Judgment Against Nonparties Reversed; Respondent Held to Have Waived Arguments

Timothy Kowal, Esq.
March 22, 2021

Waiver or forfeiture of arguments is a big concern for appellants on an appeal. But rarely do courts find that a respondent had waived or forfeited an argument.

In Travis v. Brand (D2d8 Mar. 19, 2021) 2021 WL 1049863 (published), various citizens, political action committees, and elected officials, and other political operatives litigated over whether to redevelop the Redondo Beach waterfront. Ultimately, the trial court found against the two resident plaintiffs who had favored redevelopment, and awarded almost $1 million in fees and costs against them.

Judgment Against Nonparties Void

The twist: The court also entered judgment against several nonparties, who had funded plaintiffs litigation efforts. The trial court called plaintiffs the "shills" of the nonparties, The nonparties were the proverbial man behind the curtain.

Nope, said the Second District, Division Eight. Can't do that. Issuing rulings and judgments against nonparties "implicated due process." Although the nonparties had notice the case was ongoing, they had "no notice the judgment could include them." And even though the nonparties funded the suit, due process includes people funding lawsuits, too. "California has no public policy against funding of litigation by outsiders. (Pacific  Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1136.)"

Nonparties Had Standing to Appeal

Defendants-respondents tried out a technical appellate procedure angle: The nonparties don't have standing to challenge the judgment against them because, you see, they are not parties. In an admirable show of restraint, the Court of Appeal patiently rejected this argument (which struck me rather a piece of sophistry).

It is true that to have standing to appeal a judgment, an appellant must be (1) a party of record and (2) aggrieved by the challenged judgment. (County  of Alameda v. Carleson (1971) 5 Cal.3d 730, 736 (Carleson); see also Code Civ. Proc., § 902.)

There is an exception to the “party of record” requirement if the judgment has a “res judicata effect” on the nonparty. (Marsh  v. Mountain Zephyr, Inc. (1996) 43 Cal.App.4th 289, 295 (Marsh).)

The court concludes the judgment "arguably has a res judicata effect" on the nonparties. (And it explicitly named the nonparties as "judgment debtors" in the fee and cost award.)

As to the second requirement for standing, a judgment aggrieves a person if it has an “ ‘immediate, pecuniary, and substantial’ ” injurious effect on the person's rights or interests. (Carleson, supra, 5 Cal.3d at p. 737.)"

Respondents Forfeited Arguments on Appeal

In another curious twist, when defendant-respondents argued the nonparties could be bound as "agents" of the plaintiffs, the Court of Appeal rejected this as forfeited because it was not raised in the trial court.

This is curious because, while appellants must always be cautious to preserve arguments for appeal, all respondent's arguments are deemed preserved by operation of law: "It is, of course, immaterial that the theory upon which the judgment may be affirmed is not identical with that relied upon by plaintiffs or by the trial court, since plaintiffs are required only to plead and prove facts sufficient to justify relief, and the trial court's judgment must be affirmed if the findings, supported by the evidence, are sufficient to warrant the relief granted on any legal theory." (Sears v. Rule (1945) 27 Cal.2d 131, 140–141.)

But in Travis, the Second District found defendant-respondents had waived their agency theory by not raising it below. The court noted that plaintiff-appellants had raised the issue when they objected to proposed judgment's findings. When the respondents replied, they "said nothing about an agency relationship" and they "cited no agency law."

Even though the trial court ruled the plaintiffs were "shills" of the nonparties, "'shills' is not a legal designation. It was not a finding of an agency relationship."

Again, this is an unusual holding. I expect it would be deemed peculiar to the facts of this case. But if you are an appellant trying to avoid an implied finding on appeal, you might consider citing Travis v. Brand.

Tim Kowal helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at www.CALPodcast.com, and publishes a newsletter of appellate tips for trial attorneys at www.tvalaw.com/articles. Contact Tim at tkowal@tvalaw.com or (714) 641-1232.