17-CIV-04633 MARIELLEN BAKER, TRUSTEE OF THE BLACK OAK TRUST DATED MARCH 11, 1995 vs. KRAIG R. KAST, et al.

MARIELLEN BAKER RICHARD W. LUND

ERICKSON PRODUCTIONS, INC. LYNDA I. CHUNG

erickson productions, inc.’S and jim erickson’s demurrer to the complaint

TENTATIVE RULING:

As to each of the First, Second and Fifth Causes of Action (for quiet title, unjust enrichment/constructive trust and declaratory relief) set forth in the October 10, 2017 Complaint of Plaintiff Mariellen Baker, Trustee of the Black Oak Trust Dated March 11, 1995, a California irrevocable trust, Defendants Erickson Productions, Inc.’s and Jim Erickson’s (Defendants) Demurrer is SUSTAINED WITH LEAVE TO AMEND. The Court finds that Defendants’ claims are all predicated on a foundational issue that was already litigated and decided against Baker and Defendant Kast in a prior federal court proceeding and that Plaintiff is collaterally estopped from re-litigating that issue.

Collateral estoppel, or “issue preclusion,” is a doctrine that exists to “promote judicial economy, preserve the integrity of the judicial system, and protect litigants from harassment by vexatious litigation.” In re Bush (2008) 161 Cal.App.4th 133, 145-46; Lucido v. Superior Court (1990) 51 Cal.3d 335. It applies upon a showing that (1) the issue necessarily decided at the previous proceeding is identical to the one sought to be re-litigated; (2) the previous proceeding resulted in a final judgment; and (3) the party against whom collateral estoppel is sought (here, Plaintiff Baker) was a party to or in privity with a party to the previous proceeding. In re Bush, supra, at 146.

Here, all three causes of action asserted against the Erickson Defendants hinge on Plaintiff Baker’s allegation/contention that title to the two Foster City properties (the Properties) was conveyed/transferred in 2007 (and allegedly, as confirmed by documents signed thereafter) to Mr. Kast in his capacity as trustee of an irrevocable trust (the Black Oak Trust) of which Baker is alleged to be the sole beneficiary. See Complaint, ¶20 (“This controversy makes necessary a prompt judicial determination whether title to the Properties is held by the Irrevocable Trust or the Revocable Trust, if the later still exists.”). Based on the documents subject to judicial notice, including the Northern District of California’s October 5, 2017 Order in Case No. 5:13-cv-05472-HRL, which granted in part Erickson’s motion to amend the Judgment in that case, that exact issue – namely, whether an irrevocable trust or a revocable trust holds title to the Properties – was previously briefed, argued and decided in the federal court case. This fact is made clear by voluminous documents filed by both Kast and Baker in the federal court case in which they made the same arguments that Baker now seeks to rehash. Specifically, Baker’s Complaint here alleges that beginning in December 2007, for the purpose of securing a $470,000 loan that Baker previously made to Kast, Kast agreed to convert his revocable trust to an irrevocable trust for Baker’s sole benefit and agreed to convey the Properties into the irrevocable trust. As she and Kast argued in the federal court case, Baker’s Complaint here again alleges that this promised transfer/conveyance to an irrevocable trust was in fact accomplished, as purportedly proven by documentary evidence, including an “Addendum A” executed on December 30, 2007 and quitclaim deeds recorded on February 3, 2012. A review of Kast’s and Baker’s filings in the district court case demonstrate this is the identical issue previously presented to the district court in the context of the Erickson Defendants’ motion to amend the Judgment in that case, and which the federal court, after extensive briefing and oral argument, decided against Kast and Baker in an 18-page written Order. (See October 5, 2017 Order in Case No. 5:13-cv-05472-HRL.)

The Court also finds that Baker was in privity with Kast with respect to Defendant Erickson’s motion to amend the Judgment in the federal court case. In her Complaint here, Baker alleges Kast was the original trustee of the purported irrevocable trust and that after Kast resigned as trustee on December 31, 2015, Baker succeeded Kast as the trustee. (See Compl., ¶6). In general, prior judgments are binding on successors-in-interest. Code Civ. Proc. Sect. 1908(a)(2). Further, in the district court case, Kast (who incidentally is Baker’s fiancé), as the former trustee of the purported irrevocable trust, fully participated in opposing Defendants’ motion to amend. Kast offered the same arguments and evidence that Baker now asks this Court to consider anew. See Defendants’ December 21, 2017 RJN, Exhs. 1-20.

Further, this is not the typical collateral estoppel situation in which a party who had no actual involvement in a prior proceeding is protesting the notion of being bound by an issue decided in a prior case. Although not a named defendant in the federal court case, Baker herself fully participated in opposing Erickson’s motion to amend the Judgment for nearly a year, during which time she was represented by the same counsel that represents her here. In the district court proceeding, Baker offered evidence, filed numerous briefs and appeared at the hearing on Defendants’ motion to amend the Judgment, wherein she asserted the same arguments that she alleges in her Complaint here, citing to the same evidence (and as Defendants note, Baker and her counsel are shown on the federal court docket as parties to the case). After comparing Baker’s allegations here with Baker’s and Kast’s arguments before the district court, it is difficult to reach any conclusion other than that Baker is now requesting that this Court re-decide the identical issue that she and Kast already extensively argued to the district court and which the district court decided against them. The Court finds Plaintiff is estopped from doing so.

As to Plaintiff’s Second Cause of Action, which seeks imposition of a “constructive trust” as “a remedy for unjust enrichment” (see Opp. at 13), there are also no alleged facts supporting the proposition that if the Erickson Defendants were allowed to levy on the Foster City Properties, they would somehow be “unjustly enriched.” A federal court jury held that Kast infringed Defendants’ copyright(s) and awarded damages to Erickson for that infringement. By seeking to levy on the Properties that the district court held are controlled by Kast, Defendants merely seek to collect on the Judgment. Baker’s Complaint does not allege any wrongdoing by either Mr. Erickson or his company that would support the conclusion that by seeking to collect on the Judgment (either by levying Kast’s Properties or otherwise), they would be “unjustly enriched.”

As to the First Cause of Action for quiet title, Defendants also argue that although the Complaint alleges Kast “took cash out” of the Properties in 2007, Plaintiff has not named Kast’s lenders as defendants, which Defendants argue is required because they are indispensable parties. The Court declines to pass on this argument because it is not adequately supported by the cited authority. Defendants cite Code Civ. Proc. Sect. 761.010 and 761.020(c), which state that a quiet title complaint shall identify all adverse claims to the title. Even if a lender has a security interest in the Properties, it is unclear whether that fact alone requires that the lender(s) be named as defendants.

Plaintiff’s briefing does not address the issue of amending the Complaint. Given the foregoing, it may be that Plaintiff cannot amend the Complaint to allege a proper cause of action against the Erickson Defendants. However, in light of this Court’s generally liberal policy with respect to amendments, the Court grants leave to amend. Any amended complaint shall be filed within 14 days of this Order.

Plaintiff Baker’s unopposed Request for Judicial Notice (RJN) of the Complaint filed in the district court case is GRANTED. Evid. Code Sect. 452(d).

The Erickson Defendants’ Requests for Judicial Notice are also unopposed. Defendants’ RJN is GRANTED as to the documents filed in the district court case (see December 21, 2017 RJN, Exhs. 1-13, 17-20) (Evid. Code Sect. 452(d)); GRANTED as to the documents recorded with the San Mateo County Recorder (see December 21, 2017 RJN, Exhs. 14-16) (Evid. Code Sect. 452(c)); and GRANTED as to the excerpt from the district court case docket (see Defendants’ January 19, 2018 RJN) (Evid. Code Sect. 452(d)).