Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County No. GIC871259, Linda B. Quinn, Judge.
McDONALD, J.
In August 2006 Citizens for Responsible Equitable Environmental Development (CREED), along with Affordable Housing Coalition of San Diego County (AHC), filed this action seeking a writ of mandate, along with declaratory and injunctive relief, alleging 57 separate condominium conversion projects had been improperly approved by the City of San Diego (City). CREED alleged that each project was approved in violation of the Subdivision Map Act (SMA), the San Diego Municipal Code (SDMC), and the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) (CEQA). CREED sought a judgment nullifying the approvals and requiring City to conduct further administrative reviews, including CEQA review, before these projects are approved.
AHC and CREED were petitioners and plaintiffs in the action, and are co-appellants. On appeal, City challenged AHC's ability to prosecute the appeal on the ground that AHC's corporate privileges had been suspended, and filed a request for judicial notice, which we hereby grant, demonstrating that during the pendency of this appeal AHC's corporate standing was suspended. However, AHC has subsequently provided documentation showing it has been revived and is active, permitting it to prosecute the appeal. For ease of reference, we employ the term "CREED" to apply to both CREED and AHC.
During the next two years, CREED added numerous new parties (apparently as real parties in interest) through Doe amendments, dismissed all claims against numerous real parties in interest (some of which were apparently dismissed based on settlements), dismissed some of the claims against several other real parties in interest, and sought default judgments against other persons and entities. However, in briefs filed in advance of the May 2008 hearing on CREED's non-CEQA causes of action, and again at the hearing itself, City argued the action should be dismissed because CREED could not demonstrate that all indispensable parties had been brought before the court. The court agreed with City, and ultimately dismissed the petition with prejudice because CREED had not established that all parties who would be affected by a judgment had been brought before the court. On appeal, CREED argues dismissal of its action was error.
CREED also asserts that, because dismissal of all or part of its action was error, City's memorandum of costs should have been stricken as premature. However, CREED concedes that its argument regarding the prematurity of City's memorandum of costs necessarily fails if we affirm the order of dismissal. Because we conclude the dismissal was not an abuse of discretion, we do not further discuss the prematurity argument.
I
FACTUAL AND PROCEDURAL BACKGROUND
A. The Lawsuit
CREED filed this action in August 2006. CREED alleged 57 separate condominium conversion projects (identified by project number) had been improperly approved by City. The named defendants included City and the owners of all 57 of the identified projects. CREED also alleged numerous Doe defendants had an ownership or other cognizable interest in one or more of the identified conversion projects.
CREED alleged each project was approved based in part on the determination that the conversion was exempt from CEQA, and that determination violated CEQA because the conversions had significant direct, indirect and cumulative adverse impacts. CREED also alleged the approvals violated both the SMA and the SDMC because the requisite findings made as to each project did not have sufficient evidentiary support. CREED's CEQA claim sought a declaration that the conversion approvals were null and void, and that each project be subjected to CEQA review in connection with the application for approval of the conversion project and an injunction enjoining City from approving the projects until City complied with CEQA. CREED's claims under the SMA and SDMC similarly sought a declaration vacating City's approvals as null and void for not complying with the SMA and SDMC, requiring each project be reviewed in compliance with the SMA and SDMC, and enjoining City from approving the projects until City complied with those statutory schemes.
B. Pre-hearing Events
Shortly after filing the action, CREED began adding parties through Doe amendments. During the next 20 months, new parties were added, existing parties were subtracted (through dismissals entered both with and without prejudice), some defendants had default judgments entered against them (although some of those defaulted defendants later appeared after previously entered defaults were set aside by stipulation), and some defendants entered stipulated settlements. Indeed, the continued uncertainty of the identities of the real parties in interest and defendants was apparently ongoing throughout the litigation, as CREED continued to name additional parties (pursuant to Doe amendments) at least through the end of May 2008, and to seek default judgments against some defendants as late as the end of August 2008.
C. The Hearings and Ruling
In January 2008 the court heard and denied CREED's motion for judgment on the pleadings. The court also ordered trial on the SMA and SDMC claims bifurcated from, and tried prior to, trial of the CEQA claim. The court scheduled trial of the SMA and SDMC claims (the Phase I trial) for April 2008, and set a briefing schedule for the Phase I trial. As of the January 2008 hearing, there were at least 24 named real parties in interest, related to many of the 57 projects, involved in the litigation.
CREED filed an opening brief for the Phase I trial at the end of February 2008. In City's opening brief for the Phase I trial, City asserted (among other things) CREED had not shown that all parties affected by the requested judgment were before the court. Accordingly, City asserted that even if the court was inclined to grant some or all of the requested relief, the court should defer doing so until CREED demonstrated that all affected parties had been brought before the court. CREED's reply asserted that every remaining real party in interest had been identified (both by name and project number) in its opening brief and, except as to three real parties in interest for whom settlements were pending, CREED sought judgment against all of the parties and projects identified in its opening brief. Approximately one week before the scheduled hearing on the issues to be determined in the Phase I trial, CREED filed an Update of Party Status that showed only 10 real parties in interest remained as current parties.
It appears that, even in the one month between the January 2008 hearing and the February 2008 filing of Creed's opening brief, the real-party-in-interest defendants remained in flux.
City noted CREED had entered requests for defaults as to 12 real parties in interest but none had been entered, and other real parties in interest had been served but had neither answered nor been defaulted. More importantly, City asserted CREED had not alleged that each owner of an interest in the various projects subject to CREED challenges had been served and brought into the action, and City believed there were persons or entities who owned interests in the various projects but were not in the action and would not be bound by any judgment.
However, a few days before the hearing, City filed an amended answer asserting the action was barred because CREED failed to join all persons who owned interests in the projects and who would be affected by the judgment; City's amended answer listed 19 sets of persons or entities who City alleged, on information and belief, had acquired interests in the projects but had not been named and/or served. City also filed a request for judicial notice in advance of the hearing that requested judicial notice of 25 deeds conveying interests in the projects from the named project developers to third parties.
The hearing on the Phase I trial was conducted on May 19, 2008. Although the court's tentative ruling was to grant the request for a writ of mandate, City at oral argument again asserted CREED had not shown that all indispensable parties had been identified and made parties to the action. City argued there were at least four projects that remained in the action as challenged projects (project Nos. 71366, 76894, 83377 & 76942) as to which there were numerous subsequent grantees who had never been served or made parties to the action, and the court was required either to compel the plaintiff to bring those persons or entities before the court or to dismiss the action. CREED represented that several of the projects had settlements in progress (which CREED expected would be final and result in dismissals as to such projects by the end of May 2008), and therefore asserted there were only two projects (Nos. 83377 & 71366) on which there were potential indispensable parties who had not been joined. CREED suggested the court could delay the hearing for a short period to allow CREED the opportunity to serve the unjoined indispensable parties.
The tentative ruling would have invalidated the approvals as to those challenged projects remaining in the action, and required City to hold appeal hearings under the SMA and SDMC on non-CEQA grounds for those projects.
Apparently, a fifth project identified by City's amended answer as presenting indispensable party issues (project No. 83646) had settled with CREED and was awaiting documentation and dismissals.
CREED argued the subsequent transferees of another project (project No. 4165) did not need to be joined because, CREED asserted peremptorily, these were fraudulent transfers.
The court stated it would postpone any order "for the settlements and to--if you're going to pursue other parties, indispensable parties, then you've got 30 days to do it." The court later reiterated that it was taking the matter under submission "for two purposes; [one] is in regard to the pending settlements, and the other is to review the documents in light of the arguments that have been made as to [the subsequent transferees of the remaining challenged projects]."
D. Post-hearing Events, Rulings and Motions
CREED began serving numerous new parties after the May 19, 2008, hearing, as well as processing dismissals of other parties previously served. However, on June 19, 2008, the court issued its ruling that denied the petition because CREED "has failed to establish that all affected parties have been brought before the Court."
CREED moved ex parte for "clarification" of the order. At the July 8, 2008, ex parte hearing, CREED filed a document purporting to list all parties who had been served and had either answered or been defaulted (as well as other parties who had been dismissed), but CREED's counsel conceded at the hearing that the list could be incorrect and he was not certain of the precise number of purchasers who might be indispensable parties. The court subsequently issued a minute order clarifying that its reference to "affected parties" in the June 19, 2008, ruling meant "indispensable parties," and that it had denied the petition because CREED had failed to "present adequate proof at trial that all indispensable parties have been joined in the case."
City filed its memorandum of costs on July 23, 2008. CREED moved to strike the cost bill on the ground that it was premature, asserting (among other things) that because CREED's CEQA claim had been bifurcated from the claims adjudicated in the Phase I trial, there was not yet a judgment because the CEQA claim remained outstanding. At the next hearing on September 5, 2008, at which the court heard both CREED's motion to strike and City's application for an order dismissing the entire action with prejudice, CREED's counsel again expressed uncertainty over the identity of all indispensable parties and/or whether those parties had been brought before the court. At the end of the hearing, CREED's counsel suggested that he could "propound some discovery on the City... to find out whether [the projects that remained in the case] have received their final maps [and then] go try to do a search of public records to see if they have conveyed any of those properties" to assess whether all indispensable parties were before the court. The court, after noting it was "amazed that that hasn't been done so far," stated it would take all of the motions under submission. The court ultimately ruled the absence of indispensable parties also supported dismissal of the CEQA claim, dismissed the action with prejudice, and denied the motion to strike City's memorandum of costs.
The identities of the real parties in interest and defendants apparently continued in flux even after the July 9 clarification, because CREED continued to seek entry of defaults against several of the newly served buyers. Indeed, as late as August 19, 2008, CREED was still filing proofs of service of summons and seeking defaults as to two different indispensable parties.
ANALYSIS
A. The Order Dismissing the SMA and SDMC Claims
Legal Standards
The parties agree on the applicable legal principles governing indispensable parties. Under Code of Civil Procedure section 389, a person must be made a party of a proceeding if "(1) in his absence complete relief cannot be accorded among those already parties or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest." (Id. at subd. (a).) If a person is determined to qualify under one of the standards outlined above, and that person remains absent, "the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed without prejudice, the absent person being thus regarded as indispensable. The factors to be considered by the court include: (1) to what extent a judgment rendered in the person's absence might be prejudicial to him or those already parties; (2) the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; (3) whether a judgment rendered in the person's absence will be adequate; (4) whether the plaintiff or cross-complainant will have an adequate remedy if the action is dismissed for nonjoinder." (Id. at subd. (b).) We review a trial court's ruling on whether a party is indispensable, and whether his or her absence supports dismissal, under the deferential abuse of discretion standard. (Deltakeeper v. Oakdale Irrigation Dist. (2001) 94 Cal.App.4th 1092, 1106.)
Analysis
City argues, and CREED does not dispute, that because the gravamen of CREED's non-CEQA claims sought to invalidate the approvals for each project (and to require each invalidated project be subjected to a new review process that complied with the SMA and SDMC), all persons who had acquired an interest under the final maps recorded in reliance on the approvals were indispensable parties. The evidence submitted at trial by City showed, at a minimum, CREED had not ensured (prior to the Phase I trial) that numerous individuals who had acquired interests in various projects had been joined. Moreover, although the court granted CREED an additional 30 days to cure its failure to join all indispensable parties, the record submitted on appeal does not reflect whether service on all the individuals specifically identified during the May 2008 hearing resulted in appearances or defaults. More importantly, the record on appeal provides substantial evidence from which the trial court could conclude that, even as late as September 2008 (well after any deadlines set by the court had passed and months after the court had ruled dismissal was the appropriate remedy for failure to join indispensable parties), CREED was still unable to demonstrate that it had joined every subsequent grantee (much less every interest holder) for every project not dismissed by CREED.
Although the parties appear to assume it would have been sufficient for CREED to have served the purchasers of each condominium, we are not as sanguine, because it is likely that each purchaser's interest was hypothecated to a purchase money lender, and there is no evidence any of the lenders were named or served with CREED's lawsuit that (if successful) could have threatened to eliminate their security interest in the properties.
We recognize that a plaintiff's failure to join an indispensable party " 'is not "a jurisdictional defect" in the fundamental sense [because] even in the absence of an "indispensable" party, the court still has the power to render a decision as to the parties before it which will stand. [Instead, it] is for reasons of equity and convenience, and not because it is without power to proceed, that the court should not proceed with a case where it determines that an "indispensable" party is absent and cannot be joined. [Citation.]' [Citation.]" (Save Our Bay, Inc. v. San Diego Unified Port Dist. (1996) 42 Cal.App.4th 686, 692 [quoting Sierra Club, Inc. v. California Coastal Com. (1979) 95 Cal.App.3d 495, 500.)
"Whether to dismiss an action for failure to name an indispensable party is subject to the discretion of the court." (Tracy Press, Inc. v. Superior Court (2008) 164 Cal.App.4th 1290, 1299.) In Tracy Press, the court evaluated four factors to determine whether the dismissal of the action should be reversed for abuse of discretion: whether there would be prejudice to the person not joined, whether the court could design protective provisions to mitigate that prejudice, whether any order rendered in the non-party's absence would be adequate, and the adequacy of the remedy available to the plaintiff. (Id. at pp. 1298-1302.) The Tracy Press court concluded the order of dismissal was not an abuse of discretion because (1) there would be potential prejudice to the unjoined party, (2) the plaintiff "suggests no method by which we could enter an order in favor of [plaintiff] but, at the same time, protect [the unjoined party's] interests" (id. at p. 1300), and (3) any order entered in the absence of the unjoined party would be inadequate and create confusion and potentially conflicting orders. (Id. at p. 1301.) While the Tracy Press court acknowledged that the final factor weighed against dismissal, because "failure to name an indispensable party leaves [plaintiff] without a remedy[,] [t]his situation... is of [plaintiff's] own making and, therefore, does not weigh in favor of a determination on the merits." (Id. at p. 1302.)
The same analysis convinces us that the order here was not an abuse of discretion. If the court had attempted to proceed and entered an order vacating all of the approvals, there would be potential prejudice to unjoined parties by threatening to cloud the validity of the deeds (as well as a lender's security interest) that rested on the approvals, and CREED "suggests no method by which we could enter an order in favor of [CREED] but, at the same time, protect [the unjoined party's] interests." (Tracy Press, Inc. v. Superior Court, supra, 164 Cal.App.4th at p. 1300.) Additionally, any order rendered in the absence of all interest holders in all of the projects remaining under challenge would be inadequate because it would not have bound any unjoined interest holder (and therefore would be subject to relitigation in multiplicitous suits by each interest holder that potentially could render futile any judgment entered in this proceeding) and would have caused substantial confusion as to the validity of multiple conveyances. (Cf. Kraus v. Willow Park Public Golf Course (1977) 73 Cal.App.3d 354, 368-369 [indispensable party doctrine is not a jurisdictional defect but instead is rooted in the underlying policy considerations of avoiding piecemeal litigation, multiplicity of suits and entering futile judgments].) Finally, although CREED complains that dismissal should only have been entered as to projects on which there were potentially absent indispensable parties, and not as to CREED's entire action, CREED elected to structure its action in a manner that pleaded its SDMC and SMA claims against multiple projects as a group rather than filing individual actions against each project, and took no steps to enjoin subsequent transfers by the project developers, which created the morass in which a constantly evolving list of potentially affected persons and entities would become indispensable parties. Because the problems engendered by CREED's procedural choices was a situation of its own making (Kraus v. Willow Park Public Golf Course, supra, 73 Cal.App.3d at pp. 368-369), the fact that dismissal rendered inadequate the remedy available to CREED does not alone make the dismissal order an abuse of discretion.
We are cited nothing on appeal suggesting CREED sought leave to amend its action to segregate projects as to which CREED could prove that all interest holders had been joined from projects on which CREED was uncertain whether potentially impacted persons and entities had been joined, and to proceed only as to the former projects. Accordingly, CREED cannot complain on appeal that the court abused its discretion by not sua sponte ordering such amendment and limiting dismissal to the latter projects.
CREED finally asserts that, even if dismissal of its action was not an abuse of discretion, the order was erroneous insofar as it dismissed CREED's action with prejudice. CREED is correct: when a defendant asserts (and the court finds) indispensable parties are absent, "the court shall determine whether... the action should proceed among the parties before it, or should be dismissed without prejudice." (Code Civ. Proc., § 389, subd. (b), italics added.) Accordingly, we order that on remand the court amend its judgment to order the action dismissed without prejudice and affirm the judgment as amended.
City asserts that, even if it was error to order the action dismissed with (rather than without) prejudice, it is harmless because the expiration of the statute of limitations would bar CREED from resurrecting its action. However, because a defense of limitations can be waived (3 Witkin, Cal. Procedure (5th ed. 2008) Actions, § 440, pp. 560-561), or may otherwise be tolled (id. at § 738 et seq., p. 962 et seq.) under disparate circumstances, we will not speculate on whether CREED could successfully resurrect its action.
B. The Order Dismissing the CEQA Claim
CREED's opening brief on appeal asserted that, even if the SMA and SDMC claims were properly dismissed, it was improper to dismiss the CEQA claim based on the absence of indispensable parties. CREED's opening brief argued a CEQA claim may be pursued as long as the lawsuit names "as a real party in interest, any recipient of an approval that is the subject of an action or proceeding [under CEQA]" (Pub. Resources Code, § 21167.6.5, subd. (a), italics added), and further provides "[f]ailure to name potential parties, other than those real parties in interest described in subdivision (a), is not grounds for dismissal pursuant to Section 389 of the Code of Civil Procedure." (Pub. Resources Code, § 21167.6.5, subd. (d).) CREED asserted that because it named and joined each project, and only the individual project was a "recipient of the approval," the fact that subsequent persons acquired ownership interests does not render those subsequent owners indispensable parties for purposes of CREED's CEQA claim.
However, City's opening brief noted that, in County of Imperial v. Superior Court (2007) 152 Cal.App.4th 13, the court construed the provisions of Public Resources Code section 21167.6.5, subdivision (a), as encompassing not merely the formal applicants for the project receiving CEQA approval, but also third parties who were not the named recipients of the approval but were nevertheless contemplated to be direct beneficiaries of the project approval. (County of Imperial, at pp. 32-34.) Because these third parties were deemed to have been recipients of the challenged approval within the contemplation of section 21167.6.5, subdivision (a), the County of Imperial court then examined whether the failure to name the third parties would permit dismissal pursuant to Code of Civil Procedure section 389, subdivision (b). The court concluded the factors supported the discretionary determination to dismiss the CEQA claim because (1) an adverse determination on the approval would prejudice the third parties (§ 389, subd. (b), factor (1)) by eliminating the contemplated benefits they would receive under the approved project; (2) there was no suggested method of lessening the prejudice (§ 389, subd. (b), factor (2)); and (3) the disparate and potentially conflicting interests between the joined and unjoined defendants supported the conclusion that a judgment entered in the absence of the third parties could inadequately protect the third parties' interests (§ 389, subd. (b), factor (3)). (County of Imperial, at pp. 35-38.) The County of Imperial court, after also concluding the plaintiff had alternative remedies available, ruled dismissal was not an abuse of discretion. (Id. at pp. 39-41.)
We agree with City that the subsequent transferees of interests in the projects, whether viewed as successors in interest to the recipients of the CEQA approvals or as parties falling within County of Imperial's analysis for contemplated direct beneficiaries of the project approval, are recipients within the contemplation of Public Resources Code section 21167.6.5, subdivision (a). CREED's reply brief in effect concedes the subsequent transferees of interests in the projects were recipients within the contemplation of Public Resources Code section 21167.6.5, subdivision (a), because CREED's principal argument against dismissal of the CEQA claims is that many of the subsequent transferees were joined and hence dismissal as to them was improper. However, we are not persuaded by that argument because CREED did not seek below to amend its complaint to separately assert CEQA claims against each individual project (see fn. 10), and CREED has not articulated how--even if CREED had amended its complaint to direct its CEQA claim at each individual project--a CEQA claim could have been pursued against some of the subsequent transferees of interests in that project when other interest holders in the same project might not have yet been joined.
In its reply brief, CREED also asserts for the first time on appeal that its CEQA claim was improperly dismissed because CREED should have been provided additional time to locate and serve any subsequent transferees not joined as of the date of dismissal of the CEQA claim. We do not consider arguments raised for the first time in reply briefs. (City of Oakland v. Hassey (2008) 163 Cal.App.4th 1477, 1490.)
DISPOSITION
The trial court shall amend the judgment to reflect that the action is dismissed without prejudice and, as so modified, the judgment is affirmed. City is entitled to costs on appeal.
WE CONCUR: HALLER, Acting P. J., AARON, J.