Steen v. County of Los Angeles CA2/8 ( 2014 )

Filed 12/1/14 Steen v. County of Los Angeles CA2/8
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
DONYA STEEN et al., B249613
Plaintiffs, (Los Angeles County
Super. Ct. No. BC492258)
v.
COUNTY OF LOS ANGELES,
Defendant, Cross-defendant and
Respondent,
WONDRA HOPE HUNTER,
Defendant, Cross-complainant and
Appellant.
APPEAL from a judgment of the Superior Court of Los Angeles County, Rolf M.
Treu, Judge. Affirmed.
Law Offices of Leo James Terrell and Leo James Terrell for Defendant, Cross-
complainant and Appellant.
Collins Collins Muir + Stewart, Melinda W. Ebelhar, Tomas A. Guterres and
Christie Bodnar Swiss for Defendant, Cross-defendant and Respondent.
******
Cross-complainant Wondra Hope Hunter appeals a judgment after the trial court
sustained cross-defendant County of Los Angeles’s (the County’s) demurrer to her first
amended cross-complaint without leave to amend. We affirm.
BACKGROUND
Following the death of their daughter and granddaughter, plaintiffs Donya Steen,
Marion Steen-Prager, and Michael Prager filed a civil rights action against the County,
Hunter, and Lorna Hornbeek, who were both social workers employed by the Los
Angeles County Department of Children and Family Services. Plaintiffs sought punitive
damages. The County demurred.
While the demurrer was pending, the County sent a letter to Hunter (attached as an
exhibit to Hunter’s cross-complaint) indicating the allegations against Hunter involved
conduct within the course and scope of her employment so the County would provide a
defense to her and indemnify her for any settlement or judgment for compensatory
damages. It noted by statute it was not obligated to pay an award of punitive damages
against Hunter and would only do so in its sole discretion if it determined the conditions
in Government Code section 825 were satisfied.1 It assigned the Law Offices of David
Weiss (Weiss) to represent Hornbeek and Hunter, while the County was represented by
separate counsel. It noted there was an inherent potential for a conflict of interest from
the joint representation of Hornbeek and Hunter, but it was unaware of any actual
1 Government Code section 825, subdivision (b) authorizes, but does not require, a
public entity to pay punitive or exemplary damages assessed against a public employee
“if the governing body of that public entity, acting in its sole discretion except in cases
involving an entity of the state government, finds all of the following: [¶] (1) The
judgment is based on an act or omission of an employee or former employee acting
within the course and scope of his or her employment as an employee of the public entity.
[¶] (2) At the time of the act giving rise to liability, the employee or former employee
acted, or failed to act, in good faith, without actual malice and in the apparent best
interests of the public entity. [¶] (3) Payment of the claim or judgment would be in the
best interests of the public entity.” All further undesignated statutory citations are to the
Government Code unless otherwise noted.
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conflict. If a conflict arose and Weiss withdrew from representation, the County
indicated it would provide separate counsel to Hunter.
Hunter refused the County’s defense and retained separate counsel to defend the
lawsuit.
After the County sent Hunter this letter, plaintiffs filed a notice of intent to file a
first amended complaint in lieu of responding to the County’s demurrer. Rather than wait
for plaintiffs to file an amended complaint, Hunter (through her separate counsel) filed an
answer to the original complaint and a cross-complaint against the County seeking to
recover attorney fees and costs for her separate counsel. Four days after Hunter filed her
answer and cross-complaint, plaintiffs filed their first amended complaint, dropping the
claim for punitive damages.
Hunter answered the amended complaint and filed an amended cross-complaint,
alleging several conflicts of interest arose from Weiss’s representation, which
“constructively denied” her a defense and forced her to retain private counsel. For
example, she claimed the County sought to impose discipline on her and Hornbeek for
the death underlying the civil suit, and during civil service commission hearings the
County and Hornbeek attempted to blame Hunter for the death. She also claimed Weiss
was “controlled” by the County because he had a “symbiotic relationship” with the
County, provided legal services for a set fee pursuant to a contract with the County,
represented the County in “numerous” prior and pending cases, and had a financial
interest in the “lucrative” contract with the County.
Both the County and Hornbeek (through Weiss) demurred to plaintiffs’ first
amended complaint, which the trial court sustained without leave to amend. Hunter filed
a similar motion for judgment on the pleadings, but before the trial court could rule on it,
plaintiffs filed a request for dismissal with prejudice, prompting Hunter to withdraw her
motion.
The County also demurred to Hunter’s cross-complaint, which the trial court
sustained without leave to amend, relying on City of Huntington Beach v. Petersen Law
Firm (2002) 95 Cal. App. 4th 562 (Huntington Beach) to conclude Hunter was not entitled
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to separate counsel at the County’s expense. The court entered judgment and Hunter
timely appealed.2
STANDARD OF REVIEW
“We review de novo the sustaining of a demurrer. [Citation.] ‘“In reviewing the
sufficiency of a complaint against a general demurrer, we are guided by long-settled
rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not
contentions, deductions or conclusions of fact or law. [Citation.] We also consider
matters which may be judicially noticed.’ [Citation.] Further, we give the complaint a
reasonable interpretation, reading it as a whole and its parts in their context. [Citation.]
When a demurrer is sustained, we determine whether the complaint states facts sufficient
to constitute a cause of action.”’” (Barker v. Garza (2013) 218 Cal. App. 4th 1449, 1454.)
“[W]here the demurrer is sustained without leave to amend, reviewing courts
determine whether the trial court abused its discretion in doing so. [Citations.] On
review of the trial court’s refusal to grant leave to amend, we will only reverse for abuse
of discretion if we determine there is a reasonable possibility the pleading can be cured
by amendment. Otherwise, the trial court’s decision will be affirmed for lack of abuse.”
(Hernandez v. City of Pomona (1996) 49 Cal. App. 4th 1492, 1497-1498.)
DISCUSSION
Several provisions of the Government Code govern a public entity’s obligation to
provide a public employee with a defense in a civil action. “Except as otherwise
provided in Sections 995.2 and 995.4, upon request of an employee or former employee,
a public entity shall provide for the defense of any civil action or proceeding brought
against him, in his official or individual capacity or both, on account of an act or
omission in the scope of his employment as an employee of the public entity.” (§ 995.)
The County may satisfy this duty to provide a defense either “by its own attorney or by
2 In her notice of appeal, Hunter purported to appeal from the trial court’s order
sustaining the County’s demurrer, which was not appealable. But we will liberally
construe the notice to apply to the judgment of dismissal entered after the demurrer was
sustained. (Gu v. BMW of North America, LLC (2005) 132 Cal. App. 4th 195, 202-203.)
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employing other counsel for this purpose or by purchasing insurance which requires that
the insurer provide the defense.” (§ 996.)
However, the public entity’s duty is not unlimited. As relevant here, “A public
entity may refuse to provide for the defense of a civil action or proceeding brought
against an employee or former employee if the public entity determines any of the
following: [¶] (1) The act or omission was not within the scope of his or her
employment. [¶] (2) He or she acted or failed to act because of actual fraud, corruption,
or actual malice. [¶] (3) The defense of the action or proceeding by the public entity
would create a specific conflict of interest between the public entity and the employee or
former employee. For the purposes of this section, ‘specific conflict of interest’ means a
conflict of interest or an adverse or pecuniary interest, as specified by statute or by a rule
or regulation of the public entity.” (§ 995.2, subd. (a).)
“If a public entity fails or refuses to comply with its duty to provide a defense --
for example, because it erroneously believes that one of the exceptions applies -- and the
employee retains his or her own counsel to defend the action, the employee is entitled to
recover from the public entity the reasonable attorney’s fees and other expenses incurred
in presenting the defense. (§ 996.4.)” (Huntington Beach, supra, 95 Cal.App.4th at
pp. 566-567.)
In this case, the County did not refuse to provide Hunter with a defense. To the
contrary, it offered to pay for Weiss to defend both Hunter and Hornbeek, while the
County was represented by separate counsel. The County was aware of no conflict of
interest from the joint representation, and it assured Hunter if an actual conflict arose, the
County would provide separate counsel. Although Hunter alleged several conflicts of
interest required the County to pay for separate counsel of her choosing, Huntington
Beach rejected a similar argument under similar facts. There, as in this case, the city did
not refuse to defend the employee officers in the underlying civil lawsuit. Instead, the
city provided the officers with the same counsel it retained for itself. The officers
rejected the defense on the ground that there was an actual or potential conflict of interest
between themselves and the city that required separate representation, which the city
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improperly refused to furnish. The court concluded that, even if actual or potential
conflicts of interest existed, the city could not be forced to pay for separate counsel.
(Huntington Beach, supra, 95 Cal.App.4th at p. 567.)
“The answer is most obvious when considering an employee’s rights and a public
entity’s obligations in the event of an actual conflict of interest between them. Under
those circumstances, the public entity need not provide any defense whatsoever.
(§ 995.2, subd. (a)(3); see, e.g., Stewart v. City of Pismo Beach (1995) 35 Cal. App. 4th
1600, 1605-1606.) The public entity’s right to refuse to provide any defense at all
necessarily includes the right to refuse to provide a separate defense.
“By contrast, when the conflict of interest is only potential rather than actual, the
public entity remains obligated to provide a defense. Although subdivision (a)(3) of
section 995.2 does not distinguish between actual and potential conflicts of interest when
describing a public entity’s right to refuse to provide a defense to its employees,
subdivision (c) of that section makes clear that a public entity is relieved of its duty to
defend only when an ‘actual’ conflict of interest exists.
“But a public entity has no obligation to provide that employee with a separate
defense. The liability of public entities is entirely statutory. (§ 815, subd. (a).) Although
public entities are statutorily obligated to defend their employees (§ 995), even if a
potential conflict of interest exists (§ 995.2), no statute specifies that a public entity is
liable for the cost of providing an entirely separate defense for an employee instead of a
joint defense of the public entity and the employee (see DeGrassi v. City of Glendora
(9th Cir. 2000) 207 F.3d 636, 643).
“Nor does decisional law support liability to provide a separate defense. To the
contrary, the courts have expressly refused to establish ‘a judicially declared right to
independent counsel . . . .’ (Laws v. County of San Diego (1990) 219 Cal. App. 3d 189,
192.) Because of the potentially enormous fiscal impact on state and local governments,
the importance of the relationship between public employers and their employees (id. at
p. 201), and the extensive statutory scheme already in place, such a broad extension of
existing law should be made by the Legislature, not the courts (id. at p. 192).”
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(Huntington Beach, supra, 95 Cal.App.4th at pp. 567-568, fn. omitted; see City of San
Diego v. Haas (2012) 207 Cal. App. 4th 472, 501-502 [citing Huntington Beach to reject
argument that conflict of interest in dual representation of city and public employee class
required the appointment of separate counsel, whether conflict was actual or merely
potential].)
Under this reasoning, if Hunter’s alleged conflicts of interest were actual conflicts,
the County had no obligation to provide any defense to Hunter, let alone a separate
defense. (§ 995.2, subd. (a)(3).) If the conflicts were merely potential, the County’s
letter implicitly waived those conflicts when it provided joint counsel to Hunter and
Hornbeek and agreed to provide separate counsel if an actual conflict arose. (§ 996.) As
Huntington Beach explained, Hunter’s options at that point were to “join the public entity
in waiving the potential conflict and accept the public entity’s offer of a joint defense. Or
the employee may refuse to waive the potential conflict of interest, decline the proffered
joint representation, and retain separate representation at the employee’s own expense.”
(Huntington Beach, supra, 95 Cal.App.4th at p. 568.) Hunter chose the latter course.
Hunter argues the County was unwilling to waive any potential conflicts of
interest when it provided a defense that included a “reservation of rights” regarding
punitive damages. Hunter relies on dicta in a footnote in Huntington Beach, in which the
court suggested, “Arguably, if the public entity is not willing to waive the potential
conflict, it may be obligated to provide a separate defense. However, we do not consider
that possibility here. There is no evidence that the City refused to waive any potential
conflict of interest. To the contrary, by providing a joint representation without any
reservation of rights, it indicated its willingness to accept any potential conflicts.”
(Huntington Beach, supra, 95 Cal.App.4th at p. 568, fn. 3.)
We need not decide whether to apply this reasoning here because, as in
Huntington Beach, nothing in the County’s letter offering a defense to Hunter could
rationally be interpreted as either a unwillingness to waive any potential conflicts or a
“reservation of rights” on punitive damages. The County expressly recognized the
potential for conflicts of interest in the dual representation of Hunter and Hornbeek and
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implicitly waived them by appointing Weiss to jointly represent them. The County even
went so far as to offer separate counsel to Hunter in the event an actual conflict forced
Weiss to withdraw from representing her, which it was not obligated to do. (§ 995.2,
subd. (a)(3); Huntington Beach, supra, 95 Cal.App.4th at p. 567.)
The County also did not reserve its rights with regard to punitive damages; it
simply recited its statutory discretion to pay any punitive damages award and the
requirements for doing so. Even if this could be interpreted as a “reservation of rights” as
Hunter contends, “the mere existence of a punitive damages claim does not necessarily
create a conflict of interest requiring the appointment of independent counsel” for an
employee. (Laws v. County of San Diego, supra, 219 Cal.App.3d at p. 199 [rejecting
argument that employees would be “‘hung out to dry’” on punitive damages when
compensatory damages are vigorously defended against and there is no dispute over the
course and scope of employment requirement].)
As the court in Huntington Beach concluded, whether there was an actual or
potential conflict of interest from Weiss’s representation of Hunter, the County was not
obligated to provide Hunter with a separate defense of her choosing. (Huntington Beach,
supra, 95 Cal.App.4th at p. 570.) The trial court therefore properly sustained the
County’s demurrer to her cross-complaint. Hunter failed to demonstrate a reasonable
possibility an amendment could cure the pleading defects, so the trial court acted within
its discretion in denying leave to amend.
DISPOSITION
The judgment is affirmed. Respondent is awarded costs on appeal.
FLIER, J.
WE CONCUR:
BIGELOW, P. J. GRIMES, J.
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