Collateral estoppel is no day at the beach (a lesson in appealing in a timely fashion)

Occasionally, a party will try to get around the finality of a decision by making a “collateral attack” on its validity in a separate proceeding. That can work if you are attacking the jurisdiction of the tribunal to issue the prior ruling, but otherwise . . . well, I haven’t seen it work. (But there may be a case out there.)

The plaintiffs in Bowman v. California Coastal Commission, case no B243015 (2d. Dist. March 18, 2014) were unusually imaginative in their attempt. Plaintiffs owned a coastal property. Their predecessor had applied for a coastal development permit to refurbish the residence on the property. After his death, his successors (plaintiffs) received notice that the permit had been approved on the condition that the owners offer to dedicate a lateral easement across the property. The owners did not appeal that decision.

Later, they applied for a second permit, this time to replace a collapsed barn on the property, but also including remodeling of the residence and some other improvements that had been approved in the first permit. They asked the County to remove the condition that was placed on the first permit. The County did so, but two commissioners and a couple of public interest groups appealed to the Coastal Commission, which reversed, meaning the condition stayed. The owners petitioned for administrative mandate.

The arguments the owners (SDS) had made to the commission concerned whether the easement was an appropriate condition to place on the first permit. They get nowhere, for the Court of Appeal points out that having failed to appeal that decision on the first permit, the decision — condition included — had become final, and the doctrine of collateral estoppel precluded the owners’ collateral attack on the condition.

Since they never completed the renovation authorized by the first permit, the owners argued they could avoid collateral estoppel by “walking away” from the first permit, giving Justice Gilbert an opportunity to deliver one of his typically witty lines (emphasis mine):

SDS argues, without citation to authority, that a permit applicant who is dissatisfied with a permit condition may simply “walk away” from the permit and apply for a new one. SDS may be able to walk away from the permit, but it cannot walk away from collateral estoppel.

The lesson here? If you are dissatisfied, appeal in a timely fashion. Don’t count on being able to attack any aspect of the decision in a later proceeding.

Make the argument yours, not someone else’s

You represent an appellant in a state court action who claims the action is precluded by a prior federal court action because the plaintiff split his cause of action between the two lawsuits. Your first argument is under the longstanding “primary rights” standard applied by the California courts. Your second is that the court should apply the federal “transaction” standard, which is far more favorable to your position. Only one standard can apply, and you are asking the appellate court to apply a federal standard not previously applied by the California courts. Throw into the mix the fact that the continuing vitality of the California “primary rights” standard was recently reaffirmed by the California Supreme Court, and you can see you’ve got your work cut out for you.

That is the uphill climb that appellant faced in FujiFilm Corp. v. Yang, case no. B243770 (2d Dist., Jan. 24, 2014). The Court of Appeal rejects the invitation to apply the federal “transaction” standard and holds that under the California “primary right” standard, there was no splitting of the cause of action, and thus no preclusion.

One can debate the best way to argue for application of the federal standard — if at all — in such circumstances. Perhaps unique underlying facts or the federal-state dichotomy between the two actions would give an opening to argue that the federal standard should be applied in this particular instance. But nothing like that is mentioned in the Court of Appeal’s rather uncharitable assessment of the appellant’s effort (emphasis mine):

Appellant urges that we apply the “transaction” doctrine of federal law, instead of California’s primary rights theory, to find Fuji wrongfully split its cause of action. We need not linger on appellant’s request, however, because she does not cite any California authority applying the transaction doctrine to define a cause of action. Instead of pertinent case law to support her position, her appellant’s brief relies solely on an eight-and-a-half page block quotation from a 15-year-old law review article. But our Supreme Court as recently as three years ago affirmed that the primary rights theory applies in California. [Citation.] We are not free to depart from binding Supreme Court precedent, and we decline appellant’s invitation to make new law by adopting the federal transaction doctrine. [Citation.]

That’s some quotation!

Was the appellant just trying to tee the case up for review by the California Supreme Court? We’ll see. I’ll update this post if a petition for review is filed.

UPDATE (3/28/2014): The remittitur issued today. No petition for review was filed with the Supreme Court.