Kahn v. Kahn

• Decision Date: 24 March 1977
• Court: California Court of Appeals Court of Appeals
• Parties: Henry KAHN, Plaintiff and Appellant, v. Melvin KAHN, Defendant and Respondent. Civ. 39273.

Page 332

137 Cal.Rptr. 332

68 Cal.App.3d 372

Henry KAHN, Plaintiff and Appellant, v. Melvin KAHN, Defendant and Respondent.

Civ. 39273.

Court of Appeal, First District, Division 1, California.

March 24, 1977.

Hearing Denied May 19, 1977.

William P. Daley, Oakland, for plaintiff and appellant.

Trump, Kouba & Dickson, San Francisco, for defendant and respondent.

LAZARUS, ^* Associate Justice (Assigned).

We are confronted on this appeal with a crucial question that seems to be of first impression in this jurisdiction: Is the dismissal of an action invoked as a sanction under Code of Civil Procedure section 2034, subdivision (b)(2) for failure to comply with the discovery rules a dismissal on the merits barring another action involving the same parties and subject matter?

This litigation arises from a dispute over property rights between two brothers who were former partners in a furniture business. The appeal is from a judgment of dismissal of the second of two suits (the first being the one in which sanctions were applied) commenced by Henry Kahn against Melvin Kahn pursuant to an order sustaining a demurrer without leave to amend. It is conceded that both actions were based on the same causes of action. The demurrer to the complaint in the second case was sustained on the ground that 'the former action is res judicata and a bar to maintenance of this action.'

The original lawsuit was commenced on November 30, 1971, by Henry in the Alameda County Superior Court to impress a constructive trust on four parcels of real property. They included commercial properties in Oakland and Alameda, and a duplex and an unimproved lot in alameda. The gravamen of the complaint was that before their estrangement a fiduciary relationship existed between them. During that happier period in their relationship, Henry, upon the advice and urging of Melvin, transferred title to each of the parcels of real property to the latter without consideration. While these transactions occurred at different intervals of time, the complaint makes it clear that each took place at a time that Henry was having either business or marital problems and were calculated to shield his real property from the reach of his creditors or his wife. It was also averred that on each occasion it was orally agreed that Henry would continue to make the mortgage and tax payments for each parcel and that Melvin would reconvey the property to Henry on demand. Thereafter Henry did in fact make the payments for each of the four parcels of property. Finally, the complaint alleged, in 1964 Henry made demand upon Melvin for a reconveyance of the property. Negotiations as to the terms of the reconveyance continued until 1971, but without progress. Henry therefore concluded that his brother's adamant position with regard to the negotiations was tantamount to a refusal to convey the property, hence the ensuing court action. In addition to equitable relief, he also prayed for both general and punitive damages in substantial amounts.

After a number of preliminary skirmishes in the trial court, Henry was cited to appear before Judge John P. Sparrow to show cause why sanctions should not be imposed against him for failure to comply with a discovery order. There was no appearance for appellant on the return date, the attorney who had been substituted for his former counsel having evidently miscalendared the hearing. In any event, on April 3, 1975, Judge Sparrow signed his order that upon defendant's motion, 'The Court having duly heard and considered the matter,' the cause 'is hereby dismissed' on the grounds that 'plaintiff has wilfully failed and refused to comply with orders of this Court to give discovery.' There has been no direct attack on that order.

Later, Lawrence Jarvis, the newly retained attorney for Henry, learned what had happened. He thereupon went out to the judge's courtroom and asked the court clerk if the dismissal was with or without prejudice. The clerk, after taking the matter up with Judge Sparrow, returned and informed Jarvis only that the action had been 'just dismissed.'

Instead of attempting to set aside the dismissal by motion to reconsider or appeal from the judgment, appellant filed the present action on April 22, 1975. The allegations of the complaint in the new action were almost identical with those set forth in the pleadings in the first action, with one unimportant exception--one of the four parcels of real property described in the original pleading was for some reason omitted from the subsequent complaint. A demurrer to that complaint was filed on May 23, 1975, on the ground that the prior action between the parties based upon the same causes of action was still pending (the time for appeal from the judgment entered therein not having expired). The demurrer prayed, inter alia, for an order barring any further action in the second suit until after final determination of the first action. In response, Henry filed what purported to be a request for voluntary dismissal of the first action. On June 23, 1975, Melvin demurred again to the complaint in the second action, this time on the ground that the judgment in the original case had in the meantime become final, and was res judicata as to all issues in the second suit. The order and judgment from which this appeal was taken resulted.

The primary issue on this appeal is therefore as to whether the dismissal of the first action for failure to comply with the discovery orders was actually an adjudication on the merits which would bar the subsequent action. ¹ Respondent presents other issues (raised for the first time on appeal) as alternative grounds for affirming the judgment below. These include questions involving the bar of the statute of limitations and the application of the unclean hands doctrine. Such matters will, of course, become moot if this court agrees with respondent that the final judgment of dismissal in the first action must be deemed to have had the force and effect of an adjudication on the merits. Since we do agree for reasons that follow, it becomes inappropriate for us to pass upon these collateral issues.

I. The prior judgment was res judicata, barring a subsequent action involving the same parties and subject matter.

Appellant earnestly relies upon the well settled rule that a judgment of dismissal is not res judicata unless it was on the merits. (Gonsalves v. Bank of America (1940) 16 Cal.2d 169, 172--173, 105 P.2d 118; Goddard v. Security Title Ins. & Guar. Co. (1939) 14 Cal.2d 47, 52--53, 92 P.2d 804; Campanella v. Campanella (1928) 204 Cal. 515, 520--521, 269 P. 433.) He argues that a dismissal as a discovery sanction (unless otherwise specified in the order) is merely a procedural technicality that is not dispositive of the case on its merits. ² Respondent contends otherwise, arguing that as a matter of statutory construction, and under federal case law construing the res judicata effect of a dismissal under Federal Rules of Civil Procedure rule 37(b)(2)(C) (the progenitor of Code Civ.Proc., § 2034, subd. (b)(2)), the judgment below should be affirmed. Both parties concede at the outset, however, that as heretofore noted, the question is one that has never before been the subject of appellate decision in California.

We therefore start our unchartered course with the following precept taken from Moch v. Superior Court (1919), 39 Cal.App. 471 at pages 475--476, 179 P. 440, at page 441, 'In considering the question whether or not this judgment was an adjudication of the merits of the controversy, it must be conceded that the use of the word 'dismissed' is not determinative. The cases are not rare wherein judgments or orders purporting to be merely 'dismissals' have been held to be final adjudications upon the merits. This question is to be determined, not on the basis of any single word or phrase used, but upon a consideration of the entire 'judgment,' together with the pleadings and the findings, in the light of the provisions, the scope and the apparent purpose of the (applicable) court law.'

The grounds on which an action may be dismissed are generally prescribed by statute. ³ We must therefore look first to the statutory framework from which the present inquiry must be resolved. A. The prior judgment is res judicata under the applicable statutory provisions in California as reasonably interpreted.

Code of Civil Procedure section 2034, subdivision (b)(2), the statutory basis for the dismissal in the instant case, states in pertinent part: 'If any party or person for whose immediate benefit the action or proceeding is prosecuted or defended . . . refuses to obey an order made under subdivision (a) of this section . . . the Court may make such orders in regard to the refusal as are just, and among others the following: . . . ( ) (iii) An order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or Dismissing the action or proceeding or any part thereof, or Rendering a judgment by default against the disobedient party; . . .' (Emphasis added.)

Various express grounds for involuntary dismissal are conferred on the courts by Code of Civil Procedures sections 581--583 as part of title 8, chapter 1, under the title 'Judgment in General.' Sections 581, 581a, 581c and 583 state generally the statutory grounds for dismissal, either with or without prejudice. All dismissals ordered by the court when filed and entered in the manner prescribed by statute 'shall constitute judgments and be effective for all purposes.' (Code Civ.Proc., § 581d.) Finally, section 582 reads: 'In all other cases (presumably those not mentioned in tit. 8, ch. 1) judgment chall be rendered on the merits.' However, the latter section does not apply where the record affirmatively shows that there was not an actual determination on the merits. ⁴

The civil discovery statutes (Code Civ.Proc., §§ 2016--2035), it has been said, are intended "(1...