Smith v. Smith

• Decision Date: 28 December 1981
• Citation: 127 Cal.App.3d 203,179 Cal.Rptr. 492
• Court: California Court of Appeals Court of Appeals
• Parties: Rosemary E. SMITH, Plaintiff and Appellant, v. Clarence D. SMITH et al., Defendants and Respondents. Civ. 20722.

Page 492

179 Cal.Rptr. 492

127 Cal.App.3d 203

Rosemary E. SMITH, Plaintiff and Appellant, v. Clarence D. SMITH et al., Defendants and Respondents.

Civ. 20722.

Court of Appeal, Third District, California.

Dec. 28, 1981.

As Modified Jan. 18, 1982.

Friedberg Law Corp., Sacramento, and David W. Abbott, Carmichael, for plaintiff and appellant.

Jack N. Martin, Sacramento, for defendant and respondent Smith.

George Deukmejian, Atty. Gen., and Jeffrey L. Gunther, Deputy Atty. Gen., for defendant and respondent State of Cal.

BLEASE, Associate Justice.

We consider whether the trial court erred in ruling that plaintiff's action to determine her interest in her former husband's military retirement benefits is barred by the doctrine of res judicata. We hold that the binding effect of the divorce decree on such

interests was conclusively determined against her in an intervening action and may not be relitigated. We affirm the judgment.

FACTS

This is the fourth action in a prolonged dispute concerning plaintiff's interest in defendant's ¹ military retirement benefits. Plaintiff seeks in this action a partition of the benefits which she claims are held by the parties as tenants in common.

The first action commenced in February of 1967 when plaintiff filed a complaint for divorce. Although defendant was receiving military retirement benefits at that time, the retirement benefits were not pleaded as items of community property and were not considered in the litigation or apportioned by the trial court. The divorce was uncontested and the interlocutory decree divided the listed community property. The final decree incorporated the interlocutory decree.

On July 17, 1968, plaintiff moved to amend the final judgment of divorce on the basis of the mistake, inadvertance, and excusable neglect of her former attorney. The basis of the motion was that defendant's retirement benefits had been omitted from the list of community assets owned by the parties. It was denied on grounds of untimeliness. (See Smith v. Lewis (1975) 13 Cal.3d 349, 354, 118 Cal.Rptr. 621, 530 P.2d 589.)

On November 4, 1968, plaintiff, represented by her present attorney, initiated a new action against defendant (hereafter "1968 action"), seeking, alternatively, (1) equitable relief to set aside the decree of divorce, or (2) the award of one-half of defendant's California National Guard retirement benefits. Equitable relief was sought on the ground that plaintiff was deprived of her "day in court" because her former attorney (Lewis) had negligently failed to include defendant's California National Guard retirement benefits as an item of community property in the divorce action.

Defendant demurred on the grounds that (1) Lewis' mistake was intrinsic for which no equitable relief lies and (2) the divorce decree was res judicata of the community property rights of the parties. Plaintiff filed no written opposition but argued the matter orally on December 23, 1968. On the same day, the demurrer was sustained without leave to amend and plaintiff, with remarkable prescience, immediately filed a malpractice action against Lewis. The judgment of dismissal of the 1968 action followed, on January 13, 1969, which plaintiff did not appeal. The malpractice action was pursued successfully to judgment and plaintiff was awarded damages in the amount of $100,000. It was affirmed on appeal on January 20, 1975. (Smith v. Lewis, supra, 13 Cal.3d at pp. 353-361, 118 Cal.Rptr. 621, 530 P.2d 589.)

In May 1978, plaintiff demanded an accounting and payment of one-half of defendant's retirement benefits. This action followed defendant's refusal to comply. Defendant answered the complaint and asserted numerous defenses, including that the judgment in the 1968 action was res judicata.

The trial court concluded, as a matter of law, that the second cause of action of plaintiff's 1968 complaint was identical in all material respects to the allegations of her current complaint and that the sustaining of the demurrer to the 1968 complaint without leave to amend was equivalent to an adjudication on the merits of the community property claims. It found the present action barred under the doctrine of res judicata.

DISCUSSION

A.

Plaintiff, having recovered damages from her former attorney for his negligent loss of her community interest in defendant's military retirement benefits (Smith v. Lewis, supra, 13 Cal.3d 349, 118 Cal.Rptr. 621, 530 P.2d 589), now seeks to recover from defendant the interest which she had lost. ² However, no issue is tendered whether the malpractice judgment collaterally estops plaintiff from maintaining this action. Rather, we are asked to consider whether the judgment in the intervening 1968 action is a bar to the present action.

The 1968 action sought alternative remedies: to set aside the divorce decree on equitable grounds or to adjudicate plaintiff's entitlement to a share of defendant's National Guard retirement benefits. The demurrer attacked the first as seeking improper relief and the second on grounds the divorce decree was res judicata on the issue of plaintiff's interest in defendant's retirement benefits.

The judgment of dismissal necessarily resolved both prongs of the demurrer. If the judgment were limited to the propriety of the equitable remedy, it would not act as a bar to an appropriate remedy in a subsequent action. (See 4 Witkin, Cal.Procedure (2d ed. 1971) Judgment, § 193, p. 3333; Rest., Judgments, § 49, com. a, p. 195; § 65, com. g, p. 276.) But the judgment also resolved the issue of res judicata tendered by the demurrer. ³ The trial court mistakenly found that issue to involve the merits of the plaintiff's claim to a share of the retirement benefits. ⁴ Rather, the 1968 action determined that plaintiff should have tendered the issue of retirement benefits in the divorce proceeding and that having failed to do so she is barred from litigating the issue.

Plaintiff misconceives the effect of the judgment in the 1968 action. She cites to the familiar rule that a judgment is res judicata if it was rendered on the merits; a judgment rendered on procedural or other grounds unrelated to the merits is not res judicata. (4 Witkin, Cal. Procedure, supra, Judgment, § 168, pp. 3310 et seq.) Plaintiff then argues that the 1968 judgment did not reach the merits of her military retirement claim and that the issue of res judicata is therefore procedural. Although we agree with the premise, the conclusion does not follow.

Plaintiff's claim that res judicata is limited to the merit of the underlying claim is too sweeping. "Increasingly, ... by statute, rule, or court decision, judgments not passing directly on the substance of the claim have come to operate as a bar.... (S)uch judgments are often described as 'on the merits' or as 'operating as an adjudication on the merits,' ..." (Rest.2d, Judgments (Tent. Draft No. 1 (1973)) § 48, com. a, p. 36.) Thus, a party is " 'precluded from relitigating the very question which was litigated in the prior action.' " (MIB, Inc. v. Superior Court (1980) 106 Cal.App.3d 228, 232, 164 Cal.Rptr. 828, quoting from Rest., Judgments, supra, § 49, com. b, at p. 195; see also Code Civ.Proc., § 1911.) ⁵ As the rule is stated in the Restatement Second of Judgments (Tent. Draft No. 4 (1977)) section 68, page 1: "When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim." (See also Rest., Judgments, supra, § 49, com. b, pp. 196-197.) This is called "issue preclusion" by the Restatement. "Issue preclusion in a second action on the same claim is sometimes designated as direct estoppel. If, as more frequently happens, the second action is brought on a different claim, the rule of ... Section (68) also applies; in such cases, preclusion is sometimes designated as collateral estoppel." (Rest.2d, Judgments (Tent. Draft No. 4 (1977)) § 68, com. b, p. 2; see also Rest., Judgments, § 49, com. b, p. 195; § 68.) Here we have a direct estoppel.

In California, issue preclusion is subsumed under Code of Civil Procedure section 1911, which provides: "That only is deemed to have been adjudged in a former judgment which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto." (See Estate of Williams (1950) 36 Cal.2d 289, 292-293, 223 P.2d 248.)

The effect in a subsequent action of an issue which has been litigated turns, of course, on what was decided. (See 4 Witkin, Cal. Procedure, supra, §§ 173, 174, pp. 3315-3317.) If the issue which was decided is the kind which conclusively determines an action, then it is conclusive in a second action on the same claim. ⁶

The question which was determined in the 1968 action was the res judicata effect of the divorce decree on the plaintiff's entitlement to a share of defendant's retirement benefits. Plaintiff's success in this action, based upon Henn v. Henn (1980) 26 Cal.3d 323, 330-331, 161 Cal.Rptr. 502, 605 P.2d 10, necessarily requires a determination that the 1967 divorce decree did not conclusively determine such interests. But that is precisely what was litigated and determined adversely to plaintiff in the 1968 action. It may not be relitigated.

We find support for this conclusion in Henn, albeit in dicta. In Henn, Henry Henn argued that a denial of a motion to modify the original decree "was a favorable ruling on the merit of his res judicata defense (to the motion)." (Henn v. Henn, supra, 26 Cal.3d at p. 331, 161 Cal.Rptr. 502, 605 P.2d 10.) The court rejected the claim because of Henry's failure to establish that the motion was denied on that ground. (Id., at p. 332, 161 Cal.Rptr. 502, 605 P.2d 10.) However, the court said: "If Henry had established that the denial constituted an adjudication of ... his...