Opinion
A146080
09-25-2017
DAVID CARPENTER, Plaintiff and Appellant, v. MARK CHAMBERS et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Solano County Super. Ct. No. FCS043746)
In this action for negligent misrepresentation and concealment in connection with the purchase of real property, the superior court sustained the motion of defendants Mark Chambers and Chambers Pool and Plaster (together, Chambers) for judgment on the pleadings. Plaintiff David Carpenter appeals, contending that the superior court erred in finding an "identity of claims" in the two suits Carpenter has filed, such that res judicata bars his claims. On the narrow issue presented here, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
This action (filed in 2014) and a prior, settled action (filed in 2013) each arise out of the purchase of a residential property in Green Valley, California. In both complaints, Carpenter alleges he purchased the property in reliance on misrepresentations regarding construction and quality of the property. Carpenter alleges that after purchasing the home, he discovered the home had numerous undisclosed construction defects which reduced the property's market value.
The 2013 action, which named the seller and his general contractor as defendants (but not Chambers), alleged a variety of construction defects, including a defective refurbishment of the swimming pool. The complaint states that the general contractor led Carpenter to understand the pool's interior had recently been replastered, when he knew it had merely been coated with an epoxy product. It also alleges the same misinformation was provided to him by Mark Chambers, the owner of Serrano Pool and Plaster, whom Carpenter hired to inspect the pool. Although Chambers is not named as a defendant, the complaint states he provided Carpenter with a written report falsely stating that the pool surfaces were "one year old plaster" even though Chambers knew the pool had only be treated with an inferior epoxy coating, which subsequently failed.
Based upon these facts, Carpenter set forth causes of action for breach of contract, breach of a third party beneficiary contract, negligence, fraud, and negligent misrepresentation, and sought general damages, including for diminution in property value, property damage, the cost of repairs and increased maintenance obligations, and emotional distress, as well as punitive damages on the fraud claim.
The 2013 action was settled and dismissed with prejudice.
In 2014, Carpenter filed this lawsuit against Chambers alleging intentional or negligent misrepresentation and concealment of material facts concerning the swimming pool plaster. Carpenter allegedly relied upon Chambers' inspection report, which misrepresented the condition of the pool's plaster surfaces, which caused Carpenter to purchase the property at an inflated price and to incur repair costs.
Chambers moved for judgment on the pleadings, arguing, inter alia, that all causes of action in the 2014 lawsuit were res judicata by virtue of the prior settled action. The trial court agreed. The court found an identity of claims between the two lawsuits, as both actions arose from the alleged concealment of defects in the swimming pool's plaster; that the dismissal of the 2013 lawsuit, following settlement, constituted a final judgment on the merits; and the claims were brought by the same plaintiff in each case, satisfying the doctrine's privity requirement.
The 2014 action was dismissed and this appeal followed.
DISCUSSION
Carpenter challenges only the trial court's finding that there is an identity of claims between the two lawsuits. We review that finding de novo, to determine as a matter of law whether the complaint states a cause of action. (Ludgate Insurance Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 602 (Ludgate); Noble v. Draper (2008) 160 Cal.App.4th 1, 10.) Like the trial court, we must accept as true all material facts alleged in the complaint and construe the complaint liberally "with a view toward attaining substantial justice." (Ludgate, at p. 602.) We may also consider matters subject to judicial notice. (Harris v. Grimes (2002) 104 Cal.App.4th 180, 185.) We review the judgment, not the court's rationale. (Ibid.)
Carpenter asserts that we review for an abuse of discretion. Not so. (Ludgate, supra, 82 Cal.App.4th at p. 603 ["A trial court has no discretion in granting or denying a motion for judgment on the pleadings."].) Were Carpenter challenging the trial court's denial of a request for leave to amend, the abuse of discretion standard would apply. (Ott v. Alfa-Laval Agri, Inc. (1995) 31 Cal.App.4th 1439, 1448.) He did not raise this issue, however.
The doctrine of res judicata operates as a bar to the maintenance of a second suit between the same parties, or parties in privity with them, on the same cause of action. (Branson v. Sun-Diamond Growers (1994) 24 Cal.App.4th 327, 340 (Branson).) To " 'curtail . . . vexation and expense to the parties and wasted effort and expense in judicial administration,' " the doctrine " ' "precludes piecemeal litigation by splitting a single cause of action or relitigation of the same cause of action on a different legal theory or for different relief." ' " (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 897, italics omitted.) The doctrine is not limited to those claims that were actually argued and decided; so long as the cause of action could have been litigated in the first suit, and the other requirements of the doctrine are met, it is barred. (Noble v. Draper, supra, 160 Cal.App.4th at p. 11.)
Chambers was not a party to the first lawsuit. In support of his motion for judgment on the pleadings, he argued that his privity with sellers, who were defendants in the first lawsuit, permits him to assert res judicata. The trial court ruled Chambers was not subject to any such requirement, citing, inter alia, Bernhard v. Bank of America National Trust & Savings Association (1942) 19 Cal.2d 807. This is not a correct statement of the law. (See DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824-825 [observing that notwithstanding imprecise language in Bernhard, and other decisions, a party asserting res judicata must also have been a party, or in privity with a party, to the prior action].) While we ordinarily refrain from discussing an issue clearly forfeited by an appellant, failure to do so here may perpetuate the same confusion identified in DKN Holdings LLC.
This appeal presents the narrow question of whether there exists an "identity of claims" between the 2014 and 2013 actions. The requisite "identity" exists when the second suit asserts the same "cause of action" as the first. (Mycogen Corp. v. Monsanto Co., supra, 28 Cal.4th at p. 904.) A cause of action is not a legal theory; California applies the primary right theory to define a "cause of action" as "(1) a primary right possessed by the plaintiff, (2) a corresponding duty imposed upon the defendant, and (3) a wrong done by the defendant which is a breach of such primary right and duty." (Balasubramanian v. San Diego Community College District (2000) 80 Cal.App.4th 977, 991 (Balasubramanian), disapproved on another ground in Stryker v. Antelope Valley Community College District (2002) 100 Cal.App.4th 324, 334-337.) Thus, the cause of action is based upon the harm suffered, rather than the legal theory asserted or the relief sought. (Ibid.)
The mere fact that two lawsuits arise out of the same set of operative facts does not trigger the application of res judicata. (Agarwal v. Johnson (1979) 25 Cal.3d 932, 954 (Agarwal), overruled on another ground in White v. Ultramar (1999) 21 Cal.4th 563, 574, fn. 4.) Nor does the fact that two suits arise from or concern the same "transaction." (See, e.g., Brenelli Amedeo, S.P.A. v. Bakara Furniture, Inc. (1994) 29 Cal.App.4th 1828, 1834.) A single course of events may involve violations of more than one primary right. (Sawyer v. First City Financial Corp. (1981) 124 Cal.App.3d 390, 399.) In some circumstances, however, multiple wrongful actions are deemed to invade only a single primary right. (Bay Cities Paving & Grading, Inc. v. Lawyers' Mutual Insurance Co. (1993) 5 Cal.4th 854, 862-864, cited with approval in Branson, supra, 24 Cal.App.4th at p. 342.) In each case, we consider the right asserted by the plaintiff, the corresponding duty of the defendant not to violate that right, and the resulting injury. (Balasubramanian, supra, 80 Cal.App.4th at p. 991.)
We conclude, like the trial court, that this action is premised upon the same primary right and seeks redress for the same injury as the prior action, and is thus barred. The 2013 complaint alleged various persons, including Chambers, misrepresented the composition and condition of the swimming pool's plaster walls and floor, which deception induced Carpenter to overpay for the property and incur unforeseen remediation costs. The 2014 complaint charges Chambers with concealing the same material facts, causing Carpenter to pay a higher price for the property than he otherwise would have, and to incur repair costs. In both cases, Carpenter alleges he had a right to receive truthful information about the condition of the swimming pool and Chambers breached his duty to Carpenter by failing to disclose accurate information. Thus, the two complaints seek to vindicate the same primary right and allege the same type of invasions of that right. Under the primary rights analysis, then, the two actions concern the same "injury." (See, e.g., Eichman v. Fotomat Corp. (1983) 147 Cal.App.3d 1170, 1174-1175 [franchisee's suits against franchisor both alleged financial harm flowing from breaches of franchise agreement and covenant of good faith and fair dealing, and were thus grounded in the same primary right; although each suit alleged different acts, they violated the same right and the second suit was barred]; Lazzarone v. Bank of America (1986) 181 Cal.App.3d 581, 591 [probate court's approval of trust accountings necessarily encompassed claims, filed in subsequent suit, for negligence and fraud by trustee bank in advising plaintiff and investing his money, where the alleged losses were fully disclosed in the accountings presented to probate court].)
Carpenter contends each action sought to enforce different primary rights. The 2013 action, he argues, focuses on the seller's and developer's failure to competently renovate the property and seeks redress for construction defects. The 2014 lawsuit, he argues, focuses on the nondisclosure issue, and seeks redress for fraudulent misrepresentation not construction defects. This argument, however, overlooks key allegations in the 2013 complaint, that is, that Carpenter was defrauded by false "representations . . . concerning the condition and value of the subject property" (including the pool) and thereby "induced" to purchase the property for an inflated price and to incur other costs. Further, the 2013 complaint alleged that had Carpenter "known the true facts, [he] would not have taken such action" to purchase the home. The latter allegation, implying that the harm was avoidable, all but admits that the nondisclosure of defects is what injured Carpenter not, as he argues, the defects themselves. Thus, the prior lawsuit, like the instant one, is grounded in the failure to disclose.
Like the 2013 complaint, the complaint at bar includes allegations implying that the harm was caused by the nondisclosure, not the defect, as the harm could have been avoided by "adjusting the price for the [defective] pool."
Carpenter relies heavily on authorities that are inapposite. Agarwal, supra, 25 Cal.3d 932, involved the invasion of two distinct and separate rights with distinct and exclusive remedies: the statutory right, under the Federal Civil Rights Act, to be free of employment discrimination and the right to reputational integrity under state common law. (Agarwal, supra, 25 Cal.3d at pp. 954-955.) Although the alleged reputational harms allegedly occurred in conjunction with the plaintiff's employment discrimination, and the two cases involved some factual overlap, each action focused on different wrongful acts, concerned distinct harms, and contemplated distinct remedies that would not have been available in the other action. (Id. at p. 955.) This case does not involve statutory and tort claims; nor does it involve distinct harms flowing from separate acts; rather, both actions filed by Carpenter sought money damages for harms flowing from the same wrong—the failure to disclose the true status of the swimming pool's plaster.
Similarly, Sawyer v. First City Financial Corp. (1981) 124 Cal.App.3d 390 involved two actions both arising out of a real estate development transaction. In the first action, the plaintiffs (the sellers of land) sought damages against the developer and development lender for their alleged failure to perform as agreed under the parties' agreements (the promissory note, deed of trust and loan, and development agreement), which resulted in their failure to pay the plaintiffs on the promissory note. (Sawyer, at p. 396.) The plaintiffs filed a second action for conspiracy and fraud against all of the same parties and the ultimate purchaser of the property, alleging that they conspired 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." (Id. at p. 397.) On summary judgment, the trial court ruled that the first action was res judicata as to the issues in the second. (Id. at p. 398.) The court of appeal reversed, finding that the first action was purely on the contract and focused only on one issue (the effectiveness of the waiver of deficiency judgment by the plaintiffs), whereas the second suit, unlike the first, assumed that the waiver was effective but rested its allegations on a different set of facts which plaintiff alleged were independently tortious. (Id. at p. 402 ["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."].) By contrast, Carpenter's two actions focus on the same issues and seek redress for the same injury.
Carpenter also relies upon Brenelli Amedeo, S.P.A. v. Bakara Furniture, Inc. (1994) 29 Cal.App.4th 1828. There, the plaintiff filed and prevailed on claims for breach of contract. Following entry of judgment, the defendants allegedly engaged in a series of fraudulent activities designed to prevent the plaintiff from collecting on the judgment. (Id. at pp. 1837-1838 & fn. 2.) The former suit was held not to be res judicata of the latter, as they were grounded in different wrongful acts, and would require considerably different proof at trial. While, in the first suit, the plaintiff had to establish that corporate defendant breached a contract with the plaintiff; in the second, the plaintiff would have to show that the individual shareholders "fraudulently conveyed corporate assets, conspired to fraudulently transfer those assets, suppressed facts, conspired to defraud, and converted corporate property to their own benefit," a showing which would rest on completely different facts. (Id. at p. 1837.) Here, the crux of both lawsuits is the same, as both require Carpenter to establish a violation of his right to know the truth about the condition of the pool before purchasing the property.
Carpenter also suggests that, under Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, the harm in a construction defect case is the defect itself (as opposed to an injury caused by the defect). Hicks does not stand for this proposition, however. In that case, the court considered whether product malfunction is an element of a cause of action for breach of warranty, for purposes of determining whether the cause of action was amenable to class treatment. (Id. at pp. 917-922.) The court contrasted two cases, one involving a plaintiff who only sought damages for an injury caused by the defect (emotional distress caused by living with a defective artificial heart valve) and another where the plaintiffs only sought damages for the defect itself (i.e., the cost of replacing the defective unit); in the latter, the defect itself "was the injury." (Id. at p. 922.) This case is factually distinguishable because Carpenter demands more than the cost of replacing the defective component, he also sues for diminution in value and ongoing maintenance and repair costs. More importantly, Hicks's discussion illustrates the more fundamental point that the primary rights analysis is individualized and fact intensive.
We agree with Carpenter that authority factually on all fours with this case is sparse. However, at least one case provides a very close analogy. (See Merchants Fire Assurance Corp. v. Retail Credit Co. (1962) 206 Cal.App.2d 55 (Merchants Fire).) In Merchants Fire, the plaintiff, who was in the business of insuring real property against various kinds of physical damage, sought to evaluate the risk in continuing to insure a specific property; he obtained a report from defendant evaluating the risks and, relying upon it, including a representation that the home was not built on fill, decided to keep the insurance in force. (Id. at pp. 56-57.) Later, when a landslide occurred, the plaintiff learned that the home was in fact built on filled ground and entered into a compromise settlement with the insured, paying out for the loss. (Id. at p. 57.) The plaintiff sued defendant for furnishing a false report, asserting causes of action for negligent misrepresentation (based upon the making of false statements without reasonable grounds for believing them to be true) and breach of contract (the breach being defendant's negligent preparation of the report and the inclusion of false information therein). (Ibid.) This action was dismissed on statute of limitation grounds, and plaintiff immediately filed a second action for fraudulent deceit and breach of contract. (Id. at pp. 56, 62.)
The second action included four counts: The first was substantially the same as the fraud count in the earlier complaint, with some embellishment and now alleging affirmative fraud and deceit; the second was for breach of a written agreement to supply accurate information; the third was for breach of an agreement " 'to use a high degree of accuracy' "; and the fourth alleged a written contract to use reasonable care in supplying the information. (Merchants Fire, supra, 206 Cal.App.2d at 62-63.) The trial court gave an interlocutory judgment abating the second action pending final determination of the first case. (Id. at p. 63.)
In determining whether a plea in abatement should be sustained, the court found that, despite pleading different legal theories, both actions involved the same "primary right." (Merchants Fire, supra, 206 Cal.App.2d at p. 63.) While the court did not define the "primary right" by name, the facts are very similar, in that there were two actions alleging nondisclosure of an existing property defect in violation of the duty to disclose material facts resulting in unanticipated financial losses. Thus, we find that there is an identity of claims between the two lawsuits and this action is barred.
The same analysis is applied for purposes of res judicata or a plea in abatement, and serves the same policy considerations. (See Crowley v. Katleman (1994) 8 Cal.4th 666, 682.) --------
DISPOSITION
The trial court's order granting judgment on the pleadings is affirmed. Chambers shall recover their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)
/s/_________
REARDON, J. We concur: /s/_________
RUVOLO, P. J. /s/_________
STREETER, J.