Garret Murai | California Construction Law Blog
Generally, I think restraint in litigation is a good thing. Don’t go crazy on your claims, don’t go nut-so in your discovery, and don’t present your case at trial in a way that causes the judge and/or jury to raise their eyebrows or shake their heads in disbelief. But, as with nearly everything, there’s always an exception. One of which is: don’t hold back on a claim because you “think” you might be able to bring it later, because you might not be able to as the next case, 5th and LA v. Western Waterproofing Company, Inc., 87 Cal.App.5th 781 (2023), demonstrates.
The 5th and LA Case
At the outset, let me first say how much I enjoyed reading this case based on the writing alone. The case, as the 2nd District Court of Appeals states, involves “a second lawsuit about an increasingly leaky roof.”
In 2012, property owner 5th and LA hired roofing contractor Western Waterproofing Company, Inc. to remove and recoat a parking lot that served also served as the roof over retail and office space below. Western completed its work in July 2012 and almost immediately 5th and LA noticed water that the coating was failing causing water leaks to the interior of the building.
In October 2013, 5th and LA filed suit against Western alleging breach of express and implied warranties. The case went to trial in 2015, by which time, the roof had about ten leaks. At trial, Western admitted errors in its work, including improper ordering and timing of material applications, but argued that 5th and LA had not shown that the leaks were the result of these errors.
One would think that Western would have lost, guilt by claim association or something along those blurry lines, but it didn’t. Rather, the jury found that: (1) Western provided a warranty for its work; (2) the coating did not perform as promised within the warranty period; (3) 5th and LA took reasonable steps to notify Western that the coating was not performing as promised; and (4) 5th and LA was harmed; BUT (5) the coating failure was not a substantial factor in causing the harm.
5th and LA appealed but the verdict was upheld in an unpublished decision by the 2nd District Court of Appeals which held that 5th and LA had never explicitly said that issues with the coating caused the leaks and Western’s expert identified possible sources of leaks other than the coating such as gaps in door frames and cracks in masonry and stucco. End of Act 1.
In January 2020, 5th and LA filed a second lawsuit against Western claiming that the roof now had about 50 leaks “all due to failures of labor (workmanship) by [Western].” Western in turn filed a motion for summary judgment claiming that 5th and LA’s second lawsuit was barred under the doctrine of claim preclusion . The trial court agreed, finding that 5th and LA was suing on the same primary right: “for [Western} to honor its warranty for the work it did in 2012.” 5th and LA appealed again.
On appeal, the 2nd District Court of Appeal held that “claim preclusion bars the owner’s second suit” explaining that:
Claim preclusion bars a new lawsuit if the first case had (1) the same cause of action; (2) between the same parties, or parties in privity; and (3) a final judgment on the merits. Following our Supreme Court’s lead, we refer to this doctrine as “claim preclusion,” not “res judicata.” The doctrine promotes judicial economy by preventing claim splitting. It requires all claims based on the same cause of action, which were or could have been raised, to be decided in a single suit.
But, explained the Court of Appeal, “[t]his issue can be knotty.” “Reigning doctrine tells us that, in applying th[e] first element, courts must discern whether the lawsuits involve the same ‘primary right’ — the plaintiff’s right to be free from the injury suffered — and breach of duty.”
Here, held the Court of Appeal, the claimed harm involved the same “primary right” in both the first and second lawsuit, namely, 5th and LA’s right to be free of harm from Western’s materials and labor. “The first suit,” explained the Court, “found [Western’s] installation did not harm [5th and LA]. [Western] has not performed new work since that single transaction. There is no new breach. [5th and LA] litigated problems with [Western’s] workmanship in the first suit, which resolved the issue.”
Further, explained the Court of Appeal, “changed conditions or new facts are not, by themselves, enough”:
New leaks are pertinent only if the owner asserts they are from a cause the owner did not know about and could not have known about in its first lawsuit. The complaint does not make this allegation. . . . “We can conceive of no logical reason’ why the first suit should encompass the first leaks but not the later ones. That is, whatever physical cause accounted for the first leaks apparently is still at work, but the first suit settled the liability for that physical cause. The second suit simply tried to relitigate a resolution the owner disliked and would prefer to escape. Claim preclusion bars this repetitive attack on finality.”
(emphasis in original).
Finally, noted the Court of Appeal, while the Supreme Court has written that “the primary right theory is notoriously uncertain in application” and legal scholars have stated that “no one knows what it means in practice,” lower courts (i.e., the Courts of Appeal) must follow the guidance of the Supreme Court, and that analyses “buttresses the conclusion that the first judgment bars this second suit.”
So there you have it folks. Or, perhaps, there you don’t have it. If a subsequent claim is based on a “primary right” previously adjudicated, the subsequent suit will be barred under the doctrine of claim preclusion, although no one really knows how to apply it in practice, until of course, you have to.
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