Shapell Industries, Inc. v. Superior Court
| Decision Date | 19 September 2005 |
| Docket Number | No. B181881.,B181881. |
| Citation | 132 Cal.App.4th 1101,34 Cal.Rptr.3d 149 |
| Court | California Court of Appeals Court of Appeals |
| Parties | SHAPELL INDUSTRIES, INC., et al., Petitioners, v. The SUPERIOR COURT of Los Angeles County, Respondent; Allan Stark, Real Party in Interest. |
Wood, Smith, Henning & Berman, Stephen J. Henning, Tod R. Dubow, Los Angeles and Eve A. Brackmann for Petitioners.
No appearance for Respondent.
Susman Godfrey, Marc M. Seltzer, David H. Orozco, Los Angeles, Rachel S. Black, Seattle, WA, and Kathryn P. Hoek, Newport Beach, for Real Party in Interest Allan Stark.
Petitioners Shapell Industries, Inc. and Shapell Industries Escrow1 challenge the respondent superior court's order granting a motion for leave to file a second amended complaint adding a new plaintiff as an individual and as the representative plaintiff of an uncertified class. Shapell contends the trial court lacked subject matter jurisdiction to allow the second amended complaint to be filed to add a new plaintiff, real party in interest Allan Stark, because the original plaintiff, Steven J. Borecki, had voluntarily dismissed himself as a party to the action, after attempting to name Stark as a coplaintiff in a first amended complaint without first obtaining leave of court. According to Shapell, Borecki dismissed the entire action, thus divesting the trial court of subject matter jurisdiction. Shapell further contends that neither Stark nor Borecki had standing to seek leave to file a second amended complaint because the voluntary dismissal removed Borecki from the action and Stark was never properly made a party to the action.
We issued an order to show cause in this original proceeding. We now conclude that the order of dismissal pertained to Borecki alone, and that his dismissal did not divest the trial court of subject matter jurisdiction, such that it became incompetent to continue to hear the matter and permit the second amended complaint to be filed naming Stark as the representative plaintiff. The petition for extraordinary writ is denied.
Borecki filed a complaint in February 2004, alleging three causes of action on his own behalf as an individual as well as a class action on behalf of homebuyers who purchased real property from Shapell Industries, Inc. and were charged for escrow services purportedly rendered by Shapell Industries Escrow. The first cause of action was for violation of Civil Code section 2995,2 the second for violation of the unfair competition law (Bus. & Prof.Code, § 17200 et seq.), and the third for restitution.
In August 2004, Shapell's demurrer to Borecki's individual cause of action for violation of Civil Code section 2995 was sustained with leave to amend on statute of limitations grounds and for failure to state a cause of action against Shapell Industries Escrow, which is not a real estate developer.3 Demurrer was overruled as to the second and third causes of action stated by Borecki as an individual. Shapell's demurrer to the entire complaint on the basis of the class action allegations was sustained with leave to amend based on Borecki's failure to adequately plead a community of interest regarding the law and facts among the class members, the court noting that Borecki had not cited authority permitting him to represent a class even though his own claim is barred by the statute of limitations.
Borecki filed a first amended complaint on August 25, 2004, naming Allan Stark (who purchased his home in June 2002) as an additional plaintiff, in an attempt to cure the class action allegations. In response, on September 28, 2004, Shapell filed a demurrer to the first amended complaint, along with a motion to strike Stark from the amended complaint on the ground that Borecki had not sought or obtained leave of court to add Stark as a plaintiff.
While the demurrer was pending for hearing, on October 15, 2004, Borecki filed a request for dismissal of the action as to himself. The request for dismissal and supporting declaration stated that the dismissal without prejudice was as to Borecki alone, that Borecki reserved his rights as "an absent class member," and that Borecki understood that the action would continue to be litigated by Stark as the plaintiff.
The trial court granted the request for dismissal and entered an order dismissing Borecki, "without prejudice to his rights as an absent class member," on October 27, 2004.
On January 6, 2005, the trial court granted Shapell's motion to strike Stark from the first amended complaint, finding that Stark had not been effectively added as a plaintiff because leave of court had not been sought, in violation of Code of Civil Procedure section 473, and that such leave is required even where a plaintiff has been granted leave to amend a complaint upon the sustaining of a demurrer. The request to add a plaintiff must be made by way of a motion, application, or stipulation. In its minute order, the court stated: "The Court gives leave to defendant [sic] to file motion, application, and/or stipulation." The demurrer was deemed to be moot.
On January 29, 2005, Borecki filed a motion seeking leave to file a second amended complaint adding Stark as a plaintiff. The motion named Borecki as the sole plaintiff in the action—despite the fact he had been dismissed from the action—but identified Stark as the moving party. Borecki argued that the entire action was not dismissed in October 2004 because Stark was already a party to the class action by virtue of his being an absent member of the proposed class. Borecki argued that case authority permitted substitution of a qualified representative class plaintiff for a plaintiff determined to be unqualified, such that Stark was permitted to be added as a plaintiff.
Shapell filed opposition on February 7, 2005, arguing that the dismissal of Borecki at the time when Stark had not properly been added as a plaintiff terminated the trial court's subject matter jurisdiction over the entire action. As such, neither Borecki (who had voluntarily dismissed himself out), nor Stark, a nonparty, had standing to file the motion to amend. Shapell pointed out that the cases relied upon in the motion to amend as permitting substitution of representative plaintiffs all involved ongoing actions in which the original plaintiff had not dismissed the action before the substitution occurred.
Borecki filed a reply brief, again arguing that the entire action had not been dismissed. He contended that because the trial court had sustained Shapell's demurrer to the first amended complaint with leave to amend, it had thus implicitly invited and/or authorized the addition of Stark as a successor plaintiff in a second amended complaint.
Hearing was held on the matter on February 18, 2005. The trial court granted leave to file the second amended complaint.
Shapell then filed its petition for writ of mandate on March 24, 2005, and requested a stay of the trial court proceedings. Preliminary opposition to the writ petition was filed on behalf of Stark on April 4, 2005, followed by Shapell's reply to the preliminary opposition, filed April 14, 2005.
On June 10, 2005, this court issued an alternative writ and ordered the trial court proceedings stayed pending further order of this court.
Stark filed a return on July 8, 2005. Shapell filed a reply to the return on August 3, 2005.
Shapell's first demurrer was sustained with leave to amend after Borecki essentially conceded that the three-year statute of limitations barred his individual cause of action under Civil Code section 2995. Shapell contends that Borecki's attempt to add Stark as a named representative plaintiff or substitute Stark for Borecki in the first amended complaint was a nullity, since Borecki failed to specifically request leave of court to do so.
In support of this contention, Shapell cites authority to the effect that naming a new party in a complaint without obtaining prior leave of court is a nullity.
We agree that the proper course would have been for Borecki to seek leave of court to file the first amended complaint adding Stark as a plaintiff and substituting him for Borecki as the named representative plaintiff.
Shapell further contends that after the ineffectual attempt to add Stark as a plaintiff, the trial court's granting of Borecki's request for dismissal resulted in dismissal of the entire action, and the divestment of subject matter jurisdiction, such that the trial court lacked jurisdiction thereafter to allow an amendment to the complaint. We disagree.
We note that the parties have not cited and our research has not found a case involving the unusual procedural scenario that occurred here. In order to decide the issue presented in this case, we must extrapolate from cases discussing the nature of class actions and the procedures and precepts that govern their maintenance, as well as cases that deal in general with voluntary dismissals and amendment of pleadings.
It is true that "[f]ollowing entry of a dismissal of an action by a plaintiff under Code of Civil Procedure...
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