Gladys SNYDER and Gina Rae, Plaintiffs and Appellants, v. ASHKENAZY ENTERPRISES, INC., Defendant and Respondent.
This appeal is taken from a judgment of dismissal entered after the demurrer of respondent Ashkenazy Enterprises, Inc. (AEI) to the first amended complaint (FAC) was sustained without leave to amend by the Los Angeles County Superior Court. The FAC filed April 8, 1987, sought to prevent the eviction of appellants Gladys Snyder (Snyder) and Gina Rae (Rae) from the premises owned by AEI, a debtor-in-possession under Chapter 11 of the Bankruptcy Act.
Counsel for Snyder and Rae did not proceed with the FAC at the time of commencement of the action, but rather decided first to defend against any unlawful detainer actions subsequently brought by AEI and gave counsel for AEI an open extension of time to respond to the FAC.
In September 1987, AEI filed separate unlawful detainer actions against Snyder and Rae in the municipal court and obtained judgments in both actions after trials on the merits by the court.
Following the unlawful detainer actions, AEI's 30 day extension to respond to the FAC was terminated. AEI then filed demurrers to the FAC in the superior court. The demurrers were successful, resulting in a judgment of dismissal by the superior court.
This appeal followed, raising, inter alia, issues pertaining to a contended right by appellants to proceed with their action in the superior court since the municipal court unlawful detainer trials do not constitute res judicata and do not collaterally estopp appellants from proceeding with this superior court action.
As hereafter discussed, we find no merit in the appellants' contentions and affirm the judgment.
FACTUAL AND PROCEDURAL SYNOPSISA. Statement of Facts
In this action Snyder and Rae seek to recover damages purportedly resulting from the exercise by AEI of its option under the Ellis Act to remove rent controlled apartments from the rental market. Snyder and Rae contend that AEI did not comply with certain provisions of the Ellis Act and of the West Hollywood Rent Stabilization Ordinance and that they had an enforceable right to remain in their apartment units “as long as they wished.”
AEI owns a hotel at 8440 Sunset Boulevard, West Hollywood, California (Le Mondrian). AEI filed a petition for reorganization in Bankruptcy on February 20, 1986, under chapter 11 of the Federal Bankruptcy statutes. AEI needed to go out of the rental housing business as part of its plan of reorganization.
Prior to August 1983, Le Mondrian was operated as an apartment building. Prior to the incorporation of the City of West Hollywood on November 29, 1984, Le Mondrian was located in an unincorporated area of Los Angeles County: Snyder and Rae were each tenants in apartment units located within Le Mondrian.
In August 1983, AEI applied to Los Angeles County for a conditional use permit (CUP) enabling AEI to convert Le Mondrian from an apartment building into a hotel. The County of Los Angeles granted AEI's application on January 4, 1984. AEI complied with all required procedures for obtaining a CUP from the County. Pursuant to section 22.56.030 of the Los Angeles County Code, AEI filed a list with the County of the names and addresses of all persons shown on the latest available assessment roll of the County of Los Angeles as owning property within 500 feet of the area to be occupied by the use.
At the time, there were approximately 13 units still occupied in the building. Under Los Angeles County's Rent Control Ordinance then in effect, it was permissible for AEI to evict the tenants in these units in order to remodel the building for use as a hotel. Instead, AEI arranged to relocate each of these tenants, including Snyder and Rae, at its own expense, to another luxury hotel owned by AEI during the course of the remodeling.
In September 1983, the company managing the facility sent to both Snyder and Rae a letter informing them of the plans to remodel Le Mondrian and of the arrangements which had been made to move them temporarily out of their apartments. In the letter, it was further stated that neither Snyder nor Rae would be charged any rent for her unit during that time and that no charge would be made for the hotel suite accommodations. It also stated that each could return to her apartment in Le Mondrian once the remodeling was completed, and that they would be welcome to remain in their remodeled units as long as they wished on the same terms and conditions as their existing leases.
In late September 1983, Snyder and Rae moved out of their apartments and into Le Dufy Hotel. They stayed rent free at the Le Dufy Hotel for almost one year in suites which had a then market rental rate of $70 per night. At the end of one year they moved back into units at Le Mondrian, which had been remodeled and refurbished as hotel suites, where they lived until they were evicted pursuant to court judgments in early 1988.
As a result of certain financial reversals, AEI filed a petition in Bankruptcy for reorganization on February 20, 1986. In October 1986, AEI, as the debtor-in-possession of the Le Mondrian Hotel, concluded that it would not be economically feasible to continue to maintain rental housing units in Le Mondrian in a successful plan of reorganization. In order to facilitate that plan and increase the value of the hotel facility, AEI decided to exercise its right under the Ellis Act1 to remove all of the 13 remaining apartment units in Le Mondrian from the rental market.
On October 30, 1986, AEI, as the debtor-in-possession, sent to Snyder and Rae a “Notice to Tenant of Termination of Tenancy.” In accordance with the provisions of the West Hollywood Rent Stabilization Ordinance, the termination notice stated that pursuant to paragraph 15 of section 6413(A) of Article VI, Chapter 4 of the West Hollywood Municipal Code, their apartments in Le Mondrian would be withdrawn from the rental market as of December 31, 1986. AEI also complied with existing legal requirements by offering Snyder and Rae relocation assistance. As of December 31, 1986, the apartments of Snyder and Rae were removed from the rental market.
In accordance with the termination notice. AEI refused to accept any payments of rent from Snyder or Rae after December 1986. AEI permitted Snyder and Rae to remain in their apartments rent free after December 1986, and took no immediate steps to evict them from their units, in anticipation that they would relocate without the necessity of an eviction. In early 1988, Snyder and Rae were evicted pursuant to court judgments entered after trial of the unlawful detainer actions.
B. Procedural History
On April 6, 1987, Snyder and Rae filed a complaint in the superior court against AEI seeking to prevent their evictions from Le Mondrian Hotel. On April 8, 1987, Snyder and Rae filed a first amended complaint (FAC), pleading nine causes of action for declaratory relief, preliminary and permanent injunction, fraud, promissory estoppel, breach of contract, specific performance, negligent and intentional infliction of emotional distress and retaliatory eviction.
On April 30, 1987, Snyder and Rae unsuccessfully sought a preliminary injunction to prohibit AEI from proceeding to evict them by way of unlawful detainer actions. At that time, Snyder and Rae suspended prosecution of their superior court action and waited for unlawful detainer actions to be brought against them and to raise affirmative defenses. Snyder and Rae, by their counsel of record, granted AEI an open extension of time to respond to the FAC subject to 30 days written notice.
In September 1987, AEI filed unlawful detainer actions against Rae and Snyder in the Beverly Hills Municipal Court, entitled Ashkenazy Enterprises, Inc. v. Gina Rae (LAMC Case No. 87C002946) and Ashkenazy Enterprises. Inc. v. Gladys Snyder aka Candy Ward (Case No. 87C002943), respectively. In both of the complaints filed in the unlawful detainer actions. AEI alleged AEI's compliance with the Ellis Act and the Rent Stabilization Ordinance.2
The same counsel who had filed Snyder's and Rae's complaint over seven months before defended both Snyder and Rae in their respective unlawful detainer action and filed answers on behalf of each.
In her answer, filed on or about October 23, 1987, Rae placed in issue all of the causes of action set forth in her FAC by way of a general denial and by way of affirmative defenses. Rae's defenses included, but were not limited to, violations of the Ellis Act, the West Hollywood Stabilization Ordinance, promissory estoppel and retaliatory eviction.
In her amended general denial filed October 7, 1987, Snyder alleged as affirmative defenses violations of the Ellis Act and of the West Hollywood Rent Stabilization Ordinance. Although Snyder's counsel knew of the defenses of promissory estoppel and retaliatory eviction. Snyder failed to affirmatively raise these defenses in either her general denial or amended general denial. Snyder made a motion at the end of AEI's case in chief on the second day of the unlawful detainer trial to further amend her answer to allege these defenses. The court denied Snyder's motion to amend the answer on the grounds that Snyder had long known of the absent defenses and that Snyder's motion was untimely.
After a full trial on the merits, the court entered judgment for possession and damages in favor of AEI in each action. The judgment against Snyder was affirmed on appeal to the appellate department of the superior court. Rae and Snyder were evicted pursuant to judgments in early 1988.
On July 21, 1989, Snyder and Rae, in pro per, terminated AEI's open extension to respond to the superior court action and demanded that AEI respond to the FAC within 30 days. On August 16, 1989, AEI's counsel advised Snyder and the attorney they proposed to substitute as counsel of record that AEI would file and serve a demurrer to the FAC on or before August 21, 1989.
On August 21, 1989, AEI filed and served its demurrer to the FAC. AEI demurred on the grounds that the causes of action therein were barred by res judicata, including collateral estoppel, pursuant to the judgments entered following the unlawful detainer trials in the municipal court and further that the FAC failed to state facts sufficient to constitute a cause of action against AEI. Snyder and Rae, in the interim filed a document entitled “First Amended Complaint”3 on August 21, 1989 without obtaining an order of court permitting such filing.
On October 5, 1989, the court on its own motion struck the pleading of Rae and Snyder entitled “First Amended Complaint” filed August 21, 1989, on grounds that it was filed without leave of court. Without opposition, the court sustained AEI's demurrer to the second, third and seventh causes of action and struck these causes of action on grounds of mootness. The court sustained AEI's demurrer to the first, fourth, fifth, sixth, eighth and ninth causes of action without leave to amend on all grounds set forth in AEI's points and authorities filed in support of the demurrer.
On October 18, 1989, Snyder and Rae timely filed their notice of appeal. On February 23, 1990, Snyder brought a motion in the superior court to set aside the dismissal and judgment, which the superior court denied for lack of jurisdiction.
Rae and Snyder formulate the following contentions on appeal:
1. Res judicata does not bar any cause of action in the FAC since the sole issue in the unlawful detainer actions was possession and not damages;
2. The doctrine of collateral estoppel does not apply against Snyder since violation of the Ellis Act and the Rent Stabilization Ordinance in the FAC were not identical issues in the unlawful detainer action;
3. Identical issues set forth in the FAC were not litigated in the prior unlawful detainer actions;
4. Collateral estoppel should not act as a bar to the FAC since it is conjectural that the issues in the FAC were litigated in the unlawful detainer actions;
5. Collateral estoppel should not be a bar in this case since an “injustice” would result by reason of AEI's conspiracy to violate local ordinances designed to protect persons with low and moderate income;
6. Since it was counsel for Rae and Snyder who failed to raise and improperly argued the unlawful detainer actions, it is in the interest of the judicial system that Rae and Snyder be allowed to proceed on their FAC in order to prevent injustice;
7. AEI circumvented and violated the Ellis Act and the Rent Stabilization Ordinance by pretending to remove the units from the “rental market” when in fact AEI intended to evict Rae and Snyder to obtain a greater income from the units as luxury hotel rooms; and
8. The Rent Stabilization Ordinance would be frustrated if Rae and Snyder were evicted from their housing without any redress.
For the reasons hereafter expressed we find no merit to any of the contentions formulated by appellants.
[1,2] The burden is on the appellants to make an affirmative showing of both error, and injury from the error, in the ruling of the court below. (9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, § 325, p. 335.) The trial court's ruling sustaining AEI's demurrer without leave to amend is a discretionary ruling and the standard of review on appeal is whether the trial court abused its discretion. Under this standard, the trial court's ruling will not be reversed unless there is a showing of a clear case of abuse and a miscarriage of justice. (Blank v. Kirwan (1985) 39 Cal.3d 311, 331, 216 Cal.Rptr. 718, 703 P.2d 58.) The burden is on appellants to establish an abuse of discretion. (Ibid.)
 Further, since this appeal follows the sustaining of a demurrer without leave to amend, the facts alleged in the FAC must be regarded as true. However, “where an allegation is contrary to law or to a fact of which a court may take judicial notice, it is to be treated as a nullity.” (Fundin v. Chicago Pneumatic Tool Co.) (1984) 152 Cal.App.3d 951, 955, 199 Cal.Rptr. 789; Code Civ.Proc., § 430.30.) The appellate courts shall take judicial notice of any matter properly noticed by the trial court. (Evid.Code, § 459, subd. (a).) The trial court below properly took judicial notice of the records and files of the prior unlawful detainer actions against Snyder and Rae. On January 18, 1990, this appellate court ordered that the record on appeal include the records and files of the unlawful detainer actions in the municipal court by judicial notice.
Contrary to the contentions of Snyder and Rae, AEI's compliance with both the Ellis Act and the Rent Stabilization Ordinance were raised and litigated in AEI's favor in both prior unlawful detainer actions. Further, the remaining pivotal issues in the FAC were or could have been adjudicated in each prior unlawful detainer action. As hereafter discussed, we conclude that the causes of action of the FAC and/or essential elements pertinent thereto are barred by res judicata and/or collateral estoppel.
Both Snyder and Rae have had ample opportunity to litigate the issues raised on appeal and should not now be permitted to do so yet another time by obtaining a reversal of the judgment below. They have failed to establish any error and/or abuse of discretion by the trial court and the rulings of the trial court are affirmed.
In Sutphin v. Speik (1940) 15 Cal.2d 195, 202, 99 P.2d 652, the court stated: “[I]f [a matter] is actually raised by proper pleadings and treated as an issue in the cause, it is conclusively determined by the first judgment. But the rule goes further. If the matter was within the scope of the action, related to the subject-matter and relevant to the issues, so that it could have been raised, the judgment is conclusive on it despite the fact that it was not in fact expressly pleaded or otherwise urged. The reason for this is manifest. A party cannot by negligence or design withhold issues and litigate them in consecutive actions. Hence, the rule is that the prior judgment is res judicata on matters which were litigated or litigable․ ‘․ This principle [that an issue may not be split into pieces] also operates to demand of a defendant that all of its defenses to the cause of action urged by the plaintiff be asserted under penalty of forever losing the right to thereafter so urge them.” ’ (Original emphasis and emphasis added.) (See also, Bernhard v. Bank of America (1942) 19 Cal.2d 807, 122 P.2d 892; Krier v. Krier (1946) 28 Cal.2d 841, 172 P.2d 681; Shore v. Shore (1954) 43 Cal.2d 677, 277 P.2d 4.)
The court in Frommhagen v. Board of Supervisors (1987) 197 Cal.App.3d 1292, 1299, 243 Cal.Rptr. 390 stated that: “The doctrine of res judicata has a double aspect. First, it precludes parties or their privies from relitigating the same cause of action that has been finally determined by a court of competent jurisdiction. Second, although a second suit between the same parties on a different cause of action is not precluded by a prior judgment, the first judgment operates as an estoppel or conclusive adjudication as to such issues in the second action as were actually litigated and determined in the first action. This second aspect of res judicata is commonly referred to as collateral estoppel.” (Citations omitted; original emphasis.)
In discussing collateral estoppel, the court goes on to state: “Issues are actually litigated if the judgment itself indicates they have been litigated or litigation of the issue was necessary to the judgment. [Citations.] The entire record of the first suit may be examined to determine if an issue was decided by the judgment.” (Id. at p. 1301, fn. 3, 243 Cal.Rptr. 390.)
 AEI's unlawful detainer complaints against both Snyder and Rae contained allegations of compliance with the Ellis Act and the Rent Stabilization Ordinance as elements of its prima facie case. Snyder and Rae each filed a general denial in response to AEI's complaints, thus placing in issue AEI's statutory compliance as material allegations of the complaint. (Code Civ.Proc., § 431.30, subd. (d).)
Further, contrary to the contentions of appellants, both Snyder and Rae alleged violation of the Ellis Act and of the West Hollywood Rent Stabilization Ordinance as affirmative defenses to the unlawful detainer actions brought by AEI. Clearly, the issues of AEI's violation of the Ellis Act and of the West Hollywood Rent Stabilization Ordinance were actually raised, litigated and decided in the previous actions.
The judgment with findings of fact obtained against Rae in the unlawful detainer action specifically found that: “All of the requirements of the Ellis Act and of the West Hollywood Rent Stabilization Ordinances were followed scrupulously by the Landlord [AEI].” (Emphasis added.)
On the appeal of Snyder from the unlawful detainer judgment, the memorandum judgment issued by the appellate department of the superior court specifically states: “The trial court's finding that Mr. Miller was, indeed, a hotel guest puts to rest the controversy since it defeats appellant's claim that Government Code section 7060 [Ellis Act] and West Hollywood Municipal Code section 6413(A)(15) [Rent Stabilization Ordinance] were not complied with by respondent.” (Emphasis added.)
The record and all reasonable inference to be drawn therefrom clearly establish that both Rae and Snyder litigated AEI's alleged violation of the Ellis Act and the West Hollywood Rent Stabilization Ordinance in defense of the unlawful detainer actions. The court in each case found no violation of such laws by AEI.
Further, West Hollywood Municipal Code section 6413(A)(15)(g)4 provides in pertinent part: “Failure by any landlord to comply with the requirements of this paragraph 15 shall constitute a defense in any unlawful detainer action brought to evict a tenant under this paragraph 15.”
The record clearly shows that AEI's compliance with the Rent Stabilization Ordinance was actually determined in the unlawful detainer actions. Consequently, Snyder and Rae have no viable causes of action upon which to base actual and/or punitive damages predicated upon such alleged violations by AEI. (Sutphin v. Speik, supra, 15 Cal.2d 195, 202, 99 P.2d 652; Frommhagen v. Board of Supervisors, supra, 197 Cal.App.3d 1292, 243 Cal.Rptr. 390.)
However, in the event AEI's statutory compliance had not been raised as an affirmative defense by Snyder and Rae, the issue would now be barred since it could have been raised in the prior actions. (Sutphin v. Speik, supra, 15 Cal.2d 195, 202, 99 P.2d 652.) We find no doubt or “conjecture” about these issues being litigated in the unlawful detainer actions or that these issues are purportedly not identical to the issues raised in the superior court action brought by Snyder and Rae. Accordingly, the causes of action based thereon are barred by res judicata and/or collateral estoppel and the trial court properly sustained AEI's demurrer.
Snyder and Rae attempt to allege that AEI violated provision 6406(A)(7) of the West Hollywood Rent Stabilization Ordinance pertaining to the requirement of a change of use exemption prior to withdrawing units from the rental market.5 However, both by its terms and by the admissions of Snyder and Rae, this ordinance became effective January 5, 1987, after AEI had terminated the residential tenancies on December 31, 1986, pursuant to notices served October 31, 1986. By its terms, section 6406A(7) is applicable to “[a] rental residential unit existing on January 5, 1987.” Snyder's and Rae's residential tenancies terminated on December 31, 1986, and their reliance on this provision is misplaced. Accordingly, Snyder and Rae failed to state, and clearly cannot state, a cause of action based thereon. The trial court properly sustained AEI's demurrer to the FAC.
Snyder and Rae have clearly failed to meet their burden of showing error and/or any abuse of discretion by the trial court.
Rae specifically alleged and relied upon promissory estoppel based upon a letter dated September 9, 1983, and retaliatory eviction, both expressed as affirmative defenses in the unlawful detainer action. The trial court in the unlawful detainer action specifically found that any alleged promise in the letter had been reasonably kept for a reasonable time and that there was no evidence of “retaliation” in the eviction by AEI.
Rae's fifth cause of action for promissory estoppel and her ninth cause of action for retaliatory eviction have been litigated in the unlawful detainer action and are barred by the doctrine of res judicata. (Sutphin v. Speik, supra, 15 Cal.2d 195, 202, 99 P.2d 652.)
Snyder failed to raise the defenses of promissory estoppel founded upon the letter of September 9, 1983, and/or retaliatory eviction in either her answer or amended answer to the unlawful detainer action, although both clearly could have been raised. Her motion to further amend her answer to assert said defenses made on the second day of trial at the completion of AEI's case in chief was denied by the trial court as untimely since she had known of the defenses for at least seven months. Snyder appealed the denial of her motion to amend, which denial was upheld.
We do not read the holding by our Supreme Court in Sutphin so narrowly as to exclude a consideration of timeliness when the court holds that collateral estoppel will apply if the issues could have been litigated in the prior action. We find nothing in the Sutphin6 decision to preclude a holding by this court that if the issues could have been “timely” litigated in the prior action then collateral estoppel applies and we so hold. We are hard pressed to find that Snyder made a timely request to amend her answer, until the completion of AEI's case in chief. This is particularly so since the affirmative defenses of promissory estoppel and retaliatory eviction were clearly known by Snyder for at least seven months prior to trial.
Appellants admit that Snyder could have litigated promissory estoppel in the prior action. Snyder cannot be permitted through her own negligence to withhold a timely presentation of issues and litigate them piecemeal in consecutive actions.
Represented by counsel throughout all proceedings, appellants have had ample opportunity to litigate the causes of action and/or issues involved in their FAC.
Pertaining to appellants' contention that they should not be bound by the mistakes of their counsel in the unlawful detainer actions, we merely reinforce a well accepted legal precept that the lawyer is deemed the agent of his or her client and any errors by that attorney are chargeable to the client, save conduct which is tantamount to abandonment of the client. We find no such abandonment in this case. If appellants' representation was mishandled, a malpractice action is the appropriate remedy. (Kim v. Orellana (1983) 145 Cal.App.3d 1024, 1027–1028, 193 Cal.Rptr. 827.) Snyder has hired and dismissed five attorneys since commencing the action in the superior court. Both Snyder and Rae are currently in pro per. Appellants have had ample opportunity to litigate the issues herein. No injustice results from our affirming the trial court's ruling.
To the extent that we may have refrained from discussing any contention of appellants on this appeal, the reason therefore is not through oversight but through our belief that such contentions are meritless.
The judgment is affirmed. Respondent to recover costs on appeal.
I respectfully dissent. I am very concerned my colleagues in the majority have given an overbroad reading to Sutphin v. Spiek (1940) 15 Cal.2d 195, 99 P.2d 652 and then applied that overbroad construction where it does not belong. Furthermore, the majority opinion ignores more recent Supreme Court authority which has denied collateral estoppel effects to unlawful detainer judgments in subsequent ordinary civil actions, even these involving the very same issues.
I. PRINCIPLES OF RES JUDICATA DO NOT PRECLUDE LITIGATION OF APPELLANTS' CAUSES OF ACTION IN SUPERIOR COURT BECAUSE THEIR AFFIRMATIVE DEFENSES IN THE UNLAWFUL DETAINER ACTION DO NOT CONSTITUTE CAUSES OF ACTION
The theory of res judicata embraces two distinct concepts—claim preclusion (sometimes called “res judicata”) and issue preclusion (sometimes called “collateral estoppel”). (Second Rest. of Judgments (1982) Ch. 1, p. 1.) Claim preclusion prevents retrial of the same cause of action which was decided in an earlier proceeding. (7 Witkin, Cal. Procedure (3d ed. 1985) Judgment, § 189.) If the same cause of action indeed is involved in both proceedings, this principle prevents retrial not only of issues actually decided in the earlier proceeding but also issues which could have been decided in the earlier proceeding. (Id. at §§ 243–246, 248–49, 251.)
Issue preclusion, often called collateral estoppel, is at one and the same time both a broader and narrower concept. It is broader in the sense it prevents relitigation of any issue decided in an earlier proceeding even where that other proceeding involved a completely different cause of action. It is narrower in the sense the issue must be one which was “actually litigated” in the earlier proceeding. (Stout v. Pearson (1960) 180 Cal.App.2d 211, 4 Cal.Rptr. 313; 7 Witkin Cal.Procedure (3d ed., supra ) Judgment, § 189, 253–256, 266–267.) It is not enough the issue could have been litigated in that earlier proceeding. (Gorman v. Gorman (1979) 90 Cal.App.3d 454, 153 Cal.Rptr. 479.) “[A] former judgment is not a collateral estoppel on issues which might have been raised but were not: just as clearly, it is a collateral estoppel on issues which were raised, even though some factual matters or legal argument which could have been presented were not. (Citations omitted).” (7 Witkin, Cal.Procedure (3d ed., supra ) Judgment, § 257, italics in original. But see Vella v. Hudgins (1977) 20 Cal.3d 251, 142 Cal.Rptr. 414, 572 P.2d 28 discussed at pp. 799–800 infra where issue was not precluded because unsuccessful party in first action may not have had the opportunity to adequately litigate all the factual matters or legal arguments related to the “issue” which was resolved against her at the first trial.)
Respondents evidently persuaded the trial court to treat this as a case of claim preclusion and the majority apparently has done the same. However, the affirmative defenses in the legal detainer action did not constitute the same causes of action as were brought in the civil case. They may involve identical issues, but they do not involve the same causes of action. Why not? For one thing, an affirmative defense—unlike a cross complaint or counter claim—is not a “cause of action.” If defendants prevail on an affirmative defense this does not mean they are entitled to recover damages or receive any other affirmative relief. Successful affirmative defenses merely defeat the plaintiffs' causes of action and deny the recoveries they seek. Having won with an affirmative defense in plaintiff's lawsuit, a defendant is free to file and litigate his or her own cause of action predicated on the same issue embodied in the affirmative defense. “Claim preclusion” does not foreclose that subsequent affirmative law suit because it is not the same “cause of action” only the same “issue”.
When confronted with AEI's unlawful detainer action appellants Snyder and Rae could only make limited use of their claims AEI had treated them illegally. Because of the summary nature of an unlawful detainer action, they could not file these as counter claims or cross complaints allowing them to recover damages or other relief in the unlawful detainer court. (Vasey v. California Dance Co. 70 Cal.App.3d 742, 748, 139 Cal.Rptr. 72.) Instead they could only assert these claimed illegalities as affirmative defenses in an effort to retain possession of their apartments. Thus, whether these affirmative defenses were successful or unsuccessful they could not preclude the filing or litigation of these claims in an independent civil action where they could be awarded damages or other affirmative relief.
II. COLLATERAL ESTOPPEL DOES NOT PRECLUDE LITIGATION OF TWO ISSUES SNYDER FAILED TO RAISE AS AFFIRMATIVE DEFENSES BECAUSE THOSE ISSUES WERE NOT “ACTUALLY LITIGATED” IN THE UNLAWFUL DETAINER ACTION
My view that appellants' claims are not subject to claim preclusion does not necessarily mean, however, that they may not be subject to issue preclusion, that is, what is frequently called collateral estoppel. What it does mean, however, is that these claims are barred only to the extent they involve issues which are identical to those involved in the unlawful detainer action and then only to the extent these issues were actually litigated in the earlier proceeding. (7 Witkin, Cal.Procedure (3d ed., supra ) Judgment, §§ 254, 257, and cases cited therein.) It is not enough the issues could have been raised and decided in the unlawful detainer action. For issue preclusion (or collateral estoppel) to apply, an issue must have been actually litigated and adjudicated in the earlier proceeding. (7 Witkin, Cal.Procedure (3d ed. supra ) Judgment, §§ 253–254, 257, and cases cited therein.)
Applying these basic principles of res judicata to the instant case I find two of Snyder's civil causes of action—promissory estoppel and retaliatory eviction—were not asserted as affirmative defenses in the unlawful detainer action. Consequently, they were not litigated in that earlier action and, in my view, remain viable causes of action in the instant proceeding.
It is true these claims could have been raised as defenses in the unlawful detainer action. Indeed both the trial court and the appellate department specifically found the defenses of retaliatory eviction and promissory estoppel “were known to be available to assert, since she had raised them in the superior court action some months previously.” (Ashkenazy Enterprises v. Gladys Snyder, Memorandum Judgment, Appellate Department of the Superior Court. County of Los Angeles (April 5, 1989) at p. 22.) However, it is equally true AEI resisted litigation of these issues in the unlawful detainer action by opposing amendment of Snyder's answer to add them as affirmative defenses. Moreover, this resistance was successful. The trial court refused to allow Snyder to amend her answer. Consequently, the promissory estoppel and retaliatory eviction issues (now causes of action in the instant civil action) were not “actually litigated” in the unlawful detainer action.
AEI attempts to have it both ways. At Snyder's unlawful detainer trial it successfully resisted amendment of Snyder's answer to include the affirmative defenses of promissory estoppel and retaliatory eviction. AEI thereby prevented “actual litigation” of those two issues in the unlawful detainer trial. It now asserts those issues could have been adjudicated in the unlawful detainer action and thus are precluded from litigation in this civil action. Not surprisingly, prior decisions have made it clear defendants cannot have their cake and eat it, too. (Barragan v. BCH (1986) 188 Cal.App.3d 283, 297, 232 Cal.Rptr. 758 [no issue preclusion (in second action) where defendant successfully opposed plaintiff's attempt to file cross-complaint in first action on same issue plaintiff raised as affirmative cause of action in second action].) If AEI wanted to have issue preclusion on the potential promissory estoppel and retaliatory eviction causes of action in the unlawful detainer case, it should have allowed those claims to have been asserted as affirmative defenses in that action. In my view, without litigation there is no preclusion.
AEI succeeded in convincing the trial court and the majority of this court that Sutphin v. Speik, supra, 15 Cal.2d 195, 99 P.2d 652 applies to this case and precludes litigation of these two claims because they could have been raised as affirmative defenses in the unlawful detainer action even though they were not “actually litigated” in that proceeding. In my opinion, this would be an erroneous reading of Sutphin even if the first case had been a regular civil action not an unlawful detainer proceeding. I will explain why shortly. But the first case was an unlawful detainer action and that fact has profound implications not mentioned in the majority opinion.
Over thirty years after Sutphin, the Supreme Court held this sort of action is a summary proceeding which ordinarily does not collaterally estop subsequent litigation even of issues which were raised and decided in the unlawful detainer hearing. (Vella v. Hudgins, supra, 20 Cal.3d 251, 142 Cal.Rptr. 414, 572 P.2d 28, discussed at pp. 799–800 infra.) A fortiori, unlawful detainer hearings cannot have collateral estoppel effects as to issues which could have but were not even considered by the unlawful detainer court. Under the Supreme Court's Vella opinion the only way an unlawful detainer proceeding can result in “issue preclusion” in a subsequent action is where there is persuasive evidence the issue was fully litigated in that unlawful detainer hearing. (Vella v. Hudgins, supra, 20 Cal.3d at p. 255, 142 Cal.Rptr. 414, 572 P.2d 28.) Obviously there can be no such evidence when as here we know these two issues were not even litigated in the unlawful detainer proceeding. Accordingly, the majority's extension of its broad reading of Sutphin to issues which could have but were not raised in unlawful detainer hearing flies in the face of the Supreme Court's more recent pronouncement in Vella.
As to Sutphin itself, I am concerned the majority gives it an overly broad reading. The majority overlooks the Supreme Court's own clarification in Sutphin which undercuts the language the majority quotes and relies on. In an addendum to its opinion the high court justified its denial of a petition for rehearing by highlighting it had not ruled that issue preclusion applies to issues which could have been but were not decided in the prior action. Rather it had merely held that new theories could not be raised to justify relitigation of old issues which actually had been decided in the earlier proceeding. As the Supreme Court observed in addendum:
“Defendant in his petition for rehearing challenges certain portions of our opinion, which he interprets as meaning that in a second suit on a different cause of action, any issue which could have been raised in the first suit is res judicata in the second, even though not actually determined in the first. (Emphasis in original.) This is not our holding, and the opinion must be read in connection with the facts of this case, and with an understanding of the issue which was, in fact decided in the former action. (Italics added.)
“Defendant, in his petition, has again urged that the former judgment cannot be res judicata as to the new issue of the title to oil from wells bottomed on state land, which title was acquired after the conclusion of the first action. (Emphasis in original.) The difficulty with this argument is that the asserted ‘new issue’ is not such in fact. Defendant has simply offered another legal theory by which the same issue might be differently decided.” (Sutphin v. Speik, supra, 15 Cal.2d 195, 204–205, 99 P.2d 652.)
From the above language, it is apparent the very Supreme Court that decided Sutphin does not interpret that opinion the way the majority of this court does. Indeed the Supreme Court expressly said it was not holding that “any issue which could have been raised in the first suit is res judicata in the second, even though not actually determined in the first.” Yet that is the precise reading the majority of this court gives to Sutphin. And it is this discredited interpretation the majority relies on to support its decision to give collateral estoppel (issue preclusion) effect to the two issues Snyder could have but did not raise as affirmative defenses in the unlawful detainer proceeding.
What the Supreme Court actually held in Sutphin was consistent with generally accepted principles of collateral estoppel. That is, when an issue is actually litigated, issue preclusion applies to foreclose relitigation of “factual matters or legal argument which could have been presented but were not.” (7 Witkin. Cal.Procedure supra. 1985) Judgment, § 257, emphasis in original.) Yet, “a former judgment is not a collateral estoppel on issues which might have been raised but were not.” (Ibid.)
In Sutphin itself, the same issue had been “actually litigated” in the earlier lawsuit. The defendant was merely trying to introduce a new legal theory he could have presented but failed to raise in the former case. In other words, he was trying to raise new “factual matters (and) legal argument which could have been presented but were not.” But since the “issue” had been “actually litigated” once already, the defendant was precluded from having it relitigated in the second action.
In the instant case, on the other hand, what could have been but were not raised as affirmative defenses in the unlawful detainer proceeding qualified as separate “issues” not merely “factual matters or legal argument” encompassed within issues which were actually litigated in that action. Accordingly, even under Sutphin—as the court which decided that case interpreted its own opinion—collateral estoppel does not apply to preclude litigation of those issues in the subsequent superior court action.
III. THE REMAINING ISSUES APPELLANTS RAISED AS AFFIRMATIVE DEFENSES MAY BE SUBJECT TO ISSUE PRECLUSION BUT AT THE DEMURRER STAGE IT IS NOT POSSIBLE TO DETERMINE WHETHER THEY WERE ADEQUATELY LITIGATED IN THE UNLAWFUL DETAINER PROCEEDING
Because of the summary nature of unlawful detainer actions, the courts have shown great reluctance to preclude later litigation of issues which may have been decided in those proceedings. (7 Witkin, Cal.Procedure (3d ed., supra ). Judgment, § 267, and cases cited therein.) “[A] judgment in unlawful detainer usually has very limited res judicata effect and will not prevent one who is dispossessed from bringing a subsequent action ․ to adjudicate other legal and equitable claims between the parties [citations omitted].” (Vella v. Hudgins, supra, 20 Cal.3d 251, 255, 142 Cal.Rptr. 414, 572 P.2d 28; Gonzales v. Gem Properties, Inc., (1974) 37 Cal.App.3d 1029, 112 Cal.Rptr. 884; Patapoff v. Reliable Escrow Service Corp. (1962) 201 Cal.App.2d 484, 19 Cal.Rptr. 886.)
In Vella v. Hudgins, supra, for example, the California Supreme Court approved litigation of a suit to set aside a trustee's sale based on fraud. It did so even though the defendant in that lawsuit had won a previous unlawful detainer action evicting the plaintiff from that property and the fraud issue had been raised as an affirmative defense in the unlawful detainer trial. The court ruled the record was “virtually barren” as to whether the defendant in the unlawful detainer action had an “adequate opportunity to litigate the defense”. (Italics added.) Accordingly, it refused to grant collateral estoppel status to the resolution of the fraud issue in the unlawful detainer action.
At the same time, however, the Supreme Court in Vella expressly approved then distinguished the Court of Appeal decision in Wood v. Herson (1974) 39 Cal.App.3d 737, 114 Cal.Rptr. 365. In the latter case, the court held issue preclusion prevented retrial of a fraud claim related to title after it had been determined as an affirmative defense in an unlawful retainer action. However, the Supreme Court stressed that in Wood v. Herson there was ample evidence the unlawful detainer court had conducted a full blown hearing lasting seven days. The Supreme Court also noted there had been extensive discovery and the trial court had issued precise findings after hearing detailed evidence on the very issue the unsuccessful defendant in the unlawful detainer case was now seeking to raise again in an independent action.
In the instant case, I cannot find sufficient evidence of an adequate hearing on the affirmative defenses raised in the Rae and Snyder unlawful detainer actions to justify issue preclusion. Clearly, it would be preferable if trial courts waited for the summary judgment stage to rule on these collateral estoppel (issue preclusion) contentions where they arise out of earlier summary proceedings such as unlawful detainer actions. This would afford both the trial courts and the reviewing courts an opportunity to consider actual evidence and not merely pleadings and court records to determine exactly what took place in the unlawful detainer proceeding.
This case illustrates why it is so difficult to rule on “issue preclusion” contentions at the demurrer stage. The record properly before the trial court consisted solely of the pleadings and judgments in the two unlawful detainer actions along with the complaint in the superior court action. Neither that court nor this one had available the transcript which might have disclosed exactly what occurred in the unlawful detainer hearing. Nor was there any evidence available about the sort of “extensive discovery” and “precise findings after hearing detailed evidence” which persuaded the Supreme Court “issue preclusion” was appropriate in Wood v. Herson, supra, 39 Cal.App.3d 737, 114 Cal.Rptr. 365, even though it was not proper in Vella v. Hudgins, supra, 20 Cal.3d 251, 142 Cal.Rptr. 414, 572 P.2d 28.
On the basis of the meager record before this court, I simply am unable to agree to sustain the trial court's ruling as to the four causes of action raised as affirmative defenses in Rae's unlawful detainer action and as to the two causes of action raised as affirmative defenses in Snyder's unlawful detainer action.
In the instant case, there is no dispute appellant Rae actually pleaded four affirmative defenses which resemble all of her causes of action from the civil suit. AEI also raised two of these issues—compliance with the Ellis Act and the West Hollywood Rent Stabilization Ordinances—in its own complaint. However, given the summary nature of unlawful detainer actions none of these issues was pleaded with enough specificity or detail to know whether Rae's causes of action in the civil suit were “actually raised by proper pleadings ” in the unlawful detainer action against Rae.
The limited record available in connection with the demurrer further indicate the unlawful detainer court made findings in AEI's favor on all these affirmative defenses. It found “[a]ll of the requirements of the Ellis Act and of the West Hollywood Rent Stabilization Ordinances were followed scrupulously by [AEI].” The court also found the promissory estoppel defense was without merit because the promise in the letter had been reasonably kept for a reasonable time. The unlawful detainer court further found there was no evidence of retaliatory eviction.
What is not clear from the limited record before this court, however, is whether the unlawful detainer court's findings on these defenses were based on a hearing where Rae had an “adequate opportunity to litigate” the very same issues she now seeks to raise in her civil suit in superior court. It is entirely possible they were. But at the demurrer stage we, and the trial court, simply lack the evidence necessary to make that evaluation. Unlike Wood v.. Herson, supra, which was decided on summary judgment, we are not in a position to describe this proceeding as a full blown hearing where detailed evidence was presented—and the court ruled—on the precise issues the unsuccessful defendant in the unlawful detainer action now seeks to raise in the Superior Court civil action.
As to appellant Snyder the facts are somewhat different even with regard to the causes of action based on the Ellis Act and the West Hollywood Rent Stabilization Ordinances. True, Snyder like Rae alleged a violation of the Ellis Act and of the West Hollywood Rent Stabilization Ordinance as affirmative defenses in the unlawful detainer action brought against her. As it had in the case against Rae, AEI also alleged compliance with these laws in its unlawful detainer complaint against Snyder. Unlike the Rae case, however, the unlawful detainer court in Snyder's case did not make any findings on Snyder's affirmative defenses or AEI's allegations. Consequently, there is even less evidence available on the critical question whether the unlawful detainer court conducted an adequate hearing and made precise findings after hearing detailed evidence on the very issues Snyder seeks to litigate in her superior court civil action.
AEI and the majority opinion point to some language in the appellate department's memorandum judgment: “[t]he trial court's finding that [another long term hotel occupant] was, indeed, a hotel guest ․ defeats appellant's claim that [the Ellis Act] and [the West Hollywood Rent Stabilization Ordinance] were not complied with by respondent.” But this reference is even less precise than the specific findings I conclude are insufficient to justify “issue preclusion” in Rae's unlawful detainer action under the standards the Supreme Court set forth in Vella.
Indeed what the appellate department wrote raises serious doubts about the adequacy of the unlawful detainer hearing in its consideration of the issues Snyder seeks to pursue in her civil action. The pleadings in that action go far beyond and, on the record before this court at least, would not be defeated by a finding that another long term hotel occupant was a hotel guest. Was this the only evidence related to the “non-compliance” affirmative defenses the unlawful detainer court admitted in that proceeding? If so, it is likely Snyder was denied an “adequate opportunity to litigate” the issues she now seeks to raise in her civil action in superior court. On the other hand, it also is entirely possible the unlawful detainer court may have made this finding only after a full hearing on all aspects of these defenses and thus accorded Snyder her “adequate opportunity to litigate” these issues.
The basic point is we simply do not know whether either Snyder or Rae was given an adequate hearing in the summary unlawful detainer action on the issues they seek to litigate in their superior court action. Under the principles enunciated in Vella and like cases, trial courts are not to give collateral estoppel effect to unlawful detainer judgments unless clear evidence demonstrates the unlawful detainer hearing was atypically thorough for such a summary proceeding While I agree there is some evidence in the record even at the demurrer stage to suggest the possibility Rae, in particular, may have been accorded that sort of hearing. However, there is not enough at this stage to justify denying either of the appellants her day in superior court.
Collateral estoppel is a blunt, unforgiving tool. It should be wielded with great care especially when, as here, the initial hearing took place in a summary proceeding. Tempted as courts may be by considerations of judicial economy, collateral estoppel should never be used to deprive litigants of at least one full and fair hearing on their claims.
1. Government Code section 7060, et seq. The act provides a comprehensive scheme which governs the conditions under which landlords are terminated to withdraw residential real property from the residential rental market and enacting restrictions on public entities which would compel owners of residential real property to continue to keep their property on the market for renting or leasing.
2. We have taken judicial notice of the court files in the Los Angeles Municipal Court, the Beverly Hills Judicial District, Ashkenazy Enterprises, Inc. v. Gina Rae (LAMC Case No. 87C002946) and Ashkenazy Enterprises, Inc. v. Gladys Snyder aka Candy Ward (LAMC Case No. 87C002943), pursuant to order dated January 18, 1990. The complaints filed in each action by AEI are attached to respondent's brief on appeal as Appendix A. The answer of Rae and the answer and amended answer of Snyder are attached as Appendix B to respondent's brief on appeal.
3. This pleading is more properly delineated a “second amended complaint.”
4. Appellants improperly cite this section as “6404(15)(g)” at appellants' opening brief, page 27, line 19.
5. Appellants' citation to West Hollywood Rent Stabilization Ordinance section 6413(a)12(g), at appellants' brief, page 11, lines 8–17, is misplaced in that subsection 12 is only applicable in the event the Landlord is evicting a tenant on the basis of intended owner or relative occupancy, that is, the landlord, or his or her parent, grandparent, brother, sister or child plans to live in the unit.
6. We are cognizant of the California Supreme Court case of Vella v. Hudgins (1977) 20 Cal.3d 251, 142 Cal.Rptr. 414, 572 P.2d 28 brought to our attention by the dissent. We find nothing in Vella which precludes our decision herein although forcefully argued by the dissent. To the contrary, we find support in Vella at page 256, 142 Cal.Rptr. 414, 572 P.2d 28 where the Supreme Court states:“Recently, in Wood v. Herson (1974) 39 Cal.App.3d 737 [114 Cal.Rptr. 365] the Court of Appeal held that a suit for specific performance of a contract to convey was foreclosed by a prior unlawful detainer judgment which had decided all issues of fact material to the second action. Noting that the Woods' affirmative defense of fraud in the unlawful detainer action was virtually idential to the fraud allegations upon which their suit for specific performance was based, the court concluded that even though title ‘normally is not a permissible issue in an unlawful detainer action,’ the essential issues had been full and fairly disposed of in the earlier proceeding. (Id., at p. 740 [114 Cal.Rptr. 365].) The court cited in support of its ruling such varied factors as the length of the ‘summary’ unlawful detainer hearing (seven days), the scope of discovery by the parties (‘extensive’ and ‘complete’), the quality of the evidence (‘detailed’), and the general character of the action (‘[c]learly ․ not the customery unlawful detainer proceeding’). (Id., at pp. 742, 745 [114 Cal.Rptr. 365].) A lengthy and comprehensive superior court record replete with precise findings of fact persuaded the Wood court that application of collateral estoppel to curtail further litigation would involve ‘no miscarriage of justice—[the] Woods have had their day in court․’ [Citations.]”We believe that the Rae and Snyder unlawful detainer actions fall squarely within the Wood v. Herson (1974) 39 Cal.App.3d 737, 114 Cal.Rptr. 365 “full and fair” litigation exception referred to by the Supreme Court in Vella. The Vella decision is otherwise distinguishable since the case pertained to the preclusion of trying title in an unlawful detainer action. “Title” was never in issue in this case.
WOODS, Associate Justice.
LILLIE, P.J., concurs.