Case Name: Kenneth S. Manrao and Rosemary Ann Manrao v. Anita Chan and William Joe
Case No.: 2015-1-CV-281194

Motion for Judgment on the Pleadings by Defendants Anita Chan and William Joe to the First Amended Complaint of Plaintiffs Kenneth S. Manrao and Rosemary Ann Manrao

Factual and Procedural Background

On October 12, 2011, Metro Eight Properties, LLC (“Metro Eight”) filed a complaint for breach of contract (case no. 1-11-CV-210917 [“2011 Action”]) against Kenneth S. Manrao and Rosemary Ann Manrao (collectively, the “Manraos”). (See Request for Judicial Notice [“RJN”] at Exhibit B.) According to the complaint, Metro Eight held the ground lease for the real property located at 1310 North First Street, San Jose, California (the “Property”). Metro Eight’s predecessor in interest sublet the Property to the Manraos’ predecessor in interest pursuant to a written sublease (the “Sublease”). Metro Eight claimed that the Manraos breached the Sublease by failing to maintain the buildings on the Property in good condition and repair at the termination of the Sublease.

On April 3, 2012, the Manraos filed a cross-complaint against Metro Eight alleging the following causes of action: (1) breach of contract; (2) declaratory relief; and (3) unfair business practices – Business and Professions Code § 17200 et seq. (See RJN at Exhibit C.) According to the cross-complaint, the Manraos claimed that Metro Eight breached the Sublease by preventing them from exercising their lawful right to demolish the structures and buildings. The Manraos also alleged that Metro Eight wrongfully interfered with their right of first refusal.

The case proceeded to trial on June 17, 2013. Following a bench trial, the court (Judge Monahan) issued a written decision and entered judgment in favor of Metro Eight against the Manraos in the amount of $126,654. (See RJN at Exhibits D-E.) On November 7, 2013, the Manraos filed a Notice of Appeal challenging the trial court’s judgment. (Id. at Exhibit F.)

On June 23, 2015, the Manraos (now self-represented) filed a first amended complaint (“FAC”), now the operative pleading, against defendants Anita Chan and William Joe (collectively, “Defendants”), allegedly members of Metro Eight, asserting causes of action for: (1) breach of contract; (2) declaratory relief; (3) unfair business practices – Business and Professions Code § 17200 et seq.; and (4) violation of Civil Code section 1013.

On July 8, 2015, Defendants filed a demurrer to the FAC on the ground that another action is pending and the pleading is barred by the rule of exclusive concurrent jurisdiction. The Manraos filed written opposition. Following oral argument, the court issued an order sustaining the demurrer to the FAC. (See RJN at Exhibit A.) In doing so, the court stayed any further proceedings until the 2011 Action had terminated. (Ibid.)

On December 21, 2015, the Sixth District Court of Appeal issued its opinion in the 2011 Action and affirmed the judgment. (See RJN at Exhibit G.) Thereafter, the California Supreme Court denied the Manraos’ petition for review and a remittitur issued on March 10, 2016. (See RJN at Exhibits H-I.)

On March 14, 2016, Defendants filed a motion for judgment on the pleadings to the FAC on the ground that it fails to state a cause of action. The court denied the motion on the ground that Defendants failed to file their answer to the FAC. (See Code Civ. Proc., § 438, subd. (f) [motion for judgment on the pleadings may be filed after the time for demur has expired and an answer has been filed].) In its order, the court also stated that the temporary stay of trial court proceedings had been lifted.

On April 28, 2016, Defendants filed their answer alleging various affirmative defenses.

Currently before the court is Defendants’ motion for judgment on the pleadings to the FAC on the ground that it fails to state a cause of action. (Code Civ. Proc., § 438.) Defendants argue that the Manraos are collaterally estopped from relitigating their claims in the 2011 Action that resulted in a final judgment. Defendants filed a request for judicial notice in conjunction with the motion. The Manraos filed written opposition. Defendants filed reply papers.

Motion for Judgment on the Pleadings

Request for Judicial Notice

Defendants’ request for judicial notice is GRANTED. (See Evid. Code § 452, subd. (d); see also Stepan v. Garcia (1974) 43 Cal.App.3d 497, 500 [the court may take judicial notice of its own file].)

Legal Standard

“Judgment on the pleadings is akin to a demurrer and is properly granted only if the complaint does not state facts sufficient to state a cause of action against that defendant. The grounds for the motion must appear on the face of the complaint, and in any matters subject to judicial notice. The court accepts as true all material factual allegations, giving them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts.” (Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254 [internal citations omitted].)
Analysis

The doctrine of collateral estoppel obviates the need to relitigate issues in a second action already adjudicated in the first action. (Lockwood v. Sup. Ct. (1984) 160 Cal.App.3d 667, 671.) “The purposes of the doctrine are said to be ‘to promote judicial economy by minimizing repetitive litigation, to prevent inconsistent judgments which undermine the integrity of the judicial system, [and] to protect against vexatious litigation.’ [Citations.]” (Ibid.) “There are three prerequisites which must be shown before the doctrine will be applied: (1) the issue in the second action must be identical to the issue adjudicated in the first action; (2) the first action must have proceeded to a final judgment on the merits; and (3) the party against whom the collateral estoppel is to be asserted must have been a party, or in privity with a party, to the first action.” (Tushinsky v. Arnold (1987) 195 Cal.App.3d 666, 672.) “[T]he inquiry that must be made is whether the traditional requirements and policy reasons for applying the collateral estoppel doctrine have been satisfied by the particular circumstances of this case. [Citation.]” (Lockwood, supra, at p. 672.)

“The collateral estoppel aspect of res judicata will apply as to all issues which were involved in the prior case even though some factual matters or legal arguments which could have been presented in the prior case in support of such issues were not presented. [Citation.] Thus, where two lawsuits are brought and they arise out of the same alleged factual situation, and although the causes of action or forms of relief may be different, the prior determination of an issue in the first lawsuit becomes conclusive in the subsequent lawsuit between the same parties with respect to that issue and also with respect to every matter which might have been urged to sustain or defeat its determination. [Citation.] If the legal principle were otherwise, litigation would end finally only when a party could no longer find counsel whose knowledge and imagination could conceive of different theories of relief based upon the same factual background. [Citations.]” (Frommhagen v. Bd. of Supervisors (1987) 197 Cal.App.3d 1292, 1301.)

As stated in the court’s previous order, the Manraos’ cross-complaint in the 2011 Action and the current action involve the same issues. (See RJN at Exhibit A.) The issues involve the right of first refusal and demolition of the hotel. Following trial, the court determined that the Manraos (1) did not have a right of first refusal to purchase the property and (2) were not prevented from demolishing the hotel during their tenancy. (Id. at Exhibit E.) These issues were subject to a final judgment on the merits which was affirmed on appeal. As the Manraos were parties to the first action, it appears that the doctrine of collateral estoppel would apply.

The Manraos’ arguments in opposition are unpersuasive. Even though the Manraos now seek to hold Defendants individually liable in this action, the issues involving right of first refusal and demolition of the hotel were conclusively established in the first action. Also, contrary to the opposition, the trial court considered the Manraos’ argument based on Metro Eight’s refusal to sign demolition permits as part of its statement of decision (see RJN at Exhibit E). Finally, to the extent that the Manroas allege a new cause of action for violation of Civil Code section 1013, such a claim seeks relief based on Defendants’ alleged interference with the Manraos’ right to demolish the building. Again, this issue was fully litigated in the first action and subject to a final judgment on the merits. Having rejected these arguments, the court concludes that the doctrine of collateral estoppel bars the current action.

Accordingly, the motion for judgment on the pleadings is GRANTED WITHOUT LEAVE TO AMEND for failure to state a claim. (See Baughman v. State of California (1995) 38 Cal.App.4th 182, 187 [“If there is no liability as a matter of law, leave to amend should not be granted.”].)