Opinion
Opinions on pages 360-388 omitted.
HEARINGS GRANTED
References To This Case
For Opinion on Hearing, see 134 Cal Rptr. 388, 556 P.2d 750.
[543 P.2d 102] [125 Cal.Rptr. 102] O'Melveny & Myers, Allyn O. Kreps, Robert J. White and Matthew T. Kirby, Los Angeles, for petitioner.
Wenke, Burge & Taylor, John R. Schilling and Daniel Nishiyama, Santa Ana, for real party in interest.
OPINION
KAUFMAN, Associate Justice.
Petitioner (hereinafter 'Occidental') is the defendant in a pending action in Orange County Superior Court numbered 206187 instituted by real party in interest Fred Fahnestock (hereinafter 'Fahnestock' or 'plaintiff'). The pending suit purports to be a class action brought pursuant to Code of Civil Procedure, section [543 P.2d 103] [125 Cal.Rptr. 103] 382, seeking damages for deceit (see Civ.Code §§ 1572, 1709, 1710).
Occidental petitioned this court for a peremptory writ of mandate commanding respondent Orange County Superior Court to vacate its order dated May 13, 1975, determining that the suit is properly brought as a class action.
Pertinent Facts
The first count of the complaint purports to state a cause of action for intentional misrepresentation. Occidental is the developer of a multi-tract subdivision known a Lake Forest located near El Toro, California. The alleged class consists of approximately 155 homeowners in the 'Garden Homes' portion of Lake Forest specified by tract number and lot number each of whom purchased his or her lot prior to August 1, 1971. Each member of the class is a member of the Lake Forest Community Association (hereinafter 'Association'), a homeowners' association charged with, inter alia, maintenance of certain common areas within the development. Association members are assessed monthly fees for common area maintenance. Membership in Association is mandatory.
The complaint refers to Occidental '. . . and/or its predecessors in interest.' For purposes of this opinion reference to Occidental includes reference to its predecessors in interest.
It would be more accurate to refer to trial judges, inasmuch as this suit was found to be properly maintained as a class action by two different judges on two separate occasions.
In order to induce sales, Occidental allegedly represented to plaintiff and each member of the class, orally and in writing:
'A. That the common areas to be maintained by the association included all grass and planted areas within the Garden Homes cul-de-sacs and all areas between the privacy walls and the major streets of each tract.
'B. That the monthly assessment to each homeowner for said maintenance was to be $12.99 per month.
'C. That said $12.99 figure represented the actual proportionate maintenance cost for each lot within said tracts.
'D. That said monthly assessment would be increased in the future only as a result of inflationary increases in the cost of maintenance and the increased age of the facilities.'
These representations were allegedly false and were knowingly made with intent to deceive and to induce reliance. The members justifiably relied on these representations and were thereby induced to purchase lots. These purchases would not have occurred if the true facts had been known.
At the time the misrepresentations were made, the true proportionate maintenance cost was approximately $40 per lot per month. To conceal the falsity of its representations, Occidental secretly subsidized Association, paying the difference between the actual cost of maintenance and the cost represented. This secret subsidy was made '. . . with the malicious intent to deceive and defraud' each member of the class.
On or about August 1, 1971, Occidental informed the class that (1) Association had been subsidized, (2) the subsidy would cease, (3) Association would assess each homeowner the true proportionate cost of maintenance or reduce the maintenance provided, (4) Association would no longer maintain grass in planted common areas within each cul-de-sac, (5) Association would henceforth maintain only landscaped areas on major streets, and (6) maintenance assessments would be approximately $20 per month per lot.
The second count on the theory of negligent misrepresentation incorporates by reference most of the allegations of the first count except for scienter. It is alleged that Occidental made the false representations without a sufficient or reasonable ground for believing them to be true.
The complaint seeks $1,550,000 actual damages and an equal amount in punitive damages.
[543 P.2d 104] [125 Cal.Rptr. 104] The lawsuit is in the following procedural posture. The complaint was filed August 30, 1973. The same day plaintiff filed a motion seeking certification of the action as a proper class action and an order that defendant be required to notify the class of the pendency of the action. In support of the motion for certification plaintiff filed points and authorities and a one-paragraph declaration of Fred Fahnestock which does little more than refer to the allegations of the complaint. Substantially the entirety of this declaration is set forth in the margin. A hearing was held October 31, 1973, and the motion to certify the action as a proper class action was granted. The motion to require defendant to notify members of the class was denied. On November 9, 1973, Occidental filed a motion for reconsideration. No responsive declarations were filed by plaintiff, but the motion for reconsideration was denied. Discovery was undertaken by both sides. An at-issue memorandum was filed and an April 5, 1976, trial date was set. On March 13, 1975, Occidental filed a motion for an order decertifying the action as a proper class action. In support of this motion Occidental filed a number of declarations. In opposition plaintiff filed only a memorandum of points and authorities asserting that the court lacked jurisdiction to entertain the motion. Thus the only evidence presented by plaintiff in support of the determination that the action is properly a class action is the one-paragraph declaration by Fred Fahnestock, filed in conjunction with the motion filed on the date the complaint was filed (see fn. 2, ante). The motion to decertify was denied 'without prejudice' on May 13, 1975. On May 27, 1975, Occidental filed the instant petition for writ of mandate.
'. . . I purchased my home prior to August 1, 1971. At the time of said purchase defendant Occidental Petroleum Land Development Corporation [sic] through its sales agents and through written material submitted to me, made the representations as set forth in the claim on file herein. I have personal knowledge of all the facts set forth in said complaint. The members of the class identified as parties plaintiff to this action consist of myself and all other homeowners [owning identified lots] within the so-called 'Garden Homes' of the Lake Forest development, who purchased homes within said tracts prior to august 1, 1971. Said class members consist of the owners of approximately 155 homes, and I believe it would be impracticable to bring them all before this court. I believe that I can fairly and adequately represent and protect the interests of this class . . ..'
It is true, as the majority assert, that proof of representations made to those persons who purchased directly from defendant would differ from proof of representations made to those purchasing resales from others. This should present no obstacle to the present suit proceeding as a class action. If necessary, the trial court might divide the class into two subclasses. (Vasquez v. Superior Court, supra, 4 Cal.3d at p. 821, 94 Cal.Rptr. 796, 484 P.2d 964.)
Subsequently, apparently without court authorization or approval and without notice to Occidental or its participation in fixing the wording of the notice, plaintiff apparently undertook to notify members of the class of the pendency of the action. The record before us does not include a copy of the notice, and we do not know whether or not the notice contains the information specified in Civil Code, section 1781(e) and rule 23(c)(2) of the Federal Rules of Civil Procedure. (See Vasquez v. Superior Court, 4 Cal.3d 800, 820-821, 94 Cal.Rptr. 796, 484 P.2d 964.)
Implicit in this determination is that it is not impracticable to bring all members of the class before the court. If this be the result, conceivably each plaintiff could be present in court with his own counsel, conduct his own examination and cross-examination of witnesses, and present his own arguments to the jury. Obviously, a quite burdensome trial could be the consequence. It can hardly be contended that proceeding styled in this fashion is a judicious utilization of a trial court's resources.
Contentions and Issues
Occidental contends that the trial court's refusal to decertify the action as a proper class action had no factual basis and constituted an abuse of discretion. Plaintiff asserts Occidental is guilty of laches and denies that the trial court abused its discretion. In issuing an alternative writ, we have determined Occidental has no adequate remedy in the ordinary course of law. (Randone v. Appellate Department, 5 Cal.3d 536, 543, 96 Cal.Rptr. 709, 488 P.2d 13; Brown v. Superior Court, 5 Cal.3d 509, 515, 96 Cal.Rptr. 584, 487 P.2d 1224; Ford v. Superior Court, 34 Cal.App.3d 338, 340, 109 Cal.Rptr. 844.)
Laches
Assuming without deciding that laches could bar the relief sought by Occidental, we conclude that Occidental is [543 P.2d 105] [125 Cal.Rptr. 105] not guilty of laches. To establish laches requires a showing of unreasonable delay accompanied by either acquiescence or prejudice. (Conti v. Board of Civil Service Commissioners, 1 Cal.3d 351, 359-360, 82 Cal.Rptr. 337, 461 P.2d 617; Hadley v. Superior Court, supra, 29 Cal.App.3d 389, 395, 105 Cal.Rptr. 500.) Occidental is not guilty of unreasonable delay in seeking to decertify.
Although the defense of laches is generally available in mandamus proceedings (see Hadley v. Superior Court, 29 Cal.App.3d 389, 395, 105 Cal.Rptr. 500; 5 Witkin, Cal. Procedure (2d ed.) 1971, pp. 3895-3897 and cases there cited), we have been referred to no case in which the doctrine of laches was held to bar certification or decertification of a class action. Manifestly laches should be applied with caution in respect to a motion to decertify a purported class action, for, otherwise, the result might be the unwarranted trial of an improper class action and the erroneous imposition of a class judgment. This would defeat the very purpose of class actions--economic and efficient utilization of judicial resources.
For further discussion in support of this position, see Frankel, Some Preliminary Observations Concerning Civil Rule 23, 43 F.R.D. 39, 47, and 3B Moore's Federal Practice, § 23.45, 23-762-764.
Plaintiff complains that Occidental could have sought mandate immediately after plaintiff's motion for certification of the class was granted and characterizes Occidental's motion to decertify as merely an improper third attempt at reconsideration of the original certification of the action as a proper class action. It is true that Occidental could have sought mandate to reverse the original order, but plaintiff's contentions reveal a misunderstanding of the procedures applicable to the certification or decertification of a class action.
Inasmuch as Code of Civil Procedure, section 382 contains no instructive procedural provisions, our Supreme Court has suggested that trial courts follow the procedure set out in Civil Code, section 1781(c) a hearing on notice and motion, supported by affidavits, to determine if a suit qualifies as a class action. (Vasquez v. Superior Court, supra, 4 Cal.3d at pp. 820-821, 94 Cal.Rptr. 796, 484 P.2d 964.) It further suggested the employment of procedures prescribed by rule 23 of the Federal Rules of Civil Procedure. (Vasquez v. Superior Court, supra, 4 Cal.3d at p. 821, 94 Cal.Rptr. 796, 484 P.2d 964.) Federal rule 23(c)(1) contemplates the possibility of successive motions concerning certification of class actions, for it provides: 'As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained. An order under this subdivision may be conditional, and may be altered or amended before the decision on the merits.' (Emphasis added.) So does the California Supreme Court. In Vasquez the court stated: 'It is desirable for the trial court to retain some measure of flexibility in the pretrial and trial of a class action, for conceivably even after an initial determination of the propriety of such on action the trial court may discover subsequently that it is not appropriate.' (Vasquez v. Superior Court, supra, 4 Cal.3d at p. 821, 94 Cal.Rptr. at p. 809, 484 P.2d at p. 977.) (Emphasis added.)
Thus the initial certification of a class action is not immutable. A subsequent motion to decertify is appropriate where discovery or other developments in the case disclose that it is not a proper class action. Occidental was justified in pursuing discovery and thereafter moving to decertify on March 13, 1975, on the basis of facts most of which were not before the court at the time of the original motion or the time of the motion for reconsideration. No showing has been made that Occidental was guilty of unreasonable delay.
Obviously the moving party in a subsequent motion to certify or decertify must do more than simply re-present the same facts that were before the court at the time of its original ruling. A contrary rule would be conducive to rampant 'judge shopping' and cause serious desutility of judicial resources. There are at least two bases for such a subsequent motion, however: (1) facts not previously before the trial court, and (2) a change in decisional law. The propriety of successive motions will rest in the sound judicial discretion of the trial court. The statement of the court in Vasquez is appropriate: '. . . we must rely upon the ability of the trial courts to adopt innovative procedures which will be fair to litigants and expedient in serving the judicial process.' (4 Cal.3d at p. 821, 94 Cal.Rptr. at p. 810, 484 P.2d at p. 978.)
As the majority note, a decision to certify a case as a class action is not immutable. (Vasquez v. Superior Court, supra, 4 Cal.3d at p. 821, 94 Cal.Rptr. 796, 484 P.2d 964.) Such a determination may be changed or modified at any time prior to a decision on the merits. (Id.) Thus, the trial court has authority to alter the course of the litigation if subsequent events indicate that individual issues will predominate.
[543 P.2d 106] [125 Cal.Rptr. 106] Abuse of Discretion
'Although the statute [Code Civ.Proc., § 382] appears to speak in the alternative, it uniformly has been held that two requirements must be met in order to sustain any class action: (1) there must be an ascertainable class [citations omitted]; and (2) there must be a well defined community of interest in the questions of law and fact involved affecting the parties to be represented [citations omitted].' (Daar v. Yellow Cab Co., 67 Cal.2d 695, 704, 63 Cal.Rptr. 724, 731, 433 P.2d 732, 739; accord: Vasquez v. Superior Court, supra, 4 Cal.3d at p. 809, 94 Cal.Rptr. 796, 484 P.2d 964; Harrison v. Board of Supervisors, 44 Cal.App.3d 852, 861-862, 118 Cal.Rptr. 828.) The burden of persuasion rests upon the purported representative plaintiff. (City of San Jose v. Superior Court, 12 Cal.3d 447, 460, 115 Cal.Rptr. 797, 525 P.2d 701; Vasquez v. Superior Court, supra, 4 Cal.3d at p. 820, 94 Cal.Rptr. 796, 484 P.2d 964; Bauman v. Islay Investments, 45 Cal.App.3d 797, 801-803, 119 Cal.Rptr. 681.)
The requirement of an ascertainable class presents no insuperable obstacle in the case at bench. The complaint alleges the class consists of all homeowners who purchased certain identified lots prior to August 1, 1971. The class is amenable to a sufficiently precise definition, and each member of the alleged class can readily be identified by a search of public records.
Occidental contends that the class alleged in the complaint is too broad, inasmuch as it includes not only those persons who purchased directly from Occidental but, also, those who purchased from other persons (resales). Even if Occidental is correct, the class is still ascertainable, consisting of approximately 75 homeowners who purchased directly from Occidental prior to August 1, 1971.
We turn to the requirement that there be a well defined community of interest in the questions of fact and law involved. 'The ultimate question in every case of this type is whether, given an ascertainable class, the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.' (Collins v. Rocha, 7 Cal.3d 232, 238, 102 Cal.Rptr. 1, 4, 497 P.2d 225, 228; accord: City of San Jose v. Superior Court, supra, 12 Cal.3d at p. 460, 115 Cal.Rptr. 797, 525 P.2d 701.) Stated differently, it must be shown that the questions of law and fact susceptible to common proof predominate over questions of law and fact that must be individually determined. (Bauman v. Islay Investments, supra, 45 Cal.App.3d at p. 802, 119 Cal.Rptr. 681; cf. Civ.Code, § 1781(b)(2); Federal Rules of Civil Procedure, rule 23(b)(3).)
To prevail upon trial, plaintiff must show that Occidental, or persons for whom Occidental is liable, made false material representations to each member of the class with knowledge of their falsity or an unreasonable belief in their veracity and that these representations were made with intent to and did induce justifiable reliance by each member of the class and that each member of the class suffered damages as a result. (Vasquez v. Superior Court, supra, 4 Cal.3d at p. 811, 94 Cal.Rptr. 796, 484 P.2d 964; Ach v. Finkelstein, 264 Cal.App.2d 667, 674, 70 Cal.Rptr. 472; 3 Witkin, Cal. Procedure (2d ed.) pp. 2210, 2225.) Insofar as proof at trial is concerned, the most significant element is that of 'representations.' If the purported representative plaintiff cannot by common proof show that substantially the same representations were made to each of the class members, common proof of the other elements of actionable deceit will be impossible.
Occidental urges that plaintiff has made no showing at all that the same or substantially the same representations were made by Occidental or its representatives to each member of the alleged class. We quite agree.
[543 P.2d 107] [125 Cal.Rptr. 107] In the first place the class alleged by the complaint includes not only those persons who purchased directly from Occidental but, also, those persons who purchased resales from others. Obviously, the proof of representations made to the latter would be different than the proof of representations made to the former.
Secondly, unlike the situation in Vasquez, supra, there is here no showing of a standardized, rehearsed sales pitch. On the contrary, from declarations filed by Occidental it appears that 30 or more sales persons were involved in the sale of 'Garden Homes' prior to August 1, 1971, and that these persons were not trained to make a standardized, rehearsed sales presentation to prospective customers concerning the extent of common-area maintenance or the fees likely to be assessed therefor. Neither the allegations of the complaint nor any document filed by plaintiff asserts that there was a uniform or standardized sales presentation made to the members of the alleged class. The declarations submitted by Occidental deny that any such representations as set forth in the complaint were made to plaintiff or to the members of the class plaintiff claims to represent.
Most importantly, it bears emphasis that the declarations submitted on behalf of Occidental are uncontroverted by and declarations or other showing on the part of Fahnestock. The only declaration ever submitted by Fahnestock in support of his claim that a class action is proper is the one-paragraph declaration in support of his original motion for a determination that the action is a proper class action. (See fn. 2, ante.) Emphasizing that the purported representative plaintiff has the burden of proof on the issue of commonality of interest, Occidental asserts that Fred Fahnestock's declaration is vague, conclusory and wholly inadequate to support a determination that a class action is proper. We agree. The showing made by the purported representative plaintiff in this case is not unlike that made by the purported representative plaintiff in Bauman v. Islay Investments, supra, 45 Cal.App.3d 797, 119 Cal.Rptr. 681, which showing was held to be wholly inadequate to justify a class action. (45 Cal.App.3d at p. 802, 119 Cal.Rptr. 681.)
Plaintiff contends, however, that the Final Subdivision Public Report concerning the development was distributed to each prospective purchaser and that this report embodied the representations alleged in the complaint. Pertinent portions of the report are set forth in the margin. We [543 P.2d 108] [125 Cal.Rptr. 108] have thoroughly read the report and cannot agree with plaintiff that the representations as alleged in the complaint are to be found in the report. The report contains an estimated amount for the maintenance of common areas and expressly warns in capital letters that 'EXPENSES OF OPERATION ARE DIFFICULT TO ESTIMATE INITIALLY AND EVEN IF ACCURATELY ESTIMATED TEND TO INCREASE SUBSTANTIALLY WITH PRICE INCREASES AND THE INCREASED AGE OF FACILITIES.' It is true that the report shows the initial assessment to be $12.99 per month, but there is no representation that the assessment would not be increased except for inflation in the cost of maintenance and the increased age of the facilities. Additionally, there is no representation that the Association will maintain all grass and planted areas within the 'Garden Homes' culde-sacs. On the contrary, the report provides that each owner will have certain maintenance responsibilities and that the Association will maintain only certain common areas which exceed 25 feet in width. Even if it were to be conceded, however, that the report is reasonably susceptible to more than one interpretation, it would still require the testimony of each member of the alleged class to establish what he or she understood the report to mean. Thus, we conclude that the representations are not susceptible of common proof by means of the Final Subdivision Public Report.
'THIS PROJECT IS A 'PLANNED DEVELOPMENT'. IT INCLUDES COMMON AREAS AND COMMON FACILITIES WHICH WILL BE OPERATED BY AN INCORPORATED OWNERS' ASSOCIATION.
We conclude that plaintiff has utterly failed to demonstrate that the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants. In the face of this total absence of proof, the trial court abused its discretion in deciding to the contrary.
Let a peremptory write of mandate issue to respondent Orange County Superior Court commanding it to vacate its order dated May 13, 1975, in case 206187 determining that the action is properly maintained as a class action and to enter its order determining that, on the basis of the showing heretofore made, the action is not properly maintainable as a class action. The alternative writ heretofore issued is discharged.
McDANIEL, J., concurs.
KERRIGAN, Associate Justice.
I dissent.
I strongly disagree with the majority's decision that the trial judge abused his discretion in certifying this case as a class action. As Mr. Justice Tobriner stated in his dissent in City of San Jose v. Superior Court, 12 Cal.3d 447, 465, 115 Cal.Rptr. 797, 809, 525 P.2d 701, 713: 'The majority . . . give no deference to [the trial] court's exercise of its discretion. In a one-sided presentation, the majority opinion notes the individual issues which divide the proposed class, but pays little heed to the more significant common issues of law and fact which unite the class; observes the burden of class litigation but overlooks the far greater burden of individual suits; . . . The trial judge carefully weighed the benefits and burdens of a class proceeding, and concluded that maintenance of this suit as a class action would yield a substantial saving of time and expense; the majority lean on the scales.'
[543 P.2d 109] [125 Cal.Rptr. 109] The majority correctly determine that ascertainment of class members presents no serious impediment herein, but incorrectly decide that common issues of law and fact do not predominate. The requisite community of interest is not dependent upon an identical recovery, and the mere fact that each member of the class must prove his separate claim to share in any recovery by the class is only one factor to be considered in determining whether a class suit is the proper mode of procedure. (Vasquez v. Superior Court, 4 Cal.3d 800, 809, 94 Cal.Rptr. 796, 484 P.2d 964.) The fact that individual transactions are involved does not preclude a finding of a community of interest if every member of the alleged class would not be required to litigate numerous and substantial questions to ascertain his personal right to recover subsequent to the rendering of any class judgment which determined in plaintiff's favor whatever questions were common to the class. (Vasquez v. Superior Court, supra, 4 Cal.3d at p. 809, 94 Cal.Rptr. 796, 484 P.2d 964.) Basically, a balancing test is applied by the trial judge to decide whether the questions of law and fact susceptible of common proof predominate. The showing required for certification of a class is within his discretion, so long as the correct criteria are employed. (Petherbridge v. Altadena Fed. Sav. & Loan Assn., 37 Cal.App.3d 193, 199, 112 Cal.Rptr. 144.) Occidental does not claim the trial judge 1 used incorrect criteria in denying its motion to decertify, but rather, contends he abused his discretion in applying them. I find no such abuse.
While recognizing that the procedural device of a class action is not intended as a panacea for the ills of an interdependent society, I would find, however, that the instant controversy is particularly appropriate for treatment in such fashion. Initially, it should be noted that the predominant issue herein--defendant's scienter and intent, or, conversely, defendant's lack of reasonable grounds for believing the representations to be true--is not dependent upon testimony of individual members of the class. The majority apparently place heavy reliance on two other factors: (1) the assertion that unlike the situation in Vasquez, no standardized sales presentation was employed by defendant's sales personnel and thus, the question of whether the same or substantially similar representations were made to each class member may not be proved without resort to individual testimony; and (2) the issue of reliance may not be susceptible of common proof. I shall discuss the validity of these points seriatim.
As noted by the majority, the declaration introduced by Fahnestock in support of his contention that the action was properly maintained on a class basis, was somewhat deficient. However, the plaintiff's verified complaint was available to the trial judge in deciding whether to decertify the class. While maintainability may be determined on the basis of the pleadings, such decision generally should be predicated on more information than the complaint itself affords. (Huff v. N. D. Cass Company of Alabama, 5 Cir., 485 E.2d 710, 713; 7A Federal Practice & Procedure (Wright & Miller ed.) § 1785, p. 131.)
In this case, the Final Subdivision Public Report, filed in support of defendant's motion, was also available for consideration by the trial court. Each prospective homeowner read and signed this report before entering into a purchase agreement. 2 The report is ambiguous and it cannot be said [543 P.2d 110] [125 Cal.Rptr. 110] as a matter of law that it does not represent the facts as alleged in the complaint. Furthermore, it could also be inferred that any oral representations were consistent with these written representations. Defendant's salespersons had access to the report and the trial judge could properly infer that if asked, they would respond in a manner consistent with such report. Indeed, the contrary would tend to prove there was no reasonable ground for asserting the truth of such representations.
In discussing the issue of reliance, I shall assume, without deciding, that an inference thereof cannot be drawn. It is this factor that the majority apparently consider dispositive of the controversy. They assert that each member of the class would be required to offer proof of his individual reliance, and thus, the common issues would not predominate. 3 While this reasoning has a certain cogency, I would hold that even if separate trials are needed on this point, the common issues remain predominant and that maintenance of this suit as a class action would be advantageous to the litigants and the judicial process. The California Supreme Court has urged trial courts to be innovative in formulating procedural devices designed to promote utility of judicial resources in connection with class action litigation. (Vasquez v. Superior Court, supra, 4 Cal.3d at p. 821, 94 Cal.Rptr. 796, 484 P.2d 964.) It has also encouraged them to incorporate procedures from outside sources in deciding upon the propriety of allowing a suit to be maintained as a class action. (City of San Jose v. Superior Court, supra, 12 Cal.3d at p. 453, 115 Cal.Rptr. 797, 525 P.2d 701.) The trial judge would be acting within the scope of his discretion if he determined separate trials on the question of individual reliance would be efficacious in serving the judicial process.
The federal courts have employed this procedure in dealing with securities fraud class actions time after time. In Dolgow v. Anderson, 43 F.R.D. 472, 490 (E.D.N.Y.), the court stated that 'the common issues need not be dispositive of the entire litigation. The fact that questions peculiar to each individual member of the class may remain after the common questions have been resolved does not dictate the conclusion that a class action is not permissible.' Dolgow proceeded to hold that the common issues predominated even though different statements had been made to different plaintiffs, and each member of the class had to prove reliance, damages, and compliance with the statute of limitations. In Mersay v. First Republic Corporation of America, 43 F.R.D. 465, 471 (S.D.N.Y.), the litigation was deemed proper despite the fact that damages, reliance, and the statute of limitations were individual questions. Furthermore, the issue of whether each class member had actual knowledge of the misrepresentations was not common to the class. In Vernon J. Rockler and Co. v. Graphic Enterprises, Inc., 52 F.R.D. 335, 346 (D.Minn.), the court found no difficulty in allowing the action to proceed despite major questions of individual reliance. It noted that once the common elements had been adjudicated, the court could order separate trials on the reliance issue. The court in Green v. Wolf Corporation, 406 F.2d 291 (2d Cir.), cert. den., 395 U.S. 977, 89 S.Ct. 2131, 23 L.Ed.2d 766, could 'see no sound reason why the trial court, if it determines individual reliance is an essential element of the proof, cannot order separate trials on that particular issue, as on the question of damages, [543 P.2d 111] [125 Cal.Rptr. 111] if necessary. The effective administration of 23(b)(3) [which requires the court to find that common questions of fact or law predominate as to all class members] will often require the use of the 'sensible device' of split trials. [Citations.]' (Green v. Wolf Corporation, supra, 406 F.2d at p. 301.) 4 The utility of rule 23 would be undermined if a class action could be denied merely because all of the allegations of the class do not fit together like pieces in a 'jigsaw puzzle.' (Green v. Wolf Corporation, supra, 406 F.2d at p. 300.) 5
Reliance is an issue in almost every securities fraud case, and to require that it first be proven would virtually eliminate the concept of a Rule 10b-5 class action. (Green v. Wolf Corporation, supra, 406 F.2d at p. 301; Vernon J. Rockler and Co. v. Graphic Enterprises, Inc., supra, 52 F.R.D. at p. 345.) Can the majority realistically assert that the reliance issue confronting us in the instant controversy is radically different from that present in securities fraud cases? We have here a group of homeowners who allegedly purchased their property in reliance on the representations contained within the Final Subdivision Public Report. Thus, in this type of situation, whether it be homeowners in a multiple-tract housing development, in a mobile home park, or in a condominium complex, reliance will almost always be an issue lurking in the background.
I conclude that neither the factors discussed in the majority opinion, nor the individual issues present in this case, preclude the maintenance of this suit as a class action. I would deny the petition for a peremptory writ of mandamus and discharge the alternative writ.
'THE ASSOCIATION HAS THE RIGHT TO LEVY ASSESSMENTS AGAINST YOU FOR MAINTENANCE OF THE COMMON AREAS AND OTHER PURPOSES. YOUR CONTROL OF OPERATIONS AND EXPENSES IS LIMITED TO YOUR RIGHT TO VOTE AT MEETINGS.
'. . .
'MAINTENANCE AND OPERATION EXPENSES: The annual budget for maintenance, operation and reserves for the project, when fully developed, as estimated by the developer, is $351,507.
'EXPENSES OF OPERATION ARE DIFFICULT TO ESTIMATE INITIALLY AND EVEN IF ACCURATELY ESTIMATED TEND TO INCREASE SUBSTANTIALLY WITH PRICE INCREASES AND THE INCREASED AGE OF FACILITIES.
'In this unit there is a total of 168 owners. You will be assessed for your share of the estimated budget as follows:
'Owners of patio house Lots . . . will be initially assessed $12.99 per month per lot. . . .
'. . .
'If you do not pay your assessment it may become a lien on your lot.
'The subdivider must pay assessments on any unsold lots. If some owners are delinquent in payment of their assessments the remaining owners have legal rights to recover all delinquent assessments. During the time these legal rights are being pursued, the assessments of the remaining owners may be temporarily increased.
'. . .
'Each OWNER of property within Single Family Areas shall keep all shrubs, trees, grass and plantings of every kind on his property, including setback areas and planted areas between adjacent sidewalks and the street curb, if any and on any Common Area located between the boundary line of his property and the street (public or private) on which such property abuts, neatly trimmed, property cultivated and free of trash, weeds, and other unsightly material; provided, however, that if the width of any such Common Area exceeds 25 feet, the ASSOCIATION and not such OWNER shall be responsible for maintenance of all such Common Area. The ASSOCIATION shall have the right, at any time, to plant, replace, maintain and cultivate shrubs, trees, grass and plantings on any property within Common Areas, regardless of whether any such OWNER or the ASSOCIATION is responsible hereunder for maintenance of such Areas. . . .'