Court Opinion

ID: 1043092
Source: CourtListenerOpinion
Date Created: 2013-10-03 17:19:21.292062+00
Date Added: 2024-06-11T13:01:24.770423
License: Public Domain

Filed 10/3/13

      IN THE SUPREME COURT OF CALIFORNIA

BADRUDIN KURWA,                        )
                                       )
           Plaintiff and Appellant,    )
                                       )                           S201619
           v.                          )
                                       )                    Ct.App. 2/5 B228078
MARK B. KISLINGER et al.,              )
                                       )                    Los Angeles County
           Defendants and Respondents. )                  Super. Ct. No. KC045216
____________________________________)

      Under California‟s “one final judgment” rule, a judgment that fails to dispose
of all the causes of action pending between the parties is generally not appealable.
(Code Civ. Proc., § 904.1, subd. (a);1 Morehart v. County of Santa Barbara (1994)
7 Cal.4th 725, 740-741 (Morehart).) This case poses the question whether an
appeal may be taken when the judgment disposes of fewer than all the pled causes
of action by dismissal with prejudice, and the parties agree to dismiss the
remaining counts without prejudice and waive operation of the statute of
limitations on those remaining causes of action. We conclude such a judgment is
not appealable. As a line of Court of Appeal decisions beginning with Don Jose’s
Restaurant, Inc. v. Truck Ins. Exchange (1997) 53 Cal.App.4th 115 (Don Jose’s)
has recognized, the parties‟ agreement holding some causes of action in abeyance
for possible future litigation after an appeal from the trial court‟s judgment on
others renders the judgment interlocutory and precludes an appeal under the one
final judgment rule. We therefore reverse the judgment of the Court of Appeal

1       All unspecified statutory references are to the Code of Civil Procedure.

                                          1
below, which declined to follow Don Jose‟s and its progeny and entertained an
appeal from the interlocutory judgment rendered in the trial court.
                   FACTUAL AND PROCEDURAL BACKGROUND

       Plaintiff Badrudin Kurwa and defendant Mark B. Kislinger, both
ophthalmologists, undertook a venture to provide medical services to patients of a
health maintenance organization and formed a corporation for that purpose.
Several years later, plaintiff‟s license to practice medicine was suspended.
Defendant then notified the health maintenance organization that plaintiff‟s
participation in the enterprise was terminated and that the agreed medical services
would henceforth be performed by defendant‟s medical corporation. The health
maintenance organization terminated its agreement with the parties‟ joint
corporation and executed a new agreement with defendant‟s corporation.
       Plaintiff sued defendant for breach of fiduciary duty and defamation,
among other claims. Defendant cross-complained for defamation. Ruling for
defendant on his pretrial motions, the trial court concluded that once plaintiff and
defendant had created a corporation to conduct their business, they owed each
other no fiduciary duty. Plaintiff conceded he could not proceed on his cause of
action for breach of fiduciary duty and related claims, which would therefore be
dismissed with prejudice, as would other counts plaintiff expressly “abandon[ed].”
       The parties, however, agreed to dismiss as well their respective defamation
claims without prejudice and to waive the applicable statute of limitations.
According to defense counsel, this would allow the parties to “test the issue” of
fiduciary duty and “get a ruling” from the appellate court before disposing of the
defamation claims, which were “kind of outside this whole discussion.” The
purpose of this agreed disposition, plaintiff‟s attorney further explained, was to
“preserve” both defamation causes of action “for such time as this case may come
back from appeal.” The trial court ordered plaintiff‟s action dismissed with
prejudice with the exception of the defamation cause of action, which, together

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with defendant‟s cross-complaint, the court dismissed without prejudice. The
court then entered judgment in favor of defendant, from which judgment plaintiff
appealed.
       The Court of Appeal held the judgment final and appealable, reasoning that
because the defamation counts had been dismissed, they were no longer pending
between the parties and the trial court had no jurisdiction to proceed further on any
cause of action. The court acknowledged Don Jose’s, supra, 53 Cal.App.4th 115,
and its progeny were to the contrary, but declined to follow these decisions. On
the merits, the Court of Appeal determined the superior court had erred in ruling
defendant owed plaintiff no fiduciary duty on the facts pleaded, and reversed the
judgment of the superior court.
       We granted defendant‟s petition for review.
                                    DISCUSSION

       Section 904.1, subdivision (a) allows appeal “[f]rom a judgment, except . . .
an interlocutory judgment . . . .” In Morehart, we explained that the rule codified
in this provision, known as the one final judgment rule, precludes an appeal from a
judgment disposing of fewer than all the causes of action extant between the
parties, even if the remaining causes of action have been severed for trial from
those decided by the judgment. “A judgment that disposes of fewer than all of the
causes of action framed by the pleadings, however, is necessarily „interlocutory‟
(Code Civ. Proc., § 904.1, subd. (a)), and not yet final, as to any parties between
whom another cause of action remains pending.” (Morehart, supra, 7 Cal.4th at
p. 741.) The theory of the rule is that “ „piecemeal disposition and multiple
appeals in a single action would be oppressive and costly, and that a review of
intermediate rulings should await the final disposition of the case.‟ (9 Witkin, Cal.
Procedure (4th ed. 1997) Appeal, § 58, p. 113 [citations].)” (Griset v. Fair
Political Practices Com. (2001) 25 Cal.4th 688, 697.)

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       Morehart disapproved an exception to the one final judgment rule
recognized in Schonfeld v. City of Vallejo (1975) 50 Cal.App.3d 401 (Schonfeld)
and cases following it. The Schonfeld exception allowed an appeal from a
judgment that left unresolved some causes of action where the trial court had
ordered the unresolved counts to be tried separately — or as some decisions
following Schonfeld had stated, where the unresolved counts were both severed for
trial and logically separate and independent from those resolved by the judgment.
(Morehart, supra, 7 Cal.4th at pp. 738-740.)
       The Schonfeld court had supported its exception by the existence of
“unusual” circumstances that would result in “hardship and inconvenience” were
the appeal delayed until all causes of action were resolved. (Schonfeld, supra, 50
Cal.App.3d at p. 418.) In Morehart, we explained that under California
procedures such circumstances did not create appealability but could serve to
justify review of the interlocutory judgment by petition for writ of mandate, a
“more efficient avenue for obtaining a preliminary determination whether unusual
circumstances make appellate review of an interlocutory judgment appropriate
and, if the determination is affirmative, obtaining the review itself.” (Morehart,
supra, 7 Cal.4th at p. 743.) We concluded that “an appeal cannot be taken from a
judgment that fails to complete the disposition of all the causes of action between
the parties even if the causes of action disposed of by the judgment have been
ordered to be tried separately, or may be characterized as „separate and
independent‟ from those remaining. . . . A petition for a writ, not an appeal, is the
authorized means for obtaining review of judgments and orders that lack the
finality required by Code of Civil Procedure section 904.1, subdivision (a).” (Id.
at pp. 743-744.)
     With Schonfeld’s severance-for-trial exception disapproved, litigants
experimented with other techniques to obtain an appellate ruling on some causes
of action while preserving others for possible litigation later. In Don Jose’s, the
trial court granted the defendants‟ motion for summary adjudication on only two

                                          4
of the plaintiffs‟ 11 causes of action, and the parties then stipulated that pending
plaintiffs‟ appeal from the order, the remaining counts would be dismissed without
prejudice and the defendants would waive all applicable statutes of limitations.
(Don Jose’s, supra, 53 Cal.App.4th at p. 117.) As the appellate court described it,
the parties‟ agreement provided “that in the event the plaintiffs‟ appeal . . . was
successful and the matter was remanded, the action would proceed on all the
causes of action set forth in the latest complaint. On the other hand, if the
appellate court affirmed the trial court‟s order, then the plaintiffs agreed to dismiss
their remaining causes with prejudice.” (Ibid.)
     The Court of Appeal dismissed the appeal, condemning “the artifice of trying
to create an appealable order from an otherwise nonappealable grant of summary
adjudication by dismissing the remaining causes of action without prejudice but
with a waiver of applicable time bars.” (Don Jose’s, supra, 53 Cal.App.4th at
p. 116.) In substance, the Don Jose’s court explained, the proceedings below had
disposed of only two causes of action, with the remaining nine left for later trial if
the appeal was successful. “[T]he one final judgment rule does not allow
contingent causes of action to exist in a kind of appellate netherworld.” (Id. at
p. 118.)
       In Jackson v. Wells Fargo Bank (1997) 54 Cal.App.4th 240, 242, the
plaintiff pleaded eight causes of action, but the court granted summary
adjudication for the defense on only seven, leaving unresolved a cause of action
for malicious prosecution. The parties stipulated that count would be dismissed
without prejudice and could be refiled within 90 days of the decision on the
plaintiff‟s appeal, regardless of the statute of limitations; the superior court entered
a purported “final judgment” pursuant to the stipulation. (Id. at pp. 242-243.)
Following Don Jose’s, the Jackson appellate court held the judgment was
interlocutory rather than final and hence not appealable. The court observed that
“appellant still has his malicious prosecution cause of action, because his dismissal
of it was without prejudice and with a waiver of the statute of limitations. Further,

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he still has his right of appellate review regarding his other seven causes of action
— but at the appropriate time and no earlier. What he does not have is the right —
even with a willing accomplice in the respondent — to separate those causes of
action into two compartments for separate appellate treatment at different points in
time.” (Jackson, supra, at p. 245.)
       Four Point Entertainment, Inc. v. New World Entertainment, Ltd. (1997) 60
Cal.App.4th 79, followed Don Jose’s and Jackson in similar procedural
circumstances: a ruling granting the defendant summary adjudication on
plaintiff‟s tort causes of action, followed by voluntary dismissal of plaintiff‟s
contract causes of action, as well as a complaint in intervention and a cross-
complaint, with a stipulation that the contemplated appeal “ „shall not prejudice
either party‟s future right to prosecute such [dismissed] claims and causes of
action . . . following the conclusion of the appeal process.‟ ” (Four Point
Entertainment, Inc. v. New World Entertainment, Ltd., supra, at pp. 81-82.) The
Court of Appeal dismissed the appeal, noting that, as Morehart held, a petition for
a writ of mandate is the appropriate means to seek review of an interlocutory order
where justified, and that in the “run-of-the-mill procedural course in which a
defendant was able to knock out some but not all of the plaintiff‟s claims,” no
immediate appellate review is provided: “If we permitted stipulated „final‟
judgments in every case like this one, we would in effect be permitting the parties
to confer jurisdiction upon us where none exists.” (Four Point Entertainment, Inc.
v. New World Entertainment, Ltd., supra, at p. 83.)
     In Hill v. City of Clovis (1998) 63 Cal.App.4th 434, after the superior court
decided for the defense on certain causes of action, the parties stipulated that two
causes of action in a cross-complaint were to be “ „[d]ismissed without prejudice
and the statute of limitations is tolled until 30 days after remittitur to the Superior
Court.‟ ” (Id. at p. 442.) The Court of Appeal, following Don Jose’s and the other
cases discussed above, held the judgment nonfinal and nonappealable. “In effect,
the judgment keeps these causes of action undecided and legally alive for future

                                           6
resolution in the trial court. If we allowed the instant appeal to proceed, Clovis
would remain free to refile the dismissed claims and try them in the superior court
if our opinion made such action necessary or advisable. As such, the stipulated
„judgment‟ from which this appeal was taken is not final.” (Hill v. City of Clovis,
supra, at p. 445.)
     The Don Jose’s line of decisions continued in Hoveida v. Scripps Health
(2005) 125 Cal.App.4th 1466. The trial court granted summary adjudication for
the defense on all but one cause of action, that for breach of contract. The parties
then stipulated that the plaintiff would dismiss that count without prejudice to its
revival if his appeal on the other counts were successful and that the statute of
limitations would be tolled during the appeal‟s pendency. (Id. at pp. 1467-1468.)
Following Don Jose’s and its progeny, the Court of Appeal held that “because the
judgment does not dispose of all causes of action between the parties,” the court
lacked jurisdiction to hear the appeal. (Hoveida, supra, at p. 1469.)
     Finally, in Abatti v. Imperial Irrigation Dist. (2012) 205 Cal.App.4th 650,
662-667 (Abatti), the Court of Appeal analyzed the Don Jose’s line of decisions,
concluding that what made the judgments in each of those cases nonappealable
was the existence of a stipulation allowing for possible future litigation of the
unresolved causes of action. Dismissal of some counts without prejudice, by
itself, does not deprive a judgment of appealability, as “claims that are dismissed
without prejudice are no less final for purposes of the one final judgment rule than
are adjudicated claims . . . .” (Abatti, supra, at p. 665.) But where the parties have
reached an agreement that assures the potential for future litigation of the
dismissed claims, the judgment “lacks sufficient finality to be appealable pursuant
to the one final judgment rule.” (Id. at p. 667.) In Abatti itself, the judgment,
which adjudicated the plaintiffs‟ claim under the California Environmental Quality
Act (CEQA) but not their non-CEQA claims, was appealable because the
unadjudicated causes of action had been voluntarily dismissed “without any
waiver of the applicable statute of limitations as to the dismissed claims, and

                                          7
without any stipulation that would facilitate the potential future litigation of the
dismissed claims.” (Abatti, supra, at p. 666.)
     In the present case, the Court of Appeal majority noted the above decisions
(except Abatti, which was not yet decided), but declined to follow them, reasoning
as follows: “We interpret the term „pending‟ more narrowly. In our view, a cause
of action is pending when it is filed but not yet adjudicated. Such was the case in
[Morehart]. The Supreme Court there held that the judgment was not final
because the trial court which entered it continued to have jurisdiction over
additional causes of action pending before it. While a cause of action which has
been dismissed may be pending „in the appellate netherworld,‟ it is not pending in
the trial court, or in any other court, and thus cannot fairly be described as „legally
alive.‟ We conclude that, because no causes of action remained to be tried in the
court which entered judgment in favor of Dr. Kislinger, and indeed that court had
no jurisdiction to do anything except enter judgment, the judgment entered is
final.”
     We disagree with the appellate court below, and agree with Don Jose’s and
the decisions following it, including Abatti. When, as here, the trial court has
resolved some causes of action and the others are voluntarily dismissed, but the
parties have agreed to preserve the voluntarily dismissed counts for potential
litigation upon conclusion of the appeal from the judgment rendered, the judgment
is one that “fails to complete the disposition of all the causes of action between the
parties” (Morehart, supra, 7 Cal.4th at p. 743) and is therefore not appealable.
     The Court of Appeal below was correct that causes of action the parties have
dismissed without prejudice are no longer pending in the trial court, in the sense
that no immediate action remains for the trial court to take on such counts. But
where the parties, by waiver or agreed tolling of the statute of limitations or a
similar agreement, have arranged for those causes of action to be resurrected upon
completion of the appeal, they remain “legally alive” in substance and effect.
(Hill v. City of Clovis, supra, 63 Cal.App.4th at p. 445.) The rule of the lower

                                           8
court, under which a voluntary dismissal is considered to dispose of a cause of
action regardless of any agreement facilitating its future litigation, elevates form
over substance and permits parties to evade the one final judgment rule of section
904.1, subdivision (a), through what the Don Jose’s court aptly called an
“artifice.” (Don Jose’s, supra, 53 Cal.App.4th at p. 116.)
       A plaintiff or cross-complainant has, of course, the right to voluntarily
dismiss a cause of action without prejudice prior to trial. (§ 581, subds. (b)(1),
(c).) And as the Abatti court explained, such a dismissal, unaccompanied by any
agreement for future litigation, does create sufficient finality as to that cause of
action so as to allow appeal from a judgment disposing of the other counts. (See
Abatti, supra, 205 Cal.App.4th at p. 666.) That is because “a party‟s voluntary
dismissal without prejudice does not come equipped by law with an automatic
tolling or waiver of all relevant limitations periods; instead, such a dismissal
includes the very real risk that an applicable statute of limitations will run before
the party is in a position to renew the dismissed cause of action.” (Hill v. City of
Clovis, supra, 63 Cal.App.4th at p. 445.) But when the parties agree to waive or
toll the statute on a dismissed cause of action pending an appeal, they establish an
assurance the claim can be revived for litigation at the appeal‟s conclusion. It is
that assurance — the agreement keeping the dismissed count legally alive — that
prevents the judgment disposing of the other causes of action from achieving
finality. (Abatti, supra, at p. 665.)
       Where the dismissed causes of action are to be revived only if the appeal is
successful (as was agreed in Don Jose‟s and Hoveida, but not, at least expressly,
in the present case), it might be debated whether the Don Jose’s rule is needed to
prevent multiple appeals. But, as we have previously recognized, the one final
judgment rule can have salutary effects beyond simply reducing the number of
appeals: avoiding “ „uncertainty and delay in the trial court,‟ ” allowing for the
possibility that “ „the trial court may completely obviate an appeal by altering the
rulings from which an appeal would otherwise have been taken‟ ” or that “ „[l]ater

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actions by the trial court may provide a more complete record which dispels the
appearance of error or establishes that it was harmless,‟ ” and giving the reviewing
court “ „the benefit of a complete adjudication‟ ” upon which it may tailor its
remedies “ „by giving specific directions rather than remanding for another round
of open-ended proceedings.‟ ” (Morehart, supra, 7 Cal.4th at p. 741, fn. 9,
quoting Kinoshita v. Horio (1986) 186 Cal.App.3d 959, 966-967.)
       Plaintiff, though he adopts some of the lower court‟s reasoning, refrains
from arguing against Don Jose’s and its progeny. Instead, plaintiff urges us to
apply the rule of those cases only where “the parties‟ stipulated dismissal without
prejudice is endorsed by the trial court and incorporated into the judgment.”
Because the judgment here did not recite or incorporate the parties‟ agreement,
plaintiff contends, the judgment should be deemed final and appealable.
       We are not persuaded that whether the parties‟ agreement is formally
incorporated into the judgment should be dispositive. In the present case, the
parties announced their agreement in open court, explaining to the trial court that
the dismissal without prejudice and waiver of the statute of limitations was
intended to preserve the unresolved defamation counts until plaintiff‟s appeal on
the breach of fiduciary duty issues was resolved; the trial court accepted the
agreement, entering the voluntary dismissals in its minute order. That the agreed
dismissal of the defamation claims without prejudice was only put on the record in
open court and entered as a minute order, but not recited in the judgment itself,
does not appear significant. The parties here agreed, expressly and on the record,
that they would seek an appellate ruling on a portion of the action between them
while holding the remainder, their defamation claims, in abeyance during the
pendency of the appeal. This agreement ensured that the defamation claims,
although formally dismissed, could be resurrected after the appeal,
notwithstanding any statute of limitations bar. To permit this kind of manipulation
of appellate jurisdiction — in effect, allowing the parties and trial court to

                                          10
designate a substantively interlocutory judgment as final and appealable — would
be inconsistent with the one final judgment rule.
       In an amicus curiae brief, the California Academy of Appellate Lawyers
catalogues numerous policy goals this court should consider in deciding
appealability, including that a rule of finality should “allow parties as much
autonomy and choice as possible” and should promote efficiency at the trial level
as well as the appellate level, and more specifically that parties “should not be
forced needlessly to try claims simply to obtain an appealable judgment.” Some
but not all of the Academy‟s members support a rule, similar to the Court of
Appeal‟s below, to the effect that a dismissal without prejudice is a final
disposition for appealability purposes even if accompanied by an agreement
facilitating the claim‟s revival.
       We are not free, however, to adopt whatever rule we find best balances the
interests of party autonomy or trial and appellate efficiency. Unlike jurisdictions
that provide for trial courts‟ selective entry of final judgments on fewer than all
claims for relief (see, e.g., Fed. Rules Civ.Proc., rule 54(b), 28 U.S.C.) or for
interlocutory appeals in the discretion of the reviewing court (see, e.g., 28 U.S.C.
§ 1292(b)), California law provides no case-by-case efficiency exception to the
one final judgment rule for appealability. Where unusual circumstances justify it,
review of interlocutory judgments may be obtained by petition for writ of
mandate, but not by appeal. (§ 904.1, subd. (a); Morehart, supra, 7 Cal.4th at pp.
743-744.) The question is thus not what rule will best serve litigants and trial
courts, but what rule is most consistent with the policy against piecemeal appeals
codified in section 904.1 and vindicated in Morehart. In the present
circumstances, we believe the Don Jose’s rule, which prevents parties from
agreeing to split an action‟s disposition into two or more appealable judgments, is
the approach most consistent with our statute and precedent. The one final
judgment rule does not permit parties “to separate [their] causes of action into two

                                          11
compartments for separate appellate treatment at different points in time.”
(Jackson, supra, 54 Cal.App.4th at p. 245.)
       Because the parties‟ defamation claims were dismissed without prejudice
and were effectively preserved for later litigation by an agreement waiving
applicable statutes of limitations, the judgment adjudicating other causes of action
was not final or appealable. The Court of Appeal was required to dismiss, rather
than decide, plaintiff‟s appeal from that judgment.
                                   DISPOSITION

       The judgment of the Court of Appeal is reversed and the matter is
remanded to that court with directions to dismiss the appeal.

                                          WERDEGAR, J.

WE CONCUR:
CANTIL-SAKAUYE, C. J.
KENNARD, J.
BAXTER, J.
CHIN, J.
CORRIGAN, J.
LIU, J.

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See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Kurwa v. Kislinger
__________________________________________________________________________________

Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 204 Cal.App.4th 21
Rehearing Granted

__________________________________________________________________________________

Opinion No. S201619
Date Filed: October 3, 2013
__________________________________________________________________________________

Court: Superior
County: Los Angeles
Judge: Dan T. Oki

__________________________________________________________________________________

Counsel:

Robert S. Gerstein; and J. Brian Watkins for Plaintiff and Appellant.

Harrington, Foxx, Dubrow & Canter, Dale B. Goldfarb, Carol G. Arnold, Daniel E. Kenney and John D.
Tullis for Defendants and Respondents.

Robert A. Olson, Jay-Allen Eisen, Jon B. Eisenberg, Dennis A. Fischer, Robin B. Johansen; Severson &
Werson and Jan T. Chilton for California Academy of Appellate Lawyers as Amicus Curiae.
Counsel who argued in Supreme Court (not intended for publication with opinion):

Robert S. Gerstein
12400 Wilshire Blvd., Suite 1300
Los Angeles, CA 90025
(310) 820-1939

Dale B. Goldfarb
Harrington, Foxx, Dubrow & Canter
1055 W. Seventh Street, 29th Floor
Los Angeles, CA 90017
(213) 489-3222