Rodgers v. Sargent Controls & Aerospace

• Decision Date: 30 January 2006
• Docket Number: No. A110023.,A110023.
• Citation: 136 Cal.App.4th 82,38 Cal.Rptr.3d 528
• Court: California Court of Appeals Court of Appeals
• Parties: James RODGERS, Plaintiff and Appellant, v. SARGENT CONTROLS & AEROSPACE, Defendant and Respondent.

38 Cal.Rptr.3d 528

136 Cal.App.4th 82

James RODGERS, Plaintiff and Appellant, v. SARGENT CONTROLS & AEROSPACE, Defendant and Respondent.

No. A110023.

Court of Appeal, First District, Division 1.

January 30, 2006.

As Modified February 7, 2006.

Brayton * Purcell, Alan R. Brayton, Esq., Gilbert L. Purcell, Esq., Lloyd F. LeRoy, Esq., Nevato, David L. Fiol, Esq., Nance F. Becker, Esq., San Francisco, for Plaintiff and Appellant.

Carroll, Burdick & McDonough LLP, James P. Cunningham, Esq., Laurie J. Hepler, Esq., San Francisco, Lee G. Sullivan, for Defendant and Respondent.

SWAGER, J.

The trial court granted respondent's motion for summary judgment and dismissed appellant's action for personal injuries caused by asbestos exposure. The court determined that appellant is bound by findings in prior superior court cases that respondent cannot be found liable to appellant as a successor entity to Arnot Marine Corporation. We conclude that the doctrine of collateral estoppel cannot be applied to appellant, and therefore remand the case to the trial court for determination of the successor liability issue on the merits.

STATEMENT OF FACTS AND PROCEDURAL HISTORY

Appellant filed the present personal injury action against respondent and other named defendants on December 5, 2000. The complaint alleged that during the course of appellant's employment duties he was exposed to "asbestos and asbestos-containing products," which caused him to develop asbestosis and other lung damage. Respondent Sargent Controls & Aerospace (respondent or Sargent) was alleged to be liable to appellant as a successor-in-interest to other corporate entities: Sargent Industries, Inc., Kahr Bearing Corporation (Kahr), Aetna Steel Products Corporation (Aetna), and Arnot Marine Corporation (Arnot).

Following discovery, respondent moved for summary judgment on the ground, among others, that it was not a successor-in-interest or alter-ego of Arnot, which was the entity alleged to be one of the sources of appellant's asbestos exposure.¹ Respondent pointed out in support of the summary judgment motion that "in two separate actions in the San Francisco Superior Court" brought by other plaintiffs represented by appellant's counsel, Vasen v. Alta Building Materials, et al. (Case No. 312211) (Vasen), and Pena v. Asbestos Defendants (Case No. 303548) (Pena), the issue of corporate succession and assumption of liability was adjudicated and resolved in its favor following evidentiary hearings.² Respondent claimed that under collateral estoppel principles appellant was barred from relitigating the issue of successor liability, and a complete defense to the action was established. In addition, respondent claimed that under the evidence presented Sargent did not acquire Arnot or its liabilities, and therefore incurred no liability as a successor corporation. In opposition to the motion appellant argued that respondent failed to establish the requisite identity of the parties to invoke the collateral estoppel doctrine.

The evidence pertinent to the summary judgment motion indicated that in 1961 appellant began his employment with Lorentzen & Co. as an "apprentice" in the field of insulation work in the Bethlehem Shipyard in San Francisco. Appellant's employment duties consisted of mixing and delivering insulation products used in the construction of two President Line ships, and "then performing cleanup." In the course of his duties appellant regularly operated in close proximity to "joiner workers" employed by Arnot, who cut and installed "Marinite panels" in the ships that contained asbestos fiber. Arnot was engaged in the performance of joiner work at shipyards.

In 1961, the net assets of Arnot, a division of Aetna, and the capital stock of its subsidiary corporation Marine Development, Inc., were purchased by Kahr in exchange for unissued common stock. Kahr was a company engaged in the manufacture and sale of bearings for the aircraft industry, but the acquisition included Arnot Marine Division. Thereafter, Arnot operated as a division of Kahr. Arnot ceased business operations in 1967, but did not dissolve as a corporate entity.

In February of 1969, respondent's predecessor, Sargent Industries, Inc., purchased 488,933 of the common outstanding shares of Kahr from a company known as GAC Corporation. Pursuant to the stock purchase agreement GAC promised to indemnify Sargent against all claims arising from "the marine division of the Corporation (which discontinued operations in 1967) whether or not disclosed." In the agreement GAC also warranted that Kahr did not have any liabilities as of December 31, 1968, save a claim listed for a debt in the amount of $38,144.29 owed by Arnot to a company engaged in a bankruptcy proceeding. The agreement also noted a creditor's claim filed by Arnot in the same bankruptcy proceeding.³ Appellant did not dispute that Sargent assumed no tort liabilities from Kahr under the stock purchase agreement.

In December of 1973, the Board of Directors of Sargent merged Kahr into Sargent, and resolved to purchase the outstanding shares of Kahr not yet held by the parent company — then less than 10 percent. Kahr was thereafter treated as a division of Sargent.

The trial court found that following the rulings in the Vasen and Pena cases appellant is collaterally estopped in the present action from claiming that "Sargent is the corporate successor" of Arnot. Based upon the lack of any successor liability, respondent's motion for summary judgment was granted, and judgment in favor of respondent was entered. This appeal followed.

DISCUSSION

Appellant challenges the trial court's ruling that he is precluded under collateral estoppel principles from litigating the merits of the issue of respondent's liability to him as a successor corporation of Arnot. Appellant focuses upon the lack of identity of parties in the prior and current actions to argue that the requirements of collateral estoppel were not met by respondent. He recognizes that the collateral estoppel doctrine had been extended to those "in privity" with parties to a prior action, but maintains that his only connection with the cases in which lack of successor liability was found—that he is represented by the "same counsel" as the "otherwise unrelated parties" — does not suffice to foreclose him from litigating an issue previously resolved in favor of respondent. Appellant therefore claims that "the doctrine of collateral estoppel was improperly applied by the trial court" to decide the summary judgment motion, "and its order and judgment must be reversed."

"The standard for deciding a summary judgment motion is well-established, as is the standard of review on appeal. `[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law.... There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.' [Citation.]" (Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 572, 32 Cal.Rptr.3d 244.)

"Summary judgment is an appropriate remedy when the doctrine of collateral estoppel refutes all triable issues of fact suggested by the pleadings and supporting documents. [Citation.] We review the trial court's decision de novo." (Kelly v. Vons Companies, Inc. (1998) 67 Cal.App.4th 1329, 1335, 79 Cal.Rptr.2d 763.)

I. The Claim of Waiver of the Collateral Estoppel Defense.

As a threshold matter we find that respondent did not waive the issue of collateral estoppel by failing to plead it as an affirmative defense, as asserted by appellant. We observe that only the preclusion of relitigation of claims pursuant to the principles of res judicata is an affirmative defense that must be pled or otherwise raised in the trial court to avoid waiver. (Dillard v. McKnight (1949) 34 Cal.2d 209, 219, 209 P.2d 387; David v. Hermann (2005) 129 Cal.App.4th 672, 683, 28 Cal.Rptr.3d 622; Walton v. City of Red Bluff (1991) 2 Cal.App.4th 117, 131, 3 Cal.Rptr.2d 275.) "[R]es judicata (precluding the relitigation of claims) must be pleaded, while collateral estoppel (a subset of res judicata precluding the relitigation of issues) need not be." (Thibodeau v. Crum (1992) 4 Cal.App.4th 749, 758, 6 Cal.Rptr.2d 27.) "[C]ollateral estoppel is waived if not raised in the trial court." (People v. Morales (2003) 112 Cal.App.4th 1176, 1185, 5 Cal.Rptr.3d 615, italics added.) Collateral estoppel as a defense need not be alleged in an answer or other responsive pleading, particularly where, as here, the evidence to support it — that is, a prior adjudication of the issue — did not then exist. "`A defense founded upon the conclusiveness of a former adjudication must be either pleaded or proved. [Citations.] Such defense is waived if not raised either by the pleadings or the evidence. [Citations.]' [Citation.]" (People v. Neely (1999) 70 Cal.App.4th 767, 782, 82 Cal.Rptr.2d 886, italics added.) "Where a party joins issue on a question previously litigated or voluntarily opens an investigation of matters which he might claim to be concluded by a prior judgment, he will be held to have waived his right to assert the benefit of the former adjudication and the case will be determined without regard therefor." (Dillard v. McKnight, supra, at p. 219, 209 P.2d 387.)

Here, the issue of successor liability had not been resolved in the other cases until after respondent filed an answer to appellant's complaint in February of 2001. Respondent then raised the issue of the collateral estoppel effect of orders in the Vasen and Pena cases in its summary judgment motion, in conjunction with the alternative contention that if the prior rulings were not considered binding, successor liability was nevertheless negated by the evidence. Respondent...