California Supreme Court Rejects Erosion of One Final Judgment Rule: "Final Means Final"

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On October 3, 2013, the California Supreme Court handed down its opinion in Kurwa v. Kislinger, S201619, confirming that under settled California practice, as codified in Code of Civil Procedure section 904.1(a), to be appealable a judgment must dispose of all causes of action pending between the parties. The Court rejected arguments submitted by the California Academy of Appellate Lawyers, as amicus curiae, that permitting appeals under the circumstances presented would “allow parties as much autonomy and choice as possible,” thereby facilitating efficiency both at the trial and appellate levels.

Plaintiff and defendant were doctors who formed a corporation to serve patients of a health maintenance organization (“HMO”). Later, plaintiff’s license was suspended, and defendant notified the HMO that their corporation was ended and that defendant’s medical corporation would treat the HMO’s patients going forward. The HMO terminated its contract with the parties’ corporation and signed a new one with defendant’s corporation. 

Litigation ensued, with plaintiff alleging breach of fiduciary and defamation claims (among others), and defendant cross-complaining for defamation. On pretrial motions, the trial court held that the parties’ formation of a corporation relieved them of further fiduciary duties to one another. Since the ruling foreclosed prosecution of the fiduciary duty and related claims, those were dismissed with prejudice, as well as other counts he abandoned. But (and it is a big “but”), the parties agreed to dismiss the reciprocal defamation claims without prejudice together with a waiver of the limitations period, allowing them to test the fiduciary duty issue on appeal before disposing of the temporarily dormant defamation claims.

No can do, notwithstanding any claimed efficiency. In Morehart v. County of Santa Barbara, the Court expressly disapproved of a similar tactic, ruling that the parties’ desire to segregate claims—some for review and others not—was directly contrary to the one judgment rule. Instead, if parties who lacked a single final judgment were so inclined to seek appellate review, the proper procedural vehicle was a petition for a writ of mandate. (Note, the Court did not address the reality that such petitions are granted as frequently as Democrats and Republicans agree on fiscal issues.) The Court endorsed a considerable line of intermediate appellate authority, starting with Don Jose’s Restaurant, Inc v. Truck Ins. Exchange, holding that reservation of some issues from review will not be countenanced under settled California practice.

The unspoken driver of the opinion, for a Court that issues relatively few opinions a year, may well be the additional burden on appellate courts if such a policy were permitted. “We are busy enough without these cases being brought up for another level of scrutiny.”