Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Appeal from a judgment of the Superior Court of Orange County, Super. Ct. No. 07CC10062, Sheila Fell, Judge.
Friedman, Enriquez & Carlson and Grant A. Carlson for Plaintiff and Appellant.
Ferruzzo & Ferruzzo, James J. Ferruzzo and John R. Pelle for Defendant and Respondent.
OPINION
MOORE, J.
Plaintiff Rose Starow appeals the trial court’s decision to sustain a demurrer to her complaint against Gary Stein based on the doctrine of res judicata. Because the plaintiff now owns a different interest than she did during the pendency of the first case, we agree that the trial court wrongly applied res judicata. We also find that defendant’s additional arguments related to collateral estoppel and the statute of limitations have no merit. The matter is therefore reversed and remanded to the trial court with directions to overrule the demurrer.
I
FACTS
In 1988, Rose Starow (Rose) and her husband Allen Stein (Allen), formed a partnership with Allen’s brother Gary Stein (Gary) to purchase a condominium in Huntington Beach (the property). Rose and Allen owned 50 percent as community property and Allen owned the other half. Title to the property, however, was placed in Gary’s name, and his name alone appears on the title.
Due to the common surnames involved, we refer to those involved by their first names to avoid confusion. No disrespect is intended. (In re Marriage of Smith (1990) 225 Cal.App.3d 469, 475-476, fn. 1.)
In June 2004, while her divorce from Allen was pending, Rose brought an action against both Gary and Allen as defendants (Starow I). Starow I alleged, in essence, that both defendants had acted to deprive Rose of her interest in the property, breaching the partnership agreement, their fiduciary duty, committing fraud, and converting the property for their own use. In 2005, Starow I was dismissed due to discovery violations by Rose, with prejudice as to Gary and without prejudice as to Allen.
In January 2007, pursuant to a final judgment in the divorce proceedings, Allen conveyed whatever interest he had in the property to Rose and promised to sign a quitclaim deed. In September 2007, Rose filed the instant action against Gary alone, seeking to recover the 50 percent of the property she felt she was due under both the original partnership agreement and Allen’s subsequently conveyed interest. She alleged causes of action for breach of the partnership agreement, breach of fiduciary duty, and conversion, seeking compensatory damages and various forms of equitable relief.
Gary filed a demurrer, arguing that the doctrines of res judicata and collateral estoppel prevented Rose’s action from going forward. He also alleged the statute of limitations had lapsed on all causes of action. The trial court sustained the demurrer without leave to amend on the grounds that both actions concerned the same parties and claims. Rose now appeals.
II
DISCUSSION
Standard of Review
“In reviewing the sufficiency of a complaint against a general demurrer, we are guided by long-settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.’ [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.]” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
Res Judicata
“Under the doctrine of res judicata, conclusive effect is given to a previous judgment in subsequent litigation involving the same claim or controversy. [Citation.]” (Morris v. Blank (2001) 94 Cal.App.4th 823, 830.) “[T]he application of the principle of res judicata in a given case depends upon an affirmative answer to these three questions: Was the issue decided in the prior adjudication identical with the one presented in the subsequent litigation? Was there a final judgment on the merits? Was the party against whom the principle is invoked a party or in privity with a party to the prior adjudication? [Citations.]” (Estate of Muller (1969) 2 Cal.App.3d 259, 274-275.)
The second element is the simplest, and we address it first. A dismissal resulting from discovery sanctions is a final judgment on the merits for purposes of res judicata. (Kahn v. Kahn (1977) 68 Cal.App.3d 372, 379-383.)
In this case, the question of the first element — whether the issues decided in the prior adjudication are identical with those presented now — is the dispositive one. Gary’s essential argument appears to be that because Allen and Rose were still married when Rose filed Starow I, they were automatically in privity. Therefore, Rose was not really suing to recover her share of the community property interest, but the entire 50 percent interest owned by the community.
The question of privity confuses matters somewhat, because it seems to invoke the third element. There is no issue of privity here because the third element only asks whether the party against whom res judicata is to be invoked — in this case, Rose — was in privity with the litigant in the prior case — also Rose. Because Rose was the plaintiff in the prior case, there is no issue of privity as far as the elements of res judicata are concerned. Privity between Rose and Allen, however, is relevant to the first element — whether the issues in the two cases are identical.
This is an interesting theory, but it is not what actually happened in Starow I. Rose, whether properly or improperly, was suing to enforce her own rights, not the community’s rights. Further, courts have long since rejected the notion that divorcing couples are automatically in privity with each other. (See Washington v. Washington (1956) 47 Cal.2d 249.)
Gary devotes much argument to the question of whether Rose could properly sue in her own capacity in Starow I. That was an issue of standing for the trial court in that case to decide. Even if she did not have standing at the time, her after-acquired interest in the entire 50 percent the community once owned may have changed that outcome.
We cannot now simply deem Starow I to have been on behalf of the community interest when on its face it was not, and Gary cannot point to any evidence that such determinations were made by the trial court in that action. Nor was there any indication that Allen’s interest was barred from any future redress by the judgment in Starow I. In that case, Allen was named as a defendant; he was an adverse party to Rose. Due to the change in circumstances which happened after the judgment in Starow I, Allen’s interest now belongs to Rose.
We cannot find a directly analogous case on point, but other cases in which a change of circumstance occurred between the first and second lawsuits are instructive. In a 19th-century property case, the United States Supreme Court held that a judgment in ejectment does not affect a title acquired by the defendant after the commencement of the action. (Merryman v. Bourne (1869) 76 U.S. 592.) Despite that case’s antiquity, the situation is not that different here. Further, in a quiet title case, the purchaser relied on a deed acquired subsequent to the first case, which had determined that he was not the owner of the property. The court held the first case could not be given res judicata effect due to the subsequently acquired title. (District Bond Co. v. Hillliker (1940) 37 Cal.App.2d 81, 90.)
In this case, Rose acquired the full community interest in the property subsequent to judgment in Starow I. Prior to acquiring the full interest, she had no right to litigate, at least as to the portion deeded to her by Allen. In short, the issues are not identical because Rose now represents the entire 50 percent interest once owned by the community. She cannot be deemed to have represented that interest in Starow I, when Allen was on the opposite side of the case and Rose, at most, owned one-half of the community interest. She has subsequently acquired the full title to whatever the community owned, and is therefore entitled to pursue her legal rights as to that property.
Collateral Estoppel
After two parties have litigated to judgment and subsequently find themselves in court again, the first judgment “operates as an estoppel or conclusive adjudication as to such issues in the second action as were actually litigated and determined in the first action.” (Todhunter v. Smith (1934) 219 Cal. 690, 695.) This doctrine is sometimes referred to as issue preclusion, or more commonly, collateral estoppel.
For the same reasons that res judicata does not preclude this action, Gary’s collateral estoppel argument fails. One of the requirements of collateral estoppel is that the issue decided in the prior case must be identical with the one now presented. (Stolz v. Bank of America (1993) 15 Cal.App.4th 217, 222.) It does not apply to issues not raised by the complaint and not actually litigated and necessarily decided in the prior litigation. (Ruffalo v. Patterson (1991) 234 Cal.App.3d 341, 344.)
The issues here are not identical because Rose is no longer seeking to recover, at most, her one-half interest in the community’s portion, but the undivided 50 percent interest in the property once owned by the community. We cannot, therefore, say the issues in the prior case were identical, and collateral estoppel does not apply.
Statute of Limitations
Because the demurrer tests the pleading alone, and not the evidence or other extrinsic matters, it lies only where the defects appear on the face of the pleading. (Code Civ. Proc., § 430.30) “A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.] In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred. [Citation.]” (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403.)
Here, Gary argues that the statute of limitations was triggered when Rose discovered she was damaged. He argued below that Rose must have discovered her damage more than three or four years ago, because she alleged that “despite repeated requests” Gary had failed to provide an accounting. This, however, does not appear from the face of the complaint, or from any judicially noticeable matter. Thus, it is not appropriate for determination at the pleading stage of the case.
Further, this argument seems to fly in the face of Gary’s claims that Rose had no standing to pursue this matter until she obtained Allen’s, and thus the community’s, full interest. In any event, the statute of limitations for each claim raises questions of fact that cannot be resolved via demurrer.
III
DISPOSITION
The judgment is reversed and the matter is remanded for further proceedings consistent with this opinion. Rose is entitled to her costs on appeal.
WE CONCUR: SILLS, P. J., O’LEARY, J.