Guttman v. Guttman

Filed 12/2/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
BRUCE J. GUTTMAN, B307048
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC723226)
v.
PHILLIP GUTTMAN et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of Los Angeles
County, Richard J. Burdge, Jr., Judge. Appeal dismissed.
ORIGINAL PROCEEDINGS in mandate. Petition denied.
________________________________
Harrison Law and Mediation and Susan L. Harrison for
Plaintiff and Appellant.
Thompson Coburn and Mitchell B. Stein for Defendants and
Respondents.
________________________________
Bruce J. Guttman (Bruce), Phillip Guttman (Phillip),
and Judith Douglas (Judith) are siblings and co-equal general
partners of the Guttman Family Limited Partnership (the
partnership), which owns certain real estate in Los Angeles
County.1 Bruce sued to dissolve the partnership. In response,
Phillip and Judith initiated a statutory procedure to buy out
Bruce’s interest in the partnership. Pursuant to this procedure,
court-appointed appraisers submitted to the court their
valuations of the partnership’s properties. Bruce, believing the
appraisals undervalued the properties, dismissed his complaint
without prejudice. The court then granted Phillip and Judith’s
motion to vacate the dismissal. Bruce appealed.
We treat the appeal, which is from a nonappealable order,
as a petition for writ of mandate. Because the court did not
err in granting the motion to vacate Bruce’s dismissal of his
complaint, we deny the petition.
FACTUAL AND PROCEDURAL SUMMARY
On September 25, 2018, Bruce filed a verified complaint
against Phillip and Judith alleging causes of action for breach
of fiduciary duty, waste, and dissolution of the partnership.2
In the dissolution cause of action, Bruce alleged that Phillip
and Judith refused to allow Bruce to act as a general partner,
1 Because of common surnames among some of the
parties, we will refer to individuals by their first names for
the sake of clarity and readability. We intend no disrespect.
2 The cause of action for breach of fiduciary duty is
asserted by Bruce individually and derivatively on behalf of
the partnership. The waste cause of action is asserted by Bruce
derivatively on behalf of the partnership.
2
breached fiduciary duties owed to him, committed waste on
the partnership’s real property, and spent excessive amounts
of partnership funds on projects and services that damaged
the partnership. He further alleged that, as a result, “it is not
reasonably practicable to continue to carry on the affairs of
the [p]artnership.” Bruce sought an order that the partnership
be dissolved and its affairs wound up pursuant to Corporations
Code section 15908.02, subdivision (a).3
On November 2, 2018, Phillip and Judith filed a verified
answer to the complaint.
On February 11, 2019, Phillip and Judith filed a motion
invoking a statutory limited partnership buyout procedure
under section 15908.02, subdivision (b) (the buyout motion).
They stated that they agreed with Bruce that “it is not
reasonably practicable to carry on the activities of the
[p]artnership in conformity with the [p]artnership agreement”
and that they have “elect[ed] to purchase the [p]artnership
interest owned by [Bruce].”
On August 16, 2019, the court issued its order on the
buyout motion. The order recites that Bruce seeks dissolution
of the partnership and Phillip and Judith “agree that it is
not reasonably practicable to carry on the activities of the
[p]artnership in conformity with the [p]artnership agreement.”
The order provides that the “dissolution action shall be
stayed . . . so long as [Phillip and Judith] keep in full force
and effect, a bond in the amount of [$125,000].” The court
identified three appraisers to appraise the fair market value
3 Subsequent references to section 15908.02 are to that
section of the Corporations Code.
3
of the partnership properties as of September 25, 2018—the
date Bruce commenced the dissolution action. The court further
established protocols regarding the appraisals, set a deadline
of November 29, 2019 for the submission of the appraisals to
the court, established a timetable for briefs, and set a hearing
to be held on December 27, 2019 “for confirmation of an award
and entry of a decree that shall provide in the alternative for
winding up and dissolution of the [p]artnership unless payment
is made for [Bruce’s] [p]artnership interest within ninety (90)
calendar days from entry of the decree.” The cost of the
appraisals “shall be borne by the [p]artnership.”
On November 29, 2019, the parties lodged the appraisals
with the court.4 One appraiser concluded that the value of the
partnership properties was $37,180,000; a second appraiser
established the value at $38,300,000; and the third at
$39,037,000.
In an ex parte application filed on December 23, 2019,
Phillip and Judith took the position that section 15908.02 and
the court’s August 16, 2019 order require at least two of the
appraisers reach a consensus as to the valuation.5 Because
no such consensus had been reached, they argued that the
appraisers’ work “is not done,” and the appraisers should
4According to counsel for Phillip and Judith, the cost of
the appraisals was $110,000.
5 Phillip and Judith relied on the following language
in the court’s August 16, 2019 order: “The award of the
[a]ppraisers or a majority of them, as and when confirmed
by the court, shall be final and conclusive upon all parties.”
The language is substantially similar to language in
section 15908.02, subdivision (d).
4
determine if the required consensus can be reached. Bruce
disagreed, and argued that a consensus among the appraisers is
not required and that “it is the Court which is to ‘ascertain and
fix the fair market value of [Bruce’s] partnership interest,’ ” not
the appraisers.
In response to the ex parte application, the court vacated
the December 27, 2019 hearing date and set a status conference
and case management conference for January 15, 2020.
At the January 15, 2020 conference, the court indicated
that it agreed with Bruce that the buyout procedure did not
require a consensus among the appraisers, or among two of
them, and that the court “can come up with numbers that are
different from what the appraisers themselves came up with.”
The court explained, however, that it may also conduct “some
additional fact finding,” which could include “asking the
appraisers if they could reach a consensus.” The court then,
over Bruce’s objection, directed Phillip and Judith’s counsel
to ascertain whether the appraisers were willing to meet
in order to reach a consensus valuation and to report their
response to the court. The court set a further hearing “to
potentially confirm the award” for March 18, 2020. “If a
consensus or majority cannot be reached by the appraisers,
then the hearing will proceed with evidence by briefing.”
During the status conference, Bruce’s counsel referred
to what she described as “flaws” in the “lowball appraisals,”
and asserted that the valuations of approximately $38 million
“should be closer to $58 million.”
The next day, Bruce filed a request for dismissal of the
entire action without prejudice. The court clerk entered the
dismissal on January 22, 2020.
5
On January 28, 2020, Phillip and Judith filed an ex parte
application to vacate the dismissal. The court set a hearing
on the matter to be held on February 18, 2020. Bruce filed a
written opposition and Phillip and Judith filed a reply.
After a hearing, the court granted the motion to vacate
the dismissal and “reinstated” its August 16, 2019 order,
stating that the dismissal “was improperly entered.” The court
reasoned, in part, that allowing a plaintiff who has received “the
valuations given by the agreed upon appraisers . . . to dismiss
the action and ‘start over’ because he is unhappy with the
valuations received seems terribly inefficient and a waste
of resources of the parties and the court. In addition, for the
statutory procedure to be effective according to its terms, there
should not be a procedure available for one party to unilaterally
‘overrule’ the appraisers’ valuations.”
Plaintiff filed a notice of appeal on June 7, 2020.
DISCUSSION
A. Appealability
Although Phillip and Judith have not challenged the
ability of Bruce to appeal from the order granting their motion
to vacate the entry of dismissal, we must consider the issue
when, as here, “a doubt exists as to whether the trial court
has entered a[n] . . . order or judgment made appealable by
Code of Civil Procedure section 904.1.” (Jennings v. Marralle
(1994) 8 Cal.4th 121, 126; see Estate of Sapp (2019) 36
Cal.App.5th 86, 98 [“[b]ecause appealability goes to the question
of this court’s jurisdiction, we must address that threshold
question before addressing the merits of [the] appeal”].)
6
The “ ‘right to appeal is strictly statutory, and a judgment
or order is not appealable unless made so by statute.’ ”
(Warwick California Corp. v. Applied Underwriters, Inc. (2020)
44 Cal.App.5th 67, 72.) In addressing appealability in his
opening brief, Bruce does not refer us to any statute authorizing
the appeal, and we have found none. Instead, Bruce relies on
Basinger v. Rogers & Wells (1990) 220 Cal.App.3d 16 (Basinger).
The Basinger court, citing a section of Witkin’s treatise on
California Procedure, stated, without analysis, that an “order
vacating . . . previously filed dismissals is appealable.” (Id.
at p. 21, citing 9 Witkin, Cal. Procedure (3d ed. 1985) Appeal,
§ 108, p. 127.)
In H. D. Arnaiz, Ltd. v. County of San Joaquin (2002) 96
Cal.App.4th 1357 (H. D. Arnaiz), the Court of Appeal disagreed
with Basinger and criticized its reliance on Witkin for the
general principle that “a vacating order is generally appealable,”
because “[t]he very next paragraph in Witkin . . . qualifies
the general rule of appealability” by stating that “ ‘[a] vacating
order is not appealable unless it vacates a prior appealable
judgment. [Citation.]’ ” (Id. at p. 1365, quoting 9 Witkin, Cal.
Procedure (4th ed. 1997) Appeal, § 149, p. 215; accord, 9 Witkin,
Cal. Procedure (5th ed. 2020) Appeal, § 195.) The court in
H. D. Arnaiz further stated that the Basinger court “ignores the
requirement of a statutory basis for finding an order appealable
and the requirement that a vacating order is appealable only
if it vacates an appealable judgment.” (H. D. Arnaiz, supra,
96 Cal.App.4th at p. 1366; see also Mesa Shopping Center-East,
LLC v. O Hill (2014) 232 Cal.App.4th 890, 898 [agreeing “that
an order granting a motion to vacate a voluntary dismissal is
not appealable as such”].) We agree with H. D. Arnaiz and
7
decline to follow Basinger on this point and, finding no statutory
authority for an appeal from an order vacating a voluntary
dismissal, conclude that the order is not appealable.
We requested that the parties brief the question whether,
if the challenged order is not appealable, we should treat
the purported appeal as a petition for writ of mandate. In
responding to the request, both sides urge us to do so.
Discretionary writ review of an appeal from a
nonappealable order may be appropriate “when (1) requiring
the parties to wait for a final judgment might lead to
unnecessary trial proceedings; (2) the briefs and record
included, in substance, the necessary elements for a proceeding
for a writ of mandate; (3) there was no indication the trial
court would appear as a party in a writ proceeding; (4) the
appealability of the order was not clear; and (5) the parties
urged the court to decide the issues rather than dismiss the
appeal.” (Hall v. Superior Court (2016) 3 Cal.App.5th 792, 807,
citing Olson v. Cory (1983) 35 Cal.3d 390, 400−401.)
These elements are present here: (1) If Bruce is correct on
the merits of his challenge to the order vacating his dismissal,
further proceedings in the case would be unnecessary and a
waste of resources by the parties and the courts; (2) the briefs
and the record on appeal satisfy the requirements for writ
review; (3) there is no indication that the trial court would
appear as a party in a writ proceeding; (4) as shown by the
discussion above concerning the Basinger and H. D. Arnaiz
decisions, the appealability of the challenged order was not
clear; and (5) all parties urge us to decide the merits of the
issue. We will therefore treat the appeal as a petition for writ
of mandate. (See H. D. Arnaiz, supra, 96 Cal.App.4th at p. 1367
8
[treating appeal from order granting motion to vacate dismissal
as petition for writ of mandate].)
B. Standard of Review
This case involves the interpretation of statutes and their
application to undisputed facts. We review these issues de novo.
(People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th
415, 432; Gogri v. Jack in the Box Inc. (2008) 166 Cal.App.4th
255, 262.)
C. Analysis
1. Limited partnership dissolution and
the statutory buyout procedure
Bruce sought dissolution of the partnership under
subdivision (a) of section 15908.02, which provides that a
partner in a limited partnership may apply to a court for
an order dissolving the partnership “if it is not reasonably
practicable to carry on the activities of the limited partnership
in conformity with the partnership agreement.” (§ 15908.02,
subd. (a).)
Phillip and Judith filed their buyout motion pursuant to
subdivision (b) of section 15908.02. This subdivision provides
that, in a “suit for judicial dissolution” of a limited partnership,
“the other partners may avoid the dissolution of the limited
partnership by purchasing for cash the partnership interests
owned by the partners so initiating the proceeding . . . at
their fair market value.” (Ibid.) The partners who commence
the dissolution proceeding are described in the statute as the
“moving parties” (ibid.); the “other partners” who initiate the
buyout procedure are referred to as the “purchasing parties.”
(Id., subds. (b) & (c).)
9
The purchasing parties, who “elect to purchase the
partnership interests owned by the moving parties,” may
initiate the buyout procedure by “application” “either in the
pending action” or by commencing a separate proceeding in
the superior court. (§ 15908.02, subd. (c).) If the court grants
the application, it must “stay the winding up and dissolution
proceeding and shall proceed to ascertain and fix the fair
market value of the partnership interests owned by the moving
parties.” (Ibid.) The court shall appoint appraisers to appraise
the fair market value of the moving parties’ partnership
interests and order “the time and manner for producing
evidence, if evidence is required.” (Id., subd. (d).)
Subdivision (d) of section 15908.02 provides that “[t]he
award of the appraisers or a majority of them, when confirmed
by the court, shall be final and conclusive upon all parties.”
Although it does not appear that a court has interpreted
this language in section 15908.02, courts have held that the
same language in analogous statutes regarding the buyout
of interests in limited liability companies and corporations
does not limit the court’s ability to select among the various
appraisals or independently determine the value of the parties’
interests. (See, e.g., Cheng v. Coastal L.B. Associates, LLC
(2021) 69 Cal.App.5th 112, 119 [construing identical language
in Corporations Code section 17707.03 concerning the buyout
of interests in limited liability corporations, the “appraisers’
award does not bind the trial court” and the “court may select
among conflicting appraiser opinions or decide the matter
de novo”]; Goles v. Sawhney (2016) 5 Cal.App.5th 1014, 1021
(Goles) [notwithstanding identical language in Corporations
Code section 2000, concerning buyout of corporate shareholder
10
interests, court could “make a de novo determination of the
fair value of [a party’s] shareholder interest”].)
Ultimately, the “court shall enter a decree that shall
provide in the alternative for winding up and dissolution
of the limited partnership unless payment is made for the
partnership interests within the time specified by the decree.”
(§ 15908.02, subd. (d).) If the purchasing parties pay to the
moving parties the judicially determined value of the moving
parties’ partnership interests, “the moving parties shall
transfer their partnership interests to the purchasing parties.”
(Id., subd. (e).) If the purchasing parties do not make timely
payment for the partnership interests, the partnership shall be
dissolved and wound up, and judgment entered against the
purchasing parties “for the amount of the expenses, including
attorneys’ fees, of the moving parties.” (Id., subd. (d); cf.
Ontiveros v. Constable (2018) 27 Cal.App.5th 259, 277
(Ontiveros).)
Courts have held that a buyout proceeding depends
upon the existence of a dissolution proceeding and, where
a dissolution proceeding is dismissed prior to the granting
of a motion to commence the buyout proceeding, the buyout
proceeding cannot go forward. (See Panakosta Partners, LP v.
Hammer Lane Management, LLC (2011) 199 Cal.App.4th 612,
630 (Panakosta); cf. Ontiveros, supra, 27 Cal.App.5th at p. 271;
Kennedy v. Kennedy (2015) 235 Cal.App.4th 1474, 1483
(Kennedy).) When, however, the court grants a buyout motion,
the buyout procedure “ ‘supplants’ the action for involuntary
dissolution.” (Ontiveros, supra, 27 Cal.App.5th at pp. 275−276,
quoting Go v. Pacific Health Services, Inc. (2009) 179
Cal.App.4th 522, 530 (Go); accord, Schrage v. Schrage (2021)
11
69 Cal.App.5th 126, 137, petn. for review pending, petn. filed
Nov. 1, 2021, S271548.); Goles, supra, 5 Cal.App.5th at
p. 1018.)6
In Ontiveros, the court explained that the word
“supplants” is “particularly apt” in this context because the
buyout statute “provides a mechanism to take the place of a
cause of action for involuntary dissolution by allowing the
parties to avoid litigating that claim and providing a means to
establish the fair value of the corporation’s shares.” (Ontiveros,
supra, 27 Cal.App.5th at p. 276.)7 Stated differently, once
the court commences a buyout procedure, “the plaintiff no
longer control[s] her cause of action” for dissolution and “the
involuntary dissolution claim cease[s] to exist.” (Ontiveros,
supra, 27 Cal.App.5th at p. 276.)
6 The corporate buyout statute discussed in Ontiveros—
Corporations Code section 2000—is substantially similar for our
purposes to section 15908.02 (Ontiveros, supra, 27 Cal.App.5th
at p. 269, fn. 8; see also Kennedy, supra, 235 Cal.App.4th at
p. 1482), and the Ontiveros court’s discussion applies with equal
force in the instant case.
7 Bruce asserts that Ontiveros is inapposite because the
plaintiff ’s dismissal of the complaint in that case was attempted
under Code of Civil Procedure section 581, subdivision (e),
which, unlike dismissals under subdivision (b), does not apply
to special proceedings such as corporate and partnership
dissolutions. Ontiveros’s holding that the corporate buyout
provision supplants the plaintiff ’s corporation dissolution
action, however, is not dependent upon the subdivision of Code
of Civil Procedure section 581 under which the plaintiff sought
dismissal.
12
2. No dismissal after court granted buyout
motion
Bruce sought dismissal under Code of Civil Procedure
section 581, subdivision (b)(1),8 which provides: “An action
may be dismissed . . . [¶] . . . [w]ith or without prejudice, upon
written request of the plaintiff to the clerk, filed with papers in
the case, or by oral or written request to the court at any time
before the actual commencement of trial, upon payment of the
costs, if any.”9 Although a partnership dissolution proceeding
is, like its corporation dissolution counterpart, a special
proceeding (cf. Esparza v. Kadam, Inc. (1960) 182 Cal.App.2d
802, 807), an “[a]ction,” for purposes of section 581, includes
a “special proceeding.” (§ 581, subd. (a)(1); see 321 Henderson
Receivables Origination LLC v. Red Tomahawk (2009) 172
Cal.App.4th 290, 301.)
8 Subsequent references to section 581 are to that section
of the Code of Civil Procedure.
9 Phillip and Judith make a threshold argument based
upon the phrase in section 581, subdivision (b)(1), requiring
the dismissing plaintiff to make “payment of the costs, if
any.” They argue that Bruce’s request for dismissal was
improper because he has not “paid or offered to pay costs.”
The argument appears to assume that the word “costs” in
section 581, subdivision (b)(1) refers to costs recoverable by a
prevailing party under Code of Civil Procedure section 1032,
subdivision (b). “[C]osts,” in section 581, subdivision (b),
however, refers only to the fee, if any, charged by the clerk of
the court for entering the requested dismissal. (See Hopkins v.
Superior Court (1902) 136 Cal. 552, 553; Home Real Estate Co.
v. Winnants (1919) 39 Cal.App. 643, 645.) At the time plaintiff
filed his request for dismissal, the Los Angeles Superior Court
did not charge such a fee.
13
A plaintiff ’s right to dismiss an action under section 581
is not absolute. (Cole v. Hammond (2019) 37 Cal.App.5th
912, 921; Groth Bros. Oldsmobile, Inc. v. Gallagher (2002)
97 Cal.App.4th 60, 66 (Groth).) Among other limitations
on that right, a plaintiff must request dismissal “before the
actual commencement of trial.” (§ 581, subd. (b)(1).) The
commencement of trial, for purposes of section 581, is statutorily
defined as “the beginning of the opening statement or argument
of any party or his or her counsel, or if there is no opening
statement, then at the time of the administering of the oath
or affirmation to the first witness, or the introduction of any
evidence.” (§ 581, subd. (a)(6).)
This definition of trial is not applied easily here. Once
the court granted the buyout motion, the dissolution case was
“stay[ed]” (§ 15908.02, subd. (c)) or “supplant[ed]” (Ontiveros,
supra, 27 Cal.App.5th at p. 276), and the buyout procedure
was set to go forward until either Phillip and Judith bought
Bruce’s partnership interest or the partnership was dissolved.
(§ 15908.02, subds. (d) & (e); see Go, supra, 179 Cal.App.4th at
p. 531.) Although the court’s task of determining the value of
the partnership shares is arguably a trial, there is no opening
statement, arguments, witnesses, or evidence submitted with
respect to the dissolution cause of action; that is, the merits of
the dissolution case are never tried because, as discussed below,
in the event the purchasing parties fail to pay for the moving
party’s shares, the court’s “self-executing” decree dissolves
the partnership. (Veyna v. Orange County Nursery, Inc. (2009)
170 Cal.App.4th 146, 156 (Veyna).)
The difficulty in applying the definition of “trial” in
section 581 to the stayed or supplanted dissolution action under
14
section 15908.02 does not end our analysis. In Wells v. Marina
City Properties, Inc. (1981) 29 Cal.3d 781 (Wells), the plaintiff
dismissed his complaint without prejudice after the defendant’s
demurrer was sustained with leave to amend and the plaintiff
failed to amend. (Id. at p. 789.) The plaintiff argued that the
dismissal was valid because the statutory definition of trial in
section 581 provided the “exclusive test” regarding his right
to dismiss his complaint and he retained that right “until
the occurrence of one of the specific acts” described in that
definition. (Wells, supra, 29 Cal.3d at p. 786.) The Supreme
Court disagreed, and explained that the plaintiff ’s argument,
if adopted, would allow the plaintiff “to reassert the same
allegations in still another complaint, seeking a more favorable
ruling from another court, rather than to proceed in a more
appropriate, expeditious and final, course to appeal on the legal
sufficiency of those allegations. [¶] The obvious consequence
of such a statutory construction would be to prolong, rather
than to terminate, lawsuits. It would not serve the orderly and
timely disposition of civil litigation. No good reason appears
why encouragement should be given to such tactics, the effect
of which is to expose defendants to duplicative ‘annoying and
continuous litigation,’ to burden our trial courts with ‘fruitless’
proceedings, and to delay the ultimate resolution of the
validity of the plaintiff ’s pleading.” (Id. at pp. 788−789.)
Since Wells, the definition of trial in section 581
“has been held to be illustrative rather than exclusive of the
circumstances under which a trial has begun” (Miller v. Marina
Mercy Hospital (1984) 157 Cal.App.3d 765, 768 (Miller); accord,
Gray v. Superior Court (1997) 52 Cal.App.4th 165, 171 (Gray)),
and courts will consider the policy goal of avoiding “abuse by
15
plaintiffs who, when led to suppose a decision would be adverse,
would prevent such decision by dismissing without prejudice
and refiling, thus subjecting the defendant and the courts
to wasteful proceedings and continuous litigation” (Kyle v.
Carmon (1999) 71 Cal.App.4th 901, 909). Courts have thus
denied a plaintiff the right to dismiss an action without
prejudice when the court issues a tentative ruling that the
court will sustain the demurrer without leave to amend (Groth,
supra, 97 Cal.App.4th at p. 70), and denied a plaintiff the
right to dismiss after the court had announced its tentative
ruling to grant the defendant’s summary judgment motion
(Mary Morgan, Inc. v. Melzark (1996) 49 Cal.App.4th 765, 767,
771−772). The “common thread running through . . . these
decisions,” one court stated, “is the notion of fairness, which
in turn depends on the plaintiff ’ s motivation and intent
in dismissing his complaint.” (Tire Distributors, Inc. v. Cobrae
(2005) 132 Cal.App.4th 538, 546.)
Courts have also denied the plaintiff the right to dismiss
an action without prejudice when dismissal “would frustrate
a statutory scheme.” (Gray, supra, 52 Cal.App.4th at p. 172.)
In Herbert Hawkins Realtors, Inc. v. Milheiser (1983) 140
Cal.App.3d 334, for example, a judicial arbitration of the
plaintiffs’ small claims case was favorable to the defendants.
The plaintiffs requested trial de novo and, prior to trial,
dismissed the case without prejudice. (Id. at p. 337.) The
Court of Appeal held that the dismissal was improper.
Permitting the plaintiffs “to voluntarily dismiss without
prejudice,” the court explained, would defeat “the express
legislative purpose of ‘expediting and removing complexities
from the judicial process relating to small civil claims.’ ”
16
(Id. at p. 339; see also Gray, supra, 52 Cal.App.4th at p. 173
[allowing plaintiff to dismiss partition action after referee
made findings of fact would circumvent the statutory scheme
regarding partition actions]; Mary Morgan, Inc. v. Melzark,
supra, 49 Cal.App.4th at pp. 771−772 [allowing plaintiff to
dismiss after hearing on summary judgment motion began
would “eviscerate the summary judgment procedure”];
Hartbrodt v. Burke (1996) 42 Cal.App.4th 168, 175 [plaintiff
who failed to comply with a discovery order could not dismiss
his complaint just prior to a hearing on the defendant’s motion
for terminating sanctions because the “tactic would simply
defeat the trial court’s power to enforce its discovery orders”];
Miller, supra, 157 Cal.App.3d at p. 769 [plaintiff failed to
respond to requests for admission, which resulted in dispositive
facts being deemed admitted; plaintiff ’ s subsequent attempt to
dismiss the action was denied because it would have frustrated
and circumvented the statutory scheme concerning requests for
admissions].)
Here, Bruce’s dismissal of the dissolution cause of action
would frustrate the statutory scheme under section 15908.02.
Under that statute, once the buyout procedure has been
ordered, the plaintiff ’ s dissolution action is stayed—or, as
Ontiveros stated, “supplanted” (Ontiveros, supra, 27 Cal.App.5th
at p. 279)—and the buyout procedure goes forward in its
place. If Bruce is allowed to dismiss his dissolution action and
then permitted to file a new action for dissolution, he would
effectively nullify the order staying the action and deny Phillip
and Judith the relatively quick and efficient resolution of the
issue the buyout procedure was intended to provide. Indeed, as
the trial court observed, each time Bruce “is unhappy” with the
17
appraiser’s valuations, he could simply dismiss his action and
start over with a new complaint. The result not only frustrates
the statutory scheme, but is patently unfair to Phillip and
Judith and an obvious waste of judicial resources.
Although policy concerns weigh heavily in favor of
denying Bruce the right to dismiss, the denial of that right
cannot be based solely on policy grounds. As one court
explained, “[w]hile we agree that looking to the equities is
good judicial policy, we are mindful that any consideration
of when the statutory right to voluntary dismissal terminates
must be rationally connected to the statutory phrase
‘commencement of trial.’ ” (Franklin Capital Corp. v. Wilson
(2007) 148 Cal.App.4th 187, 207.) The Franklin court thus
disagreed with a prior case “to the degree that it might be
read to stand for the idea that equities alone can justify
the termination of the statutory right.” (Ibid.) But, as the
cases cited above reveal and a concurring justice in Franklin
observed, courts have construed the phrase, “ ‘commencement of
trial’ to encompass any procedure that is potentially dispositive,
including demurrer or summary judgment tentative rulings,
or a pending motion for terminating sanctions.” (Id. at p. 221
(conc. opn. of Aronson, J.).) The phrase, “ ‘commencement of
trial,’ ” another court explained, “is not restricted to only jury or
court trials on the merits, but also includes pretrial procedures
that effectively dispose of the case.” (Gogri v. Jack in the Box
Inc., supra, 166 Cal.App.4th at p. 262; see also M & R Properties
v. Thomson (1992) 11 Cal.App.4th 899, 903–904 [“plaintiff ’s
right [to dismiss] is cut off once it is established that there will
be no trial”].)
18
Here, although the order granting the buyout motion
did not address or determine the merits of the dissolution
action, it did effectively dispose of the cause of action and
determine that there will be no trial on the claim. As
explained above, the effect of the order granting the motion
can be viewed as either supplanting the cause of action, as
the Ontiveros court described it, or staying the cause of action
such that a trial on the merits of the dissolution cause of action
never occurs. Even if the purchasing parties ultimately decline
to purchase the moving party’s interests, there is no trial of the
dissolution cause of action; the “self-executing” decree (Veyna,
supra, 170 Cal.App.4th at p. 156) dissolving the partnership
is simply “entered against” the purchasing parties (§ 15908.02,
subd. (d)). Thus, the dissolution cause of action either “cease[s]
to exist” (Ontiveros, supra, 27 Cal.App.5th at p. 276) or is
put into the legal equivalent of a coma from which it is never
revived. In either case, the granting of the buyout motion
determined that there would be no trial on the dissolution
cause of action and thus effectively disposed of that cause of
action. That disposition, together with the policy considerations
discussed above, precludes Bruce from dismissing his cause of
action for dissolution after the buyout motion has been granted.
Bruce relies on Panakosta, supra, 199 Cal.App.4th 612,
and Kennedy, supra, 235 Cal.App.4th 1474, for his argument
that he can dismiss his dissolution cause of action “even
in the face of a buyout motion.” (Boldface & capitalization
omitted.) In Panakosta, the plaintiffs filed a complaint
seeking judicial dissolution of a limited partnership and
other relief. (Panakosta, supra, 199 Cal.App.4th at p. 620.)
The defendants—other partners of the limited partnership—
19
filed a cross-complaint alleging various tort and contract
causes of actions and, under a separate case number, filed
a “special proceeding” to initiate the buyout procedure
under section 15908.02 and a motion for the appointment
of appraisers. (Panakosta, supra, 199 Cal.App.4th at
pp. 620−621.) Before that motion was heard, the plaintiffs
dismissed their dissolution cause of action with prejudice and
the defendants dismissed their cross-complaint. (Id. at p. 621.)
It does not appear that the defendants challenged in the trial
court the plaintiffs’ ability to dismiss their dissolution cause of
action. The plaintiffs then filed an opposition to the defendants’
buyout petition on the ground that there was no cause of action
for dissolution pending. (Ibid.) The trial court agreed and
denied the defendants’ buyout petition and the motion for
appointment of appraisers on the ground that no dissolution
proceeding was pending. (Ibid.)
The Court of Appeal affirmed the denial of the defendants’
buyout proceeding on the ground that the trial court lacked
“jurisdiction to grant a buyout under section 15908.02 when no
cause of action for judicial dissolution is pending.” (Panakosta,
supra, 199 Cal.App.4th at p. 630.) The court rejected the
defendants’ argument that “the right to dismiss a dissolution
cause of action must be cut off when a motion for buyout is
filed.” (Id. at p. 632.) The court also rejected the defendants’
“concern that the dismissal was a tactical ploy” because
the plaintiffs “dismissed [their] cause of action for judicial
dissolution with prejudice” and could not, therefore, “refile
[their] judicial dissolution action after the denial of the buyout
petition.” (Ibid.)
20
Panakosta is distinguishable because the plaintiffs in
that case dismissed their case prior to the court’s ruling on
the defendants’ buyout motion. Here, Bruce filed his request
for dismissal five months after the court commenced the buyout
procedure. Moreover, the policy rationale that Panakosta relied
on does not apply here. In contrast to the plaintiffs in that case,
who dismissed their dissolution cause of action with prejudice
and did not, therefore, use the dismissal as a “tactical ploy,”
Bruce dismissed his action without prejudice and thus would
presumably have the right, as he asserts, “ ‘to later refile
essentially the same action.’ ” Thus, as the trial court indicated
in this case, if the dismissal was allowed to stand, Bruce could
engage in the kind of gamesmanship that was unavailable to
the plaintiffs in Panakosta. Panakosta, therefore, does not help
Bruce.
Bruce’s reliance on Kennedy fares no better. In that
case, the court held that a plaintiff who had sued for dissolution
of certain corporations and limited liability corporations could
dismiss his dissolution claims after defendants had filed a
buyout motion under statutes analogous to section 15908.02
but before the motion was heard or decided. (Kennedy, supra,
235 Cal.App.4th at pp. 1479−1480.) We agree with the
Ontiveros court that the holding in Kennedy should be limited to
that procedural situation. (See Ontiveros, supra, 27 Cal.App.5th
at p. 272.) Here, by contrast, Bruce’s request for dismissal was
made after the court had granted the buyout motion; indeed, it
was not made until the buyout process was nearing completion.
We therefore reject Bruce’s reliance on Kennedy.
Contrary to Bruce’s suggestion, our conclusion does not
imply that a dissolution action can never be dismissed once
21
a buyout procedure has commenced. As the Ontiveros court
stated: “[W]e do not suggest that a court does not have
discretion to dismiss a special proceeding under any
circumstance. For example, we can imagine a scenario where
the parties settle the dispute rendering the purpose of the
special proceeding moot. In addition, there may be other
scenarios where justice or equity would support a court ending”
the buyout proceeding. (Ontiveros, supra, 27 Cal.App.5th at
p. 279.) Bruce has not presented any such scenario here.
3. No dismissal when defendants seek
affirmative relief
In addition to the commencement of trial limitation on
a plaintiff ’s right to dismiss, a plaintiff may not dismiss an
action when a defendant seeks affirmative relief in the case.
(§ 581, subd. (i); Conservatorship of Martha P. (2004) 117
Cal.App.4th 857, 869−870; Gray, supra, 52 Cal.App.4th at
p. 174.) Affirmative relief is “new matter that in effect amounts
to a counterattack. The relief sought, if granted, operates
not as a defense but affirmatively and positively to defeat the
plaintiff ’ s cause of action.” (Schwartz v. Schwartz (2008) 167
Cal.App.4th 733, 742–743; see Aetna Casualty & Surety Co. v.
Humboldt Loaders, Inc. (1988) 202 Cal.App.3d 921, 928 [same].)
“The phrase ‘new matter’ refers to something relied on by a
defendant [that] is not put in issue by the plaintiff.” (State
Farm Mut. Auto. Ins. Co. v. Superior Court (1991) 228
Cal.App.3d 721, 725.) The purpose of the rule is “to prevent a
plaintiff from dismissing an action where the defendant has on
file pleadings seeking affirmative relief on which in the future
the defendant would be entitled to a hearing.” (Golden Gate
22
Mechanical Con. Assn. v. Seaboard Surety Co. (9th Cir. 1968)
389 F.2d 892, 894.)
Although section 581 refers to “affirmative relief . . .
sought by [a] cross-complaint” (§ 581, subd. (i)), the “name
of the pleading” is not determinative; “the controlling factor
is whether affirmative relief is requested” (Guardianship
of Lyle (1946) 77 Cal.App.2d 153, 155). Thus, contrary to
Bruce’s suggestion that a cross-complaint is a sine qua non
of preventing voluntary dismissal under this rule, the rule
applies when affirmative relief is sought “regardless of the
form of the pleading.” (Conservatorship of Martha P., supra,
117 Cal.App.4th at p. 869; see also Gray, supra, 52 Cal.App.4th
at p. 174; In re Marriage of Tamraz (1994) 24 Cal.App.4th 1740,
1747.)
Phillip and Judith contend that they sought affirmative
relief through the court-approved buyout procedure and that
Bruce was thereby prevented from voluntarily dismissing his
complaint. We agree.
In their buyout motion, Phillip and Judith introduced
new matter by way of their election to purchase Bruce’s
partnership interest. The buyout procedure they sought to
invoke was not an affirmative defense, but a counterattack that
positively sought to defeat the plaintiff ’ s cause of action.
Because Phillip and Judith were pursuing the affirmative
relief available under the buyout provision at the time Bruce
filed his request to dismiss the action, the entry of dismissal was
improper and the court did not err in vacating the dismissal.
23
DISPOSITION
The appeal from the order dated February 18, 2020
granting the motion to vacate dismissal is dismissed. Deeming
the appeal as a petition for writ of mandate, the petition is
denied.
Phillip Guttman and Judith Douglas are awarded their
costs in this proceeding.
CERTIFIED FOR PUBLICATION.
ROTHSCHILD, P. J.
We concur:
CHANEY, J.
BENDIX, J.
24