Ducoing Mgmt. Inc. v. Superior Court of Orange Cnty.

• Decision Date: 01 January 2015
• Docket Number: G050457
• Citation: 183 Cal.Rptr.3d 548,234 Cal.App.4th 306
• Court: California Court of Appeals Court of Appeals
• Parties: DUCOING MANAGEMENT INC., Petitioner, v. The SUPERIOR COURT OF ORANGE COUNTY, Respondent, Winston & Associates Insurance Brokers, Inc., et al., Real Parties in Interest.

234 Cal.App.4th 306

183 Cal.Rptr.3d 548

DUCOING MANAGEMENT INC., Petitioner,

v. The SUPERIOR COURT OF ORANGE COUNTY, Respondent,Winston & Associates Insurance Brokers, Inc., et al., Real Parties in Interest.

G050457

Court of Appeal, Fourth District, Division 3, California.

Filed 2/10/2015

See 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 853.

Original proceedings; petition for a writ of mandate to challenge an order of the Superior Court of Orange County, John C. Gastelum, Judge. Petition granted. Motion for Sanctions. Denied. (Super. Ct. No. 30–2010–00361854)

Foley Bezek Behle & Curtis, Roger N. Behle, Jr., Costa Mesa, Justin P. Karczag, Santa Barbara and Muhammed T. Hussain, Los Angeles, for Petitioner.

No appearance for Respondent.

Wood, Smith, Henning & Berman, Seymour B. Everett III, Newport Beach,David L. Martin and Christopher C. Hossellman for Real Parties in Interest.

OPINION

THE COURT: ^*

Introduction

This writ petition demonstrates the importance of the disposition in an appellate opinion in determining the form of judicial relief, particularly when the disposition reverses a judgment and remands for retrial. The disposition articulates what the trial court should do, with clear and understandable instructions, and whether and how the trial court should exercise its discretion upon remand.

Here, this court issued an opinion in an appeal from two plaintiffs, represented by the same counsel, who were both nonsuited at trial. We affirmed the judgment of nonsuit as to the first plaintiff, but reversed the judgment “in all other respects,” and remanded the matter for a retrial by the second plaintiff. Essentially, we left plaintiffs' claims intact, holding they properly were pursued in their entirety by the second plaintiff, the first plaintiff being superfluous for purposes of recovery. We awarded no costs on appeal. No party filed a petition for rehearing.

Are defendants automatically entitled to recover all their trial costs as prevailing parties from the first plaintiff, without further review by the trial court following the appellate judgment? If yes, defendants will succeed in recovering their very substantial trial costs from the first trial even though all plaintiffs' original litigation objectives yet may be achieved by and through the one remaining plaintiff at the second trial.

In this writ proceeding, we apply the plain words of the disposition to preclude such an irrational outcome. Because we reversed the judgment “in all other respects,” our disposition reversed not only the judgment of nonsuit as to the second plaintiff, but also that portion of the judgment which assessed unapportioned costs against both plaintiffs. In accordance with our prior notification to the parties, we issue a peremptory writ in the first instance to effectuate the clear meaning of our disposition.

Statement of Facts and Procedural History

In Ducoing Enterprises, Inc. v. Winston & Associates Insurance Brokers, Inc. (Sept. 9, 2013, G046734, 2013 WL 4782809) [nonpub. opn.] (hereafter Slip Opn.), we considered an appeal from a judgment of nonsuit in a trial against real parties, an insurance broker and his insurance brokerage, who were sued for negligent failure to procure insurance coverage.

Brent and Ami Ducoing, a married couple, created a corporation, Ducoing Enterprises, Inc. (DEI), to provide painting services. At their accountant's advice and with real party's assistance, the Ducoings later created another corporation, petitioner Ducoing Management, Inc. (petitioner), ostensibly to take advantage of lower rates for workers' compensation insurance. Both petitioner and DEI do business under the fictitious name “Perfection Painting.” A dishonest payroll manager concocted a scheme to create so-called “ghost” employees and embezzled more than $90,000, causing substantial losses. To their consternation, the Ducoings discovered their current coverage did not include employee dishonesty coverage, even though real party recalled that employee dishonesty coverage had been included in prior policies. (Slip Opn. at pp. 2–7.)

In April 2010, petitioner and DEI filed suit against real parties for negligence, negligent misrepresentation, and breach of fiduciary duty in failing to procure full insurance coverage with “ ‘all the bells and whistles,’ ” as allegedly promised by the insurance broker. (Slip Opn. at p. 3.) Petitioner and DEI jointly pursued the same causes of action, and jointly sought the same damages from real parties.

The matter came to jury trial over several days in January 2012. At the close of plaintiffs' case-in-chief, the trial court (Judge David R. Chaffee) granted real parties' motion for nonsuit against both petitioner and DEI. The trial court reasoned that DEI sustained no loss because the payroll manager only stole money from petitioner, not DEI, and because real parties owed no duty to petitioner to provide employee dishonesty coverage; such duties, if any, were owed only to DEI. (Slip Opn. at pp. 7–8.)

On March 28, 2012, the trial court entered judgment in favor of real parties and against petitioner and DEI. In the first paragraph, the trial court ordered that real parties “shall have JUDGMENT entered in their favor and against PLAINTIFFS, DUCOING MANAGEMENT, INC., and DUCOING ENTERPRISES, INC. dba PERFECTION PAINTING (hereinafter ‘Plaintiffs') who shall recover nothing by reason of their Complaint against Defendants.” In the second paragraph, the trial court ordered that real parties were entitled to costs in the amount of $50,089.

Both petitioner and DEI appealed from the March 28, 2012 judgment.

On September 9, 2013, we filed our unpublished decision in the Ducoing appeal. The decision affirmed the judgment of nonsuit as to petitioner, but reversed the judgment “[i]n all other respects,” and remanded the matter for “further proceedings.” (Slip Opn. at p. 11.)

Here is our disposition in the Ducoingappeal: “The judgment against [petitioner] is affirmed. In all other respects, the judgment is reversed and the matter is remanded for further proceedings. In the interest of justice, no party may recover costs incurred on appeal.” (Slip Opn. at p. 11, italics added.)

In particular, we reversed the trial court on its key evidentiary finding: that the payroll manager's theft did not affect DEI. We held “[t]he evidence at trial established that all of the money stolen by [the payroll manager] came from DEI.” (Slip Opn. at p. 9, italics added.) “This is not a matter of blurring corporate distinctions, as the trial court stated. The money embezzled by [the payroll manager] came from her employer, DEI. Although the falsified checks were drawn from [petitioner's] payroll account, the money came from DEI.” ( Ibid.)

As to petitioner, we affirmed the judgment of nonsuit, but for a different reason than that provided by the trial court. Because the payroll manager was not petitioner's employee, we concluded that petitioner could have no claim under any employee dishonesty coverage, even were real parties to owe a duty of reasonable care to petitioner to procure such protection. We stated: “But one fact is dispositive: [The payroll manager] was not an employee of [petitioner] at the time her dishonest conduct occurred. She was employed by DEI. Thus even if [real parties] owed [petitioner] a duty of care, and breached that duty of care by failing to procure employee dishonesty coverage for [petitioner], no claim could have been made by [petitioner] under such coverage.” (Slip Opn. at p. 10.)

As a result of our opinion in the Ducoingappeal, real parties remained potentiallyliable for all damages proximately caused by their negligent failure to provide employee dishonesty coverage. Real parties did not file a petition for rehearing, nor did they seek clarification of our disposition.

Following the remand, the case was reassigned to a different trial judge (Judge John C. Gastelum), who set the matter for retrial as to DEI.

Instead of filing a new cost bill to seek costs against petitioner alone, real parties began trying to execute against petitioner on the full amount ($50,089) of the original joint cost award in the March 28, 2012 judgment. They secured an order from the trial court for petitioner to appear at a judgment debtor examination, and they placed liens on its bank accounts.

Petitioner filed a motion to quash the judgment debtor examination, and for an order deeming the costs portion of the March 28, 2012 judgment to be unenforceable. According to petitioner, “... all Defendants still face the very same claims and damages that they faced in the original trial. The Court of Appeal merely confirmed that these claims and damages may not be pursued jointly by both [petitioner] and DEI, but may be pursued by DEI, alone.”

The trial court denied petitioner's motion. The court construed our disposition affirming the judgment against petitioner to include the full cost award of $50,089. The court held it had no power to stay enforcement.

Petitioner timely filed a writ petition, with an immediate stay request, and real parties filed a preliminary opposition. After reviewing the submitted documents, we granted an immediate stay of the scheduled judgment debtor examination and any further enforcement efforts. We issued a Palma notice and gave real parties the option of filing a further supplemental response. (Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, 179, 203 Cal.Rptr. 626, 681 P.2d 893 (Palma ).) Real parties filed a supplemental response, with supporting exhibits.

We issued our original per curiam opinion on September 19, 2014. On October 15, 2014, we granted real parties' petition for rehearing, and augmented the record to include some additional proceedings below.

Discussion

A. We Exercise De Novo Review of the Dispositional Language in the Ducoing Opinion.

The disposition constitutes the rendition of the judgment of appeal, and is the part of the opinion where we, in popular...