Cal Sierra Development, Inc. v. George Reed, Inc.

A primary actor or a party bearing derivative or vicarious liability for the primary actor’s torts are in privity for res judicata purposes, and so, no matter which one the plaintiff sues first, a judgment against the plaintiff is binding in favor of both.  Plaintiff and Western Aggregate shared mining rights in the Yuba Goldfields under a Mutual Operations Agreement.  When plaintiff’s dredge was about to collide with the asphalt plant erected by Western Aggregate’s licensee, plaintiff brought claims against Western Aggregate in arbitration, prevailing on a breach of contract claim, but losing on trespass and nuisance.  Plaintiff then sued the licensee, Reed.  Held, the suit against Reed is barred by the res judicata effect of the arbitration award.  Reed is in privity with Western Aggregate, not because it is a licensee, but because Western Aggregate bears derivative or vicarious liability for Reed’s acts in siting the asphalt plant as permitted by the license.  A derivative or vicarious liability relationship is sufficient to confer privity whether the plaintiff first sues the primary actor or the other party bearing derivative or vicarious liability for the primary actor’s torts.  Here, the claim was the same.  Both suits arose from the allegedly wrongful placement of the asphalt plant in the path of plaitniff’s gold dredge.  The arbitration award was sufficiently final to be accorded res judicata effect.  A superior court had entered an order confirming the award, though it did not then enter judgment.  And plaintiff had accepted payment under the award on its successful contract claim, so it was estopped from arguing the award was unenforceable.

California Court of Appeal, Third District (Duarte, J.); August 22, 2017; 2017 WL 3599608

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