Monday, May 30, 2005

Daar & Newman v. VRL Int'l (Cal. Ct. App. - May 16, 2005)

I would have thought that this one was a total no-brainer, since the correct resolution of the issue is so crystal clear. But apparently not, since the trial judge -- Judge Alan Buckner -- got it horribly wrong. But that's why we have the Court of Appeal. And Justice Hastings indeed rides to the rescue, and, in a fairly brief opinion, explains what (in my mind) should have been pretty darn obvious to Judge Buckner. Indeed, what should be pretty darn obvious to just about anyone.

Here's the issue. A California law firm (Daar & Newman) is hired to represent a defendant (VRL International) in a civil action in California. Defendant is incorporated in the Cayman Islands, has its principal place of business in the Bahamas, has virtually no contact whatsoever with California, and is being sued in California by a plaintiff who was injured in a jet ski accident in the Bahamas. Daar & Newman successfully move to quash the California action on the ground that there's no personal jurisdiction over the defendant in California, and this decision is affirmed on appeal. So no personal jurisdiction.

Then VRL International allegedly doesn't pay Daar & Newman for the legal work they did on its behalf in the California action. So Daar & Newman sue, in California. At which point VRL moves to quash on the ground that the court has already determined that VRL isn't subject to jurisdiction here. And -- stunningly -- Judge Buckner agrees, holding that the prior finding is binding as both res judicata and pursuant to the doctrine of judicial estoppel.

But that's just plain silly. And Justice Hastings cogently -- and briefly -- explains why. Mostly it's because the issue in Lawsuit #1 is different than that at issue in Lawsuit #2. Sure, there was no personal jurisdiction over VRL in California for an accident that transpired in the Bahamas. But that's a different issue than the one at issue in Lawsuit #2, and surely doesn't mean that there's automatically no personal jurisdiction over VRL based upon its retention of a California law firm in California to defend VRL in a California suit. The issues are utterly distinct. Hence no res judicata and no judicial estoppel.

Justice Hastings says the same thing, albeit in 11 pages rather than four paragraphs. And is clearly, without any doubt whatsoever, completely correct. I can't fathom how Judge Buckner could have been led astray on such a seemingly basic point. Or why the current counsel for VRL -- Arlene Berger and Patrick Kelly -- were of the belief that they could snooker the Court of Appeal just like they apparently snookered Judge Buckner. An unjust win is likely to be reversed, the net result being that you've just wasted your client's money on further fees. Sure, sometimes the Court of Appeal reaches an equally silly finding. But that's pretty rare, at least when the case is this utterly clear cut. I couldn't have argued the res judicata/judicial estoppel point on behalf of VRL with a straight face. I'd have busted out laughing if I'd have even tried.

Maybe that makes me a bad lawyer. Oh well. I'll live.