Supreme Court reverses Kurwa v. Kislinger – there are limits to the manufacture of appellate jurisdiction

Even most non-appellate lawyers are familiar with the “one final judgment rule,” under which a judgment is not appealable unless it disposes of all of the claims between the parties to the appeal. Plaintiffs who have had some claims, but not all, either have to defer appellate review of the summary adjudication order until the remaining claims have been tried, or dismiss the remaining claims with prejudice so as to create a judgment that disposes of all claims and is thus appealable. (Of course, the plaintiff also has the option of petitioning for writ relief from the summary adjudication order.)

In Kurwa, the parties tried to preserve their defamation crossclaims against each other by stipulating to dismiss them without prejudice and waiving the statute of limitations, so that they could be revived after the appeal of the ruling knocking out the plaintiff’s claim for breach of fiduciary duty and related claims. Prior to the Court of Appeal decision in Kurwa, a consistent line of cases starting with Don Jose’s Restaurant, Inc. v. Truck insurance Exchange (1997) 53 Cal.App.4th 115 had held that such an arrangement did not create an appealable judgment because their was no finality in the disposition of the dismissed claims. The Court of Appeal in Kurwa, however, departed from this reasoning and concluded that dismissals without prejudice and waivers of the statute of limitations create an appealable judgment because there are no longer any claims “pending” in the trial court.

The Supreme Court reverses in a unanimous decision:

We disagree with the appellate court below, and agree with Don Jose’s and the decisions following it, including Abatti [v. Imperial Irrigation Dist. (2012) 205 Cal.App.4th 650] . When, as here, the trial court has resolved some causes of action and the others are voluntarily dismissed, but the parties have agreed to preserve the voluntarily dismissed counts for potential litigation upon conclusion of the appeal from the judgment rendered, the judgment is one that “fails to complete the disposition of all the causes of action between the parties” (Morehart [v. County of Santa Barbara], supra, [1994] 7 Cal.4th [725] at p. 743) and is therefore not appealable.

The Court of Appeal below was correct that causes of action the parties have dismissed without prejudice are no longer pending in the trial court, in the sense that no immediate action remains for the trial court to take on such counts. But where the parties, by waiver or agreed tolling of the statute of limitations or a similar agreement, have arranged for those causes of action to be resurrected upon completion of the appeal, they remain “legally alive” in substance and effect. (Hill v. City of Clovis, supra, [1998] 63 Cal.App.4th [434] at p. 445.) The rule of the lower court, under which a voluntary dismissal is considered to dispose of a cause of action regardless of any agreement facilitating its future litigation, elevates form over substance and permits parties to evade the one final judgment rule of section 904.1, subdivision (a), through what the Don Jose’s court aptly called an “artifice.” (Don Jose’s, supra, 53 Cal.App.4th at p. 116.)

The Abatti case mentioned by the Supreme Court was decided after the Court of Appeal had decided Kurwa and represents a middle ground. In Abatti, judgment was entered after the plaintiff dismissed claims without prejudice and without any waiver or tolling of the statute of limitations. This absence of an agreement assuring that the dismissed claims could be litigated following the appeal was a distinguishing feature in the eyes of the Abatti court:

[C]laims that are dismissed without prejudice are no less final for purposes of the one final judgment rule than are adjudicated claims, unless, as in Don Jose’s Restaurant and its progeny, there is a stipulation between the parties that facilitates potential future litigation of the dismissed claims.

Interestingly, the Supreme Court specifically states that it agrees with Abatti even though its Kurwa opinion explicitly limits the issue before the court to those cases that, unlike the dismissals without prejudice in Abatti, include stipulations to keep the dismissed claims alive:

This case poses the question whether an appeal may be taken when the judgment disposes of fewer than all the pled causes of action by dismissal with prejudice, and the parties agree to dismiss the remaining counts without prejudice and waive operation of the statute of limitations on those remaining causes of action.

In an amicus brief, the California Academy of Appellate Lawyers raises a point that has always bugged me. The one final judgment rule is frequently cited as a means to avoid piecemeal litigation, but that is only true of litigation in the Court of Appeal. It necessarily means that cases may have to be tried piecemeal. The Academy argued that a rule on finality should promote efficiency at the trial level as well as the appellate level by allowing the parties “as much autonomy and choice as possible.” The Supreme Court isn’t buying it:

We are not free, however, to adopt whatever rule we find best balances the interests of party autonomy or trial and appellate efficiency. Unlike jurisdictions that provide for trial courts’ selective entry of final judgments on fewer than all claims for relief (see, e.g., Fed. Rules Civ.Proc., rule 54(b), 28 U.S.C.) or for interlocutory appeals in the discretion of the reviewing court (see, e.g., 28 U.S.C. § 1292(b)), California law provides no case-by-case efficiency exception to the one final judgment rule for appealability. Where unusual circumstances justify it, review of interlocutory judgments may be obtained by petition for writ of mandate, but not by appeal. ([Code Civ. Proc.,] § 904.1, subd. (a); Morehart, supra, 7 Cal.4th at pp. 743-744.) The question is thus not what rule will best serve litigants and trial courts, but what rule is most consistent with the policy against piecemeal appeals codified in section 904.1 and vindicated in Morehart.

I think the court paints a somewhat rosy picture of writ review here by referring merely to “unusual circumstances” without mentioning that those circumstances are found present in less than 10% of writ proceedings. Nonetheless, a prospective appellant who values the claims disposed of by the trial court more than his remaining claims, but wants to keep all options open as long as possible, should consider first seeking writ review and, if unsuccessful, then dismiss his remaining claims with prejudice and appeal from the ensuing judgment

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