Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. HG08422308
McGuiness, P.J.
Appellant Xuan T. James appeals from an order dismissing her action against respondent Days Inn Worldwide, Inc. (Days Inn) for failure to join a necessary and indispensable party under Code of Civil Procedure section 389. On appeal, James contends the lower court erred in concluding that a Days Inn franchisee that operates the Minnesota hotel at which she was allegedly injured is a necessary party to her personal injury action. We agree and accordingly reverse the judgment of dismissal.
All further statutory references are to the Code of Civil Procedure unless otherwise specified.
Factual and Procedural Background
James filed suit against Days Inn and one of its franchisees, claiming she fell and injured herself at a Days Inn located in Bloomington, Minnesota. She asserts she was injured as a result of a dangerous condition at the hotel, inaccurate instructions from hotel employees, and an unclear map of the hotel. Her complaint contains causes of action for general negligence, intentional tort, premises liability, and breach of contract.
T.H. Continental Limited Partnership (T.H. Continental), which operates the hotel at which James was allegedly injured, moved to quash the summons and complaint on the ground it lacks sufficient contacts with the state of California for personal jurisdiction to be exercised over it. T.H. Continental is a franchisee of Days Inn and manages the Days Inn hotel located in Bloomington, Minnesota.
The trial court granted T.H. Continental’s motion to quash for lack of personal jurisdiction and dismissed T.H. Continental from the action. On appeal, this court affirmed the order of dismissal, holding that James had not met her burden to establish that T.H. Continental had sufficient minimum contacts with the state of California to justify the court’s exercise of jurisdiction over that party. (James v. T.H. Continental Limited Partnership (Mar. 26, 2010, A125879) [nonpub. opn.].)
Unlike its franchisee T.H. Continental, franchisor Days Inn did not contest jurisdiction and answered the complaint filed by James. After the trial court dismissed T.H. Continental for lack of personal jurisdiction, Days Inn filed a motion to dismiss the action against it for failure to join an indispensable party. In its motion, Days Inn argued that T.H. Continental was a necessary party because “complete relief” could not be afforded without T.H. Continental as a party, arguing that Days Inn would be precluded from obtaining indemnity from T.H. Continental in the California action instituted by James. Days Inn also argued that, as a franchisor, it has no control over the day-to-day management and operation of the hotel at which James was allegedly injured. It further contended it may be subject to multiple or inconsistent obligations and that a judgment against it in California would generate further litigation in Minnesota. Days Inn claimed that equitable considerations made T.H. Continental an indispensable as well as a necessary party, thus justifying dismissal of the action against Days Inn for reasons of “equity and good conscience” under section 389, subdivision (b).
The trial court agreed with Days Inn and dismissed the action without prejudice. James timely appealed from the order dismissing the action.
Discussion
A. Necessary and Indispensable Parties—Applicable Law
The determination of whether a party is “indispensable” involves a two-step analysis under section 389. (See Deltakeeper v. Oakdale Irrigation Dist. (2001) 94 Cal.App.4th 1092, 1100.) The first step involves assessing whether the party is “necessary”—specifically, whether the party should be joined in the lawsuit if possible under criteria set forth in section 389, subdivision (a). (See County of San Joaquin v. State Water Resources Control Bd. (1997) 54 Cal.App.4th 1144, 1149.) The statute provides: “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 shall be joined as a party in 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. If he has not been so joined, the court shall order that he be made a party.” (§ 389, subd. (a).)
If a party determined to be necessary under subdivision (a) of section 389 cannot be joined in the lawsuit, then the court proceeds to the second step of the analysis to 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.” (§ 389, subd. (b).) In assessing whether a party is indispensable, the court weighs four equitable factors listed in subdivision (b) of section 389. The factors 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.” (Ibid.) None of these factors is determinative or necessarily more important than another. (County of Imperial v. Superior Court (2007) 152 Cal.App.4th 13, 35.)
“A determination that the persons are necessary parties is the predicate for the determination whether they are indispensable parties” under subdivision (b) of section 389. (Deltakeeper v. Oakdale Irrigation Dist., supra, 94 Cal.App.4th at p. 1100.) In other words, a court may proceed to assess whether a party that cannot be joined is indispensable only after it has first determined that the party is necessary under subdivision (a) of section 389.
Section 389 “tracks the language of its federal counterpart, rule 19 of the Federal Rules of Civil Procedure.... [Citations.]” (Countrywide Home Loans, Inc. v. Superior Court (1999) 69 Cal.App.4th 785, 791-792 (Countrywide).) “ ‘It is therefore appropriate to use federal precedents as a guide to application of the statute.’ [Citations.]” (Id. at p. 792.)
B. Standard of Review
The parties each claim that this court should apply a de novo review of the trial court’s order granting Days Inn’s motion to dismiss for failure to join an indispensable party. We disagree.
As support for her claim that we should apply de novo review, James relies upon Save Our Bay, Inc. v. San Diego Unified Port Dist. (1996) 42 Cal.App.4th 686, 692. One court has observed that Save Our Bay is “contrary to the available authority.” (County of San Joaquin v. State Water Resources Control Bd., supra, 54 Cal.App.4th at pp. 1151, 1152, fn. 5.) Because the determination of whether a party is indispensable under section 389, subdivision (b) involves a weighing of equitable factors in light of practical realities, the decision necessarily turns on an exercise of discretion by the trial court. It is for this reason that “[t]he standard of review of a trial court’s determination pursuant to section 389, subdivision (b) is abuse of discretion. [Citation.]” (Deltakeeper v. Oakdale Irrigation Dist., supra, 94 Cal.App.4th at p. 1106; accord County of San Joaquin v. State Water Resources Control Bd., supra, at pp. 1152-1153.)
An abuse of discretion standard of review also applies to this court’s review of a lower court ruling concerning whether a party is “necessary” under subdivision (a) of section 389. (See TG Oceanside, L.P. v. City of Oceanside (2007) 156 Cal.App.4th 1355, 1365 [reviewing both “necessary” and “indispensable” determination for abuse of discretion]; Hayes v. State Dept. of Developmental Services (2006) 138 Cal.App.4th 1523, 1529 [same].) In federal practice, too, appellate courts apply an abuse of discretion standard to the determination of whether a party is necessary under the federal counterpart to section 389, subdivision (a). (See Picciotto v. Continental Cas. Co. (1st Cir. 2008) 512 F.3d 9, 15 [“all of the circuits that have examined the question have applied an abuse of discretion standard to Rule 19(a) determinations”].) Therefore, we review the court’s decision for abuse of discretion.
“A trial court abuses its discretion when its decision exceeds the bounds of reason by being arbitrary, capricious or patently absurd. [Citation.]” (Dodge, Warren & Peters Ins. Services, Inc. v. Riley (2003) 105 Cal.App.4th 1414, 1420.) However, when exercising a grant of discretion, a court’s “ ‘ “scope of discretion always resides in the particular law being applied....” ’ ” (Thayer v. Wells Fargo Bank (2001) 92 Cal.App.4th 819, 833.) “In other words, judicial discretion must be measured against the general rules of law and, in the case of a statutory grant of discretion, against the specific law that grants the discretion. [Citations.]” (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 393-394.) A ruling premised upon an error of law necessarily constitutes an abuse of discretion. (See In re Charlisse C. (2008) 45 Cal.4th 145, 159; Bisno v. Douglas Emmett Realty Fund 1988 (2009) 174 Cal.App.4th 1534, 1550.)
C. Analysis
Section 389, subdivision (a) includes three distinct clauses that must be analyzed when considering whether a party is considered “necessary” and thus should be joined if possible. (Countrywide, supra, 69 Cal.App.4th at pp. 792-793.) “ ‘Clause (1) stresses the desirability of joining those persons in whose absence the court would be obliged to grant partial or “hollow” rather than complete relief to the parties before the court.... Clause (2)(i) recognizes the importance of protecting the person whose joinder is in question against the practical prejudice to him which may arise through a disposition of the action in his absence. Clause (2)(ii) recognizes the need for considering whether a party may be left, after the adjudication, in a position where a person not joined can subject him to a double or otherwise inconsistent liability.’ [Citation.]” (Id. at pp. 792-793.) We address each of the three clauses in turn.
1. Ability to Award Complete Relief
“The ‘complete relief’ clause ‘requires joinder when nonjoinder precludes the court from effecting relief not in some overall sense, but between extant parties. In other words, joinder is required only when the absentee’s nonjoinder precludes the court from rendering complete justice among those already joined.... Properly interpreted, [the “complete relief” clause] is not invoked simply because some absentee may cause future litigation. The effect of a decision in the present case on the absent party is immaterial under the “complete relief” clause. The fact that the absentee might later frustrate the outcome of the litigation does not by itself make the absentee necessary for complete relief. The “complete relief” clause does not contemplate other potential defendants, or other possible remedies.’ [Citation.]” (Countrywide, supra, 69 Cal.App.4th at pp. 793-794.)
Days Inn claims that it cannot obtain complete relief because it is prevented from seeking indemnity from T.H. Continental in this action. It argues that, as a franchisor, it had no control over the day-to-day operations of the Days Inn franchise in Minnesota and that its liability, if any, derives from actions taken by its franchisee, T.H. Continental, which has previously been determined to be beyond the reach of California courts. The trial court accepted this argument, reasoning that “complete relief cannot be accorded to those already parties to this action, particularly [Days Inn], because [Days Inn] will be prevented from filing a cross-claim for indemnification against the entity that was actually directly responsible for [James’s] allegedly injury.”
Days Inn misconstrues the “complete relief” requirement, which does not contemplate that all potential defendants must be joined in a single action. Instead, the term “complete relief” refers only to relief between the existing parties, regardless of any claims the existing parties may have against absent parties. (See Countrywide, supra, 69 Cal.App.4th at p. 794.)
Here, James may obtain complete relief without the presence of T.H. Continental in this action. According to Days Inn, its liability, if any, is vicarious and is based upon the actions of its franchisee, T.H. Continental. Insofar as T.H. Continental acted as the agent of Days Inn, Days Inn may be liable for all legally compensable damages suffered by James as a result of T.H. Continental’s negligence. (Cf. Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 302-303 [principal is vicariously liable for tortious acts of agent].) “Whenever a judgment is entered against the principal on account of its agent’s conduct, some adverse consequences to the agent may reasonably be expected, but it is clear, as a general matter, that the agent is not a necessary party....” (Wylain, Inc. v. Kidde Consumer Durables Corp. (D. Del. 1977) 74 F.R.D. 434, 436; see also In re Czuba (Bankr. D. Minn. 1992) 146 B.R. 225, 230 [debtor agent not necessary party simply because her actions are the basis for principal’s liability].) Thus, as between James and Days Inn, complete relief may be afforded even though T.H. Continental is not a party to the action.
T.H. Continental would not be a necessary party even if it were determined that Days Inn was a joint tortfeasor, rather than vicariously liable for the torts of its franchisee. “It is well settled that ‘[j]oint tortfeasors are not necessary to afford complete relief.’ [Citations.]” (Countrywide, supra, 69 Cal.App.4th at pp. 794-795.)
For purposes of the “complete relief” clause, it is irrelevant that Days Inn may have an indemnity claim against a party that cannot be joined in the California action. If it is found liable to James in California, Days Inn presumably may seek indemnity from T.H. Continental in a court that can properly exercise personal jurisdiction over T.H. Continental. Simply because Days Inn may pursue such collateral litigation does not render the relief as between James and Days Inn any less complete. “The primary concern is in rendering complete justice among those already joined, not in finding that an absentee is necessary simply to avoid multiple litigation.” (2 Moore’s Manual: Federal Practice and Procedure (Matthew Bender 2010) § 14.04[1][b], p. 14-13, fn. omitted.)
Furthermore, to the extent Days Inn argues it would be more appropriate for this action to be litigated in Minnesota courts for a variety of practical and equitable reasons, the argument is irrelevant to the determination of whether a party is necessary under section 389, subdivision (a). A party is not “necessary” merely because the plaintiff may need to obtain evidence from the absent party and the defendant would have to defend the absent party’s actions at trial. (Brown v. United States (Fed. Cl. 1998) 42 Fed. Cl. 538, 563-564.) Days Inn’s concerns are more appropriately addressed, if at all, in a forum non conveniens motion. (See § 410.30, subd. (a); Martinez v. Ford Motor Co. (2010) 185 Cal.App.4th 9, 18.)
“[T]he question of whether or not an entity or individual should be a party to an action is something quite different from the questions and problems associated with obtaining evidence from such an entity or individual. Rule 19 of the Federal Rules of Civil Procedure [the federal equivalent of section 389] does not list the need to obtain evidence from an entity or individual as a factor bearing upon whether or not a party is necessary or indispensable to a just adjudication.” (Costello Publishing Co. v Rotelle (D.C. Cir. 1981) 670 F.2d 1035, 1044.)
We express no opinion on whether a forum non conveniens motion would be meritorious under the circumstances of this case. The issue is not before us.
Accordingly, we conclude that complete relief may be afforded among the existing parties to the action without joining T.H. Continental as a party.
2. Potential Harm of Nonjoinder
a. Harm to Nonjoined Persons
Under clause (2)(i) of section 389, subdivision (a), “absentees should be joined if they claim an interest relating to the subject of the action, and the disposition of the action, in their absence, could ‘impair or impede’ their ability to protect that interest. [Citation.]” (Countrywide, supra, 69 Cal.App.4th at p. 795.) Days Inn does not contend that T.H. Continental’s interests may be impaired or impeded as a result of its absence from this litigation. Indeed, because T.H. Continental has been determined to be beyond the reach of California courts and is not bound by a decision in this action, its interests will not be not impaired or impeded by any decision that may be reached.
b. Harm to Existing Parties
Under clause (2)(ii) of section 389, subdivision (a), joinder would be required if, in the absence of T.H. Continental, the action would expose Days Inn to a “substantial risk of incurring double, multiple, or otherwise inconsistent obligations....” (§ 389, subd. (a)(2)(ii).) “ ‘[A] “substantial risk” means more than a theoretical possibility of the absent party’s asserting a claim that would result in multiple liability. The risk must be substantial as a practical matter.’ [Citation.]” (Countrywide, supra, 69 Cal.App.4th at p. 796.)
Days Inn contends that it could face “contradictory legal obligations” if it is “found liable in California and [T.H. Continental] is found not liable in Minnesota.” The trial court agreed with Days Inn, reasoning that “[i]f [Days Inn] were to file a separate indemnity action against [T.H. Continental] in Minnesota, it would clearly face the possibility of inconsistent rulings and obligations.”
Days Inn’s concerns about inconsistent obligations are misplaced, at least in the context of the determination of whether a party is necessary under section 389. As an initial matter, there is no legitimate concern that Days Inn will face double or multiple obligations in connection with any damages suffered by James. Further, with regard to Days Inn’s complaint that it may face inconsistent rulings if it is forced to seek indemnity in Minnesota, the risk is purely theoretical. It has offered no reason to believe a Minnesota court would reach a different result than would a California court on the question of T.H. Continental’s liability.
More importantly, however, Days Inn misconstrues the purpose of the “inconsistent obligation” clause of section 389. The clause “compels joinder of an absentee to avoid inconsistent obligations and not to avoid inconsistent adjudications.” (2 Moore’s Manual: Federal Practice and Procedure, supra, § 14.04[1][d], p. 14-16, fn. omitted.) “Inconsistent obligations occur when a party is unable to comply with one court’s order without breaching another court’s order concerning the same incident. [Citation.] Inconsistent adjudications or results, by contrast, occur when a defendant successfully defends a claim in one forum, yet loses on another claim arising from the same incident in another forum. [Citations.]” (Delgado v. Plaza Las Americas, Inc. (1st Cir. 1998) 139 F.3d 1, 3.) “The possibility that because of an absentee joint tortfeasor, a defendant may be liable in the original action and lose a subsequent action for contribution against the joint tortfeasor is not the kind of inconsistency contemplated by the ‘multiple liability’ clause.” (2 Moore’s Manual: Federal Practice and Procedure, supra, § 14.04[1][d], p. 14-16, fn. omitted.)
Here, there is no possibility that Days Inn might face inconsistent obligations as a consequence of pursuing collateral litigation against T.H. Continental in Minnesota. Even if the California action and any Minnesota action resulted in inconsistent adjudications on the issue of liability, Days Inn would not face inconsistent obligations. It would be able to comply with the orders of each of the courts without fear of breaching the other court’s order.
Days Inn does not face a substantial risk of double, multiple, or otherwise inconsistent obligations as a result of T.H. Continental’s absence from this action. Thus, we conclude Days Inn failed to establish that T.H. Continental is a necessary party under any of the three clauses of section 389, subdivision (a). It is unnecessary for us to proceed to the second step of the analysis and consider whether T.H. Continental is an indispensable party under the equitable factors listed in section 389, subdivision (b).
The trial court’s order concluding that T.H. Continental is an indispensable party constitutes an abuse of discretion because it was premised upon errors of law. Specifically, the court erred as a matter of law in concluding that Days Inn’s inability to seek indemnity from T.H. Continental in this action meant that complete relief could not be accorded among the existing parties to the action. The court also erred as a matter of law in concluding that the mere possibility of an inconsistent “adjudication” in any Minnesota action constituted a substantial risk of inconsistent “obligations.”
Disposition
The order dismissing the entire action without prejudice for failure to join an indispensable party is reversed. Appellant Xuan James shall recover her costs on appeal.
We concur: Siggins, J., Jenkins, J.