Talley v. Miller & Schroeder

Full title: BRUCE R. TALLEY, Plaintiff and Appellant, v. MILLER & SCHROEDER et al.…

Court: California Court of Appeals, Fourth District, First Division

Date published: Sep 12, 2007

No. D048438 (Cal. Ct. App. Sep. 12, 2007)

Opinion

BRUCE R. TALLEY, Plaintiff and Appellant, v. MILLER & SCHROEDER et al., Defendants and Respondents. D048438 California Court of Appeal, Fourth District, First Division September 12, 2007

NOT TO BE PUBLISHED

APPEAL from judgments of dismissal of the Superior Court of San Diego County, Linda B. Quinn, Judge., Super. Ct. No. GIC836807.

HUFFMAN, J.

Plaintiff and appellant Bruce R. Talley sued a number of individual and corporate defendants for fraud and related theories, based upon their different roles in allegedly participating in a securities fraud scheme, the "Heritage Bonds" transactions lasting from 1996-1999. Plaintiff was a securities sales representative who was previously employed by securities firm Miller & Schroeder Financial, Inc. (Miller & Schroeder), the now bankrupt predecessor of one of the current defendants and respondents, the Marshall Group, Inc. (Marshall).¹ Plaintiff alleges that in the scope of his employment by Miller & Schroeder, he sold worthless Heritage bonds to his investor clients, who then sued him and others, resulting in the loss of his livelihood and other injury. He seeks to recover damages from the various defendants and respondents on different theories, based on the nature of their participation in the Heritage Bonds securities fraud, and he claims personal financial loss of over $5 million.

1 Miller & Schroeder filed for bankruptcy in Minnesota in January 2002 under its then-current name, Securities Resolution Corporation (SRC). The complaint, filed in October 2004, states that Miller & Schroeder was not named as a party to this action due to the bankruptcy stay under 11 United States Code section 362. As will be discussed, plaintiff alleged in bankruptcy court and also alleges here that Miller & Schroeder fraudulently transferred its assets to Marshall, as well as other successor entities, before going out of business.

To briefly outline the identities of the other named defendants and respondents: Plaintiff worked at Miller & Schroeder with several of the individual named defendants, who were officers and key employees there (e.g., respondents Victor Dhooge and Kenneth Larsen).² Other individual named defendants and respondents are Robert Kasirer and his affiliated companies, and his wife Debra Kasirer, who were promoters of Heritage health care facilities and the recipients of investors' funds in the securities scheme. Other named defendants and respondents are Jerold Goldstein and Leo Dierckman, who were officers and affiliates of the Kasirer group, which was attempting to develop the Heritage facilities.

2 Kenneth Larsen (formerly the chief financial officer and a control person of Miller & Schroeder) has settled the action and plaintiff has obtained a dismissal of this portion of his appeal. (Cal. Rules of Court, rule 8.244.)

Additionally, plaintiff has sued two corporate defendants, U.S. Trust Corporation (U.S. Trust), the indenture trustee for the worthless bonds, and Valuation Counselors Group, Inc. (Valuation), the appraiser for real property that was security for the bonds.

Earlier, in federal court, plaintiff was sued under the Private Securities Litigation Reform Act (15 U.S.C. § 78a et seq.; PSLRA) by one of his clients, the Betker family (Betker), who bought millions of dollars in Heritage Bonds. (Betker Partners One et al. v. U.S. Trust Corporation, N.A. et al. (C.D. Cal. 2001) No. CV 01-5752-DT-RCx (Betker) (the underlying federal action).) As a defendant in that action, Talley filed a cross-complaint for indemnity and contribution. In opposition to plaintiff's first amended complaint in this state action (the complaint), as we next outline, these defendants filed demurrers in superior court, mainly alleging the pleading was barred by principles of res judicata, due to plaintiff's filing and dismissal with prejudice, after settlement with Betker in that underlying federal action, of that federal cross-complaint against alleged joint tortfeasors. They additionally relied upon their own settlements in that action in which some of them obtained Bar orders against further litigation on the same claims, as will be further explained post (e.g., the Kasirer good faith settlement approval and "entry of Bar order"). In other grounds of demurrer, defendants extensively argued the complaint was defective for failure to state sufficient facts or due to the bar of the applicable statutes of limitations.

Marshall additionally alleged any action based on fraudulent conveyance theories against it was barred by a 2002 bankruptcy court ruling that approved its own monetary settlement in an adversary proceeding in Miller & Schroeder's case. (In re SRC Holding Company/Miller & Schroeder Inc. (Bankr. Minn. 2002) Nos. 40284-40286 (the bankruptcy matter).)

In ruling on the various demurrers in four separate orders, which we now review, the trial court took judicial notice of those federal district court and bankruptcy court filings and Bar orders, and sustained the demurrers to all claims, ruling that the current pleading relates to the same primary rights against fraudulent conduct that were allegedly violated and contested by defendants and cross-defendants in the Betker case, or by parties in privity with them, in the context of plaintiff's dismissed federal cross-complaint for indemnity. (Evid. Code, §§ 452, 459.)

Plaintiff declined an opportunity to amend his now-operative theories, which are (1) fraud, (3) breach of fiduciary duty, (4) aiding and abetting breach of fiduciary duty, and (7) fraudulent conveyance. Plaintiff appeals the dismissal of his complaint as to the defendants and respondents named above, which we will group as follows: (A) Marshall, the predecessor of Miller & Schroeder; (B) Robert Kasirer, the alleged architect of the fraudulent bond scheme, and his affiliated personal corporations and companies, as well as his wife Debra Kasirer and associate Leo Dierckman; (C) an individual Kasirer associate, Jerold Goldstein, and a Miller & Schroeder employee, Victor Dhooge; and (D) the corporate defendants, U.S. Trust (indenture trustee) and Valuation (appraiser).

On appeal, plaintiff argues the trial court erred in all of its res judicata rulings, based on the dismissal of his cross-complaint, because that previous federal cross-complaint sought only declaratory relief, indemnity and contribution against certain defendants, whereas in this action, he is seeking "affirmative relief" mainly against different defendants, based upon injury to him personally from the fraud and other torts alleged, and therefore different primary rights should be involved and there should be no bar. He also contends he has pled fraud with the necessary specificity, as well as adequately pleading breaches of recognized fiduciary duties and related theories. He further contends there are no statute of limitations problems due to his late discovery of the allegedly fraudulent acts in October 2001, upon his being separately sued by former clients.

As we will discuss, Marshall has persuasively demonstrated that plaintiff's sole theory against it, fraudulent conveyance, was conclusively litigated and disposed of in the Minnesota bankruptcy matter, where plaintiff appeared as an unsecured creditor, and Marshall may no longer be pursued by plaintiff on that basis. As to Marshall, the demurrers were properly sustained without leave to amend, and we affirm that judgment of dismissal.

Likewise, the Kasirer group and Debra Kasirer have adequately demonstrated that the district court issued a Bar order against any further litigation arising out of the same Heritage Bonds transactions as are disputed here, and Talley was a party in the same federal court action and is specifically named in the order as precluded from further suit in those matters, due to the good faith settlement reached by Kasirer with the Betker plaintiffs. That order also specifically includes Dierckman as one of the settling defendants who is entitled to protection from further suit. Plaintiff has appealed that order to the Ninth Circuit Court of Appeals, and appeal is pending, but for our purposes, under the rule of Levy v. Cohen (1977) 19 Cal.3d 165, 172(Levy), it is currently deemed to be final.³ We must consider ourselves bound by the broad language of that Bar order. As to the Kasirer defendants and Dierckman, the demurrers were properly sustained without leave to amend, and we affirm that judgment of dismissal.

3 The record includes docket entries from two of Talley's appeals to the Ninth Circuit Court of Appeals of the Bar orders issued as to various of these defendants. These appeals are being held in abeyance pending the disposition of a third such appeal in the underlying case. (9th Circuit case nos. 05-55072, 05-55371, 05-56621.) In May 2007, the lead case was remanded to the district court over a bonding dispute and there is no indication that those appeals have yet been resolved, as counsel confirmed at oral argument.

Likewise, the record contains a similar settlement and Bar order specifically referring to former Miller & Schroeder employee Victor Dhooge (also charged here with fraud and breach of fiduciary duty), as entitled to protection from any further litigation arising out of the Heritage Bonds transactions.⁴ Another such settlement and Bar order, similarly broad in scope, was issued in favor of individual Kasirer associate Goldstein, who is now charged with fraud, and this court allowed Goldstein to submit a copy of it, to complete the record referencing it. Due to the broad language of all those Bar orders, these demurrers were properly sustained without leave to amend regarding Dhooge and Goldstein, and we affirm those trial court orders of dismissal. Although we have discussed these parties' extensive arguments regarding primary rights and res judicata bars to the current action, we decline to rely upon those grounds, as we will explain further in part IIID, post.

4 We note that although Talley makes arguments about the demurrer ruling as to defendant Victor Dhooge, an investment banker, officer and managing agent for the Miller & Schroeder defendants, our internal records show that Dhooge's attorney says he is not a party to this appeal and he has not filed a respondent's brief. Plaintiff alleges Dhooge was sanctioned by federal authorities in connection with the Heritage Bonds and was barred from the securities industry until 2010. Where a respondent has not filed a brief, "we do not treat the failure to file a respondent's brief as a 'default' (i.e., an admission of error) but examine the record, appellant's brief . . . to see if it supports any claims of error made by the appellant. [Citations.]" (Riddle v. Riddle (2005) 125 Cal.App.4th 1075, 1078, fn. 1.) We consider the demurrer rulings on Dhooge as a defendant in part III, post.

However, with respect to the remaining named defendants and respondents, U.S. Trust and Valuation, who are charged with aiding and abetting breach of fiduciary duty (and fraud as to Valuation), no similar Bar orders appear in the record. Under all the circumstances, we do not consider the res judicata arguments to be a valid ground of demurrer, and we further find the trial court ruling was erroneous on other grounds. As will be explained, additional demurrers were not reached by the trial court, and remain for resolution (i.e., lack of standing, uncertainty or limitations bars). We therefore reverse the judgments of dismissal as to U.S. Trust and Valuation only, but affirm the balance of the dismissal judgments.

FACTUAL AND PROCEDURAL BACKGROUND

A

Original Federal Court Actions, Cross-Action; Settlement; Talley's Previous State Court Complaint

Miller & Schroeder was the lead underwriter which financed, structured, and marketed numerous (12) tax-exempt revenue bond offerings, raising money from investors for various Heritage entities, to finance the development of certain health care facilities. Plaintiff alleges that from 1996-1999, these entities and individuals made improper transfers of bond monies among themselves, and committed fraud on the Heritage bondholders, and others, including plaintiff, via the use of the Heritage Bonds, as follows: "The Defendants designed, built, and operated a Ponzi Scheme series of fraudulent bond offerings which they provided their broker, Bruce Talley, to sell to the public."

Upon the collapse of the Heritage Bond scheme in 1999, one of plaintiff's clients (Betker) sued plaintiff, Miller & Schroeder, and other defendants (including Dhooge and Larsen) in the underlying federal action, for securities fraud under the PSLRA, seeking millions of dollars in damages. In response, plaintiff filed his cross-complaint seeking indemnity and contribution and requesting a defense, based upon the defendants' alleged misrepresentations and/or concealed knowledge of the questionable validity of the Heritage Bonds. The named cross-defendants in federal court were his former employer, Miller & Schroeder, Larsen, Dhooge, and a large group of former defendants, including John M. Clarey et al, who were control persons for the firm.⁵ The basis of the cross-complaint was that if Talley were held liable to the Betker plaintiffs, it would be solely due to the conduct of the cross-defendants, such that he was entitled to indemnity for any vicarious or secondary liability, as well as contribution and a declaration of rights and duties. (15 U.S.C. § 78u-4(g) [providing for rights of contribution and settlement discharges in private securities fraud actions].)

5 The former defendant group, Clarey et al., included a group of five other Miller & Schroeder control persons, who obtained the initial and lead demurrer ruling, on which the trial court later relied for the other demurrers. We outline that reasoning later. They obtained a Bar order in the federal action, which also benefited Dhooge, although he demurred separately in the current action. Clarey et al. have been dismissed as parties to this appeal.

Following the filing of the underlying Betker action, a federal class action was brought separately against the same set of defendants, except Talley was not named as a class action defendant. The class action was consolidated with the Betker action for discovery purposes as part of the multidistrict Heritage Bonds litigation. Eventually, Betker settled with Talley, who in December 2004 dismissed his federal cross-complaint with prejudice. In his reply brief, plaintiff goes beyond the record and explains that Betker mainly wanted to settle with various third-party lawyer defendants in the federal action, and Betker settled with plaintiff in order to make that happen. However, plaintiff did not pay any money to Betker nor did plaintiff recover any other relief on his dismissed cross-complaint.

In connection with other settlements reached by Betker with the Kasirer group, Dhooge/Clarey et al., and Goldstein, the district court issued its Bar orders to protect the settling defendants (i.e., Kasirer, the Dhooge/Clarey defendants, and Goldstein) from further litigation "arising out of or related to the released claims or the transactions, facts, or occurrences giving rise to those claims . . . ." These orders were made under the authority of the PSLRA and Code of Civil Procedure section 877.6.

The Kasirer Bar order dated December 6, 2004, states that it does not resolve the class action allegations against Kasirer. (Since Talley individually was not a party to the class action, we will not further discuss the class action.) The Kasirer Bar order includes Dierckman among its "settling defendants" who were entitled to a release of claims, as well as the Kasirers and their companies. A similar Dhooge/Clarey et al. Bar order had been filed August 9, 2004, and the Goldstein order was issued February 7, 2005.

The first such good faith settlement and Bar order (Dhooge/Clarey et al.) states that all persons are barred from pursuing any claims, etc. "arising out of or related to the underwriting, sale, or purchase of the Heritage Bonds, or any of the transactions or occurrences alleged, or that could be alleged, in any of the actions that comprise the (multidistrict litigation). . . ." These included claims and cross-complaints for indemnity, contribution, or damages, however denominated, against any of the settling defendants. (However, purchasers of the Heritage Bonds were not precluded from continuing their actions against the settling defendants to recover losses. Talley was not a purchaser.)

The Kasirer Bar order used the same general language to bar further litigation against the settling defendants arising out of or related to the released claims or the transactions or occurrences giving rise to those claims. The district court's Bar order made additional rulings that certain specific claims, including Talley's, were dismissed with prejudice, and the court found that the existing cross-claims all arose from the same core of facts, "i.e., the underwriting, marketing, and sale of the Heritage Bonds, and that they deal with the same alleged representations and/or omissions . . . no evidence was presented by Bruce Talley [or other defendants] that any of them suffered any direct loss or damage separate and/or independent from the indemnity and/or contribution claims asserted . . . and these claims are 'interrelated' to the factual allegations from which Betker Plaintiffs' claims arise." Likewise, the Goldstein district court order barred all persons and entities from prosecuting any claim or cross-claims "arising out of or related to the claims released in the Settlement Agreement, or the transactions, facts or occurrences giving rise to those claims," such as could have been alleged in the multidistrict litigation.⁶

6 In its demurrer, Valuation generally referred the trial court to one of the Bar orders which Talley was appealing, but Valuation did not represent that it applied to itself specifically. The record does not include any comparable Bar order in the federal court specifically applicable to the corporate defendants, U.S. Trust or Valuation. However, at oral argument, counsel for those parties represented that similar Bar orders had been obtained in their favor from the federal court (class action) at some time during the underlying superior court proceedings, but "for reasons of judicial efficiency," copies of them were not furnished to the trial court. We do not consider the effect of any such orders, even if they were shown to exist.

Talley has appealed to the Ninth Circuit Court of Appeals from the Kasirer, the Dhooge/Clarey, and the Goldstein federal district court good faith settlement and Bar orders. As of the date of oral argument in this Court, counsel confirmed that the federal appeals have not yet been resolved. (See fn. 3, ante.)

While the underlying federal action was ongoing, on December 18, 2002, plaintiff filed the first version of this state case, Talley v. Miller & Schroeder (Super. Ct. San Diego County, 2002, No. GIC802187). This action was stayed in August 2003 by the trial court, due to the pending federal case, and plaintiff then dismissed it without prejudice on or about June 28, 2004.

B

Current State Court Complaint: General Summary

Talley filed his complaint in October 2004 and amended it in 2005. We next generally outline the factual background for his theories that are still pursued on appeal. At the outset, however, we note that although plaintiff also originally alleged a negligence theory and other economic torts (causes of action nos. 2, 5, 6, interference with business advantage, etc.), demurrers to those claims were sustained without leave to amend, and he does not challenge those portions of the rulings.⁷

7 The rulings sustaining the various demurrers on the negligence and economic tort theories were based on the bar of the two-year statute of limitations in Code of Civil Procedure section 339. The court found that although plaintiff alleged having notice of the wrongs committed on October 25, 2001, the action was nevertheless untimely filed on October 6, 2004, and he was not entitled to tolling of the limitations period due to the previous version of the state action.

Consequently, we next outline the facts underlying the four remaining causes of action that are the subjects of this appeal (fraud, breach of fiduciary duty, aiding and abetting same, and fraudulent conveyance). Plaintiff generally alleges that he trusted the defendants to tell the truth about these bond products, "and to provide him with diligently researched, fully-vetted, properly-operated and ethically-run Bond deals. Believing they had done so, he sold the Bonds to his clients and the public. Unbeknownst to Mr. Talley, the defendants had commingled investors' funds, stolen bondholders' money, lied about the status and business underlying the bonds, concealed the nefarious background of the Bonds' operators, and lied about the poor due diligence they had conducted." Based on their recommendations, he "sold to his clients bonds in each of the Heritage Entities' 12 bond offerings, to the tune of millions of dollars, beginning in February 1996 and continuing through March 1999."

Based upon those defendants' breaches of duty, which he alleges were not discovered until October 25, 2001 when a client went to arbitration against him, plaintiff contends that his clients "lost tens of millions of dollars and Mr. Talley lost his career. He cannot work in the securities industry because his industry license has been effectively destroyed by Defendants' actions. His clients blame him for their losses, and a number of them have sued him." He further contends, "[t]he loan participation business that Plaintiff spent countless hours and efforts building is ruined and cannot be pursued because Plaintiff has lost his base on which to build it. [¶] Because of defendants' actions, Plaintiff has lost his job income, his savings, his house, and suffers from depression and severe emotional distress." In his opening brief, he contends defendants' actions violated "his distinct primary right to be free of personal injury and harm."

We next briefly outline the alleged activities of the following defendant groups, as set forth in the complaint: (A) Marshall, the predecessor of Miller & Schroeder; (B) Kasirer group, Debra Kasirer, and their associate Dierckman; (C) the remaining individual Kasirer affiliate, Goldstein, as well as Miller & Schroeder employee Dhooge, and (D) the two corporate defendants, U.S. Trust (the indenture trustee for the bonds), and Valuation (the appraiser).

Regarding Marshall: Plaintiff now alleges that after Miller & Schroeder filed for bankruptcy in Minnesota in January 2002, Marshall was a successor in interest to all the Miller & Schroeder individual and corporate defendants, and fraudulently obtained their assets as follows: "The sole purpose behind the formation of this new entity was to enable the defendants to seize and keep and hide the assets of Miller & Schroeder while alienating and shedding the obligations and liabilities, including the liabilities and obligations to Plaintiff, which Miller & Schroeder owed and knew it would owe. In short, a fraudulent transfer." (Italics added.)

Regarding the Kasirer group and Debra Kasirer: Defendant Robert Kasirer "controlled, directly or indirectly," the Heritage entities and bond scheme, and directed the commingling of funds, and prior to the conception of the Heritage Bonds Ponzi scheme, "Kasirer had a long history of business failures and legal troubles arising from his involvement with similar bonds, a fact which Miller & Schroeder knew or should have known but concealed." Debra Kasirer, as a trustee of the family trust and owner of a family corporation, allegedly "received and accepted and concealed transfers of Heritage Bonds funds which she knew did not belong to her or Robert Kasirer." Dierckman, an affiliate of the Kasirer defendants and the Heritage defendants, gave tours of the health facilities properties and was involved in the underwriting process, including preparation of the official statements for the bonds, which were misleading.

With respect to the remaining individuals: Goldstein allegedly exercised dominion and control over the Heritage entities through his capacities as their president, general counsel, chief operating officer and/or director, and he allowed improper transfers of bond monies among the various Heritage entities. Dhooge, a Miller & Schroeder investment banker, was a control person in the firm who structured the Heritage Bond offerings and negotiated with the issuers and Kasirer.

With respect to the corporate defendants, U.S. Trust (indenture trustee) is a for-profit business marketing itself to the investing public as providing trust services nationwide and having expertise, among other things, in government bonds and bond projects. Its subsidiary, U.S. Trust Texas, was the direct dealer for the Heritage Bonds. In acting as the trustee of the Heritage Bonds, plaintiff alleges the U.S. Trust entities undertook "to guard the interests of the investors. Pursuant to the Indentures, Loan Agreement and the Trust Deed and Mortgages it undertook and assumed a duty to Plaintiff, and to the investors to whom Plaintiff had sold and would sell the bonds, to monitor the Heritage Entities and Heritage Bonds in the best interests of the investors. . . ." However, U.S. Trust allegedly failed to report defendants' improper transfers of bond proceeds among and between various bond offerings and facilities.⁸

8 The Trust Indenture Act of 1939 (15 U.S.C. § 77aaa et seq.) governs the duties of indenture trustees. (69 Am.Jur.2d (1993) Securities Regulation-Federal, § 872 et seq., pp. 954-956.) The Act "specifies certain duties and responsibilities which are required to be imposed upon trustees in the performance of their duties under trust indentures, particularly in the event of default of an obligor. While it has been held that the indenture trustee is considered a fiduciary of the indenture security holders and is obligated to protect the indenture security holders from attempted violations of the Act, it has also been held that an indenture trustee is the creation of the contractual arrangement in the indenture and, while trustees must refrain from engaging in conflicts of interest, there is no implied fiduciary duty imposed on a trustee to advance the financial interests of the indenture security holders prior to default. The Act also expressly permits certain provisions to be included in an indenture regarding the extent of the trustee's liability under such indenture." (69 Am.Jur.2d, supra, § 881, p. 965, fns. omitted.)

Also, as to Valuation, plaintiff alleges that it was one of the companies performing bond security property appraisals, allegedly at outrageously high valuations. All defendants are generally alleged to be the agents and/or employees of each other.

C

Current State Court Complaint: Specific Theories Against Each Defendant

The operative allegations of the remaining causes of action may further be summarized as follows. As against all remaining defendants except U.S. Trust, plaintiff pleads fraud (first cause of action). Generally, he contends all the defendants prepared information which they presented to plaintiff in connection with the offerings, which purported to provide full and complete information about the projects, but this information "was negligently and/or knowingly deficient, misleading, incomplete, and/or fraudulent, unbeknownst to Plaintiff . . . . Defendants further knew that Plaintiff was relying on this information in deciding whether, when and how much of the Heritage bond offerings to offer to his clients." Once the bond scheme fell apart, plaintiff alleges the Miller & Schroeder defendants looted the company and left the shell in bankruptcy court, by "engineer[ing] a sham sale of the company's assets . . . in order to insulate themselves from liability for their actions. They left their clients and their employees hanging, alone, to face the claims and bear the losses from the fraudulent bond scheme." Plaintiff alleges he detrimentally relied on these representations and has suffered millions of dollars in financial loss in his career because of this fraud.

In the third cause of action (for which the only remaining defendants are Dhooge, possibly Marshall as successor to Miller & Schroeder, and possibly Robert Kasirer individually; Larsen and Clarey et al. have been dismissed), plaintiff alleges: "Defendants owed a fiduciary duty to Plaintiff to deal with him in the highest degree of good faith, integrity and fair dealing in the design, creation, operation, marketing, disclosure, research, preparation, offering for sale and sale of the Heritage Bonds, and to present him with legitimate and honest and suitable products to sell to his clients. . . . Defendants' fiduciary duties arose from their position as Plaintiff's employer and as designers, creators, marketers, operators, . . . researchers, preparers and underwriters of bonds for Plaintiff to sell to his clients, lead investor and their directorship position, their agreements with Plaintiff, and from their course of dealing with Plaintiff, their representations to him about the Heritage Bonds and bonds offered for sale in general, and others, including the duty not to do any acts which caused damage to Plaintiff's clients and to Plaintiff's business and profession."⁹

9 The complaint is unclear whether Robert Kasirer individually is charged with a breach of fiduciary duty, or alternatively, with aiding and abetting another's breach of fiduciary duty. This confusion has been pointed out by both U.S. Trust and Dierckman. In any event, we examine both allegations in the alternative. It is also unclear whether plaintiff intended to name Marshall in the third cause of action; in any case, Marshall filed opposition to that claim in its demurrer.

Next, in his fourth cause of action for aiding and abetting breach of fiduciary duty (against the Kasirer group, Debra Kasirer, Dierckman, Goldstein, U.S. Trust, and Valuation), plaintiff claims they assisted in the breaches of fiduciary duty by the Miller & Schroeder employees (such as Dhooge and Larsen, the predecessor of Marshall, and Mr. Kasirer). For example, "Unbeknownst to plaintiff, all the Heritage Bonds were unsuitable for sale to any investor, because the normal risk inherent in any bond was replaced with a certainty of failure, due to Defendants' actions herein. Had Plaintiff known these true facts, which the Defendants knew but didn't disclose to him despite their obligations to do so, he would not have sold the Heritage Bonds to any of his clients, and would have not remained with the company." The allegedly concealed facts included improper funds transfers, excessive appraisals, and improper documentation by these defendants.

In the seventh cause of action for fraudulent conveyance, plaintiff sues the Kasirer defendants and Debra Kasirer for an improper transfer of the $4 million Beverly Hills family residence to a personal family trust, as well as certain transfers of $770,000 and $1.9 million in investors' funds to family companies, all to shelter the Kasirers from liability.

The prayer of the complaint seeks damages estimated at $5 million, an order to set aside fraudulent transfers of assets, and further relief.

D

Demurrers and Rulings: Summary

All defendants brought extensive demurrers. Marshall relied on the earlier bankruptcy settlement it reached with the trustee for Miller & Schroeder, on fraudulent conveyance claims. All the other defendants mainly relied on res judicata claims based on the dismissed federal cross-complaint, along with other grounds of demurrers. Plaintiff opposed all demurrers, relying in part on earlier refusals by the federal district court to dismiss portions of the cross-complaint (although Talley eventually voluntarily dismissed it with prejudice).

We next set forth the reasoning of the trial court in sustaining the demurrers brought by the following defendant groups: (1) Marshall; and (2) the remaining defendants, Kasirer group, Debra Kasirer and Dierckman; the two remaining individuals, Goldstein and Dhooge; and U.S. Trust and Valuation. In an effort to avoid unnecessary confusion, we will defer a complete statement of the trial court's rulings on the res judicata grounds until the discussion portion of this opinion. In part 2, post, we will only set forth the initial and lead ruling obtained by the Clarey group, and then explain how the trial court relied on it later, with respect to all the others.

1. Marshall

First, we summarize the trial court's conclusions regarding Marshall, as that demurrer ruling is based upon different grounds (bankruptcy litigation), than are the res judicata rulings arising out of Talley's dismissed federal cross-complaint. The trial court rejected plaintiff's effort to proceed against Marshall on the first cause of action for fraud, and to the extent that plaintiff apparently sought to proceed against Marshall as one of the Miller & Schroeder defendants, the ruling could be read to apply to the third cause of action as well. The court reasoned: "The bankruptcy trustee for bankrupt Miller & Schroeder is the one who has standing to assert the claims that plaintiff pleads in the causes of action challenged by defendant The Marshall Group, Inc.'s demurrer. Those claims arise from defendant The Marshall Group, Inc.'s purchase of assets from bankrupt Miller & Schroeder. [¶] In addition, the bankruptcy court in an order approved a settlement agreement (see, Exhibits 3, 6 & 7 to defendant The Marshall Group, Inc.'s supporting judicial notice request) that released any and all claims against the defendant The Marshall Group, Inc. that arises from its purchase of bankrupt Miller & Schroeder's assets. That bankruptcy court order precludes plaintiff from maintaining the first [and other] causes of action of his (first) amended complaint against The Marshall Group, Inc., including under a successor liability claim."

2. Res Judicata Grounds: the Kasirers, Dierckman, Goldstein, Dhooge, U.S. Trust, and Valuation

The rulings regarding the above sets of remaining defendants closely followed the reasoning of the August 9, 2005 order on demurrer by the former defendant group, Clarey et al.¹⁰ The trial court relied on the same analysis with respect to the primary rights and res judicata arguments. Thus, the trial court took judicial notice of the federal order of dismissal and sustained the subject demurrers as follows:

10 As already noted, the Clarey group has been dismissed from this appeal and the remittitur has been issued.

"As pled, the Court finds that the action is barred under the doctrine of res judicata. Whenever a judgment in one action is raised as a bar to a later action under the doctrine of res judicata, a key issue is whether the same cause of action is involved in both suits. California law approaches the issue by focusing on the 'primary right' at stake: If two actions involve the same injury to the plaintiff and the same wrong by the defendant then the same primary right is at stake even if in the second suit the plaintiff pleads different theories of recovery, seeks different forms of relief and/or adds new facts supporting recovery. [Citation.] If the same primary right is involved in two actions, judgment in the first bars consideration not only of all matters actually raised in the first suit but also all matters which could have been raised as to that issue. [Citation.]

"In [the underlying federal court action] plaintiff sought indemnity based upon alleged misrepresentations and/or concealed knowledge of the questionable validity of the Heritage Bonds. Based on the pleadings in this action, plaintiff makes the same allegations.

"In opposition, plaintiff claims he is not seeking indemnity in this action, but 'affirmative relief' based upon injury to him personally. However, in this action, plaintiff pleads that as a result of defendants' actions, plaintiff has suffered financial loss in the amount to be proven at trial 'believed to be in excess of $5,000,000.' Although the damages may be more extensive than the cross-complaint for indemnity, they both relate to the same fraud allegedly purported by defendants and cross-defendants in the Betker case. Leave to amend is granted to allege a violation of a primary right other than alleged in the Betker cross-complaint."

In sustaining the current demurrers with leave to amend, on the same res judicata grounds, the trial court took judicial notice of the federal court order dismissing the cross-complaint as part of the Betker settlement with plaintiff. The court also took judicial notice of the federal district court Bar orders in the Kasirer settlement with Betker, in the Dhooge/Clarey settlement with Betker, and the Goldstein settlement.

Moreover, separate demurrers were also sustained with respect to certain problems identified about alleging an aiding and abetting theory regarding another's breach of fiduciary duty (i.e., lack of agency allegations), based on the trial court's reliance on the authority of Everest Investors No. 8 v. Whitehall Real Estate Limited Partnership XI (2002) 100 Cal.App.4th 1102 (Everest Investors), analyzing conspiracy allegations.

E

Appeal; Judicial Notice on Appeal

Plaintiff declined to amend and now appeals. Both the appellant's appendix and the numerous respondents' appendices contain the same judicially noticeable material of the pleadings and orders from the federal case involving Betker and the cross-complaint, and the Kasirer, Dhooge and Goldstein settlements. In his reply brief, plaintiff adds a narrative explanation of significant procedural facts, in that Betker sought to settle with various third-party lawyer defendants in the federal action, and plaintiff's dismissal of this cross-complaint was necessary to facilitate that resolution, but plaintiff did not pay any money to Betker nor did plaintiff recover any other relief on his dismissed cross-complaint.

Also, Marshall has obtained a judicial notice order from this Court of the Minnesota bankruptcy pleadings and order, in which the bankruptcy trustee for Miller & Schroeder brought a fraudulent conveyance action against Marshall, and obtained a settlement and judgment in which Marshall paid over $1.2 million (approximately $1.4 million) to the trustee.

As previously noted, Larsen has not filed a respondent's brief and plaintiff has dismissed that portion of the appeal. No appearance has been made by Dhooge. The other six sets of respondents have filed briefs. At oral argument, counsel represented that to their knowledge, the federal appeals have not yet been resolved regarding the Kasirer, Dhooge, and Goldstein Bar orders arising out of their settlements.

DISCUSSION

I

INTRODUCTION

For purposes of analyzing the rulings on demurrer, we take as true the allegations in the complaint. (Brenelli Amedeo, S.P.A. v. Bakara Furniture, Inc. (1994) 29 Cal.App.4th 1828, 1834, fn. 1 (Brenelli Amedeo).) We liberally construe the allegations of the complaint to determine whether sufficient facts are stated to constitute a cause of action, and seek to attain substantial justice among the parties. (Ibid.; Grinzi v. San Diego Hospice Corp. (2004) 120 Cal.App.4th 72, 78.) While we accept as true all facts properly pled in the complaint, we do not assume the truth of "contentions, deductions or conclusions of law." (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967 (Aubry).) We also consider all properly judicially noticed matters, including those demonstrating any applicability of res judicata principles. (Evid. Code, §§ 452, 459; Frommhagen v. Board of Supervisors (1987) 197 Cal.App.3d 1292, 1299; Citizens for Open Access to Sand and Tide, Inc. v. Seadrift Ass'n. (1998) 60 Cal.App.4th 1053, 1065 (COAST).)

The trial court exercises its discretion in deciding whether to grant leave to amend. (Aubry, supra, 2 Cal.4th at p. 967.) Here, plaintiff did not seek amendment, preferring to stand upon the pleadings regarding the primary rights asserted as to most of the remaining defendants, i.e., (A) Kasirer group, Debra Kasirer and Dierckman, (B) the individuals Goldstein and Dhooge, and (C) the two remaining corporate defendants, U.S. Trust and Valuation. In part III, post, we will discuss those res judicata issues arising out of the dismissal of the cross-complaint in the underlying federal litigation. These include whether the same primary rights are involved here as were raised and resolved in the cross-complaint in that Betker litigation. The effect of the Bar orders upon the various defendants is a separate issue.

In part IV, post, we will discuss to the extent necessary the additional arguments and the trial court's rulings regarding U.S. Trust and Valuation, on the other grounds of demurrers, including uncertainty, statute of limitations, lack of standing, etc.

Next, however, as to the demurrer ruling specifically regarding Marshall, plaintiff contends there is no applicable bar to his complaint from a different source, the Minnesota bankruptcy adversary proceeding and order dealing with fraudulent conveyances of Miller & Schroeder assets, to Marshall. We now turn to that contention.

II

FRAUD AND FIDUCIARY DUTY THEORIES AGAINST MARSHALL

Plaintiff bases all his allegations against Marshall on the background facts that before Miller & Schroeder went into bankruptcy in Minnesota in January 2002, it transferred all its assets to others, including its successor in interest, Marshall, a Minnesota corporation doing business in California and other places. Plaintiff contends, "The sole purpose behind the formation of this new entity was to enable the defendants to seize and keep and hide the assets of Miller & Schroeder while alienating and shedding the obligations and liabilities, including the liabilities and obligations to Plaintiff, which Miller & Schroeder owed and knew it would owe. In short, a fraudulent transfer." As part of the relief sought in the prayer of the complaint, plaintiff requested an order to set aside fraudulent transfers of assets, and further relief.

Specifically against Marshall, plaintiff now pleads fraud, in that it allegedly participated in the activities of other defendants in the "looting" of the company, to leave only a shell in bankruptcy court, by "engineer[ing] a sham sale of the company's assets . . . in order to insulate themselves from liability for their actions. They left their clients and their employees hanging, alone, to face the claims and bear the losses from the fraudulent bond scheme." Similarly, allegations of breach of fiduciary duty owed to plaintiff are generally asserted, regarding duties which arose from "their position as Plaintiff's employer and as designers, creators, marketers, operators, . . . researchers, preparers and underwriters of bonds for Plaintiff to sell to his clients, lead investor and their directorship position, their agreements with Plaintiff, and from their course of dealing with Plaintiff, their representations to him about the Heritage Bonds and bonds offered for sale in general, and others, including the duty not to do any acts which caused damage to Plaintiff's clients and to Plaintiff's business and profession."

In its demurrer, Marshall mainly alleged claims preclusion from orders made in the Marshall adversary proceeding in the Minnesota bankruptcy matter. It sought judicial notice (also obtained here) of the pleadings and orders issued in proceedings by the bankruptcy trustee for Miller & Schroeder against Marshall, for fraudulent conveyance of assets. The bankruptcy trustee obtained a settlement and judgment in which Marshall paid approximately $1.4 million to the trustee, including fees and costs.

The trial court sustained Marshall's general demurrer to the fraud claims against it, and also to the negligence and business torts formerly claimed. The ruling stated that only the bankruptcy trustee for Miller & Schroeder would have had standing to assert the claims that plaintiff was now pursuing, because "[t]hose claims arise from defendant The Marshall Group, Inc.'s purchase of assets from bankrupt Miller & Schroeder. [¶] In addition, the bankruptcy court in an order approved a settlement agreement [citation] that released any and all claims against the defendant The Marshall Group, Inc. that arises from its purchase of bankrupt Miller & Schroeder's assets. That bankruptcy court order precludes plaintiff from maintaining [all] causes of action of his (first) amended complaint against The Marshall Group, Inc., including under a successor liability claim." A special demurrer, based on defect or misjoinder of parties, was deemed to be moot.

Plaintiff challenges this ruling, contending that Marshall is a successor in interest to Miller & Schroeder, and therefore remains a proper defendant in the fraud and fiduciary duty causes of action. Plaintiff relies on Ray v. Alad Corporation (1977) 19 Cal.3d 22, 28, for the proposition that when a corporation purchases the principal assets of another corporation, it also assumes the other's liabilities. There are different bases for this rule, and plaintiff argues Marshall qualifies because it is a "mere continuation of the seller." (Ibid.) To prevail on that theory, plaintiff would have to demonstrate: "(1) no adequate consideration was given for the predecessor corporation's assets and made available for meeting the claims of its unsecured creditors; (2) one or more persons were officers, directors, or stockholders of both corporations. [Citations.]" (Id. at p. 29.)

Plaintiff goes on to contend that his current fraud and breach of fiduciary duty claims could not have been asserted by the Miller & Schroeder trustee in bankruptcy, against Marshall, and therefore he, as an ordinary plaintiff, "may proceed against a culpable associate of the bankrupt party." (Practice Service Corp. v. HCA Health Services (1995) 37 Cal.App.4th 1003, 1006 (Practice Service Corp.).) He contends these conclusory allegations should be enough to survive demurrer. (But see, Hughes v. Western MacArthur Co. (1987) 192 Cal.App.3d 951, 956 (Hughes).)

In response, Marshall also relies on Practice Service Corp., supra, 37 Cal.App.4th 1003, for the concept that where a judgment creditor sues the owner of a bankrupt corporation that allegedly looted the corporation's assets, "only the bankruptcy trustee had standing to recover the looted assets." (Id. at p. 1006.) It contends that the trustee for Miller & Schroeder already litigated the same basic claims now being brought by plaintiff, and that plaintiff filed a creditor's claim, had notice of the proceedings, and should be bound by them.

Regarding the preclusive nature of that ruling, Marshall cites to hornbook law that "An arrangement confirmed by a bankruptcy court has the effect of a judgment rendered by a federal district court. [Citation.] . . . [¶] Proceedings in bankruptcy are proceedings in rem and all persons concerned, including creditors, are deemed to be parties to the proceedings. [Citations.] As an unsecured creditor of the limited partnership, plaintiff . . . was a party to the consolidated proceeding in the bankruptcy court." (Levy, supra, 19 Cal.3d 165, 172.) Marshall therefore argues that when the Miller & Schroeder bankruptcy trustee proceeded against it on a fraudulent conveyance theory, and obtained an order approving its settlement, plaintiff was a party with notice of those proceedings as an unsecured creditor, and cannot now raise similar theories. This position is well supported by authority such as In re Medomak Canning (1st Cir. 1990) 922 F.2d 895, 900-901, in which the court explained that a court-approved settlement in bankruptcy court, reached by a bankruptcy trustee for the debtor with a third party, receives the same res judicata effect as a litigated judgment. (Ibid.) "A trustee in bankruptcy is a fiduciary representing the estate and creditors. [Citation.] In order efficiently to administer the estate, a trustee's court-approved settlement must have finality, and settling parties must be assured that those the trustee represents will not relitigate settled claims. Such a result is implicitly recognized in Bankruptcy Rule 9019, which requires notice to interested parties prior to approval of such a settlement." (Id. at p. 901.)

Marshall therefore argues that plaintiff is merely artfully repleading a claim that was the property of the Miller & Schroeder bankruptcy estate. (Practice Service Corp., supra, 37 Cal.App.4th 1003, 1007; Curtis v. Kellogg and Andelson (1999) 73 Cal.App.4th 492, 506 [trustee is the representative of the bankruptcy estate with authority to collect the debtor's assets].) Essentially, no more than fraudulent conveyance of Miller & Schroeder assets is alleged, rather than any independent actions by Marshall, and the Miller & Schroeder trustee already litigated that set of issues and received a final award and judgment in bankruptcy court. Marshall also joins in other grounds raised by other defendants, on the basis that any subordinate successor in interest claims against Marshall should also fail.

We agree with Marshall that plaintiff cannot now recharacterize his fraudulent conveyance theories in different manners to escape the effect of the bankruptcy court approval of the settlement agreement and release between the trustee and Marshall. Plaintiff had notice of those proceedings and did not file any objections. In light of the substance of the judicially noticed materials, it is not enough for plaintiff to allege broadly that Marshall is a successor in interest to Miller & Schroeder, because only the same basic conduct by Marshall appears to be attacked here. (See Hughes, supra, 192 Cal.App.3d at p. 956.) Based on the above authorities, the bankruptcy order has claims preclusive effect, no possibility of amendment is apparent, and the demurrer was properly sustained.

III

RES JUDICATA PRINCIPLES AND EFFECT OF THE BAR ORDERS

A

Introduction

The chief basis of the trial court's rulings on demurrers as to the non-Marshall defendants was the bar of res judicata. Plaintiff challenges those rulings in favor of (A) the Kasirer group, Debra Kasirer and Dierckman; (B) the two remaining individuals, Goldstein and Dhooge; and (C) the two corporate defendants, U.S. Trust and Valuation. Each of those parties successfully argued Talley's dismissal with prejudice of his cross-complaint for declaratory relief, indemnity and contribution (i.e., as to any potential Betker liability), in the underlying federal court action, should have claims preclusive effect upon all the current causes of action, fraud and related theories, due to identical primary rights involved. All defendants additionally rely upon the Bar orders in the record that were reached in connection with the various settlements with Betker, as precluding relitigation of the same basic claims. (See fn. 6, ante.)

Also, the trial court set out additional bases for sustaining the demurrers as to the fourth cause of action only, which alleged that some defendants had aided and abetted breaches of fiduciary duties committed by others. Other grounds for demurrer raised were not reached by the trial court. We will discuss those arguments separately in part IV, post.

Here, however, we first set out basic res judicata principles, to determine the effect of the dismissal of the federal cross-complaint upon the current pleading, with respect to the various Bar orders and a comparison of the rights to relief asserted in both actions.

B

Elements of Res Judicata

In Mycogen Corporation v. Monsanto Company (2002) 28 Cal.4th 888, 896-897 (Mycogen), the policy of res judicata is simply stated: "A clear and predictable res judicata doctrine promotes judicial economy. Under this doctrine, all claims based on the same cause of action must be decided in a single suit; if not brought initially, they may not be raised at a later date. ' "Res judicata precludes piecemeal litigation by splitting a single cause of action or relitigation of the same cause of action on a different legal theory or for different relief." ' [Citation.]" (Id. at pp. 896-897, citing Lucido v. Superior Court (1990) 51 Cal.3d 335, 341 (Lucido).) To further define the two aspects of this doctrine: " 'Res judicata' describes the preclusive effect of a final judgment on the merits. Res 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.' " (Mycogen, supra, at p. 896.)

In both of its major aspects, bar and collateral estoppel, the doctrine will apply to all courts, so the federal judgment or order may be controlling if all the required elements are satisfied. (Code Civ. Proc., § 1908, subd. (a) [referring to the judgment of "a court or judge of this state, or of the United States"], see 7 Witkin, Cal. Procedure (4th ed. 1997) Judgment, § 293, p. 838.) Even if the criteria for applying the res judicata doctrine can be established, courts may nevertheless decline to apply the doctrine " 'if injustice would result or if the public interest requires that relitigation not be foreclosed. [Citations.]' [Citation.]" (COAST, supra, 60 Cal.App.4th 1053, 1065.)

Levy, supra, 19 Cal.3d 165, 171-172, sets out the criteria for identifying when the doctrine should be applied. It "precludes parties or their privies from relitigating an issue that has been finally determined by a court of competent jurisdiction. [Citation.] 'Any issue necessarily decided in such litigation is conclusively determined as to the parties or their privies if it is involved in a subsequent lawsuit on a different cause of action.' [Citation.] The application of the doctrine in a given case depends upon an affirmative answer to these three questions: (1) Was the issue decided in the prior adjudication identical with the one presented in the action in question? (2) Was there a final judgment on the merits? (3) Was the party against whom the plea is asserted a party to or in privity with a party to the prior adjudication? [Citations.]" (Ibid.)

Gamble v. General Foods Corp. (1991) 229 Cal.App.3d 893, 898(Gamble), outlines the rule for determining whether two actions, filed in different courts, will constitute only a single cause of action, as both affecting the same primary right: "Where, as here, an action is filed in a California state court and the defendant claims the suit is barred by a final federal judgment, California law will determine the res judicata effect of the prior federal court judgment on the basis of whether the federal and state actions involve the same primary right. [Citation.]" (Ibid.) The federal test for determining if the same cause of action is involved is somewhat different, and examines whether the two actions arose from the same "transactional nucleus of facts" or a single "core of operative facts." (Ibid.)

It is essential to address at the outset the scope of the various orders in the federal action that are claimed to have preclusive effect. These include not only Talley's own dismissal with prejudice of the Talley cross-complaint, but also the three settlement and Bar orders issued by the district court in connection with separate settlements in Betker that were reached by Kasirer, the Dhooge/Clarey group and Goldstein. (At oral argument, counsel for U.S. Trust and Valuation stated that they had obtained similar orders in the class action portion of the federal litigation, but those were not before the trial court and should not be considered here; see fn. 6, ante.) All of these orders arose out of the multidistrict Heritage Bonds litigation, but they only disposed of the Betker claims against the various settling defendants, not the class actions. At that time, Talley was a codefendant who was seeking indemnity and contribution, if he were held liable to Betker, and his request was therefore contingent in nature. His cross-complaint for indemnity, equitable indemnity, contribution, and declaratory relief named as cross-defendants only the Miller & Schroeder defendants, of whom only Dhooge remains. This raises the difficult issue of which current defendants can appropriately assert the protection of Talley's dismissal with prejudice of his cross-complaint, since it directly affected in federal court only Dhooge and Larsen of the currently named parties in this state court action (although Larsen has been dismissed due to his current settlement here).

Thus, in light of the judicial notice taken of the federal Bar orders in the record (which are final for our purposes), we next inquire whether under Gamble, supra, 229 Cal.App.3d 893, 898, the federal test for determining if the same cause of action is involved should be applied to those defendants affected by the Bar orders. This test inquires whether the two actions arose from the same "transactional nucleus of facts" or a single "core of operative facts." (Ibid.) Since our review of the demurrer rulings is de novo, we address this ground first, in the alternative, before turning to the trial court's choice of analysis, primary rights.

C

Scope of Federal Bar Orders in favor of Defendants Kasirer Group, Dierckman, Dhooge, and Goldstein

Talley is currently appealing elsewhere (9th Circuit) the Bar orders issued as to Kasirer, the Dhooge/Clarey defendants and Goldstein, in connection with the federal Betker settlement. Under the federal rule, "a judgment or order, once rendered, is final for purposes of res judicata until reversed on appeal or modified or set aside in the court of rendition. [Citations.]" (Levy, supra, 19 Cal.3d 165, 172.)

The terms of the settlement and Bar orders issued by the district court provide that the Kasirers, along with Dierckman, are within the definition of settling defendants. The Dhooge and Goldstein orders also identified them as settlors. All these orders broadly state that pursuant to Code of Civil Procedure section 877.6 and the PSLRA, all defendants, cross-complainants and/or nonsettling parties are barred from asserting, in any forum, any claims or cross-claims arising out of or related to the released claims or the transactions, facts or occurrences giving rise to those claims. The district court expressly dismissed Talley's claims against Kasirer et al., as settling defendants, with prejudice. Similarly and reciprocally, the released persons were barred from asserting other claims arising out of the same transactions. The Kasirer ruling further stated that Talley had not presented any evidence of direct losses or damages that were separate or independent from the indemnity or contribution claims already asserted, and those claims were deemed to be inter-related to the factual allegations giving rise to the claims by the Betker plaintiffs. The other orders do not expressly identify the remaining parties who may not bring further claims against the settling parties, but they reference the same actions and cross-actions, such as Talley's federal cross-complaint.

At this time, while the federal appeals are pending, the Bar orders should be considered final. (See fn. 3, ante.) To interpret their proper effect in light of the factual and procedural context in which they arose, including the cross-complaint dismissal, we must consider basic indemnity principles. As set out in Western Steamship Lines, Inc. v. San Pedro Peninsula Hospital (1994) 8 Cal.4th 100 (Western Steamship), the main purpose of the doctrine of equitable indemnity is " ' "to distribute the loss [among multiple tortfeasors] in proportion to the allocable concurring fault." ' " (Id. at p. 110.) Accordingly, to promote that purpose, there is an "express exception immunizing from further liability defendants who enter into good faith settlements. [Citations.] In light of the 'strong public policy in favor of encouraging settlement of litigation' reflected in Code of Civil Procedure section 877, which affords similar immunity from contribution [citation], [the Supreme Court] concluded that 'from a realistic perspective the legislative policy underlying the provision dictates that a tortfeasor who has entered into a "good faith" settlement [citation] with the plaintiff must also be discharged from any claim for partial or comparative indemnity that may be pressed by a concurrent tortfeasor.' " (Western Steamship, supra, at p. 110.)

In light of these protections normally to be accorded to a good-faith settling defendant, against further claims for indemnity or contribution made by a concurrent tortfeasor, we conclude the Kasirer defendants, Dierckman, Dhooge, and Goldstein have each made a sufficient showing that the federal Bar orders, made in light of Talley's own settlement, specifically cover further actions arising out of the same transactions, and these include Talley's current state action on fraud and related theories. (Gamble, supra, 229 Cal.App.3d at p. 898.) Due to the procedural posture of this case, and the nature of the indemnity claims previously alleged and resolved, we may apply the federal transactional test to analyze the final federal Bar orders as to those defendants. The matters are now before the federal appellate court. The same core of operative facts is involved as to these defendants. (Ibid.; Lucido, supra, 51 Cal.3d at p. 342.) The language of the federal Bar orders, which followed the dismissal, is broad enough to cover all of Talley's restated claims, and it supports the trial court's order sustaining these defendants' demurrers (Kasirer defendants, Dierckman, Dhooge, and Goldstein).¹¹

11 In light of the effect of these Bar orders, we need not discuss further grounds of demurrer raised as to these parties (e.g., uncertainty, insufficient facts, or statute of limitations grounds).

D

Alternative Primary Rights Analysis

1. Introduction: Defendants Protected by Bar Orders

Notwithstanding the above conclusions, the basis of the trial court's orders sustaining the demurrers was res judicata: "Plaintiff's action, as pled, is based upon the same primary right as that set forth in the cross-complaint in the Betker case. Based on this ruling, the Court does not rule on the other issues raised in the demurrer." All demurrers were sustained, and no amendment was made. Regarding Dierckman, the trial court followed the same reasoning. The same is true as to Dhooge and Goldstein.

Since the federal appeals of the Bar orders remain pending, we treat them as final and binding. With respect to those defendants entitled to the protection of the Bar orders, as outlined above, the issues regarding the trial court's choice of analysis, primary rights, are purely theoretical and need not be discussed here, as that would be dicta at this time.

However, Valuation and U.S. Trust have not brought themselves within that ground of demurrer (Bar orders), and we will next address their res judicata arguments to determine whether this complaint was properly dismissed as to those parties, as otherwise barred. As we will show, we disagree with the trial court ruling in this respect, and must accordingly address the further grounds of demurrer as to Valuation and U.S. Trust in part IV, post.

2. Defendants Not Protected by Bar Orders: U.S. Trust and Valuation

With respect to U.S. Trust and Valuation, the trial court sustained res judicata demurrers to all causes of action (now solely aiding and abetting breach of fiduciary duties, plus fraud as to Valuation). The ruling stated: "Plaintiff's action as pled is based upon the same primary right as that set forth in the cross-complaint in the Betker case. Leave to amend is granted to allege a violation of a primary right other than that alleged in the Betker cross-complaint. Alternatively, plaintiff may plead why [these defendants are] not similarly situated to the prior moving defendants [former Clarey defendants]." We first address this reasoning, and defer until part IV, post, our consideration of the alternative ground of ruling, the Everest Investors authority about pleading agency or employment, and related arguments.

(a) Applicable Test and Privity Element

Three elements must be shown in a claims preclusion case: A final judgment on the merits or equivalent, same cause of action or identity of issues, and a sufficient degree of privity as to the party to be bound by the prior judgment (in this case, Talley). In Lucido, supra, 51 Cal.3d 335, 341, those threshold requirements are restated: "First, the issue sought to be precluded from relitigation must be identical to that decided in a former proceeding. Second, this issue must have been actually litigated in the former proceeding. Third, it must have been necessarily decided in the former proceeding. Fourth, the decision in the former proceeding must be final and on the merits. Finally, the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding. [Citation.] The party asserting collateral estoppel bears the burden of establishing these requirements. [Citation.]" (Id. at p. 341; italics added.)

At the outset, we find the privity element to be satisfied as against Talley. (However, the elements of finality and identity of issues/claims are more problematic, as we will discuss in the next sections.) As summarized by Witkin, the concept of privity now receives a broader reading than in the past: "[M]odern courts are concerned with the practical question of 'whether the non-party is sufficiently close to the original case to afford application of the principle of preclusion.' [Citations.]" (7 Witkin, Cal. Procedure, supra, Judgment, § 393, p. 961.) Substantial identity of parties is enough to satisfy this test. (Id. at § 388, p. 958.)

"The concept of privity for the purposes of res judicata or collateral estoppel refers 'to a mutual or successive relationship to the same rights of property, or to such an identification in interest of one person with another as to represent the same legal rights [citations] . . . .' " (COAST, supra, 60 Cal.App.4th 1053, 1069-1070.) The key consideration is normally the fairness of binding a party to the result obtained in earlier proceedings in which it did not participate. (Ibid.) " ' "Whether someone is in privity with the actual parties requires close examination of the circumstances of each case." [Citation.]' [Citation.]" (Id. at p. 1070.)

Because of the nature of Talley's involvement in the underlying federal court litigation, he may be bound by his own dismissal without regard to privity, on the issues resolved. He is the party against whom preclusion is sought, the same as in the former proceeding. (Lucido, supra, 51 Cal.3d at p. 341; italics added.) As a codefendant, Talley had notice of the various proceedings in federal court regarding Betker, and there does not appear to be any problem with this element of privity in the claims preclusion analysis. If the other elements of the analysis are present (finality and identity of issues or claims), even nonparties to the federal action may assert the underlying federal dismissal order against him. Talley dismissed his own cross-complaint without expressly preserving a right to proceed on those allegations, and it is fair to hold him to it, but only so far as it goes, as we next address.

(b) Finality Element and Derivative Liability Considerations

With regard to finality, a settlement agreement that is incorporated into a judgment or order may qualify as the essential element of a final decision on the merits, if it represents a " ' " 'prior adjudication of an issue in another action that is determined to be sufficiently firm to be accorded conclusive effect.' " [Citations.]' [Citation.]" (COAST, supra, 60 Cal.App.4th 1053, 1065.) Talley's cross-complaint dismissal with prejudice, after settlement, could qualify as a final judgment that was issued on the merits, regarding the claims raised. In determining whether a prior adjudication of an issue in another action, where a settlement was reached, should be accorded conclusive effect, courts will inquire whether the parties in the proceedings demonstrated their intent to be collaterally bound by the terms of the settlement. (Ibid.; see 7 Witkin, Cal. Procedure, supra, Judgment, § 321, pp. 872-873 [parties may show intent in a settlement and dismissal to bar a new action].)

As this Court explained in Alpha Mechanical, Heating & Air Conditioning, Inc. v. Travelers Cas. & Sur. Co. of America (2005) 133 Cal.App.4th 1319, 1330-1331 (Alpha Mechanical), such a dismissal of an action with prejudice is deemed to be a judgment on the merits against that plaintiff. We relied on Torrey Pines Bank v. Superior Court (1989) 216 Cal.App.3d 813, 820 (using the terminology of retraxit). Also, as relevant here, this court went on to explain the correct manner in which such a dismissal will be analyzed under a res judicata analysis, as follows:

"In further proceedings occurring between the same parties following a retraxit [dismissal with prejudice], the dual principles of res judicata arise because it is necessary to determine the preclusive effect of the retraxit/final judgment in the defendant's favor. In other words, a court will apply principles of res judicata to resolve precisely what causes of action or issues are barred as a result of the retraxit. Hence, in Torrey Pines Bank, we described retraxit as invoking principles of res judicata. [Citation.] It is therefore incorrect to suggest, as some courts have [citation], that res judicata principles somehow supplant the retraxit doctrine; to the contrary, as stated, res judicata principles are applied to ascertain the scope and effect of the retraxit and thus the principles operate together." (Alpha Mechanical, supra, 133 Cal.App.4th 1319, 1331.)

We now compare Talley's federal cross-complaint allegations and dismissal to the current claims, to determine the scope and effect of the dismissal. This raises concerns about derivative liability as to these parties, who claim that the resolution of the federal case, as to those parties whom they allegedly aided and abetted, must also operate in their favor, because only derivative liability could apply as to U.S. Trust and Valuation. They rely on cases such as Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 578-580 (LeVine), in which the court held that a former partner was not allowed to pursue a conspiracy or aiding and abetting cause of action against the partnership's accountant, by claiming wrongful allocation of partnership profits. Previously, the partnership itself had prevailed in an arbitration proceeding on the same essential claim by the former partner, and the accountant who was involved in allocating partnership profits was held to be entitled to assert the protection of the earlier judgment. The court said that since the accountant was being sued on a conspiracy and aiding and abetting theory, but after the plaintiff had lost its case against the direct tortfeasor, "the claim preclusion aspect of res judicata bars plaintiff's conspiracy and aiding and abetting claim." (Id. at p. 580.)

In LeVine, supra, 131 Cal.App.4th 566, 572-573, the court outlined general principles about derivative liability, as follows: Collateral estoppel and claims preclusion may be applied " 'where the liability of the defendant asserting the plea of res judicata is dependent upon or derived from the liability of one who was exonerated in an earlier suit brought by the same plaintiff upon the same facts. [Citations.]' " (Id. at p. 579.) In that case, the court gave examples of such derivative liability: master and servant, principal and agent, and indemnitor and indemnitee. It then explained: "But imposition of derivative liability is not limited to the doctrine of respondeat superior. Liability based on an aiding and abetting or conspiracy theory is also 'derivative,' i.e., liability is imposed on one person for the direct acts of another. . . . [A]iding and abetting liability may ' "be imposed on one who aids and abets the commission of an intentional tort if the person (a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person's own conduct, separately considered, constitutes a breach of duty to the third person." ' [Citation.]" (Ibid.)

In reaching its conclusions, the court in LeVine, supra, 131 Cal.App.4th 566, analyzed claims preclusion rules and case law for the purposes of identifying when one defending party could assert another party's favorable final judgment against the losing plaintiff, when the original prevailing defendant was related to the current defending party through agency or employment. Thus, where a principal is exonerated on a claim arising from the acts of its employees, the claimant cannot separately sue the employees. (Sartor v. Superior Court (1982) 136 Cal.App.3d 322, 325-328.) Likewise, where a general contractor prevails in arbitration about work, then the losing plaintiff cannot subsequently sue the subcontractor who had done the work. (Thibodeau v. Crum (1992)4 Cal.App.4th 749, 757.) Similarly, where a securities broker is found not liable for investment losses in arbitration, the losing plaintiff cannot subsequently sue the broker's principal. (Brinton v. Bankers Pension Services, Inc. (1999) 76 Cal.App.4th 550, 557-558.) Such cases require U.S. to take into account not only the relationship of the original defendants and the later defendants, such as employment or agency, but also the extent of the issues resolved in the final judgment.

When the court in LeVine, supra, 131 Cal.App.4th 566, applied claim preclusion rules to protect the accountant defendant who was sued on a conspiracy and aiding and abetting theory, it did so because the same plaintiff had already lost on the merits against the direct tortfeasor, regarding the same alleged invasion of its primary right (wrongful allocation of partnership profits). We think this case is distinguishable, because the scope of the issues resolved by the dismissal of Talley's federal cross-complaint did not include resolution on the merits of the fraud claims raised by Betker, on which Talley's request for indemnification was based. Even though the dismissal was final in nature as to Talley's indemnity claims, it did not represent any resolution on the merits of the root cause of the indemnification request. Moreover, Valuation and U.S. Trust are currently alleged to be direct tortfeasors, and more than derivative liability is sought against them, even though on an aiding and abetting theory, as we next outline. The element of finality of the subject dismissal has not been conclusively established here.

(c) Criteria for Determining if Same Issues/Primary Rights are Asserted by Plaintiff to Create Liability Against These Defendants

We accordingly address whether the final criterion for the application of res judicata is present, i.e., the necessary identity of issues/claims, which is actually the main issue argued by the parties. Our inquiry is whether Talley's earlier response to the Betker litigation, by seeking indemnity and contribution against his federal codefendants, invoked the same primary rights that are being reasserted here. Defendants argue plaintiff is merely recharacterizing his federal indemnity/contribution claim as state fraud or fiduciary duty claims. Talley instead argues he is claiming direct and individual harm from fraud and other breaches of duty committed by the defendants, causing him financial losses in his career and apparently, also personal injury of a reputational or emotional nature. The question becomes whether any of the defendants are correct that only one basic primary right has ever been asserted by Talley in either forum, i.e., the right to be free of fraudulent conduct, or to have nonfraudulent securities to sell, or not to suffer economic loss arising from fraud.

Conversely, the question can be framed as whether the current demurring defendants (not named as cross-defendants in Talley's federal cross-complaint) can assert the same rights as could those particular named (and dismissed) federal cross-defendants, such as being free of further litigation about those rights, due to a strict application of claims preclusion. This requires looking at the nature of those respective rights, and whether these demurring defendants (i.e., U.S. Trust and Valuation) can fairly assert claims preclusion, regarding fraud and aiding and abetting.

To ascertain the scope and effect of the dismissal, we note that Talley's federal cross-complaint mainly sought declaratory relief, implied or comparative or equitable indemnity, or contribution. However, it also requested an award of damages and attorney fees and costs, and indemnification of any settlement or compromise amounts to be paid. Apparently, no such awards were ever made. This requires U.S. to follow the approach in Alpha Mechanical, supra, 133 Cal.App.4th 1319, for identifying exactly what substantive claims or issues are deemed barred as a result of that dismissal, and as to whom. As set out in Mycogen, supra, 28 Cal.4th 888, 904, and Crowley v. Katleman (1994) 8 Cal.4th 666, 681-682, the content of a "primary right is simply the plaintiff's right to be free from the particular injury suffered. [Citation.] It must therefore be distinguished from the legal theory on which liability for that injury is premised: 'Even where there are multiple legal theories upon which recovery might be predicated, one injury gives rise to only one claim for relief.' [Citation.] The primary right must also be distinguished from the remedy sought: 'The violation of one primary right constitutes a single cause of action, though it may entitle the injured party to many forms of relief, and the relief is not to be confounded with the cause of action, one not being determinative of the other.' [Citation.]" (Ibid.) Accordingly, to determine any preclusive effect, we must compare authorities distinguishing from the underlying right to be free of injury, the remedy sought. We also seek to distinguish between the underlying right itself, and the legal theory of liability.

(d) Different Relief for Same Cause of Action, or Separate Right to Recover?

It is difficult to characterize the type of relief sought by Talley's underlying federal cross-complaint for declaratory relief, indemnity and contribution, but it is important to do so in order to determine if this dismissal with prejudice precludes further claims by Talley against defendants U.S. Trust and Valuation. In Mycogen, supra, 28 Cal.4th 888, the Supreme Court was specifically analyzing a declaratory relief provision which represents an exception to ordinary claims preclusion rules. (Code Civ. Proc., § 1062.) The court held that the declaratory judgment act "carves out an exception to the bar of res judicata only where a plaintiff's initial action seeks purely declaratory relief." (Mycogen, supra, at p. 897.) In contrast, where the previous action sought and obtained more than declaratory relief, or "coercive" relief (e.g., specific performance or injunction), then a second action is not allowed on the same primary right. (Ibid.) The court reasoned, "Unlike coercive relief (such as damages, specific performance, or an injunction) in which a party is ordered by the court to do or to refrain from doing something, a declaratory judgment merely declares the legal relationship between the parties. Under the provisions of the Act, a declaratory judgment action may be brought to establish rights once a conflict has arisen, or a party may request declaratory relief as a prophylactic measure before a breach occurs." (Id. at pp. 898.)

Talley's indemnity request in federal court included mainly declaratory relief language, and was mainly prophylactic in nature, in seeking to declare the legal relationship regarding liability as between the parties. This would support reading his previous indemnity request narrowly, as only resolving the rights of the cross-defendants actually before the federal court, and therefore as representing an exception to claims preclusion principles, similar to declaratory relief. The current defendants thus cannot take advantage of it for claims preclusion purposes, because public policy supports allowing parties to obtain declaratory relief for conflict resolution, and this should extend to indemnification declarations.

Even if we accept the defendants' formulation that only one basic primary right has ever been asserted by Talley in either forum (i.e., the right to be free of fraudulent conduct, or not to suffer economic loss arising from fraud, or to have nonfraudulent securities to sell), this does not account for harm to Talley from that fraud personally, as opposed to harm to the third-party investors for which the defendants could have been liable, and for which Talley could have sought indemnification if also found liable. The alleged direct and personal harm to plaintiff, caused by U.S. Trust and Valuation through assisting others, seems to differ materially from the restitution he sought for lost property rights through his indemnity and contribution claims arising from Betker's injuries.

It is significant that the dominant purpose of the indemnity cross-complaint was protective only and no affirmative relief was recovered or even sought, beyond potential indemnification from existing parties. Because the affirmative remedy sought in the current action, damages for injuries alleged to have been caused by Valuation and U.S. Trust, differs in kind from the defensive indemnity claim in the federal court, we decline to read the record regarding Talley's federal cross-complaint as showing that he was requesting "coercive" relief in the nature of fees, costs, and a damages award based on comparative fault. It does not control that both types of relief arose out of the same basic set of facts about the Heritage Bonds investment fraud, because different types of harms are addressed. It would go too far to impose claims preclusion based on that dismissal against the current set of remaining defendants. Talley should have a separate right to seek recovery for different injuries.

(e) Different Legal Theory on Same Cause of Action, or Separate Right to Relief?

Since Talley's dismissal with prejudice of his cross-complaint for indemnity, etc. was made in the factual and procedural context of settling the Betker action alone (Talley was not named as a defendant in the consolidated class action), Talley only had federal court exposure to liability for damages as to the Betker plaintiffs, for which any indemnity might be needed. This dismissal represented only a defensive measure in connection with his own settlement. (See 7 Witkin, Cal. Procedure, supra, Judgment, § 354, pp. 915-917 [judgment as collateral estoppel confined to issues actually litigated].) Under this narrow reading, there should be no basis to allow the cross-complaint's dismissal with prejudice to apply to resolve any claims other than the precise indemnity and contribution issues raised against the named federal cross-defendants, and in any case, the merits were not reached previously.

By comparison, in the statute of limitations context, the courts have recognized that for limitations purposes, "a tort defendant's claim for equitable indemnity is separate and distinct from the injured party's claim against the additional defendant." (People ex rel. Dept. of Transportation v. Superior Court (1980) 26 Cal.3d 744, 752.) The reason for this is: "[A] tort defendant does not lose his own independent right to seek such recovery simply because the injured party is barred from pursuing its separate claim against the additional defendant by the applicable statute of limitations. [Citations.]" (Ibid.; also see County of Riverside v. Loma Linda University (1981) 118 Cal.App.3d 300, 315 ["A tort defendant's claim for comparative indemnity from a concurrent tortfeasor is separate and distinct from the injured party's claim against the tortfeasors and, therefore, the right to seek indemnity against a joint tortfeasor is not foreclosed by the injured party's failure to name him as a joint tortfeasor"].) We can reason by analogy to this limitations context that, for primary rights purposes, indemnity based on comparative fault is not merely a different legal theory seeking to vindicate the same underlying right. A plaintiff who previously sought indemnification for potential exposure to liability, to a third party, may alternatively allege individualized harm to a different primary right, i.e., harm that caused a different injury.

We think that a different primary right was asserted by Talley in the previous federal action, as opposed to the claims against U.S. Trust and Valuation in this action, such that he is not merely asserting a different legal theory on the same cause of action. The aim of the indemnity cross-complaint was to protect Talley from bearing an undue share of liability of his alleged fellow joint tortfeasors, with respect to the claims raised by the investor-plaintiffs in Betker. Talley would have no such right to equitable or implied indemnity unless he had been found liable to Betker, because it is a "fundamental principle that 'there can be no indemnity without liability.' [Citations.] Indemnity does not invariably follow fault; it is premised on a joint legal obligation to another for damages." (Western Steamship, supra, 8 Cal.4th 100, 114.) Also, "Indemnity is distinguished from the related doctrine of contribution in that the latter 'presupposes a common liability which is shared by the joint tortfeasors on a pro rata basis.' [Citation.]" (Id. at p. 108, fn. 6.) Talley was never found liable to Betker, and therefore he was not actually injured insofar as his potential indemnity rights are concerned. Those rights to indemnity are different from the Betker plaintiffs' rights not to be defrauded. Nor can these defendants properly contend that Talley is relitigating the same injury to himself.

In Western Steamship, the Supreme Court explained that indemnity has a "restitutionary nature." (Western Steamship, supra, 8 Cal.4th at pp. 108-109.) The court further explained that with regard to matters of substantive law, indemnity "is wholly derivative and subject to whatever immunities or other limitations on liability would otherwise be available. [Citations.]" (Id. at p. 115.) In light of these theoretical limitations on the indemnification request, we cannot find that Talley's federal indemnity request was so broad in scope or effect as to foreclose his current claims against the current defendants. We reject the corporate defendants' efforts to take advantage of the dismissal of Talley's cross-complaint as to the cross-defendants in federal court (e.g., Larsen, Miller & Schroeder, or its employees such as Dhooge or the Clarey group, who are not appearing in this proceeding). By pursuing the cross-complaint, Talley was seeking to shield himself from liability as a joint tortfeasor, since he claimed he had done no wrong. Talley was not pursuing affirmative relief to vindicate other primary rights than indemnification, since he was not seeking to recover anything in federal court other than being made whole, if joint tortfeasor liability were imposed.

It is difficult to compare cases arising in other factual contexts, but they may be instructive. In Flynn v. Gorton (1989) 207 Cal.App.3d 1550, 1555, there was an accident between two drivers, and a third party passenger was also injured. Driver No. 1's indemnity claim against Driver No. 2 (when both drivers were later sued by the passenger) was held not to state the same cause of action as Driver No. 2's underlying negligence claim against Driver No. 1. Even though Driver No. 2 had earlier obtained an arbitration award against Driver No. 1, this only addressed Driver No. 2's primary right to be free of personal injury. When Driver No. 1 later sought indemnification as a joint tortfeasor from Driver No. 2, upon being sued by the passenger for negligence, it was held that the prior arbitration award did not bar such an indemnification request with respect to the third-party damages to which Driver No. 1 was now exposed. For our purposes here, this supports a conclusion that the legal theories are separate between the underlying lawsuit and a related indemnity request, and represent different interests. (Also see Fleck v. Bollinger Home Corporation (1997) 54 Cal.App.4th 926, 931 ["a cause of action distinct from one for injury to property arises when defendants seek implied equitable indemnity" (under comparative fault principles applicable to concurrent tortfeasors)].)

In determining whether a later proceeding is based on the same primary right as in an earlier action, courts will "compare the two actions, looking at the rights which are sought to be vindicated and the harm for which redress is claimed. [Citation.] 'Reference must be made to the pleadings and proof in each case. [Citation.]' [Citation.]" (COAST, supra, 60 Cal.App.4th 1053, 1067.) Under the state test, we conclude different primary rights are involved in the two successive actions as to these demurring defendants, because in the federal cross-action, Talley did not allege personal entitlement to compensation for fraud from any of the existing defendants, and the cross-complaint was solely restitutionary, declaratory and contingent in nature. It did not represent the same primary right of action by way of pursuing only a different theory of recovery. (Id. at p. 1068.) Where "the injuries and wrongs associated with the two cases differ, regardless of the theories of recovery pleaded," (Brenelli Amedeo, supra, 29 Cal.App.4th 1828, 1837), claims preclusion will not apply.

Thus, as to U.S. Trust and Valuation, the current aiding and abetting allegations are distinguishable from the previously asserted indemnity rights against a cotortfeasor. Although the same set of securities transactions gave rise to both actions, Talley was in a different position as an accused codefendant/joint tortfeasor than he is in now, as an alleged innocent victim of fiduciary breaches and the aiding and abetting of same. He can claim different wrongs were committed and seek other compensation than before.

In any case, we are not required to apply res judicata theories " 'if injustice would result or if the public interest requires that relitigation not be foreclosed. [Citations.]' [Citation.]" (COAST, supra, 60 Cal.App.4th 1053, 1065.) Talley's dismissal of his federal cross-complaint for indemnity does not amount to a final disposition of the alleged claims of aiding and abetting the breaches of fiduciary duties by others, that would be sufficient to satisfy res judicata standards. The judicially noticeable materials in the record do not support an application of res judicata principles to preclude relitigation of any issues already decided as to these defendants, because no such common issues were already decided on the same primary rights.

However, the trial court went on to make separate rulings regarding those corporate defendants, regarding the fourth cause of action for aiding and abetting, as we next discuss.

IV

ADDITIONAL ARGUMENTS ON DEMURRER: U.S. TRUST AND VALUATION

We have determined above that the plea of res judicata raised by Valuation and U.S. Trust does not warrant dismissal after demurrer, on this record. Nor do the Bar orders apply to these defendants, as a matter of law. However, we are next required to discuss the alternative grounds of demurrer that were before the trial court, some of which were ruled upon and some of which were not.

A

Valuation and U.S. Trust: Aiding and Abetting a Fiduciary

To reiterate the allegations of the fourth cause of action, plaintiff now claims that from 1996 through 1999, U.S. Trust and Valuation either intentionally or negligently substantially assisted certain other defendants in creating the investment scheme, with knowledge that those fiduciaries were not dealing in good faith in offering the Heritage Bonds for sale. In particular, Talley alleges that the charged defendants knew of the unsuitability of the bonds but did not disclose that information to him, and therefore they knowingly aided and abetted those fiduciary breaches by others, causing him damage when he continued to sell the bonds and remain with the company. For example, U.S. Trust allegedly failed to report defendants' improper transfers of bond proceeds among and between various bond offerings and facilities, even though such fund transfers were allowed to be done in advance of agreed-upon times, and were based upon inadequate documentation. Valuation allegedly performed inaccurate property appraisals, at outrageously high valuations, that were not justified by the represented appreciation of the Heritage properties. Also, fraud is separately alleged against Valuation. All defendants are generally alleged to be the agents or employees of the other defendants.

These allegations regarding aiding and abetting refer to the underlying breaches of fiduciary duty by the Miller & Schroeder group, Marshall and the Kasirer group ("the named principals") and their employees Larsen and Dhooge. This raises a number of theoretical problems. First, those named principals who allegedly breached the fiduciary duties are no longer involved in this action, for various reasons set out above, and in fact, Talley admits his former employer Miller & Schroeder was not ever brought in as a party here. However, as will be further discussed post, there is no clear reason to assume that a cause of action for aiding and abetting cannot be stated, merely because the named principals cannot now be pursued in this action. Nor is it fatal that the underlying negligence causes of action have been dismissed. The previous activities of the allegedly disloyal fiduciaries can still be pled as underlying facts in the aiding and abetting claims, either as negligent or fraudulent conduct.

These employers and their associates were alleged to owe fiduciary duties as outlined in Pierce v. Lyman (1991) 1 Cal.App.4th 1093, 1101-1102: "A fiduciary or confidential relationship can arise when confidence is reposed by persons in the integrity of others, and if the latter voluntarily accepts or assumes to accept the confidence, he or she may not act so as to take advantage of the other's interest without that person's knowledge or consent. [Citation.]" Since those defendants are no longer before us, nor is the third cause of action against them, it is admittedly difficult to interpret the current pleading, which is problematic to the extent it is based on those alleged underlying fiduciary duty breaches. As a securities representative, Talley had fiduciary duties to his clients, but the scope of fiduciary duties owed to him by his employers, regarding the validity of the bonds to sell, is unclear. (See 3 Witkin, Summary of Cal. Law (10th ed. 2005) Agency and Employment, § 46, pp. 85-87 [a stockbroker must act in the highest good faith toward the client, but generally tort actions by the client in that context are not authorized for breach of the implied covenant of good faith and fair dealing]; see CACI No. 4100 et seq. [breach of fiduciary duty as to stockbrokers].)

We do not express any opinion at this time on the validity or viability of the underlying third cause of action for breach of fiduciary duty, since it is not directly alleged against the two remaining defendants, Valuation and U.S. Trust. With those pleading problems in mind, we next turn to the reasoning of the trial court.

B

Ruling; Everest Investors

With respect to only the fourth cause of action (aiding and abetting), the trial court's ruling included certain additional findings as to U.S. Trust and Valuation. The court ruled their demurrers should be sustained on the following basis: A nonfiduciary is ordinarily not liable for aiding and abetting a fiduciary; rather, "In order to allege aiding and abetting to a fiduciary, the plaintiff must allege that the non-fiduciary is either an employee or an agent of the fiduciary. Plaintiff's first amended complaint fails to allege that [those] defendants are either an employee or an agent of the fiduciary."

In their briefs on appeal, these corporate defendants have not analyzed the trial court's reliance on Everest Investors, supra, 100 Cal.App.4th 1102, which was a case arising out of conspiracy allegations based on underlying torts of breach of fiduciary duty, unfair business practices, and constructive fraud. There, the appellate court was dealing with a specific conceptual problem in conspiracy theory, and framed its holding as follows:

"The question on this appeal is whether a nonfiduciary defendant can be liable for conspiring with a fiduciary defendant to breach the fiduciary's duty to the plaintiff. The answer, in our view, is sometimes yes and sometimes no. When the nonfiduciary is an agent or employee of the fiduciary, the nonfiduciary is entitled to the benefit of the 'agent's immunity rule' (and thus not liable on a conspiracy theory) unless the nonfiduciary was acting for its own benefit. If the nonfiduciary is neither an employee nor agent of the fiduciary, it is not liable to the plaintiff on a conspiracy theory because a nonfiduciary is legally incapable of committing the tort underlying the claim of conspiracy (breach of fiduciary duty). Since the answer in this case is 'no,' we affirm the order of dismissal that is the subject of this appeal." (Everest Investors, supra, 100 Cal.App.4th at p. 1104, fn. omitted.)

In Everest Investors, the court went on to explain that "an agent who acts for his own advantage loses the immunity he would otherwise have vis-à-vis his principal and can be liable for conspiracy to interfere with his principal's contract or inducing the breach of his principal's contract. [Citations.] But we do not see how the agent's unauthorized and self-serving act can make him liable to a third party for conspiracy to breach a fiduciary duty that he does not owe to anyone. [Citations.]" (Everest Investors, supra, 100 Cal.App.4th at p. 1109.) We think those observations, and any reliance on this authority, are simply inapposite to our situation here, in which plaintiff has not alleged any form of conspiracy among the various defendants, so as to invoke any theoretical concerns about agent immunity, such as were before the court in Everest Investors. Moreover, the complaint in this case includes the standard agency or employment allegations among all defendants, so that U.S. Trust and Valuation can alternatively be viewed as taking independent actions within the securities transactions or as acting on behalf of others. In light of the lack of any conspiracy theories pled here, the trial court erroneously required plaintiff to make additional allegations of agency or employment in the fourth cause of action.

C

Correct Approach

We next seek to determine whether U.S. Trust and Valuation are correct in asserting that they cannot be held liable for aiding and abetting the breach of fiduciary duty by others (Larsen, Dhooge, and/or Miller & Schroeder, and/or Marshall and/or Robert Kasirer), because they themselves did not owe a fiduciary duty to plaintiff, and therefore only "derivative" liability could be alleged. We also address to some extent the defendants' statute of limitations arguments, which relied upon deposition testimony about when plaintiff was placed on notice of problems in the Heritage Bonds transactions, and about the various ways in which plaintiff has so far unsuccessfully pursued these claims. Defendants argue this lack of success to date conclusively shows no further amendments could be successful, and further, that plaintiff will not be able to plead any actual knowledge on their parts of any breaches by others of their fiduciary duties.

Nonetheless, under the following authorities, we think Talley should be given another chance to attempt to plead the aiding and abetting theory, as well as fraud against Valuation. In Certified Grocers of California, Ltd. v. San Gabriel Valley Bank (1983) 150 Cal.App.3d 281, 289 (Certified Grocers), the court said, "a person not himself a fiduciary may be liable for breach of a fiduciary duty as a result of colluding with a disloyal fiduciary." "Where there is a common plan or design to commit a tort, all who participate are jointly liable whether or not they do the wrongful acts." (Ibid.)

Case law appears to treat aiding and abetting in the tort context differently and less strictly than it treats conspiracy theory. Defendants should not assume the aiding and abetting theory is equivalent to conspiracy, or that it has the same restrictions. Specifically, in Heckmann v. Ahmanson (1985) 168 Cal.App.3d 119, 127-128 (Heckmann), the appellate court recognized that a group of nonfiduciary persons could be held jointly liable for aiding and abetting certain wrongdoing by a group of corporate directors, which had breached its own fiduciary duty to the stockholders. The court commented that an active participant in the others' breach of duty, which reaped the benefit of that breach, could not disclaim the burden of it. (Ibid., citing Gray v. Sutherland (1954) 124 Cal.App.2d 280, 290; Bancroft-Whitney Co. v. Glen (1966) 64 Cal.2d 327, 353; also see Overgaard v. Johnson (1977) 68 Cal.App.3d 821, 824 [measure of damages for fiduciary tort actions is the full amount of loss caused]; 6 Witkin, Summary of Cal. Law, supra, Torts, § 1717, pp. 1249-1252.)

In Neilson v. Union Bank of California, N.A. (C.D.Cal. 2003) 290 F.Supp.2d 1101, the federal district court relied on Fiol v. Doellstedt (1996) 50 Cal.App.4th 1318, 1325-1326, as setting forth a California rule that, " '[l]iability may . . . be imposed on one who aids and abets the commission of an intentional tort if the person (a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person's own conduct, separately considered, constitutes a breach of duty to the third person.' [Citations.]" (Neilson, supra, at p. 1118.) The federal court analyzed California law as including no requirement "that the aider and abettor owe plaintiff a duty so long as it knows the primary wrongdoer's conduct constitutes a breach of duty, and it substantially assists that breach of duty. (See Fiol, supra, 50 Cal.App.4th at 1325-26.)" (Neilson, supra, at p. 1127.)

Although the concept of derivative liability was previously discussed for purposes of the claims preclusion analysis, we must revisit it to determine if sufficient facts can be stated in this cause of action. "Liability based on an aiding and abetting or conspiracy theory is also 'derivative,' i.e., liability is imposed on one person for the direct acts of another. . . . [A]iding and abetting liability may ' "be imposed on one who aids and abets the commission of an intentional tort if the person (a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person's own conduct, separately considered, constitutes a breach of duty to the third person." ' [Citation.]" (LeVine, supra, 131 Cal.App.4th at p. 579.) Although U.S. Trust and Valuation also claim their liability is only "derivative" from that of the defendants in the separate breach of fiduciary duty action, some separate facts are necessarily alleged about their participations in filling different roles in the underlying transactions. They allegedly caused direct and personal harm to plaintiff, through assisting others, and this harm may differ materially from that caused by the underlying breaches of fiduciary duty allegedly committed by the others. The term "derivative" in this sense does not insulate parties charged with aiding and abetting the tort of another, if the requirements for aiding and abetting can be shown (knowledge of wrongfulness and substantial assistance, as outlined above; LeVine, supra, at pp. 578-580).

In their briefs on appeal, these defendants also rely on cases such as Casey v. U.S. Bank National Ass'n. (2005) 127 Cal.App.4th 1138, 1145-1146, stating that liability for aiding and abetting will depend on proof the defendant had actual knowledge of the specific primary wrong that defendant substantially assisted. They deny they had any such knowledge. However, for pleadings purposes, Talley generally attempted to allege the necessary knowledge on the part of these defendants, and may be able to add additional facts. Currently, he pleads that U.S. Trust was careless and complicit in enabling the Heritage entities to misappropriate funds, in contravention of its own duties and obligations. Likewise, he alleges Valuation's property appraisals were not justified by the unlikely and excessive reported appreciation of the Heritage properties, resulting in its intentional or negligent assistance to the other defendants in breaching their duties. Also, fraud is separately alleged against Valuation.

In conclusion, we think plaintiff may appropriately claim that these third parties "colluded" with disloyal fiduciaries. (Certified Grocers, supra, 150 Cal.App.3d 281, 289.) The demurrers should not have been sustained on this ground.

D

Remaining Grounds of Demurrer; Conclusion

The trial court did not rule upon and deemed to be moot certain additional arguments raised on demurrer by U.S. Trust, with respect to the aiding and abetting claim, such as: Bar of the statute of limitations; lack of standing of the plaintiff to assert any duties not found in the trust indentures for the bonds; and lack of sufficient alter ego allegations. (See 69 Am.Jur.2d, supra, § 872 et seq., pp. 954-959 [on the strict limitations on trust indenture duties].)

Likewise, Valuation raised additional objections to the fraud and aiding and abetting causes of action (statute of limitations and uncertainty). At oral argument, counsel for Valuation strenuously argued that the limitations grounds of demurrer was meritorious, and urged this court to reach it. However, to do so would require analysis of deposition testimony regarding the time of Talley's discovery of his cause of action. In a similar demurrer of another party, Dierckman, the trial court refused to resolve limitations issues, stating that at the demurrer stage, the court was bound by what is pled, i.e., that plaintiff learned of the alleged fraud on October 25, 2001. Regardless of the correctness of such an approach, this appellate court may appropriately decline to decide this limitations ground de novo.

Moreover, Valuation and plaintiff continue to debate on appeal whether the current action should have been brought only as a compulsory counterclaim under Federal Rules of Civil Procedure, rule 13(a), or whether a permissive cross-claim could have been filed, such that this action remains viable. (Ibid. ["A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction . . . .", italics added; but see rule 13(g), referring to permissive counterclaims].) The current question is, who qualifies as "any opposing party" in federal court? The trial court has not addressed that issue and we decline to decide the applicability of this federal rule on a de novo basis. We do not resolve whether the filing of the indemnification request, alleging that Talley had potential liability exposure from fraud committed by other parties defendant, meant that Talley at that time also had to bring in all potential defendants into the federal court action, or be foreclosed from ever suing for fraud, etc. (Fed. Rules Civ. Proc., rule 13.)

We have already noted that plaintiff's theories as currently alleged have major inconsistencies, due to the recent removal of the negligence cause of action that was referenced in the fourth cause of action, and due to the ongoing evolution in the identity of the charged defendants who breached fiduciary duties, on which the fourth cause of action is based as to both of these remaining defendants. At least arguably, separate grounds of liability against Valuation and U.S. Trust have been alleged, regarding their own professional activities, not only derivative liability from that of the fiduciary defendants (Miller & Schroeder, Larsen, and Dhooge). (Heckmann, supra, 168 Cal.App.3d 119, 127-128.) Those issues should not be decided de novo on this record, nor can we now say that plaintiff will never be able to plead any viable theory against these defendants.

Notwithstanding the above conclusions, we have other concerns about the pleading of the current complaint against the remaining defendants. In light of plaintiff's current formulation of his ideas in his opening brief, it is extremely novel, to say the least, for him to assert these particular causes of action in an effort to allege how the corporate defendants' actions in this business tort context violated "his distinct primary right to be free of personal injury and harm." (Italics added.) In the complaint, he claims damages for the loss of his income, savings, and house, as well as his suffering of depression and severe emotional distress, but all in the context of the defendants' activities in these highly sophisticated business transactions.

Accordingly, we express no opinion on any of the grounds of demurrer not yet ruled upon. We decide only that no res judicata bar arose in the federal court proceedings as to these two remaining defendants, and no grounds of demurrer reached were meritorious. The judgments of dismissal must be reversed as to these remaining defendants/respondents (U.S. Trust and Valuation). The trial court is directed to conduct further appropriate proceedings in which these remaining issues may be litigated, if the subject parties choose to pursue them, upon proper notice of any renewed motions or demurrers upon remand. The trial court may, in its discretion, also entertain applications to allow any appropriate amendment of pleadings, in connection with hearing any further demurrers.

However, as to Marshall, the Kasirer group, Debra Kasirer, Dierckman, Goldstein and Dhooge, we are required as a matter of law to affirm the judgments of dismissal, based upon the judicially noticeable materials supplied regarding the Bar orders.

DISPOSITION

The judgments of dismissal are affirmed in part and reversed in part, with directions to conduct appropriate further proceedings in accordance with the views expressed in this opinion. Valuation and U.S. Trust are to pay plaintiff's costs on appeal; all other parties are to bear their own costs.

WE CONCUR: McCONNELL, P. J., BENKE, J.