Lee v. K.B.R., Inc. CA1/2 ( 2021 )

Filed 12/22/21 Lee v. K.B.R., Inc. CA1/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
FREIDA LEE,
Plaintiff and Appellant, A159980
v.
(Alameda County Super. Ct.
K.B.R., INC., et al.,
No. RG12660482)
Defendant and Respondent.
This appeal arises out of a long running dispute between Freida Lee
and K.B.R., Inc. (KBR) based on a credit report indicating that KBR reported
Lee’s same debt twice and failed to mark the debt as disputed. Lee first filed
an individual action asserting two claims. After the trial court denied Lee’s
motion for leave to amend and granted KBR’s motion for summary
adjudication on one claim, Lee voluntarily dismissed the other claim and
appealed the trial court’s rulings.
The same day of the voluntary dismissal, Lee filed a class action
against KBR asserting six claims. The trial court sustained KBR’s demurrer
without leave to amend as to the first four claims, and KBR filed a motion for
judgment on the pleadings (MJOP) seeking to abate the two remaining
claims while the appeal in the individual action was pending because both
1
actions involved the same “primary rights.” The trial court granted the
MJOP and subsequently dismissed all claims against KBR.
On appeal, Lee challenges the trial court’s rulings on demurrer and
MJOP, as well as the dismissal order itself. While we conclude the trial court
did not err in sustaining the demurrer in part or granting the MJOP, we
agree that the entry of the dismissal order was in error as to Lee’s remaining
two claims and reverse on that basis. These claims were properly abated
while the appeal of the first action was pending. Once that appeal had been
resolved, however, the primary rights doctrine afforded no basis to dismiss
Lee’s remaining two claims in the second action.
BACKGROUND
I.
Prior Individual Action
In January 2012, Lee filed a complaint against Professional Recovery
Systems, Inc. (PRS), Rash Curtis (RC), and Doe defendants. Lee alleged she
had received a credit report indicating that PRS and RC had negatively
reported the same debt twice. Lee also alleged she had notified defendants in
January 2011 that she was disputing the debt, but thereafter PRS failed to
note the dispute on her credit report. The complaint asserted two causes of
action based on defendants’ actions: (1) violation of section 1788.17 of the
Rosenthal Fair Debt Collection Practices Act (Civ. Code, § 1788.1 et seq.)1
(RFDCPA); and (2) violation of section 1785.25, subdivision (a)
(section 1785.25(a)) of the Consumer Credit Reporting Agencies Act (§ 1785.1
et seq.) (CCRAA). The complaint sought damages, attorney fees, declaratory
relief, and injunctive relief “prohibiting defendants from engaging in such
1All further statutory references are to the Civil Code unless
otherwise indicated.
2
conduct in the future.” Despite the complaint’s caption identifying Lee as the
plaintiff “on behalf of herself and others similarly situated” and her counsel
as “FOR PLAINTIFF AND THE CLASS,” it contained no class allegations
and sought relief only on behalf of Lee.
Lee subsequently inserted KBR for one of the Doe defendants.
Discovery closed, and trial was set for July 2014. In March 2014, defendants
filed a motion for summary judgment or, in the alternative, summary
adjudication. In support of their motion, defendants filed a declaration
stating that PRS and RC were registered fictitious business names of KBR
used to conduct debt collection, and that the double reporting on Lee’s credit
report from Equifax resulted unintentionally from an error that occurred
when a KBR employee attempted to update the subscriber codes used with
credit reporting agencies after KBR purchased the assets and name of PRS
and took over the handling of its accounts.
Shortly after the filing of defendants’ motion, Lee moved for leave to
amend her complaint to add class allegations and new causes of action. The
trial court denied the motion based on the prejudice to KBR, as well as Lee’s
failure to sufficiently explain her delay in seeking amendment until after the
close of discovery, while defendants’ motion was pending, and shortly before
the trial (already continued twice) was scheduled to take place.
In May 2014, the trial court granted summary adjudication in favor of
KBR as to the RFDCPA claim and dismissed it on the ground that it was
preempted by federal law (15 U.S.C. § 1681t(b)(1)(F)). The court denied
summary adjudication as to the CCRAA claim. In June 2014, Lee requested
dismissal of the complaint without prejudice. After the dismissal was
entered, Lee appealed the trial court’s rulings denying her motion for leave to
amend the complaint and granting summary adjudication on her RFDCPA
3
claim. This court affirmed, concluding that the trial court did not abuse its
discretion in denying leave to amend the complaint and that the RFDCPA
claim was preempted by federal law. (Lee v. Professional Recovery Systems,
Inc. (Feb. 22, 2018, A142730) [nonpub. opn.].) It also concluded that Lee did
not appear to have proven her RFDCPA claim because section 1788.17
applies only to a “debt collector collecting or attempting to collect a consumer
debt.” (Lee, supra, A142730.) Lee had neither alleged nor argued that
defendants were engaged in debt collection activities or efforts during the
time period relevant to her claims (from January 2011 going forward), but
instead relied solely on their acts of credit reporting as “furnishers of
information.” (Ibid.) This court explained there was “no reason to apply debt
collection proscriptions to credit reporting merely because the reporting is
being done by a debt collection agency.” (Ibid.)
II.
Current Class Action
In June 2014, on the same day the individual action was dismissed, Lee
filed a class action against KBR. In July 2014, Lee moved to consolidate this
class action with a pending consolidated class action she had previously filed
against Equifax Information Solutions, LLC based on the same credit
reporting for which she had sued KBR. In August 2014, the motion was
granted for all purposes except trial. Lee then filed a first amended class
action complaint, alleging KBR had reported the same debt twice and failed
to note Lee’s dispute of the debt on her credit report. The complaint asserted
six causes of action. The first three causes of action alleged KBR violated
section 1785.25(a) of the CCRAA because it had “furnished information
incompletely and/or inaccurately” to credit reporting agencies by
(1) “suggesting that Rash Curtis had a right or ability to credit report
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accounts of which it had no ownership or other right as to herself and a
similarly situated class,” (2) “reporting the same debt in a duplicate fashion
in the name of both Rash Curtis and PRS,” and (3) “reporting the debt in
issue without noting plaintiff’s dispute.” For each of these causes of action,
Lee alleged she “did not learn of the routine and systematic nature of these
acts until February of 2014.”
The fourth cause of action alleged KBR violated the Consumer Legal
Remedies Act (§ 1750 et seq.) (CLRA) “by and through its furnishing of
information to credit reporting agencies.” The fifth cause of action alleged
KBR violated the Unfair Competition Law (Bus. & Prof. Code, § 17200 et
seq.) (UCL) because its actions were unlawful, fraudulent, and unfair.
Through this UCL cause of action, Lee sought injunctive relief “necessary to
prevent the use or employment by [KBR] of the practices alleged herein.” Lee
also asserted a sixth cause of action for declaratory relief to determine
whether KBR “may permissibly furnish credit reporting agencies information
in the name of entities who have no ownership or other right to report such
accounts” and “duplicate report the same account and/or fail to notify credit
reporting agencies of consumer disputes.”
KBR then filed a demurrer to the complaint. In October 2014, the trial
court sustained the demurrer without leave to amend as to the three CCRAA
causes of action because they were barred by the two-year statute of
limitations applicable to CCRAA claims. The trial court rejected Lee’s
argument that the “delayed discovery doctrine” applied to her class action
claims as she did not learn of the “routine and systematic nature” of the
alleged violations until KBR moved for summary adjudication in her
individual action. The trial court explained: “Plaintiff’s argument
demonstrates a misunderstanding of basic class action law, i.e. that a
5
plaintiff must first have viable individual causes of action before she can
pursue those causes of action on behalf of a class. Because no class has been
certified, at this point Plaintiff’s claims remain individual.” The trial court
also sustained the demurrer without leave to amend as to the CLRA cause of
action, finding the CLRA inapplicable because KBR asserted it did not deal in
either goods or services, and Lee “offered no authority for the proposition that
a consumer may seek relief under the CLRA from a person or entity who
provided services to a third party.” The trial court, however, overruled the
demurrers as to the UCL and declaratory relief causes of action.
In April 2015, KBR filed its MJOP as to these remaining UCL and
declaratory relief causes of action. The trial court granted the motion,
concluding that Lee had violated the primary rights doctrine—a plaintiff may
bring only one action for a defendant’s violation of a primary right—by
bringing the consolidated class action while her individual action was still
pending on appeal. The trial court found that both actions invoked the same
primary rights: “the right to be free from credit reporting the same account
twice and the right to have a debt marked as disputed.”
In June 2015, the trial court entered a judgment of dismissal in favor of
KBR. Lee then moved to vacate the judgment, arguing that the MJOP order
had only abated the consolidated class action while the appeal was still
pending in the individual action. The trial court granted the motion, vacated
the June 2015 judgment, and stayed the consolidated class action until
resolution of the appeal.
In August 2018, after the appeal in the individual action had been
resolved, KBR moved to lift the stay of the consolidated class action and enter
judgment in its favor. In November 2018, the trial court lifted the stay but
denied entry of judgment, based on its determination that there were no prior
6
orders dismissing the UCL or declaratory relief causes of action. KBR filed a
writ petition in this court challenging the denial, and this court issued an
alternative writ of mandate directing the trial court either to set aside and
vacate its order denying KBR’s motion for entry of judgment and grant the
motion, or to show cause as to why a peremptory writ of mandate should not
issue. In February 2020, the trial court vacated the portion of its order
denying KBR’s motion for entry of judgment and granted the motion. It
dismissed all claims against KBR. Lee then filed her notice of appeal from
the February 2020 order of dismissal.
DISCUSSION
I.
Jurisdiction
Before turning to the merits of the appeal, we first address KBR’s
argument that we lack jurisdiction to decide it because the appeal is
untimely. Specifically, KBR suggests that Lee’s appeal from the
February 2020 dismissal order is insufficient to challenge the demurrer and
MJOP rulings because she did not appeal those prior orders. Not so. An
order sustaining a demurrer without leave to amend is not appealable; an
appeal lies only from the subsequently entered judgment. (Vibert v. Berger
(1966) 64 Cal.2d 65, 67.) An order granting MJOP is similarly not
appealable, and any appeal must be taken from the subsequent judgment.
(Little v. Mountain View Dairies (1950) 35 Cal.2d 232, 234.)
While notice of entry of the original judgment of dismissal was filed on
June 15, 2015, that judgment was vacated on August 3, 2015, before the
applicable 60-day deadline to appeal had expired. (Cal. Rules of Court,
rule 8.104, subd. (a)(1)(B).) The trial court subsequently entered the
February 2020 dismissal order, which is an appealable judgment. (Code Civ.
7
Proc., §§ 581d, 904.1, subd. (a)(1).) Lee filed her notice of appeal on
March 16, 2020, well within any deadline to appeal the order. (Cal. Rules of
Court, rule 8.104, subd. (a)(1).)
II.
Standard of Review
The standard of review governing an order sustaining a demurrer
without leave to amend is “long-settled.” (Blank v. Kirwan (1985) 39 Cal.3d
311, 318.) “On appeal, we review the trial court’s sustaining of a demurrer
without leave to amend de novo, exercising our independent judgment as to
whether a cause of action has been stated as a matter of law and applying the
abuse of discretion standard in reviewing the trial court’s denial of leave to
amend.” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457,
1469.) As Lee challenges the rulings on demurrer that her CCRAA and
CLRA claims fail as a matter of law, our review is de novo. Lee bears the
burden of proving the trial court erred in sustaining the demurrer on these
claims. (McKell, at p. 1469.) Moreover, we “must affirm if the trial court’s
decision to sustain the demurrer was correct on any theory.” (Kennedy v.
Baxter Healthcare Corp. (1996) 43 Cal.App.4th 799, 808.) In other words, “we
do not review the validity of the trial court’s reasoning but only the propriety
of the ruling itself.” (Orange Unified School Dist. v. Rancho Santiago
Community College Dist. (1997) 54 Cal.App.4th 750, 757.)
As an MJOP is equivalent to a demurrer, the same de novo standard of
review applies to an appeal from the granting of an MJOP. (Angelucci v.
Century Supper Club (2007) 41 Cal.4th 160, 166.)
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III.
Demurrer
Lee argues that the trial court erred in sustaining the demurrer on
both her CCRAA and CLRA causes of action. As to her CCRAA claims, Lee
contends the ruling was in error for two reasons. Neither is persuasive.
First, Lee argues that the “delayed discovery” rule applied to these
claims and thus they were not barred by the statute of limitations.
Section 1785.33 of the CCRAA provides, in relevant part, that “[a]n action to
enforce any liability created under this chapter may be brought in any
appropriate court of competent jurisdiction within two years from the date
the plaintiff knew of, or should have known of, the violation of this title . . . .”
Lee filed her individual action in January 2012 and thus knew of her CCRAA
claims since at least that time. Indeed, she concedes that she was “clearly
aware of her own claims against KBR.” Her consolidated class action was
filed in June 2014, more than two years after the filing of her individual
action.
The delayed discovery rule, however, “postpones accrual of a cause of
action until the plaintiff discovers, or has reason to discover, the cause of
action.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807 (Fox).)
Lee argues that this rule applies here because she was not aware of her class
action claims until defendants filed their summary adjudication motion in the
individual action in March 2014. She contends: “It was only KBR’s
revelation in its summary judgment motion that allowed her to know that the
practices alleged did not just apply to her, but to perhaps as many as 100,000
California consumers.”
We conclude that the delayed discovery rule is inapplicable here
because Lee does not have “other’s claims” that can be asserted
9
independently from her own time-barred individual claim. “A representative
plaintiff still possesses only a single claim for relief—the plaintiff’s own.
That the plaintiff has undertaken to also sue ‘for the benefit of all’ does not
mean that the plaintiff has somehow obtained a ‘class claim’ for relief that
can be asserted independent of the plaintiff’s own claim.” (Watkins v.
Wachovia Corp. (2009) 172 Cal.App.4th 1576, 1589.)
Moreover, even if Lee was not time-barred by her individual action, she
has not satisfied the requirements of the delayed discovery rule. To rely on
the rule, a plaintiff “ ‘must specifically plead facts to show (1) the time and
manner of discovery and (2) the inability to have made earlier discovery
despite reasonable diligence.’ ” (Fox, supra, 35 Cal.4th at p. 808.) “In
assessing the sufficiency of the allegations of delayed discovery, the court
places the burden on the plaintiff to ‘show diligence’; ‘conclusory allegations
will not withstand demurrer.’ ” (Ibid.) Here, in both her opposition to the
demurrer and on appeal, Lee makes only conclusory allegations that (despite
the caption on her initial complaint stating she was suing “on behalf of
herself and others similarly situated”) she belatedly discovered the class-wide
nature of her claims. She has not specifically pleaded any facts regarding
either her inability to have made that discovery in the first two years of her
individual action or her reasonable diligence in attempting to do so.
Second, Lee argues that equitable tolling should have been applied to
otherwise extend the statute of limitations on these CCRAA claims. Lee
never raised this argument in the trial court, and thus we deem the
argument forfeited. (Daneshmand v. City of San Juan Capistrano (2021)
60 Cal.App.5th 923, 936.) Even if not forfeited, however, we would reject the
argument. “The equitable tolling of statutes of limitations is a judicially
created, nonstatutory doctrine.” (McDonald v. Antelope Valley Community
10
College Dist. (2008) 45 Cal.4th 88, 99.) The doctrine is a narrow remedy
applied when “ ‘ “an injured person has several legal remedies and,
reasonably and in good faith, pursues one,” ’ ” but it later becomes necessary
to pursue another. (Ibid.; see also Saint Francis Mem. Hosp. v. State Dept. of
Pub. Health (2020) 9 Cal.5th 710, 724.) But this doctrine does not apply. Lee
is not seeking to assert a different legal remedy on her own behalf. Rather,
she is seeking to assert a class claim where her individual claim is time
barred. Lee argues that the statute of limitations for her consolidated class
action should be tolled from the filing of her individual action because she
“put KBR on notice of her claim and its nature and it was KBR that
subsequently and unilaterally divulged the systematic and widespread
nature of the failures at issues.” Equitable tolling, however, has been
explicitly rejected when a plaintiff voluntary dismisses his or her first action.
(Wood v. Elling Corp. (1977) 20 Cal.3d 353, 359; Thomas v. Gilliland (2002)
95 Cal.App.4th 427, 433.) In short, Lee’s voluntary dismissal of her
individual action precludes application of equitable tolling to her consolidated
putative class action.
As to her CLRA claim, Lee argues that the trial court erred in
concluding that the statute did not apply to KBR. The CLRA provides a non-
exclusive statutory remedy for “unfair or deceptive acts or practices
undertaken by any person in a transaction intended to result or that results
in the sale or lease of goods or services to any consumer.” (§ 1770, subd. (a);
Gallin v. Superior Court (1991) 230 Cal.App.3d 541, 545–546.) It defines
“[t]ransaction” as “an agreement between a consumer and another person”
(§ 1761, subd. (e)); “[g]oods” as “tangible chattels bought or leased for use
primarily for personal, family, or household purposes” (id., subd. (a)); and
“[s]ervices” as “work, labor, and services for other than a commercial or
11
business use, including services furnished in connection with the sale or
repair of goods” (id., subd. (b)). Lee does not contend that KBR directly
transacted with her, or that KBR provided her with a “good” or “service” as
defined by the CLRA. Instead, without any supporting authority, she claims
that KBR is subject to the CLRA because she (Lee) transacted with the East
Bay Municipal Utility District (EBMUD) for a service, incurred a debt to
EBMUD, and KBR subsequently acted “in furtherance of that transaction in
attempting to collect on it” as either a “successor owner” or “agent” of
EBMUD.
As a preliminary matter, the argument is not supported by the
allegations in Lee’s complaint: it does not allege that KBR was engaged in
any debt collection activities or efforts but instead alleges KBR furnished
inaccurate or incomplete information to third-party credit reporting agencies.
Moreover, we are not persuaded that such actions fall within the scope of the
CLRA. While we agree that the CLRA must be “liberally construed and
applied” to protect against unfair and deceptive practices, the plain language
of the statute explicitly limits its purview to actions undertaken “in a
transaction intended to result or that results in the sale or lease of goods or
services to any consumer.” (§§ 1760, 1770, subd. (a).) Courts have rejected
similar attempts to seek CLRA coverage by relying on actions that are
ancillary to the “goods” or “services” provided in a particular transaction. In
Fairbanks v. Superior Court (2009) 46 Cal.4th 56, for example, the plaintiffs
argued that life insurance policies were not “services” as defined by the
CLRA, but that services related to those policies—including the use of agents
or employees to assist customers or process claims—fell within the reach of
the statute. (Fairbanks, at p. 65.) The California Supreme Court disagreed,
concluding that virtually all intangible goods were connected to ancillary
12
services and that such services could not be used to bring the life insurance
policies within the scope of the CLRA. (Fairbanks, at p. 65.) In Alborzian v.
JPMorgan Chase Bank, N.A. (2015) 235 Cal.App.4th 29, the plaintiffs
asserted a CLRA claim based on the defendants’ collection letters and calls
after plaintiffs had defaulted on their mortgage loan. (Alborzian, at pp. 33–
34.) The appellate court concluded that such ancillary services did not
convert mortgage loans into “goods” or “services” under the CLRA.
(Alborzian, at p. 40.) The same reasoning applies here with even greater
force: KBR’s credit reporting to third-party agencies is far removed from the
transaction between EBMUD and Lee that resulted in EBMUD’s provision of
utility services and accordingly does not fall within the specific proscriptions
of the CLRA.
In sum, we conclude that the trial court did not err in sustaining the
demurrer on the CCRAA and CLRA causes of action.
IV.
MJOP
Lee argues next that the trial court erred in granting the MJOP on her
UCL and declaratory relief causes of action. She contends there are three
reasons that the ruling was in error. Again, we disagree.
First, Lee argues that the MJOP should have been denied because
KBR’s invocation of the primary rights doctrine was untimely. This
argument was never raised in the trial court, and thus it is forfeited. (Critzer
v. Enos (2010) 187 Cal.App.4th 1242, 1261–1262.) Even if not forfeited,
however, we would reject the argument. A defendant can invoke the primary
rights doctrine “by either of two means: (1) if the first suit is still pending
when the second is filed, the defendant in the second suit may plead that fact
in abatement [citations]; or (2) if the first suit has terminated in a judgment
13
on the merits adverse to the plaintiff, the defendant in the second suit may
set up that judgment as a bar under the principles of res judicata [citation].”
(Crowley v. Katleman (1994) 8 Cal.4th 666, 682.) KBR proceeded here under
the first method, seeking abatement of Lee’s class action while her individual
action was still pending.
“The proper time to raise a plea in abatement is in the original answer
or by demurrer at the time of the answer.” (Vitug v. Griffin (1989) 214
Cal.App.3d 488, 493–494.) “It is a technical objection and must be pleaded
specifically. Thus an affirmative defense or demurrer which contains a
general assertion that plaintiff has not stated a cause of action does not
suffice to raise a plea in abatement.” (Id. at p. 494.) A trial court, however,
has the discretion to permit the defense to be made later. (Kelley v. Upshaw
(1952) 39 Cal.2d 179, 188–189.) Courts have allowed defendants to seek
abatement in advance of trial or judgment in the action, including on a
motion that attacks the pleadings. (See Virgin v. State Farm Fire & Casualty
Co. (1990) 218 Cal.App.3d 1372, 1376, n. 5.) We see no basis to conclude that
the trial court abused its discretion in considering KBR’s request for
abatement in its MJOP.
Second, Lee argues that this court’s decision on the appeal from the
individual action is either “law of the case,” or “clearly shows” the two actions
involved different primary rights. We are not persuaded. “The doctrine of
the law of the case provides that ‘ “ ‘the decision of the case[ ] conclusively
establishes that rule and makes it determinative of the rights of the same
parties in any subsequent trial or appeal in the same case.’ ” ’ ” (Joyce v. Simi
Valley Unified School Dist. (2003) 110 Cal.App.4th 292, 304, italics added.)
This court’s decision in the prior individual action—a different case from the
current class action—is not law of the case here. (Ibid.) Nor does the
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decision “clearly show[]” the two actions involved different primary rights.
This court simply determined that Lee had not proven her RFDCPA claim
because she never alleged that KBR was engaged in debt collection activities
efforts, and thus the statute did not apply. (Lee v. Professional Recovery
Systems, Inc., supra, A142730.) Lee argues that this determination somehow
“shows” there are primary rights under debt collection statutes that are
separate from primary rights under the credit reporting statutes.
This argument, however, fundamentally misunderstands the primary
rights doctrine and its attendant analysis. The primary rights doctrine
provides that a litigant may bring only one action—termed a “single cause of
action”—for the invasion of his or her primary right. (Slater v. Blackwood
(1975) 15 Cal.3d 791, 795.) The “cause of action,” for this purpose, is defined
by the harm suffered, regardless of the particular remedy sought or legal
theory advanced by the litigant. (Ibid.) “Even where there are multiple legal
theories upon which recovery might be predicated, one injury gives rise to
only one claim for relief.” (Ibid.) Accordingly, we are not persuaded by Lee’s
attempt to draw a distinction between the remedies she sought in each
action: namely, for violation of the debt collection and credit reporting
statutes. This is particularly true given that here, there is no meaningful
distinction to be made. Lee appears to argue that her individual action
(including the RFDCPA claim) invoked a primary right related to debt
collection, whereas her class action (including the CCRAA claims) invoked a
primary right related to credit reporting. But Lee asserted both RFDCPA
and CCRAA claims in the individual action. Lee’s voluntarily dismissal of
the CCRAA claim in her individual action does not mean that claim was not
or could not have been asserted in that action. (Wulfjen v. Dolton (1944)
24 Cal.2d 891, 896 [“The theory of relief urged in the present action against
15
said defendants was open to plaintiff within the legitimate scope of her
pleading in the prior action”].) Indeed, prior to her voluntary dismissal, she
did assert the CCRAA claim in her individual action.
In any event, we turn to the “determinative factor” in our primary
rights analysis: the harm suffered. (Boeken v. Philip Morris USA, Inc. (2010)
48 Cal.4th 788, 798.) “When two actions involving the same parties seek
compensation for the same harm, they generally involve the same primary
right.” (Ibid.) Lee’s individual and class actions sought compensation for the
same alleged harm: KBR’s furnishing of inaccurate or incomplete
information that resulted in the double reporting of debt and failure to mark
the debt as disputed.
The authority cited by Lee for her contrary position is distinguishable
because it involves litigants who, unlike Lee, have not run afoul of the
primary rights doctrine because they asserted two different harms in the two
causes of actions. In Grisham v. Philip Morris U.S.A., Inc. (2007) 40 Cal.4th
623, for example, one of the plaintiffs alleged that her addiction to cigarettes
caused emphysema, as well as other painful and disfiguring oral problems.
(Id. at p. 630.) She also alleged that the defendants had been unjustly
enriched by her ongoing and continuing purchases of cigarettes. (Id. at
p. 631.) The California Supreme Court concluded that the plaintiff had
alleged “two different types of injury, one serious physical injury or injuries,
the other an economic injury, giving rise to two different causes of action.”
(Id. at p. 643.) Unlike Grisham, Lee’s individual and class actions both
invoked the same harm and thus the same primary right: the right to be free
from inaccurate or incomplete credit reporting.
Third, Lee argues that her class action should be permitted to proceed
because her CLRA and UCL claims involve a separate primary right: the
16
right to seek injunctive relief on behalf of the public. As to the CLRA claim,
we reject the argument because the trial court previously sustained KBR’s
demurrer on that claim without leave to amend on other grounds, which
ruling we have affirmed earlier in this opinion. As to the UCL claim, Lee
cites Zakaryan v. The Men’s Wearhouse (2019) 33 Cal.App.5th 659 for the
proposition that a UCL claim can involve two primary rights: (1) the
individual plaintiff’s right to be made whole (through damages or restitution);
and (2) the public’s right to be protected from deceptive or wrongful practices
through an injunction. What this argument overlooks, however, is that Lee
sought both damages and injunctive relief in her individual action.
Specifically, in both her RFDCPA and CCRAA claims, Lee requested
“injunctive relief prohibiting defendants from engaging in such conduct in the
future.” Like the UCL, the RFDCPA and CCRAA were enacted for protection
of the public. (See § 1785.1, subd. (e) [“The Legislature hereby intends to
regulate consumer credit reporting agencies pursuant to this title in a
manner which will best protect the interests of the people of the State of
California”]; Davidson v. Seterus, Inc. (2018) 21 Cal.App.5th 283, 289.)
Accordingly, we see no basis to conclude that the UCL claim Lee asserted in
the class action invoked any primary right that was separate from any
primary rights invoked in the individual action.
In sum, we conclude that the trial court did not err in granting the
MJOP on the UCL and declaratory relief causes of action.
V.
Dismissal Order
Finally, Lee argues that the trial court erred in entering the
February 2020 dismissal order because there was no basis to dismiss the
UCL and declaratory relief claims. We agree.
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As described above, the primary rights doctrine can be invoked by
either (1) a plea of abatement or (2) an argument that the res judicata effect
of the judgment in the first action bars the subsequent action. (Crowley v.
Katleman, supra, 8 Cal.4th at p. 682.) Where, as here, the defendant asserts
a plea of abatement, “the appropriate remedy is the entry of an interlocutory
judgment postponing trial, rather than dismissal of the action.” (Boyd v.
Freeman (2017) 18 Cal.App.5th 847, 858, fn. 6.)
Then, if a judgment upon the merits is rendered in the first action, the
defendant who asserted the plea in abatement can argue the res judicata
effect of the judgment of the first action. (Lord v. Garland (1946) 27 Cal.2d
840, 851.) In other words, the party who invokes the primary rights doctrine
under the first method (abatement) must turn to the second method (res
judicata) to dismiss the subsequent action. (Ibid.) If, however, “the prior
litigation is not determined upon the merits, the trial court should hear and
decide the rights of the parties in accordance with the issues presented by the
pleadings in the second action.” (Ibid.)
Here, Lee’s individual action was not determined on the merits because
she voluntarily dismissed the action without prejudice. For the purposes of
res judicata, a dismissal without prejudice is not a final judgment on the
merits. (Shuffer v. Board of Trustees (1977) 67 Cal.App.3d 208, 216.)
Accordingly, the UCL and declaratory relief claims could not be dismissed
under the primary rights doctrine. We see no other basis for dismissal of
these two claims. While the trial court noted that Lee could only assert
claims against KBR as a furnisher of information following this court’s
decision in Lee v. Professional Recovery Systems, Inc., supra, A142730, the
UCL and declaratory relief claims are based on that alleged conduct. The
trial court in Lee’s initial action did not resolve the CCCRA claim on the
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merits, and Lee’s voluntary dismissal of the complaint in that case did not
operate as res judicata to bar Lee’s assertion of claims based on the same
primary rights. Abatement, rather than dismissal, was thus the proper
remedy with respect to the UCL and declaratory relief causes of action.
DISPOSITION
The February 21, 2020 order of dismissal is reversed as to the UCL and
declaratory relief causes of action and the case is remanded to the trial court
for further proceedings to address those claims. The order is otherwise
affirmed.
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STEWART, J.
We concur.
RICHMAN, Acting P.J.
KLINE, J.*
Lee v. K.B.R., Inc. (A159980)
* Assigned by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
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