STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner,
v.
The SUPERIOR COURT of Los Angeles County, Respondent;
Jerry Hill et al., Real Parties in Interest.
Court of Appeal, Second District, Division One.
*147 Heller Ehrman White & McAuliffe, Paul Alexander, Robin A. Schaefers, Julia M. Laurin, Menlo Park; Skadden, Arps, Slate, Meagher & Flom and Raoul D. Kennedy, San Francisco, for Petitioner.
No appearance for Respondent.
*148 Hennigan, Bennett & Dorman, J. Michael Hennigan, Mark Anchor Albert, Michael Swartz, Los Angeles; Gianelli & Morris, Timothy J. Morris, Los Angeles; Ernst and Mattison, Raymond E. Mattison; Law Offices of Robert S. Gerstein and Robert S. Gerstein for Real Parties in Interest.
MALLANO, J.
In general, if a trial judge enters judgment in a civil action, and the judgment is reversed on appeal, resulting in a remand to the trial judge for a "new trial," any party can disqualify the judge by way of a peremptory challenge. (See Code Civ. Proc., § 170.6, subd. (a)(2), 2d par.)
In the present case, after the pleading stage, defendant filed a motion in the trial court to resolve a conflict of laws issue: whether California law or Illinois law applied to plaintiffs' causes of action. Defendant argued that Illinois law applied and that the case had to be dismissed. Plaintiffs argued that California law governed and that dismissal would be improper. The trial court agreed with plaintiffs.
Defendant petitioned this court for a writ of mandate. After briefing and oral argument, we granted the petition, concluding that Illinois law applied but that the trial court had correctly declined to dismiss the case. On remand, the parties appeared before the same trial judge. Defendant moved to disqualify him, filing a peremptory challenge. The judge denied the motion.
Defendant then filed another petition for writ of mandate which is now before us contending that the trial judge should have granted the motion to disqualify. We conclude that, given the limited nature of the prior writ proceeding to determine which state's law is applicable a peremptory challenge does not lie because the trial judge did not "try" the case, nor will the prior writ proceeding result in a "new trial." Rather, the trial judge will simply continue on with the case, applying Illinois law.
I
BACKGROUND
Defendant State Farm Mutual Automobile Insurance Company (State Farm) was created under the laws of the State of Illinois in 1922. It is incorporated there and is headquartered in Bloomington, Illinois. The board of directors meets in Bloomington.
On June 17, 1998, State Farm policyholders filed this action, alleging that State Farm had retained an excessive amount of its surplus funds and, instead, should have returned the excess surplus to the policyholders in the form of higher dividends. The complaint contained causes of action for breach of contract and breach of the covenant of good faith and fair dealing, among others.
After the pleading stage, State Farm brought a "Motion to Determine Applicable Law," contending that, under the "internal affairs" doctrine, Illinois law governed plaintiffs' causes of action.[1] State Farm also argued that the business judgment rule applied to plaintiffs' claims.[2]*149 In a separate "Motion to Dismiss," State Farm argued that the internal affairs doctrine required dismissal of the case in favor of an Illinois forum that plaintiffs had to file the case in Illinois. Plaintiffs filed opposition papers, arguing that the internal affairs doctrine did not apply, California law governed, the business judgment rule was not applicable, and dismissal would be improper.
In a statement of decision dated May 21, 2003, the trial court ruled that the internal affairs doctrine did not apply, California law was controlling, the business judgment rule was not applicable, and the case would not be dismissed.
State Farm filed a petition for writ of mandate with this court, seeking to overturn the trial court's decision. We issued an order to show cause, instructed the parties to submit briefs, and heard oral argument.
In a published opinion, State Farm, supra,
In addition, "[f]or guidance, we set forth [in the opinion] the principles under current Illinois law" (State Farm, supra,
On remand after the granting of the petition, the case returned to the same trial judge. State Farm moved to disqualify the judge under section 170.6, subdivision (a)(2), second paragraph, of the Code of Civil Procedure, which states in part: "A motion [to disqualify] may be made following reversal on appeal of a trial court's decision, or following reversal on appeal of a trial court's final judgment, if the trial judge in the prior proceeding is assigned to conduct a new trial on the matter." (Italics added; hereafter section 170.6(a)(2); all further statutory references are to the Code of Civil Procedure.)
The trial court denied the motion on the ground that "[w]hile [section 170.6(a)(2)] permits a [peremptory] challenge following reversal on appeal, it does not afford the same right on issuance of a writ by a Court of Appeal directing a trial court to apply different law to an interlocutory legal determination made by the trial court."
State Farm then filed a petition for writ of mandate with this court, challenging the trial court's ruling on the motion to disqualify. We issued an order to show cause why the trial court's decision should not be *150 vacated. We also established a briefing schedule and calendared the matter for oral argument. Having considered the parties' written and oral presentations, we now consider the merits of the petition.
II
DISCUSSION
As our Supreme Court recently explained: "[A] party may secure the disqualification of a judge on the basis of an affidavit asserting that the party believes the judge is biased. This constitutes the peremptory challenge of a judge set forth in section 170.6....
"... The statute `provides in substance that any party or attorney to a civil or criminal action may make an oral or written motion to disqualify the assigned judge, supported by an affidavit that the judge is prejudiced against such party or attorney or the interest thereof so that the affiant cannot or believes he cannot have an impartial trial.... [T]here are strict limits on the timing and number of such motions; but if the motion is timely and in proper form, the judge must recuse himself without further proof and the case must be reassigned to another judge.' ... [T]he statute reasonably serves the Legislature's evident purpose of `maintaining the appearance as well as the fact of impartiality in the judicial system: the business of the courts ... must be conducted in such a manner as will avoid even the "suspicion of unfairness."' ... [¶] ... [¶]
"[But] the peremptory challenge created by section 170.6 presents the potential for abuse and judge-shopping on the part of either or both parties. In response to this danger, we [have] pointed out, `the courts of this state have been vigilant to enforce the statutory restrictions on the number and timing of the motions permitted.... "We cannot permit a device intended for spare and protective use to be converted into a weapon of offense and thereby to become an obstruction to efficient judicial administration."'" (Peracchi v. Superior Court (2003)
In determining the applicability of section 170.6(a)(2) here, "we apply the well-established rules of statutory construction and seek to `"ascertain the intent of the Legislature so as to effectuate the purpose of the law."' ... As always, we begin with the words of a statute and give these words their ordinary meaning.... If the statutory language is clear and unambiguous, then we need go no further.... If, however, the language is susceptible to more than one reasonable interpretation, then we look to `extrinsic aids, including the ostensible objects to be achieved, the evils to be remedied, the legislative history, public policy, ... and the statutory scheme of which the statute is a part.'" (Hoechst Celanese Corp. v. Franchise Tax Bd. (2001)
Before 1985, section 170.6 did not expressly provide for a peremptory challenge in a new trial following reversal on appeal. "Prior to the enactment of the 1985 amendment, a matter remanded by an appellate court for full or partial retrial was normally assigned to the same trial judge who heard the case at the trial level. This policy was based on the premise that the trial judge who presided over the first trial was familiar with the issues in the case and was in a better position to expeditiously resolve the matter pursuant to the appellate decision.
"The concern expressed by the proponents of the 1985 amendment was that a judge who had been reversed might prove to be biased against the party who successfully *151 appealed the judge's erroneous ruling at the original trial. The amendment was `intended to permit a party to challenge a judge who had been assigned to conduct the "new trial" of the case in which his or her decision was reversed on appeal. The term "new trial" is intended to cover situations where the case is to be re-tried and not merely remanded with instructions to perform some specific task (e.g., recalculate interest).'" (Stegs Investments v. Superior Court (1991)
As several Courts of Appeal have recognized: "The legislative history of the 1985 amendment suggests that the applicability of [section 170.6(a)(2)] does not turn on . . . whether the issue(s) to be resolved on remand are limited, but what the court must do to resolve them. If the court's function is merely a ministerial act (such as the recalculation of interest), the 1985 amendment does not apply. If, however, the court must conduct an actual retrial, even if that trial involves only one issue, the court may be disqualified upon a timely affidavit filed pursuant to section 170.6." (Stegs, supra,
Thus, the courts have held that section 170.6(a)(2) was applicable where: (1) after a bench trial in a civil action, the judgment was reversed on appeal, and the case was remanded for an evidentiary hearing and the determination of an issue of fact (Stegs, supra, 233 Cal.App.3d at pp. 574, 576,
Although section 170.6(a)(2) does not provide a definition of "new trial," section 656 defines "new trial" as the "re-examination of an issue of fact in the same court after a trial and decision by a jury, court, or referee." This definition, as applied by the courts in ruling on motions for a new trial, is helpful in determining when a peremptory challenge is permitted. (See Peracchi v. Superior Court, supra, 30 Cal.4th *152 at p. 1261,
In Carney v. Simmonds (1957)
The court in Carney concluded that a motion for new trial would be proper where judgment had been entered in a number of situations, including judgment on the pleadings, judgment for failure to state a cause of action, judgment after a plaintiff's opening statement or at the close of a plaintiff's evidence, judgment on a directed verdict, judgment after a demurrer is sustained without leave to amend, and judgment on an agreed statement of ultimate facts. (Carney, supra, 49 Cal.2d at pp. 88-91,
That is not to say that section 170.6(a)(2) should be liberally construed. As the Supreme Court recently stated: "[W]ith respect to the assertion that section 170.6 must be given a liberal construction, our own cases have observed that because of the dangers presented by judge-shopping by either party the limits on the number and timing of challenges pursuant to this statute are vigorously enforced. . . . We do not believe that the 1985 amendment of section 170.6, subdivision (2) was intended to eliminate all restrictions on the challenge or to counter every possible situation in which it might be speculated that a court could react negatively to a reversal on appeal." (Peracchi v. Superior Court, supra,
Further, the Supreme Court has rejected the notion that "a section 170.6 challenge should be permitted at any hearing in which there is any potential for bias." (Peracchi v. Superior Court, supra,
The 1985 amendment of section 170.6, as originally drafted, provided that a peremptory challenge could be made after reversal on appeal where the trial judge in the prior proceedings was assigned "to rehear the matter." (Assem. Bill No. 1213 (1985-1986 Reg. Sess.) as introduced Mar. 4, 1985, § 1.) A subsequent version of the bill replaced "to rehear the matter" with "for a new trial," thus limiting the scope of peremptory challenges to "new trials" that follow reversal on appeal. (See Assem. Bill No. 1213 (1985-1986 Reg. Sess.) as amended May 15, 1985, § 1.)
As in the case here, "the trial court in a writ [of mandate] proceeding, though a nominal respondent, is nonetheless a neutral party in the underlying controversy between the parties, and as such, has a duty to remain impartial. . . . [T]he real party in interest, not the respondent court, has [a] beneficial interest in the litigation and is the aggrieved party, i.e., the adverse party in whose favor the act complained of has been done. As the aggrieved party, the real party in interest is the party with sufficient interest in the subject matter of the dispute to press its case with vigor." (James G. v. Superior Court (2000)
There are some types of mandate proceedings not like the one here in which the trial court is the real adverse party, as where a writ proceeding directly affects the operations and procedures of the trial court or may impose financial obligations that would directly affect the court's operations. (See James G. v. Superior Court, supra, 80 Cal.App.4th at pp. 280-281,
Finally, as the statutory language indicates, section 170.6(a)(2) applies to reversals after an "appeal." One court has held that the statute also applies to reversals after a writ of mandate proceeding. (See Overton, supra, 22 Cal.App.4th at pp. 115-116,
Based on the foregoing authorities, we conclude that a peremptory challenge is permitted under section 170.6(a)(2) where (1) a trial court's decision or final judgment is made in conjunction with a "trial" and (2) a subsequent reversal of that decision results in a "new trial." Applying this test here, we further conclude that State Farm's peremptory challenge was not permitted.
The conclusion that section 170.6(a)(2) contemplates two "trials" one before reversal and a "new" one thereafter is confirmed by the legislative history. "`The concern expressed by the proponents of the [statute] was that a judge who had been reversed might prove to be biased against the party who successfully appealed the judge's erroneous ruling at the original trial.' . . . [A] legislative committee . . . described the [statute] as `"intended to permit a party to challenge a judge who had been assigned to conduct the `new trial' of the case in which his or her decision was reversed on appeal. The term `new trial' is intended to cover situations where the case is to be re-tried and not merely remanded with instructions to perform some specific task (e.g., recalculate interest)."'" (Peracchi v. Superior Court, supra,
Further, in construing section 170.6(a)(2), we look to the statutes that govern motions for new trial (§§ 656, 657). (See Peracchi v. Superior Court, supra,
But the high court has also stated that section 656, which applies to motions for a new trial, "does not provide an exclusive definition of `trial' or `new trial,' . . . On the contrary, in defining `trial' [the court has] said `that it is the determination of an issue of law or fact' . . . or `the examination . . . of the facts or law put in issue in a cause. . . .'" (McDonough Power Equipment Co. v. Superior Court (1972)
As stated, the purpose of that statute is to avoid the potential bias of a judge whose decision at the first "trial" is reversed and who, on remand, is to conduct a "new trial." But here, the trial court's rulings on State Farm's motions and our brief intervention in the litigation do not resemble, in form or substance, the cases where peremptory challenges have been permitted after a reversal on appeal. (Cf. Stegs, supra,
We acknowledge that, for purposes of section 170.6(a)(2), certain types of motions constitute a "trial." A motion for summary judgment falls into this category. In Stubblefield, supra,
Although courts have commented generally that summary judgment motions serve the laudable goal of disposing of unmeritorious cases without trial (see, e.g., Brizuela v. CalFarm Ins. Co. (2004)
Similarly, the granting of an anti-SLAPP motion constitutes a "trial." (See Pfeiffer, supra, 107 Cal.App.4th at pp. 767-768,
But it does not follow that the trial court's decision in this case should constitute a "trial" under section 170.6(a)(2). Unlike Stubblefield, supra,
Further, the trial court's rulings on State Farm's motions did not "terminate[] the action" (People v. Superior Court (Maloy), supra,
In this case, the trial court's ruling on State Farm's Motion to Determine Applicable Law necessarily preceded any "trial." That determination regarding what law governs had to be made before any of plaintiffs' causes of action could be adjudicated. And the granting of the prior writ petition, which corrected the trial court's ruling, will not result in a "new trial." The trial court has yet to "try" any of plaintiffs' causes of action; it merely decided (albeit incorrectly) which state's law will apply when the case is tried or otherwise adjudicated. This crucial distinction was recognized in First State Ins. Co. v. Superior Court (2000)
State Farm's Motion to Determine Applicable Law, though not expressly provided for in the Code of Civil Procedure, is the equivalent of an in limine motion that seeks to resolve a conflict of laws or choice of law issue. (See, e.g., Blakesley v. Wolford (3d Cir.1986)
Simply put, during the routine progress of this case, State Farm filed a motion to determine whether California law or Illinois law applied to plaintiffs' causes of action. The trial court concluded that California law applied. We granted State Farm's writ petition to make clear that Illinois law is controlling. And with the writ proceeding completed, the case will resume its course in the trial court and move toward trial (the first trial) or some other disposition.
Finally, State Farm argues that the peremptory challenge was valid because, after the granting of the prior writ petition, the trial court will perform more than a "ministerial" task on remand. Disqualification under section 170.6(a)(2) may be required in such a situation, depending on the circumstances. (See, e.g., Pfeiffer, supra,
Accordingly, we conclude that the trial court properly denied State Farm's motion to disqualify under section 170.6(a)(2). The trial court's earlier decision on State Farm's motions, for the purpose of resolving a conflict of laws issue, did not constitute a "trial," and the granting of State Farm's prior writ petition will not result in a "new trial."
III
DISPOSITION
The petition for writ of mandate is denied. The order to show cause is discharged. The parties to this proceeding are to bear their own costs.
We concur: SPENCER, P.J., and ORTEGA, J.
NOTES
Notes
[1] The internal affairs doctrine is a conflict of laws principle which recognizes that matters of corporate governance for example, a dispute between the board of directors and shareholders over whether to declare dividends should be decided under the law of the company's state of incorporation. (See State Farm Mutual Automobile Ins. Co. v. Superior Court (2003)
[2] "`The common law `business judgment rule' refers to a judicial policy of deference to the business judgment of corporate directors in the exercise of their broad discretion in making corporate decisions....'" (Barnes v. State Farm Mut. Auto. Ins. Co. (1993)
[3] Section 170.6(a)(2) was amended in 1998, but that amendment is of no relevance here. (See Pfeiffer Venice Properties v. Superior Court (2003)