Final judgment rule

When a California trial court the trial court does not render a judgment that is final and appealable, it retains power to act in the case.

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Substantive facts

Badrudin Kurwa and defendant, Mark B. Kislinger, were both ophthalmologists. They formed a corporation. That corporation entered into contracts to provide medical services to patients of a health maintenance organization (HMO).

In 2003, Kurwa’s license to practice medicine was suspended for 60 days. He was also placed on probation for five years. Kislinger notified the HMO that Kurwa’s license had been suspended, that Kurwa would no longer provide medical services. This automatically terminated the HMO’s agreement with the parties’ corporation.

Kislinger also informed the HMO that he had formed a new corporation that would hire substantially all of the employees of the parties’ corporation.

Procedural facts

In 2004, Kurwa sued Kislinger for breach of fiduciary duty and defamation, among other things. Kislinger cross-complained for defamation.

The trial court dismissed certain breach of fiduciary duty claims with prejudice.

The parties agreed to dismiss their respective defamation claims without prejudice and waive the applicable statutes of limitations. (See Code Civ. Proc., § 581, subd. (c) [“A plaintiff may dismiss his or her complaint, or any cause of action asserted in it, in its entirety, or as to any defendant or defendants, with or without prejudice prior to the actual commencement of trial.”].)

The stipulation provided, in pertinent part: “Neither KURWA nor KISLINGER shall be permitted to reinstitute their defamation claim unless the Judgment entered in this case as to all remaining causes of action shall be reversed and remanded for trial. In that event, either KURWA or KISLINGER may reinstitute their respective defamation claims, and they shall not be subject to the bar of the statute of limitations. . . .”

“According to defense counsel, this would allow the parties to ‘test the issue’ of fiduciary duty and ‘get a ruling’ from the appellate court before disposing of the defamation claims, which were ‘kind of outside this whole discussion.’ The purpose of this agreed disposition, plaintiff’s attorney further explained, was to ‘preserve’ both defamation causes of action ‘for such time as this case may come back from appeal.’ ” (Kurwa I, supra, 57 Cal.4th at p. 1101.) On August 23, 2010, the trial court entered judgment in favor of Kislinger, and Kurwa appealed.

The California Supreme Court held that “the parties’ agreement holding some causes of action in abeyance for possible future litigation after an appeal from the trial court’s judgment on others renders the judgment interlocutory and precludes an appeal under the one final judgment rule.” (Kurwa I, supra, 57 Cal.4th at p. 1100.) We remanded the matter to the Court of Appeal “with directions to dismiss the appeal.” (Id. at p. 1108.).

On remand to the trial court, Kurwa moved to rescind the stipulation waiving the statute of limitations and asked the court to reconsider its 2010 adverse rulings. The trial court declined to do so, concluding it lacked jurisdiction to modify the judgment.

Kurwa then filed a petition for writ of mandate to order the trial court to rescind the stipulation, which the Court of Appeal denied. The court explained that “[p]etitioner is not without other means to attempt to make the judgment reviewable,” although the court did not specify what those means might be. This court denied review.

Returning to the trial court, Kurwa moved to amend the complaint to add a cause of action for rescission of the stipulation due to mistake of law. The court denied Kurwa’s motion and Kurwa again sought a writ of mandate from the Court of Appeal. The Court of Appeal denied the petition, concluding that the trial court did not abuse its discretion in denying Kurwa’s “motion to amend to add a rescission claim related to the stipulation . . . .”

Analysis

To avoid piecemeal appeals, the “one final judgment” rule ordinarily limits appellate review to trial court judgments that finally dispose of all issues. (Kurwa I, supra, 57 Cal.4th at p. 1101.) The parties in this case attempted to circumvent the rule to obtain what was, in effect, interlocutory review of a trial court’s partial order of dismissal by agreeing to dismiss the remainder of their claims without prejudice and waiving the statutes of limitations.

Kurwa previously asked the trial court to do just that, and the trial court refused, professing lack of jurisdiction to vacate its earlier order dismissing the defamation claims without prejudice.

The California Supreme Court agreed with Kurwa that the trial court was mistaken, reasoning that if the trial court has not entered a judgment that is final and appealable, it retains the power to render one.

Because the trial court did not render a judgment that was final and appealable, it retains power to act in the case.

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