California Court of Appeals, First District, Fourth Division
[257
Cal.Rptr.3d 117] City & County of San Francisco Superior
Court, Harold E. Kahn, Judge (City & County of San Francisco
Super. Ct. No. CGC10496887)
Page 989
COUNSEL
Counsel
for Appellants: FOLEY & LARDNER LLP, Kathleen Smalley
Counsel
for Respondents: MANATT, PHELPS & PHILLIPS, LLP, Barry W.
Lee, Benjamin G. Shatz, Christian E. Baker, Ana G. Guardado,
Stephanie A. Roeser, San Francisco
OPINION
STREETER,
J.
Page 990
After
a bench trial in this commercial real estate dispute, the
trial court (Hon. Marla Miller) entered judgment for
defendants on all claims, some legal and some [257
Cal.Rptr.3d 118] equitable.[1] Plaintiffs appealed the
judgment, and we reversed as to the legal claims (holding
plaintiffs demand for a jury trial as to those claims should
not have been stricken), affirmed as to the equitable claims,
and remanded for further proceedings. (Rincon I,
supra, 8 Cal.App.5th at pp. 5, 22, 213 Cal.Rptr.3d 410.)
On remand, the trial court (Hon. Harold Kahn) granted summary
judgment for defendants, concluding Judge Millers findings
pertaining to the equitable claims were binding and were
dispositive of plaintiffs legal claims.
Plaintiffs
appeal the ensuing judgment, contending that, on remand after
Rincon I, they were entitled to a jury trial on
their legal claims. Specifically, plaintiffs argue that (1)
after this courts partial reversal in Rincon I,
they were entitled to litigate anew all factual issues
relevant to the legal claims, even if the same issues were
determined by Judge Miller in connection with her resolution
of the equitable claims, (2) by granting defendants summary
Page 991
judgment motion, Judge Kahn violated this courts remittitur
in Rincon I and the law of the case, (3) under the
statutes governing judicial notice and summary judgment
procedure, Judge Kahn, in ruling on defendants motion, could
not consider the "truth" of the facts found by
Judge Miller, and (4) even if Judge Millers findings were
properly considered on remand and had binding effect, those
findings do not dispose of plaintiffs legal claims. We
reject plaintiffs arguments and will affirm the judgment.
I. BACKGROUND
"[Plaintiffs]
borrowed $110 million in 2007 from Bear Stearns Commercial
Mortgage, Inc. (Bear Stearns) to finance the purchase of
Rincon Towers, a San Francisco apartment complex (the
Property). In 2010, after plaintiffs failed to repay the loan
and after changes in the ownership of the loan, defendant CP
III Rincon Towers, Inc. (CP III) purchased the Property at a
nonjudicial foreclosure sale. Plaintiffs sued CP III and
seven other entities who were involved in administering the
loan, unsuccessful workout negotiations, and the eventual
foreclosure sale, alleging various causes of action, some
legal (breach of contract, fraud, slander of title, trade
secret misappropriation), and some equitable (unfair
competition, to set aside the foreclosure sale, and for an
accounting)." (Rincon I, supra, 8 Cal.App.5th
at p. 5, 213 Cal.Rptr.3d 410.)
Specifically,
plaintiffs fifth amended complaint, the operative complaint
at trial, asserted the following causes of action: (1) breach
of a loan agreement (Loan Agreement) entered at the time of
the loan (the Loan) in June 2007, (2) breach of a cash
management agreement (Cash Management Agreement) entered into
by plaintiffs and Bear Stearns concurrently with the Loan
Agreement, (3) breach of a March 2009 prenegotiation
agreement entered [257 Cal.Rptr.3d 119] into by plaintiffs
and the Maiden Lane Trust (an entity that became the lender
after Bear Stearnss 2008 collapse) in connection with
negotiations about a possible modification of the Loan, (4)
fraud, (5) to set aside the foreclosure, (6) unfair
competition (Bus. & Prof. Code, § 17200 et seq.) (the Unfair
Competition Law (UCL)), (7) slander of title, (8) violation
of the Uniform Trade Secrets Act (UTSA) (Civ. Code, § 3426 et
seq.), and (9) accounting. (Rincon I, supra, 8
Cal.App.5th at p. 7, 213 Cal.Rptr.3d 410.) In their UCL cause
of action, plaintiffs alleged in part that the conduct
supporting several of their other causes of action (including
defendants alleged breaches of contract, fraud, slander of
title and violation of the UTSA) also violated the UCL.
Plaintiffs
sought a jury trial as to six of these claims— the
three breach of contract claims, as well as the claims for
fraud, slander of title and violation of the UTSA (the legal
claims). (Rincon I, supra, 8 Cal.App.5th at p. 9,
213 Cal.Rptr.3d 410.) As to their other three claims—
to set aside the foreclosure, for unfair competition, and for
an accounting (the equitable claims)— plaintiffs did
not seek a
Page 992
jury trial and agreed those claims were " equitable in
nature. " (Ibid. ) In response to a motion by
defendants, Judge Miller struck plaintiffs jury demand based
on jury waiver provisions in the three contracts at issue,
the Loan Agreement, the Cash Management Agreement and the
prenegotiation agreement. (Ibid. ) According to the
register of actions that is included in the appellate record,
Judge Miller also denied or took off calendar two motions by
defendants to bifurcate or sever certain issues to be tried
separately (the second time on the ground that bifurcation
was moot in light of the order striking the jury demand).
Judge
Miller held a bench trial, issued a detailed statement of
decision rejecting all of plaintiffs claims, and entered
judgment for defendants. (Rincon I, supra, 8
Cal.App.5th at pp. 5, 10, 213 Cal.Rptr.3d 410.) Plaintiffs
appealed. (Id. at p. 5, 213 Cal.Rptr.3d 410.)
In
Rincon I, we concluded Judge Miller erred by
striking plaintiffs jury demand as to the legal claims, and
we therefore reversed the judgment as to those claims.
(Rincon I, supra, 8 Cal.App.5th at pp. 5, 10, 18,
21-22, 213 Cal.Rptr.3d 410.) We concluded, however, there was
no error as to the equitable claims, and we affirmed the
judgment as to those claims. (Id. at pp. 5, 18-19,
22, 213 Cal.Rptr.3d 410.) We remanded for further proceedings
as to the legal claims. (Id. at pp. 5, 22, 213
Cal.Rptr.3d 410.)
On
remand, defendants filed a motion for summary judgment,
contending in part that the findings Judge Miller made in
connection with her resolution of plaintiffs equitable
claims were "binding on, and dispositive of, plaintiffs
remaining legal claims." After a hearing, Judge Kahn
granted the motion, concluding Judge Millers findings in
connection with plaintiffs equitable claim for unfair
competition (the UCL claim) necessarily resolved plaintiffs
legal claims. In reaching this conclusion, Judge Kahn relied
on the principle that, in a case involving both legal and
equitable claims, findings made in connection with one set of
claims are binding in a subsequent disposition of the other
set of claims.[2] (E.g., [257 Cal.Rptr.3d 120]
Hoopes v. Dolan (2008) 168 Cal.App.4th 146, 156-157,
85 Cal.Rptr.3d 337');">85 Cal.Rptr.3d 337 (Hoopes ).)
In his
written ruling, Judge Kahn stated in part: "Both the
fifth amended complaint and plaintiffs post-trial brief ...
make clear, and plaintiffs do not dispute, that all of the
substantive law allegations of their six legal claims are
also alleged as grounds that defendants violated the UCL.
[Citations.] Because the alleged substantive law violations
of the six legal claims were subsumed within the UCL claim,
Judge Millers findings resolving the entirety of the UCL
claim in favor of defendants necessarily also resolved all
Page 993
six of plaintiffs legal claims in favor of defendants, and a
plain reading of [Judge Millers] Statement of Decision shows
that this is what happened. [Citation.] Among other things,
as part of her ruling on the UCL claim, Judge Miller found
that defendants did not breach any of the three contracts
that they were alleged to have breached, did not commit any
fraudulent conduct against the plaintiffs, did not slander
plaintiffs title to the property and did not misappropriate
any of plaintiffs asserted trade secrets."
Judge
Kahn entered judgment for defendants, and plaintiffs
appealed.
II. DISCUSSION
A. When an Action Involves Both Legal and Equitable
Claims, Findings Pertaining to One Set of Claims Are Binding
in the Subsequent Resolution of the Other Set of
Claims
As we
noted in Rincon I, "[w]hile a litigant in a
civil action generally has a constitutional right to jury
trial on legal causes of action, there is no such right
with respect to equitable causes of action [citation], or
equitable remedies [citation]." (Rincon I,
supra, 8 Cal.App.5th at p. 19, 213 Cal.Rptr.3d 410.) For
that reason, we held that, although it was error to strike
plaintiffs jury demand as to their legal claims, Judge
Miller did not err in deciding the equitable claims.
(Id. at pp. 18-19, 213 Cal.Rptr.3d 410.) We also
noted that, under established California precedent, when a
case involves both legal and equitable claims or issues, the
trial court " "may decide the equitable issues
first, and this decision may result in factual and legal
findings that effectively dispose of the legal claims."
"[3] (Rincon I, supra, 8
Cal.App.5th at p. 19, 213 Cal.Rptr.3d 410; accord, e.g.,
Raedeke v. Gibraltar Sav. & Loan Assn. (1974) 10
Cal.3d 665, 671, 111 Cal.Rptr. 693, 517 P.2d 1157
(Raedeke ); Alcoa, supra, 12 Cal.App.5th at
p. 355, 219 Cal.Rptr.3d 474; see Hoopes, supra, 168
Cal.App.4th at p. 158, 85 Cal.Rptr.3d 337');">85 Cal.Rptr.3d 337 ["The rule
minimizes inconsistencies, and avoids giving one side two
bites of the apple. [Citation.] The rule also prevents
duplication of effort."].)
Judge
Kahn concluded that this was in effect what happened here,
i.e., the equitable claims were decided first, when Judge
Miller addressed them in her statement of decision. On remand
after our decision in Rincon I, with only the legal
claims ...