McKINSTER, Acting P.J.
Plaintiff and appellant Gary Bailey appeals a judgment awarding him $222,373.38, following an order granting a defense motion for summary judgment or summary adjudication. Bailey contends that he is entitled to a larger award of damages, including punitive damages. We will affirm the judgment as to the compensatory damages, but will reverse as to punitive damages.
The current appeal arises from the latest in a series of lawsuits between Bailey and Lamar Advertising Company (Lamar) or Lamar's predecessor, Outdoor Media Group (OMG). We recite the following factual and procedural history from our opinion in Bailey v. Outdoor Media Group (2007) 155 Cal.App.4th 778 (Fourth Dist., Div. Two; hereafter Bailey II):
In Bailey II, Bailey contended that the trial court incorrectly calculated the amount of damages to which he was entitled as the result of the wrongful occupation of his leasehold by OMG and Lamar. He contended that under section 3334, he was entitled to recover the gross revenue, not the net profit, generated by the billboards, along with the proceeds of OMG's sale of the billboards to Lamar. With respect to OMG, the trial court awarded Bailey OMG's net profits and did not include the proceeds of OMG's sale to Lamar. With respect to Lamar, the trial court found that its occupation of the property was the result of a mistake of fact, and therefore awarded Bailey the reasonable rental value of the property under section 3334, subdivision (b)(2). (Bailey II, supra, 155 Cal.App.4th at pp. 782-783.)
We examined the legislative history of section 3334 and determined that the Legislature intended to eliminate financial incentives for wrongfully occupying the land of another but did not intend to punish such occupiers. We concluded that an award of gross revenue would be punitive, and that the phrase "benefits obtained" as used in section 3334, subdivision (b)(1) normally means the defendant's net profit, at least in a case involving the wrongful occupation of real property in order to conduct a business. We held that a plaintiff's burden is to prove the gross revenues obtained by the defendant, and that the defendant bears the burden of proving expenses incurred in the wrongful use of the property, as a matter of defense. If the defendant proves its expenses, the trial court may offset them against the gross revenues. If the defendant does not present credible evidence of its expenses, however, the court may award damages in the amount of the defendant's gross revenues. (Bailey II, supra, 155 Cal.App.4th at pp. 784-789.) We affirmed the trial court's award of damages against OMG in the amount of its net profit (id. at pp. 788-789) and modified the judgment to award Bailey damages in the amount of Lamar's net profits, rather than the reasonable rental value the trial court employed with respect to Lamar (id. at pp. 795-796).
On February 8, 2008, Bailey filed the current suit against Lamar, seeking damages from March 1, 2005, through February 3, 2008, for trespass, wrongful occupation of real property, money had and received, as well as an accounting and imposition of a constructive trust. Lamar answered the complaint and then filed a motion for summary judgment.
In the summary judgment motion, Lamar conceded that Bailey was entitled to Lamar's net profits from the billboards from July 2005 to January 2008, in the amount of $222,373.38.
Bailey filed a timely notice of appeal.
On appeal after a motion for summary judgment or summary adjudication has been granted, we review the record de novo, considering all the evidence set forth in the moving and opposition papers except that to which objections have been made and sustained. Where it is the defendant seeking summary judgment or adjudication, we determine whether the defendant has conclusively negated a necessary element of the plaintiff's case or has demonstrated that under no hypothesis is there a material issue of fact that requires the process of trial, such that the defendant is entitled to judgment as a matter of law. (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334.) If the defendant produces affirmative evidence which, unless materially contradicted or rebutted, would establish that each of the plaintiff's causes of action lacked merit, the burden shifts to the plaintiff to produce or point to evidence which shows the existence of one or more triable issues of material fact. (Id. at p. 335, fn. 7.)
Lamar concedes that Bailey is entitled to Lamar's net profit from the billboards but contends that his damages are limited to Lamar's net profit, both as a matter of law and by reason of res judicata. It contends that Bailey has not demonstrated the existence of any new facts which would permit an award of punitive damages. Bailey contends that net profit is not the exclusive measure of damages as a matter of law, and that under the facts of this case, where Lamar has intentionally continued its wrongful occupation of his land, a jury could have determined that its conduct warranted punitive damages.
We held in Bailey II, supra, that where the defendant has wrongfully occupied the land of another for the purpose of conducting a business, net profit is ordinarily the "benefit obtained," as provided for in section 3334, subdivision (b)(1). We held that in most such cases, gross revenue is the measure of damages under section 3334 only when the defendant has failed to produce credible evidence of its expenses which may offset its gross revenues. (Bailey II, supra, 155 Cal.App.4th at pp. 784-788.) Here, Lamar produced credible evidence which establishes its net profit, as Bailey apparently concedes. Nevertheless, Bailey contends that gross revenue is the more appropriate measure of damages for Lamar's conduct. He notes that in Bailey II, we held that in amending section 3334 to provide for the "benefit obtained" measure of damages, the Legislature intended to eliminate any financial incentive for trespass. (See Bailey II, supra, at p. 786.) In his reply brief, Bailey argues that this statement in Bailey II supports the idea that gross revenue rather than net profit may be the appropriate measure of damages under section 3334 if "a circumstance arises wherein a business entity is willing to wrongfully occupy land and operate a business in order to break even at the end so that the entity can obtain some additional related benefit[.] In such a situation, the threat of an award of net profits will have no practical effect of `eliminating the financial incentive' for the wrongful occupation of property, as is the express purpose of section 3334. In such [an] instance, is the court barred by section 3334 from awarding something other or more than `net profits' to effectively eliminate the financial incentive for the wrongful occupation?"
This is an interesting question, but one we need not address because Bailey has not cited any evidence that Lamar continued to trespass on his property in order to gain some future advantage. The future advantage which comes to mind is, of course, that Lamar would negotiate a lease of the property after Bailey's lease terminated and would continue to use the billboards to generate revenue. However, Bailey's lease terminated on February 3, 2008, and Bailey filed his complaint on February 28, 2008. We assume that if Lamar did continue to use the land after February 3, 2008, Bailey could have produced evidence of that fact. However, he has not done so. Consequently, net profit is the appropriate measure of damages under the facts of this case.
As Bailey contends, an intentional trespass may support an award of punitive damages under section 3294. (See Civic Western Corp. v. Zila Industries, Inc. (1977) 66 Cal.App.3d 1, 19.) Section 3294 provides for punitive damages in tort cases "where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice." (§ 3294, subd. (a).) Here, Bailey sought an award of punitive damages under section 3294. The question to be decided, therefore, is whether the evidence presented in connection with the summary judgment motion would support a finding that Lamar's conduct amounted to oppression, fraud or malice.
Bailey contends that Bailey II involved Lamar's mistaken belief that it had the right to occupy the property, while this case involves an "intentional, wilful trespass and wrongful occupation" of the property. He argues that this difference supports a finding that Lamar acted maliciously, within the meaning of section 3294. Lamar contends, first, that in Bailey II, the trial court found no basis for awarding punitive damages against it, and because the facts in the current case are identical, res judicata or collateral estoppel precludes a different finding. Second, it contends that even if those doctrines do not apply, the evidence does not support a finding that it acted with malice or oppression, within the meaning of section 3294. (Lamar correctly notes that Bailey does not contend that it acted fraudulently.)
For purposes of section 3294, "malice" means "conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others," and "oppression" means "despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights." (§ 3294, subd. (c)(1), (2).) Although Lamar clearly acted with conscious disregard of Bailey's right to control the property, it is equally clear that no rational juror would find that its actions subjected Bailey to cruel or unjust hardship. Indeed, Bailey is receiving all of Lamar's profit derived from the billboards, as opposed to the 25 percent of gross revenue he was entitled to under his agreement with OMG. Assuming that OMG would have derived the same amount in gross revenue as Lamar did during the period with which this lawsuit is concerned, Bailey's income from the property would have been approximately $53,000 less.
The evidence does, however, potentially support an award of punitive damages as despicable conduct carried on by Lamar with a willful and conscious disregard of Bailey's property rights. Within the meaning of section 3294, subdivision (c)(1), despicable conduct is conduct that is "`". . . so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people."' [Citation.] `Such conduct has been described as "[having] the character of outrage frequently associated with crime." [Citation.]'" (American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton (2002) 96 Cal.App.4th 1017, 1050-1051.) Bailey has demonstrated by clear and convincing evidence that Lamar acted with conscious disregard of Bailey's right to control his property. Because we cannot say as a matter of law that this conduct is not despicable, within the meaning of section 3294, Bailey has the right to a trial on that issue.
Lamar contends that Bailey's claim for punitive damages is barred by collateral estoppel because the trial and appellate courts in Bailey II considered and rejected that claim. We disagree.
Collateral estoppel is an aspect of the doctrine of res judicata. It does not bar an action, but rather precludes a party to an action from relitigating in a second proceeding matters which were finally adjudicated in a prior proceeding. (Border Business Park, Inc. v. City of San Diego (2006) 142 Cal.App.4th 1538, 1563 [Fourth Dist., Div. Two].) The issues must be identical in order for the bar to apply. (Ibid.) And, the issue must necessarily have been decided. (Bame v. City of Del Mar (2001) 86 Cal.App.4th 1346, 1364.)
In Bailey II, the trial court found that the evidence was insufficient to justify imposing punitive damages on Lamar. It did not explain the basis for that finding. It also found that Lamar was liable only for the reasonable rental value of the property, rather than for the benefit obtained, in part because Bailey was equitably estopped to demand the greater measure of damages, based on Bailey's conduct in attempting to negotiate a lease with Lamar. The court also found that reasonable rental value was the appropriate measure of damages because Lamar was operating under a mistake of fact induced by OMG's representation that it had a valid sublease. (Bailey II, supra, 155 Cal.App.4th at p. 792.) We rejected both of those grounds for limiting Lamar's liability to the reasonable rental value of the property and modified the judgment to award Bailey the benefit Lamar had obtained. (Id. at pp. 792-797.) We pointed out that Lamar had constructive knowledge of Bailey's lease by virtue of the lis pendens Bailey had filed. (Id. at pp. 793-794.) We also concluded that there was insufficient evidence to support application of equitable estoppel. (Id. at pp. 790-792.)
The judgment denying punitive damages was based at least in part on the trial court's incorrect conclusions that Lamar was operating under a mistake of fact and that Bailey was estopped to seek damages in excess of reasonable rental value. On appeal, we determined that the judgment was erroneous in both respects. Consequently, the final judgment in Bailey II does not reflect an adjudication that punitive damages were not warranted based on the trial court's legal and factual conclusions. On the contrary, our rejection of the legal and factual basis for the judgment for reasonable rental value vitiates any collateral estoppel effect with respect to punitive damages, in that there was no determination as to the propriety of punitive damages based on the facts and the law as determined on appeal. The fact that we did not remand the cause in Bailey II to permit Bailey to reassert his claim for punitive damages does not alter the effect of the judgment.
Lamar also contends that collateral estoppel precludes Bailey's claim for punitive damages because the trial court stated, "The Court in [Bailey I] did not order ejectment, which makes it harder to find that OMG's continued occupation was malicious or despicable under Section 3294 of the Civil Code." However, whether OMG's continued occupation following the judgment in Bailey I was malicious or despicable has no bearing on whether Lamar's conduct in doing so following the judgment in Bailey II was malicious or despicable. The issues are not identical, and collateral estoppel does not apply. (Border Business Park, Inc. v. City of San Diego, supra, 142 Cal.App.4th at p. 1563.)
The judgment is reversed as to Bailey's claim for punitive damages, and the cause is remanded for further proceedings on that issue only. The judgment is otherwise affirmed. Bailey is awarded costs on appeal.
King, J. and Miller, J., concurs.
All further statutory citations will refer to the Civil Code, unless another code is specified.
