Opinion
A165727
04-12-2024
GERARD ZELNIK, Plaintiff and Appellant, v. DEPARTMENT OF HEALTH CARE ACCESS AND INFORMATION, Defendant and Respondent.
NOT TO BE PUBLISHED
(San Mateo County Super. Ct. No. 19CIV02895)
LANGHORNE WILSON, J.
Plaintiff Gerard Zelnik appeals from a judgment dismissing his lawsuit after the trial court sustained defendant Office of Statewide Health Planning and Development's (Office) demurrer without leave to amend, concluding Zelnik's lawsuit was barred under the doctrine of claim preclusion. We affirm.
The Department of Health Care Access and Information was formerly known as the Office of Statewide Health Planning and Development. (Health & Saf. Code, §§ 127000, 127002.) To maintain consistency with the parties' references to its former name, we refer to defendant as the Office.
We take facts from the operative third amended complaint and matters which have been judicially noticed. (See Brown v. Deutsche Bank National Trust Co. (2016) 247 Cal.App.4th 275, 279 (Brown).) We may also consider factual allegations contained in prior complaints. (See Doe v. United States Youth Soccer Assn., Inc. (2017) 8 Cal.App.5th 1118, 1122.)
A. Zelnik's Employment with the Office
Zelnik was employed by the Office from 1990 until he resigned in 2018. In 2011, he was promoted from compliance officer to regional compliance officer, responsible for inspecting health care facilities throughout the state. While traveling for work in 2012, Zelnik was seriously injured in a car accident and took intermittent periods of medical leave over the years that followed. In July 2017, he returned from one of those leave periods. In October 2017, a doctor deemed him permanently disabled.
Thereafter, the Office attempted to demote Zelnik to a compliance officer position, which would reduce his salary and benefits. Zelnik objected. One week later, the Office informed him he would return to his position as regional compliance officer contingent on his acceptance of the offer. Zelnik accepted.
The Office did not respond to Zelnik's acceptance. Instead, while he was on medical leave in December 2017, the Office notified Zelnik of its intent to demote him to a compliance officer position. The Office based the demotion on his alleged fraudulent signing of timesheets for an employee who had failed to report to work.
B. State Personnel Board Appeal
Zelnik appealed his demotion to the State Personnel Board (Board). In May 2018, while he was on disability leave, Zelnik and the Office reached a written settlement agreement (agreement) resolving the dispute. The agreement provided, in part, that the Office would withdraw Zelnik's demotion and restore him to the position of regional compliance officer as if he had not been demoted, and he would receive all back pay and benefits he would have accrued had he not been demoted. The Office agreed to provide Zelnik's salary and benefits as a regional compliance officer accruing from the end of December 2017 through the date of his resignation. For his part, Zelnik agreed to not perform any work for the Office and to resign on December 1, 2018, or upon the exhaustion of his leave credits, whichever was earlier. The Board approved the agreement.
C. Board Decision and Resignation
In August 2018, the Office informed Zelnik he would have to resign earlier than December 1, 2018, because he had exhausted his leave credits. In late-August 2018, Zelnik requested an order from the Board compelling the Office to comply with the agreement, claiming the Office had not compensated him for back pay and benefits and had not restored him to his position as regional compliance officer. In September 2018-while the appeal was pending-Zelnik resigned.
In December 2018, the Board issued its decision and denied Zelnik's request for relief. It concluded, among other things, that he had been restored to his prior position as regional compliance officer effective December 2017; he had not been forced to resign in September 2018-both parties carried out their agreement for Zelnik to retire when his leave balance was exhausted-and his September 2018 resignation date stood; and there was no evidence that Zelnik did not receive adequate back pay and benefits but, rather, the Office's evidence documented payments paid and benefits made available, including over $110,000 in back pay as well as health, vision and dental benefits, life insurance, long-term disability insurance, and other allowances.
In 2019, Zelnik's retirement benefits through the California Public Employees Retirement System (CalPERS) and long-term disability benefits through the Standard Insurance Company were reduced.
D. The Present Litigation
Zelnik filed a complaint against the Office in May 2019. The operative third amended complaint (complaint) asserts causes of action for breach of contract, intentional and negligent misrepresentation, and false promise.The causes of action are based on Zelnik's contentions that the Office breached the agreement by failing to provide him back pay, salary and benefits, and made misrepresentations in entering the agreement.
Zelnik's initial complaint alleged employment-based claims, including discrimination and wrongful termination. His subsequent first and second amended complaints focused on employment-based claims and added breach of contract claims based on the agreement.
The Office demurred to the complaint. As relevant here, it argued the doctrine of claim preclusion barred Zelnik's lawsuit. It contended Zelnik's complaint attempted to litigate the same primary right-failure to pay his salary and benefits in violation of the agreement-which he had already unsuccessfully litigated in the Board proceeding. Thus, the Board's decision barred Zelnik's lawsuit.
The Office also demurred on grounds of the statute of limitations, statutory tort immunities, failure to exhaust administrative remedies, and vagueness and uncertainty. The trial court declined to rule on these grounds.
In opposition, Zelnik argued claim preclusion did not bar his lawsuit because his claims were based on facts that occurred after the Board's decision-his reduction in benefits due to the Office's alleged failure to restore him to a regional compliance officer position-and were, therefore, not addressed in that decision. In a supporting declaration, he described the reduction of his CalPERS benefits. He stated that in April 2019, CalPERS reduced his monthly allowance after it determined he did not return to work from late-December 2017 through his resignation in September 2018, and that his retroactive compensation and service credit was not reportable. He explained to CalPERS that he had no knowledge the effect the agreement would have on his CalPERS benefits. In August 2019, CalPERS confirmed the reduction in retirement benefits.
The trial court sustained the Office's demurrer without leave to amend. The court concluded claim preclusion barred Zelnik's lawsuit. It reasoned the Board's decision was a final judgment on the merits between the same parties, and that both actions involved the same cause of action because the complaint sought to protect the same primary right as his claim before the Board-his right to enforcement of the terms of the agreement. The court rejected Zelnik's theory that his lawsuit was not barred by claim preclusion because his benefits were reduced after the Board's decision. It concluded the alleged benefit reductions were based on the claim that the Office breached the agreement and were already litigated. The court issued a judgment dismissing Zelnik's lawsuit.
II. DISCUSSION
Zelnik argues claim preclusion does not bar his lawsuit because it is not based on the same primary right as that in the Board proceeding, and because his lawsuit addresses benefit reductions which occurred after the Board's decision. Further, he contends the trial court abused its discretion by denying leave to amend. We disagree.
A. Claim Preclusion Principles and Standard of Review
The doctrine of claim preclusion-previously referred to as res judicata-prohibits a second suit between the same parties on the same cause of action. (Robinson v. Southern Counties Oil Company (2020) 53 Cal.App.5th 476, 481.) Claim preclusion arises if a second suit involves (1) the same cause of action (2) between the same parties (3) after a final judgment on the merits in the first action. (Id. at p. 482.) If claim preclusion is established, it bars relitigation of the claim altogether. (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824.) A "final judgment serves as a bar not only to the issues litigated but to those that could have been litigated at the same time." (Takahashi v. Board of Education (1988) 202 Cal.App.3d 1464, 1481.)
As to the first element, California has long followed the primary right theory to determine what constitutes a cause of action. (Colebrook v. CIT Bank, N.A. (2021) 64 Cal.App.5th 259, 263 (Colebrook).) A cause of action is comprised of a primary right of the plaintiff, a corresponding duty of the defendant, and a wrongful act by the defendant constituting a breach of that duty. (Ibid.) A primary right"' "is indivisible: the violation of a single primary right gives rise to but a single cause of action.... As far as its content is concerned, the primary right is simply the plaintiff's right to be free from the particular injury suffered. [Citation.] It must therefore be distinguished from the legal theory on which liability for that injury is premised: 'Even where there are multiple legal theories upon which recovery might be predicated, one injury gives rise to only one claim for relief.' [Citation.] The primary right must also be distinguished from the remedy sought: 'The violation of one primary right constitutes a single cause of action, though it may entitle the injured party to many forms of relief, and the relief is not to be confounded with the cause of action, one not being determinative of the other.'" '" (Ibid.)
A primary right includes the right to performance of a contractual obligation. (Olsen v. Breeze, Inc. (1996) 48 Cal.App.4th 608, 625.) "It is well established that a judgment in an action for breach of contract bars a subsequent action for additional relief based on the same breach." (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 905.) A "breach of contract gives rise to a single cause of action in which all remedies based on that breach must be requested." (Id. at p. 906.)
A court may sustain a demurrer on claim preclusion grounds if all facts necessary to show the action is barred are within the complaint or subject to judicial notice. (Thompson v. Ioane (2017) 11 Cal.App.5th 1180, 1191.) We review the trial court's order sustaining a demurrer de novo and determine whether the complaint states a cause of action on any available legal theory. (Brown, supra, 247 Cal.App.4th at p. 279.) We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions, or conclusions of fact or law. (Ibid.) We affirm the judgment if it is proper on any grounds stated in the demurrer. (Shaw v. Los Angeles Unified School Dist. (2023) 95 Cal.App.5th 740, 754.) When, as here," 'the trial court sustains a demurrer without leave to amend, we review the determination that no amendment could cure the defect in the complaint for an abuse of discretion. [Citation.] The trial court abuses its discretion if there is a reasonable possibility that the plaintiff could cure the defect by amendment. [Citation.] The plaintiff has the burden of proving that amendment would cure the legal defect, and may meet this burden on appeal.'" (Brown, supra, 247 Cal.App.4th at p. 279.)
B. Claim Preclusion Bar
The trial court concluded the doctrine of claim preclusion bars Zelnik's lawsuit. We agree.
The only dispute is the first element of claim preclusion-whether the present lawsuit and the Board proceeding involve the same cause of action. In making this determination, we apply the primary right theory.
The primary right in the present lawsuit is Zelnik's right to have the Office comply with the agreement. Each cause of action in the complaint includes the same allegations: The agreement stated Zelnik "would receive all back pay and benefits as if he had not been demoted, as well as all salary and benefits from December 20, 2017 through the effective date of [his] resignation." He voluntarily resigned in compliance with the agreement. The Office breached the agreement "by failing to provide [Zelnik] all of his back pay, salary, and benefits." The basis of the complaint is Zelnik's claim that the Office did not comply with the agreement and injured him by failing to provide back pay, salary and benefits.
The same primary right was involved in the Board proceeding. There, Zelnik asserted the Office had not compensated him for back pay and benefits and had not restored him to his position as regional compliance officer. Based on the evidence before it, the Board concluded the Office had restored Zelnik to his regional compliance officer position as of December 2017. Regarding back pay and benefits, the Board concluded there was no evidence that Zelnik had not received adequate back pay and benefits. Indeed, it determined that the Office's evidence "clearly documented the payments paid and benefits made available" to Zelnik, including over $110,000 in back pay as well as medical benefits, long-term disability insurance, and other allowances.
Because the present lawsuit and the Board proceeding sought to vindicate the same primary right-the Office's compliance with the agreement-and therefore involved the same cause of action, the doctrine of claim preclusion bars Zelnik's lawsuit. (See Mycogen Corp. v. Monsanto Co., supra, 28 Cal.4th at p. 904 [second action barred because "both suits are based on the same cause of action"].)
Attempting to overcome the claim preclusion bar, Zelnik contends his lawsuit is based on facts which occurred after the Board issued its decision in December 2018. Claim preclusion does not"' "prevent a re-examination of the same question between the same parties where, in the interval between the first and second actions, the facts have materially changed or new facts have occurred which have altered the legal rights or relations of the litigants." '" (Union Pacific Railroad Co. v. Santa Fe Pacific Pipelines, Inc. (2014) 231 Cal.App.4th 134, 179-180 (Union Pacific); see also City of Oakland v. Oakland Police &Fire Retirement System (2014) 224 Cal.App.4th 210, 230.)
Zelnik focuses on reductions in two categories of benefits-retirement benefits under CalPERS and long-term disability benefits. Preliminarily, we point out that Zelnik relies on facts outside of the complaint, which we may not consider. (See Brown, supra, 247 Cal.App.4th at p. 279 [we consider properly pleaded material facts and matters which may be judicially noticed].) We discuss these facts on the topic of leave to amend, post, but here we confine our analysis to facts contained in the complaint or subject to judicial notice. Turning to the complaint, in a section titled "Defendant's Reduction in Benefits," Zelnik alleged, "On or about August 1, 2018,
Defendant informed Plaintiff that he would have to resign earlier than December 1, 2018. But, Defendant did not restore Plaintiff's benefits pursuant to the Settlement Agreement. [¶] As a result, on April 15, 2019, Plaintiff's benefits with . . . CalPERS . . . were reduced by $268.70 per month for a total of $9,302.24. [¶] Further, on or about November 15, 2019, Plaintiff's long-term disability benefits with the Standard Insurance Company [] were reduced." (Italics added.)
Zelnik's argument is unpersuasive. That his retirement and long-term disability benefits were reduced after the Board issued its decision does not mandate the conclusion that the events altered the parties' legal rights and obligations. (See Union Pacific, supra, 231 Cal.App.4th at pp. 179-180.) By the complaint's own language, the benefits were reduced "as a result" of the Office's alleged failure to restore Zelnik's benefits pursuant to the agreement-the same primary right involved in the Board proceeding. In opposing the demurrer, Zelnik argued the 2019 benefits "reductions were based on [the Office]'s failure to restore [his] position as a Regional Compliance Officer in violation of the" agreement. Whether the Office violated the agreement by failing to restore Zelnik to the position of regional compliance officer was raised in the Board proceeding and decided against Zelnik.
The reductions, therefore, do not constitute a new injury to Zelnik or a new wrong by the Office. (See Atwell v. City of Rohnert Park (2018) 27 Cal.App.5th 692, 701 [the "key question" was whether facts that occurred after the first action constituted a new injury to the plaintiffs and a new wrong by the defendant].) Rather, the "claims are premised upon and flow from" the Office's alleged breach of the agreement. (Colebrook, supra, 64 Cal.App.5th at p. 264 [it was immaterial that facts in the present lawsuit occurred after prior lawsuits, because plaintiff's claims were premised upon, and flowed from, the defendant's allegedly wrongful interference with her ownership rights in the property].) The trial court properly sustained the demurrer based on claim preclusion.
C. Leave to Amend
Zelnik contends the trial court abused its discretion in denying leave to amend. He asserts he can demonstrate that the 2019 reduction in benefits altered the relationship of the parties. Thus, he claims, amendment regarding these matters can cure the claim preclusion bar. As discussed above, he focuses on the reduction to his CalPERS and long-term disability benefits.
To satisfy the burden of demonstrating the trial court abused its discretion in denying leave to amend, "a plaintiff 'must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.' . . . The plaintiff must clearly and specifically set forth the 'applicable substantive law' [citation] and the legal basis for amendment, i.e., the elements of the cause of action and authority for it. Further, the plaintiff must set forth factual allegations that sufficiently state all required elements of that cause of action.... [¶] The burden of showing that a reasonable possibility exists that amendment can cure the defects remains with the plaintiff; neither the trial court nor this court will rewrite a complaint. [Citation.] Where the appellant offers no allegations to support the possibility of amendment and no legal authority showing the viability of new causes of action, there is no basis for finding the trial court abused its discretion when it sustained the demurrer without leave to amend." (Rakestraw v. California Physicians' Service (2000) 81 Cal.App.4th 39, 43-44 (Rakestraw).)
Zelnik's minimal discussion regarding leave to amend does not clearly identify any proposed amendments. Based on his overarching argument on appeal, we consider the following facts: As Zelnik alleged in the complaint, in April 2019 his CalPERS monthly benefits were reduced. He claims CalPERS determined that the compensation he received pursuant to the agreement from December 2017 through his resignation was not considered compensation earnable because he did not reinstate service, therefore it was excluded from his final compensation period. He did not reinstate service, he contends, per the agreement. He contends paragraph nine of the agreement-that he would perform no work for the Office until the effective date of his resignation-was the basis for CalPERS's determination to reduce his benefits. Zelnik also asserts that he learned from a CalPERS representative that the money he had received under the agreement could not be factored into his monthly benefit under CalPERS's rules. The representative also informed Zelnik that the Office had been trained on this rule and that CalPERS announced the rule in a 2016 circular letter. Additionally, he states his long-term disability benefits were reduced in November 2019, which he had alleged in the complaint.
Zelnik failed to meet his burden of proving that amendment would cure the claim preclusion bar. (Brown, supra, 247 Cal.App.4th at p. 279.) He did not explain how new facts would affect his causes of action nor identify whether he would add causes of action. He did not set forth the applicable substantive law or the legal basis for amendment. (Rakestraw, supra, 81 Cal.App.4th at p. 43.) He claims, "the reduction of his benefits in 2019 altered the relationship between the parties," but he failed to explain how the above facts had such effect. (See Union Pacific, supra, 231 Cal.App.4th at pp. 179-180 [no claim preclusion where, in the period between actions, facts materially changed or new facts occurred which altered the legal rights or relations of the parties].) He did not explain how adding these facts leads to the conclusion that his lawsuit and the Board proceeding involved different primary rights. The burden is on Zelnik. It is not our obligation to rewrite the complaint. (Rakestraw, at p. 44.)
Next, we question whether Zelnik could amend in a way that would not contradict material allegations in the operative complaint. As we discussed, Zelnik alleged the Office failed to restore his benefits "pursuant to" the agreement, and "[a]s a result," his benefits were reduced. Also, in opposing the demurrer, Zelnik's counsel declared that in conferring with opposing counsel regarding filing the operative complaint, Zelnick "also explained that the doctrine of res judicata [meaning claim preclusion] . . . did not apply to his claims because [the] causes of action were based on an alleged breach of the Settlement Agreement, not on the underlying claims that gave rise to the Settlement Agreement." Now, it appears Zelnik wishes to allege that his benefits reductions were not caused by a breach of the agreement. But he did not address any potential contradictions. (See Doe v. United States Youth Soccer Assn., Inc., supra, 8 Cal.App.5th at p. 1122 [a plaintiff may not discard or avoid factual allegations of prior complaints by making contradictory averments in an amended pleading].)
We observe that Zelnik included allegations in prior complaints regarding CalPERS informing him certain provisions of the agreement were not enforceable, which he deleted from the operative complaint. Zelnik has amended his complaint three times. In his opening brief, he contends this lawsuit is "based on facts that occurred after the December 2018 [Board] decision." (Boldface and capitalization omitted.) If that was the basis for Zelnik's lawsuit against the Office, he had multiple opportunities to state facts and causes of action based on post-Board decision events.
Finally, while we make no determination on this issue, Zelnik did not address whether an amended complaint based on allegations which occurred after the Board's decision would survive the statute of limitations. (See Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 1011 ["leave to amend need not be granted if any possible amendment would inevitably be barred by the statute of limitations"].)
Zelnik has provided no basis for us to conclude the trial court abused its discretion in denying leave to amend. (Rakestraw, supra, 81 Cal.App.4th at p. 44.)
Because the trial court properly sustained the Office's demurrer based on the doctrine of claim preclusion, we need not, and do not, discuss other grounds raised in the demurrer. (Shaw v. Los Angeles Unified School Dist., supra, 95 Cal.App.5th at p. 754.)
III. DISPOSITION
The judgment is affirmed. The Office is entitled to costs on appeal. (Cal. Rules of Court, rule 8.278(a)(2).)
WE CONCUR: HUMES, P. J., CASTRO, J. *
[*] Judge of the Alameda County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.