Vella v. Hudgins

• Decision Date: 08 December 1977
• Citation: 20 Cal.3d 251,142 Cal.Rptr. 414,572 P.2d 28
• Court: California Supreme Court
• Parties: , 572 P.2d 28 Nancy C. VELLA, Plaintiff and Appellant, v. Everett R. HUDGINS, Defendant and Appellant. L.A. 30779.

Page 414

142 Cal.Rptr. 414

20 Cal.3d 251, 572 P.2d 28

Nancy C. VELLA, Plaintiff and Appellant, v. Everett R. HUDGINS, Defendant and Appellant.

L.A. 30779.

Supreme Court of California.

Dec. 8, 1977.

Joseph L. Shalant, Los Angeles, for plaintiff and appellant.

Milton Zerin and L. Dean Petty, Beverly Hills, for defendant and appellant.

RICHARDSON, Justice.

Plaintiff Nancy C. Vella brought this action to set aside a trustee's sale, alleging that defendant Everett R. Hudgins, holder of a note secured by a second deed of trust on her residence, fraudulently induced her to default on the note. The question which we consider is whether the present suit is precluded by the prior adjudication of the fraud issue in an unlawful detainer action between the parties.

The trial court found that Vella, who originally owned the subject property, had for several years maintained a confidential and intimate relationship with defendant. Vella encountered financial difficulty and the property became subject to multiple encumbrances, including a second deed of trust then held by the Penrod Corporation. In May of 1969, Hudgins purchased the note and the second trust deed securing it, informing Vella that he had acquired the note to protect her from default, and assuring her that she need not worry about making payments on the obligation. Relying upon that promise and the confidential nature of their relationship, Vella ceased paying on the note, and used her resources to discharge other debts. Thereafter, the parties quarreled, and Hudgins directed the trustee named in the second deed of trust to give appropriate notice of default and election to sell. The trustee complied and Hudgins subsequently purchased the property at the trustee's sale in September of 1969. The record indicates the property at that time had a fair market value in excess of $40,000.

Vella immediately filed the present suit, framed as an action for injunctive relief and for imposition of a constructive trust. Meanwhile, Hudgins served Vella with a three-day notice to quit the premises and thereafter promptly initiated unlawful detainer proceedings under Code of Civil Procedure section 1161a. (All statutory references are to that code, unless otherwise specified.) In the unlawful detainer action Vella asserted as an affirmative defense the same allegations of fraud that form the basis for the present equity action which was then pending. Judgment in the unlawful detainer suit was given for Hudgins and Vella was evicted. That judgment is now final.

Hudgins unsuccessfully urged the unlawful detainer judgment as a bar to the present action. His motion to strike the complaint was denied, and the cause proceeded to trial on the merits. After a four-day trial, the court, on the basis of detailed findings of fact, concluded that Vella's default had been induced by Hudgins' fraud and ordered the property returned to Vella.

Both Vella and Hudgins appealed, raising not only the res judicata issue which we consider herein, but various other unrelated issues. The Court of Appeal, without considering these other issues, reversed the trial court judgment solely on the ground that Vella's fraud claim had been conclusively adjudicated in the prior unlawful detainer proceeding, and that judgment for Hudgins in that action cut off Vella's right to pursue an independent claim for equitable relief. We conclude that the unlawful detainer judgment was not res judicata under the circumstances, and consequently will retransfer the cause to the Court of Appeal for consideration of the remaining issues in the appeals. (See Taylor v. Union Pac. R. Corp. (1976) 16 Cal.3d 893, 895, 130 Cal.Rptr. 23, 549 P.2d 855.)

The history and scope of unlawful detainer actions have been discussed at length in several recent appellate decisions. (E. g., Gonzales v. Gem Properties, Inc. (1974) 37 Cal.App.3d 1029, 1033-1035, 112 Cal.Rptr. 884; Union Oil Co. of Cal. v. Chandler (1970) 4 Cal.App.3d 716, 721-722, 84 Cal.Rptr. 756; cf. Green v. Superior Court (1974) 10 Cal.3d 616, 631-634, 111 Cal.Rptr. 704, 517 P.2d 1168.) For our present purpose, it is sufficient to note that the proceeding is summary in character; that ordinarily, only claims bearing directly upon the right of immediate possession are cognizable (Green, supra, at pp. 632-634, 111 Cal.Rptr. 704, 517 P.2d 1168; Knowles v. Robinson (1963) 60 Cal.2d 620, 625, 36 Cal.Rptr. 33, 387 P.2d 833; Cheney v. Trauzettel (1937) 9 Cal.2d 158, 159, 69 P.2d 832; see Cruce v. Stein (1956) 146 Cal.App.2d 688, 304 P.2d 118); and that cross-complaints and affirmative defenses, legal or equitable, are permissible only insofar as they would, if successful, "preclude the removal of the tenant from the premises." (Green, supra, at p. 634, fn. 19, 111 Cal.Rptr. at p. 716, 517 P.2d at p. 1180; Union Oil Co. of Cal., supra, 4 Cal.App.3d at p. 725, 84 Cal.Rptr. 756.)

As a consequence of the foregoing principles a judgment in unlawful detainer usually has very limited res judicata effect and will not prevent one who is dispossessed from bringing a subsequent action to resolve questions of title (Cheney v. Trauzettel, supra, 9 Cal.2d at p. 160, 69 P.2d 832; Byrne v. Baker (1963) 221 Cal.App.2d 1, 5-6, 34 Cal.Rptr. 178; Bekins v. Trull (1924) 69 Cal.App. 40, 45, 230 P. 24), or to adjudicate other legal and equitable claims between the parties (Gonzales v. Gem Properties, Inc., supra, 37 Cal.App.3d 1029, 112 Cal.Rptr. 884; Union Oil Co. of Cal. v. Chandler, supra, 4 Cal.App.3d 716, 84 Cal.Rptr. 756; Haase v. Lamia (1964) 229 Cal.App.2d 654, 658, 40 Cal.Rptr. 518; Patapoff v. Reliable Escrow Service Corp. (1962) 201 Cal.App.2d 484, 19 Cal.Rptr. 886; cf. Staudigl v. Harper (1946) 76 Cal.App.2d 439, 449, 173 P.2d 343).

A qualified exception to the rule that title cannot be tried in unlawful detainer is contained in Code of Civil Procedure section 1161a, which extends the summary eviction remedy beyond the conventional landlord-tenant relationship to include certain purchasers of property such as Hudgins. Section 1161a provides for a narrow and sharply focused examination of title. To establish that he is a proper plaintiff, one who has purchased property at a trustee's sale and seeks to evict the occupant in possession must show that he acquired the property at a regularly conducted sale and thereafter "duly perfected" his title. (§ 1161a, subd. 3.) Thus, we have declared that "to this limited extent, as provided by the statute, . . . title may be litigated in such a proceeding." (Cheney v. Trauzettel, supra, 9 Cal.2d at p. 159, 69 P.2d at p. 833.)

Applying the traditional rule that a judgment rendered by a court of competent jurisdiction is conclusive as to any issues necessarily determined in that action, the courts have held that subsequent fraud or quiet title suits founded upon allegations of irregularity in a trustee's sale are barred by the prior unlawful detainer judgment. (Freeze v. Salot (1954) 122 Cal.App.2d 561, 266 P.2d 140; Bliss v. Security-First Nat. Bank (1947) 81 Cal.App.2d 50, 183 P.2d 312; Seidell v. Anglo-California Trust Co. (1942) 55 Cal.App.2d 913, 132 P.2d 12.) Where, however, the claim sought to be asserted in the second action encompasses activities not directly connected with the conduct of the sale, applicability of the res judicata doctrine, either as a complete bar to further proceedings or as a source of collateral estoppel, is much less clear.

Recently, in Wood v. Herson (1974) 39 Cal.App.3d 737, 114 Cal.Rptr. 365, the Court of Appeal held that a suit for specific performance of a contract to convey was foreclosed by a prior unlawful detainer judgment which had decided all issues of fact material to the second action. Noting that the Woods' affirmative defense of fraud in the unlawful detainer action was virtually identical to the fraud allegations upon which their suit for specific performance was based, the court concluded that even though title "normally is not a permissible issue in an unlawful detainer action," the essential issues had been fully and fairly disposed of in the earlier proceeding. (Id., at p. 740, 114 Cal.Rptr. at p. 366.) The court cited in support of its ruling such varied factors as the length of the "summary" unlawful detainer hearing (seven days), the scope of discovery by the parties ("extensive" and "complete"), the quality of the evidence ("detailed"), and the general character of the action ("(c)learly . . . not the customary unlawful detainer proceeding"). (Id., at pp. 742, 745, 114 Cal.Rptr. at pp. 367.) A lengthy and comprehensive superior court record replete with precise findings of fact persuaded the Wood court that application of collateral estoppel to curtail further litigation would involve "no miscarriage of justice (the) Woods have had their day in court . . .." (Id., at p. 745, 114 Cal.Rptr. at p. 370; see also High v. Cavanaugh (1962) 205 Cal.App.2d 495, 23 Cal.Rptr. 121; compare Gonzales v. Gem Properties, Inc., supra, 37 Cal.App.3d 1029, 112 Cal.Rptr. 884; Haase v. Lamia, supra, 229 Cal.App.2d 654, 40 Cal.Rptr. 518; Byrne v. Baker, supra, 221 Cal.App.2d 1, 34 Cal.Rptr. 178; Patapoff v. Reliable Escrow Service Corp., supra, 201 Cal.App.2d 484, 19 Cal.Rptr. 886.)

We agree that "full and fair" litigation of an affirmative defense even one not ordinarily cognizable in unlawful detainer, if it is raised without objection, and if a fair opportunity to...