Unpublished Disposition, 865 F.2d 265 (9th Cir. 1988)

MEMORANDUM^** 

Appellant Michael Schaefer timely appeals from a summary judgment granted in favor of Appellee, the A.O. Smith Company. The district court had jurisdiction under 28 U.S.C. § 1332 (1982), and we now have jurisdiction under 28 U.S.C. § 1291 (1982). Mr. Schaefer urges this court to hold that the district court erred in granting summary judgment on the ground that the doctrine of collateral estoppel bars his action. We decline to do so, and therefore we affirm. At the same time, we exercise our authority under Fed. R. App. P. 38 and 28 U.S.C. § 1912 (1982) by awarding the A.O. Smith Company double its costs and attorneys' fees incurred in defending this frivolous appeal.

BACKGROUND

In October 1983 Mr. Schaefer brought an action against the A.O. Smith Company in the Municipal Court of the Los Angeles Judicial District alleging a cause of action for breach of express warranty for the loss of a hot water heater. The Municipal Court rendered a judgment in favor of the A.O. Smith Company in July 1985, and Mr. Schaefer appealed to the Appellate Department of the Los Angeles County Superior Court. In the interim, Mr. Schaefer, "on behalf of himself and all others similarly situated," filed this action against the A.O. Smith Company in the United States District Court for the Southern District of California alleging a cause of action for the "breach of implied covenant of good faith."

More than six months passed without Mr. Schaefer moving the district court to certify the plaintiff class under Fed. R. Civ. P. 23. In July 1986 the district court granted the A.O. Smith Company's motion to stay the federal proceeding pending the outcome of Mr. Schaefer's appeal in the California court system. The basis of the A.O. Smith Company's motion was that Mr. Schaefer's failure to certify the class meant that the state and federal proceedings involved identical parties, and therefore the outcome of the state proceeding would control the outcome of the federal proceeding.

In June 1987 the state proceedings concluded in favor of the A.O. Smith Company. Shortly thereafter the A.O. Smith Company moved the district court for summary judgment on the ground that Mr. Schaefer's action was barred by the doctrines of res judicata and collateral estoppel. The district court recognized that the issues considered by the California courts in the breach of warranty claim involved identical issues to those required to succeed on a claim of breach of an implied covenant of good faith. Because those issues had been decided against Mr. Schaefer, the district court entered summary judgment in favor of the A.O. Smith Company. From that judgment Mr. Schaefer appeals.

ANALYSIS

A grant of summary judgment is reviewed de novo. Darring v. Kincheloe, 783 F.2d 874, 876 (9th Cir. 1986). The reviewing court must determine, viewing the evidence in the light most favorable to the nonmoving party, "whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law." Ashton v. Cory, 780 F.2d 816, 818 (9th Cir. 1986). There are no disputed issues of fact in this case. The sole issue is whether the district court correctly applied the doctrine of collateral estoppel, which, under California law, prohibits a party from relitigating issues that were litigated or might have been litigated in a previous suit involving the same parties. See Clemente v. State, 40 Cal. 3d 202, 222, 707 P.2d 818, 830, 219 Cal. Rptr. 445, 457 (1985).

The focus of Mr. Schaefer's argument on appeal is that the two proceedings involve different parties, that is, that the plaintiff in the state proceedings was Mr. Schaefer individually, while the plaintiff in the federal proceeding is Mr. Schaefer representing a class. This argument, however, presupposes that the federal action was operating as a class action. But this assumption is not supported by the district court's decision staying the federal proceeding because that decision depended on a finding that the state and federal proceedings involved identical parties. This conclusion is wholly within the district court's power to make.

According to Fed. R. Civ. P. 23(c) (1), the district court must rule on the issue of class certification " [a]s soon as practicable after the commencement of an action brought as a class action...." And under Local Rule 200-4(c), the "party seeking to maintain an action as a class action shall file a motion for a determination whether it may be so maintained pursuant to Rule 23(c) (1) within six months of the filing of that party's first pleading...." Here, Mr. Schaefer made no effort to certify the class even though six months passed from the date he filed his complaint to the date the district court stayed the proceedings. Instead, Mr. Schaefer argued the merits of the A.O. Smith Company's motion to stay the proceedings and its subsequent motion for summary judgment. This court has held previously that a party who proceeds directly to the merits without moving for certification of the class thereby waives any right to pursue the claim as a class action. Wright v. Schock, 742 F.2d 541, 544 (9th Cir. 1984). Accordingly, Mr. Schaefer waived his right to pursue the claim as a class action under Rule 23.

Once the two actions are characterized as involving the same parties, little remains about which Mr. Schaefer can complain. In both the federal and state proceedings Mr. Schaefer's recovery depended on proof that the A.O. Smith Company failed to honor its warranty. The issue that the A.O. Smith Company did not warrant the hot water heater was determined by a final decision of the Municipal Court and affirmed on appeal to the Superior Court. That ruling, adverse to Mr. Schaefer, precludes him from relitigating the issue in federal court. Therefore, we affirm the district court's summary judgment granted in favor of the A.O. Smith company.

The A.O. Smith Company argues that Mr. Schaefer's appeal is frivolous and therefore sanctions are appropriate under Fed. R. App. P. 38 and 28 U.S.C. § 1912 (1982). Under these provisions, " [t]his court has discretion to award damages and single or double costs as a sanction against bringing a frivolous appeal," McConnell v. Critchlow, 661 F.2d 116, 118 (9th Cir. 1981), including an award for attorneys' fees, see Ellingson v. Burlington Northern, Inc., 653 F.2d 1327, 1332 (9th Cir. 1981). In this circuit an appeal is frivolous when the result is "obvious," Jaegar v. Canadian Bank of Commerce, 327 F.2d 743, 746 (9th Cir. 1964), or when the appellant's assignments of error are "wholly without merit," Libby, McNeill & Libby v. City National Bank, 592 F.2d 504, 514 (9th Cir. 1978) (quoting United States ex rel. Ins. Co. of N. Am. v. Santa Fe Eng'rs., Inc., 567 F.2d 860, 861 (9th Cir. 1978) (per curiam)). In our judgment Mr. Schaefer's arguments are wholly without merit and the result is obvious. As an attorney, he should know better.

Mr. Schaefer's brief essentially repeats the same meritless argument advanced below: Comparing the state and federal proceedings, according to Mr. Schaefer, is equivalent to comparing "apples and oranges." His brief, however, does little to explain why the two proceedings are vastly different except that he advances the argument that the federal proceeding is a class action. But the result of that argument is obvious: There is no doubt that the district court properly treated the action as filed only on behalf of Mr. Schaefer even though the caption of the complaint characterized the action as one filed on behalf of a class. Mr. Schaefer's failure to avail himself of the proper procedures for certifying the class under Fed. R. Civ. P. 23(c) (1) and Local Rule 200-4(c) cannot be corrected on appeal. Thus, we hold that Mr. Schaefer's appeal, asking this court to do just that, is frivolous. We will exercise our discretion and order Mr. Schaefer to reimburse the A.O. Smith Company double its costs and attorneys' fees incurred in defending this frivolous appeal.

CONCLUSION

The judgment of the district court is AFFIRMED, and the case is hereby REMANDED for a hearing to determine the amount awarded to the A.O. Smith Company to cover double its costs and attorneys' fees.

AFFIRMED and REMANDED FOR HEARING.