Court Opinion

ID: 2797551
Source: CourtListenerOpinion
Date Created: 2015-04-29 21:02:07.144423+00
Date Added: 2024-06-11T08:03:22.327441
License: Public Domain

Filed 4/29/15 Deermont v. Ortiz 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                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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(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 This opinion has not been certified for publication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 THREE

DEERMONT, LLC,                                                        B247626

         Plaintiff, Cross-Defendant and                               (Los Angeles County
         Respondent,                                                  Super. Ct. No. SC113395)

         v.

GABRIEL ORTIZ,

         Defendant, Cross-Complainant and
         Appellant,

U.S. CREDIT BANCORP, INC. and
MICHEAL RONE,

         Cross-Defendants and Respondents.

         APPEAL from judgment of the Superior Court of Los Angeles County,
Cesar C. Sarmiento, Judge. Affirmed.
         Law Offices of Derek L. Tabone and Derek L. Tabone for Defendant, Cross-
Complainant and Appellant.
         Law Office of Stan Stern and Stan Stern for Plaintiff, Cross-Defendant, and
Respondent.
         Cheng Law Firm and Hanwei Cheng for Cross-Defendants and Respondents.
                                    INTRODUCTION
       Appellant Gabriel Ortiz appeals the trial court’s judgment finding that Ortiz’s
cross-complaint, which sought to cancel the deed of trust resulting from a foreclosure,
was barred by collateral estoppel. Ortiz asserts that the court abused its discretion in
allowing Deermont, LLC (Deermont), and U.S. Credit Bancorp, Inc. and its
representative Michael Rone (collectively referred to as Bancorp) to amend their answers
to include the defense of collateral estoppel on the eve of the bench trial. Ortiz also
argues that collateral estoppel is inapplicable because the elements for collateral estoppel
have not been satisfied and because the prior judgment resulted from an arbitration
award. We affirm because Ortiz never asserted prejudice in opposing the amendments,
was in privity with a party to the prior proceeding, and the issues necessarily decided in
the prior adjudication are identical to the issues raised by the cross-complaint. Because
this is an assertion of mutual collateral estoppel, the fact the prior judgment resulted from
arbitration is inconsequential.
                    FACTS AND PROCEDURAL BACKGROUND
       Prior to the foreclosure, Anatolio and Guadalupe Garcia owned the property
located at 416 Lincoln Boulevard in Venice, California for almost 40 years. In 2003, the
Garcias sought loans for funds to develop the property. In May 2003, Bancorp loaned the
Garcias $205,000, secured by a Deed of Trust on the property. In January 2005, Bancorp
provided the Garcias with another loan, this time in the amount of $170,000, also secured
by a Deed of Trust on the property. At the Garcias’ request, Bancorp extended the
maturity dates for both loans until December 2010, with the understanding that the
Garcias would pay off both loans by that date. Both notes and deeds of trust provided
that if the Garcias transferred all or part of the property to another without Bancorp’s
written consent, Bancorp had the option to accelerate the loans and require immediate
payment in full of all sums secured by the deeds of trusts.

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       In February 2010, the Garcias stopped making payments on the loans. In June
2010, Bancorp noticed default and its election to sell under the deed of trust as to the
$170,000 loan. In October 2010, Bancorp noticed the trustee’s sale as to the $170,000
loan, stating the estimated pay off amount. Bancorp noticed default and election to sell
under the deed of trust as to the $205,000 loan also in October 2010.
       In the interim, the Garcias transferred their full interest in the property to Gabriel
Ortiz as a gift via a grant deed in September 2010 without obtaining Bancorp’s consent.
Around that time, the Garcias also executed a partnership agreement with Ortiz. The
objectives of the partnership were for the parties to develop and perform construction on
the property, and for Ortiz to obtain financing for the property to satisfy the defaults on
the loans from Bancorp.
       The trustee’s sale was noticed for December 15, 2010. Two days before the
scheduled sale, Ortiz transferred a 25 percent interest in the property back to Guadalupe
Garcia, who immediately filed for Chapter 13 bankruptcy to stay the sale. Almost a
month later, Guadalupe Garcia’s bankruptcy action was dismissed. Guadalupe Garcia
filed for bankruptcy two more times in January and March 2011; these two bankruptcy
actions were also dismissed.
       In March 2011, the Garcias sued Bancorp to enjoin the foreclosure sale. Based on
an arbitration agreement signed by the Garcias in relation to the deeds of trust, the parties
arbitrated the Garcias’ claims. In November 2011, the arbitrator found in favor of
Bancorp. The arbitrator concluded that the Garcias never tendered any money to
Bancorp to cure the deficiencies. The arbitrator also held that the Garcias failed to
establish that Bancorp breached the contracts, miscalculated or misstated the amounts due
to cure the defaults or pay off the loans, or engaged in any unfair or deceptive business
practices. The court entered judgment in favor of Bancorp based on the parties’
stipulation to confirm the arbitration award.

                                                3
         In July 2011, Deermont purchased the property in the trustee’s sale, paying an
amount that satisfied the Garcias’ unpaid debts to Bancorp. Shortly thereafter, Deermont
brought the present action against the Garcias and Ortiz to quiet title. Ortiz filed cross-
complaints against Deermont and Bancorp, seeking to cancel the trustee’s sale.
         One month before trial, Deermont requested to amend its answers to include the
defenses of collateral estoppel and res judicata. Ortiz filed an opposition to the motion to
amend, mainly asserting that the motion was not in the interest of justice. On the day
trial was set to commence, the court heard Deermont’s motion to amend, in which
Bancorp joined. Ortiz’s counsel did not appear at the hearing to oppose the motion. The
court granted the motions to amend, noting that amendment would result in very minimal
prejudice to Ortiz.
         The following day, the bench trial commenced. The court first tried Deermont’s
and Bancorp’s collateral estoppel defense to Ortiz’s cross-complaint. The court found
that collateral estoppel barred Ortiz’s claims, based on the judgment entered against the
Garcias. The court subsequently granted judgment for Deermont on its action for quiet
title.
                                        DISCUSSION
         Ortiz’s appeal solely addresses the cross-complaint and the affirmative defense of
collateral estoppel. Ortiz argues that the court abused its discretion in granting Deermont
and Bancorp leave to amend their answers. Ortiz also argues that the elements of
collateral estoppel cannot be satisfied and application of collateral estoppel is barred by
Vandenberg v. Superior Court (1999) 21 Cal. 4th 815. We address each argument in turn.
1.       The Court Did Not Abuse Its Discretion in Granting Leave to Amend
         Ortiz argues that the court abused its discretion in granting Deermont’s and
Bancorp’s motions for leave to amend their answers. “In the furtherance of justice, trial
courts may allow amendments to pleadings and if necessary, postpone trial. (Code Civ.
Proc. § 473.) Motions to amend are appropriately granted as late as the first day of trial
[citation] or even during trial [citation] [if the opposing party] . . . will not be prejudiced.
‘When a request to amend has been denied, an appellate court is confronted by two

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conflicting policies. On the one hand, the trial court’s discretion should not be disturbed
unless it has been clearly abused; on the other, there is a strong policy in favor of liberal
allowance of amendments. This conflict “is often resolved in favor of the privilege of
amending, and reversals are common where the appellant makes a reasonable showing of
prejudice from the ruling.” ’ [Citation.] ” (Honig v. Financial Corp. of America (1992)
6 Cal. App. 4th 960, 965.) Moreover, the policy of liberal allowance of amendments
applies with particular force to answers (Gould v. Stafford (1894) 101 Cal. 32, 34;
Permalab-Metalab Equipment Corp. v. Maryland Cas. Co. (1972) 25 Cal. App. 3d 465,
472) “for a defendant denied leave to amend is permanently deprived of a defense”
(Hulsey v. Koehler (1990) 218 Cal. App. 3d 1150, 1159).
          Here, one month before trial, Deermont moved to amend its answer to incorporate
the defenses of collateral estoppel and res judicata. Ortiz filed an opposition to the
motion to amend, asserting that the motion was not in the interest of justice and that
Deermont and Bancorp lacked diligence in amending. Ortiz also argued that: “Denial of
permission to amend pleadings may be based on long un-excused delay especially when
the proposed amendment interjects a new issue that may require further investigation or
discovery procedures.” Yet, neither Ortiz’s brief nor his attorney’s declaration asserted
that Ortiz would be prejudiced by the amendment. The brief and declaration never stated
that this amendment necessitated further investigation or additional discovery. The above
quoted language was the sole argument Ortiz proffered on the issue of prejudice.
Additionally, Ortiz’s counsel did not appear at the hearing to oppose Deermont’s and
Bancorp’s motions. In its order granting the motions to amend, the court noted that “the
only prejudice to Ortiz is the potential that the trial will need to be delayed.” The court
permitted the amendment due to this lack of prejudice and “[t]he strong policy in favor of
permitting amendment and permitting a defendant to present all available defenses at
trial.”

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          Based on these facts we find no abuse of discretion. Although Ortiz now argues
on appeal that he was prejudiced by the amendment because he did not have the
opportunity to conduct discovery, and that he was “ambush[ed]” by the amendment, these
arguments were never presented to the trial court. We decline to consider arguments not
raised at trial. (See generally Lambert v. Carneghi (2008) 158 Cal. App. 4th 1120, 1129.)
In making its decision, the trial court appropriately considered the arguments before it
and balanced the interests at stake. Its decision to allow amendment in favor of long
standing public policy in favor of permitting amendments to answers was clearly not an
abuse of discretion as there was no evidence of prejudice. We therefore affirm the
court’s decision to allow Deermont and Bancorp to amend their answers.
2.        The Court Properly Applied Collateral Estoppel
          Ortiz asserts that collateral estoppel is inapplicable to his claims against Deermont
and Bancorp. Under the doctrine of “collateral estoppel” or “issue preclusion,” “an issue
necessarily decided in prior litigation may be conclusively determined as against the
parties or their privies in a subsequent lawsuit on a different cause of action. [Citation.]
. . . ‘[I]n its collateral estoppel aspect, the doctrine may also preclude a party to prior
litigation from redisputing issues therein decided against him, even when those issues
bear on different claims raised in a later case. Moreover, because the estoppel need not
be mutual, it is not necessary that the earlier and later proceedings involve the identical
parties or their privies. Only the party against whom the doctrine is invoked must be
bound by the prior proceeding.’ [Citation.]” (Roos v. Red (2005) 130 Cal. App. 4th 870,
879.) “Collateral estoppel applies when (1) the party against whom the plea is raised was
a party or was in privity with a party to the prior adjudication, (2) there was a final
judgment on the merits in the prior action and (3) the issue necessarily decided in the
prior adjudication is identical to the one that is sought to be relitigated. [Citation.]”
(Ibid.)

                                                6
       Here, Ortiz attacks the first and third elements of collateral estoppel, stating that
he was not in privity with the Garcias and that the issues presented in this case are
different than those previously adjudicated. He also asserts that because the prior
judgment resulted from an arbitration, he cannot be collaterally estopped by it. We
review the applicability of collateral estoppel de novo. (Jenkins v. County of Riverside
(2006) 138 Cal. App. 4th 593, 618 [“The issue whether collateral estoppel applies is itself
a question of law, which question we review de novo.”].)
       a.      Identity of the Parties: Privity between Ortiz and Garcia
       As Ortiz was not a party to the arbitration, we first address whether he was in
privity with the Garcias, such that he should be bound by the prior litigation. “The
concept of privity for the purposes of res judicata or collateral estoppel refers ‘to a mutual
or successive relationship to the same rights of property, or to such an identification in
interest of one person with another as to represent the same legal rights [citations] and,
more recently, to a relationship between the party to be estopped and the unsuccessful
party in the prior litigation which is “sufficiently close” so as to justify application of the
doctrine of collateral estoppel. [Citations.]’ ” (Citizens for Open Access etc. Tide, Inc. v.
Seadrift Assn (1998) 60 Cal. App. 4th 1053, 1069-1070 (Citizens for Open Access).)
“In the context of collateral estoppel, due process requires that the party to be estopped
must have had an identity or community of interest with, and adequate representation by,
the losing party in the first action as well as that the circumstances must have been such
that the party to be estopped should reasonably have expected to be bound by the prior
adjudication.” (Clemmer v. Hartford Insurance Co. (1978) 22 Cal. 3d 865, 875.)
       “A party is adequately represented for purposes of the privity rule ‘if his or her
interests are so similar to a party’s interest that the latter was the former’s virtual
representative in the earlier action. [Citation.]’ [Citation.] We measure the adequacy of
‘representation by inference, examining whether the ... party in the suit which is asserted
to have a preclusive effect had the same interest as the party to be precluded, and whether
that . . . party had a strong motive to assert that interest. If the interests of the parties in
question are likely to have been divergent, one does not infer adequate representation and

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there is no privity. [Citations.] If the . . . party’s motive for asserting a common interest
is relatively weak, one does not infer adequate representation and there is no privity.
[Citation.]’ [Citation.]” (Citizens for Open Access, supra, 60 Cal.App.4th at p. 1071.)
       Through the co-ownership of the property and the partnership agreement, Ortiz
clearly shared a community of interest with the Garcias as to the property. Evidence
indicates that Ortiz and the Garcias worked together to prevent the foreclosure sale, and
the arbitration pursued by the Garcias was just a step in this collective effort to oppose
the foreclosure. The Garcias transferred the property in full to Ortiz, only after the
Garcias had been in default for six months and after Bancorp had already issued and
recorded notice of default and its election to sell the property. At that same time, Ortiz
had formed a partnership with the Garcias for the purpose of securing financing to pay
off arrearages on the Bancorp loans and developing the property, as evidenced by the
written partnership agreement signed by Ortiz and Ortiz’s testimony regarding the nature
of the partnership. Ortiz also testified that he knew that the property had been in default
for six or seven months and that he had unsuccessfully attempted to obtain loans several
times to pay off the default to Bancorp.
       Furthermore, two days before the first noticed foreclosure sale, Ortiz conveyed
25 percent of the property back to Guadalupe Garcia, who declared bankruptcy that same
day, in what appears to be an attempt to stay foreclosure proceedings. After multiple
failed bankruptcy actions, the Garcias sued to enjoin the sale, and their claims against
Bancorp were arbitrated. Ortiz admitted that he was made aware of the litigation and that
he testified at the arbitration at the Garcias’ request. These facts clearly establish that
Ortiz and the Garcias had successive and mutual rights to the property at issue, and that
their relationship was “sufficiently close” so as to justify application of the doctrine of
collateral estoppel in the present action.

                                               8
       To the extent that Ortiz asserts that he was not in privity with the Garcias because
he had no control over the prior action, did not direct or participate in it except as a
witness, and did not attend the hearings nor select the counsel, the evidence indicates that
Ortiz should have expected to be bound by the arbitration. As a co-owner of the
property, Ortiz’s interests were identical to the Garcias’ interests in stopping the
foreclosure. Based on their co-ownership of the property, their partnership, and their
joint efforts to prevent foreclosure, we can reasonably and fairly conclude that Ortiz was
represented by his partners, the Garcias, in the prior adjudication. Ortiz should
realistically have expected to be bound by the arbitration brought by the Garcias,
particularly since Ortiz took ownership of the property amidst the foreclosure
proceedings and because Ortiz was well aware that the property was in default.
       The facts strongly support a finding of privity, as does public policy. “Collateral
estoppel is an equitable concept based on fundamental principles of fairness.” (Sandoval
v. Superior Court (1983) 140 Cal. App. 3d 932, 941.) The objective of the doctrine of
collateral estoppel is “ ‘ “ ‘to promote judicial economy by minimizing repetitive
litigation, to prevent inconsistent judgments which undermine the integrity of the judicial
system, [and] to protect against vexatious litigation.’ ” ’ ” (Gottlieb v. Kest (2006)
141 Cal. App. 4th 110, 148.) Here, it would be unfair to require Bancorp and its purchaser
to relitigate the same issues associated with the foreclosure simply because the Garcias
gifted the property to another party after receiving notice of default and election to sell
under the deed of trust. Not only would trying Ortiz’s cross-complaint result in repetitive
adjudications but could possibly result in inconsistent judgments.
       We therefore conclude that for the purposes of applying collateral estoppel, Ortiz
was in privity with the Garcias. The first element of collateral estoppel has been
satisfied.

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       b.     Identity of the Issues
       In his reply brief, Ortiz argues that the issues adjudicated in the first arbitration are
not the same as those raised in his cross-complaint to cancel the trustee’s sale. “ ‘The
“identical issue” requirement addresses whether “identical factual allegations” are at
stake in the two proceedings, not whether the ultimate issues or dispositions are the
same.’ ” (Hernandez v. City of Pomona (2009) 46 Cal. 4th 501, 511-512, citing Lucido v.
Superior Court (1990) 51 Cal. 3d 335, 342.)
       Here, the cross-complaint alleges that Bancorp (1) demanded more than was due
on the loans, (2) failed to serve trustors with a notice of default on either loan, (3) failed
to state the correct amounts due on the notices of default, (4) failed to serve trustors with
notice of trustee’s sale, and (4) failed to accurately indicate the amount due. Yet, these
factual issues regarding notices of default and trustee’s sale, and calculations of the
amounts due on the loans were all necessarily decided in the first action where the
Garcias arbitrated these issues.
       Although the Garcias alleged breach of contract, misrepresentation, and unfair
business practices in the first action, the factual issues in that action dealt with the
validity of the foreclosure process engaged in by Bancorp and its trustee. There, the
arbitrator found that the Garcias stopped making payments on the loans in February 2010,
that Bancorp caused notices of default and election to sell under deed of trust to be
recorded with regard to the $170,000 and $205,000 loans in June and October 2010
respectively, and that Bancorp caused a notice of trustee’s sale to be recorded with regard
to the $170,000 loan in September 2010. The arbitrator further determined that: “During
the period between February 2010 and July 1, 2011, the parties themselves and through
their respective attorneys engaged in extensive negotiations regarding the amounts
required to cure the defaults under the loans, the amounts necessary to pay off the loans,
especially the $170K loan, regarding extensions of the trustee’s sale dates to allow [the
Garcias] to obtain new financing, and requests by [Bancorp] for evidence of such
financing. During that same period, [the Garcias] filed three separate bankruptcy
proceeding[s] in order to stay the trustee’s sale, all of which were dismissed, and obtained

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agreements from [Bancorp] to continue the trustee’s sale dates. [¶] . . . Notwithstanding
that the [Garcias] disputed various calculations by [Bancorp] of the amounts necessary to
cure [the Garcias’] defaults under the loans, particularly the $170K loan, [the Garcias]
never tendered any amounts to [Bancorp] to cure their default and [the Garcias] have
failed by a preponderance of evidence to establish that [Bancorp] breached any contract
or any implied or expressed covenant of the contracts, or that [Bancorp] either
intentionally or negligently miscalculated or misstated the amounts necessary to cure
[the Garcias’] defaults or pay off their loans at any particular time, or engaged in any
unfair or deceptive business practices.” (Italics added.)
       In finding in favor of Bancorp, the arbitrator determined that the foreclosure
proceedings were properly conducted. This necessarily included a finding that the
notices of default and of the trustee’s sale were properly issued and recorded, and
calculations of the amounts due were accurate, including the interest due. As
summarized above, these are the very factual issues pleaded in the cross-complaint.
Thus, the identical issue requirement for collateral estoppel is satisfied.
       To the extent that Ortiz asserts that the arbitrator only contemplated the $170,000
loan, we disagree. The arbitrator’s decision, quoted above, clearly discusses a plural
number of loans on the property, and even specifically mentions the second loan, stating
that Bancorp “caused a Notice Of Default And Election To Sell Under Deed Of Trust to
be recorded with regard to the $205K loan.” The arbitrator determined that the
foreclosure process engaged in for both loans was proper.
       Ortiz also asserts that the cross-complaint raises a new issue that “Rone had
breached an express promise not to conduct a trustee’s sale while the Garcias’ action was
pending.” Yet, Ortiz fails to inform this court how that promise could effectively cancel
the deed of trust, particularly where all aspects of the foreclosure were proper and there
are no facts alleged showing that such a promise was in any way enforceable. Those
factual contentions are inconsequential to Ortiz’s claims, and thus do not provide a new,
previously unadjudicated ground to cancel the trustee’s sale.

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       We therefore conclude that there is identity of the issues raised in the cross-
complaint and the prior action.
       c.      The Fact Prior Matter Decided by Arbitration Is Inconsequential
       Lastly, citing Vandenberg, supra, 21 Cal. 4th 815, Ortiz argues that collateral
estoppel cannot apply because the prior judgment is premised on an arbitration award. In
Vandenberg, property owners (the Boyds) sued a former lessee (Vandenberg) for
contamination of soils and groundwater underlying their property. (Id. at p. 825.) As
part of a settlement agreement, the Boyds released all claims against Vandenberg except
for their claim for breach of the lease agreement, which the parties agreed to resolve
through arbitration or trial. (Id. at p. 826.)
       Following the arbitrator’s ruling in the Boyds’ favor, Vandenberg subsequently
sued several of his liability insurers for failure to defend. (Vandenberg, supra, 21 Cal.4th
at p. 826 .) Although they were not parties to the arbitration, two of the liability insurers
asserted that Vandenberg was collaterally estopped from relitigating one of the issues
decided during the arbitration. (Id. at pp. 826–827.) Usually, a nonparty, like one of the
insurers, may “take advantage, in a later unrelated matter, of findings made against his
current adversary in the earlier proceeding” under what is known as “nonmutual
collateral estoppel.” (Id. at pp. 828–829.)
       After considering various public policy arguments regarding the use of nonmutual
collateral estoppel where the prior judgment results from a private arbitration, the
Supreme Court concluded that fairness mandated that collateral estoppel could not be
invoked by a nonparty to the prior arbitration. (Vandenberg, supra, 21 Cal.4th at p. 835)
The Court discussed how although arbitrations offer parties benefits of an informal and
expeditious forum for disputes, the use of arbitration rulings by nonparties can have
unintended consequences because arbitration proceedings are subject to limited judicial
review and arbitrators are not bound by technical interpretations of law. (Id. at P. 831-
832.) The Court highlighted that California’s statutory scheme for private arbitration
nowhere specifies that a private arbitration award is binding in favor of nonparties in the
absence of such an agreement. (Id. at p. 831.) The Court reasoned that a nonparty’s use

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of an arbitrator’s rulings against an arbitral party “is not an inherent or expected feature
of private arbitration that is implicitly accepted by the arbitral parties.” (Ibid.) In sum,
the court barred the assertion of nonmutual collateral estoppel where the prior judgment
resulted from arbitration “unless the arbitral parties agreed, in the particular case, that
such a consequence should apply.” (Id. at p. 834.)
       Here, there are three parties invoking collateral estoppel: Bancorp, Rone, and
Deermont. Bancorp and Rone were clearly parties to the arbitration and thus, both have
asserted mutual collateral estoppel. Vandenberg is therefore inapplicable to Bancorp’s
and Rone’s assertion of collateral estoppel.
       We also conclude that Vandenberg is inapplicable to Deermont’s assertion of
collateral estoppel because Deermont is in privity with Bancorp and bound by the
arbitration. In Bernhard v. Bank of America (1942) 19 Cal. 2d 807, 811, the Supreme
Court explained the meaning of mutual collateral estoppel, stating that “only parties to
the former judgment or their privies may take advantage of or be bound by it. . . . A
privy is one who, after rendition of the judgment, has acquired an interest in the subject
matter affected by the judgment through or under one of the parties, as by inheritance,
succession, or purchase. [Citations.] The estoppel is mutual if the one taking advantage
of the earlier adjudication would have been bound by it, had it gone against him.” The
Court further stated that, “[h]e is bound by that litigation only if he has been a party
thereto or in privity with a party thereto.” (Id. at p. 812.)
       Here, Deermont purchased the property from Bancorp’s foreclosure proceedings,
and thus acquired an interest in the subject matter of the arbitration through purchase.
Had the Garcias succeeded at arbitration against Bancorp, the trustee who performed the
sale and the purchaser, Deermont, would be bound by that decision and the purchase of
the property would have been voidable. (See Bank of America etc. Assn v. Reidy (1940)
15 Cal. 2d 243, 248 [“It is the general rule that courts have power to vacate a foreclosure
sale where there has been fraud in the procurement of the foreclosure decree or where the
sale has been improperly, unfairly or unlawfully conducted, or is tainted by fraud, or
where there has been such a mistake that to allow it to stand would be inequitable to

                                               13
purchaser and parties.”]; People ex rel. State of Cal. v. Drinkhouse (1970) 4 Cal. App. 3d
931, 936-939 (The Court affirmed application of collateral estoppel applied against a
grantee because the deed was void as to the grantor and the grantee could have no greater
rights to the property than his grantor.) As such, Deermont’s use of collateral estoppel
was mutual. Vandenberg’s prohibition against nonmutual collateral estoppel premised on
arbitration awards is thus inapplicable.
       Based on the foregoing, we conclude that the court properly applied collateral
estoppel to Ortiz’s cross-complaint. As leave to amend the answers and the application
of collateral estoppel were the only issues raised on appeal, we affirm the judgment
against Ortiz.

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                                    DISPOSITION
      The judgment is affirmed. Deermont and U.S. Credit Bancorp, Inc. and Michael
Rone are awarded their costs on appeal.

      NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                KITCHING, Acting P. J.

I concur:

                    ALDRICH, J.

                    LAVIN, J.*

*
        Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.

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