The California Supreme Court Clarifies How To Give Up Causes of Action To Preserve Appealability

The California Supreme Court issued an important decision last week that potentially impacts all California litigation, including insurance coverage litigation. In Kurwa v. Kislinger, __Cal.4th __ (October 3, 2013) (Supreme Court No. S201619), the Supreme Court held it is not possible to create an appealable final judgment by dismissing remaining causes of action without prejudice and tolling the applicable statute of limitations. This resolves an important split in California appellate courts on the one final judgment rule. The issue commonly arises when parties attempt to move a case into the appellate court after the trial court has resolved the key issues, but some causes of action remain.

The Supreme Court explained: “Under California’s ‘one final judgment’ rule, a judgment that fails to dispose of all the causes of action pending between the parties is generally not appealable. This case poses the question whether an appeal may be taken when the judgment disposes of fewer than all the pled causes of action by dismissal with prejudice, and the parties agree to dismiss the remaining counts without prejudice and waive operation of the statute of limitations on those remaining causes of action. We conclude such a judgment is not appealable.”

Importantly, it is not the dismissal of claims without prejudice that prevents finality under the Kurwa holding. It is the dismissal without prejudice combined with an agreement to toll the statute of limitations that runs afoul of the rule, as the Court explained:

“[S]uch a dismissal [without prejudice], unaccompanied by any agreement for future litigation, does create sufficient finality as to that cause of action so as to allow appeal from a judgment disposing of the other counts….But when the parties agree to waive or toll the statute on a dismissed cause of action pending an appeal, they establish an assurance the claim can be revived for litigation at the appeal’s conclusion. It is that assurance — the agreement keeping the dismissed count legally alive — that prevents the judgment disposing of the other causes of action from achieving finality.”