Ruffu v. Haney

• Decision Date: 07 February 2011
• Docket Number: No. GC041133,B218864,GC041133
• Parties: GAIL E. RUFFU, Plaintiff and Appellant, v. STEVEN H. HANEY et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

GAIL E. RUFFU, Plaintiff and Appellant,

v.STEVEN H. HANEY et al., Defendants and Respondents.

B218864

No. GC041133

COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

Filed: February 7, 2011

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

APPEAL from a judgment of the Superior Court of Los Angeles County, C. Edward Simpson, Judge. Affirmed.

Gail E. Ruffu, in pro. per., for Plaintiff and Appellant.

Haney, Buchanan & Patterson and Steven H. Haney for Defendants and Respondents.

Appellant Gail E. Ruffu, a horse trainer, brought an action against respondents for breach of a contract regarding a racehorse named Urgent Envoy. The trial court dismissed the action on the ground that the decision in an administrative proceeding before the California Horse Racing Board (CHRB) collaterally estopped Ruffu's claims. We affirm.

RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

In 2003, Ruffu entered into a syndicate agreement with respondents Steven H. Haney, Richard Seiden, Hal Haney, and Norton Copper regarding the purchase and training of Urgent Envoy. Under the agreement, Ruffu and the four respondents each held a 20 percent ownership interest in Urgent Envoy. Ruffu was designated the "[s]yndicate [m]anager," and provided training services.

On December 27, 2004, the CHRB filed a complaint against Ruffu, alleging that she had improperly taken Urgent Envoy from horse trainer Richard Baltas at Hollywood Park. In January 2005, following a formal hearing on the complaint, the Board of Stewards (stewards) ordered Ruffu to return the horse to Baltas. Ruffu noticed an appeal from the order, which was heard by Judge Michael A. Scarlett, an administrative law judge. On September 20, 2005, after an evidentiary hearing, Judge Scarlett issued a proposed decision sustaining the stewards' order and directing Ruffu to return the horse. The proposed decision stated: "Failure to return the horse within [a specified] period of time shall result in the suspension of [Ruffu's] horse trainer's license...." In November 2005, the CHRB adopted Judge Scarlett's findings and conclusions of law, but struck the statement that Ruffu would lose her license if she failed to return the horse within the specified period. Following the CHRB's decision, Ruffu never returned Urgent Envoy.¹

In July 2008, Ruffu initiated the underlying action against respondents together with Baltas, the CHRB, the stewards, and Judge Scarlett. Her original and first amended complaints alleged that respondents had breached the syndicate agreement regarding Urgent Envoy, and engaged in wrongful conduct involving the CHRB. After the CHRB, the stewards, and Judge Scarlett successfully demurred to the first amended complaint, the trial court dismissed them from the action.²

On December 19, 2008, Ruffu filed her second amended complaint (SAC) against respondents, which asserts claims for breach of the syndicate agreement and the implied covenant of good faith and fair dealing. The SAC alleges that respondents' misconduct began on July 15, 2004, when respondents secretly decided to remove Urgent Envoy from her care. Later, at a clandestine meeting with the stewards of Santa Anita Park, respondents made false statements regarding Ruffu's conduct and obtained an order directing the horse's transfer to Baltas. On July 17, 2004, respondents supervised the horse's forcible transfer from Ruffu's barn at Santa Anita Park. Following the transfer, respondents excluded Ruffu from decisions regarding the horse, and placed it under the supervision of Baltas, whose irresponsible training activities injured it. In December 2004, Ruffu "rescue[d] Urgent Envoy by removing him from [respondents'] custody and keeping him safe from [respondents'] reckless disregard for his welfare."

Respondents demurred to the SAC, contending that Ruffu's claims were collaterally estopped by Judge Scarlett's decision in the CHRB proceedings following Ruffu's conduct in December 2004. On February 3, 2009, the trial court overruled respondents' demurrer. Later, shortly before trial, respondents filed a motion to dismiss Ruffu's action on the basis of collateral estoppel. In support of the motion, respondents asked the trial court to take judicial notice of Judge Scarlett's decision, and also submitted a full transcript of the hearing before Judge Scarlett. Following a hearing, the trial court granted the motion. Judgment was entered in respondents' favor on August 14, 2009.

DISCUSSION

Ruffu contends that the trial court improperly dismissed her action against respondents. For the reasons explained below, we disagree.

A. Governing Principles

Collateral estoppel ordinarily bars the relitigation of an issue decided at a previous proceeding when the following threshold requirements are satisfied: "1) the issue to be precluded must be identical to that decided in the prior proceeding; 2) the issue must have been actually litigated at that time; 3) the issue must have been necessarily decided; 4) the decision in the prior proceeding must be final and on the merits; and 5) the party against whom preclusion is sought must be in privity with the party to the former proceeding." (People v. Garcia (2006) 39 Cal.4th 1070, 1077.)³ The doctrine encompasses factual issues {id. at p. 1076), as well as legal issues wholly grounded in the facts underlying the first decision (Flores v. Transamerica HomeFirst, Inc. (2001) 93 Cal.App.4th 846, 852). Under the doctrine, a final decision in an administrative adjudication may be given collateral estoppel effect in a subsequent judicial proceeding if "the agency was acting in a judicial capacity" and the threshold requirements are satisfied. (Brosterhous v. State Bar (1995) 12 Cal.4th 315, 324.) The party asserting collateral estoppel has the burden of establishing these elements. (See Lucido v. Superior Court (1990) 51 Cal.3d 335, 341.)

Here, respondents raised their collateral estoppel defense in a motion to dismiss, rather than in a motion for summary judgment. Ordinarily, after the defendants in an action have answered the complaint, the appropriate vehicle for establishing a collateral estoppel defense prior to trial is by motion for summary judgment. (Kelly v. Vons Companies, Inc. (1998) 67 Cal.App.4th 1329, 1334.) However, when the answer has been filed, "[a]n action may be dismissed upon motion where the complaint does not state a cause of action and cannot be amended to state such. [Citations.] The motion is in the nature of a general demurrer. [Citation.] An order granting the motion is tantamount to an ordersustaining a demurrer without leave to amend. [Citation.]" (Timberlake v. Schwank (1967) 248 Cal.App.2d 708, 710.)

Respondents' motion to dismiss amounted to a general demurrer, as it challenged the SAC's legal sufficiency. Generally, defenses predicated on principles of res judicata and collateral estoppel may be raised on demurrer when all facts "are within the complaint or subject to judicial notice." (Carroll v. Puritan Leasing Co. (1978) 77 Cal.App.3d 481, 485; see Barker v. Hull (1987) 191 Cal.App.3d 221, 226-227.) Because respondents predicated their collateral estoppel defense solely on matters subject to judicial notice (Hogen v. Valley Hospital (1983) 147 Cal.App.3d 119, 125 [administrative records and files may be judicially noticed]; Agostini v. Strycula (1965) 231 Cal.App.2d 804, 806 [same]), the motion effectively contended that the SAC failed to state a claim. Accordingly, we review the ruling on the motion under the principles applicable to demurrers.

"Because a demurrer both tests the legal sufficiency of the complaint and involves the trial court's discretion, an appellate court employs two separate standards of review on appeal. [Citation.]... Appellate courts first review the complaint de novo to determine whether or not the... complaint alleges facts sufficient to state a cause of action under any legal theory, [citation], or in other words, to determine whether or not the trial court erroneously sustained the demurrer as a matter of law. [Citation.]" (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 879.) "Second, if a trial court sustains a demurrer without leave to amend, appellate courts determine whether or not the plaintiff could amend the complaint to state a cause of action. [Citation.]" (Id. at p. 879, fn. 9.)

Under the first standard of review, "we examine the complaint's factual allegations to determine whether they state a cause of action on any available legal theory. [Citation.] We treat the demurrer as admitting all material facts whichwere properly pleaded. [Citation.] However, we will not assume the truth of contentions, deductions, or conclusions of fact or law [citation], and we may disregard any allegations that are contrary to the law or to a fact of which judicial notice may be taken. [Citation.]" (Ellenberger v. Espinosa (1994) 30 Cal.App.4th 943, 947.) Under the second standard of review, the burden falls upon the plaintiff to show what facts he or she could plead to cure the existing defects in the complaint. (Cantu v. Resolution Trust Corp., supra, 4 Cal.App.4th at p. 890.) "To meet this burden, a plaintiff must submit a proposed amended complaint or, on appeal, enumerate the facts and demonstrate how those facts establish a cause of action." (Ibid.)

B. Proceedings Before Judge Scarlett

We begin by examining the hearing before Judge Scarlett and his decision.⁴ Generally, jurisdiction over horse racing operations in California is vested in the CHRB, which is authorized to delegate enforcement of its rules to "duly appointed stewards." (Jamgotchian v. Slender (2009) 170 Cal.App.4th 1384, 1398.) When the stewards...