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In reversing a trial court ruling, a California appellate court held that there is no res judicata effect from an arbitration award applied to a non-party where the non-party's liability cannot be derived from a party to the arbitration proceeding.
In Ross v. Gandolfo, No. B189709, 2007 WL 4171206 (Cal. Ct. App.2d Nov. 27, 2007), Bar and Helena Ross, along with their minor child, lived in a home containing a garage converted into living space by landlord Pamela Stableford. The remodeling had been done without the required permits. The Ross' discovered a carbon monoxide leak which led them to stop paying rent and notify authorities.
The Ross's filed suit against Stableford alleging various claims and Stableford cross-claimed for the unpaid rent. The parties agreed to binding arbitration. Gandolfo, the contractor that had worked on the house, had been named as a "doe" respondent and did not participate in arbitration. An arbitration award was issued in favor of Stableford.
Upon the receipt of new evidence regarding their minor child's health, the Ross's sought to reopen the case. After a procedural battle, the trial court ultimately entered an order barring the Ross' from filing any related claim against any of the parties involved, citing principles of res judicata. The Ross' appealed.
This Court determined that the trial court erred in applying principles of res judicata in its holding that the Ross' minor child was barred against making future claims against Gandolfo.
First, Gandolfo was not a party to the arbitration. Gandolfo would be given an unfair advantage from a victory in arbitration won by another. This result would "not serve to protect 'one who has already prevailed against the same opponent.'" Vandenberg v. Superior Court, 21 Cal.4th 815, 833 (1999).
Further, this Court rejected Gandolfo's reliance on the proposition that it was excepted from this principle because its liability is derived from Stableford. See Richard B. LeVine Inc. v. Higashi, 131 Cal.App.4th 566, 576 (2005). Gandolfo was hired by Stableford to install a water heater. It did not become Stableford's agent or employee by this action, but was an independent contractor. Its liability was not derivative of Stableford's liability. See id.
For the foregoing reasons, the Ross's minor child was not barred from bringing an action against Gandolfo under principles of res judicata. The trial court's ruling was reversed.
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