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Elizabeth Garcia v. Jerry Roger Smith and James P. Smith CV 071063

TENTATIVE RULING

Defendant Jerry Roger Smith (“Smith”) drove Defendant James P. Smith’s (collectively “Defendants”) vehicle while intoxicated and struck Plaintiff Elizabeth Garcia’s (“Plaintiff”) vehicle causing personal injuries to Plaintiff.   

Plaintiff’s claim for punitive damages in the original Complaint was premised upon the allegation that Smith ingested alcohol knowing that he would later be driving.  Plaintiff argued this constituted despicable conduct that showed a willful and conscious disregard for the rights and safety of others.  Plaintiff’s First Amended Complaint added allegations that, after the accident, Smith attempted to bribe Plaintiff not to call the police and attempted to leave the scene of the accident.  The Court sustained Defendants’ two prior demurrers to Plaintiff’s punitive damages claim with leave to amend. 

Plaintiff’s Second Amended Complaint now alleges that six months prior to the subject accident, Smith was convicted of driving under the influence of alcohol which included various probationary restrictions including the requirements that he not drive with alcohol in his blood and drive only if licensed and insured.  At the time of the subject accident Smith was driving with alcohol in his blood and driving on a suspended license in violation of the terms of his probation.  These additional facts are now coupled with the previous allegations that Smith ingested alcohol to the point of intoxication knowing he would drive a vehicle immediately afterwards. 

Taylor v. Superior Court (1979) 24 Cal.3d 890 and its progeny Dawes v. Superior Court (1980) 111 Cal.App.3d 82 and Peterson v. Superior Court (1982) 31 Cal.3d 147 allowed claims for punitive damages for intoxicated activity.  However, those cases were decided prior to the 1987 amendment to Civil Code §3294 which inserted “despicable” and “willful” into the definition of malice.  “Malice” now means despicable conduct which is carried out with a willful and conscious disregard of the rights and safety of others.

In Sumpter v Mattson (2008) 158 Cal.App.4th 928, the appellate court addressed allegations of conduct that defendant ingested drugs “right before” he left his house, that by his own admission, he knew he was under the influence when he got into his car, and that he knew the light was red for over a quarter mile before he entered the intersection, yet he never braked, choosing instead to take the risk and run the red light.  The appellate court stated those facts reflected a conscious disregard for the rights and safety of others which could support the imposition of punitive damages.(Id at 936) 

Considering the totality of the pleading, Smith’s actions can be considered despicable.  After a conviction for driving under the influence, Smith operated a vehicle with alcohol in his blood, on a suspended license and in violation of his probation.  As such, the pleading alleges conduct in willful disregard of the rights and safety of others.  Punitive damages are proper when the tortious conduct rises to levels of extreme indifference to the plaintiff's rights, a level which decent citizens should not have to tolerate. (Lackner v. North (2006) 135 Cal.App.4th 1188, 1210)

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Jessica Bath, et al. v. Blue Shield of California  CV 070360

Plaintiffs served on Defendant a Notice of Depositions and Notice to Produce Documents at Deposition.  Plaintiffs seek testimony and documents on the following issues:

• The drafting history of the following provisions in the insuring agreement: (1) Termination/Cancellation; (2) Entire Agreement: Changes; and (3) Endorsements and Appendices;
• The drafting history of the application forms; and
• The submission to the Department of Managed Health Care of the application forms and any approval given by that entity for use of the application forms.

Defendant agreed to produce a PMK witness on the “Termination/Cancellation” provision identified in Category 1.  It is assumed this also includes production of documents related to that topic.  Defendant will produce a PMK witness as to submissions made to the Department of Managed Health Care as identified in Category 3.

Defendant continues to object to production of any PMK witness or documents regarding the drafting history of the “Entire Agreement: Changes” and “Endorsements and Appendices” provisions (Category 1) and to the drafting history of the application forms (Category 2). 

Defendant as the moving party is required to show that the burden, expense, or intrusiveness involved clearly outweighs the likelihood that the information sought will lead to the discovery of admissible evidence. (Emerson Elec. Co. v. Sup.Ct. (1997) 16 Cal 4th 1101, 1110)

Relying on the identified “rules” of contract interpretation set forth in ACL Technologies, Inc. v. Northbrook Property & Casualty Ins. Co. (1993) 17 Cal.App.4th 1773, Defendant contends the drafting history is irrelevant and inadmissible to the interpretation of the insuring agreement.  Plaintiffs rely on Pacific Gas & Elec. Co. v. G. W. Thomas Drayage & Rigging Co. (1968) 69 Cal.2d 33, in which extrinsic evidence such as drafting history was admissible to prove a meaning to which the language of the instrument was reasonably susceptible.

This is a discovery dispute; admissibility at trial is not required.  The test is whether the information sought might reasonably lead to other evidence that would be admissible. (CCP § 2017.010; Davies v. Sup.Ct. (1984) 36 Cal.3d 291, 301)  Defendant concedes the drafting history of the “Termination/Cancellation” provision is relevant and discoverable. 

The “Entire Agreement: Changes” provision states, “the insuring agreement, including the appendices, constitutes the entire agreement between the parties.”  The “Endorsement and Appendices” provision states, “nothing contained in any endorsement shall affect the insuring agreement.”  Defendant based its coverage determination on information disclosed in the application.  The application and its contents are relevant to the insuring agreement and its provisions.  The drafting history is extrinsic evidence which may prove useful to whether the insuring agreement is “reasonably susceptible” to the interpretation urged by Plaintiffs. (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 392-393)

Defendant objects on the grounds it is too burdensome to manually review its old files as there have been no changes to the “Entire Agreement: Changes” and “Endorsement and Appendices” provisions during the past ten years.  However, Defendant admits it was able to locate a CD and some files that may contain responsive information, but it will take “many, many hours” to review the information.  It is not enough that the response will require a lot of work.  It must be shown that the burden is so unjust that it amounts to oppression.(West Pico Furniture Co. v. Superior Court (1961) 56 Cal.2d 407, 417)  If the burden is too much for Defendant, Plaintiffs would surely volunteer to review the CD and files.  The burden does not outweigh the utility of the information sought. 

Defendant, without actually searching and identifying specific documents, summarily objects on the grounds of attorney client privilege and attorney work product.  Without more, Defendant has not met its burden of showing the information is actually protected by the attorney client privilege or the attorney work product doctrine.  Those objections are better suited for the actual depositions and production of documents. 

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Proposed Tentative Ruling on Motion for Summary Adjudication

Taxpayer’s Watch v LOCSD, et al., CV 050862

Plaintiffs’ second amended complaint challenges the propriety of certain expenditures approved by the individual defendant members of the Los Osos Community Services District.  Code of Civil Procedure §526a provides standing to a taxpayer to challenge any illegal expenditure of, waste of, or injury to, the estate, funds, or other property of a county, town or city.

Plaintiffs seek to compel the individual defendant members of the LOCSD to personally reimburse the District for the challenged expenditures.

[W]e start with the general principle that expenditures by an administrative official are proper only insofar as they are authorized, explicitly or implicitly, by legislative enactment.... [S]uch executive officials are not free to spend public funds for any 'public purpose' they may choose, but must utilize appropriate funds in accordance with the legislatively designated purpose." Accordingly, a public official who controls public funds may be held personally liable to repay improperly expended funds if he has failed to exercise due care in permitting the expenditure. (Stanson v. Mott (1976) 17 Cal.3d 206, 226-227)

A cause of action under Code of Civil Procedure section 526a will not lie where the challenged governmental conduct is legal and conduct in accordance with regulatory standards “is a perfectly legal activity.” (Coshow v. City of Escondido (2005) 132 Cal.App.4th 687, 714). 

Even though Defendants’ motion for summary adjudication ultimately seeks to establish that the challenged expenditures were lawful, the court is mindful of the fact that under Stanson v. Mott, an illegal expenditure is only one element of liability.  If the expenditure is found “unlawful”, Plaintiffs must still prove an absence of due care in making the expenditure and resulting damage.   (Stevens v.Geduldig (1986) 42 Cal.3d 24, 35)

In Stevens v.Geduldig, the trial court found that the chairman of a Governor's tax reduction task force had been negligent in contracting to use funds provided by the State Department of Social Welfare for purposes unrelated to that department and that the Director of the State Health Care Services Department had been negligent in authorizing the chairman to enter into consulting subcontracts on behalf of that department.

The Supreme Court reversed the trial court’s judgment against the two officials. Despite finding that the expenditures were improper, the court ruled that subsequent reimbursement by the Governor’s office eliminated all damages attributable to the negligence of the defendants. 

When the only illegality is the source of the funds, and the state has subsequently corrected its error and transferred funds from a proper source, we see no reason to require a repayment that would unjustly enrich the state treasury and leave the contractor without compensation for services rendered.  Stevens v.Geduldig (1986) 42 Cal.3d 24, 35

To the extent that plaintiffs, at trial, rely upon the theory that the expenditures are unlawful, they will have the burden to establish Defendants’ lack of due care and resulting damage.  Whether Defendants were negligent and whether the District suffered actual damage because of the payment of its legitimate obligations will, no doubt, figure prominently. 

Fire Protection Fee:

The District paid $760,000.00 to the CDF to continue fire protection services.  In June of 2006 the operating fund was insufficient to cover that expense.  The District paid the fee from funds transferred from the District’s LAIF Account.  Plaintiffs contend that the LAIF fund was originally derived from the 2002 Wastewater Project Bond Sales and was not a legal source of funds to pay the CDF fire debt.  Therefore, the expenditure was illegal.

Defendant’s Material Fact 5:  In reliance on the declaration of Lisa Schicker and Exhibit Q, defendants assert that the LAIF account was a legal source of revenue to pay this obligation because at least $760,000.00 (earmarked for fire and water reserves) remained in the account.

Exhibit Q is a document that shows the deposits and expenditures of LAIF Account -1011.  The disbursements are only identified as “transfers to op”.  Defendants assert that sufficient fire and water reserves remained in the LAIF account because all of the other disbursements were made solely for purposes of the wastewater treatment plant. 

Exhibit Q is simply insufficient to prove that sufficient fire and water reserves remained in the LAIF account if for no other reason than the document lacks any detail concerning the expenditures identified as “transfers to op”.

Paragraph 13 of Bruce Buell’s declaration disputes Fact 5.  He states that, in 2002, the Board adopted Resolution No. 2002-48 that authorized repayment of the interfund loans with bond proceeds.  (See Exhibit C) He further states that the repayments were completed shortly after the bond proceeds were received.  Therefore, no funds in the LAIF account were fire and water reserves at least up to the time that he was placed on administrative leave in October of 2005.

Fact 5 is not adequately established by the evidence.  A more detailed accounting could prove that fire and water reserves were maintained in the LAIF account and sufficient money remained at the time the Fire Services payment was due.  However, Exhibit Q is inadequate because there is no description of the real nature of the disbursements from the LAIF account.  Moreover, Buell’s declaration disputes the assertion that fire and water reserve funds remained in the LAIF account.

Accordingly, the motion for summary adjudication on the issue of the Fire Protection Fee is denied.

Bond Assessment Payment:

The District paid $716,000.00 on a bond assessment payment from its Reserve fund in the LAIF account. 

Under the terms of Resolution 2002-33 and the bond agreement, bond payments were to be made with assessment revenues held in the Redemption Fund.  Where there is a shortfall, payments were to be made from a Reserve Fund.  [See Exhibit A at pages 10-11; Exhibit R where MBIA demands payment from the reserve fund and Buell declaration at ¶8(c)]

There is no dispute of fact that the reserve fund was a legal source of payment of bond payment.  As such, that expenditure is legal.  Plaintiffs fall back to an argument that the expenditures that depleted the Redemption fund were illegal.  That issue is not tendered in the prayer of the complaint or in the motion for summary adjudication.

Accordingly, the motion for summary adjudication on the issue of the legality of the Bond Assessment payment is granted.  There is no triable issue of fact that payment was made from a legal source of the budget. 

Settlements:

Government Code §1090:

The District settled five separate lawsuits on November 23, 2005.  Concerned Citizens of Los Osos was the plaintiff in three of those lawsuits. 

Plaintiffs’ second amended complaint alleges that the settlements were collusive or sham settlements.  Specifically, paragraph 13 complains that the dismissal of the Measure B lawsuit pending on appeal with a payment settling that case was improper.  The complaint further alleges that defendants had personal ties to the organizations that benefitted from the settlements and that defendants benefitted directly or indirectly from the settlement payments.  Paragraph 14 alleges that the Board used state money from the State Water Quality Control Board’s Revolving Fund program designated to pay contractors who worked on the project.  Paragraph 21 alleges that the settlements were paid without legal cause.

Defendants’ motion argues that none of the individual board members were in violation of Government Code §1090 because they derived no financial or pecuniary benefit from the settlements. Government Code § 1090 codified the common law prohibition of public officials having a financial interest in contracts they make in their official capacities. The purpose of this section is to prohibit self-dealing, not representation of the interests of others. (See Breakzone Billiards v. City of Torrance (2000) 81 Cal.App.4th 1205, 1230 and 1231 )

Plaintiffs attempt to dispute Fact Number 23 with Plaintiff’s Exhibits 12 and 13.   They are proffered in an effort to establish that Schicker and Tacker received indirect financial benefits in the form of compensation because they were “covert” members of CCLO. 

The exhibits consist of copies of email communications between Schicker and Tacker on the one hand with attorneys Parker & Hawley as well as Julie Biggs on the other.  The exhibits establish that Schicker and Tacker were in communication with the above referenced attorneys concerning the status of and strategy for handling of the litigation. 

The email correspondence with Parker & Hawley also reveals discussion concerning the need for payment of attorneys’ fees and costs to keep the litigation going.  The tenor of the communications relate to CCLO’s obligation to keep the account current.  Exhibit 12 establishes that CCLO’s lack of money to finance the litigation, in large part, led to Parker & Hawley’s withdrawal. 

The settlement agreements of the CCLO lawsuits (Defendants’ Exhibit K) establish that the settlement covered fees for services through November 15, 2005, a period that would encompass Parker & Hawley’s representation.  However, the evidence does not establish that Schicker and Tacker received a financial or pecuniary benefit from the settlements because these exhibits do not establish that they were personally liable for fees incurred by CCLO.  Moreover, according to the email communications, Keith Swanson appears to be the party who was responsible for keeping the accounts current on CCLO’s behalf.

Footnote 1 of plaintiff’s opposition makes reference to Schicker’s signature on CCLO’s contract for legal services.  Plaintiffs state that the contract is not presented in the opposition because there is a dispute about its admissibility. 

Plaintiffs’ points and authorities also make reference to Schicker’s deposition where she states she signed a contract in a representative capacity.  This does not establish any personal liability for the attorney’s fees incurred. 

There is no evidence presented that would establish that Schicker obligated herself to be personally responsible for the payment of attorney’s fees. 

Plaintiffs raise no dispute to the assertion in Fact 23 that Fouche, Senet and Cesena had no pecuniary or financial interest in any of the settlements whatsoever. 

Based upon the evidence presented in the separate statement of facts, plaintiffs have not adequately disputed Fact 23.

Fact 27 states that no defendant was an officer, director or member of CCLO at any time that BWS represented CCLO in the actions.  Although it is not clear from Exhibits 12 and 13 when Burke, Williams and Sorenson undertook representation of CCLO, Julie Biggs is associated with that law firm.  Communications with Biggs are set out in Exhibit 13.  Those communications do involve some strategic decisions concerning the ongoing litigation.  The evidence contained in Exhibit 13 could lead a reasonable trier of fact to conclude that Tacker acted as a member to CCLO because she participated in what appears to be confidential communications.   Therefore, Fact 27 appears to be disputed.

Plaintiffs also argue that the settlements were improper as a gift of public funds in violation of Cal. Const., art. XVI, § 6, despite the fact that the pleading does not make this specific claim.  Finally plaintiffs argue that the settlements were paid from an illegal source of funds.

Gift of Public Funds:

[T]he settlement of a good faith dispute between the State and a private party is an appropriate use of public funds, neither wasteful within the meaning of section 526a, nor a gift barred by article XVI, section 6, because the relinquishment of a colorable legal claim in return for settlement funds paid by the State is good consideration and accomplishes a valid public purpose.  County Foundation v. Irvine Co. (1983) 139 Cal.App.3d 195, 200

Where funds are expended pursuant to a settlement agreement in exchange for wholly invalid claim, no “public purpose” is achieved. Such an expenditure violates the gift clause of Cal. Const., art. XVI, § 6. Orange County Foundation v. Irvine Co. (1983) 139 Cal.App.3d 195, 201

The court in Jordan v. California Dept. of Motor Vehicles (2002) 100 Cal.App.4th 431 followed the rationale in Orange County Foundation when it invalidated an arbitrator’s award of attorney’s fees in the amount of $88,000,000.00 when a statute limited such an award to $18,000,000.00.  The court reasoned that, because the attorneys had no colorable claim to fees in excess of $18 million, any payment over that amount served no public purpose. (Jordan v. California Dept. of Motor Vehicles (2002) 100 Cal.App.4th 431, 451)

The issue of whether the settlement of the five cases constitutes a gift of public funds is not raised in the motion for summary adjudication.  Therefore, the motion does not trigger plaintiff’s burden of production of evidence nor does it dispose of plaintiff’s entire claim. 

However, to prevail on the theory that the settlements were an improper gift of public funds, plaintiffs will have the burden to establish that each settlement was of a compromise of a wholly invalid claim. 

"[C]ompromise of a doubtful claim asserted and maintained in good faith constitutes a sufficient consideration for a new promise, even though it may ultimately be found that the claimant could not have prevailed." (Union Collection Co. v. Buckman, (1907) 150 Cal. 159, 163)  Thus, surrender of a possibly meritless claim which is disputed in good faith is supported by valid consideration.(Stub v. Belmont, (1942) 20 Cal.2d 208, 218)   

The court is mindful that there are numerous reasons to settle and resolve pending lawsuits, even those that have little or no merit.  The issue of whether the settlements constitute a gift of public funds requires a very narrow inquiry.  It is not an invitation to retry the merits of each compromised lawsuit nor does it provide the opportunity to examine the propriety of the reasons for the settlement.  The key issue is whether there was a compromise of a knowingly unfounded claim. (Orange County Foundation v. Irvine Co. (1983) 139 Cal.App.3d 195, 200)   

Source of Funds for Settlement:

Plaintiffs challenge the settlement payments on the basis that they were drawn from the State Water Quality Control Board Revolving Fund.  Here again, plaintiffs have the burden to establish the elements of illegality and lack of due care on the part of the defendants.  This would require the same analysis as set out in Stanson v. Mott.  Plaintiff will have the burden to prove expenditures from an illegal source and negligence resulting in damage. 

Failure to Request Corrective Action:

Defendants assert that plaintiffs failed timely request corrective action.  There are triable issues concerning whether this was a futile act.

Conclusion:

Accordingly, the motion for summary adjudication of the claim related to the payment of the fire service fund is denied.  Fact 5 has not been adequately established by the evidence and is disputed in the declaration of Bruce Buel.

Defendants’ motion for summary adjudication of the claim related to the bond fund is granted. There is no dispute of fact that the source of the payment was a proper and legal source.

The motion for summary adjudication of the claim related to settlement of litigation is denied. Fact 27 is disputed.  Moreover, the facts, even if undisputed, do not dispose of plaintiffs’ entire claim. 

The brief incorrectly refers to Exhibits 11 and 12.

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 King v Pacific Co. CV 080152
Tentative Ruling; Demurrer to First Amended Complaint

The demurrer to the first cause of action for reformation of contract is sustained with leave to amend. The complaint should attach the entire contract including all of its exhibits. Moreover, the complaint should allege facts that establish what was intended by the contract and facts that establish that defendant knew plaintiff was operating under a mistake. The viability of the second cause of action for breach of written contract is dependent upon reformation of the written contract. Therefore, the demurrer to the second cause of action is sustained with leave to amend as well.

The demurrer to the third, fifth and sixth cause of action is overruled.

The demurrer to the fourth cause of action for breach of the covenant of good faith and fair dealing is sustained without leave to amend. It alleges the same breach as in the breach of oral contract. The cause of action is redundant to the breach of contract causes of action.

The demurrer to the seventh and eighth cause of action is sustained without leave to amend. In both the negligent misrepresentation and false promise causes of action, Plaintiff’s reliance on the defendant’s representation must be a substantial factor in causing harm. (CACI §§ 1902 and1903) Plaintiff relied on plaintiff’s representations by conveying an easement and entering into an agreement. The harm suffered by the plaintiff is the cost of correcting the elevation of the communications terminal, not the conveyance of the easement or entry into the agreements.

The demurrer to the complaint by Oak Hill, LLC is sustained with leave to amend. There are no allegations under these facts to establish that Oak Hill (a limited liability company) is a real party in interest as it is not alleged to be a party to the contracts and purchased the subject property after the pad was installed.

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Tentative Rulings for the Tuesday, October 7, 2008 Probate Calendar

9:00 a.m. at the Vet’s Hall, with Judge Barry T. LaBarbera presiding

PLEASE NOTE:  The Estates & Trusts Probate calendar is being heard on Tuesdays at the Vet’s Hall commencing July 1, 2008

The following matters are PRE-APPROVED and no appearance is necessary:

Estate of:  Jeanie Dixon

Estate of:  Barbara Bremner (Subject to Receipt of Duties & Liabilites)

Estate of:  William Gross

In Re:  Lucille Olson

The following matters remain SET FOR HEARING and you should appear:

Estate of:  John Costello

Estate of:  Phyllis Mancini

Estate of:  Joseph Brennan

Estate of:  Margaret Cockrell

In Re:  Bruenig Living Trust

In Re:  Richard Moreno Irrevocable Trust

The following matter has been TAKEN OFF-CALENDAR:

Carolynn Higginson vs. Thomas MacFarlane

A $40 fee will be charged for each petition that is filed for hearing in a case involving an estate, trust, conservatorship, guardianship, or minor’s compromise.  Gov’t Code sections 70617 & 70657

PLEASE NOTE:  The sole Probate Referee for San Luis Obispo County is Douglas Barth.  Please add his name to the Order for Probate before submitting.

For more information, please call the Probate Examiner at 781-5428 or the Probate Tentative Rulings recording at 781-5178.