Case Number: BC524409    Hearing Date: September 04, 2014    Dept: 58

JUDGE ROLF M. TREU
DEPARTMENT 58
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Hearing Date: Thursday, September 4, 2014
Calendar No: 10
Case Name: Greenberg, et al. v. The Walt Disney Company
Case No.: BC524409 (r/t BC492473)
Motion: (1) Demurrer
(2) Motion for Sanctions
Moving Party: Defendant The Walt Disney Company
Responding Party: Plaintiffs Marty Greenberg, William Dunlap, Dennis Weisenbaugh, and RBC Four Co., LLC aka RBC Co.
Notice: OK

Tentative Ruling: Demurrer is sustained with 15 days leave to amend. Motion for sanctions is denied without prejudice.
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I. Background
On 10/11/13, Plaintiff Marty Greenberg filed this action (BC524409) against Defendant The Walt Disney Company arising out of the allege discharge of contaminated water that polluted neighboring properties in violation of the Safe Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”). On 12/13/13, the Court found this action related to BC492473 (a Proposition 65 action filed by Environmental World Watch, LLC (“EWW LLC”) and Dennis Weisenbaugh against Defendant and related entities): BC492473 is related to BC414964 (a Proposition 65 action filed by Environmental World Watch, Inc. (“EWW Inc.”) against Defendant and related entities) and BC415444 (a nuisance and trespass action filed by Greenberg against Defendant and related entities).

Pursuant to the parties’ stipulation, the operative Second Amended Complaint was filed on 5/9/14. The named plaintiffs to the SAC are Greenberg, William Dunlap, Weisenbaugh, and RBC Four Co., LLC aka RBC Co. The SAC asserts causes of action for (1) violation of Health & Safety Code § 25249.5; (2) violation of Health & Safety Code § 25429.6; (3) violation of Bus. & Prof. Code § 17200, and (4) fraudulent concealment.

II. Demurrer

1. Request for Judicial Notice
Defendant requests judicial notice of various filings in Case Nos. NC039846, NC050458, BC414964 (“2009 Action”), CV09-4045 DMG (PLAx), BC491157, and BC492473 (“2012 Action”). Defendant requests judicial notice of various notices and amended notices of violations. See SAC ¶ 40 (alleging that notices were sent on 11/10/10, 5/2/12, and 3/29/13). Defendant requests judicial notice of the 9/24/01 enrolled bill memorandum to governor for Senate Bill 471 (2001-2002 Reg. Sess.) and the final statement of reasons for the adoption of 22 C.C.R. § 12903 by the Office of Environmental Health Hazard Assessment. Defendant requests judicial notice of various articles published by the Burbank Water and Power. The RJN is granted.

2. Objections
Defendants submit general and specific objections to the declaration of Daniel N. Greenbaum submitted in opposition to the demurrer. The general objections are sustained.

3. Res Judicata
“Res judicata precludes the relitigation of a cause of action only if (1) the decision in the prior proceeding is final and on the merits; (2) the present action is on the same cause of action as the prior proceeding; and (3) the parties in the present action or parties in privity with them were parties to the prior proceeding.” Zevnik v. Superior Court (2008) 159 Cal.App.4th 76, 82.

Defendant demurs to the SAC on the ground that it is barred by res judicata because of the 4/24/12 dismissal with prejudice of the 2009 Action (RJN Ex. 5) and the 5/8/14 judgment in favor of Defendant on the Proposition 65 claims in the 2012 Action pursuant to CCP § 631.8 (RJN Ex. 6). This Court has previously ruled that the elements of res judicata were met as between the 2009 Action and the 2012 Action as to the Proposition 65 and fraudulent concealment claims. RJN Exs. 13, 23.

The SAC asserts the same claims (SAC ¶¶ 26-34 (alleging discharges in August to November 2011 that have not ceased)) and rely on the same notices as these prior actions (id. ¶ 40). Defendant has established that Dunlap, Weisenbaugh, and RBC are in privity with the plaintiffs in the prior actions. See RJN Ex. 1 (finding that Dunlap, Doris Nichols, and Denis Becvar are the alter egos of EWW Inc.), Ex. 14 (alleging that Nichols is the manager of the fictitious business entity RBC). The SAC indicates that Greenberg has signed a release of claims in BC41544. SAC ¶¶ 13-14. This establishes that Plaintiffs are in privity (Consumer Advocacy Group, Inc. v. ExxonMobil Corp. (2008) 168 Cal.App.4th 675, 689, 691-93 (“CAG”)) and that the same causes of action are involved based on the primary rights theory (id. at 686-89; see also Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896-97). Therefore, Defendant has established that res judicata applies to this action.

In opposition, Plaintiffs do not dispute the elements or the application of res judicata. Instead, Plaintiffs argue that the doctrines of continuous accrual and continuing violations apply. See, e.g., Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1197-1200. However, these continuing-wrong principles apply to a statute of limitations defense: it has no relevancy to Defendant’s res judicata argument. However, the Court understands Plaintiffs’ arguments as raising an exception to the application of res judicata, which the Court has previously accepted in the 2012 Action.

The Court notes that it had previously refused to apply res judicata “‘if injustice would result or if the public interest requires that relitigation not be foreclosed.’” (Citizens for Open Access to Sand and Tide, Inc. v. Seadrift Ass’n (1998) 60 Cal.App.4th 1053, 1065 (citation omitted)). Plaintiffs allege that Defendant continues to release chemicals in the present. SAC ¶¶ 12, 34. However, this exception is extremely narrow and is applied in exceptional circumstances. CAG, 168 Cal.App.4th at 694. Plaintiffs fail to allege any facts, let alone sufficiently exceptional ones, as to why justice or the public interest require that relitigation not be foreclosed where Plaintiffs (through parties with whom they are in privity) were given the opportunity to prove these claims in the 2012 Action and failed to establish a prima facie case. That there has been a change in threshold levels (Greenbaum Decl. ¶ 12) does not provide grounds to refuse to apply res judicata. See Slater v. Blackwood (1975) 15 Cal.3d 791, 797.

Therefore, the demurrer is sustained as to the SAC on res judicata grounds.

4. Other Arguments
Defendant also argues that Plaintiffs have not complied with the certificate of merit requirement of Health and Safety Code § 25249.7(d)(1) for the 2nd COA, submitting that the certificate of merit is signed by Dunlap who is not indicated to be the attorney or noticing party (see RJN Ex. 12). See DiPirro v. American Isuzu Motors, Inc. (2004) 119 Cal.App.4th 966, 974-75 (holding that failure to comply with the certificate of merit requirement cannot be cured). Plaintiffs assert that Dunlap is a co-manager of RBC and the agent for Greenberg: this has not been alleged. The demurrer is sustained as to the 2nd COA on this independent ground.

Defendant also argues that Plaintiffs fail to allege a cognizable injury (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 323), noting that Plaintiffs allege only that Defendant has avoiding hazardous waste disposal fees (SAC ¶ 54) and Plaintiffs have been required to buy bottled drinking water or other third-party supplied water (id. ¶ 58). Plaintiffs’ first theory of injury raises no cognizable injury as to Plaintiffs, and the second theory of injury fails to allege facts as to how these costs are more than de minimis (see Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 82) in light of the Burbank Water and Power’s water standards (RJN Exs. 21-22). The demurrer is sustained as to the 3rd COA on this independent ground.

Defendant also argues that Plaintiffs’ fraudulent concealment claim is not alleged with specificity (see Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1472) and is barred by the statute of limitations (see CCP § 338(d)). These grounds do not provide an independent basis to sustain Defendant’s demurrer because the fraud specificity requirements are intended to apply to affirmative misrepresentations (Alfaro v. Community Housing Improvement System & Planning Ass’n, Inc. (2009) 171 Cal.App.4th 1356, 1384) and Plaintiffs’ allegations of continuing-wrongs does not render the 4th COA completely barred by the statute of limitations.

5. Ruling
The demurrer is sustained. Plaintiffs have requested leave to amend. Because this is the first challenge to the pleadings addressed by the Court in this case, the Court will grant Plaintiffs leave to amend. However, the Court notes that this is likely the only opportunity for leave to amend that will be granted in light of the extensive litigation history between the parties on related matters.

III. Sanctions
Defendant seeks sanctions pursuant to CCP § 128.7. Defendant establishes that this motion complies with the statutory 21-day safe harbor period of CCP § 128.7(c)(1) (Martorana v. Marlin & Saltzman (2009) 175 Cal.App.4th 685, 698; Malovec v. Hamrell (1999) 70 Cal.App.4th 434, 441). See Jansma Decl. ¶¶ 2-4. Defendant argues that the SAC is presented primarily for an improper purpose (CCP § 128.7(b)(1)) and is not warranted by existing law or nonfrivolous argument (CCP § 128.7(b)(2)) because of the res judicata bar.

At issue is whether the SAC is legally frivolous which is defined as “not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law” (Guillemin v. Stein (2002) 104 Cal.App.4th 156, 167). CCP § 128.7 “requires only that the conduct be ‘objectively unreasonable’ (Guillemin, 104 Cal.App.4th at 167). The Court notes that the SAC is the result of this Court’s previous rulings on the demurrers in the 2012 Action where the Court applied the exception to res judicata. Indeed, though the Court has sustained Defendant’s demurrer on res judicata grounds, the Court has granted Plaintiffs leave to amend to permit the opportunity to allege sufficiently exceptional facts to support the exception to the application of res judicata. Under these circumstances, the Court does not find that the filing of the SAC is sanctionable. Therefore, the motion is denied without prejudice.