Opinion
A100177.
11-24-2003
STATEWIDE CELLULAR et al., Plaintiffs and Appellants, v. HARRY G. BRIX, Defendant and Respondent.
In this complex litigation, the plaintiffs, Statewide Cellular and Michael Hood individually and dba Statewide Cellular (hereafter collectively Statewide Cellular), appeal a summary judgment dismissing the action against an individual defendant, Harry G. Brix. We take judicial notice of the disposition of other aspects of the case and dismiss the appeal on this procedural ground.
PROCEDURAL HISTORY
In a second amended complaint filed May 14, 2001, Statewide Cellular alleged 11 causes of action against Verizon Wireless, AirTouch Communications, Cellco Partnership, and a series of related defendants including The Brix Group, H. G. Brix Company, Harry G. Brix, individually and dba Motor Sound Corporation, Pana-Pacific Corporation, Brixcom and Brix Wireless. Though the record is silent, plaintiffs counsel informs us that Statewide Cellular dismissed all its causes of action against Verizon Wireless, Cellco and AirTouch Communications.
Harry G. Brix individually filed a motion for summary judgment that was denied on the ground that Statewide Cellular had not yet conducted sufficient discovery to allow it to adequately respond. Five months later, he filed a renewed motion for summary judgment. The trial court granted the motion and entered a judgment on June 20, 2002, in favor of the defendant Harry G. Brix. Statewide Cellular filed a timely notice of appeal.
At this stage in the litigation, the case against the defendants had been reduced to six causes of action. The court had sustained a demurrer against five causes of action, leaving causes of action for violation of Business and Professions Code section 17200 (count one), contractual bad faith (count three), breach of contract (count four), intentional interference with prospective economic advantage (count eight), accounting (count nine), and conversion (count eleven).
While the appeal from the judgment in favor of the individual defendant, Harry G. Brix, was pending, the other defendants prevailed against the plaintiff, Statewide Cellular. On October 24, 2002, the trial court entered an order granting summary adjudication in favor of The Brix Group, Inc., with respect to three causes of action: intentional interference with prospective economic advantage (count eight), accounting (count nine), and conversion (count eleven). The remaining causes of action came on for trial the same month of October 2002. The court subsequently issued a statement of decision finding for the defendants and on April 8, 2003, it entered a judgment in favor of the defendants. Notice of entry of judgment was served April 15, 2003. Statewide Cellular and Michael Hood appealed from the judgment but later filed an abandonment of appeal.
We grant respondents requests for judicial notice filed April 8, 2003, and April 17, 2003.
We take judicial notice of this courts records in A103478.
DISCUSSION
Although the appeal is from an order granting summary judgment, we face the initial and ultimately dispositive issue of the effect of the judgment entered April 8, 2003. It is well established that "[a] final judgment in a related proceeding may determine all the issues in a pending appeal and render it moot." (9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 646, p. 675.) Brix argues that this principle applies to the judgment entered April 8, 2003, in the related proceedings against corporate defendants. He maintains that, even if we were to decide that the summary judgment was in error, we could not grant Statewide Cellular effective relief because the action against him would be barred by the doctrine of res judicata.
The landmark decision, Bernhard v. Bank of America (1942) 19 Cal.2d 807, 813 (Bernhard), holds that, in applying the doctrine of res judicata, "three questions are pertinent: Was the issue decided in the prior adjudication identical with the one presented in the action in question? Was there a final judgment on the merits? Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication?" In adopting this analysis, the Bernhard court relied on an older line of decisions dealing with the derivative liability of principal and agent: "if a plaintiff sues a servant for injuries caused by the servants alleged negligence within the scope of his employment, a judgment against the plaintiff on the grounds that the servant was not negligent can be pleaded by the master as res judicata if he is subsequently sued by the same plaintiff for the same injuries. Conversely, if the plaintiff first sues the master, a judgment against the plaintiff on the grounds that the servant was not negligent can be pleaded by the servant as res judicata if he is subsequently sued by the plaintiff." (Id. at pp. 812-813.)
We find three decisions following Bernhard that apply the doctrine of res judicata to relationships involving derivative liability under facts closely parallel to the present case. In Loughran v. Reynolds (1945) 70 Cal.App.2d 241, the plaintiff, Loughran, was a former employee of a corporation, 20th Century Health Institute, which was an alleged alter ego of the defendant Reynolds. When the corporation filed for bankruptcy, Loughran filed a claim of damages based on breach of his employment contract. In a hearing on the merits, the referee in bankruptcy found that the corporation had not breached its contract with Loughran. Loughran subsequently sued Reynolds personally as the alter ego of the corporation. The court upheld the corporations defense of res judicata: "the issues concerning the breach of the contract, identical in the bankruptcy court and in the superior court, have been decided by the bankruptcy court. As to those issues there has been a judgment on the merits. The party [Loughran] against whom the plea of res judicata is asserted was a party to the prior adjudication . . . ." (Id. at p. 244.)
In Sartor v. Superior Court (1982) 136 Cal.App.3d 322, the co-owners of a house, Edna and Kent Jeffrey, brought an action against an architecture firm, Interactive Resources, Inc., and three employees of the firm, alleging theories of fraud and negligence. The court ordered the matter stayed pending arbitration between Edna Jeffrey and the architecture firm pursuant to an arbitration clause. The arbitrator found that the firm was not liable for fraud and was obliged only to replace certain defective gaskets as a result of its negligence. After judgment was entered on the award, the three employees moved for summary judgment on the ground that the judgment on the arbitration award was a bar to action against them individually. Applying the Bernhard analysis, the court ordered the trial court to grant the motion for summary judgment: "Since a corporation may act only through its agents, a finding that the corporation was liable only for the defective gaskets on the solar collector can be pleaded by [the employees] as res judicata in the subsequent action against them." (Sartor v. Superior Court, supra, at p. 328.)
In Brinton v. Bankers Pension Services, Inc. (1999) 76 Cal.App.4th 550, the plaintiff initiated arbitration of a claim against the defendant, Bankers Pension Services, Ronald Thon, one of the defendants officers, and a securities dealership for which Thon worked. The defendant refused to participate in the arbitration because it was not subject to an arbitration agreement with the plaintiff. After an arbitration panel denied the plaintiffs claims against Thon and the securities dealership, plaintiff sued Bankers Pension Services. Upholding the defendants defense of res judicata, the court held that since the liability of Bankers Pension Services was "merely derivative of Thons, it is unnecessary for defendant to have been a party to the prior action to assert a claim preclusion defense in this case." (Id. at pp. 557-558.)
In the case at bar, Statewide Cellular claims, alternatively, that Brix was the agent of the corporate defendants through which he did business and that he is the alter ego of these corporate defendants, or sham corporate entities. We find no claim that Brix incurred liability in a role distinct from the corporate (or sham corporate) defendants associated with his business; either he acted as an agent for the corporate defendants or conducted personal business behind the facade of a corporate identity. On either theory, the factual issues presented by the action against the corporate defendants (or sham corporate entities) and against Brix personally are the same.
In this appeal from the summary judgment in favor of Harry Brix individually, Statewide Cellular pursues a narrow assignment of error, i.e., that Brix violated Business and Professions Code section 17200 by improper use of fictitious names. Precisely the same issue, however, was litigated in the trial of its complaint against the corporate defendant, The Brix Group. In that trial, Statewide Cellular sought to prove that The Brix Group — the corporation through which Harry Brix did business — engaged in the same improper practices that it alleges against Brix individually. The issues are the same, whether Brix engaged in the alleged practices as an officer and owner of the corporation or as an individual.
In its statement of decision, the trial court carefully reviewed the alleged violation of section 17200 through use of fictitious names and found that Statewide Cellular failed "to prove by a preponderance of the evidence that The Brix Group engaged in any unlawful, unfair or fraudulent business practice." In our opinion this finding bars litigation of the issue against Brix individually. Applying the Bernhard test, we conclude that the issue decided in the prior adjudication in favor of The Brix Group was identical with the one pursued against Brix individually; the judgment is final; and Statewide Cellular is the party against which the judgment was entered. Our conclusion follows the Loughran/Sartor/Brinton line of decisions holding that, where a corporations liability is derivative of that of an individual defendant, a final judgment against one is a bar to litigation of a claim against the other. These precedents, which represent an application of the more general principles enunciated in Bernhard, clearly govern the present case.
Our decision calls for dismissal of the appeal. As stated in Guardianship of Thomas (1954) 125 Cal.App.2d 135, 137, "[i]f, when an appeal is pending, an event occurs which makes it impossible for this court to grant the appellant any effectual relief, the appeal should be dismissed." (See also Estate of Jackson (1935) 2 Cal.2d 283.)
The appeal is dismissed.
We concur: Marchiano, P. J. and Stein, J.