Superior Court Los Angeles County No. KC045216, Ct.App. 2/5 B228078 Dan T. Oki, Judge.
Robert S. Gerstein; and J. Brian Watkins for Plaintiff and Appellant.
Harrington, Foxx, Dubrow & Canter, Dale B. Goldfarb, Carol G. Arnold, Daniel E. Kenney and John D. Tullis for Defendants and Respondents.
Robert A. Olson, Jay-Allen Eisen, Jon B. Eisenberg, Dennis A. Fischer, Robin B. Johansen; Severson & Werson and Jan T. Chilton for California Academy of Appellate Lawyers as Amicus Curiae.
Under California’s “one final judgment” rule, a judgment that fails to dispose of all the causes of action pending between the parties is generally not appealable. (Code Civ. Proc., § 904.1, subd. (a); Morehart v. County of Santa Barbara (1994) 7 Cal.4th 725, 740-741 (Morehart).) This case poses the question whether an appeal may be taken when the judgment disposes of fewer than all the pled causes of action by dismissal with prejudice, and the parties agree to dismiss the remaining counts without prejudice and waive operation of the statute of limitations on those remaining causes of action. We conclude such a judgment is not appealable. As a line of Court of Appeal decisions beginning with Don Jose’s Restaurant, Inc. v. Truck Ins. Exchange (1997) 53 Cal.App.4th 115 (Don Jose’s) has recognized, the parties’ agreement holding some causes of action in abeyance for possible future litigation after an appeal from the trial court’s judgment on others renders the judgment interlocutory and precludes an appeal under the one final judgment rule. We therefore reverse the judgment of the Court of Appeal below, which declined to follow Don Jose’s and its progeny and entertained an appeal from the interlocutory judgment rendered in the trial court.
Factual and Procedural Background
Plaintiff Badrudin Kurwa and defendant Mark B. Kislinger, both ophthalmologists, undertook a venture to provide medical services to patients of a health maintenance organization and formed a corporation for that purpose. Several years later, plaintiff’s license to practice medicine was suspended. Defendant then notified the health maintenance organization that plaintiff’s participation in the enterprise was terminated and that the agreed medical services would henceforth be performed by defendant’s medical corporation. The health maintenance organization terminated its agreement with the parties’ joint corporation and executed a new agreement with defendant’s corporation.
Plaintiff sued defendant for breach of fiduciary duty and defamation, among other claims. Defendant cross-complained for defamation. Ruling for defendant on his pretrial motions, the trial court concluded that once plaintiff and defendant had created a corporation to conduct their business, they owed each other no fiduciary duty. Plaintiff conceded he could not proceed on his cause of action for breach of fiduciary duty and related claims, which would therefore be dismissed with prejudice, as would other counts plaintiff expressly “abandon[ed].”
The parties, however, agreed to dismiss as well their respective defamation claims without prejudice and to waive the applicable statute of limitations. According to defense counsel, this would allow the parties to “test the issue” of fiduciary duty and “get a ruling” from the appellate court before disposing of the defamation claims, which were “kind of outside this whole discussion.” The purpose of this agreed disposition, plaintiff’s attorney further explained, was to “preserve” both defamation causes of action “for such time as this case may come back from appeal.” The trial court ordered plaintiff’s action dismissed with prejudice with the exception of the defamation cause of action, which, together with defendant’s cross-complaint, the court dismissed without prejudice. The court then entered judgment in favor of defendant, from which judgment plaintiff appealed.
The Court of Appeal held the judgment final and appealable, reasoning that because the defamation counts had been dismissed, they were no longer pending between the parties and the trial court had no jurisdiction to proceed further on any cause of action. The court acknowledged Don Jose’s, supra, 53 Cal.App.4th 115, and its progeny were to the contrary, but declined to follow these decisions. On the merits, the Court of Appeal determined the superior court had erred in ruling defendant owed plaintiff no fiduciary duty on the facts pleaded, and reversed the judgment of the superior court.
We granted defendant’s ...