Court Opinion

ID: 9731093
Source: CourtListenerOpinion
Date Created: 2023-08-26 15:32:59.15048+00
Date Added: 2024-06-11T18:26:13.047684
License: Public Domain

HUFFMAN, J., Dissenting.
The majority opinion holds an individual liable for a loan guaranty for an amount of over $500,000 although he has raised claims by way of affirmative defense which, if true, would totally relieve him of responsibility for those sums. Yet, at this stage of the proceedings, no trier of fact has ever passed on the factual or legal merits of those defenses, no witnesses have been called, nor any documents produced on the truth or falsity of his claimed defense. Why then is this person unable to defend against such an enormous liability? Because he committed a retraxit!1
Simply put, White’s attorney, for no reason apparent on this record, dismissed with prejudice a lawsuit in which White was a coplaintiff. The dismissal was neither negotiated for consideration nor was it compelled by the court. It is unknown why this course of action was followed as opposed to the use of a dismissal without prejudice, which would have been perfectly satisfactory to terminate the suit for any purpose we can discern.
Because of this simple, if inexplicable, event, the majority opinion applies retraxit to produce issue preclusion in a separate case, thereby preventing White from raising any affirmative defenses therein. However, no reported case found by either party or by the court has gone so far, and there is good reason for such dearth of authority. In examining the theoretical underpinnings of collateral estoppel, one can find no justification for issue preclusion where the issues were never “actually litigated” by the parties.
I believe the majority, in making its analysis of this problem, incorrectly applies well-established rules from the field of res judicata, restricting the ability of a party who previously dismissed an action to pursue a second such action, to the quite different situation of deciding whether a defense in *826a civil case stemming from the same set of facts must be barred. Because collateral estoppel is a “distinct aspect of the doctrine of res judicata” (7 Witkin, Cal. Procedure (3d ed. 1985) Judgment, § 253, p. 691), and because retraxit is likewise an aspect of res judicata which becomes applicable where two successive actions are involved, collateral estoppel principles are applicable and must be considered here. However, the majority approach fails to take into consideration an important factor in collateral estoppel analysis, whether the party who dismissed the action ever had a day in court to actually litigate the claims asserted. Moreover, these facts require an examination into the importance of the fact that this record does not reveal that the dismissal was made in return for any consideration.
In Teitelbaum Furs, Inc. v. Dominion Ins. Co., Ltd. (1962) 58 Cal.2d 601, 605-606 [25 Cal.Rptr. 559, 375 P.2d 439], the Supreme Court explained the policy reasons underlying the doctrine of collateral estoppel and outlined certain limitations on the preclusive effect of a felony plea of guilty by a party in a criminal case in a subsequent civil action relating to the same conduct. The court set forth these fundamental policies underlying collateral estoppel: “ ‘The rule is based upon the sound public policy of limiting litigation by preventing a party who has had one fair trial on an issue from again drawing it into controversy.’ (Bernhard v. Bank of America, [1942] 19 Cal.2d 807, 811 [122 P.2d 892].) ‘This policy must be considered together with the policy that a party shall not be deprived of a fair adversary proceeding in which fully to present his case. ’ (Jorgensen v. Jorgensen, [1948] 32 Cal.2d 13, 18 [193 P.2d 728].) When a plea of guilty has been entered in the prior action, no issues have been ‘drawn into controversy’ by a full presentation ’ of the case. It may reflect only a compromise or a belief that paying a fine is more advantageous than litigation. Considerations of fairness to civil litigants and regard for the expeditious administration of criminal justice [citation] combine to prohibit the application of collateral estoppel against a party who, having pleaded guilty to a criminal charge, seeks for the first time to litigate his cause in a civil action.” (Italics added.)
The Supreme Court in Gagnon Co., Inc. v. Nevada Desert Inn (1955) 45 Cal.2d 448, 455 [289 P.2d 466], emphasized that res judicata is not a principle susceptible of mechanical application: “It would seem clear that a dismissal with prejudice by plaintiff of its action is a bar to a subsequent action on the same cause; otherwise there would be no meaning to the ‘with prejudice’ feature. ‘A dismissal with prejudice terminates the action and the rights of the parties are affected by it. It is a final judgment in favor of defendants and they are entitled to recover their costs. But a mere statement that a judgment of dismissal is “with prejudice ” is not conclusive. It is the nature of the action and the character of the judgment that determines whether it is res judicata. The intention of the court to make a determination *827on the merits may be important, but if the judgment is clearly not on the merits, the court’s intention is immaterial.’ ” (Italics added.)
Further limitations on issue preclusion are addressed in the Restatement Second of Judgments, section 27: “When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.” (Rest.2d Judgments (1982) § 27.)
The key operative phrase within the Restatement is the term “actually litigated,” and the Supreme Court similarly emphasized this factor in Teitelbaum Furs, Inc. v. Dominion Ins. Co., Ltd., supra, 58 Cal.2d 6Ó1. From these authorities I conclude the policies underlying the principle of collateral estoppel are not served by applying issue preclusion to affirmative defenses raised by a defendant who, for reasons not disclosed in the record, previously dismissed a prior action based on the same facts without any litigation on the merits ever having taken place. Just as the Supreme Court hypothesized in Teitelbaum, supra, that dismissal could have been made for reasons unrelated to establishing a conclusive judgment on the merits. I do not believe existing authority compels the harsh result reached by the majority.
For example, in Roybal v. University Ford, supra, 207 Cal.App.3d 1080, this court held a dismissal with prejudice pursuant to section 581 constituted a retraxit barring the maintenance of a second separate action. We pointed out “[rjelevant language providing for a plaintiff’s voluntary dismissal with prejudice was introduced into section 581 to limit the plaintiff’s leeway to abandon a case and then refile it. [Citations.]” (Roybal v. University Ford, supra, 207 Cal.App. 3d at p. 1086, italics added.) Also in Roybal, supra, 207 Cal.App.3d 1080, we discussed the requirement of consideration which some courts had imposed upon dismissals in order to give them the effect of a retraxit. (See, e.g., Markwell v. Swift & Co. (1954) 126 Cal.App.2d 245 [272 P.2d 47] (overruled on another point in Stewart v. Cox (1961) 55 Cal.2d 857, 861 [13 Cal.Rptr. 521, 362 P.2d 345]); Hildebrand v. Delta Lumber etc. Co. (1944) 67 Cal.App.2d 88 [153 P.2d 377]; Key v. Caldwell (1940) 39 Cal.App.2d 698 [104 P.2d 87]; Hawber v. Raley (1928) 92 Cal.App. 701 [268 P. 943].) We concluded the res judicata effect of Roybal’s voluntary dismissal with prejudice did not depend upon the presence of any consideration for the dismissal. (Roybal, supra, 207 Cal.App.3d at p. 1086.)
However, the facts in Roybal, supra, 207 Cal.App. 3d 1080, presented only the issue of the viability of a second action after the dismissal of a prior *828similar one; we were not required in our discussion of the effect of a dismissal without any consideration to consider the distinction between the maintenance of a second action and the presentation of a defense based on the same facts. Thus, the reasoning in Roybal on retraxit and on the issue of consideration for a dismissal is not dispositive here.
The result in Roybal, supra, 207 Cal.App.3d 1080, although harsh in barring a plaintiff who may inadvertently have checked the wrong box on a dismissal form from refiling the action, is at least consistent with prior law. Roybal, however, does not reach the issue of whether issue preclusion in the form of collateral estoppel would be proper to prevent a defendant such as White from raising affirmative defenses in a lawsuit, notwithstanding an earlier dismissal of his own action in which the facts supporting those affirmative defenses were never actually litigated, and where nothing was received in return for the dismissal. Special considerations of fairness should apply to that situation, in which the issue to be decided is whether a party should be precluded from putting on a full defense. No one can dispute that a litigant’s right to have his or her case heard on the merits before a trier of fact is precious and should yield only where sound principles of public policy compel that result. In my opinion, that is not the case here.
Just as with Roybal, supra, 207 Cal.App.3d 1080, the other cases relied upon by the majority opinion to address the estoppel effect of prior judgments are not helpful in this matter because they arose out of different procedural contexts and involved factual considerations not present here. For example, the majority relies upon the language of Hamilton v. Carpenter (1940) 15 Cal.2d 130 [98 P.2d 1027] which indicates that defendants could be precluded from asserting an affirmative defense where the issues raised had been finally adjudicated in an earlier action. The difficulty with reliance on Hamilton, however, is that the earlier action went to trial where the issues underlying the claims were actually litigated before a trier of fact. In Gagnon Co., Inc. v. Nevada Desert Inn, supra, 45 Cal.2d 448, 454 a judicial proceeding was also involved before dismissal took place, in which the dismissal with prejudice barring further litigation was entered by the court upon plaintiff’s motion for judgment of dismissal.
Similarly, in Gates v. Superior Court (1986) 178 Cal.App.3d 301, 311 [223 Cal.Rptr. 678], another pertinent factor not present in this case was key to the result; the dismissal found to bar further litigation on the same subject matter was based on a stipulated judgment following a settlement agreement reached upon some sort of consideration. The same type of stipulated settlement for consideration was found to operate as a retraxit in Datta v. Staab (1959) 173 Cal.App.2d 613, 621 [343 P.2d 977], and in Rodriguez v. Fireman’s Fund Ins. Co. (1983) 142 Cal.App.3d 46, 54 [190 Cal.Rptr. 705] *829(disapproved on other grounds in Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287, 310 [250 Cal.Rptr. 116, 758 P.2d 58]). (Accord Ghiringhelli v. Riboni (1950) 95 Cal.App.2d 503, 505-506 [213 P.2d 17]; Wouldridge v. Burns (1968) 265 Cal.App.2d 82, 86 [71 Cal.Rptr. 394]; Sylvester v. Soulsburg (1967) 252 Cal.App.2d 185, 193 [60 Cal.Rptr. 218]; Sears v. DeMota (1958) 157 Cal.App.2d 216, 219-220 [320 P.2d 579].)
Concededly, certainty in the law and bright lines for the guidance of counsel and the courts, such as are provided by the doctrines of res judicata and retraxit, are good things. The avoidance of repetitive litigation, conservation of judicial resources, and giving certainty to judgments are likewise valuable goals. However, as the Supreme Court has taught, the nature of the action and the character of the prior jqdgmgnt (or dismissal) must determine the applicability of the doctrine of res judicata. (Gagnon Co., Inc. v. Nevada Desert Inn, supra, 45 Cal.2d 448, 455.)
In my judgment, there is no reason in policy or logic, and no requirement in authority, to apply the doctrine of issue preclusion to bar the assertion of a defense where there has been no actual litigation of the underlying issues and where the facts disclose no consideration was given in return for a party’s dismissal of the complaint with prejudice. Sufficient controls on litigation and adequate sanctions are provided when the litigant is barred from refiling as a complaint any version of the lawsuit that was, for whatever reason, dismissed with prejudice. I do not believe the technical harshness of the doctrine of retraxit extends to create issue preclusion under the circumstances present in this case. For these reasons, I conclude the trial court’s ruling on the motion for summary judgment and adjudication was correct, and I cannot join in the analysis or the result reached by the majority.

Of course, all common law scholars will immediately recognize the term retraxit even if the majority of practitioners and judges will have to repair to their respective libraries in order to seek a definition of that ancient phrase. (See maj. opn., ante, at p. 820.) Black’s Law Dictionary (5th ed. 1979) at page 1183 defines retraxit in this manner: “[A] voluntary renunciation by plaintiff in open court of his suit and cause thereof, and by it plaintiff forever loses his action. [Citation.] It is equivalent to a verdict and judgment on the merits of the case and bars another suit for the same cause between the same parties. [Citation.]” In Roybal v. University Ford (1989) 207 Cal.App.3d 1080, 1087 [255 Cal.Rptr. 469], we noted the common law requirement of renunciation in open court has been dispensed with by the procedure provided in Code of Civil Procedure section 581. (All statutory references are to the Code of Civil Procedure unless otherwise specified.)