Opinion
H043786
12-22-2017
KENNETH S. MANRAO et al., Plaintiffs and Appellants, v. ANITA CHAN et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Clara County Super. Ct. No. 1-15-CV281194)
This action arises out of a dispute concerning property located on 1310 N. First Street in San Jose upon which is located a motel (the Property). Appellants Kenneth S. and Rosemary Ann Manrao (collectively, the Manraos) through assignment, were sublessees under a sublease (Sublease) in which Metro Eight Properties, LLC (Metro Eight) was sublessor. The Property was owned by, among others, respondents Anita Chan (Chan) and William Joe (Joe; collectively, Chan/Joe). They were also two of the members of Metro Eight. In May 2015, the Manraos filed this action against Chan/Joe for breach of contract and other claims. The Manraos alleged, in essence, that they had rights in the Property that were abridged, consisting of (1) a right to demolish the structures located on the Property, and (2) a right of first refusal to purchase the Property.
Although there is some reference in documents filed in the appeal of a prior related case involving the Manraos (discussed in detail, post) that Chan and Joe are husband and wife, this fact does not appear in the record in this appeal.
The Manraos refer in this lawsuit to Metro Eight as a general partnership with Chan and Joe as among its general partners. But it was established in prior related litigation (discussed, post) that Metro Eight, a limited liability company, was the entity that was the sublessor under the Sublease in which the Manraos were sublessees.
Chan/Joe filed a motion for judgment on the pleadings challenging the first amended complaint (Complaint). They contended that the Manraos' claims had been finally adjudicated in a prior lawsuit between Metro Eight and the Manraos, and the instant claims were therefore barred under the doctrine of collateral estoppel. The court below granted judgment on the pleadings without leave to amend. We conclude that the court did not err in granting the motion for judgment on the pleadings and did not abuse its discretion in denying leave to amend. We will therefore affirm the judgment.
I. FACTS
Since a motion for judgment on the pleadings addresses the factual allegations of the pleading and searches for defects only disclosed from those allegations or from matters of which judicial notice may be taken (Cloud v. Northrop Grumman Corp (1998) 67 Cal.App.4th 995, 999 (Cloud)), we identify the facts here as those contained in the Manraos' Complaint and in court records of which the trial court properly took judicial notice.
A. The 2011 Action
In their motion, Chan/Joe requested that the court take judicial notice of eight documents filed in a prior lawsuit, Metro Eight Properties, LLC v. Manrao, Santa Clara Superior Court No. 1-11-CV210917 (the 2011 Action). The court properly granted the request. (Evid Code § 452, subd. (d)(1); see In re Martin L. (1986) 187 Cal.App.3d 534, 539 [because "[a] court may take judicial notice of records and orders in its own file," it was proper to take judicial notice of prior delinquency petitions that were sustained for the same offense as current petition to establish knowledge of the wrongfulness of conduct].) We therefore take judicial notice of these documents. (Evid Code § 459, subd. (a)(1).)
On October 12, 2011, Metro Eight filed its complaint in the 2011 Action alleging one cause of action for breach of contract against the Manraos. It alleged that its predecessor-in- interest, Lederer Properties, Inc. (Lederer), entered into a ground lease (Ground Lease) on the Property on June 11, 1959, and on the same day, Lederer, as sublessor, entered into a Sublease with Ray B. Larson, Inc. (Larson), as sublessee; the term of the Sublease was from June 11, 1959, to June 10, 2011. Metro Eight alleged that it was the successor-lessee to Lederer under the Ground Lease and successor-sublessor under the Sublease, and that the Manraos were the successor sublessees to Larson under the Sublease. It alleged further that the Manraos vacated the Property on June 11, 2011, and they breached the Sublease by failing to maintain the buildings in good condition and repair. Metro Eight asserted that the swimming pool, roof, and balcony of the building were in disrepair.
The Manraos filed a cross-complaint against Metro Eight in the 2011 Action, asserting causes of action for breach of contract, declaratory relief, and unfair business practices (Bus. & Prof. Code, § 17200 et seq.). They referred to a December 1971 amendment to the Sublease providing that the sublessee had the right at any time to make new construction or replace or alter any building or improvements on the Property to the extent permitted under section 8.1 and 8.2 of the Ground Lease; they thereafter quoted from those provisions in the Ground Lease. The Manraos also cited to section XXII of the Ground Lease as affording the tenant a right of first refusal to purchase the Property in the event the owner at any time wished to sell. The Manraos alleged that in June 1990, they became sublessee under the Sublease through an assignment to which Metro Eight consented and in the same month and year purchased the Comfort Inn Airport Motel (Motel) located on the Property. The Manraos alleged that Metro Eight was the tenant under the Ground Lease. They alleged further that pursuant to a 2008 court ruling, they had the absolute right to demolish the Motel and surrounding structures, but at Metro Eight's request, the Manraos forwent demolition. Afterwards (they alleged), Metro Eight filed suit, claiming they had failed to maintain the Motel and surrounding buildings. The Manraos then obtained a demolition permit and sought the landowner's consent as required under municipal code, but Metro Eight refused to give said consent.
The commercial establishment located on the Property is identified alternatively in the record as a motel and hotel. We will refer to it herein as the Motel.
This prior ruling, as explained by the trial court in the 2011 Action in its statement of decision, arose out of a 2006 lawsuit (Santa Clara County Superior Court No. 1-06-CV076158) in which Metro Eight sued the Manraos seeking, among other things, to prohibit them from demolishing buildings on the Property. In a January 2008 order in that 2006 lawsuit, the court denied Metro Eight's motion for summary adjudication of its third cause of action for permanent injunctive relief, concluding the Manraos had the right to demolish the structures and there was a triable issue of fact as to whether the Manraos had threatened permanent harm. Metro Eight thereafter dismissed without prejudice its cause of action for injunctive relief.
In the first cause of action of their cross-complaint, the Manraos alleged that because Metro Eight prevented them from demolishing the structures on the Property, the Manraos were excused from further performance under the Sublease. It alleged further that Metro Eight breached the Sublease by requiring performance of the Manraos thereunder that had been excused and by refusing to execute the demolition permit. In the declaratory relief claim, the Manraos alleged that controversies existed between the parties in that (1) Metro Eight contended the Manraos had a duty to maintain the premises, while they claimed their obligations had been excused by Metro Eight's refusal to sign the consent to demolition and its violation of the Manraos' right of first refusal; (2) Metro Eight asserted the Manraos "had no right to purchase the [P]roperty under the terms of the lease agreement," while they contended that when Metro Eight "purchased the [P]roperty they usurped a right exclusive to [the Manraos] and interfered with [their] right of first refusal"; and (3) the Manraos contended that Metro Eight "breached the lease" by refusing to sign a consent to demolition of the structures." And the Manraos alleged in their unfair business practices claim that Metro Eight "engaged in unlawful, unfair, or fraudulent business acts or practices by refusing to execute the documents for demolition and for asking [them to] forbear[ from] act[ing] but then charging them for their forbearance."
In the breach of contract and declaratory relief causes of action of their cross-complaint, the Manraos refer to "the lease," "the lease agreement," and "the Lease Agreement"; none is a term defined in the cross-complaint. This ambiguity infects each of the three causes of action of the cross-complaint, as it cannot be ascertained whether these references are to the Ground Lease, the Sublease, or to both instruments, collectively.
The 2011 Action proceeded to court trial in June 2013. After hearing testimony, the court issued an 18-page tentative decision and proposed judgment on July 15, 2013, finding in favor of Metro Eight on its complaint and against the Manraos on their cross-complaint. That tentative decision was ultimately adopted as the court's statement of decision (hereafter, the statement of decision). Specifically, as recited in its decision, the court found that (1) Metro Eight, through assignment, was the tenant under the Ground Lease and the sublessor under the Sublease, with the Manraos as sublessees, and Metro Eight therefore had the right to enforce the terms of the Sublease; (2) Metro Eight fully performed under the Sublease; (3) the Manraos breached the sublease by failing to maintain and repair the pool, roof, and balcony of the Property; and (4) Metro Eight sustained resulting damages of $126,654. The court concluded the Manraos had failed to establish any of their 25 affirmative defenses to the complaint, and they had not met their burden of establishing any of the three causes of action asserted in their cross-complaint. Specifically, the court found the Manraos had not established (1) their breach of contract claim that they were excused from maintaining the buildings on the property because Metro Eight prevented them from demolishing the Motel; (2) their declaratory relief claim establishing their positions that their obligation to maintain the buildings was excused, that Metro Eight breached the Sublease by refusing to consent to the demolition of the buildings, and that the Manraos had a right of first refusal under the Sublease that was usurped by Metro Eight; and (3) their unfair business practices claim that was premised on their contract claim.
Judgment was thereafter entered on October 8, 2015, in favor of Metro Eight and against the Manraos in the total amount (including attorney fees and costs) of $172,271.41. The Manraos appealed, and in an unpublished decision filed December 21, 2015, this court affirmed the judgment. (Metro Eight Properties, LLC v. Manrao (Dec. 21, 2015, H040340) [nonpub. opn.]; see K.G. v. Meredith (2012) 204 Cal.App.4th 164, 172, fn. 9 [citation of unpublished opinion appropriate "to explain the factual background of the case and not as legal authority"].) Pursuant to Evidence Code sections 452, subdivision (d) and 459, subdivision (a), we take judicial notice of that opinion and of the appellate briefs filed by the parties therein. (See Flatley v. Mauro (2006) 39 Cal.4th 299, 306, fn. 2 [judicial notice of court materials appropriate to "help complete the context of this case"]; see also ZF Micro Devices, Inc. v. TAT Capital Partners, Ltd. (2016) 5 Cal.App.5th 69, 73, fn. 3 [judicial notice of appellate court's prior, related unpublished appellate decision]; Freeman v. Schack (2007) 154 Cal.App.4th 719, 723, fn. 3 [judicial notice of appellate court's files and prior opinions related to current appeal].) That appellate decision, after the California Supreme Court denied review, became final.
B. The Current Action
The Manraos alleged in the Complaint herein that they became sublessees under the Sublease through a June 1990 assignment to which Metro Eight, including partners (members) that included Chan/Joe, consented. Also in June 1990, the Manraos purchased the Motel for $2 million. They alleged that they had the right under the Sublease to replace or alter any building or improvement on the Property. They alleged further that, at Chan/Joe's request, the Manraos forwent demolition "with the expectation of buying the real property." At some later (unspecified time), the Manraos applied for permits to demolish the Motel and sought the landowner's consent as required under the municipal code, but Chan/Joe refused to give said consent in or about June 2011.
At oral argument, counsel for the Manraos asserted that, although Chan/Joe were general partners of an entity, "Metro Eight, a General Partnership," there was nothing in the record suggesting that Chan/Joe were ever members of "Metro Eight Properties, LLC," the entity we have identified in shorthand in this opinion as "Metro Eight" and the plaintiff and cross-defendant in the 2011 Action. But in the proceedings below, Chan/Joe asserted in their demurrer to the Complaint that they were in fact members of Metro Eight (the LLC), a point the Manraos did not rebut in their opposition papers. And in the appellate proceedings from the judgment entered in the 2011 Action, the Manraos stated in their reply brief that Metro Eight (the LLC) had brought suit in that case "on behalf of individuals who own the property and who just happened to be a member [sic] of the LLC." (Original italics.) Elsewhere in their reply brief, the Manraos identified the individuals who owned the property as eight people, including Chan and Joe. Therefore, contrary to the assertion of the Manraos' counsel, the record supports the conclusion that Chan/Joe were members of Metro Eight (the LLC).
The Manraos alleged that under the Ground Lease, they, as tenants, had a right of first refusal to purchase the Property. The Manraos also alleged that in or about 2006, Chan/Joe "and other owners of the land" agreed to sell the Property to the Manraos at a price of 5 percent more than offers from potential buyers, which agreement was confirmed in emails and faxes. Despite the agreement, Chan/Joe "refused to close escrow with [the Manraos]," and sold the Property in June 2011 to VN Alliance.
II. PROCEDURAL BACKGROUND
The Manraos initiated this action on May 28, 2015. They filed the (First Amended) Complaint on June 23, 2015. In it, the Manraos alleged claims for breach of contract, declaratory relief, unfair business practices (Bus. & Prof. Code, § 17200 et seq.), and violation of Civil Code section 1013. Chan/Joe demurred on the basis that there was another action pending in the same court, i.e., the 2011 Action. On August 13, 2015, the court sustained the demurrer and stayed the instant action until the termination of the 2011 Action.
On April 29, 2016, Chan/Joe filed a motion for judgment on the pleadings challenging the Complaint. The Manraos opposed the motion. After hearing argument, on June 8, 2016, the court granted the motion for judgment on the pleadings and denied leave to amend. The Manraos filed a timely notice of appeal.
Chan/Joe filed an initial motion for judgment on the pleadings on March 14, 2016, which was opposed by the Manraos. Because the stay of the action had not yet been dissolved and Chan/Joe had not answered the Complaint, the court denied the motion and lifted the temporary stay. Chan/Joe answered the Complaint on April 28, 2016.
III. DISCUSSION
A. Applicable Law
1. Motion for Judgment on the Pleadings
"A trial court's determination of a motion for judgment on the pleadings accepts as true the factual allegations that the plaintiff makes. [Citations.] In addition, it gives them a liberal construction." (Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468, 515-516 (Gerawan Farming).) The motion "performs the same function as a general demurrer, and hence attacks only defects disclosed on the face of the pleadings or by matters that can be judicially noticed. [Citations.]" (Cloud, supra, 67 Cal.App.4th at p. 999.) A judgment on the pleadings may be granted (or demurrer sustained) in an appropriate case where, as a matter of law, the plaintiff is collaterally estopped from asserting the claim. (See, e.g., Buesa v. City of Los Angeles (2009) 177 Cal.App.4th 1537 [judgment on pleadings proper where police officers' action for violation of their rights was precluded by final judgment denying their prior petition for administrative mandamus]; Weiner v. Mitchell, Silberberg & Knupp (1980) 114 Cal.App.3d 39, 170 [affirming general demurrer sustained on grounds of collateral estoppel established by judicial notice of prior proceedings].)
Because the trial court determines as a matter of law whether a pleading is vulnerable to a motion for judgment on the pleadings, " 'we review the ruling de novo, assuming the truth of all material facts properly pled.' [Citation.]" (Angelucci v. Century Supper Club (2007) 41 Cal.4th 160, 166; see also Gerawan Farming, supra, 24 Cal.4th at p. 515.) An appellate court will affirm the granting of a motion for judgment on the pleadings if it was correct on any legal basis, irrespective of the correctness of the trial court's rationale. (Stevenson Real Estate Services, Inc. v. CB Richard Ellis Real Estate Services, Inc. (2006) 138 Cal.App.4th 1215, 1220.) We review for abuse of discretion the trial court's determination as to whether the plaintiff has met his or her burden of showing a reasonable possibility that the complaint may be amended to cure the defect exposed by the motion for judgment on the pleadings. (Mendoza v. Rast Produce Co., Inc. (2006) 140 Cal.App.4th 1395, 1402.)
2. Collateral Estoppel
The California Supreme Court set forth the elements of collateral estoppel in Lucido v. Superior Court (1990) 51 Cal.3d 335 (Lucido). "Collateral estoppel precludes relitigation of issues argued and decided in prior proceedings. [Citation.] Traditionally, we have applied the doctrine only if several threshold requirements are fulfilled. First, the issue sought to be precluded from relitigation must be identical to that decided in a former proceeding. Second, this issue must have been actually litigated in the former proceeding. Third, it must have been necessarily decided in the former proceeding. Fourth, the decision in the former proceeding must be final and on the merits. Finally, the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding. [Citations]." (Id. at p. 341, fn. omitted; see also Hernandez v. City of Pomona (2009) 46 Cal.4th 501, 511 (Hernandez); Pacific Lumber Co. v. State Water Resources Control Bd. (2006) 37 Cal.4th 921, 943 (Pacific Lumber).) The correctness of the prior decision is not material to the application of collateral estoppel, since, as this court has previously stated, " 'collateral estoppel may apply even where the issue was wrongly decided in the first action.' [Citations.]" (Proctor v. Vishay Intertechnology, Inc. (2013) 213 Cal.App.4th 1258, 1270.) The burden of proving each of these elements of collateral estoppel rests with the party asserting it. (Pacific Lumber, supra, at p. 943; see also Santa Clara Valley Transp. Authority v. Rea (2006) 140 Cal.App.4th 1303, 1311.)
In applying principles of collateral estoppel, "an issue was actually litigated in a prior proceeding if it was properly raised, submitted for determination, and determined in that proceeding. [Citation.] In considering whether these criteria have been met, courts look carefully at the entire record from the prior proceeding, including the pleadings, the evidence, the jury instructions, and any special findings or verdicts. [Citations.] '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. [Citation.]' [Citations.]" (Hernandez, supra, 46 Cal.4th at pp. 511-512; see also Lumpkin v. Jordan (1996) 49 Cal.App.4th 1223, 1231 ["collateral estoppel depends on what issues are adjudicated, not the nature of the proceeding or the relief requested"].) The doctrine will apply to bar previously litigated issues if they " 'were involved in the prior case even though some factual matters or legal arguments which could have been presented in the prior case in support of such issues were not presented. [Citation.] Thus, where two lawsuits are brought and they arise out of the same alleged factual situation, and although the causes of action or forms of relief may be different, the prior determination of an issue in the first lawsuit becomes conclusive in the subsequent lawsuit between the same parties with respect to that issue and also with respect to every matter which might have been urged to sustain or defeat its determination. [Citation.]' [Citation.]" (Frommhagen v. Board of Supervisors (1987) 197 Cal.App.3d 1292, 1301 (Frommhagen), original italics.)
B. No Error In Granting of Judgment on the Pleadings
The Manraos contend that the court erred in granting judgment on the pleadings based upon the conclusion that they were collaterally estopped from asserting the claims alleged in the Complaint. They argue that the factual allegations supporting the claims in the current suit are not identical, in several respects, to those asserted in their cross-complaint in the 2011 Action. The Manraos contend that in the 2011 Action, they alleged that Metro Eight refused to provide its written consent to the permits they obtained to demolish the buildings on the Property, while in the current suit, they allege that Chan/Joe, individually and as owners of the Property, refused to give their consent to the demolition permits. Further, in the current case, the Manraos assert a right of first refusal under the Ground Lease, whereas in the 2011 Action, they made no such claim and the trial court therefore did not address it. Moreover, the Manraos argue that collateral estoppel should not apply because in the present case (unlike their allegations in the 2011 Action), they allege that in 2006, Chan/Joe agreed individually to sell the Property to the Manraos at 5 percent above any offer Chan/Joe received and that such agreement was confirmed in emails and faxes.
Putting aside the Manraos' contentions that the present action involves different parties and the assertion of rights under different agreements than those claimed in the 2011 Action, both cases involve two fundamental issues: (1) whether the Manraos had a right to demolish the buildings on the Property (the demolition right issue) that was abridged; and (2) whether they had a right of first refusal to purchase the Property (the right of first refusal issue) that was interfered with or otherwise thwarted. Indeed, the trial court so concluded. Accordingly, we separately address these issues to determine whether the trial court correctly concluded that the doctrine of collateral estoppel barred the present claims.
1. The Demolition Right Issue
A comparison of the cross-complaint in the 2011 Action and the Complaint herein reveals nearly identical allegations concerning the Manraos' claimed demolition right. In both pleadings, the Manraos refer to and quote from a provision of the Sublease concerning the sublessees' right to alter or replace structures on the Property in accordance with sections 8.1 and 8.2 of the Ground Lease. Likewise, in both pleadings, the Manraos quote from sections 8.1 and 8.2 of the Ground Lease. There is a reference in both the cross-complaint in the 2011 Action and in the Complaint herein to a prior 2008 court ruling that the Manraos had "the absolute right to demolish" the Motel and surrounding buildings. The Manraos alleged further in the cross-complaint that (1) Metro Eight requested that they not demolish the buildings because the land was more valuable developed than as a vacant lot; (2) as a result, they forwent such demolition; (3) they later obtained demolition permits; and (4) Metro Eight, which was required to consent to the demolition, refused to do so. The Complaint contains the same allegations, except it is there alleged that Chan/Joe made the request that the Manraos forgo demolition and Chan/Joe later refused to consent to demolition after the Manraos obtained the demolition permits.
The Manraos alleged in the cross-complaint in the 2011 Action that Metro Eight (1) prevented them from exercising their demolition right under "the lease agreement" (breach of contract claim); (2) "breached the lease" by refusing to consent to the demolition permits (declaratory relief claim); and (3) engaged in unfair business practices by refusing to consent to the demolition permits. In the current action, the Manraos allege in the Complaint that Chan/Joe (1) breached the Ground Lease by refusing to sign the demolition permits (breach of contract and declaratory relief claims); and; (2) engaged in unfair business practices by refusing to consent to the demolition permits.
The fact that the allegations in the two actions concerning the demolition right issue are nearly identical is of great significance for purposes of collateral estoppel. But in evaluating whether the Manraos' present claims are precluded by final adjudication of issues in the 2011 Action, we also consider the evidence and any special findings in the prior proceeding. (Hernandez, supra, 46 Cal.4th at pp. 511-512.) In its statement of decision in the 2011 Action, the court—after noting that the Manraos contended that Metro Eight prevented them from exercising their right to demolish the Motel and this constituted a breach of contract —found that "[t]he Manraos failed to present any persuasive evidence at trial to support the claim that they were prevented from demolishing the [Motel]." The court concluded that the evidence showed that (1) the Manraos advised Metro Eight of their intention to demolish the Motel, but later withdrew the notice, and (2) Kenneth Manrao (Kenneth) learned in April or May 2011 that obtaining a demolition permit would take five to six months and demolition would cost $85,000. For the same failure-of-proof reason, the trial court in the 2011 Action rejected the Manrao's declaratory relief and unfair business practices claims based upon Metro Eight's having allegedly breached the Sublease by refusing to consent to demolition of the buildings.
It is clear that the demolition right issue presented in the 2011 Action was identical to the parallel issue in the present case. In both cases, the Manraos claimed that (1) their demolition rights stem from provisions of the Sublease and Lease; (2) the court adjudicated in 2008 that they had the "absolute right" to demolish structures on the Property; (3) they were dissuaded from exercising their demolition right by their adversary's concern about such demolition devaluing the Property; (4) they later gave notice of their intention to demolish buildings on the Property; and (5) their adversary refused to consent to demolition of the buildings in violation of the Manraos' rights. The only difference was that the Manraos alleged in the 2011 Action that Metro Eight was the party responsible for interfering with their demolition right, while they asserted in the present case that Chan/Joe were the responsible parties. Because Chan/Joe were both members of the limited liability company, Metro Eight (see Corp. Code, § 17704.07 [members of limited liability company, in general, are vested with joint management responsibility]), this difference is immaterial and does not preclude a finding that the issues concerning the demolition right in the two cases were identical. The first element of collateral estoppel—identical issues—was satisfied. (Lucido, supra, 51 Cal.3d at p. 341.)
Further, as seen from the above discussion, the demolition right issue was a focal point of the Manraos' cross-complaint in the 2011 Action; Metro Eight's alleged prevention of the Manraos' exercise of their demolition rights was central to each of the three causes of action. And the recitals in the court's statement of decision make it clear that the parties submitted evidence on the demolition right issue, and the court unambiguously concluded that there was no persuasive evidence supporting the claim that the Manraos were prevented from exercising their demolition right. Moreover, the fact that the Manraos may not have presented a particular fact or asserted a particular theory—e.g., that it was Chan/Joe, specifically, who interfered with the exercise of the Manraos' demolition right—does not negate the conclusion that the issue was in fact litigated in the 2011 Action. (Frommhagen, supra, 197 Cal.App.3d at p. 1301 [previously litigated issues barred by collateral estoppel if they " 'were involved in the prior case even though some factual matters or legal arguments which could have been presented in the prior case in support of such issues were not presented' "].) Finally, we note that the Manraos did, in fact, assert in the 2011 Action—at least at the appellate level—that Chan/Joe were responsible for interfering with the Manraos' demolition right. They argued in the appeal in the 2011 Action that Chan/Joe (not Metro Eight) were "the true decision makers" relative to the Property, and that they "refused to sign the demolition permit application." Moreover, the fact that the Complaint herein included an additional cause of action arising out of the demolition right issue not pleaded in the cross-complaint in the 2011 Action—the claim for violation of Civil Code section 1013—does not preclude the application of collateral estoppel. (See Ojavan Investors, Inc. v. California Coastal Com. (1997) 54 Cal.App.4th 373, 384 [application of former adjudication principles do "not depend on whether the causes of action in the present action are identical to the causes of action in a prior action"].) Therefore, the demolition right issue was "actually litigated" in the 2011 Action. (Lucido, supra, 51 Cal.3d at p. 341.)
Third, it is plain from a review of the court's statement of decision in the 2011 Action that the court "necessarily decided" the demolition right issue, concluding that the Manraos had failed to meet their burden of proving their claims based upon Metro Eight's alleged abridgement of that right. (Lucido, supra, 51 Cal.3d at p. 341; see also Younan v. Caruso (1996) 51 Cal.App.4th 401, 407 [determination of issue in prior proceeding for collateral estoppel purposes "may be based on a failure of proof"].)
Fourth, the decision in the 2011 Action became final on the merits on or about March 9, 2016. (Lucido, supra, 51 Cal.3d at p. 341.)
Fifth, issue preclusion is sought against the Manraos, the same party in the former proceeding (the 2011 Action). (Lucido, supra, 51 Cal.3d at p. 341.)
Based upon the foregoing, the trial court did not err in concluding that the Manraos were barred by collateral estoppel from asserting the demolition right issue in the present action.
2. The Right of First Refusal Issue
The Manraos alleged in the cross-complaint in the 2011 Action that section XXII of the Ground Lease gives the tenant a right of first refusal to purchase the Property; they expressed their intention to buy the Property; and Metro Eight repeatedly assured them it would sell it to them. The Manraos alleged in the Complaint in this case that article XXII of the Ground Lease "provides for the option for a right of first refusal in the case of the sale of the [Property]."
They alleged further in the cross-complaint in the 2011 Action in support of their declaratory relief claim that Metro Eight contended the Manraos had no right to purchase the Property "under the terms of the lease agreement," while the Manraos asserted that Metro Eight "usurped a right exclusive to [them] and interfered with [their] right of first refusal" when it purchased the Property. In the breach of contract claim in their Complaint herein, the Manraos alleged they "had the right [of first] refusal as the tenant" under the Ground Lease, which was denied by Chan/Joe. They alleged further in the Complaint that in or about 2006, Chan/Joe agreed to sell the Property to the Manraos at a price of 5 percent above any other offer received, and that the agreement was confirmed in emails and faxes. Notwithstanding this agreement, Chan/Joe refused to close escrow with the Manraos, instead selling the property in approximately June 2011 to VN Alliance. The Manraos also alleged in the Complaint that Chan/Joe breached the Ground Lease (declaratory relief claim), and engaged in unfair business practices by interfering with the Manraos' "first right of refusal."
The allegations in the cross-complaint in the 2011 Action and in the Complaint herein concerning the right of first refusal issue are substantially the same. In both instances, the Manraos alleged that the Ground Lease provided for a right of first refusal and that their adversary's refusal to sell the Property to them constituted a breach of contract. In the Complaint in the present case, the contract allegedly breached was clearly identified as the Ground Lease. In the cross-complaint in the 2011 Action, the allegations are less than clear; the Manraos referred to their right of first refusal as emanating from "the lease agreement." (See fn. 5, ante.) In both pleadings, the Manraos alleged that their right of first refusal was abridged, using the verb "usurped" in the cross-complaint to describe Metro Eight's conduct, and the verb "interfered with" in the Complaint to describe Chan/Joe's conduct.
We consider also the evidence and any special findings in the prior proceeding. (Hernandez, supra, 46 Cal.4th at pp. 511-512.) The court noted in its statement of decision in the 2011 Action that the Manraos asserted as a defense to their failure to maintain the Motel that Metro Eight refused to negotiate with them concerning the purchase of the Property notwithstanding their claimed right of first refusal. The trial court rejected this defense, concluding that "[t]he Manraos failed to present any persuasive evidence that they had a right of first refusal pursuant to the Sublease. The terms of the Sublease provide for no such right." Further, the court concluded that the Manraos, contrary to their contention, "were not assigned the rights under the Ground Lease." It noted: "The Manraos confuse Metro Eight's right of first refusal under the Master Ground Lease as a provision of the Sublease, which it is not."
As was true with the demolition right issue, the right of first refusal issue presented in the 2011 Action was identical to the parallel issue in the instant case. The fact that the contentions regarding the issue were made in the previous case against Metro Eight, while here, they were made against two of the limited liability company's members, Chan/Joe, does not prohibit a finding that the issues concerning the right of first refusal in the two cases were identical. The first element of collateral estoppel—identical issues—was satisfied. (Lucido, supra, 51 Cal.3d at p. 341.)
We next address whether the right of first refusal issue was "actually litigated" in the 2011 Action. As noted above, the trial court concluded in its statement of decision that the Manraos had failed to present persuasive evidence of their claimed right of first refusal under the Sublease, and the Sublease by its terms provided for no such right. Further, in our appellate opinion affirming the judgment, there are several references to the Manraos' claimed right of first refusal, including a recitation of testimony from the Manraos on the question.
The Manraos are correct in noting that they did not allege in the cross-complaint in the 2011 Action—as they did in the Complaint in the instant action—that they had entered into an agreement in or about 2006 with Chan/Joe under which they had a right to buy the Property at a price of 5 percent above any purchase offer. But the absence of this allegation does not mean the alleged 2006 agreement was not presented in the 2011 Action. In fact, the trial court concluded in its statement of decision that although "Ken Manrao testified that he consistently offered to pay Metro Eight five percent (5%) over any offer it received for the Property[, t]here was no persuasive evidence that any of Mr. Manrao's offers to buy the Property were even accepted by Metro Eight. If Mr. Manrao believed he had a right of first refusal he would have insisted on paying an amount equal to any offer received by Metro Eight, not 5% over other prices Metro Eight was offered. This testimony is not consistent with a right of first refusal." Further, as we noted in the appellate opinion in the 2011 Action, Kenneth testified, in contrast to the testimony of Michael Myers, a member of Metro Eight, that "he did reach an agreement in 2006 with Metro Eight to purchase the [M]otel, though no purchase agreement was ever signed. Rather, there were e-mails in which he agreed to pay five percent more than any offer Metro Eight received," and he delivered a deposit to purchase the Property to Joe at Metro Eight's offices. And in the Manraos' opening brief in that appeal, they referred to evidence (1) of their "open offer" to "pay 5% over any offer" received for the Property, (2) that "Joe wanted a higher offer so they ask for 5% over [Pacifica's] offer [sic]"; and (3) "[t]he Landlord agreed to sell the land at 5% of offer they get [sic]." The issue of the Manraos' claimed right of first refusal, insofar as it concerned a contention that there was an agreement under which they would purchase the Property at a price of 5 percent above any other offer, was in fact litigated in the prior proceeding. That such agreement was not precisely alleged in the cross-complaint or was not articulated in the exact manner as alleged in the Complaint in the present action is not an impediment to a finding that the issue was actually litigated. (See Frommhagen, supra, 197 Cal.App.3d at p. 1301.)
Further, the Manraos contend the right of first refusal issue was not actually litigated because here, unlike in the 2011 Action, there is a claim that their right stems from the Ground Lease, not the Sublease. This argument fails for several reasons. First, as noted (see fn. 5, ante), the allegations of the cross-complaint were ambiguous insofar as the Manraos claimed a right of first refusal arose out of an unspecified "the lease agreement." Second, while the trial court held that the Manraos had no right of first refusal under the Sublease, it also concluded that the Manraos "were not assigned the rights under the Ground Lease," and they "confuse[d] Metro Eight's right of first refusal under the Master Ground Lease as a provision of the Sublease, which it is not." Third, the Manraos specifically argued in some detail in their appellate briefs in the 2011 Action that they had a right of first refusal under the terms of the Ground Lease. For example, they urged that the Ground Lease and Sublease "be recognized as one complete document. The Master Lease document provides for the First Right of Refusal to be given to [the Manraos]." Fourth, regardless of whether the question of the Manraos' claimed right of first refusal arising out of the Ground Lease was precisely alleged in the cross-complaint or presented at the trial, they are nonetheless precluded from asserting it in the present action under recognized principles of collateral estoppel. " ' "If the matter was within the scope of the action, related to the subject-matter and relevant to the issues, so that it could have been raised, the judgment is conclusive on it despite the fact that it was not in fact expressly pleaded or otherwise urged." ' [Citations.] A party cannot ' "by negligence or design withhold issues and litigate them in consecutive actions" ' [citation], or 'escape the bar of the prior decision[ ] by asserting that . . . [it has] other evidence which was not introduced in the earlier proceedings.' [Citation.]" (Direct Shopping Network, LLC v. James (2012) 206 Cal.App.4th 1551, 1559 (Direct Shopping).)
It is therefore clear from the record of the 2011 Action that the right of first refusal issue was "actually litigated in the former proceeding" and was "necessarily decided" in that action. (Lucido, supra, 51 Cal.3d at p. 341.) And without question, the fourth and fifth Lucido elements of collateral estoppel—finality of the prior decision on the merits and assertion of collateral estoppel against the party (or one in privity with the party) to the former proceeding—are satisfied. Accordingly, the trial court properly concluded that the Manraos were precluded by the 2011 Action from asserting the right of first refusal issue in the present action.
C. No Abuse of Discretion in Denial of Leave to Amend
The Manraos, citing Kenneth's declaration in opposition to the motion for judgment on the pleadings, urge that they made a sufficient showing below to require that the trial court grant them leave to amend the Complaint. In that declaration, Kenneth, among other things, stated that Chan/Joe (1) accepted rent from him while he operated the Motel; (2) were, along with their partners, beneficiaries of insurance policies they procured for the Property; (3) received the refund on property taxes he paid; (4) refused permission for him to move or demolish the buildings on the Property; and (5) are, among other individuals, the owners of the Property. Kenneth also declared conclusorily that his claims against Chan/Joe in the instant case were "distinctly different" from the claims asserted in the cross-complaint in the 2011 Action. Kenneth requested that he be permitted leave to amend, indicating that he "could supply further details concerning [Chan/Joe's] misrepresentation of the ownership status of the property, [his] rights under the Ground Lease, the right of first refusal offered by [Chan/Joe, their] role in preventing demolition of the structures on the [P]roperty, and [their] roles in preventing [him] from moving the structures on the [P]roperty."
The Manraos failed to make an adequate showing in support of their request for leave to amend. The facts proffered by Kenneth that Chan/Joe were among the owners of the Property, accepted rent and tax refunds, and were insurance policy beneficiaries were irrelevant to the Manraos' ability to state a viable cause of action. Further, as discussed above, the proffered facts that Chan/Joe refused permission for the Manraos' proposed demolition of structures on the Property and offered the Manraos a right of first refusal had previously been alleged in the Complaint but were nonetheless issues precluded by the 2011 Action. And the Manraos' suggestion that they could offer new facts or evidence through a proposed amended pleading is likewise unavailing. A contention that new evidence is available will generally be unsuccessful in defending against an otherwise meritorious collateral estoppel defense. (Direct Shopping, supra, 206 Cal.App.4th at p. 1561 ["new evidence, however compelling, is generally insufficient to avoid application of collateral estoppel"].) "Having had a full and fair opportunity to present evidence [supporting their claim regarding the right of first refusal issue, the Manraos were] not entitled to supplement [their] inadequate showing by bringing in 'other evidence . . . not introduced in the earlier proceedings.' [Citation.]" (Ibid.)
Additionally, the Manraos note, in arguing that the court erred in denying leave to amend, that "[t]he operative pleading is a complaint by a pro per party." To the extent it may be inferred from the Manraos' brief that they should have been given preferential treatment by the trial court because they were, at the time, representing themselves, we disagree. A self-represented litigant must " 'be treated like any other party and is entitled to the same, but no greater consideration than other litigants and attorneys. [Citation.]' [Citation.] Thus, as is the case with attorneys, [self-represented] litigants must follow correct rules of procedure." (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1247.)
In determining whether leave to amend should have been granted where a pleading is vulnerable to a motion for judgment on the pleadings, we assess "whether the defect can reasonably be cured by amendment." (Schonfeldt v. State of California (1998) 61 Cal.App.4th 1462, 1465.) We review a trial court's denial of leave to amend under an abuse of discretion standard. (Ott v. Alfa-Laval Agri, Inc. (1995) 31 Cal.App.4th 1439, 1448.) And in establishing error in the denial of leave to amend, "[t]he burden of proof is squarely on the plaintiff." (Baughman v. State of California (1995) 38 Cal.App.4th 182, 187, citing Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The Manraos have not met their burden of demonstrating how they could cure the Complaint's fatal deficiencies or how they could avoid application of collateral estoppel principles to their asserted claims. Accordingly, the court did not abuse its discretion by denying the Manraos leave to amend.
IV. DISPOSITION
The judgment is affirmed.
/s/_________
BAMATTRE-MANOUKIAN, J. WE CONCUR: /s/_________
ELIA, ACTING P.J. /s/_________
MIHARA, J.