Rincon EV Realty LLC v. CP III Rincon Towers, Inc.

Filed 12/26/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FOUR
RINCON EV REALTY LLC et al.,
Plaintiffs and Appellants, A152935
v. (City & County of San Francisco
Super. Ct. No. CGC10496887)
CP III RINCON TOWERS, INC., et al.,
Defendants and Respondents.
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
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.) On remand, the trial court (Hon. Harold
Kahn) granted summary judgment for defendants, concluding Judge Miller’s findings
1
The background of the parties’ dispute and the resulting litigation (some of
which we discuss further below) is set forth in this court’s opinion addressing an earlier
appeal in this matter. (Rincon EV Realty LLC v. CP III Rincon Towers, Inc. (2017)
8 Cal.App.5th 1, 5–7 (Rincon I).) The plaintiffs are Rincon EV Realty LLC, Rincon ET
Realty LLC and Rincon Residential Towers LLC. (Id. at p. 5.) The defendants are
(1) CP III Rincon Towers, Inc. (CP III), (2) other “Carmel Partners” entities (Carmel
Partners, Inc.; Carmel Partners, LLC; Carmel Management, LLC; and Carmel Partners
Investment Fund III, L.P.), (3) U.S. Bank National Association (USB) as trustee for the
Maiden Lane Commercial Mortgage-Backed Securities Trust 2008-1 (the Maiden Lane
Trust), (4) the Maiden Lane Trust, and (5) Maiden Lane LLC. (Id. at pp. 6–7.)
1
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 court’s 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 judgment motion, Judge Kahn violated this court’s 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 Miller’s
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.)
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
2
Bear Stearns concurrently with the Loan Agreement, (3) breach of a March 2009
prenegotiation agreement entered into by plaintiffs and the Maiden Lane Trust (an entity
that became the lender after Bear Stearns’s 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.) 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.) 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 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.) Plaintiffs appealed. (Id. at p. 5.)
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.) We concluded, however, there
3
was no error as to the equitable claims, and we affirmed the judgment as to those claims.
(Id. at pp. 5, 18–19, 22.) We remanded for further proceedings as to the legal claims.
(Id. at pp. 5, 22.)
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 Miller’s 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., Hoopes v. Dolan (2008) 168 Cal.App.4th 146, 156–157
(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 Miller’s
findings resolving the entirety of the UCL claim in favor of defendants necessarily also
resolved all six of plaintiffs’ legal claims in favor of defendants, and a plain reading of
[Judge Miller’s] 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
2
In their summary judgment motion, defendants also argued judgment in their
favor was appropriate on the alternative ground of collateral estoppel. Judge Kahn did
not reach that argument. Because we affirm on the ground addressed by Judge Kahn, we
need not address defendants’ argument that collateral estoppel provides an alternative
basis for affirmance.
4
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.) 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.) 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; accord, e.g., Raedeke v. Gibraltar Sav. & Loan Assn.
(1974) 10 Cal.3d 665, 671 (Raedeke); Alcoa, supra, 12 Cal.App.5th at p. 355; see
Hoopes, supra, 168 Cal.App.4th at p. 158 [“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
3
California courts have stated the “ ‘better practice’ is for ‘the trial court [to]
determine the equitable issues before submitting the legal ones to the jury’ ” (Hoopes,
supra, 168 Cal.App.4th at p. 157) and have referred to this approach as the “ ‘ “equity
first” rule’ ” (Orange County Water Dist. v. Alcoa Global Fasteners, Inc. (2017)
12 Cal.App.5th 252, 355 (Alcoa)). But the same preclusion principle applies when the
legal claims are decided first by a jury, i.e., the jury’s findings are binding in the trial
court’s subsequent disposition of the equitable claims. (Hoopes, supra, at p. 157.)
5
of decision. On remand after our decision in Rincon I, with only the legal claims
remaining for resolution, Judge Kahn noted that “[t]he present posture of this case is
analogous to a bifurcated trial.” He therefore applied the preclusion principle noted
above and concluded the findings Judge Miller made when resolving the equitable claims
also disposed of the legal claims.
On appeal, plaintiffs acknowledge the general applicability of the preclusion rule
invoked by Judge Kahn. Plaintiffs state in their opening appellate brief that, “[a]bsent
exceptional circumstances, factual findings by the factfinder in the first phase of the trial
(either the judge or jury) are binding on the factfinder in the second phase. [Citations.]
This may mean that findings from the first phase of trial obviate the need for the second
phase.” As noted, however, plaintiffs argue that, for several reasons, this rule should not
apply here, or, if it does apply, it does not entitle defendants to judgment. We initially
address (in part II.B below) the parties’ arguments as to whether Judge Miller’s findings
pertaining to the equitable claims (assuming they are binding) are dispositive of
plaintiffs’ legal claims. We then address (in parts II.C–II.E below) plaintiffs’ contention
that, in the circumstances of this case, the usual preclusion rule applied by Judge Kahn
should not apply and Judge Miller’s findings pertaining to the equitable claims should not
be given binding effect.
B. Judge Miller’s Findings Pertaining to the Equitable Claims Are Dispositive
of the Legal Claims
Judge Kahn correctly determined that Judge Miller’s findings in connection with
plaintiffs’ equitable UCL claim disposed of plaintiffs’ six legal claims. The UCL
prohibits “unfair competition,” which includes “any unlawful, unfair or fraudulent
business act or practice.” (Bus. & Prof. Code, § 17200.) “The UCL’s ‘unlawful’ prong
‘borrows violations of other laws . . . and makes those unlawful practices actionable
under the UCL.’ [Citation.] ‘ “[V]irtually any law or regulation—federal or state,
statutory or common law—can serve as [a] predicate for [an] . . . ‘unlawful’ [prong]
violation.” ’ ” (Candelore v. Tinder, Inc. (2018) 19 Cal.App.5th 1138, 1155.) A UCL
claim brought by a private plaintiff is an equitable cause of action, even when it is based
6
on an underlying violation that is legal in nature.4 (Hodge v. Superior Court (2006)
145 Cal.App.4th 278, 284.)
In their UCL cause of action, plaintiffs invoked all three prongs of the UCL,
alleging defendants’ conduct was unlawful, unfair, and fraudulent. As to the unlawful
prong, plaintiffs incorporated their other claims, including all six of their legal claims,
contending defendants’ acts and practices were “unlawful” for purposes of the UCL
because they constituted breaches of contract, fraud, slander of title, and violated the
UTSA. Plaintiffs made a similar argument in their post-trial brief following the bench
trial before Judge Miller, asserting defendants’ unlawful acts included their alleged
breaches of contract, slander of title, and violation of the UTSA, while asserting that the
alleged misrepresentations and nondisclosures that formed the basis of their common law
fraud claim established defendants’ liability under the fraudulent prong of the UCL as
well.
In her statement of decision, Judge Miller addressed all three prongs of the UCL
when she resolved plaintiffs’ claim under that statute. After concluding plaintiffs failed
to establish defendants’ conduct was unfair within the meaning of the UCL, Judge Miller
turned to the fraudulent prong and found there was “no evidence supporting the
allegations of fraudulent acts or practices.” Judge Miller expressly found there was no
merit in the fraud allegations asserted both in connection with plaintiffs’ separate fraud
claim and in support of their claim of fraudulent conduct under the UCL. Finally, as to
the unlawful prong of the UCL, Judge Miller stated plaintiffs “failed to prove unlawful
conduct,” as they had not established any of “the alleged violations of law” cited in their
post-trial brief (a list of violations that, as noted, included defendants’ alleged breaches of
contract, slander of title, and violation of the UTSA).
4
The situation is different when the government brings a UCL claim for civil
penalties, historically a legal claim as to which there is a right to a jury trial. (Nationwide
Biweekly Administration, Inc. v. Superior Court (2018) 24 Cal.App.5th 438, 454–455,
review granted September 19, 2018, S250047.)
7
In ruling on plaintiffs’ equitable claim under the UCL, Judge Miller thus
addressed whether each of plaintiffs’ six legal claims had merit. She expressly concluded
none of them did. Judge Kahn correctly ruled these determinations dispose of plaintiffs’
legal claims. There was nothing left to be submitted to a jury.
Plaintiffs’ arguments to the contrary are not persuasive. Plaintiffs assert Judge
Miller’s findings on the equitable UCL claim do not dispose of the legal claims because
in her statement of decision Judge Miller “applied different standards [to the UCL claim]
from those that would be relevant to the legal claims.” Plaintiffs cite a portion of the
statement of decision in which Judge Miller states that plaintiffs did not meet what she
concluded was the applicable standard for determining whether an act or practice is
“unfair” within the meaning of the UCL, i.e., conduct that “ ‘threatens an incipient
violation of an antitrust law, or violates the policy or spirit of one of those laws because
its effects are comparable to or the same as a violation of the law, or otherwise
significantly threatens or harms competition.’ ” (Citing Cel-Tech Communications, Inc.
v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 187.) Plaintiffs argue such
a showing was not an element of any of their legal claims, so Judge Miller’s finding that
they did not meet the Cel-Tech standard does not establish that they cannot prevail on
those claims.
This argument is misplaced. As noted, Judge Miller did not limit her analysis to
whether plaintiffs had proven “unfairness” under the UCL. Instead, she addressed
plaintiffs’ claims under all three prongs of the statute, and she expressly concluded
plaintiffs had not established the purported misconduct that supported both their legal
claims and the “unlawful” and “fraudulent” branches of their equitable UCL claim.
In their reply brief, plaintiffs suggest Judge Miller’s rulings on the “unlawful” and
“fraudulent” prongs of the UCL did not encompass rulings on the merits of their breach
of contract and fraud claims, because, they assert, (1) Judge Miller adopted an argument
made by defendants that a breach of contract, without more, could not support UCL
liability, and (2) Judge Miller’s analysis of the “fraudulent” prong of the UCL was
limited to whether defendants had deceived the general public. Plaintiffs are incorrect.
8
In her statement of decision, Judge Miller did not reject plaintiffs’ claim under the
“unlawful” prong of the UCL on the ground that a breach of contract could not support
liability under that prong. Instead, she ruled categorically that none of the “alleged
violations of law” identified by plaintiffs (a list that included alleged breaches of
contract) had been established. And as to fraud, Judge Miller did not limit her discussion
to a conclusion that plaintiffs had not deceived the general public. She went on to hold
specifically that the fraudulent inducement allegations asserted in support of both the
fraud and UCL causes of action were “without merit.”
Finally, focusing on the organization of Judge Miller’s written statement of
decision, plaintiffs note in their reply brief that Judge Miller included many of her more
specific findings about whether plaintiffs had established their claims—such as her
findings that plaintiffs did not meet the conditions for an extension of the Loan’s maturity
date, that plaintiffs breached the Loan Agreement by not repaying the Loan and by other
conduct, that defendants did not fraudulently induce plaintiffs into entering the
prenegotiation agreement or into paying taxes for the Property, and that plaintiffs did not
establish damages—in the portions of the statement of decision addressing plaintiffs’
legal claims, including their claims for breach of contract and fraud. But we reject
plaintiffs’ suggestion that this method of organizing the statement of decision means
Judge Miller only made substantive findings in connection with the legal claims and not
in connection with the UCL claim.
As Judge Kahn correctly noted at the hearing on defendants’ summary judgment
motion, the structure of Judge Miller’s statement of decision was a result of the way
plaintiffs presented their case. Judge Miller addressed plaintiffs’ causes of action in the
order in which they were pled in the fifth amended complaint, with headings for the
different causes of action. To the extent certain findings pertained both to a legal cause
of action and to the equitable UCL claim that incorporated the legal cause of action, it
was not necessary for Judge Miller to repeat all the findings under both headings.
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C. Judge Kahn Did Not Disregard the Rincon I Remittitur or the
Law of the Case
Plaintiffs argue that Judge Kahn, by determining that Judge Miller’s findings were
binding and disposed of plaintiffs’ legal claims, misinterpreted or disregarded this court’s
disposition in Rincon I and the “law of the case” as established by our Rincon I opinion.
We disagree.
“ ‘A reviewing court has authority to “affirm, reverse, or modify any judgment or
order appealed from, and may direct the proper judgment or order to be entered, or direct
a new trial or further proceedings to be had.” (Code Civ. Proc., § 43.) The order of the
reviewing court is contained in its remittitur, which defines the scope of the jurisdiction
of the court to which the matter is returned.’ [Citations.] ‘The trial court is empowered
to act only in accordance with the direction of the reviewing court; action which does not
conform to those directions is void.’ ” (Ayyad v. Sprint Spectrum, L.P. (2012)
210 Cal.App.4th 851, 859.)
In addition to following the appellate court’s remittitur, a trial court on remand
must comply with the law of the case. “ ‘ “The doctrine of ‘law of the case’ deals with
the effect of the first appellate decision on the subsequent retrial or appeal: The decision
of an appellate court, stating a rule of law necessary to the decision of the case,
conclusively establishes that rule and makes it determinative of the rights of the same
parties in any subsequent retrial or appeal in the same case.” ’ ” (Leider v. Lewis (2017)
2 Cal.5th 1121, 1127.)
Here, based on his reading of our opinion in Rincon I, Judge Kahn concluded he
had authority to consider Judge Miller’s findings pertaining to the equitable claims and to
determine that those findings disposed of the legal claims. “Whether the trial court
correctly interpreted our opinion is an issue of law subject to de novo review. [Citations.]
[¶] Our remittitur directions are contained in the dispositional language of our previous
opinion. [Citation.] The trial court’s interpretation of those directions is not binding on
us. [Citation.] We look to the wording of our directions to determine whether the trial
court’s order comports with them. [Citation.] When, as in this case, the reviewing court
10
remands the matter for further proceedings, its directions must be read in conjunction
with the opinion as a whole.” (Ayyad v. Sprint Spectrum, L.P., supra, 210 Cal.App.4th at
p. 859.)
The language of the Rincon I disposition and opinion establishes Judge Kahn acted
within the permitted scope of jurisdiction on remand. In Rincon I, we stated in the
disposition: “The judgment is reversed as to plaintiffs’ claims for breach of contract,
fraud, slander of title, and violation of the UTSA (the first, second, third, fourth, seventh
and eighth causes of action in the fifth amended complaint) and the case is remanded for
further proceedings consistent with this opinion as to those causes of action. The
judgment is affirmed as to plaintiffs’ claims to set aside the foreclosure sale, for unfair
competition, and for an accounting (the fifth, sixth and ninth causes of action in the fifth
amended complaint). The parties shall bear their own costs on appeal.” (Rincon I, supra,
8 Cal.App.5th at p. 22, italics added.)
In footnote 12 of the Rincon I opinion (footnote 12), we addressed the parties’
arguments about whether defendants’ success in connection with the equitable claims
would have an impact on resolution of the legal claims on remand. (Rincon I, supra,
8 Cal.App.5th at p. 20, fn. 12.) We stated in footnote 12: “Defendants assert that, on
remand, the trial court’s previously entered judgment on the equitable claims would
likely require the court to enter summary judgment for them on any remaining legal
claims. Plaintiffs disagree, contending even the present judgment on the equitable claims
would not eliminate their right to submit some issues to a jury. We need not address this
issue, except to point out the fact we reverse in part for lack of an enforceable jury waiver
does not mean the plaintiffs are necessarily entitled to a jury trial on their remaining legal
claims. On remand, defendants may submit to the trial court any [Code of Civil
Procedure] section 437c motion or other form of dispositive motion they may wish to
file. We express no view about whether the grounds relied upon by the trial court for
rejecting any of plaintiffs’ claims—equitable or legal—might justify granting such a
motion.” (Rincon I, supra, at p. 20, fn. 12.)
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We thus did not determine in Rincon I whether Judge Miller’s findings on the
equitable claims disposed of plaintiffs’ legal claims, but in footnote 12 we permitted
defendants to present that question on remand, and we authorized the trial court to decide
it. Accordingly, in the language of our Rincon I disposition, Judge Kahn’s determination
of the preclusive effect of Judge Miller’s findings was a proceeding “consistent with” the
opinion in Rincon I. (Rincon I, supra, 8 Cal.App.5th at p. 22.) And for the reasons
discussed in part II.B above, we conclude Judge Kahn’s resolution of that preclusion
issue was correct.
Plaintiffs assert Judge Kahn’s ruling was in effect a finding that Judge Miller’s
error in striking plaintiffs’ jury demand was “harmless,” contrary to our determination in
Rincon I that the error in striking the demand was per se reversible. Specifically,
plaintiffs contend that, in Rincon I, “this court determined—and it is law of the case—
that the record before it was insufficient to support judgment in favor of [defendants] on
[plaintiffs’] six Legal Claims.”
We disagree. In the bench trial, Judge Miller, pursuant to the contractual jury
waivers, addressed and resolved the legal claims on the merits. (Rincon I, supra,
8 Cal.App.5th at pp. 9–10.) In Rincon I, we concluded (1) the jury waivers were
unenforceable, so it was error to strike plaintiffs’ jury demand (id. at pp. 10–18), and
(2) the error was of a type that required reversal as to the legal claims without a showing
of prejudice by plaintiffs (i.e., a showing that they would have fared better if their legal
claims had been submitted to a jury) (see id. at pp. 18–19). In addressing the latter point,
we stated in part: “ ‘Denial of the right to a jury trial is reversible error per se, and no
showing of prejudice is required of a party who lost at trial.’ [Citation.] Accordingly,
when a trial court erroneously deprives a party of a jury trial on a cause of action the
party was entitled to submit to a jury, reversal of the judgment on that cause of action is
required.” (Id. at p. 18.)
Our partial reversal in Rincon I thus was based on the type of error involved; it
was not based on an assessment of the strength or weakness of the evidence in the record.
Contrary to plaintiffs’ current argument, we did not hold or state that the record before
12
Judge Miller (and before this court on appeal in Rincon I) was “insufficient” to support
her findings or to support a later judgment in favor of defendants on the legal claims.5
Judge Kahn’s determination on remand that Judge Miller’s findings pertaining to the
equitable claims are dispositive of the legal claims does not conflict with any conclusion
we reached in Rincon I about the evidence or about Judge Miller’s findings, or with any
rule of law stated in that opinion. Judge Kahn did not violate our remittitur or the law of
the case.
More broadly, in our view there is no inconsistency between our finding of
reversible error in Rincon I and the established rule in California jurisprudence that, when
a case involves both legal and equitable claims, the resolution of one set of claims may
result in factual and legal determinations that dispose of the other set of claims. (E.g.,
Raedeke, supra, 10 Cal.3d at p. 671; Alcoa, supra, 12 Cal.App.5th at p. 355; Hoopes,
supra, 168 Cal.App.4th at p. 157.) As Judge Kahn correctly recognized, the net result of
our disposition in Rincon I was to leave intact (as a de facto first-phase trial) Judge
Miller’s resolution of the equitable claims. Before conducting a second-phase trial of the
legal claims, it was appropriate for Judge Kahn to consider whether Judge Miller’s
findings in connection with the equitable claims rendered such a trial unnecessary.
Plaintiffs were not powerless to avoid this result. As illustrated by the Supreme
Court’s decision in Raedeke, if a plaintiff asserts both legal and equitable claims and
wishes to preserve the ability to submit the legal claims to a jury, the plaintiff can
abandon the equitable claims. (See Raedeke, supra, 10 Cal.3d at p. 671.) In their
briefing in Rincon I, plaintiffs themselves noted they might have taken this approach if
Judge Miller had declined to enforce the jury waivers and had announced her intention to
5
Also incorrect is plaintiffs’ assertion that this court’s “mandate, after Rincon I
and footnote 12, was to try the case on the legal claims with plaintiffs’ jury demand
granted.” As noted, we stated in footnote 12 that “the fact we reverse in part for lack of
an enforceable jury waiver does not mean plaintiffs are necessarily entitled to a jury trial
on their remaining legal claims.” (Rincon I, supra, 8 Cal.App.5th at p. 20, fn. 12, italics
added.)
13
conduct a bench trial on the equitable claims before submitting the legal claims to a jury.
(Rincon I, supra, 8 Cal.App.5th at p. 20.)
But plaintiffs could have taken the same approach in response to Judge Miller’s
actual ruling, i.e., her decision to enforce the jury waivers and conduct a bench trial on all
claims. Having argued unsuccessfully to Judge Miller that the jury waivers were
unenforceable (see Rincon I, supra, 8 Cal.App.5th at p. 9), and aware that her ruling on
that point would be an appealable issue if they did not prevail on the legal claims at trial,
plaintiffs could have decided it was a priority to preserve their ability to submit
(eventually) their legal claims to a jury. To keep that option open, they could have
dropped some or all of their equitable claims to ensure that an adverse outcome on those
claims would not interfere with their ability to seek a future jury trial on the legal claims.
Plaintiffs may have had reasons for not taking this approach. They may have
decided it was a priority to seek a favorable disposition of the equitable claims (which
included the claim to set aside the foreclosure of the Property (see Rincon I, supra,
8 Cal.App.5th at p. 9)) rather than abandoning those claims. We note that, in their
appellate briefs in Rincon I, plaintiffs presented extensive arguments challenging Judge
Miller’s resolution of the equitable claims for unfair competition and to set aside the
foreclosure, suggesting they viewed those claims as important. (See Rincon I, supra,
8 Cal.App.5th at p. 5; Rincon EV Realty LLC v. CP III Rincon Towers, Inc. (Jan. 31,
2017, A138463) [nonpub. portion of partially pub. opn.] (Rincon I, nonpub. portion).)
But similar considerations likely exist in any case where a plaintiff must choose whether
to drop his or her equitable claims to preserve the ability to submit legal claims to a jury.
Since plaintiffs did not abandon their equitable claims, Judge Miller’s findings in
connection with those claims are binding and (as discussed) dispose of plaintiffs’ legal
claims.
D. Plaintiffs Are Not Entitled to Relitigate Issues Resolved by Judge Miller
Plaintiffs contend that, as a matter of appellate procedure, they were entitled on
remand to relitigate all factual issues relevant to their legal claims, even if Judge Miller
resolved the identical issues when she addressed the equitable UCL claim. Plaintiffs base
14
this argument on the rule that, in general, “ ‘[a]n unqualified reversal remands the cause
for a new trial . . . , and places the parties in the trial court in the same position as if the
cause had never been tried, with the exception that the opinion of the court on appeal
must be followed so far as applicable.’ [Citation.] This principle is equally applicable to
a partial reversal of a judgment.” (Hall v. Superior Court (1955) 45 Cal.2d 377, 381
(Hall); accord, e.g., Bevis v. Terrace View Partners, LP (2019) 33 Cal.App.5th 230, 263.)
But as plaintiffs acknowledge, an appellate court may limit or define the issues to
be addressed on remand. (E.g., Puritan Leasing Co. v. Superior Court (1977)
76 Cal.App.3d 140, 148–149 [prior appellate opinion foreclosed retrial on some but not
all issues]; see Hall, supra, 45 Cal.2d at p. 381 [general rule allowing retrial is subject to
proviso that trial court is to follow the opinion of the appellate court].) Here, as discussed
in part II.C above, our opinion in Rincon I, specifically footnote 12, contemplates and
authorizes trial court proceedings on remand that could narrow or eliminate the issues to
be tried. (Rincon I, supra, 8 Cal.App.5th at p. 20, fn. 12.) Judge Kahn, by proceeding in
accordance with footnote 12, did not violate the rules of appellate procedure. We need
not determine what the proper scope of proceedings on remand would have been if we
had not addressed the matter in footnote 12.
The three pairs of cases highlighted by plaintiffs in support of their argument that
a retrial was required here—the Bate, Lagiss, and Robinson cases—are distinguishable.
In each set of cases, the appellate court in the first appeal reversed a trial court judgment
without specifying any limitation on the issues to be retried. In the second appeal, the
appellate court held the prior unqualified reversal required a retrial.
In Bate v. Marsteller (1959) 175 Cal.App.2d 573, 576, 583–584 (Bate I), a fraud
action brought by sellers of real estate, the appellate court reversed a judgment in favor of
a group of broker defendants as unsupported by substantial evidence, while rejecting
some other grounds for reversal; the court affirmed the judgment in favor of a different
group of defendants. In Bate v. Marsteller (1965) 232 Cal.App.2d 605, 617–618
(Bate II), the appellate court held that the “unqualified reversal” in Bate I as to the broker
defendants left factual issues as to those defendants “open for determination.”
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In People ex rel. Department of Public Works v. Lagiss (1958) 160 Cal.App.2d 28,
30, 33, 37 (Lagiss I), a condemnation action, the appellate court reversed the judgment
because the trial court improperly prevented the defendant property owner from pleading
and seeking to prove that the condemning agency acted in bad faith and abused its
discretion. In People ex rel. Department of Public Works v. Lagiss (1963)
223 Cal.App.2d 23, 30, 31, fn. 4, 44–45 & fn. 13, 47–49 (Lagiss II), the appellate court
held that the “unqualified reversal” in Lagiss I “set[] the case at large,” so the defendant
property owner was entitled to relitigate the issue of the amount of compensation due,
even though the first appeal involved no claim of error as to compensation.
In Robinson v. Thornton (1893) 102 Cal. 675, 679–681, 685 (Robinson I), an
action involving competing claims to land, the Supreme Court reversed the trial court
judgment and found there was sufficient evidence to support a finding that defendant
Thornton obtained title through adverse possession. In Robinson v. Thornton (1896)
114 Cal. 275, 276–277 (Robinson II), the Supreme Court held that the reversal in
Robinson I did not require the jury to find at the retrial that adverse possession was
established, and the trial court erred by directing a verdict on that point; adverse
possession was a question of fact for the jury.
None of these cases involved the scenario at issue here, where the first appellate
decision (i.e., our opinion in Rincon I) (1) affirmed the judgment as to one set of claims
and (2) authorized the trial court to determine on remand whether the findings made in
connection with those claims disposed of the remaining claims. We are not persuaded by
plaintiffs’ argument that Bate, Lagiss, and Robinson establish that Judge Kahn committed
reversible error here.
In a related argument, plaintiffs assert that the usual rule that findings pertaining to
one set of claims (equitable or legal) are binding in the determination of the other set of
claims (discussed in parts II.A and II.B above) has no application when the trial court’s
decisions resolving the two sets of claims are separated by a Court of Appeal decision.
Plaintiffs contend applying that preclusion doctrine after a partial reversal and remand
would conflict with the rules of appellate procedure allowing for a retrial as set forth in
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Hall, supra, 45 Cal.2d 377 and other cases. Again, however, we see no conflict between
these doctrines in the present case. As discussed, Judge Kahn’s determination of the
preclusive effect of Judge Miller’s findings was consistent both with our opinion in
Rincon I (and thus with Hall, which, as noted, provides a trial court is to proceed in
accordance with the opinion of the appellate court) and with the preclusion principles
applicable in cases involving equitable and legal claims.
In their reply brief, plaintiffs suggest that giving preclusive effect to Judge
Miller’s findings improperly impairs their ability to obtain appellate review of those
findings. They did not develop such an argument in their opening brief, so we need not
address it. (Neighbours v. Buzz Oates Enterprises (1990) 217 Cal.App.3d 325, 335,
fn. 8.) Plaintiffs note that Samara v. Matar (2018) 5 Cal.5th 322 (Samara), the case on
which they rely for this argument, was decided in June 2018, after plaintiffs filed their
opening brief in May 2018, but before defendants filed their appellate brief in September
2018. If plaintiffs wished to add an argument based on Samara, they should have sought
leave to file a supplemental opening brief before defendants’ brief was due, rather than
saving the issue for reply. (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764–766.)
Plaintiffs’ contention lacks merit in any event. In their appeal from the judgment
entered by Judge Miller, plaintiffs had the opportunity to challenge any and all of her
factual and legal determinations. As we discussed in the unpublished portion of our
opinion in Rincon I, plaintiffs challenged some aspects of Judge Miller’s analysis of their
UCL claim, including arguing (1) Judge Miller applied the wrong legal standard for
determining whether defendants’ conduct was “unfair” under the UCL, (2) Judge Miller
misinterpreted contract terms and defendants’ conduct pertaining to such matters as
whether defendants approved a budget for the Property, and defendants’ efforts to
convince plaintiffs’ investor sponsor to contribute funds for tax payments, and (3) Judge
Miller’s finding that plaintiffs were not entitled to extend the maturity date of the Loan
beyond June 2009 and defaulted by failing to repay it (a finding that Judge Miller
concluded barred all of plaintiffs’ claims) did not insulate defendants from liability for
their unfair conduct, including allegedly engaging in “dual tracking” by seeking to sell
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the Loan while participating in loan modification discussions. (Rincon I, nonpub.
portion, supra, A138463.)
But as to Judge Miller’s conclusion that plaintiffs had not established liability
under the “unlawful” and “fraudulent” prongs of the UCL (and the legal causes of action
that underlay those portions of the equitable UCL claim), plaintiffs did not challenge a
number of the key findings that were the principal bases for Judge Miller’s rulings. For
example, Judge Miller found plaintiffs were not entitled to extend the maturity date of the
Loan and therefore were in default when they failed to repay the Loan in June 2009, a
finding that was a central ground for Judge Miller’s conclusion that defendants were not
liable on the legal claims that underlay their UCL claim. In addition, in connection with
each of the alleged violations of law underlying the “unlawful” and “fraudulent” prongs
of the UCL claim—including defendants’ alleged breaches of contract, fraud, slander of
title, and violation of the UTSA—Judge Miller found that plaintiffs did not show that
defendants’ conduct caused them to suffer any damages, which she held to be an essential
element of each of those underlying claims. In the Rincon I appeal, plaintiffs did not
challenge Judge Miller’s findings that they were in default and proved no damages.
In addition, as to the causation-of-injury element of the UCL claim itself, we
concluded in Rincon I that, in plaintiffs’ opening appellate brief in that case, they did not
challenge Judge Miller’s finding that they had not proven defendants’ alleged conduct
caused them to suffer injury. (Rincon I, nonpub. portion, supra, A138463.) Based on
plaintiffs’ failure to challenge that essential element of UCL liability, we affirmed Judge
Miller’s rejection of that claim, and we did not address plaintiffs’ arguments about
whether Judge Miller mischaracterized certain aspects of defendants’ conduct. (Ibid.)
Plaintiffs now argue that, because this court in Rincon I affirmed the judgment on
the UCL claim based on their failure to challenge Judge Miller’s causation determination,
her findings about whether defendants’ conduct violated the UCL have “evaded” review
and should not have binding effect. We disagree.
Plaintiffs rely on our Supreme Court’s decision in Samara, supra, 5 Cal.5th 322,
but that case provides no basis for reversal here. In Samara, the court held that, for
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purposes of claim and issue preclusion, when a trial court ruling is based on multiple
grounds, “a ground reached by the trial court and properly challenged on appeal, but not
embraced by the appellate court’s decision, should not affect the judgment’s preclusive
effect.” (Id. at p. 334, italics added.) Instead, the preclusive effect of the judgment
should be evaluated as though the trial court had not reached the issue that the appellate
court did not reach. (Id. at pp. 326, 338.) The Supreme Court noted a limitation on its
ruling: “We caution, however, that we take no position on the significance of an
independently sufficient alternative ground reached by the trial court and not challenged
on appeal.” (Id. at p. 337.)
In Samara, a dental malpractice case, the plaintiff (Samara) sued two dentists,
Dr. Nahigian, who allegedly was negligent, and Dr. Matar, on grounds of vicarious
liability. (Samara, supra, 5 Cal.5th at p. 327.) The trial court entered summary judgment
for Dr. Nahigian on two grounds, the statute of limitations and a lack of evidence of
causation. (Ibid.) In the first appeal, the appellate court affirmed solely on the basis of
the statute of limitations, even though Samara urged the court to address and reverse the
finding of a lack of causation. (Ibid.) In the meantime, Dr. Matar moved for summary
judgment on the basis that the trial court’s prior ruling that Dr. Nahigian’s alleged
negligence did not cause injury entitled him (Dr. Matar) to judgment as well, since the
sole alleged basis for his liability was his vicarious liability for Dr. Nahigian’s conduct.
(Id. at pp. 327–328.) After the appellate decision in favor of Dr. Nahigian became final,
the trial court granted Dr. Matar’s motion, but the Court of Appeal reversed, and the
Supreme Court affirmed the Court of Appeal’s decision (id. at p. 328), concluding “the
preclusive effect of the judgment in favor of Nahigian should be evaluated as though the
trial court had not reached the causation issue” (id. at p. 338).
Even assuming Samara might in some circumstances limit the applicability of the
preclusion principle on which Judge Kahn relied (i.e., the rule that findings pertaining to
equitable claims are binding in the resolution of legal claims in the same case), it does
not support plaintiffs’ position here. As discussed, unlike the appellant in Samara, supra,
5 Cal.5th at p. 334, plaintiffs in Rincon I did not “properly challenge[]” the findings by
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Judge Miller that are dispositive of the legal claims underlying the “unlawful” and
“fraudulent” prongs of plaintiffs’ equitable UCL claim, including the findings that
plaintiffs were in default as of June 2009 and did not prove any damages flowing from
defendants’ conduct. Accordingly, Judge Miller’s findings, in particular those bearing on
causation of injury—whether viewed as an element of plaintiffs’ underlying legal claims
or as a prerequisite for liability on plaintiffs’ equitable claim under the UCL—are binding
and are unaffected by Samara. Those findings were grounds for Judge Miller’s decision
that plaintiffs did not challenge in their first appeal. (Samara, supra, at pp. 334, 337;
Rincon I, nonpub. portion, supra, A138463.)
E. Judge Kahn Could Properly Take Judicial Notice of Judge Miller’s Findings
to Determine Their Preclusive Effect
In support of the summary judgment motion that ultimately was heard by Judge
Kahn, defendants submitted a request for judicial notice of several documents, including
Judge Miller’s statement of decision. Plaintiffs contend Judge Kahn could not take
judicial notice of the truth of Judge Miller’s findings and therefore defendants’ summary
judgment motion lacked any evidentiary support. But even assuming it was necessary for
Judge Kahn to take judicial notice as a prerequisite to considering findings made during
an earlier phase of the same case, he correctly ruled that it is proper for a court to take
judicial notice of factual findings in determining whether those findings have preclusive
effect. (Hawkins v. SunTrust Bank (2016) 246 Cal.App.4th 1387, 1393 (Hawkins).)
Taking judicial notice of a finding in determining its preclusive effect does not
involve a determination of the finding’s truth. As the Hawkins court explained in the
context of claim and issue preclusion: “ ‘ “Whether a factual finding is true is a different
question than whether the truth of that factual finding may or may not be subsequently
litigated a second time. The doctrines of res judicata and collateral estoppel will, when
they apply, serve to bar relitigation of a factual dispute even in those instances where the
factual dispute was erroneously decided in favor of a party who did not testify truthfully.”
[Citation.] In other words, even though a factual finding in a prior judicial decision may
not establish the truth of that fact for purposes of judicial notice, the finding itself may be
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a proper subject of judicial notice if it has a res judicata or collateral estoppel effect in a
subsequent action.’ ” (Hawkins, supra, 246 Cal.App.4th at p. 1393.) Judge Kahn
properly took judicial notice of Judge Miller’s findings in determining their preclusive
effect.
III. DISPOSITION
The judgment is affirmed. Defendants shall recover their costs on appeal.
STREETER, J.
WE CONCUR:
POLLAK, P. J.
TUCHER, J.
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Trial Court: City & County of San Francisco Superior Court
Trial Judge: Hon. Harold E. Kahn
Counsel for Appellants: FOLEY & LARDNER LLP
Kathleen Smalley
Counsel for Respondents: MANATT, PHELPS & PHILLIPS, LLP
Barry W. Lee
Benjamin G. Schatz
Christian E. Baker
Ana G. Guardado
Stephanie A. Roeser
Rincon EV Realty LLC v. CP III Rincon Towers, Inc. (A152935)
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