Taxing Matters
Overtaxed Member
The rule against claim splitting is a result of applying the doctrine of res judicata, or claim preclusion. The underlying principle behind res judicata is once you bring a particular claim and the court has resolved that claim, you cannot bring that same claim again in that court or any other hoping for a different result than the first. In general courts define claims based on the underlying core nucleus of facts that make up the claim rather than the particular legal theory that is argued in the case. Where those facts are essentially the same and only the damages differ you cannot split the claim in two to seek the differing damages in two different suits. California adopts this view:
For that reason, the claim preclusion aspect of the res judicata doctrine generally bars a second action brought solely to recover greater or different damages. (Villacres v. ABM Industries Inc. (2010) 189 Cal.App.4th 562, 585, 117 Cal.Rptr.3d 398.) The rule prohibiting a plaintiff from splitting a cause of action into several suits is likewise an application of claim preclusion principles. (Allstate Ins. Co. v. Mel Rapton, Inc. (2000) 77 Cal.App.4th 901, 907, 92 Cal.Rptr.2d 151.)
Hong Sang Mkt., Inc. v. Peng, 20 Cal. App. 5th 474, 490, 229 Cal. Rptr. 3d 99, 111 (Ct. App. 2018).
Here, the underlying core facts are the same: the homeowner has an obligation to pay the COA fees as a result of the contract that binds the homeowners to the association. The only difference is the time periods for which the fees are owed. Thus, if you split the case into two to have damages under the $5,000 limit for each suit so you can be in small claims court, each case will require proving much the same thing, evidence of the HOA contract, etc. The only difference would be the damages owed for the differing periods involved. That is a waste of court resources and burdensome for the defendant to deal with two claims that could easily be dealt with in one with very little extra evidence needed. And thus this type of claim splitting is generally not allowed. In the Hong Sang Market case cited above, the different suits filed by the plaintiff both sought unpaid rent, though for differing periods of time. Had they both been simple lawsuits for judgment on the debt, the court indicated that defendant Peng’s claim that the plaintiff was barred in the second suit because of claim splitting would have been successful.
It is undisputed that two of the three requisites for the application of claim preclusion are present here. The unlawful detainer proceeding resulted in a final judgment on the merits and the parties in this action are identical to the parties in the unlawful detainer action. The parties' dispute turns on whether the claim raised in this breach of contract action for back-due rent is identical to the claim raised in the unlawful detainer action, in which Hong Sang sought and was awarded one month's rent. Peng asserts that the claims are identical and amount to Hong Sang splitting a single cause of action for accrued but unpaid rent into two different lawsuits.
At first blush, Peng's argument appears meritorious. After all, Hong Sang sought accrued and unpaid rent in two different actions, albeit for different time periods.
Hong Sang Mkt., Inc. v. Peng, 20 Cal. App. 5th 474, 490, 229 Cal. Rptr. 3d 99, 111 (Ct. App. 2018).
Note that the court specifically mentions that the fact that the rent was for different time periods would not defeat a claim of improper claim splitting. So had the two actions been the same but for the differing time periods, Peng would have succeeded in blocking the second suit based on res judicata — improper splitting of the claim. The court ruled against Peng on this issue, however, because the first case was fundamentally a different claim — it was a suit for repossession of the property, which in California is a very narrow kind of proceeding. The second suit was for a judgment on unpaid rent. The very different nature of the two proceedings and the proof needed killed the claim splitting argument that Peng made.
Here, however, the two proceedings would be the same — actions for judgments for the debt. And just as the court indicated in Hong Sang that differing periods of rent in otherwise indentical claims for a judgment on the debt would not overcome a claim of improper claim splitting it should also be the case that differing periods of unpaid HOA fees should not overcome a claim of improper claim splitting in otherwise identical claims of a unpaid HOA fees.
Even though the rules may not mandate suing for all the periods together, the fact that they can be brought together is enough.
Under the doctrine of res judicata, “ ‘ “f the matter [raised in the subsequent suit] was within the scope of the [prior] action, related to the subject matter and relevant to the issues, so that it could have been raised, the judgment is conclusive on it despite the fact that it was not in fact expressly pleaded or otherwise urged.
Villacres v. ABM Indus. Inc., 189 Cal. App. 4th 562, 583–84, 117 Cal. Rptr. 3d 398, 415 (2010).
So the bottom line is that I think the trying to split what is presently owed into $5,000 chunks to sue separately in small claims won't work because it would amount to improper splitting of the claims. If more periods become owed while the case is pending, typically one could amend the complaint to include the newly owed periods.
I don't practice in California so the OP might want to get an opinion from a California lawyer on it, but I rather think the California lawyer will tell the OP the same thing,
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