Filed 7/14/23 TriCoast Builders v. Travelers Commercial Ins. Co. CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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(a). This 

opinion has not been certified for publication or ordered published for purposes of rule 8.1115(a). 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

TRICOAST BUILDERS, INC.,

Plaintiff and Appellant,

v.

TRAVELERS COMMERCIAL 

INSURANCE COMPANY et al.,

Defendants and Respondents.

B314073

Los Angeles County

Super. Ct. No. BC647811

APPEAL from judgments of the Superior Court of Los

Angeles County, Malcolm H. Mackey, Judge. Affirmed.

Connette Law Office and Michael Connette for Plaintiff and 

Appellant.

Usery & Associates and Kathleen M. DeLaney for 

Defendant and Respondent Travelers Commercial Insurance 

Company.

Marcus, Watanabe & Enowitz and Daniel J. Enowitz for 

Defendant and Respondent MUFG Union Bank, N.A.

_______________________________________
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INTRODUCTION

Two homeowners hired plaintiff and appellant TriCoast 

Builders, Inc. (TriCoast) to rebuild their home after a devastating 

fire. Litigation eventually ensued and, in a prior appeal, we 

affirmed a judgment entered pursuant to an arbitration award in 

favor of the homeowners. The arbitrator determined that the 

homeowners owed TriCoast roughly $5,000 for work performed, 

which amount was offset by more than $130,000 in damages 

TriCoast owed the homeowners relating to defective construction 

and work performed by unlicensed subcontractors.

After the remittitur issued in the prior appeal, the trial 

court entered judgments of dismissal in favor of defendants and 

respondents Travelers Commercial Insurance Company 

(Travelers) and MUFG Union Bank, N.A. (Union Bank), the 

homeowners’ property insurer and mortgage lender, respectively. 

TriCoast had asserted a cause of action styled as “breach of the 

obligation to pay money” against both entities, alleging that they 

had a responsibility to pay TriCoast for work performed for the 

homeowners by virtue of the homeowners’ property insurance 

coverage. Citing principles of res judicata, both entities asserted 

that the arbitrator’s finding that the homeowners did not owe 

TriCoast any money for work performed (after accounting for 

offsets) barred TriCoast from seeking the same damages from 

them. We agree and affirm the judgments of dismissal.

FACTS AND PROCEDURAL BACKGROUND

1. Background

On January 1, 2015, the homeowners’ Los Angeles 

residence caught fire and suffered significant damage. That day, 

a representative from TriCoast approached the homeowners 
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offering emergency services, i.e., to board up and secure the 

property. The homeowners and TriCoast signed a single-page 

work authorization agreement (work authorization) to that effect. 

The work authorization included a notice to Travelers and Union 

Bank by which the homeowners instructed those entities to send 

payment for services rendered directly to TriCoast.

Due to the extent of the fire damage, large portions of the 

residence needed to be reconstructed. The homeowners retained 

TriCoast to rebuild their home as reflected in a home 

improvement agreement dated May 4, 2015 (May 4 agreement.)

2. The Lawsuit, Arbitration, and Prior Appeal

At some point, the relationship between the homeowners 

and TriCoast soured. In January 2017, TriCoast filed the present 

lawsuit against the homeowners, Travelers, and Union Bank. 

The complaint contains four causes of action styled as breach of 

obligation to pay money, breach of written contract, foreclosure of 

mechanic’s lien, and reasonable value of labor and materials 

furnished. With respect to each of the four causes of action, 

TriCoast seeks to recover $128,187.34 for work it has performed 

at the homeowners’ residence for which it has not been paid.

Citing the May 4 agreement’s arbitration provision, the 

homeowners petitioned the court to stay the action and compel 

arbitration of their disputes with TriCoast. The court granted the 

petition. The arbitrator heard testimony and received 

documentary evidence over the course of five days in August and 

September 2018. TriCoast sought to recover the $128,187.34 

damages set forth in its complaint. The homeowners sought 

damages against TriCoast relating to overpayments, work 

performed by unlicensed subcontractors, and defective 

construction.
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The arbitrator determined that the homeowners owed 

TriCoast $4,826.77 for work performed under the May 4 

agreement. That amount was offset, however, by the 

homeowners’ damages: $55,711 the homeowners paid TriCoast 

for work performed by unlicensed subcontractors and $75,056.42 

relating to the repair or correction of defective construction. The 

total arbitration award in favor of the homeowners was $125,940 

in damages and $8,749.99 in costs. The court confirmed the 

arbitration award and entered judgment in favor of the 

homeowners on May 2, 2019. TriCoast appealed and we affirmed 

the judgment. (TriCoast Builders, Inc. v. Barnhisel et al.

(Feb. 2, 2021, B298947) [nonpub. opn.].)

3. Post-Appeal Trial Court Proceedings; Appeal

After we issued the opinion in the prior appeal, the trial

court held a status conference and issued an order to show cause 

as to why the case against Travelers and Union Bank should not 

be dismissed. Both defendants argued that principles of res 

judicata barred TriCoast’s claims against them. Travelers 

submitted a brief explaining that TriCoast’s only claim against it, 

styled as “breach of the obligation to pay money,” was predicated 

on the allegation that the homeowners owed TriCoast payment

for work performed on their home. According to the complaint, 

Travelers was obligated by the terms of the work authorization to 

pay any insurance claims by the homeowner directly to TriCoast.

But as Travelers noted, the arbitrator had determined that, after 

offsets, the homeowners did not owe any money to TriCoast. In 

short, Travelers contended, because the homeowners owed 

nothing to TriCoast, Travelers, as their insurer, also owed 

nothing to TriCoast. Accordingly, Travelers asserted that the 
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court should reject TriCoast’s bid to relitigate its claim and 

dismiss the case against Travelers with prejudice.

Union Bank also filed a brief asking the court to dismiss 

the case against it. Like Travelers, Union Bank explained that 

TriCoast’s theories of liability presumed that the homeowners 

owed TriCoast money for work performed. As to the claim for 

“breach of the obligation to pay money,” the complaint alleged 

that Union Bank failed to pay TriCoast for services rendered to 

the homeowners. Union Bank argued that because the arbitrator 

determined that the homeowners owed no money to TriCoast, the 

derivative claim against Union Bank was barred. And as to 

TriCoast’s third cause of action, which sought to foreclose its 

mechanic’s lien on the homeowner’s property, Union Bank noted 

the arbitrator found that TriCoast had no basis to assert a lien on

the homeowners’ property. Any claim relating to that lien was,

therefore, also barred.

In opposition, TriCoast argued that neither Travelers nor 

Union Bank could use the arbitrator’s factual findings to defeat 

TriCoast’s claims. Mainly, TriCoast asserted that the arbitrator’s 

award could not have any preclusive effect as to Travelers or 

Union Bank because they were not parties to the arbitration.

Also, TriCoast contended, the cause of action for “breach of 

obligation to pay money” was distinct and involved different 

issues than the breach of contract cause of action which was 

resolved in the arbitration. TriCoast also claimed that the 

homeowners had falsified invoices submitted to Travelers and 

that Travelers made misrepresentations to TriCoast in order to 

allow the homeowners to “pocket money owed to TriCoast.” On 

that basis, TriCoast requested the opportunity to amend its 

complaint to include causes of action for fraud and equitable 
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indemnity against Travelers. TriCoast conceded, however, that it 

had no basis to foreclose on its mechanic’s lien.

The court heard the matter on May 13, 2021 and ruled that 

principles of res judicata bar TriCoast from proceeding against

Travelers and Union Bank. Specifically, the court found that 

TriCoast’s claim against those defendants is derivative of its 

claim against the homeowners. Therefore, the court found,

TriCoast is barred from seeking the same damages it sought from 

the homeowners (and failed to recover in the arbitration) against 

Travelers and Union Bank directly. The court entered judgments 

of dismissal in favor of Travelers and Union Bank on July 6, 

2021.

TriCoast timely appeals.

DISCUSSION

As noted, the trial court relied on principles of res judicata 

to find that the judgment against TriCoast and in favor of the 

homeowners bars TriCoast’s claims against Travelers and Union 

Bank. TriCoast challenges the court’s ruling on several grounds, 

which we address in turn.

“The claim preclusion doctrine, formerly called res judicata, 

‘prohibits a second suit between the same parties on the same 

cause of action.’ (Boeken v. Philip Morris USA, Inc. (2010) 48 

Cal.4th 788, 792 (Boeken).) ‘Claim preclusion arises if a second 

suit involves (1) the same cause of action (2) between the same 

parties (3) after a final judgment on the merits in the first suit.’

(DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824 (DKN 

Holdings).)” (Kim v. Reins International California, Inc. (2020) 

9 Cal.5th 73, 91.) Claim preclusion also applies to parties in 

privity with the parties to the first judgment. (Mycogen Corp. v. 

Monsanto Co. (2002) 28 Cal.4th 888, 896 (Mycogen Corp.).) 
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Although res judicata is usually applied based on a prior 

judicial decision, a prior judgment confirming an arbitration 

award may, in some circumstances, bar a subsequent claim based 

on the same cause of action. (See Code Civ. Proc., § 1287.4;

Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 

576–579; Brinton v. Bankers Pension Services, Inc. (1999) 76 

Cal.App.4th 550, 556–558; Thibodeau v. Crum (1992) 4 

Cal.App.4th 749, 755 (Thibodeau); Sartor v. Superior Court

(1982) 136 Cal.App.3d 322, 328 (Sartor); cf. Vandenberg v.

Superior Court (1999) 21 Cal.4th 815, 824, fn. 2 (Vandenberg)

[“Nothing in our decision imposes or implies any limitations on 

the strict res judicata, or ‘claim preclusive,’ effect of a California 

law private arbitration award.”].) “A predictable doctrine of res 

judicata benefits both the parties and the courts because it ‘seeks 

to curtail multiple litigation causing vexation and expense to the 

parties and wasted effort and expense in judicial administration.’ 

[Citation.]” (Mycogen Corp., supra, 28 Cal.4th at p. 897; see also 

Vandenberg, at p. 829 [noting the purpose of the res judicata 

doctrine is “to preserve the integrity of the judicial system, 

promote judicial economy, and protect litigants from harassment 

by vexatious litigation”].) The application of the doctrine of res 

judicata is an issue of law we review de novo. (E.g., Association of 

Irritated Residents v. Department of Conservation (2017) 11 

Cal.App.5th 1202, 1218.)

Citing Vandenberg, TriCoast asserts that res judicata is 

inapplicable in the present case because an arbitration award has 

no nonmutual preclusive effect. Here, as TriCoast notes, 

Travelers and Union Bank were not parties to the arbitration 

proceeding. And Vandenberg held that “a private arbitration 

award, even if judicially confirmed, may not have nonmutual 
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collateral estoppel effect under California law unless there was 

an agreement to that effect in the particular case.” (Vandenberg,

supra, 21 Cal.4th at p. 824.) Seizing on that language, TriCoast 

argues that the award in favor of the homeowners should not 

preclude it from pursuing its claims against Travelers and Union 

Bank.

We reject this argument because Vandenberg expressly 

limited its holding: “Our holding is narrowly circumscribed. 

Nothing in our decision imposes or implies any limitations on the 

strict res judicata, or ‘claim preclusive,’ effect of a California law 

private arbitration award.” (Vandenberg, supra, 21 Cal.4th at p. 

824, fn. 2.) The high court cited Sartor and Thibodeau as 

examples of the types of cases to which its holding did not apply. 

The Vandenberg court summarized Thibodeau as holding that an 

“unconfirmed award in private arbitration between homeowner 

and general contractor is res judicata barring homeowner’s 

identical claim against subcontractor.” (Ibid.) In addition, the 

court described Sartor as holding that a “confirmed private 

arbitration award in favor of architectural firm is res judicata 

barring homeowner’s identical causes of action against firm’s 

employees.” (Ibid.) In both cases, the preclusive effect of the 

arbitration award applied to claims predicated on the defendant’s 

derivative liability. In Sartor, the corporation’s liability was 

derivative of its agent’s liability, and in Thibodeau, the general 

contractor’s liability was derivative of its subcontractor’s liability. 

(Sartor, supra, 136 Cal.App.3d at p. 328; Thibodeau, supra, 4 

Cal.App.4th at p. 757.)

Our high court touched on this issue more recently in DKN 

Holdings and, in distinguishing derivative liability from joint and 

several liability, clarified the application of the claim preclusion 
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doctrine in cases involving derivative liability: “[I]n Lippert v. 

Bailey (1966) 241 Cal.App.2d 376, the plaintiff was precluded 

from suing insurance agents after he settled with the insurance 

company for the same loss. Because these agents had no liability 

apart from that of their principal (id. at p. 382), the defendants 

were in privity with the insurance company, and were thus 

effectively the same parties for purposes of preclusion. When a 

defendant’s liability is entirely derivative from that of a party in 

an earlier action, claim preclusion bars the second action because 

the second defendant stands in privity with the earlier one.

[Citations.] The nature of derivative liability so closely aligns the 

separate defendants’ interests that they are treated as identical 

parties. [Citation.] Derivative liability supporting preclusion has 

been found between a corporation and its employees [citations], a 

general contractor and subcontractors [citation], an association of 

securities dealers and member agents [citation], and among 

alleged coconspirators [citation].” (DKN Holdings, supra, 

61 Cal.4th 813 at pp. 827–828, italics added.)

TriCoast’s claims against Travelers and Union Bank are 

subject to claim preclusion because those claims are premised

exclusively on the defendants’ derivative liability for the debts of 

the homeowners. As explained ante, the complaint does not allege 

that either Travelers or Union Bank has a direct relationship 

with TriCoast. Instead, TriCoast alleges that the homeowners 

owe it roughly $128,000 for work performed at their residence. As 

to Travelers and Union Bank, TriCoast seeks to recover the 

homeowners’ $128,000 debt from them based on the assumption 

that the work TriCoast performed for the homeowners falls

within the scope of the homeowners’ property insurance coverage. 

TriCoast alleges that Travelers and Union Bank owe it “an 
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obligation to pay money” because the work authorization directed 

them to send insurance claims payments relating to TriCoast’s 

work at the homeowners’ residence to TriCoast directly. As noted, 

however, the arbitrator determined that the homeowners owed 

TriCoast nothing for work performed at their residence after 

accounting for offsets. A debt owing from the homeowners to 

TriCoast relating to TriCoast’s work is a necessary predicate for 

TriCoast’s claims against Travelers and Union Bank. Because 

those defendants’ liability is derivative only, TriCoast’s claims 

against them are barred by the judgment in favor of the 

homeowners.

TriCoast also asserts that Travelers and Union Bank 

cannot assert that claim preclusion applies because they did not 

participate in the arbitration. As already noted, however, claim 

preclusion may be asserted by nonparties to a prior judgment if 

they are in privity with a party to that judgment. Here, as 

already noted, if Travelers or Union Bank were to owe any money 

to TriCoast, it would be because they stand in the shoes of the 

homeowners as their insurer and mortgage lender. As such, they 

are in privity with the homeowners. (See, e.g., Grande v. 

Eisenhower Medical Center (2022) 13 Cal.5th 313, 326 [describing 

privity as “ ‘the sharing of “an identity or community of interest,”

with “adequate representation” of that interest in the first suit, 

and circumstances such that the nonparty “should reasonably 

have expected to be bound” by the first suit’ ”].)

Finally, TriCoast appears to argue that its discovery of 

“new facts” bars the application of res judicata and required the 

court to allow it to amend its complaint. The argument relates to 

an issue we addressed briefly in our prior opinion. “As we 

understand it, TriCoast asked the arbitrator to continue the 
11

arbitration so that it could conduct discovery, i.e., request 

documents from and depose a representative of the homeowners’ 

insurer. Apparently, TriCoast believed the homeowners may have 

submitted to their insurer falsified invoices purporting to be from 

TriCoast. TriCoast claims it was prejudiced by the arbitrator’s 

denial of its request for a continuance because it was not allowed 

sufficient time and latitude to conduct discovery on this issue.

“We disagree because it is not apparent how TriCoast’s 

allegations, even if proven, could have impacted the arbitration 

between the homeowners and TriCoast. The issues before the 

arbitrator related to the value of TriCoast’s work, its entitlement 

to payment from the homeowners, and the harm suffered by the 

homeowners due to defective construction. The arbitrator relied 

on the evidence submitted by the parties on those issues. 

TriCoast has not explained how communications between the 

homeowners and their insurer—truthful or fraudulent—have any 

bearing on those issues. Accordingly, we conclude TriCoast failed 

to establish that it was prejudiced by the arbitrator’s denial of its 

request for a continuance.” (TriCoast Builders, Inc. v. Barnhisel 

et al., supra, B298947 [p. 19].)

In the present appeal, TriCoast again invokes the specter of 

fraudulent conduct by the homeowners which, TriCoast alleges, it 

did not discover until more than a year after it filed its complaint. 

TriCoast seems to suggest that the homeowners fabricated, and 

may have collected on, falsified invoices that appeared to be from 

TriCoast. And TriCoast now complains that the court refused to 

allow it to amend its complaint to include these allegations. We 

are still puzzled, however, as to how this conduct, even if proven, 

impacted TriCoast because it has already been fully paid for its 

work. In other words, TriCoast fails to establish that the court’s 
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denial of the opportunity to amend its complaint, if erroneous, 

was prejudicial. (Cal. Const., art VI, § 13 [judgment or order

cannot be reversed on appeal unless it is both erroneous and 

prejudicial, i.e., results in a miscarriage of justice].)

DISPOSITION

The judgments of dismissal are affirmed. Respondents 

Travelers Commercial Insurance Company and MUFG Union 

Bank, N.A., shall recover their costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

LAVIN, J.

WE CONCUR:

EDMON, P. J.

EGERTON, J.