In Zevnik v. Superior Court, case no. B201105 (2d Dist. Jan 18, 2008), the Court of Appeal continues a string of recent cases holding (contrary to older cases) that where a trial court relies on alternative grounds, each sufficient to uphold its decision, and appellate review follows, only the ground relied on by the appellate court has collateral estoppel (issue preclusion) effect.
In Zevnik, the petitioners were lawyers sued for malpractice and breach of fiduciary duty arising out of a conflict of interest in representing multiple clients in prior litigation. Petitioners sought preclusive effect for the trial court’s findings on a disqualification motion in the prior litigation, in which the trial court had denied the disqualification motion both on the merits and on the ground of laches. The disqualification ruling had been reviewed by the Court of Appeal and affirmed, but only on laches grounds without reaching the alternate ground of the merits. Thus, the issue in Zevnik is whether collateral estoppel extends to the trial court’s findings on both the merits and laches or only to laches, the ground affirmed by the Court of Appeal. Or, as stated more generically by the court:
The issue presented here is the preclusive effect of a trial court decision based on alternative grounds, each of which was sufficient to support the decision, after an appellate court has affirmed the decision on only one of the alternative grounds without deciding the other grounds.
Addressing this issue, the court first recognizes that recent California Court of Appeal decisions extending collateral estoppel effect only to those grounds relied on by the reviewing court followed a federal case that based its holding on the “final decision” requirement for collateral estoppel effect. That is, since the trial court’s decision was appealed, it was not “final” for collateral estoppel purposes. Only the reviewing court’s judgment is final, and thus only the grounds stated in the appellate opinion should have preclusive effect.
Citing the importance of appellate review “in ensuring the reliability of a determination,” the court finds that when an appellate court does not review a particular ground for a decision, that ground is “not enhanced and is left in the same condition as if there had been no opportunity for review.” This strikes me as an odd justification, especially since the court explicitly recognizes that the principal reason a reviewing court declines to review alternative grounds for affirmance is judicial economy.
Indeed, it is interference with this judicial economy that the court fears from a contrary rule (emphasis mine):
Moreover, to accord collateral estoppel effect to alternative grounds relied on by the trial court after the appellate court affirmed on another ground and declined to review the alternative grounds would put pressure on appellate courts to review alternative grounds as a matter of course, in order to avoid the unintended consequence of establishing collateral estoppel on grounds that the appellate court did not review. This would dramatically increase the burden on appellate courts. Any benefit that might result from precluding the relitigation of issues in potential collateral litigation, which may or may not arise, would come at the cost of increasing the burden on the appellate court in the initial action. If an appellate court is aware of or anticipates collateral litigation and believes that to establish collateral estoppel on an alternative ground would be beneficial, the court may affirm the trial court judgment on more than one ground.
I think the court was wise to layout this groundwork in the emphasized portion of this excerpt. It takes care of the initial objection I had when I read the holding: I thought that the holding might encourage more appeals by losing parties who, even if they knew they would lose on appeal, might appeal in the hope of limiting the scope of the trial court decision’s collateral estoppel effect in anticipated collateral litigation. The court’s recommendation in the emphasized language alleviates this possible effect.
Advocates for respondents who anticipate collateral litigation and want the trial court ruling to have the fullest possible collateral estoppel effect should cite this passage of Zevnik and urge the Court of Appeal to consider all alternate grounds for affirmance.