Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. GC041133, C. Edward Simpson, Judge.
Gail E. Ruffu, in pro. per., for Plaintiff and Appellant.
Haney, Buchanan & Patterson and Steven H. Haney for Defendants and Respondents.
MANELLA, J.
Appellant Gail E. Ruffu, a horse trainer, brought an action against respondents for breach of a contract regarding a racehorse named Urgent Envoy. The trial court dismissed the action on the ground that the decision in an administrative proceeding before the California Horse Racing Board (CHRB) collaterally estopped Ruffu’s claims. We affirm.
RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
In 2003, Ruffu entered into a syndicate agreement with respondents Steven H. Haney, Richard Seiden, Hal Haney, and Norton Copper regarding the purchase and training of Urgent Envoy. Under the agreement, Ruffu and the four respondents each held a 20 percent ownership interest in Urgent Envoy. Ruffu was designated the “[s]yndicate [m]anager, ” and provided training services.
On December 27, 2004, the CHRB filed a complaint against Ruffu, alleging that she had improperly taken Urgent Envoy from horse trainer Richard Baltas at Hollywood Park. In January 2005, following a formal hearing on the complaint, the Board of Stewards (stewards) ordered Ruffu to return the horse to Baltas. Ruffu noticed an appeal from the order, which was heard by Judge Michael A. Scarlett, an administrative law judge. On September 20, 2005, after an evidentiary hearing, Judge Scarlett issued a proposed decision sustaining the stewards’ order and directing Ruffu to return the horse. The proposed decision stated: “Failure to return the horse within [a specified] period of time shall result in the suspension of [Ruffu’s] horse trainer’s license....” In November 2005, the CHRB adopted Judge Scarlett’s findings and conclusions of law, but struck the statement that Ruffu would lose her license if she failed to return the horse within the specified period. Following the CHRB’s decision, Ruffu never returned Urgent Envoy.
As explained below (see Discussion, pt. C., post), the record also establishes that Ruffu never sought judicial review of the CHRB’s decision through administrative mandamus (Code Civ. Proc., § 1094.5).
In July 2008, Ruffu initiated the underlying action against respondents together with Baltas, the CHRB, the stewards, and Judge Scarlett. Her original and first amended complaints alleged that respondents had breached the syndicate agreement regarding Urgent Envoy, and engaged in wrongful conduct involving the CHRB. After the CHRB, the stewards, and Judge Scarlett successfully demurred to the first amended complaint, the trial court dismissed them from the action.
The limited record before us does not disclose when (if ever) Ruffu’s claims against Baltas were resolved.
On December 19, 2008, Ruffu filed her second amended complaint (SAC) against respondents, which asserts claims for breach of the syndicate agreement and the implied covenant of good faith and fair dealing. The SAC alleges that respondents’ misconduct began on July 15, 2004, when respondents secretly decided to remove Urgent Envoy from her care. Later, at a clandestine meeting with the stewards of Santa Anita Park, respondents made false statements regarding Ruffu’s conduct and obtained an order directing the horse’s transfer to Baltas. On July 17, 2004, respondents supervised the horse’s forcible transfer from Ruffu’s barn at Santa Anita Park. Following the transfer, respondents excluded Ruffu from decisions regarding the horse, and placed it under the supervision of Baltas, whose irresponsible training activities injured it. In December 2004, Ruffu “rescue[d] Urgent Envoy by removing him from [respondents’] custody and keeping him safe from [respondents’] reckless disregard for his welfare.”
Respondents demurred to the SAC, contending that Ruffu’s claims were collaterally estopped by Judge Scarlett’s decision in the CHRB proceedings following Ruffu’s conduct in December 2004. On February 3, 2009, the trial court overruled respondents’ demurrer. Later, shortly before trial, respondents filed a motion to dismiss Ruffu’s action on the basis of collateral estoppel. In support of the motion, respondents asked the trial court to take judicial notice of Judge Scarlett’s decision, and also submitted a full transcript of the hearing before Judge Scarlett. Following a hearing, the trial court granted the motion. Judgment was entered in respondents’ favor on August 14, 2009.
DISCUSSION
Ruffu contends that the trial court improperly dismissed her action against respondents. For the reasons explained below, we disagree.
A. Governing Principles
Collateral estoppel ordinarily bars the relitigation of an issue decided at a previous proceeding when the following threshold requirements are satisfied: “1) the issue to be precluded must be identical to that decided in the prior proceeding; 2) the issue must have been actually litigated at that time; 3) the issue must have been necessarily decided; 4) the decision in the prior proceeding must be final and on the merits; and 5) the party against whom preclusion is sought must be in privity with the party to the former proceeding.” (People v. Garcia (2006) 39 Cal.4th 1070, 1077.) The doctrine encompasses factual issues (id. at p. 1076), as well as legal issues wholly grounded in the facts underlying the first decision (Flores v. Transamerica HomeFirst, Inc. (2001) 93 Cal.App.4th 846, 852). Under the doctrine, a final decision in an administrative adjudication may be given collateral estoppel effect in a subsequent judicial proceeding if “the agency was acting in a judicial capacity” and the threshold requirements are satisfied. (Brosterhous v. State Bar (1995) 12 Cal.4th 315, 324.) The party asserting collateral estoppel has the burden of establishing these elements. (See Lucido v. Superior Court (1990) 51 Cal.3d 335, 341.)
Historically, collateral estoppel -- or “issue preclusion” -- has been viewed as an aspect of res judicata, which governs “the preclusive effect of a final judgment on the merits.” (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896.) The term “‘res judicata’” has often been used to encompass collateral estoppel and the distinct doctrine of “claim preclusion, ” although in recent years the term has been restricted to claim preclusion. (Id. at pp. 896-897, fn. 7.) Generally, “[r]es judicata, or claim preclusion, prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them. Collateral estoppel, or issue preclusion, ‘precludes relitigation of issues argued and decided in prior proceedings.’ [Citation].” (Id. at p. 896.)
Here, respondents raised their collateral estoppel defense in a motion to dismiss, rather than in a motion for summary judgment. Ordinarily, after the defendants in an action have answered the complaint, the appropriate vehicle for establishing a collateral estoppel defense prior to trial is by motion for summary judgment. (Kelly v. Vons Companies, Inc. (1998) 67 Cal.App.4th 1329, 1334.) However, when the answer has been filed, “[a]n action may be dismissed upon motion where the complaint does not state a cause of action and cannot be amended to state such. [Citations.] The motion is in the nature of a general demurrer. [Citation.] An order granting the motion is tantamount to an order sustaining a demurrer without leave to amend. [Citation.]” (Timberlake v. Schwank (1967) 248 Cal.App.2d 708, 710.)
Respondents’ motion to dismiss amounted to a general demurrer, as it challenged the SAC’s legal sufficiency. Generally, defenses predicated on principles of res judicata and collateral estoppel may be raised on demurrer when all facts “are within the complaint or subject to judicial notice.” (Carroll v. Puritan Leasing Co. (1978) 77 Cal.App.3d 481, 485; see Barker v. Hull (1987) 191 Cal.App.3d 221, 226-227.) Because respondents predicated their collateral estoppel defense solely on matters subject to judicial notice (Hogen v. Valley Hospital (1983) 147 Cal.App.3d 119, 125 [administrative records and files may be judicially noticed]; Agostini v. Strycula (1965) 231 Cal.App.2d 804, 806 [same]), the motion effectively contended that the SAC failed to state a claim. Accordingly, we review the ruling on the motion under the principles applicable to demurrers.
“Because a demurrer both tests the legal sufficiency of the complaint and involves the trial court’s discretion, an appellate court employs two separate standards of review on appeal. [Citation.]... Appellate courts first review the complaint de novo to determine whether or not the... complaint alleges facts sufficient to state a cause of action under any legal theory, [citation], or in other words, to determine whether or not the trial court erroneously sustained the demurrer as a matter of law. [Citation.]” (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 879.) “Second, if a trial court sustains a demurrer without leave to amend, appellate courts determine whether or not the plaintiff could amend the complaint to state a cause of action. [Citation.]” (Id. at p. 879, fn. 9.)
Under the first standard of review, “we examine the complaint’s factual allegations to determine whether they state a cause of action on any available legal theory. [Citation.] We treat the demurrer as admitting all material facts which were properly pleaded. [Citation.] However, we will not assume the truth of contentions, deductions, or conclusions of fact or law [citation], and we may disregard any allegations that are contrary to the law or to a fact of which judicial notice may be taken. [Citation.]” (Ellenberger v. Espinosa (1994) 30 Cal.App.4th 943, 947.) Under the second standard of review, the burden falls upon the plaintiff to show what facts he or she could plead to cure the existing defects in the complaint. (Cantu v. Resolution Trust Corp., supra, 4 Cal.App.4th at p. 890.) “To meet this burden, a plaintiff must submit a proposed amended complaint or, on appeal, enumerate the facts and demonstrate how those facts establish a cause of action.” (Ibid.)
B. Proceedings Before Judge Scarlett
We begin by examining the hearing before Judge Scarlett and his decision. Generally, jurisdiction over horse racing operations in California is vested in the CHRB, which is authorized to delegate enforcement of its rules to “duly appointed stewards.” (Jamgotchian v. Slender (2009) 170 Cal.App.4th 1384, 1398.) When the stewards issue a decision, an aggrieved party is entitled to appeal the ruling to the CHRB. (Bus. & Prof. Code, § 19517.) The appeal is properly heard by an administrative law judge, who may consider new evidence. (See Stokes v. California Horse Racing Bd. (2002) 98 Cal.App.4th 477, 479-481 & fn. 8.)
Although respondents asked the trial court to take judicial notice only of Judge Scarlett’s decision, the trial court also appears to have consulted the reporter’s transcript of the hearing before Judge Scarlett, which respondents submitted in support of their motion to dismiss. As Ruffu has not raised a challenge to the transcript on appeal and the parties rely on it in their briefs, we take judicial notice of the transcript. (See Hogen v. Valley Hospital, supra, 147 Cal.App.3d at p. 125 [appellate court may take judicial notice of matters which could have been noticed by the trial court, even where the trial court was not requested to take such notice].)
During the hearing before Judge Scarlett, Ruffu represented herself and testified on her own behalf; in addition, Judge Scarlett heard testimony from Steven Haney and other witnesses. Ruffu acknowledged that she removed Urgent Envoy from the stable on December 23, 2004, but contended that she was entitled to do so because respondents had breached their contract with her and failed to pay her as a trainer. In view of this contention, Judge Scarlett admitted the syndicate agreement and heard testimony regarding its provisions.
Under the agreement, Ruffu was charged with the initial responsibility of buying Urgent Envoy for $5,000. After the horse was purchased, Ruffu and respondents were each to hold a 20 percent ownership interest in Urgent Envoy, and Ruffu was to act as the “[s]yndicate [m]anager.” In exchange for these interests, each respondent contributed $1,250, and Ruffu agreed to provide “all labor services, including training services, in lieu of a monetary payment.” The agreement also required respondents jointly to contribute $1,000 per month to pay for ongoing expenses. “[I]n lieu of having to pay expenses, ” Ruffu was obliged to “provide all labor services, including training services.”
Regarding Ruffu’s role as syndicate manager, the agreement stated: “Manager[’]s Duties. [¶] Subject to the approval of the Owners, the Syndicate Manager shall have full charge of the control over the management of the horse and of all training matters arising out of this enterprise. Any decision of the Syndicate Manager can be rejected and /or changed by a 50% vote of the Owners....” In addition, the agreement provided: “Active Participation. [¶] Notwithstanding Manager’s duties, each Owner shall materially and substantially participate in the day to day decisions affecting and relating to this joint venture and all management decisions relating to this joint venture and all management decisions relating to said horse.”
Ruffu testified that on July 17, 2004, respondents improperly removed Urgent Envoy from her care. They secretly met and decided to transfer the horse from her, and secretly persuaded the stewards of Santa Anita Park to authorize the transfer. Steven Haney was present when Urgent Envoy was forcibly removed from Ruffu’s care by Santa Anita Park employees, one of whom struck Ruffu. After the transfer, Ruffu tried to resolve her dispute with respondents by negotiation, but found that respondents treated her as if she had no ownership interest; in addition, she learned that the horse had suffered serious injuries under trainer Baltas’s supervision.
Ruffu further testified that on December 23, 2004, after Baltas invited her to visit the horse, she took the horse from Baltas’s stable. She denied that she gave the Santa Anita Park gateman false information to remove the horse. Ruffu maintained that she was entitled to take possession of the horse to protect her ownership interest and to assert a lien for unpaid services as a trainer (Civ. Code, § 3080 et seq.), arguing that respondents’ conduct in connection with the transfer violated her contract rights as owner, syndicate manager, and trainer. Ruffu also contended that her conduct was necessary to protect Urgent Envoy’s welfare.
Steven Haney testified that prior to the July 2004 transfer, respondents paid Ruffu $1,000 per month, as required under the syndicate agreement, but were dissatisfied with her performance as a trainer. On July 14, 2004, Ruffu informed respondents that she would not race Urgent Envoy unless her ownership interest was increased. Respondents invited Ruffu to participate in an owners’ conference phone call, but she declined to do so. During the call, respondents unanimously decided to remove Ruffu as syndicate manager and trainer. On July 15, 2004, respondents informed Ruffu of their decision by letter. After the horse was transferred, respondents permitted Ruffu to retain her 20 percent ownership interest, even though she paid no syndicate expenses. Haney maintained that Ruffu was owed no funds under the syndicate agreement.
Steven Haney further testified that after the horse was placed in Baltas’s care, the horse suffered a leg injury. In August 2004, respondents moved the horse to a farm to recover. Ruffu participated in this decision. Later, when respondents asked Ruffu to select a trainer other than Baltas in whom she had confidence, she insisted that she serve as trainer. After Baltas resumed the horse’s training, he discovered that the injury had not completely healed, and recommended that the horse be placed “on vacation.” Shortly afterwards, Ruffu removed the horse from Baltas’s stable. Although the stewards and law enforcement authorities had directed Ruffu to return the horse, Ruffu had not done so, and respondents could not find it.
Aside from Ruffu and Steven Haney, the gateman at Hollywood Park testified that when Ruffu removed Urgent Envoy on December 23, 2004, she first identified the horse as “Sudden Splash, ” and later as “Engine and Boy.” Helnuth von Bluecher, a veterinarian who examined Urgent Envoy in the fall of 2004, testified that he saw no signs that Baltas had abused the horse. In addition, Judge Scarlett heard testimony regarding whether the stewards complied with CHRB rules in ordering the horse’s transfer from Ruffu in July 2004.
In sustaining the stewards’ January 2005 order requiring Ruffu to return the horse, Judge Scarlett made detailed determinations. According to the findings, in June 2004, Urgent Envoy performed poorly in its first race, and was discovered to have a “‘sore shin.’” Respondents concluded that Ruffu’s training methods might be harmful to the horse, and unanimously decided to change trainers. On July 15, 2004, they notified Ruffu that she had been removed as syndicate manager, but permitted her to retain her ownership interest. On July 17, 2004, they asked the stewards to transfer the horse. Because Ruffu was reluctant to permit the transfer, the stewards needed the assistance of security guards and police to remove the horse from Ruffu’s custody. In August 2004, when Baltas learned that the horse had a stress fracture, he heeded a veterinarian’s advice and put the horse “out to pasture” for three months; later, in December 2004, Baltas put the horse on a reduced training regimen when he found that the injury had not healed. At midnight on December 23, 2004, Ruffu took the horse from Baltas’s barn without respondents’ permission, and used false information to secure his departure from the race track.
Noting the terms of the syndicate agreement, Judge Scarlett affirmed the stewards’ January 2005 determination that respondents had properly exercised their authority under the syndicate agreement in removing Ruffu as Urgent Envoy’s trainer in July 2004. Judge Scarlett found insufficient evidence to support Ruffu’s allegation that Baltas had abused the horse while it was in his care, and rejected Ruffu’s contention that her 20 percent ownership interest permitted her to take possession of the horse. Although Judge Scarlett did not expressly address Ruffu’s statute-based contention that she seized the horse to assert a lien for unpaid services as a trainer, he found that prior to the transfer in July 2004, respondents had paid her $1,000 per month, as required under the agreement, and that she was obliged to provide her training services in exchange for her ownership interest. Judge Scarlett concluded that Ruffu had removed the horse from Baltas without respondents’ permission “under the [s]yndicate [a]greement which governed ownership rights.”
In view of these determinations, Judge Scarlett ruled that Ruffu had violated CHRB rule 1489, which authorizes the CHRB to deny a license to anyone who commits an act of moral turpitude, or an act that is “fraudulent or in violation of a trust or duty.” (Cal. Code Regs., tit. 4, § 1489). In addition, he ruled that Ruffu had violated CHRB rule 1902, which bars licensees from “engag[ing] in any conduct which by its nature is detrimental to the best interests of horse racing.” (Cal. Code Regs., tit. 4, § 1902.)
C. Analysis
The trial court concluded that Judge Scarlett’s decision barred Ruffu’s contract-based claims against respondents. We agree. Collateral estoppel prevents a party from relitigating issues that were “raised, actually submitted for determination and determined” (Barker v. Hull, supra, 191 Cal.App.3d at p. 226) in a “judicial-like adversary proceeding” (People v. v Sims (1982) 32 Cal.3d 468, 479 (Sims)), provided that the resolution of the issues was required for the decision in the prior proceeding (First N.B.S. Corp. v. Gabrielsen (1986) 179 Cal.App.3d 1189, 1196). As explained below, Judge Scarlett’s determinations are binding upon Ruffu, and preclude her from relitigating the factual and legal issues that underpin her claims.
The proceedings before Judge Scarlett were sufficiently judicial in nature to support the application of collateral estoppel. Generally, “[f]or an administrative decision to have collateral estoppel effect, it and its prior proceedings must possess a judicial character. [Citation.] 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. [Citation.]” (Pacific Lumber Co. v. State Water Resources Control Bd. (2006) 37 Cal.4th 921, 944.) As the hearing before Judge Scarlett displayed all these features, his decision is capable of having collateral estoppel effect.
We turn to the requirements regarding the finality of the decision and the privity of the parties. An administrative law judge’s decision is final under the doctrine of collateral estoppel when the administrative agency’s rehearing deadline passes, and the aggrieved party fails to mount a timely and successful attack on the decision in the courts. (See Sims, supra, 32 Cal.3d at pp. 485-486; Knickerbocker v. City of Stockton (1988) 199 Cal.App.3d 235, 243-244 [explaining that party who receives adverse finding in administrative hearing and fails to have it set aside through judicial review procedures is bound by it in later civil action].) Under the regulations governing the CHRB, when the CHRB issues a decision in an administrative appeal, the decision “is subject to review by the court having jurisdiction.” (Cal. Code Regs., tit. 4, § 1763.) Ruffu’s appropriate vehicle for obtaining judicial review was administrative mandamus. (Code. Civ. Proc., § 1094.5; see Jones v. Superior Court (1981) 114 Cal.App.3d 725, 727-731.) As Ruffu’s complaints establish that she never sought administrative mandamus regarding Judge Scarlett’s decision (as adopted by the CHRB), it is now final for purposes of collateral estoppel.
In assessing whether the SAC states legally tenable claims, we may examine Ruffu’s original complaint and her positions in previous litigation. (Cantu v. Resolution Trust Corp., supra, 4 Cal.App.4th at p. 877.) The original complaint in this action alleges that after the CHRB adopted Judge Scarlett’s decision in November 2005, the stewards suspended Ruffu’s trainer’s license through September 2008 for failure to return Urgent Envoy. According to Ruffu’s June 2008 claim to the California Victims Compensation and Government Claims Board, which she incorporated into the original complaint, Ruffu sought an appeal of the stewards’ ruling before the CHRB, but the appeal never took place, and her license remained suspended as of June 2008. These allegations are sufficient to show that Ruffu never obtained a successful review of Judge Scarlett’s decision in the courts.
Although respondents were not parties in the proceedings before Judge Scarlett, they may properly challenge Ruffu’s claims on the basis of collateral estoppel. Generally, defendants are entitled to assert that the plaintiff is barred from relitigating factual and legal issues decided against the plaintiff in a previous action, even though the defendants were not involved as parties in that action. (Bernhard v. Bank of America (1942) 19 Cal.2d 807, 812-813; Burdette v. Carrier Corp. (2008) 158 Cal.App.4th 1668, 1688; Flores v. Transamerica HomeFirst, Inc., supra, 93 Cal.App.4th at p. 852.) This principle encompasses findings rendered in administrative proceedings. (Marie Y. v. General Star Indemnity Co. (2003) 110 Cal.App.4th 928, 955.)
We turn to the remaining requirements, which concern the identity of the issues litigated and “necessarily decided” in the proceedings before Judge Scarlett (People v. Garcia, supra, 39 Cal.4th at p. 1077). Because our inquiry addresses the application of collateral estoppel, the question before us is not whether Judge Scarlett adjudicated the claims that Ruffu has asserted in the SAC, but whether his factual and legal findings resolve the critical allegations underlying her claims. As our Supreme Court has explained, collateral estoppel “bars parties or their privies from relitigating in a new proceeding on a different cause of action issues actually determined in a prior proceeding.” (In re Russell (1974) 12 Cal.3d 229, 233, italics added.)
Generally, the judgment in a prior action “is a collateral estoppel on issues that were raised, even though some factual matters or legal arguments that could have been presented were not.” (7 Witkin, Cal. Procedure (5th ed. 2008) Judgment, § 419, pp. 1064-1065.) Judge Scarlett’s decision, coupled with the transcript of the proceedings before him, constitute an adequate basis for assessing the issues raised and determined in the proceedings. (Id. at § 418, pp. 1063-1064; see Kelly v. Vons Companies, Inc., supra, 67 Cal.App.4th at pp. 1339-1341.) In light of these principles, we compare Judge Scarlett’s determinations with the allegations in the SAC, which asserts that respondents breached the syndicate agreement and the implied covenant of good faith contained within it.
Generally, every contract “‘“imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” [Citation.]’” (Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 371-372, quoting Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 683-684.) The implied covenant operates to protect the express covenants or promises of the contract. (Racine & Laramie, Ltd. v. Department of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1031-1032.) “‘In essence, the covenant is implied as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party’s rights to the benefits of the contract.’” (Ibid., italics omitted, quoting Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 1153.) Accordingly, it imposes “‘not only... upon each contracting party the duty to refrain from doing anything which would render performance of the contract impossible by any act of his own, but also the duty to do everything that the contract presupposes that he will do to accomplish its purpose.’” (Pasadena Live v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1093, quoting Harm v. Frasher (1960) 181 Cal.App.2d 405, 417.) However, because the covenant protects only the express terms of the agreement, “[i]t cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349-350.) The precise nature and extent of the duties imposed under the implied covenant thus depend upon the purposes of the contract. (Foothill Properties v. Lyon/Copley Corona Associates (1996) 46 Cal.App.4th 1542, 1551-1552.)
We conclude that Ruffu’s claims fail, insofar as they rely on the July 2004 transfer of Urgent Envoy from Ruffu. Regarding the transfer, the SAC alleges that respondents secretly decided to terminate Ruffu as syndicate manager and trainer; secretly met with the stewards and misinformed them that Ruffu was blackmailing respondents by declining to race Urgent Envoy; supervised the use of physical force against Ruffu during the transfer; and denied Ruffu advance notice of the transfer. After admitting testimony regarding all these matters, Judge Scarlett found (1) that respondents had honored their contractual obligations prior to the transfer by paying their monthly share of expenses, (2) that the syndicate agreement authorized respondents to arrange for the transfer of Urgent Envoy to a new trainer, (3) that the stewards ordered the transfer, and (4) that security guards and police officers “facilitate[d]” the transfer. These determinations were essential to Judge Scarlett’s decision, in view of the defenses Ruffu raised before him (First N.B.S. Corp. v. Gabrielsen, supra, 179 Cal.App.3d at p. 1196 [for purposes of collateral estoppel, determinations are necessary for prior decision when trial court was required to make them to resolve questions raised at trial]); moreover, they undercut Ruffu’s allegations regarding the July 2004 transfer. Accordingly, the determinations preclude Ruffu from litigating her claims, to the extent they are predicated on the transfer.
This conclusion encompasses Judge Scarlett’s determinations regarding the interpretation of the syndicate agreement, as the claims in the SAC involve the same course of events that Judge Scarlett examined. (See Flores v. Transamerica HomeFirst, Inc., supra, 93 Cal.App.4th at p. 852). The conclusion also applies to Ruffu’s claim in the SAC based on the implied covenant, even though Ruffu did not refer to the implied covenant before Judge Scarlett; Ruffu’s assertion of a new legal theory based on the same facts cannot avert the collateral estoppel effects of Judge Scarlett’s decision. (See Castillo v. City of Los Angeles (2001) 92 Cal.App.4th 477, 479 (Castillo)).
Judge Scarlett’s findings also undermine Ruffu’s claims, insofar as they are based on the events following the transfer. The SAC alleges that after the transfer, respondents refused to pay Ruffu $1,000 per month, as specified in the syndicate agreement; excluded Ruffu from participating as an owner in the syndicate’s decisions; failed to tell Ruffu that they were placing Urgent Envoy in Baltas’s care; ignored advice from Ruffu and veterinarians regarding the horse’s training regimen; and permitted Baltas to engage in irresponsible and injurious training methods. The SAC maintains that as a result of this misconduct, Ruffu suffered damages exceeding $85,000, comprising the monthly payments she was denied after the transfer, and losses arising from the injuries to Urgent Envoy, which diminished his value and prevented him from racing.
According to the SAC, Ruffu’s damages embrace the $1,000 monthly payments that the respondents discontinued after July 17, 2004, and losses stemming from Urgent Envoy’s injuries at the hands of Baltas. The latter include the loss of her “‘sweat equity’” and Worker’s Compensation Insurance payments prior to the July 2004 transfer, which she valued at $4,000 per month; the loss of other “hard costs” she paid prior to the transfer that were not covered by respondents’ $1,000 monthly contributions; the diminished value of Ruffu’s interest in Urgent Envoy, whose total assessed worth had allegedly decreased from $25,000 (in June 2004) to nothing (in December 2008); and loss of her opportunity to profit from Urgent Envoy’s winnings.
Although Judge Scarlett did not address all of these allegations, his findings are fatal to Ruffu’s claims. After admitting evidence regarding the parties’ conduct after the transfer, Judge Scarlett made numerous findings, including that Ruffu retained her ownership interest in Urgent Envoy after the transfer, but he did not resolve whether respondents permitted Ruffu to participate in the syndicate’s decisions. Nonetheless, because his findings establish that Ruffu has suffered no damages, her claims fail, as “[a] breach of contract is not actionable without damage” (Bramalea California, Inc. v. Reliable Interiors, Inc. (2004) 119 Cal.App.4th 468, 473).
To the extent the SAC asserts that Ruffu has a contractual right to the $1,000 monthly payments for horse-related expenses after the transfer, Judge Scarlett found that respondents properly removed Urgent Envoy from her care, that she no longer acted as the horse’s trainer under the syndicate agreement after the transfer, and that she wrongfully took possession of the horse in December 2004. These findings conclusively rule out Ruffu’s alleged contract-based entitlement to the monthly expense payments for Urgent Envoy’s care after the transfer. Furthermore, to the extent the SAC attributes damages to respondents’ placement of the horse with Baltas, Judge Scarlett found that there was “insufficient evidence” to support Ruffu’s contention that Baltas’s training methods injured the horse. As our Supreme Court has explained, for purposes of collateral estoppel, a binding determination may be based on a failure of proof. (Sims, supra, 32 Cal.3d at p. 484.) Because Judge Scarlett’s determinations were required to resolve Ruffu’s defenses, they operate to bar her claims regarding the events following the transfer, as they establish that Ruffu cannot recover damages for respondents’ conduct.
Judge Scarlett stated: “[Ruffu] claimed that her actions in taking Urgent Envoy were justified because Baltas’s training methods had caused injury to the horse. There is insufficient evidence in the record to support this contention. The evidence showed that the horse suffered an injury to his shin prior to being transferred to Baltas in July 2004, and that this injury ultimately resulted in a stress fracture while the horse was being trained by Baltas. It is not at all clear that the stress fracture would not have resulted but for actions committed by Baltas.”
In addition to the allegations discussed above, the SAC asserts that respondent Steven Haney breached the syndicate agreement by “relentlessly, albeit unsuccessfully, pursuin[g] criminal charges against [Ruffu.]” As Judge Scarlett found that Ruffu improperly removed Urgent Envoy from Baltas’s stable, this allegation cannot support her contract-based claims against respondents. On appeal, Ruffu has offered no argument for the contrary conclusion, and thus has forfeited any such contention.
Ruffu challenges the application of collateral estoppel to Judge Scarlett’s decision on several grounds. To begin, she maintains that her contract-based contentions were not properly before Judge Scarlett because they were not pled in the CHRB complaint at issue in the hearing. We disagree. Generally, the party urging collateral estoppel must prove that the issue was actually litigated and there was a full opportunity to present evidence on the issue. (Barker v. Hull, supra, 191 Cal.App.3d at pp. 225-226.) “An issue is actually litigated ‘[w]hen [it] is properly raised, by the pleadings or otherwise, and is submitted for determination, and is determined....” (Sims, supra, 32 Cal.3d at p. 484, quoting Rest.2d Judgments (1982) § 27, com. d, p. 255, italics deleted and added.) We may consult the entire record of the prior proceeding to determine whether these requirements are satisfied. (Murphy v. Murphy (2008) 164 Cal.App.4th 376, 401.)
Under these principles, issues can be “actually litigated” in the prior proceeding without being raised by the pleadings. In Castillo, a city employee was dismissed for unauthorized absences and tardiness. (Castillo, supra, 92 Cal.App.4th at pp. 479, 481.) He requested an administrative appeal of his dismissal, which took the form of an evidentiary hearing. (Id. at p. 479.) At the hearing, the employee denied that his attendance was unsatisfactory, and presented evidence that he had been subjected to disparate treatment by his supervisor. (Id. at p. 482.) After the hearing officer concluded that the dismissal was appropriate, the city affirmed the dismissal. (Id. at pp. 479, 482.) The employee then sued the city, alleging wrongful discharge due to age, race, and national origin. (Id. at p. 480.) When the trial court granted summary judgment in the city’s favor on the basis of collateral estoppel, the appellate court affirmed, reasoning that the employee’s allegations of discrimination had been “actually litigated” in the administrative appeal. (Id. at pp. 482, 487.) We reach the analogous conclusion here, as Ruffu raised her contentions before Judge Scarlett and presented extensive evidence in support of them.
Ruffu contends that Judge Scarlett’s factual and legal findings are incorrect. She argues that Judge Scarlett erred in assessing the evidence presented during the trial, and misinterpreted the syndicate agreement; she further attributes these errors to Steven Haney, who she alleges “r[a]n procedurally amok” before Judge Scarlett and misled him. Our examination of the record discloses no material misconduct by Haney. More importantly, Ruffu cannot avoid the application of collateral estoppel by asserting such irregularities, which should have been addressed to Judge Scarlett or raised in a direct review of Judge Scarlett’s decision in the courts. (Panos v. Great Western Packing Co. (1943) 21 Cal.2d 636, 640.) In assessing the application of collateral estoppel, we do not examine the correctness of Judge Scarlett’s findings. As our Supreme Court has explained, for purposes of collateral estoppel, “‘[a]n erroneous judgment is as conclusive as a correct one.’” (Martin v. Martin (1970) 2 Cal.3d 752, 763, quoting Panos v. Great Western Packing Co., supra, 21 Cal.2d at p. 640.) Regardless of whether Judge Scarlett erred, his factual determinations are binding upon Ruffu, as are his legal findings regarding the interpretation of the syndicate agreement. (See Martin v. Martin, supra, 2 Cal.3d at p. 763.) As explained above, Ruffu failed to challenge the determinations through administrative mandamus, the appropriate form of judicial review of Judge Scarlett’s decision (as adopted by the CHRB).
The sole instance of potential error we discern occurred when Steven Haney -- acting on behalf of the CHRB investigator -- elicited testimony from a steward, whom Haney had apparently arranged to appear at the hearing. Later in the hearing, Judge Scarlett concluded that because Haney was only a real party in interest, Haney should not have examined the steward. Judge Scarlett also determined that Haney’s conduct was not prejudicial, and that his role in the remainder of the hearing would be limited to that of a witness.
Ruffu maintains that the ruling of the CHRB adopting Judge Scarlett’s decision cannot have collateral estoppel effect because it lacked jurisdiction to adjudicate her contractual conflict with respondents. The crux of her argument is that the statutes governing the CHRB grant it no authority to resolve civil contract disputes. This contention presents a question of first impression. Although courts have held that the CHRB lacks the authority to award affirmative monetary relief for tortious conduct (Youst v. Longo (1987) 43 Cal.3d 64, 82-83) and breach of contract (Horsemen’s Benevolent & Protective Assn. v. Valley Racing Assn. (1992) 4 Cal.App.4th 1538, 1553-1554), no published decision has addressed whether the CHRB may determine a licensed trainer’s contractual rights regarding a horse. As explained below, we conclude that Judge Scarlett, acting on the CHRB’s behalf, had the authority to do so.
Ruffu also contends that the CHRB lacked the authority to order her to return the horse. As the propriety of the remedy ordered by the CHRB is irrelevant to the application of collateral estoppel, which relies entirely on Judge Scarlett’s factual and legal findings, we do not address this additional contention.
Respondents suggest that Ruffu forfeited this contention by failing to raise it before the trial court. Because the contention raises a pure question of law on undisputed facts in the record, we decline to find a forfeiture. (Preserve Shorecliff Homeowners v. City of San Clemente (2008) 158 Cal.App.4th 1427, 1433.)
Generally, “[a]n administrative agency can act only as to those matters which are within the scope of the powers delegated to it.” (County of Alpine v. County of Tuolumne (1958) 49 Cal.2d 787, 797.) Here, Business and Professions Code section 19440 grants the CHRB “all powers necessary and proper to enable it to carry out fully and effectually [its] purposes, ” including “(1) [a]dopting rules and regulations for the protection of the public and the control of horse racing and parimutuel wagering[;] (2) [a]dministration and enforcement of all laws, rules, and regulations affecting horse racing and parimutuel wagering[;] (3) [a]djudication of controversies arising from the enforcement of those laws and regulations dealing with horse racing and parimutuel wagering[; and] (4) [l]icensing of each racing association and all persons, other than the public at large, who participate in a horse racing meeting with parimutuel wagering.” This provision accords the CHRB “very broad power to regulate and discipline wrongful conduct which involves horseracing, ” to promulgate rules to this end, and to punish violations of rules by suspension or revocation of licenses, fines, and exclusion from racetracks. (Youst v. Longo, supra, 43 Cal.3d at pp. 80-83.)
Several CHRB regulations were invoked before Judge Scarlett. Under these regulations, trainers may not delegate their duties to another trainer absent extenuating circumstances, and may not have “any interest in the earnings, winnings, and bonuses of any other trainer” (Cal. Code Regs., tit. 4, § 1894); furthermore, a trainer may be denied a license for committing an act of moral turpitude, including conduct that is “fraudulent or in violation of a trust or duty” (Cal. Code Regs., tit. 4, § 1489). In addition, the regulations prohibit any person from making an unauthorized entry into a stable under the stewards’ supervision (Cal. Code Regs., tit. 4, § 1889).
As Ruffu does not suggest that the CHRB lacked the authority to promulgate these regulations, she has forfeited any such contention. In view of the regulations, Judge Scarlett had the jurisdiction to determine Ruffu’s contractual rights regarding Urgent Envoy. He properly examined Ruffu’s contract-based interests in Urgent Envoy in order to determine whether the transfer to Baltas violated the regulations; moreover, as Ruffu asserted a contract-based defense to the allegation that she wrongfully entered Baltas’s stable and took the horse, he was authorized to adjudicate the defense (see Camp Meeker Water System, Inc. v. Public Utilities Com. (1990) 51 Cal.3d 845, 862 [agency did not act beyond its jurisdiction by interpreting deed when doing so was “a necessary incident” of the discharge of its statutory duties].) Accordingly, Judge Scarlett did not act beyond his jurisdiction in rendering his decision.
In a related contention, Ruffu contends that the CHRB proceedings were unlawful because (1) the stewards contravened certain CHRB regulations in transferring Urgent Envoy from her care in July 2004, and (2) the CHRB failed to address her appeal of the stewards’ December 2005 order suspending her license. However, these assertions of error do not preclude the application of collateral estoppel to Ruffu’s claims in the SAC, as they are irrelevant to whether Judge Scarlett had the jurisdiction to render his decision. Furthermore, as we elaborate below (see pt. D., post), they do not support amendments to the SAC that cure its deficiencies.
Finally, Ruffu contends that the application of collateral estoppel contravenes her constitutional right to a jury trial on the SAC. However, as explained in Roos v. Red (2005) 130 Cal.App.4th 870, 881-882 and McGowan v. City of San Diego (1989) 208 Cal.App.3d 890, 897-898, application of the doctrine does not do so. In sum, Judge Scarlett’s decision precludes Ruffu from relitigating the critical allegations that underpin her claims in the SAC.
D. No Possibility of Amendment
The remaining question is whether Ruffu has suggested amendments to the SAC that cure its fatal defects. As explained below, she has failed to do so.
We limit our inquiry to contentions raised in Ruffu’s briefs. As explained in Rakestraw v. California Physicians’ Service (2000) 81 Cal.App.4th 39, 44, “[t]he burden of showing that a reasonable possibility exists that amendment can cure the defects remains with the plaintiff; neither the trial court nor this court will rewrite a complaint. [Citation.] Where the appellant offers no allegations to support the possibility of amendment and no legal authority showing the viability of new causes of action, there is no basis for finding the trial court abused its discretion when it sustained the demurrer without leave to amend. [Citations.]”
During the hearing on respondents’ motion to dismiss, the trial court asked Ruffu to identify her grounds for avoiding the application of collateral estoppel. Aside from noting facts alleged in the SAC, Ruffu pointed to the syndicate agreement, which states in pertinent part: “Any decision of the Syndicate [Manager] can be rejected and /or changed by a 50 % vote of the Owners.” She maintained (1) that the provision did not authorize respondents to remove her as syndicate manager and trainer, and (2) that Steven Haney improperly added the provision to the syndicate agreement without her knowledge in August 2003.
These contentions do not preclude the application of collateral estoppel. Ruffu raised item (1) before Judge Scarlett, who rejected it. Although Ruffu apparently did not raise item (2) before Judge Scarlett, she had a full opportunity to do so, as the evidence supporting them was available to her. For purposes of collateral estoppel, “once an issue is litigated and determined, it is binding in a subsequent action notwithstanding that a party may have omitted to raise a matter for or against it which, if asserted, might have produced a different outcome [citations].” (Alhino v. Starr (1980) 112 Cal.App.3d 158, 170-171, italics added.) In contending that the provision did not authorize respondents’ conduct before Judge Scarlett, Ruffu relied solely upon her interpretation of the provision, and she refrained from challenging its inclusion in the syndicate agreement. Under these circumstances, she is bound by Judge Scarlett’s determinations regarding the provision. (See Wittman v. Chrysler Corp. (1988) 199 Cal.App.3d 586, 593 [parties were collaterally estopped from challenging validity of loan instruments after failing to attack their validity prior to judgment in first action].)
For similar reasons, we reject a related contention Ruffu raises on appeal. She maintains that respondents, in entering into the syndicate agreement, made oral assurances regarding her status as trainer that they did not honor. As Ruffu could have raised this contention before Judge Scarlett in arguing that the syndicate agreement did not authorize respondents’ conduct, she is bound by Judge Scarlett’s decision.
On appeal, Ruffu asserts that she was denied due process through CHRB misconduct involving respondents. She argues that in July 2004, respondents prompted the stewards to transfer Urgent Envoy, who denied her due process in authorizing the transfer. As the CHRB and stewards have been dismissed from the action, the focus of our inquiry is whether these allegations can state a due process claim against respondents.
Ruffu also maintains that the CHRB denied her due process in failing to resolve her administrative appeal from the stewards’ December 2005 order suspending her license. Because she does not allege that respondents played any role in this purported misconduct, she has failed to show that the purported misconduct supports a due process claim against respondents.
We conclude that Ruffu has forfeited her contention, as she has presented no legal authority establishing that respondents’ conduct during the July 2004 transfer constitutes “state action” for purposes of a due process claim. (See 7 Witkin, Summary of Cal. Law (2005) Constitutional Law, §§ 616, 619, 622, pp. 1008-1009, 1011-1012, 1016-1017.) Moreover, in view of Judge Scarlett’s decision, the contention would fail on the merits, even were we to address it. Before Judge Scarlett, Ruffu contended that in July 2004, respondents secretly persuaded the stewards of Santa Anita Park to authorize the transfer, that she received no advance notice of the transfer, and that Steven Haney was present when a security guard and a truck driver used force against her during the transfer. She maintained that this conduct denied her due process.
The sole misconduct Judge Scarlett found was that the stewards, in authorizing the transfer, failed to comply with CHRB regulations requiring notice to licensees and written records of meetings and orders. Regarding respondents’ conduct, Judge Scarlett determined that prior to the transfer, respondents told Ruffu they had decided to remove her as trainer, and that they had the authority to seek the transfer. As Ruffu is bound by these findings, she cannot now allege that respondents were implicated in the violations of CHRB regulations that Judge Scarlett identified, as he attributed them solely to the stewards. In sum, the trial court properly granted respondents’ motion to dismiss the SAC.
We recognize that Judge Scarlett stated that the stewards’ July 2004 order authorizing the transfer had not been “properly raised” in the appeal before him, in view of the fact that Ruffu did not notice her appeal from it. Nonetheless, he made determinations regarding the propriety of the order, as both Ruffu and the stewards raised contentions regarding it. Because these determinations were required for the resolution of the issues in dispute, we conclude that the pertinent issues were “‘necessarily decided, ’” for purposes of collateral estoppel (see Lucido v. Superior Court, supra, 51 Cal.3d at p. 342 [issue is “‘necessarily decided’” when resolution of issue is not “‘entirely unnecessary’ to the judgment in the initial proceeding”]).
DISPOSITION
The judgment is affirmed. Respondents are awarded their costs on appeal.
We concur: EPSTEIN, P.J., SUZUKAWA, J.
For purposes of our inquiry, we do not assess the truth of the testimony provided during the hearing before Judge Scarlett. Generally, courts addressing demurrers will not take judicial notice of the truth of statements contained in deposition transcripts or declarations included in court records. (Bach v. McNelis (1989) 207 Cal.App.3d 852, 864 865; see Garcia v. Sterling (1985) 176 Cal.App.3d 17, 21-22 (Garcia).) As the court explained in Garcia, “[a]lthough the existence of statements contained in a deposition transcript filed as part of the court record can be judicially noticed, their truth is not subject to judicial notice.” (Id. at p. 22.) A court may properly take judicial notice of matters found in deposition transcripts or elsewhere only when “‘there is not or cannot be a factual dispute’” about the matters in question. (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 375, quoting Cruz v. County of Los Angeles (1985) 173 Cal.App.3d 1131, 1134.) Under these principles, we will take judicial notice that the hearing participants made the statements disclosed by the transcript, but not that the statements are true.
We recognize the SAC also alleges that Ruffu suffered damages in the form of “severe emotional distress, mental instability, shame and humiliation.” However, our analysis disregards these allegations, as damages for emotional distress and injury to reputation ordinarily are not recoverable for breach of contract. (Maxwell v. Fire Ins. Exchange (1998) 60 Cal.App.4th 1446, 1449 [no recovery for emotional distress]; Frangipani v. Boecker (1998) 64 Cal.App.4th 860, 865-866 [no recovery for injury to reputation].)