Petition for Writ of Certiorari — Cullen v. Trainor

Supreme Court brief1994

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IN THE

SUPREME COURT OF THE UNITED STATES

October, 1992, Term

MARK T. CULLEN

PETITIONER

vs.

TRAINOR, ROBERTSON, SMITS & WADE, ET. AL.,

RESPONDENTS

PETITION FOR REVIEW

To The Supreme Court of the State of

California

PETITION FOR WRIT OF CERTIORARI

MARK T. CULLEN

P.O. Box 1215

Shingle Springs, CA 95682

(916) 933-3112

PETITIONER, IN PRO SE

QUESTIONS PRESENTED FOR REVIEW

A. Whether California’s statute of

limitation for legal malpractice (Civil Code of

Procedure §340.6) is unconstitutional as it

violates due process since the statute is vague

as to the meaning of “actual injury".

B. Whether a partnership is a separate

legal entity, and if so, should the appellate

court differentiate a partnership cause of

action from an individual cause of action as it

relates to the statute of limitations for legal

malpractice under Civil Code of Procedure

§340.6.

C. Whether petitioner has been denied due

process and equal protection of the law since

the lower courts have barred petitioner

from bringing a cause of action for fraud

against respondents.

TABLE OF CONTENTS

OPINIONS BELOW ... + « «© «© «© «© © © « « 1

St de Cs a a a a 1

CONSTITUTIONAL PROVISIONS INVOLVED... 2

STATEMENT OF THE CASE . ..-. « « «© © «© « « 2

A. The underlying Housing

Authority v. Cullen Claim... 3

B. The underlying legal malpractice

and fraud claims by petitioner

against respondents ..... .- 19

C. The Court of Appeal’s first

decision in Cullen v. Trainor . 23

D. The Court of Appeal’s Second

Decision in Cullen v. Trainor . 24

REASONS FOR GRANTING WRIT .. +. + «© « « « 26

II.

CALIFORNIA’S STATUTE OF LIMITATION FOR

LEGAL MALPRACTICE (CIVIL CODE OF

PROCEDURE §340.6) IS UNCONSTITUTIONAL

AS IT VIOLATES DUE PROCESS SINCE THE

STATUTE IS VAGUE AS TO THE MEANING OF

"ACTUAL INJURY" . . «© « «© «© «© «© « « 26

SINCE A PARTNERSHIP IS A SEPARATE LEGAL

ENTITY THE APPELLATE COURT FAILED TO

DIFFERENTIATE A PARTNERSHIP CAUSE OF

ACTION FROM AN INDIVIDUAL CAUSE OF

ACTION AS IT RELATES TO THE STATUTE OF

LIMITATIONS FOR LEGAL MALPRACTICE UNDER

C.C.P. §340.6 . « « « «© «© © © © © «© 37

III. PETITIONER HAS BEEN DENIED DUE PROCESS

AND EQUAL PROTECTION OF THE LAW SINCE

THE LOWER COURTS HAVE BARRED PETITIONER

FROM BRINGING A CAUSE OF ACTION FOR FRAUD

AGAINST RESPONDENTS .....-.« -« 50

CONCLUS ION es e . es es ° . - 7 a e es se « + 62

APPENDIX:

A. DENIAL OF PETITION FOR REVIEW BY THE

CALIFORNIA SUPREME COURT FILED MARCH

31, 1993 A-1

B. OPINION OF DENIAL OF PETITION FOR

REHEARING BY THE COURT OF APPEAL,

THIRD APPELLATE DISTRICT, FILED

FEBRUARY 1, 1993 B-1

C. OPINION OF THE COURT OF APPEAL

THIRD APPELLATE DISTRICT, FILED

JANUARY 4, 1993 C-1

D. SECOND OPINION OF SACRAMENTO

COUNTY SUPERIOR COURT FILED

ON SEPTEMBER 27, 1991 D-1

E. FIRST OPINION OF SACRAMENTO

COUNTY SUPERIOR COURT FILED

ON JULY 16, 1991 E-1

F. DENIAL OF PETITION FOR REVIEW

BY THE CALIFORNIA SUPREME COURT

IN HOUSING AUTHORITY v. CULLEN

FILED FEBRUARY 10, 1993 F-1

G. OPINION DENIAL OF REHEARING OF

THE COURT OF APPEAL, THIRD APPELLATE

DISTRICT, IN HOUSING AUTHORITY v.

CULLEN, FILED DECEMBER 15, 1992 G-1

Wsacnsiimeiieimmiaei iliac i

iii

OPINION OF THE COURT OF APPEAL,

THIRD APPELLATE DISTRICT, IN

HOUSING v. CULLEN FILED NOVEMBER

20, 1992 F-1

SECOND OPINION OF SACRAMENTO COUNTY

SUPERIOR COURT IN HOUSING AUTHORITY

v. CULLEN, FILED APRIL 4, 1991 I-1

OPINION OF CALIFORNIA ADMINISTRATIVE

LAW COURT FILED JULY 25, 1990 J-1

FIRST OPINION OF SACRAMENTO COUNTY

SUPERIOR COURT IN HOUSING AUTHORITY

v. CULLEN FILED JUNE 21, 1987 K-l

TABLE OF AUTHORITIES

CASES

Alton v. Rogers (1954) 127 Cal. App.2d 667 55

Board of Regents v Roth, 408 US,

at 570-571, n8, 33 L. Ed2d 548,

92 Ss ce 2701 s a . + se 7 - - s s * aoe 61

Clean Air Transport Systems v. San Mateo County

Transit Dist. (1988)

198 Cal. App. 3d 576 o se 2 s . * o . = 44

Cox v. Delmas (1893) 99 C. 104 ...... 60

Epstein v. Frank (1981) 125 Cal.App.3d 111 40

Evans v. Galardi (1976) 16 Cal.3d 300... 41

Fazzi v. Peters (1968) 68 Cal.2d 590 ... 43

Finlayson v. Sanbrook (Nov. 1992,

Sixth Dist.) 10 Cal. App. 4th 1436 . . 32

First Amendment Foundation v. Brookfield

(1983, ND ILL) 575 F. Supp. 1207... 44

Giaccio v. Pennsylvania (1966)

382 U.S. 399, 402-403,

15 L ed 2d 447, 86 8 Ct 518 ....e 36

Hensley v. Caietti (Feb. 1993, Third Dist.)

Bs Cal. App. 66H 1265 « «© «6 we ow we et se 3S

Johnson v. Simonelli (1991)

231 Cal. App. 3d 105 s a * om o = © . . 22

Kimball v. Pacific Gas & Electric Company

(3934) 220 C. 203 «se ase vnsse

Knapp v. Knapp (1940) 15 Cal.2d 237... . 57

Kovacevich v. McKinney & Wainwright

(June 1993) 93 Daily Journal

D.A.R. 6983 ° . 2 ° o e 7 * se . - . o 34

Laird v. Blacker (1992)

2 Cal.4éth 606 ..-«-. 27, 28, 31, 49, 63

Logan v. Zimmerman Brush Company (1982)

455 US 422, 433, 71 L.Ed2d 265,

102 Ss cet 1148 . * e s o e is 7 e * 35, 61

Lynch v. Glass (1975) 44 Cal. App.3d 948 . 30

People v. Sobiek (1973) 30 Cal.App.3d 458 . 42

Promotus Enterprises, Inc. v. Jiminez (1971)

21 Cal.App.3d 560 * - a eo e se - e se

Safine v. Sinnot (May 1993,

First Dist., Div. One)

AS Cal. App. 408 GIE \. «© ws sw we woos SB

Sirott v. Latts (May 1992)

6 Cal. App. 4th 923 o . J 7 7 e a _ * - 31

Stoll v. Superior Court (Sept. 1992, First

Dist., Div. Five) 9 Cal.App.4th 1362 32

Turner v. American Bar Asso. (1975, DC Tex)

407 F. Supp. 451 *. . se es . * e e e es so 44

United States v. A. & P. Trucking Co. (1959)

358 U.S. 121, 79 S.Ct. 203,

3 L.Ed.2d 165 e es = 2 a * se . 7 s o e 39

Vann v. Shilleh (1975) 54 Cal. App.3d 192 . 44

CONSTITUTION

United States Constitution Fifth

Rmemament «ss es te tb eee ew ew ew Oy CST

Ly ee a a

United States Constitution Fourteenth

Amendment .<«+++s+#e«¢e+e«ee« 2, 37, 62

United States Constitution .. 2, 36, 37, 62

STATUTES

ee a a

Bi ie EES kk sk 5 5k OTS ale a

Oe ee a |

ee ee a a

ee he

ee EO so ed dE ke «2

California Business and Professions

Code §6125 * > ° - © . ° * ° 7 . 7 ~ . 43

California Code of Civil Procedure

§ 170.6 a oe * * a . a * . e e e se J y

California Civil Code of Procedure

Section 338 ~ ” a - e - a a . es 38, 52

California Code of Civil Procedure §340.6

: + s 6 bo 6 Re Oe ate Bae aes. Ses. BO

37, 39, 49, 50, 62

California Code of Civil Procedure §579 . . 39

Corporations Code Section 15006 ..... . 38

California Government Code §§ 900

et. seq. ‘ie ow ee oe ee i a ee oe ee oe

California Government Claims Act ..... 59

California Government Tort Claims Act ... 59

vii

Ceepeer Zi 2« «© © 8 6 et ee ee elle le CUR

Deering’s California Codes, annotated... 52

OTHER

1 Witkin, California Procedure, Attorneys,

Section 95 at p- 113 e = e o a _ . - a s * 60

5 Witkin, Calif. Proc. 3d, Pleading §856 . 38

6 Witkin, Summary of Cal. Law

(Oth ed. 1974 . «+ «ess esvesnves ec oS)

7 Witkens, (3rd ed.) Judgements

Section 288 (c) .«..+«+«-+s«-e-+-ee-eee Sl

9 Witkins, California Procedure, Appeals,

Section 49, page 74 .... +... 46

13 Cal Jur 3d, Constitutional Law §294,

Se 7p : Se ee ee eee ee ee ee ee ee ee

Bankruptcy Form 4... ..+ «+ .+-+«-+.«-«-« « 44

Bankruptcy Rule 2009(e) . .... +. +++ + 44

Blacks Law Dictionary, 5th Ed. 594 .... 52

Civil Procedure, 3rd ed. James, Hazard

(1985) Pp. 477 s + a = J * - se * _ 7” 39

Entity and Aggregate Theories, §14,

pp. 4264-4265 ...«+«-+«e2ee eee 41

meget. ow TOECM, GE32 «© «© we oe we sb we weseess 23

U.S. Code & Congressional and Administrative

News 5, 95th Congress, 2nd Session 1978,

page 6158 ...«-+«-e«-e«-e«e see ce « « « 45

OPINIONS BELOW

The Supreme Court of California denied

Petition for Review March 31, 1993. A copy is

attached as Appendix A of Appendix.

The Court of Appeal, Third Appellate

District, Opinion on Denial of Petition For

Rehearing was filed on February 1, 1993. A copy

is attached as Appendix B of Appendix.

The Court of Appeal, Third Appellate

District, first Opinion was filed January 4,

1993. A copy is attached as Appendix C of

Appendix.

The second opinion of the Superior Court

filed on September 27, 1991. A copy is attached

as Appendix D of Appendix.

The first opinion of the Superior Court

filed on July 16, 1991. A copy is attached as

Appendix E of Appendix.

JURISDICTION

This petition for writ of certiorari is

taken from a decision rendered on March 31l,

ay enn

1993, by the Supreme Court of California, a

court of last resort, in the case styled MARK T.

CULLEN v. TRAINOR, ROBERTSON, SMITS, & WADE, et.

al., Case No. 8031216. This Court has

jurisdiction pursuant to the provisions of 28

CONSTITUTIONAL PROVISIONS INVOLVED

No State shall make or enforce any law

which shall abridge the privileges or immunities

of citizens of the United States; nor shall any

State deprive any person of life, liberty, or

property, without due process of law; nor deny

to any person within its jurisdiction the equal

protection of the laws. U.S. Const. Amend. XIV,

§l.

“No person shall be .. . deprived of . .

- property, without due process of law;" U.S.

Const. Amend. V.

STATEMENT OF THE CASE

The underlying action for legal malpractice

and fraud arose out of legal representation

provided to Mark T. Cullen (hereinafter

“petitioner"), and Cullen Development Company,

a general partnership, by the law firm of

Trainor, Robertson, Smits and Wade - and

individual attorneys: Charles Trainor, Stuart

Smits, William Davis, Dave Robertson, and Gary

Funamura (hereinafter collectively referred to

as "“respondents").

Due to the complexity of the underlying

case wherein the legal malpractice and fraud

were committed, petitioner, will first set forth

a summary of the Housing Authority v. Cullen, et

al. case.

A. The underlying Housing Authority v. Cullen

Claim.’

Cullen Development Company was a California

General Partnership comprised of petitioner,

. Petitioner has petitioned the Court for

a WRIT OF CERTIORARI to review the underlying

connected ousi Authority v. Cullen case,

No. 92-1765. Pursuant to Rule 201 of the Federal

Rules of Evidence, petitioner respectfully requests

the Court take Judicial Notice of the above

referenced case.

nn [ee

Richard Cullen, and James Cullen. The

partnership was formed for the sole purpose of

doing construction work. Petitioner was the

managing and qualifying partner with the

California State Contractors License Board.

Additionally, petitioner was responsible for

providing all of the financial backing for the

partnership, whereas, Richard Cullen and James

Cullen provided onsite field work.

In 1984, Cullen Development Company entered

into four Public Works Construction Contracts

with the Housing’ Authority, County of

Sacramento. Late that year, problems and

disputes developed between the Housing Authority

and Cullen Development Company. On or about

April 22, 1985, Cullen Development Company filed

a Cessation of Work Notice on all four contracts

and stopped any, and all, further work with the

Housing Authority.’

. A detailed discussion of the dispute

between the Housing Authority and petitioner may be

found in Administrative Law Judge Smith’s decision.

(Appendix J) Pursuant to Rule 201 of the Federal

Rules of Evidence, petitioner respectfully requests

that the Court take Judicial Notice of the above-

Thereafter, the Housing Authority sued

Cullen Development Company, a general

partnership, and petitioner individually, for

breach of Contract on the Rio Linda Project and

filed four complaints with the California State

Contractors License Board. On or about

September of 1985, Cullen Development Company,

as_a artnership, and petitioner, as an

individual, employed respondents to represent

petitioner and Cullen Development Company

throughout the litigation, including the filing

of four Cross-Complaints as to the four

contracts.

On October 25, 1985, respondents filed a

Demurrer to the Housing Authority First Amended

Complaint, which was overruled by the court, and

an Answer was ordered to be filed. Thereafter,

on December 9, 1985, respondents filed an

Answer to the First Amended Complaint. For

reasons unknown to petitioner, respondents took

no further actions for almost 14 months.

referenced decision.

On February 5, 1987, respondents entered

into a stipulation (without petitioner’s

knowledge or approval) with Housing Authority

attorney Bleier for the filing of a single

cause of action Cross-Complaint on only one

contract, the Rio Linda Contract, just thirteen

days before the February 18, 1987 scheduled

trial date.

On February 6, 1987, twelve (12) days

before the scheduled trial date, respondents

made a Motion to Amend the Trial Setting Order

and to allow for further Law and Motion. This

was a direct result of respondents’s complete

failure to prepare for trial. As an example of

how reprehensible and inadequate respondents’s

legal representation was, see Declaration of

respondents (dated February 6, 1987).?’ The

3 Declaration of Cullen Attorney Davis

[Trainor], in pertinent part:

"8. Defendants [Cullens] timely

propounded a request for Production of Documents

on Plaintiff’s [Housing Authority] Counsel. To

date defendant’s counsel has not reviewed said

records. At no point in time did plaintiff’s

counsel represent that said documents could not

be removed after the discovery cut-off date. In

order to adequately prepare this matter for

trial, it is necessary that these documents be

trial court denied said request by respondents.

The bottom line is, that respondents were

faced with going to trial on February 18, 1987,

without any pre-trial preparation or discovery.

On February 24, 1987, respondents sent

petitioner a letter stating that the trial date

had been rescheduled to June 16, 1987.

On June 3, 1987, just thirteen days before

the second scheduled trial date of June 16,

1987, respondents abandoned legal representation

of the partnership, Cullen Development Company,

and individual petitioner. Not only were the

individual partners forced to represent

themselves, In Pro Se, but the partnership

itself was forced into, In Pro Se. Respondents

reviewed.

9. In addition, Defendant’s counsel

had no idea that Plaintiff’s counsel would be

objecting to the discovery cut-off date, given

the fact that Plaintiff was agreeing to

stipulate to the filing of a Cross-Complain

within thirty (30) days of trial, and giving th

fact that the Cross-Defendants will be answering

the Cross-Complaint by February 10, 1987.

10. In order to adequately prepare

this matter for trial, it will be necessary to

depose approximately eight (8) to ten (10)

witnesses prior to trial.

ll. The above-stated discovery can be

completed without jeopardizing the case from

going to trial on February 18, 1987..."

made no explanation to the court as to who was

going to represent the partnership. The purpose

of said substitution of legal representation by

respondents, was a last effort delay tactic by

respondents to continue the June 16, 1987, trial

date. At this time petitioner was not aware

that respondents had completely failed to

prepare petitioner’s case for trial.

On June 8, 1987, respondents called

petitioner, who was residing in Arizona, stating

that the court would require a Declaration from

petitioner in order to hear a Motion to Continue

the scheduled trial date. Respondents dictated

the contents of said Motion (dated June 8, 1987)

that respondents requested. Two critical

statements in the Declaration were that

petitioner allegedly owed respondents legal

fees, and that, petitioner desired to be placed,

In Pro Se. Each of these statements were

fabricated by respondents in order to delay the

pending trial date.

At the time of this Declaration,

respondents knew that the firm was paid in

full, with extra monies still on retainer.

Then respondents drafted the Motion to

Continue the June i6, 1987, trial date and on

June 11, 1987, respondents made a Special

Appearance on petitioner’s behalf, anticipating

that the Motion would be granted, but the court

denied said Continuance.

On the morning of June 16, 1987, petitioner

continued the morning trial by -making a

California Civil Code of Procedure §170.6

Motion to recuse the first assigned judge from

the case. The case was then trailed to an

afternoon hearing on the same date. Shortly

thereafter on the advise of respondents,

petitioner as an individual, filed a voluntary

Chapter II Bankruptcy Petition with the Federal

Bankruptcy Court (Eastern Dist.) before

appearing at the afternoon trial on June 16,

1987.

The sole purpose of petitioner’s Chapter II

filing was to initiate the automatic stay of

litigation of the Housing Authority case.

Petitioner, thought, and was led to believe by

respondents, that the filing of the Chapter II

Petition would stay the Housing Authority trial

as it related to petitioner and Cullen

Development Company. Petitioner attended the

trial, on the afternoon of June 16, 1987, for

the sole purpose of having the Federal

Bankruptcy Automatic Stay Petition read into the

court record. Judge Morris promptly ordered

the Petition into the record.‘

On June 16, 1987, before the trial against

unrepresented, individual and partner James

Cullen commenced, James Cullen stated he would

voluntarily default as he was not prepared, nor

capable of representing himself, much less the

partnership Cullen Development Company.

Petitioner did not actively participate in the

trial of June 16, 1987, as it related to

unrepresented Cullen Development Company and/or

¢ Mark Cullen presented a copy of his

Bankruptcy Petition filed on June 16, 1987. The

court thereafter ordered no further action be taken

against Mark Cullen.

himself. Petitioner did request to help

translate a few times for James Cullen who

suffers from a reading and speech impediment.°

On June 16, 1987, after an approximately 15

minute trial, Judge Morris entered a Judgment

against James Cullen and Cullen Development

Company.*° However, the trial judge made very

clear that the judgment rendered was to have no

effect on Mark T. Cullen.’

S“MARK CULLEN: Your Honor, my brother has a

little speech problem; do you mind if I speak for

him?

THE COURT: Well let me determine to what

extent you have this speech problem. Mr. James

Cullen, have you understood all we have said here?

MR. JAMES CULLEN: Not really. It’s all

above my head this level deal.”

THE COURT: After Mr. Cullen has had a chance

to examine the document.

MR. JAMES CULLEN: Can I get this read to me?

My reading is real bad.

. This judgment is set forth in Appendix

K. Pursuant to Rule 201 of the Federal Rules of

Evidence, petitioner respectfully requests the

Court take Judicial Notice of the above-referenced

judgment.

“MR. MARK CULLEN: Your Honor, I wouldn’t

agree that it was against me if I am still a part.

THE COURT: James Cullen and Cullen

Development Company.

MR. MARK CULLEN: I’d like the record to

state that clearly.

THE COURT: This record states that, ..."

On April 20, 1988, the California State

Contractors License Board caused the California

State Attorney General to file an Accusation

against Cullen Development Company, and the

three individual partners, under’ various

provisions of the California Business and

Professions Code. On May 16, 1988, petitioner

and Cullen Development Company filed a General

Denial to the Contractors State License Board

Accusation. The Contractors State License Board

Complaint was litigated, in a Judicial Trial

Format, for eight days in 1989. The

Contractors State License Board was represented

by Deputy Attorney General June Long, and

petitioner represented the partnership and

himself, In Pro Se. Testimony was presented by

more that eighteen witnesses and over 425

evidentiary documents were entered into

evidence. The Administrative Law decision

found, inter alia, that the Housing Authority

breached the Rio Linda Contract, that the

Housing Authority breached five Implied

Covenants, that the Housing Authority committed

Negligent Misrepresentation, and that the

Hous Aut it committed Fraud in Labor

Compliance. On July 25, 1990, the Registrar of

Contractors, David R. Phillips, accepted

Administrative Law Judge Smith’s decision as a

Final Judgment. (See Appendix J) No appeal was

taken by either party. Therefore, after 30 days

it became a final order of the court.*®

It is important to note that this was the

first decision as it relates to petitioner on

either the complaint or cross-complaint.

On August 14, 1990, petitioner filed a

Motion for Leave to File an Amended Cross-

Complaint (in the Housing Authority v. Cullen

case), accompanied by a Memorandum of Points and

Authorities in support thereof, in an effort to

’ “The decision became effective 30 days

after it was mailed to the respondent [Cullen}]

unless a reconsideration is ordered within that

time ...." Government Code, Title 2 Div. 2, §11519

(a).

Pursuant to Rule 201 of the Federal Rules

of Evidence, petitioner respectfully requests that

the court take Judicial Notice of the above-

referenced decision.

eee

remedy the negligent and fraudulent conduct of

respondents. On August 30, i990, the Housing

Authority filed an Opposition to petitioner’s

Motion. Petitioner filed a Reply on September

4, 1990. On September 7, 1990, Superior Court

Judge Gray denied petitioner’s Motion for Leave

to File an Amended Cross-Complaint, on grounds

of the court’s discretion. Judge Gray referred

to the prior stipulation that was entered by the

Cullen attorneys.’

This was the first time that individual

petitioner suffered actual injury as it relates

to California’s Legal Malpractice Statute (Civil

9 “THE COURT: Well, Mr. Campbell, among

other reasons for exercising discretion against

allowing the amendment was the fact that it was

carefully stated in your moving papers how the

decision not to add this cross-complaint or to

litigate this matter was a tactical decision that

was made by the parties. And having made that

tactical decision, I think the parties should live

with it.

MR. CAMPBELL: Yes, your Honor. The

stipulation that was entered at a time just a

matter of days before the first trial date. ..."

After argument by petitioner the court

further stated:

“THE COURT: I’m saying that you’ve made your

bed and you can lie in it.”

Code of Procedure §340.6).

On September 19, 1990, respondents sent

petitioner a letter referencing a_ recent

Sacramento Bee newspaper article wherein

petitioner’s favorable Administrative Law

decision was written about. Respondents

offered to provide legal services to petitioner

in the upcoming trial.*®

On September 26, 1990, the Housing

Authority filed a Motion for Summary Judgement

on petitioner’s individual remaining Cross-

Complaint on the Rio Linda Contract. Petitioner

filed an Opposition to the Motion for Summary

Judgment on October 16, 1990. The Housing

Authority filed a Reply to petitioner’s

Opposition on October 25, 1990. Thereafter, on

October 30, 1990, Judge Gray granted Summary

” In pertinent part:

“I know you must be very happy to have turned

the tide and to accomplish this first large step in

vindicating the rights of you personally and Cullen

Development Company.

The article indicated that you have a

November trial date with Mr. Bleier. If you are

still in pro per in that litigation, I would be

pleased to respond to any inquiries you might have

with respect to appropriate litigation strategy.”

Judgment against individual petitioner. The

result of this judgment was that petitioner’s

remaining Cross-Complaint against the Housing

Authority was finally dismissed.

Soon thereafter, a trial date was scheduled

for February 11, 1991, for the Housing

Authority’s remaining Complaint against

individual petitioner on the Rio Linda Contract.

The trial began February 11, 1991. One and

one-half days into trial, Judge Morris made a

ruling on a Motion in Limine (presented by

Housing Authority Attorney Campbell), wherein

petitioner was disallowed the opportunity to

allege his affirmative defenses against the

Housing Authority. In effect, petitioner was

finally denied the right to have the Housing

Authority v. Cullen case tried by the Superior

Court in an actual trial format.” Before

concluding the trial, Judge Morris took under

consideration petitioner’s Oral Motion that the

“ Petitioner was procedurally barred from

presenting his case-in-chief. Further, petitioner

was barred from the opportunity to even present a

defense.

en GAA

prior Administrative Law Judgement should have

a Collateral Estoppel effect on the Housing

Authority’s complaint against individual

petitioner.

Judge Morris ruled for both the Housing

Authority and petitioner to present Post Trial

Briefs arguing the issue. On April 4, 1991,

Judge Morris ruled on the Collateral Estoppel

Issue in favor of the Housing Authority.

On April 4, 1991, the Housing Authority’s

individual judgment against petitioner was filed

into the record. Appendix I of Appendix.

On May 29, 1991, petitioner filed an Appeal

in the Housing Authority v. Cullen, et.al.,

case. Third District Court of Appeals: 3 Civil

No. C011217.

On November 20, 1992, Honorable Justice

Davis, with the Third District Court of Appeals,

rendered a 22 page decision, on the one hand,

affirming petitioner’s denial of a "trial on the

merits" in the underlying Superior Court action.

But on the other hand, Justice Davis stated:

“Indeed, in light of the

findings of the CSLB’s administrative

law judge, this is not a case where

the result bespeaks “justice” in an

abstract sense since SCHA is being

permitted to recover from a breach

occasioned by its own obstructionist

bureaucratic conduct." (See Appendix

H, pp. H-31-B32)?

The resultant effect of the Housing Authority

case is as follows: petitioner has lost in

excess of 2.7 Million dollars (1985 value) and

has incurred judgements against him in excess of

$2 Million by certain sureties and others. In

addition the petitioner has incurred a judgment,

of $367,000 in favor of the Housing Authority,

against petitioner for Breach of Contract while

at the same time the Appellate Court states, it

believes the Housing Authority breached the

contract. Administrative Law Judge Smith (after

18 days of trial, over 18 witnesses, and in

excess of 425 documentary exhibits) found in his

decision, that the Housing Authority breached

the Rio Linda Contract. (Appendix J)

ad Appendix H of appendix. Pursuant to

Rule 201 of the Federal Rules of Evidence,

petitioner respectfully requests the Court to take

Judicial Notice of the above-referenced decision.

Succinctly stated, petitioner has been

denied the opportunity to present his evidence,

or a defense, in the trial court and a judgment

has been rendered against him. While at the

same time, the facts of the case have proven

that the Housing Authority was at fault.

B. The underlying legal malpractice and fraud

claims by petitioner against respondents.

On April 29, 1991, petitioner and Cullen

Development, a general partnership, filed a

Complaint for Damages for Legal Malpractice, and

Fraud, against the Law Offices of Trainor,

Robertson, Smits & Wade, and Charles Trainor,

Stuart Smits, William Davis, Dave Robertson, and

Gary Funarmura, individually. Respondents

employed attorney Henry Crowle to represent the

law firm and each of them individually. On May

30, 1991, respondents filed a Demurrer to the

Complaint. The Demurrer Hearing was set for

July 2, 1991. On June 25, 1991, petitioner

filed a Notice of Opposition to Demurrer; Points

and Authorities in Support Thereof; Declaration

of Mark T. Cullen; and Judicial Notice in

Support Thereof.

On June 27, 1991, respondents requested ex-

parte, and were granted an Extension of Time to

file a Reply to petitioner’s Opposition to

Demurrer. Thereafter, on June 28, 1991,

respondents filed a Notice of Change of Hearing

Date. On July 9, 1991, respondents filed a

Reply to petitioner’s Opposition to Demurrer.

The First Demurer by the Trial Court in

Cullen _v. Trainor was, again, considered by

Judge Gray.

On July 10, 1991, Judge Gray made the

following Tentative Ruling:

"22. CULLEN DEVELOPMENT CO. V.

TRAINOR, ROBERTSON, ETC.

Demurrer to complaint of Cullen

Development Company sustained without

leave to amend. Demurrer to third

count (breach of contract) sustained

for failure to state whether the

alleged contract is oral or written.

Demurrer to lst, 2d, and 4th counts

sustained with leave to amend based

w1 the statutes of limitations. 10

says to amend, 10 days thereafter to

respond."

On July 11, 1991, Judge Gray ordered his

ghia Ua vale hace

Tentative Ruling accepted. Thereafter, on July

16, 1991, the Order was Noticed and filed.’

Next, on July 29, 1991, petitioner filed a

First Amended Complaint for Damages for Legal

Malpractice. On July 22, 1991 (Filed August l,

1991), petitioner mailed Judge Gray a letter,

bringing to the court’s attention a conflict

between the Court’s Tentative Ruling and the

Order Filed." Then, on July 31, 1991,

petitioner sent a confirming letter to the court

(confirming a telephone conversation between the

Bailiff and petitioner) wherein the Bailiff

stated Judge Gray recognized the conflict and

that the Filed Order would prevail. Next, on

August 6, 1991, petitioner and respondents

stipulated to allow petitioner to File a Further

Amended First Amended Complaint. The

‘ See Appendix E of appendix. Pursuant

to Rule 201 of the Federal Rules of Evidence,

petitioner respectfully requests the Court take

Judicial Notice of the above-referenced case.

The tentative ruling barred petitioner

from filing a cause of action based on breach of

contract. The Final Order granted petitioner the

opportunity to refile a cause of action based on

breach of contract.

Stipulation was so Ordered by the Court.

On August 15, i991, petitioner filed his

Further Amended First Amended Complaint for

Damages for Legal Malpractice and fraud.

Thereafter, on August 27, 1991, respondents

filed a Notice of Demurrer, and other supporting

documents. Then, on September 16, 1991,

petitioner filed a Notice of Opposition to

Demurrer and supporting documents. On September

20, 1991, respondents filed a Reply Memorandum

of Points and Authorities in Support of

Demurrer.

The second Demurrer by the trial court in

Cullen v. Trainor was also considered by Judge

Gray. On September 24, 1991, Judge Gray made a

Tentative Ruling sustaining respondents’

demurrer.’* Petitioner requested a hearing on

the tentative ruling and one was calendared for

the next morning. Thereafter, on September 24,

a “This matter argued by counsel and

submitted. Demurrer sustained without leave to

amend for failure to state a cause of action. The

statute of limitations has expired. Johnson

v. Simonelli 1991 231 Cal. App. 3d 105”

1991, petitioner and respondents submitted Oral

Argument to the court. Judge Gray affirmed his

Tentative Ruling. Then, on September 27, 1991,

an Order and Judgment of Dismissal Re: Demurrer,

was filed.*®

On November 20, 1991, petitioner filed a

Notice of Appeal.

Cc. The Court of Appeal’s first decision in

Cullen v. Trainor.

The appellate court’s first decision

affirmed the trial court’s judgment of dismissal

against petitioner. See Appendix C. The

opinion held, as to the commencement of the

statute of limitations for Legal Malpractice:

"We will conclude that’ the

statute of limitations began on the

date the judgment in the underlying

action was entered against’ the

partnership of which Cullen was a

member, October 13, 1987, for that is

the date upon which he _ suffered

injury to his interests." Appendix C,

p 2?

- See Appendix D of appendix.

a Although the trial was held June 16,

1987, the judgment was not correctly filed until

October 13, 1987.

Secondly, as to the commencement of the

statute of limitations for Actual Fraud:

"We also will conclude that the

limitations period was not tolled by

reason of an alleged fraud in the

nondisclosure of defendants’ failure

to meet the claim statute, an alleged

predicate to success on the cross-

complaint brought in the Housing

Authority action, because such a

fraud was not the legal cause of the

injury sustained." Appendix C p. 2

In rebuttal to this decision, petitioner

petitioned the appellate court for rehearing on

the following grounds:

One, the appellate Court’s opinion failed

to differentiate between a partnership cause of

action for legal malpractice and an individual

cause of action for legal malpractice.

Secondly, the opinion failed to address the

three other projects, whereupon, the respondents

also committed actual fraud in respondents’

concealment of their failure to file claims

under the Government Claims Act.

D. The Court of Appeal’s Second Decision in

Cullen v. Trainor.

The appellate court stated:

"His sole noteworthy complaint

is that the opinion’s. principal

theory of resolution of his fraud

claim does not squarely extend to

part of his case. While the point

has arguable merit, the underlying

claim has no merit for reasons that

closely parallel those given in the

;

Supreme Court to review the Cullen v. Trainor,

31,

opinion." (Appendix B, p. 1-2)

Then the appellate court stated:

"Cullen knew in 1987 that the

cross-complaint prepared by

defendants did not put in issue the

other three contract causes of

action. He took no action to pursue

these causes until 1990. Assuming

for the sake of discussion that

defendants concealed a failure to

file government tort claims

concerning these contracts, no harm

to Cullen can be attributed to this

delict." (Appendix B, p. 4)

Further the appellate court held:

"“Defendants’ failure to disclose

that they had not filed government

tort claims did not prevent Cullen

from pursuing these causes of action

on a theory sounding in contract.

Having slept on his rights sounding

in contract, if any, to recover from

the Housing Authority for the breach

of these three contracts, Cullen

cannot recover from his’ former

counsel for failing to perfect a

potential alternative remedy, for the

reasons given. The petition for

rehearing is denied." (Appendix B,

pp- 5)

Petitioner, petitioned the California

et al. case and that request was denied on March

1993. See Appendix A of appendix.

REASONS FOR GRANTING WRIT

CALIFORNIA’S STATUTE OF LIMITATION FOR LEGAL

MALPRACTICE (CIVIL CODE OF PROCEDURE §340.6)

IS UNCONSTITUTIONAL AS IT VIOLATES DUE

PROCESS SINCE THE STATUTE IS VAGUE AS TO

THE MEANING OF ACTUAL INJURY.

The statute of limitations for legal

malpractice in California may be found in West’s

Annotated Civil Code of Procedure Section

340.6:

(a) An action against an

attorney for a wrongful act or

omission, other than for. actual

fraud, arising in the performance of

professional services shall be

commenced within one year after the

plaintiff discover, or through the

use of reasonable diligence should

have discovered, the facts

constituting the wrongful act or

omission, whichever occurs first. In

no event shall the time for

commencement of legal action exceed

four years except that the period

shall be tolled during the time that

any of the following exist:

(1) The plaintiff has not

sustained actual injury;

(2) The attorney continues to

represent the plaintiff regarding the

specific subject matter in which the

alleged wrongful act or omission

occurred;

(3) The attorney willfully

conceals the facts constituting the

wrongful act or omission when such

facts are known to the attorney,

ed ina iad

except that this subdivision shall

toll only the four year limitation;

and

(4) The plaintiff is under a

legal or physical disability which

restricts the plaintiff’s ability to

commence legal action.

(b) In an action based upon an

instrument in writing, the effective

date of which depends upon some act

or event of the future, the period of

limitations provided for by this

section shall commence to run upon

the occurrence of such act or event.

The meaning of the words “Actual Injury"

has been the subject of multiple interpretations

as a result of numerous lawsuits preceding

California’s landmark case of Laird v. Blacker

(1992) 2 Cal.4th 606.

In the Laird case, the California Supreme

Court held:

"We conclude the limitations

period of section 340.6 commences

when a client suffers an adverse

judgment or order of dismissal in the

underlying action on which the

malpractice action is based." Id. p.

609.

It seems clear from C.C.P. §340.6, and its

Laird case interpretation, that in order for the

statute of limitations for legal malpractice to

commence running, (1) the client must discover

the malpractice, and (2) also suffer “actual

injury" from the malpractice.

It took the California Supreme court, in

the Laird case, 16 pages to explain the meaning

of two words: "actual injury". The meaning is

still not clear and has resulted in numerous

lawsuits since the Laird decision.

"It is a general principle of

statutory law that a statute must be

definite and certain to be valid. A

statute that either forbids or

requires the doing of an act in terms

so vague that persons of common

intelligence must necessarily guess

at the meaning of the statute, and

differ as to its application violates

the first essential of due process of

law." 13 Cal Jur 3d, Constitutional

Law §294, p. 733

In his dissent to the Laird case, Justice

Mosk stated:

"The majority err in declaring

(maj. opn,. ante, p.620) that section

340.6 is “clear on its face." A

statute that is clear on its face

does not require a lengthy opinion to

expound its meaning, nor does it

generate the varying interpretations

seen in the case law. On the

contrary, the phrase “actual injury"

in section 340.6 is not self-

explanatory, as noted by the State

Bar in a prescient letter to the

Governor. (Letter of Edward Rubin,

’

Pres. of State Bar, Sept. 13, 1977,

warning that the phrase was ambiguous

and would lead to litigation.)" Id.

p. 621

“Actual injury" has been held to be an

adverse order, as compared to aée final

adjudication of a matter. Unfortunately, what

is not clear is, at what point in the litigation

do we start counting the adverse order? For

example, is it the denial of a motion? A

demurrer? A summary judgment motion? An order

to compel? And so forth.

In petitioner’s underlying Housing

Authority case, the first adverse order,

against petitioner, was on September 7 990.

Notwithstanding that, the lower courts have

refused to recognize that date.

A judgment was entered against’ the

partnership entity, Cullen Development Company

on June 16, 1987, although petitioner has

petitioned this Court in case No. 92-1765, that

the judgment should be void, ab initio.

For argument sake, if the judgment is

upheld on appeal, petitioner did not expect to

be bound by the June 16, 1987, judgment. In

fact, to be sure he wasn’t, petitioner asked the

trial judge at the end of the hearing if the

judgment would have any effect on petitioner and

the trial judge clearly stated that it would

not. (See Footnotes 4 and 7, supra)

Appellate Justice Davis, made this same

conclusion in the Housing Authority first

appellate decision: "No action was taken against

Mark T. Cullen on the complaint or on the cross-

complaint." Appendix H, p. 8

In the underlying Housing Authority case,

James Cullen could not adequately represent

himself, much less the partnership entity and

petitioner. Petitioner therefore, did not

receive his due process protection guaranteed

under the constitution.

“Nevertheless, due process

requirements must be met. The non

party must have had an identity or

community of interest with, and

adequate representation by, the

losing party in the first action; and

the circumstances must have been such

that the nonparty expected to be

bound by the prior adjudication."

Lynch v. Glass (1975) 44 Cal. App.3d

Neti t iene age iaioe eae Pes | ev

DE aC PEE iets 1 ARG Doe

948. (7 Witkens, (3rd ed.)

Judgements Section 288 (c)).

In the underlying Trainor case, the Housing

Authority judgment against the partnership

entity, has been used by the trial court to

commence the statute of limitations for legal

malpractice as to petitioner’s individual ciaim.

Neither CCP §340.6 nor the Laird case infer that

a judgment against one individual [Cullen

Development Company] can be used to commence the

statute of limitations against another

individual [petitioner]. Either the lower

courts have misapplied the malpractice statute

or given the statute interpretation beyond the

plain meaning of the words.

Subsequent to the Laird case, just as

Justice Mosk predicted, several lower courts

have interpreted the meaning of “actual injury"

in a variety of ways:

In Sirott v. Latts (May 1992) 6 Cal. App.

4th 923, a case which involved a retiring doctor

whom, it appears, received bad legal advise in

regards to the purchasing of "tail" insurance

for medical malpractice, the court held:

“Any appreciable and actual harm

flowing from the attorney’s negligent

conduct establishes a cause of action

upon which the client may sue. [{]

Indeed, once having discovered his

attorney’s negligence and having

suffered some damage, the client must

institute his action within the time

prescribed..." Id. p. 930

In Stoll _v. Superior Court (Sept. 1992,

First Dist., Div. Five) 9 Cal.App.4th 1362, a

case which involved a rather unique approach by

plaintiff to extend the time to commence his

suit against defendants by using a "fiduciary

duty" attack, the court held:

"the action is time barred,

since the corporation had knowledge

of facts constituting the cause of

action more than one year before

filing the action, . .. " Id. p.

1362

| In Finlayson v. Sanbrook (Nov. 1992, Sixth

Dist.) 10 Cal. App. 4th 1436, a case which

involved an action wherein the defendant

attorneys missed a statute of limitations in an

_underlying case, the court held:

a ee that the one-year

limitations period of Code Civ.

Proc., §340.6, commences when the

statute of limitations for’ the

underlying cause of action expires in

4 casege of attorney malpractice

; predicated on missing a statute of

i limitations. The fact of damage is

apparent when a right or remedy is

lost due to an attorney’s failure to

file within a statutory limitation.

Plaintiff’s attempts to "remedy" some

of the harm by filing a third party

action did not delay accrual of the

statute of limitations, the court

held, since once plaintiff’s right

was lost, he was damaged even though

the amount of his damages had not

been ascertained. The focus of the

statute of limitations for legal

malpractice should be on discovery of

the fact of damage, not the amount."

Id. p. 1346

In Hensley v. Caietti (Feb. 1993, Third

Dist.) 13 Cal. App. 4th 1165, a case which

involved client dissatisfaction with a marital

settlement agreement, the court held:

". «.« «»« that the trial court

properly concluded that plaintiff

suffered actual injury on the date of

entry into the marital settlement

agreement, even though some or all of

the provisions were to be

subsequently incorporated in a

judgment." Id. p. 1165

In Safine v. Sinnot (May 1993, First Dist.,

Div. One) 15 Cal. App. 4th 614, a case which

involved an attorney suing his client over legal

fees and a subsequent cross-claim by the client

for malpractice, the court held:

"., . . that the claim for

attorney malpractice based on an

erroneous amount in a judgment

payable by plaintiff was barred by

the statute of limitations (Code Civ.

Proc., §340.6). The limitations

period was not tolled until the date

when the corrected judgment was

reversed on appeal; that an appeal

has been taken does not alter that

fact that an adverse judgment injured

the client."

In Kovacevich v. McKinney & Wainwright

(June 1993) 93 Daily Journal D.A.R. 6983, a case

which involved a group of attorneys, and others,

hoodwinking a farmer into guaranteeing a line of

credit for a proposed private bank that failed,

the court held:

"Under section 340.6, the one-

year statute of limitations for legal

malpractice does not begin to run

until a plaintiff knows of the

attorney’s negligence and sustains

actual and appreciable harm.

[Footnote omitted]" Id. p. 6983

Neither petitioner nor other plaintiffs, in

legal malpractice actions, can receive due

process of law under a statute that is not clear

as to its meaning. As Civil Code of Procedure

“4

§340.6 has shown, as reported in case after

case, the courts have been free to interpret the

meaning (ie., legislate the law). This type of

adjudicating is not fair and equal protection of

the law as constitutionally guaranteed. In

fact, one could justifiably take the position

that there is an underlying agenda to protect

attorneys, from liability, notwithstanding the

fact they have committed legal malpractice.

The Court has not sanctioned the denial of

due process of law. As this Court has stated:

"As our decisions have

emphasized time and again, the Due

Process Clause grants the aggrieved

party the opportunity to present his

case and have its merits fairly

judged. Thus it has become a truism

the “some form of hearing" is

required before the owner is finally

deprived of a protected property

interest. Board of Regents v Roth,

408 US, at 570-571, n8, 33 L. Ed2d

548, 92 S Ct 2701 (emphasis in

original)." Logan v. Zimmerman Brush

Company (1982) 455 US 422, 433, 71

L.Ed2d 265, 102 S Ct 1148.

"The Court traditionally has

held that the Due Process Clauses

protect civil litigants who seek

recourse in the courts, either as

defendants hoping to protect their

property or as plaintiffs attempting

to redress grievances. Id. p. 429

In the Logan case, Justice Powell, with

whom Justice Renquist joins, concurring in the

judgment, stated:

"It is necessary for this Court

to decide cases during almost every

Term on due process and equal

protection grounds. Our opinion in

these areas are often criticized,

with justice, as lacking consistency

and clarity. Because these issues

arise in various’ settings, and

opinions are written by each of nine

Justices, consistency of language is

an ideal unlikely to be achieved."

Id. p. 443 Fn.

Any statute should be written clearly,

concisely, and be able to withstand scrutiny as

to whether it violates "due process" under the

United States Constitution.

A statute violates due process

"if it is so vague and standardless

that is leaves the public uncertain

as to the conduct it prohibits or

leaves judges and jurors free to

decide, without any legally fixed

standards, what is prohibited and

what is not in each particular case.

[Citations.]" Giaccio Vv.

Pennsylvania (1966) 382 U.S. 399,

402-403, 15 L ed 2d 447, 86 S Ct 518

Petitioner respectfully requests that the

Court grant review of this case to decide if

wer Abit EL aig SIO

California Civil Code of Procedure §340.6 is

unconstitutionally vague.

II.

SINCE A PARTNERSHIP IS A SEPARATE LEGAL

ENTITY THE APPELLATE COURT FAILED TO

DIFFERENTIATE A PARTNERSHIP CAUSE OF

ACTION FROM AN INDIVIDUAL CAUSE OF

ACTION AS IT RELATES TO THE STATUTE OF

LIMITATIONS FOR LEGAL MALPRACTICE UNDER C.C.P.

§340.6.

The trial court is a state actor, and is

mandated to enforce the constitutional rights of

each individual (including petitioner) that are

guaranteed under the United States Constitution

and a state Constitution. Trial courts must

afford petitioner, as well as a partnership

legal entity, the constitutional safeguards of

the due process clauses of the Fourteenth and

Fifth Amendments, as well as Equal Protection of

the laws under the Fourteenth Amendment.

A partnership, like a corporation, is a

separate legal entity. As such, a partnership,

like a corporation, can incur a judgment,

separate from an individual member partner.

Partnerships are defined under

California Corporations Code Section

15006: (1) A partnership is an

association of two or more persons to

Carry on as co-owners a business for

profit.

California Code of Civil

Procedure Section 388, in pertinent

part states: (a) Any partnership or

unincorporated association, whether

organized for profit or not, may sue

and be sued in the name which it has

assumed or by which it is known.

There is no question that the law, and case

history, over the years regarding partnerships

is contradictory and sometimes’ confusing.

Justice Blease’s opinion (Appendix C), twice

mentions the exceptional recognition of a

partnership “entity” theory, but goes on to hold

that a partnership is really not _a_ separate

legal entity. The appellate court, clearly

erred finding that petitioner’s individual

interests were the same as his partnership

interests.

Petitioner asserts that a partnership

(i.e., an individual) and an individual

[Petitioner] can each be a real party in

interest. (See generally 5 Witkin, Calif. Proc.

1 i Ay AND lsat Lak aa ABT i

3d, Pleading §856, p. 299, C.C.P. §579) As

such, “Since different individuals suffering

personal injury obviously have separate legal

rights, it followed that any such claimant had

a separate cause of action that did not effect

another claimant." Civil Procedure, 3rd ed.

James, Hazard (1985) p. 477.

In support of petitioner’s legal

conclusion, this Court has taken the

opportunity, in a criminal case, to previously

set forth guidance on this issue.

In the United States v. A. & P. Trucking

Co. (1959) 358 U.S. 121, 79 S.Ct. 203, 3 L.Ed.2d

165, this Court held:

" ,. . ethat a partnership can

violate each of the statutes here in

question quite apart from’ the

participation and knowledge of the

partners as_ individuals. The

corollary is, of course, that the

conviction of a partnership cannot be

used to punish the individual

partners, who might be completely

free from personal guilt. As in the

case of corporations, the conviction

of the entity can lead only to a fine

levied on the firms assets."

In the Trucking Co. case, two partnerships

were charged as_— entities, in separate

informations with violations of 18 U.S.C. §835,

18 U.S.C.A. §835, which makes it criminal

knowingly to violate Interstate Commerce

Commission regulations for the safe

transportation in interstate commerce of

“explosives and other dangerous articles." The

District Court dismissed, on motion, the

informations on the ground that .a partnership

entity cannot be guilty of violating the

statutes involved. The Court found that

partnerships are entities and that judgments, or

fines, can be rendered against these entities

separate from the individual partners.

California case law and public policy, lend

support to the emerging position that a

partnership is a separate legal entity. In

Epstein _v. Frank (1981) 125 Cal.App.3d 111,

held:

", »« « a limited partnership is

regarded an entity separate and apart

from its partners when it is sued,

when it is served with process, and

when executing upon its assets. We

can perceive of: no compelling reason

he ee ee

TOR ENG GeMa ey ee ee he ee

eee MO, Pete:

jFiat aNne, SD.

ata lb Sala! 68 tno et

why, in determining the applicability

of Code of Civil Procedure section

351, it should not be regarded as an

entity, which, like a corporation, is

considered ..." Id. p. 120

The Epstein case goes on further to state:

“A partnership, however, is not

always regarded as an aggregate of

individuals. The authorities are

replete with instances where the

partnership is considered an entity.

(See 6 Witkin, Summary of Cal. Law

(8th ed. 1974) Entity and Aggregate

Theories, §14, pp. 4264-4265.)" Id.

p. 119

"In the area of procedures, a

partnership is treated substantially

the same as a corporation [Fn 4

omitted], and an entity concept

predominates. Thus in order to

acquire jurisdiction over a

partnership the partnership entity

must be designated as the defendant,

and the naming of the individual

partner is not sufficient. [Citations

omitted] The interest of an

individual partner in partnership

assets is not subject to attachment

or execution except on a claim

against the partnership. [Citations

omitted]." Id. pp. 119-120

Petitioner’s position is further supported

by Evans v. Galardi (1976) 16 Cal.3d 300 wherein

the California Supreme Court held:

". «+ »« we need only point out

that a limited partnership is viewed

as an entity separate and apart from

the limited partners for purposes of

suing and being sued. (Code of Civ.

Proc. §388. subd. (a); §15526.)[Fn 16

omitted] The limited partner is not

a proper party to proceedings by or

against the limited partnership (§

15526), and the limited partnership

is not involved in suits against the

limited partners in their individual

Capacity." Id. p. 31l

In People v. Sobiek (1973) 30 Cal.App.3d

458 the court held:

"Under traditional legal

concepts the partnership is regarded

as an aggregate of individuals with

each partner acting as agent for all

other partners in the transaction of

the partnership business, and the

agents of the partnership acting as

agents for all of the partners."

[Citation omitted] Id. p. 467

"Thus, given the recent trend in

the law in recognizing unincorporated

associations as separate legal

entities ..." Id. p. 468

In Promotus Enterprises, Inc. v. Jiminez

(1971) 21 Cal.App.3d 560, the court held:

"We are supported in our

conclusion by a recent partnership

decision of our Supreme Court, Fazzi

v. Peters, 68 Cal.2d 590, wherein a

copartnership was sued and service

was made on all of the partners

individually. As the action named

only the copartnership as a defendant

and did not name as defendants either

of the partners individually, the

court held that a judgment’ in

personam could not be entered against

one not a party to the action and

‘ voided the judgment against the

individual partners." Id. p. 566

In Fazzi_ v. Peters (1968) 68 Cal.2d 590,

; this Court held:

"., . » an individual judgment

: may not be rendered against a partner

not joined as a defendant in an

action against the partnership of

which he is, or is alleged to be, a

member [Fn 7 Omitted]". Id. p. 597

In addition, there is other sound legal

support to conclude a partnership is a separate

legal entity, distinct from its individual

RE a ARE PT ELE ti POP G5 Rl ei a

members.

First, by statute a partner, not licensed

to practice law, to a general partnership cannot

epee = SL eee os een) Cee ond

represent the partnership in legal matters, In

Pro Se. (See Calif. B&PC §61257*)

“Corporations and partnerships

both of which are fictional legal

persons, obviously cannot appear for

themselves personally. With regard

to these two types of business

associations, the longstanding and

18 "No person shall practice law in this

State unless he is an active member of the State

Bar." Deerings, B&PC §6125, Page 389.

consistent court interpretation of

§1654 is that they must be

represented by licensed counsel."

[Turner _v. American Bar Asso. (1975,

DC Tex) 407 F. Supp. 451, 476]

“Corporations must be represented in

court by attorneys admitted to

practice, and may not apply through

an officer or other lay

representative." "The same _ rule

applies to partnerships and other

unincorporated associations." [First

Amendment _. Foundation v. Brookfield

(1983, ND ILL) 575 F. Supp. 1207.)

Partnerships and corporations are

independent legal entities. In Vann

v. Shilleh (1975) 54 Cal. App.3d 192,

the holding is that a corporation

cannot appear in pro per. [Clean Air

ransport stems v. San Mateo Count

Transit Dist. (1988) 198 Cal. App.3d

576) holding that “an unincorporated

association must be represented by a

licensed attorney."

Secondly, the Federal Bankruptcy Courts,

have continually allowed partnerships to file

for bankruptcy protection, notwithstanding the

fact that the individual partners do not have to

file unless they become insolvent, or vise

versa. (See generally 11 U.S.C. §303(3), 11

U.S.C. §723, Bankruptcy Rule 2009(e), and

Bankruptcy Form 4)

"There is no requirement that

any partner in a case under Title II

file under the same chapter as the

partnership or vise versa." U.S.

Code & Congressional and

Administrative News 5, 95th Congress,

2nd Session 1978, page 6158.

In addition:

“A partner may file a voluntary

case under II U.S.C. 301 whether or

not the partnership is a debtor under

a case under Title II." U.S. Code &

: Congressional and Administrative News

5, 95th Congress, 2nd Session 1978,

page 6158.

| Third, and finally, the underlying trial

court determined that petitioner had individual

claims separate from the partnership Cullen

Development Company. On June 16, 1987, Judge

Morris stated:

"Mark Thomas Cullen has just

filed with the court a voluntary

petition in bankruptcy under chapter

eleven, which was ordered filed in

: the federal bankruptcy court at 1:20

P.M. this day, and Mr. Mark Cullen,

who’s present together with James

Cullen, has lodged that with the

court, and I [the court] will order

it filed as a record of this case.

That precludes any further

proceedings against defendant Mark

Thomas Cullen."

At that point, Judge Morris protected

petitioner’s individual rights as to the

complaint, against petitioner, and petitioner’s

cross-complaint against the Housing Authority.

Therefore, petitioner suffered no “actual

injury" by reason of the adverse judgment of

1987 because the action was stayed with respect

to his individual liability and his cross-

complaint against the Housing Authority.

Witkin, also concurs that if there are

separate and distinct interests that they are

separately appealable.

"It is well settled that where

parties have distinct interests there

can be a_ separate, final and

appealable judgment for each." 9

Witkins, California Procedure,

Appeals, Section 49, page 74.

So too, should the partnership, Cullen

Development Company and petitioner have had

separate causes of action for legal malpractice

against respondents because both individuals

were separately represented by respondents.

This should lead to the correct legal

conclusion that a partnership oor other

unincorporated association capable of suing or

being sued as "an entity" in the State in which

an action is brought should be deemed a citizen

LAI Niet Wena No sw Tt he

Wh 9 ait add ely Sa aie ieee be Ae te

of the State where it has its principal place of

business, whether such action is brought by or

against such partnership or other unincorporated

association or by or against any person as an

agent or representative thereof.

Notwithstanding the fact that a judgment

was entered against the partnership, Cullen

Development Company on June 16, 1987, no

judgment _was entered against individual

petitioner until September 7, 1990. According

to the California Statute of Limitations for

legal malpractice, petitioner had suffered no

“actual injury" in the underlying Housing

Authority case until the above-referenced date.

The appellate court correctly focused into

the heart of the issue in deciding when

petitioner sustained actual injury. The problem

is, the Appellate Court in the two underlying

cases (Housing Authority v. Cullen and Cullen v.

Trainor) came to two diametrically opposed

opinions as to when petitioner suffered actual

injury.

"The question is when did Cullen

"sustain actual injury" within the

meaning of that statute. Defendants

argue that Cullen sustained injury in

1987 when the adverse judgment was

entered against Cullen Development

Company, among other reasons, because

"his interest in the partnership

claims against the Housing Authority

were [sic] lost and he had sustained

injury at that time." The argument

is persuasive." Appendix C, p. C-12-

This conclusion by Appellate Justice Blease

is in complete contrast to the Housing Authority

v. Cullen appellate decision by Appellate

Justice Davis, wherein Justice Davis held:

On June 16, 1987,"no action was

taken against Mark T. Cullen on the

complaint or on the cross-complaint."

Appendix H, p. 8

The contradiction of these two decisions

focusses on the confusion between’ the

partnership, Cullen Development Company’s, cause

of action for legal malpractice and petitioner’s

individual cause of action for legal

malpractice.

Petitioner respectfully suggests’ the

appellate court erred in finding petitioner

sustained “actual injury" under Civil Code of

Procedure §340.6 at the same time the

partnership did since petitioner had a separate

cause of action. Petitioner’s case went on for

approximately four years before his cause of

action for legal malpractice against respondents

became ripe.

The partnership Cullen Development Company,

as a legal entity, could have brought a lawsuit

for legal malpractice against defendants (on or

after June 16, 1987), but not petitioner, as an

individual, since petitioner had suffered no

individual "actual injury". (See generally CCP

§340.6 and Laird v. Blacker (1992) 2 Cal.4th

606) Simply because the partnership failed to

assert its legal rights does not bar petitioner

from asserting his individual legal rights.

Petitioner suffered "actual injury" on September

7, 1990, as pleaded. Since petitioner had

suffered no injury, until this time, petitioner,

on April 29, 1991, timely filed his action for

Legal Malpractice against respondents.

The court, in Laird v. Blacker 2 Cal.4th

606, 615 (May 1992), held that:

". . « under section 340.6, the

statute of limitations for legal

malpractice actions commences’ on

entry of adverse judgment or final

order of dismissal."

Petitioner respectfully requests that the

Court grant review of this case to decide if

petitioner and Cullen Development Company have

separate causes of action for legal malpractice

against respondents.

Itt.

PETITIONER HAS BEEN DENIED DUE PROCESS

AND EQUAL PROTECTION OF THE LAW SINCE

THE LOWER COURTS HAVE BARRED PETITIONER

FROM BRINGING A CAUSE OF ACTION FOR FRAUD

AGAINST RESPONDENTS.

Respondents voluntarily agreed to provide

legal representation for petitioner,

individually, and the partnership, Cullen

Development Company, in the underlying Housing

Authority case. Respondents were employed to

answer the complaint by the Housing Authority

and file cross-complaints for petitioner and

Cullen Development Company on four separate

contracts.

As a prerequisite to the filing of a cross-

debit eat wg Wn RS se bie Petes OB:

complaint on three of the contracts’ the

respondents were under an obligation to file

claims’*® with Sacramento County before any

legal action was commenced on the _ three

projects.”°

It should distinguished, a claim was not

required to be filed for the Rio Linda contract

because the Housing Authority was the plaintiff.

Respondents failed to file the required

claims, and thereafter, concealed this fact from

petitioner.

Fraud is defined as:

“An intentional perversion of

truth for purpose of inducing another

in reliance upon it to part with some

valuable thing belonging to him or to

surrender a legal right. A false

representation of a matter of fact,

whether by words or conduct, by false

or misleading allegations, or by

concealment of that which should have

- been disclosed, which deceives and is

intended to deceive another so that

he shall act upon it to his legal

19 California Government Code §§ 900 et.

seq. Deerings California Codes.

” Those three projects being the South

Sacramento Family Residence, the North Highlands

Family Residence, and the Elk Grove Family

Residence.

injury." (Emphasis added). [Blacks

Law Dictionary, 5th Ed. 594.]

Once respondents discovered their error, a

date upon which petitioner is uncertain,

respondents practiced damage control and

concealed from petitioner their negligence.

After petitioner’s discovery of

respondents’ concealment in August’ 1989,

petitioner timely filed an action for fraud

against respondents.

California Civil Code of Procedure Section

338 sets forth the statutory limitation for,

inter alia, fraud or mistake, as three years.

In pertinent part CCP §338 (d):

"An action for relief on the

ground of fraud or mistake. The

cause of action in the case is not to

have been deemed to have accrued

until the discovery, by the aggrieved

party, of the facts constituting the

fraud or mistake." Deering’s

California Codes, annotated.

Petitioner filed his cause of action for

fraud against respondents on April 29, 1991,

well within the required statutory period.

The appellate court’s decision held:

) ". . »« Cullen’s argument fails

: for the reason that the alleged fraud

was not the legal cause of his

injuries." (AD1 p.12) In support of

that argument, the appellate court

relied simply on Rest. 2d Torts,

§432, subd. (1) "[Tjhe actor’s

negligent conduct is not a

substantial factor in bringing about

harm to another if the harm would

have been sustained even if the actor

had not been negligent." Appendix C,

p. C-19

_ we vty took ei, ae Daa Ae it by re

Then the appellate court’s decision states:

"Cullen seeks to prize off a

tort theory of liability from the

contract theory which was pled in the

cross-complaint. He claims the tort

theory could have been brought if a

governmental tort claim had been

filed against the public entity."

Appendix C, p. C-20

Then the appellate court held:

“Whether the cross-complaint

sounded in tort or in contract or

both, it advanced but one cause of

action. Had the defendants done what

Cullen says they should have done,

i.e., timely filed a tort claim and

amended the cross-complaint to

advance this as an additional but

alternative theory of recovery, the

unfavorable default judgment

nonetheless would have been entered

in the Housing Authority case and

would have barred any subsequent

. action on this claim." Appendix C,

pp. C-20-21

Then the appellate court’s decision held:

"The cause of harm to Cullen

thus occurred at the point of entry

of the judgment on the cross-

complaint.” Further, the appellate

court’s decision stated: "The

alleged failure to plead the tort

theory and the "fraudulent" failure

to disclose the reason did not cause

Cullen any harm because it cannot be

said that Cullen would have recovered

“but for" these wrongs." Appendix C,

Pp. C-21

The appellate court has overlooked and

wrongfully lumped four contracts together. The

appellate court is correct in stating that a

judgment was entered against Cullen Development

Company on the Rio Linda Contract. However, no

judgment was entered on the other’ three

contracts.

These three contracts were not part of the

underlying judgment entered against Cullen

Development Company on June 16, 1987. Since

these contracts are independent, petitioner

should not be denied the opportunity to bring a

cause of action for fraud against respondents.

The lower courts failed to recognize that

as a prerequisite to the filing of cross-

complaint by petitioner on three of the

underlying contracts respondents were

statutorily required to file claims*’, with the

County of Sacramento, first. The lower courts

have confused these claims with tort claims.

Accordingly, whether petitioner’s cause[s] of

action fell under contract, tort, or both, a

claim was required to be filed by respondents.

Respondents failed to file said claims and,

wantonly and willfully, concealed this from

petitioner.

In support of petitioner’s position, in the

Alton v. Rogers case (1954) 127 CA2d 667, the

defendant attorney withheld information from his

client regarding the status of a promissory

note. Plaintiff- client knew the attorney was

not fulfilling the promises in the year 1941.

Plaintiff filed his action for fraud some 10

years later. In view of the confidential

relationship that existed between the parties,

plaintiff was legally entitled to rely on the

many reassurances of the defendant attorney that

"= See Footnote 19, supra.

everything was alright, and the court held this

legitimately delayed the discovery of fraud.

“Causes of action based on fraud

of attorney are not barred when

brought within three years after

discovery of fraud, and attorney may

not successfully claim that plaintiff

should have discovered fraud when he

knew that loan he purportedly made to

third person, at attorney’s

instigation, was not paid within a

year as attorney had represented, and

that the plaintiff should not have

been so credulous as to have believed

attorney’s subsequent representations

and continuing promises." Id. p.668

In petitioner’s underlying Housing

Authority case, petitioner relied on the

respondents to be truthful. Petitioner had

every right to believe, and did in fact believe,

and follow all recommendations made by the

respondents. Petitioner should not be penalized

for following the guidance of the respondents

and now be barred from seeking damages for

respondents’ incompetence, lies, and deceit.

Respondents’ abandonment of petitioner in the

underlying Housing Authority case had no reason

to excite petitioner’s suspicion that the

respondents had done anything wrong.

ee eee en

“ado sedies

After all, respondents told petitioner that

the Substitution of Attorneys and their

fabricated claim that monies were owed [to the

respondents] would certainly delay the pending

trial date of June 16, 1987. The Court should

not lose sight of who procedurally controlled

the underlying Housing Authority case--the

respondents.

The Knapp v. Knapp case (1940) 15 Cal.2d

237, also supports petitioner’s position. This

case involved the sale of real property jointly

owned by two brothers. One brother sold the

property and defrauded the other as to the

amount of the sale, and kept more than his

share, of monies, which he converted to his own

use. The court held:

". .« »« a plaintiff who sues to

recover damages for fraudulent

representations made more than three

years prior to the commencement of

his action is required to

affirmatively plead that he did not

discover the facts constituting the

fraud until within the _ statutory

period of limitation. A further

element of his cause of action is a

statement of facts showing that he

had no notice or means of knowledge

which, if followed by inquiry, would

have shown the true facts."

[Citations omitted] "However, the

latter requirement has been relaxed

in cases involving’ confidential

relationship,-—because facts which

justify investigation in the ordinary

case would not excite suspicion where

the circumstances show a right to

rely upon the representations of

another and the same degree of

diligence should not be required."

Id. p. 242

Nothing happened in petitioner’s underlying

case to excite petitioner’s suspicion that he

was being defrauded by the respondents. Because

of the existence of a fiduciary relationship

between respondents and petitioner, petition

had every right and justification to

detrimentally rely on the statements) and

representations conveyed to him by respondents

in the underlying Housing Authority case.

In Kimball _v. Pacific Gas & Electric

Company (1934) 220 C. 203, a very similar

concealment [to the one petitioner alleges

respondents committed] took place. Plaintiff in

this case was injured in a work related injury

by an employee of a company other than

4S inl Aeit bs

plaintiff’s. P.G. & E. and the other company

set out on a campaign to conceal this fact from

the damaged plaintiff. This concealment of the

two companies was successful, until plaintiff

discovered a letter that set forth the true

facts and facts regarding the concealment. [So

too, was respondents’ concealment successful

until petitioner discovered the concealment. ]

The court held:

"., . « a fraudulent concealment

by the defendant of the facts upon

which a legal common-law action is

based, under the proper

circumstances, tolls the statute

until discovery and that upon

discovery the statute applicable to

that particular action then commences

to run." Id. p. 210

The respondents set out on ae similar

concealment in the underlying case. Respondents

failed to file required claims under the

Government Claims Act. Then respondents

concealed this negligent act from petitioner for

over one and one-half years. Even when

respondents abandoned representation of

petitioner, respondents continued to conceal

this negligent act from petitioner.

Respondents’ defense, by way of the

underlying Demurrer, was that petitioner should

have discovered this negligent act as soon as

petitioner was substituted, In Pro Se.

Respondents were under a Fiduciary Duty and

Ethical Duty to disclose this concealment to

petitioner. Respondents breached both of these

duties.

After all, an attorney [respondents] is

[are] an officer[s] of the court.

"The relation between attorney

and client is a fiduciary relation of

the very highest character, and binds

the attorney to most conscientious

fidelity--uberrima fides. (Cox v.

Delmas (1893) 99 C. 104" 1 Witkin,

California Procedure, Attorneys,

Section 95 at p. 113

It is a clear violation of petitioner’s

right to "due process of law" to bar petitioner

from litigating a valid and ripe cause of action

for fraud against respondents.

This Court has not sanctioned the denial of

due process of law. As the Court has stated:

"As our decisions have

emphasized time and again, the Due

Process Clause grants the aggrieved

party the opportunity to present his

case and have its merits’ fairly

judged. Thus it has become a truism

the “some form of hearing" is

required before the owner is finally

deprived of a protected property

interest. Board of Regents v Roth,

408 US, at 570-571, n8, 33 L. Ed2d

548, 92 S Ct 2701 (emphasis in

original)."“ Logan v. Zimmerman Brush

Company (1982) 455 US 422, 433, 71

L.Ed2d 265, 102 S Ct 1148.

"The Court traditionally has

held that the Due Process Clauses

protect civil litigants who seek

recourse in the courts, either as

defendants hoping to protect their

property or as plaintiffs attempting

to redress grievances. Id. p. 429

In the Logan case, Justice Powell,

judgment, stated:

"It is necessary for this Court

to decide cases during almost every

Term on due process and equal

protection grounds. Our opinion in

these areas are often criticized,

with justice, as lacking consistency

and clarity. Because these issues

arise in various’ settings, and

opinions are written by each of nine

Justices, consistency of language is

an ideal unlikely to be achieved."

Id. p. 443 Fn.

with

whom Justice Renquist joins, concurring in the

Petitioner respectfully requests the Court

grant review of this case to decide if

petitioner has a valid cause of action for fraud

against respondents.

CONCLUSION

No individual, whether it be a partnership,

legal entity or petitioner should be denied due

process and equal protection of the law under

the United States Constitution, made applicable

to each state through the Fourteenth Amendment.

The Court should not allow state courts,

even the highest state court, to legislate the

law. The separation of powers concept is deeply

rooted in our system of government.

Accordingly, when a vague statute is passed

into law, such as California Civil Code of

Procedure §340.6, that statute should be

stricken from use until the legislature writes

a statute clear enough so that persons of common

intelligence must not necessarily guess at the

meaning. If the Court allows California’s

present statute of limitations for Legal

Malpractice to go unchallenged, the appellate

courts will continue to be inundated with legal

malpractice cases, just as they have since the

Laird decision. A result that Justice Mosk

legally reasoned and so accurately predicted in

the Laird case.

Petitioner respectfully prays that this

Court consider the grave effects when due

process is denied upon the public, other general

partnerships and petitioner, grant this writ,

accord petitioner the process deserved, and

order the California Supreme Court to reverse

the Court of Appeal, Third Appellate District,

to overturn the lower court’s denial of Cullen’s

procedural DUE PROCESS right to bring causes of

action for legal malpractice and fraud against

respondents.

DATED: June 25, 1993

Respectfully submitted,

frie | LX

-Mark~?.—Cullen——

P.O. Box 1215

Shingle Springs, CA 95682

PETITIONER, IN PRO SE

A-1

APPENDIX A

Third Appellate District No. C012365

$031216

IN THE SUPREME COURT OF THE STATE OF

CALIFORNIA

IN BANK

MARK T. CULLEN, Appellant

Vv. FILED: MAR. 31, 1993

Robert Wandruff Clerk

ROBERTSON, SMITS & WADE MTRAINOR Et Al.,

Respondents

Appellant’s petition for review DENIED.

LUCAS

Chief Justice

B-1

APPENDIX B

NOT FOR PUBLICATION

IN THE COURT OF APPEAL FOR THE STATE OF

CALIFORNIA

THIRD APPELLATE DISTRICT

(SACRAMENTO )

FILED: FEBRUARY 1, 1993

MARK T. CULLEN, Plaintiff

and Appellant,

3 Civ.C012365

(Super.Ct.No.

CV520230)

Vv.

TRAINOR, ROBERTSON, SMITS &

WADE, Defendants and

Respondents.

mm ee ee eee eee eee

OPINION ON DENIAL

OF PETITION FOR REHEARING

Cullen petitions for a rehearing. His sole

noteworthy complaint is that the opinion’s

principal theory of resolution of his fraud

claim does not squarely extend to part of his

case. While the point has arguable merit, the

underlying claim has no merit for reasons that

B-2

closely parallel those given in the opinion.

Cullen had worked on four construction

contracts for the Housing Authority, all of

which were canceled in April 1985. The Housing

Authority filed its suit, in July 1985, for

breach of contract as to only one of these, the

Rio Linda contract. Cullen retained the

defendant law firm and they agreed to file a

cross-complaint for damages for breach on all

four contracts on tort and contract theories.

The cross-complaint defendants filed, in

February 1987, was limited to the Rio Linda

contract and only presented a theory sounding in

contract. As explained in the opinion, Cullen

sustained actual injury when this cause of

action was lost in the trial of June 1987.

Cullen represented himself thereafter. He

alleged that, when he learned of the Tort Claims

Act in law school in the fall of 1989, he

discovered defendants had defrauded him by

failing to tell him that they had impaired his

opportunity to pursue tort theories on the four

B-3

causes of action. On August 14, 1990, he filed

a motion to amend his existing cross-complaint,

apparently seeking, inter alia, to add counts

stating causes of action for damages on the

other three contracts. The Housing Authority

opposed this motion and it was denied.

Cullen suggests that the theory in the

opinion rejecting his fraud claim for lack of

causation of harm only pertains to the Rio Linda

contract cause of action that had been stated in

the original cross-complaint. He argues that he

was defrauded by defendants concealing their

failure to file government tort claims as to the

other three contracts, and as to this he

suffered no actual harm until the denial of his

motion to amend in 1990. He submits that the

statute of limitations to litigate the three

other contract claims was not barred by the

statute of limitations because "they relate

back" to the date the Housing Authority sued him

on the Rio Linda contract.

The relation back theory is untenable.

B-4

(See 5 Witkin, Cal. Procedure (3d ed. 1985)

Pleading, § § 1161-1162.) A claim of breach of

separate contracts concerning the construction -

of structures at different locations is a wholly

different legal liability or obligation from

that stated in the original cross-complaint and

cannot relate back for purposes of evading the

statute of limitations.

Cullen knew in 1987 that the cross-

complaint prepared by defendants did not put in

issue the other three contract causes of action.

He took no action to pursue these causes until

1990. Assuming for the sake of discussion that

defendants concealed a failure to _ file

government tort claims concerning’ these

contracts, no harm to Cullen can be attributed

to this delict.

These causes of action must have arisen

prior to April 1985 when all of the contracts

were terminated. If, as Cullen suggests, these

were independent causes of action, he was free

to pursue them in an independent action or to

axe ee

B-5

move to amend and include them in the existing

action. The failure to do so until after the

expiration of the period of limitations on a

action for breach of contract is the cause of

any harm for loss of a judicial remedy on the

causes of action. Defendants’ failure to

disclose that they had not filed government tort

claims did not prevent Cullen from pursuing

these causes of action on a theory sounding in

contract. Having slept on his rights sounding

in contract, if any, to recover from the Housing

Authority for the breach of these three

contracts, Cullen cannot recover from his former

counsel for failing to perfect a potential

alternative remedy, for the reasons given in the

opinion.

The petition for rehearing is denied.

BLEASE , Je

We concur:

PUGLIA , P.J.

SCOTLAND , Je

Cel

APPENDIX C

NOT TO BE PUBLISHED

IN THE COURT OF APPEAL OF THE STATE OF

CALIFORNIA

THIRD APPELLATE DISTRICT

(SACRAMENTO)

FILED: JANUARY 4, 1993

MARK T. CULLEN, Plaintiff

and Appellant,

3 Civ.C012365

(Super.Ct.No.

CV520230)

TRAINOR, ROBERTSON, SMITS &

WADE, Defendants and

Respondents.

This is an appeal froma judgment following

dismissal after a general demurrer was sustained

without leave to amend. Plaintiff Mark Cullen

seeks to prosecute a cause of action against

defendants Trainor, Robertson, Smits & Wade, the

law firm whose attorneys represented him during

a lawsuit brought against him for breach of

contracts to construct public housing for the

County of Sacramento. He claims that the law

C-2

firm abandoned its defense and failed to

prosecute a counter claim against the plaintiff

in that action. A general demurrer was

sustained on the ground that the action is

barred by the statute of limitations, Code of

Civil Procedure section 340.6.”

Cullen contends that the trail court erred

in applying the statute of limitations. We will

conclude that the statute of limitations began

on the date the judgment in the underlying

action was entered against the partnership of

which Cullen was a member, October 13, 1987, for

that is the date upon which he suffered injury

to his interests. That date is more than one

year form the date on which the complaint in

this action was filed, April 29, 1991. We also

will conclude that the limitations period was

not tolled by reason of an alleged fraud in the

nondisclosure of defendants’ failure to meet the

claims statute, an alleged predicate to success

22 References to a section are to the Code

of Civil Procedure unless otherwise indicated.

C-3

on the cross-complaint brought in the Housing

Authority action, because such a fraud was not

a legal cause of injury sustained.

We will affirm the judgment (order of

dismissal).

FACTS AND PROCEDURAL BACKGROUND

Cullen’s first complaint for malpractice in

this action was filed on April 29, 1991. The

verified complaint was filed in propria persona,

on his own behalf and in the name of Cullen

Development Company, a partnership. He alleged,

among other things, that Cullen Development

Company suffered severe financial damages as a

result of the same alleged attorney malpractice

of which he complains. A demurrer was sustained

to the first complaint as to Cullen Development

Company without leave to amend and with respect

to Cullen with leave to amend. No issue is

tendered on the appeal concerning the propriety

of the demurrer granted with respect to Cullen

Development Company.

The demurrer we review was granted as to

c-4

Cullen’s first amended complaint, styled

"Further Amended First Amended Complaint"

consisting of an introduction and four counts.

Stripped of conclusions of law, evidentiary

matter (see 4 Witkin, Cal. Procedure (3d ed.

1985) Pleading, § § 338, 346), and immaterial

asides the complaint makes the following

material allegations of fact.

In September 1985 Cullen retained Trainor,

Robertson, Smits & Wade (Counsel) to represent

him in the defense and prosecution of a cross-

complaint in a lawsuit brought against him by

the Housing Authority of Sacramento County

(Housing Authority). Cullen was led to believe

that the cross-complaint would include counts

stating causes of action for breach of contract

and tortious breach of contract. Counsel failed

to file a governmental tort claim as a predicate

for the contemplated cross-complaint within the

period prescribed by statute. The cross-

complaint, filed on February 5, 1987, asserted

only a cause of action for breach of contract.

C-5

Counsel also failed to prepare properly for

trail. Counsel concealed the true reason for

failing to file the cross-complaint as

originally proposed and informed Cullen that the

original scope of the cross-complaint could be

achieved under affirmative defenses and by way

of an amendment to conform to proof at trial.

Less than a month before the scheduled

trial date of June 16, 1987, Counsel informed

Cullen that they desired to terminate the

attornment. At their request, Cullen signed the

papers substituting him as his own attorney and

the substitution was filed two weeks prior to

trial. The day before trial Counsel advised

Cullen that if the matter came on for trial as

scheduled he could delay the trial _ by

peremptorily challenging tthe first judge

assigned and filing a bankruptcy petition to

obtain a stay of pending proceedings against

him. Counsel failed to inform Cullen of the

proper method to file a bankruptcy when both an

individual and a partnership were involved. In

C-6

terminating the attornment Counsel “again

concealed their procedural errors, by not

informing [Cullen] of [their] procedural errors

to date."

Cullen had a meritorious defense and

counterclaim in the Housing Authority lawsuit.

If Counsel had acted competently in representing

him he would have prevailed. During 1989 Cullen

represented himself and Cullen Development

Company, a general partnership operating under

a general building contractor’s license of which

Cullen was the qualifying partner, in an

administrative hearing before the Registrar of

Contractors, defending against an accusation

that discipline was warranted against the

license because of failure to complete the

contracts in issue in the Housing Authority’s

lawsuit without legal excuse. On June 25, 1990,

the Registrar of Contractors issued a decision

in the matter finding that discipline was not

warranted on the ground of failure to complete

the contracts because the failure was caused by

C-7

misconduct of the Housing Authority in the

administration of the contracts.

On August 30, 1990, Cullen filed a motion

to amend his cross-complaint in the Housing

Authority lawsuit. On September 7, 1990, the

motion was denied. On October 30, 1990, the

court granted a partial summary judgment motion

in favor of the Housing Authority denying relief

under the cross-complaint. On April 4, 1991,

judgment was entered against Cullen in favor of

the Housing Authority.

Despite numerous opportunities to disclose

their negligence in failing to file a

governmental tort claim counsel failed to do so.

Counsel concealed this negligence by falsely

stating to Cullen, for the purpose of deceiving

him, that the reason they delayed in filing the

cross-complaint and filed the abbreviated

version of the cross-complaint was Cullen’s lack

of funds. The true en that counsel

failed to research the Tort Claims Act in a

timely fashion, failed to file a governmental

C-8

tort claim within the required time, and failed

to do the research necessary to find an

exception to cure their error.

Cullen relied upon the misrepresentation in

believing that counsel had made a zealous effort

to file the appropriate cross-complaint. He did

not discover Counsel’s failure to file a

governmental tort claim until the fall of 1989.

That ends the pertinent allegations in Cullen’s

complaint.

Counsel demurred contending that Cullen’s

first amended complaint fails to state a cause

of action not barred by the applicable statutes

of limitations. The demurrer attacks the

complaint, viewed in the context of matters

occurring in the Housing Authority lawsuit - of

which judicial notice had been taken in

proceedings on the earlier demurrer. The record

of that litigation shows the following. The

defendants in the Housing Authority lawsuit

included Cullen and Cullen Development Company.

When the matter came on for trial on June 16,

C-9

1987, it was stayed as to Cullen because of his

bankruptcy petition filing but went forward as

to the other defendants. At the conclusion of

the trial, the court announced that judgment

would be granted in favor of the Housing

Authority against Cullen Development Company.

On October 13, 1987, that judgment was entered.

- After the bankruptcy stay was lifted as to

Cullen the Housing Authority lawsuit proceeded

as to him. The issues tendered in the cross-

complaint were resolved in favor of the Housing

Authority in a partial summary judgment which

was based upon the theory the earlier judgment

against Cullen Development Company warranted

issue preclusion against Cullen.

The trial court in this action sustained

the demurrer to Cullen’s first amended

complaint.

DISCUSSION

Introduction

"In reviewing the sufficiency of a

C-10

complaint against a general demurrer, we are

guided by long-settled rules. ‘We treat the

demurrer as admitting all material facts

properly pleaded, but not contentions,

deductions, or conclusions of fact or law.

[Citation.] We also consider matters which may

be judicially noticed.’ (Serrano v. Priest

(1971) 5 Cal.3d 584, 591, [96 Cal.Rptr. 601, 487

P.2d 1241, 41 A.L.R.3d 1187].) Further, we give

the complaint a reasonable interpretation,

reading it as a whole and its parts in their

context. (Speegle v. Board of Fire Underwriters

(1946) 29 Cal.2d 34, 42 [172 P.2d 867].) When

a demurrer is sustained, we determine whether

the complaint states facts sufficient to

constitute a cause of action. (See Hill v.

Miller (1966) 64 Cal.2d 757, 759 [51 Cal.Rptr.

689, 415 P.2d 33].) And when it is sustained

without leave to amend, we decide whether there

is a reasonable possibility that the defect can

be cured by amendment: if it can be, the trial

court has abused its discretion and we reverse;

C-11

if not, there has been no abuse of discretion

and we affirm. (Kilgore v. Younger (1982) 30

Cal.3d 770, 781, [180 Cal.Rptr. 657, 640 P.2d

793]; Copper v. Leslie Salt Co. (1969) 70 Cal.2d

627, 636 [75 Cal.Rptr. 766, 451 P.2d 406].) The

burden of proving such reasonable possibility is

squarely on the plaintiff. (Copper v. Leslie

Salt Co., supra, at p. 636.)" (Blank v. Kirwan

(1985) 39 Cal.3d 311, 318.)

. Cullen contends that the trial court erred

in sustaining the demurrer. He argues that he

should not have been barred under the statute of

limitations pertaining to legal malpractice,

section 340.67*, for two reasons. The first is

23° section 340.6 in pertinent part provides:

“An action against an attorney for a wrongful act

or omission, other than for actual fraud, arising

in the performance of professional services shall

be commenced within one year after the plaintiff

discovers, or through the use of reasonable

diligence should have discovered, the facts

constituting the wrongful act or omission, or four

years from the date of the wrongful act or

omission, whichever occurs first. In no event

shall the time for commencement of legal action

exceed four years except that the period shall be

tolled during the time that any of the following

exist:

(1) The plaintiff has not sustained actual

injury;

C-12

that he suffered no "actual damages" until the

order denying him leave to amend the cross-

complaint. The second is that he pled actual

fraud in concealing the failure to file a

governmental tort claim. We will discuss these

claims seriatim; neither is persuasively

supported and the contention of error is not

meritorious.

Cullen claims that his cause of action is

timely under section 340.6 because he suffered

no “actual damages" until the order denying him

leave to amend the cross-complaint. He asserts

he “discover[ed] . . . the facts constituting

the wrongful act or omission" of Counsel in the

allegedly wrongful failure to prepare the case

for trial in June 1987.

The question is when did Cullen “sustain

actual injury" within the meaning of the

(3) The attorney willfully conceals the

facts constituting

the wrongful act or omission when such facts are

known to the attorney, except that this subdivision

shall toll only the four-

year limitation;. .

C-13

statute. Defendants argue that Cullen sustained

injury in 1987 when the adverse judgement was

entered against Cullen Development Company,

among other reasons, because "his interest in

all partnership claims against the Housing

Authority were [sic] lost and he had sustained

injury at that time." The argument is

persuasive.

The statutory provision that the

limitations period is tolled during the time

"the plaintiff has not sustained actual injury"

is premised upon the view that the cause of

action does not accrue until the alleged

negligence results in some actionable harm to

the plaintiff.

"If the allegedly negligent conduct does

not cause damage, it generates no cause of

action in tort. The mere breach of a

professional duty, causing only nominal damages,

speculative harm, or the threat of future harm -

- not yet realized -- does not suffice to create

a cause of action for negligence. Hence, until

the client suffers appreciable harm as a

consequence of his attorney’s negligence, the

client cannot establish a cause of action for

malpractice. Prosser states the proposition

succinctly, ‘It follows that the statute of

limitations does not begin to run against a

negligence action until some damage _ has

C-14

occurred.’ [{] The cause of action arises,

however, before the client sustains all, or even

the greater part, of the damages occasioned by

his attorney’s negligence. Any appreciable and

actual harm flowing from the _ attorney’s

negligent conduct establishes a cause of action

upon which the client may sue." (Budd v. Nixen

(1971) 6 Cal.3d 195, 200-201, citations and fn.

omitted. )

Cullen submits that he suffered no

appreciable harm by reason of the adverse

judgement in 1987 because the action was stayed

with respect to his liability and his cross-

claim against the Housing Authority. Cullen’s

implicit claim is that the harm he suffered

while wearing his partnership hat cannot be

considered harm to him under his individual hat.

This is not persuasive.

"The underlying fallacy in respondent’s

argument is the assumption that the partnership

is a distinct unit, separate form the members

thereof. Occasional suggestions of this

‘entity’ theory of partnership are found in

statutes or decisions, but apart from

exceptional situations, a partnership is not

considered an entity, but an association of

C-15

individuals." (Reed v. Industrial Acc. Com.

(1937) 10 Cal.2d 191, 192-193.) "A partner is

a coowner with the other partners of specific

partnership property holding as a tenant in

partnership." (Corp. Code, § 15025, subd. (1).)

As related, Cullen alleged in his first verified

complaint that the partnership suffered the loss

of a valuable property right, a chose in action,

under the adverse judgment by reason of the

alleged malpractice of Counsel. Cullen suffered

appreciable harm in the loss or destruction of

this partnership property of which he was a

coowner.

As a partner Cullen could have commenced an

action to recover for the alleged malpractice

upon the entry of the adverse judgment on the

partnership’s cross-complaint. (See Laird v.

Blacker (1992) 2 Cal.4th 606, 615; Corp. Code,

§ 15009; see generally Owens v. Palos Verdes

Monaco (1983) 142 Cal.App.3d 855.) The policy

of the statutes of limitation is one of repose,

to preclude the assertion of stale claims. (See

C-16

3 Witkin, Cal. Procedure, supra, Actions, §

309.) In these circumstances, an exceptional

recognition of a partnership "entity" theory

would defeat this policy and is unwarranted.

Cullen also makes a protracted argument

that is an attempted collateral attack in this

court on the judgment in 1987 in an independent

lawsuit. He argues that judgment should be

found “not controlling in the case at bar"

because in his view the trial court in that

lawsuit erred in failing to stay the proceedings

against his partners and Cullen Development

Company as a result of his filing of a

bankruptcy petition. He argues that the trial

court in that lawsuit lacked jurisdiction to

enter judgment against his codefendants because

it had an adverse effect on his bankruptcy

estate. He requests that we "vacate" the 1987

judgment in the Housing Authority action. He

also argues that the degree of misconduct of

Counsel was so egregious as to warrant equitable

relief from the adverse 1987 judgment.

C-17

We imply no view on the potential merit of

these arguments if raised in an appropriate

forum. This is not such a forum. The 1987

judgment was obtained in an entirely different

action than the one we review. It runs in favor

of a different party. If the 1987 judgment can

be "“vacated" or otherwise overcome that must

occur in an action to which the parties to that

judgment are joined. If Cullen were to succeed

in such an endeavor he could pursue his original

remedy against the alleged underlying malefactor

and has no claim against Counsel for depriving

him of that remedy. If not, then it follows, as

Cullen himself artlessly suggests, harm was done

to him in the entry of the judgment in 1987 and

at that point time under the one year period of

limitations provided in section 340.6 pertaining

to his cause of action against Counsel began to

run.

IIl

Failing these claims Cullen argues that the

statute of limitations was tclled until his

C-18

discovery that defendants fraudulently concealed

their alleged negligence in failing to file a

governmental tort claim which would have allowed

them to plead a tort theory in the cross-

complaint against the Housing Authority as an

alternative to the contract theory which was

plead. This, he argues, renders section 340.6

inapplicable.

This theory is based upon the view that, in

addition to the cause of action for malpractice

for abandonment of his defense to the Housing

Authority action, Cullen stated a cause of

action for fraud relating to his cross-complaint

which could be maintained within three years of

discovery under section 338, subdivision (d).**

That discovery, so he alleges, occurred in

August 1989 when he became aware of the

concealment. The argument does not attend to

24 section 338, subdivision (d), provides a

three year period of limitation for “An action for

relief on the ground of fraud or mistake. The

cause of action in that case is not to be deemed to

have accrued until the discovery, by the aggrieved

party, of the facts constituting the fraud or

mistake."

——

C-19

the language of section 340.6, which

distinguishes between "actual fraud", that is

excepted from its ambit, and “wilfully

conceal[ing] the facts constituting the wrongful

act or omission when such facts are known to the

attorney .. ."

Regardless of that distinction, Cullen’s

argument fails for the reason that the alleged

fraud was not the legal cause of his injuries.

"“[Tjhe actor’s negligent conduct is not a

substantial factor in bringing about harm to

' another if the harm would have been sustained

even if the actor had not been negligent."

(Rest.2d Torts, § 432, subd. (1).) As discussed

above, Cullen’s interest were injured when the

judgment was entered against Cullen Development

Company in favor of the Housing Authority on its

complaint and against the company on its cross-

complaint. As explained, the statute of

limitations started to run on regarding Cullen’s

malpractice claims predicated upon defendants’

TR eT om

failures to defend against the Housing Authority

C-20

action. For the same reason the statute of

limitations started to run against Cullen’s

malpractice claims regarding the - cross-

complaint.

Cullen seeks to prize off a tort theory of

liability from the contract theory which was

pled in the cross-complaint. He claims the tort

theory could have been brought if a governmental

tort claim had been filed against the public

entity. As to this theory he claims the statute

of limitations was tolled until discovery of the

reason why the tort theory was not pursued. The

viability of this theory is dependent upon its

survivability as an independent cause of action.

That is the defect in the argument.

Whether the cross-complaint sounded in tort

or in contract or both, it advanced but one

cause of action. Had the defendants done what

Cullen says they should have done, i.e., timely

filed a tort claim and amended the cross-

complaint to advance this as an additional but

alternative theory of recovery, the unfavorable

C-21

default judgment nonetheless would have been

entered in the Housing Authority case and would

have barred any subsequent action on the claim.

The judgment entered in favor of the Housing

Authority adjudicated the merits of Cullen’s

cross-complaint against the Housing Authority

regardless of theory of recovery. (See

generally, Perry v. Robertson (1988) 201

Cal.app.3d 333.) The cause of harm to Cullen

thus occurred at the point of entry of the

judgment on the cross-complaint. For the

reasons already advanced, the statute of

limitations then began to run on claims arising

out of loss of that cause of action. The

alleged failure to plead the tort theory and the

"fraudulent" failure to disclose the reason did

not cause Cullen any harm because it cannot be

said that Cullen would have recovered “but for"

these wrongs.

DISPOSITION

Cullen’s motion for judicial notice on this

appeal of certain materials in the record of his

C-22

appeal in the Housing Authority v. Cullen

litigation is denied. The judgment (order of

dismissal) is affirmed.

BLEASE , Je

We concur:

PUGLIA , P.J.

SCOTLAND , J.

\ D-1

APPENDIX D

| MEMERING, VARANINI, HURST,

CROWLE & TRIMBLE

POST OFFICE BOX 590

SACRAMENTO, CALIFORNIA 95812-0590

TELEPHONE: (916) 923-2800 \

Attorneys for Defendants

Law Firm of Trainor, Robertson, Smits

& Wade and CHARLES TRAINOR, STUART SMITS,

WILLIAM DAVIS, DAVE ROBERTSON and

GARY FUNAMURA, individually

FILED: SEPTEMBER 27, 1991

IN THE SUPERIOR COURT OF THE STATE OF

CALIFORNIA IN AND FOR THE COUNTY

OF SACRAMENTO

CULLEN DEVELOPMENT COMPANY, NO. 520230

et al.,

Plaintiffs, ORDER AND JUDGMENT

OF DISMISSAL RE:

DEMURRER

vs.

DATE: SEPT. 24, 1991

TRAINOR, ROBERTSON, SMITS TIME: 9:00 A.M.

& WADE, et al., DEPT: 28

THE HONORABLE JOE

S. GRAY

Defendants.

The demurrer of defendants, LAW FIRM of

TRAINOR, ROBERTSON, SMITS & WADE, and CHARLES

) TRAINOR, STURART SMITS, DAVE ROBERTSON, WILLIAM

DAVIS AND GARY FUNAMURA, individually, to the

D-2

Further Amended First Amended Complaint of

plaintiff, MARK T. CULLEN, came on regularly for

hearing in this Court, Department 28 of

Sacramento County Superior Court, before the

Honorable Joe S. Gray on September 24, 1991.

Plaintiff MARK T. CULLEN, represented himself

and appeared on his own behalf. Defendants, Law

Firm of TRAINOR, ROBERTSON, SMITS & WADE, and

CHARLES TRAINOR, STUART SMITS, DAVE ROBERTSON,

WILLIAM DAVIS and GARY FUNAMURS, individually,

were represented by their counsel, HENRY W.

CROWLE of MEMERING, VARANINNI, HURST, CROWLE &

TRIMBLE.

On proof made to the satisfaction of the

court that grounds for dismissal, with

prejudice, and judgment thereon were proper as

supported by defendants’ demurrer, points and

authorities, declarations, and other moving

papers herein, and that defendants’ demurrer be

sustained without leave to amend,

IT IS HEREBY ADJUDGED, ORDERED AND DECREED

that defendants’ demurrer be, and the same

D-3

hereby is, sustained, without leave to amend on

the basis that plaintiff’s Further First Amended

Complaint states no facts to constitute any

cause of action whereby the action be dismissed,

with prejudice, in its; entirely, and that

judgment of dismissal be awarded to defendants.

DATED: SEPTEMBER 27, 1991

JOE S. GRAY

JUDGE OF THE SUPERIOR COURT

E-1

APPENDIX E

MEMERING, VARANINI, HURST,

CROWLE & TRIMBLE

POST OFFICE BOX 590

SACRAMENTO, CALIFORNIA 95812-0590

TELEPHONE: (916) 923-2800

Attorneys for Defendants

Law Firm of Trainor, Robertson, Smits

& Wade and CHARLES TRAINOR, STUART SMITS,

WILLIAM DAVIS, DAVE ROBERTSON and

GARY FUNAMURA, individually

FILED: JULY 16, 1991

IN THE SUPERIOR COURT OF THE STATE OF

CALIFORNIA IN AND FOR THE COUNTY

OF SACRAMENTO

CULLEN DEVELOPMENT COMPANY, NO. 520230

et al.,

Plaintiffs, ORDER AFTER

HEARING

vs.

DATE: JULY 11, 1991

TRAINOR, ROBERTSON, SMITS TIME: 9:00 A.M.

& WADE, et al., DEPT: 28

THE HONORABLE JOE

S. GRAY

Defendants.

The defendants’ Demurrer in the above-

entitled action came on regularly before this

E-2

court for hearing on July 11, 1991. Considering

defendants’ demurrer, plaintiffs’ opposition,

‘. supporting points and authorities, the court

files herein and on proof made to the

satisfaction of the this Court,

IT IS HEREBY ORDERED THAT:

1. The Demurrer to Complaint of Cullen

Development Company is sustained without leave

to amend.

2. The Demurrer to the third cause of

action for breach of contract is sustained with

leave to amend for failure to state whether the

alleged contract was written or oral.

3. The Demurrer to the first, second and

fourth causes of action are sustained with leave

to amend based on the statutes of limitations.

4. Plaintiff MARK T. CULLEN shall have 10

days after service of this order in compliance

with Local Rules, Rule 32, to amend his

complaint.

5. Defendants shall have 10 days from date

of service of amended complaint to file a

_——

responsive pleading.

DATED: JULY 16, 1991

JOE S. GRAY

JUDGE OF THE SUPERIOR COURT

tae |

APPENDIX F

Third Appellate District No. C011217

S030563

IN THE SUPREME COURT OF CALIFORNIA

IN BANK

HOUSING AUTHORITY OF THE COUNTY OF SACRAMENTO,

RESPONDENT

Ve. FILED: FEB. 10, 1993

Robert Wandruff Clerk

MARK T. CULLEN, APPELLANT

Appellant’s petition for review DENIED.

LUCAS

Chief Justice

G-1

APPENDIX G

COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

FILED: DECEMBER 15, 1992

HOUSING AUTHORITY OF THE

COUNTY OF SACRAMENTO,

)

) 3 Civ.C0i112i7

Plaintiff and Respondent, )

) (Super.Ct.No.

) CV331596)

V. )

)

MARK T. CULLEN,

Defendant and Appellant.

By the Court:

Appellant’s petition for rehearing is

denied.

Dated: December 15, 1992

SIMS, Acting P.J.

H-1

APPENDIX H

NOT TO BE PUBLISHED

COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

( SACRAMENTO)

FILED: NOVEMBER 20, 1992

HOUSING AUTHORITY OF THE

COUNTY OF SACRAMENTO,

—

3 Civ.C011217

Plaintiff and Respondent,

(Super.Ct.No.

CV331596)

Vv.

MARK T. CULLEN,

Defendant and Appellant.

INTRODUCTION

Although what is past is always prologue,

in this appeal we must get a particularly long

running start to comprehend the nature of the

appellate contentions. Plaintiff Housing

Authority of Sacramento County (SCHA) filed this

action in 1985 for breach of contract against

Mark T. Cullen.” The Cullens and _ the

= Also named defendants in the amended

complaint were James and Richard Cullen and the

business in which the three Cullens were partners,

Cullen Development Company (hereafter, “the

partnership”). Any subsequent undesignated “Mr.

Cullen” references will be to Mark Cullen.

H-2

partnership filed a cross-complaint for breach

of contract in February 1987. At the eventual

start of trial in June 1987, Mr. Cullen produced

a copy of a petition for voluntary bankruptcy

(pursuant to title 11 of the United States Code)

that he had just filed in federal court, which

the trial court stated "preclude[d] any further

proceedings against Defendant Mark Thomas

Cullen." Ultimately, the court entered judgment

against James and Richard Cullen and the

partnership on both the complaint and cross-

complaint in 1987.

Following Mr. Cullen’s voluntary dismissal

of his bankruptcy petition in December 1989,

SCHA resumed proceedings against him. In August

1990, Mr. Cullen sought to amend his surviving

portion of the cross-complaint (on which the

trial court had taken no action) to add causes

of action based on his successful defense of his

contractor’s license in a 1989-1990 disciplinary

administrative proceeding instigated by SCHA.

The trial court denied the motion without

H-3

comment. SCHA then moved for summary judgment

on the cross-complaint on the ground of issue-

preclusion, based on the fact it had prevailed

on the cross-complaint against the other cross-

claimants. The trial court granted the motion.

Immediately prior to the February 1991 trial

against Mr. Cullen, SCHA successfully moved in

limine to exclude the introduction of any

evidence in support of affirmative defenses

which were related to the now-defunct cross-

complaint. At the conclusion of trial, the

court ruled in favor of SCHA but stayed entry of

judgment pending additional argument on any

issue-preclusive effect of the administrative

proceeding. Ruling (after supplementary

briefing) that there was no preclusive effect,

the trial court entered judgment against Mr.

Cullen in April 1991.

This brings us to Mr. Cullen’s pro. per.

appellate contentions. He asserts the 1987

judgments entered against the partnership and

his partners are invalid because the Cullens

H-4

were abandoned by the attorneys representing

them and because his bankruptcy stay should have

been extended to his co-defendants. He also

claims the trial court should never have allowed

the attorneys to substitute out of the action,

and should have allowed a continuance once they

did. The short answer to this category of

argument is that it comes too late in the day--

the 1987 judgments against the partnership and

the other Cullens, never having been appealed,

are now final and may not be attacked here by

Mr. Cullen either directly or collaterally. Mr.

Cullen also challenges the denial of his motion

to amend his cross-complaint, the grant of

summary judgment on the cross-complaint, the

preclusive effect on his affirmative defense

accorded to the summary judgment ruling, and the

failure to accord the administrative proceeding

any preclusive effect in the present action. We

shall affirm.

FACTS

To focus (at least initially) on the

H-5

transaction which is the subject of the original

complaint and cross-complaint, SCHA and the

Cullen partnership executed a written contract

in August 1984 for construction of a 20-unit

low/moderate-income housing project in Rio Linda

at 6029 Dry Creek Road. The project was to

begin in August 1984 and be _ substantially

completed by March 1985. The partnership

stopped work on the project in April 1985,

having completed 46 percent of it, and ignored

SCHA’s demands to finish the job. SCHA took

charge of the project and rebid it to another

contractor. After deducting a number of

credits, the cost to SCHA of completion was

approximately $366,000.

In a curious maneuver, SCHA filed both a

complaint and an amended complaint for breach of

this contract on July 22, 1985. James, Richard,

and Mark Cullen filed an unverified answer

individually and as Cullen Development Company;

they included the affirmative defense of a

breach of contract on the part of SCHA, as well

H-6

as misrepresentation and fraud by SCHA in the

inducement of the contract. For some reason,

Tom Cullen also answered, although not named in

the amended complaint.*®

On February 5, 1987, the parties filed a

stipulation for an order permitting defendants

Cullen and the partnership to file a cross-

complaint (despite the pending February 18 trial

date) "containing a cause of action for Breach

of Contract only." This pleading alleged that

SCHA had frustrated the ability of the

partnership to complete the project by altering

terms and failing to pay for work completed in

a timely fashion. On February 19, the case was

reset for trial in June 1987 because there were

no available courtrooms.

On June 3, 1987, James, Richard, and Mark

i The original complaint included Tom

Cullen as a defendant; the amended complaint

deleted him. There is no explanation of the

change. There were indications at the second trial

in this matter that Tom Cullen was not a member of

the partnership (although he is a brother of Mr.

Cullen). As he is not a significant character in

the lawsuits (other than as the executor of

numerous proofs of service), we will not further

concern ourselves with him.

H-7

Cullen filed a substitution of themselves in

propria persona for their retained counsel

(Trainor, Robertson & Smits); Mark Cullen signed

a substitution on behalf of the partnership.

Trainor, Robertson & Smits nonetheless appeared

"specially" to argue for a continuance of trial,

arguing they had substituted out because they

had not been paid and their former clients would

not be able to find alternative counsel in time

for trial. Mark Cullen represented that he and

his fellow litigants would be able to come up

with the money for new counsel within the next

60 days. The court denied that motion.

On the morning of June 16, Richard Cullen

failed to appear for trial and a default

judgment was entered against him. Mark Cullen

filed a peremptory challenge against’ the

assigned judge, and the matter was reassigned to

a different judge for trial that afternoon.

When the matter was called for trial at 1:30

p.m., Mark Cullen presented the court with his

bankruptcy petition, which had been filed 10

H-8

Minutes earlier. He remained present at the

hearing. After perfunctory questioning of James

Cullen and a witness testifying to SCHA’s

damages, the court ruled against James Cullen

and the partnership on SCHA’s complaint and on

the cross-complaint. No action was taken

against Mark Cullen on the complaint or on the

cross-complaint. The court initially entered

judgment in favor of SCHA only on the complaint

against Richard and James Cullen and the

partnership; it later amended the judgment to

include the cross-complaint. The judgment

recited that the partnership had appeared "Pro

per by JAMES CULLEN."

In April 1988, the Contractors’ State

License Board (CSLB) filed an accusation against

Mark Cullen’s contractor’s license. This was

based on consumer complaints filed by SCHA in

June 1985 alleging the partnership had abandoned

the Rio Linda Project and three other projects

in April 1985 for which SCHA held contracts with

the partnership. In a decision rendered May 22,

2 ine bsad

H-9

1990 (and adopted by the CSLB on June 25,

1990),?’ the administrative law judge found no

basis for discipline for abandonment of these

four projects because SCHA’s conduct rendered

performance by the partnership impracticable due

to excessive and unreasonable expense and

difficulty.” The CSLB did impose a 30-day

suspension of the license for failure to account

sah Mr. Cullen had requested the trial

court to take judicial notice of the complaint,

accusation, and decision; SCHA raised no

objection. We therefore take judicial notice of

this decision as an official act of the executive

branch. (Evid. Code, §452, subd. (c).) We may

take judicial notice of the truth of its findings

of fact. (Bach v. McNelis (1989) 207 Cal.App.3d

852, 865.)

” To quote a representative passage of

the decision, “[SCHA]’s breaches of covenants and

implied warranties, infra, coupled with selfish and

incompetent project administration, constituted a

material failure of consideration and rendered

Cullen’s continued performance on the Rio Linda

project impracticable due to excessive and

unreasonable difficulty and expense [SCHA]‘s

administrators significantly interfered with Cullen

on the job site and with Cullen’s relationships

with its bonding companies and private line of

credit, substantially hampering Cullen’s ability to

{perform successfully]. The totality of [SCHA]’s

conduct toward Cullen operated to deny Cullen the

benefit of its bargain made with [SCHA] in signing

the contract. The material failure of

consideration and the impracticability due to

excessive and unreasonable difficulty and expense

extinguished Cullen’s obligation to further perform

under the contract and provided Cullen the right to

rescind."

H-10

properly for funds received on the Rio Linda

project.

In September 1990, Mr. Cullen moved for

leave to file an amended cross-complaint.

According to his notice of motion, these new

allegations “were discovered in a_e recent

Administrative Law Case hearing the same legal

issues," which was final as to the CSLB. He

asserted any delay was reasonable because of his

bankruptcy filing. He also claimed he had

wished to await the resolution of the CSLB

proceeding, since it presented the same factual

and legal issues. The proposed cross-complaint

now encompassed all four contracts with SCHA and

contained causes of action for breach of

contract and miscellaneous torts. SCHA opposed

the amendment on several grounds: unreasonable

delay and concomitant prejudice to SCHA; issue

preclusion; failure to comply with procedural

prerequisites for filing tort claims against

governmental agencies; and the _ statute of

limitations with respect to any new cross-

H-11

defendants brought into the action. SCHA’s

counsel also averred he had stipulated to

permitting a cross-complaint to be filed on the

eve of the 1987 trial only if it were limited to

the single breach-of-contract cause of action.

At the hearing on the motion, the court stated

it felt the scope of the cross-complaint in 1987

was a tactical compromise by which Mr. Cullen

should be _ bound.’® The court was also

disturbed by expanding the number of contracts

at issue from one to four and adding tort claims

(although Mr. Cullen expressed his willingness

to abandon the tort claims). The court denied

the motion "in its discretion."

Shortly after obtaining the order

denying this motion to amend, SCHA filed a

motion for summary judgment on the original

cross-complaint. It argued the issue of whether

it had breached the contract with Mr. Cullen

29 The trial court thus accepted the truth of

SCHA’s declaration on this point, which we may not

gainsay. (Beckett v. Kaynar Mfg. Co., Inc. (1958)

49 Cal.2d 695, 699; Philippine Export & Foreign

Loan Guarantee Corp. v. Chuidian (1990) 218

Cal.App.3d 1058, 1077.)

H-12

had previously been adjudicated when the trial

court had entered judgment against the other

cross-complainants (i.e., the partnership and

James and Richard Cullen) on the cross-

complaint. The court granted the motion "for

the reasons stated in the moving party’s points

and authorities."

In its final procedural salvo against

Mr. Cullen, SCHA filed a motion in limine to

exclude evidence of damages arising out of facts

related to the dismissed cross-complaint. In

arguing the motion, SCHA expanded the scope to

any "legal excuse to not .. . performon...

the contract." The court at first denied the

motion. After reexamining SCHA’s authority, the

court ruled that Mr. Cullen was precluded from

introducing any evidence of the conduct on which

the cross-complaint was based as an affirmative

defense.

During trial, Mr. Cullen raised the CSLB

proceedings as a defense, claiming SCHA was

precluded from relitigating the question of his

H-13

breach of contract. The court told him he would

have the opportunity to brief the issue before

it rendered a written judgment. After receiving

the parties’ supplementary briefing, the trial

court ruled it would not give an effect to the

CSLB decision (giving five bases in its written

order). This appeal followed.

DISCUSSION

Mr. Cullen’s bankruptcy petition

has no relevance to these proceedings

Woven throughout Mr. Cullen’s brief on

appeal are references to the effect of his

bankruptcy filing on the validity of the 1987

judgments. We must first purge this spectre

from the discussion.

It is true his interest in the partnership

is considered part of his bankruptcy estate (In

re Manning (10th Cir. 1987) 831 F.2d 205, 207)

and therefore any proceeding by a creditor

against that interest would be subject to the

H-14

automatic stay that is the "fundamental

protection provided by the bankruptcy laws" (11

U.S.C. §362, subd. (a) (1); 1 Collier,

Bankruptcy Manual (3d ed. 1992) §362.01, p.

362-3; §362.03[{1], pp. 362-11 to 362-14).*

Any action taken in violation of the automatic

stay is void and without effect. (In re 48th

Street Steakhouse, Inc. (2d Cir. 1987) 835 F.2d

427, 431.)

However, as noted above, SCHA never

relied on the preclusive effect of the judgments

against the other Cullens and the partnership in

connection with its own complaint; rather, it

relied on the judgments against the other cross-

claimants on the cross-complaint. The automatic

stay of the bankruptcy laws do not apply to

actions brought by debtors. (1 Collier, op.

cit. supra, §362.03, p. 362-15.) Even Mr.

Moreover, even if the partnership were

somehow considered separate from Mr. Cullen’s

estate, the automatic stay| could be applied to it

if any judgment against it would in effect be a

judgment against the debtor. (A. H. Robins Co.,

ot v. Piccinin (4th Cir. 1986) 788 F.2d 994,

EIR PPE ee NG tial murs

sired ies”.

H-15

Cullen admits in one part of his brief that the

bankruptcy stay had no effect on the cross-

complaint. The trial court refrained from any

adjudication of his portion of the cross-

complaint not because of the bankruptcy stay but

because his cause of action vested in the

bankruptcy trustee so Mr. Cullen could not

continue to prosecute his action personally,

absent an order of the bankruptcy court. (See

Lauriton v. Carnation Co. (1989) 215 Cal.App.3d

161, 164-165.)* Thus, even assuming the

judgment against the partnership on SCHA’s

complaint is void on its face and thus subject

to collateral attack (8 Witkin, Cal. Procedure

(3d ed. 1985) Attack on Judgment in Trail Court,

§6, pp. 410-411; §12, pp. 414-415), it is

merely an academic question in the present

31 presumably, the partnership was under no

such disability in prosecuting the cross-complaint

in its own name. However, the parties have not

provided any argument or authority on the point,

and we are not inclined to pursue it further.

There is no suggestion by Mr. Cullen that

the partnership is somehow directly attacking the

prior judgment against it on the complaint. (8

Witkin, op. cit. supra, Judgment, §2, pp. 405-406

{listing various methods of direct attack].)

H-16

proceeding--the judgement on the complaint is

not being used in any preclusive fashion against

Mr. Cullen, and the judgment on the cross-

complaint does not suffer a similar disability.

We consequently will not consider the bankruptcy

stay--or the prior judgment on the complaint--in

any subsequent part of the discussion.

The trial court correctly disallowed

the motion to amend the cross-complaint

The amendment of pleadings is governed

by Code of Civil Procedure section 473, which

provides in pertinent part, “The court may, in

furtherance of justice, and on such terms as may

be proper, allow a party to amend any pleading

- « « - “ While there is a policy of liberality

in permitting amendment, the question of whether

a particular amendment should be allowed is

within the discretion of the trial court. (Moss

Estate Co. v. Adler (1953) 41 Cal.2d 581, 585-

586 [no abuse in denying leave to amend answer

H-17

on eve of trial to assert new defense based on

different facts].)

On appeal, the plaintiff attacks the

trial court’s reliance on the earlier

stipulation filed by Trainor, Robertson & Smits

that limited the cross-claim to one cause of

action. He claims he should not be bound by the

actions of counsel which he characterizes as

"alleged negligence and malpractice."

All the facts underlying the new

contractual causes of action in the proposed

amendment to the cross-complaint were within the

knowledge of Mr. Cullen and his attorneys at the

time of the stipulated cross-complaint in

February 1987 (as they related entirely to

conduct on the part of SCHA prior to the

partnership ceasing work on the four projects in

April 1985).** In exchange for avoiding the

risk of losing the motion for leave to amend on

eve of trial (a denial more likely to occur and

33, We will take Mr. Cullen at his word that

he was willing to waive all other causes of action,

thus avoiding the need to address the additional

objections by SCHA to them.

H-18

be upheld (e.g., Moss Estate Co., supra, 41

Cal.2d at pp. 585-586)), Mr. Cullen’s counsel

agreed to file a cross-claim limited to the one

cause of action for breach of the Rio Linda

contract. Mr. Cullen is consequently bound by

that stipulation, and the trial court correctly

refused to allow amendment in light of it.

It is true a party may seek relief from

the effect of a stipulation pursuant to Code of

Civil Procedure section 473. (In re Marriage of

Carter (1971) 19 Cal.App.3d 479, 489.) However,

even if we characterize Mr. Cullen’s motion to

amend his cross-complaint as incorporating a

"pre-motion" to be relieved from the earlier

stipulation on the basis of "“unknowing[ ]

depriv[ation] of effective representation"

(Daley v. County of Butte (1964) 227 Cal.App.2d

380, 392),** and even assuming the conduct of

Trainor, Robertson & Smits rose to a level

34 We have our doubts his papers would satisfy

the formalities required for such a motion pursuant

to the statute. (See 8 Witkin, op. cit. supra,

Attack on Judgment in Trial Court, §167, p. 571.)

We need not decide the question, however.

H-19

satisfying this standard,*® the "pre-motion" is

untimely under the six-month jurisdictional

limitation of the statute. (8 Witkin, op. cit.

supra, Attack on Judgment in Trial Court, §169,

os. §73.)” If indeed Mr. Cullen was badly

served by his former counsel making this

stipulation, his remedy is-not reversal of the

trial court’s decision denying his motion. (By

the same measure, he may not challenge the trial

court’s failure to prevent Trainor, Robertson &

Smits from “abandoning its clients" cross-

complaint, its allowing the partnership to

proceed in pro.per., or its failure to allow a

continuance after counsel substituted out of the

35 In light of this assumption, we have not

set out any of the facts on which Mr. Cullen bases

his claim.

36 Nor would it be of any succor to construe

Mr. Cullen’s motion to amend as incorporating a

motion to invoke the court’s inherent equitable

power to relieve him of the effect of the

stipulation (8 Witkin, op. cit. supra, §2(5), p.

406; §200, p. 598), assuming arguendo that a

stipulation rather than a judgment can be the

subject of such a motion. Being a narrower basis

of relief than the statutory remedy, one cannot

rely on counsel’s inexcusable neglect. (Carroll v.

Abbott Laboratories, Inc. (1982) 32 Cal.3d 892,

901, fn.8.)

H-20

action, since the time for challenging any of

these actions had long expired by the time of

his motion to amend.)

Itt

The cause of action in the cross~-complaint

is precluded by the prior judgment

Tne doctrine of "res judicata" both bars

a second suit between the same parties on the

same cause of action ("claim preclusion," in the

modern terminology) and estops a party against

whom a judgment has been obtained from

relitigating in a second proceeding any issues

fully and fairly litigated in the first

(denominated "issue preclusion").

(Knickerbocker v. City of Stockton (1988) 199

Cal.App.3d 235, 242; Rest.2d Judgments,

Introduction to Chapter l, p. 1.) The elements

for application of issue preclusion are (1)

whether the issue decided in the _ first

proceeding is identical to the one raised in the

second, (2) whether the first proceeding

culminated in a final judgment on the merits,

H-21

and (3) whether the party against whom issue

preclusion is raised was a party or in privity

with a party against whom the issue was decided

in the first proceeding. (Knickerbocker, supra,

199 Cal.App.3d at p. 244.)

To recapitulate, SCHA’s motion for

summary judgment on the cross-complaint was

based solely on the ground of issue preclusion,

SCHA asserting the 1987 judgment against the

other cross-claimants on the cross-complaint

resolved the issue of whether it had breached

the contract on which Mr. Cullen’s unamended

cross-complaint was based. In essence, Mr.

Cullen argues on appeal that application of

issue preclusion here is a violation of his due

process rights because of the lack of privity

between himself and James Cullen, or between

James Cullen and the partnership.*’ Be this as

it may, it is entirely beside the point.

37 He adverts in passing to the absence of a

final judgment on the merits, but as he advances

neither argument nor authority on this point, it is

deemed waived. (People v. Hardy (1992) 2 Cal.4th

86, 150-151.)

H-22

As he admits here, and admitted in the

trial court, he was the "managing general

partner" of the partnership, was "in complete

control of all partnership assets, including the

instant litigation" (on the cross-complaint),

and had full authority for management of the

partnership affairs (his fellow partners Richard

and James averring they simply supervised the

actual construction work). As such, it was his

decision (whether voluntarily or as a victim of

circumstance) to restrict himself to merely

sitting in court and failing to present any

affirmative case of the partnership’s cross-

complaint, allowing judgment to be entered

against it, and failing to appeal the adverse

decision. As the person controlling the

partnership with financial interest in the

partnership, the issue-preclusive consequences

of the failure to present any case on behalf of

the partnership--which is no less “conduct of

the action" than affirmatively presenting a

case--may permissibly be applied against Mr.

H-23

Cullen, since he was in privity with the

partnership. "’A person who is not a party to an

action but who controls the action is bound by

the judgment where he has a proprietary or

financial interest in the judgment or in the

determination of question of fact or law with

reference to the same ‘subject matter or

transaction.’" (7 Witkin, Cal. Procedure (1985)

Judgment, §295, p. 733; accord Stafford v.

Russell (1953) 117 Cal.App.2d 319, 320

[principal stockholder of previously

unsuccessful plaintiff corporation bound by

judgment against corporation because he had

controlled conduct of earlier litigation].)*

Therefore, there was no obstacle to granting

38 Mr. Cullen argued in the trial court that

he was denied a full and fair opportunity to

litigate the issue of SCHA’s breach of contract in

the prior action. He does not specifically renew

this as a ground for reversal of the trial court’s

ruling. However, as with his attempt to avoid the

effect of the stipulation on his attempt to amend

his cross-complaint, any direct attack upon the

prior judgment against the partnership on the

cross-complaint by means of a motion under Code of

Civil Procedure section 473 is untimely, and

counsel’s alleged inexcusable behavior cannot be a

basis for relief under the trial court’s inherent

equitable powers.

H-24

summary judgment on the cross-complaint on the

basis of issue preclusion.

The trail court properly granted the motion

excluding all evidence tied to the cross-

complaint

In granting the motion in limine brought

by SCHA, the trial court expressly relied on

Torrey Pines Bank v. Superior Court (1989) 216

Cal.App.3d 813. In an extremely abbreviated

argument, Mr. Cullen argues against application

of this decision on two bases. First, he claims

the bankruptcy stay distinguishes the present

situation from Torrey Pines. Second, he claims

the trial court expressly stated the 1987

judgment “would have no effect on [him]."

In Torrey Pines, the petitioner bank

filed an action against a guarantor of a debtor

business which had defaulted. The debtor then

filed an action against the bank for breaches of

fiduciary duty and the covenant of good faith

and fair dealing, for negligent

b ANT Sieh er be ne.

De aS pirat BSA ale tale

H-25

misrepresentation, and for negligence. The

guarantor subsequently filed an amended

complaint in the debtor’s action naming himself

as a plaintiff both individually and as the

debtor’s guarantor. Ultimately, the guarantor

filed a dismissal with prejudice of his action.

(216 Cal.App.3d at pp. 816-817.) In granting a

writ directing entry of summary judgment against

the guarantor, the Torrey Pines court held the

guarantor’s affirmative defenses were barred by

the issue-preclusive effect of the dismissal

with prejudice (termed a "“retraxit") of his ow”

action against the bank, since they were based

on the same facts. (Id. at pp. 819-822.) The

court relied on Hamilton v. Carpenter (1940) 15

Cal.2d 130, 132-133, in which the Supreme Court

had held that the defendants were properly

prevented from introducing evidence of fraud as

a defense where they had previously brought an

action for the identical fraud and had not

prevailed.

Given the myriad of ways in which issue

H-26

preclusion may occur, the Torrey Pines decision

is sufficiently analogous to be controlling

here. The gist of Mr. Cullen’s cross-complaint

was the behavior of SCHA in insisting on

performance that varied so substantially from

the terms of the written agreement that it

constituted a breach. The affirmative defenses

to the complaint--breach of contract,

misrepresentation, and fraud--depend on the same

facts. It is of no import that Torrey Pines

involved a separate action rather than a

dismissed cross-complaint. It is also of no

import that Mr. Cullen (and possibly the

partnership) had the benefit of an automatic

stay because of his bankruptcy petition; at the

risk of endless iterations, it is the issue-

preclusive effect of the judgment against the

partnership on the cross-complaint--which was

not subject to the stay--which bars’ the

introduction of this evidence. Finally, to the

extent Mr. Cullen could rely on the trial

court’s pronouncements at the 1987 "trial," the

waedveba

H-27

quotations to which he refers are directed only

to the question of the effect of the 1987

proceedings on the action against him; there is

no "promise" that there will be no effect on his

cross-complaint. Thus, the trial court properly

excluded evidence relating to the cross-

complaint.

No preclusion results from the CSLB’s

resolution

Finally, Mr. Cullen challenges’ the

various bases for the trial court’s failure to

accord any preclusive effect to the CSLB’s

determination. Since it is sufficient to rely

on any one of the trial court’s rationales in

affirming its ruling, we limit our discussion to

the simplest--i.e., the different burden of

proof in the two proceedings.”

39 To recount this portion of the court’s

ruling, “The standards of proof in the two

actions were distinct. Complainant’s failure of

proof by clear and convincing evidence of a breach

of contract in the administrative hearing does not

preclude proof of such by a preponderance of the

evidence in the instant case.”

H-28

Although Mr. Cullen devotes a portion of

his argument to the proposition, it is not

disputed by SCHA that "a valid and final

adjudicative determination by an administrative

tribunal has the same effects under the rules of

res judicata, subject to the same exceptions and ~

qualifications, as a judgment of a court."

(Rest.2d Judgments, §83, subd. (1) [emphasis

added]; accord County of Los Angeles v.

Department of Industrial Relations (1989) 214

Cal.App.3d 1538, 1544.)*° We have already set

out the necessary elements for invocation of

issue preclusion, which we will assume arguendo

are satisfied here (including privity).“

However, even where these elements are

satisfied, "relitigation of the issue in a

40 Therefore, we will eschew any explanation

of the requisites and limitations connected with

according issue-preclusive effect to an

administrative determination. (See Rest.2d

Judgments, Introduction to Chapter 6; §83, subds.

(2) - (4)-)

We note, however, that the presence of

privity between the CSLB and the SCHA (which was

not a party to the CSLB proceedings and had no

control over the litigation) is problematic. (See

Rest.2d Judgments, §36, comment f [discussing

intragovernmental privity].)

H-29

subsequent action .. . is not precluded...

(4) [where t]he party against whom preclusion is

sought had a significantly heavier burden of

persuasion with respect to the issue in the

initial action than in the subsequent action .

° (Rest.2d Judgments, §28.) As the

Restatement explains, "To apply issue preclusion

in the cases described in Subsection (4) would

be to hold, in effect, that the losing party in

the first action would also have lost had a

significantly different burden been imposed. .

- This is a major reason for the general rule

that, even when the parties are the same, an

acquittal in a criminal proceeding is not

conclusive in a subsequent civil action arising

out of the same event." (Id., comment f.)

We have held in past that failure to

establish guilt beyond a reasonable doubt in a

criminal proceeding has no preclusive effect in

a subsequent probation-revocation proceeding

between the same parties where an issue need

only be established by preponderance of the

H-30

evidence. (In re Anderson (1951) 107 Cal.App.2d

670, 672 [cited with approval in Teitelbaum

Furs, Inc. v. Dominion Ins. Co., Ltd. (1962) 58

Cal.2d 601, 605]).) By a parity of reasoning,

that an issue has been established by only a

mere preponderance in a dependency proceeding is

not determinative in a subsequent proceeding

between the same parties to terminate parental

rights, where the issue must be established by

clear and convincing evidence. (In re Nathaniel

P. (1989) 211 Cal.App.3d 660, 670-672.)

The burden of proof in an administrative

hearing involving the discipline of licensees is

clear and convincing’ evidence. (Realty

Projects, Inc. v. Smith (1973) 32 Cal.App.3d

204, 212; Evid. Code, §115.) In the absence of

any affirmative showing to the contrary, we

presume this is the standard applied in the

administrative proceedings under review, even if

On the other hand, a party’s failure to

establish a fact even by a mere preponderance is

preclusive in a subsequent proceeding with a higher

burden of proof. (People v. Sims (1982) 32 Cal.3d

468, 485.)

Cee, ee

H-31

not specifically recited in the decision. (Feist

v.- Rowe (1970) 3 Cal.App.3d 404, 422; Evid.

Code, §664.) On the other hand, the burden of

proof in the present proceedings under review is

merely preponderance of the evidence. (Evid.

Code, §115.) Although there is no precedent

specifically involving the present

circumstances, the principle of the Anderson and

Nathaniel P. cases mandates that even if the

SCHA can be considered to be in privity with the

CSLB, the CSLB’s failure to establish a breach

of contract in a proceeding where it had a

burden of clear and convincing evidence has no

effect in a subsequent proceeding where SCHA

need only prove the breach by a preponderance.

Consequently, the court correctly refused to

accord the CSLB decision any preclusive effect

in the present action.

Mr. Cullen claims the totality of the

trial court’s action resulted in the denial of

his due process rights. Indeed, in light of the

H-32

findings of the CSLB’s administrative law judge,

this is not a case where the result bespeaks

"justice" in an abstract sense since SCHA is

being permitted to recover for a_ breach

occasioned by its own obstructionist

bureaucratic conduct. However, SCHA has been

placed in the catbird seat not by the actions of

the trial court but by the de facto default of

the Cullens and the partnership in 1987 (Mr.

Cullen’s bankruptcy merely forestalling the

inevitable with respect to him).

DISPOSITION

The judgment is affirmed. Neither party

shall recover costs.

DAVIS , Je

We concur:

SIMS , Acting P.J.

SCOTLAND - *

syns

APPENDIX I

SUPERIOR COURT OF CALIFORNIA

COUNTY OF SACRAMENTO

FILED: APRIL 4, 1991

HOUSING AUTHORITY OF THE ) NO. 331596

COUNTY OF SACRAMENTO, a public ) Dept. 6

body corporate and politic, )

)

Plaintiff, )

)

vs. ORDER AFTER HEARING

RE COLLATERAL ESTOPPEL

MARK T. CULLEN, doing business )

as CULLEN DEVELOPMENT COMPANY )

and DOES 1 to 10, )

)

Defendants.

)

By post-trial briefing with points and

authorities argued by both plaintiff and

defendant, Mark T. Cullen, defendant argues that

principals of collateral estoppel should

preclude plaintiff from re-litigating the issue

of defendant’s breach of contract.

The relevant facts on this issue are as

follows:

Plaintiff obtained a verdict after

trial by the court against all defendants with

I-2

the exception of Mark T. Cullen on its breach of

contract complaint of June 16, 1987. The

complaint as to Mark T. Cullen was stayed by

virtue of that defendant’s bankruptcy action

filed in federal court.

2. Mark T. Cullen obtained a favorable

result at an administrative hearing brought

against him by the Contractors’ State License

Board wherein he was found by the administrative

law judge not to have breached this contract

with this plaintiff. Said decision was rendered

on June 25, 1990, to become effective on July

25, 1990.

3. Trial in the instant matter was held on

February 11 and 13, 1991, wherein this Court

ruled in plaintiff’s favor on the motion in

limine precluding defendant from asserting any

affirmative defense under the doctrine of

collateral estoppel by virtue of the privity of

this defendant with the other defendants in the

verdict entered on June 16, 1987.

4. This Court rendered a verdict in favor

I-3

of plaintiff and against this defendant on the

breach of contract complaint as stated on the

record and stayed judgment pending briefing and

decision on defendant’s collateral estoppel

arguments.

The Court finds for plaintiff and against

defendant on defendant’s collateral estoppel

claims - stated hereinafter.

l. While the issues in the

administrative hearing and present trial were

sufficiently similar (breach of contract and

legal excuse therefore), the remedies were

sufficiently dissimilar (suspension or

revocation of contractors’ license and money

damages for breach of contract) to preclude a

finding of privity between this plaintiff and

the complainant, Contractors’ State License

Board.

2. The plaintiff herein and_ the

complainant in the administrative action had

sufficiently diverse interests to militate

against a finding of privity between them.

I-4

3. The standards of proof in the two

actions were distinct. Complainant’s failure of

proof by clear and convincing evidence of a

breach of contract in the administrative hearing

does not preclude proof of such by a

preponderance of the evidence in the instant

case.

4. Defendant herein has additionally

failed to allege and prove the finality of the

administrative decision.

5. This Court will not give collateral

estoppel effect to an administrative

determination that was rendered subsequent in

time to the prior determination in this same

case in which this Court had _ previously

determined that principles of collateral

estoppel operate against this defendant.

The verdict rendered herein is confirmed

and the stay is lifted. Plaintiff is directed

to prepare the judgment.

DATED: April 4, 1991

oe 6 ea ete aati fs

I-5

JAMES I. MORRIS

JUDGE OF THE SUPERIOR COURT

I-6

LAW OFFICES OF BRENTON A. BLEIER

1001 "G" Street, Suite 101

Sacramento, CA 95814

Telephone: (916) 444-5994

Attorneys for HOUSING AUTHORITY

OF THE COUNTY OF SACRAMENTO

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SACRAMENTO

-0o00- FILED: APRIL 4, 1991

HOUSING AUTHORITY OF NO. 331596

THE COUNTY OF SACRAMENTO,

JUDGMENT AS TO

DEFENDANT MARK T.

MARK T. CULLEN

Plaintiff,

JAMES CULLEN, et al.,

Defendants.

)

This cause came on regularly for trial on

February 11, 1991 in Department 6 of the above

entitled court, Honorable James I. Morris

presiding, sitting without jury, a jury having

been duly waived. Plaintiff HOUSING AUTHORITY

OF THE COUNTY OF SACRAMENTO appeared by Alan C.

Campbell, its attorney, and Defendant MARK T.

I-7

CULLEN appeared in pro per. Evidence, both oral

and documentary, having been presented by the

parties, the cause having been argued and

submitted for decision,

IT IS ADJUDGED, ORDERED, AND DECREED that

judgment be, and hereby is, entered in favor of

Plaintiff HOUSING AUTHORITY OF THE COUNTY OF

SACRAMENTO and against Defendant MARK T. CULLEN

in the amount of Three Hundred Sixty-Two

Thousand Six Hundred One Dollars ($362,601), and

that Defendant MARK T. CULLEN takes nothing by

his cross-complaint. Plaintiff to recover

costs. $1,545.43

Dated: April 4, 1991

JAMES I. MORRIS

Judge of the Superior Court

J-1

APPENDIX J

BEFORE THE

REGISTRAR OF CONTRACTORS

CONTRACTORS STATE LICENSE BOARD

DEPARTMENT OF CONSUMER AFFAIRS

STATE OF CALIFORNIA

FILED: JUNE 25, 1990

In the Matter of the Accusation) NORTHERN REGION

)

Against: ) CASE NO. N-87-513

)

CULLEN DEVELOPMENT COMPANY ) OAH NO. N-31620

P.O. Box 1215

Shingle Springs, CA 95682

License No. 448299, B

Mark T. Cullen, QP

Richard N. Cullen, PT

James P. Cullen, PT

Respondent

DECISION

The attached Proposed Decision of the

Administrative Law Judge is hereby adopted by

the Registrar of Contractors as his Decision in

the above-entitled matter.

IT IS FURTHER ORDERED that respondent,

CULLEN DEVELOPMENT COMPANY, License No. 448299,

on or after August 24, 1990 shall file a bond or

post a cash deposit in the amount of $15,000.00

J-2

pursuant to and in accordance with the

provisions of Section 7071.8 of the Business and

Professions Code, and that respondent is hereby

notified that practice under the license herein

concerned may not be restored until satisfactory

evidence of such bond or cash deposit is on file

with the Registrar of Contractors.

This Decision shall become effective on the

25th day of July, 1990.

IT IS SO ORDERED June 25, 1990 .

DAVID R. PHILLIPS

REGISTRAR OF CONTRACTORS

J-3

BEFORE THE

REGISTRAR OF CONTRACTORS

CONTRACTORS STATE LICENSE BOARD

DEPARTMENT OF CONSUMER AFFAIRS

STATE OF CALIFORNIA

In the Matter of the Accusation) NORTHERN REGION

)

Against: ) CASE NO. N-87-513

)

CULLEN DEVELOPMENT COMPANY ~ ) OAH NO. N-31620

P.O. Box 1215

Shingle Springs, CA 95682

License No. 448299, B

Mark T. Cullen, QP

Richard N. Cullen, PT

James P. Cullen, PT

Respondent

ee et ee ee eee eee

PROPOSED DECISION

Between June 13, 1989 and December 22,

1989, on eighteen days which are of record, in

Sacramento, California, Stephen J. Smith,

Administrative Law Judge, Office of

Administrative Hearings, State of California,

heard this matter.

June LaVerne Long, Deputy Attorney General,

represented complainant.

Mark T. Cullen qualifying partner, Cullen

Development Company, appeared in person and

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represented himself and Cullen Development

Company. James P. Cullen and Richard N. Cullen

did not appear.

Evidence was received and the _ record

remained open for the receipt of closing written

argument and briefs. Complainant’s opening

brief and argument was received on February 7,

1990. Respondent’s closing brief and argument

was received on February 26, 1990.

Complainant’s reply brief was received on March

14, 1990. The record was closed and the matter

was submitted.

FINDINGS OF FACT

JURISDICTION AND PRELIMINARY MATTERS

A.T. Lennan, Assistant Regional Deputy,

Contractors’ State License Board ("the Board"),

State of California, made charges. and

allegations contained in the Accusation in his

official capacity pursuant to the authority of

Business and Professions Code sections 7090 and

7106.5.

PD eel area

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LICENSE HISTORY

On November 3, 1983, the Board issued

contractor’s license number 448299,

classification B, general building contractor,

to Cullen Development Company ("Cullen"), a

general partnership. The partnership listed

Mark Cullen as qualifying partner, James Cullen

and Richard Cullen as partners. On September

21, 1985, the license was suspended pursuant to

the mandate of Code of Civil Procedure section

996.340, for failure to post an adequate

contractor’s bond. The license expired still

suspended on November 30, 1985.

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CONTRACTS WITH SACRAMENTO HOUSING AND

REDEVELOPMENT AGENCY

On December 18, 1984, Cullen Development

Company entered into a contract in writing with

the Sacramento Housing and Redevelopment Agency

("SHRA") to construct a 20 unit low income

housing apartment complex with a _ separate

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laundry building at 6601 Pomegranate Avenue in

South Sacramento, California ("the Pomegranate

project"). The project was to be constructed

for the sum of $684,968.00. Work commenced on

the South Sacramento project on March 6, 1984.

Work stopped on April 22, 1985 when Cullen filed

a Stop Notice pursuant to Civil Code section

3103. At that time, Cullen had been paid the

sum of $677,137.00 by SHRA. The work was

substantially complete and the apartments were

occupied by residents when the Stop Notice was

filed, but exterior and interior punch lists

were not completed.

On July 23, 1984, Cullen entered into a

contract in writing with SHRA for’ the

construction of a 20 unit low income housing

apartment complex at 5519 Date Avenue, North

Highlands, California ("the Date Avenue

project"). The project was to be constructed

for the sum of $496,600.00. Work commenced on

July 26, 1984, and ceased on April 22, 1985 with

the filing by Cullen of a Stop Notice pursuant

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to Civil Code section 3103. At that time,

Cullen had been paid the sum of $404,664.00 by

SHRA.

On August 16, 1984, Cullen entered into a

contract in writing with SHRA for’ the

construction of a 20 unit low income housing

apartment complex with a separate laundry room

at 3025-3031 Dry Creek Road, Rio Linda,

California ("the Rio Linda project"). The

project was to be constructed for the sum of

$744,900. Work commenced on August 20, 1984,

and ceased on April 22, 1985 with the filing by

Cullen of a Stop Notice pursuant to Civil Code

section 3103. At that time, ee had been

paid the sum of $309.002.00

On December 18, 1984, Cullen contracted in

writing with SHRA for the construction of a 16

unit low income housing apartment complex

located at 9205 Elk Grove Boulevard, Elk Grove,

California ("the Elk Grove project"). The

project was to be constructed for a total cost

of $649,990.00 Work commenced on a date not

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established and ceased on April 22, 1985 with

the filing of a Stop Notice by Cullen pursuant

to Civil Code section 3103. At the time work

was stopped, Cullen had been paid the sum of

$19,575.00 by SHRA.

Each of the four above-referenced

construction contracts were entirely federally

funded by the U.S. Department of Housing and

Urban Development ("HUD"). SHRA was the local

administrator of the projects, oversaw the

construction in accordance with federal

guidelines, and disbursed the construction funds

obtained from HUD. Every aspect of the projects

required advance HUD approval. SHRA had no

local budget or funds of its own to assist in

the construction of the projects. Each of the

four contracts incorporated by reference the

general conditions, which were HUD standard form

and identical for each contract, special

conditions and the architectural drawings. The

special conditions and drawings were unique to

each contract. Administration of the contracts

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by SHRA was to be governed by the uniform HUD

general conditions.

ABANDONMENT

It was not contested that Cullen abandoned

the Rio Linda construction project with the work

46% completed. The list of work set forth at

Paragraph 5 of the Accusation was not completed

by Cullen at the time the Stop Notices were

filed. At the time Cullen filed the Stop

Notices, SHRA had paid Cullen $309,002.00. This

sum was 41% of the contract price, unadjusted

for extra work required as the work progressed.

Cullen’s abandonment of the Rio Linda

project work was with legal excuse. SHRA’s

breaches of covenants and implied warranties,

infra, coupled with selfish and incompetent

project administration, constituted a material

failure of consideration and rendered Cullen’s

continued performance on the Rio Linda project

impracticable due to excessive and unreasonable

difficulty and expense. SHRA’s administrators

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significantly interfered with Cullen on the job

site and with Cullen’s relationships with its

bonding companies and private line of credit,

substantially hampering Cullen’s ability to

successfully perform. The totality of SHRA’s

conduct toward Cullen operated to deny Cullen

the benefit of its bargain made with SHRA in

Signing the contract. The material failure of

consideration and the impracticability due to

excessive and unreasonable difficulty and

expense extinguished Cullen’s obligation to

further perform under the contract and provided

Cullen the right to rescind. Cullen exercised

that right by filing the Stop Notice.

At the time Cullen filed the Stop Notice,

it was bankrupt as an entity and its principals

were personally bankrupt as well. Although

bankruptcy was not necessarily a prerequisite to

proof of impracticability of further

performance, it was demonstrative of the effects

of the material failure of consideration and the

excessive and unreasonable difficulty and

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expense Cullen encountered. The bankruptcy was

in stark contrast to Cullen’s stated net worth

of $2.7 million at the commencement of work with

SHRA 21 months earlier, and included the

evaporation of a $1 million line of credit

Cullen obtained to assist in performing under

the contracts with SHRA. SHRA’s architect

acknowledged that Cullen bid the Rio Linda

project competently and actually in excess of

the architect’s own estimate of the cost of

construction.

BREACH OF IMPLIED COVENANTS

The HUD General Conditions, incorporated in

the Rio Linda contract, are generally silent

regarding the express duties of the Local

Housing Authority (SHRA) with respect to the

administration of the contracts. However,

implied covenants exist in fact and in law that

govern SHRA’s conduct in its administrative

duties. These implied covenants are that SHRA

must reasonably and expeditiously process

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requests by the contractor for change orders,

compensation for extra work and time delays,

that SHRA could and would competently and fairly

administer the contract, that SHRA would refrain

from conduct that could or would deny Cullen the

benefit of its bargain or impair Cullen’s

ability to perform, and that SHRA would conduct

“iteelf in accordance with the implied-in-law

covenant of good faith and fair dealing. SHRA

breached each of these implied covenants in the

Rio Linda project contract.

1. IMPLIED COVENANT TO PROCESS CHANGE ORDERS

EXPEDITIOUSLY

SHRA’s representatives acknowledged that it

"held" requests for change orders by the

contractor that it considered "too small" to

process immediately. These small requests for

changes, typically $2,000.00 or less, were

accumulated until “enough" such requests had

been accumulated to justify the - SHRA

administrative time required to process them.

It was well known that processing was very slow

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without such additional delay because HUD was

slow to approve such requests. It was known to

SHRA that such delays were costly to the

contractor in that delays in obtaining

authorization for changes delayed the work,

denied the contractor prompt compensation for

extra work, and frequently required the

contractor to reorganize the work. SHRA also

knew that it was obligated under the Rio Linda

contract to expeditiously process each request

for change order received from the contractor,

regardless of amount. SHRA representatives

acknowledged at the hearing that, despite

awareness of this obligation, it refused to

promptly process small change order requests

until SHRA decided it was administratively

reasonable for it to do so.

SHRA breached the implied covenant to

process change order requests expeditiously and

fairly for Cullen on the Rio Linda project.

Although Cullen submitted at least three such

requests, one "small" but two of which requested

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authorization, compensation and delay time for

significant changes to the contract work, SHRA

fully processed none of these requests. - Only

one of these requests made by Cullen was

submitted to HUD for approval, and then, only in

response to threats from Cullen’s attorneys.

This request was never approved by HUD or

returned to SHRA, and had been delayed for

months by SHRA’s neglect before the receipt of

the threat from Cullen’s attorneys. Cullen

received no expeditiou

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