Filed 6/10/14 Curtin v. Keenan CA4/1
Received for posting 7/11/14
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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                    COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                   DIVISION ONE

                                           STATE OF CALIFORNIA



THOMAS L. CURTIN,                                                   D064135

    Plaintiff, Cross-defendant and Respondent,

BETTY M. RULE, as Administrator, etc.,                              (Super. Ct. No. 37-2010-00060162-
                                                                     CU-BC-NC)
    Plaintiff and Respondent,

    v.

JAMES W. KEENAN et al.,

  Defendants, Cross-complainants and
Appellants.



         APPEAL from a judgment of the Superior Court of San Diego County,

Timothy M. Casserly, Judge. Reversed with directions.

         McKenna, Long & Aldridge, Charles A. Bird and Aaron T. Winn for Defendants,

Cross-complainants and Appellants.

         Testa & Associates, James A. Testa and Deborah A. Ries for Plaintiff, Cross-

defendant and Respondent Thomas L. Curtin.
        Douglas L. Applegate and Dean E. Daggett for Plaintiff and Respondent Betty

Rule.

        Plaintiff, cross-defendant and respondent Dr. Thomas L. Curtin (Curtin), and

plaintiff and respondent Betty Rule, as administrator of the estate of her deceased son,

Paul Rule (Rule or Estate; sometimes together Respondents) brought this action for

dissolution of a verbal partnership agreement and for related relief, against defendants,

cross-complainants and appellants James Keenan and Judy Keenan (together Keenan).

Respondents sought injunctive relief, dissolution of partnership and accounting, on

theories of constructive trust, reformation of deed, and quiet title, to enforce the verbal

partnership agreement that adjusted their percentage interests in the partnership that

operated commercial real property. (Code Civ. Proc., § 761.010 et seq.) The real

property, the Loma Alta Industrial Park (the "real property"), is the sole asset of the

partnership and is held in the names of the individual partners.

        In response, Keenan filed a cross-complaint against Curtin only, to quiet title and

obtain declaratory relief and an accounting, regarding the nature and respective

percentage ownership portions of the real property, as shown by record title.

        Based on the contents of two orders issued in previous partnership-related

litigation among the parties, in bankruptcy court (Curtin) and in probate court (Rule), the

trial court in the current action granted judgment on the pleadings for both respondents on

their second amended complaint (SAC), on the grounds of collateral estoppel.

(Hernandez v. City of Pomona (2009) 46 Cal.4th 501, 511 (Hernandez).) On the same

rationale, summary judgment was awarded to Curtin on Keenan's cross-complaint, and

                                              2
Keenan's requests for reconsideration or new trial were denied. (Code of Civ. Proc.,

§§ 437c, subd. (c); 438, subd. (c)(l)(A); 1008.)

       Keenan appeals, contending the trial court erred as a matter of law in determining

that a 2004 bankruptcy court order in Keenan's then-pending case, In Re James Keenan,

U.S. Bankruptcy Court, No. 96-00871 B11 (the Keenan bankruptcy), or a final order in

the Rule probate·matter, were each entitled to have collateral estoppel effect that would

bar Keenan from pursuing any defenses to the SAC, or from prosecuting his own cross-

complaint. (Estate of Rule (Sept. 14, 2012, D058759) [nonpub. opn.] (our prior

opinion).)

       Keenan argues that even though the contentious history of the partnership, its

verbal arrangements and changes, and its partners' related real property transactions were

heavily litigated in both of those related actions, among the various parties and others,

triable material issues remain here regarding the title and ownership status of the real

property. He argues he is entitled to pursue further litigation of both the SAC and his

quiet title cross-action, to attempt to show no ownership of the real property by the

partnership, and that instead the deeds showing a tenancy in common should control.

       As will be described, this record shows that each of the orders in Keenan's

bankruptcy case (affecting Curtin) and in the Rule probate action (sometimes together,

the "related rulings") made certain findings about the existence of an oral partnership

agreement between Keenan, Curtin and/or Paul Rule, for the management and operation

of partnership business upon the real property, and about the percentage ownership

interest of each partner in the partnership and its proceeds. However, with respect to the

                                             3
current quiet title theories pursued by the parties, the related rulings did not expressly,

impliedly or finally determine the percentage ownership interest of each party in the

underlying real property asset that was operated by the partnership.

       On de novo review, we determine that all of the essential elements of collateral

estoppel (e.g., identity of parties and issues, with finality) cannot now be identified as

barring the entirety of the current litigation. (Vandenburg v. Superior Court (1999) 21

Cal.4th 815, 828-829 (Vandenburg).) Despite many similarities in the issues raised and

resolved among the various cases, these collateral estoppel rulings were not justified as a

matter of law. We reverse the summary judgment on the cross-complaint and the

judgments on the pleadings, with directions to deny the motions and allow for further

appropriate proceedings.

                                               I

                       BACKGROUND AND ROLES OF PARTIES

       In the 1980's to 1990's, Keenan ran a real estate management company, Data

Property Services, and Paul Rule was his longtime employee and friend. Keenan's

business employed accountant Ken Cunningham for business and tax purposes. Thomas

Perlowski acted as accountant for Curtin. It was not until 1996 that Keenan filed for

bankruptcy and a Chapter 11 trustee of his bankruptcy estate was appointed. The

bankruptcy litigation included testimony from those parties, and continued until its

closure in 2010.




                                              4
                       A. Curtin and Keenan Invest in Real Property

       Before 1984, Curtin was a partner with other persons in a partnership that owned

the subject real property. In 1984, Curtin and Keenan decided to conduct business

together. Through an arrangement in which Curtain provided collateral to Keenan,

Keenan (and later Paul Rule as an additional partner) bought out all of Curtin's partners in

the existing partnership. They executed deeds transferring an 82.014 percent interest in

the real property to Keenan and 17.986 percent to Curtin. A subsequent deed transferred

a 76.014 percent interest in the real property to Keenan, 6 percent to Paul Rule and

17.986 percent to Curtin, and stated that all those interests were to be held as tenants in

common.1

       Thus, when Keenan and Paul Rule purchased their interests in the real property,

they financed the transaction with a note and trust deed back to the sellers (Curtin's

previous partners). Curtin already owned his own interest in the real property. The SAC

alleges that this financial arrangement was effectively a loan by Curtin of his existing

collateral to the other partners to secure the note. This situation became unwieldy from

accounting, tax and legal perspectives, and eventually the partners decided to readjust

their percentage interests.




1      Under Civil Code section 685, "[a]n interest in common is one owned by several
persons, not in joint ownership or partnership." (Italics added.) Under Civil Code
section 686, "[e]very interest created in favor of several persons in their own right is an
interest in common, unless acquired by them in partnership, for partnership purposes, or
unless declared in its creation to be a joint interest, as provided in Section 683, or unless
acquired as community property."
                                              5
       When Curtin and his wife dissolved their marriage, their 1992 property settlement

agreement transferred one-half of his interest in the real property to his ex-wife. Keenan

subsequently purchased Curtin's ex-wife's interest. In 1992, record title to the real

property reflected that Curtin owned 8.993 percent, Keenan owned 85.007 percent and

Paul Rule owned 6 percent of the real property. In 1993, Paul Rule died. Keenan

continued to manage all partnership affairs.

       According to the SAC, the current parties orally agreed that effective January 1,

1995, they realigned their interests in the partnership as follows: Keenan held 55 percent,

Curtin held 37.328 percent and Rule, 7.672 percent. However, they did not record any

new trust deeds to reflect any such change in record title to the property. According to

the SAC, one of Keenan's bankruptcy declarations and letters from his accountant

Cunningham, this arrangement was intended to correct an imbalance in interest expense

allocation among the partners, due to the partnership financing arrangement they had

made earlier. The SAC seeks an order to implement the partners' oral agreement that

they should hold record title to the Loma Alta Property in trust for the partnership,

according to their true and revised percentage interests.

       In 1995, a former business partner of Keenan in an unrelated matter, Dorothy

Satten, obtained a large judgment against him, which was upheld on appeal. As his major

creditor, she began vigorous collection efforts.

                          B. Keenan's Bankruptcy Proceedings

       In January 1996, Keenan filed for personal bankruptcy reorganization under

Chapter 11. He listed Satten, Curtin and Rule among the many creditors of his

                                               6
bankruptcy estate. For several years beginning in 1996, the bankruptcy trustee (Ross

Pyle, represented by attorney Jeffrey Isaacs) litigated several adversary actions he filed to

determine the respective interests of various parties in several partnerships that were

operating various real properties, including this one, that were managed by Keenan.

       The bankruptcy trustee hired an accountant to go over Keenan's 800 to 900 boxes

of business documents, which had been seized due to the trustee's concerns about

maintaining their integrity.

       In the adversary proceedings, Curtin contended he had an oral partnership

agreement with Keenan for operation of the subject real property, and he was entitled to a

partnership interest in the proceeds from the property that was larger than the recorded

title amount, (8.993 percent) and that instead he held the orally arranged amount (37.328

percent). Without taking a position on the merits of the dispute, the trustee for Keenan's

bankruptcy estate placed excess cash proceeds from the operation of the real property

into a blocked account, representing the difference between those two percentage figures.

When the amount became very large over a number of years, the trustee entered into an

"interim distribution agreement" (IDA) with Curtin, to allocate a portion of the blocked

proceeds for distribution to Curtin, according to his understanding of the shares agreed to

in the oral partnership agreement. Notably, the IDA recites that "Curtin's interest in the

partnership is established at 37.328% for purposes of this agreement only." (Italics

added.)

       Keenan opposed the implementation of that IDA, and the matter went to a five-day

evidentiary hearing before the bankruptcy judge, Peter Bowie. Declarations were filed

                                              7
and testimony was taken from Keenan and Curtin, as well as Keenan's accountant

Cunningham and others.

       In its related ruling, the bankruptcy court resolved that evidentiary showing by

characterizing the issue before it as resolving, at the request of the trustee, the extent of

Curtin's interest in the putative partnership, which was disputed by Keenan. First, the

court observed that the deeds showed a relatively small interest for Curtin, and that

Keenan was contending there was only a tenancy in common in the real property.

Accordingly, for Curtin to show entitlement to a larger partnership interest, he would

have to make an additional showing of the creation of a valid California general

partnership on other, different terms (i.e., a greater percentage interest for Curtin). The

court ruled: "Based on the record adduced at the evidentiary hearing, the Court finds and

concludes that for purposes of resolving the present motion Dr. Curtin has established by

a preponderance of the evidence that a general partnership does exist between Mr.

Keenan and Dr. Curtin in the operation of the [general partnership and] Loma Alta

Industrial Park. [¶] Even if Dr. Curtin had failed to establish a general partnership with

Mr. Keenan, the next question would be whether Mr. Keenan should be permitted to deny

the partnership's existence at this late date after consistently asserting that it does exist."

(Italics added.)

       The court stated that the record in its proceedings was "replete" with Keenan's

assertions that a partnership with Curtin had been established, and they were enforceable,

so that Keenan should not be able to argue the real property that was being operated did

not become part of his bankruptcy estate. Keenan's assertions amounted to judicial

                                                8
admissions of the fact that there was a general partnership and that Curtin was a partner.

"It also appears that judicial estoppel may apply in these circumstances. [Citations.] Mr.

Keenan has consistently asserted for years that Loma Alta is a partnership and that Dr.

Curtin is one of the partners. He kept his major creditor at bay for some years by those

assertions, and has fomented expensive and lengthy litigation by the estate over those

assertions. His current position that Dr. Curtin is not a partner in Loma Alta is clearly

contrary to Mr. Keenan's earlier sworn statements, as well as other statements. His

assertions over the years the bankruptcy case has been pending have consistently risked

inconsistent results. And, it is clear that allowing Mr. Keenan to so diametrically oppose

his earlier position is unfair to Dr. Curtin, and to the trustee, both of whom have

proceeded in reliance on Mr. Keenan's prior statements."

       In its related ruling, the bankruptcy court concluded that Keenan had transferred a

portion of his community partnership interest to Curtin, quite apart from any real property

transfer or change in the deeds, which never occurred. There was persuasive evidence in

the record from Keenan's accountant, Cunningham, showing the terms of the realignment

of the partnership interest, effective January 1, 1995. Accordingly, the court ruled that

Curtin's interest in that general partnership was 37.328 percent. The order released the

designated percentage of proceeds from the operation of the real property from the

blocked account, according to the terms of the IDA. The court concluded that for

purposes of the present motion for interim distribution, both Curtin and the trustee had

preserved their respective rights and positions, and a sound business purpose for the

payment had been established.

                                              9
       Keenan appealed the related ruling to the district court but was unsuccessful. In

2010, the Keenan bankruptcy was closed and the adversary actions were dismissed. Due

to other pending litigation, the subject real property was placed in a state court

receivership.

                   C. Creation of Rule Estate; Keenan as Administrator

       After Paul Rule died in 1993, his family agreed that Keenan should be appointed

as the independent administrator for the Rule Estate. Keenan was eventually removed as

such by the probate court. In May 2005, Keenan filed an amended final account and

petition for settlement and allowance of fees. (Prob. Code, §§ 10952, 1061, subd. (a)(1).)

Objections were filed by the Estate's successor administrator. The matter went to a bench

trial in 2008 on limited issues, as identified by the parties in their joint trial statement, on

whether Keenan had breached his fiduciary duties to the Estate. Ultimately, the probate

court's September 16, 2010 order (the related ruling) surcharged Keenan over $1.9

million for his breaches of care and fiduciary duty that took place while he was acting as

administrator. The court found that Paul Rule was not indebted to Keenan for the

acquisition of the subject real property, among others, and that Keenan's amended

account should be disapproved with respect to its treatment of the percentage ownership

interests of the Rule Estate in real property.

       In this related ruling, which resolved the fiduciary duty issues, the probate court

set forth its resolution of the disputed ownership interests with respect to the properties as

identified in the estate inventory and appraisements. Specifically regarding this real



                                                 10
property, the court determined that Rule held a 7.672 percent interest, as tenant in

common with Keenan et al.

       Keenan appealed the related probate ruling imposing the surcharges and partially

approving the amended account. In our prior opinion, we affirmed, concluding that the

record strongly supported the orders surcharging Keenan and accepting, with restrictions

that corrected the percentage interests, his amended account: "Substantial evidence

supports the court's determinations that as the Rule Estate administrator, Keenan

breached his fiduciary duties, did not act with due care, and caused losses to that Estate

for which he should be surcharged."

       In the current appeal, we granted Rule's request for judicial notice of the filed

opinion in that matter, but denied a related request for judicial notice of certain

documents from that appellate record. (Evid. Code, § 452, subd. (d).)

                                D. Filing of Current Action

       The current action was filed in September 2010, and Keenan responded with his

quiet title cross-complaint. After Rule was added as a plaintiff and the pleadings were

amended, Curtin brought a motion for summary judgment on all allegations of Keenan's

cross-complaint. Curtin provided judicially noticeable materials regarding the related

bankruptcy court ruling in support of his affirmative defense of collateral estoppel, as

barring Keenan from relitigating Curtin's percentage ownership interest in the

partnership, as well as his ownership in the real property. Keenan filed opposition. The

court granted Curtin's motion for summary judgment.



                                              11
       Later, at the argument on Keenan's motions for reconsideration and a new trial,

Curtin's counsel characterized the title documents as showing the legal interests in the

property, but contended the related ruling had established the existence of the

partnership's equitable or beneficial interest in the property, in a greater amount,

according to the intent of the parties. Keenan's motions were denied.

       Curtin and Rule filed joint motions for judgment on the pleadings on the SAC, for

their remaining theories of constructive trust, reformation of deed, quiet title, injunctive

relief, and dissolution of partnership and related accounting and liquidation of assets.

They asserted their claims were meritorious as matters of law, because Keenan should be

collaterally estopped from relitigating the issues related to the existence of the

partnership, or its ownership of the real property as agreed in 1994-1995, or the agreed-

upon percentage interests of the partners. Keenan filed opposition. At the argument on

the motion, counsel for Curtin argued that his right to the property depends upon the

existence of the partnership, and the partners had intended that title should be conformed

to the interests in the partnership, so that it would be unjust for Keenan to be able to

retain the greater percentage of recorded title.

       On collateral estoppel grounds, the court granted the motions for judgment on the

pleadings on each theory of the SAC, to be specifically enforced upon application to the

court. Keenan appeals the judgment in all aspects, including its disposition of his cross-

complaint.




                                              12
                                              II

                           APPLICABLE LEGAL PRINCIPLES

       The parties agree that the applicability of collateral estoppel principles to this

established record presents issues of law reviewed de novo. (Lucido v. Superior Court

(1990) 51 Cal.3d 335, 341 (Lucido); Smith v. ExxonMobil (2007) 153 Cal.App.4th 1407,

1414-1415.) Collateral estoppel is often referred to as "issue preclusion." (Roos v. Red

(2005) 130 Cal.App.4th 870, 879.) It is to be distinguished from the other aspect of the

concept of res judicata, claims preclusion. (Lucido, supra at p. 341, fn. 3.)

       "Collateral estoppel applies when (1) the party against whom the plea is raised was

a party or was in privity with a party in the prior adjudication, (2) there was a final

judgment on the merits in the prior action and (3) the issue necessarily decided in the

prior adjudication is identical to the one that is sought to be relitigated." (Roos v. Red,

supra, 130 Cal.App.4th 870, 879.) The latter criteria, identity of issues, also requires that

"the issue must have been actually litigated in the former proceeding," as well as

necessarily decided there. (Hernandez, supra, 46 Cal.4th 501, 511; Vandenburg, supra,

21 Cal.4th at pp. 828-829.)

       "The party asserting collateral estoppel bears the burden of establishing these

requirements." (Lucido, supra, 51 Cal.3d 335, 341.) A high degree of certainty is

required that the same question was litigated and determined between the same parties in

the previous action. (People v. Garcia (2006) 39 Cal.4th 1070, 1092 [conc. & dis. opn.,

J. Chin].) "[I]t is not enough that the proposed evidence tends to show that the precise

question may have been involved in such litigation." (Ibid.) Argument or inference do

                                              13
not suffice. " ' "If upon the face of a record anything is left to conjecture as to what was

necessarily involved and decided, there is no estoppel in it when pleaded, and nothing

conclusive in it when offered in evidence." [Citation.]' " (Ibid.)

       "For purposes of collateral estoppel, an issue was actually litigated in a prior

proceeding if it was properly raised, submitted for determination, and determined in that

proceeding. [Citation.] In considering whether these criteria have been met, courts look

carefully at the entire record from the prior proceeding, including the pleadings, the

evidence, the jury instructions, and any special jury findings or verdicts. [Citations.]

'The "identical issue" requirement addresses whether "identical factual allegations" are at

stake in the two proceedings, not whether the ultimate issues or dispositions are the

same.' " (Hernandez, supra, 46 Cal.4th 501, 511-512; Lucido, supra, 51 Cal.3d at

p. 342.)

       "[T]he public policies underlying collateral estoppels--preservation of the integrity

of the judicial system, promotion of judicial economy, and protection of litigants from

harassment by vexatious litigation--strongly influence whether its application in a

particular circumstance would be fair to the parties and constitute sound judicial policy."

(Lucido, supra, 51 Cal.3d at p. 343.)

       As a threshold matter, it is clear that Curtin and Rule, under the portion of the

collateral estoppel test requiring party identity or privity with a party, could properly

assert against Keenan the findings in the related rulings. The more difficult questions

arise from the requirement of identity of issues.



                                              14
                                             III

             CURTIN: IDENTITY OF ISSUES REQUIREMENT NOT MET

                           A. Scope of Bankruptcy Court Order

       Essentially the same collateral estoppel questions are presented with regard to the

effect of the related bankruptcy ruling upon Curtin's rights as asserted in his SAC, and as

to Keenan's asserted defenses to the SAC, and also as to his cross-complaint. Our task is

to determine whether "identical factual allegations" are placed in issue in the current

pleadings, as opposed to those resolved by the related ruling. (Hernandez, supra, 46

Cal.4th at pp. 511-512.)

       In the trustee's declaration filed at the time of the IDA motion, he stated: "Since

the commencement of the Partnership Adversary Proceeding . . . the Trustee has not

found or been presented with evidence inconsistent with the contention that Curtin's

interest in the Partnership and the Property is 37.3280%."2 The bankruptcy court

considered other evidence as well, and its order expressly circumscribed the issues before

it in several ways. The court said it was adjudicating the extent of Curtin's interest in the

"putative" partnership, "for purposes of resolving the present motion," in which the

trustee sought to enforce the IDA for release of some proceeds, measured by the amount

of Curtin's claimed interest in the oral partnership agreement. Next, the court noted that

there had been no change in the real property deeds, so Curtin would have to prove other

aspects of the partnership agreement had been addressed. Further, the court found that


2     This trustee's declaration also discussed an issue not involved here under Title 11
United States Code section 547, dealing with avoidable preferences in bankruptcy.
                                             15
Curtin had shown that Keenan had effectively transferred a portion of his community

partnership interest to Curtin, which was distinct from any real property transfers.

       Based on that evidence, the bankruptcy court concluded that a valid California

general partnership had been created and that Curtin's interest in it was 37.328 percent.

Its related ruling found only that for purposes of the present motion for interim

distribution, both Curtin and the trustee had preserved their respective rights and

positions, and a sound business purpose for the payment had been established.

       In the rulings currently on appeal, the trial court found that the related bankruptcy

court ruling had collateral estoppel effect with regard to Curtin's ownership of not only a

37.328 percent interest in the orally created partnership, but also his ownership of that

percentage of the real property utilized by the partnership.

                           B. Contentions on Current Pleadings

       Keenan draws a distinction between the ownership interests of the partners in the

partnership business (operating the property), as opposed to the record title ownership of

the partners of the subject real property. In his view, triable issues remain in support of

his contention that Curtin is entitled to no more than his 8.993 percent record title

ownership in the subject real property, as a tenant in common with the other named

titleholders. Keenan points out that a tenancy in common interest in property is

statutorily different from a partnership's holding of property as an owner. (Civ. Code,

§§ 685, 686.)

       The Civil Code defines ownership by tenancy in common as inconsistent with

ownership by a partnership. "A tenancy in common, which is a cotenancy without the

                                             16
right of survivorship, exists where several persons own property not as joint tenants or

partners. [Citation.] An interest created in favor of several persons is presumed to be a

tenancy in common, unless it was acquired in partnership for partnership purposes or as

community property, or expressly declared to be in joint tenancy." (12 Witkin, Summary

of Cal. Law (10th ed. 2005) Real Property, § 39, p. 90; italics omitted.)

       Keenan cites to the Uniform Partnership Act of 1994, Corporations Code section

16204, subdivision (d), stating, "Property acquired in the name of one or more of the

partners, without an indication in the instrument transferring title to the property of the

person's capacity as a partner or of the existence of a partnership and without use of

partnership assets, is presumed to be separate property, even if used for partnership

purposes." Here, the deeds are silent on that transfer issue.

       In response to such arguments, Curtin asserts that under the verbal partnership

agreement, Keenan cannot rely on the deeds as written, because the SAC pleads that a

constructive trust and reformation of the deeds is required, and quieting title, to

accurately reflect the terms of the parties' verbal partnership agreement, under a mutual

mistake theory in failing to vest title in the partnership or the partners specifically on

behalf of the partnership. Curtin thus claims that by operation of law, the property held

by any of the partners is held in trust for the partnership. He mainly relies on Swarthout

v. Gentry (1943) 62 Cal.App.2d 68, 78 (Swarthout), in which the court stated: "It is well

settled in California that a partnership may be formed by parol even though its sole

purpose is to deal in real estate. If a partnership is formed and real property is dedicated

to partnership use and is used by the partnership for its sole benefit, the fact that title was

                                              17
acquired by one or more of the partners with their private funds or was owned by them as

tenants in common prior to the formation of the partnership will not necessarily defeat the

claim of the partnership to ownership of the property in the absence of an express

agreement that it should remain property of those in whose names title stood. Under such

circumstances the owners of the legal title hold the property in trust for the partnership."

(See also 48 Cal.Jur.3d (2012) Partnership, § 64, p. 519 ["A partner who, in purchasing

real property for the firm, takes title in that partner's own name acts as agent and trustee

for the other partners, who are beneficiaries of the trust. The trust is a constructive and

not a resulting trust."].)

       In Swarthout, supra, 62 Cal.App.2d 68, the court further noted, "Nor does the

statute of frauds prevent proof of the existence of a trust in favor of the partnership where

title stands in the names of the partners or in that of a third person. In Bates v. Babcock

(1892) 95 Cal. 479, it was held that under such circumstances the statute of frauds could

not be invoked to commit a fraud on the partnership by depriving it of property belonging

to it." (Swarthout, supra, at p. 79.)

       In Bates v. Babcock, supra, 95 Cal. 479, a partnership agreement provided for

operation of a business on property, and the evidence showed the land was necessary to

carry on the business. The court concluded that property rights in the land were an

incident to the agreement: "The partnership being established by evidence upon which a

partnership may be found, the premises necessary for the purposes of that partnership are

by operation of law held for the purposes of that partnership." (Id. at p. 489.) The

partnership could assert a resulting trust in its favor, by operation of law, upon ownership

                                             18
of the land. Parol evidence could be presented to prove that the partnership agreement to

operate the business concerned the land, in a manner that allowed the partnership to

assert an interest in the land (a portion of the assets of the partnership), by operation of

law, as an incident to such partnership. (Ibid.)

         C. Rules Regarding Partnership Property; Effect of Judicial Admissions

       A partnership may exist without owning any assets. "It is not necessary, to

constitute a partnership, that there be property jointly owned by the partners forming its

capital. The partners may, where so agreed, contribute only the use of property owned by

them separately or as tenants in common." (48 Cal.Jur.3d, supra, Partnership § 35, pp.

473-474, fn. omitted.)

       However, when a partnership acts to acquire real property, the land is property of

the partnership and not of the partners individually. (Corp. Code, § 16203; 9 Witkin,

Summary of Cal. Law, supra, Partnership, § 27, p. 602.) A partner uses or possesses

partnership property only on behalf of the partnership. (Ibid.; Corp. Code, § 16401,

subd. (g).)

       "Although property is purchased by partners in their individual names and with

their individual funds, the conduct of the parties may show that the property was

purchased and used for the partnership as partnership property and that the contribution

that each partner made to the funds used to acquire the property was a subscription of

additional capital to the partnership." (48 Cal.Jur.3d, supra, Partnership, § 44, p. 488, fn.

omitted, citing Swarthout, supra, 62 Cal.App.2d 68.)



                                              19
       For purposes of determining whether the related rulings should have collateral

estoppel effect to bar further litigation on the issues of ownership of property, by the

partnership or the partners individually, we also consider the parties' arguments about

judicial admissions in pleadings or declarations. Collateral estoppel presents issues of

law, not issues of proof. A judicial admission "is a conclusive concession of the truth of

a matter and has the effect of removing it from the issues. Nor is a judicial admission

treated procedurally as evidence; the particular pleading or allegation is not formally

offered in evidence but may nevertheless be relied upon and treated in argument as part

of the case." (1 Witkin, Cal. Evidence (5th ed. 2012) Hearsay, § 98, p. 922.) For

example, "[a] pleading in a prior civil proceeding may be offered as an evidentiary

admission against the pleader in a subsequent proceeding." (Id. at § 99, p. 923; Heater v.

Southwood Psychiatric Center (1996) 42 Cal.App.4th 1068, 1079-1080, fn. 10.)

       The related doctrine of judicial estoppel is also to be distinguished from the

doctrine of collateral estoppel, which has different elements. The requirements for a

judicial estoppel ruling have been summarized as follows: "(1) the same party has taken

two positions; (2) the positions were taken in judicial or quasi-judicial administrative

proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal

adopted the position or accepted it as true); (4) the two positions are totally inconsistent;

and (5) the first position was not taken as a result of ignorance, fraud, or mistake."

(Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 183 [applying federal

doctrine to California law].)



                                              20
       In the bankruptcy court's ruling, it noted that Keenan's declarations in connection

with the trustee's 1996 motion for turnover of properties appeared to admit that a

partnership owned and operated the real property, and that the partners' percentage

interests in it were 55 percent for Keenan, 37.328 percent as to Curtin and 7.672 percent

as to Paul Rule or his estate. There were other such apparent ownership concessions in

Keenan's schedule filings in February 1996 (reflecting his 55 percent general partnership

interest in the real property). In Keenan's 1999 amendment to his property schedules, he

again listed the real property as owned by the partnership, in which he held an 83.335

percent general partnership interest. (As noted by the bankruptcy court in its ruling, the

latter figure apparently accounted for the smaller interests that Keenan was conceding

that Paul Rule and Curtin owned in the partnership that operated the property.)

       In response, Keenan's appellate briefs cite to a recently obtained deposition

transcript from Curtin, in which Curtin expressed some uncertainty as to which

conversations with Keenan or with Keenan's accountant, Cunningham, had given rise to

the amendment of the partnership agreement that Curtin claimed had increased his

percentage interest in it. Keenan contends this testimony completely undermines the

validity of the collateral estoppel finding.

       Generally, the existence of a partnership is a question of fact. (People v. Park

(1978) 87 Cal.App.3d 550, 564; Bank of California v. Connolly (1973) 36 Cal.App.3d

350, 364; 9 Witkin, Summary of Cal. Law, supra, Partnership, § 22, pp. 597-598.) It is

not surprising that over the many years in which the partnership was operating, and

during litigation, there were many dealings and differences among the parties, and it is

                                               21
not persuasive in this context to point to one statement as a "smoking gun" in this

instance.

       The merits of the SAC or the cross-complaint are not now before us. We cannot

currently give conclusive effect to the various judicial admissions identified by the

bankruptcy court as having been made by Keenan, about creation or modification of the

partnership and the effect of the various parties' contributions to it. Collateral estoppel

rules include other considerations about the required identity of issues litigated and

actually resolved. We express no opinion on the binding nature of any such judicial

admissions previously made by Keenan or others.

                                        D. Analysis

       "The party asserting collateral estoppel bears the burden of establishing these

requirements," to a high degree of certainty, to show that the same question was litigated

and actually determined between the same parties in the previous action. (Lucido, supra,

51 Cal.3d 335, 341; People v. Garcia, supra, 39 Cal.4th 1070, 1092 [conc. & dis. opn.,

J. Chin].) "For purposes of collateral estoppel, an issue was actually litigated in a prior

proceeding if it was properly raised, submitted for determination, and determined in that

proceeding." (Hernandez, supra, 46 Cal.4th at p. 511.)

       On the current record, under the rules outlined above, it is clear that the

bankruptcy court refrained from ruling on the nature of the real property ownership or

partnership ownership issues, as they were unnecessary for resolving the IDA issues.

Instead, the bankruptcy related ruling was limited to disposing of the oral partnership

issues only for purposes of an interim distribution, as between Curtin and the bankruptcy

                                             22
trustee, and only as to one partnership asset, the monetary proceeds from the operation of

the real property. The bankruptcy court relied on Keenan's judicial admissions as

supporting its finding an oral general partnership agreement existed as to Curtin, in the

stated percentages, but only for purposes of making the interim distribution. The current

pleadings contradict each other on the status of the real property ownership issues, and

the prior related ruling should not be interpreted to preclude resolution on the merits of

those ownership issues.

       For example, the verbal partnership agreement that became effective in 1995 was

modifying the original partnership arrangement which began in 1984. The SAC alleges

Curtin had effectively lent his collateral to the other partners to secure their note. The

effects of that "loan" transaction, and of the respective contributions to the partnership

operations over time, remain unclear as to the proper allocation of all ownership interests

in the real property partnership asset. In some cases, the conduct of the parties may show

that "property was purchased and used for the partnership as partnership property," even

where the property was "purchased by partners in their individual names and with their

individual funds." (48 Cal.Jur.3d, supra, Partnership, § 44, p. 488, citing Swarthout,

supra, 62 Cal.App.2d 68.)

       Under this complicated set of circumstances, we cannot find that the related ruling

has established, solely by operation of law, that the real property held by the partners

individually is held in trust for the partnership, so that pursuant to the SAC, the deeds

must be reformed, or a constructive trust imposed, or title quieted, as Curtin requests.

(See Swarthout, supra, 62 Cal.App.2d 68.) Rather, the narrow issue identified and

                                             23
resolved by the bankruptcy court did not arise out of the " 'identical factual allegations' "

made in the current pleadings. (Hernandez, supra, 46 Cal.4th 501, 511-512; Lucido,

supra, 51 Cal.3d at p. 342.) Moreover, any implied findings made by the bankruptcy

court are not certain enough to be given collateral estoppel effect to resolve disputes

about partnership assets that go beyond the IDA issues addressed in bankruptcy court.

(People v. Garcia, supra, 39 Cal.4th at p. 1092 [conc. & dis. opn., J. Chin].)

       It makes no difference that Keenan unsuccessfully appealed the bankruptcy court

order to the federal district court, or that the adversary action involving Curtin was

eventually dismissed when Keenan's bankruptcy case was closed in 2010.3 We need not

discuss any collateral estoppel issues regarding finality of this bankruptcy court related

ruling, since only a narrow scope of issues was resolved in it, within the much larger

topic of identifying and allocating the partnership's assets. (Lucido, supra, 51 Cal.3d

335, 341.)

                                              IV

                     ESTATE OF RULE: NO IDENTITY OF ISSUES

                             A. Scope of Probate Court Ruling

       Keenan first argues that Rule's joinder in Curtin's appellate brief does not help

Rule to support the validity of the trial court's collateral estoppel finding, because the

issues that were previously before the bankruptcy court (regarding Curtin) were different



3     It is unnecessary to address Keenan's contentions that he was unable to prepare
adequate opposition to the IDA motion, in light of the trustee's seizure of his business
documents during the bankruptcy matter.
                                              24
from those in the related Rule ruling. Keenan next contends the probate court was neither

asked nor required to adjudicate ownership to the underlying real property. He then

contradicts himself by citing to the probate court's finding as conclusively establishing

that the real property was held by all partners as tenants in common.

       A fair reading of the probate court's related ruling leads us to conclude that its

express and implied findings were necessarily confined to the major issues identified

during the 2008 trial, on the successor administrator's objections to Keenan's amended

account. The parties' joint trial statement limited those issues to whether (a) Keenan

breached his fiduciary duty and should be surcharged, based on the stipulated judgment

against the Estate entered in favor of his own bankruptcy estate; and/or (b) Keenan had

breached his duties in regard to the bankruptcy trustee's disallowance of a balance due on

a note that Keenan owed to the Estate (i.e., whether Keenan acted to protect Rule's

interests by opposing such a debt forgiveness in his own favor).4 Numerous witnesses

testified and numerous exhibits were received in evidence. Our prior opinion affirming

that ruling was confined to that record.

                      B. Comparison of Probate Court Order to SAC

       The probate court proceeding was not a vehicle for litigating quiet title issues

between Keenan and the Estate. Rather, the probate court accepted the documentation

presented to it in the inventory and appraisement, and at that time, the information given

the court was that the Estate had certain real property interests, as they were reflected in


4     In the probate matter, there was also a tax return and liability issue, but it was not
pursued on appeal.
                                             25
the deeds. The probate court did not have any oral partnership issues before it, nor did it

resolve any civil claims. Instead, our prior opinion took note that there were ongoing

quiet title proceedings elsewhere concerning the same real property (these proceedings),

but they did not affect the probate issues presented to us in that appeal.

       The related ruling in probate court established only that Keenan had committed

various breaches of his fiduciary duties to the Estate, in their business dealings. For

collateral estoppel purposes in this appeal, Rule has not demonstrated that his SAC

theories, that the tenancy in common deeds do not reflect the true intent of the partners

and a constructive trust and reformation of deeds should be ordered, were actually

brought before the probate court or resolved, as part of the Estate's claims against

Keenan's administration of it. (Hernandez, supra, 46 Cal.4th at pp. 511-512.)

       In conclusion, there are not enough "identical factual allegations" at stake in Rule's

SAC, regarding any partnership ownership interests in the real property, to justify any

conclusion that any such partnership ownership interests were already actually litigated

and resolved. (Lucido, supra, 51 Cal.3d at p. 342.) Our analysis is confined to the

collateral estoppel doctrine and we can express no opinion on the merits of the issues of

the respective ownership claims under any express or implied agreements, judicial

estoppel or admissions, or constructive trust principles.

                                      DISPOSITION

       The judgment is reversed and the trial court is directed to enter different orders

denying the motion for summary judgment on the cross-complaint, and denying the



                                             26
motion for judgment on the pleadings on the SAC, and to allow further proceedings on

the merits. Each party shall bear its own costs on appeal.




                                                              HUFFMAN, Acting P. J.

WE CONCUR:



                      HALLER, J.


                  McDONALD, J.




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