Hernandez v. Tseheridis
Filed 11/14/13 Hernandez v. Tseheridis CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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
FOURTH APPELLATE
DISTRICT
DIVISION THREE
ROBERT HERNANDEZ,
Plaintiff and
Appellant,
v.
STEVE TSEHERIDIS,
Defendant and
Appellant.
G048946
(Super. Ct.
No. SCVSS138772)
O P I N I O
N
Appeal from a judgment
of the Superior Court
of
Bernardino County, Donald R. Alvarez, Judge. Affirmed in part, reversed in part, and
remanded.
Law Offices of Guinevere
M. Malley and Guinevere M. Malley for Plaintiff and Appellant.
Kirt J. Hopson for
Defendant and Appellant.
INTRODUCTION
is the second appeal in long-running and wide-ranging court battles over the
failed purchase of a piece of commercial real estate in Rialto. The buyer and seller have been litigating
against each other since 2006 on various theories. Peripheral parties, such as the appellant
here, Robert Hernandez, have also been sucked into the whirlpool. In this case, Hernandez is suing the seller,
respondent and cross-appellant Steve (Stavros) Tseheridis, for canceling the
escrow on the Rialto property; Hernandez intended to buy the liquor license and
the trade fixtures associated with the property, which were being sold at the
same time.
The case was tried in
June 2011 and resulted in a defense verdict on two causes of action – breach of
contract and fraud. One of the issues is
whether the case should have been dismissed for exceeding the five-year
rule. Tseheridis, who won at trial, has
appealed on this issue. As for
Hernandez, he has appealed from the refusal of the trial court to give
collateral estoppel effect to one of the earlier incarnations of this
verdict he labels “inconsistent.â€
We affirm the trial
court’s refusal to dismiss the case for being brought to trial too late. The record indicates that if the case went
over the line, it did so because of court congestion, not because of any
untoward delay by Hernandez. We also
affirm the trial court’s decision not to apply collateral estoppel to the
present case. The California Supreme
Court has clearly stated that an arbitration decision cannot have nonmutual
collateral estoppel effect.
But, regrettably, we
must reverse the judgment on Hernandez’s cause of action for breach of
contract. The verdict was not
inconsistent; the verdict form was wrong, as a matter of law. The error appears to have originated with the
trial court, not with counsel, and it clearly prejudiced Hernandez. The cause of action must be retried.
FACTS
In December 2005,
Tseheridis and Thee Aguila, Inc., through its president, Henry Aguila, entered
into a written agreement entitled “Standard
Offer, Agreement and Escrow Instructions for Purchase of Real Estate†providing
that Thee Aguila, Inc., or its assignee (Thee Aguila, LLC) would purchase
certain real property located in Rialto from Tseheridis. After escrow failed to close, a dispute arose
as to whether Tseheridis was entitled to keep Thee Aguila’s $ 50,000 deposit as
liquidated damages.
Tseheridis initiated
arbitration through the American Arbitration Association pursuant to the
arbitration provision contained in the agreement. An arbitration hearing occurred before a
three-arbitrator panel in June 2007. The
arbitrators issued an award at the end of July in which they found that the
Aguila entities did not breach the agreement and concluded Tseheridis was
therefore not entitled to retain the deposit as liquidated damages. The superior court confirmed the arbitration
award, and we affirmed the superior court’s decision in 2009, in an unpublished
opinion. (Thee Aguila, Inc. v. Tseheridis (Apr. 24, 2009, G040066) [nonpub. opn.].)
In the meantime,
Tseheridis filed a lawsuit in San Bernardino Superior Court in May 2007,
alleging that the Aguila parties (now including Henry Aguila) had breached the Standard
Offer Agreement and Escrow Instructions by not delivering the purchase funds and
the necessary documents by the date specified in the escrow instructions. As he had in the arbitration, Tseheridis
claimed he was entitled to the $50,000 deposit as liquidated damages.
The court granted Thee
Aguila’s motion for summary judgment, on collateral estoppel grounds,
presumably because the arbitrators had already determined that Tseheridis was
not entitled to the deposit.
name="_ftnref1" title="">[1] Evidently this judgment was not appealed.
The plaintiff in this
case, Hernandez, is a relative and a business associate of Henry Aguila. The Rialto
property over which Tseheridis and the Aguila parties are fighting consisted
not only of real estate, but also of a liquor license and trade fixtures.
estate, and Hernandez was to buy the license and the fixtures. Although only one agreement was signed by the
parties, two escrows were opened, one for Thee Aguila as buyer of the real
estate and the other for Hernandez as buyer of the license and fixtures.
After the sale fell
through, Hernandez filed suit against Tseheridis in June 2006, alleging breach
of contract.
title="">[3] He alleged he had an agreement with
Tseheridis to buy the license and fixtures, but Tseheridis canceled the escrow
and withdrew his consent with Alcoholic Beverage Control to transfer the liquor
license. Tseheridis, for his part,
testified he canceled the escrow because late in the deal Henry Aguila tried to
change its terms. Instead of obtaining a
loan to buy the property, Aguila wanted Tseheridis to take a note for most of
the purchase price.
The matter went to trial
in June 2011. Tseheridis argued at the
outset that the case had to be dismissed because the case had not been brought
to trial within the five-year limit. The
court denied this motion. After the
parties had rested, Hernandez argued that the prior arbitration between Thee
Aguila and Tseheridis should be given collateral estoppel effect in this case, preventing
Tseheridis from arguing that he was justified in canceling Hernandez’s escrow
because Henry Aguila or Thee Aguila had breached the sale agreement. The court denied this request as well.
The jury found for
Tseheridis on both the breach of contract
and fraud causes of action, using a special verdict that will be discussed
in more detail below.
Hernandez has appealed
from the denial of his motion regarding collateral estoppel and from the
special verdict form. He also complains
about jury instructions regarding failure of conditions that he claims should
have been given but were not. Tseheridis
has appealed the court’s refusal to dismiss the action for failure to bring the
case to trial in five years.
The judgment must be
reversed. Although the trial court did
not abuse its discretion when it refused to dismiss the case, and although it
ruled correctly on collateral estoppel, the special verdict on the breach of
contract cause of action misstated the law.
This portion of the case must be retried.
DISCUSSION
under Code of Civil Procedure section 583.360
“‘An action shall be
brought to trial within five years after the action is commenced against the
defendant.’ (§ 583.310.) An action which is not brought within the
prescribed period must be dismissed. (§
583.360, subd. (a).) These requirements
are mandatory ‘and are not subject to extension, excuse, or exception except as
expressly provided by statute.’ (§
583.360, subd. (b).) ‘In computing the
time within which an action must be brought to trial pursuant to this article,
there shall be excluded the time during which any of the following conditions
existed: . . . [¶] (c) Bringing the action to trial . . . was impossible,
impracticable, or futile.’ (§ 583.340.)
“What is impossible,
impracticable, or futile is determined in light of all the circumstances of a
particular case, including the conduct of the parties and the nature of the
proceedings. The critical factor is
whether the plaintiff exercised reasonable diligence in prosecuting its case. [Citation.] The statute must be liberally construed,
consistent with the policy favoring trial on the merits. [Citation.]
“Generally, the
determination whether prosecution of an action was impossible, impracticable,
or futile is a matter within the trial court’s discretion and will not be
disturbed on appeal unless an abuse of discretion is shown. [Citation.]â€
(Brown & Bryant, Inc., v.
Hartford Accident & Indemnity Co. (1994) 24 Cal.App.4th 247, 251-252.)
The complaint in this
action was filed on June 15, 2006. According to the record before us, the
impending expiration of the five-year rule was raised first at a hearing on February 7, 2011. At that time, the court set a trial date of
May 9 for a two-week bench trial. A week
later, Hernandez was back in court seeking to change the trial back to one
before a jury. The court set a hearing
on this motion for March 29. At the
March 29 hearing, the court granted the motion and retained the same trial
date, May 9. At a hearing on April 27,
the defense represented that it was ready for trial on the May date. The clerk, however, informed the court that
another five-year case was scheduled for trial on May 9. The court reset the trial date for June 14,
in part to accommodate a personal matter.
On June 2, at the trial readiness conference, the parties were ready to
start on June 14, but the court had another trial in session. Plaintiff’s opening statement and the testimony
of the first witness took place on June 20.
On June 15, the defense
made a motion to dismiss for failure to
bring the case to trial within five years.
At that point, jury voir dire was about to begin. Most of the argument concerning the motion
centered on when the five years actually expired and when trial actually began. The court denied the motion, and voir dire
commenced.
We review the outcome of
the court’s order, not its reasoning. (
& Liability Ins. Co. (1997) 59 Cal.App.4th 6, 15.) And we do not disturb a trial court’s
exercise of its discretion unless abuse is shown. (De
Santiago v. D & G Plumbing, Inc. (2007) 155 Cal.App.4th 365, 371.) Tseheridis has the burden of establishing
abuse of discretion. (
Corp. (2004) 123 Cal.App.4th 443, 447.)
The record amply
supports the trial court’s decision. The
plaintiff brought the impending expiration of the five-year rule to the court’s
attention well before the deadline. A
trial date comfortably in advance of the expiration date was secured, and both
sides were ready to proceed. Then,
through no fault of Hernandez, the May trial date, which the judge had
confirmed in March, was continued because he was unavailable. The June 14 trial date, which the court assured
the parties “will . . . definitely be certain,†had to be continued because the
judge was in trial with another case.
The period to get a case
to trial is tolled when a courtroom, or a judge, is unavailable. (Chin
v. Meier (1991) 235 Cal.App.3d 1473, 1477-1478.) In this case, the trial date was continued
over a month after the first “confirmed†trial date of May 9, because another
case was being tried, and then a “definitely certain†date of June 14 had to be
continued again because the judge was still in trial. Tseherides also failed to present evidence
that Hernandez had not been reasonably diligent in prosecuting the case during
the previous five years. Under these
circumstances, we cannot find the court abused its discretion in denying the
motion to dismiss.
Estoppel
Whether
collateral estoppel applies is a question of law, which we review de novo. (Happy
Nails & Spa of Fashion Valley, L.P. v. Su (2013) 217 Cal.App.4th 1459,
1469.)
“Collateral
estoppel is one of two aspects of the doctrine of res judicata. In its narrowest form, res judicata ‘“precludes
parties or their privies from relitigating a cause of action [finally resolved in a prior proceeding].â€â€™ [Citation.]
But res judicata also includes a broader principle, commonly termed
collateral estoppel, under which an issue
“‘necessarily decided in [prior] litigation [may be] conclusively determined
privies . . . in a subsequent lawsuit on a different cause of action.â€â€™ [Citation, italics added.] [¶]
Thus, res judicata does not merely bar relitigation of identical claims
or causes of action. Instead, in 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. [Citations.]
[¶] Accordingly, the collateral estoppel doctrine
may allow one who was not a party to prior litigation to take advantage, in a
later unrelated matter, of findings made against his current adversary in the
earlier proceeding. This means that the
loss of a particular dispute against a particular opponent in a particular
forum may impose adverse and unforeseeable litigation consequences far beyond
the parameters of the original case.
[Citation.]†(
Cal.4th 815, 828-829 (Vandenberg).)
In
Vandenberg, the Supreme Court held
that “a private arbitration award cannot have nonmutual collateral estoppel
effect unless the arbitral parties so agree.â€
(Vandenberg, supra, 21 Cal.4th
at pp. 836-837.) As the court pointed out,
in the interest of avoiding the expense and delay of a court battle, a party
may decide to assume the “risk that the arbitration will result in a ‘final’
and ‘binding’ defeat with respect to
party would have won in court, and even though the arbitrator’s errors must be
accepted without opportunity for review. [Citation.] But this does not mean each arbitral party
also consents that issues decided against him by this informal, imprecise
method may bind him, in the same manner as a court trial, in
at p. 832.) The court also noted that “California’s
private arbitration statutes . . . do not warn parties who choose arbit[r]ation
over court litigation that the arbitrator’s award may be used against them by
third persons to resolve different causes of action. The contractual nature of private arbitration
dictates that the scope and effect of an arbitral award must derive from the
parties’ consent. Yet the informal
nature of arbitration, the usual reasons for its use, the potentially
disproportionate consequences of nonmutual collateral estoppel, and the fact
that such consequences may not be immediately apparent to the arbitral parties,
all suggest that their silence on the subject does not imply consent. Fairness
and public policy thus counsel against application of nonmutual collateral
estoppel in this setting, unless the parties specifically agree thereto.†(Id.
at p. 835.)
In
this case, Hernandez was not a party to the arbitration between Thee Aguila and
Tseheridis, in which the arbitrators held in favor of Thee Aguila, and there is
no evidence that the parties agreed that the arbitrators’ decision could have
collateral estoppel effect beyond the parties. The arbitration provision in the “Standard
Offer, Agreement and Escrow Instructions for Purchase of Real Estate†of
December 2005 certainly reflects no such agreement. The arbitration award could have no
collateral estoppel effect against Tseheridis in this action, and the court
correctly denied the request to instruct the jury regarding collateral
estoppel.
At
trial, Hernandez focused on the summary judgment motion granted in the 2007
superior court case between Thee Aguila and Tseheridis. The ruling in that case, however, was based
in turn on the ruling in the arbitration.
It was the arbitrators who decided that Thee Aguila had not breached the
agreement, not the superior court. The
superior court decided only that Tseheridis could not litigate this issue
again.
It
was permissible to consider the arbitration in evaluating res judicata or
collateral estoppel in the 2007 case, because the parties were the same in both
instances. (See Vandenberg, supra, 21 Cal.4th at p. 824, fn. 2.) Under Vandenberg,
however, it is not permissible for Hernandez – who was not a party to the
arbitration – to use the arbitrators’ decision for collateral estoppel effect
in his case against Tseheridis.
Verdict
The special verdict for
the breach of contract cause of action, as presented to the jury, stated:
“Question
1: Did Robert Hernandez, by way of
an assignment of rights from Thee Aguila, Inc., enter into a contract with
Steve Tseheridis which it Exhibit 1 the Standard Offer?
“YES NO
“If
your answer to question number 1 is ‘yes,’ then Skip question 2 and go on to
the next question.
“If
you answered ‘no,’ go on to the next question.
“Question
2: Did Robert Hernandez, by way of
an assignment of rights from Thee Aguila, Inc., enter into a contract with
Steve Tseheridis which is Exhibit(s) 8 and 12 the Bill of Sale?
“YES NO
“If
you answer question number two ‘yes,’ then answer the next question.
“If
you answer question number two ‘no,’ then stop here, answer no further
questions, have the presiding juror sign and date this form then go on to the
fraud verdict form.
“Question
3: Did Robert Hernandez do all, or
substantially all, of the significant things that the contract required him to
do?
“YES NO
“If
you answer question number three ‘yes’ or ‘no’ then go on to the next question
4.
“Question
4: Was Robert Hernandez excused or
prevented by the actions of the defendant from having to do all or
substantially all of the significant things that the contract required him to
do?
“YES NO
“If
you answer question number four ‘yes,’ then answer the next question.
“If
you answer question number four ‘no,’ stop here, answer no more questions, have
the presiding juror sign and date this form then go on to the fraud verdict
form.â€
The jury responded “Noâ€
to the first question (on a divided vote), “Yes†to the second question
(another divided vote), “Yes†unanimously to the third question, and “Noâ€
unanimously to the fourth question.
Following instructions, the jury stopped there.
This verdict form is
clearly flawed. A plaintiff in a breach
of contract action must establish either
that he performed all or substantially all of his obligations under the
contract or that he was excused from
performing, but not both.
name="_ftnref5" title="">[5] (See, e.g., Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th
1602, 1614 [elements of cause of action]; Munoz
v. MacMillan (2011) 195 Cal.App.4th 648, 655 [same]; Wall Street Network, Ltd. v. New York Times Co. (2008) 164
Cal.App.4th 1171, 1178 [summary judgment proper if no evidence of either
performance or excuse for non-performance].) If Hernandez performed, as the jury found,
then his performance did not need to be excused.
Question three is
obviously the culprit. If the jury answered
“yes†to that question, it should have been told to skip question four, the one
about being excused, and go on to other elements of the cause of action. Only if the jury had answered question three “noâ€
would it need to consider whether Hernandez was excused or prevented from
performing. According to this verdict
form, however, whether the jury answered “yes†or “no†to question three did
not matter; either way, it had to go to question four.
told to move on to the fraud verdict form.
As a result, the jury did not answer additional questions on the special
verdict form that needed to be answered, given the jury’s answers to questions
two and three. It did not address
important questions on the special verdict form pertaining to a breach of
contract claim (e.g., question five, whether Tseheridis breached the contract;
question seven, whether Hernandez “was harmed by any breach†and question
seventeen, “what are Robert Hernandez’s damages for Steve Tseheredis’ breach of
contract?â€) and possible affirmative defenses (questions eight through
sixteen).
How the special verdict
form got into this state is not entirely clear.
The record contains multiple versions of a proposed special verdict form
submitted by counsel; none of them includes this error. The record does reflect lengthy arguments
about the wording of the special verdict (although hardly at all about what
came to be question three), even after the jury had been instructed and was
sitting in the deliberation room. It
appears that the judge finally became so frustrated with the endless arguments,
which were going around in circles while the jury waited, that he devised his
own special verdict form, based on the versions before him.
The
verdict was not inconsistent, as would be the case if, for example, a jury
found that a plaintiff was an at-will employee who could be fired only for
cause. (See Shaw v. Hughes Aircraft Co. (2000) 83 Cal.App.4th 1336, 1345.) Instead, the verdict form itself potentially
directed the jury to make a mistake of law, as it did. Moreover, it was contrary to the related jury
instruction, which correctly told the jury to decide either whether Hernandez
had performed or whether he was excused.
Hernandez was
unquestionably prejudiced by this mistake.
The jury found that he had a contract; it also found, unanimously, that
he had performed his contractual obligations.
But because he had not also
been excused, the jury did not consider the rest of the cause of action. This is an incorrect statement of the law of
contracts. There is no way to fix this
at the appellate level, and the cause of action must be retried. (See Byrum
v. Brand (1990) 219 Cal.App.3d 926, 938-393 [verdict form incorrectly
stated law of fiduciary duty; causes of action must be retried].) The verdict on the cause of action for fraud,
however, was not affected by the error, and, in any event, Hernandez has not
appealed from that part of the verdict.
This portion of the judgment is therefore affirmed. (See id.
at p. 947.)
DISPOSITION
judgment on the cause of action for breach of contract is reversed. In all other respects, the judgment is
affirmed. The parties are to bear their
own costs on appeal.
BEDSWORTH,
ACTING P. J.
WE CONCUR:
FYBEL, J.
IKOLA, J.
name="_ftn1" title=""> [1] For some reason,
a different judge granted Henry Aguila’s motion for summary judgment, but did
not specify the grounds.
name="_ftn2" title=""> [2] Thee Aguila intended to use the
property as a nightclub.
