Peninsula Development Co., LLC v. Jeremy Dzubay, et al.

A demurrer to a complaint can be sustained in situations when, as a matter of law, the plaintiff is collaterally estopped from advancing the claim. [See Weiner v. Mitchell, Silberberg & Knupp (1980) 114 Cal.App.3d 39, 48.] Therefore, if all the facts needed to show that an action is barred by claim preclusion are included in the complaint or can be judicially noticed, the trial court can properly sustain a general demurrer. [Shine v. Williams-Sonoma, Inc. (2018) 23 Cal.App.5th 1070, 1076-1077.]

Discussion.

Defendants contend that Plaintiff’s two causes of action—breach of contract and negligence—are barred by claim preclusion based on the judgment entered in their favor in the Small Claims Case. Claim preclusion stops the reassertion of the same cause of action in a second lawsuit between the same parties or those in privity. It applies when a later case involves (1) the same cause of action, (2) the same parties, and (3) a final judgment on the merits in the first case. [DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824.] Assuming all of the elements are satisfied, the earlier judgment would bar this action if both suits seek to vindicate the same primary right. [Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 904.]

A. Same Cause of Action.

In the Small Claims Case, Defendants sued Plaintiff’s property manager, C & C Property Management (“C&C”), claiming it failed to follow the move-out procedures outlined in Civil Code section 1950.5. They also alleged wrongful withholding of a security deposit and sewer overcharges. [Plaintiff’s Claim and Order in Small Claims Case at ¶ 3, pp. 2-3; FAC at ¶ 8.] By contrast, the current case involves alleged physical damage to the property, mold remediation, and breach of lease obligations. [FAC at ¶¶ 12-29.] C&C’s actions during administrative tasks related to the security deposit differ from Plaintiff’s claim that Defendants caused damage to the property. The judgment in the Small Claims Case, which awarded Defendants a portion of their deposit, neither determines whether the premises were damaged nor addresses the mold or repair costs raised in the FAC.

B. Same Parties or Privity.

Plaintiff was not a party to the small claims action. Instead, Defendants claim that Plaintiff was in privity with C&C.

In the context of collateral estoppel, due process requires that Plaintiff, as the party to be estopped here, must have shared an interest or community of interest with, and be adequately represented by, C&C, which was the losing party in the Small Claims Case. [Clemmer v. Hartford Insurance Co. (1978) 22 Cal.3d 865, 875.] Additionally, the circumstances must have been such that Plaintiff could reasonably expect to be bound by the earlier decision in the Small Claims Case. [Ibid.] Therefore, when determining whether to apply collateral estoppel, this Court must weigh the rights of Plaintiff against the necessity of applying it in this case. [Ibid.] The goal is to promote judicial economy by reducing duplicative litigation, preventing inconsistent judgments that could undermine judicial integrity, and protecting against vexatious lawsuits. [Ibid.]

Here, Defendants have not shown privity between Plaintiff and C&C. The FAC alleges a “separate agreement” between Plaintiff and C&C governing the property management relationship. [FAC at ¶ 8 (“C&C was a property manager for Plaintiff pursuant to a separate agreement between Plaintiff and C&C.”).] That “separate agreement” is not before the Court. Although C&C signed the lease as Plaintiff’s property manager [ibid.], Defendants provide no authority establishing that C&C adequately represented Plaintiff’s interests at the small claims

hearing or that Plaintiff should reasonably have expected to be bound by that adjudication. Further, the claim for property damage belongs to the owner, Plaintiff here, and C&C has no interest in recovering for the damage. Finally, Defendants’ speculative assertion that C&C shared identical litigation interests is insufficient.

C. Final Judgment and Preclusive Effect of Small Claims Judgments.

Even assuming the judgment in the Small Claims Case is final, Defendants misstate its preclusive effect. Under Sanderson v. Niemann (1941) 17 Cal.2d 563, small claims judgments do not have a collateral estoppel effect in subsequent superior court actions. In doing so, the Sanderson court reasoned that small claims courts were established to offer a means of obtaining speedy resolution of small amounts in dispute. [Id. at 573.] Small claims courts also functioned informally and expeditiously, with no attorneys, no pleadings, no legal rules of evidence, no juries, and no formal findings. [Ibid.]

Relying on Pitzen v. Superior Court (2004) 120 Cal.App.4th 1374, Defendants argue that the final judgment in the Small Claims Action was resolved on the merits in their favor, barring this subsequent action. [Demurrer at 9.] Pitzen carved a narrow exception applicable only when a plaintiff in a small claims action seeks to relitigate, in a subsequent related action, an issue that was litigated and decided against that plaintiff in the small claims action. [Pitzen, 120 Cal.App.4th at 1377.] That exception does not apply here: Defendants were the small claims plaintiffs, and the party Defendants seek to bind (Plaintiff) was not the prior defendant in the Small Claims Case.

Thus, the judgment in the Small Claims Case, even if this Court assumes it was “final,” has no preclusive effect. The demurrer is OVERRULED.

Conclusion.

Defendants’ demurrer is OVERRULED, and they have 10 days from the date of service of the Court’s signed order to answer the FAC. [Cal. Rules of Ct., rule 3.1320, subd. (g).] The CMC scheduled for August 7, 2026, is CONTINUED to September 22, 2026, at 9:00 a.m. in Department 14.

NOTE RE TENTATIVE RULING This tentative ruling becomes the court’s order, and no hearing shall be held unless one of the parties contests it by following Rule 3.1308 of the California Rules of Court and Monterey County Local Rule 7.9. Those parties wishing to present an oral argument must notify all other parties and the Court no later than 4:00 p.m. on the court day before the hearing; otherwise, NO ORAL ARGUMENT WILL BE PERMITTED, AND THE TENTATIVE RULING WILL BECOME THE ORDER OF THE COURT AND THE HEARING VACATED. You must notify the court by email or by calling the Calendar Department at 831-647-5800, extension 3040, before 4:00 p.m. on the court day before the hearing.

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