Opinion
21-56239
10-18-2022
TETON GLOBAL INVESTMENTS LLC, a Wyoming series limited liability company, Plaintiff-Appellant, v. LC INVESTMENT 2010, LLC, a Delaware limited liability company; et al., Defendants-Appellees.
NOT FOR PUBLICATION
Argued and Submitted October 7, 2022 Pasadena, California
Appeal from the United States District Court for the Southern District of California Anthony J. Battaglia, District Judge, Presiding No. 3:20-cv-01756-AJB-MSB
Before: TASHIMA and McKEOWN, Circuit Judges, and BENNETT, Senior District Judge.
This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.
MEMORANDUM
This case involves the application of issue preclusion to a state court judgment granting guests of a condominium unit access to amenities at the Omni La Costa Resort & Spa ("the Resort"). Defendants-Appellees (collectively, "Omni") are three LLCs that operate the Resort. Appellant Teton Global Investments, LLC ("Teton") owns two condominiums, "Unit 6509" and "Unit 6550," at the Resort. Teton seeks a declaratory judgment that would grant a judgment of the Superior Court of California for San Diego County governing Unit 6509 (the "Judgment") preclusive effect over Unit 6550. The district court granted summary judgment to the Appellees. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.
This case turns on the application of issue preclusion, also known as collateral estoppel. The sole issue before us is whether, under the doctrine of issue preclusion, the Judgment governing Unit 6509 applies to Unit 6550, and precludes Appellees from relitigating the matter of guest access to the Resort's amenities. "The judgment giving rise to preclusion issued in a California court, so it is California law that determines the judgment's preclusive effect." Rangel v. PLS Check Cashers of Cal., Inc., 899 F.3d 1106, 1110 n.2 (9th Cir. 2018). The party invoking issue preclusion bears the burden to establish that a judgment is entitled to preclusive effect. Pac. Lumber Co. v. State Water Res. Control Bd., 126 P.3d 1040, 1054 (Cal. 2006) (citing Lucido v. Superior Ct., 795 P.2d 1223, 1225 (Cal. 1990)). "Where there is doubt about the application of issue preclusion, it should not apply." Union Pac. R.R. Co. v. Santa Fe Pac. Pipelines, Inc., 180 Cal.Rptr.3d 173, 214 (Cal.Ct.App. 2014).
"Issue preclusion prohibits the relitigation of issues argued and decided in a previous case, even if the second suit raises different causes of action." DKN Holdings LLC v. Faerber, 352 P.3d 378, 386 (Cal. 2015) (emphasis omitted). Issue preclusion "applies only '(1) after final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or one in privity with that party.'" Samara v. Matar, 419 P.3d 924, 926 (Cal. 2018) (quoting DKN Holdings, 352 P.3d at 387). "In considering whether these criteria have been met, courts look carefully at the entire record from the prior proceeding, including the pleadings, the evidence, the jury instructions, and any special jury findings or verdicts." Hernandez v. City of Pomona, 207 P.3d 506, 514 (Cal. 2009). Teton argues that the Judgment mandates that the Resort's Unit Maintenance and Operations Agreement ("UMA") includes a right of access to guest amenities and housekeeping services for guests of any unit owned by Teton, provided that Teton has paid the Resort's Fee with respect to that unit.
Teton has not carried its burden to establish entitlement to collateral estoppel. First, the issues addressed in this case are not identical to those in the prior action. "[T]he 'identical issue' requirement addresses whether 'identical factual allegations' are at stake in the two proceedings, not whether the ultimate issues or dispositions are the same." Id. at 511-12 (quoting Lucido, 795 P.2d at 1225). Teton claims that the state court determined "the right of access to guest amenities and application of standardized housekeeping charges." However, there is a crucial difference between Unit 6509 and Unit 6550: Unit 6509, the villa governed by the Judgment in the prior action, was subject to the Rental Management Agreement ("RMA"), and both parties in that case alleged concurrent violations of the RMA. Those violations were relevant to the result, as the Superior Court rendered its Judgment after finding that "both parties concurrently breached the RMA," and explained that the new rules outlined in the Judgment were necessary to allow the parties to "exist in harmony going forward."
Comparatively, the present case centers on Unit 6550, which has opted out of the RMA, and involves an allegation that the UMA itself provides a right of access. Accordingly, "the factual predicate of the legal issue decided in the prior case" is distinct from the circumstances here, precluding the application of issue preclusion. Textron, Inc. v. Travelers Cas. & Sur. Co., 259 Cal.Rptr.3d 26, 36 (Cal.Ct.App. 2020). Although both cases involve the legal question of guest access, the Superior Court's ruling on that issue is inextricably intertwined with the dual breaches of the RMA that it sought to remedy. Absent similar allegations in this case, and in the context of a unit that has waived the RMA, it is entirely unclear that the Superior Court would reach the same holding on the issue of guest access to the Resort's amenities. Accordingly, collateral estoppel is inappropriate on these grounds.
Second, Teton cannot show that the Superior Court found a right of access emanating from the UMA itself. Teton notes that the Judgment frames itself in terms of the UMA, stating that "the [UMA] is a valid contract and remains in effect," and that "[t]he parties shall abide by the following rules with respect to the UMA." Nevertheless, courts determine the preclusive effect of a prior judgment by examining "the entire record from the prior proceeding." Hernandez, 207 P.3d at 511; see also Wright & Miller, 18A Fed. Practice and Procedure § 4465 (3d ed.) ("[I]n most circumstances, a ruling by the first court that its judgment should not establish nonmutual preclusion should be honored by later courts without further inquiry."). In a September 28, 2018, hearing on the parties' objections to the Judgment, Judge Maas of the Superior Court emphasized that the Judgment was a ruling in equity, and rejected a request to read a right of access into the UMA:
[The Judgment] should not be read as [if] this is somehow applicable to everybody else. . . . I made unique orders to these parties in what was a very unique trial and finding by the Court. Since I was doing [that] in equity, I was trying to come up with a path to stop litigation and allow the parties to go forward, . . . I do not view these as a specific interpretation of the UMA. I find them as the specific orders from the Court going forward to allow these parties to live in -- or to exist in harmony going forward.
Accordingly, we hold that the issue of guest access to Resort amenities under the UMA was not "actually litigated and necessarily decided" in the prior case, Samara, 419 P.3d at 926, and that issue preclusion does not apply in this matter.
AFFIRMED.
The Honorable Richard D. Bennett, United States Senior District Judge for the District of Maryland, sitting by designation.