TRIDENT U.K., INC., et al., Petitioners, v. The SUPERIOR COURT of Los Angeles County, Respondent; Ken SCOTT et al., Real Parties in Interest.
This writ proceeding challenges a trial court finding petitioners to be vexatious litigants and ordering them to post security as a condition precedent to proceeding with their lawsuit. Based upon the particular factual background to this matter, we conclude that the trial court's ruling was erroneous and therefore issue a peremptory writ to set aside its order.
FACTUAL AND PROCEDURAL BACKGROUND
The First Lawsuit
In September 1993, Ken Scott and Komos Productions, Inc. (collectively Scott) sued Trident U.K., Norman Sheffield, and Malcom Levinthal (collectively Trident). The linchpin of Scott's claim was breach of a contract by which Trident agreed to collect record royalties owing to Scott. Causes of action were asserted for breach of contract, fraud, negligent misrepresentation, breach of fiduciary duty, and constructive trust. Scott sought compensatory and punitive damages and declaratory relief rescinding the agreement allegedly breached. Scott prayed for $73,268.78 compensatory damages and $134,358.97 in the event the court rescinded the agreement. Lastly, Scott sought costs and attorney fees although the complaint never alleged that the oral contract upon which they sued contained an attorney fee provision.
In September 1994, the trial court struck Trident's answer based upon “[its] failure to cooperate in the discovery process” and ordered that the “matter shall proceed by way of default prove up to be perfected to judgment.”
A prove-up hearing was conducted where Scott introduced declarations and counsel appeared on behalf of Trident. On January 12, 1995, the court entered judgment for $134,435.97 plus interest. The judgment did not allocate its award to or among particular causes of action nor did it identify the type of damages awarded (e.g., compensatory or punitive). The judgment had no reference to Scott's request for rescission. The judgment awarded $61,517.86 in attorney fees.
Trident did not appeal from the default judgment.
In April 1995, Trident moved to set aside the default judgment as void. Trident urged the damages awarded exceeded the court's jurisdiction because the court awarded more than the amount prayed for in Scott's pleading. At the April 11, 1995, hearing the trial court did not rule upon the merits of the motion but instead ordered it off calendar because of procedural defects.
Shortly thereafter, Trident filed a “renewed motion” to set aside the default judgment. At the May 25, 1995, hearing, the court found the motion to be “procedurally defective and ․ on that ground ordered [it] off calendar.”
Trident responded by filing a motion for reconsideration of the May 25 ruling. At the July 7, 1995, hearing, the trial court denied the motion, citing subdivisions (a) and (e) of section 1008 of the Code of Civil Procedure. Those subdivisions set forth the jurisdictional prerequisites that the motion for reconsideration must be timely and alleged “new or different facts, circumstances, or law․” The notice of ruling further provides: “In the alternative, the Court advised the parties that had it reconsidered the prior motions on the merits, it would have denied the motions and reaffirmed its prior rulings.”
In September 1995, Trident filed a notice of appeal from the trial court's denial of its motion for reconsideration. That appeal (Trident U.K., Inc., et al. v. Scott et al., B096432) is pending in this court.
The Second Lawsuit
In February 1996, Trident filed an action against Scott seeking to vacate the default judgment. Primarily, Trident urged the judgment was void because it awarded damages in excess of those alleged in Scott's complaint. Trident sought a court order vacating that judgment, a quashing of the writ of execution issued to enforce the judgment, and an injunction barring Scott from further attempts to enforce the judgment. Additionally, Trident sought declaratory relief that it was entitled to $68,000 allegedly due it under the 1990 agreement made with Scott.
Pursuant to motion by Scott, the superior court found the second action was related to the first action and therefore sent the second action to the trial judge who had presided over the first action. Trident successfully disqualified the judge (Code Civ.Proc., § 170.6) and the matter was assigned to another court.
Scott then moved for an order finding Trident to be a vexatious litigant, barring Trident from filing any new litigation without leave of court, and requiring Trident to post security in its action to vacate the default judgment. The nub of Scott's motion was the claim that Trident was a vexatious litigant because of its repeated attempts to have the default judgment set aside.
The trial court ultimately ruled in favor of Scott. The court's order states: “The Court finds that [Trident is a] vexatious litigant[ ] within the meaning of CCP § 391(b)(2). The issues in this related case are the subject of a final judgment. Indeed, the complaint is to set aside the prior judgment in the lead case. [Trident's] opposition to [Scott's] motion to have the case declared related stated at page 5 that no appeal was taken from the prior judgment. [Trident] may not wish to recognize the effect of the prior judgment, but it is just that. As such, [Trident is] clearly attempting to relitigate the validity of the determination against the same parties against whom the prior litigation was finally determined. [¶] The Court finds that there is no reasonable probability that [Trident] will prevail in this litigation. CCP §§ 391.1, 391.3.[¶] The Court hereby orders [Trident] to furnish for the benefit of [Scott] security in the amount of $30,000 within thirty days. [Scott] shall furnish said security within thirty days of the May 20, 1996 hearing. All actions are stayed for said thirty day period or until security is furnished. CCP § 391.3.[¶] The Court further orders that if the security is not so furnished, this action shall be dismissed with prejudice upon motion of [Scott]. CCP § 391.4.[¶] The Court further orders that [Trident is] prohibited from filing any new litigation in the courts of this state concerning the subject matter of this lawsuit without first obtaining the leave of the presiding judge of the court where such action is proposed to [be] filed. Disobedience of this order by a vexatious litigant [may be] punished as a contempt of court. CCP § 391.7.”
The Writ Proceeding
Following the trial court's ruling that it was a vexatious litigant, Trident sought extraordinary relief in this court. We stayed implementation of the trial court's order and issued an alternative writ, directing the trial court to show cause why relief should not be granted “on the grounds that (1) the issue whether the prior default judgment is void was not determined on the merits in the prior action and (2) an independent action in equity is a lawful means to vacate a final judgment in a prior action as void.”
We begin by briefly noting what issues are not raised in this writ proceeding. None of the trial court's rulings in the first case is cognizable in this writ. Consequently, we will not examine the propriety of any of those rulings. Nor are we concerned with the merits of the second action, to wit, whether in fact Trident can establish the default judgment is void. We are faced with a much narrower issue: in the second lawsuit, did the trial court properly find Trident to be a vexatious litigant?
“The vexatious litigant statutes were enacted to require a person found a vexatious litigant to put up security for the reasonable expenses of a defendant who becomes the target of one of these obsessive and persistent litigants whose conduct can cause serious financial results to the unfortunate object of his attack. The purpose of the statutory scheme is to deal with the problem created by the persistent and obsessive litigant who has constantly pending a number of groundless actions, often against the judges and other court officers who decide or were concerned in the decision of previous actions adversely to him.” (First Western Development Corp. v. Superior Court (1989) 212 Cal.App.3d 860, 867–868, 261 Cal.Rptr. 116.)
Code of Civil Procedure section 391 1 sets forth various definitions of a vexatious litigant. The trial court relied upon section 391, subdivision (b)(2) which provides: “After a litigation has been finally determined against the person, repeatedly relitigates or attempts to relitigate, in propria persona, either (i) the validity of the determination against the same defendant or defendants as to whom the litigation was finally determined or (ii) the cause of action, claim, controversy, or any of the issues of fact or law, determined or concluded by the final determination against the same defendant or defendants as to whom the litigation was finally determined.”
The vexatious litigant statute does not define the phrase “final determination against the same defendant.” However, it has been interpreted to mean that once all avenues for direct appellate review have been exhausted, the judgment is final. (Childs v. PaineWebber Incorporated (1994) 29 Cal.App.4th 982, 993, 35 Cal.Rptr.2d 93; First Western Development Corp. v. Superior Court, supra, 212 Cal.App.3d at pp. 863–864, 261 Cal.Rptr. 116.)
The thrust of Trident's action (the second lawsuit) is the claim that Scott's default judgment is void. The trial court found that Trident was a vexatious litigant because that was a claim that Trident had already unsuccessfully litigated in the first lawsuit. We disagree. Trident first raised this claim in its April 1995 motion. The trial court never ruled upon the merits of that motion but instead placed it off calendar because of procedural defects. Trident's second attempt to raise the contention—its May 1995 motion—met a similar fate; it too was taken off calendar because of procedural defects. Trident's subsequent motion for reconsideration was denied because Trident failed to satisfy the jurisdictional prerequisites for such a motion. Trident's appeal from that latter ruling is pending in this court. It is therefore apparent that there has not been a final determination on the merits of the contention that the default judgment is void because it granted relief in excess of that sought in the complaint. The fact that the trial court, in denying the motion for reconsideration, indicated that had it reconsidered its earlier rulings and addressed the motion on the merits it would have denied the motion does not change that result. This indication is the trial court equivalent of dicta—a statement unnecessary to its decision—and thus of no force.
Simply stated, there has been no final determination on the merits of the validity of the contention raised in the second lawsuit. Given this procedural context, the trial court erred in determining that Trident was a vexatious litigant. In light of this analysis, we need not, and do not, determine if the trial court's ruling conflicted with the general principle that an independent action in equity can be brought at any time to collaterally attack a void judgment entered in a prior action.
Let a peremptory writ of mandate issue compelling respondent court to set aside its order granting real parties' motion to declare petitioners to be vexatious litigants and to enter a new and different order denying said motion. Our stay order to remain in effect pending issuance of the remittitur. Petitioners to recover their costs in these proceedings. (Cal. Rules of Court, rule 56.4.)
1. All subsequent statutory references are to the Code of Civil Procedure.
CHARLES S. VOGEL, Presiding Justice.
EPSTEIN and HASTINGS, JJ., concur.