## Facts

- Alan Jardine and Mike Love were founding members of The Beach Boys.
- By the late 1990s, interpersonal conflict led Love to refuse to appear onstage with Jardine.
- Brother Records, Inc. (BRI) was formed to hold and manage intellectual-property interests connected to the Beach Boys, including rights in “The Beach Boys” name.
- BRI voted to grant each of the three surviving founding members (including Jardine and Love) a nonexclusive license to conduct separate concert tours using “The Beach Boys” name for a limited period.
- BRI sent Jardine a written license agreement, which Jardine signed and returned.
- After receiving Jardine’s signature, BRI requested additional assurances; Jardine did not provide what BRI requested.
- Jardine toured using the name “Beach Boys Family and Friends.”
- BRI sued Jardine in federal court for trademark infringement; the federal court ruled for BRI and enjoined Jardine from using “Beach Boys” as a trademark.
- Jardine then sued in California state court against Love, Brian Wilson, Melinda Wilson, Bernard Gudvi, the Carl Wilson Trust, and BRI, alleging (1) breach of fiduciary duty and (2) declaratory relief.
- Jardine’s fiduciary-duty theory was that the other BRI shareholders (and related parties) owed him duties as a shareholder and, by concentrating control in Love and attempting to block Jardine’s touring activities, they harmed him and the value of his ownership interest.
- Defendants demurred, arguing the state action was barred by res judicata and collateral estoppel based on the federal trademark case; they also argued Jardine could not plead a “minority shareholder” fiduciary-duty claim because each principal allegedly held 25%.
- The trial court sustained the demurrer without leave to amend and dismissed the case, relying on res judicata and collateral estoppel.
- On appeal, Jardine challenged only the dismissal of the breach of fiduciary duty cause of action; he did not challenge dismissal of declaratory relief.

## Issues

1. Whether res judicata barred Jardine’s state-law breach of fiduciary duty claim in light of the prior federal trademark judgment.
2. Whether collateral estoppel barred the fiduciary-duty claim because the federal trademark action actually litigated and necessarily decided issues that would defeat it.
3. Whether California’s primary-right theory meant Jardine’s fiduciary-duty claim involved a different right from the trademark-infringement dispute, even if the cases shared background facts.

## Decision

- The Court of Appeal held the trial court erred in sustaining the demurrer on res judicata grounds as to the individual defendants (the noncorporate respondents).
- The court held the trial court improperly relied on a broad transactional approach rather than analyzing claim preclusion through California’s primary-right theory.
- The court held collateral estoppel did not apply because the federal case did not adjudicate the fiduciary-duty issues Jardine pleaded in state court.
- The court left in place the dismissal of the declaratory relief cause of action because Jardine did not appeal that portion of the judgment.
- The court reversed the judgment of dismissal to permit the fiduciary-duty claim to proceed against the individual respondents and remanded for further proceedings consistent with its opinion.

## Legal Principles

- Under California law, claim preclusion turns on whether the same “primary right” is at issue; overlapping facts do not necessarily mean the same cause of action.
- A trademark-infringement action resolves rights concerning trademark use and infringement; it does not automatically resolve internal corporate rights and duties among shareholders and corporate decisionmakers.
- Issue preclusion requires that the identical issue was actually litigated and necessarily decided in the prior proceeding; a prior judgment’s factual background or related subject matter is not enough.
- On demurrer, preclusion doctrines apply only when the face of the pleadings and judicially noticeable materials establish the required elements; doubts about what was decided in the prior case weigh against preclusion at the pleading stage.
- A shareholder’s fiduciary-duty claim may proceed where it asserts a distinct wrong (breach of duties owed in corporate governance) from the wrong litigated in a prior trademark case (unauthorized use of a mark).

## Conclusion

The California Court of Appeal held that the federal trademark judgment against Jardine did not bar his state breach-of-fiduciary-duty claim against the individual BRI insiders because the fiduciary-duty claim implicated a different primary right and the federal action did not actually decide the fiduciary-duty issues; however, the unappealed dismissal of declaratory relief remained final, and the case was remanded for further proceedings on the fiduciary-duty claim against the individual respondents.


Jardine v. Love, 2003 Cal. App. Unpub. LEXIS 10223 (2003)