Eichman I On July 31, 1973, Eichman sued Fotomat in California State Superior Court in San Bernardino County ( Eichman I). Eichman v. Fotomat Corp., 147 Cal.App.3d 1170, 197 Cal.Rptr. 612 (1983). Eichman alleged that Fotomat breached the franchise agreement and violated California's Unfair Trade Practices Act, Cal.Bus. Prof.Code § 17200 et seq. 147 Cal.App.3d 1170, 1173, 197 Cal.Rptr. 612. Eichman alleged that Fotomat sold photoprocessing to Eichman's franchise store at prices higher than the prices available to company stores, failed to advertise properly for franchise stores, placed company stores unreasonably close to Eichman's store, and fraudulently induced Eichman to enter into the franchise agreement by representing that Fotomat's company stores would not compete with Eichman's store. 147 Cal.App.3d at 1173, 197 Cal.Rptr. 612.

On October 14, 1983, the Court of Appeal affirmed the Superior Court judgment. Eichman v. Fotomat Corp., 147 Cal.App.3d 1170, 197 Cal.Rptr. 612 (1983). Eichman's suit before us here ( Eichman III) was filed in the United States District Court for the Southern District of California on June 19, 1981.

We find Eichman v. Fotomat Corp. (1983) 147 Cal.App.3d 1170, 1176 (Eichman) particularly instructive. There, franchisees filed two suits against their franchisor.

“If those requirements are satisfied, res judicata applies not only to the issues actually litigated in the prior proceeding, but also to those issues that could have been litigated in that proceeding.” Id.; see also Eichman v. Fotomat Corp., 147 Cal.App.3d 1170, 1175, 197 Cal.Rptr. 612 (1983) (judgment “bars consideration not only of all matters actually raised in the first suit but also all matters which could have been raised”). With respect to the definition of a “cause of action” to which res judicata principles may apply, “California's res judicata doctrine is based upon the primary right theory.”

Regarding the first prong, "[i]f two actions involve the same injury to the plaintiff and the same wrong by the defendant, then the same primary right is at stake even if in the second suit the plaintiff pleads different theories of recovery, seeks different forms of relief and/or adds new facts supporting recovery." Eichman v. Fotomat Corp., 147 Cal. App. 3d 1170, 1174 (Ct. App. 1983). Furthermore, "[a] final judgment is on the merits for the purposes of res judicata 'if the substance of the claim is tried and determined . . . .'"

"California law approaches the [cause of action] issue by focusing on the 'primary right' at stake: if two actions involve the same injury to the plaintiff and the same wrong by the defendant then the same primary right is at stake even if in the second suit the plaintiff pleads different theories of recovery, seeks different forms of relief and/or adds new facts supporting recovery." Eichman v. Fotomat Corp., 147 Cal. App. 3d 1170, 1174 (1983) (citing Slater v. Blackwood, 15 Cal. 3d 791, 795 (1975)). "If the same primary right is involved in two actions, judgment in the first bars consideration not only of all matters actually raised in the first suit, but also all matters which could have been raised."

SAME CAUSE OF ACTION INVOLVED Under California law, res judicata bars all claims that were litigated, as well as every claim that might have been litigated, in the first action.See Eichman v. Fotomat Corp., 147 Cal.App.3d 1170, 1175, 197 Cal.Rptr. 612, 614 (1983). As the court in Eichman stated:

Although plaintiff alleged different legal theories in her federal action and instant action, the two complaints nevertheless are founded on the same primary right and injuries. (Ibid.; Mycogen, supra, 28 Cal.4th at p. 904; Eichman v. Fotomat Corp. (1983) 147 Cal.App.3d 1170, 1174 (Eichman) ["If two actions involve the same injury to the plaintiff and the same wrong by the defendant then the same primary right is at stake even if in the second suit, the plaintiff pleads different theories of recovery, seeks different forms of relief and/or adds new facts supporting recovery."].) Plaintiff alleged in both actions that defendants Ocwen, Deutsche Bank, and WPL wrongfully and illegally attempted to collect plaintiff's mortgage debt and exercise the power of sale under the deed of trust, without authority to do so. Plaintiff alleged in both actions that Ocwen and WPL had no right to possession of the Property and the mortgage debt was not legally transferred, conveyed, or assigned to Ocwen, Deutsche Bank, or WPL.

As Newport Crest points out, the doctrine of res judicata may apply when one lawsuit is resolved by way of settlement and another lawsuit is brought thereafter. (Villacres v. ABM Industries Inc., supra, 189 Cal.App.4th at pp. 577, 592-593; Eichman v. Fotomat Corp. (1983) 147 Cal.App.3d 1170, 1177.) For example, in Eichman v.Fotomat Corp., supra, 147 Cal.App.3d 1170, a second lawsuit by franchisees against a franchisor was barred where judgment had been entered upon the parties' settlement in the first lawsuit and the second lawsuit was based upon acts which occurred before that judgment was entered.

The fact appellant included various theories of recovery (i.e., breach of contract, conversion, common counts, declaratory relief) does not change the primary right at issue in the action. (4) As the court observed in Eichman v. Fotomat Corp. (1983) 147 Cal.App.3d 1170 [ 197 Cal.Rptr. 612], ". . . if two actions involve the same injury to the plaintiff and the same wrong by the defendant then the same primary right is at stake even if in the second suit the plaintiff pleads different theories of recovery, seeks different forms of relief and/or adds new facts supporting recovery." ( Eichman v. Fotomat Corp., supra, 147 Cal.App.3d at pp. 1174-1175.)