Haines vs. ARC Investments

Plaintiff now alleges a number of times he obtained a buyer but Defendant would not approve the sale. And when Plaintiff was in escrow with a buyer, Defendant’s counsel told him Defendant would not approve the buyer’s lease application unless Plaintiff dismissed his case. [SAC, ¶¶ 19-27.] Plaintiff alleges this statement was “false, coercive, material, and made with intent to force Plaintiff to surrender litigation rights.” [Id., ¶ 28.]

On 9/19/24, under direct pressure and financial duress, Plaintiff signed a dismissal with prejudice. [SAC, ¶¶ 29-30.]

Despite Plaintiff complying with its demands, ARC delayed buyer approval and Plaintiff was forced to sell the mobile home as a “pull out” at the reduced price of $46,000 rather than the $221,000 it was worth with the slot. [Id., ¶ 31.]

Plaintiff alleges that this action is intended to assert a different primary right than the one involved in Case No. 30 2024 01413277. [SAC, ¶ 33.] “The primary right at issue in this action is Plaintiff's right to be free from extrinsic fraud, coercion, and economic duress in connection with litigation and settlement decisions.” [Id., ¶ 35.] “This action does not seek to relitigate the issues raised in the prior case, but instead seeks damages for Defendants’ fraudulent procurement of Plaintiff’s September19, 2024 dismissal.” [Id., ¶ 37 (bold added).]

According to documents for which Defendant seeks judicial notice, on 7/12/24 Plaintiff filed a complaint alleging that Defendant was illegally blocking him from selling his property and on 9/19/24 dismissed that action with prejudice. [RJN (ROA #119), Exs. A and

B.] The caption page of the complaint listed causes of action for wrongful eviction, illegal unlawful detainer (service), and illegal seizure of property. [Id., Ex. A.]

The court file in the prior action also reflects that Plaintiff move to vacate the dismissal of that action on the ground that it was induced by extrinsic fraud. [Orange County Superior Court case no. 2024 01413277 at ROA # 37.]. This motion was denied. [Id. at ROA # 47.] The court found that the fraud described by Plaintiff (which is the same alleged in this action) was at best intrinsic fraud:

Additionally, even assuming the purported fraudulent statements are attributed to Defendant, including that Helms would not approve the lease unless Plaintiff dropped the lawsuit, and/or that the sale would be cancelled and Plaintiff would “lose the funds” if Plaintiff did not sign the dismissal, and/or that Plaintiff’s home would be auctioned off and he would receive nothing, are intrinsic as the alleged fraud goes to the merits of Plaintiff’s claims for illegal seizure of property and his right to the home and ability to sell the home which were at issue in the Complaint.

[Id. at 2.]

Demurrer Legal Standard A demurrer can be used only to challenge defects that appear within the “four corners” of the pleading – which includes the pleading, any exhibits attached, and matters of which the court is permitted to take judicial notice. Blank v. Kirwan (1985) 39 Cal. 3d 311, 318; Donabedian v. Mercury Ins. Co. (2004) 116 Cal. App. 4th 968, 994. Limited to the “four corners” as such, a pleading is adequate if it contains a reasonably precise statement of the ultimate facts, in ordinary and concise language, and with sufficient detail to acquaint a defendant with the nature, source and extent of the claim. Leek v. Cooper (2011) 194 Cal. App. 4th 399, 413.

On demurrer, a complaint must be liberally construed. Code Civ. Proc. § 452; Stevens v. Superior Court (1999) 75 Cal. App. 4th 594, 601. All material facts properly pleaded, and reasonable inferences, must be accepted as true. Aubry v. Tri-City Hospital Dist. (1992) 2 Cal. 4th 962, 966-67.

A pleading is adequate if it contains a reasonably precise statement of the ultimate facts, in ordinary and concise language, and with sufficient detail to acquaint a defendant with the nature, source and extent of the claim. The degree of detail required depends on the extent to which the defendant in fairness needs such detail which can be conveniently provided by the plaintiff. Less particularity is required when the defendant ought to have co-extensive or superior knowledge of the facts. Under normal circumstances, there is no need for specificity in pleading evidentiary facts.

However, bare conclusions of law are insufficient. Code Civ. Proc. §§ 425.10(a), 459; Doe v. City of Los Angeles (2007) 42 Cal. 4th 531, 549-50; Zelig v. County of Los Angeles (2002) 27 Cal. 4th 1112, 1126; Doheny Park Terrace HOA v. Truck Ins. Exchange (2005) 132 Cal. App. 4th 1076, 1098-99; Berger v. California Insurance Guarantee Assn (2005) 128 Cal. App. 4th 989, 1006.

Discussion

Res Judicata/Collateral Estoppel The doctrine of retraxit finds it roots in the common law. At common law, a “retraxit” was “an open and voluntary renunciation of the suit in open court.” Ghiringhelli v. Riboni (1950) 95 Cal.App.2d 503, 506; see also Westbay v. Gray (1897) 116 Cal. 660, 666. The primary features of a common law retraxit were that it was made by the plaintiff in person and in open court. Roybal v. University Ford (1989) 207 Cal.App.3d 1080, 1086. A dismissal with prejudice is the modern name for a common law retraxit. Robinson v. Hiles (1953) 119 Cal.App.2d 666, 672; Lama v. Comcast Cablevision (1993) 14 Cal.App.4th 59, 64.

“[A] dismissal with prejudice is the equivalent of a final judgment on the merits, barring the entire cause of action.” Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 793. This is true even when there was no settlement or agreement. Here, Plaintiff alleges there was no settlement, only coercion. [FAC, ¶ 14.] “[A] dismissal with prejudice [is] a retraxit constituting a decision on the merits invoking the principles of res judicata.” Torrey Pines Bank v. Superior Court (1989) 216 Cal.App.3d 813, 822.

Code of Civil Procedure section 1908 codifies the res judicata doctrine, and provides that “a judgment or final order in an action or special proceeding” is conclusive as to “the matter directly adjudged.” Id. at subd. (a)(2). “Res judicata, or claim preclusion, prevents relitigation of the same cause of action in a second suit between the

same parties or parties in privity with them.” Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896–897.

The doctrine applies when (1) the issues decided in the prior adjudication are identical with those presented in the later action; (2) there was a final judgment on the merits in the prior action; and (3) the party against whom the plea is raised was a party or was in privity with a party to the prior adjudication. Pollock v. University of Southern California (2003) 112 Cal.App.4th 1416, 1427.

“ ‘The doctrine of res judicata rests upon the ground that the party to be affected ... has litigated, or had an opportunity to litigate the same matter in a former action in a court of competent jurisdiction, and should not be permitted to litigate it again to the harassment and vexation of his opponent. Public policy and the interest of the litigants alike require that there be an end to litigation.’ ” Fairchild v. Bank of America (1958) 165 Cal.App.2d 477, 482 (emphasis added).

Claim preclusion and res judicata apply to a pending proceeding only when a prior adjudication resolved, or could have resolved, the same cause of action pending in the current proceeding. Brenelli Amedeo, S.P.A. v. Bakara Furniture, Inc. (1994) 29 Cal.App.4th 1828, 1835.

To determine whether the same cause of action is involved, California courts apply the “primary rights” theory. Id. The “firmly settled rule in California for determining a cause of action is the primary rights theory.... ‘ “...Under this theory, the underlying right sought to be enforced determines the cause of action. In determining the primary right, ‘the significant factor is the harm suffered.’ ” ‘ ” Id. at 1835– 1836. A “plaintiff’s primary right is defined by the legally protected interest which is harmed by defendant’s wrongful act, and is not necessarily coextensive with the consequence of that wrongful act.”

Henderson v. Newport–Mesa Unified School Dist. (2013) 214 Cal.App.4th 478, 499. Thus, because breaching a contract inflicts harm on a legally protected interest different from tortious conduct that renders uncollectable a judgment arising from the breach of contract, two different primary rights arise. Fujifilm Corp. v. Yang (2014) 223 Cal.App.4th 326, 331–332.

Since a retraxit “invok[es] the principles of res judicata,” it of course follows that a retraxit only bars claims dismissed with prejudice between the same parties or their privies. Datta v. Staab (1959) 173 Cal.App.2d 613, 621 (“ ‘A retraxit is equivalent to a verdict and judgment on the merits of the case and is deemed to be a bar to another suit for the same cause between the same parties.... ’ ”) (italics added.); Torrey Pines Bank v. Superior Court, 216 Cal.App.3d at 820

(“A retraxit is equivalent to a judgment on the merits and as such bars further litigation on the same subject matter between the parties.”); Moradi–Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287, 312 (“ ‘ “ ‘Where the parties to an action settle their dispute and agree to a dismissal, it is a retraxit and amounts to a decision on the merits and as such is a bar to further litigation on the same subject matter between the parties ’ ” ‘ ”).

There are very limited exceptions to the rules of claim and issue preclusion based on public policy or manifest injustice. “[M]anifest injustice and public interest exceptions are extremely narrow and have never enjoyed wide approval or frequent application.” Schneider v. Lane (2024) 107 Cal.App.5th 39, 48 (citation and internal quote marks omitted).

[A] general demurrer lies where the facts alleged in the complaint or matters judicially noticed show that plaintiff is seeking relief from the same defendant on the same cause of action as in a prior action, or is asserting an issue decided against plaintiff in the prior action. [Boeken v. Philip Morris USA, Inc. (2010) 48 C4th 788, 792, 108 CR3d 806, 808—plaintiff’s wrongful death action barred by her prior voluntary dismissal of loss of consortium action against same defendant; Gabriel v. Wells Fargo Bank, N.A. (2010) 188 CA4th 547, 556, 115 CR3d 622, 630—complaint barred by collateral estoppel; Proctor v.

Vishay Intertechnology, Inc. (2013) 213 CA4th 1258, 1270-1271, 152 CR3d 914, 923 —action barred by collateral estoppel subject to demurrer even if issue wrongly decided in first action; Shine v. Williams- Sonoma, Inc. (2018) 23 CA5th 1070, 1076-1077, 233 CR3d 676, 681 —court properly took judicial notice of “pleading, settlement agreement, and stipulated judgment of dismissal” in earlier class action to sustain demurrer on res judicata grounds in new class action]

Cal. Prac. Guide Civ. Pro. Before Trial Ch. 7(I)-A §7:60.9

Defendant’s contention is that Plaintiff’s current complaint is barred by his prior complaint and dismissal. To the extent Plaintiff contends he was induced by extrinsic fraud to dismiss his prior case, that issue

was settled with the court’s denial of Plaintiff’s motion to vacate the dismissal of the prior action with a finding that the fraud he asserts is intrinsic fraud. Accordingly, claim preclusion applies.

As alleged, Plaintiff’s first through fifth causes of action are expressly based on conduct and representations leading up to the dismissal of the prior action and are tied to the merits of that action as noted by the court there. [See prior action, ROA #47 at 2.] This is intrinsic fraud and not the basis for a separate action. Heyman v. Franchise Mortgage Acceptance Corp. (2003) 107 Cal.App.4th 921, 926 (“The trial court here correctly concluded the alleged fraud of Knyal in securing Heyman’s dismissal of the 1992 action through misleading statements about the value of FMAC (or of the loan servicing rights) was intrinsic.”).

Plaintiff’s sixth and seventh cause of action are expressly based on conduct that took place after dismissal of the prior action. They are therefore not barred by claim preclusion. They are discussed below.

But it is not clear that claim preclusion would apply to Plaintiff’s claim for interference with prospective economic advantage – especially to the extent it is based on Defendant’s alleged conduct after the dismissal. [See FAC, ¶ 15, 10.d.] The same would be true for the remaining causes of action.

Remaining Causes of Action Defendant argues all the causes of action are barred by the litigation under Civil Code section 47. “[T]he litigation ‘privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action.” Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 970. The litigation privilege has been held to apply to statement made during negotiations to settle a lawsuit. Id. Nothing in the SAC reflects unequivocally that any of the alleged statements were part of negotiations to settle the prior case. This is especially true for anything that was said or took place after dismissal of the prior action. What settlement negotiations would be necessary at that point?

Fifth Cause of Action for Intentional Interference with Prospective Economic Advantage The elements of a cause of action for intentional interference with prospective economic advantage are: (1) an economic relationship between the plaintiff and some third party, with a reasonable probability of future economic benefit or advantage to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant. Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal. 4th 1134, 1153; Plummer v. Day/Eisenberg (2010) 184 Cal. App. 4th 38, 51.

To recover for interference with prospective economic advantage, a plaintiff must plead and prove the defendant’s interference was wrongful by some measure beyond the fact of the interference itself. Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal. 4th 376, 392-393; National Medical Transportation Network v. Deloitte & Touche (1998) 62 Cal. App.4th 412, 440. Wrongful conduct is insufficient if it is merely unfair or immoral or the product of an improper but lawful purpose. Rather, an act is independently wrongful if it is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard. Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal. 4th 1134, 1159.

Plaintiff alleges that independently wrongful acts that interfered with his sale took place after dismissal, but the only factual allege is that Defendant acted wrongfully by “continuing to delay, obstruct, and withhold lease approval, despite having conditioned approval on the dismissal and despite knowing that Plaintiff dismissed the lawsuit for the sole purpose of allowing the sale to proceed.” [SAC, intro to sixth cause of action and ¶ 110.]

This is breach of contract. Generally speaking, and without more, breach of contract is not an independently wrongful act for purposes of interference liability. Drink Tank Ventures LLC v. Real Soda in Real Bottles, Ltd. (2021) 71 Cal.App.5th 528, 539–540.

For this reason, the demurrer to the sixth cause of action is sustained.

Seventh Cause of Action for Unfair Business Practices B&P § 17200 et seq. (“UCL”) prohibits unfair competition, including unlawful, unfair or fraudulent business acts. Cel-Tech Comm., Inc. v. Los Angeles Cellular Tele. Co. (1999) 20 Cal.4th 163, 180. A UCL action is equitable in nature and damages cannot be recovered. Id. at

179-80. It requires a person to have suffered injury in fact and have lost money or property as a result of unfair competition in order to have standing for a UCL cause of action. Pfizer Inc. v. Superior Court (2010) 182 Cal.App.4th 622, 630.

In Korea Supply Co. v. Lockheed Martin Corp., the California Supreme Court ruled that restitution is a remedy for violation of section 17200 but “nonrestitutionary disgorgement,” which is akin to damages, is not. Id., 29 Cal. 4th at 1144-51.

“In the context of the UCL, ‘restitution’ is limited to the return of property of funds in which plaintiff has an ownership interest (or is claiming through someone with an ownership interest).” Madrid v. Perot Systems Corp. (2005) 130 Cal.App.4th 440, 453. “Thus, the California Supreme Court has defined a UCL order for restitution as one ‘compelling a UCL defendant to return money obtained through an unfair business practice to those persons in interest from whom the property was taken, that is, to persons who had an ownership interest in the property or those claiming through that person.’” Id. “The California Supreme Court has held that, while restitutionary disgorgement [of profits] may be an available remedy under the UCL, nonrestitutionary disgorgement [of profits] is not available in a UCL individual action or in a UCL representative action....” Id. at 460.

Here, Plaintiff has not alleged that Defendant holds property or funds that Plaintiff has an ownership interest in. Rather, he seeks his “economic loss.” [SAC, ¶ 125.] He calls this restitution, but it is not. [Id]

In his prayer, Plaintiff prays for injunctive relief but he does not allege ongoing conduct that would give rise to the need for or right to an injunction.

For this reason, the demurrer to this cause of action is sustained.

Case Management Conference

Continued to August 10, 2026 at 9:00 a.m. 4 Kim vs. Kim

2024-01376224 1. Motion for Protective Order 2. Motion to Compel Deposition (Oral or Written) 3. Order to Show Cause re: Monetary Sanctions

Off Calendar