Branson v. Sun-Diamond Growers

• Court: California Court of Appeals
• Writing for the Court: SPARKS; PUGLIA, P.J., and BLEASE
• Citation: Branson v. Sun-Diamond Growers, 24 Cal.App.4th 327, 29 Cal.Rptr.2d 314 (Cal. App. 1994)
• Decision Date: 21 April 1994
• Docket Number: SUN-DIAMOND,No. C013859,C013859
• Parties: , 9 IER Cases 827 Richard BRANSON, Plaintiff and Appellant, v.GROWERS OF CALIFORNIA, Defendant and Respondent.

Page 314

29 Cal.Rptr.2d 314

24 Cal.App.4th 327, 9 IER Cases 827

Richard BRANSON, Plaintiff and Appellant, v. SUN-DIAMOND GROWERS OF CALIFORNIA, Defendant and Respondent.

No. C013859.

Court of Appeal, Third District, California.

April 21, 1994.

[24 Cal.App.4th 331] Michael F. Babitzke, Stockton, for plaintiff and appellant.

Thelen, Marrin, Johnson & Bridges, Janet F. Bentley and Karen A. Henry, San Francisco, for defendant and respondent.

SPARKS, Associate Justice.

Corporations Code section 317, subdivision (e)(4), permits a court to authorize a corporation to indemnify its agent against a judgment arising from the agent's reasonable and good faith acts on behalf of the corporation. Such an order may be made in "[t]he court in which the proceeding [against the agent] is or was pending...." (Corp.Code, § 317, subd. (e)(4).)

In a different case arising out of proceedings filed in Contra Costa County, the Court of Appeal for the First District held that the agent in question was not entitled to indemnification from the corporation under this statute for an adverse judgment entered against him. (Plate v. Sun-Diamond Growers (1990) 225 Cal.App.3d 1115, 275 Cal.Rptr. 667.) In this case filed in San Joaquin County the agent again seeks indemnification from the corporation, this time on additional claims of contractual rights and equitable estoppel. The question on appeal is whether this present action is barred by the Plate judgment under the doctrines of res judicata and collateral estoppel.

The agent, plaintiff Richard Branson, appeals from a judgment in favor of the corporation, defendant Sun-Diamond Growers of California (Sun-Diamond). The trial court granted Sun-Diamond's motion to dismiss Branson's second amended complaint on the ground that all of his causes of action were barred by the principles of res judicata and collateral estoppel as a result of the decision in Plate v. Sun-Diamond Growers, supra, 225 Cal.App.3d 1115, 275 Cal.Rptr. 667.

On appeal, Branson claims for a variety of reasons that the appellate decision in the prior Plate case cannot have res judicata or collateral estoppel effect on those causes of action in his present suit which are unrelated to indemnity under Corporations Code section 317. We agree and therefore reverse the judgment entered in favor of Sun-Diamond.

PROCEDURAL HISTORY

This litigation had its genesis in a lawsuit filed in Contra Costa County in March 1986 by H.R. Plate and H.R. Plate & Company, Inc. (Plate), against Branson, Sun-Diamond, and three other individuals. The litigation resulted in a verdict in favor of Plate and against Branson and another individual for $275,968 but which exonerated Sun-Diamond. Branson then obtained an order in the same proceeding compelling Sun-Diamond to indemnify him against that judgment. Sun-Diamond appealed that order and in a published opinion issued by the Court of Appeal in Plate v. Sun-Diamond Growers, supra, 225 Cal.App.3d 1115, 275 Cal.Rptr. 667, the reviewing court reversed the indemnification order. Because that appellate decision is pivotal to this appeal, we quote at length from selected portions of the opinion in the Plate case.

"Sun-Diamond is a corporation owned by four food cooperatives, which serves as an administrative and sales organization for approximately sixty thousand growers who comprise the four cooperatives. Plate is an industrial commodity food broker and was the exclusive broker for Sun-Diamond products in Northern California. Between 1977 and 1985, Plate developed his Sun-Diamond brokerage account from five to one hundred eighteen customers. In late 1984, Plate was the number one Sun-Diamond broker in the United States, measured by volume of business developed and dollar sales.

"McElroy was a sales manager with Sun-Diamond who acted as a liaison between Sun-Diamond management and the brokers. Plate was one of approximately 14 brokers who reported to McElroy. Branson [the plaintiff here] was the industrial marketing manager for all of Sun-Diamond's products.

"Donald Soetaert and James Santo, defendants in the underlying litigation, were Sun-Diamond's vice-president of sales and marketing, and director of sales and marketing for industrial products, respectively. Branson and McElroy reported to Santo.

"......

"Until 1983, Plate had never received any criticism of his brokerage services from anyone at Sun-Diamond. In July 1983, McElroy delivered a letter reprimanding Plate for making sales for competitors of Sun-Diamond. Plate responded to the letter, stating that there were special circumstances justifying each of the sales listed in the letter.

"Because of McElroy's letter, Plate was placed on six months' probation ending January 1984. He successfully cleared the probationary period. At that time, McElroy met with Plate and told him he wanted to become a partner in Plate's business. Plate told him the business was too small.

"In January 1985, McElroy discussed with Plate's son the possibility of his leaving Sun-Diamond and taking the Sun-Diamond account away from Plate. Thereafter, making use of information regarding Plate's accounts to which they had access, Branson and McElroy began planning to establish their own brokerage business. Branson testified that he took a look at Plate's broker profile in February 1985, once he began considering going into the brokerage business.

"......

"In the latter part of May 1985, McElroy and Branson told Santo for the first time that they were going into the brokerage business and asked if Sun-Diamond would appoint them as its industrial brokers for Northern California. After Branson and McElroy gave Sun-Diamond a firm departure date, Santo and Soetaert discussed the benefits and detriments of replacing Plate. They decided that McElroy and Branson would be better representatives for Sun-Diamond in Northern California, as they had more knowledge of the products than any other brokers Santo and Soetaert knew. In addition, they did not want Branson and McElroy working for the competition.

"On June 6, 1985, Santo terminated Plate. Branson and McElroy remained at Sun-Diamond until June 28, 1985. In July 1985, Branson and McElroy began their brokerage business with Sun-Diamond as their only account." (Id. at pp. 1119-1121, 275 Cal.Rptr. 667.)

These events led to litigation by Plate. As the Plate court further recounted, "On March 21, 1986, Plate initiated [the Contra Costa suit] against Sun-Diamond, McElroy, Branson, Santo, and Soetaert. The first amended complaint stated a cause of action against Sun-Diamond for breach of contract; causes of action against McElroy and Branson for intentional interference with contract and intentional interference with prospective economic advantage; and causes of action against all defendants for conspiracy to induce breach of contract and conspiracy to interfere with prospective economic advantage.

"[I]n June 1986, it was determined that counsel for Sun-Diamond would undertake representation of all five defendants, and Sun-Diamond would bear the costs of litigation. Branson and McElroy inquired as to who would be responsible for an adverse judgment rendered against them. Counsel for Sun-Diamond responded with a letter stating that Sun-Diamond would indemnify them to the extent required by [Corporations Code] section 317 against liabilities arising from the litigation.

"The case proceeded to jury trial. Following the submission of the case to the jury, the jury returned a special verdict exonerating Sun-Diamond, Santo, and Soetaert as against all claims, but finding Branson and McElroy liable for intentional interference with contract, intentional interference with prospective economic advantage, and conspiracy to interfere with prospective economic advantage. The jury awarded damages against these two defendants in the amount of $275,968. On February 8, 1988, a judgment was entered accordingly.

"Following the entry of judgment, Branson and McElroy sought indemnification from Sun-Diamond against the judgment. On April 27, 1988, the Sun-Diamond board of directors advised them that Sun-Diamond declined to indemnify. Branson and McElroy then filed a motion for indemnification pursuant to [Corporations Code] section 317, subdivision (e)(4)." (Id. at p. 1121, 275 Cal.Rptr. 667.)

In their amended memorandum of points and authorities in support of their motion for indemnification pursuant to Corporation Code section 317, Branson and McElroy ¹ pointed out "parallel theories including theories under Labor Code 2802, express indemnification and promissory estoppel to illustrate the fairness of the application of [C]orporation[s] Code 317. Since these parallel theories would have to be presented by a formal complaint in a separate action, they are presented in this motion solely for purpose of demonstrating the good faith and equity of indemnification."

Turning again to the Plate decision, the court continued: "Following a hearing, the trial court ordered indemnification, stating in its written decision: 'The motion of defendants Branson and McElroy for indemnification is granted. [p] The Court finds each of said defendants was an agent of Sun Diamond within the meaning of Section 317 of the Corporations Code, and each acted in good faith and in a manner each believed to be [in] the best interests of the corporation.' " (Id. at pp. 1121-1122, 275 Cal.Rptr. 667.)

Sun-Diamond appealed from the ordering granting indemnification to Branson and McElroy. While that appeal was pending, Branson filed the present case in San Joaquin County against Sun-Diamond and its attorneys. His second amended complaint alleged causes of action against Sun-Diamond for breach of an express written contract to indemnify him pursuant to Corporations Code section 317; for breach of an oral contract of indemnity; for breach of an implied-in-fact agreement of indemnity; for breach of a duty to indemnify under Labor Code section 2802; for breach of...