Court Opinion

ID: 9943238
Source: CourtListenerOpinion
Date Created: 2024-02-22 21:04:04.227366+00
Date Added: 2024-06-11T13:46:34.321987
License: Public Domain

Filed 2/22/24 Clean Up America v. Arrow Disposal Services CA2/2
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                        DIVISION TWO

 CLEAN UP AMERICA, INC.,                                     B323729

           Plaintiff and Appellant,                          (Los Angeles County
                                                             Super. Ct. No.
           v.                                                21STCV36046)

 ARROW DISPOSAL
 SERVICES, INC. et al.,

      Defendants and
 Respondents.

     APPEAL from a judgment of the Superior Court of Los
Angeles County, Wendy Chang, Judge. Affirmed.

     Law Office of Gronemeier & Hickambottom, Dale L.
Gronemeier and Elbie J. Hickambottom, Jr., for Plaintiff and
Appellant.
     Stream Kim Hicks Wrage & Alfaro, Theodore K. Stream,
Mario H. Alfaro and Donna M. DiCarlantonio for Defendants and
Respondents.

                              ******
       An out-of-business trash hauler sued one of its competitors
for unfair competition in years past. The hauler elected not to
show up on the first day of trial, and its claims were dismissed.
By that time, however, the competitor had filed cross-claims for
unfair competition. When those cross-claims were on the verge of
trial over two years later, the hauler filed a brand new lawsuit
that largely repeated the allegations from its claims that were
dismissed. The trial court ruled that the new lawsuit was barred
because it should have been brought as a compulsory cross-claim
to the competitor’s cross-claims in the first lawsuit. We agree
and affirm.
         FACTS AND PROCEDURAL BACKGROUND
I.     The Parties and Their Business Operations
       A.    Clean Up America, Inc.
       From at least 2010 through 2016, Clean Up America, Inc.
(Clean Up) operated as a commercial hauler of construction and
demolition waste in Los Angeles. It ceased its operations in 2016,
when a fire that raged and then smoldered for six weeks
destroyed its waste processing facility.
       B.    The Arrow companies
       Arrow Services, Inc. (Arrow Services) and Arrow Disposal
Services, Inc. (Arrow Disposal) (collectively, the Arrow
companies) are also haulers of construction and demolition waste

                                2
in Los Angeles. The president of the Arrow companies is Kirk
Tahmizian.
       C.      Competition in the trash hauling industry
       Prior to Clean Up going out of business in 2016, Clean Up
and the Arrow companies directly competed in the Los Angeles
waste hauling industry.
II.    The First Lawsuit
       A.      Clean Up’s complaint
       In December 2016, Clean Up sued (1) Arrow Services and
(2) Tahmizian (the first lawsuit). In the operative second
amended complaint, which was filed in February 2018, Clean Up
generally alleged that (1) Arrow Services induced customers to
cancel their contracts with Clean Up and instead hire Arrow
Services by misrepresenting that Clean Up was going out of
business and would not be able to fulfill its hauling contracts; and
(2) Arrow Services illegally dumped waste at the wrong disposal
facilities to lower its operating costs, thereby obtaining an unfair
competitive advantage. Based on these allegations, Clean Up
alleged claims for (1) inducing breach of contract, (2) intentional
interference with prospective economic advantage, and (3)
equitable relief for unlawful business practices under California’s
Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et
seq.); Clean Up sought equitable relief as well as $2.86 million in
damages.
       B.      The Arrow companies’ cross-complaints
       On March 1, 2017, Arrow Services filed a cross-complaint
against Clean Up. Arrow Services generally alleged that (1)
Clean Up’s illegal dumping of waste at its own disposal facility
not only resulted in a historic fire, but also created an unfair
competitive advantage for Clean Up by saving on disposal costs;

                                 3
and (2) Clean Up induced customers to hire it by misrepresenting
that Arrow Services charged higher fees due to its “inefficiency.”
Based on these allegations, Arrow Services alleged claims for (1)
interference with existing and prospective economic relations and
(2) unfair and unlawful business practices under the UCL; Arrow
Services sought $1 million in damages. Clean Up filed an answer
to Arrow Services’ cross-complaint on October 23, 2018.
      Although not sued by Clean Up in the first lawsuit, on June
26, 2018, Arrow Disposal also filed a cross-complaint against
Clean Up.1 This complaint exactly duplicated the cross-
complaint filed by Arrow Services. Clean Up filed an answer to
Arrow Disposal’s cross-complaint on Halloween 2018.

1      Arrow Disposal’s insertion into the first lawsuit was
procedurally proper because, once the existing parties to the first
lawsuit elected not to object to its filing or involvement, Arrow
Disposal became a de facto intervenor. (See Code Civ. Proc., §
387 [setting forth procedure for nonparty to intervene in action];
Vosburg v. County of Fresno (2020) 54 Cal.App.5th 439, 461 [de
facto intervener (1) “has not been formally recognized by the
court as an intervener pursuant to the procedure set forth in . . .
section 387,” and (2) “actually participates in the litigation in
essentially the same way as a formally recognized party”]; Tukes
v. Richard (2022) 81 Cal.App.5th 1, 12-13 [court will excuse
“failure to comply with section 387’s requirements . . . where . . .
the parties accepted the unapproved intervention without
protest”].) By waiting until its reply brief on appeal to object to
Arrow Disposal’s insertion in the first lawsuit, Clean Up waived
this very belated objection. (Piedmont Capital Management,
L.L.C. v. McElfish (2023) 94 Cal.App.5th 961, 970, fn. 6
(Piedmont Capital) [arguments made for first time in reply brief
are waived]; Gallo v. Wood Ranch USA, Inc. (2022) 81
Cal.App.5th 621, 646 (Gallo) [same].)

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       C.    Dismissal of the first lawsuit
       Trial on Clean Up’s claims in the first lawsuit was set for
January 24, 2019, but Clean Up opted not to show up. As a
result, the trial court dismissed Clean Up’s claims. But the
Arrow companies’ cross-complaints remained pending.
       Trial on the Arrow companies’ cross-claims in the first
lawsuit was set for October 14, 2021. That trial did not go
forward, and the Arrow companies’ cross-complaints were later
dismissed on May 4, 2022.
       D.    Absence of any cross-claims by Clean Up
       At no point in time while the cross-claims filed by the
Arrow companies were pending did Clean Up file any cross-claim
to either cross-complaint. At no point in time while Clean Up’s
claims were pending did Clean Up amend its own pleading in
response to the cross-complaints.
III. The Second Lawsuit (This Lawsuit)
       A.    Clean Up’s complaint
       On September 30, 2021—two weeks before trial was set to
begin on the Arrow companies’ cross-claims in the first lawsuit—
Clean Up brought a new lawsuit (the second lawsuit). In the
operative second amended complaint to this lawsuit,2 Clean Up
sued the Arrow companies and Tahmizian (collectively,
defendants) on a single claim of unlawful competition under the
UCL, generally alleging that defendants illegally disposed of
waste to cut costs and charge customers less. These allegations
were substantively identical to the allegations supporting Clean
Up’s UCL claim in the first lawsuit. Clean Up also alleged that

2      The parties litigated numerous motions on prior iterations
of Clean Up’s complaint. Because those motions are not relevant
to this appeal, we do not discuss them.

                                5
Arrow Services, Arrow Disposal, and Tahmizian were alter egos
of one another, each being “responsible for the wrongdoing” of the
other and for the “relief” sought by Clean Up.
       B.    Defendants’ motion to strike
       On April 28, 2022, defendants filed a motion to strike the
operative complaint along with a request for judicial notice. In
their motion, defendants argued that Clean Up’s filing of the
second lawsuit violated the compulsory cross-complaint rule,
codified in Code of Civil Procedure section 426.30,3 because Clean
Up did not assert its new UCL claim in the first lawsuit as a
cross-claim to the Arrow companies’ cross-complaints, and
because this violation necessitated dismissal of the second
lawsuit. Following an opposition brief by Clean Up, a reply brief
by defendants with a second request for judicial notice, an initial
hearing, a third and fourth request for judicial notice by
defendants, and another hearing, the trial court issued an 11-
page ruling granting the motion to strike without leave to
amend.4 The court also granted defendants’ first and second
requests for judicial notice.
       The trial court reasoned that Clean Up’s allegations in the
second lawsuit are “the exact same allegations” it asserted in the
first lawsuit; that such “parallels” “make clear” that Clean Up’s

3    All further statutory references are to the Code of Civil
Procedure unless otherwise indicated.

4      Defendants had also filed a demurrer to the second
amended complaint, which the trial court overruled as moot in
light of its ruling granting the motion to strike. Because we
affirm that ruling granting the motion to strike, we have no
occasion to reach the parties’ further arguments regarding
defendants’ demurrer.

                                 6
claims “arise out of the same events, transactions, etc.”; that
Clean Up knew of its UCL claim at the time it filed its answers to
the Arrow companies’ cross-complaints; and that the “policy” of
section 426.30 requires that the claims all be “resolved in a single
action.” “[N]o amendment,” the trial court concluded, “can cure
this defect.”
IV. The Appeal
      Following entry of judgment for defendants in the second
lawsuit, Clean Up filed this timely appeal.
                           DISCUSSION
      Clean Up argues that the trial court erred in granting
defendants’ motion to strike its second amended complaint.
      A defendant may move to strike “the whole or any part” of a
complaint if, as pertinent here, it is “not drawn or filed in
conformity with the laws of this state . . . .” (§§ 435, subd. (b),
436.) Like a demurrer, the grounds for a motion to strike must
appear on the face of the challenged complaint or from matters
properly subject to judicial notice. (§ 437.) In reviewing an order
granting a motion to strike, we read the allegations of the
operative pleading “‘as a whole, all parts in their context, and
assume their truth.’” (Mitchell v. Atwell Islands Water Dist.
(2020) 45 Cal.App.5th 624, 628 (Mitchell); Blakemore v. Superior
Court (2005) 129 Cal.App.4th 36, 53 [complaint’s allegations “are
assumed to be true”].) We generally review a ruling striking a
complaint for abuse of discretion,5 but where the issue on appeal

5     We also review the denial of leave to amend for abuse of
discretion (Branick v. Downey Savings & Loan Assn. (2006) 39
Cal.4th 235, 242; CLD Construction, Inc. v. City of San Ramon
(2004) 120 Cal.App.4th 1141, 1147), but we need not consider

                                 7
presents a question of statutory interpretation applied to
undisputed facts, we review the issue de novo. (Cal-Western
Business Services, Inc. v. Corning Capital Group (2013) 221
Cal.App.4th 304, 309; Clauson v. Superior Court (1998) 67
Cal.App.4th 1253, 1255.) We review a ruling granting a request
for judicial notice for abuse of discretion. (Physicians Com. for
Responsible Medicine v. Los Angeles Unified School Dist. (2019)
43 Cal.App.5th 175, 182.)
I.     Analysis
       California’s compulsory cross-complaint rule prohibits a
party from asserting a claim in a new lawsuit if, at the time the
party answered a complaint in prior litigation, it “fail[ed] to
allege in a cross-complaint any [then-existing,] related cause of
action.” (§ 426.30, subd. (a); Align Technology, Inc. v. Tran (2009)
179 Cal.App.4th 949, 952 (Align Technology).) The rule “is
designed to prevent ‘piecemeal litigation,’” because the “‘law
abhors a multiplicity of actions.’” (Align Technology, at p. 959;
Carroll v. Import Motors, Inc. (1995) 33 Cal.App.4th 1429, 1436
(Carroll); Heshejin v. Rostami (2020) 54 Cal.App.5th 984, 993.)
The rule operates as an affirmative defense and completely
disposes of a claim or entire action to which it applies. (Heshejin,
at p. 993.) As pertinent here, the rule not only applies when a
party does not file a cross-claim to a complaint in prior litigation,
but also applies when a party does not file a cross-claim to a
cross-complaint in prior litigation. (§ 426.10, subds. (a) & (b)
[compulsory cross-complaint rule applies to cross-complaints];
Align Technology, at pp. 959-961 [same].)

that issue because Clean Up makes no argument as to how it can
cure the legal defect in its pleading.

                                 8
       As its name suggests, the compulsory cross-complaint rule
bars a claim by a party in the current litigation if (1) that claim is
related to a claim asserted against that party in prior litigation,
and (2) that claim existed at the time the party filed its answer in
the prior litigation. (§ 426.30, subds. (a) & (b)(2); Carroll, supra,
33 Cal.App.4th at pp. 1435-1436 [“section 426.30 precludes [a
plaintiff] from bringing a new action based on claims arising from
the same transaction that served as the basis for [a defendant’s]
cross-complaint in the first action”]; ZF Micro Devices, Inc. v.
TAT Capital Partners, Ltd. (2016) 5 Cal.App.5th 69, 81 (ZF
Micro); Align Technology, supra, 179 Cal.App.4th at pp. 965,
969.) With regard to the first requirement, two claims are
“related” if they “arise[] out of the same transaction, occurrence,
or series of transactions or occurrences” (§ 426.10, subd. (c));
because the compulsory cross-complaint rule was meant to apply
“expansive[ly],” claims arise out of the same transaction or
occurrence as long as they are “logically related”; they need not
rest on identical factual allegations. (Currie Medical Specialties,
Inc. v. Bowen (1982) 136 Cal.App.3d 774, 777 [noting logical
relationship is “expansive”]; Align Technology, at pp. 960, 965;
Saunders v. New Capital for Small Business, Inc. (1964) 231
Cal.App.2d 324, 338-339 (Saunders) [rule does not apply if claims
are “devoid of any logical interrelation”]; ZF Micro, at pp. 82, 84
[logical relationship construed “broadly”].)
       We independently agree with the trial court that Clean
Up’s sole claim is barred by the compulsory cross-complaint rule.
       Clean Up’s UCL claim in the current lawsuit is logically
related to the Arrow companies’ cross-claims for UCL violations
in the first lawsuit. Indeed, Clean Up does not arduously dispute
this point—and for good reason: The Arrow companies’ prior

                                  9
cross-claims and Clean Up’s current claim effectively mirror one
another, at their core attacking the parties’ competitive
relationship during nearly the same time period. (See Align
Technology, supra, 179 Cal.App.4th at pp. 961-962 [claims that
“arose out of the employment relationship between the parties”
had a “logical relationship”]; Saunders, supra, 231 Cal.App.2d at
pp. 338-339 [same, as to claims arising out of the parties’
“subsisting fiduciary relationship”]; cf. ZF Micro, supra, 5
Cal.App.5th at pp. 83-84 [claims not logically related where
claims arise from conduct during different time periods].)
       Clean Up’s UCL claim in the current lawsuit also existed at
the time it filed its answers to the Arrow companies’ cross-claims
in October 2018. That is because the UCL claim that Clean Up
now presses is identical to the UCL claim Clean Up alleged in its
original lawsuit as far back as February 2018. If it existed in
February 2018, it existed eight months later in October 2018.
II.    Clean Up’s Counterarguments
       Clean Up raises what boils down to three arguments in
response to our conclusion.
       First, Clean Up argues that the compulsory cross-complaint
rule does not apply here because—even if the substance of the
claims are logically related—the parties are not the same.
Specifically, Clean Up notes that its current complaint is against
(1) Arrow Services, (2) Arrow Disposal, and (3) Tahmizian, but
the only parties who filed cross-complaints in the first litigation
were (1) Arrow Services and (2) Arrow Disposal. Even if we
assume for the sake of argument that the compulsory cross-
complaint rule requires a complete identity of parties, that
requirement is met here once we give effect, as we must, to Clean
Up’s own allegations in this lawsuit that Arrow Services, Arrow

                                10
Disposal, and Tahmizian are “alter egos” of one another, and
hence all the same party. Clean Up devoted several pages of its
operative complaint to its allegations that defendants “operate
not as individual persons and entities, but rather as one,” and
that Tahmizian “personally orchestrated the . . . disregard for
any separateness . . . for his own personal advantage and
improper purposes.” We are obligated to accept these allegations
as conclusive. (Mitchell, supra, 45 Cal.App.5th at p. 628 [“‘An
admission in a pleading is conclusive on the pleader’”].) Clean
Up’s sole response is to accuse the trial court and defendants of
employing something called an “impermissible defensive alter ego
analysis.” Suffice it to say, that is not “a thing” in the law (and
none of the “ten California published opinions” Clean Up cites
says it is). Clean Up essentially argues that it should be able to
simultaneously allege that defendants are and are not alter egos
of one another. Suffice it to say, taking factually inconsistent
positions is “a thing” in the law; unfortunately for Clean Up, it is
a prohibited thing.
       Second, Clean Up argues that the compulsory cross-
complaint rule does not apply because Arrow Services was a
corporation in “suspended” status (by the Franchise Tax Board)
at the time that Clean Up filed its answer to Arrow Services’
cross-complaint in October 2018. While a corporate party is
suspended, any obligation to respond to a cross-complaint by that
party becomes voluntary (rather than compulsory), such that the
compulsory cross-complaint rule does not apply. (Electronic
Equipment Express, Inc. v. Donald H. Seiler & Co. (1981) 122
Cal.App.3d 834, 844-845.) Clean Up is right on the facts and law
as stated above, but these points do not negate the applicability
of the compulsory cross-complaint rule in this case. That is

                                11
because Arrow Services’ suspended status was lifted in August
2020, at which point in time Clean Up’s duty to respond to Arrow
Services’ cross-complaint became compulsory (Electronic
Equipment, at p. 846 [a suspended corporation’s acts in litigation
become “retroactively validated once reinstatement [of corporate
status] occurs”]), such that Clean Up’s failure to file a cross-
complaint in the 21-month window between August 2020 and
May 2022, when the Arrow companies’ cross-complaints were
dismissed, now bars the second lawsuit under the compulsory
cross-complaint rule. For the first time in its reply brief on
appeal, Clean Up argues that the cross-complaint filed by Arrow
Disposal was a “fraudulent sham” meant to serve as a
“placeholder” during the pendency of Arrow Service’s suspension.
Not only is this argument waived due to its untimely assertion
(Piedmont Capital, supra, 94 Cal.App.5th at p. 970, fn. 6; Gallo,
supra, 81 Cal.App.5th at p. 646), it is also irrelevant to the
application of the compulsory cross-complaint rule because the
applicability of that rule does not turn on the parties’ motives.6

6      Clean Up’s argument is also factually unsupported. While
we grant Clean Up’s request for judicial notice of Arrow
Disposal’s dismissal of two individuals from its cross-complaint
shortly after Arrow Services’ corporate status was reinstated
(Evid. Code, §§ 452, subd. (d), 459, subd. (a)), that dismissal does
nothing to substantiate the theory that Arrow Disposal’s cross-
complaint against Clean Up was a sham. Also, we pause to note
that Clean Up is asking us to take judicial notice of new items for
the first time in conjunction with its filing of a reply brief while
simultaneously lambasting the trial court for doing precisely the
same thing. At best, Clean Up’s inconsistent positions are
unpersuasive; at worst, they are duplicitous.

                                 12
      Third and lastly, Clean Up argues that the trial court
violated its due process rights by taking judicial notice in this
lawsuit of two categories of pleadings from the first lawsuit—
namely, (1) Arrow Disposal’s cross-complaint, which was the
subject of defendants’ second request for judicial notice; and (2)
the two answers Clean Up filed in response to the Arrow
companies’ cross-complaints in the first lawsuit, of which the trial
court took judicial notice on its own.
      The trial court did not abuse its discretion in judicially
noticing these filings. Such pleadings are certainly an
appropriate subject of judicial notice. (See Evid. Code, § 452,
subd. (d) [judicial notice may be taken of “[r]ecords of . . . any
court of this state”].) The trial court did not otherwise commit
any prejudicial procedural errors in taking judicial notice. The
court did not abuse its discretion or violate due process in taking
judicial notice of Arrow Disposal’s cross-complaint: Judicial
notice may be taken at any time as long as the parties are given
an opportunity to respond. (Jacobs v. Coldwell Banker
Residential Brokerage Co. (2017) 14 Cal.App.5th 438, 449; Evid.
Code, § 453 [trial court “shall” take judicial notice if adverse
party given sufficient notice of request].) Here, Clean Up had
ample opportunity—including at two hearings with a 60-day gap
between them—to respond to defendants’ request for judicial
notice of Arrow Disposal’s cross-complaint and even filed an
objection to that request; the trial court did not err in granting
the request over Clean Up’s objection. Clean Up complains that
it was lulled into inaction because the trial court initially said it
would deny judicial notice and then subsequently changed its
ruling. But this complaint is based on a misreading of the record,
as the trial court initially denied defendants’ third and fourth

                                 13
requests for judicial notice; the court’s sole ruling on the second
request was to grant it. The court also did not abuse its
discretion or otherwise violate due process in taking judicial
notice, on its own, of the two answers Clean Up filed in response
to the Arrow companies’ cross-complaints. Procedural errors in
taking judicial notice can be harmless (Aquila, Inc. v. Superior
Court (2007) 148 Cal.App.4th 556, 569), and Clean Up cannot
credibly complain that it was prejudiced by the trial court’s
decision to judicially notice Clean Up’s own prior filings. What is
more, any error in the procedures followed by the trial court is
now irrelevant because defendants asked this Court to take
judicial notice of Clean Up’s answers, and because Clean Up had
the opportunity to object to that request and did not. Thus, the
answers are properly before us by virtue of our independent act of
taking judicial notice.

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                        DISPOSITION
      The judgment is affirmed. Defendants are entitled to their
costs on appeal.
      NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

                                     ______________________, J.
                                     HOFFSTADT

We concur:

_________________________, P. J.
LUI

_________________________, J.
CHAVEZ

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