Stern v. Superior Court

• Decision Date: 10 January 2003
• Docket Number: No. B150315.,B150315.
• Citation: 105 Cal.App.4th 223,129 Cal.Rptr.2d 275
• Court: California Court of Appeals Court of Appeals
• Parties: Boris STERN et al. Petitioners, v. The SUPERIOR COURT of Los Angeles County, Respondent; Getz, Krycler & Jakubovits et al. Real Parties in Interest.

129 Cal.Rptr.2d 275

105 Cal.App.4th 223

Boris STERN et al. Petitioners, v. The SUPERIOR COURT of Los Angeles County, Respondent Getz, Krycler & Jakubovits et al. Real Parties in Interest.

No. B150315.

Court of Appeal, Second District, Division 3.

January 10, 2003.

Certified for Partial Publication.^*

Harris & Kaufman, William E. Harris, Sherman Oaks, and Matthew A. Kaufman for Petitioners.

Reback, McAndrews & Kjar, John M. Caron and Matthew A. Stein for Real Parties in Interest.

KITCHING, J.

I. INTRODUCTION

Before unification of the lower courts, a case that did not meet the jurisdictional amount in controversy was subject to transfer from superior to municipal court. After court unification and enactment of a new statutory scheme, a case that does not meet the jurisdictional amount in controversy is a "limited civil case" (Code Civ. Proc, § 85)¹ and is subject to reclassification. Despite the change in court organization, nomenclature, and statutes, prior substantive and procedural law continues to govern how a trial court determines whether a case should be reclassified. Applying that law, we hold that a trial court should order jurisdictional reclassification based on the amount in controversy only after the parties have received proper notice and the opposing party has had an opportunity to contest reclassification.

We also find that the trial court may only determine whether a matter shall be a class action after the parties have notice and an opportunity to present evidence. Finally, under Walker v. Superior Court (1991) 53 Cal.3d 257, 262, 279 Cal.Rptr. 576, 807 P.2d 418, we find that the trial court improperly reclassified this action as a limited civil case without evidence that the matter will "necessarily" result in a verdict below the jurisdictional amount required by statute for classification as an unlimited civil case.

Plaintiffs appeal from an order reclassifying their case as a limited civil case. We treat the appeal as a petition for extraordinary relief, and issue a writ of mandate ordering the trial court to vacate the reclassification order.

II. FACTUAL AND PROCEDURAL HISTORY

In the operative complaint, plaintiffs Boris Stern, Atale Stern, Alexander Flig, Sheva Treskunova, Jacob Goldner, and "All Others Similarly Situated" named as defendants Getz, Krycler, & Jakubovits, an accountancy corporation, Michael J. Krycler, C.P.A, Yossi Jakubovits, C.P.A, and Kenneth M. Walheim.

The complaint alleged as follows: the California Board of Accountancy licensed Walheim as a Certified Public Accountant on December 5, 1980. Unless renewed, such license expired on April 30 of evennumbered years. Walheim's license expired on April 30, 1996 and was not valid from May 1, 1996, through November 19, 2000. Although Walheim did not have a valid public accountancy license during this period, he continued to practice public accountancy as an agent and employee of Getz, Krycler, & Jakubovits. Orally and in writing, that firm and Walheim advertised and represented to the public that Walheim was a Certified Public Accountant (C.P.A.). These false advertisements and representations violated accountancy licensing statutes (Bus. & Prof.Code, §§ 5050, 5051, 5055, 5070.8, 5120, & 5121).

While Walheim was unlicensed, plaintiffs hired and paid Walheim to perform accounting services as a C.P.A. employed by remaining defendants. Plaintiffs did not find out that Walheim had no valid C.P.A. license until November 14, 2000.

The complaint contained causes of action by Flig, Treskunova, and Goldner individually for violation of the California Consumers Legal Remedies Act (Civ.Code, § 1750, et seq.), by all plaintiffs individually for unlawful and fraudulent business practices in violation of Business and Professions Code section 17200, et seq, and by all plaintiffs individually for fraud (Civ.Code, § 1709).

The complaint contained a cause of action by three of the plaintiffs against all defendants for class action pursuant to Civil Code section 1781 for violation of the California Consumers Legal Remedies Act; by all plaintiffs for class action, in their representative capacity for unlawful and fraudulent business practices in violation of Business and Professions Code section 17200, et seq.; and by all plaintiffs for class action against Getz, Krycler, & Jakubovits, and Krycler and Jakubovits individually, for negligent misrepresentation (Civ. Code, § 1710, subd. (2)).

The three class action causes of action, brought pursuant to Civil Code section 1781 and section 382, alleged that while Walheim did not have a valid C.P.A. license, he performed accounting services for and collected fees from other consumers. Defendants' records identified those consumers and amounts they paid defendants for Walheim's services. Plaintiffs represented a class consisting of all defendants' clients for whom Walheim rendered accounting services for the three years before plaintiffs filed their original complaint.

At a May 9, 2001, initial status conference, the trial court observed that the action had not been certified a class action. Plaintiffs' attorney conceded it was not certified. Without giving the plaintiffs notice or an opportunity to present evidence, the trial court found that the matter was not a class action and ordered the matter reclassified as a limited civil case because plaintiffs had not shown they could recover more than the $25,000 jurisdictional limit.

Plaintiffs filed a notice of appeal on May 16, 2001.

III. ISSUES

The issue in this case is whether the trial court abused its discretion when it ordered this case reclassified without notice and without giving the opposing party an opportunity to contest reclassification.

An unpublished portion of this opinion addresses an additional issue.

IV. DISCUSSION

A. Appealability^**

B. The Trial Court Abused Its Discretion in Ordering Reclassification

As stated, the issue in this case is whether the trial court abused its discretion by ordering the case reclassified without notice and without giving plaintiffs the opportunity to oppose reclassification. We conclude that the trial court, without providing notice and an opportunity to present opposition, erroneously ordered the action reclassified as a limited civil case. We find an abuse of discretion and reverse the reclassification order.

1. Procedural and Substantive Requirements for a Reclassification Order

Formerly a case whose amount in controversy did not meet the jurisdictional minimum was subject to a transfer of jurisdiction from the superior court to the municipal court. (Walker v. Superior Court, supra, 53 Cal.3d at p. 264, 279 Cal.Rptr. 576, 807 P.2d 418.) Now, however, there are no longer municipal courts. (General Electric Capital Auto Financial Services, Inc. v. Appellate Division (2001) 88 Cal.App.4th 136, 141, fn. 1, 105 Cal. Rptr.2d 552.) Therefore a "transfer" of jurisdiction from one court to another no longer takes place. The superior court has original jurisdiction in a limited civil case. (Former § 85.1.) The statutory scheme now authorizes "reclassification" of a case that is erroneously classified. (§ 403.040, subd. (a).)

Notwithstanding the changes in court organization, procedure, and nomenclature reflected in sections 85 through 89 and 403.010 through 403.090, the amount in controversy continues to provide a ground for reclassifying an action. A "limited civil case" includes, inter alia, a case at law "in which the demand, exclusive of interest, or the value of the property in controversy amounts to twenty-five thousand dollars ($25,000) or less." (§ 86, subd. (a)(1).) "A civil action or proceeding other than a limited civil case may be referred to as an unlimited civil case." (§ 88.) The statutory changes have not altered substantive and procedural law governing how a trial court values a case to determine the jurisdictional amount in controversy when ruling on a motion for reclassification.

A trial court has authority to conduct a pretrial hearing to obtain information about whether the amount of the judgment will require reclassification. (Walker v. Superior Court, supra, 53 Cal.3d at p. 268, 279 Cal.Rptr. 576, 807 P.2d 418.) The Walker requirements for determining the amount in controversy formerly applied to the "transfer" of a case from superior to municipal court, and continue to apply when a court makes a determination of the amount in controversy for purposes of "reclassification." A party moving for reclassification should make a noticed motion. (Id. at p. 271, 279 Cal. Rptr. 576, 807 P.2d 418.) A court contemplating ordering reclassification on its own motion must also provide notice to the parties. (Ibid.; Kent v. Superior Court (1992) 2 Cal.App.4th 1392, 1394, 4 Cal. Rptr.2d 21.) Whether a party makes a motion, or the court raises the jurisdictional issue on its own motion pursuant to section 403.040, subdivision (a), the court must provide "sufficient opportunity to respond and offer reasons why [reclassification] should or should not be ordered." (Walker v. Superior Court, supra, 53 Cal.3d at p. 272, 279 CaLRptr. 576, 807 P.2d 418.) Even if no hearing is held, before ordering reclassification the court must afford the parties an opportunity to contest reclassification. (Id. at p. 262, 279 Cal.Rptr. 576, 807 P.2d 418; see also Kent v. Superior Court, supra, 2 Cal.App.4th at p. 1394, 4 Cal.Rptr.2d 21.)

Regarding valuation of the amount of a future judgment, Walker holds that a matter can be transferred (or reclassified) when (1) before trial, the complaint, petition, or related documents make the absence of jurisdiction apparent; or (2) during pretrial litigation, it becomes clear that the matter will "necessarily" result in a verdict below the jurisdictional amount. (Walker v. Superior Court, supra, 53 Cal.3d at p. 262, 279 Cal.Rptr. 576, 807 P.2d 418.)²

This court reviews a reclassification order according to an abuse of discretion standard, i.e., whether the...