Mib, Inc. v. Superior Court

• Decision Date: 28 May 1980
• Court: California Court of Appeals Court of Appeals
• Parties: MIB, INC., Petitioner, v. The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; Laslo BERESH and Ibolya Beresh, Real Parties in Interest. Civ. 58101.

Page 828

164 Cal.Rptr. 828

106 Cal.App.3d 228

MIB, INC., Petitioner, v. The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent Laslo BERESH and Ibolya Beresh, Real Parties in Interest.

Civ. 58101.

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

May 28, 1980.

Hearing Denied July 23, 1980.

Munger, Tolles & Rickershauser and Allen M. Katz, Los Angeles, for petitioner.

Lee J. Grant, Encino, for real party Ibolya Beresh.

Laslo Beresh in pro. per.

FILES, Presiding Justice.

The critical issue in this proceeding is whether a finding in a former action that a nonresident defendant is not subject to California process is res judicata in a subsequent action brought by the same plaintiffs against the same defendant, which concededly has not changed its relationship to California since the former decision was made. We have concluded that res judicata applies, and that the nonresident defendant is entitled to an order quashing service of process in the current action.

The petitioner here, MIB, Inc., formerly called Medical Information Bureau, is a Delaware nonprofit corporation engaged in the business of interchanging information with and for life insurance companies who are its members for the protection of the members against fraudulent applications for insurance. The complaint filed on August 25, 1978, by Laslo and Ibolya Beresh in the Los Angeles Superior Court, alleges that petitioner and certain of its members have disseminated inaccurate and false information concerning plaintiffs and have refused to make disclosures to plaintiffs in conformity with the federal Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.).

Process was served upon MIB, Inc., by mailing to its office in Greenwich, Connecticut.

MIB, Inc., filed a motion pursuant to Code of Civil Procedure section 418.10 to quash the service of summons upon the ground of lack of jurisdiction, in that MIB, Inc., did not have sufficient contact with the state of California to be subject to suit here, and on the ground that determinations of the issue of jurisdiction in each of three prior actions were res judicata. In support of that motion MIB asked the court to take judicial notice of two actions which had been brought in the Los Angeles Superior Court (numbers C 198233 and C 212268), where service had been quashed on August 25, 1977, and December 6, 1977 respectively, and a third action brought in the United States District Court for the Central District of California (number CV 78-0662-RF), where service had been quashed on April 24, 1978.

We have before us the motions to quash and the orders quashing service of process in the three earlier actions. In each case the trial court determined that the plaintiff had failed to establish that the moving party defendant had sufficient contacts with the state of California to be subject to suit in the courts of this state.

In the fourth case, which is the subject of this mandate proceeding, the minute order of the trial court denying the motion to quash states:

"1. Judicial notice: Court takes judicial notice of Los Angeles Superior Court cases C198233 and C212268 and of US District Court (Central District of California) case CV78-0662-(RF).

"2. Res judicata and collateral estoppel: The in personum jurisdiction rulings in the judicially-noticed cases are not res judicata in this case nor is the doctrine of collateral estoppel applicable. This court finds personal jurisdiction on the basis that the acts of defendant-moving party done outside the state caused an effect within this state."

Plaintiffs do not contend that MIB has changed its activity in any significant respect since the three earlier cases were decided. Plaintiffs seek to justify this fourth attempt on the grounds that (1) they have made a stronger showing based upon newly discovered evidence; (2) they have pleaded new causes allegedly arising since the prior rulings; (3) additional defendants have been joined in the present action; and (4) MIB changed its form from an unincorporated association to a membership nonprofit corporation after the first three cases were decided.

The fact is that Medical Information Bureau, an unincorporated association, incorporated on May 25, 1978, under the laws of Delaware, as MIB, Inc., and continued to carry on the business which had been conducted by the association. The current complaint by the Bereshes was filed August 25, 1978. This complaint, like the complaints in the three prior actions, named as a defendant "Medical Information Bureau (MIB), a nonprofit unincorporated association." This complaint, like the earlier ones, is based upon an alleged course of conduct commencing in 1976. MIB, Inc., appearing specially for the purpose of moving to quash service of process, identified itself as the successor in interest of the unincorporated association. It is clear that the parties recognize, as do we, that, for the purpose of this jurisdictional issue, the corporation and the association are the same entity. ¹

The standard for determining personal jurisdiction over a foreign association is not significantly different from the standard applied to a foreign corporation. (See International Aerial Tramway Corp. v. Konrad Doppelmayr & Sohn (1969) 70 Cal.2d 400, 404, 74 Cal.Rptr. 908, 450 P.2d 284; Lewis Mfg. Co. v. Superior Court (1956) 140 Cal.App.2d 245, 295 P.2d 145; 1 Witkin Cal. Procedure, 2d ed. 1970, Jurisdiction, § 113, p. 642.) It follows that the change in the form of organization has no materiality in this case.

The Restatement of Judgments, section 49 states:

"Where a valid and final personal judgment not on the merits is rendered in favor of the defendant, the plaintiff is not thereby precluded from thereafter maintaining an action on the original cause of action and the judgment is conclusive only as to what is actually decided."

Comment b states:

"b. Effect of judgment as to issues decided. Although, where the judgment for the defendant is not on the merits, the plaintiff is not precluded from maintaining a new action on the same cause of action, he is precluded from relitigating the very question which was litigated in the prior action."

We have found very little discussion in the case law bearing upon the logical application of this principle to an adjudication that the court has no jurisdiction over the person of the defendant.

The single case which we have found which applied this rule to the issue of jurisdiction over the person is Archie v. Piaggo & Co. (1968) 109 N.H. 162, 245 A.2d 76.

There the plaintiff had filed a tort action which was dismissed upon the ground that jurisdiction over the defendant corporation could not be had in New Hampshire. A second action between the same parties was dismissed, and the dismissal was upheld in the Supreme Court upon the ground that plaintiff was "directly estopped to relitigate matters actually litigated or admitted by the pleadings in a former suit."

Other cases in California and elsewhere support the principle that a finding with respect to jurisdictional facts will be treated as res judicata in subsequent actions, although the dismissal is not res judicata on the merits of the underlying cause of action.

In Nichols v. Canoga Industries (1978) 83 Cal.App.3d 956, 148 Cal.Rptr. 459 the appellate court held that the decision of a federal court that it lacked jurisdiction over the subject matter did not have res judicata effect on the underlying action for breach of contract. The Nichols court explained (at p. 967, 148 Cal.Rptr. at p. 466):

"A dismissal for lack of jurisdiction is not res judicata (citations), and does not by the operation of collateral estoppel bar relitigation of substantive issues raised (4 Witkin, Cal.Procedure, supra, Judgment, §§ 210, 211) except as to issues necessary for the determination of jurisdiction. (Shore v. Shore (1954) 43 Cal.2d 677, 277 P.2d 4.)"

Shore v. Shore, cited in Nichols, supra, discussed the effect of a prior annulment of marriage proceeding in which the decree had stated "That the Court, finding both parties at fault in the purported marriage, declines for lack of jurisdiction to make any award of property alleged to be community in character."

The Supreme Court pointed out (at p. 681, 277 P.2d at p. 6) that "although a judgment refusing to determine an issue on the ground of lack of jurisdiction is not ordinarily res judicata (citations) when the decision on the jurisdictional question is based upon a determination of the merits of an issue before the court, it constitutes a binding determination of that issue."

In County of Los Angeles v. Superior Court (1933) 128 Cal.App. 522, 18 P.2d 112, the juvenile court for Los Angeles County had found that the minor was a resident of Alameda County and transferred the case there. The Alameda court then found the residence to be Los Angeles and ordered the case back. Los...