AP-Colton LLC v. Ohaeri

240 Cal. App. 4th 500, 192 Cal. Rptr. 3d 754, 2015 Cal. App. LEXIS 812

• Court: California Court of Appeal
• Decided: September 15, 2015
• Docket: E059505
• Status: Published

Opinion

Opinion

RAMIREZ, P. J.

Defendants Charles and Stella Ohaeri (Ohaeris) leased space for a thrift store in a shopping center owned by plaintiff AP-Colton LLC (AP-Colton). The thrift store was not a success, and the Ohaeris stopped paying rent. According to the Ohaeris, AP-Colton had fraudulently induced them to enter into the lease by stating that a church was going to move into the space next to theirs, but a competing store moved in instead.

AP-Colton originally filed the case as a limited civil action, in which damages are limited to $25,000. The Ohaeris filed a cross-complaint seeking more than $25,000, but they did not pay the $140 fee required to reclassify the case as an unlimited civil action. Thereafter, AP-Colton filed an amended complaint seeking more than $25,000; as the Ohaeris should already have paid the reclassification fee, AP-Colton did not pay it. After a bench trial, the trial court rejected the Ohaeris’ fraud claims and awarded AP-Colton $126,437.25.

The Ohaeris now contend, among other things, that the case remained a limited civil action, and thus, the trial court erred by awarding damages of more than $25,000. We do agree that the case should have remained a limited civil action. The Ohaeris, however, took the position below that the case had become an unlimited civil action, and the trial court accepted this position by awarding AP-Colton damages in excess of $25,000; we will hold that, as a result, the Ohaeris are judicially estopped to deny that the case was an unlimited civil action. Accordingly, on condition that it pays the $140 reclassification fee, AP-Colton can recover the full award.

I, II *

III

THE NATURE OF THE CASE AS A LIMITED OR UNLIMITED CIVIL ACTION

The Ohaeris contend that the trial court erred by awarding more than $25,000 in damages, because the case was filed as a limited civil action and never reclassified.

A. Additional Factual and Procedural Background.

In February 2012, AP-Colton commenced this action by filing an unlawful detainer complaint. The complaint sought damages of less than $25,000 and stated, “ACTION IS A LIMITED CIVIL CASE.” In May 2012, the Ohaeris surrendered possession of the premises. As a result, the action was converted to an ordinary civil action.

In June 2012, the Ohaeris filed a cross-complaint. The cross-complaint sought damages of $1 million and stated, “ACTION IS AN UNLIMITED CIVIL CASE.” On the same date, the Ohaeris filed applications for fee waivers, but the trial court denied them. This meant that the Ohaeris had 10 days in which to pay the reclassification fee. (Gov. Code, § 68634, subd. (g).) Nevertheless, they did not pay the reclassification fee within 10 days — or ever.

In July 2012, the Ohaeris filed a case management statement on which they checked the box for “UNLIMITED CASE.”

Later in July 2012, AP-Colton filed an amended complaint. The amended complaint sought damages of $236,390.85 and stated, “ACTION IS AN UNLIMITED CIVIL CASE.” AP-Colton did not pay a reclassification fee.* 4

On March 18, 2013, the trial court held a bench trial. On June 21, 2013, it entered judgment awarding AP-Colton $121,357.25 against the Ohaeris, plus attorney fees and costs.

B. Discussion.

Subject to exceptions not relevant here, a civil case in which the damages claimed are $25,000 or less is a limited civil action. (Code Civ. Proc., § 86, subd. (a)(1).) This includes an unlawful detainer proceeding in which the damages claimed are $25,000 or less. (Code Civ. Proc., § 86, subd. (a)(4).) In a limited civil action, the judgment cannot exceed $25,000. (Code Civ. Proc., § 580, subd. (b)(1).)

“For reclassification of a case from a limited civil case to an unlimited civil case, a fee shall be charged . . . .” (Code Civ. Proc., § 403.060, subd. (a).) “The fee for reclassification of a case from a limited civil case to an unlimited civil case ... is one hundred forty dollars ($140).” (Gov. Code, § 70619.)

“If a plaintiff . . . files an amended complaint . . . that changes the jurisdictional classification from limited to unlimited, the party at the time of filing the pleading shall pay the reclassification fee ... , and the clerk shall promptly reclassify the case.” (Code Civ. Proc., § 403.020, subd. (a).)

Similarly, “[i]f a party in a limited civil case files a cross-complaint that causes the action or proceeding to exceed the maximum amount in controversy for a limited civil case ... , the caption of the cross-complaint shall state that the action or proceeding is a limited civil case to be reclassified by cross-complaint, or words to that effect. The party at the time of filing the cross-complaint shall pay the reclassification fees . . . , and the clerk shall promptly reclassify the case.” (Code Civ. Proc., § 403.030.)

“If a reclassification fee is required and is not paid at the time an amended complaint or ... a cross-complaint ... is filed ... , the clerk shall not reclassify the case and the case shall remain and proceed as a limited civil case.” (Code Civ. Proc., § 403.060, subd. (b).)

Here, neither side ever paid a reclassification fee. Thus, the Ohaeris argue that, under Code of Civil Procedure section 403.060, subdivision (b), the case had to “remain and proceed as a limited civil case.” They assert that “[tjhe jurisdictional limit of the limited civil case is analogous to subject matter jurisdiction which cannot be waived . . . .”

The classification of a case as a limited or unlimited civil action does not go to subject matter jurisdiction. “ ‘Prior to 1998, California counties had two major designations of civil courts — the superior courts and the municipal courts, and each court system had separate subject matter jurisdiction. . . . [¶] In 1998, the California Constitution was amended to permit unification of the municipal and superior courts in each county into a single superior court system having original jurisdiction over all matters formerly designated as superior court and municipal court actions. [Citation.] After unification, the municipal courts ceased to exist. [Citations.] Now civil cases formerly within the jurisdiction of the municipal courts are classified as “limited” civil cases, while matters formerly within the jurisdiction of the superior [courts] áre classified as “unlimited” civil action[s]. [Citations.]’ [Citation.]” (Housing Authority of Monterey County v. Jones (2005) 130 Cal.App.4th 1029, 1037-1038 [30 Cal.Rptr.3d 676].)

While Code of Civil Procedure section 86 is entitled “Jurisdiction,” that is a relic of the era before trial court unification. This title was not part of the amended statute as enacted by the Legislature. (See Stats. 1998, ch. 931, § 29, pp. 6410-6412.) Thus, it is not relevant to our construction of the statute. (Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, 1096, fn. 2 [184 Cal.Rptr.3d 643, 343 P.3d 834] [“[A] provision’s title ‘is never allowed to enlarge or control the language in the body of the [provision].’ [Citations.]”].)

Pajaro Valley Water Management Agency v. McGrath (2005) 128 Cal.App.4th 1093 [27 Cal.Rptr.3d 741] is not squarely on point, but it is instructive. There, the issue was whether the judgment in a certain prior action was collateral estoppel. In that prior action, a local agency had sued a landowner (McGrath) in municipal court for unpaid “groundwater augmentation charges.” (Id. at p. 1097.) McGrath argued that the charges were illegal. (Id. at pp. 1097-1099.) The municipal court lacked jurisdiction to adjudicate the legality of a tax or assessment. (Id. at p. 1101.) Before judgment, the municipal courts were unified with the superior courts, and the case automatically became a limited civil action. (Id. at p. 1098.) However, in a limited civil action, the trial court is not supposed to adjudicate the legality of a tax or assessment. (Id. at p. 1102.) Ultimately, the court entered judgment in favor of the local agency and thus implicitly ruled that the charges were legal. (Id. at p. 1098.)

McGrath argued that the judgment in the prior action was void and therefore not collateral estoppel. (Pajaro Valley Water Management Agency v. McGrath, supra, 128 Cal.App.4th at p. 1099.) The appellate court rejected this argument: “After unification ... , the case was no longer pending before the municipal court, a court of limited jurisdiction, but before the superior court, a court of general jurisdiction, and indeed the only court in which it could now be tried. [Citations.] The court therefore did not lack the fundamental power to adjudicate the matter. [Citation.]

“It is trae that after the matter was converted to a superior court action, McGrath’s challenge to the validity of the charge continued to have some potential effect. . . . [W]hen McGrath’s answer tendered issues concerning the validity of the charges, it had the effect of potentially changing the matter from a limited case to an unlimited case. That change, however, would not affect the fundamental jurisdiction of the court; it would only relieve the parties of certain limitations affecting the manner in which the case could be adjudicated. [Citation.]” (Pajaro Valley Water Management Agency v. McGrath, supra, 128 Cal.App.4th at pp. 1102-1103.)

In this case, because subject matter jurisdiction is not involved, the Ohaeris could be judicially estopped to dispute that the case was an unlimited civil action. “Subject matter jurisdiction . . . cannot be conferred by waiver, consent, or estoppel. [Citation.]” (Sullivan v. Delta Air Lines, Inc. (1997) 15 Cal.4th 288, 307, fn. 9 [63 Cal.Rptr.2d 74, 935 P.2d 781].) By contrast, “when a court has subject matter jurisdiction over an action, ‘a party who seeks or consents to action beyond the court’s power as defined by statute or decisional rale may be estopped to complain of the ensuing action in excess of jurisdiction.’ [Citation.]” (Simmons v. Ghaderi (2008) 44 Cal.4th 570, 584 [80 Cal.Rptr.3d 83, 187 P.3d 934].)

“ ‘ “ ‘Judicial estoppel precludes a party from gaining an advantage by taking one position, and then seeking a second advantage by taking an incompatible position. [Citations.] The doctrine’s dual goals are to maintain the integrity of the judicial system and to protect parties from opponents’ unfair strategies. [Citation.] Application of the doctrine is discretionary.’” [Citation.] The doctrine applies when “(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.” [Citations.]’ [Citations.]” (People v. Castillo (2010) 49 Cal.4th 145, 155 [109 Cal.Rptr.3d 346, 230 P.3d 1132], italics omitted.)

All of the requirements of judicial estoppel were satisfied here. In the trial court, the Ohaeris took the position that the case was an unlimited civil action, which would have allowed them to recover damages in excess of $25,000. They were successful in asserting that position (although not successful in actually recovering damages), in that the trial court awarded AP-Colton damages in excess of $25,000. Now, to avoid having to pay damages in excess of $25,000, they have taken the exact opposite position. Finally, the Ohaeris have never claimed that they acted out of ignorance, fraud, or mistake.

We also note that the Ohaeris’ notice of appeal stated, “UNLIMITED CIVIL CASE.” According to the Ohaeris, the superior court clerk nevertheless routed the appeal to the appellate department of the superior court; they then affirmatively caused it to be transferred to this court on the theory that the judgment was in excess of $25,000. An appeal in a limited civil case must be taken to the appellate department, not to this court. (Code Civ. Proc., §§ 904.1, subd. (a), 904.2.) We see no reason why this would not apply to an appeal contending that the amount of damages awarded was excessive. Thus, by appealing to this court, the Ohaeris have, once again, successfully taken an inconsistent position.

The Ohaeris argue that AP-Colton knew or should have known that they had not paid the reclassification fee. While that might be relevant to equitable estoppel, it is irrelevant to judicial estoppel. “The doctrine of judicial estoppel is designed to protect the integrity of the legal system as a whole, and does not require a showing of detrimental reliance by a party. [Citations.]” (People v. Castillo, supra, 49 Cal.4th at p. 156.)

In any event, we disagree. We have found no statute or court rule that requires the clerk to notify the parties that the case has been reclassified. Quite the contrary, it is the party that causes a reclassification who is supposed to give notice. California Rules of Court, rule 2.111(11) provides: “If a case is reclassified by an amended complaint, cross-complaint, amended cross-complaint, or other pleading . . . , the caption must indicate that the action or proceeding is reclassified by this pleading. . . . The caption or title must state that the case is a limited civil case reclassified as an unlimited civil case, or an unlimited civil case reclassified as a limited civil case, or other words to that effect.”

In this case, as already noted, the Ohaeris’ cross-complaint stated, “ACTION IS AN UNLIMITED CIVIL CASE.” Admittedly, this did not comply fully with the rule, because it did not state that the case had been reclassified. Nevertheless, it was substantial compliance; it gave the necessary notice, if only in “other words to that effect.” 5

The Ohaeris argue that AP-Colton had access to the register of actions, which would have shown that the reclassification fee had not been paid. A party has no duty to keep checking the register of actions. Before the Internet, this was not reasonably feasible; and even since the Internet, no such duty has been imposed. Thus, AP-Colton could reasonably accept the Ohaeris’ representation that, after they filed their cross-complaint, the case became an unlimited civil action. 6

We are mindful that “[j]udicial estoppel is an equitable doctrine, and" its application, even where all necessary elements are present, is discretionary. [Citations.]” (MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 422-423 [30 Cal.Rptr.3d 755, 115 P.3d 41].) We do not mean to allow parties to reclassify an action as an unlimited civil action collusively, simply by labeling it as such, without paying the necessary reclassification fee. The reclassification fee requirement was “established for a public reason,” and thus it “cannot be contravened by a private agreement.” (Civ. Code, § 3513.)

As a court of equity, to prevent collusion and to protect the public fiscal interest at stake, we conclude that the application of judicial estoppel in this case should be made conditional on AP-Colton’s payment of the $140 reclassification fee. Subject to that condition, however, we hold that the trial court properly entered judgment in excess of $25,000.

IV

DISPOSITION

The judgment is affirmed, on the condition that AP-Colton pays the $140 reclassification fee within not more than 10 days after the issuance of our remittitur. If AP-Colton fails to pay the reclassification fee in a timely manner, the judgment is reversed and the trial court is directed to enter a new judgment reducing the amount of the damages awarded to $25,000. AP-Colton is awarded costs on appeal against the Ohaeris.

Hollenhorst, J., and McKinster, J., concurred.

* See footnote, ante, page 500.

4 In a declaration in opposition to the Ohaeris’ subsequent motion for new trial, an attorney for AP-Colton testified, “I reasonably assumed that [the Ohaeris] paid the reclassification fee at the time they filed their Cross-Complaint, or else that the fee was waived due to one of [the Ohaeris’] several fee waiver requests.”

5 This is particularly true because the Ohaeris were in propria persona at the time. AP-Colton could reasonably assume that the Ohaeris failed to comply with the notice requirements of California Rules of Court, rule 2.111 through mere ignorance.

6 For this reason, it seems likely that, in addition to judicial estoppel, equitable estoppel would also apply. However, we need not decide this question.