warrant a reversal but a remand for amendment. Here in view of
the trial court’s favorable rulings, the petitioners never had cause to seek to
amend by bringing in their children as parties. * * *

So here, insofar as the petitioners may have stated a cause of action on behalf
of their children they should be permitted to amend to make the children
themselves parties. We therefore must analyze the merits of the complaint from
the standpoint of the children’s constitutional rights. * * *

***

… [I]n Crawford v. Board of Education , [(1976) 17 Cal. 3d 280, 130 Cal.

Rptr. 724, 551 P.2d 28] , the court struck down definitions predicated upon
specific percentages and a command to have racial balance in each school. The
court reviewed the legal principles governing such requirements and concluded:
“In sum, from a constitutional standpoint, we see nothing inherently invalid in
the fact that percentages of various racial or ethnic groups may vary, even
significantly, in different schools throughout a school district, or even that a
particular minority group may be completely unrepresented in a particular
school. On the other hand, if the minority enrollment in a school is so
disproportionate as realistically to isolate minority students from other students
in the district, a finding of unconstitutional [752/753]segregation will generally be
proper.” (Id., p. 304.) We conclude that the foregoing and other criteria referred
to in Crawford for evaluating the need for, and the provisions of, any
intradistrict remedial plan, should be considered in determining the existence of
proscribed segregation, and if found, the remedies to be applied on an
interdistrict scale.

The judgment is reversed and the case is remanded with leave to petitioners
to serve and file, within 30 days after this decision is final, an amended petition,
substituting or adding the involved children as petitioners, and deleting the
evidentiary matter the subject of the special demurrer upheld by the trial court.
Each party shall bear its own costs on appeal.
 NOTES AND QUESTIONS REGARDING REAL PARTY IN
INTEREST/STANDING DOCTRINE

(1) The real party in interest/standing doctrine is related to the doctrine of

capacity; and in some cases, such as the right of an assignee or subrogee to sue,
they are virtually indistinguishable. However, unlike lack of capacity to sue
where a party has a cause of action but is unable to assert it due to “disability,”
lack of standing goes to the very existence of a cause of action. See, e.g.,
McKinny v. Bd. of Trustees , 31 Cal. 3d 79, 90, 181 Cal. Rptr. 549, 642 P.2d
460 (1982) (“It is elementary that a plaintiff who lacks standing cannot state a
valid cause of action”). Consequently, as Tinsley indicates, an objection to
standing is not waived by failure to raise it by demurrer or answer, and may be
raised at any point in the proceedings. Common Cause v. Bd. of Supervisors, 49
Cal. 3d 432, 438, 261 Cal. Rptr. 574, 777 P.2d 610 (1989) ; McKinny v. Bd. of
Trustees, supra.

(2) Code of Civil Procedure Section 367 requires that every action be
prosecuted in the name of the “real party in interest,” but does not generally
define what that phrase means. Unless a statute specifically grants standing, the
real party determination is made by reference to the substantive law — the
person possessing the right to sue under the applicable substantive law
ordinarily is the real party in interest. See, e.g., Wallner v. Parry Profl. Bldg.,
Ltd., 22 Cal. App. 4th 1446, 1449, 27 Cal. Rptr. 2d 834 (1994) (when a
partnership has a claim, the real party in interest is the partnership; but a limited
partner held to be the real party in interest in a limited partner’s derivative
action to enforce a claim which the limited partnership possesses against the
general partners but which the partnership refuses to enforce); County of
Alameda v. State Bd. of Control , 14 Cal. App. 4th 1096, 18 Cal. Rptr. 2d 487
(1993) (county and County taxpayer lacked standing to assert claims of crime
victims for reimbursement from state Crime Restitution Fund because statutory
substantive right to make such a claim belongs only to crime victims under Gov.
Code §§ 13959-60); Killian v. Millard, 228 Cal. App. 3d 1601, 1605, 279 Cal.
Rptr. 877 (1991) (defendant, who had no substantive right in contract between
plaintiff and third parties, lacked standing to seek to void that contract);
Associated Builders & Contractors, Inc. v. San Francisco Airports Com., 21
Cal. 4th 352, 87 Cal. Rptr. 2d 654, 981 P.2d 499 (1999) (discussing the
requirements for associational standing).

[753/754]
 (3) The courts have developed no useful general test because the applicable
substantive law obviously varies from case to case. Midpeninsula Citizens for
Fair Housing v. Westwood Investor , 221 Cal. App. 3d 1377, 1385, 271 Cal.
Rptr. 99 (1990) (“Standing requirements will vary from statute to statute based
upon the intent of the Legislature and the purpose for which the particular statute
was enacted.” Plaintiff citizen group lacked standing to challenge defendant’s
rental policy under the “person aggrieved” requirement of the Unruh Act, Civil
Code § 52; but had standing to sue “on behalf of the general public” under the
Unfair Competition Statute, Bus. & Prof. Code § 17204); Committee on
Children’s Television, Inc. v. Gen. Foods Corp ., 35 Cal. 3d 197, 210-11, 197
Cal. Rptr. 783, 673 P.2d 660 (1983) (plaintiffs organizations, parents and
children had standing to bring suit for deceptive advertising against cereal
manufacturer under broad authority of certain consumer protection statutes, and
may under fraud statute if complaint amended; but lacked standing for breach of
fiduciary duty action).

(4) The real party in interest/standing problems occur when the party bringing
a cause of action in a civil lawsuit has filed a federal bankruptcy petition. The
general rule seems to be that the trustee in bankruptcy is the real party in interest
as to any causes of action that accrued to the petitioner prior to the bankruptcy
filing, but the petitioner has standing to bring any cause of action that accrued
subsequent to the filing of the bankruptcy petition. See Haley v. Dow Lewis
Motors, Inc., 72 Cal. App. 4th 497, 85 Cal. Rptr. 2d 352 (1999) (collecting
cases); see also Cloud v. Northrop Grumman Corp., 67 Cal. App. 4th 995, 79
Cal. Rptr. 2d 544 (1998) (plaintiff lacked standing because her wrongful
termination cause of action was the property of her bankruptcy estate, but
plaintiff simply needed to amend her complaint to substitute in the trustee as the
real party in interest); but see Bostanian v. Liberty Sav. Bank , 52 Cal. App. 4th
1075, 61 Cal. Rptr. 2d 68 (1997) (trustee in bankruptcy is the real party in
interest as to a cause of action that accrued after the filing of a bankruptcy
petition, where that cause arose from an asset in the bankruptcy estate).

(5) Ripeness and Mootness. The criteria for standing are intertwined with the
concepts of ripeness and mootness. A case is considered ripe when the facts
present an actual dispute that permit a court to make a degree finally disposing
of the controversy that require a judicial resolution, as opposed to issuing a
purely advisory opinion. See, e.g., Pacific Legal Found.n v. Cal. Coastal
Com., 33 Cal. 3d 158, 170, 188 Cal. Rptr. 104, 655 P.2d 306 (1982) ; Wilson &
Wilson v. City Council of Redwood City , 191 Cal. App. 4th 1559, 1573-74,
120 Cal. Rptr. 3d 665 (2011) . A case is considered moot when the facts at one
time presented an actual controversy but, due to a change in circumstances,
cease to do so such that a court cannot grant the plaintiff any effectual relief. See
Wilson & Wilson, supra, 191Cal. App. 4th at 677-78 (discussing several
mootness cases). How are these two doctrines intertwined with the standing
doctrine?

[2] Statutory Exceptions

There are several statutory exceptions to the real party in interest

requirement.

[754/755]

[a] Personal Representatives and Trustees

One such statutory exception is CCP § 369, which authorizes such persons as
a personal representative (as defined by Probate Code § 58) and a trustee of an
express trust, to sue without joining as parties the persons for whose benefit the
action is prosecuted. The courts interpret § 369 as authorizing the legal
representative of an estate, not the heirs or legatees of the deceased, to sue for
debts due the estate. E.g., Klopstock v. Superior Court, 17 Cal. 2d 13, 17, 108
P.2d 906 (1941) ; see also Saks v. Damon Raike & Co., 7 Cal. App. 4th 419, 8
Cal. Rptr. 2d 869 (1992) (trust beneficiaries lack standing to sue attorney and
real estate broker employed by trust for breach of fiduciary duty; must sue
trustee or pursue other remedies in Probate Court).

Although the general rule is that the trustee is the real party in interest when a
cause of action is prosecuted on behalf of a trust, the California courts have
recognized a common law exception to this rule permitting a trust beneficiary to
bring an action against third parties who actively participate in a trustee’s
breach of trust. See, e.g., Harnedy v. Whitty, 110 Cal. App. 4th 1333, 2 Cal.
Rptr. 3d 798 (2003) (when a claim alleges breach of trust by the trustee, a
beneficiary has standing to pursue such claim against either the trustee directly,
the trustee and participating third parties, or such third parties alone); Wolf v.
Mitchell, Silberberg & Knupp, 76 Cal. App. 4th 1030, 90 Cal. Rptr. 2d 792
(1999); City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc ., 68
Cal. App. 4th 445, 80 Cal. Rptr. 2d 329 (1998).

[b] Homeowner Associations

CCP § 1368.3 [formerly, CCP § 374] contains another exception, which

authorizes associations established to manage common interest developments to
bring certain actions as the real party in interest without joining individual
owners. See, e.g., Duffey v. Superior Court, 3 Cal. App. 4th 425, 4 Cal. Rptr.
2d 334 (1992) (homeowners association had standing under former § 374(a) to
seek declaratory relief action to obtain an authoritative interpretation of
governing CC&Rs); see Matthew T. Powers, Comment, Homeowner
Association Standing in California: A Proposal to Expand the Role of the
Unit Owner, 26 Santa Clara L. Rev. 619 (1986).

[c] Other Statutory Exceptions

Other statutory exceptions include CCP § 377.60 [formerly § 377] (heirs or

dependent parents authorized to maintain wrongful death actions), Civil Code §
798.87(c) (mobile home park resident, management, or city attorney authorized
to bring civil action to remedy violation of park rules), Family Code § 4000
(either other parent or child may bring action against errant parent who willfully
fails to provide child support), Unemployment Insurance Code § 409.2 (any
interested person or organization may bring certain actions for declaratory
relief), and CCP § 526a (taxpayers suits).

[755/756]

[3] Standing vs. Real Party in Interest

The California courts generally treat the concept of standing as synonymous

with that of real party in interest. See, e.g., Amstone v. Peninsular Fire Ins. Co.,
226 Cal. App. 3d 1019, 1023, 277 Cal. Rptr. 260 (1991) (“Persons have
standing to sue when they are real parties in interest”); Don Rose Oil Co., Inc.
v. Lindsley, 160 Cal. App. 3d 752, 759, 206 Cal. Rptr. 670 (1984) . The courts
tend to refer to the doctrine as “standing” in cases involving public interest laws
or an organization’s right to sue on behalf of its members, and refer to it as “real
party in interest” in more traditional private party litigation.

[a] Purposes

The California courts define the purposes of each doctrine in similar, but not
identical, terms. The standing requirement is designed “to ensure that the courts
will decide only actual controversies between parties with a sufficient interest
in the subject matter of the dispute to press their case with vigor.” Common
Cause v. Bd. of Supervisors, 49 Cal. 3d 432, 439, 261 Cal. Rptr. 574, 777 P.2d
610 (1989); Harman v. City and Cnty. of San Francisco, 7 Cal. 3d 150, 159,
101 Cal. Rptr. 880, 496 P.2d 1248 (1972) . The real party rule is designed “to
protect a defendant from a multiplicity of suits and from further annoyance and
vexation, and to fix and determine the real liability which is alleged in the
complaint.” Bank of Orient v. Superior Court, 67 Cal. App. 3d 588, 594, 136
Cal. Rptr. 741 (1977). Are the differences in these two statements of purpose
meaningful?

[b] More Than One Real Party?

There may be more than one real party in interest under the applicable
substantive law. See Municipal Court v. Bloodgood, 137 Cal. App. 3d 29, 44,
186 Cal. Rptr. 807 (1982). For example, in a case involving a partial
assignment (or subrogation) of a claim, both the assignor and the assignee are
real parties in interest with respect to the claim and both have standing to sue.
See Cain v. State Farm Mut. Auto. Ins. Co., 47 Cal. App. 3d 783, 795, 121 Cal.
Rptr. 200 (1975); see Bank of Orient v. Superior Court, supra; Crofton v.
Young, 48 Cal. App. 2d 452, 456, 119 P.2d 1003 (1941) (where entire interest
was assigned, the assignee was the only real party in interest). Such cases
generally require joinder of all real parties in interest. Why? What purpose is
furthered by requiring such joinder?

[4] Taxpayer Lawsuits

Code of Civil Procedure § 526a establishes a unique authority for taxpayer

standing, providing in relevant part: “An action to obtain a judgment, restraining
and preventing any illegal expenditure of, waste of … funds … of a county,
town, city or city and county of the state, may be maintained against any officer
thereof … by a citizen resident therein … who is … liable to pay, or, within one
year before the commencement of the action, has paid, a tax therein.”
 [756/757]

[a] Liberal Construction

The California Supreme Court has consistently construed § 526a liberally to

achieve its remedial purpose: “to enable a large body of the citizenry to
challenge governmental action which would otherwise go unchallenged in the
courts because of the standing requirement.” Blair v. Pitchess, 5 Cal. 3d 258,
267-68, 96 Cal. Rptr. 42, 486 P.2d 1242 (1971) (taxpayers had standing to
challenge claim and delivery statute enforced by county officials); Van Atta v.
Scott, 27 Cal. 3d 424, 447, 166 Cal. Rptr. 149, 613 P.2d 210 (1980) (taxpayers
had standing to challenge constitutionality of county pre-trial release and
detention program even though directly affected persons — pretrial detainees —
were not parties). The plaintiff taxpayer has standing even though she alleges no
special personal injury or interest; and even though other individuals exist who
were directly affected by the challenged government action. E.g. , Arrieta v.
Mahon, 31 Cal. 3d 381, 386-87, 182 Cal. Rptr. 770, 644 P.2d 1249 (1982)
(taxpayers had standing to challenge constitutionality of county’s policy in
enforcing eviction writs regardless of whether plaintiffs or defendants had a
special, personal interest in the outcome); White v. Davis, 13 Cal. 3d 757, 764,
120 Cal. Rptr. 94, 533 P.2d 222 (1975) (taxpayers had standing to challenge
constitutionality of police intelligence gathering in university classrooms; no
showing of special injury to particular taxpayer was necessary).

The California Supreme Court has permitted taxpayer suits for declaratory
relief, damages, and mandamus, in addition to ones for injunctive relief, e.g.,
Van Atta v. Scott, supra , 27 Cal. 3d at 449-50 (and cases cited in footnotes 25-
27 therein); and has permitted such suits against state, as well as local, officials.
See Blair v. Pitchess, supra, 5 Cal. 3d at 267-68. The California Supreme
Court has upheld taxpayer standing even though a federal court had previously
dismissed the same case for lack of federal standing. See White v. Davis, supra,
13 Cal. 3d at 764 (plaintiffs had standing as taxpayers to challenge
constitutionality of ongoing undercover activities on UCLA campus).

[b] Restrictions on Taxpayer Suits

The only court imposed limitation on taxpayer standing under § 526a is that
the suit must seek to measure government performance against a legal standard
or duty — such as violation of the Constitution, a statute or an ordinance — but
must not trespass into the domain of legislative or executive discretion. Harman
v. City and Cnty. of San Francisco, 7 Cal. 3d 150, 159, 101 Cal. Rptr. 880,
496 P.2d 1248 (1972) (taxpayer had standing to challenge city’s method of
appraising city property for sale as violation of city charter); California Assn.
for Safety Ed. v. Brown, 30 Cal. App. 4th 1264, 1281-84, 36 Cal. Rptr. 2d 404
(1994) (taxpayer suit not appropriate to compel state agency to allocate certain
state funds to reimburse cost of driver’s training because state under no duty to
use such funds to pay driver training expenses for high school districts).

Of course, the plaintiff must also be a taxpayer. E.g., Torres v. City of Yorba
Linda, 13 Cal. App. 4th 1035, 1046-48, 17 Cal. Rptr. 2d 400 (1993) (plaintiffs’
alleged payment of city sales tax as consumers did not establish their status as
taxpayers for taxpayer standing under CCP § 526a because sales tax is levied
upon the retailer, not upon the consumer); Cornelius v. L. A. County Metro.
Trans. Auth., 49 Cal. App. 4th 1761, 1774-80, 57 Cal. Rptr. 2d 618 (1996)
[757/758](plaintiff lacked standing as a taxpayer to challenge a county
transportation authority’s affirmative action program because the plaintiff was
not a resident of the county and did not pay real estate taxes in the county);
Chiatello v. City and Cnty. of San Francisco,189 Cal. App. 4th 472, 480-98,
117 Cal. Rptr. 3d 169 (2010) (taxpayer who is not subject to the tax lacks
standing to enjoin the collection of the allegedly illegal tax).

[c] Liberal Standing

The policy in favor of liberal standing in public interest cases is so strong

that the court will find standing even though § 526a may not actually apply. For
example, in Common Cause v. Bd. of Supervisors, 49 Cal. 3d 432, 261 Cal.
Rptr. 574, 777 P.2d 610 (1989) , plaintiff taxpayers sought an injunction to
compel Los Angeles County to implement state-mandated voter outreach
programs. The defendant County contended that the plaintiffs lacked standing
under § 526a because their suit sought to compel, rather than halt, expenditure of
county funds. The Supreme Court found it unnecessary to apply § 526a, but held
that the plaintiffs have standing as citizens to seek enforcement of a public right.
Id. at 439.

[d] Taxpayer Suits in Federal Courts

The broad favorable treatment afforded taxpayer suits under § 526a is not
fully appreciated unless contrasted to the generally hostile reception such suits
receive in federal court. E.g. , Valley Forge Christian Coll. v. Americans
United for Separation of Church and State, Inc., 454 U.S. 464, 102 S. Ct. 752,
70 L. Ed. 2d 700 (1982) (taxpayers lacked standing to challenge
constitutionality of federal land transfer to religious college. “[T]he expenditure
of public funds in an allegedly unconstitutional manner is not an injury sufficient
to confer standing, even though the plaintiff contributes to the public coffers as a
taxpayer.” Id. at 477); cf. Flast v. Cohen, 392 U.S. 83, 88 S. Ct. 1942, 20 L. Ed.
2d 947 (1968) (limited exception permitted taxpayer standing).

In light of the California courts’ liberal attitude toward standing in public

interest suits, does the doctrine present any real limitation on such actions
against government officials? Is there any reason to pursue such suits in federal
court?

[5] Federal Standing and Real Party Doctrines

[a] Real Party Rule

Rule 17(a), F.R.C.P. , outlines the federal real party in interest doctrine. The
federal rule has the same meaning and purposes as the California doctrine, but
has additional consequences for subject matter jurisdiction. See, e.g., Gogolin
& Stelfer v. Karn’s Auto Imports, Inc ., 886 F.2d 100, 102 (5th Cir. 1989)
(purpose of rule is to prevent multiple conflicting lawsuits by persons who
would not be bound by res judicata principles); see generally Wright, Miller &
Kane, Federal Practice and Procedure: Civil 3d §§ 1543-58 (2010). The
citizenship of real parties, but not nominal ones, is relevant for determining
diversity jurisdiction under 28 U.S.C. § 1332. Navarro Sav. Assn. v. Lee , 446
U.S. 458, 460-61, 100 S. Ct. 1779, 64 L. Ed. 2d 425 (1980).

[758/759]

[b] Article III Standing Requirements

The doctrine of standing in federal court implements Article III of the U.S.
Constitution, which limits the federal judicial power to resolution of “cases”
and “controversies.” See, e.g. , Valley Forge Christian Coll. v. Americans
United for Separation of Church and State, Inc., 454 U.S. 464, 470-76, 102 S.
Ct. 752, 70 L. Ed. 2d 700 (1982). The federal doctrine is quite complex in its
application, and has been summarized as follows (Id. at 472-75):

[A]t an irreducible minimum, Art. III requires the party who invokes
the court’s authority to “show that he personally has suffered some actual
or threatened injury as a result of the putatively illegal conduct of the
defendant,” and that the injury “fairly can be traced to the challenged
 action” and “is likely to be redressed by a favorable decision.” In this
manner does Art. III limit the federal judicial power “to those disputes
which confine federal courts to a role consistent with a system of separated
powers and which are traditionally thought to be capable of resolution
through the judicial process.”

***

Beyond the constitutional requirements, the federal judiciary has also

adhered to a set of prudential principles that bear on the question of
standing. Thus, this Court has held that “the plaintiff generally must assert
his own legal rights and interests, and cannot rest his claim to relief on the
legal rights or interests of third parties.” In addition, even where the
plaintiff has alleged redressable injury sufficient to meet the requirements
of Art. III, the Court has refrained from adjudicating “abstract questions of
wide public significance” which amount to “generalized grievances,”
pervasively shared and most appropriately addressed in the representative
branches. Finally, the Court has required that the plaintiff’s complaint fall
within “the zone of interests to be protected or regulated by the statute or
constitutional guarantee in question.”

[c] Federal Standing Requirements in State Courts

The California courts have repeatedly held that the restrictive federal
standing requirements do not determine the scope of standing provided by a
California statute in state court. E.g., White v. Dan’s, supra , 13 Cal. 3d at 764;
Midpeninsula Citizens for Fair Housing v. Westwood Investors, 221 Cal. App.
3d 1377, 1385-88, 271 Cal. Rptr. 99 (1990). Why are the California courts free
to disregard U.S. Supreme Court pronouncements on standing? Is this a violation
of Article III? Of the Supremacy Clause? Why not? The different effect of these
standing doctrines is most pronounced in taxpayer suits. See discussion of
California taxpayer suits, supra.

[759/760]

[C] Survival of Actions

[1] Legislative Revision

 As part of a comprehensive revision of the statutes regarding litigation which
involves decedents, the Legislature in 1992 enacted CCP §§ 377.10-377.62 to
govern the effect of the death on parties to civil actions. See 3 Witkin,
California Procedure, Actions §§ 12-17 (5th ed. 2008) for a discussion of these
revisions.

[2] Survival Statutes

As with earlier survival statutes, CCP § 377.20 provides that unless there is
some specific statutory exception, “a cause of action for or against a person is
not lost by reason of the person’s death, but survives subject to the applicable
limitation period.”

[a] Decedent’s Cause of Action

An action that survives may be commenced or continued by the decedent’s

personal representative or, if none, by the decedent’s successor in interest as
defined in CCP §§ 377.10 & .11. CCP §§ 377.30 & .31. The procedure for
commencement or continuation by a successor in interest is specified in CCP §
377.32. In an action by a personal representative or successor in interest on the
decedent’s cause of action, the damages recoverable are limited to the loss the
decedent sustained before death, including punitive damages, but not including
damages for pain, suffering, or disfigurement. CCP § 377.34; see Sullivan v.
Delta Air Lines, Inc., 15 Cal. 4th 288, 63 Cal. Rptr. 2d 74, 935 P.2d 781
(1997) (CCP § 377.34 does not bar recovery of pain and suffering damages
awarded in a judgment if the plaintiff dies after the judgment was rendered but
while an appeal is pending). What are the likely policy reasons for this
limitation on recoverable damages?

[b] Cause of Action Against Decedent

Subject to compliance with the creditor claims requirements of the Probate

Code, a cause of action against a decedent that survives may be asserted against
the decedent’s personal representative or, to the extent permitted by statute,
against the decedent’s successor in interest. CCP § 377.40; see, e.g., Sacks v.
FSR Brokerage, Inc., 7 Cal. App. 4th 950, 956-60, 9 Cal. Rptr. 2d 306 (1992)
(judgment cannot be rendered for or against personal representative unless made
a party by substitution). All damages are recoverable that might have been
recoverable had the decedent lived, except punitive damages. CCP § 377.42;
see Whelan v. Rallo, 52 Cal. App. 4th 989, 60 Cal. Rptr. 2d 876 (1997)
(construing CCP § 377.42 as extinguishing the right to punitive damages only if
the defendant died before judgment was entered). What are the likely policy
reasons for this limitation on recoverable damages?

[760/761]

§ 10.07 CLASS ACTIONS

[A] General California Requirements

[1] Introductory Note

The class action is the ultimate joinder device. One or more named plaintiffs
may represent the interests of thousands of absentee class members, and may
obtain a class judgment that will bind those absentees by res judicata. See, e.g.,
Daar v. Yellow Cab Co. , 67 Cal. 2d 695, 63 Cal. Rptr. 724, 433 P.2d 732
(1967) (class action by taxicab customer against taxicab company on behalf of
all others similarly situated to recover excessive charges would be res judicata
on thousands of class members); Lazar v. Hertz Corp., 143 Cal. App. 3d 128,
191 Cal. Rptr. 849 (1983) (class action on behalf of approximately 5,000,000
rental car customers); Cartt v. Superior Court, 50 Cal. App. 3d 960, 124 Cal.
Rptr. 376 (1975) (consumer class action on behalf of over 700,000 credit card
holders). Recently adopted California Rules of Court now govern the
management of class actions, including motions to certify or decertify a class,
case conferences, notice to class members, orders in the conduct of class
actions, discovery from unnamed class members, and settlement and dismissals
of class actions. See Cal. Rules of Ct. 3.760-3.771.

[a] No Comprehensive Class Action Statute

Despite the obvious importance of the class actions and their concomitant
potential for procedural problems, the California Legislature has yet to enact a
comprehensive statute which specifically governs all applications of the class
action device. As Richmond v. Dart Industries, reproduced infra, illustrates,
the courts rely on CCP § 382 as the general authority for class actions and on
Civil Code § 1781 for procedural guidelines.

In the absence of controlling California authority, the California Supreme

Court has suggested that trial courts utilize the class action procedures of Rule
23 of the Federal Rules of Civil Procedure. City of San Jose v. Superior Court,
12 Cal. 3d 447, 453, 115 Cal. Rptr. 797, 525 P.2d 701 (1974) (trial courts
should be procedurally innovative and incorporate class action procedures from
outside sources, specifically Rule 23, F.R.C.P. ); La Sala v. American Sav. and
Loan Assn., 5 Cal. 3d 864, 872, 97 Cal. Rptr. 849, 489 P.2d 1113 (1971) .
Consequently, the California courts often cite federal court interpretations of
Federal Rule 23 as authority when determining state court class action
procedural issues. See, e.g., Bell v. American Title Ins. Co., 226 Cal. App. 3d
1589, 277 Cal. Rptr. 583 (1991) (analyzing federal court interpretations of the
notice requirements for class actions certified under federal Rules 23(b)(1), (2),
and (3) to determine propriety of class settlement that precludes opt outs);
Frazier v. City of Richmond, 184 Cal. App. 3d 1491, 228 Cal. Rptr. 376
(1986) (following federal rule 23 procedures regarding class notice). You might
therefore expect that the California courts’ treatment of the class action device
would be identical to that of the federal courts. In most applications, that
expectation is reality. But in a few important procedural areas, discussed
below, the California courts’ approach differs markedly from that of the federal
courts.

[761/762]

[b] Prerequisites

The general California prerequisites for maintenance of a class action are

identified in Richmond v. Dart Industries, infra, as: The party seeking
certification as a class action representative must establish the existence of an
ascertainable class and a well-defined community of interest among the class
members. This general test embodies several more specific factors which are
analyzed in the notes following our principal cases.

RICHMOND v. DART INDUSTRIES, INC.

SUPREME COURT OF CALIFORNIA
29 Cal. 3d 462, 174 Cal. Rptr. 515, 629 P.2d 23 (1981)

Bird, Justice.

May a trial court deny a motion to certify a class if the defendants are able to
show there was antagonism to the lawsuit on behalf of some absent class
members? A secondary issue centers on whether the plaintiffs’ prayer for
rescission and punitive damages prevents the use of a class action suit.
 I.

Tahoe Donner Subdivision is a recreational home site with approximately

6,000 lots near Truckee, California. Dart Industries, Inc. (Dart) developed the
subdivision in 1971 and sold approximately 2,600 lots by 1976. Then, 157 past
and present owners at Tahoe Donner filed suit based on claims of fraud and
violations of the Subdivided Lands legislation (Bus. & Prof. Code, § 11000 et
seq.). * * *

In their complaint, plaintiffs alleged that Dart or its subsidiary, Dart Resorts,
failed to plan and provide for adequate water supply, sewage treatment
facilities, recreational facilities, and maintenance. They prayed for
compensatory and punitive damages, rescission, declaratory relief, and
requested that a constructive trust be established to ensure that there was
sufficient money to provide adequate facilities.

Each individual who purchased a lot at Tahoe Donner was given a copy of
the Final Subdivision Public Report. That report gave assurances that there
would be an adequate water supply, sewage treatment and recreational facilities
for the entire development. It is the alleged violation of these assurances upon
which plaintiffs base their suit.

Plaintiffs filed a class certification motion under Code of Civil Procedure

section 382 which authorizes class action suits. They requested that the trial
court grant them the right to represent all of the record owners of Tahoe Donner
lots. A certification hearing was held on the 17th and 18th of November 1977.

Plaintiffs based their motion for class certification on the allegations of their
complaint, their declarations, exhibits incorporated in the record, and points and
authorities. The thrust of their argument was that a class action was proper since
they had established an ascertainable class and a well-defined community of
[762/763]interest among the class members. (See Daar v. Yellow Cab Co. (1967)
67 Cal. 2d 695, 704 [63 Cal. Rptr. 724, 433 P.2d 732] .) The ascertainable
class, they maintained, consisted of the record owners of lots at Tahoe Donner
who had received the Final Subdivision Public Report and since each member
of the class was affected by the failure of Dart to meet the needs of the
subdivision, the requirement of a community of interest was also met.
 In order to prove that they could adequately represent the entire class, the
plaintiffs filed declarations by their attorneys as to the attorneys’ experience
with class action suits. Individuals who were personally aware of the attorneys’
prior experience, also filed declarations.

The Tahoe Donner Association (TDA), interveners in this lawsuit, opposed

the motion to certify the class. This association automatically includes in its
membership any purchaser of a lot at Tahoe Donner. At the time TDA decided
to intervene, Dart had a controlling interest in the association since a majority of
the Tahoe Donner lots were still owned by Dart. Furthermore, Dart then had
three representatives on the five-member board of directors of this association
and the president of TDA was Mr. Sid Karsh, president of Dart Resorts.

At the certification hearing, a “survey” conducted with Dart’s assistance in

the spring of 1976 was introduced to attempt to show that there was antagonism
within the class to be represented. The “survey” consisted of a flyer entitled
“Support Your Project!,” which was sent to the property owners by Dart
Resorts on the approval of its president, Mr. Karsh. The flyer was written by a
homeowner, Mr. Jess Huffman, who subsequently reimbursed Dart Resorts for
the cost of producing and mailing the pamphlet.

The flyer accused plaintiffs of damaging the Dart project by filing their
lawsuit. It was claimed that the lawsuit was “more emotional than factual.”
There was no attempt to present the opposite viewpoint or even to list the
factual allegations contained in the complaint that there had been problems with
adequate water and sewage connections. The flyer boldly stated: “Dart has gone
the distance, plus the extra mile, to meet their [sic] commitments to us, the
property owners.”

The pamphlet invited each property owner to return to Mr. Huffman the lower
portion of the flyer after checking one of the boxes which indicated that (1) the
owner felt that “Tahoe Donner is a fine project and Dart is meeting their [sic]
commitments”; or (2) the owner was “not satisfied with Dart’s efforts to meet
their [sic] commitments”; or (3) the owner could be “counted on to contribute
some funds towards the ‘support Tahoe Donner’ effort.”

Of the 2,600 lot owners to whom it was mailed, only 325 responded.
Frazier v. City of Richmond . . . . . . . . . . . . . . . . . . . . 567; 760; 779; 783
Freedman v. Pac. Gas & Electric Co. . . . . . . . . . . . . . . . . . . . . 967
Freedom Newspapers, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 188
Freeman v. Lind . . . . . . . . . . . . . . . . . . . . 1075
Freeman; People v. . . . . . . . . . . . . . . . . . . . . 1033
Freeman v. State Farm Mut. Auto. Ins. Co. . . . . . . . . . . . . . . . . . . . . 132
Freidberg v. Cox . . . . . . . . . . . . . . . . . . . . 42
Fremont Indemnity Co. v. Workers’ Comp. Appeals Bd. . . . . . . . . . . . . . . .
. . . . . 1319
French v. Rishell . . . . . . . . . . . . . . . . . . . . 569
Fresno, City of v. Harrison . . . . . . . . . . . . . . . . . . . . 1123
Fresno, City of v. Superior Court . . . . . . . . . . . . . . . . . . . . 840
Frink v. Prod . . . . . . . . . . . . . . . . . . . . 1301; 1386
Fritz v. Ehrmann . . . . . . . . . . . . . . . . . . . . 126
Frommhagen v. Board of Supervisors . . . . . . . . . . . . . . . . . . . . 465; 526
Frontier Oil Corp. v. RLI Ins. Co. . . . . . . . . . . . . . . . . . . . . 314
Frost v. Mighetto . . . . . . . . . . . . . . . . . . . . 335
Fuhrman v. Cal. Satellite Systems . . . . . . . . . . . . . . . . . . . . 774
Fukuda v. City of Angels . . . . . . . . . . . . . . . . . . . . 1384
Fuller v. Tucker . . . . . . . . . . . . . . . . . . . . 624
Furda v. Superior Court . . . . . . . . . . . . . . . . . . . . 297, 298; 417; 422
Furia v. Helm . . . . . . . . . . . . . . . . . . . . 588
[TC-14/TC-15]

Furtado v. Schriefer . . . . . . . . . . . . . . . . . . . . 1275

G. D. Searle & Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 92

Gaggero v. Yura . . . . . . . . . . . . . . . . . . . . 890
Gagnon Co. v. Nevada Desert Inn, Inc. . . . . . . . . . . . . . . . . . . . . 980
Gale v. McDaniel . . . . . . . . . . . . . . . . . . . . 152; 625
Gale v. Superior Court . . . . . . . . . . . . . . . . . . . . 448
Gale v. Witt . . . . . . . . . . . . . . . . . . . . 1217
Gallagher v. Municipal Court of Los Angeles . . . . . . . . . . . . . . . . . . . .
1061
Gallin v. Superior Court . . . . . . . . . . . . . . . . . . . . 372
Gallo v. Superior Court . . . . . . . . . . . . . . . . . . . . 65, 66
Gamble v. General Foods Corp. . . . . . . . . . . . . . . . . . . . . 485; 509
Gann v. Williams Bros. Realty, Inc. . . . . . . . . . . . . . . . . . . . . 1044
Gant v. Union Bank . . . . . . . . . . . . . . . . . . . . 1048
Garabedian v. Skochko . . . . . . . . . . . . . . . . . . . . 128
Garat v. City of Riverside . . . . . . . . . . . . . . . . . . . . 1268; 1270; 1279
Garau v. Torrance Unified School Dist. . . . . . . . . . . . . . . . . . . . . 335
Garcia v. Duro Dyne Corp . . . . . . . . . . . . . . . . . . . . 718, 719
Garcia v. Hejmadi . . . . . . . . . . . . . . . . . . . . 907
Garcia v. Los Angeles Unified Sch. Dist. . . . . . . . . . . . . . . . . . . . . 186
Garcia v. McCutchen . . . . . . . . . . . . . . . . . . . . 16; 20; 971
Garcia; People v. . . . . . . . . . . . . . . . . . . . . 553
Garcia v. Politis . . . . . . . . . . . . . . . . . . . . 909
Garcia v. Rehrig Internat., Inc. . . . . . . . . . . . . . . . . . . . . 565
Garcia, Marriage of . . . . . . . . . . . . . . . . . . . . 210
Garden Grove Sch. Dist. v. Hendler . . . . . . . . . . . . . . . . . . . . 1317
Garner v. Wolfinbarger . . . . . . . . . . . . . . . . . . . . 808
Garnison v. Bd. of Dir. of the United Water Conservation Dist. . . . . . . . . .
. . . . . . . . . . . 604
Garrett v. Crown Coach Corp. . . . . . . . . . . . . . . . . . . . . 611; 620, 621
Garrett v. Superior Court . . . . . . . . . . . . . . . . . . . . 377
Garrick Dev. Co. v. Hayward Unified Sch. Dist. . . . . . . . . . . . . . . . . . . . .
1379
Garvey v. State Farm Fire & Casualty Co. . . . . . . . . . . . . . . . . . . . . 135;
681
Gasperini v. Center for Humanities, Inc. . . . . . . . . . . . . . . . . . . . . 1124
Gates v. Municipal Court . . . . . . . . . . . . . . . . . . . . 1245
Gates v. Superior Court . . . . . . . . . . . . . . . . . . . . 514
Gauss v. GAF Corp . . . . . . . . . . . . . . . . . . . . 980
Gebers v. State Farm Gen. Ins. Co. . . . . . . . . . . . . . . . . . . . . 1022
Geffen v. Moss . . . . . . . . . . . . . . . . . . . . 1146
Geldermann, Inc. v. Bruner . . . . . . . . . . . . . . . . . . . . 1032
GEM Developers v. Hallcraft Homes of San Diego, Inc. . . . . . . . . . . . . . . .
. . . . 727
General Acceptance Corp. v. Robinson . . . . . . . . . . . . . . . . . . . . 378
General Credit Corp. v. Pichel . . . . . . . . . . . . . . . . . . . . 601
General Ins. Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 956
General Motors Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 614; 636
Generale Bank, New York Branch v. Choudhury . . . . . . . . . . . . . . . . . . . .
419
Geneva Towers Ltd. v. San Francisco . . . . . . . . . . . . . . . . . . . . 190
Gentry v. Superior Court . . . . . . . . . . . . . . . . . . . . 1002; 1013, 1014
Gentry Constr. Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 727
Geoghegan v. Retirement Board . . . . . . . . . . . . . . . . . . . . 569
George Arakelian Farms, Inc. v. A.L.R.B. . . . . . . . . . . . . . . . . . . . . 515;
521; 555; 577
George Arakelian Farms, Inc. v. Agric. Labor Relations Bd. . . . . . . . . . . . .
. . . . . . . . 202
George F. Hillenbrand, Inc. v. Ins. Co. of North America . . . . . . . . . . . . . .
. . . . . . 566
Germann v. Workers’ Comp. Appeals Bd. . . . . . . . . . . . . . . . . . . . . 1330
Getty v. Getty . . . . . . . . . . . . . . . . . . . . 209
Getz v. City of West Hollywood . . . . . . . . . . . . . . . . . . . . 1382
Ghanooni v. Superior Court . . . . . . . . . . . . . . . . . . . . 884
Ghazaryan v. Diva Limousine, Ltd. . . . . . . . . . . . . . . . . . . . . 772
Giest v. Sequoia Ventures, Inc. . . . . . . . . . . . . . . . . . . . . 328
Gikas v. Zolin . . . . . . . . . . . . . . . . . . . . 554; 568
Gilbert Street Developers, LLC v. La Quinta Homes, LLC . . . . . . . . . . . . .
. . . . . . . 1008
Gilliland v. Lyons . . . . . . . . . . . . . . . . . . . . 1125
Gilman v. Beverly California Corp. . . . . . . . . . . . . . . . . . . . . 1209
Gilroy, City of v. State Bd of Equalization . . . . . . . . . . . . . . . . . . . . 569
Ginise v. Zaharia . . . . . . . . . . . . . . . . . . . . 327
Glacier General Assurance Co. v. Superior Court . . . . . . . . . . . . . . . . . . . .
809
Glage v. Hawes Firearms Co. . . . . . . . . . . . . . . . . . . . . 1095; 1319
Glass v. Superior Court . . . . . . . . . . . . . . . . . . . . 845; 848
Glendale, City of v. Superior Court . . . . . . . . . . . . . . . . . . . . 1355
Glende Motor Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1204, 1205
Glendora Cmty. Redevelopment Agency v. Demeter . . . . . . . . . . . . . . . . . .
. . 1178
Glenfed Dev. Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 841
Goat Hill Tavern v. City of Costa Mesa . . . . . . . . . . . . . . . . . . . . 1388
Goddard v. Security Title Ins. & Guarantee Co. . . . . . . . . . . . . . . . . . . . .
514
Goehring v. Superior Court . . . . . . . . . . . . . . . . . . . . 342
Gogolin & Stelter v. Karn’s Auto Imports, Inc. . . . . . . . . . . . . . . . . . . . .
757
Goldman v. Simpson . . . . . . . . . . . . . . . . . . . . 356
Goldman v. Wilsey Foods, Inc. . . . . . . . . . . . . . . . . . . . . 599; 602
Goldrich v. Natural Y Surgical Specialties, Inc. . . . . . . . . . . . . . . . . . . . .
588
Goldtree v. Spreckels . . . . . . . . . . . . . . . . . . . . 976
Golfland Entertainment Centers, Inc. v. Superior Court . . . . . . . . . . . . . . . .
. . . . 859
Gonsalves v. Bank of America . . . . . . . . . . . . . . . . . . . . 948
Gonzales v. County of Los Angeles . . . . . . . . . . . . . . . . . . . . 67; 962
Gonzales v. State of Cal. . . . . . . . . . . . . . . . . . . . . 655, 656
Gonzalez v. Kalu . . . . . . . . . . . . . . . . . . . . 126
Goodman v. Kennedy . . . . . . . . . . . . . . . . . . . . 651, 652
Goodman v. Lozano . . . . . . . . . . . . . . . . . . . . 1148; 1186, 1187; 1211
Goodman v. Mead Johnson & Co. . . . . . . . . . . . . . . . . . . . . 109
Goodwine v. Superior Court . . . . . . . . . . . . . . . . . . . . 408, 409
Gordon v. Law Offices of Aguirre & Meyer . . . . . . . . . . . . . . . . . . . . 145
[TC-15/TC-16]

Gordon v. Superior Court . . . . . . . . . . . . . . . . . . . . 803

Gorman v. Leftwich . . . . . . . . . . . . . . . . . . . . 1069
Gottlieb v. Kest . . . . . . . . . . . . . . . . . . . . 579
Gould v. Maryland Sound Industries, Inc. . . . . . . . . . . . . . . . . . . . . 648
Gourley v. State Farm Mutual Automobile Insurance Co. . . . . . . . . . . . . . .
. . . . . . 915; 1137; 1212
Gow v. Mitchell Brothers’ Santa Ana Theater . . . . . . . . . . . . . . . . . . . .
459
Goya v. P.E.R.U. Enterprises . . . . . . . . . . . . . . . . . . . . 387
Graciano v. Robinson Ford Sales, Inc. . . . . . . . . . . . . . . . . . . . 1167
Graf v. Gaslight . . . . . . . . . . . . . . . . . . . . 949
Grafton Partners v. Superior Court . . . . . . . . . . . . . . . . . . . . 1045
Graham v. Beers . . . . . . . . . . . . . . . . . . . . 967
Graham v. DaimlerChrysler Corp. . . . . . . . . . . . . . . . . . . . . 1170; 1173;
1179
Graham v. Hansen . . . . . . . . . . . . . . . . . . . . 71; 618
Grand Lake Drive In, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 835
Grant v. Board of Medical Examiners . . . . . . . . . . . . . . . . . . . . 1369; 1381
Grant v. CompUSA, Inc. . . . . . . . . . . . . . . . . . . . 189
Grant v. McAuliffe . . . . . . . . . . . . . . . . . . . . 218; 229; 317
Grappo v. Coventry Financial Corp. . . . . . . . . . . . . . . . . . . . . 330
Gravillis v. Coldwell Banker Residential Brokerage Co. . . . . . . . . . . . . . .
. . . . . 1007
Gray v. Begley . . . . . . . . . . . . . . . . . . . . 739
Gray v. Don Miller & Assoc., Inc. . . . . . . . . . . . . . . . . . . . . 1158
Gray v. Hall . . . . . . . . . . . . . . . . . . . . 921
Gray v. Reeves . . . . . . . . . . . . . . . . . . . . 71
Gray v. Stewart . . . . . . . . . . . . . . . . . . . . 1209
Gray v. Superior Court . . . . . . . . . . . . . . . . . . . . 976
Gray, Marriage of . . . . . . . . . . . . . . . . . . . . 1071
Great Northern Ry. Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 420
Greater Westchester Homeowners Asso. v. Los Angeles . . . . . . . . . . . . . . .
. . . . . 1130; 1136
Greathouse v. Amcord, Inc. . . . . . . . . . . . . . . . . . . . . 725
Green v. City of Oceanside . . . . . . . . . . . . . . . . . . . . 197; 200; 203; 339
Green v. GTE California, Inc. . . . . . . . . . . . . . . . . . . . . 845; 885
Green v. Laibco, LLC . . . . . . . . . . . . . . . . . . . . 1117
Green v. Obledo . . . . . . . . . . . . . . . . . . . . 21; 778; 1139; 1166; 1182
Green v. State Center Community College Dist. . . . . . . . . . . . . . . . . . . . .
180, 181
Green v. Zissis . . . . . . . . . . . . . . . . . . . . 120; 1249
Green, Marriage of . . . . . . . . . . . . . . . . . . . . 1213
Greenblatt v. Munro . . . . . . . . . . . . . . . . . . . . 198
Greener v. Workers’ Comp. Appeals Bd. . . . . . . . . . . . . . . . . . . . . 338
Greenfield v. Mather . . . . . . . . . . . . . . . . . . . . 470
Greenfield v. Spectrum Inv. Corp. . . . . . . . . . . . . . . . . . . . . 1121
Greenly v. Cooper . . . . . . . . . . . . . . . . . . . . 463
Greenman v. Yuba Power Products, Inc. . . . . . . . . . . . . . . . . . . . 620
Greenspan v. LADT, LLC . . . . . . . . . . . . . . . . . . . . 1008
Greenup v. Rodman . . . . . . . . . . . . . . . . . . . . 908; 916, 917; 922
Greve v. Taft Realty Co. . . . . . . . . . . . . . . . . . . . . 419
Greyhound Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 794; 796,
797; 1346
Greyhound Lines, Inc. v. County of Santa Clara . . . . . . . . . . . . . . . . . . . .
104
Grier v. Alameda-Contra Costa Transit Dist. . . . . . . . . . . . . . . . . . . . .
1288
Griffin, Marriage of . . . . . . . . . . . . . . . . . . . . 1274
Griffis v. S.S. Kresge Co. . . . . . . . . . . . . . . . . . . . . 154; 953
Grim v. State Bar . . . . . . . . . . . . . . . . . . . . 338
Grimshaw v. Ford Motor Co. . . . . . . . . . . . . . . . . . . . . 1120
Griset v. Fair Political Practices Com. . . . . . . . . . . . . . . . . . . . . 1275,
1276; 1327
Grisham v. Phillip Morris U.S.A., Inc. . . . . . . . . . . . . . . . . . . . 107–110;
114–116
Griswold v. Connecticut . . . . . . . . . . . . . . . . . . . . 855
Grobeson v. City of L. A . . . . . . . . . . . . . . . . . . . . 1093
Groth Bros. Oldsmobile, Inc. v. Gallagher . . . . . . . . . . . . . . . . . . . . 973,
974
Grothe v. Cortlandt Corp. . . . . . . . . . . . . . . . . . . . . 1232
Groves v. Peterson . . . . . . . . . . . . . . . . . . . . 545; 946
Grubb & Ellis Co. v. Bello . . . . . . . . . . . . . . . . . . . . 999
Grudt v. City of Los Angeles . . . . . . . . . . . . . . . . . . . . 47; 590; 602
Gryczman v. 4550 Pico Partners, Ltd . . . . . . . . . . . . . . . . . . . . 89
Guardado v. Superior Court . . . . . . . . . . . . . . . . . . . . 824; 1035
Guardian Savings & Loan Assn. v. MD Associates . . . . . . . . . . . . . . . . . . .
. 287
Guardino, In re Marriage of . . . . . . . . . . . . . . . . . . . . 1221
Guevara v. Brand . . . . . . . . . . . . . . . . . . . . 1027
Guevara v. Ventura County Comm. College Dist . . . . . . . . . . . . . . . . . . . .
127; 159
Guinn v. Dotson . . . . . . . . . . . . . . . . . . . . 188
Gulf Oil Corp. v. Gilbert . . . . . . . . . . . . . . . . . . . . 406–409
Gumbs v. Pueblo Intl., Inc. . . . . . . . . . . . . . . . . . . . . 1125
Gutierrez v. California Commerce Club, Inc. . . . . . . . . . . . . . . . . . . . . 777
Gutierrez v. Cassiar Mining Corp . . . . . . . . . . . . . . . . . . . . 341; 345
Gutierrez v. Mofid . . . . . . . . . . . . . . . . . . . . 70; 78; 87; 145; 151; 153;
178; 616, 617
Gutknecht v. Paul . . . . . . . . . . . . . . . . . . . . 207
Guz v. Bechtel National, Inc. . . . . . . . . . . . . . . . . . . . 888
Guzman v. Superior Court . . . . . . . . . . . . . . . . . . . . 1101
 H

Hacienda Hotel v. Culinary Workers Union . . . . . . . . . . . . . . . . . . . . 989

Hackethal v. Loma Linda Cmty. Hosp. Corp. . . . . . . . . . . . . . . . . . . . .
1385
Hackett v. John Crane, Inc. . . . . . . . . . . . . . . . . . . . 724
Hagan v. Superior Court of Los Angeles County . . . . . . . . . . . . . . . . . . . .
1357; 1361
Hagen v. Hickenbottom . . . . . . . . . . . . . . . . . . . . 893
Hahn v. Bd. of Ed. . . . . . . . . . . . . . . . . . . . . 206–208
Haley v. Dow Lewis Motors, Inc. . . . . . . . . . . . . . . . . . . . . 604; 753
Hall v. Cole . . . . . . . . . . . . . . . . . . . . 1159
[TC-16/TC-17]

Hall v. Coyle . . . . . . . . . . . . . . . . . . . . 471

Hall Street Associates, L.L.C. v. Mattel, Inc. . . . . . . . . . . . . . . . . . . . 1003
Hallett v. Slaughter . . . . . . . . . . . . . . . . . . . . 1217
Haluck v. Ricoh Elec., Inc. . . . . . . . . . . . . . . . . . . . 1123
Hambrecht & Quist Venture Partners v. American Medical Internat., Inc. . .
. . . . . . . . . . . . . . . . . . 95–97; 289; 326, 327
Hambrose Reserve, Ltd. v. Faitz . . . . . . . . . . . . . . . . . . . . 1194
Hamilton v. Asbestos Corp. . . . . . . . . . . . . . . . . . . . . 101; 320; 322
Hamilton v. Gage Bowl, Inc. . . . . . . . . . . . . . . . . . . . . 1074
Hamilton v. Superior Court . . . . . . . . . . . . . . . . . . . . 368
Hamm v. Carson City Nugget . . . . . . . . . . . . . . . . . . . . 244
Hamm v. Elkin . . . . . . . . . . . . . . . . . . . . 915
Hammell v. Britton . . . . . . . . . . . . . . . . . . . . 1218
Hammell v. Superior Court . . . . . . . . . . . . . . . . . . . . 335
Hampton v. Superior Court . . . . . . . . . . . . . . . . . . . . 1328
Hamud v. Hawthorne . . . . . . . . . . . . . . . . . . . . 209
Hand Elec., Inc. v. Snowline Joint Unified Sch. Dist. . . . . . . . . . . . . . . . . .
. . . 1115, 1116; 1119
Handy v. First Interstate Bank . . . . . . . . . . . . . . . . . . . . 1010
Handy v. Samaha . . . . . . . . . . . . . . . . . . . . 456
Hanley, Estate of . . . . . . . . . . . . . . . . . . . . 1262
Hanley, In re Marriage of . . . . . . . . . . . . . . . . . . . . 512
Hansberry v. Lee . . . . . . . . . . . . . . . . . . . . 773
Hansen v. Owens-Corning Fiberglas Corp. . . . . . . . . . . . . . . . . . . . . 414;
416
Hanson v. Denckla . . . . . . . . . . . . . . . . . . . . 347; 1255
Hanson v. Grode . . . . . . . . . . . . . . . . . . . . 905
Harding Lawson Assoc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 823
Hargrave, In re Marriage of . . . . . . . . . . . . . . . . . . . . 1298
Harlow v. Carleson . . . . . . . . . . . . . . . . . . . . 1376
Harman v. San Francisco . . . . . . . . . . . . . . . . . . . . 755, 756
Harnedy v. Whitty . . . . . . . . . . . . . . . . . . . . 754
Harris v. Billings . . . . . . . . . . . . . . . . . . . . 973
Harris v. Cavasso . . . . . . . . . . . . . . . . . . . . 389
Harris v. Grimes . . . . . . . . . . . . . . . . . . . . 505; 544; 658
Harris v. Rudin, Richman & Appel . . . . . . . . . . . . . . . . . . . . 980
Harris v. Superior Court . . . . . . . . . . . . . . . . . . . . 816; 818–820; 893
Harroman Co. v. Town of Tiburon . . . . . . . . . . . . . . . . . . . . 1379
Hart v. Avetoom . . . . . . . . . . . . . . . . . . . . 53
Hartbrodt v. Burke . . . . . . . . . . . . . . . . . . . . 976
Hartford Accident & Indem. Co. v. Superior Court . . . . . . . . . . . . . . . . . . .
. 727
Hartman v. Burford . . . . . . . . . . . . . . . . . . . . 1038
Hartman v. Santamarina . . . . . . . . . . . . . . . . . . . . 956
Hasson v. Ford Motor Co. . . . . . . . . . . . . . . . . . . . . 1065; 1070; 1096;
1098; 1118; 1120; 1122; 1313; 1315; 1318
Hatch v. Collins . . . . . . . . . . . . . . . . . . . . 61
Hathaway v. Spiro . . . . . . . . . . . . . . . . . . . . 1070
Haumschild v. Continental Casualty Co. . . . . . . . . . . . . . . . . . . . . 218
Hausmann v. Farmers Ins. Exch. . . . . . . . . . . . . . . . . . . . . 739
Hauter v. Zogarts . . . . . . . . . . . . . . . . . . . . 1077
Havlicek v. Coast-to-Coast Analytical Services, Inc. . . . . . . . . . . . . . . . . .
. . 328
Hawk v. Superior Court . . . . . . . . . . . . . . . . . . . . 1111
Haworth v. Superior Court . . . . . . . . . . . . . . . . . . . . 1022
Hayworth v. City of Oakland . . . . . . . . . . . . . . . . . . . . 1321
Hazel v. Hewlett . . . . . . . . . . . . . . . . . . . . 620; 623; 630
HealthMarkets, Inc. v. Superior Court, . . . . . . . . . . . . . . . . . . . . 353
Heap v. Gen. Motors Corp. . . . . . . . . . . . . . . . . . . . . 1071
Hearn v. Howard . . . . . . . . . . . . . . . . . . . . 390
Heaton v. Marin County Emp. Retirement Bd. . . . . . . . . . . . . . . . . . . . .
1333
Hebbard v. Colgrove . . . . . . . . . . . . . . . . . . . . 764
Hebrew Academy of San Francisco v. Goldman . . . . . . . . . . . . . . . . . . . .
104
Heidary v. Yadollahi . . . . . . . . . . . . . . . . . . . . 945
Helfend v. So. Cal. Rapid Transit Dist. . . . . . . . . . . . . . . . . . . . . 1302
Helicopteros Nacionales de Colombia, S. A. v. Hall . . . . . . . . . . . . . . . . . .
. . 348
Hellman v. La Cumbre Golf & Country Club . . . . . . . . . . . . . . . . . . . .
 1071, 1072
Henard v. Superior Court . . . . . . . . . . . . . . . . . . . . 813
Henderson v. Pac. Gas & Electric Co. . . . . . . . . . . . . . . . . . . . 907; 934
Hendricks v. Hendricks . . . . . . . . . . . . . . . . . . . . 1216; 1218
Henn v. Henn . . . . . . . . . . . . . . . . . . . . 543; 545
Henneberque v. City of Culver City . . . . . . . . . . . . . . . . . . . . 1277
Hennefer v. Butcher . . . . . . . . . . . . . . . . . . . . 661, 662
Hennessey’s Tavern, Inc. v. American Air Filter Co. . . . . . . . . . . . . . . . . .
. . . 949
Hennigan v. Boren . . . . . . . . . . . . . . . . . . . . 1336
Henry v. Alcove Investment, Inc. . . . . . . . . . . . . . . . . . . . . 1010
Hensler v. City of Glendale . . . . . . . . . . . . . . . . . . . . 61
Hensley v. Caietti . . . . . . . . . . . . . . . . . . . . 126
Hensley v. Eckerhart . . . . . . . . . . . . . . . . . . . . 1175
Heppler v. J.M. Peters Co. . . . . . . . . . . . . . . . . . . . . 1188
Herbert v. Lankershim . . . . . . . . . . . . . . . . . . . . 1317
Heredia v. Farmers Ins. Exchange . . . . . . . . . . . . . . . . . . . . 660
Heritage Marketing & Ins. Services, Inc. v. Chrustawka . . . . . . . . . . . . . . .
. . . . . 122
Hernandez v. Badger Constr. Equip. Co. . . . . . . . . . . . . . . . . . . . . 732
Hernandez v. Burger . . . . . . . . . . . . . . . . . . . . 239, 240
Hernandez v. County of Los Angeles . . . . . . . . . . . . . . . . . . . . 186
Herrick Corp. v. Canadian Ins. Co. . . . . . . . . . . . . . . . . . . . . 727
Hess v. Ford Motor Co. . . . . . . . . . . . . . . . . . . . 1137; 1213
Hewlett-Packard Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 772
Heyman v. Franchise Mortgage Acceptance Corp. . . . . . . . . . . . . . . . . . . . .
944
Heyward-Robinson Co.; United States v. . . . . . . . . . . . . . . . . . . . . 675
HFH, Ltd. v. Superior Court . . . . . . . . . . . . . . . . . . . . 651
Hickman v. Taylor . . . . . . . . . . . . . . . . . . . . 830; 833
Hicks v. Feiock . . . . . . . . . . . . . . . . . . . . 1246, 1247
Hicks v. Kaufman & Broad Home Corp. . . . . . . . . . . . . . . . . . . . . 769
Higgason, Marriage of . . . . . . . . . . . . . . . . . . . . 745
[TC-17/TC-18]

Higgins v. Del Faro . . . . . . . . . . . . . . . . . . . . 597

Higgins v. L. A. Gas & Electric Co. . . . . . . . . . . . . . . . . . . . . 1084
Highland Dev. Co. v. City of L. A. . . . . . . . . . . . . . . . . . . . . 738; 1270
Highland Fed. Savings & Loan; People v. . . . . . . . . . . . . . . . . . . . . 588
Hill v. City of Clovis . . . . . . . . . . . . . . . . . . . . 1282
Hill; People v. . . . . . . . . . . . . . . . . . . . . 898
Hilliard v. A.H. Robins Co. . . . . . . . . . . . . . . . . . . . . 956; 1075; 1111
Hilliger v. Golden . . . . . . . . . . . . . . . . . . . . 1196
Him v. Superior Court . . . . . . . . . . . . . . . . . . . . 960
Hinckley v. Bechtel Corp. . . . . . . . . . . . . . . . . . . . . 647
Hinshaw, Winkler, Draa, Marsh & Still v. Superior Court . . . . . . . . . . . . .
. . . . . . . 823
Hinton v. Beck . . . . . . . . . . . . . . . . . . . . 739
Hiott v. Superior Court . . . . . . . . . . . . . . . . . . . . 808; 1362
Hirsa v. Superior Court . . . . . . . . . . . . . . . . . . . . 598
Hirsch v. Ensign . . . . . . . . . . . . . . . . . . . . 989
Hitchings, In re . . . . . . . . . . . . . . . . . . . . 1099
Hittle v. Santa Barbara County Employees Retirement Ass’n . . . . . . . . . . .
. . . . . . . . . 203
HLC Properties, Ltd. v. Superior Court . . . . . . . . . . . . . . . . . . . . 805
Hobbs v. Weiss . . . . . . . . . . . . . . . . . . . . 437
Hoch v. Allied-Signal, Inc. . . . . . . . . . . . . . . . . . . . 723; 1210
Hock & Gordon-Hock, Marriage of . . . . . . . . . . . . . . . . . . . . 931; 967
Hodge v. Kirkpatrick Dev., Inc. . . . . . . . . . . . . . . . . . . . 740
Hodges v. Severns . . . . . . . . . . . . . . . . . . . . 1063
Hoffman v. Brandt . . . . . . . . . . . . . . . . . . . . 1055; 1060, 1061; 1064
Hoffman v. Keeton . . . . . . . . . . . . . . . . . . . . 625
Hogar Dulce Hogar v. Cmty. Dev. Com . . . . . . . . . . . . . . . . . . . . 1179
Hogya v. Superior Court . . . . . . . . . . . . . . . . . . . . 1345, 1346; 1353; 1355
Hoiles v. Superior Court . . . . . . . . . . . . . . . . . . . . 808
Hollister Convalescent Hosp., Inc. v. Rico . . . . . . . . . . . . . . . . . . . . 1280;
1290
Hollywood Circle, Inc. v. Dept. of Alcoholic Beverage Control . . . . . . . . .
. . . . . . . . . . . 515
Holmes v. David H. Bricker, Inc. . . . . . . . . . . . . . . . . . . . . 466; 481; 483,
484; 675, 676
Holmes v. Syntex Laboratories, Inc. . . . . . . . . . . . . . . . . . . . . 404, 405;
409; 413
Holt v. Monterey County . . . . . . . . . . . . . . . . . . . . 208
Home Ins. Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1034
Home Ins. Co. v. Zurich Ins. Co. . . . . . . . . . . . . . . . . . . . . 944
Home Sav. & Loan Assn. v. Superior Court . . . . . . . . . . . . . . . . . . . . 778;
782
Homestead Supplies, Inc. v. Executive Life Ins. Co. . . . . . . . . . . . . . . . . . .
. . 1295
Honda Motor Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 400
Honig v. Financial Corp. of America . . . . . . . . . . . . . . . . . . . . 596
Hood v. Superior Court . . . . . . . . . . . . . . . . . . . . 903
Horn v. Atchison, T. & S. F. R. Co. . . . . . . . . . . . . . . . . . . . . 1055–1057;
1060, 1061; 1064; 1075
Horowitz v. Noble . . . . . . . . . . . . . . . . . . . . 1122
Horton v. Jones . . . . . . . . . . . . . . . . . . . . 1274
Hosford v. Bd. of Admin. . . . . . . . . . . . . . . . . . . . . 1383
Hospital Council of Northern Cal. v. Superior Court . . . . . . . . . . . . . . . . . .
. . 741
Hotaling v. Superior Court . . . . . . . . . . . . . . . . . . . . 1246
Hoveida v. Scripps Health . . . . . . . . . . . . . . . . . . . . 1282
Howard v. Data Storage Assoc., Inc. . . . . . . . . . . . . . . . . . . . 689
Howard v. Thrifty Drug & Discount Stores . . . . . . . . . . . . . . . . . . . . 21;
957; 961, 962; 964, 965
Howard Contracting, Inc. v. G.A. MacDonald Const. Co. . . . . . . . . . . . . . .
. . . . . . 868; 1287
Howard Jarvis Taxpayers Assn. v. City of La Habra . . . . . . . . . . . . . . . . . .
. . 88; 105
Hrnjak v. Graymar, Inc. . . . . . . . . . . . . . . . . . . . . 1317
Hsu v. Abbara . . . . . . . . . . . . . . . . . . . . 1146; 1148; 1150
Hu v. Silgan Containers Corp. . . . . . . . . . . . . . . . . . . . . 587
Huang v. Garner . . . . . . . . . . . . . . . . . . . . 1074
Huber, Hunt & Nichols, Inc. v. Moore . . . . . . . . . . . . . . . . . . . . 1304
Huddleson v. Huddleson . . . . . . . . . . . . . . . . . . . . 207
Huff v. Mendoza . . . . . . . . . . . . . . . . . . . . 946
Hughes v. Kimble . . . . . . . . . . . . . . . . . . . . 961
Hughes v. Quackenbush . . . . . . . . . . . . . . . . . . . . 746
Hull v. Central Pathology Service Med. Clinic . . . . . . . . . . . . . . . . . . . .
143
Hull; People v. . . . . . . . . . . . . . . . . . . . . 1035; 1337
Hull v. Rossi . . . . . . . . . . . . . . . . . . . . 1176
Hulsey v. Koehler . . . . . . . . . . . . . . . . . . . . 518; 599, 600; 663
Humes v. Margil Ventures, Inc. . . . . . . . . . . . . . . . . . . . . 944
Hummel v. First Nat. Bank . . . . . . . . . . . . . . . . . . . . 1332
Hung v. Wang . . . . . . . . . . . . . . . . . . . . 1042, 1043
Hunt v. Fahnestock . . . . . . . . . . . . . . . . . . . . 1150
Hunt v. Superior Court . . . . . . . . . . . . . . . . . . . . 355
Hunt-Wesson Foods, Inc. v. County of Alameda . . . . . . . . . . . . . . . . . . . .
1390
Hunter v. Pacific Mechanical Corp . . . . . . . . . . . . . . . . . . . . 904
Hunting World, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 444; 446
Huntington v. Attrill . . . . . . . . . . . . . . . . . . . . 1227
Huntley v. Foster . . . . . . . . . . . . . . . . . . . . 863
Hurd v. Albert . . . . . . . . . . . . . . . . . . . . 538
Hurlbut v. Sonora Cmty. Hosp. . . . . . . . . . . . . . . . . . . . . 1069; 1197, 1198;
1211
Hurtado v. Statewide Home Loan Co. . . . . . . . . . . . . . . . . . . . . 964; 1306
Hurtado v. Superior Court of Sacramento County . . . . . . . . . . . . . . . . . . . .
232; 240, 241; 244, 245; 259, 260; 265; 300; 307; 309; 332; 411
Hurtado v. Western Medical Center . . . . . . . . . . . . . . . . . . . . 863
Huskinson & Brown, LLP v. Wolf . . . . . . . . . . . . . . . . . . . . 55
Hutchinson v. Ainsworth . . . . . . . . . . . . . . . . . . . . 480
Hutchinson v. City of Sacramento . . . . . . . . . . . . . . . . . . . . 1338
Hutchinson v. Hutchinson . . . . . . . . . . . . . . . . . . . . 309
Hutchinson; People v. . . . . . . . . . . . . . . . . . . . . 1082; 1089; 1109
[TC-18/TC-19]

Huysman v. Kirsch . . . . . . . . . . . . . . . . . . . . 93; 95

Hydratec, Inc. v. Sun Valley 260 Orchard & Vineyard Co. . . . . . . . . . . . . .
. . . . . . . 1193
Hydrotech Sys., Ltd. v. Oasis Waterpark . . . . . . . . . . . . . . . . . . . . 746,
747; 1278

I. J. Weinrot & Son, Inc. v. Jackson . . . . . . . . . . . . . . . . . . . . 273; 1277;

1283
Iliff v. Dustrud . . . . . . . . . . . . . . . . . . . . 1230
Imen v. Glassford . . . . . . . . . . . . . . . . . . . . 550–552
Imperial Bank v. Pim Elec., Inc. . . . . . . . . . . . . . . . . . . . . 1240
Imperial, County of v. Superior Court . . . . . . . . . . . . . . . . . . . . 686
In re Marriage of (see name of party) . . . . . . . . . . . . . . . . . . . .
In re (see name of party) . . . . . . . . . . . . . . . . . . . .
Industrial Indem. Co. v. Industrial Acci. Com. . . . . . . . . . . . . . . . . . . . .
148
Inland Casino Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1340
Inland Counties Regl. Center, Inc. v. Office of Admin. Hearings . . . . . . . . .
. . . . . . . . . . . 687
Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee . . . .
. . . . . . . . . . . . . . . . 339; 358; 379
Intel Corp. v. U.S. Air, Inc. . . . . . . . . . . . . . . . . . . . 971
Interinsurance Exchange of the Auto. Club v. Superior Court . . . . . . . . . . . .
. . . . . . . . 541
International Harvester Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 413
International Industries v. Olen . . . . . . . . . . . . . . . . . . . . 1151
International Ins. Co. v. Montrose Chem. Corp. . . . . . . . . . . . . . . . . . . . .
846, 847
International Shoe Co. v. Washington . . . . . . . . . . . . . . . . . . . . 341; 348,
349
International Union, UMW v. Bagwell . . . . . . . . . . . . . . . . . . . . 1246,
1247
Intershop Communications AG v. Superior Court . . . . . . . . . . . . . . . . . . . .
426
Interstate Brands v. Unemployment Ins. Appeals Bd. . . . . . . . . . . . . . . . . . .
. . 1386; 1389
Iott v. Franklin . . . . . . . . . . . . . . . . . . . . 935
IRM Corp. v. Carlson . . . . . . . . . . . . . . . . . . . . 726
Irvine v. Regents of the Univ. of Cal. . . . . . . . . . . . . . . . . . . . . 981
Irving v. Carpentier . . . . . . . . . . . . . . . . . . . . 619; 627; 629
Irvington-Moore, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 841
Irwin Mem. Blood Bank v. Superior Court . . . . . . . . . . . . . . . . . . . . 821
Isbell v. County of Sonoma . . . . . . . . . . . . . . . . . . . . 21; 1255
IT Corp. v. County of Imperial . . . . . . . . . . . . . . . . . . . . 457, 458; 460
Iwekaogwu v. City of Los Angeles . . . . . . . . . . . . . . . . . . . . 1096

J. Alexander Securities, Inc. v. Mendez . . . . . . . . . . . . . . . . . . . . 999;

1007
J.L. Thomas, Inc. v. County of Los Angeles . . . . . . . . . . . . . . . . . . . . 1382
Jabro v. Superior Court . . . . . . . . . . . . . . . . . . . . 824
Jackson v. Bank of America . . . . . . . . . . . . . . . . . . . . 921; 926; 932
Jackson v. County of Los Angeles . . . . . . . . . . . . . . . . . . . . 578, 579
Jackson v. Doe . . . . . . . . . . . . . . . . . . . . 188
Jackson v. Garmon . . . . . . . . . . . . . . . . . . . . 961
Jackson v. Homeowners Assn. Monte Vista Estates-East . . . . . . . . . . . . . . .
. . . . . 1152
Jackson v. Johns-Manville Sales Corp. . . . . . . . . . . . . . . . . . . . . 109
Jackson v. Pasadena City School Dist. . . . . . . . . . . . . . . . . . . . . 584
Jacobs, Marriage of . . . . . . . . . . . . . . . . . . . . 1220
Jade K. v. Viguri . . . . . . . . . . . . . . . . . . . . 741; 743; 932
Jaffe v. Albertson Co. . . . . . . . . . . . . . . . . . . . . 1038
Jaffe v. Huxley Architecture . . . . . . . . . . . . . . . . . . . . 677
Jaimez v. Daiohs USA, Inc. . . . . . . . . . . . . . . . . . . . 772
James Talcott, Inc. v. Short . . . . . . . . . . . . . . . . . . . . 1269
James W. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1362
Janik v. Rudy, Exelrod & Zieff . . . . . . . . . . . . . . . . . . . . 775
Janofsky v. Garland . . . . . . . . . . . . . . . . . . . . 24
Jarrow Formulas, Inc. v. LaMarche . . . . . . . . . . . . . . . . . . . . 657
Javor v. Dellinger . . . . . . . . . . . . . . . . . . . . 52
Jeanette H., In re . . . . . . . . . . . . . . . . . . . . 831
Jefferson v. County of Kern . . . . . . . . . . . . . . . . . . . . 194
Jeffords v. Young . . . . . . . . . . . . . . . . . . . . 1217
Jehl v. Southern Pac. Co. . . . . . . . . . . . . . . . . . . . . 1042, 1043; 1045; 1125
Jenkins v. Pope . . . . . . . . . . . . . . . . . . . . 485
Jensen v. Hewlett-Packard Co. . . . . . . . . . . . . . . . . . . . . 1074
Jermstad v. McNelis . . . . . . . . . . . . . . . . . . . . 689
Jerry’s Shell v. Equilon Enterprises LLC . . . . . . . . . . . . . . . . . . . . 931
Jessen v. Mentor Corp . . . . . . . . . . . . . . . . . . . . 22
Jevne v. Superior Court . . . . . . . . . . . . . . . . . . . . 1021
Jhaveri v. Teitelbaum . . . . . . . . . . . . . . . . . . . . 728
Jiminez v. Sears, Roebuck & Co. . . . . . . . . . . . . . . . . . . . . 1119
JKH Enter., Inc. v. Dept. of Indus. Relations . . . . . . . . . . . . . . . . . . . .
1389; 1394
Jocer Enterprises, Inc. v. Price . . . . . . . . . . . . . . . . . . . . 123
Joe Z. v. Superior Court . . . . . . . . . . . . . . . . . . . . 793
Jogani v. Jogani . . . . . . . . . . . . . . . . . . . . 579
Johansen v. California State Auto. Asso. Inter-Insurance Bureau . . . . . . . . .
. . . . . . . . . . . 979
John B. v. Superior Court . . . . . . . . . . . . . . . . . . . . 822
John Norton Farms . . . . . . . . . . . . . . . . . . . . 1074
John R. v. Oakland Unified School District . . . . . . . . . . . . . . . . . . . . 185
Johnson v. American Airlines, Inc. . . . . . . . . . . . . . . . . . . . . 499, 500
Johnson v. City of Loma Linda . . . . . . . . . . . . . . . . . . . . 208; 211; 515;
1392
Johnson v. DeWaard . . . . . . . . . . . . . . . . . . . . 601
Johnson v. Goodyear Tire & Rubber Co. . . . . . . . . . . . . . . . . . . . . 620
Johnson v. Hamilton . . . . . . . . . . . . . . . . . . . . 774
Johnson v. Pratt & Whitney Canada, Inc. . . . . . . . . . . . . . . . . . . . . 1137;
1209
Johnson v. Railway Express Agency . . . . . . . . . . . . . . . . . . . . 112
Johnson v. Santos . . . . . . . . . . . . . . . . . . . . 742
Johnson v. Stanhiser . . . . . . . . . . . . . . . . . . . . 911
Johnson v. Superior Court . . . . . . . . . . . . . . . . . . . . 821
Johnson v. Tosco Corp. . . . . . . . . . . . . . . . . . . . . 1318
Johnson & Johnson v. Superior Court . . . . . . . . . . . . . . . . . . . . 403, 404
[TC-19/TC-20]

Johnson-Stovall v. Superior Court . . . . . . . . . . . . . . . . . . . . 1044

Joint Council of Interns & Residents v. Bd. of Supervisors . . . . . . . . . . . . .
 . . . . . . . 1378; 1380
Jolly v. Eli Lilly & Co. . . . . . . . . . . . . . . . . . . . . 67; 78; 85, 86; 88; 92;
105; 113; 151–153; 156, 157; 194; 617, 618; 771
Jonathan Neil & Assoc., Inc. v. Jones . . . . . . . . . . . . . . . . . . . . 203; 205
Jones v. Drain . . . . . . . . . . . . . . . . . . . . 1146, 1147
Jones v. Interstate Recovery Service . . . . . . . . . . . . . . . . . . . . 914
Jones v. John Crane, Inc. . . . . . . . . . . . . . . . . . . . 725
Jones v. Moore . . . . . . . . . . . . . . . . . . . . 869
Jones v. Oxnard School Dist. . . . . . . . . . . . . . . . . . . . . 584
Jones v. Sieve . . . . . . . . . . . . . . . . . . . . 1095; 1099; 1118
Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison . . . . . . . . . . . . .
. . . . . . . 124, 125
Jordan v. Superstar Sandcars . . . . . . . . . . . . . . . . . . . . 960
Jordan, In re . . . . . . . . . . . . . . . . . . . . 804
Jordy v. County of Humboldt . . . . . . . . . . . . . . . . . . . . 1118
Jorgensen v. Jorgensen . . . . . . . . . . . . . . . . . . . . 1216–1219; 1222
Joshua S, Adoption of . . . . . . . . . . . . . . . . . . . . 1168
Joslin v. H.A.S. Ins. Brokerage . . . . . . . . . . . . . . . . . . . . 621; 631
Joyce v. Black . . . . . . . . . . . . . . . . . . . . 1027; 1213; 1275; 1283
Juarez v. Boy Scouts of America, Inc. . . . . . . . . . . . . . . . . . . . 883
Juge v. County of Sacramento . . . . . . . . . . . . . . . . . . . . 895
Justus v. Atchison . . . . . . . . . . . . . . . . . . . . 1278
Jutkowitz v. Bourns, Inc. . . . . . . . . . . . . . . . . . . . . 1156
Jutzi v. County of L. A. . . . . . . . . . . . . . . . . . . . . 1099

K.R.L. Partnership v. Superior Court . . . . . . . . . . . . . . . . . . . . 373

Kadelbach v. Amaral . . . . . . . . . . . . . . . . . . . . 826; 835
Kagan v. Gibraltar Sav. & Loan Ass’n . . . . . . . . . . . . . . . . . . . . 774
Kahn v. Berman . . . . . . . . . . . . . . . . . . . . 1224
Kahn v. Superior Court . . . . . . . . . . . . . . . . . . . . 823
Kaiser Foundation Hospitals v. Superior Court . . . . . . . . . . . . . . . . . . . .
565
Kane v. Hurley . . . . . . . . . . . . . . . . . . . . 53
Kantor v. Housing Auth. of Fresno Cnty. . . . . . . . . . . . . . . . . . . . . 727
Kaplan v. Mamelak . . . . . . . . . . . . . . . . . . . . 124
Kappel v. Bartlett . . . . . . . . . . . . . . . . . . . . 396
Kass v. Young . . . . . . . . . . . . . . . . . . . . 912
Kavruck v. Blue Cross of Cal. . . . . . . . . . . . . . . . . . . . . 771
Kaye v. Mount La Jolla Homeowners Assn. . . . . . . . . . . . . . . . . . . . . 962
Keal v. Bd. of Med. Quality Assurance . . . . . . . . . . . . . . . . . . . . 1304
Kearney v. Salomon Smith Barney, Inc. . . . . . . . . . . . . . . . . . . . . 265; 274;
316; 318; 320; 322
Keena v. United Railroads . . . . . . . . . . . . . . . . . . . . 1060
Keener v. Jeld-Wen, Inc. . . . . . . . . . . . . . . . . . . . . 1068
Keeton v. Hustler Magazine, Inc. . . . . . . . . . . . . . . . . . . . 347
Kelley v. Trunk . . . . . . . . . . . . . . . . . . . . 905
Kelly v. Yee . . . . . . . . . . . . . . . . . . . . 1199, 1200; 1210, 1211
Kelly-Zurian v. Wohl Shoe Co. . . . . . . . . . . . . . . . . . . . . 1119
Kemper v. Schardt . . . . . . . . . . . . . . . . . . . . 1011
Kendrick v. City of Eureka . . . . . . . . . . . . . . . . . . . . 127
Kennedy v. Superior Court . . . . . . . . . . . . . . . . . . . . 853
Kennedy/Jenks Consultants, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . .
. 377
Kenneth Mebane Ranches v. Superior Court . . . . . . . . . . . . . . . . . . . . 1339
Kensinger v. Abbott Laboratories . . . . . . . . . . . . . . . . . . . . 69; 71; 85
Kern v. Levolor Lorentzen, Inc. . . . . . . . . . . . . . . . . . . . . 1124
Kerr v. United States District Court . . . . . . . . . . . . . . . . . . . . 1345; 1364
Kerr-McGee Chemical Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . .
624
Kerrigan v. Fair Employment Practice Com. . . . . . . . . . . . . . . . . . . . .
1387, 1388
Ketchens v. Reiner . . . . . . . . . . . . . . . . . . . . 459
Ketchum v. Moses . . . . . . . . . . . . . . . . . . . . 1006; 1179, 1180
Keyes v. School District No. 1, Denver, Colo. . . . . . . . . . . . . . . . . . . . .
749
Khan v. Med. Bd. . . . . . . . . . . . . . . . . . . . . 1071
Khourie, Crew & Jaeger v. Sabek, Inc. . . . . . . . . . . . . . . . . . . . . 382; 934,
935
Khoury v. Maly’s of Cal., Inc. . . . . . . . . . . . . . . . . . . . . 589
Kidd v. Hillman . . . . . . . . . . . . . . . . . . . . 467
Kids’ Universe v. In2Labs . . . . . . . . . . . . . . . . . . . . 889
Killian v. Millard . . . . . . . . . . . . . . . . . . . . 752
Kilroy v. State of Cal. . . . . . . . . . . . . . . . . . . . . 648
Kim v. Euromotors West/The Auto Gallery . . . . . . . . . . . . . . . . . . . . 1152
Kimberly v. Kaiser Found. Hosp. . . . . . . . . . . . . . . . . . . . . 1050
King v. Central Bank . . . . . . . . . . . . . . . . . . . . 651
King v. State Bar . . . . . . . . . . . . . . . . . . . . 39
Kinney v. United Healthcare Services, Inc. . . . . . . . . . . . . . . . . . . . . 1017
Kinoshita v. Horio . . . . . . . . . . . . . . . . . . . . 1263; 1270; 1274; 1276
Kirk Corp. v. First Natl. Title Co. . . . . . . . . . . . . . . . . . . . . 1071
Kirkeby v. Superior Court . . . . . . . . . . . . . . . . . . . . 441
Kirkpatrick v. City of Oceanside . . . . . . . . . . . . . . . . . . . . 566
Kirkpatrick; People v. . . . . . . . . . . . . . . . . . . . . 1050
Kitzig v. Nordquist . . . . . . . . . . . . . . . . . . . . 86, 87
Kizer v. Sulnick . . . . . . . . . . . . . . . . . . . . 813
Klapprott v. United States . . . . . . . . . . . . . . . . . . . . 947
Klaxon Co. v. Stentor Electric Mfg. Co. . . . . . . . . . . . . . . . . . . . . 331
Kleefeld v. Superior Court . . . . . . . . . . . . . . . . . . . . 106
Klein v. Farmer . . . . . . . . . . . . . . . . . . . . 1037
Klemm v. Superior Court . . . . . . . . . . . . . . . . . . . . 38
Klinghoffer v. S.N.C. Achille Lauro . . . . . . . . . . . . . . . . . . . . 360
Klopstock v. Superior Court . . . . . . . . . . . . . . . . . . . . 599; 754
Knight v. Alefosio . . . . . . . . . . . . . . . . . . . . 734
Knodel v. Knodel . . . . . . . . . . . . . . . . . . . . 1270
Knoettgen v. Superior Court . . . . . . . . . . . . . . . . . . . . 822
Knox v. Streatfield . . . . . . . . . . . . . . . . . . . . 774
Koch v. Hankins . . . . . . . . . . . . . . . . . . . . 500
Koch v. Rodlin Enterprises, Inc. . . . . . . . . . . . . . . . . . . . . 513
Kodiak Films, Inc. v. Jensen . . . . . . . . . . . . . . . . . . . . 930
Kohan v. Cohan . . . . . . . . . . . . . . . . . . . . 120, 121
[TC-20/TC-21]

Kohn v. Jaymar-Ruby, Inc. . . . . . . . . . . . . . . . . . . . . 981

Kojababian v. Genuine Home Loans, Inc. . . . . . . . . . . . . . . . . . . . 905; 907
Kolani v. Gluska . . . . . . . . . . . . . . . . . . . . 143
Korea Data Sys. Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 809
Korea Supply Co. v. Lockheed Martin Corp . . . . . . . . . . . . . . . . . . . . 789
Korean United Presbyterian Church v. Presbytery of the Pacific . . . . . . . . .
. . . . . . . . . . . 1269
Kostecky v. Henry . . . . . . . . . . . . . . . . . . . . 1067
Kott v. Superior Court . . . . . . . . . . . . . . . . . . . . 400
Kowis v. Howard . . . . . . . . . . . . . . . . . . . . 578; 1361; 1385
Kracht v. Perrin, Gartland & Doyle . . . . . . . . . . . . . . . . . . . . 310
Krainock v. Superior Court . . . . . . . . . . . . . . . . . . . . 184
Kralyevich v. Magrini . . . . . . . . . . . . . . . . . . . . 1108
Kraus v. Trinity Mgmt. Serv., Inc. . . . . . . . . . . . . . . . . . . . 789
Kraus v. Willow Park Public Golf Course . . . . . . . . . . . . . . . . . . . . 685;
688
Krawitz v. Rusch . . . . . . . . . . . . . . . . . . . . 643
Kreines v. United States . . . . . . . . . . . . . . . . . . . . 642
Kreutzer v. County of San Diego . . . . . . . . . . . . . . . . . . . . 1175
Krieger v. Nick Alexander Imports, Inc. . . . . . . . . . . . . . . . . . . . . 61, 62;
103
Kroopf v. Guffey . . . . . . . . . . . . . . . . . . . . 401
Krouse v. Graham . . . . . . . . . . . . . . . . . . . . 1089; 1094
Krupski v. Costa Crociere . . . . . . . . . . . . . . . . . . . . 641
Kruss v. Booth . . . . . . . . . . . . . . . . . . . . 329
Kubrick; United States v. . . . . . . . . . . . . . . . . . . . . 69; 84
Kuebler, Estate of v. Superior Court . . . . . . . . . . . . . . . . . . . . 912
Kulchar v. Kulchar . . . . . . . . . . . . . . . . . . . . 939, 940; 942–944; 1215
Kulesa v. Castleberry . . . . . . . . . . . . . . . . . . . . 906
Kulko v. Superior Court . . . . . . . . . . . . . . . . . . . . 7
Kullar v. Foot Locker Retail, Inc. . . . . . . . . . . . . . . . . . . . . 784
Kumar v. Nat. Med. Enter., Inc. . . . . . . . . . . . . . . . . . . . . 1381
Kunstman v. Mirizzi . . . . . . . . . . . . . . . . . . . . 148, 149; 587
Kuperman v. Great Republic Life Ins. Co. . . . . . . . . . . . . . . . . . . . . 976
Kupka v. Board of Administration . . . . . . . . . . . . . . . . . . . . 968
Kyle v. Carmon . . . . . . . . . . . . . . . . . . . . 973

L. C. Rudd & Son, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 721

La Jolla Village Homeowners’ Assn. v. Superior Court . . . . . . . . . . . . . . .
. . . . . 660
La Manna v. Stewart . . . . . . . . . . . . . . . . . . . . 1106, 1107; 1113; 1116;
1121
La Sala v. American Savings & Loan Assn. . . . . . . . . . . . . . . . . . . . . 21;
760; 765; 774; 784
Laborers’ Intl. Union of North America v. El Dorado Landscape Co. . . . . .
. . . . . . . . . . . . . . . 969
Lachkar v. Lachkar . . . . . . . . . . . . . . . . . . . . 1153
LaClette v. Galindo . . . . . . . . . . . . . . . . . . . . 126
Ladas v. California State Auto. Ass’n . . . . . . . . . . . . . . . . . . . . 1188, 1189
Ladd v. Dart Equip. Corp. . . . . . . . . . . . . . . . . . . . . 1305
Laird v. Blacker . . . . . . . . . . . . . . . . . . . . 123, 124
Lakin v. Watkins Assoc. Indus. . . . . . . . . . . . . . . . . . . . . 1137; 1212; 1284
Lama v. Comcast Cablevision . . . . . . . . . . . . . . . . . . . . 976
Lamb v. Harbaugh . . . . . . . . . . . . . . . . . . . . 467
Lambert v. Commonwealth Land Title Ins. Co. . . . . . . . . . . . . . . . . . . . .
104; 143
Lambert v. Haskell . . . . . . . . . . . . . . . . . . . . 456
Lambert v. McKenzie . . . . . . . . . . . . . . . . . . . . 69
Lamberton v. Rhodes-Jamieson . . . . . . . . . . . . . . . . . . . . 728
Lances, Estate of . . . . . . . . . . . . . . . . . . . . 1075; 1108
Landau v. Salam . . . . . . . . . . . . . . . . . . . . 683
Landeros v. Pankey . . . . . . . . . . . . . . . . . . . . 547
Lane v. Hughes Aircraft Co. . . . . . . . . . . . . . . . . . . . . 1116; 1120
Lang v. Hochman . . . . . . . . . . . . . . . . . . . . 883; 931
Langford v. Superior Court . . . . . . . . . . . . . . . . . . . . 1354; 1359
Langsam v. City of Sausalito . . . . . . . . . . . . . . . . . . . . 1379
Lankster v. Alpha Beta Co. . . . . . . . . . . . . . . . . . . . . 1097
Lantz v. Superior Court . . . . . . . . . . . . . . . . . . . . 821
Lantzy v. Centex Homes . . . . . . . . . . . . . . . . . . . . 145; 155, 156
Lara v. Nevitt . . . . . . . . . . . . . . . . . . . . 1097
Laraway v. Pasadena Unified School Dist. . . . . . . . . . . . . . . . . . . . . 1275
Larcher v. Wanless . . . . . . . . . . . . . . . . . . . . 106
Larner v. Los Angeles Doctors Hospital Associates, LP . . . . . . . . . . . . . . .
. . . . . 775
Larson v. Barnett . . . . . . . . . . . . . . . . . . . . 625
Larwin-Southern California, Inc. v. JGB Investment Co. . . . . . . . . . . . . . . .
. . . . . 651
Las Palmas Assoc. v. Las Palmas Ctr. Assoc. . . . . . . . . . . . . . . . . . . . .
1063, 1064; 1121; 1144
Laube, Marriage of . . . . . . . . . . . . . . . . . . . . 1299
Laurel Heights Improvement Ass’n v. Regents of University of California .
. . . . . . . . . . . . . . . . . . . 1166
Lauro Lines v. Chasser . . . . . . . . . . . . . . . . . . . . 1286
Laursen & Fogarty, Marriage of . . . . . . . . . . . . . . . . . . . . 1323
Lavely v. Nonemaker . . . . . . . . . . . . . . . . . . . . 600
Lawrence v. Western Mut. Ins. Co. . . . . . . . . . . . . . . . . . . . . 64
Lawyers Title Ins. Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 519,
520
Laxalt v. McClatchy . . . . . . . . . . . . . . . . . . . . 825
Lazar v. Hertz Corp. . . . . . . . . . . . . . . . . . . . . 760; 769; 772; 776
Le Parc Community Assn. v. Workers’ Comp. Appeals Bd . . . . . . . . . . . . .
. . . . . . . 514; 546
Leach v. Drummond Medical Group, Inc. . . . . . . . . . . . . . . . . . . . . 651
Leader v. Health Indus. of America, Inc. . . . . . . . . . . . . . . . . . . . 967
Leadford v. Leadford . . . . . . . . . . . . . . . . . . . . 519
Leaf v. City of San Mateo . . . . . . . . . . . . . . . . . . . . 82
Lealao v. Beneficial Cal., Inc. . . . . . . . . . . . . . . . . . . . 790; 1180
Leasequip, Inc. v. Dapeer . . . . . . . . . . . . . . . . . . . . 145; 156
Lee v. Bank of America . . . . . . . . . . . . . . . . . . . . 603
Lee v. Dynamex, Inc. . . . . . . . . . . . . . . . . . . . 777
[TC-21/TC-22]

Lee v. Los Angeles County Metropolitan Transit Authority . . . . . . . . . . . . .

 . . . . . . . 104
Lee v. Swansboro Country Property Owners Assn. . . . . . . . . . . . . . . . . . . .
. 1240
Lee v. Wells Fargo Bank . . . . . . . . . . . . . . . . . . . . 1182
Leeper v. Beltrami . . . . . . . . . . . . . . . . . . . . 209
Leff v. Gunter . . . . . . . . . . . . . . . . . . . . 1131
Legg v. Mutual Ben. Health & Acci. Asso. . . . . . . . . . . . . . . . . . . . . 647
Legislature of Cal. v. Eu . . . . . . . . . . . . . . . . . . . . 1357
Leland Stanford Junior Univ. v. Superior Court . . . . . . . . . . . . . . . . . . . .
1033
Lemen, Marriage of . . . . . . . . . . . . . . . . . . . . 885
LeMons v. Regents of Univ. of Cal. . . . . . . . . . . . . . . . . . . . . 1066; 1312;
1315
Lenn E, Adoption of . . . . . . . . . . . . . . . . . . . . 744
Lent v. Doe . . . . . . . . . . . . . . . . . . . . 98
Leo v. Dunlap . . . . . . . . . . . . . . . . . . . . 921
Leone v. Medical Board . . . . . . . . . . . . . . . . . . . . 1364; 1393
Lerma v. County of Orange . . . . . . . . . . . . . . . . . . . . 1032
Lerner v. Los Angeles City Board of Education . . . . . . . . . . . . . . . . . . . .
561
Lerner v. Ward . . . . . . . . . . . . . . . . . . . . 1142; 1144
Lesko v. Superior Court . . . . . . . . . . . . . . . . . . . . 948
Leslie G. v. Perry & Associates . . . . . . . . . . . . . . . . . . . . 888
Leuzinger v. County of Lake . . . . . . . . . . . . . . . . . . . . 1321
Levi Strauss & Co., In re . . . . . . . . . . . . . . . . . . . . 786
Levie, Estate of . . . . . . . . . . . . . . . . . . . . 330
Levin v. Ligon . . . . . . . . . . . . . . . . . . . . 578
Levine v. Smith . . . . . . . . . . . . . . . . . . . . 919
Levy v. Blum . . . . . . . . . . . . . . . . . . . . 52, 53
Levy v. Superior Court . . . . . . . . . . . . . . . . . . . . 980
Levy-Zentner Co. v. Southern Pac. Transportation Co. . . . . . . . . . . . . . . . .
. . . . 1132
Lewco Iron Metals, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1028
Lewis v. Bill Robertson & Sons, Inc. . . . . . . . . . . . . . . . . . . . . 1053
Lewis v. County of Sacramento . . . . . . . . . . . . . . . . . . . . 569; 892
Lewis v. Hankins . . . . . . . . . . . . . . . . . . . . 1233
Lewis v. Superior Court . . . . . . . . . . . . . . . . . . . . 144; 445
Lewis v. Upton . . . . . . . . . . . . . . . . . . . . 1325
Lhotka v. Geographic Expeditions, Inc. . . . . . . . . . . . . . . . . . . . 1012
Li v. Majestic Industry Hills LLC . . . . . . . . . . . . . . . . . . . . 53
Li v. Yellow Cab Co. . . . . . . . . . . . . . . . . . . . . 74; 691; 702
Liberty Loan Corp. v. Petersen . . . . . . . . . . . . . . . . . . . . 910
Liberty Mut. Fire Ins. Co. v. LcL Administrators, Inc. . . . . . . . . . . . . . . . . .
 . . 883
Liberty Mut. Ins. Co. v. Fales . . . . . . . . . . . . . . . . . . . . 163; 677
Liberty Mutual Ins. Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 844
Lieberman v. Aetna Ins. Co. . . . . . . . . . . . . . . . . . . . . 943
Lieberman v. Superior Court . . . . . . . . . . . . . . . . . . . . 376
Liebig v. Superior Court . . . . . . . . . . . . . . . . . . . . 65, 66
Liebow v. Superior Court . . . . . . . . . . . . . . . . . . . . 1252
Lieppman v. Lieber . . . . . . . . . . . . . . . . . . . . 376
Liew v. Official Receiver and Liquidator . . . . . . . . . . . . . . . . . . . . 332
Life v. County of Los Angeles . . . . . . . . . . . . . . . . . . . . 179; 1287
Lifeco Services Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 422, 423
Lilienthal & Fowler v. Superior Court . . . . . . . . . . . . . . . . . . . . 483; 1337
Lincoln Natl. Life Ins. Co. v. State Bd. of Equalization . . . . . . . . . . . . . . . .
. . . . 739
Linden Partners v. Wilshire Linden Assoc. . . . . . . . . . . . . . . . . . . . . 903
Linder v. Thrifty Oil Co. . . . . . . . . . . . . . . . . . . . . 772, 773
Lindley v. General Electric Co. . . . . . . . . . . . . . . . . . . . . 641
Linhart v. Nelson . . . . . . . . . . . . . . . . . . . . 1101; 1115; 1118
Link v. Cater . . . . . . . . . . . . . . . . . . . . 966
Liodas v. Sahadi . . . . . . . . . . . . . . . . . . . . 1288
Lippel, Marriage of . . . . . . . . . . . . . . . . . . . . 908; 919
Lippman v. City of Los Angeles . . . . . . . . . . . . . . . . . . . . 743
Lippold v. Hart . . . . . . . . . . . . . . . . . . . . 1112
Lipson v. Jordache Enterprises, Inc. . . . . . . . . . . . . . . . . . . . . 932
Liquidator of Integrity Ins. Co. v. Hendrix . . . . . . . . . . . . . . . . . . . . 946;
1256
Little v. Auto Stiegler, Inc. . . . . . . . . . . . . . . . . . . . 999; 1013; 1020
Litwin v. Estate of Formela . . . . . . . . . . . . . . . . . . . . 122
Liu, In re Marriage of . . . . . . . . . . . . . . . . . . . . 1118; 1122, 1123
LLC v. Superior Court . . . . . . . . . . . . . . . . . . . . 294
A Local & Regional Monitor v. City of L. A. . . . . . . . . . . . . . . . . . . . .
1379
Lockheed Martin Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 770
Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort . . . . . . .
. . . . . . . . . . . . . 649
Lockman Found. v. Evangelical Alliance Mission . . . . . . . . . . . . . . . . . . . .
408
Locksley v. Ungureanu . . . . . . . . . . . . . . . . . . . . 1084; 1112; 1119
Lockton v. O’Rourke . . . . . . . . . . . . . . . . . . . . 126
Loduca v. Polyzos . . . . . . . . . . . . . . . . . . . . 1147
Loeb & Loeb v. Beverly Glen Music, Inc. . . . . . . . . . . . . . . . . . . . . 431;
433
Loehr v. Ventura County Cmty. Coll. Dist. . . . . . . . . . . . . . . . . . . . . 1393
Lofthouse v. Department of Motor Vehicles . . . . . . . . . . . . . . . . . . . . 568
Lohnes v. Astron Computer Products . . . . . . . . . . . . . . . . . . . . 744
Long Beach, City of v. Superior Court . . . . . . . . . . . . . . . . . . . . 825; 832–
835
Long Beach Memorial Medical Center v. Superior Court . . . . . . . . . . . . . .
. . . . . . 719
Long Beach Unified Sch. Dist. v. California . . . . . . . . . . . . . . . . . . . . 515;
556
Looney v. Superior Court . . . . . . . . . . . . . . . . . . . . 657
Loope v. Greyhound Lines, Inc. . . . . . . . . . . . . . . . . . . . . 120
Lopez v. Civil Service Commission . . . . . . . . . . . . . . . . . . . . 199; 1381
Lopez v. Fancelli . . . . . . . . . . . . . . . . . . . . 918
Lopez v. State of California . . . . . . . . . . . . . . . . . . . . 966
Lopez v. Swyer . . . . . . . . . . . . . . . . . . . . 70
Loral Corp. v. Moyes . . . . . . . . . . . . . . . . . . . . 1073
Loranger v. Nadeau . . . . . . . . . . . . . . . . . . . . 227; 309
Lord v. Garland . . . . . . . . . . . . . . . . . . . . 519
[TC-22/TC-23]

Los Angeles Branch NAACP v. Los Angeles Unified School Dist. . . . . . . .

. . . . . . . . . . . . . 509
Los Angeles, City of v. Decker . . . . . . . . . . . . . . . . . . . . 1111
Los Angeles v. Gleneagle Dev. Co. . . . . . . . . . . . . . . . . . . . . 966
Los Angeles, City of v. L.A. Farming & Milling Co. . . . . . . . . . . . . . . . . . .
. . 911
Los Angeles, City of v. Superior Court . . . . . . . . . . . . . . . . . . . . 184; 476;
499; 506, 507
Los Angeles, County of v. Berk . . . . . . . . . . . . . . . . . . . . 210
Los Angeles, County of v. City of Los Angeles . . . . . . . . . . . . . . . . . . . .
461
Los Angeles, County of v. County of Los Angeles Assessment Appeals
Board . . . . . . . . . . . . . . . . . . . . 536
Los Angeles, County of v. Guerrero . . . . . . . . . . . . . . . . . . . . 720; 1279
Los Angeles, County of v. Superior Court . . . . . . . . . . . . . . . . . . . . 866-
868; 965
Los Angeles County Safety Police Assn. v. County of L. A. . . . . . . . . . . . . .
. . . . . . . 1305
Los Angeles Police Protective League v. City of Los Angeles . . . . . . . . . . .
. . . . . . . . . 1161–1163; 1171; 1332
Loube v. Loube . . . . . . . . . . . . . . . . . . . . 1144
Louie v. BFS Retail & Commercial Operations, LLC . . . . . . . . . . . . . . . . .
. . . 509; 567
Love v. Fire Ins. Exchange . . . . . . . . . . . . . . . . . . . . 87
Love v. Wolf . . . . . . . . . . . . . . . . . . . . 1055; 1057; 1060; 1062; 1064
Lovett v. Superior Court . . . . . . . . . . . . . . . . . . . . 813
Loving & Evans v. Blick . . . . . . . . . . . . . . . . . . . . 991; 1011
Lowe v. Cal. Resources Agency . . . . . . . . . . . . . . . . . . . . 337
Lowry v. Obledo . . . . . . . . . . . . . . . . . . . . 779
Lowy Dev. Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 847
Loya, Marriage of . . . . . . . . . . . . . . . . . . . . 1274
Lu v. Dryclean-U.S.A. of Cal., Inc. . . . . . . . . . . . . . . . . . . . 426
Lu v. Superior Court . . . . . . . . . . . . . . . . . . . . 884
Luberski, Inc. v. Oleificio F.LLI Amato S.R.L . . . . . . . . . . . . . . . . . . . .
356
Lubetzky v. Friedman . . . . . . . . . . . . . . . . . . . . 1303
Lucas v. County of Los Angeles . . . . . . . . . . . . . . . . . . . . 505
Lucido v. Superior Court . . . . . . . . . . . . . . . . . . . . 532, 533; 548; 553; 568
Ludgate Ins. Co. v. Lockheed Martin Corp. . . . . . . . . . . . . . . . . . . . . 660
Lugo, Marriage of . . . . . . . . . . . . . . . . . . . . 210
Luna Records Corp. v. Alvarado . . . . . . . . . . . . . . . . . . . . 166
Lund v. California State Employees Assn. . . . . . . . . . . . . . . . . . . . . 197
Lundquist v. Reusser . . . . . . . . . . . . . . . . . . . . 1288
Lungren, People ex rel. v. Community Redevelopment Agency . . . . . . . . . .
. . . . . . . . . . 687
Luster v. Collins . . . . . . . . . . . . . . . . . . . . 1007, 1008
Luti v. Graco, Inc. . . . . . . . . . . . . . . . . . . . . 965
Lutz v. Tri-City Hospital . . . . . . . . . . . . . . . . . . . . 176
Lyly & Sons Trucking Co. v. State of California . . . . . . . . . . . . . . . . . . . .
703; 717
Lynch v. Bencini . . . . . . . . . . . . . . . . . . . . 910
Lyon v. Goss . . . . . . . . . . . . . . . . . . . . 1263; 1274
Lyons v. Chinese Hosp. Assn. . . . . . . . . . . . . . . . . . . . . 1174
Lyons v. Wickhorst . . . . . . . . . . . . . . . . . . . . 948; 971; 1025, 1026

M&R Properties v. Thomson . . . . . . . . . . . . . . . . . . . . 976

M’Elmoyle v. Cohen . . . . . . . . . . . . . . . . . . . . 1227
M. Lowenstein & Sons, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . .
383; 395; 399
M. Perez Co. Inc. v. Base Camp Condo. Assn. No. One . . . . . . . . . . . . . . .
. . . . . 1146
MacFarlane & Lang, Marriage of . . . . . . . . . . . . . . . . . . . . 956
MacGregor v. Unemployment Ins. Appeals Bd. . . . . . . . . . . . . . . . . . . . .
1394
Mack v. Superior Court . . . . . . . . . . . . . . . . . . . . 867
MacPhail v. Court of Appeal . . . . . . . . . . . . . . . . . . . . 1359
Madden v. Kaiser Found. Hosp. . . . . . . . . . . . . . . . . . . . . 1045
Maddox v. Kentucky Finance Co., Inc. . . . . . . . . . . . . . . . . . . . . 675
Maggio, Inc. v. United Farm Workers . . . . . . . . . . . . . . . . . . . . 964
Mah See v. North American Acci. Ins. Co. . . . . . . . . . . . . . . . . . . . . 1305
Mahon v. Safeco Title Ins. Co. . . . . . . . . . . . . . . . . . . . . 515
Main Fiber Products, Inc. v. Morgan & Franz Ins. Co. . . . . . . . . . . . . . . . . .
. . . 731
Malcolm v. Superior Court . . . . . . . . . . . . . . . . . . . . 448
Maldonado v. Superior Court . . . . . . . . . . . . . . . . . . . . 843
Malibu, City of v. Cal. Coastal Com. . . . . . . . . . . . . . . . . . . . . 739
Malibu Mountains Recreation, Inc. v. County of L. A. . . . . . . . . . . . . . . . . .
. . . 1388
Malkasian v. Irwin . . . . . . . . . . . . . . . . . . . . 1114
Mallard v. U.S. Dist. Court . . . . . . . . . . . . . . . . . . . . 1364
Mallick v. Superior Court . . . . . . . . . . . . . . . . . . . . 743
Malovec v. Hamrell . . . . . . . . . . . . . . . . . . . . 53
Mammoth Lakes Land Acquisition, LLC v. Town of Mammoth Lakes . . . . .
. . . . . . . . . . . . . . . 200
Manco Contracting Co. v. Bezdikian . . . . . . . . . . . . . . . . . . . . 1257
Mandel v. Myers . . . . . . . . . . . . . . . . . . . . 1239
Mangini v. Aerojet-General Corp. . . . . . . . . . . . . . . . . . . . . 102
Mangini v. J.G. Durand Intl. . . . . . . . . . . . . . . . . . . . . 191; 461
Manguso v. Oceanside Unified School Dist. . . . . . . . . . . . . . . . . . . . . 91;
152
Manhattan Loft, LLC v. Mercury Liquors, Inc. . . . . . . . . . . . . . . . . . . . .
448
Mann v. Cracchiolo . . . . . . . . . . . . . . . . . . . . 1323
Mann v. State of California . . . . . . . . . . . . . . . . . . . . 573, 574
Mannheim v. Superior Court . . . . . . . . . . . . . . . . . . . . 233
Manson, Iver & York v. Black . . . . . . . . . . . . . . . . . . . . 945
Mansouri v. Superior Court . . . . . . . . . . . . . . . . . . . . 1009
Manthey v. San Luis Rey Downs Enter., Inc. . . . . . . . . . . . . . . . . . . . . 1211
Manzetti v. Superior Court . . . . . . . . . . . . . . . . . . . . 1362
Maple v. Cincinnati, Inc. . . . . . . . . . . . . . . . . . . . . 1083; 1092, 1093; 1115
Marasco v. Wadsworth . . . . . . . . . . . . . . . . . . . . 612; 621; 626; 629
Marbury v. Madison . . . . . . . . . . . . . . . . . . . . 333
Marcus v. Superior Court . . . . . . . . . . . . . . . . . . . . 813
[TC-23/TC-24]
Maria P. v. Riles . . . . . . . . . . . . . . . . . . . . 460; 1158; 1166; 1173; 1182;
1299; 1301
Marine Terminals Corp. v. Paceco, Inc. . . . . . . . . . . . . . . . . . . . . 1133
Marini v. Municipal Court . . . . . . . . . . . . . . . . . . . . 1164
Mark C., In re . . . . . . . . . . . . . . . . . . . . 1302
Marrese v. American Academy of Ortho. Surgeons . . . . . . . . . . . . . . . . . . .
. 503; 508
Marriage of (see name of party) . . . . . . . . . . . . . . . . . . . .
Marsh v. Mountain Zephyr, Inc. . . . . . . . . . . . . . . . . . . . 866
Marsha V. v. Gardner . . . . . . . . . . . . . . . . . . . . 98
Marshall v. Dept. of Water & Power . . . . . . . . . . . . . . . . . . . . 1120
Martell v. Antelope Valley Hosp. Med. Center . . . . . . . . . . . . . . . . . . . .
186
Martin v. Aboyan . . . . . . . . . . . . . . . . . . . . 438
Martin v. Johnson . . . . . . . . . . . . . . . . . . . . 927
Martin v. Ohio . . . . . . . . . . . . . . . . . . . . 1243
Martin v. Wilks . . . . . . . . . . . . . . . . . . . . 570
Martin v. Workers’ Comp. Appeals Bd. . . . . . . . . . . . . . . . . . . . . 805
Martinez v. County of Los Angeles . . . . . . . . . . . . . . . . . . . . 174
Martinez v. Master Protection Corp . . . . . . . . . . . . . . . . . . . . 1019
Martinez v. Traubner . . . . . . . . . . . . . . . . . . . . 320
Martinez-Ferrer v. Richardson-Merrell, Inc. . . . . . . . . . . . . . . . . . . . . 70;
107; 117
Mary M. v. City of L. A. . . . . . . . . . . . . . . . . . . . . 1067
Mary Morgan, Inc. v. Melzark . . . . . . . . . . . . . . . . . . . . 907; 974
Mary R. v. B. & R. Corp. . . . . . . . . . . . . . . . . . . . . 738
Maryland Cas. Co. v. Andreini & Co. . . . . . . . . . . . . . . . . . . . . 731
Maryland Cas. Co. v. Bailey & Sons, Inc. . . . . . . . . . . . . . . . . . . . . 726
Mashon v. Haddock . . . . . . . . . . . . . . . . . . . . 207
Mason, Marriage of . . . . . . . . . . . . . . . . . . . . 542, 543
Mass., Commonwealth of v. First Nat. Supermarkets, Inc. . . . . . . . . . . . . . .
. . . . . . 825
Massachusetts Mut. Life Ins. Co. v. Superior Court . . . . . . . . . . . . . . . . . . .
. 771
Massae v. Superior Court . . . . . . . . . . . . . . . . . . . . 368; 371; 374
Massie v. AAR Western Skyways, Inc. . . . . . . . . . . . . . . . . . . . . 1044
Mata v. City of Los Angeles . . . . . . . . . . . . . . . . . . . . 496
Matera v. McLeod . . . . . . . . . . . . . . . . . . . . 918; 931
Matsushita Electrical Industrial Co. v. Zenith Radio Corp. . . . . . . . . . . . . .
. . . . . . . 888
Mattco Forge, Inc. v. Arthur Young & Co. . . . . . . . . . . . . . . . . . . . . 730
Matthew S., In re . . . . . . . . . . . . . . . . . . . . 392
Mattison v. Dallas Carrier Corp. . . . . . . . . . . . . . . . . . . . . 1124
Mattson v. City of Costa Mesa . . . . . . . . . . . . . . . . . . . . 476; 499; 502–
504; 507
Mauro B. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1281; 1354
Maxwell v. Powers . . . . . . . . . . . . . . . . . . . . 1065; 1092
Mayberry v. Coca Cola Bottling Co. . . . . . . . . . . . . . . . . . . . . 605
Mayer v. L & B Real Estate . . . . . . . . . . . . . . . . . . . . 104
Mayes v. Bryan . . . . . . . . . . . . . . . . . . . . 724
Maynard v. Brandon . . . . . . . . . . . . . . . . . . . . 968
McAdams v. Monier, Inc. . . . . . . . . . . . . . . . . . . . 771
McArthur v. Bockman . . . . . . . . . . . . . . . . . . . . 883
McCann v. Bank of America . . . . . . . . . . . . . . . . . . . . 588
McCann v. Foster Wheeler LLC . . . . . . . . . . . . . . . . . . . . 315; 327
McCarroll v. L.A. County etc. Carpenters . . . . . . . . . . . . . . . . . . . . 995
McCarthy v. Superior Court . . . . . . . . . . . . . . . . . . . . 377
McCarty v. Fremont . . . . . . . . . . . . . . . . . . . . 467
McCarty, In re . . . . . . . . . . . . . . . . . . . . 1243
McCauley v. Howard Jarvis Taxpayers Assn. . . . . . . . . . . . . . . . . . . . .
603
McClain v. Rush . . . . . . . . . . . . . . . . . . . . 518; 545
McComber v. Wells . . . . . . . . . . . . . . . . . . . . 724
McCorkle v. Los Angeles . . . . . . . . . . . . . . . . . . . . 1336
McCoy v. Gustafson . . . . . . . . . . . . . . . . . . . . 102
McCoy v. Hearst Corp. . . . . . . . . . . . . . . . . . . . . 1325
McCreery v. Eli Lilly & Co. . . . . . . . . . . . . . . . . . . . . 73; 75; 88
McCurter v. Older . . . . . . . . . . . . . . . . . . . . 1297
McDermott, Inc. v. AmClyde . . . . . . . . . . . . . . . . . . . . 732
McDonald v. Antelope Valley Comm. College Dist . . . . . . . . . . . . . . . . . . .
. 145
McDonald v. John P. Scripps Newspaper . . . . . . . . . . . . . . . . . . . . 820
McDonald v. Southern Pac. Transp. Co. . . . . . . . . . . . . . . . . . . . . 1097
McDonald v. Superior Court . . . . . . . . . . . . . . . . . . . . 884
McDonough Power Equip., Inc. v. Greenwood . . . . . . . . . . . . . . . . . . . .
1099
McDougald v. Hulet . . . . . . . . . . . . . . . . . . . . 164
McFarland v. City of Sausalito . . . . . . . . . . . . . . . . . . . . 1306
McGhee v. Bank of America . . . . . . . . . . . . . . . . . . . . 776
McGill v. Hill . . . . . . . . . . . . . . . . . . . . 283
McGonnell v. Kaiser Gypsum Co. . . . . . . . . . . . . . . . . . . . . 903
McGowan v. Faulkner Concrete Pipe Co. . . . . . . . . . . . . . . . . . . . . 776
McIntosh v. Bowman . . . . . . . . . . . . . . . . . . . . 1044
McIntosh v. Crandall . . . . . . . . . . . . . . . . . . . . 1182
McKelvey v. Boeing North American, Inc. . . . . . . . . . . . . . . . . . . . . 78
McKeon v. Hastings College . . . . . . . . . . . . . . . . . . . . 687
McKinney v. Cal. Portland Cement Co. . . . . . . . . . . . . . . . . . . . . 1137
McKinny v. Bd. of Trustees . . . . . . . . . . . . . . . . . . . . 752
McLarand, Vasquez & Partners, Inc. v. Downey Sav. & Loan Assn . . . . . .
. . . . . . . . . . . . . . 1148; 1150; 1186
McLellan v. McLellan . . . . . . . . . . . . . . . . . . . . 1344
McManus v. CIBC World Markets Corp . . . . . . . . . . . . . . . . . . . . 1020
McNair v. Worldwide Church of God . . . . . . . . . . . . . . . . . . . . 152
McNall v. Summers . . . . . . . . . . . . . . . . . . . . 99
McNulty v. Copp . . . . . . . . . . . . . . . . . . . . 484
McOwen v. Grossman . . . . . . . . . . . . . . . . . . . . 624
Medical Legal Consulting Services, Inc. v. Covarrubias . . . . . . . . . . . . . . .
. . . . . 517; 1254
Medrazo v. Honda of North Hollywood . . . . . . . . . . . . . . . . . . . . 772
Meehan v. Hopps . . . . . . . . . . . . . . . . . . . . 1277
Melamed v. City of Long Beach . . . . . . . . . . . . . . . . . . . . 1149
Melendres v. City of Los Angeles . . . . . . . . . . . . . . . . . . . . 538
[TC-24/TC-25]

Mena, Marriage of . . . . . . . . . . . . . . . . . . . . 687, 688

Menchaca v. Farmers Ins. Exch. . . . . . . . . . . . . . . . . . . . . 1274
Mencor Enterprises, Inc. v. Hets Equities Corp. . . . . . . . . . . . . . . . . . . . .
280
Menendez v. Superior Court . . . . . . . . . . . . . . . . . . . . 814
Mennonite Bd. of Missions v. Adams . . . . . . . . . . . . . . . . . . . . 392; 398
Mentzer v. Hardoin . . . . . . . . . . . . . . . . . . . . 18; 1024
Mepco Serv., Inc. v. Saddleback Valley Unified Sch. Dist . . . . . . . . . . . . .
. . . . . . . 1147
Mercantile Acceptance Co. v. Frank . . . . . . . . . . . . . . . . . . . . 227
Merced County Taxpayers’ Assn. v. Cardella . . . . . . . . . . . . . . . . . . . .
1153
Mercer v. Perez . . . . . . . . . . . . . . . . . . . . 1107; 1109
Mercuro v. Superior Court . . . . . . . . . . . . . . . . . . . . 1019, 1020
Mercury Ins. Group v. Superior Court . . . . . . . . . . . . . . . . . . . . 1024
Mercury Interactive Corp. v. Klein . . . . . . . . . . . . . . . . . . . . 1277
Merideth, Marriage of . . . . . . . . . . . . . . . . . . . . 361
Merry v. Coast Community College Dist. . . . . . . . . . . . . . . . . . . . . 501–
503
Mesecher v. County of San Diego . . . . . . . . . . . . . . . . . . . . 1067; 1093
Mesler v. Bragg Management Co. . . . . . . . . . . . . . . . . . . . . 598; 600
Metcalf v. County of San Joaquin . . . . . . . . . . . . . . . . . . . . 1066
Metromedia Co. v. Fugazy . . . . . . . . . . . . . . . . . . . . 1124
Metropolitan Service Corp. v. Casa De Palms, Ltd. . . . . . . . . . . . . . . . . . .
. . 930; 933
Metropolitan Transit System v. Superior Court . . . . . . . . . . . . . . . . . . . .
377
Meyer v. Carnow . . . . . . . . . . . . . . . . . . . . 100
MHC Operating Ltd. Partnership v. City of San Jose . . . . . . . . . . . . . . . . . .
. . 1389
Michael U. v. Jamie B. . . . . . . . . . . . . . . . . . . . . 1299
Michelson v. Hamada . . . . . . . . . . . . . . . . . . . . 1136
Midpeninsula Citizens for Fair Housing v. Westwood Investors . . . . . . . . .
. . . . . . . . . . . 753; 758
Migra v. Warren City School Dist. Bd. of Ed. . . . . . . . . . . . . . . . . . . . . 508
Milekovich v. Quinn . . . . . . . . . . . . . . . . . . . . 1219
Mill Valley Refuse Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 722
Millennium Corporate Solutions v. Peckinpaugh . . . . . . . . . . . . . . . . . . . .
1327
Miller v. Bechtel Corp. . . . . . . . . . . . . . . . . . . . . 70; 85; 616; 618; 1222
Miller v. Christopher . . . . . . . . . . . . . . . . . . . . 731
Miller v. City of Hermosa Beach . . . . . . . . . . . . . . . . . . . . 939; 944
Miller v. Eisenhower Med. Center . . . . . . . . . . . . . . . . . . . . 205; 208; 210,
211
Miller v. Kennedy . . . . . . . . . . . . . . . . . . . . 1067
Miller v. L. A. County Flood Control Dist. . . . . . . . . . . . . . . . . . . . . 1116
Miller v. Lakeside Village Condo. Assn. . . . . . . . . . . . . . . . . . . . . 107;
114; 117
Miller v. Marina Mercy Hospital . . . . . . . . . . . . . . . . . . . . 975
Miller v. Pac. Constructors, Inc. . . . . . . . . . . . . . . . . . . . . 1062
Miller v. Silver . . . . . . . . . . . . . . . . . . . . 1279
Miller v. State of Cal. . . . . . . . . . . . . . . . . . . . . 1389
Miller v. Superior Court . . . . . . . . . . . . . . . . . . . . 387; 591
Miller v. Thomas . . . . . . . . . . . . . . . . . . . . 630
Miller v. Woods . . . . . . . . . . . . . . . . . . . . 776; 790
Milliken v. Pratt . . . . . . . . . . . . . . . . . . . . 229
Mills v. County of Trinity . . . . . . . . . . . . . . . . . . . . 1322
Mills v. Forestex Co. . . . . . . . . . . . . . . . . . . . 99
Milman v. Shukhat . . . . . . . . . . . . . . . . . . . . 1146
Milton v. Perceptual Dev. Corp . . . . . . . . . . . . . . . . . . . . 931; 933
Minder v. Cielito Lindo Restaurant . . . . . . . . . . . . . . . . . . . . 22
Mine Workers v. Gibbs . . . . . . . . . . . . . . . . . . . . 501; 506
Mink v. Superior Court . . . . . . . . . . . . . . . . . . . . 66; 934
Minneapolis & St. Louis R.R. Co. v. Bombolis . . . . . . . . . . . . . . . . . . . .
1045
Minnesota Asbestos Litigation, In re . . . . . . . . . . . . . . . . . . . . 342
Minsky v. City of Los Angeles . . . . . . . . . . . . . . . . . . . . 613
Minton v. Cavaney . . . . . . . . . . . . . . . . . . . . 562; 667
Mishalow v. Horwald . . . . . . . . . . . . . . . . . . . . 621
Mission Imports, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 369; 373;
375
Mitchell v. Frank R. Howard Mem. Hosp. . . . . . . . . . . . . . . . . . . . . 143
Mitchell v. Gonzales . . . . . . . . . . . . . . . . . . . . 1318
Mitchell v. Jones . . . . . . . . . . . . . . . . . . . . 546; 921
Mitchell v. State . . . . . . . . . . . . . . . . . . . . 268
Mitchell v. Superior Court . . . . . . . . . . . . . . . . . . . . 803, 804; 806, 807;
1246; 1345
Mito v. Temple Recycling Center Corp. . . . . . . . . . . . . . . . . . . . . 18; 587
Mitsui Manufacturers Bank v. Superior Court . . . . . . . . . . . . . . . . . . . .
654, 655
Mix v. Superior Court . . . . . . . . . . . . . . . . . . . . 447
Mix, Marriage of . . . . . . . . . . . . . . . . . . . . 1304
Mizel v. City of Santa Monica . . . . . . . . . . . . . . . . . . . . 868
Moallem v. Coldwell Banker Com. Group, Inc. . . . . . . . . . . . . . . . . . . . .
1140
Modnick, Marriage of . . . . . . . . . . . . . . . . . . . . 206, 207; 210; 943; 1221
Moeller v. Superior Court . . . . . . . . . . . . . . . . . . . . 808
Moffat v. Moffat . . . . . . . . . . . . . . . . . . . . 1340
Moles v. Regents of Univ. of Cal. . . . . . . . . . . . . . . . . . . . . 1324
Molko v. Holy Spirit Assn. . . . . . . . . . . . . . . . . . . . . 727; 887
Moncharsh v. Heily & Blase . . . . . . . . . . . . . . . . . . . . 983; 994; 1002–
1004; 1006; 1010, 1011; 1015; 1301
Monogram Co. v. Kingsley . . . . . . . . . . . . . . . . . . . . 371
Monroe v. Trustees of the California State Colleges . . . . . . . . . . . . . . . . . .
. . 74; 88
Monterey Club v. Superior Court . . . . . . . . . . . . . . . . . . . . 1355
Monterey S.P. Partnership v. W.L. Bangham, Inc. . . . . . . . . . . . . . . . . . . .
688
Monterey/Santa Cruz Trades Council v. Cypress Marina Heights LP . . . . .
. . . . . . . . . . . . . . . 1168
Montgomery v. Bio-Med Specialties, Inc. . . . . . . . . . . . . . . . . . . . 741
Montrose Chem. Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 903
Mooney v. Caspari . . . . . . . . . . . . . . . . . . . . 571
Moonie v. Lynch . . . . . . . . . . . . . . . . . . . . 93
Moore v. First Bank of San Luis Obispo . . . . . . . . . . . . . . . . . . . . 1000
Moore v. Powell . . . . . . . . . . . . . . . . . . . . 375
[TC-25/TC-26]
Moore v. Preventive Medicine Medical Group, Inc. . . . . . . . . . . . . . . . . . .
. . 1087
Moore v. State Bd. of Control . . . . . . . . . . . . . . . . . . . . 65
Moradi-Shalal v. Fireman’s Fund Ins. Co. . . . . . . . . . . . . . . . . . . . . 21;
276; 1343, 1344
Morales v. Superior Court . . . . . . . . . . . . . . . . . . . . 822
Moran v. Murtaugh Miller Meyer & Nelson, LLP . . . . . . . . . . . . . . . . . . . .
190
Moran v. Superior Court . . . . . . . . . . . . . . . . . . . . 947; 957; 961
Morcos v. Bd. of Retirement . . . . . . . . . . . . . . . . . . . . 1181
Morehart v. County of Santa Barbara . . . . . . . . . . . . . . . . . . . . 1267; 1276;
1325; 1328; 1341
Morehouse v. Wanzo . . . . . . . . . . . . . . . . . . . . 911
Moreno v. Sanchez . . . . . . . . . . . . . . . . . . . . 64; 89; 91
Morgan v. Southern Cal. Rapid Transit Dist. . . . . . . . . . . . . . . . . . . . . 915,
916
Morgan Hill, City of v. Brown . . . . . . . . . . . . . . . . . . . . 690
Morris v. Blank . . . . . . . . . . . . . . . . . . . . 515
Morrisette v. Superior Court . . . . . . . . . . . . . . . . . . . . 1355
Morrison v. Superior Court . . . . . . . . . . . . . . . . . . . . 367
Morse, In re . . . . . . . . . . . . . . . . . . . . 1236
Morton v. Bd. of Registered Nursing . . . . . . . . . . . . . . . . . . . . 1380; 1393
Morton v. Hollywood Park, Inc. . . . . . . . . . . . . . . . . . . . . 199
Mosby v. Superior Court . . . . . . . . . . . . . . . . . . . . 363; 371
Moses v. DeVersecy . . . . . . . . . . . . . . . . . . . . 1238
Moses H. Cone Hospital v. Mercury Constr. Corp. . . . . . . . . . . . . . . . . . . .
. 1004; 1022; 1364
Mosesian v. Pennwalt Corp. . . . . . . . . . . . . . . . . . . . . 1118; 1306
Moshonov v. Walsh . . . . . . . . . . . . . . . . . . . . 1000
Moskowitz v. Superior Court . . . . . . . . . . . . . . . . . . . . 820
Moss v. Bluemm . . . . . . . . . . . . . . . . . . . . 1038
Moss v. Superior Court . . . . . . . . . . . . . . . . . . . . 1244
Motion Picture & Television Fund Hosp. v. Superior Court . . . . . . . . . . . .
. . . . . . . . 1035
Motley v. Parks . . . . . . . . . . . . . . . . . . . . 642
Motor City Sales v. Superior Court . . . . . . . . . . . . . . . . . . . . 619
Mount Diablo Med. Ctr. v. Health Net of Cal., Inc. . . . . . . . . . . . . . . . . . . .
1023
Mounts v. Uyeda . . . . . . . . . . . . . . . . . . . . 121, 122; 1326
Moyal v. Lanphear . . . . . . . . . . . . . . . . . . . . 7; 18; 971
Moyer v. Workmen’s Comp. Appeals Bd. . . . . . . . . . . . . . . . . . . . . 364
Muao v. Grosvenor Properties, Ltd. . . . . . . . . . . . . . . . . . . . . 1010
Muccianti v. Willow Creek Care Ctr. . . . . . . . . . . . . . . . . . . . . 1333
Muega v. Menocal . . . . . . . . . . . . . . . . . . . . 1027
Muldrow v. Norris . . . . . . . . . . . . . . . . . . . . 986
Mullane v. Central Hanover Bank & Trust Co. . . . . . . . . . . . . . . . . . . . .
379; 389; 392; 398; 781
Muller v. Fresno Cmty. Hosp. & Med. Ctr. . . . . . . . . . . . . . . . . . . . . 1277
Mullins v. Rockwell Intl. Corp . . . . . . . . . . . . . . . . . . . . 105
Municipal Court v. Bloodgood . . . . . . . . . . . . . . . . . . . . 755
Municipal Court v. Superior Court . . . . . . . . . . . . . . . . . . . . 1356
Munoz v. BCI Coca-Cola Bottling Co. of Los Angeles . . . . . . . . . . . . . . . .
. . . . 784; 791
Munoz v. Purdy . . . . . . . . . . . . . . . . . . . . 612; 618; 621; 627; 631
Munoz v. State of California . . . . . . . . . . . . . . . . . . . . 170
Muraoka v. Budget Rent-A-Car, Inc. . . . . . . . . . . . . . . . . . . . . 146
Murillo v. Fleetwood Enter., Inc. . . . . . . . . . . . . . . . . . . . 1213
Murphy v. Check ‘N Go of Cal., Inc. . . . . . . . . . . . . . . . . . . . 1012
Murray v. Alaska Airlines, Inc. . . . . . . . . . . . . . . . . . . . 544; 546; 553
Murray v. Oceanside Unified Sch. Dist . . . . . . . . . . . . . . . . . . . . 201
Musgrove v. Ambrose Properties . . . . . . . . . . . . . . . . . . . . 1107
Muskopf v. Corning Hospital Dist. . . . . . . . . . . . . . . . . . . . . 470
Musser v. Provencher . . . . . . . . . . . . . . . . . . . . 728
Mustachio v. Ohio Farmers Ins. Co. . . . . . . . . . . . . . . . . . . . . 1347
MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co. . . . . . .
. . . . . . . . . . . . . . 579
Mycogen Corp. v. Monsanto Co. . . . . . . . . . . . . . . . . . . . . 498
Myers v. County of Orange . . . . . . . . . . . . . . . . . . . . 130; 132
Myers v. Sierra Valley Stock & Agricultural Asso. . . . . . . . . . . . . . . . . . . .
. 335
Myers Bldg. Indus., Ltd. v. Interface Tech., Inc. . . . . . . . . . . . . . . . . . . . .
1069, 1070; 1302
Mysel v. Gross . . . . . . . . . . . . . . . . . . . . 193

Nacht & Lewis Architects, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . .

825; 835
Nagle v. Superior Court . . . . . . . . . . . . . . . . . . . . 844
Nagy v. Nagy . . . . . . . . . . . . . . . . . . . . 588
Najera v. Huerta . . . . . . . . . . . . . . . . . . . . 1208
Nakash v. Superior Court . . . . . . . . . . . . . . . . . . . . 487; 496
Nakasone v. Randall . . . . . . . . . . . . . . . . . . . . 439
Nally v. Grace Cmty. Church . . . . . . . . . . . . . . . . . . . . 1074
Nanfito v. Superior Court . . . . . . . . . . . . . . . . . . . . 962; 1024
Nasser v. Superior Court . . . . . . . . . . . . . . . . . . . . 1148; 1150
Nassif v. Municipal Court . . . . . . . . . . . . . . . . . . . . 948
Nathaniel P., In re . . . . . . . . . . . . . . . . . . . . 532; 541
National Diversified Serv., Inc. v. Bernstein . . . . . . . . . . . . . . . . . . . . 945
National Elevator Serv., Inc. v. Dept. of Indus. Relations . . . . . . . . . . . . . .
. . . . . . 1122
National Equipment Rental, Ltd. v. Szukhent . . . . . . . . . . . . . . . . . . . . 398
National Solar Equip. Owners’ Assn. v. Grumman Corp. . . . . . . . . . . . . . .
. . . . . . 773
National Steel Products Co. v. Superior Court . . . . . . . . . . . . . . . . . . . .
866
National Union Fire Ins. Co. v. Stites Professional Law Corp. . . . . . . . . . .
. . . . . . . . . . 511
Navarro Sav. Ass’n v. Lee . . . . . . . . . . . . . . . . . . . . 757
Navellier v. Sletten . . . . . . . . . . . . . . . . . . . . 658
Navrides v. Zurich Ins. Co. . . . . . . . . . . . . . . . . . . . . 980
[TC-26/TC-27]

NBC Subsidiary (KNBC-TV), Inc. v. Superior Court . . . . . . . . . . . . . . . . .

. . . 846
Neadeau v. Foster . . . . . . . . . . . . . . . . . . . . 396
Neal v. Farmers Ins. Exch. . . . . . . . . . . . . . . . . . . . . 1120, 1121; 1288
Neal v. Montgomery Elevator Co. . . . . . . . . . . . . . . . . . . . . 1069; 1101;
1114; 1116
Neary v. Regents of the Univ. of Cal. . . . . . . . . . . . . . . . . . . . . 977; 1333
Nedlloyd Lines B.V. v. Superior Court . . . . . . . . . . . . . . . . . . . . 278; 288,
289; 297; 421; 427
Neel v. Magana, Olney, Levy, Cathcart & Gelfand . . . . . . . . . . . . . . . . . . .
. 21; 83; 90; 93, 94; 151
Neet v. Holmes . . . . . . . . . . . . . . . . . . . . 373
Neff v. New York Life Ins. Co. . . . . . . . . . . . . . . . . . . . . 87
Nelson v. A.H. Robins Co. . . . . . . . . . . . . . . . . . . . . 948
Nelson v. Anderson . . . . . . . . . . . . . . . . . . . . 1188
Nelson v. Flintkote Co. . . . . . . . . . . . . . . . . . . . . 66; 322
Nelson v. Indevus Pharm., Inc. . . . . . . . . . . . . . . . . . . . 85
Nelson v. Justice Court . . . . . . . . . . . . . . . . . . . . 1333
Nelson v. State of California . . . . . . . . . . . . . . . . . . . . 182
Nestle v. City of Santa Monica . . . . . . . . . . . . . . . . . . . . 651; 1294
Neumann v. Bishop . . . . . . . . . . . . . . . . . . . . 1063
Nevin v. Salk . . . . . . . . . . . . . . . . . . . . 291
New Albertsons, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 874
New West Federal Sav. & Loan Assn. v. Superior Court . . . . . . . . . . . . . .
. . . . . . 962
New York Times Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 908
Newby v. Vroman . . . . . . . . . . . . . . . . . . . . 718; 1138
Newing v. Cheatham . . . . . . . . . . . . . . . . . . . . 1075
Newman v. County of Sonoma . . . . . . . . . . . . . . . . . . . . 377
Newman v. Emerson Radio Corp . . . . . . . . . . . . . . . . . . . . 21
Newman v. State Personnel Bd. . . . . . . . . . . . . . . . . . . . . 1390
Newman, Marriage of . . . . . . . . . . . . . . . . . . . . 330; 1256
Newport Beach Country Club, Inc. v. Founding Members of the Newport
Beach Country Club . . . . . . . . . . . . . . . . . . . . 549
Ng v. Superior Court . . . . . . . . . . . . . . . . . . . . 1357, 1358; 1362
Nguyen v. Los Angeles County Harbor/UCLA Med. Center . . . . . . . . . . . . .
. . . . . . . 179; 184
Nicolo v. Philip Morris, Inc. . . . . . . . . . . . . . . . . . . . . 109
Nightlife Partners, Ltd. v. City of Beverly Hills . . . . . . . . . . . . . . . . . . . .
1382
Nissan v. Barton . . . . . . . . . . . . . . . . . . . . 632
Nissan Motor Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1035
NMSBPCSLDHB v. County of Fresno . . . . . . . . . . . . . . . . . . . . 1041
No Oil, Inc. v. Los Angeles . . . . . . . . . . . . . . . . . . . . 1380
Noghrey, Marriage of . . . . . . . . . . . . . . . . . . . . 1274
Nogueiro v. Kaiser Foundation Hospitals . . . . . . . . . . . . . . . . . . . . 987
Norgart v. Upjohn Co. . . . . . . . . . . . . . . . . . . . . 75; 77, 78; 80, 81; 112,
113; 1287
North American Asbestos Corp. v. Superior Court . . . . . . . . . . . . . . . . . . .
. 324; 328
North Coast Bus. Park v. Nielsen Constr. Co. . . . . . . . . . . . . . . . . . . . .
1301
North Cnty. Contractors’ Assn. v. Touchstone Ins. Services . . . . . . . . . . . .
. . . . . . . . 719
Northern Cal. Psychiatric Socy. v. City of Berkeley . . . . . . . . . . . . . . . . . .
. . 743
Northern California Dist. Council of Hod Carriers v. Pennsylvania
Pipeline, Inc. . . . . . . . . . . . . . . . . . . . . 374
Northridge Hosp. Found. v. Pic’N’ Save No. 9, Inc. . . . . . . . . . . . . . . . . . .
. . 210
Northrop Corp. v. McDonnell Douglas Corp . . . . . . . . . . . . . . . . . . . . 688
Northwest Energetic Serv., LLC v. Cal. Franchise Tax Bd. . . . . . . . . . . . . .
. . . . . . . 1179
Norton v. Superior Court . . . . . . . . . . . . . . . . . . . . 799
Nosbisch, In re Marriage of . . . . . . . . . . . . . . . . . . . . 513
Nye v. 20th Century Ins. Co. . . . . . . . . . . . . . . . . . . . . 958
 O

O’Brien v. City of Santa Monica . . . . . . . . . . . . . . . . . . . . 946

O’Hearn v. Hillcrest Gym & Fitness Ctr., Inc. . . . . . . . . . . . . . . . . . . . 731
O’Malley v. Petroleum Maintenance Co. . . . . . . . . . . . . . . . . . . . . 985,
986; 989
O’Neill v. Tichy . . . . . . . . . . . . . . . . . . . . 126
Oakes v. McCarthy Co. . . . . . . . . . . . . . . . . . . . 92; 620
Oakland, City of v. Oakland Raiders . . . . . . . . . . . . . . . . . . . . 1177; 1179
Oakland Raiders v. National Football League . . . . . . . . . . . . . . . . . . . .
1117
Oasis West Realty v. Goldman . . . . . . . . . . . . . . . . . . . . 657
Oats v. Oats . . . . . . . . . . . . . . . . . . . . 403
Obregon v. Superior Court . . . . . . . . . . . . . . . . . . . . 876
Ocean Services Corp. v. Ventura Port Dist. . . . . . . . . . . . . . . . . . . . . 179
Oceanside Union School Dist. v. Superior Court . . . . . . . . . . . . . . . . . . . .
1348; 1363
Ocheltree v. Gourley . . . . . . . . . . . . . . . . . . . . 1383, 1384
Ochoa v. Superior Court . . . . . . . . . . . . . . . . . . . . 1278
Offshore Rental Co. v. Continental Oil Co. . . . . . . . . . . . . . . . . . . . . 258;
265; 269; 272; 316; 323, 324
Ogo Associates v. City of Torrance . . . . . . . . . . . . . . . . . . . . 198
Ohio Casualty Ins. Group v. Superior Court . . . . . . . . . . . . . . . . . . . . 378
Olden v. Hatchell . . . . . . . . . . . . . . . . . . . . 635
Oldham v. Kizer . . . . . . . . . . . . . . . . . . . . 1389
Oliver v. Bledsoe . . . . . . . . . . . . . . . . . . . . 1233
Olivera v. Grace . . . . . . . . . . . . . . . . . . . . 939; 1216, 1217
Oliveros v. County of Los Angeles . . . . . . . . . . . . . . . . . . . . 1031
Olsan v. Comora . . . . . . . . . . . . . . . . . . . . 1233
Olsen v. Breeze, Inc. . . . . . . . . . . . . . . . . . . . 1174
Olson v. Automobile Club of Southern California . . . . . . . . . . . . . . . . . . . .
1167
Olson v. Cory . . . . . . . . . . . . . . . . . . . . 1272; 1281; 1283; 1341
Olvera v. Olvera . . . . . . . . . . . . . . . . . . . . 383; 922
Olwell v. Hopkins . . . . . . . . . . . . . . . . . . . . 476
Olympic Club v. Superior Court . . . . . . . . . . . . . . . . . . . . 822
Omaha Indem. Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1330; 1342
[TC-27/TC-28]

On v. Cow Hollow Properties . . . . . . . . . . . . . . . . . . . . 1159; 1305

One 1941 Chevrolet Coupe; People v. . . . . . . . . . . . . . . . . . . . . 1038;
 1040
One 1953 Ford Victoria; People v. . . . . . . . . . . . . . . . . . . . . 247; 272
One Star, Inc. v. STAAR Surgical Co. . . . . . . . . . . . . . . . . . . . 1206
1119 Delaware v. Continental Land Title Co. . . . . . . . . . . . . . . . . . . . . 655
Ontario, City of v. Superior Court . . . . . . . . . . . . . . . . . . . . 185; 944
Ontiveros v. DHL Express (USA), Inc. . . . . . . . . . . . . . . . . . . . 1012; 1019
Optical Surplus, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 618; 620;
630
Orange County Air Pollution Control Dist. v. Superior Court . . . . . . . . . . .
. . . . . . . . . 897
Orchard, Marriage of . . . . . . . . . . . . . . . . . . . . 519
Ordway v. Superior Court . . . . . . . . . . . . . . . . . . . . 1346; 1355
Oren Royal Oaks Venture v. Greenberg, Bernhard, Weiss & Karma, Inc. . .
. . . . . . . . . . . . . . . . . . 47
Orient Handel v. United States Fid. and Guar. Co. . . . . . . . . . . . . . . . . . . . .
674; 1053; 1066
Oro Fino Gold Mining Corp. v. County of El Dorado . . . . . . . . . . . . . . . . .
. . . 539
Ortega v. Pajaro Valley Unified School Dist. . . . . . . . . . . . . . . . . . . . . 185
Ortzman v. Van Der Waal . . . . . . . . . . . . . . . . . . . . 1304
Osborn v. Irwin Mem. Blood Bank . . . . . . . . . . . . . . . . . . . . 1079
Osborne v. Subaru of America, Inc. . . . . . . . . . . . . . . . . . . . . 331; 771
Otay River Constr. v. San Diego Expressway . . . . . . . . . . . . . . . . . . . .
1153
Otay Water District v. Beckwith . . . . . . . . . . . . . . . . . . . . 104
Otto v. City of L. A. Unified Sch. Dist . . . . . . . . . . . . . . . . . . . . 1171
Ovitz v. Schulman . . . . . . . . . . . . . . . . . . . . 1021
Owen v. United States . . . . . . . . . . . . . . . . . . . . 731

P.R. Burke Corp. v. Victor Valley Wastewater Reclamation Auth. . . . . . . .

. . . . . . . . . . . . . 1284
Pacific Bell; People v. . . . . . . . . . . . . . . . . . . . . 337
Pacific Coast Dist. Assn. . . . . . . . . . . . . . . . . . . . . 962
Pacific Estates, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 722; 727
Pacific Fire etc. Bureau v. Bookbinders’ Union . . . . . . . . . . . . . . . . . . . .
985
Pacific Gas & Electric Co. v. Superior Court . . . . . . . . . . . . . . . . . . . .
1000
Pacific Gas & Electric Co. v. Zuckerman . . . . . . . . . . . . . . . . . . . . 1304
Pacific Indem. Group v. Dunton . . . . . . . . . . . . . . . . . . . . 467
Pacific Land Research Co.; People v. . . . . . . . . . . . . . . . . . . . . 778
Pacific Legal Found.n v. Cal. Coastal Com. . . . . . . . . . . . . . . . . . . . . 753;
1380
Pacific Loan Mgmt. Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 689
Pacific Lumber Co. v. State Water Resources Control Bd . . . . . . . . . . . . . .
. . . . . . 553
Pacific Mut. Life Ins. Co. v. Haslip . . . . . . . . . . . . . . . . . . . . 592
Pacific Mut. Life Ins. Co. v. McConnell . . . . . . . . . . . . . . . . . . . . 530
Pacific Tel. & Tel. Co. v. Superior Court of San Diego County . . . . . . . . . .
. . . . . . . . . . 795; 1348
Pacific Vegetable Oil Corp. v. C.S.T. Ltd. . . . . . . . . . . . . . . . . . . . . 986;
988
Pacifica Corp. v. City of Camarillo . . . . . . . . . . . . . . . . . . . . 1379; 1382
Paesano v. Superior Court . . . . . . . . . . . . . . . . . . . . 378
Palm Valley Homeowners Assn., Inc. v. Design MTC . . . . . . . . . . . . . . . . .
. . . 746
Palma v. U.S. Industrial Fasteners, Inc. . . . . . . . . . . . . . . . . . . . . 1348
Palmer v. GTE Cal., Inc. . . . . . . . . . . . . . . . . . . . 1115
Palmer v. Schindler Elevator Corp . . . . . . . . . . . . . . . . . . . . 1206
Palmer v. Shawback . . . . . . . . . . . . . . . . . . . . 1141, 1142; 1144
Panos v. Great Western Packing Co. . . . . . . . . . . . . . . . . . . . . 469, 470;
475; 486; 1352
Paradise Valley Hospital v. Schlossman . . . . . . . . . . . . . . . . . . . . 703
Paragon Real Estate Group of San Francisco, Inc. v. Hansen . . . . . . . . . . . .
. . . . . . . . 728
Parish v. Peters . . . . . . . . . . . . . . . . . . . . 919
Park, In re Marriage of . . . . . . . . . . . . . . . . . . . . 209, 210; 937; 939; 942,
943; 1222
Park Plaza, Ltd. v. Pietz . . . . . . . . . . . . . . . . . . . . 987; 989
Parker v. Bowron . . . . . . . . . . . . . . . . . . . . 749, 750
Parker v. Robert E. McKee, Inc. . . . . . . . . . . . . . . . . . . . 620; 628; 1282
Parker v. Walker . . . . . . . . . . . . . . . . . . . . 517
Parker v. Wolters Kluwer U. S., Inc. . . . . . . . . . . . . . . . . . . . 883
Parklane Hosiery Co. v. Shore . . . . . . . . . . . . . . . . . . . . 550–552
Parkview Villas Assn., Inc. v. State Farm Fire & Cas. Co. . . . . . . . . . . . . .
. . . . . . . 906
Parsons v. Bristol Dev. Co. . . . . . . . . . . . . . . . . . . . . 1304, 1305
Parsons v. Umansky . . . . . . . . . . . . . . . . . . . . 977
Parsons Steel, Inc. v. First Alabama Bank . . . . . . . . . . . . . . . . . . . . 508;
513
Pasadena City Bd. of Education v. Spangler . . . . . . . . . . . . . . . . . . . . 750
Pasadena Hospital Assn., Ltd. v. Superior Court . . . . . . . . . . . . . . . . . . . .
 606
Pasadena Medi-Center Associates v. Superior Court . . . . . . . . . . . . . . . . . .
. . 382
Pashley v. Pacific Elec. Ry. Co. . . . . . . . . . . . . . . . . . . . . 151; 153
Pate v. Channel Lumber Co. . . . . . . . . . . . . . . . . . . . . 883
Patterson, Estate of . . . . . . . . . . . . . . . . . . . . 332
Paulo v. Bepex Corp. . . . . . . . . . . . . . . . . . . . . 331
Paverud v. Niagara Mach. & Tool Works . . . . . . . . . . . . . . . . . . . . 1066
Pavlovich v. Superior Court . . . . . . . . . . . . . . . . . . . . 350, 351
Pawlowski v. Pierce . . . . . . . . . . . . . . . . . . . . 562; 568
Payless Drug Store v. Superior Court . . . . . . . . . . . . . . . . . . . . 1358
Payne v. National Collection Systems, Inc. . . . . . . . . . . . . . . . . . . . 566
Payne v. Rader . . . . . . . . . . . . . . . . . . . . 1290
Payne v. Superior Court . . . . . . . . . . . . . . . . . . . . 1346
Pearson Dental . . . . . . . . . . . . . . . . . . . . 1020
Pease v. Pease . . . . . . . . . . . . . . . . . . . . 541
Peck v. Hagen . . . . . . . . . . . . . . . . . . . . 437; 512
Peiser v. Mettler . . . . . . . . . . . . . . . . . . . . 368; 370; 373; 376
Pellegrino v. Robert Half Intl., Inc. . . . . . . . . . . . . . . . . . . . 1179
Pelletier v. Eisenberg . . . . . . . . . . . . . . . . . . . . 1115
Peloso v. Hartford Fire Insurance Co. . . . . . . . . . . . . . . . . . . . . 139–141
Peltier v. McCloud River R.R. Co. . . . . . . . . . . . . . . . . . . . . 967
[TC-28/TC-29]

Pember v. Superior Court . . . . . . . . . . . . . . . . . . . . 836

Penasquitos, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 746
Pennoyer v. Neff . . . . . . . . . . . . . . . . . . . . 513; 922; 1255
People v. (see name of defendant) . . . . . . . . . . . . . . . . . . . .
People ex rel. (see name of relator) . . . . . . . . . . . . . . . . . . . .
Perdue v. Kenny A. . . . . . . . . . . . . . . . . . . . . 1180
Perez v. City of San Bruno . . . . . . . . . . . . . . . . . . . . 532
Perez v. County of Santa Clara . . . . . . . . . . . . . . . . . . . . 823
Perez v. Roe . . . . . . . . . . . . . . . . . . . . 66
Perez v. Smith . . . . . . . . . . . . . . . . . . . . 402; 949
Perko’s Enter., Inc. v. RRNS Enter. . . . . . . . . . . . . . . . . . . . . 1182; 1189
Permalab-Metalab Equipment Corp. v. Maryland Cas. Co. . . . . . . . . . . . . .
. . . . . . . 666
Perry v. Thomas . . . . . . . . . . . . . . . . . . . . 1023
Peter Culley & Assoc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 726
Peterson v. Superior Court . . . . . . . . . . . . . . . . . . . . 21; 210; 1360
Petty v. Manpower, Inc. . . . . . . . . . . . . . . . . . . . . 945
Phelan v. Superior Court . . . . . . . . . . . . . . . . . . . . 1281; 1346; 1353–1355
Philippine Export & Foreign Loan Guar. Corp. v. Chuidian . . . . . . . . . . . .
. . . . . . . . 1323
Phillips v. Desert Hospital Dist. . . . . . . . . . . . . . . . . . . . . 171; 586; 644
Phillips Petroleum Co. v. Shutts . . . . . . . . . . . . . . . . . . . . 305; 331; 782
Photias v. Doerfler . . . . . . . . . . . . . . . . . . . . 106
Pico v. Cohn . . . . . . . . . . . . . . . . . . . . 1218
Pierce; People v. . . . . . . . . . . . . . . . . . . . . 1083
Pierotti v. Torian . . . . . . . . . . . . . . . . . . . . 1324
Pierson v. Honda . . . . . . . . . . . . . . . . . . . . 1026
Pierson v. Sharp Mem. Hosp., Inc. . . . . . . . . . . . . . . . . . . . . 656
Pilimai v. Farmers Ins. Exch. Co. . . . . . . . . . . . . . . . . . . . . 1137; 1212,
1213
Pineda v. Los Angeles Turf Club, Inc. . . . . . . . . . . . . . . . . . . . . 1206
Pinsker v. Pacific Coast Society of Orthodontists . . . . . . . . . . . . . . . . . . . .
1369, 1370; 1373, 1374
Pioneer Electronics (USA), Inc. v. Superior Court . . . . . . . . . . . . . . . . . . .
. 777; 821
Piper Aircraft Co. v. Reyno . . . . . . . . . . . . . . . . . . . . 406–411; 414
Pirkig v. Dennis . . . . . . . . . . . . . . . . . . . . 1148
Pitchess v. Superior Court . . . . . . . . . . . . . . . . . . . . 815
Pitts v. Perluss . . . . . . . . . . . . . . . . . . . . 1378
Pittsburg Unified Sch. Dist. v. Com. on Professional Competence . . . . . . . .
. . . . . . . . . . . . 1383
Planned Parenthood v. Aakhus . . . . . . . . . . . . . . . . . . . . 1174
Planned Parenthood Affiliates v. Van De Kamp . . . . . . . . . . . . . . . . . . . .
1341
Planned Parenthood Golden Gate v. Garibaldi . . . . . . . . . . . . . . . . . . . .
1245
Planned Parenthood Golden Gate v. Superior Court . . . . . . . . . . . . . . . . . .
. . 822
Planning & Conservation League v. Castaic Lake Water Agency . . . . . . . . .
. . . . . . . . . . . 571
Plant Insulation Co. v. Fibreboard Corp. . . . . . . . . . . . . . . . . . . . . 519, 520
Platt v. Coldwell Banker Residential Real Estate Services . . . . . . . . . . . . .
. . . . . . . 677
Platt Pacific, Inc. v. Andelson . . . . . . . . . . . . . . . . . . . . 1008, 1009
Plaza Tulare v. Tradewell Stores, Inc. . . . . . . . . . . . . . . . . . . . . 1274
Plemon v. Nelson . . . . . . . . . . . . . . . . . . . . 1145
Plotitsa v. Superior Court . . . . . . . . . . . . . . . . . . . . 918
Plumlee v. Poag . . . . . . . . . . . . . . . . . . . . 606
Plunkett v. Spaulding . . . . . . . . . . . . . . . . . . . . 865
PNEC Corp. v. Meyer . . . . . . . . . . . . . . . . . . . . 1153
Pockman v. Leonard . . . . . . . . . . . . . . . . . . . . 74
Pointe San Diego Residential Community v. Procopio, Cory, Hargreaves &
Savitch, LLP . . . . . . . . . . . . . . . . . . . . 602
Polster, Inc. v. Swing . . . . . . . . . . . . . . . . . . . . 1133
Ponce v. Tractor Supply Co. . . . . . . . . . . . . . . . . . . . . 518
Ponce-Bran v. Trustees of the Cal. State Univ. . . . . . . . . . . . . . . . . . . . .
1277
Pool v. City of Oakland . . . . . . . . . . . . . . . . . . . . 1312; 1315, 1316; 1318
Pooshs v. Altria Group, Inc. . . . . . . . . . . . . . . . . . . . . 110
Pooshs v. Phillip Morris USA, Inc. . . . . . . . . . . . . . . . . . . . . 108, 109; 112
Popelka, Allard, McCowan & Jones v. Superior Court . . . . . . . . . . . . . . . .
. . . . 1360
Porreco v. Red Top RV Center . . . . . . . . . . . . . . . . . . . . 961
Posey v. Leavitt . . . . . . . . . . . . . . . . . . . . 459
Poster v. So. Cal. Rapid Transit Dist. . . . . . . . . . . . . . . . . . . . . 981; 1202
Potomac Oil Co. v. Dye . . . . . . . . . . . . . . . . . . . . 1363
Powell v. Superior Court . . . . . . . . . . . . . . . . . . . . 868
Powers v. City of Richmond . . . . . . . . . . . . . . . . . . . . 1337; 1363; 1393
Powers, Marriage of . . . . . . . . . . . . . . . . . . . . 205; 209
Poynter v. Ratcliff . . . . . . . . . . . . . . . . . . . . 1124
Pratali v. Gates . . . . . . . . . . . . . . . . . . . . 121; 1249
Pratt v. Vencor, Inc. . . . . . . . . . . . . . . . . . . . 1080
Preferred Risk Mutual Ins. Co. v. Reiswig . . . . . . . . . . . . . . . . . . . . 79;
167
Prentice v. North American Title Guar. Corp. . . . . . . . . . . . . . . . . . . . .
1140; 1155; 1158
Press v. Lucky Stores, Inc. . . . . . . . . . . . . . . . . . . . . 1168–1170; 1176–
1178; 1181
Pressler v. Donald L. Bren Co. . . . . . . . . . . . . . . . . . . . . 968
Price v. Atchison, T. & S. F. R. Co. . . . . . . . . . . . . . . . . . . . . 406–409
Price v. Civil Service Com. . . . . . . . . . . . . . . . . . . . . 1361
Price v. Sixth District . . . . . . . . . . . . . . . . . . . . 524
Price Pfister, Inc. v. William Lyon Co. . . . . . . . . . . . . . . . . . . . 729
Prince v. CLS Transp., Inc. . . . . . . . . . . . . . . . . . . . 777
Producers Dairy Delivery Co. v. Sentry Ins. Co. . . . . . . . . . . . . . . . . . . . .
512; 533; 555, 556
Profit Concepts Mgmt., Inc. v. Griffith . . . . . . . . . . . . . . . . . . . . 1153
Prudential Home Mortgage Co. v. Superior Court . . . . . . . . . . . . . . . . . . . .
93
Prudential-LMI Commercial Ins. v. Superior Court . . . . . . . . . . . . . . . . . . .
. 85; 135; 146; 189
Public Works Bd., State of California ex rel. v. Bragg . . . . . . . . . . . . . . . . .
. . . 20
Pugh v. Candies, Inc. . . . . . . . . . . . . . . . . . . . . 1302
Pullin v. Superior Court . . . . . . . . . . . . . . . . . . . . 841
Pultz v. Holgerson . . . . . . . . . . . . . . . . . . . . 898
Puritan Leasing Co. v. August . . . . . . . . . . . . . . . . . . . . 1291
[TC-29/TC-30]

Putnam v. Clague . . . . . . . . . . . . . . . . . . . . 963, 964

Quattrone v. Superior Court . . . . . . . . . . . . . . . . . . . . 1360

Queen of Angels Hosp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 853
Quinn v. State of California . . . . . . . . . . . . . . . . . . . . 1155, 1156
Quintana v. Board of Administration . . . . . . . . . . . . . . . . . . . . 1388

R.S. Creative, Inc. v. Creative Cotton, Ltd. . . . . . . . . . . . . . . . . . . . . 883

Rabkin, Marriage of . . . . . . . . . . . . . . . . . . . . 548
Rader Co. v. Stone . . . . . . . . . . . . . . . . . . . . 586; 590
Raedeke v. Gibraltar Sav. & Loan Asso. . . . . . . . . . . . . . . . . . . . . 1037,
1038
Raff v. Raff . . . . . . . . . . . . . . . . . . . . 1263
Ragan v. City of Hawthorne . . . . . . . . . . . . . . . . . . . . 208; 211
Rail-Transport Employees Assn. v. Union Pac. Motor Freight . . . . . . . . . .
. . . . . . . . . . 885
Rainer v. Community Memorial Hosp. . . . . . . . . . . . . . . . . . . . . 598
Ramer, In re Marriage of . . . . . . . . . . . . . . . . . . . . 1298
Ramirez v. Macadam . . . . . . . . . . . . . . . . . . . . 852
Ramirez v. Moran . . . . . . . . . . . . . . . . . . . . 1115; 1290
Ramirez v. Sturdevant . . . . . . . . . . . . . . . . . . . . 978
Ramirez v. Superior Court . . . . . . . . . . . . . . . . . . . . 1022
Ranchers Bank v. Pressman . . . . . . . . . . . . . . . . . . . . 670
Rancho Bernardo Development Co. v. Superior Court . . . . . . . . . . . . . . . . .
. . . 866; 1362
Randles v. Lowry . . . . . . . . . . . . . . . . . . . . 1197, 1198
Randone v. Appellate Depart. . . . . . . . . . . . . . . . . . . . . 7; 432, 433; 463
Rappleyea v. Campbell . . . . . . . . . . . . . . . . . . . . 937
Rare Coin Galleries, Inc. v. A-Mark Coin Co., Inc. . . . . . . . . . . . . . . . . . . .
 . 1327
Rashad H, In re . . . . . . . . . . . . . . . . . . . . 1333
Rassier, Marriage of . . . . . . . . . . . . . . . . . . . . 330, 331; 1256
Raven v. Deukmejian . . . . . . . . . . . . . . . . . . . . 1357
Rawnsley v. Superior Court . . . . . . . . . . . . . . . . . . . . 800
Ray v. Goodman . . . . . . . . . . . . . . . . . . . . 1213
Ray Wilson Co. v. Anaheim Memorial Hospital Assn. . . . . . . . . . . . . . . . .
. . . . 989
Rebney v. Wells Fargo Bank . . . . . . . . . . . . . . . . . . . . 789, 790; 1287
Redevelopment Agency v. Gilmore . . . . . . . . . . . . . . . . . . . . 1139
Redevelopment Agency v. Herrold . . . . . . . . . . . . . . . . . . . . 600
Reed v. Superior Court . . . . . . . . . . . . . . . . . . . . 1277
Regan Roofing Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 720–722
Regency Outdoor Advertising, Inc. v. City of L. A. . . . . . . . . . . . . . . . . . . .
. 1207, 1208; 1212, 1213
Regents of the Univ. of California v. Superior Court . . . . . . . . . . . . . . . . . .
. . 156; 368
Reich v. Purcell . . . . . . . . . . . . . . . . . . . . 233–238; 240, 241; 244, 245;
259; 263; 265, 266; 302; 305; 307, 308; 316; 318; 323
Reid v. Balter . . . . . . . . . . . . . . . . . . . . 945
Reid v. Google, Inc. . . . . . . . . . . . . . . . . . . . 905, 906
Reliable Enter., Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1245,
1246
Reliance Audio Visual Corp. v. Bronson . . . . . . . . . . . . . . . . . . . . 382
Reneria v. Juvenile Justice, Dept. of Corrections & Rehabilitation . . . . . . .
. . . . . . . . . . . . . 170
Rent-A-Center, West, Inc. v. Jackson . . . . . . . . . . . . . . . . . . . . 1012
Resch v. Volkswagen of America, Inc. . . . . . . . . . . . . . . . . . . . . 1068
Rescue Army v. Municipal Ct. . . . . . . . . . . . . . . . . . . . . 1353
Respers v. Univ. of Cal. Retirement Sys. . . . . . . . . . . . . . . . . . . . . 1383
Reuter v. Superior Court . . . . . . . . . . . . . . . . . . . . 852
Reyes v. San Diego Cnty. Bd. of Supervisors . . . . . . . . . . . . . . . . . . . . 769
Reynolds v. Willson . . . . . . . . . . . . . . . . . . . . 1079
Reynolds Metals Co. v. Alperson . . . . . . . . . . . . . . . . . . . . 1141; 1144,
1145; 1147; 1154
Rhee v. El Camino Hosp. Dist. . . . . . . . . . . . . . . . . . . . . 1377
Rice v. Cook . . . . . . . . . . . . . . . . . . . . 456
Rice v. Crow . . . . . . . . . . . . . . . . . . . . 546
Rich, Conservatorship of . . . . . . . . . . . . . . . . . . . . 1277
Richards v. Stanley . . . . . . . . . . . . . . . . . . . . 1353
Richaud v. Jennings . . . . . . . . . . . . . . . . . . . . 870
Richmond v. Dart Industries, Inc. . . . . . . . . . . . . . . . . . . . . 761; 1278
Rico v. Mitsubishi Motors Corp . . . . . . . . . . . . . . . . . . . . 829, 830
Rider v. County of San Diego . . . . . . . . . . . . . . . . . . . . 1157
Rietveld v. Rosebud Storage Partners . . . . . . . . . . . . . . . . . . . . 1026
Rifkind v. Superior Court . . . . . . . . . . . . . . . . . . . . 836
Rifkind & Sterling, Inc. v. Rifkind . . . . . . . . . . . . . . . . . . . . 999
Riley v. Brown and Root, Inc. . . . . . . . . . . . . . . . . . . . . 319
Riley v. Fitzgerald . . . . . . . . . . . . . . . . . . . . 328
Riley v. Superior Court . . . . . . . . . . . . . . . . . . . . 1327
Rim Forest Lumber Co. v. Woodside Constr. Co. . . . . . . . . . . . . . . . . . . . .
965
Rio Linda Unified Sch. Dist. v. Superior Court . . . . . . . . . . . . . . . . . . . .
903
Risley v. Lenwell . . . . . . . . . . . . . . . . . . . . 1062
Rittenhouse v. Superior Court . . . . . . . . . . . . . . . . . . . . 801
Riverside, County of v. Superior Court . . . . . . . . . . . . . . . . . . . . 823
RN Solution, Inc. v. Catholic Healthcare West . . . . . . . . . . . . . . . . . . . .
1008
Roa v. Lodi Med. Group, Inc. . . . . . . . . . . . . . . . . . . . 55
Roach v. Lewis . . . . . . . . . . . . . . . . . . . . 963, 964
Road Sprinkler Fitters Local Union No. 669 v. G & G Fire Sprinklers, Inc.
. . . . . . . . . . . . . . . . . . . . 517
Robarge; People v. . . . . . . . . . . . . . . . . . . . . 1112
Robbins v. L. A. Unified Sch. Dist. . . . . . . . . . . . . . . . . . . . . 944
Robbins v. Superior Court . . . . . . . . . . . . . . . . . . . . 1338; 1354
Robert McMullan & Son, Inc. v. United States Fid. & Guar. Co. . . . . . . . . .
. . . . . . . . . . . 304
Roberts v. City of Palmdale . . . . . . . . . . . . . . . . . . . . 804; 806
Roberts v. County of Los Angeles . . . . . . . . . . . . . . . . . . . . 186
Roberts v. Home Ins. Indem. Co. . . . . . . . . . . . . . . . . . . . 402
[TC-30/TC-31]

Roberts v. Superior Court . . . . . . . . . . . . . . . . . . . . 807; 852; 1346; 1348;

1355; 1363
Robinson v. Varela . . . . . . . . . . . . . . . . . . . . 935
Roby v. McKesson Corp . . . . . . . . . . . . . . . . . . . . 1122
Roder; People v. . . . . . . . . . . . . . . . . . . . . 1242
Rodgers v. Sargent Controls & Aerospace . . . . . . . . . . . . . . . . . . . . 570,
571
Rodriguez v. Barnett . . . . . . . . . . . . . . . . . . . . 1284
Rodriguez v. McDonnell Douglas Corp . . . . . . . . . . . . . . . . . . . . 826
Rodriguez v. Solis . . . . . . . . . . . . . . . . . . . . 1338
Roe v. Superior Court . . . . . . . . . . . . . . . . . . . . 1355
Roebuck v. Drexel University . . . . . . . . . . . . . . . . . . . . 1124
Rogalski v. Nabers Cadillac . . . . . . . . . . . . . . . . . . . . 934; 936; 1215
Roger Hedgecock for Mayor Com.; People v. . . . . . . . . . . . . . . . . . . . .
1175
Rogers v. Silverman . . . . . . . . . . . . . . . . . . . . 945
Rojas v. Cutsforth . . . . . . . . . . . . . . . . . . . . 587
Rojas v. Superior Court . . . . . . . . . . . . . . . . . . . . 830
Rojo v. Kliger . . . . . . . . . . . . . . . . . . . . 200, 201; 205
Rollins Burdick Hunter of So. Cal., Inc. v. Alexander & Alexander
Services, Inc. . . . . . . . . . . . . . . . . . . . 351
Romadka v. Hoge . . . . . . . . . . . . . . . . . . . . 976
Roman v. County of Los Angeles . . . . . . . . . . . . . . . . . . . . 194
Roman v. Usary Tire & Service Center . . . . . . . . . . . . . . . . . . . . 17; 965
Romano v. Rockwell International, Inc. . . . . . . . . . . . . . . . . . . . . 61; 105
Romero v. Riggs . . . . . . . . . . . . . . . . . . . . 1116, 1117; 1119
Rominger, People ex rel. v. County of Trinity . . . . . . . . . . . . . . . . . . . .
734, 735; 737
Roodenburg v. Pavestone Co. . . . . . . . . . . . . . . . . . . . . 1138
Rooney v. Vermont Inv. Corp. . . . . . . . . . . . . . . . . . . . . 1283
Rosas v. Superior Court . . . . . . . . . . . . . . . . . . . . 370
Rose v. Fife . . . . . . . . . . . . . . . . . . . . 618
Rose v. Fuqua . . . . . . . . . . . . . . . . . . . . 946
Rose v. Hertz Corp. . . . . . . . . . . . . . . . . . . . . 1211
Rosefield Packing Co. v. Superior Court of San Francisco . . . . . . . . . . . . .
. . . . . . . 65
Roseleaf Corp. v. Chierighino . . . . . . . . . . . . . . . . . . . . 290
Rosenau v. Heimann . . . . . . . . . . . . . . . . . . . . 1288
Rosenblit v. Superior Court . . . . . . . . . . . . . . . . . . . . 1382
Rosencrantz v. Rogers . . . . . . . . . . . . . . . . . . . . 619
Rosenthal v. Garner . . . . . . . . . . . . . . . . . . . . 387; 930
Rosenthal v. Great Western Financial Securities Corp . . . . . . . . . . . . . . . .
. . . . 1011; 1041
Ross v. Bernhard . . . . . . . . . . . . . . . . . . . . 1046
Ross v. Creel Printing & Publishing Co. . . . . . . . . . . . . . . . . . . . . 648
Ross v. Superior Court . . . . . . . . . . . . . . . . . . . . 1244; 1246
Rossa v. D.L Falk Constr. . . . . . . . . . . . . . . . . . . . . 1326
Rowe v. Superior Court . . . . . . . . . . . . . . . . . . . . 1043
Rowland v. Christian . . . . . . . . . . . . . . . . . . . . 249
Rowland v. County of Sonoma . . . . . . . . . . . . . . . . . . . . 338, 339
Rowland v. Superior Court (Zappia) . . . . . . . . . . . . . . . . . . . . 599
Roy v. Superior Court . . . . . . . . . . . . . . . . . . . . 359; 361
Royal Globe Ins. Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1343
Royal Indemnity Co. v. United Enterprises, Inc. . . . . . . . . . . . . . . . . . . .
739
Royal Trust Co. v. MacBean . . . . . . . . . . . . . . . . . . . . 318
Roylance v. Doelger . . . . . . . . . . . . . . . . . . . . 698
Rozan v. Rozan . . . . . . . . . . . . . . . . . . . . 329
Ruckelshaus v. Sierra Club . . . . . . . . . . . . . . . . . . . . 1139
Rudy v. Slotwinsky . . . . . . . . . . . . . . . . . . . . 1218
Ruffalo v. Patterson . . . . . . . . . . . . . . . . . . . . 540
Ruiz v. Dept. of Corrections . . . . . . . . . . . . . . . . . . . . 200
Rumac v. Bottomley . . . . . . . . . . . . . . . . . . . . 830
Rumberg v. Weber Aircraft Corp. . . . . . . . . . . . . . . . . . . . . 133
Runyon v. Bd. of Trustees . . . . . . . . . . . . . . . . . . . . 554
Russell v. Stanford Univ. Hosp. . . . . . . . . . . . . . . . . . . . . 168
Russell v. Trans Pac. Group . . . . . . . . . . . . . . . . . . . . 1154
Russell v. United Pacific Ins. Co. . . . . . . . . . . . . . . . . . . . . 457
Rutan v. Summit Sports, Inc. . . . . . . . . . . . . . . . . . . . . 909; 932
Rutherford v. Owens-Illinois, Inc. . . . . . . . . . . . . . . . . . . . 1317
Rutherford v. State of California . . . . . . . . . . . . . . . . . . . . 545; 549
Ruvalcaba v. Govt. Employees Ins. Co. . . . . . . . . . . . . . . . . . . . 882
Ryan v. North Alaska Salmon Co. . . . . . . . . . . . . . . . . . . . . 227
Ryan v. Superior Court of Los Angeles County . . . . . . . . . . . . . . . . . . . .
850
Ryan, Marriage of . . . . . . . . . . . . . . . . . . . . 328
Rymer v. Hagler . . . . . . . . . . . . . . . . . . . . 515
Rynsburger v. Dairymen’s Fertilizer Coop., Inc. . . . . . . . . . . . . . . . . . . .
520; 566
 S

Saad v. City of Berkeley . . . . . . . . . . . . . . . . . . . . 1379

Saari v. Jongordon Corp. . . . . . . . . . . . . . . . . . . . . 1079
Saba v. Crater . . . . . . . . . . . . . . . . . . . . 1208
Sabella v. Southern Pac. Co. . . . . . . . . . . . . . . . . . . . . 1054; 1302
Sacks v. FSR Brokerage, Inc. . . . . . . . . . . . . . . . . . . . . 759
Sacramento, City of v. Drew . . . . . . . . . . . . . . . . . . . . 1171; 1175, 1176
Sacramento, City of v. State of California . . . . . . . . . . . . . . . . . . . . 534;
549
Sade Shoe Co. v. Oschin & Snyder . . . . . . . . . . . . . . . . . . . . 746
Saelzler v. Advanced Group 400 . . . . . . . . . . . . . . . . . . . . 888; 904
Safaie v. Jacuzzi Whirlpool Bath, Inc. . . . . . . . . . . . . . . . . . . . 779
Safeco Insurance Co. v. Tholen . . . . . . . . . . . . . . . . . . . . 528; 530
Safway Steel Products, Inc. v. Lefever . . . . . . . . . . . . . . . . . . . . 148
Sagadin v. Ripper . . . . . . . . . . . . . . . . . . . . 703; 718
Sagaser v. McCarthy . . . . . . . . . . . . . . . . . . . . 1172
Saika v. Gold . . . . . . . . . . . . . . . . . . . . 1012, 1013
Sail’er Inn, Inc. v. Kirby . . . . . . . . . . . . . . . . . . . . 198
Saint Agnes Med. Ctr. v. Pacificare of Cal. . . . . . . . . . . . . . . . . . . . . 1009
Saks v. Damon Raike & Co. . . . . . . . . . . . . . . . . . . . . 336; 754
Salas v. Sears, Roebuck & Co. . . . . . . . . . . . . . . . . . . . . 957; 959
Salasguevara v. Wyeth Labs, Inc. . . . . . . . . . . . . . . . . . . . . 905
Saleeby v. State Bar . . . . . . . . . . . . . . . . . . . . 1380
Salkin v. California Dental Ass’n . . . . . . . . . . . . . . . . . . . . 1339
[TC-31/TC-32]

Salowitz Org., Inc. v. Traditional Indus., Inc. . . . . . . . . . . . . . . . . . . . .

1026
Salton Bay Marina, Inc. v. Imperial Irrigation Dist. . . . . . . . . . . . . . . . . . . .
. 1177, 1178
Sam Andrews’ Sons v. A.L.R.B. . . . . . . . . . . . . . . . . . . . . 1298
Sammons Enterprises, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 351
Samuel v. Stevedoring Serv. . . . . . . . . . . . . . . . . . . . . 1277
Samuels v. Mix . . . . . . . . . . . . . . . . . . . . 100
San Bernardino, County of v. Superior Court . . . . . . . . . . . . . . . . . . . . 377
San Diego, County of v. Hotz . . . . . . . . . . . . . . . . . . . . 546
San Diego, County of v. Sanfax Corp . . . . . . . . . . . . . . . . . . . . 261; 742
San Diego Gas & Electric Co. v. Superior Court . . . . . . . . . . . . . . . . . . . .
604
San Diego Professional Asso. v. Superior Court of San Diego County . . . .
 . . . . . . . . . . . . . . . . 867
San Diego Teachers Assn. v. Superior Court . . . . . . . . . . . . . . . . . . . . 337
San Diego Trolley, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 813
San Francisco Bay Conservation & Dev. Com. v. Town of Emeryville . . . .
. . . . . . . . . . . . . . . . 1322; 1341
San Francisco, City and County of v. Cobra Solutions, Inc. . . . . . . . . . . . . .
. . . . . . 38
San Francisco, City and County of v. Pacello . . . . . . . . . . . . . . . . . . . . 209;
211
San Francisco, City and County of v. State of Cal. . . . . . . . . . . . . . . . . . . . .
740
San Francisco, City and County of v. Strahlendorf . . . . . . . . . . . . . . . . . . . .
657
San Francisco, City and County of v. Sweet . . . . . . . . . . . . . . . . . . . . 1158
San Francisco Unified Sch. Dist. v. W.R. Grace & Co. . . . . . . . . . . . . . . . .
. . . 161
San Jose, City of v. Superior Court . . . . . . . . . . . . . . . . . . . . 21; 173; 760;
770; 772, 773; 775–777
Sanabria v. Embrey . . . . . . . . . . . . . . . . . . . . 1193
Sanchez v. City of L. A. . . . . . . . . . . . . . . . . . . . . 960
Sanchez v. South Hoover Hosp. . . . . . . . . . . . . . . . . . . . . 69; 85; 151; 153;
617
Sanchez-Corea v. Bank of America . . . . . . . . . . . . . . . . . . . . 1094; 1102;
1291; 1299
Sanders v. Los Angeles . . . . . . . . . . . . . . . . . . . . 1156
Sanders v. Pacific Gas & Elec. Co. . . . . . . . . . . . . . . . . . . . . 736; 743
Sanders, Estate of . . . . . . . . . . . . . . . . . . . . 943; 1215; 1222
Sanderson v. Niemann . . . . . . . . . . . . . . . . . . . . 467
Sandoval v. Superior Court . . . . . . . . . . . . . . . . . . . . 25; 512; 532; 550;
552; 555, 556
Sandstrom v. Montana . . . . . . . . . . . . . . . . . . . . 1242
Sanford v. Smith . . . . . . . . . . . . . . . . . . . . 389; 392
Santa Clara County Counsel Attorneys Assn. v. Woodside . . . . . . . . . . . . .
. . . . . . . 1338
Santa Clara, County of v. Hayes Co. . . . . . . . . . . . . . . . . . . . . 130, 131
Santa Clara, County of v. Superior Court . . . . . . . . . . . . . . . . . . . . 1247;
1354
Santee v. Santa Clara County Office of Ed. . . . . . . . . . . . . . . . . . . . . 179
Santee, City of v. Superior Court . . . . . . . . . . . . . . . . . . . . 1393
Santisas v. Goodin . . . . . . . . . . . . . . . . . . . . 1151, 1152
Santos v. Civil Serv. Bd. . . . . . . . . . . . . . . . . . . . . 1187; 1193
Sapp v. Barenfeld . . . . . . . . . . . . . . . . . . . . 986
Sarale v. Pac. Gas & Electric Co. . . . . . . . . . . . . . . . . . . . . 337
Sarracino v. Superior Court . . . . . . . . . . . . . . . . . . . . 746
Sarti v. Salt Creek, Inc. . . . . . . . . . . . . . . . . . . . 22
Sartor v. Superior Court . . . . . . . . . . . . . . . . . . . . 515; 545; 554
Saucedo v. Mercury Sav. & Loan Assn. . . . . . . . . . . . . . . . . . . . . 1147
Saunders v. New Capital for Small Businesses, Inc. . . . . . . . . . . . . . . . . . .
. . 670
Saunders; People v. . . . . . . . . . . . . . . . . . . . . 1332
Saunders v. Saunders . . . . . . . . . . . . . . . . . . . . 1217
Sav-On Drug Stores, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 770
Sav-On Drugs, Inc. v. Superior Court of Los Angeles County . . . . . . . . . . .
. . . . . . . . . 821; 826; 1348
Save Open Space Santa Monica Mountains v. Superior Court . . . . . . . . . . .
. . . . . . . . . 822
Save Our Bay, Inc. v. San Diego Unified Port Dist . . . . . . . . . . . . . . . . . . .
. 687
Save the Plastic Bag Coalition v. City of Manhattan Beach . . . . . . . . . . . . .
. . . . . . . 1356
Sawyer v. First City Financial Corp. . . . . . . . . . . . . . . . . . . . . 471; 484,
485; 499; 508; 518
SBAM Partners, LLC v. Wang . . . . . . . . . . . . . . . . . . . . 1235
Scarzella v. DeMers . . . . . . . . . . . . . . . . . . . . 965
Schaefer Dixon Assoc. v. Santa Ana Watershed Project Auth. . . . . . . . . . . .
. . . . . . . . . 181
Scharlin v. Superior Court . . . . . . . . . . . . . . . . . . . . 1354
Schatz v. Allen Matkins Leck Gamble & Mallory LLP . . . . . . . . . . . . . . . .
. . . . 1002
Scheiding v. Dinwiddie Construction Co. . . . . . . . . . . . . . . . . . . . . 904
Schelbauer v. Butler Mfg. Co. . . . . . . . . . . . . . . . . . . . . 1121
Scherer v. Mark . . . . . . . . . . . . . . . . . . . . 620; 623
Schermerhorn v. Los Angeles P. R. Co. . . . . . . . . . . . . . . . . . . . . 482
Schiavone v. Fortune . . . . . . . . . . . . . . . . . . . . 607; 641
Schifando v. City of Los Angeles . . . . . . . . . . . . . . . . . . . . 200
Schlagenhauf v. Holder . . . . . . . . . . . . . . . . . . . . 1364
Schmid v. Lovette . . . . . . . . . . . . . . . . . . . . 1175
Schmid v. Superior Court . . . . . . . . . . . . . . . . . . . . 720
Schnabel v. Superior Court . . . . . . . . . . . . . . . . . . . . 793; 818; 821
Schnabel, Marriage of . . . . . . . . . . . . . . . . . . . . 53
Schneider v. Kaiser Foundation Hospitals . . . . . . . . . . . . . . . . . . . . 989;
1301
Schonfeld v. City of Vallejo . . . . . . . . . . . . . . . . . . . . 1268; 1271, 1272
School Dist. Of Okaloosa County v. Superior Court . . . . . . . . . . . . . . . . . .
. . 1035
Schreiber v. Ditch Road Inv. . . . . . . . . . . . . . . . . . . . . 1278
Schreiber v. Estate of Kiser . . . . . . . . . . . . . . . . . . . . 860
Schumacher v. Ayerve . . . . . . . . . . . . . . . . . . . . 1026, 1027; 1248
Schumpert v. Tishman Co. . . . . . . . . . . . . . . . . . . . . 964, 965
Schwab v. Rondel Homes, Inc. . . . . . . . . . . . . . . . . . . . . 591; 913
Schweiger v. Superior Court . . . . . . . . . . . . . . . . . . . . 1346
[TC-32/TC-33]

Science Applications Internat. Corp. v. Superior Court . . . . . . . . . . . . . . . .

. . . . 1189
Scognamillo v. Herrick . . . . . . . . . . . . . . . . . . . . 936
Scott v. Industrial Accident Com. . . . . . . . . . . . . . . . . . . . . 338
Scott v. Municipal Court . . . . . . . . . . . . . . . . . . . . 1363
Scott Co. of Cal. v. Blount, Inc. . . . . . . . . . . . . . . . . . . . . 1154
Scottsdale Ins. Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 809
Scripps Health v. Superior Court . . . . . . . . . . . . . . . . . . . . 808
SCT, U.S.A. Inc. v. Mitsui Mfr. Bank . . . . . . . . . . . . . . . . . . . . 66
Seacall Dev., Ltd. v. Santa Monica Rent Control Bd. . . . . . . . . . . . . . . . . .
. . . 936
Seaman’s Direct Buying Service, Inc. v. Standard Oil Co. . . . . . . . . . . . . .
. . . . . . . 653; 1315; 1318
Searle v. Allstate Life Insurance Co. . . . . . . . . . . . . . . . . . . . . 577
Sears, Roebuck & Co. v. Intl. Harvester Co. . . . . . . . . . . . . . . . . . . . 722
Sears, Roebuck & Co. v. Mackey . . . . . . . . . . . . . . . . . . . . 1271; 1286
Seastrom v. Neways, Inc. . . . . . . . . . . . . . . . . . . . . 774
Seattle Times Co. v. Rhinehart . . . . . . . . . . . . . . . . . . . . 846
Security Envtl. Sys., Inc. v. South Coast Air Quality Mgmt. Dist. . . . . . . . .
. . . . . . . . . . . . 1384; 1389
Security Pacific National Bank v. Geernaert . . . . . . . . . . . . . . . . . . . . 440;
1233
See v. Joughin . . . . . . . . . . . . . . . . . . . . 514
Seelenfreund v. Terminix of Northern Cal., Inc. . . . . . . . . . . . . . . . . . . . .
93
Seever v. Copley Press, Inc. . . . . . . . . . . . . . . . . . . . 1189
Seimon v. Southern Pac. Transportation Co. . . . . . . . . . . . . . . . . . . . .
1065; 1073
Selby Constructors v. McCarthy . . . . . . . . . . . . . . . . . . . . 1319
Select Base Materials v. Board of Equal. . . . . . . . . . . . . . . . . . . . . 364
Selleck v. Globe Intl., Inc. . . . . . . . . . . . . . . . . . . . . 644
Sellery v. Cressey . . . . . . . . . . . . . . . . . . . . 98
Semole v. Sansoucie . . . . . . . . . . . . . . . . . . . . 582
Semsch v. Henry Mayo Newhall Mem. Hosp. . . . . . . . . . . . . . . . . . . . .
1302
Semtek International, Inc. v. Lockheed Martin Corp . . . . . . . . . . . . . . . . . . .
. 509
Serrano v. Priest . . . . . . . . . . . . . . . . . . . . 750; 1140; 1155–1158; 1161;
1165, 1166; 1176–1181
Serrano v. Stefan Merli Plastering Co., Inc. . . . . . . . . . . . . . . . . . . . . 1169
Serrano v. Unruh . . . . . . . . . . . . . . . . . . . . 1139; 1166; 1176–1179; 1181,
1182
Sessions Payroll Mgmt., Inc. v. Noble Constr. Co. . . . . . . . . . . . . . . . . . . .
1147
Sevidal v. Target Corp . . . . . . . . . . . . . . . . . . . . 769
Sexton v. Superior Court . . . . . . . . . . . . . . . . . . . . 876
Seymour v. Oelrichs . . . . . . . . . . . . . . . . . . . . 1037
Shackelton v. Department of Motor Vehicles . . . . . . . . . . . . . . . . . . . . 562;
568
Shadoan v. World Sav. & Loan Assn. . . . . . . . . . . . . . . . . . . . . 1144
Shaffer v. Heitner . . . . . . . . . . . . . . . . . . . . 348; 439
Shaffer v. Superior Court . . . . . . . . . . . . . . . . . . . . 54
Shain v. City of Albany . . . . . . . . . . . . . . . . . . . . 1200
Shamblin v. Brattain . . . . . . . . . . . . . . . . . . . . 1303, 1304; 1306
Shane v. Superior Court . . . . . . . . . . . . . . . . . . . . 730
Shannon v. Sims Service Center, Inc. . . . . . . . . . . . . . . . . . . . . 190, 191
Shapell Indus. v. Governing Bd. . . . . . . . . . . . . . . . . . . . . 1378, 1379
Shapira v. Superior Court . . . . . . . . . . . . . . . . . . . . 860
Shapiro v. Clark . . . . . . . . . . . . . . . . . . . . 937
Sharff v. Superior Court . . . . . . . . . . . . . . . . . . . . 857
Sharon S. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1168
Sharp v. Union Pac. R.R. Co. . . . . . . . . . . . . . . . . . . . . 1280
Shaw v. Hughes Aircraft Co. . . . . . . . . . . . . . . . . . . . 1287
Shearson/American Express Inc. v. McMahon . . . . . . . . . . . . . . . . . . . .
991
Sheldon v. Sill . . . . . . . . . . . . . . . . . . . . 333
Sheldon Appel Co. v. Albert & Oliker . . . . . . . . . . . . . . . . . . . . 42; 45–47;
50
Shelton v. Rancho Mortg. & Inv. Corp . . . . . . . . . . . . . . . . . . . . 1284
Shepard & Morgan v. Lee & Daniel, Inc. . . . . . . . . . . . . . . . . . . . . 589
Sherman v. Kinetic Concepts, Inc. . . . . . . . . . . . . . . . . . . . . 883; 1122,
1123
Shiley, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 415
Shisler v. Sanfer Sports Cars, Inc. . . . . . . . . . . . . . . . . . . . 356
Shively v. Bozanich . . . . . . . . . . . . . . . . . . . . 103
Shively v. Stewart . . . . . . . . . . . . . . . . . . . . 793
Shooker v. Superior Court . . . . . . . . . . . . . . . . . . . . 807
Shopoff & Cavallo LLP v. Hyon . . . . . . . . . . . . . . . . . . . . 1041
Shpiller v. Harry C’s Redlands . . . . . . . . . . . . . . . . . . . . 1282
Shriver v. Silva . . . . . . . . . . . . . . . . . . . . 1062
Shuey; People v. . . . . . . . . . . . . . . . . . . . . 573; 578
Shute v. Carnival Cruise Lines . . . . . . . . . . . . . . . . . . . . 346; 422; 427
Sibley v. Superior Court . . . . . . . . . . . . . . . . . . . . 340, 341
Sidney v. Superior Court . . . . . . . . . . . . . . . . . . . . 162; 677
Siebel v. Mittlesteadt . . . . . . . . . . . . . . . . . . . . 51
Siegal v. Superior Court . . . . . . . . . . . . . . . . . . . . 1106; 1117
Sierra Club v. Cal. Coastal Com. . . . . . . . . . . . . . . . . . . . . 1385
Sierra Club v. Morton . . . . . . . . . . . . . . . . . . . . 751
Sierra Club v. San Joaquin Local Agency Formation Com. . . . . . . . . . . . . .
. . . . . . . 202; 1381
Sierra Club v. State Bd. of Forestry . . . . . . . . . . . . . . . . . . . . 1338
Sierra Club, Inc. v. California Coastal Com. . . . . . . . . . . . . . . . . . . . . 683
Sierra Nevada Mem.-Miners Hosp., Inc. v. Superior Court . . . . . . . . . . . . .
. . . . . . . 960
Silbrico Corp. v. Raanan . . . . . . . . . . . . . . . . . . . . 1250
Siligo v. Castellucci . . . . . . . . . . . . . . . . . . . . 1145
Silver v. Boatwright Home Inspection, Inc. . . . . . . . . . . . . . . . . . . . 1152
Silver v. Gold . . . . . . . . . . . . . . . . . . . . 1192
Silver v. Pac. American Fish Co., Inc. . . . . . . . . . . . . . . . . . . . 1281
Silver Creek, LLC v. BlackRock Realty Advisors, Inc. . . . . . . . . . . . . . . . .
. . . . 1150
Silver Organizations Ltd. v. Frank . . . . . . . . . . . . . . . . . . . . 675
Silverman v. Superior Court . . . . . . . . . . . . . . . . . . . . 349
Simi Valley, City of v. Superior Court . . . . . . . . . . . . . . . . . . . . 500; 505;
509
Simmons v. Southern Pac. Transp. Co. . . . . . . . . . . . . . . . . . . . . 1064
Simmons, Estate of . . . . . . . . . . . . . . . . . . . . 968
[TC-33/TC-34]

Simpson Redwood Co. v. State of California . . . . . . . . . . . . . . . . . . . . 733

Sims; People v. . . . . . . . . . . . . . . . . . . . . 491; 541; 553; 556; 560, 561;
567, 568; 921
Sindell v. Abbott Laboratories . . . . . . . . . . . . . . . . . . . . 67–69; 72, 73; 75;
157, 158
Singer v. Superior Court . . . . . . . . . . . . . . . . . . . . 836
Singer Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 722
Sirott v. Latts . . . . . . . . . . . . . . . . . . . . 648; 655
Sjoberg v. Hastorf . . . . . . . . . . . . . . . . . . . . 1279
Skelley, In re Marriage of . . . . . . . . . . . . . . . . . . . . 1277; 1353
Slack v. Slack . . . . . . . . . . . . . . . . . . . . 980
Slagle v. Superior Court . . . . . . . . . . . . . . . . . . . . 813
Slater v. Blackwood . . . . . . . . . . . . . . . . . . . . 44; 465; 468; 475; 482; 484;
508; 529; 675, 676
Slavin v. Borinstein . . . . . . . . . . . . . . . . . . . . 1071, 1072
Slottow v. American Cas. Co. . . . . . . . . . . . . . . . . . . . . 731
Small v. Fritz Companies, Inc. . . . . . . . . . . . . . . . . . . . . 588
Smeltzley v. Nicholson Mfg. Co. . . . . . . . . . . . . . . . . . . . . 163; 598; 602;
604; 611–613
Smith v. Adventist Health System/West . . . . . . . . . . . . . . . . . . . . 462
Smith v. Busniewski . . . . . . . . . . . . . . . . . . . . 1217
Smith v. County of Los Angeles . . . . . . . . . . . . . . . . . . . . 184; 1385; 1388
Smith v. Covell . . . . . . . . . . . . . . . . . . . . 1090; 1096; 1099
Smith v. ExxonMobil Oil Corp . . . . . . . . . . . . . . . . . . . . 539; 552
Smith v. Kern County Land Co. . . . . . . . . . . . . . . . . . . . . 583, 584
Smith v. Lewis . . . . . . . . . . . . . . . . . . . . 39
Smith v. Moffat . . . . . . . . . . . . . . . . . . . . 1115; 1118
Smith v. Parks Manor . . . . . . . . . . . . . . . . . . . . 742
Smith v. Pelton Water Wheel Co. . . . . . . . . . . . . . . . . . . . . 933
Smith v. Rae-Venter Law Group . . . . . . . . . . . . . . . . . . . . 21
Smith v. Smith . . . . . . . . . . . . . . . . . . . . 371
Smith v. State Farm Mut. Auto. Ins. Co. . . . . . . . . . . . . . . . . . . . . 514
Smith v. Superior Court . . . . . . . . . . . . . . . . . . . . 826; 838; 1254; 1355
Smith, Valentino & Smith, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . .
280; 285; 360; 378; 421, 422; 425; 427
Smoketree-Lake Murray, Ltd. v. Mills Concrete Construction Co. . . . . . . . .
. . . . . . . . . . . . 1081
Smyklo, Marriage of . . . . . . . . . . . . . . . . . . . . 330
Snapp & Associates Ins. Services, Inc. v. Robertson . . . . . . . . . . . . . . . . . .
. . 155
Snider v. Whitson . . . . . . . . . . . . . . . . . . . . 583
Snoke v. Bolen . . . . . . . . . . . . . . . . . . . . 124; 621; 630
Snowney v. Harrah’s Entertainment, Inc. . . . . . . . . . . . . . . . . . . . . 354
Snukal v. Flightways Mfg., Inc. . . . . . . . . . . . . . . . . . . . 1328
Snyder v. Superior Court . . . . . . . . . . . . . . . . . . . . 835
Sobeck & Associates, Inc. v. B & R Investments . . . . . . . . . . . . . . . . . . . .
621; 632
Social Serv. Union v. Alameda Cnty. Training & Empt. Bd. . . . . . . . . . . . .
. . . . . . . . 1008
Social Service Union, Local 535 v. County of Monterey . . . . . . . . . . . . . . .
. . . . . 1297; 1319
Societe Nationale Industrielle Aerospatiale v. District Court . . . . . . . . . . .
. . . . . . . . . 848
Sokolow v. County of San Mateo . . . . . . . . . . . . . . . . . . . . 1139; 1165,
 1166; 1169; 1174, 1175; 1181
Solari v. Atlas-Universal Service . . . . . . . . . . . . . . . . . . . . 517; 665
Soliman v. Philip Morris Inc. . . . . . . . . . . . . . . . . . . . . 109, 110
Solorzano v. Superior Court . . . . . . . . . . . . . . . . . . . . 884
Soltani-Rastegar v. Superior Court . . . . . . . . . . . . . . . . . . . . 808
Solv-All v. Superior Court . . . . . . . . . . . . . . . . . . . . 931
Sommers v. Erb . . . . . . . . . . . . . . . . . . . . 1177, 1178
Sonbergh v. MacQuarrie . . . . . . . . . . . . . . . . . . . . 107
Sonora Diamond Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 351,
352
Sooy v. Peter . . . . . . . . . . . . . . . . . . . . 1158
Sosinsky v. Grant . . . . . . . . . . . . . . . . . . . . 649
Soukup v. Law Offices of Herbert Hafif . . . . . . . . . . . . . . . . . . . . 658
Soule v. General Motors Corp . . . . . . . . . . . . . . . . . . . . 622; 1065, 1066;
1308
South San Francisco, City of v. Cypress Lawn Cemetery Ass’n . . . . . . . . . .
. . . . . . . . . . 462, 463
Southern Cal. Gas Co. v. Public Utilities Com. . . . . . . . . . . . . . . . . . . . .
806
Southern Cal. Rapid Transit Dist. v. United Transportation Union . . . . . . . .
. . . . . . . . . . . . 995
Southern Cal. White Trucks v. Teresinski . . . . . . . . . . . . . . . . . . . . 729
Southern California Enterprises, Inc. v. D. N. & E. Walter & Co. . . . . . . . .
. . . . . . . . . . . . 103
Southern Christian Leadership Conference v. Al Malaikah Auditorium Co.
. . . . . . . . . . . . . . . . . . . . 460; 1159
Southern Pac. Transp. Co. v. Mendez Trucking, Inc. . . . . . . . . . . . . . . . . . .
. 1027
Southern Pac. Transp. Co. v. State of Cal. . . . . . . . . . . . . . . . . . . . . 727
Southern Pac. Transp. Co. v. Superior Court . . . . . . . . . . . . . . . . . . . .
1038, 1039
Southland Corp. v. Keating . . . . . . . . . . . . . . . . . . . . 1004; 1022, 1023
Southwell v. Mallery, Stern & Warford . . . . . . . . . . . . . . . . . . . . 518; 545
Spanair S.A. v. McDonnell Douglas Corp . . . . . . . . . . . . . . . . . . . . 957
Spangler v. Memel . . . . . . . . . . . . . . . . . . . . 291
Speedee Oil Change Systems, Inc., People v . . . . . . . . . . . . . . . . . . . . 38
Spencer v. Lowery . . . . . . . . . . . . . . . . . . . . 1237
Sperber v. Robinson . . . . . . . . . . . . . . . . . . . . 1072
Sprague v. Equifax, Inc. . . . . . . . . . . . . . . . . . . . . 1067
Spray, Gould & Bowers v. Associated Intl. Ins. Co. . . . . . . . . . . . . . . . . . .
. 154
Squire v. City and County of San Francisco . . . . . . . . . . . . . . . . . . . . 744
St. Mary Med. Center v. Superior Court . . . . . . . . . . . . . . . . . . . . 904
St. Paul Fire & Marine Ins. Co. v. Getty Oil Co. . . . . . . . . . . . . . . . . . . . .
320, 321
St. Paul Surplus Lines Ins. Co. v. Diversified Athletic Services . . . . . . . . .
. . . . . . . . . . . 303
St. Sava Mission Corp. v. Serbian Eastern Orthodox Diocese . . . . . . . . . . .
. . . . . . . . . 516
Stafford v. Mach . . . . . . . . . . . . . . . . . . . . 390; 931; 933
[TC-34/TC-35]

Stagen v. Stewart-West Coast Title Co. . . . . . . . . . . . . . . . . . . . . 447

Stalberg v. Western Title Ins. Co. . . . . . . . . . . . . . . . . . . . . 144; 155
Stallman v. Bell . . . . . . . . . . . . . . . . . . . . 1196; 1210
Stambaugh v. Superior Court . . . . . . . . . . . . . . . . . . . . 688
Standard Office Systems v. Ricoh Corp., Inc. . . . . . . . . . . . . . . . . . . . . 424
Stangvik v. Shiley, Inc. . . . . . . . . . . . . . . . . . . . . 309; 404; 416; 420
Stankewitz, In re . . . . . . . . . . . . . . . . . . . . 1083
Stansfield v. Starkey . . . . . . . . . . . . . . . . . . . . 588
Stasz v. Eisenberg . . . . . . . . . . . . . . . . . . . . 377
State v. (see name of defendant) . . . . . . . . . . . . . . . . . . . .
State Air Resources Bd. v. Superior Court . . . . . . . . . . . . . . . . . . . . 953
State Bd. of Ed. v. Honig . . . . . . . . . . . . . . . . . . . . 1339
State Comp. Ins. Fund v. Selma Trailer & Mftg. Co. . . . . . . . . . . . . . . . . . .
. 742
State Farm Fire & Cas. Co. v. Pietak . . . . . . . . . . . . . . . . . . . . 935
State Farm Fire & Cas. Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 809
State Farm Fire & Cas. Co. v. Tashire . . . . . . . . . . . . . . . . . . . . 691
State Farm Mutual Auto Ins. Co. v. Campbell . . . . . . . . . . . . . . . . . . . .
1122
State Farm Mutual Auto Ins. Co. v. Superior Court . . . . . . . . . . . . . . . . . . .
. 329; 516; 667; 679; 680
State of (see name of state) . . . . . . . . . . . . . . . . . . . .
State Personnel Bd. v. Dept. of Personnel Admin . . . . . . . . . . . . . . . . . . . .
337
Stationers Corp. v. Dun & Bradstreet, Inc. . . . . . . . . . . . . . . . . . . . . 888
Steen v. Fremont Cemetery Corp. . . . . . . . . . . . . . . . . . . . . 782; 1278
Stein v. Southern Cal. Edison Co. . . . . . . . . . . . . . . . . . . . . 1128
Steiner v. Thomas . . . . . . . . . . . . . . . . . . . . 476
Steinfeld v. Foote-Goldman Proctologic Med. Group, Inc. . . . . . . . . . . . . .
. . . . . . 1209
Steingart v. White . . . . . . . . . . . . . . . . . . . . 105
Steinhart v. South Coast Area Transit . . . . . . . . . . . . . . . . . . . . 1118
Stell v. Jay Hales Dev. Co. . . . . . . . . . . . . . . . . . . . . 1208
Stephen v. Enterprise Rent-A-Car . . . . . . . . . . . . . . . . . . . . 779; 1280
Stephen W., In re . . . . . . . . . . . . . . . . . . . . 1304
Stephens v. Coldwell Banker Commercial Group, Inc. . . . . . . . . . . . . . . . .
. . . . 1175
Stephens v. Montgomery Ward . . . . . . . . . . . . . . . . . . . . 774
Stern v. Judson . . . . . . . . . . . . . . . . . . . . 388
Stern v. Superior Court . . . . . . . . . . . . . . . . . . . . 334, 335
Sternwest Corp. v. Ash . . . . . . . . . . . . . . . . . . . . 1155
Stevenot, Marriage of . . . . . . . . . . . . . . . . . . . . 937; 939, 940; 943, 944;
1221–1223
Stevens v. Geduldig . . . . . . . . . . . . . . . . . . . . 1173
Stevens v. Parke, Davis & Co. . . . . . . . . . . . . . . . . . . . . 1109; 1116; 1121
Stevenson v. San Francisco Housing Authority . . . . . . . . . . . . . . . . . . . .
183
Stevenson v. Turner . . . . . . . . . . . . . . . . . . . . 915; 932; 945
Stewart v. American Intl. Oil & Gas Co. . . . . . . . . . . . . . . . . . . . 700; 731
Stewart v. Colonial Western Agency, Inc. . . . . . . . . . . . . . . . . . . . 876
Stewart v. Truck Ins. Exch. . . . . . . . . . . . . . . . . . . . . 1073; 1115, 1116
Stiles v. Estate of Ryan . . . . . . . . . . . . . . . . . . . . 1212
Stiles v. Wallis . . . . . . . . . . . . . . . . . . . . 939, 940
Stirlen v. Supercuts, Inc. . . . . . . . . . . . . . . . . . . . 1017
Stockett v. Association of Cal. Water Agencies Joint Powers Ins. Auth . . .
. . . . . . . . . . . . . . . . . 182
Stockton v. Ortiz . . . . . . . . . . . . . . . . . . . . 309; 688
Stockton, City of v. Superior Court . . . . . . . . . . . . . . . . . . . . 180
Stokes v. Henson . . . . . . . . . . . . . . . . . . . . 193
Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp. . . . . . . . . . . . . . . . . . . . .
1013
Stone v. Foster . . . . . . . . . . . . . . . . . . . . 1063; 1067; 1069
Stone v. McWilliams . . . . . . . . . . . . . . . . . . . . 934
Stonewall Ins. Co. v. City of Palos Verdes Estates . . . . . . . . . . . . . . . . . . .
. 1281
Stonewall Surplus Lines Ins. Co. v. Johnson Controls, Inc. . . . . . . . . . . . . .
. . . . . . . 298; 305
Stout v. Turney . . . . . . . . . . . . . . . . . . . . 1141
Stratton v. First Nat. Life Ins. Co. . . . . . . . . . . . . . . . . . . . . 1304
Stratton v. Peat, Marwick, Mitchell & Co. . . . . . . . . . . . . . . . . . . . 726
Streicher v. Tommy’s Electric Co. . . . . . . . . . . . . . . . . . . . . 609; 619–622;
631; 633; 635
Strick v. Superior Court . . . . . . . . . . . . . . . . . . . . 151
Strumsky v. San Diego County Employees Retirement Ass’n . . . . . . . . . . . .
. . . . . . . . 1368, 1369; 1371, 1372; 1375, 1376; 1387; 1390, 1391
Stuart v. Lilves . . . . . . . . . . . . . . . . . . . . 513
Stuart Whitman, Inc. v. Cataldo . . . . . . . . . . . . . . . . . . . . 968
Stub v. Harrison . . . . . . . . . . . . . . . . . . . . 927
Stull v. Sparrow . . . . . . . . . . . . . . . . . . . . 875
Sturgeon v. Leavitt . . . . . . . . . . . . . . . . . . . . 1080; 1288
Sturm, Ruger & Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1360
Styne v. Stevens . . . . . . . . . . . . . . . . . . . . 61; 200
Subsequent Injuries Fund v. Industrial Accident Comm’n . . . . . . . . . . . . . .
. . . . . . 577
Suezaki v. Superior Court of Santa Clara County . . . . . . . . . . . . . . . . . . . .
835
Suh v. Superior Court . . . . . . . . . . . . . . . . . . . . 1010
Sullivan v. Delta Air Lines, Inc. . . . . . . . . . . . . . . . . . . . . 759; 1282
Sullivan v. Lumsden . . . . . . . . . . . . . . . . . . . . 939; 1217
Sullivan v. Oracle Corp . . . . . . . . . . . . . . . . . . . . 329
Sullivan v. Shannon . . . . . . . . . . . . . . . . . . . . 227
Sully-Miller Contracting Co. v. Gledson/Cashman Constr., Inc. . . . . . . . . .
. . . . . . . . . . 981
Summers v. Superior Court . . . . . . . . . . . . . . . . . . . . 339
Summers v. Tice . . . . . . . . . . . . . . . . . . . . 73; 75; 695
Sumrall v. City of Cypress . . . . . . . . . . . . . . . . . . . . 148
Sun Oil Co. v. Wortman . . . . . . . . . . . . . . . . . . . . 326
Sundance v. Municipal Ct. . . . . . . . . . . . . . . . . . . . . 1177
Superior Court; People v. . . . . . . . . . . . . . . . . . . . . 337; 739; 1360
Superior Court; State v. . . . . . . . . . . . . . . . . . . . . 171; 201
Superior Court of Orange County; State v. . . . . . . . . . . . . . . . . . . . . 1393
Supervisors of S.F.; People v. . . . . . . . . . . . . . . . . . . . . 1351
[TC-35/TC-36]

Supple v. City of Los Angeles . . . . . . . . . . . . . . . . . . . . 1262

Surety Co. of the Pac. v. Piver . . . . . . . . . . . . . . . . . . . . 690
Suter v. City of Lafayette . . . . . . . . . . . . . . . . . . . . 1174
Sutphin v. Speik . . . . . . . . . . . . . . . . . . . . 494; 521; 541, 542; 546
Sutter, County of v. Davis . . . . . . . . . . . . . . . . . . . . 1042
Sutter Health Uninsured Pricing Cases . . . . . . . . . . . . . . . . . . . . 744
Swain v. California Casualty Ins. Co. . . . . . . . . . . . . . . . . . . . . 1282
Swan Magnetics, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1002
Swartzendruber v. City of San Diego . . . . . . . . . . . . . . . . . . . . 484
Swartzman v. Superior Court . . . . . . . . . . . . . . . . . . . . 867
Swearingen v. Byrne . . . . . . . . . . . . . . . . . . . . 1236
Sweet v. Watson’s Nursery . . . . . . . . . . . . . . . . . . . . 102
Swift v. Superior Court . . . . . . . . . . . . . . . . . . . . 1035
Sylvester v. Soulsburg . . . . . . . . . . . . . . . . . . . . 671
Synanon Foundation Inc. v. County of Marin . . . . . . . . . . . . . . . . . . . . 954
System Inv. Corp. v. Union Bank . . . . . . . . . . . . . . . . . . . . 1143
Syverson v. Heitmann . . . . . . . . . . . . . . . . . . . . 1207; 1211
Syzemore v. County of Sacramento . . . . . . . . . . . . . . . . . . . . 127

T.M. Cobb Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 981; 1194;

1201; 1203, 1204; 1206
Tahoe Keys Property Owners’ Ass’n v. State Water Resources Control Bd.
. . . . . . . . . . . . . . . . . . . . 460
Taing v. Johnson Scaffolding Co. . . . . . . . . . . . . . . . . . . . . 1209
Takahashi v. Bd. of Trustees of Livingston . . . . . . . . . . . . . . . . . . . . 490;
492; 495; 509
Takahashi v. Board of Education . . . . . . . . . . . . . . . . . . . . 488
Takahashi v. Governing Bd. of Livingston Union School Dist. . . . . . . . . . .
. . . . . . . . . . 490
Taliaferro v. Hoogs . . . . . . . . . . . . . . . . . . . . 911
Tamburina v. Combined Ins. Co. of America . . . . . . . . . . . . . . . . . . . . 961
Tameny v. Atlantic Richfield Co. . . . . . . . . . . . . . . . . . . . . 653
Tanforan v. Tanforan . . . . . . . . . . . . . . . . . . . . 590
Tanner v. United States . . . . . . . . . . . . . . . . . . . . 1100
Tanya F., In re . . . . . . . . . . . . . . . . . . . . 649
Tapia v. Barker . . . . . . . . . . . . . . . . . . . . 1082, 1083; 1087; 1089; 1099
Tapia, In re Marriage of . . . . . . . . . . . . . . . . . . . . 816
Tarasoff v. Regents of University of Cal. . . . . . . . . . . . . . . . . . . . . 35
Tarmann v. State Farm Mut. Auto. Ins. Co. . . . . . . . . . . . . . . . . . . . . 588
Tate v. Saratoga Savings & Loan Assn. . . . . . . . . . . . . . . . . . . . . 995, 996;
999
Taus v. Loftus . . . . . . . . . . . . . . . . . . . . 657
Taylor v. Madigan . . . . . . . . . . . . . . . . . . . . 1236
Taylor; People v. . . . . . . . . . . . . . . . . . . . . 559; 563
Taylor v. Sanford . . . . . . . . . . . . . . . . . . . . 192
Taylor v. State Personnel Bd. . . . . . . . . . . . . . . . . . . . . 1378
Taylor v. Sturgell . . . . . . . . . . . . . . . . . . . . 571
Taylor v. Superior Court . . . . . . . . . . . . . . . . . . . . 1347; 1354
Taylor v. Taylor . . . . . . . . . . . . . . . . . . . . 1219
Taylor v. Union P. R. Corp. . . . . . . . . . . . . . . . . . . . . 1044
Taylor-Rush v. Multitech Corp. . . . . . . . . . . . . . . . . . . . . 395
Tebbets v. Fidelity and Casualty Co. . . . . . . . . . . . . . . . . . . . 97
Tech-Bilt, Inc. v. Woodward-Clyde & Associates . . . . . . . . . . . . . . . . . . . .
 705; 710; 719, 720; 982
Teel, Estate of . . . . . . . . . . . . . . . . . . . . 1304
Teitel v. First L. A. Bank . . . . . . . . . . . . . . . . . . . . 1079
Teitelbaum v. Borders . . . . . . . . . . . . . . . . . . . . 152
Teitelbaum Furs, Inc. v. Dominion Ins. Co. . . . . . . . . . . . . . . . . . . . 541
Tejada v. Blas . . . . . . . . . . . . . . . . . . . . 953; 957
Telegraphers v. Ry. Express Agency . . . . . . . . . . . . . . . . . . . . 132
Temple v. Synthes Corp. . . . . . . . . . . . . . . . . . . . . 688
Tensor Group v. City of Glendale . . . . . . . . . . . . . . . . . . . . 487; 541
Tera Pharmaceuticals, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 819
The Termo Co. v. Luther . . . . . . . . . . . . . . . . . . . . 1389
Terzian v. County of Ventura . . . . . . . . . . . . . . . . . . . . 964
Teselle v. McLoughlin . . . . . . . . . . . . . . . . . . . . 907
Testa v. Katt . . . . . . . . . . . . . . . . . . . . 8
Tetra Pak, Inc. v. State Bd. of Equalization . . . . . . . . . . . . . . . . . . . . 1301
Tex-Cal Land Management, Inc. v. Agricultural Labor Relations Bd. . . . . .
. . . . . . . . . . . . . . . 336; 1390
Texas Commerce Bank v. Garamendi . . . . . . . . . . . . . . . . . . . . 1149
Tharp v. Superior Court . . . . . . . . . . . . . . . . . . . . 364; 368
Thayer v. Wells Fargo Bank . . . . . . . . . . . . . . . . . . . . 1181
Therma-Coustics Mfg., Inc. v. Borden, Inc. . . . . . . . . . . . . . . . . . . . 64
Thibodeau v. Crum . . . . . . . . . . . . . . . . . . . . 515
Thomas v. California Empl. Stab. Com. . . . . . . . . . . . . . . . . . . . . 1387
Thomas v. Duggins Constr. Co. . . . . . . . . . . . . . . . . . . . . 725
Thomas v. Gordon . . . . . . . . . . . . . . . . . . . . 579
Thomas v. Washington Gas Light Co. . . . . . . . . . . . . . . . . . . . . 1253
Thompson v. California Fair Plan Assn. . . . . . . . . . . . . . . . . . . . . 133
Thompson v. Friendly Hills Regl. Med. Ctr. . . . . . . . . . . . . . . . . . . . . 1116
Thompson v. Palmer Corp. . . . . . . . . . . . . . . . . . . . . 605
Thompson v. Superior Court . . . . . . . . . . . . . . . . . . . . 376
Thornton v. Carlson . . . . . . . . . . . . . . . . . . . . 1306
388 Geary Street, L.P. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1354
311 South Spring Street Co. v. Dept. of Gen. Serv. . . . . . . . . . . . . . . . . . . .
. 1128
3250 Wilshire Blvd. Bldg. v. W.R. Grace & Co. . . . . . . . . . . . . . . . . . . . .
1142
Throckmorton; United States v. . . . . . . . . . . . . . . . . . . . . 1217
Tibbitts v. Fife . . . . . . . . . . . . . . . . . . . . 1038
Tiffany Y., In re . . . . . . . . . . . . . . . . . . . . 1323
Tillery v. Richland . . . . . . . . . . . . . . . . . . . . 1303
Timberidge Enter., Inc. v. City of Santa Rosa . . . . . . . . . . . . . . . . . . . .
739; 744
Time for Living, Inc. v. Guy Hatfield Homes/All American Dev. Co. . . . . .
 . . . . . . . . . . . . . . 726
Times Mirror Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1337
Timmons v. McMahon . . . . . . . . . . . . . . . . . . . . 1339
[TC-36/TC-37]

Tingley v. Times-Mirror Co. . . . . . . . . . . . . . . . . . . . . 1055

Tinsley v. Palo Alto Unified Sch. Dist. . . . . . . . . . . . . . . . . . . . . 747, 748;
1301
Tipton-Whittingham v. City of Los Angeles . . . . . . . . . . . . . . . . . . . . 1173
Title Trust Deed Serv. Co. v. Pearson . . . . . . . . . . . . . . . . . . . . 1235; 1237
TJX Companies, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 777
Tliche v. Van Quathem . . . . . . . . . . . . . . . . . . . . 13
TMS, Inc. v. Aihara . . . . . . . . . . . . . . . . . . . . 883
Tober v. Charnita, Inc. . . . . . . . . . . . . . . . . . . . . 766
Todd Shipyards Corp. v. Cunard Line, Ltd. . . . . . . . . . . . . . . . . . . . . 996
Todhunter v. Smith . . . . . . . . . . . . . . . . . . . . 467; 482; 524
Tom Thumb Glove Co., Inc. v. Han . . . . . . . . . . . . . . . . . . . . 1252
Tomaselli v. Transamerica Ins. Co. . . . . . . . . . . . . . . . . . . . . 352
Tomi C., In re . . . . . . . . . . . . . . . . . . . . 1287
Top Hat Liquors v. Dept. of Alcoholic Beverage Control . . . . . . . . . . . . . .
. . . . . . 337
Topanga Assn. for a Scenic Cmty. v. City of Los Angeles . . . . . . . . . . . . . .
. . . . . . 1382, 1383
Torres v. City of Yorba Linda . . . . . . . . . . . . . . . . . . . . 756
Torres v. County of Los Angeles . . . . . . . . . . . . . . . . . . . . 63; 100
Torres v. Friedman . . . . . . . . . . . . . . . . . . . . 745, 746
Torres v. Superior Court . . . . . . . . . . . . . . . . . . . . 810
Torres v. Union Pacific R.R. Co. . . . . . . . . . . . . . . . . . . . . 710, 711
Torrey Pines Bank v. Hoffman . . . . . . . . . . . . . . . . . . . . 1145
Torrey Pines Bank v. Superior Court . . . . . . . . . . . . . . . . . . . . 514; 546;
976
Town of (see name of town) . . . . . . . . . . . . . . . . . . . .
Townsend v. Superior Court . . . . . . . . . . . . . . . . . . . . 876
Toyota Motor Sales U.S.A. v. Superior Court . . . . . . . . . . . . . . . . . . . .
730; 859; 1304
Toyota of Visalia, Inc. v. New Motor Vehicle Co. . . . . . . . . . . . . . . . . . . . .
1385
Traci & Marx Co. v. Legal Options, Inc. . . . . . . . . . . . . . . . . . . . 1255
Tracy Press, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 686
Tramell v. McDonnell Douglas Corp. . . . . . . . . . . . . . . . . . . . . 1089; 1092
Transamerica Title Ins. Co. v. Hendrix . . . . . . . . . . . . . . . . . . . . 395
Transit Ads, Inc. v. Tanner Motor Livery, Ltd. . . . . . . . . . . . . . . . . . . . .
 927
Traub v. Bd. of Retirement . . . . . . . . . . . . . . . . . . . . 568, 569
Travelers Indemnity Co. v. Bell . . . . . . . . . . . . . . . . . . . . 315
Treber v. Superior Court of San Francisco . . . . . . . . . . . . . . . . . . . . 1109
Tresway Aero, Inc. v. Superior Court of Los Angeles County . . . . . . . . . . .
. . . . . . . . . 953, 954
Tri-County Elevator Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1115
Tri-West Ins. Services, Inc. v. Seguros Monterrey Aetna, S.A. . . . . . . . . . .
. . . . . . . . . . 350
Triggs; People v. . . . . . . . . . . . . . . . . . . . . 1329
Trindade v. Superior Court . . . . . . . . . . . . . . . . . . . . 163–165
Trivedi v. Curexo Tech. Corp . . . . . . . . . . . . . . . . . . . . 1020
Trump v. Superior Court . . . . . . . . . . . . . . . . . . . . 1027
Truong v. Glasser . . . . . . . . . . . . . . . . . . . . 126
Tsakos Shipping & Trading, S.A. v. Juniper Garden Town Homes, Ltd. . . .
. . . . . . . . . . . . . . . . . 946; 1256
TSI Seismic Tenant Space, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . .
719
TSMC North America v. Semiconductor Mfg. Intl. Corp. . . . . . . . . . . . . . .
. . . . . . 464
Tucker, Marriage of . . . . . . . . . . . . . . . . . . . . 417
Tucson, City of v. Gallagher . . . . . . . . . . . . . . . . . . . . 708
Tull v. United States . . . . . . . . . . . . . . . . . . . . 1046, 1047
Tunis v. Barrow . . . . . . . . . . . . . . . . . . . . 387; 908; 930
Turcon Construction, Inc. v. Norton-Villiers, Ltd. . . . . . . . . . . . . . . . . . . . .
700
Turlock Theatre Co. v. Laws . . . . . . . . . . . . . . . . . . . . 371–373
Turner v. Allen . . . . . . . . . . . . . . . . . . . . 1217
Turner v. Bd. of Trustees . . . . . . . . . . . . . . . . . . . . 1389
Turner; People v. . . . . . . . . . . . . . . . . . . . . 1351
Turner v. Schultz . . . . . . . . . . . . . . . . . . . . 1153
Tusinger, In re Marriage of . . . . . . . . . . . . . . . . . . . . 393; 396
Tustin Community Hosp., Inc. v. Santa Ana Community Hosp. Assn. . . . . . .
. . . . . . . . . . . . . . 209
Tutor-Saliba-Perini Joint Venture v. Superior Court . . . . . . . . . . . . . . . . . .
. . 369; 371
Tu-Vu Drive-In Corp. v. Davies . . . . . . . . . . . . . . . . . . . . 130
Twedt v. Franklin . . . . . . . . . . . . . . . . . . . . 1116
Twighla T., In re . . . . . . . . . . . . . . . . . . . . 1360
Twine v. Compton Supermarket . . . . . . . . . . . . . . . . . . . . 915
Twomey v. Mitchum, Jones & Templeton, Inc. . . . . . . . . . . . . . . . . . . . 93
Tyson v. Tyson . . . . . . . . . . . . . . . . . . . . 90
Tyus v. Tyus . . . . . . . . . . . . . . . . . . . . 517; 1253
 U

U.S. Bancorp Co. v. Bonner Mall Partnership . . . . . . . . . . . . . . . . . . . .

1333
U.S. Financial Sec. Litig., In re . . . . . . . . . . . . . . . . . . . . 1048
UAP-Columbus JV 326132 v. Nesbitt . . . . . . . . . . . . . . . . . . . . 1260
Umphrey, Marriage of . . . . . . . . . . . . . . . . . . . . 1221, 1222
Underwriters Nat’l Assurance Co. v. North Carolina Life & Accident &
Health Ins. Guaranty Ass’n . . . . . . . . . . . . . . . . . . . . 516, 517
Unilogic, Inc. v. Burroughs Corp. . . . . . . . . . . . . . . . . . . . . 1042
Union Bank v. Superior Court . . . . . . . . . . . . . . . . . . . . 894; 903
Union Carbide Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 688
Union Collection Co. v. Oliver . . . . . . . . . . . . . . . . . . . . 968
Union Pac. Corp. v. Wengert . . . . . . . . . . . . . . . . . . . . 724
Unique Concepts, Inc. v. Manuel . . . . . . . . . . . . . . . . . . . . 675
United Artists Corp. v. Masterpiece Productions . . . . . . . . . . . . . . . . . . . .
670
United Bank & Trust Co. v. Hunt . . . . . . . . . . . . . . . . . . . . 478, 479; 518
United Community Church v. Garcin . . . . . . . . . . . . . . . . . . . . 906
United Farm Workers of America v. Superior Court . . . . . . . . . . . . . . . . . .
. . 1032
United Med. Mgmt. Ltd. v. Gatto . . . . . . . . . . . . . . . . . . . . 746
United Pac. Ins. Co. v. Hanover Ins. Co. . . . . . . . . . . . . . . . . . . . . 1280
United Serv. Auto. Assn. v. Superior Court . . . . . . . . . . . . . . . . . . . . 729
[TC-37/TC-38]

United States v. (see name of defendant) . . . . . . . . . . . . . . . . . . . .

United States Gypsum Co.; United States v. . . . . . . . . . . . . . . . . . . . . 1307;
1365
United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. . . . . . . . . . . . . . . . . .
. . . 90; 93
United Steelworkers of America v. Enterprise Wheel & Car Corp. . . . . . . .
. . . . . . . . . . . . . 995
University of Tennessee v. Elliott . . . . . . . . . . . . . . . . . . . . 515
Unjian v. Berman . . . . . . . . . . . . . . . . . . . . 85
Unnamed Physician v. Bd. of Trustees of Saint Agnes Med. Center . . . . . . .
. . . . . . . . . . . . . 202
Unruh v. Truck Ins. Exchange . . . . . . . . . . . . . . . . . . . . 339
Unruh-Haxton v. Regents of Univ. of California . . . . . . . . . . . . . . . . . . . .
86
Unterthiner v. Desert Hosp. Dist . . . . . . . . . . . . . . . . . . . . 1383; 1386;
 1392
Upjohn Co. v. United States . . . . . . . . . . . . . . . . . . . . 830
Uptain v. Duarte . . . . . . . . . . . . . . . . . . . . 660
Uram v. Abex Corp. . . . . . . . . . . . . . . . . . . . . 100, 101
Urez Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 443–445; 447
Uva v. Evans . . . . . . . . . . . . . . . . . . . . 920
Uzyel v. Kadisha . . . . . . . . . . . . . . . . . . . . 1134; 1174

Vaccaro v. Kaiman . . . . . . . . . . . . . . . . . . . . 967

Vacco Indus., Inc. v. Van Den Berg . . . . . . . . . . . . . . . . . . . . 1160
Vai v. Bank of America . . . . . . . . . . . . . . . . . . . . 1219
Valenzuela v. Superior Court . . . . . . . . . . . . . . . . . . . . 103
Valerio v. Andrew Youngquist Constr. . . . . . . . . . . . . . . . . . . . . 661
Valinda Builders, Inc. v. Bissner . . . . . . . . . . . . . . . . . . . . 292
Vallbona v. Springer . . . . . . . . . . . . . . . . . . . . 595; 883
Valley Bank of Nevada v. Superior Court of San Joaquin County . . . . . . . .
. . . . . . . . . . . . 814; 818; 1346
Valley Circle Estates v. VTN Consolidated, Inc. . . . . . . . . . . . . . . . . . . .
702
Valley Forge Christian Coll. v. Americans United for Separation of Church
and State, Inc. . . . . . . . . . . . . . . . . . . . 757, 758
Van Arsdale v. Hollinger . . . . . . . . . . . . . . . . . . . . 449
Van Atta v. Scott . . . . . . . . . . . . . . . . . . . . 756
Van Beurden Ins. Serv., Inc. v. Customized Worldwide Weather Ins.
Agency, Inc. . . . . . . . . . . . . . . . . . . . . 1118; 1290
Van de Kamp v. Bank of America . . . . . . . . . . . . . . . . . . . . 790; 1041;
1044
Van De Kamp, California ex rel. v. Tahoe Regional Planning Agency . . . . .
. . . . . . . . . . . . . . . 461
Vandenberg v. Superior Court . . . . . . . . . . . . . . . . . . . . 516; 554, 555;
1005
Vanderkous v. Conley . . . . . . . . . . . . . . . . . . . . 976
Vannier v. Superior Court . . . . . . . . . . . . . . . . . . . . 1356
Vanoni v. County of Sonoma . . . . . . . . . . . . . . . . . . . . 688
Varian Med. Sys., Inc. v. Delfino . . . . . . . . . . . . . . . . . . . . 1321
Vasquez v. California . . . . . . . . . . . . . . . . . . . . 1172; 1174
Vasquez v. Superior Court . . . . . . . . . . . . . . . . . . . . 763; 768; 770–772;
776; 778; 1165; 1346
Vaughn v. LJ Intl., Inc. . . . . . . . . . . . . . . . . . . . 329
Ventura United School Dist. v. Superior Court . . . . . . . . . . . . . . . . . . . .
377
Vermont Union Sch. Dist. v. H.P. Cummings Constr. Co. . . . . . . . . . . . . . . .
. . . . . 708
Vernon v. Great Western Bank . . . . . . . . . . . . . . . . . . . . 966
Vernon, City of v. Superior Court . . . . . . . . . . . . . . . . . . . . 1245
Vernon Fire Fighters Assn. v. City of Vernon . . . . . . . . . . . . . . . . . . . . 208,
209
Vershbow v. Reiner . . . . . . . . . . . . . . . . . . . . 435
Vesely v. Sager . . . . . . . . . . . . . . . . . . . . 244, 245; 249
Vibert v. Berger . . . . . . . . . . . . . . . . . . . . 1262
Victa v. Merle Norman Cosmetics, Inc. . . . . . . . . . . . . . . . . . . . . 566
Vigen Constr. Co. v. Millers Nat’l Ins. Co. . . . . . . . . . . . . . . . . . . . . 303
Villa v. Cole . . . . . . . . . . . . . . . . . . . . 977
Villano v. Waterman Convalescent Hosp., Inc. . . . . . . . . . . . . . . . . . . . .
1288
Vincent v. Grayson . . . . . . . . . . . . . . . . . . . . 613
Vinson v. Superior Court . . . . . . . . . . . . . . . . . . . . 854
Virginia G. v. ABC Unified Sch. Dist. . . . . . . . . . . . . . . . . . . . . 660
Virtual Magic Asia, Inc. v. Fil-Cartoons, Inc. . . . . . . . . . . . . . . . . . . . .
346; 351; 353
Vitamin Cases, In re . . . . . . . . . . . . . . . . . . . . 788
Vogel v. County of Los Angeles . . . . . . . . . . . . . . . . . . . . 74
Voices of the Wetlands v. State Water Resources Control Bd . . . . . . . . . . .
. . . . . . . . . 1385
Volkswagen of America, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . .
19
Volkswagenwerk Aktiengesellschaft v. Superior Court . . . . . . . . . . . . . . . .
. . . . 848
Volkswagenwerk AG v. Schlunk . . . . . . . . . . . . . . . . . . . . 400
Volt Information Sciences v. Board of Trustees . . . . . . . . . . . . . . . . . . . .
1004; 1023
Von Gibson v. Estate of Lynch . . . . . . . . . . . . . . . . . . . . 629; 747
Vons Companies, Inc. v. Seabest Foods, Inc. . . . . . . . . . . . . . . . . . . . 340–
346; 348; 359
Vu v. Prudential Property & Cas. Ins. Co. . . . . . . . . . . . . . . . . . . . 154

W.A. Rose Co. v. Municipal Court . . . . . . . . . . . . . . . . . . . . 910

Wagner v. Doulton . . . . . . . . . . . . . . . . . . . . 1084
Wagner v. Rios . . . . . . . . . . . . . . . . . . . . 965
Wagner v. Singleton . . . . . . . . . . . . . . . . . . . . 1114
Wagner v. Superior Court . . . . . . . . . . . . . . . . . . . . 826; 969; 1360
Wagner Constr. Co. v. Pacific Mech. Corp. . . . . . . . . . . . . . . . . . . . . 1009,
1010
Wagy v. Brown . . . . . . . . . . . . . . . . . . . . 1213
Waicis v. Superior Court . . . . . . . . . . . . . . . . . . . . 868; 877
Wale v. Rodriguez . . . . . . . . . . . . . . . . . . . . 957
Walker v. Belvedere . . . . . . . . . . . . . . . . . . . . 600
Walker v. Los Angeles County Metro. Transp. Auth. . . . . . . . . . . . . . . . . . .
. . 1284
Wall v. Donovan . . . . . . . . . . . . . . . . . . . . 540; 548
Wallace v. Consumers Coop. of Berkeley, Inc. . . . . . . . . . . . . . . . . . . .
1177
[TC-38/TC-39]

Wallace v. GEICO General Ins. Co. . . . . . . . . . . . . . . . . . . . . 774

Wallace v. Miller . . . . . . . . . . . . . . . . . . . . 461; 463
Wallin v. Vienna Sausage Mfg. Co. . . . . . . . . . . . . . . . . . . . . 1377
Wallis v. Farmers Group, Inc. . . . . . . . . . . . . . . . . . . . . 203
Wallis v. Southern Pac. Transportation Co. . . . . . . . . . . . . . . . . . . . . 620;
627, 628
Wallis v. Superior Court . . . . . . . . . . . . . . . . . . . . 653
Wallner v. Parry Profl. Bldg., Ltd. . . . . . . . . . . . . . . . . . . . . 752
Walsh v. New West Federal Sav. & Loan Assn. . . . . . . . . . . . . . . . . . . . .
1153
Walton v. City of Red Bluff . . . . . . . . . . . . . . . . . . . . 192
Walton v. UTV of San Francisco, Inc. . . . . . . . . . . . . . . . . . . . . 504
Waltrip v. Kimberlin . . . . . . . . . . . . . . . . . . . . 1231
Wank v. Richman & Garrett . . . . . . . . . . . . . . . . . . . . 1066, 1067
Ward v. Taggart . . . . . . . . . . . . . . . . . . . . 1301
Warner v. O’Connor . . . . . . . . . . . . . . . . . . . . 1076
Warren v. Atchison, Topeka & Santa Fe Ry. . . . . . . . . . . . . . . . . . . . . 656
Warth v. Seldin . . . . . . . . . . . . . . . . . . . . 745
Washburn v. City of Berkeley . . . . . . . . . . . . . . . . . . . . 1181
Washington Mut. Bank v. Superior Court . . . . . . . . . . . . . . . . . . . . 298;
331; 771
Wasko v. Dept. of Corrections . . . . . . . . . . . . . . . . . . . . 1378
Waters v. Pac. Telephone Co. . . . . . . . . . . . . . . . . . . . 337
Watkins v. Wachovia Corp . . . . . . . . . . . . . . . . . . . . 775
Watson v. Lowcountry Red Cross . . . . . . . . . . . . . . . . . . . . 821
Watson; People v. . . . . . . . . . . . . . . . . . . . . 1315; 1332
Watson v. Watson . . . . . . . . . . . . . . . . . . . . 1217
Watts v. Crawford . . . . . . . . . . . . . . . . . . . . 949
Watts v. Valley Med. Center . . . . . . . . . . . . . . . . . . . . 179
Wear v. Calderon . . . . . . . . . . . . . . . . . . . . 1206
Weary v. Civil Service Com. . . . . . . . . . . . . . . . . . . . . 1378
Weathers v. Kaiser Found. Hosp. . . . . . . . . . . . . . . . . . . . . 1098, 1099;
1115
Weaver v. Pasadena Tournament of Roses Asso. . . . . . . . . . . . . . . . . . . . .
335
Webb v. Dyer County Bd. of Ed. . . . . . . . . . . . . . . . . . . . . 1177
Webb v. Standard Oil of Cal. . . . . . . . . . . . . . . . . . . . . 821
Webb v. Trippet . . . . . . . . . . . . . . . . . . . . 1236
Weber v. Kessler . . . . . . . . . . . . . . . . . . . . 1024
Weil v. Barthel . . . . . . . . . . . . . . . . . . . . 517
Weir v. Corbett . . . . . . . . . . . . . . . . . . . . 1227
Weisenburg v. Cragholm . . . . . . . . . . . . . . . . . . . . 1325
Weitz v. Yankosky . . . . . . . . . . . . . . . . . . . . 934; 937; 939; 943; 1215;
1217
Wellpoint Health Networks, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . .
. 803, 804
Wells v. Marina City Properties, Inc. . . . . . . . . . . . . . . . . . . . . 974
Wells Fargo Bank v. DiLeonardo . . . . . . . . . . . . . . . . . . . . 883
Wells Fargo Bank v. Superior Court . . . . . . . . . . . . . . . . . . . . 808
Welton v. Los Angeles . . . . . . . . . . . . . . . . . . . . 1245
Wershba v. Apple Computer, Inc. . . . . . . . . . . . . . . . . . . . . 331; 769; 774;
783, 784
West v. Superior Court . . . . . . . . . . . . . . . . . . . . 720
West Pico Furniture Co. v. Superior Court . . . . . . . . . . . . . . . . . . . . 836
WestAmerica Bank v. MBG Indus., Inc. . . . . . . . . . . . . . . . . . . . 1210
Westbrook v. Fairchild . . . . . . . . . . . . . . . . . . . . 1128
Western Pac. Railroad Co.; United States v. . . . . . . . . . . . . . . . . . . . . 204
Western States Petroleum Assn. v. Superior Court . . . . . . . . . . . . . . . . . . . .
1339; 1380
Western Steamship Lines, Inc. v. San Pedro Peninsula Hosp. . . . . . . . . . . .
. . . . . . . . . 728
Western Steel & Ship Repair, Inc. v. RMI, Inc. . . . . . . . . . . . . . . . . . . . .
429
Westinghouse Electric Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . .
957
Westlake Comm. Hosp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 200,
201
Westphal v. Westphal . . . . . . . . . . . . . . . . . . . . 1217
Westside Cmty. for Indep. Living, Inc. v. Obledo . . . . . . . . . . . . . . . . . . . .
 1174; 1306
Wharton; People v. . . . . . . . . . . . . . . . . . . . . 813
Wharton v. Superior Court . . . . . . . . . . . . . . . . . . . . 1044
Wheeler v. Oppenheimer . . . . . . . . . . . . . . . . . . . . 584
Whelan v. Rallo . . . . . . . . . . . . . . . . . . . . 759
Wherry v. Award, Inc. . . . . . . . . . . . . . . . . . . . 1020
White v. Davis . . . . . . . . . . . . . . . . . . . . 459; 756; 758; 855
White v. Merrill . . . . . . . . . . . . . . . . . . . . 24
White v. Moriarty . . . . . . . . . . . . . . . . . . . . 63; 192
White Motor Corp. v. Teresinski . . . . . . . . . . . . . . . . . . . . 552
Whitehead v. Habig . . . . . . . . . . . . . . . . . . . . 906
Whitehill v. U. S. Lines, Inc. . . . . . . . . . . . . . . . . . . . . 1123
Whitfield v. Roth . . . . . . . . . . . . . . . . . . . . 72; 169; 1063, 1064
Whitley, Conservatorship of . . . . . . . . . . . . . . . . . . . . 1171, 1172
Whitt; People v. . . . . . . . . . . . . . . . . . . . . 577
Whittier v. Visscher . . . . . . . . . . . . . . . . . . . . 164
Whittier Union High Sch. Dist. v. Superior Court . . . . . . . . . . . . . . . . . . . .
979, 980
Whittington v. McKinney . . . . . . . . . . . . . . . . . . . . 1072
Widener v. Pac. Gas & Elec. Co. . . . . . . . . . . . . . . . . . . . . 1119
Wilcox v. Birtwhistle . . . . . . . . . . . . . . . . . . . . 874, 875
Wiley v. Southern Pac. Transp. Co. . . . . . . . . . . . . . . . . . . . . 1099; 1115
Wilhelm v. Pray, Price, Williams & Russell . . . . . . . . . . . . . . . . . . . . 588
Wilhite v. Callihan . . . . . . . . . . . . . . . . . . . . 1147
Wilkinson v. Bay Shore Lumber Co. . . . . . . . . . . . . . . . . . . . . 1066
Willden v. Washington Nat’l Ins. Co. . . . . . . . . . . . . . . . . . . . . 1066
Willen v. Boggs . . . . . . . . . . . . . . . . . . . . 403
William M. v. Superior Court . . . . . . . . . . . . . . . . . . . . 860
Williams v. Krumsiek . . . . . . . . . . . . . . . . . . . . 666
Williams v. Los Angeles Unified Sch. Dist. . . . . . . . . . . . . . . . . . . . . 403;
964
Williams v. Marshall . . . . . . . . . . . . . . . . . . . . 207
Williams v. Pac. Mut. Life Ins. Co. . . . . . . . . . . . . . . . . . . . . 192
Williams; People v. . . . . . . . . . . . . . . . . . . . . 26
Williams; People v. . . . . . . . . . . . . . . . . . . . . 1093
Williams v. San Francisco Bd. of Permit Appeals . . . . . . . . . . . . . . . . . . . .
1171
Williams v. State of California . . . . . . . . . . . . . . . . . . . . 572; 574–576
Williams v. Thomas . . . . . . . . . . . . . . . . . . . . 1283
[TC-39/TC-40]

Williams, Estate of . . . . . . . . . . . . . . . . . . . . 1216

Williamson v. Plant Insulation Co. . . . . . . . . . . . . . . . . . . . . 100, 101
Williamson v. Superior Court . . . . . . . . . . . . . . . . . . . . 867
Willis v. Gordon . . . . . . . . . . . . . . . . . . . . 1074
Wilshire Bundy Corp. v. Auerbach . . . . . . . . . . . . . . . . . . . . 961
Wilshire Westwood Assoc. v. Atlantic Richfield Co. . . . . . . . . . . . . . . . . .
. . . 102, 103
Wilson v. Bittick . . . . . . . . . . . . . . . . . . . . 513; 948
Wilson v. Garcia . . . . . . . . . . . . . . . . . . . . 191
Wilson v. John Crane, Inc. . . . . . . . . . . . . . . . . . . . . 726
Wilson v. Johns-Manville Sales Corp. . . . . . . . . . . . . . . . . . . . . 109
Wilson v. Parker, Covert & Chidester . . . . . . . . . . . . . . . . . . . . 50
Wilson v. Tri-City Hosp. Dist. . . . . . . . . . . . . . . . . . . . . 179
Wilson v. Wal-Mart Stores . . . . . . . . . . . . . . . . . . . . 1206
Wilson v. Wilson . . . . . . . . . . . . . . . . . . . . 1218
Wilson & Wilson v. City Council of Redwood City . . . . . . . . . . . . . . . . . .
. . 753
Wilson’s Heating & Air Conditioning v. Wells Fargo Bank . . . . . . . . . . . .
. . . . . . . . 1147
Wimberly v. Derby Cycle Corp . . . . . . . . . . . . . . . . . . . . 725; 875
Wimsatt v. Beverly Hills Weight Loss Clinics Intl., Inc. . . . . . . . . . . . . . . .
. . . . 542
Winston Square Homeowner’s Assn. v. Centex West, Inc. . . . . . . . . . . . . . .
. . . . . . 1198, 1199
Wise v. Southern Pac. Co. . . . . . . . . . . . . . . . . . . . . 589
Wisper Corp. v. Cal. Commerce Bank . . . . . . . . . . . . . . . . . . . . 1135
Witherspoon, In re . . . . . . . . . . . . . . . . . . . . 1246
Withrow v. Larkin . . . . . . . . . . . . . . . . . . . . 1033
Wittman v. Chrysler Corp. . . . . . . . . . . . . . . . . . . . . 485; 547
Wolf v. Mitchell, Silberberg & Knupp . . . . . . . . . . . . . . . . . . . . 754
Wolford v. Thomas . . . . . . . . . . . . . . . . . . . . 1041
Wolfsen v. Hathaway . . . . . . . . . . . . . . . . . . . . 517
Wong v. Armstrong World Indus., Inc. . . . . . . . . . . . . . . . . . . . . 950
Wong v. Tenneco, Inc. . . . . . . . . . . . . . . . . . . . . 242; 308; 310
Woo v. Superior Court . . . . . . . . . . . . . . . . . . . . 629; 631; 633
Woodland Hills . . . . . . . . . . . . . . . . . . . . 1157; 1162; 1168–1172
Woods v. Superior Court . . . . . . . . . . . . . . . . . . . . 1380, 1381
Woods v. Young . . . . . . . . . . . . . . . . . . . . 168
Woolley v. Embassy Suites, Inc. . . . . . . . . . . . . . . . . . . . . 441
World Wide Imports, Inc. v. Bartel . . . . . . . . . . . . . . . . . . . . 516, 517;
1252, 1253
World-Wide Volkswagen v. Woodson . . . . . . . . . . . . . . . . . . . . 349
Worthington v. Rusconi . . . . . . . . . . . . . . . . . . . . 126
Wright; People v. . . . . . . . . . . . . . . . . . . . . 1315
Wulfjen v. Dolton . . . . . . . . . . . . . . . . . . . . 469; 497; 519
Wurts v. County of Fresno . . . . . . . . . . . . . . . . . . . . 181; 186
Wyoming Pacific Oil Co. v. Preston . . . . . . . . . . . . . . . . . . . . 953

Xebec Dev. Partners, Ltd. v. National Union Fire Ins. Co. . . . . . . . . . . . . . .

. . . . . . 801
Xuereb v. Marcus & Millichap, Inc. . . . . . . . . . . . . . . . . . . . . 1141; 1143,
1144

Yaesu Electronics Corp. v. Tamura . . . . . . . . . . . . . . . . . . . . 444

Yamaha Motor Co., Ltd. v. Superior Court . . . . . . . . . . . . . . . . . . . . 400
Yamaha Motor Corp. v. Superior Court . . . . . . . . . . . . . . . . . . . . 196
Yanchor v. Kagan . . . . . . . . . . . . . . . . . . . . 980
Yao v. Anaheim Eye Medical Group . . . . . . . . . . . . . . . . . . . . 963
Yao v. Superior Court . . . . . . . . . . . . . . . . . . . . 190
Yeap v. Leake . . . . . . . . . . . . . . . . . . . . 967
Younesi v. Lane . . . . . . . . . . . . . . . . . . . . 1079
Young v. Haines . . . . . . . . . . . . . . . . . . . . 62; 70; 100; 106; 119; 124
Young v. Rosenthal . . . . . . . . . . . . . . . . . . . . 882
Young v. Trailwood Lakes, Inc. . . . . . . . . . . . . . . . . . . . . 767
Younger v. Superior Court of Sacramento County . . . . . . . . . . . . . . . . . . . .
364
Youngman v. Nevada Irrigation Dist. . . . . . . . . . . . . . . . . . . . . 583
Ytuarte v. Superior Court . . . . . . . . . . . . . . . . . . . . 335
Yu v. Signet Bank/Virginia . . . . . . . . . . . . . . . . . . . . 577
Yuba Cypress Housing Partners, Ltd. v. Area Developers . . . . . . . . . . . . . .
. . . . . . 1146

Zambrano v. Dorough . . . . . . . . . . . . . . . . . . . . 107

Zamora v. Clayborn Contracting Group, Inc. . . . . . . . . . . . . . . . . . . . . 933
Zamora v. Lehman . . . . . . . . . . . . . . . . . . . . 1009
Zamos v. Stroud . . . . . . . . . . . . . . . . . . . . 50
Zapanta v. Universal Care, Inc. . . . . . . . . . . . . . . . . . . . 907; 972
Zapata v. Dept. of Motor Vehicles . . . . . . . . . . . . . . . . . . . . 568
Zarrahy v. Zarrahy . . . . . . . . . . . . . . . . . . . . 1288
Zatkin v. Cesare . . . . . . . . . . . . . . . . . . . . 1026
Zavala v. Arce . . . . . . . . . . . . . . . . . . . . 904
Zavala v. Bd. of Trustees . . . . . . . . . . . . . . . . . . . . 668
Zellerino v. Brown . . . . . . . . . . . . . . . . . . . . 865
Zenith Radio Corp. v. Hazeltine Research, Inc. . . . . . . . . . . . . . . . . . . . .
1307
Zeppi v. State of California . . . . . . . . . . . . . . . . . . . . 470
Zevnik v. Superior Court . . . . . . . . . . . . . . . . . . . . 549
Zibbell v. Southern Pac. Co. . . . . . . . . . . . . . . . . . . . . 1061
Ziegler v. Barnes . . . . . . . . . . . . . . . . . . . . 292
Ziller Electronics Lab GmbH v. Superior Court . . . . . . . . . . . . . . . . . . . .
396
Zilog, Inc. v. Superior Court . . . . . . . . . . . . . . . . . . . . 1035
Zirbes v. Stratton . . . . . . . . . . . . . . . . . . . . 382
Zirker v. Hughes . . . . . . . . . . . . . . . . . . . . 506
[I-1/I-2]
 INDEX
[References are to sections]

ABC BOARD (See ALCOHOLIC BEVERAGE CONTROL (ABC)

BOARD)

ADMINISTRATIVE AGENCY AWARDS

Generally . . . 14.02[B][1][h]

ADMINISTRATIVE MANDAMUS
Generally . . . 15.03[A], [B], [B][3][b]
Appellate review . . . 15.03[D][4]
Decisions subject to
Generally . . . 15.03[B][2]
Agency discretion, constitutes . . . 15.03[B][2][b]
Evidentiary hearing, constitutes . . . 15.03[B][2][a]
Judicial review, nature of
Exclusive means of . . . 15.03[B][1][a]
Fundamental vested right test
Generally . . . 15.03[C][3]
Classification problems . . . 15.03[C][3][b]
Constitutional basis . . . 15.03[C][3][e]
Criticisms . . . 15.03[C][3][f]
Distinction . . . 15.03[C][3][a]
Exceptions . . . 15.03[C][3][c]
Quasi-legislative decisions . . . 15.03[C][3][d]
Repudiation of specific holding in Anton . . . 15.03[C][3][g]
Section 1094.5(b), scope of
Generally . . . 15.03[C][1]
Agency findings, sufficiency of . . . 15.03[C][1][b]
Fair trial . . . 15.03[C][1][a]
Section 1094.5(c), nature of
Generally . . . 15.03[C][2]
Complete record . . . 15.03[C][2][b]
Independent judgment standard . . . 15.03[C][2][a]
New evidence . . . 15.03[C][2][e]
 Substantial evidence standard . . . 15.03[C][2][c]
Trial de novo standard . . . 15.03[C][2][d]
Nongovernment decisions, review of . . . 15.03[B][1][b]
Prerequisites to, other
Finality . . . 15.03[B][4][a]
Traditional mandamus prerequisites . . . 15.03[B][4][b]
Remedies available
Judgment . . . 15.03[D][3][a]
Money damages . . . 15.03[D][3][b]
Statutes of limitations . . . 15.03[D][1]
Traditional mandamus applicable
Generally . . . 15.03[B][3][a]
Type of review . . . 15.03[B][3][c]
Writ petition . . . 15.03[D][2]

AFFIRMATIVE DEFENSES
Answer (See ANSWER, subhead: Affirmative defenses)
Cross-complaints versus
Generally . . . 9.08[B][2][a]
Setoff . . . 9.08[B][2][b]

AGREEMENT
Contractual arbitration . . . 12.06[A][2], [A][3]
Validity of arbitration agreement (See ARBITRATION, subhead:
Validity of arbitration agreement)

AGRICULTURAL LABOR RELATIONS BOARD (ALRB)

Generally . . . 6.01[C][1][a]

ALCOHOLIC BEVERAGE CONTROL (ABC) BOARD

Generally . . . 6.01[C][1][b]

ALRB (See Agricultural Labor Relations Board (ALRB))

AMENDMENTS
Generally . . . 9.03[A], [B][1][a]
Federal Rule 15(c) compared
Federal Rule 15(c)(1)(A) . . . 9.04[C][2]
Federal Rule 15(c)(1)(C) . . . 9.04[C][1]
Naming mistakes, to correct . . . 9.03[B][3]
Relation back doctrine (See RELATION BACK DOCTRINE)

ANSWER
 Generally . . . 9.07[A]
Affirmative defenses
Generally . . . 9.07[C], [C][2]
Constituting defense . . . 9.07[C][1]
Denials
Failure to deny constitutes an admission . . . 9.07[B][1]
Functions of answer . . . 9.07[B][3]
General versus specific . . . 9.07[B][2]
Verifications . . . 9.07[D]

ANTI-SLAPP STATUTE, PURSUANT TO . . . 9.06[A][3]

APPEALS
Appellate court opinions
Publication procedures . . . 15.01[G][7][b]
Supreme Court
Opinions . . . 15.01[G][7][a]
Order, depublication by . . . 15.01[G][7][c]
Unpublished opinions prohibited, citation of . . . 15.01[G][7][d]
Appellate procedure
Appellate briefs
Generally . . . 15.01[G][3]
[I-2/I-3]

Formal requirements . . . 15.01[G][3][a]

Practical guides . . . 15.01[G][3][b]
Applications and motions . . . 15.01[G][2]
California Supreme Court, review by
Generally . . . 15.01[G][6]
Discretionary review . . . 15.01[G][6][b]
Effect of denial of . . . 15.01[G][6][d]
Options when petition granted . . . 15.01[G][6][e]
Petition for review . . . 15.01[G][6][c]
Procedure . . . 15.01[G][6][a]
Costs . . . 15.01[G][5][c]
Decision, submission and . . . 15.01[G][5][a]
“Limited civil” cases, appellate review of . . . 15.01[G][5][f]
Oral argument . . . 15.01[G][4]
Record on appeal, designating . . . 15.01[G][1]
Rehearing . . . 15.01[G][5][b]
Remittitur . . . 15.01[G][5][e]
Sanctions . . . 15.01[G][5][d]
 Submission and decision . . . 15.01[G][5][a]
Appellate review
Generally . . . 15.01[D]
Record determination, scope of
Adequate record for . . . 15.01[D][1][a]
Offer of proof . . . 15.01[D][1][e]
Preserving error for appeal . . . 15.01[D][1][d]
Proceedings, complete record of . . . 15.01[D][1][c]
Standards of
Generally . . . 15.01[D][2]
Abuse of discretion . . . 15.01[D][2][c]
Administrative mandamus . . . 15.01[D][2][e]
Federal court . . . 15.01[D][2][d]
Independent (De Novo) review . . . 15.01[D][2][b]
Substantial evidence rule . . . 15.01[D][2][a]
Statement of decision . . . 15.01[D][1][b]
Cross-appeals
Generally . . . 15.01[C][1][c]
Protective . . . 15.01[C][1][e]
When both sides aggrieved . . . 15.01[C][1][d]
Judge-made exceptions to
Collateral matter, ruling on . . . 15.01[A][3][a]
independent issues . . . 15.01[A][3][c]
Judgment final as to one party . . . 15.01[A][3][b]
Separate issues . . . 15.01[A][3][c]
Judgments and orders, appealable
Federal courts, appealable judgments in
Federal Collateral Order Doctrine . . . 15.01[A][6][b]
Federal Final Judgment Rule . . . 15.01[A][6][a]
Federal Rule 54(b) . . . 15.01[A][6][c]
One-final-judgment-rule
Generally . . . 15.01[A][1]
Bifurcated trials, problem of . . . 15.01[A][1][b]
Judge-made exceptions to (See subhead: Judge-made exceptions to)
Nonfinal decisions appealable . . . 15.01[A][1][a]
Substance of decree, determined by . . . 15.01[A][1][c]
Orders, appealability of
Generally . . . 15.01[A][5]
JNOV Orders . . . 15.01[A][5][d]
Judicial interpretations . . . 15.01[A][5][b]
Neither add nor subtract from judgment . . . 15.01[A][5][c]
New trial . . . 15.01[A][5][d]
Postjudgment orders . . . 15.01[A][5][a]
 Statutory bases . . . 15.01[A][2]
Untimely appeals
Generally . . . 15.01[A][4]
Late appeals . . . 15.01[A][4][a]
Premature appeals . . . 15.01[A][4][b]
Prejudicial error rule . . . 15.01[E]
Standing to appeal
Generally . . . 15.01[B]
Moot Appeal . . . 15.01[B][4]
Prevailing Party . . . 15.01[B][3]
Remittitur . . . 15.01[B][2]
Voluntary dismissal . . . 15.01[B][1]
Stays pending appeal
Generally . . . 15.01[F]
General rule applicability . . . 15.01[F][2]
Rule and exceptions
Generally . . . 15.01[F][1]
Discretionary stays . . . 15.01[F][1][b]
Undertaking required . . . 15.01[F][1][a]
Stays
Procedure for obtaining . . . 15.01[F][3]
Purposes of . . . 15.01[F][4]
Writ of supersedeas . . . 15.01[F][5]
Stipulated reversals . . . 15.01[G][8]
Time limitations for
Cross-appeals (See subhead: Cross-appeals)
Federal appeals . . . 15.01[C][2]
General time limits . . . 15.01[C][1][a]
Postjudgment motions, extensions for . . . 15.01[C][1][b]

ARBITRATION
Arbitration statutes
Federal Arbitration Act . . . 12.06[A][8][b]
[I-3/I-4]

Special California arbitration statutes . . . 12.06[A][8][a]

Contractual
Generally . . . 12.06[A]
Arbitration statutes
Federal Arbitration Act . . . 12.06[A][8][b]
Special California arbitration statutes . . . 12.06[A][8][a]
Determined by agreement, scope of arbitration is . . . 12.06[A][3]
 Disqualification of arbitrator (See subhead: Disqualification of
arbitrator)
Forfeiture of right to arbitrate by failure to timely demand arbitration .
. . 12.06[A][4]
Scope of judicial review of arbitration award (See subhead: Scope of
judicial review of arbitration award)
Standard of judicial review determined by agreement . . . 12.06[A][2]
Validity of arbitration agreement (See subhead: Validity of arbitration
agreement)
Waiver of right to compel arbitration (See subhead: Waiver of right to
compel arbitration)
Determined by agreement, scope of arbitration is . . . 12.06[A][3]
Disqualification of arbitrator
Appointment of arbitrator . . . 12.06[A][7][a]
Arbitrator bias on award, effect of . . . 12.06[A][7][c]
Disclosures and disqualification . . . 12.06[A][7][b]
Forfeiture of right to arbitrate by failure to timely demand arbitration . . .
12.06[A][4]
Judicial
Generally . . . 12.06[B][1]
Arbitration award becomes unappealable judgment if no trial
requested . . . 12.06[B][2]
Arbitrator must determine all issues . . . 12.06[B][6]
Cases subject to . . . 12.06[B][3]
Effect of request for trial de novo in multi-party litigation . . .
12.06[B][7]
Limited authority to challenge arbitration award when no trial
requested . . . 12.06[B][5]
Sanctions for failure to participate in . . . 12.06[B][4]
Scope of judicial review of arbitration award
Generally . . . 12.06[A][1]
Arbitrators exceeding their powers . . . 12.06[A][1][a]
Injunctive relief, arbitrators exceeding their powers . . . 12.06[A][1]
[b]
Statutory rights exception to rule of arbitral finality . . . 12.06[A][1]
[c]
Standard of judicial review determined by agreement . . . 12.06[A][2]
Validity of arbitration agreement
Generally . . . 12.06[A][6], [A][6][a]
Class arbitration waivers . . . 12.06[A][6][c]
Mandatory employment arbitration agreements . . . 12.06[A][6][d]
Unconscionable arbitration agreements . . . 12.06[A][6][b]
Waiver of right to compel arbitration
 Generally . . . 12.06[A][5]
Appealability of order on petition to compel arbitration . . . 12.06[A]
[5][b]
Petition to compel arbitration and request for stay, necessity of . . .
12.06[A][5][a]

ATTORNEYS
Competence to handle cases . . . 3.02[C]
Confidentiality, duty of . . . 3.02[A]
Conflicts of interest . . . 3.02[B]
Discovery, client privilege . . . 11.01[D][3]
Duty of
Confidentiality . . . 3.02[A]
Loyalty . . . 3.02[B]
Fees . . . 10.07[D][2]
Loyalty, duty of . . . 3.02[B]

CALIFORNIA CIVIL PROCEDURE (GENERALLY)

Generally . . . Ch. 1

CALIFORNIA DISCOVERY PRINCIPLES

Generally . . . 11.01[A]
Attorney’s work product, protection of
Generally . . . 11.01[E][1]
Absolute work product protection . . . 11.01[E][2]
Federal work product doctrine, comparison to (See subhead: Federal
work product doctrine, comparison to)
Civil discovery statutes, coverage of
Generally . . . 11.01[B][1]
Arbitration . . . 11.01[B][5]
Limited civil cases . . . 11.01[B][2]
Post-judgment discovery . . . 11.01[B][4]
Small claims court . . . 11.01[B][3]
Discovery under act, scope of . . . 11.01[C]
Federal work product doctrine, comparison to
Generally . . . 11.01[E][3]
Absolute protection of opinion documents . . . 11.01[E][3][b]
Inadvertent disclosure of privileged information . . . 11.01[E][3][c]
 Work product protection, expanded . . . 11.01[E][3][a]
Privileged information, protection of
Generally . . . 11.01[D][1]
Absolute privileges . . . 11.01[D][2]
Attorney-client privilege . . . 11.01[D][3]
Inadvertent disclosure of privileged information . . . 11.01[E][3][c]
Physician-patient privilege . . . 11.01[D][4]
Qualified privileges . . . 11.01[D][5]
Right of privacy (See subhead: Right of privacy)
Qualified work product protection . . . 11.01[E][4]
Right of privacy
Generally . . . 11.01[D][6]
Consumer records . . . 11.01[D][6][a]
Employment records . . . 11.01[D][6][g]
[I-4/I-5]

Financial condition in punitive damages claims . . . 11.01[D][6][i]

Medical records . . . 11.01[D][6][c]
Memberships . . . 11.01[D][6][e]
Personnel information . . . 11.01[D][6][f]
Private settlement agreements . . . 11.01[D][6][h]
Sexual history . . . 11.01[D][6][d]
Tax returns . . . 11.01[D][6][b]

CALIFORNIA REQUIREMENTS
Class actions
Generally . . . 10.07[A][1]
Ascertainable class requirement (See CLASS ACTIONS, subhead:
Ascertainable class requirement)
Intervention (See INTERVENTION, subhead: California requirements)

CALIFORNIA’S (“DOE”) DEFENDANT PRACTICE

Generally . . . 9.04[A], [A][2]
Defendant’s name, ignorance of
Generally . . . 9.04[B][2], [B][2][a]
Actual ignorance, requirement of . . . 9.04[B][2][d]
Cause of action, ignorance of facts giving rise to . . . 9.04[B][2][b]
Law provides cause of action, ignorance that . . . 9.04[B][2][c]
Evolution of . . . 9.04[A][3]
Federal Rule 15(c)
Generally . . . 9.04[A][1]
Compared
 Federal Rule 15(c)(1)(A) . . . 9.04[C][2]
Federal Rule 15(c)(1)(C) . . . 9.04[C][1]
Limitations on Section 474
Generally . . . 9.04[B][6]
Fast track . . . 9.04[B][6][b]
Fictitious defendant practice . . . 9.04[B][6][b]
Government Claim Act . . . 9.04[B][6][a]
Pleading ignorance
Failure to, curing by amendment . . . 9.04[B][3][b]
Original complaint, pleaded in . . . 9.04[B][3][a]
Practical considerations . . . 9.04[B][7]
Relation back doctrine (See RELATION BACK DOCTRINE)
Requirements for use of
Generally . . . 9.04[B]
Defendant’s name, ignorance of (See subhead: Defendant’s name,
ignorance of)
Original complaint, timely filed . . . 9.04[B][1]
Pleading ignorance (See subhead: Pleading ignorance)
Relation back doctrine (See RELATION BACK DOCTRINE)
Service within three years
Generally . . . 9.04[B][5]
Discretionary dismissal . . . 9.04[B][5][b]
Mandatory dismissal . . . 9.04[B][5][a]

CAPACITY
Generally . . . 10.06[A]
Disability
Corporations . . . 10.06[A][1][b]
Incompetents . . . 10.06[A][1][a]
Minors . . . 10.06[A][1][a]
Federal court, in . . . 10.06[A][4]
Organizations, entity status of
Generally . . . 10.06[A][2]
Estates . . . 10.06[A][2][b]
Partnerships . . . 10.06[A][2][a]
Unincorporated associations . . . 10.06[A][2][a]
Raising, capacity issue . . . 10.06[A][3]

CASE RESOLUTION BEFORE TRIAL

Arbitration (See ARBITRATION)
Default judgment (See DEFAULT JUDGMENT)
Involuntary dismissals (See INVOLUNTARY DISMISSALS)
Settlement (See SETTLEMENTS)
 Summary judgment (See SUMMARY JUDGMENT)
Voluntary dismissals . . . 12.04

CHILDREN
Custody . . . 5.06[B][4]
Spousal support and . . . 5.06[B][5]

CHOICE OF LAW
Generally . . . 5.01
Class actions . . . 5.06[C]
Comparative impairment
Baxter’s comparative impairment analysis . . . 5.03[D][2]
Development of, further
Lower Court application . . . 5.03[E][2]
Supreme Court fine-tuning . . . 5.03[E][1]
States’ doctrines for torts, other
Generally . . . 5.03[E][3]
Interest analysis, commentary on . . . 5.03[E][3][b]
Practice, approaches difference in . . . 5.03[E][3][a]
True conflicts, resolving
Generally . . . 5.03[D][1]
California approach . . . 5.03[D][1][b]
Currie’s pure interest analysis approach . . . 5.03[D][1][a]
Contract cases
Choice-of-law agreements
Generally . . . 5.04[A]
Conflicts analysis, no choice-of-law agreement . . . 5.04[B]
[I-5/I-6]

Restatement (second), notes on

Generally . . . 5.04[C][1]
Statutory directives . . . 5.04[C][2]
Corporations
Government interest analysis . . . 5.06[A][1]
Internal affairs doctrine . . . 5.06[A][2]
Family law matters
Child custody . . . 5.06[B][4]
Community property . . . 5.06[B][1]
Dissolution of marriage . . . 5.06[B][3]
Marriage . . . 5.06[B][2]
Spousal support, child and . . . 5.06[B][5]
Federal courts . . . 5.06[D]
 Government interest analysis and tort cases
Generally . . . 5.03[A]
Comparative impairment (See subhead: Comparative impairment)
False conflicts . . . 5.03[B]
True conflicts . . . 5.03[C]
Historical evolution
California and Restatements . . . 5.02[B]
First and Second Restatements . . . 5.02[A]
Interest analysis (See subhead: Government interest analysis and tort
cases)
Miscellaneous applications
Class actions . . . 5.06[C]
Corporations
Government interest analysis . . . 5.06[A][1]
Internal affairs doctrine . . . 5.06[A][2]
Family law matters (See subhead: Family law matters)
Federal courts . . . 5.06[D]
Waiver . . . 5.06[E]
Statutes of limitations
Generally . . . 5.05[A]
California borrowing statute . . . 5.05[B]
Tort cases (See subhead: Government interest analysis and tort cases)
Waiver . . . 5.06[E]

CLASS ACTIONS
Appellate review of class determination
Generally . . . 10.07[B][4]
California Rule, problems with . . . 10.07[B][4][b]
Federal approach compared . . . 10.07[B][4][a]
Ascertainable class requirement
Generally . . . 10.07[A][2]
Broad consumer classes . . . 10.07[A][2][b]
Community of interest intertwined . . . 10.07[A][2][a]
California requirements, general
Generally . . . 10.07[A][1]
Ascertainable class requirement (See subhead: Ascertainable class
requirement)
Community of interest requirement
Generally . . . 10.07[A][3]
Class action treatment benefiting to litigants/court . . . 10.07[A][3][b]
Interests of class adequately, class representative representing . . .
10.07[A][3][b]
Predominating individual issues, law/fact . . . 10.07[A][3]
 Fluid class recovery
Generally . . . 10.07[D][1]
Controversial remedy . . . 10.07[D][1][c]
Legislative endorsement . . . 10.07[D][1][b]
Supreme Court endorsement . . . 10.07[D][1][a]
Incentive payments to class representatives . . . 10.07[D][3]
Notice to class members
Cost payee
Generally . . . 10.07[C][3]
Allocation factors, cost . . . 10.07[C][3][a]
Appellate review . . . 10.07[C][3][c]
Federal rule compared . . . 10.07[C][3][b]
Individual versus publication, required notice nature
Generally . . . 10.07[C][2]
Federal notice rule not binding . . . 10.07[C][2][b]
Permit “opt out,” notice to . . . 10.07[C][2][a]
Process concerns . . . 10.07[C][2][c]
Requirements, notice . . . 10.07[C][1]
Right to opt out
Generally . . . 10.07[C][4]
Determination . . . 10.07[C][4][b]
Process concerns . . . 10.07[C][4][a]
Settlement (See subhead: Settlement)
Prerequisites . . . 10.07[A][1][b]
Procedures
Generally . . . 10.07[B][1]
Appellate review of class determination (See subhead: Appellate
review of class determination)
Liability decision, class determination prior to . . . 10.07[B][3]
Raising, issue
Demurrer, by . . . 10.07[B][2][a]
Discovery . . . 10.07[B][2][b]
Remedies
Generally . . . 10.07[D]
Attorney fees . . . 10.07[D][2]
Class representatives, incentive payments to . . . 10.07[D][3]
Fluid class recovery (See subhead: Fluid class recovery)
Settlement
Conflicts of interest . . . 10.07[C][5][c]
Court approval required . . . 10.07[C][5][a]
Notice requirement . . . 10.07[C][5][b]
Statute, no comprehensive class action . . . 10.07[A][1][a]
Statutes of limitations, tolling of . . . 4.04[B][9]
 [I-6/I-7]

COLLATERAL ESTOPPEL
Generally . . . 8.03[A]
California collateral estoppel doctrine
Generally . . . 8.03[B], [B][1]
Actually litigated and determined, issues
Generally . . . 8.03[B][3]
Clearer collateral estoppel guidelines, need for . . . 8.03[B][3][f]
Default judgment, effect of . . . 8.03[B][3][c]
Identifying issues . . . 8.03[B][3][b]
Issues versus theories . . . 8.03[B][3][a]
Retraxit . . . 8.03[B][3][d]
Stipulated judgments . . . 8.03[B][3][e]
Basic California prerequisites . . . 8.03[B][1][a]
Exception, public interest . . . 8.03[B][1][c]
Identical issue for purposes of
Generally . . . 8.03[B][2]
Different standards of proof . . . 8.03[B][2][d]
Factual circumstance, change in . . . 8.03[B][2][c]
Historical transaction, different . . . 8.03[B][2][b]
Legal context, different . . . 8.03[B][2][c]
Legal theory versus issue . . . 8.03[B][2][a]
Scrutiny of facts necessary . . . 8.03[B][2][d]
Issues of law . . . 8.03[B][5]
Necessarily decided issue in prior proceeding
Generally . . . 8.03[B][4][a]
Alternative grounds rule . . . 8.03[B][4][b]
Public policy considerations . . . 8.03[B][1][b]
Judicial estoppel doctrine . . . 8.05[B]
Law of case doctrine . . . 8.05[A]
Mutuality and
Generally . . . 8.03[C][1]
Doctrine rejected . . . 8.03[C][2]
Final judgment for purposes of collateral estoppels
Generally . . . 8.03[C][5]
Administrative agency decisions . . . 8.03[C][5][b]
Settlement pending appeal . . . 8.03[C][5][a]
Noncourt proceedings, effect of collateral estoppels
Administrative agency decisions . . . 8.03[C][4][a]
Contractual arbitration . . . 8.03[C][4][b]
Offensive nonmutual collateral estoppels . . . 8.03[C][3]
 Privity . . . 8.04

COMPLAINT
Alternative pleading . . . 9.02[C]
Disfavored causes of action, pleading other . . . 9.02[B][2]
Heightened specificity requirements in pleading
Generally . . . 9.02[B]
Disfavored causes of action, pleading other . . . 9.02[B][2]
Pleading fraud . . . 9.02[B][1]
Inconsistent pleading . . . 9.02[C]
Pleading
Fraud . . . 9.02[B][1]
Inconsistent and alternative . . . 9.02[C]
Punitive damages, special pleading rules for
Generally . . . 9.02[D][3]
Prepleading requirements
Necessity . . . 9.02[D][3][b]
Plaintiff prevailing, probability . . . 9.02[D][3][a]
Relief, prayer for
Generally . . . 9.02[D][1]
Punitive damages, special pleading rules for (See subhead: Punitive
damages, special pleading rules for)
Statement of damages . . . 9.02[D][2]
Ultimate facts, pleading . . . 9.02[A]

CONDITIONAL SETTLEMENTS
Generally . . . 10.4[B][9][b]

CONFIDENTIALITY, DUTY OF
Generally . . . 3.02[A]

CONFLICT OF LAWS (See CHOICE OF LAW)

CONTINGENT FEES
Statutory limits on . . . 3.04[B]

CONTRACTUAL INDEMNITY
Express . . . 10.4[B][6][a]
Implied . . . 10.4[B][6][b]

CROSS-COMPLAINTS
Generally . . . 9.08[A]
Affirmative defense versus
 Generally . . . 9.08[B][2][a]
Setoff . . . 9.08[B][2][b]
Compulsory
Generally . . . 9.08[B][1]
Affirmative defense versus
Generally . . . 9.08[B][2][a]
Setoff . . . 9.08[B][2][b]
Related cause of action . . . 9.08[B][1][a]
Res judicata compared . . . 9.08[B][1][c]
Time for filing . . . 9.08[B][1][b]
New-party (See EQUITABLE INDEMNITY)
Permissive (See subhead: Compulsory)

DEFAULT JUDGMENT
Generally . . . 12.02[A][1], [A][3]
Complaint, problems caused by amendments to
Amended complaint, opening default . . . 12.02[D][2]
Answer amendment by defendant . . . 12.02[D][1]
Entry of . . . 12.02[B]
[I-7/I-8]

Federal courts, in . . . 12.02[F]

Neglect or mistake, excusable versus inexcusable
Generally . . . 12.02[G][3]
Examples of excusable neglect . . . 12.02[G][3][a]
Imposition of conditions when granting relief . . . 12.02[G][3][d]
Inexcusable neglect or mistake, examples of . . . 12.02[G][3][b]
Positive misconduct, inexcusable neglect of attorney not imputed to
client . . . 12.02[G][3][c]
Obtaining
Generally . . . 12.02[C]
Clerk’s judgment
Contract actions, authorized in certain . . . 12.02[C][1][a]
Costs, including . . . 12.02[C][1][b]
Including interest . . . 12.02[C][1][b]
Narrowly construed, authority to enter . . . 12.02[C][1][c]
Court’s default judgment, procedures for
 Generally . . . 12.02[C][2], [C][3]
Affidavits and declarations, use of . . . 12.02[C][3][b]
Prove-up hearing . . . 12.02[C][3][a]
Statutory restrictions . . . 12.02[C][4]
Time restrictions
Damages, statement of . . . 12.02[C][5][c]
Default request, time to . . . 12.02[C][5][b]
Response time . . . 12.02[C][5][a]
Relief from
Generally . . . 12.02[G][1]
Excusable versus inexcusable neglect or mistake (See subhead:
Neglect or mistake, excusable versus inexcusable)
Federal courts, in . . . 12.02[G][7]
Independent action in equity . . . 12.02[G][6]
Six months (See subhead: Six months)
Void judgments (See subhead: Void judgments)
Relief limited to demand . . . 12.02[A][2]
Res judicata effect of . . . 12.02[E]
Six months
Relief sought after
Equitable relief . . . 12.02[G][4][a]
Extrinsic fraud or mistake . . . 12.02[G][4][b]
Intrinsic fraud or mistake . . . 12.02[G][4][c]
Viability of extrinsic/intrinsic distinction . . . 12.02[G][4][d]
Relief sought within
Generally . . . 12.02[G][2]
Limitation, six month . . . 12.02[G][2][a]
Reasonable time limitation . . . 12.02[G][2][b]
Void judgments
Face, on its . . . 12.02[G][5][a]
Judgment valid on its face but otherwise void . . . 12.02[G][5][b]
Sister state judgments, validity of . . . 12.02[G][5][c]

DEFENSES (See ANSWER, subhead: defenses)

DEMURRERS
Generally . . . 9.05[A][1]
Amendment after sustained . . . 9.03[B][1][c]; 9.05[C]
Class actions, raising the issue by . . . 10.07[B][2][a]
Federal Rules compared . . . 9.05[A][3]
Procedures . . . 9.05[A][2]
Special . . . 9.05[A][1]
Standards for
 Allegations, assumes truth of . . . 9.05[B][1]
Answer, demurrer versus . . . 9.05[B][4]
Complaints, judicial council form . . . 9.05[B][3]
Judicial Notice
Generally . . . 9.05[B][2]
Court records . . . 9.05[B][2][c]
Mandatory . . . 9.05[B][2][a]
Permissive . . . 9.05[B][2][b]

DEPOSITIONS (See INDIVIDUAL DISCOVERY DEVICES, subhead:

Depositions)

DISABILITY (See CAPACITY, subhead: Disability)

DISCOVERY
California discovery principles (See CALIFORNIA DISCOVERY
PRINCIPLES)
Enforcement of discovery requests
Generally . . . 11.03[A]
Appellate review of sanctions orders . . . 11.03[C]
Sanctions . . . 11.03[B]
Individual devices (See INDIVIDUAL DISCOVERY DEVICES)

DISMISSALS
Involuntary (See INVOLUNTARY DISMISSALS)
Voluntary (See VOLUNTARY DISMISSALS)

DUTY OF
Confidentiality . . . 3.02[A]
Loyalty . . . 3.02[B]

ENFORCEMENT OF JUDGMENTS
Generally . . . 14.06[A]
Enforcement of injunctions and nonmoney judgments . . . 14.06[D]
Homestead exemptions
Generally . . . 14.06[B][5][c], [B][5][h]
History and policy . . . 14.06[B][5][g]
Overlap, two types . . . 14.06[B][5][d]
 Procedures . . . 14.06[B][5][f]
[I-8/I-9]

Two types distinguished . . . 14.06[B][5][e]

Independent action on judgment
Generally . . . 14.06[F]
Extend enforceable life of judgment, method to . . . 14.06[F][1]
Ten-year limitation period . . . 14.06[F][2]
Money judgment, effect of appeal on enforcement of . . . 14.06[G]
Nonmoney judgments, enforcement of injunctions and . . . 14.06[D]
Procedures for
Abstract of judgment . . . 14.06[B][2]
Creditors’ remedies, other . . . 14.06[B][9][b]
Creditors’ suits . . . 14.06[B][9][a]
Debtor’s examination . . . 14.06[B][8], [B][8][a]
Entry of judgment . . . 14.06[B][1]
Execution and Levy
Generally . . . 14.06[B][4]
Lien, execution . . . 14.06[B][4][b]
Personal property . . . 14.06[B][4][c]
Writ of execution . . . 14.06[B][4][a]
Exemptions
Homestead exemptions (See subhead: Homestead exemptions)
Personal property exemptions . . . 14.06[B][5][b]
Property subject to enforcement . . . 14.06[B][5][a]
Judgment lien
Effect of . . . 14.06[B][3][a]
Priorities . . . 14.06[B][3][b]
Wage garnishment (See WAGE GARNISHMENT)
Public entities, against
Duty of local to pay judgments . . . 14.06[B][7][a]
Judgment against public employee . . . 14.06[B][7][c]
Payment of judgments, duty of state with respect to . . . 14.06[B][7][b]
Satisfaction of judgment . . . 14.06[E]
Sister State judgments, enforcement of . . . 14.06[H]
Third-party claims . . . 14.06[C]

EQUITABLE INDEMNITY
Generally . . . 10.04[B][1]
Conditional settlements . . . 10.4[B][9][b]
Contractual indemnity
Express . . . 10.4[B][6][a]
 Implied . . . 10.4[B][6][b]
Contribution . . . 10.4[B][8]
Cross-complaints
Adding new parties . . . 10.04[A]
Affirmative defense versus . . . 9.08[B][2][c]
Fair Responsibility Act of 1986 . . . 10.4[B][4]
Good faith settlement
Determination
Allocation of settlement amounts in complex litigation . . . 10.04[B]
[3][d]
Defendant, rights of settling . . . 10.04[B][3][f]
Evidentiary basis . . . 10.04[B][3][c]
Joint tortfeasors, parties bound . . . 10.04[B][3][g]
Relevant factors . . . 10.04[B][3][a]
Total equitable indemnity . . . 10.04[B][3][e]
Valuation problems . . . 10.04[B][3][b]
Effect of
Generally . . . 10.04[B][2]
Calculating offset credits, complications in . . . 10.04[B][2][e]
Case, real . . . 10.04[B][2][b], [B][2][c]
Hypothetical . . . 10.04[B][2][a]
Prejudgment interest complication . . . 10.04[B][2][d]
Procedures . . . 10.04[B][10]
Indemnity in federal courts
Generally . . . 10.04[B][11]
Doctrine of contribution, federal common law . . . 10.04[B][11][a]
Federal and California approaches, compared . . . 10.04[B][11][b]
Non-negligence actions, in
Contract actions . . . 10.4[B][7][b]
Intentional torts . . . 10.4[B][7][a]
Public policy limitations . . . 10.4[B][7][c]
Strict liability . . . 10.4[B][7][a]
Sliding scale agreements . . . 10.4[B][9][a]
Statute of limitations . . . 10.4[B][5]
Statutory indemnity . . . 10.4[B][6][c]
Structured settlements . . . 10.4[B][9][c]

EXHAUSTION OF ADMINISTRATIVE REMEDIES

Exceptions to . . . 4.06[B]
Primary jurisdiction and . . . 4.06[D]
Requirement of . . . 4.06[A]
Waiver . . . 4.06[C]
EXTRAORDINARY WRITS (See WRITS)

FAIR RESPONSIBILITY ACT OF 1986

Equitable indemnity . . . 10.4[B][4]

FAST TRACK RULES

Local rules of court . . . 2.02[A][5][b]

FEDERAL ARBITRATION ACT

Generally . . . 12.06[A][8][b]
[I-9/I-10]

FEDERAL COMMON LAW DOCTRINE OF CONTRIBUTION . . .

10.04[B][11][a]

FEDERAL WORK PRODUCT DOCTRINE (See CALIFORNIA

DISCOVERY PRINCIPLES, subhead: Federal work product doctrine,
comparison to)

FEE AGREEMENTS
Generally . . . 3.04[A]
Statutory limits on contingent fees . . . 3.04[B]

FORUM NON CONVENIENS

California Doctrine, relevant factors under
Generally . . . 6.05[A]
Adequate alternative forum
Generally . . . 6.05[A][1]
Law, unfavorable change in . . . 6.05[A][1][a]
No remedy exception . . . 6.05[A][1][b]
Convenience factors, balance of . . . 6.05[A][5]
Dismissal versus stay . . . 6.05[A][3]
Plaintiff’s residence . . . 6.05[A][2]
Raising forum non conveniens, procedures for
Comparison . . . 6.05[A][4][c]
General appearance . . . 6.05[A][4][a], [A][4][b]
Forum selection agreements . . . 6.05[B]
 I

INDEMNITY IN FEDERAL COURTS (See EQUITABLE INDEMNITY,

subhead: Indemnity in federal courts)

INDIVIDUAL DISCOVERY DEVICES

Admissions, requests for . . . 11.02[F]
Depositions
Generally . . . 11.02[C]
Oral (See subhead: Oral depositions in)
Procedures during
Examination of deponent . . . 11.02[C][2][b]
Objections . . . 11.02[C][2][c]
Protective orders . . . 11.02[C][2][c]
Record . . . 11.02[C][2][a]
Transcript . . . 11.02[C][2][a]
Trial, use at
Party versus nonparty . . . 11.02[C][3][a]
Videotape depositions . . . 11.02[C][3][b]
Written depositions . . . 11.02[C][6]
Designated expert
Testimony of
Augmentation of expert list . . . 11.02[E][3][c]
Expert disclosure requirements, failure to comply with . . .
11.02[E][3][b]
Limited right to call . . . 11.02[E][3][a]
Withdrawal of . . . 11.02[E][2]
Exchange of information about trial experts
Designated expert (See subhead: Designated expert)
Expert witness disclosures . . . 11.02[E][1]
Inspections
Generally . . . 11.02[B]
Items controlled by party
Electronically stored information . . . 11.02[B][1][c]
Procedures . . . 11.02[B][1][a]
Requirements . . . 11.02[B][1][b]
Items not controlled by party
Deposition subpoenas . . . 11.02[B][2][a]
Inspections . . . 11.02[B][2][b]
Interrogatories
Generally . . . 11.02[A][1]
 Contention . . . 11.02[A][2][a]
Continuing . . . 11.02[A][2][b]
Responses to
Generally . . . 11.02[A][3][a]
Compelling further responses . . . 11.02[A][4]
Inaccurate response . . . 11.02[A][3][f]
Oath . . . 11.02[A][3][e]
Objections . . . 11.02[A][3][g]
Protective order . . . 11.02[A][3][c]
Reasonable effort . . . 11.02[A][3][d]
Time . . . 11.02[A][3][b]
Medical examinations
Generally . . . 11.02[D]
Personal injury action, noticed examination of plaintiff in
Conduct of examination . . . 11.02[D][1][a]
Court ordered examinations . . . 11.02[D][1][c]
Exchange of examination reports . . . 11.02[D][1][b]
Limits on examinations . . . 11.02[D][1][d]
Oral depositions in
California
Deponents . . . 11.02[C][1][a]
Deposition officer . . . 11.02[C][1][d]
Place of deposition . . . 11.02[C][1][c]
Time . . . 11.02[C][1][b]
Country, another . . . 11.02[C][5]
State, another . . . 11.02[C][4]
Written depositions . . . 11.02[C][6]

INSPECTIONS
Individual discovery devices (See INDIVIDUAL DISCOVERY
DEVICES, subhead: Inspections)

INTERNAL AFFAIRS DOCTRINE

Generally . . . 5.06[A][2]

INTERPLEADER
California interpleader requirements/procedures . . . 10.03[A]
Federal interpleader . . . 10.03[B]
[I-10/I-11]

INTERROGATORIES (See INDIVIDUAL DISCOVERY DEVICES,

subhead: Interrogatories)

INTERVENTION
California requirements
Generally . . . 10.05[A]
Permissive intervention (See subhead: Permissive intervention)
Right, intervention of (See subhead: Right, intervention of)
Federal intervention rules
Generally . . . 10.5[C]
Permissive intervention . . . 10.5[C][2]
Right, intervention of . . . 10.5[C][1]
Permissive intervention
Generally . . . 10.05[A][1]
Discretion . . . 10.05[A][1][e]
Federal intervention rules . . . 10.5[C][2]
Interest . . . 10.05[A][1][d]
Procedures
Application procedure
Generally . . . 10.5[B][3]
Appellate review . . . 10.5[B][3][b]
Leave of court requirement . . . 10.5[B][3][a]
Intervener, status of
Generally . . . 10.5[B][1]
Attorney fees . . . 10.5[B][1][a]
Costs . . . 10.5[B][1][a]
Diligent service and prosecution . . . 10.5[B][1][c]
Statute of limitations . . . 10.5[B][1][b]
Timely application
Generally . . . 10.5[B][2], [B][2][a]
Aggrieved person intervening and appealing . . . 10.5[B][2][b]
Unreasonable delay . . . 10.5[B][2][c]
Right, intervention of
Generally . . . 10.05[A][2]
Federal intervention rules . . . 10.5[C][1]
Statutes, special . . . 10.05[A][2][b]
Statutory prerequisites . . . 10.05[A][2][a]

INVOLUNTARY DISMISSALS
Generally . . . 12.03[A]
Discretionary dismissals for lack of prosecution
Generally . . . 12.03[C]
New trial within two years, failure to bring case to . . . 12.03[C][3]
Serve defendant within two years, failure to (See subhead: Serve
defendant within two years, failure to)
Trial within two years, failure to bring case to (See subhead: Trial
within two years, failure to bring case to)
Fast track rules, under
Generally . . . 12.03[D][1]
Dismissal and other fast track sanctions . . . 12.03[D][2]
Five years, failure to bring case to trial within
Generally . . . 12.03[B][2]
Brought to trial, action is . . . 12.03[B][2][a]
Plaintiff’s motion for preference . . . 12.03[B][2][b]
Statutory exceptions to mandatory dismissal . . . 12.03[B][2][c]
Mandatory dismissals for lack of prosecution
Generally . . . 12.03[B]
Five years, failure to bring case to trial within (See subhead: Five
years, failure to bring case to trial within)
New trial within three years, failure to bring the case to . . . 12.03[B]
[3]
Three years of filing, failure to serve the action within (See subhead:
Three years of filing, failure to serve the action within)
New trial within
Three years, failure to bring the case to . . . 12.03[B][3]
Two years, failure to bring case to . . . 12.03[C][3]
Serve defendant within two years, failure to
Generally . . . 12.03[C][1]
Excusable delay . . . 12.03[C][1][a]
Prejudice not required . . . 12.03[C][1][b]
Presumed, prejudice . . . 12.03[C][1][c]
Statutory grounds, involuntary dismissals on other . . . 12.03[E]
Three years of filing, failure to serve the action within
Generally . . . 12.03[B][1]
Amended complaint, effect of . . . 12.03[B][1][a]
Extensions of three-year limit . . . 12.03[B][1][c]
Statutory tolling provisions . . . 12.03[B][1][b]
Trial within two years, failure to bring case to
Attorney negligence, discretionary dismissal and . . . 12.03[C][2][c]
Discretionary dismissal rules . . . 12.03[C][2][a]
Failure to appear, discretionary dismissal for . . . 12.03[C][2][b]
Mandatory relief from dismissal . . . 12.03[C][2][d]

J
JNOV (See JUDGMENT NOTWITHSTANDING THE VERDICT
(JNOV))

JOINDER OF PARTIES/CLAIMS
Capacity (See CAPACITY)
Class actions (See CLASS ACTIONS)
Compulsory joinder of parties . . . 10.02
Equitable indemnity (See EQUITABLE INDEMNITY)
Interpleader (See INTERPLEADER)
Intervention (See INTERVENTION)
Permissive joinder
Claims . . . 10.01[C]
Defendants . . . 10.01[B]
Plaintiffs . . . 10.01[A]
[I-11/I-12]

Real party in interest/standing (See REAL PARTY IN

INTEREST/STANDING)
Survival of actions (See SURVIVAL OF ACTIONS)

JUDGMENT NOTWITHSTANDING THE VERDICT (JNOV)

Generally . . . 13.04[B]
Matter of law in federal court, judgment as . . . 13.04[B][5]
New trial
Motions, integrally related to . . . 13.04[B][4]
Order versus . . . 13.04[B][1]
Partial . . . 13.04[B][2]
Time limits for motion . . . 13.04[B][3]

JUDGMENT ON PLEADINGS
Generally . . . 9.06[B][2]
Partial . . . 9.06[B][3]

JUDGMENTS
Generally . . . 14.01[A]
Amount calculation, attorney fee awards
Lodestar method
Generally . . . 14.03[F][1]
Amount calculation . . . 14.03[F][2]
Proof of market rate . . . 14.03[F][2][b]
Reasonable hourly rate . . . 14.03[F][2][a]
Multiplier, lodestar
 Generally . . . 14.03[F][3], [F][3][a]
Federal approach to . . . 14.03[F][3][b]
Independent California rule . . . 14.03[F][3][c]
Negative multiplier to partial success, use of . . . 14.03[F][3][e]
Policy considerations . . . 14.03[F][3][d]
Appellate attorney fee awards . . . 14.03[G]
Attorney fees, recovery of
American Rule and exceptions . . . 14.03[A]
Attorney fee awards
Amount calculation (See subhead: Amount calculation, attorney fee
awards)
Contract (See subhead: Contract, attorney fee awards based on)
Element of damages . . . 14.03[D]
Judge-made equitable theories (See subhead: Judge-made equitable
theories, attorney fee awards based on)
Statutory authority (See subhead: Statutory authority)
Statute, procedure for obtaining based on
Collateral matter . . . 14.03[H][1][b]
Fee request not required, pleading of . . . 14.03[H][1][a]
Noticed motion procedure . . . 14.03[H][2]
CCP § 1032, prevailing party under
Generally . . . 14.04[B][1], [B][2]
Voluntary dismissals . . . 14.04[B][3]
Code of Civil Procedure § 1021.5
Generally . . . 14.03[E][1]
Awards criteria under
Generally . . . 14.03[E][3]
Benefit, significant . . . 14.03[E][3][b]
Financial burden of private enforcement . . . 14.03[E][3][c]
Private enforcement, necessity of . . . 14.03[E][3][d]
Right, important . . . 14.03[E][3][a]
Successful party determination under
Lawsuit and result achieved, causal connection between . . .
14.03[E][4][a]
Prevail on every claim, no need to . . . 14.03[E][4][b]
Common fund theory
Distinguished from
Other judge-made exceptions . . . 14.03[C][1][b]
Private attorney general statute . . . 14.03[C][1][c]
General doctrine . . . 14.03[C][1][a]
Contract, attorney fee awards based on
Generally . . . 14.03[B]
CCP § 998, relationship with . . . 14.03[B][8]
 Civil Code § 1717
Applicable although contract unenforceable . . . 14.03[B][2][c]
Combined actions, apportionment of . . . 14.03[B][2][b]
Limited to actions . . . 14.03[B][2][a]
Prevailing party (See Subhead: Prevailing party)
Claiming procedure
Fee amount, calculation of . . . 14.03[B][9][b]
Noticed motion procedure . . . 14.03[B][9][a]
Code of Civil Procedure § 1021 . . . 14.03[B][1]
Dismissal of action, effect of . . . 14.03[B][6]
Final disposition of substantive rights, awaiting for . . . 14.03[B][7]
Nonsignatory
Generally . . . 14.03[B][3]
Liability of . . . 14.03[B][4]
Equitable private attorney general theory . . . 14.03[C][3]
[I-12/I-13]

Federal Court, recovery of costs

Costs . . . 14.04[H][1]
Offers of judgment . . . 14.04[H][2]
Final judgment, relief from . . . 14.05[A]
Interest
Generally . . . 14.02[A]
Prejudgment interest (See subhead: Prejudgment interest)
Judge-made equitable theories, attorney fee awards based on
Generally . . . 14.03[C]
Common fund theory (See subhead: Common fund theory)
Equitable private attorney general theory . . . 14.03[C][3]
Federal “bad faith” doctrine . . . 14.03[C][5][b]
Federal “common fund” doctrine . . . 14.03[C][5][a]
Substantial benefit theory . . . 14.03[C][2]
Tort of another doctrine . . . 14.03[C][4]
Matter of right, costs recoverable as
Costs allowable of right . . . 14.04[D][1]
Discretionary costs . . . 14.04[D][2]
Reasonably necessary . . . 14.04[D][3]
Special cost statutes . . . 14.04[D][4]
More favorable judgment
Generally . . . 14.04[G][2][b]
Award of costs or attorney fees inclusion . . . 14.04[G][2][a]
Consequences of failure
Award of costs, effect on . . . 14.04[G][3][a]
 Expert witness expenses, effect on . . . 14.04[G][3][a]
Prejudgment interest . . . 14.04[G][3][b]
Prejudgment interest
Civil Code § 3287(a)
Generally . . . 14.02[B][1]
Administrative agency awards . . . 14.02[B][1][h]
Policy conflict . . . 14.02[B][1][d]
Public entities . . . 14.02[B][1][f]
Suspension . . . 14.02[B][1][g]
Unliquidated cross-complaint, effect of . . . 14.02[B][1][e]
Civil Code § 3291 . . . 14.02[B][3]
Contract action, breach of
Liquidated damages . . . 14.02[B][5][a]
Rate of . . . 14.02[B][5][c]
Unliquidated damages . . . 14.02[B][5][b]
Good faith settlement, effect of . . . 14.02[B][4]
Non-contract actions
Generally . . . 14.02[B][2]
Noneconomic damages, no interest on . . . 14.02[B][2][b]
Nonjury cases, application of . . . 14.02[B][2][c]
Prudent practice . . . 14.02[B][2][a]
Prevailing party
Generally . . . 14.03[B][5], [B][5][b], [B][5][c]
Costs, for . . . 14.03[B][5][d]
Recovery of costs by
Generally . . . 14.04[A]
Claiming and contesting costs, procedures for . . . 14.04[E]
Enforcing judgment . . . 14.04[F]
Matter of discretion, others as (See subhead: Matter of right, costs
recoverable as)
Matter of right, costs recoverable as (See subhead: Matter of right,
costs recoverable as)
Multiple parties . . . 14.04[C]
Statutory offers to compromise, effect of (See subhead: Statutory
offers to compromise, effect of)
Status determination problem . . . 14.03[B][5][a]
Statutory authority
Attorney fees, award of . . . 14.03[E][2]
Code of Civil Procedure § 1021.5 (See subhead: Code of Civil
Procedure § 1021.5)
Limited discretion to deny fee award
Defendant, prevailing . . . 14.03[E][5][b]
Plaintiff, prevailing . . . 14.03[E][5][a]
 Policy reasons for . . . 14.03[E][5][c]
Suits involving public entities . . . 14.03[E][5][d]
Statutory guidance on judgment and remedies . . . 14.01[B]
Statutory offers to compromise, effect of
CCP § 998
Generally . . . 14.04[G][1]
Proceedings, inapplicability to . . . 14.04[G][4]
More favorable judgment (See subhead: More favorable judgment)
Substantial benefit theory . . . 14.03[C][2]
Tort of another doctrine . . . 14.03[C][4]

JURY INSTRUCTIONS
Content of . . . 13.02[D][3][b]
Procedure . . . 13.02[D][3][c]
Right to . . . 13.02[D][3][a]

JURY SELECTION
Challenges
Cause, for . . . 13.02[B][3][a]
Constitutional limitations . . . 13.02[B][3][c]
Peremptory challenges . . . 13.02[B][3][b]
Voir dire, permissible scope of . . . 13.02[B][3][d]
Panel, selection of . . . 13.02[B][1]
Voir dire
Generally . . . 13.02[B][2]
Permissible scope of . . . 13.02[B][3][d]

JURY TRIALS
Closing argument
Generally . . . 13.01[D][2]
Ethical considerations . . . 13.01[D][2][b]
Improper argument required reversal . . . 13.01[D][2][c]
Proper argument, scope of . . . 13.01[D][2][a]
Comments by judge . . . 13.01[D][1]
Influence of . . . 13.01[A]
Instructions to jury (See JURY INSTRUCTIONS)
Right to trial by jury
Generally . . . 13.02[A]
[I-13/I-14]

Constitutional right in California courts

Equitable and legal issues, actions involving . . . 13.02[A][1][b]
 Historical analysis, other forms of . . . 13.02[A][1][c]
Legal/equitable dichotomy . . . 13.02[A][1][a]
Static right, not . . . 13.02[A][1][d]
Statutory right to . . . 13.02[A][1][e]
Federal constitutional right in federal courts . . . 13.02[A[3]]
Selection of jury (See JURY SELECTION)
Voir dire (See JURY SELECTION)
Waiver of right
Generally . . . 13.02[A][2]
Advance of litigation, contractual waiver in . . . 13.02[A][2][b]
Irrevocable, not . . . 13.02[A][2][a]
Trial process
Burden of proof . . . 13.02[C][3]
California evidence code . . . 13.02[C][1]
Expedited jury trials . . . 13.02[C][4]
Order of proceedings . . . 13.02[C][1]
Techniques . . . 13.02[C][5]
Verdicts, types of
General verdict
Accompanied by special findings . . . 13.02[E][1][d]
Special verdicts versus . . . 13.02[E][1][b]
Nonunanimous verdicts . . . 13.02[E][1][a]
Special verdicts
General verdicts versus . . . 13.02[E][1][b]
Recommended or required . . . 13.02[E][1][c]
Without jury, trial
Motion for judgment . . . 13.03[B]
Order of proceedings . . . 13.03[A]
Statement of decision . . . 13.03[C]

LACHES
Applicability . . . 4.07[B]
Asserting laches, manner of . . . 4.07[C]
Defense, elements of
Generally . . . 4.07[A][1]
Prejudice . . . 4.07[A][3]
Unreasonable delay . . . 4.07[A][2]
LIBERAL AMENDMENT POLICY
Conformations to proof . . . 9.03[B][1][b]
Demurrer, after sustained . . . 9.03[B][1][c]

LIS PENDENS
Generally . . . 7.01[B][6], [B][6][d]
Availability of . . . 7.01[B][6][f]
Due process issues . . . 7.01[B][6][e]
Effect of . . . 7.01[B][6][b]
Motion to expunge . . . 7.01[B][6][c]
Notice . . . 7.01[B][6][a]

LOYALTY, DUTY OF
Generally . . . 3.02[B]

MANDAMUS (See ADMINISTRATIVE MANDAMUS)

MARRIAGE
Choice-of-law applications
Generally . . . 5.06[B][2]
Dissolution of marriage . . . 5.06[B][3]
Dissolution of
Choice-of-law applications . . . 5.06[B][3]
Venue rules and exceptions . . . 6.03[A][1][d]

MEDICAL EXAMINATIONS
Individual discovery devices (See INDIVIDUAL DISCOVERY
DEVICES, subhead: Medical examinations)

MERITLESS LITIGATION, AVOIDING

Generally . . . 3.03

NEW TRIAL, MOTION FOR

Generally . . . 13.04[D][1]
 Federal Court
Grounds . . . 13.04[D][4][a]
Procedures . . . 13.04[D][4][b]
Grounds
Accident or surprise . . . 13.04[D][3][f]
Conditional new trial orders . . . 13.04[D][3][d]
Discretion, exercise of . . . 13.04[D][3][b]
Evidence, insufficiency of . . . 13.04[D][3][c]
Excessive damages . . . 13.04[D][3][d]
Jury misconduct and irregularities . . . 13.04[D][3][g]
Newly discovered evidence . . . 13.04[D][3][e]
Remittitur damages . . . 13.04[D][3][d]
Statutory exclusive . . . 13.04[D][3][a]
Procedures
Aggrieved party must file motion . . . 13.04[D][2][a]
Declarations must be timely filed and . . . 13.04[D][2][b]
60-day limit on trial court’s power to decide motion . . . 13.04[D][2]
[d]
State grounds and specify reasons . . . 13.04[D][2][c]

NOTICE
Claims and other prerequisites (See STATUTES OF LIMITATIONS,
subhead: Notices, claims and other prerequisites)
Class actions
Class members, to (See CLASS ACTIONS, subhead: Notice to class
members)
[I-14/I-15]

Settlement . . . 10.07[C][5][b]
Class members, to (See CLASS ACTIONS, subhead: Notice to class
members)
Lis pendens . . . 7.01[B][6][a]
Medical malpractice prelitigation notice (See STATUTES OF
LIMITATIONS, subhead: Medical malpractice prelitigation notice)
Motion procedure, attorney fee awards based on contract . . . 14.03[B]
[9][a]
Publication, actual notice . . . 6.04[B][3][d]

P
PERB (See PUBLIC EMPLOYMENT RELATIONS BOARD (PERB))

PERSONAL JURISDICTION
Generally . . . 6.02[A]
Defense
Generally . . . 6.02[C]
Appellate review
Generally . . . 6.02[C][2]
Federal review compared . . . 6.02[C][2][b]
Writ of mandate . . . 6.02[C][2][a]
Waivable due process right
Generally . . . 6.02[C][1]
Appearance . . . 6.02[C][1][a]
Federal procedure compared . . . 6.02[C][1][b]
Forum selection clauses . . . 6.02[C][1][c]
Due process
Decisions, recent . . . 6.02[B][6]
Effects test . . . 6.02[B][4]
Minimum contacts . . . 6.02[B][1]
Nonresident parent corporations
Generally . . . 6.02[B][5]
Agency theories . . . 6.02[B][5][a]
Alter ego doctrine . . . 6.02[B][5][a]
Representative services doctrine . . . 6.02[B][5][b]
Reasonableness factors . . . 6.02[B][2]
Transient jurisdiction . . . 6.02[B][3]

PHYSICIAN-PATIENT PRIVILEGE
Discovery . . . 11.01[D][4]

PLEADINGS
Generally . . . 9.01
Affirmative defenses (See AFFIRMATIVE DEFENSES)
Amendments (See AMENDMENTS)
Answer (See ANSWER)
Complaint (See COMPLAINT)
Federal Rule 15(c) compared
Federal Rule 15(c)(1)(A) . . . 9.04[C][2]
Federal Rule 15(c)(1)(C) . . . 9.04[C][1]
Ignorance
Failure to, curing by amendment . . . 9.04[B][3][b]
Original complaint, pleaded in . . . 9.04[B][3][a]
Judgment on, motion for
 Generally . . . 9.06[B][2]
Amend, leave to . . . 9.06[B][4]
Grounds . . . 9.06[B][1]
Partial . . . 9.06[B][3]
Summary judgment . . . 9.06[B][2]
Motion to strike
Anti-SLAPP statute, pursuant to . . . 9.06[A][3]
Grounds . . . 9.06[A][1]
Procedures . . . 9.06[A][2]
Relation back doctrine (See RELATION BACK DOCTRINE)

PRECLUSIVE EFFECTS OF PRIOR JUDGMENTS

Generally . . . 8.01
Collateral estoppel (See COLLATERAL ESTOPPEL)
Issue preclusion (See COLLATERAL ESTOPPEL)
Res judicata (See RES JUDICATA)

PRELIMINARY INJUNCTIVE RELIEF

Generally . . . 7.02[A], [A][1]
Interim harm
Generally . . . 7.02[A][2]
Governmental entity applicant . . . 7.02[A][2][c]
Irreparable injury . . . 7.02[A][2][a]
Special statutes . . . 7.02[A][2][d]
Threatened harm . . . 7.02[A][2][b]
Temporary restraining orders (See TEMPORARY RESTRAINING
ORDERS (TRO))
Undertaking
Federal rules compared . . . 7.02[A][3][b]
Sufficiency of . . . 7.02[A][3][a]
Waiver of . . . 7.02[A][3][d]
When not required . . . 7.02[A][3][c]

PRIMARY RIGHTS DOCTRINE

Generally . . . 8.02[A][1]
Cause of action . . . 8.02[A][3]
Declaratory judgment exception to . . . 8.02[A][7]
Historical analysis . . . 8.02[A][2]
Inherent ambiguity of . . . 8.02[A][6]
Precedent, determined by . . . 8.02[A][4]
Remedies versus . . . 8.02[A][5]
Restatement doctrine versus
Generally . . . 8.02[D][1]
 Federal-State recognition of judgments
Prior Federal Judgment in California Courts . . . 8.02[D][2][b]
State Judgment in Federal Courts, prior . . . 8.02[D][2][a]
Theories of recovery, distinguished from
Harm suffered, importance of . . . 8.02[A][4][a]
Same injury, importance of . . . 8.02[A][4][c]
Tort versus contract . . . 8.02[A][4][b]
[I-15/I-16]

PRIVACY, RIGHT OF (See CALIFORNIA DISCOVERY PRINCIPLES,

subhead: Right of privacy)

PRIVILEGED INFORMATION, PROTECTION OF (See CALIFORNIA

DISCOVERY PRINCIPLES, subhead: Privileged information, protection
of)

PROFESSIONAL RESPONSIBILITY ISSUES

Generally . . . 3.01

PROVISIONAL REMEDIES
Attachment law
Generally . . . 7.01[A][1]
Limitations
Generally . . . 7.01[A][2]
Claims, certain . . . 7.01[A][2][a]
Ex Parte writ of . . . 7.01[A][2][e]
Nonresident attachment
Generally . . . 7.01[A][5]
Due process issues . . . 7.01[A][5][b]
Purpose . . . 7.01[A][5][a]
Procedures
Ex Parte attachment procedures . . . 7.01[A][3][a]
Noticed hearing, on . . . 7.01[A][3][b]
Property, certain . . . 7.01[A][2][b]
Substantive limitations . . . 7.01[A][2][c]
Undertakings . . . 7.01[A][2][d]
California Judicial Council Forms . . . 7.01[C][1]
California Law Revision Commission Comments . . . 7.01[C][1]
Claim and delivery . . . 7.01[B][2]
Contractual arbitration . . . 7.01[B][5]
Delivery, claim and . . . 7.01[B][2]
 Lis pendens (See LIS PENDENS)
Official forms and resources . . . 7.01[C]
Prejudgment remedies, attachment and related
Exemption procedure, claim of
Generally . . . 7.04[A][4]
Homesteads . . . 7.01[A][4][b]
Personal property . . . 7.01[A][4][a]
Real Property . . . 7.01[A][4][b]
Writ of attachment
Generally . . . 7.01[A]
Attachment law (See subhead: Attachment law)
Preliminary injunctive relief (See PRELIMINARY INJUNCTIVE
RELIEF)
Receivership . . . 7.01[B][3]
Temporary
Protective orders . . . 7.01[B][1]
Restraining order . . . 7.01[B][4]

PUBLIC EMPLOYMENT RELATIONS BOARD (PERB)

Generally . . . 6.01[C][1][c]

PUBLIC UTILITIES COMMISSION (PUC)

Generally . . . 6.01[C][1][d]

PUC (See Public Utilities Commission (PUC))

REAL PARTY IN INTEREST/STANDING

Federal standing and real party doctrines
Real party rule . . . 10.06[B][5][a]
Standing requirements, Article III . . . 10.06[B][5][b]
State courts, requirements in . . . 10.06[B][5][c]
General California Doctrine . . . 10.06[B][1]
Standing versus real party in interest
Generally . . . 10.06[B][3]
Purposes . . . 10.06[B][3][a]
Real party, more than one . . . 10.06[B][3][b]
Statutory exceptions
Generally . . . 10.06[B][2], [B][2][c]
 Homeowner associations . . . 10.06[B][2][b]
Personal representatives and trustees . . . 10.06[B][2][a]
Taxpayer lawsuits
Generally . . . 10.06[B][4]
Federal courts, in . . . 10.06[B][4][d]
Liberal
Construction . . . 10.06[B][4][a]
Standing . . . 10.06[B][4][c]
Restrictions on . . . 10.06[B][4][b]

RELATION BACK DOCTRINE

California court adopting pragmatic approach . . . 9.03[B][2][d]
California’s (“Doe”) defendant practice, requirements for use of
Generally . . . 9.04[B][4]
Causes of action . . . 9.04[B][4][b]
Requirements . . . 9.04[B][4][a]
Fictitious defendants . . . 9.03[B][2][c]
Liberal amendment policy
Conformations to proof . . . 9.03[B][1][b]
Demurrer, after sustained . . . 9.03[B][1][c]
New plaintiffs . . . 9.03[B][2][e]
Original complaint, “same general set of facts” as . . . 9.03[B][2][b]
Permitted cause of action . . . 9.03[B][2][a]
Pragmatic approach, California court adopting . . . 9.03[B][2][d]

RES JUDICATA
Generally . . . 15.02[C][7]
Another action pending
Generally . . . 8.02[G]
Anti-suit injunctions . . . 8.02[G][3]
Exclusive concurrent jurisdiction . . . 8.02[G][2]
Plea in abatement . . . 8.02[G][1]
Compulsory cross-complaints and
Comparison . . . 9.08[B][1][c]
Statutes . . . 8.02[E][1]
Transactional standard
Generally . . . 8.02[E][2]
California abandon primary rights . . . 8.02[E][2][b]
[I-16/I-17]

Primary rights doctrine, impact on . . . 8.02[E][2][a]

Effect of default judgment . . . 12.02[E]
 Final judgment on merits, requirement of
California interpretations
Claim versus issue preclusion . . . 8.02[F][3][a]
Final interlocutory judgment . . . 8.02[F][3][b]
Inconsistent judgments . . . 8.02[F][3][d]
Successive judgments . . . 8.02[F][3][c]
California Rule . . . 8.02[F][1]
Federal Rule . . . 8.02[F][2]
Merits, decision on
Generally . . . 8.02[F][4]
Consent Judgments . . . 8.02[F][4][d]
Default judgment . . . 8.02[F][4][a]
General demurrer . . . 8.02[F][4][c]
Stipulated Judgments . . . 8.02[F][4][d]
Summary judgment . . . 8.02[F][4][b]
Voluntary dismissal . . . 8.02[F][4][e]
Non-judicial tribunal decision, claim preclusive effect of
Administrative agency decisions . . . 8.02[F][5][a]
Contractual arbitration . . . 8.02[F][5][b]
Judicial arbitration . . . 8.02[F][5][b]
Pleading, proof, and waiver of
Appellate Court, raising res judicata in . . . 8.02[F][7][c]
Claim preclusion, raising . . . 8.02[F][7][a]
Compulsory cross-complaint, raising failure to plead . . . 8.02[F]
[7][d]
Estopped to assert res judicata . . . 8.02[F][7][f]
Issue preclusion, raising . . . 8.02[F][7][b]
Proof of res judicata . . . 8.02[F][7][e]
Res judicata defense, special trial of . . . 8.02[F][7][g]
Sister state judgments
Enforcement of . . . 8.02[F][6][b]
Res judicata effect . . . 8.02[F][6][a]
Issue preclusion (See COLLATERAL ESTOPPEL)
Law of case . . . 15.02[C][7][a]
Pendent claims and
Generally . . . 8.02[C][1]
State claim not raised . . . 8.02[C][2]
Primary rights doctrine (See PRIMARY RIGHTS DOCTRINE)
State and federal laws, conduct which violates both
Generally . . . 8.02[B][1]
One or two primary rights . . . 8.02[B][2]
Summary denial, effect of . . . 15.02[C][7][b]
 S

SANCTIONS
Appellate review of sanctions orders . . . 11.03[C]
Enforcement of discovery requests . . . 11.03[B]

SERVICEMEMBERS CIVIL RELIEF ACT

Generally . . . 4.04[B][5]

SERVICE OF PROCESS
Generally . . . 6.04[A]
Asserting lack of proper service, procedures for
Generally . . . 6.04[E]
Federal incorporation of state laws . . . 6.04[E][7]
Motion to quash
Generally . . . 6.04[E][1]
Appellate review . . . 6.04[E][1][c]
Burden of proof . . . 6.04[E][1][a]
Federal rules . . . 6.04[E][1][d]
Granted motion, effect of . . . 6.04[E][1][b]
Process servers . . . 6.04[E][4]
Proof of service . . . 6.04[E][5]
Special service statutes . . . 6.04[E][6]
Summons . . . 6.04[E][3]
Time limits on
Court rules . . . 6.04[E][2][c]
Discretionary dismissal . . . 6.04[E][2][b]
Mandatory dismissal . . . 6.04[E][2][a]
California, service within
Generally . . . 6.04[B]
Mail, service by . . . 6.04[B][4]
Personal service . . . 6.04[B][1]
Publication
Generally . . . 6.04[B][3]
Actual notice . . . 6.04[B][3][d]
Due process . . . 6.04[B][3][c]
Proof of diligence . . . 6.04[B][3][b]
Reasonable diligence . . . 6.04[B][3][a]
Substituted service
Entities, on . . . 6.04[B][2][b]
Federal rules . . . 6.04[B][2][c]
 Individuals, on . . . 6.04[B][2][a]
Substituted service on agent
Generally . . . 6.04[B][5]
Alternative methods . . . 6.04[B][5][d]
Contract . . . 6.04[B][5][b]
Corporations and other entities . . . 6.04[B][5][a]
Implied agent . . . 6.04[B][5][c]
State, service in another
Generally . . . 6.04[C]
Due process . . . 6.04[C][4]
Mail, service by . . . 6.04[C][3], [C][4]
Other evidence . . . 6.04[C][2]
Service options . . . 6.04[C][1]
United States, service outside
International service agreements
Generally . . . 6.04[D][1]
Hague Service Convention . . . 6.04[D][1][a]
[I-17/I-18]

Inter-American Convention . . . 6.04[D][1][b]

When no treaty applies . . . 6.04[D][2]

SETTLEMENTS
Class actions (See CLASS ACTIONS, subhead: Settlement)
Conditional settlements . . . 10.4[B][9][b]
Good faith settlements (See EQUITABLE INDEMNITY, subhead: Good
faith settlement)
Issues
Authority to settle . . . 12.04[A][3]
Conflict of interests
Attorney, court, and client . . . 12.04[A][1]
Party and party’s insurer, between . . . 12.04[A][2]
Judgment by stipulation . . . 12.04[A][4]
Multi-party litigation, effect of good faith settlement in . . . 12.04[A]
[6]
Negotiation techniques . . . 12.04[A][8]
Offer to allow judgment . . . 12.04[A][5]
Structured settlements . . . 12.04[A][7]
Sliding scale agreements . . . 10.4[B][9][a]
Structured settlements . . . 10.4[B][9][c]

SLIDING SCALE AGREEMENTS

 Generally . . . 10.4[B][9][a]

SOURCES OF PROCEDURAL LAW

California judicial system
Generally . . . 2.03[B]
California Trial Court Unification . . . 2.03[A]
California procedure, history of
Generally . . . 2.01[A], [C]
Impact of . . . 2.01[B]
Local rules of court
Generally . . . 2.02[A][5]
Case management rules . . . 2.02[A][5][b]
Fast track rules . . . 2.02[A][5][b]
Local departmental rules . . . 2.02[A][5][c]
State law, not inconsistent with . . . 2.02[A][5][a]
Unwritten law
Judicial decisions . . . 2.02[B][1]
Law Revision Commission official comments . . . 2.02[B][4]
Learned treatises . . . 2.02[B][2]
Secondary authorities . . . 2.02[B][3]
Written law
Generally . . . 2.02[A]
California Code of Civil Procedure . . . 2.02[A][3]
California Constitution . . . 2.02[A][2]
California Rules of court . . . 2.02[A][4]
Local rules of court (See subhead: Local rules of court)
United States Constitution and Laws . . . 2.02[A][1]

SPECIAL CALIFORNIA ARBITRATION STATUTES . . . 12.06[A][8][a]

STATUTES OF LIMITATIONS
Generally . . . 4.01
Accrual of cause of action
Appreciable and actual harm . . . 4.03[C]
California discovery rule (See subhead: Discovery rule)
Difficult accrual cases
Generally . . . 4.03[B][3], [B][3][e]
Breach of warranty . . . 4.03[B][3][b]
Continuous accrual . . . 4.03[B][3][g]
Defamation . . . 4.03[B][3][d]
Employment, wrongful discharge . . . 4.03[B][3][f]
Injury to property . . . 4.03[B][3][c]
Nuisance . . . 4.03[B][3][a]
 Discovery rule (See subhead: Discovery rule)
Medical negligence, special issues in
Actions by minors . . . 4.03[B][4][c]
Section 340.5 . . . 4.03[B][4][a]
Wrongful death cases . . . 4.03[B][4][b]
California Government Claims Act
Claim-filing requirements of . . . 4.05[D][1]
Estoppel and . . . 4.05[D][4]
Purposes of . . . 4.05[D][2]
Substantial compliance, doctrine of
Generally . . . 4.05[D][3][a]
Claim, minimum requirements of . . . 4.05[D][3][c]
Complaint, new allegations in . . . 4.05[D][3][d]
Cross-complaints . . . 4.05[D][3][f]
Doctrine, scope of . . . 4.05[D][3][e]
Limitations to . . . 4.05[D][3][b]
Tolling provisions . . . 4.05[D][5]
Choice of law
Generally . . . 5.05[A]
California borrowing statute . . . 5.05[B]
Claims (See subhead: Notices, claims and other prerequisites)
Commencement of action
Generally . . . 4.05[A]
Choice of law . . . 4.05[B]
Filing complaint, prerequisites to
Generally . . . 4.05[C]
Medical malpractice prelitigation notice (See subhead: Medical
malpractice prelitigation notice)
Public entities and employees, actions against (See subhead:
California Government Claims Act)
Defendant, absence or nonresidence of
Generally . . . 4.04[B][2]
Section 351, constitutionality of . . . 4.04[B][2][a]
Statutory exceptions . . . 4.04[B][2][b]
Disability, statutory
Generally . . . 4.04[B][1]
Exceptions . . . 4.04[B][1][b]
Limitations . . . 4.04[B][1][a]
[I-18/I-19]

Discovery rule
Generally . . . 4.03[A]
 Judicial evolution . . . 4.03[B][1]
Legislative modification of
Generally . . . 4.03[B][2]
Approaches . . . 4.03[B][2][a]
Asbestos exposure litigation . . . 4.03[B][2][c]
Superseding limitations . . . 4.03[B][2][b]
Equitable indemnity . . . 10.4[B][5]
Exhaustion of administrative remedies (See EXHAUSTION OF
ADMINISTRATIVE REMEDIES)
Federal courts . . . 4.05[F]
Interventions . . . 10.5[B][1][b]
Laches, doctrine of (see LACHES)
Medical malpractice prelitigation notice
Generally . . . 4.05[C][1]
Judicial interpretations . . . 4.05[C][1][b]
90-day tolling provision . . . 4.05[C][1][a]
Notices, claims and other prerequisites
Generally . . . 4.05[E], [E][4]
Certificate of merit . . . 4.05[E][3]
Costs, security for . . . 4.05[E][5]
Demand requirements . . . 4.05[E][2]
Prospective defendant, notice to . . . 4.05[E][1]
Periods, statutory limitation
Generally . . . 4.02[A]
Calculation of . . . 4.02[D]
Categorizing actions for . . . 4.02[A][2]
Civil Procedure and other codes . . . 4.02[A][4]
Contractual modification of
Abridgement of . . . 4.02[B][2]
Extension of . . . 4.02[B][1]
Legislative modification of
Abridgement of time to sue . . . 4.02[C][1]
Enlargement of time to sue . . . 4.02[C][2]
Overlap, statutory . . . 4.02[A][3]
Statutory classifications . . . 4.02[A][1]
Prerequisites (See subhead: Notices, claims and other prerequisites)
Procedural aspects of
Affirmative defense . . . 4.05[G][1]
Invoking statutes of limitations . . . 4.05[G][3]
Pleading statutes of limitations . . . 4.05[G][2]
Professional malpractice statutes
Generally . . . 4.04[B][4]
Legal malpractice
 Generally . . . 4.04[B][4][b]
Actual injury . . . 4.04[B][4][c]
Continuous representation . . . 4.04[B][4][d]
Medical malpractice . . . 4.04[B][4][a]
Tolling
Generally . . . 4.04[A]
Class actions and . . . 4.04[B][9]
Cross-complaints . . . 4.04[B][10]
Equitable tolling
Estoppel and other doctrines . . . 4.04[B][8]
Statutes of limitations . . . 4.04[B][7]
Limitations periods
Defendant (See subhead: Defendant, absence or nonresidence of)
Federal savings statute . . . 4.04[B][6]
Professional malpractice statutes (See subhead: Professional
malpractice statutes)
Servicemembers Civil Relief Act . . . 4.04[B][5]
Statutory disability (See subhead: Disability, statutory)
Statutory provisions, other . . . 4.04[B][3]
Relation back doctrine . . . 4.04[B][10]

STRUCTURED SETTLEMENTS
Generally . . . 10.4[B][9][c]

SUBJECT MATTER JURISDICTION

Generally . . . 6.01[A]
Court versus administrative tribunal jurisdiction
Exclusive agency jurisdiction
Agricultural Labor Relations Board (ALRB) . . . 6.01[C][1][a]
Alcoholic Beverage Control (ABC) Board . . . 6.01[C][1][b]
Public Employment Relations Board (PERB) . . . 6.01[C][1][c]
Public Utilities Commission (PUC) . . . 6.01[C][1][d]
State Bar Court . . . 6.01[C][1][f]
Workers’ Compensation Appeals Board (WCAB) . . . 6.01[C][1]
[e]
Jurisdiction to determine jurisdictional issues
Generally . . . 6.01[C][2]
Administrative remedies, exhaustion of . . . 6.01[C][2][a]
Primary jurisdiction . . . 6.01[C][2][b]
No waiver of jurisdictional defense . . . 6.01[C][3]
Superior court jurisdiction
Limited versus unlimited civil cases
Generally . . . 6.01[B][2][a]
 Amount in controversy . . . 6.01[B][2][c]
Judgment below classification minimum amount . . . 6.01[B][2][d]
Probate court . . . 6.01[B][2][f]
Reclassification . . . 6.01[B][2][b]
Small claims court . . . 6.01[B][2][e]
Trial court unification . . . 6.01[B][1]

SUBSTANTIAL BENEFIT THEORY

Generally . . . 14.03[C][2]

SUMMARY JUDGMENT
Generally . . . 12.01[A]
[I-19/I-20]

Burden-shifting approach, California’s . . . 12.01[A][2]

California’s procedure . . . 12.01[B]
Moving party’s initial burden . . . 12.01[A][1]

SURVIVAL OF ACTIONS
Legislative revision . . . 10.06[C][1]
Survival statutes
Generally . . . 10.06[C][2]
Cause of action
Against decedent . . . 10.06[C][2][b]
Decedent’s . . . 10.06[C][2][a]

TEMPORARY RESTRAINING ORDERS (TRO)

Anti-suit injunctions . . . 7.02[B][3]
Prerequisites . . . 7.02[B][1]
Procedural safeguards
Generally . . . 7.02[B][2]
Duration . . . 7.02[B][2][a]
Enforcement . . . 7.02[B][2][b]

TRIAL PROCEEDINGS AND POST-TRIAL MOTIONS

Judicial supervision of jury decisions
Judgment notwithstanding the verdict (See JUDGMENT
NOTWITHSTANDING THE VERDICT (JNOV))
 Juror misconduct, impeachment of verdict for
Generally . . . 13.04[C]
Federal court . . . 13.04[C][4]
Jury misconduct proven, presumption of prejudice . . . 13.04[C][2]
New trial, motion for (See NEW TRIAL, MOTION FOR)
Reliance on juror expertise or other outside evidence (See
subhead: Reliance on juror expertise or other outside evidence,
impeachment for)
Voir dire, juror misconduct during . . . 13.04[C][3]
Nonsuit and directed verdict
Directed verdict . . . 13.04[A][3]
Motion for mistrial . . . 13.04[A][4]
Opening statement, completion of . . . 13.04[A][2]
Plaintiff’s evidence, completion of . . . 13.04[A][1]
Jury trial (See JURY TRIALS)
Pretrial proceedings
Case management rule . . . 13.01[B][1]
Conferences . . . 13.01[B][2]
Delay reduction rule . . . 13.01[B][1]
Reliance on juror expertise or other outside evidence, impeachment for
Improper chance verdicts . . . 13.04[C][1][c]
Inattentiveness, juror . . . 13.04[C][1][d]
Jurors’ personal experiences . . . 13.04[C][1][b]
Outside information, exposure to . . . 13.04[C][1][a]
Trial judge, disqualification of
Actual or perceived bias
Constitutional grounds for . . . 13.01[C][1][b]
Statutory grounds for . . . 13.01[C][1][a]
Peremptory challenge . . . 13.01[C][1][b]

TRIALS
Cases resolution before
Arbitration (See ARBITRATION)
Default judgment (See DEFAULT JUDGMENT)
Involuntary dismissals (See INVOLUNTARY DISMISSALS)
Settlement (See SETTLEMENTS)
Summary judgment (See SUMMARY JUDGMENT)
Voluntary dismissals . . . 12.04
Discovery, use in
Party versus nonparty . . . 11.02[C][3][a]
Videotape depositions . . . 11.02[C][3][b]

TRO (See TEMPORARY RESTRAINING ORDERS (TRO))

 U

UNLIQUIDATED CROSS-COMPLAINT, EFFECT OF

Generally . . . 14.02[B][1][e]

VENUE
Generally . . . 6.03[A]
Complaint, importance of
Generally . . . 6.03[A][4]
Declaratory relief . . . 6.03[A][4][b]
Misjoined defendants . . . 6.03[A][4][a]
Limited civil cases . . . 6.03[A][5]
Mixed actions
Generally . . . 6.03[A][2]
Causes of actions . . . 6.03[A][2][d]
“Main relief” rule . . . 6.03[A][2][a]
Multiple
Causes . . . 6.03[A][2][c]
Defendants . . . 6.03[A][2][d]
Single defendant . . . 6.03[A][2][c]
Transitory cause of action, follows . . . 6.03[A][2][b]
Puzzles . . . 6.03[A][3]
Raising improper venue
Contractual venue provisions . . . 6.03[C]
Convenience of witnesses, change of venue for
Generally . . . 6.03[B][3]
Convenient court, transfer to . . . 6.03[B][3][b]
Federal procedure compared . . . 6.03[B][3][a]
Payment of fees . . . 6.03[B][3][e]
[I-20/I-21]

Specific factual showing, necessity of . . . 6.03[B][3][d]

Time for motion . . . 6.03[B][3][c]
Coordination statutes . . . 6.03[B][5]
Motion to transfer
 Generally . . . 6.03[B][1]
Appellate review . . . 6.03[B][2][b]
Federal Rules compared . . . 6.03[B][1][a]
Jurisdictional venue . . . 6.03[B][1][c]
Proper court, transfer to . . . 6.03[B][2][c]
Suspension of jurisdiction . . . 6.03[B][2][a]
Wrong venue objection, waiver of . . . 6.03[B][1][b]
Removal statute . . . 6.03[B][4]
Rules and exceptions
Generally . . . 6.03[A][1], [A][1][g]
Actions against
Corporations and associations . . . 6.03[A][1][e]
Public officials and entities . . . 6.03[A][1][b]
Contract actions . . . 6.03[A][1][e]
Marriage, dissolution of . . . 6.03[A][1][d]
Personal injury actions . . . 6.03[A][1][c]
Real property, actions involved . . . 6.03[A][1][a]
Residence defined . . . 6.03[A][1][h]

VOLUNTARY DISMISSALS
Generally . . . 12.04

WAGE GARNISHMENT
Generally . . . 14.06[B][6]
Exemptions . . . 14.06[B][6][b]
Procedures . . . 14.06[B][6][a]
Restrictions on employer . . . 14.06[B][6][c]

WAIVER OF RIGHT
Compel arbitration, to (See ARBITRATION, subhead: Waiver of right
to compel arbitration)

WCAB (See Workers’ Compensation Appeals Board (WCAB))

WORKERS’ COMPENSATION APPEALS BOARD (WCAB)

Generally . . . 6.01[C][1][e]

WRITS
 Generally . . . 15.02[A][1], 15.02[A][4][a]
Administrative mandamus (See ADMINISTRATIVE MANDAMUS)
Appeals . . . 15.02[A][2]
Appropriate writ selection
Generally . . . 15.02[B][5]
Flexible approach . . . 15.02[B][5][a]
Improper appeal as writ, treatment of . . . 15.02[B][5][c]
Precision unnecessary . . . 15.02[B][5][d]
Certiorari, writ of
Generally . . . 15.02[B][3]
Contempt review . . . 15.02[B][3][b]
Prerequisites . . . 15.02[B][3][a]
Extraordinary writs
Generally . . . 15.02[A][3]
Practice
Generally . . . 15.02[A][4]
Alternative Writs . . . 15.02[A][4][d]
Common law writs . . . 15.02[A][4][f]
Extraordinary Remedy . . . 15.02[A][4][g]
Parties involved . . . 15.02[A][4][b]
Peremptory Writs . . . 15.02[A][4][d]
Statutory writs . . . 15.02[A][4][e]
Types of . . . 15.02[A][4][c]
Types of
Appropriate writ selection (See subhead: Appropriate writ
selection)
Certiorari (See subhead: Certiorari, writ of)
Mandate (See subhead: Mandate, writ of)
Prohibition (See subhead: Prohibition, writ of)
Supersedeas, writ of . . . 15.02[B][4]
Federal courts
Judicial hostility
Generally . . . 15.02[D][2]
Ninth circuit, mandamus use by . . . 15.02[d][2][b]
United States Supreme Court, limited mandamus use authorized by .
. . 15.02[d][2][a]
Statutory authority . . . 15.02[D][1]
Mandate, writ of
Generally . . . 15.02[B][1]
Controls discretion . . . 15.02[B][1][c]
Functions . . . 15.02[B][1][a]
Ministerial act . . . 15.02[B][1][b]
Nonjudicial entities, issued against . . . 15.02[B][1][d]
Prerequisites and procedures
Generally . . . 15.02[C], [C][1]
Alternative versus peremptory writ
Generally . . . 15.02[C][5][b]
Practical dilemma . . . 15.02[C][5][c]
Procedure after issuance of . . . 15.02[C][5][d]
Writ procedure, choice of . . . 15.02[C][5][a]
Alternative writ issuance . . . 15.02[C][2][b]
Beneficial interest . . . 15.02[C][1][c]
Denial of . . . 15.02[C][9]
Discretion revisited
Discretionary . . . 15.02[C][10][b]
Widely available writ, use of . . . 15.02[C][10][a]
[I-21/I-22]

Filing writ petitions, time limitations for

Nonstatutory writs . . . 15.02[C][6][b]
Statutory writs . . . 15.02[C][6][a]
Inadequate remedy . . . 15.02[C][1][a]
Irreparable injury . . . 15.02[C][1][b]
Nonstatutory criteria . . . 15.02[C][2][a]
Practice guides . . . 15.02[C][8][a]
Proper court for writ . . . 15.02[C][3]
Res judicata (See RES JUDICATA)
Responsive pleading . . . 15.02[C][8][b]
Writ decisions, review of . . . 15.02[C][4]
Prohibition, writ of
Generally . . . 15.02[B][2]
Jurisdictional writ . . . 15.02[B][2][b]
Threatened acts . . . 15.02[B][2][a]