Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County, No. 37-2007-00050314- CU-OR-NC Michael B. Orfield, Judge.
McINTYRE, J.
David and Carissa Meyer appeal a judgment entered after the superior court sustained a demurrer without leave to amend to their claims for declaratory relief, quiet title and various damage theories against their neighbor, John Scandalios. They contend that the superior court's ruling was based on the erroneous conclusions that a prior action brought by Scandalios against them resolved the underlying issue in this case and, to the extent the issue was not decided in the prior action, their claims are nonetheless barred because the claims were required to be asserted, if at all, as compulsory cross-claims in the prior action. We conclude the trial court's ruling was correct except as to the Meyers' claim for assault, reverse the judgment insofar as the superior court sustained Scandalios's demurrer to that cause of action and otherwise affirm the judgment in its entirety.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Allegations of the Meyers' Complaint
In December 1985, the Meyers' predecessor in interest and Scandalios's predecessor in interest agreed to provide the other with easements across their respective properties. The Meyers' predecessor granted Scandalios's predecessor an appurtenant easement for ingress and egress purposes and Scandalios's predecessor granted to the Meyers' predecessor an "'easement for open space and fencing purposes over, along and across'" a portion of his property (hereinafter, the disputed property). The easement deed relating to the disputed property provided that the easement was subject to the conditions of a separate agreement between the owners "'with respect to [the Meyers's predecessor] acquiring property in fee simple at his option at a later date.'" (Italics omitted.) After both easements were recorded, the Meyers' predecessor fenced the easement portion of the Scandalios's predecessor's property along with his own property.
In May 1997, the Meyers purchased their predecessor's property, which was represented to include the disputed property; thereafter they used the disputed property for their own recreational purposes, including a children's playground and gardens. In March 2006, however, Scandalios (having at some point purchased his predecessor's property) tore down the Meyers' fence and put up a chain link fence on the property line between the two homes. In September 2006, the Meyers gave notice to Scandalios that they were exercising the option to acquire the disputed property, but Scandalios rejected their notice on the ground that they had no contractual right to acquire the disputed property.
The Meyers filed this action against Scandalios in February 2007, seeking declaratory relief, quiet title and damages for intentional and negligent infliction of emotional distress, trespass, wrongful eviction and assault. In their first two causes of action, the Meyers allege that a dispute exists as to the parties' rights and obligations under the recorded easement in favor of the Meyers' property and seeks in part a judicial determination that the Meyers have the right to fence the disputed property for their own use, as well as a determination that they are entitled to obtain the disputed property in fee simple. In their third cause of action, the Meyers allege that, by virtue of their "actual, open, exclusive, hostile and adverse possession" of the disputed property for five years, they acquired a prescriptive easement over the property. The fourth, fifth, sixth and seventh causes of action allege intentional and negligent infliction of emotional distress, trespass and wrongful eviction, respectively, as a result of Scandalios's attempts to reclaim the disputed property in March 2006. An eighth cause of action alleges an assault occurring in May 2005.
2. The Demurrer
Scandalios demurred to the complaint on the grounds that the Meyers' claims were barred because those claims either were resolved, or were required to have been resolved, in an August 2005 action he brought against them. In connection with the demurrer, Scandalios requested that the court take judicial notice of the various pleadings filed in the 2005 action, to wit:
1. Scandalios's complaint against the Meyers and others for trespass, negligence, negligent and intentional infliction of emotional distress, alleging, inter alia, that he was the owner of the disputed property and that, despite their "[lack of any] reasonable ground for believing that they had any right or entitlement thereto," the Meyers wrongfully entered onto and damaged the disputed property by grading it for their own benefit.
2. The Meyers' October 2005 answer, which asserted numerous affirmative defenses, including that (a) the disputed property was intended to be transferred to their predecessor in interest and thus was actually owned by them; (b) they were entitled to the disputed property under principles of adverse possession; (c) they acquired a prescriptive easement over the disputed property; (d) by virtue of his own conduct relating to the disputed property, Scandalios was estopped to seek damages or relief against them; and (e) Scandalios's claims were barred by the doctrine of laches.
3. The Meyers' cross-complaint against Scandalios, seeking to quiet title to the disputed property and alleging that: (a) sometime in 1986 or 1987, Scandalios's predecessor transferred the disputed property to their predecessor; (b) since that time the disputed property had been fenced as part of their property; (c) when they started to grade the disputed property in May 2005, Scandalios "arrived at the scene and threatened to file suit if [the] work was not stopped;" and (d) they had acquired a prescriptive easement to the disputed property by virtue of their use of the disputed property since they purchased their lot.
Scandalios also requested that the court take judicial notice of a September 2006 order in the previous action granting a motion by Scandalios for summary judgment of the Meyers' cross-claims against him, which specified in relevant part:
"[The Meyers] claim there was an agreement between the parties' predecessors [that the Meyers' predecessor was] to receive the disputed property. Under the statute of frauds, a written contract is required to transfer an interest in real property. Civil Code Section 1624(a)(3). [The Meyers] argue that there was, in fact, a written contract and the full performance exception to the statute of frauds applies.
"Contrary to [the Meyers'] claim, there is no evidence that there has been full performance of the oral agreement to transfer property.
[¶] . . . [¶]
"The oral agreement was simply an agreement to grant easements. This was done by both sides. Therefore, although there has been full performance of the oral agreement, the oral agreement was to convey easements. The alleged agreement to convey the property outright to [the Meyers' predecessor] is claimed to be in the easement conveyed by [Scandalios's predecessor] . . . .
[¶] . . . [¶]
"Contrary to [the Meyers'] contentions, nothing in [the easement] clause creates a separate agreement to convey the property to [their predecessor]. The clause simply states that there is yet another separate agreement granting [their predecessor] an option to purchase the property at a later date. . . . The subject deed does not refer to another writing with a reference sufficiently certain to identify it [for statute of frauds purposes]."
Finally, Scandalios requested that the court take judicial notice of the parties' settlement agreement, in which the Meyers agreed to pay Scandalios $10,000 to settle his claims against them.
3. The Court's Ruling on the Demurrer
Based on a consideration of the parties' briefing and oral argument, the court in this action sustained Scandalios's demurrer without leave to amend on the ground that it was barred by Code of Civil Procedure section 426.30, subdivision (a) (the compulsory cross-complaint statute (hereinafter, section 426.30(a)), and dismissed the Meyers' complaint in its entirety. The Meyers appeal from the resulting judgment.
DISCUSSION
Section 426.30(a) provides:
"Except as otherwise provided by statute, if a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded[, subject to certain exceptions not applicable in this case]."
The compulsory cross-complaint statute embodies an aspect of the doctrine of res judicata and, to promote judicial economy, requires parties to litigate all conflicting claims between them that arise out of the same transaction in a single lawsuit. (Flickinger v. Swedlow Engineering Co. (1955) 45 Cal.2d 388.) To this end, section 426.30(a) bars a second lawsuit between the same parties on a "related cause of action" that could have been pled in the first action. A "related cause of action" is one that "arises out of the same transaction, occurrence, or series of transactions or occurrences" as the causes of action alleged in the plaintiff's complaint. (§§ 426.30(a), 426.10.)
In applying section 426.30(a), the term "transaction" is "interpreted broadly to encourage the joining of all claims arising from 'a series of acts or occurrences [that are] logically interrelated.'" (Ranchers Bank v. Pressman (1971) 19 Cal.App.3d 612, 620 and cases cited therein.) As so interpreted, the word "transaction" embraces almost any activity by a person that affects another's right and out of which a cause of action may arise. (Sylvester v. Soulsburg (1967) 252 Cal.App.2d 185, 191; see also Kittle Mfg. Co. v. Davis (1935) 8 Cal.App.2d 504, 513 [the policy of the law "is to require reciprocal rights flowing from a common source to be determined in a single action, thus avoiding not only unnecessary vexatious litigation but also the contingency of conflicting judgments"].)
Applying these principles, we agree with the trial court's conclusion that the Meyers' claims for declaratory relief, quiet title and damages for intentional and negligent infliction of emotional distress, trespass and wrongful eviction were barred by section 436.30(a). Sylvester v. Soulsburg, supra, 252 Cal.App.2d 185 establishes this point. There, sellers sold real and personal property to purchasers, but later filed an action to terminate the purchase contract, recover a deficiency judgment and quiet title to the property in their favor; the purchasers responded, denying that they were in default on their payment obligations and alleging that the sellers had defrauded them and trespassed on the property in such a way as to render their performance impossible. (Id. at p. 187.)
While the sellers' action was pending, the purchasers filed a separate action against them for trespass and conspiracy to commit trespass to the same real and personal property. (Ibid.) The sellers successfully sought to have the second action dismissed pursuant to the then-existing compulsory cross-complaint statute (former Code of Civ. Proc., § 439) and the purchasers appealed. The appellate court affirmed the judgment of dismissal. It reasoned:
"The claim of damage for trespass arose out of a series of acts on the part of the [sellers] closely related to the subject matter and claims in the first action . . .; the common subject matter was the real and personal property and the contracts by which it had been sold to the [purchasers]; upon alleged default of payment under the contracts for the sale of the realty, the [sellers] began the action to recover possession of the land and to foreclose the chattel mortgage; they asked for damages, entered upon the real property, took possession of the personal property, and for a time remained in possession; all these acts were in continuous sequence and made up in their entirety a single 'transaction,' as the term is used in section 439 of the Code of Civil Procedure. The claims urged by the [purchasers] were based on the same land, the same personalty, and the same contracts; the [purchasers] should have asserted their demands by counterclaim in their answer in the first case . . .; by failing to do so, they lost the right to sue separately in a later action." (Sylvester v. Soulsburg, supra, 252 Cal.App.2d at p. 192.)
A similar analysis applies here. The subject matter of both actions was the disputed property and the issue of the parties' rights and obligations relating thereto. Both actions were based on the 1985 agreement between the original owners of the properties creating an easement over the disputed property, the Meyers' (or their predecessors') use of the disputed property since that time and Scandalios's alleged interference with that use. As in Sylvester v. Soulsburg, these acts were interrelated, occurred in a continuous (if not lengthy) sequence and made up in their entirety a single 'transaction,' as the term is used in section 426.30(a). (See also Saunders v. New Capital for Small Businesses, Inc. (1964) 231 Cal.App.2d 324, 339 [recognizing that where the rights of the parties "flow from a common source," the compulsory cross-complaint statute applies].)
The Meyers argue, however, that the issue in the underlying action was limited to whether they had acquired rights over the disputed property by virtue of a prescriptive easement (i.e., one acquired through a means similar to adverse possession (Civ. Code, § 1007; Code Civ. Proc., § 321; Felgenhauer v. Soni (2004) 121 Cal.App.4th 445, 449), and that the court in that action specifically indicated that it was not making any ruling relating to the legal effect of the recorded easement. The Meyers are correct in their recitation of the circumstances of the underlying action; however, they miss the mark as to the significance of those circumstances. That there was no resolution of any claims based on the recorded easement in the underlying action simply begs the question of whether such claims were required to be resolved, if at all, in that action. (See Hulsey v. Koehler (1990) 218 Cal.App.3d 1150, 1156-1157 [recognizing that the compulsory cross-complaint statute does not bar claims previously litigated but instead related causes of action that were not litigated in a prior action between the parties].)
The Meyers also contend that they were not aware of the recorded easement until after the underlying action was ongoing. Although they do not point out the relevance of this, we note that the compulsory cross-complaint statute only requires the assertion of related claims that a party "has at the time of serving [its] answer to the complaint" in the underlying action (§ 426.30(a)) and that, under the cases interpreting it, claims arising after the underlying answer is filed are deemed to be permissive rather than compulsory. (Crocker Nat. Bank v. Emerald (1990) 221 Cal.App.3d 852, 864.)
Neither the Meyers' complaint nor their briefs specify when they discovered the recorded easement and thus we cannot discern whether the statutory language would be triggered. More importantly, because the easement was recorded in 1985 and the Meyers acquired their property in 1997, the Meyers "ha[d]" a claim thereunder even well before Scandalios filed the underlying action in 2005. (Civ. Code, § 1213 [providing that recorded instruments conveying real property provide, from the time they are filed, constructive notice of the conveyance to subsequent purchasers and mortgagors].)
The Meyers further point to Code of Civil Procedure section 426.60, subdivision (c), which creates an exception to the compulsory cross-complaint statute "where the only relief sought [in the first action] is a declaration of the rights and duties of the respective parties in an action for declaratory relief . . . ." (See also Code Civ. Proc., § 426.60 Legislative Committee Comment [noting that the exception does not apply "[i]f any party to an action seeks a remedy other than declaratory relief"].) However, since Scandalios's underlying complaint alleged more than just a claim for declaratory relief, this exception to the compulsory cross-complaint statute is inapplicable. (See AL Holding Co. v. O'Brien & Hicks, Inc. (1999) 75 Cal.App.4th 1310, 1313-1314 ["The critical time period to which section 426.30 looks is that point in time when the complaint has been filed and served against a defendant and the defendant 'fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff.'" (Italics omitted.)]; Russo v. Scrambler Motorcycles (1976) 56 Cal.App.3d 112, 117.)
As to their claims for intentional and negligent infliction of emotional distress, trespass and wrongful eviction, the Meyers argue that the conduct on which those claims are based occurred shortly before the underlying action was terminated. However, a review of the allegations of the Myers' complaint establishes that each of these causes of action is premised on the notion that Scandalios had no right to deny the Meyers' access to the disputed property, a subject raised in the underlying action. Because these claims are based on alleged rights arising from the same transactions as the underlying action, the compulsory cross-complaint statute is equally applicable to them.
The only cause of action asserted in the Meyers' complaint that is unrelated to the subject matter of the underlying action is their assault cause of action, which alleges that Scandalios made verbal threats against Mr. Meyer in May 2005. As to this cause of action, the superior court erred in sustaining Scandalios's demurrer based on section 426.30(a) and thus we reverse the judgment relating to that ruling.
DISPOSITION
The judgment is reversed insofar as the superior court sustained Scandalios's demurrer to the Meyers' claim for assault and is affirmed in all other respects. Scandalios is awarded his costs on appeal.
WE CONCUR: BENKE, Acting P.J., AARON, J.