Unpublished Disposition, 889 F.2d 1094 (9th Cir. 1989)

MEMORANDUM^*

After a bench trial, the district court found that defendant-appellant Jerome Joseph, a Missouri lawyer, had sold or assigned to plaintiff-appellee Karl L. Boeckmann interests in two judgments, one from a case called Lee v. Levis and the other from United of America Bank v. Freelandia ("UAB "), that Joseph had no right or authority to offer. The district court eventually awarded Boeckmann compensatory and punitive damages for his suit based on claims of breach of contract and fraud.

* On appeal, Joseph argues that the district court should have abstained from adjudicating the UAB claim that Boeckmann had initially brought in state court. He also contends that res judicata precluded Boeckmann from bringing the Lee claim in federal court because it had already been resolved in state court. Finally, Joseph challenges the district court's award of punitive damages on the basis that Boeckmann did not include a request for punitive damages in his pleadings or in the pretrial conference order.

Joseph's abstention argument is without merit. First, it is puzzling that he argues that the federal court should have invoked the abstention doctrine considering that he was the one who moved to have Boeckmann's state action removed to federal court. See Defendant's Petition for Removal of Civil Action, Excerpt of Record ("E.R.") at 1. In any event, a federal court has no obligation to abstain. See Colorado River Water Conservation District v. United States, 424 U.S. 800, 813 (1976) ("Abstention from the exercise of federal jurisdiction is the exception, not the rule.").

The federal court's decision whether to abstain from an action also filed in state court is left to its discretion. In particular, the district court may consider whether there are " 'exceptional circumstances where the order to the parties to repair to the State court would clearly serve an important countervailing interest.' " Id. (quoting County of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 188-89 (1959)). Here, there are no exceptional circumstances, and in fact, none was argued by Joseph.

Joseph's only contention is that the federal action was duplicative of the state action and that the federal court should have abstained in order to avoid such duplication. Appellant's Brief at 9. However, this is only one factor, and as Colorado River instructs, " [n]o one factor is necessarily determinative." 424 U.S. at 818. The district court must weigh this factor along with other factors and "tak [e] into account both the obligation to exercise jurisdiction and the combination of factors counselling against that exercise." Id. at 818-19. The district court did not abuse its discretion in declining to abstain in this case.

II

Joseph's second contention is also without merit. He argues that the settlement of an earlier state court case called Olympic Bonnie Brae Associates v. Joseph, which also involved the Lee judgment, bars Boeckmann from re-litigating that same judgment in federal court. In the state court proceeding, however, Boeckmann had intervened as a co-defendant. Boeckmann and Joseph were not adversaries nor were any issues litigated between them. Therefore, the earlier case does not preclude Boeckmann from now litigating the Lee judgment in federal court. We review this question of law de novo and affirm the district court's ruling as to the inapplicability of res judicata.

III

Joseph's final issue on appeal is that the district court erred in awarding punitive damages. He claims that Boeckmann sought only compensatory, and not punitive, damages. Although the district court initially believed that punitive damages were not available to Boeckmann, it allowed the parties to submit post-trial briefs on the issue, and ultimately awarded punitive damages.

It is within the district court's discretion to allow a party to amend its pleadings, and even to amend its prayer for relief to include punitive damages. "It is settled law in California that where the body of the complaint sets forth facts upon which an award of punitive damages may be predicated, the trier of fact can award punitive damages even in the complete absence of a prayer." Godfrey v. Steinpress, 128 Cal. App. 3d 154, 183, 180 Cal. Rptr. 95 (Ct.App.1982). In this case, Boeckmann had included in his original complaint a claim for fraud, see E.R. at 6, 9-10, and had included the claim in the Pre-Trial Conference Order, which supersedes the pleadings. Thus, Joseph was on notice that fraud was an issue that would be litigated at trial.¹ 

The district court did not abuse its discretion in awarding punitive damages. It found that "Defendant committed fraud against Plaintiff, and damages therefor are appropriate." E.R. at 45. A finding of fraud provides the basis for the award of punitive damages. See Bell v. Sharp Cabrillo Hospital, 212 Cal. App. 3d 1034, 260 Cal. Rptr. 886, 1989 Cal.App.Lexis 796, (Ct.App. Aug. 1, 1989) ("Punitive damages are properly awarded where defendants are guilty of oppression, fraud or malice."). Punitive damages can be awarded in this case regardless of whether they were specifically requested in the prayer for relief. Godfrey, 128 Cal. App. 3d at 183 (" 'The fact that exemplary damages find no express mention in the prayer of the complaint does not preclude the allowance of such damages upon a contested trial.' ") (citing Vaughn v. Jonas, 31 Cal. 2d 586, 606, 191 P.2d 432 (1948)). Joseph does not claim that the amount of the punitive damage award ($15,000) plus interest was excessive.

For the foregoing reasons, the district court's amended judgment is AFFIRMED.