Brunzell Const. Co., Inc., of Nev. v. Harrah's Club

• Decision Date: 22 August 1967
• Citation: 62 Cal.Rptr. 505,253 Cal.App.2d 764
• Court: California Court of Appeals Court of Appeals
• Parties: BRUNZELL CONSTRUCTION CO., INC., OF NEVADA, a corporation, Plaintiff and Respondent, v. HARRAH'S CLUB, a corporation, et al., Defendants and Appellants. Civ. 31107.

Page 505

62 Cal.Rptr. 505

253 Cal.App.2d 764

BRUNZELL CONSTRUCTION CO., INC., OF NEVADA, a corporation, Plaintiff and Respondent, v. HARRAH'S CLUB, a corporation, et al., Defendants and Appellants.

Civ. 31107.

Court of Appeal, Second District, Division 4, California.

Aug. 22, 1967.

[253 Cal.App.2d 766] Milo V. Olson, Los Angeles, for defendant and appellant, Harrah's club.

Leon J. Garrie, Los Angeles, for plaintiff and respondent.

FOX, Associate justice. ^*

This litigation arose out of a contract (and related matters) between Brunzell Construction Co., Inc. of Nevada (herein referred to as Brunzell) and Harrah's Club for the construction of a casino in Reno, Nevada. Approximately a month after the instant action was filed, Harrah's Club filed an action in Reno against Brunzell and Glens Falls Insurance Company (as surety). These two lawsuits ever since have been in active status. The current struggle is the determination as to whether the litigation shall be tried in Los Angeles or in Reno.

The main appeal ^** in this case is by Harrah's Club from a preliminary injunction of the Los Angeles Superior Court (October 29, 1965) restraining Harrah's Club from prosecuting the Nevada case against Brunzell and its surety. In its Los Angeles suit, filed June 11, 1962, Brunzell named as defendants, in addition to Harrah's Club, William C. Wagner, the architect, Robert Raimist, who worked for Wagner, Dames & Moore, a copartnership, Vernon A. Smoot, Trent R. Dames, William W. Moore, William W. Brewer, Jr., and Le Roy Crandall, soil engineers, John A. Martin, structural engineer, William Harrah, Harrah's South Shore Corporation and Glens Falls Insurance Company.

On June 20, 1962, before Harrah's Club filed the Nevada action (July 24, 1962), Harrah's Club and Harrah South Shore Corporation were served with copies of summons and complaint in the Los Angeles action by delivering to and leaving with Ralph T. Lui a copy of said documents; Mr On January 23, 1963, pursuant to court order, a copy of the first alias summons and a copy of the order made on January 22, 1963, by the Los Angeles Superior Court, and a copy of the complaint were served on Harrah's Club by serving Frank M. Jordan, Secretary of State, by handing to and leaving with Ralph R. Martig, deputy thereof, a copy of each of said documents.

Lui [253 Cal.App.2d 767] being the statutory agent for Harrah South Shore Corporation. William F. Harrah is the sole stockholder of Harrah's Club and Harrah South Shore Corporation. The officers and directors of the two corporations are identical.

Harrah's Club made a motion in the Los Angeles case to quash, set aside and vacate the service of summons and complaint made upon it. The trial court made an order granting the motion. Brunzell appealed. The order quashing service on Harrah's Club was reversed. The complaint in the Los Angeles action is so well summarized in the appellate court opinion (Brunzell Construction Co., Inc. v. Harrah's Club, 225 Cal.App.2d 734, 735--737, 37 Cal.Rptr. 659) that we quote it at length:

'The complaint filed on June 11, 1962, sets forth among other things that plaintiff (hereinafter sometimes referred to as Brunzell), a Nevada corporation, on January 9, 1962, made a written contract with Harrah's Club, a corporation, for the construction of a casino building in Reno, Nevada. Several other defendants are joined in the action * * * (they are identified supra).

'It is stated in the complaint (and admitted in the answer to interrogatories by William F. Harrah) that William Harrah is the sole stockholder of both Harrah's Club, a Nevada corporation, and Harrah's South Shore Corporation, a California corporation, and that the officers and directors of the two corporations are identical.

'The first cause of action is for fraud and misrepresentation against all of the defendants with the exception of Glen Falls Insurance Company. There are set out certain misrepresentations appearing in the contract documents which were prepared in Los Angeles. The second cause of action is against Harrah's Club, William Harrah, Harrah's South Shore Corporation, and some fictitious defendants and therein it is alleged that there was a breach of contract evidenced by the same documents referred to in the first cause of action. The third cause of action is against William C. Wagner, the architect, Robert Raimist, the architect's employee, Dames & Moore, a partnership, Vernon A. Smoot, Trent R. Dames, William W. Moore, William W. Brewer, Jr., Le Roy Crandall, soils engineers, John A. Martin, structural engineer, and various ficititous defendants. It is therein alleged that the said defendants negligently created and prepared the contract documents including the plans and specifications and that plaintiff was damaged as a proximate result of such negligence. It is alleged that the 'contract documents are defective, unfit, inaccurate, incomplete, self-contradictory and unsuitable for the purpose for which they were intended. * * *' The fourth cause of action is against the architect defendants and certain fictitious defendants for tortiously interfering with the contract between plaintiff and Harrah's Club. The fifth cause of action is against Harrah's Club, William Harrah, Harrah's South Shore Corporation and certain fictitious defendants. It is therein alleged that said defendants refused to make payments for stockpiled materials all to the end that plaintiff would thereby be weakened and by economic compulsion be forced to abandon the casino contract. The sixth cause of action is against all defendants with the exception of Glen Falls Insurance Company and therein it is alleged among other things that there was a breach of an express warranty with reference to the sufficiency of the contract documents. The seventh cause of action is against Harrah's Club, William Harrah, Harrah's South Shore Corporation, Glen Falls Insurance Company, and certain fictitious defendants and seeks among other things a determination of the liability of plaintiff and the named defendants with reference to a surety bond issued to Harrah's 'It is further alleged that Dames, Moore, Brewer, Crandall, Smoot, Martin, Raimist and Wagner are residents of Los Angeles County. Harrah's South Shore Corporation has admitted that it is a California corporation, and Wagner, Dames, Smoot and (in effect) John Martin admit that they are residents of Los Angeles County.' (Hear. Den.)

Club with Glen Falls Insurance Company as the surety.

In the course of its opinion reversing the order quashing service on Harrah's Club, the court stated (p. 744, 37 Cal.Rptr. p. 665): 'It is crystal clear that Harrah's South Shore Corporation is nothing but an Alter ego, an alias, a branch, a business conduit or an instrumentality of Harrah's Club to do in California what Harrah's Club otherwise could not do.'

After various law and motion proceedings in the Nevada case, Harrah's Club filed in the Nevada court on February 20, 1963, a motion for preliminary injunction enjoining Brunzell, its officers, agents, etc., pending the final determination of the Nevada action, from proceeding against Harrah's Club, its agents and officers, in the action filed by Brunzell against Harrah's Club and others in the Superior Court of Los Angeles County. Brunzell countered by moving the Nevada court for a stay of the Nevada action.

On August 23, 1963, apparently relying on the erroneous decision of the Los Angeles County Superior Court quashing service of process upon Harrah's Club and therefore holding that the California court had no jurisdiction over Harrah's Club, the Nevada trial court granted the motion of Harrah's Club for an order enjoining Brunzell from proceeding against Harrah's Club in California. The Nevada court denied Brunzell's motion for a stay of the Nevada action. The remittitur from the California Court of Appeal was received and filed in the Los Angeles action on May 25, 1964, and on May 27, 1964, the superior court in the Los Angeles action vacated its order granting the motion of Harrah's Club to quash service of summons and complaint on Harrah's Club. Harrah's Club was given an extension of time within which to file its answer to the complaint. Harrah's Club filed in the Los Angeles action a notice of motion for a stay of proceedings as to Harrah's Club and William F. Harrah. On July 1, 1964, Brunzell filed a motion in the Los Angeles court for a preliminary injunction to restrain Harrah's Club from proceeding with the Nevada action. The motion of Harrah's Club for a stay of the California action and the motion of Brunzell for a preliminary injunction against Harrah's Club restraining it from proceeding with the Nevada action were heard in the Los Angeles Superior Court on July 13, 1964. Apparently, because of the preliminary injunction granted by the Nevada court restraining Brunzell from going forward with the Los Angeles action (based on the erroneous ruling of the California Superior Court quashing service of summons and complaint on Harrah's Club), Judge Patton, on July 23, 1964, signed a written stay order staying all proceedings in the Los Angeles action against Harrah's Club and William F. Harrah, pending disposition of the Reno lawsuit or pending termination of the injunction dated August 23, 1963, made in the Nevada case by the Nevada trial court, whichever event first occurs. Judge Patton also denied Brunzell's motion for preliminary injunction to enjoin Harrah's Club from proceeding with the Nevada case. In connection with granting the stay order the court stated: 'It appears that unless this order is made, plaintiff in this action threatens to proceed with this action in violation of the injunctive order made in the 'Reno lawsuit."

No appeal was taken by Brunzell from Judge Patton's order of July 23, 1964, denying its motion for a preliminary injunction against Harrah's Club proceeding with the Nevada action.

In Nevada, following the...