IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICT
December 21, 2010
ESTATE OF RICHARD G. OLSEN, DECEASED.
MARY BOARDMAN, PLAINTIFF AND APPELLANT,
JAMES P. CURRY, ADMINISTRATOR OF THE ESTATE OF RICHARD G. OLSEN, DECEASED, DEFENDANT AND RESPONDENT.
(Santa Cruz County Super. Ct. Nos. CV161940 & PR044403)
The opinion of the court was delivered by: McAdams, J.
Estate of Olsen
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
This appeal is taken from an order of dismissal, entered after the trial court sustained defendant's demurrer without leave to amend. As grounds for the demurrer, defendant asserted res judicata and estoppel defenses, based on plaintiff's prior dissolution judgment. We conclude that the prior judgment has no preclusive effect. We therefore reverse the dismissal.
The parties to this action are plaintiff Mary Boardman and defendant James P. Curry, administrator of the estate of decedent Richard G. Olsen. Plaintiff and decedent were married in 1988 and divorced in 2005. Decedent died in 2007.
The complaint alleges that defendant improperly rejected plaintiff's creditor's claim, which seeks repayment of the balance owed by decedent on a $2 million separate property loan. Defendant demurred to plaintiff's complaint on res judicata and estoppel grounds, asserting that the 2005 dissolution judgment precludes plaintiff's claims.
On May 5, 2005, plaintiff petitioned for dissolution of her marriage to decedent in San Francisco County Superior Court (case number FDI-05-758909). She used the standard form dissolution petition (form FL-100). Concerning marital status, plaintiff stated that the parties had married in March 1988 and separated in July 1996. Plaintiff requested dissolution of the marriage by checking the box in paragraph 6-a. Concerning property, plaintiff made no request for court action. Plaintiff did not mark paragraph 4 (entitled "separate property"); she thus did not seek court confirmation of separate property assets or debts. At paragraph 5, entitled "declaration regarding community and quasi-community assets and debts as currently known," plaintiff placed an X in box 5-a, which states: "There are no such assets or debts subject to disposition by the court in this proceeding." At paragraph 7, plaintiff marked only box 7-g, thereby requesting termination of the court's jurisdiction to award spousal support to decedent; she did not mark box 7-h, determination of property rights.
On May 9, 2005, decedent was served by mail with the petition. Along with the petition, decedent also was served with several financial disclosure documents: a declaration of disclosure (form FL-105), a schedule of assets and debts (form FL-142), and an income and expense declaration (form FL-150).
On May 14, 2005, decedent acknowledged receipt of the above documents (form FL-117). He did not respond to the petition.
On June 22, 2005, plaintiff requested entry of decedent's default (form FL-165). Plaintiff marked the boxes on the form indicating that a property declaration was not attached because there were no support issues, no request for "money, property, costs or attorney fees" and "no issues of division of community property." Plaintiff marked the box for waiving costs.
On August 9, 2005, the court entered a judgment of dissolution (form FL-180). In it, the court ordered the parties' marital status terminated as of November 15, 2005. The box for property division was not marked. The judgment contains this typewritten statement: "There are no assets or liabilities subject to disposition by the court in this proceeding. Spousal support for the Petitioner is terminated by declaration. Spousal support for the Respondent is terminated by default. The court's jurisdiction to award spousal support to either party is terminated."
On December 2, 2007, decedent died intestate.
On February 5, 2008, defendant was appointed special administrator of decedent's estate in Santa Cruz County (case number PR44403). On May 27, 2008, the court entered an order for probate, authorizing independent estate administration with full authority. On June 13, 2008, letters of administration were issued, naming defendant as administrator of decedent's estate.
On April 11, 2008, plaintiff filed a creditor's claim with defendant. Plaintiff based her claim on a $2 million loan to decedent, made in May 2005 from her separate property funds. Decedent made periodic payments on the loan by paying for plaintiff's "various travel expenses, lodgings, and meals." After deducting for those payments, plaintiff claimed a balance due of $1,920,469.69.
By notice dated August 21, 2008, defendant rejected plaintiff's creditor's claim in its entirety.
Civil Proceedings Complaint
On November 14, 2008, plaintiff filed the complaint at issue here in Santa Cruz County Superior Court (case number CV161940). It asserts causes of action for common counts, breach of contract, constructive trust, and reimbursement pursuant to Family Code section 2640. The factual basis for all four causes of action is plaintiff's loan to decedent.
Concerning the loan, the complaint alleges that plaintiff "orally agreed to lend [decedent] $2,000,000 from her sole and separate property to invest in the growth of his business." The complaint alleges that "this was a loan, not a gift." The complaint further alleges that plaintiff made "no express written transmutation" that would change the character of her separate property. According to the complaint, the source of the funds was "the sale of [plaintiff's] ranch, . . . acquired by her prior to her marriage with" decedent. Attached to the complaint is a copy of a check from plaintiff to decedent in the amount of $2 million, dated May 16, 2005, along with a statement showing that decedent deposited the check. The memorandum line of the check reads "Ranch."
With regard to repayment of the loan, the complaint alleges that decedent "agreed to repay [plaintiff] over time, which he did, in part, by paying for her various travel expenses, lodgings and meals." Attached to the complaint is a copy of a spreadsheet prepared by plaintiff showing the expenses paid by decedent. According to the complaint, decedent "had repaid [plaintiff] on the original loan in the amount of approximately $79,530.31, leaving $1,920,469.69" still owed at the time of decedent's death.
On the subject of the creditor's claim, the complaint alleges that plaintiff presented it to defendant, who rejected it.
In December 2008, based on the parties' stipulation, the court ordered the civil action (case number CV161940) consolidated with the probate proceedings (case number PR44403).
Defendant demurred to the complaint, asserting plaintiff's failure to state facts sufficient to constitute a cause of action. The demurrer addresses each of the four causes of action in turn. The demurrer attacks the first cause of action, for common counts, on the ground that "it is a generalized form of pleading" that necessarily falls with the second cause of action, for breach of contract. The demurrer attacks each of the remaining causes of action on the ground that "it shows on its face and upon judicially noticeable matters that the action is barred by res judicata and estoppel principles."
Defendant supported the demurrer with a memorandum of points and authorities, in which he argued that plaintiff could have and should have raised the issue of the loan in the dissolution proceedings and that her failure to do so bars her later claim for repayment. In addition to his memorandum, defendant also submitted a request for judicial notice of six documents from the dissolution action: (1) the May 2005 dissolution petition, (2) proof of service of the summons, (3) decedent's acknowledgement of receipt, (4) plaintiff's June 2005 request for default, (5) the San Francisco County Family Law Judgment Checklist filed with the default request, and (6) the August 2005 dissolution judgment.
Plaintiff opposed the demurrer, supported by her own request for judicial notice and legal memorandum. The subject of plaintiff's request for judicial notice was the grant deed for property that plaintiff identifies as the ranch, located at One Thayer Road, Santa Cruz. The deed recites that plaintiff "acquired title as an unmarried woman" and it conveys title from plaintiff and decedent to plaintiff alone "as her sole and separate property . . . ." The deed is dated April 28, 2005; it was recorded May 13, 2005. In her legal memorandum, plaintiff argued that her claim for breach of the loan agreement was not precluded. She offered two reasons: first, "there was no breach before the dissolution," and second, "because neither party placed the issue of the character of the separate property before the Family Court, the claim could not have been litigated before such time."
Defendant replied to plaintiff's opposition, arguing that the alleged breach arose out of a marital liability arising prior to the dissolution judgment and from the same nucleus of facts as those adjudicated, that the family court did not lack jurisdiction to adjudicate the alleged separate property loan, and that the loan should have been disclosed but plaintiff failed to comply with the statutory disclosure obligations.
On April 7, 2009, the court conducted a hearing on the matter. The court began by announcing its tentative decision to sustain the demurrer without leave to amend. By way of explanation, the court cited two points: "the mandate" in dissolution proceedings that "all assets and liabilities" be disclosed by the parties and the statutory provision requiring the family court to "characterize and determine all assets and liabilities." (See Fam. Code, §§ 2100, 2623.) The court concluded that the dissolution judgment "is res judicata as to the alleged breach of the loan agreement in this case."
After announcing its tentative decision, the court entertained oral argument from both parties on both points. After hearing argument, the court stated that it would take the matter under submission and render its final decision at a hearing the following week. Plaintiff's counsel requested an opportunity to supplement the briefing, which the court granted. Both parties submitted supplemental briefing.
At the continued hearing on April 16, 2009, after stating that it had reviewed the supplemental briefing from both parties, the court posed further questions to counsel. After hearing their responses, the court explained its analytic process. The starting point of the court's analysis was "the legal proposition . . . that res judicata bars all claims not only that were actually litigated, but that could have been raised in the prior proceeding." The court then looked to statutory provisions providing for family court jurisdiction to characterize and confirm separate debts. (Fam. Code, § 2625.) The court also considered statutory provisions requiring disclosures in dissolution proceedings, noting that plaintiff was required to disclose "her assets, liabilities, and debts, and that she was also required to update that in the event there were any material changes." (Fam. Code, § 2100.) Finally, the court noted that decedent died "with no documentation or any sort of indication that the parties understood that there was a loan between them. Now the estate is left with an inability to adequately defend itself because we don't have [decedent] here to testify when this should have been resolved in the Family Law Court." At the conclusion of the hearing, the court sustained the demurrer without leave to amend.
On May 12, 2009, the court entered its formal order sustaining the demurrer without leave to amend. The court based its decision on grounds of res judicata and collateral estoppel, finding that the dissolution judgment bars the current complaint. The court cited plaintiff's failure to augment her preliminary declaration of disclosure in the dissolution action after making the loan to decedent. In the court's view, plaintiff's failure to do so had two consequences. First, it "resulted in a lack of fairness and due process" that prejudiced decedent and defendant as his "successor in interest." Second, it prevented the family court "from characterizing the 'liability' . . . and from confirming it" under the governing statutes. The court concluded: "Because these issues could have, and should have, been raised in the dissolution proceedings by Plaintiff, they were necessarily decided by the Judgment of Dissolution."
On August 14, 2009, the court entered an order dismissing plaintiff's complaint.
This timely appeal by plaintiff ensued. On appeal, plaintiff argues: (1) res judicata does not bar her complaint, (2) she was not required to make a final disclosure in the dissolution proceeding, (3) the particular causes of action asserted in her complaint are all viable, and (4) the trial court abused its discretion in sustaining the demurrer without leave to amend. Additionally, plaintiff filed a request for judicial notice in this court. The subject of the request is an action filed against her in December 2009, by defendant and his sister as decedent's "surviving nephew and niece," which partly concerns the $2 million transaction at issue in this litigation.
Defendant defends the dismissal. He argues that the trial court correctly sustained the demurrer without leave to amend, because (1) plaintiff failed to comply with her statutory disclosure obligations in the dissolution proceeding, (2) the family court had jurisdiction over the alleged loan, (3) the dissolution judgment is a conclusive determination of the parties' marital property rights, (4) plaintiff is equitably estopped from prosecuting her claim, (5) plaintiff is judicially estopped from prosecuting her claim, (6) none of plaintiff's causes of action are viable, and (7) the court properly denied plaintiff leave to amend. Defendant filed opposition to plaintiff's request for judicial notice in this court on relevance grounds.
In her reply brief, plaintiff argues (1) the statutory disclosure provisions do not alter the established legal principles limiting family court jurisdiction over separate property, and (2) the principles of equitable estoppel do not apply here.
To establish the proper framework for our discussion of the parties' contentions, we begin by summarizing the relevant legal principles governing (A) preclusion, (B) estoppel, and (C) demurrers.
I. General Legal Principles A. Preclusion
" 'Res judicata' describes the preclusive effect of a final judgment on the merits." (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896.) "The burden of proving that the requirements for application of res judicata have been met is upon the party seeking to assert it as a bar or estoppel." (Vella v. Hudgins (1977) 20 Cal.3d 251, 257.)
"The doctrine of res judicata has two distinct aspects." (Mitchell v. Jones (1959) 172 Cal.App.2d 580, 584; Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 530.) In its primary aspect, the doctrine has claim preclusive effect; in its secondary aspect, collateral estoppel, the doctrine is issue preclusive. (Clark v. Lesher (1956) 46 Cal.2d 874, 880; Ferraro v. Camarlinghi, at pp. 530-531.) "The defense of res judicata is a complete bar to an action, whereas the claim of collateral estoppel is concerned with the conclusiveness of a prior determination of a particular issue." (Hone v. Climatrol Industries, Inc. (1976) 59 Cal.App.3d 513, 529, fn. 6.) "The court decisions and legal commentators often do not distinguish between the two aspects of the doctrine. . . ." (People v. Sims (1982) 32 Cal.3d 468, 477, fn. 6.) "Collateral estoppel is a distinct aspect of res judicata." (Murray v. Alaska Airlines, Inc. (2010) 50 Cal.4th 860, 866.)
1. Claim Preclusion (Res Judicata)
The primary aspect of the res judicata doctrine, claim preclusion, "prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them." (Mycogen Corp. v. Monsanto Co., supra, 28 Cal.4th at p. 896; Murray v. Alaska Airlines, Inc., supra, 50 Cal.4th at pp. 866-867.) "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." (Mycogen Corp. v. Monsanto Co., at p. 897.)
There are three requirements for claim preclusion. First, the cause of action in the earlier and later suits must be identical; second, the prior judgment must have been final and on the merits; and third, the two actions must involve the same parties or their privies. (People v. Sims, supra, 32 Cal.3d at p. 484; Consumer Advocacy Group, Inc. v. ExxonMobil Corp. (2008) 168 Cal.App.4th 675, 685-686.)
With claim preclusion, if an issue "could have been raised, the judgment is conclusive on it despite the fact that it was not in fact expressly pleaded or otherwise urged." (Sutphin v. Speik (1940) 15 Cal.2d 195, 202.) "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 raised or could have been raised, on matters litigated or litigable." (Ibid.; In re Marriage of Mason (1996) 46 Cal.App.4th 1025, 1028.)
2. Issue Preclusion (Collateral Estoppel)
The secondary aspect of the doctrine - referred to as issue preclusion or collateral estoppel - generally "bars the relitigation of specific issues that were actually litigated in an earlier proceeding and decided adversely to the party against whom the doctrine is asserted." (Ferraro v. Camarlinghi, supra, 161 Cal.App.4th at p. 531; Gikas v. Zolin (1993) 6 Cal.4th 841, 848-849.)
There are five requirements for issue preclusion. "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." (Lucido v. Superior Court (1990) 51 Cal.3d 335, 341; Gikas v. Zolin, supra, 6 Cal.4th at p. 849.)
The collateral estoppel "aspect of the doctrine of res judicata . . . is confined to issues actually litigated." (Clark v. Lesher, supra, 46 Cal.2d at p. 880; Murray v. Alaska Airlines, Inc., supra, 50 Cal.4th at p. 867.) Thus, "despite general statements found in many cases that a prior judgment between the same parties is conclusive not only as to issues actually determined but as to those which might have been determined, it should be emphasized that, where the doctrine of res judicata is applied in its secondary aspect as a collateral estoppel rather than in its primary sense as a merger or bar, the effect of the prior judgment is confined only to those issues in the second action which were actually litigated in the first." (Saunders v. New Capital for Small Businesses, Inc. (1964) 231 Cal.App.2d 324, 331; see also, e.g., Gorman v. Gorman (1979) 90 Cal.App.3d 454, 464.)
B. Estoppel 1. Equitable Estoppel
"The doctrine of equitable estoppel affirms that a defendant may not by his statements or conduct lull the plaintiff into a false sense of security resulting in inaction." (Cuadros v. Superior Court (1992) 6 Cal.App.4th 671, 675.) "The basic principles of equitable estoppel are well established and easily stated. 'Whenever a party has, by his own statement or conduct, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he is not, in any litigation arising out of such statement or conduct, permitted to contradict it.' (Evid.Code, § 623.)" (Honeywell v. Workers' Comp. Appeals Bd. (2005) 35 Cal.4th 24, 37.)
" ' "Generally speaking, four elements must be present in order to apply the doctrine of equitable estoppel: (1) the party to be estopped must be apprised of the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury." ' " (Honeywell v. Workers' Comp. Appeals Bd., supra, 35 Cal.4th at p. 37.)
"Although estoppel is generally a question of fact, where the facts are undisputed and only one reasonable conclusion can be drawn from them, whether estoppel applies is a question of law." (Feduniak v. California Coastal Com. (2007) 148 Cal.App.4th 1346, 1360.)
2. Judicial Estoppel
Judicial estoppel, also referred to as the preclusion of inconsistent positions, prevents a party from asserting contradictory positions in legal proceedings. (Levin v. Ligon (2006) 140 Cal.App.4th 1456, 1468.) "The inconsistent position generally must be factual in nature." (ABF Capital Corp. v. Berglass (2005) 130 Cal.App.4th 825, 832.) " ' "Judicial estoppel precludes a party from gaining an advantage by taking one position, and then seeking a second advantage by taking an incompatible position. [Citations.] The doctrine's dual goals are to maintain the integrity of the judicial system and to protect parties from opponents' unfair strategies." ' " (Aguilar v. Lerner (2004) 32 Cal.4th 974, 986.) "This doctrine rests on the principle that litigation is not a war game unmoored from conceptions of ethics, truth, and justice." (Ferraro v. Camarlinghi, supra, 161 Cal.App.4th at p. 558.)
"The doctrine applies when '(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.' " (Aguilar v. Lerner, supra, 32 Cal.4th at pp. 986-987.) But "judicial estoppel is an equitable doctrine, and its application, even where all necessary elements are present, is discretionary." (MW Erectors, Inc. v. Niederhauser Ornamental and Metal Works Co., Inc. (2005) 36 Cal.4th 412, 422.) Considered an extraordinary remedy, the doctrine is invoked only when a miscarriage of justice will result from a party's inconsistent positions. (Levin v. Ligon, supra, 140 Cal.App.4th at p. 1468.)
The doctrine presents "a question of law . . . where none of the facts material to the court's decision to apply judicial estoppel are disputed." (Levin v. Ligon, supra, 140 Cal.App.4th at p. 1467.)
"A general demurrer searches the complaint for all defects going to the existence of a cause of action and places at issue the legal merits of the action on assumed facts." (Carman v. Alvord (1982) 31 Cal.3d 318, 324.) "A demurrer tests the pleading alone, and not the evidence or the facts alleged." (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459.) For that reason, we "assume the truth of the complaint's properly pleaded or implied factual allegations." (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)
The court will also "consider judicially noticed matters." (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) "A trial court may take judicial notice of a prior judgment in deciding whether to sustain a demurrer based upon res judicata principles, regardless of whether the prior judgment was pleaded, providing that (1) the court has been correctly apprised of the judgment and (2) the party responding to the demurrer is given adequate notice and an opportunity to be heard as to the effect of the judgment." (Pease v. Pease (1988) 201 Cal.App.3d 29, 32.) "If the collateral estoppel bar appears on the face of the documents judicially noticed, the defense is properly considered in reviewing the demurrer." (Four Star Electric, Inc. v. F & H Construction (1992) 7 Cal.App.4th 1375, 1379.) The same is true where the defense of res judicata is raised by demurrer. (Tensor Group v. City of Glendale (1993) 14 Cal.App.4th 154, 159-160.)
On appeal from a judgment of dismissal after a demurrer has been sustained without leave to amend, the appellant has the burden of proving error. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) Since the trial court's decision to grant the demurrer "is made as a matter of law, we review the ruling de novo." (Moreno v. Sanchez (2003) 106 Cal.App.4th 1415, 1423.) "Additionally, dismissal on res judicata grounds presents a question of law, which we review de novo." (Louie v. BFS Retail and Commercial Operations, LLC (2009) 178 Cal.App.4th 1544, 1553.) By contrast, the trial court's decision denying leave to amend is tested for an abuse of discretion. (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra, 68 Cal.App.4th at p. 459; Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1038.)
We independently review the sufficiency of plaintiff's complaint. In doing so, we consider the prior dissolution proceeding, which was properly the subject of judicial notice.*fn1 Having undertaken that review, we conclude that the court erred in sustaining the demurrer on the stated grounds. As explained below, on the facts as pleaded and judicially noticed, we find no basis for applying preclusion or estoppel principles. Consideration of the statutory disclosure requirements in dissolution proceedings does not alter the analysis. Our determination applies not only to plaintiff's principal claim, for breach of contract, but also to her other causes of action. In light of our determination that the complaint as a whole is viable, we need not discuss the trial court's denial of leave to amend.
A. Claim Preclusion
The parties disagree about whether the 2005 dissolution judgment has claim preclusive effect in this action. Plaintiff argues that it does not. Defendant argues that it does.
Plaintiff is correct. As discussed above, in its primary, claim preclusive aspect, res judicata has three requirements: (1) an identical cause of action; (2) a final judgment on the merits; and (3) the same parties or privies. (People v. Sims, supra, 32 Cal.3d at p. 484; Consumer Advocacy Group, Inc. v. ExxonMobil Corp., supra, 168 Cal.App.4th at pp. 685-686.) But as we now explain, the prior dissolution judgment fails to satisfy the first requirement for claim preclusion - an identical cause of action. (See Murray v. Alaska Airlines, Inc., supra, 50 Cal.4th at pp. 866-867.)
Under longstanding California law, "a 'cause of action' is comprised of a 'primary right' of the plaintiff, a corresponding 'primary duty' of the defendant, and a wrongful act by the defendant constituting a breach of that duty." (Crowley v. Katleman (1994) 8 Cal.4th 666, 681.) "As far as its content is concerned, the primary right is simply the plaintiff's right to be free from the particular injury suffered." (Ibid.) A prior judgment bars a second action "if both suits seek to vindicate the same primary right." (Mycogen Corp. v. Monsanto Co.supra, 28 Cal.4th at p. 904.)
"The identity of two causes of action is determined by a comparison of the facts alleged which show the nature of the invasion of plaintiff's primary right." (Bush v. Superior Court (1992) 10 Cal.App.4th 1374, 1384; Pitts v. City of Sacramento (2006) 138 Cal.App.4th 853, 857.) Where different primary rights are at stake, "the causes of action are not the same," and findings in the first action "would not give rise to res judicata or claim preclusion." (Bush v. Superior Court, at p. 1384.)
In the prior action at issue here, plaintiff sought to vindicate only one primary right - termination of her marriage to decedent. She neither sought nor obtained any adjudication of property rights. In her petition, plaintiff did not ask the court to confirm any separate property or to divide any community property. To the contrary, she averred that there were no assets or debts subject to disposition by the court, and she requested no determination of property rights. In her later request to enter decedent's default in the dissolution proceeding, plaintiff disavowed any request for "money, property, costs or attorney fees," and she again averred that there were "no issues of division of community property."
In the current action, plaintiff seeks to vindicate her primary right to the benefit of her loan contract with decedent.*fn2 Plaintiff's contract claim represents a distinct primary right, entirely separate from her right to dissolve her marriage. (See Hall v. Coyle (1952) 38 Cal.2d 543, 546 [claim for breach of settlement agreement on negligence claim was a distinct cause of action from underlying negligence claim itself]; cf., Mycogen Corp. v. Monsanto Co., supra, 28 Cal.4th at p. 905 [prior and current actions both "alleged a breach of the same contract, differing only in the requested remedy"].)
In sum, plaintiff's current "cause of action is not the same as the one previously litigated and, therefore, we are here concerned with the doctrine of collateral estoppel and not with res judicata in its primary sense." (Mitchell v. Jones, supra, 172 Cal.App.2d at p. 584.)
B. Issue Preclusion
The parties dispute whether the 2005 dissolution judgment has issue preclusive effect here. Plaintiff contends that it does not, "because neither the existence nor the character of the loan was actually litigated pursuant to the dissolution proceeding." Defendant disagrees, arguing that plaintiff "is collaterally estopped from litigating an issue (the alleged loan) that should have been disclosed in the dissolution proceeding."
Again, plaintiff is correct. As discussed above, the issue-preclusive aspect of res judicata (collateral estoppel) has five requirements. (Lucido v. Superior Court, supra, 51 Cal.3d at p. 341.) The first three are (1) an identical issue, which (2) was actually litigated and (3) necessarily decided in the prior action. (Ibid.) And as we now explain, the prior dissolution judgment fails to satisfy those three requirements.
1. No Identity of Issues
We first consider whether there is an identity of issues.
"Collateral estoppel does not apply where the issue previously litigated was not identical." (Chamberlin v. City of Palo Alto (1986) 186 Cal.App.3d 181, 187; Adoption of Jason R. (1979) 88 Cal.App.3d 11, 16.) "The 'identical issue' requirement addresses whether 'identical factual allegations' are at stake in the two proceedings, not whether the ultimate issues or dispositions are the same." (Lucido v. Superior Court, supra, 51 Cal.3d at p. 342; Hernandez v. City of Pomona (2009) 46 Cal.4th 501, 511-512.) "Accordingly, where the previous decision rests on a 'different factual and legal foundation' than the issue sought to be adjudicated in the case at bar, collateral estoppel effect should be denied." (Wimsatt v. Beverly Hills Weight etc. Internat., Inc. (1995) 32 Cal.App.4th 1511, 1517.)
The identical issue requirement is not met here. The prior dissolution proceeding presented two issues: termination of the marital status and the absence of property subject to division by the family court. This action involves the obligation to repay an asserted separate property loan. The absence of divisible property is not the same as the existence of a loan. (See In re Marriage of Lane (1985) 165 Cal.App.3d 1143, 1147 [in action for breach of warranty in marital settlement agreement, "issues litigated in the breach of warranty action were not determined in the dissolution proceeding"]; Shor v. Department of Social Services (1990) 223 Cal.App.3d 70, 73 [issue decided in criminal welfare fraud case, "the appropriate amount of restitution to be paid as a condition of probation," was not identical to issue decided at administrative proceeding, the amount of welfare benefits overpayment]; Adoption of Jason R., supra, 88 Cal.App.3d at p. 16 [issue decided in husband's earlier annulment proceeding, wife's misrepresentation that she would bear husband's children, was not identical to issue presented in husband's later action to set aside stepparent adoption, wife's promise to bear his children].) Simply put, the prior dissolution action and the current civil action involve different issues.
2. No Actual Litigation
We next consider whether the existence and nature of the loan were actually litigated. Contrary to defendant's arguments, it is not enough that the issue could have been raised. Unlike claim preclusion, issue preclusion "is confined to issues actually litigated." (Clark v. Lesher, supra, 46 Cal.2d at p. 880; Murray v. Alaska Airlines, Inc., supra, 50 Cal.4th at p. 867; Gorman v. Gorman, supra, 90 Cal.App.3d at p. 464.)
"For purposes of collateral estoppel, an issue was actually litigated in a prior proceeding if it was properly raised, submitted for determination, and determined in that proceeding." (Hernandez v. City of Pomona, supra, 46 Cal.4th at p. 511.) "In determining what issues were 'actually litigated' in the underlying action the court in the subsequent action cannot rely exclusively on the findings in the underlying action but must 'carefully scrutinize' the pleadings and proof." (Schaefer/Karpf Productions v. CNA Ins. Co. (1998) 64 Cal.App.4th 1306, 1314, quoting Clark v. Lesher, supra, 46 Cal.2d at pp. 880-881.) Where the prior judgment was by default, the inquiry focuses on what issues were pleaded. (People v. Sims, supra, 32 Cal.3d at p. 484; Murray v. Alaska Airlines, Inc., supra, 50 Cal.4th at p. 871.)
In this case, as an examination of the dissolution petition makes clear, the relief sought by plaintiff did not encompass a determination of property rights. (See In re Marriage of Lippel (1990) 51 Cal.3d 1160, 1169-1170 ["the manner in which" boxes on the standard form dissolution petition "are checked, or not checked, informs and puts the respondent on notice of what specific relief the petitioner is, or is not, seeking"].) The petition sought neither confirmation of separate property nor division of community property. (See Irwin v. Irwin (1977) 69 Cal.App.3d 317, 319-320, 322 [in default proceeding, where petitioner checked box indicating that there was "no property subject to disposition by the court in this proceeding," and did not check box requesting "that the property rights of the parties be determined," she was not barred from later seeking community property interest in husband's pension].)
Because he filed no responsive pleading, decedent did not expand the issues identified in the petition. (See Biscaro v. Stern (2010) 181 Cal.App.4th 702, 711 ["default judgment may not award more relief than a complaint requests"]; Mitchell v. Jones, supra, 172 Cal.App.2d at pp. 586-587 [default judgment "is not conclusive as to any defense or issue which was not raised"]; Paduveris v. Paris (1931) 213 Cal. 169, 172 ["an admission made by failure to answer is not the equivalent of an adjudication"].) The question of property thus was not "actually litigated." (Clark v. Lesher, supra, 46 Cal.2d at p. 880.)
3. No Decision
We next consider whether the loan's existence and character were necessarily decided by the dissolution judgment.
A judgment is preclusive only as to that "which was actually and necessarily included therein or necessary thereto." (Code Civ. Proc., § 1911; see Mitchell v. Jones, supra, 172 Cal.App.2d at p. 587 [question of party's negligence "was not raised" by prior pleadings and its determination "was not required to uphold the default judgment"].) Furthermore, collateral estoppel does not apply "if anything is left to conjecture as to what was necessarily involved and decided." (Irwin v. Irwin, supra, 69 Cal.App.3d at p. 322.)
Here, the dissolution judgment did not encompass a determination of property rights, either community or separate. To the contrary, it explicitly provides: "There are no assets or liabilities subject to disposition by the court in this proceeding." Other than terminating the court's jurisdiction to award spousal support, the judgment does not decide any financial issues, including the existence and character of the loan. Where "it does not appear from [a divorce] decree that property rights were determined by it, they are not deemed to have been adjudicated . . . ." (In re Williams' Estate (1950) 36 Cal.2d 289, 292-293.)
Furthermore, under California's divisible divorce doctrine, it was not necessary for the dissolution judgment to resolve property issues. "The concept of divisible divorce permits issues of marital status and financial responsibility to be litigated at separate times and in different forums." (Estate of Lahey (1999) 76 Cal.App.4th 1056, 1059; see also, e.g., In re Marriage of Walters (1979) 91 Cal.App.3d 535, 537.) Under the divisible divorce concept, "a divorce action which severs the personal relationship of the parties does not necessarily determine their property rights." (Hull v. Superior Court of Los Angeles County (1960) 54 Cal.2d 139, 147.) "Accordingly, it has long been the general rule that if the property of the marital partners is not mentioned or distributed by the interlocutory or final judgments dissolving the marriage, then the issue of property rights is not deemed to have been adjudicated in the marriage dissolution proceeding and may be made the subject of an independent action." (Irwin v. Irwin, supra, 69 Cal.App.3d at pp. 320-321.)
Defendant recognizes the divisible divorce concept as applied to "unresolved litigation" between the former spouses. But according to defendant, there were no such unresolved issues in the dissolution proceeding at issue here, and thus "the alleged 'loan' is not divisible from the parties' dissolution proceeding." We disagree.
As the California Supreme Court has long held, where a dissolution judgment makes no "provision respecting property rights of the parties . . . , it cannot be said that the court decided any issue other than the right to a divorce." (In re Williams' Estate, supra, 36 Cal.2d at p. 293.)*fn3 Nevertheless, under proper circumstances, "a default decree of divorce is res judicata as to the nonexistence of community property [citations]." (Id. at p. 295.) Under this common law exception, "at least as to the party filing the complaint for divorce, the issue of property rights was deemed to have been adjudicated, though not mentioned in the interlocutory or final judgment of divorce, if the divorce complaint alleged that there was 'no community property' and if a default judgment was entered against the defendant; under such circumstances, the divorce decree operated as an adjudication that at the time the divorce action was begun there was no community property." (Irwin v. Irwin, supra, 69 Cal.App.3d at p. 321.) But the defaulting defendant is estopped only "when he has been personally served with summons or has actual knowledge of the existence of the litigation" and "only where the record shows an express finding upon the allegation as to property." (In re Williams' Estate, at p. 297.)
Applying the foregoing authorities to the dissolution judgment at issue here, we conclude that it does not determine property rights. (See In re Williams' Estate, supra, 36 Cal.2d at p. 293 [decree that was "silent as to property rights . . . did no more than to declare that the bonds of matrimony should be dissolved"].) The judgment contains no specific finding about the presence or absence of community assets or debts. The judgment uses the phrase: "There are no assets or liabilities subject to disposition by the court in this proceeding." As has been observed, that phrase is ambiguous. (Irwin v. Irwin, supra, 69 Cal.App.3d at p. 321.) "Arguably, one who petitions for the dissolution of a marriage and who states that there is no property subject to disposition by the court in that proceeding is indicating that there is no community property to be distributed. On the other hand, . . . it is equally plausible to argue that a petitioner . . . who does not request that property rights be determined as provided by law, merely is reserving the right to have the collateral matter resolved at some later proceeding; if this were so, the doctrine of res judicata would be inapplicable." (Ibid.) Where - as here - a judgment is rendered on that ambiguous basis, it is "left to conjecture as to what was necessarily involved and decided." (Id. at p. 322.) Collateral estoppel therefore does not apply. (Ibid.)
In any event, even if we were to accept the dissolution judgment as an adjudication of the nonexistence of community assets and debts, it cannot be said to operate in any way on the parties' separate property.
As a general rule, the family court's authority "is limited to a disposition of the community property and the court is without power to pass upon a dispute as to separate property or the disposition of the same [citations]." (Roy v. Roy (1938) 29 Cal.App.2d 596, 603.) The family court does have authority to characterize disputed assets and liabilities as community or separate. (In re Marriage of Braud (1996) 45 Cal.App.4th 797, 810; see Fam. Code, §§ 2551, 2620-2625.) "Characterization must take place in order to determine the rights and liabilities of the parties with respect to a particular asset or obligation and is an integral part of the division of property on marital dissolution." (In re Marriage of Haines (1995) 33 Cal.App.4th 277, 291.) And in a disputed case, "this determination is for the trial judge, after the parties have had an opportunity to engage in discovery and present evidence on the issue." (Lehman v. Superior Court (1986) 179 Cal.App.3d 558, 563.) The family court also has authority to confirm separate property to the owner spouse. (In re Marriage of Braud, at p. 810.) Generally speaking, however, "the family law court has no jurisdiction in dissolution of marriage proceedings to dispose of either party's separate property." (In re Marriage of Dorris (1984) 160 Cal.App.3d 1208, 1215; see also, e.g., Reid v. Reid (1896) 112 Cal. 274, 277; Porter v. Superior Court (1977) 73 Cal.App.3d 793, 803; In re Marriage of Hixson (2003) 111 Cal.App.4th 1116, 1123.) On the other hand, the family court may "pass upon a dispute as to the separate property" when "the pleadings put in issue the status of the property and the rights of the parties therein both separate and community." (Huber v. Huber (1946) 27 Cal.2d 784, 793; see Porter v. Superior Court, at pp. 803-804 [discussing cases in which "the appellate court upheld a disposition of the separate property, because the parties had joined issue and litigated the matter in the divorce proceedings"].)
In this case, the dissolution petition filed by plaintiff did not place any property rights at issue. (Cf., Huber v. Huber, supra, 27 Cal.2d at p. 793 ["pleadings put in issue the status of the property"].) The dissolution judgment thus did not determine the separate property rights that plaintiff now asserts here.
Despite that conclusion, defendant insists that "the issue before this Court is not whether the family court had jurisdiction over the separate property, but whether [plaintiff's] failure to disclose the alleged loan precluded the family court from properly characterizing and confirming a separate liability." We consider that question now.
C. Effect of Disclosure Requirements
"The duty to disclose arises out of the fiduciary relationship between the husband and wife." (Kulchar v. Kulchar (1969) 1 Cal.3d 467, 474; In re Marriage of Geraci (2006) 144 Cal.App.4th 1278, 1294, fn. 25.) In 1992, the Legislature enacted a "comprehensive statutory scheme regarding disclosure of assets and liabilities in marital dissolution proceedings" that now appears in Family Code section 2100 et seq. (In re Marriage of McLaughlin (2000) 82 Cal.App.4th 327, 331.) "Under these statutes, parties to marital dissolution proceedings have an affirmative duty to exchange both a preliminary and a final declaration of disclosure, detailing all of their assets and liabilities, prior to judgment being entered." (Ibid.; Fam. Code, §§ 2103-2105.) In the case of default dissolution, the statute requires a preliminary declaration of disclosure but not a final declaration of disclosure. (Fam. Code, § 2110.)
Until the community property in question has been distributed, each party has a duty to make an "accurate and complete disclosure of all assets and liabilities in which the party has or may have an interest or obligation and all current earnings, accumulations, and expenses, including an immediate, full, and accurate update or augmentation to the extent there have been any material changes." (Fam. Code, § 2102, subd. (a)(1); see id., § 2100, subd. (c); see In re Marriage of Feldman (2007) 153 Cal.App.4th 1470, 1483 ["no exception for debts and assets that offset each other"].)
"These mandatory statutory requirements cannot be waived, except in strict compliance with provisions of the statute." (In re Marriage of Burkle (2006) 139 Cal.App.4th 712, 745.) "Exchanging complete preliminary declarations of disclosure and ongoing income and expense declarations under oath is important to marshal and protect assets, to provide fair support awards and to ensure equal division of property." (In re Marriage of Fell (1997) 55 Cal.App.4th 1058, 1065.)
The Legislature has provided various remedies for noncompliance, including evidentiary and monetary sanctions. (Fam. Code, § 2107; In re Marriage of Feldman, supra, 153 Cal.App.4th at pp. 1480-1481.) Moreover, a spouse who has been prejudiced by nondisclosure may also seek to set aside the judgment. (Fam. Code, §§ 2120-2129; In re Marriage of Varner (1997) 55 Cal.App.4th 128, 136-138; Gutierrez v. G & M Oil Company, Inc. (2010) 184 Cal.App.4th 551, 566.)
In this case, plaintiff gave decedent a preliminary declaration of disclosure. She served the disclosure on May 9, 2005, and decedent acknowledged its receipt five days later. Two days after that, plaintiff wrote decedent a check for $2 million. She did not augment her disclosure thereafter, nor did she serve a final disclosure on decedent. So far as the record reflects, decedent provided no disclosure to her at all.
Defendant maintains that the $2 million transaction between plaintiff and decedent "was clearly a 'material change' in the parties' respective financial circumstances, which [plaintiff] was required to immediately disclose in an updated or augmented disclosure." (See In re Marriage of Feldman, supra, 153 Cal.App.4th at p. 1483.) But defendant does not explain how plaintiff's failure to do so results in preclusion.
We fail to see how noncompliance with disclosure requirements can imbue a judgment with a preclusive effect that it otherwise lacks. To the contrary, as one court stated: "The statutory scheme creates an exception to res judicata, based on the recognition that 'the public policy of assuring finality of judgments must be balanced against the public interest in ensuring proper division of marital property, in ensuring sufficient support awards, and in deterring misconduct.' (§ 2120, subd. (c).)" (Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, 1144, italics added.)
In sum, based on application of settled res judicata principles, the prior dissolution judgment at issue here lacks preclusive effect, and plaintiff's failure to augment her disclosure does not alter that conclusion.
D. Equitable Estoppel
As discussed above, for equitable estoppel to apply, the party to be estopped must be apprised of the facts and must intend that the other party act upon his conduct, while the other party must be ignorant of the true facts and must rely on the conduct to his injury. (Honeywell v. Workers' Comp. Appeals Bd., supra, 35 Cal.4th at p. 37.) If "even one of the requisite elements for estoppel is missing, it does not apply." (Feduniak v. California Coastal Comn., supra, 148 Cal.App.4th at p. 1360.) Moreover, unless "the facts are undisputed and only one reasonable conclusion can be drawn from them," estoppel presents a question of fact. (Ibid.)
In the posture of this case, the pertinent facts are those contained in the complaint and in judicially noticed matters. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) According to the complaint, plaintiff "orally agreed to lend [decedent] $2,000,000 from her sole and separate property to invest in the growth of his business." Decedent agreed to repay plaintiff over time and had begun doing so. As reflected in the complaint and in the judicially noticed dissolution documents, the money for the loan came from the sale of plaintiff's ranch, which decedent had acknowledged as her separate property in a recent quit claim deed. Plaintiff's check for $2 million was made out to decedent, and he deposited the funds into his account at Bank of America. This $2 million transaction took place within days after decedent acknowledged receipt of the dissolution petition stating that there were no community assets or liabilities subject to disposition by the family court.
These facts do not demonstrate that plaintiff had superior knowledge, that she deceived decedent about the character of the $2 million transaction, or that he ignorantly relied on plaintiff's conduct to his detriment. Under the facts as alleged, decedent "could not have been ignorant of the true state of facts, since [he] knew as much about the circumstances surrounding" the $2 million transaction as plaintiff did. (In re Marriage of Umphrey (1990) 218 Cal.App.3d 647, 658.) Furthermore, the facts do not demonstrate decedent's "actual reliance" or plaintiff's intent that he rely. (Ibid.)
In sum, this is not a proper case for application of equitable estoppel as a matter of law. (See Feduniak v. California Coastal Comn., supra, 148 Cal.App.4th at pp. 1356, 1360 [the evidentiary record following trial did not support trial court's finding of equitable estoppel as to three of the required elements].)
E. Judicial Estoppel
As discussed above, for judicial estoppel to apply, the party to be estopped must have taken two totally inconsistent positions in judicial or quasi-judicial proceedings, he must have pressed the first position to a successful conclusion, and he must not have taken the position as a result of ignorance, fraud, or mistake. (Aguilar v. Lerner, supra, 32 Cal.4th at pp. 986-987.)
In this case, plaintiff did not take two totally inconsistent positions. In the dissolution action, plaintiff asserted that there were no community property assets or debts subject to disposition by the family court. In this civil action, she asserts that she loaned her separate property funds to decedent, which he agreed to repay. Those are not totally inconsistent positions. (See Aguilar v. Lerner, supra, 32 Cal.4th at p. 987.)
F. Viability of Particular Causes of Action
For all the reasons discussed above, plaintiff is neither precluded nor estopped from asserting her contract claim. And as we now explain, plaintiff's other causes of action also survive defendant's demurrer, which was brought on the same grounds of preclusion and estoppel.
1. Common Counts
Concerning plaintiff's first cause of action, for common counts, defendant argues that it depends for its vitality on plaintiff's contract claim and that it falls with that claim. We disagree.
As a general and longstanding rule, a common count "is not subject to attack by general demurrer or by a special demurrer for uncertainty." (Auckland v. Conlin (1928) 203 Cal. 776, 778.) However, if the "common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable." (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394.) But the converse is also true. (Steiner v. Rowley (1950) 35 Cal.2d 713, 717-718.)
Here, plaintiff's causes of action for breach of contract and common counts are based on the same facts. Because plaintiff's contract claim withstands defendant's preclusion and estoppel defenses, so too does her cause of action for common counts. (Steiner v. Rowley, supra, 35 Cal.2d at p. 720.)
2. Constructive Trust
Defendant raises a similar challenge to plaintiff's third cause of action, for a constructive trust. (See Michaelian v. State Comp. Ins. Fund (1996) 50 Cal.App.4th 1093, 1114 [setting forth pleading requirements].) We reject that challenge for the same reasons. Because plaintiff's contract claim is viable, so too is her cause of action for constructive trust.
In her opening brief, plaintiff explains that her fourth cause of action, for reimbursement pursuant to Family Code section 2640, "was offered as an alternative theory to the breach of contract claim." In plaintiff's view, this claim seems to confuse the issues and "to distract the Court from the merits of the breach of contract claim, which stands as [the] primary theory upon which she seeks relief." Plaintiff therefore "proposes to amend her complaint to remove the section 2640 reimbursement cause of action." Defendant does not address this specific cause of action.
When demurrers are at issue, the key question is "whether the pleaded facts state a cause of action on any available legal theory." (McBride v. Boughton, supra, 123 Cal.App.4th at p. 385; Michaelian v. State Comp. Ins. Fund, supra, 50 Cal.App.4th at p. 1105.) "Since pleadings are easily amended, the proper focus is on the facts alleged, rather than the theories for recovery." (Michaelian v. State Comp. Ins. Fund, at p. 1106.) Even inconsistent theories may be pleaded, as long as "there are no contradictory or antagonistic facts [citation]." (Steiner v. Rowley, supra, 35 Cal.2d at pp. 718-719; Gherman v. Colburn (1977) 72 Cal.App.3d 544, 565.) Furthermore, "a demurrer cannot rightfully be sustained to part of a cause of action or to a particular type of damage or remedy." (Kong v. City of Hawaiian Gardens Redevelopment Agency, supra, 108 Cal.App.4th at p. 1047.)
Applying those principles here, we see no basis for requiring plaintiff to withdraw her reimbursement claim. This is not a case where the facts do not "give rise to any conceivable theory" of recovery. (Michaelian v. State Comp. Ins. Fund, supra, 50 Cal.App.4th at p. 1107.) And despite plaintiff's appellate offer to amend, she has not yet abandoned her claim. (Cf., McBride v. Boughton, supra, 123 Cal.App.4th at p. 386.) In this case, plaintiff's reimbursement claim relies on the same facts as her contract claim. At the pleading stage, she is entitled to maintain both. (Steiner v. Rowley, supra, 35 Cal.2d at p. 720.) That being so, plaintiff is not required to amend her complaint to omit her fourth cause of action, for reimbursement.
All four causes of action of plaintiff's complaint survive defendant's demurrer, and plaintiff is not required to amend. Because neither preclusion nor estoppel bars plaintiff's complaint, the trial court erred in sustaining defendant's demurrer on those grounds.
The order of dismissal is reversed. Plaintiff shall have costs on appeal.
WE CONCUR: Bamattre-Manoukian, Acting P.J. Mihara, J.