California-American Water Co. v. Marina Coast Water Dist. ( 2022 )

Filed 12/28/22
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
CALIFORNIA-AMERICAN
WATER COMPANY et al.,
Plaintiffs and Appellants, A160662
v. (San Francisco County
MARINA COAST WATER Super. Ct. No. CGC-15-
DISTRICT, 546632)
Defendant and Respondent.
Here, the third and fourth appeals in this case, we address two
separate appeals by two separate plaintiffs from a summary judgment
emanating from two separate summary adjudications against them. The first
summary adjudication was based on the two-year statute of limitations, the
second on the failure to comply with the claim-filing requirement in the
Government Claims Act. The summary adjudications were entered in 2019,
seven years after the first lawsuit among the parties was filed—and eight
years after the parties spent some six months in formal and informal efforts
attempting to resolve the issues between and among them.
Our de novo review leads to the conclusion that both summary
adjudications were errors and, therefore, so was the judgment. We thus
reverse.
1
BACKGROUND 1
The Parties and the General Setting
The appeals here involve two separate appellants: Monterey County
Water Resources Agency (Monterey) and California-American Water
Company (Cal-Am). Both appeals have the same respondent: Marina Coast
Water Company (Marina).
Appellant Monterey is an independent public agency created by the
Monterey Coast Water Resources Act (MCWRA ) (Water Code, Appendix,
Chapter 52), responsible for analyzing water resources in Monterey County.
Monterey has a dual governing board structure consisting of the elected
Monterey County Board of Supervisors and a Board of Directors appointed by
the Board of Supervisors. The appointed Board is responsible for the actual
operation of the agency, approving and executing contracts and formulating
recommendations to the Board of Supervisors on matters within the scope of
the Supervisors’ duties. It also has final authority on most operational and
administrative matters.
Appellant Cal-Am is an investor-owned water utility regulated by the
California PUC, providing water to over 100,000 residents on the Monterey
Peninsula, including Carmel-by the-Sea, Monterey, Pacific Grove, Seaside,
1 Much of the background is taken from the opinion of Division One of
this court in the first appeal in this case: California-American Water Co. v.
Marina Coast Water District (2016) 2 Cal.App.5th 748 (Cal-Am One). Other
facts are from decision No. 10-12-016 by the Public Utilities Commission
(PUC) in proceeding No. 04-09-019. (See In the Matter of the Application of
California-American Water Company (U210W) for a Certificate of Public
Convenience and Necessity to Construct and Operate its Coastal Water Project
to Resolve the Long-Term Water Supply Deficit in its Monterey District and to
Recover All Present and Future Costs in Connection Therewith in Rates, 2010
Cal. PUC LEXIS 548 (Dec. 2, 2010).
2
Del Rey Oaks, and Sand City, as well as various unincorporated areas of
Monterey County.
Respondent Marina is a public agency formed in 1960 under the
County Water District law to provide water for the City of Marina and
neighboring communities on the Monterey Peninsula.
A fourth entity involved, though not a party in either appeal, is RMC
Water and Environment (RMC).
For many years, an adequate and sustainable source of potable water
was a problem on the Monterey Peninsula. And in 1995 the State Water
Resources Control Board (SWRCB) issued an Order (No. WR 95-10) to Cal-
Am to stop drawing water from the Carmel River and develop an alternate
water supply. The Order led to years of discussions, and culminated in late
2009 when Marina, Monterey, and Cal-Am reached agreement on a plan to
develop and construct a regional desalinization project designed to extract
brackish water from beneath Monterey Bay, purify it, and deliver it to
consumers (“RDP” or “the project”).
The project was to replace the Carmel River as a water supply, and in
furtherance of the project, the parties entered into five interrelated
agreements that came to be referred to as the RDP Agreements, specifically:
(1) A “Reimbursement Agreement,” entered into in February and
March 2010, under which Cal-Am agreed to reimburse Marina and Monterey
their costs in pursuing the RDP, subject to later repayments or forgiveness.
(2) A “Water Purchase Agreement” (WPA), entered into on April 6,
2010, which provided for the financing and construction of the various
facilities.
3
(3) A “Settlement Agreement,” also entered into on April 6, which
established a process for proposing the desalination project to the PUC for
approval.
(4) A “Project Management Agreement,” entered into on January 11,
2011, under which RMC was selected as the project manager; and
(5) A “Credit-Line Agreement,” also entered into on January 11,
which established a line of credit to Monterey and Marina to minimize their
project-related finances.
Meanwhile, while some of the above agreements were still being
negotiated and executed, in December 2010, the PUC approved the project,
(Cal-Am One, supra, 2 Cal.App.5th at p. 753), approval that was a condition
precedent to it. 2
Meanwhile, in January 2010, Marina hired Stephen Collins who sought
to facilitate approval of the project by the PUC, including by working on the
draft WPA. Our colleagues described Collins’s involvement in more detail:
“Stephen Collins was a member of Monterey’s appointed board of
directors when the RDP agreements were being negotiated and, in some
cases, entered into. Starting in January 2010, he also was a paid consultant
for RMC to advocate for the agreements through a contract he had with
Marina. RMC ultimately paid Collins $160,000 for his work. At a February
2011 meeting of Monterey’s board of directors, Collins exposed his potential
conflict of interest by recusing himself from a vote on the selection of RMC as
the manager of the desalination project. Local media began reporting on the
possible conflict of interest, and an investigation followed. Collins resigned
2The project was never built, and to this day a replacement water
supply has not been completed.
4
from Monterey’s board of directors on April 1, 2011.” (Cal-Am One, supra,
2 Cal.App.5th at p. 753.) 3
On July 7, 2011, Monterey’s outside counsel, Kevin O’Brien, sent a
letter to Marina and Cal-Am expressing the opinion the RDP Agreements
were void as a consequence of Collins’s financial interest in the Project. Cal-
Am then gave notice the RDP Agreements were terminated.
Marina, Monterey, and Cal-Am thereafter engaged in months of
negotiation and mediation in an attempt to resolve the future of the project,
efforts that included several mediation sessions at JAMS and with an
Administrative Law Judge at the PUC, and various private sessions. These
efforts continued, off and on, for several months, finally ending on January
16, 2012 without resolution.
On January 25, Mark Fogelman, Marina’s outside counsel, e-mailed the
parties noting “[t]he mediation is over” and declaring “the parties should be
free to pursue their legal remedies.” And in a later e-mail, Mr. Fogelman
further represented that Marina had “no objection” to the parties being able
to raise in court any and all “issues and legal claims” referred to in the
parties’ pre-mediation correspondence or other issues “reasonably related” to
such issues and claims.
Despite that, uncertainty surrounded the parties’ pre-lawsuit
discussions: Marina insisted the parties were obligated to comply with the
dispute resolution procedure in the WPA; Monterey disagreed, but
3 In November 2011, the Monterey County District Attorney filed a
criminal complaint against Collins, charging him with two felony violations of
Government Code section 1090 arising from Marina’s and RMC’s secret
payments to him and multiple felonies for stealing money from his employer.
And on March 18, 2014, Collins pleaded “no contest” and was convicted of the
felony violation of Government Code section 1090 and grand theft from his
employer.
5
nevertheless followed the contractual procedure. Marina then injected more
uncertainty into the setting by refusing to agree that the parties’ efforts were
in fact compliant with the terms of the WPA, noting, for example, that
“[W]hile it is true that representatives of the parties met on July 13, 2011, in
a non-confidential meeting, [Marina] does not admit that the July 13, 2011,
meeting was conducted pursuant to Article 19 of the WPA or that it
constituted an ‘attempt in good faith to resolve the dispute.’ ”
In light of this uncertainty, on September 18, 2012, Cal-Am submitted
a claim “pursuant to the California Government Claims Act, Government
Code sections 810 et seq” (Claims Act). It was four-pages in length, single-
spaced, and in it Cal-Am alleged that the SWRCB had ordered it to come up
with an alternative to the Carmel River as a source of water for the Monterey
Peninsula. The RDP was that alternative and, Cal-Am alleged, Marina was
responsible for causing the project’s failure, thereby forcing Cal-Am “to apply
to the CPUC for authority to pursue another water supply project. . . .” In
short, the claim was based on harm incurred from the RDP’s collapse, caused
by Marina.
With respect to the specific cause of the project’s collapse, the claim
alleged Marina failed to obtain financing for its portion of the project.
However, the claim also asserted that Marina had taken the position that the
RDP’s implementing agreements “were void pursuant to Government Code
section 1090 4 due to the conduct of a former MCWRA director,” Collins. The
claim identified, by date, the letters in which Marina took that position. And
it further alleged that Marina’s actions led to Monterey’s assertion that the
RDP agreements are void under Government Code section 1090, which led to
the termination of the RDP agreements.
4 All undesignated statutory references are to the Government Code.
6
Cal-Am filed then a lawsuit.
The Lawsuit and the Appeals
On October 4, 2012, Cal-Am filed a complaint naming as defendants
Marina and Monterey. It alleged two causes of action, both for declaratory
relief: the first, whether the RDP Agreements were void as a consequence of
Marina’s payments to Collins; the second, whether Cal-Am had the right to
terminate the Agreements regardless of any conflict of interest, as a result of
Monterey’s anticipatory repudiation. (Cal-Am One, supra, 2 Cal.App.5th at
p. 753.)
On November 19, Marina filed an answer. Marina also filed a cross-
complaint against Cal-Am and Monterey seeking a declaration barring any
challenges to the RDP Agreements. The cross-complaint alleged seven causes
of action, three of which were based on the statute of limitations and four of
which were based on the Public Utilities Code. (Cal-Am One, supra,
2 Cal.App.5th at pp. 754−754.)
At an April 2013 case management conference, the court ordered the
action bifurcated into two phases: Phase One would involve resolution of
(a) Cal-Am’s first cause of action, whether the RDP Agreements were void,
and (b) Marina’s cross-complaint. Phase Two would deal with any damage
claims.
On April 16, 2014, Monterey filed a cross-complaint of its own, alleging
a single claim for declaratory relief that the RDP Agreements were void as a
result of the payments Collins had received in violation of Government Code
section 1090. (Cal-Am One, supra, 2 Cal.App.5th at p. 756.) This cross-
complaint was included in Phase One.
Phase One was tried in early December 2014, a four-day bench trial,
following which the trial court issued its statement of decision finding the
7
payments Collins received from Marina and RMC had given him a financial
interest in the RDP Agreements in violation of Government Code section
1090. And the court found four of the five RDP Agreements (all but the
Credit Line Agreement) void. Judgment was entered in favor of Monterey
and Cal-Am. Marina appealed, and Division One of this court affirmed. That
was Cal-Am One.
The trial court also issued post-judgment orders awarding Monterey
and Cal-Am costs and attorney fees as prevailing parties pursuant to the
terms of the WPA. As pertinent to an issue here, despite having declared the
WPA void, the court applied the attorney fee provision in it. Marina appealed
these orders as well, which Division One also affirmed, in California-
American Water Company v. Marina Coast Water District (2017)
18 Cal.App.5th 571. That was Cal-Am Two.
The Post-Appeal Lawsuits
On July 1, 2015, Cal-Am and Monterey jointly filed a complaint naming
two defendants, Marina and RMC. It was followed shortly by a first amended
complaint alleging nine causes of action, for: intentional interference with
prospective economic relations; negligent interference with prospective
economic relations; concealment; breach of contract; accounting and return;
money lent; unjust enrichment; unfair competition law; and False Claims
Act.
On July 30, Marina filed its own complaint, naming as defendants Cal-
Am and Monterey. It alleged five causes of action, for: breach of warranties
and representations; breach of contract; promissory estoppel; unjust
enrichment; and violation of law or PUC orders.
On December 9, 2016, Cal-Am and Monterey filed a second amended
complaint, adding a new second cause of action, for negligence. There were
8
now 10 causes of action pled, two of which, the first and the tenth, were
against only RMC, not Marina. Of the other eight causes of action, only three
are pertinent to the issues on appeal: the second, for negligence, and the
third and fourth, for interference. And it is these causes of action that are
the focus of this opinion.
Marina filed a demurrer, and by order entered February 14, 2017, the
trial court sustained it in part and overruled in part, holding that the
negligence claim lacked a statutory basis.
Cal-Am and Monterey filed a third amended complaint, alleging
vicarious liability under Government Code sections 815.2 and 815.4. Marina
challenged the third amended complaint by a motion for judgment on the
pleadings. Among other things, Marina argued—for the first time—that the
causes of action were barred because Cal-Am’s claim was deficient. By order
dated February 5, 2018, the court agreed. And despite that this was the first
time Marina had alleged this defect, the court denied Cal-Am’s request for
leave to amend to plead it was not obligated to comply with the Claims Act,
giving two reasons: (1) the WPA could not provide an alternative to the claim
presentation requirement because it was void from inception; 5 and (2) Cal-
Am’s reference to a confidential Mediation Agreement was made for the first
time at oral argument and the Mediation Agreement appeared to have been
pursuant to the void WPA.
Cal-Am sought writ review. We issued an alternative writ of mandate
directing the court to vacate the portion of its order denying Cal-Am leave to
amend or to show cause why a peremptory writ of mandate should not be
5 This reason for the ruling is quizzical. As noted, in Cal-Am Two,
supra, 18 Cal.App.5th 571, the trial court—the same trial court as here—
made an award of attorney fees based on the agreement that court had
earlier declared void.
9
granted. The court responded by vacating its order insofar as Cal-Am was
denied leave to amend, and the writ petition was dismissed as moot.
Cal-Am and Monterey filed a fourth amended complaint, alleging
among other things that the WPA and the Mediation Agreement set forth
alternatives to the Claims Act.
Marina filed a demurrer to the fourth amended complaint. The court
overruled it, as barred by Code of Civil Procedure section 430.41,
subdivision (b).
Cal-Am and Monterey filed a fifth amended complaint that among
other things realleged alternative claims procedures under the WPA and the
Mediation Agreement. It also alleged that by entering into the WPA, Marina
had waived its right under the Claims Act.
Marina filed another motion for judgment on the pleadings against Cal-
Am, based on the claimed failure to comply with the Claims Act. The motion
argued that the tort causes of action failed to comply with the Claims Act,
and that neither the WPA nor the Mediation Agreement excused Cal-Am’s
failure to comply with the Act.
Cal-Am filed opposition and following Marina’s reply and oral
argument, the court entered its order granting the motion with leave to
amend. The court first upheld its prior ruling that the tort causes of action
failed to comply. The court next concluded that Marina could not have
waived its rights under the Claims Act by entering into the WPA because it
was void from inception. Finally, the court concluded that the Mediation
Agreement could not supply a claims procedure for alleged torts that existed
when the agreement was entered into; that the Mediation Agreement failed
to supply a claims procedure that superseded the Claims Act; and that in any
event Cal-Am failed to comply with the procedure in the Mediation
10
Agreement. The trial court nevertheless granted leave to plead waiver or
estoppel based on the Mediation Agreement, the Credit Line Agreement, or
Marina’s “broader course of conduct.”
Cal-Am and Monterey filed their sixth amended complaint. It was
24 pages long, containing 113 paragraphs. And as to the negligence cause of
action, after incorporating the prior 63 paragraphs, it alleged as follows:
“65. The RDP was a massive, multi-million dollar project and entailed
a substantial investment of time, energy, and money on the part of Cal-Am
and Monterey. Accordingly, Marina and RMC owed a duty of care to Cal-Am
and Monterey to, among other things, refrain from taking any action that
posed a risk to the project’s completion and fully and truthfully disclose any
facts within their knowledge that created risk to the project, including the
conflict of interest created by Collins’[s] work on the RDP agreements. In
particular, RMC had a duty to ensure that any retention of consultants by
them in connection with the RDP complied with applicable laws, including
section 1090 of the Government Code. In addition, all employees and
independent contractors of Marina owed Cal-Am and Monterey the same
duties described above.
“66. One of Marina’s employees, i.e., Marina’s former General
Manager Jim Heitzman, breached the foregoing duties by, among other
things, retaining Collins to work on the RDP, arranging for Collins to be paid
some $160,000 by RMC for his work, and failing to properly supervise the
scope of Collins’[s] work—even though he knew, or reasonably should have
known, that Collins’[s] role constituted an illegal conflict of interest.
Heitzman’s negligent misconduct with respect to the hiring, payment, and
supervision of Collins fell within the scope of his employment as Marina’s
General Manager. Heitzman’s negligent misconduct played a vital role in
11
precipitating Collins’[s] violation of section 1090 of the Government Code—
which posed a risk to the entire project. Pursuant to Government Code
section 815.2(a), Marina is vicariously liable for Heitzman’s negligence.
“67. Monterey is informed and believes and on that basis alleges that
employees of Marina other than Heitzman whose identities are as yet
unknown also breached the foregoing duties, and Monterey reserves the
right, pending further discovery, to hold Marina vicariously liable for such
misconduct too.
“68. Further, Marina is also vicariously liable for any torts committed
by its independent contractors pursuant to Government Code section 815.4.
In or about January/February 2010, at least three independent contractors
were performing services for Marina relating to the RDP, i.e., RMC, Lyndel
Melton (an executive at RMC), and Collins. RMC and Melton breached their
duty of care by, among other things, retaining Collins to work on the RDP,
arranging for Collins to be paid some $160,000 for his work, and failing to
properly supervise the scope of Collins’[s] work. Collins breached his duty of
care by performing consulting work that constituted an illegal conflict of
interest in violation of Government Code section 1090. Marina is vicariously
liable for the negligence of its independent contractors.”
The sixth amended complaint also included a new theory that the
Credit Line Agreement contained an alternative dispute resolution procedure
that superseded the Claims Act; that certain actions and statements of
Marina’s counsel waived Marina’s rights under the Claims Act; and that
Marina’s conduct estopped it from requiring compliance with the Claims Act.
Marina again sought judgment on the pleadings against Cal-Am
reasserting its earlier arguments and also challenging Cal-Am’s new waiver
and estoppel theories. By order dated February 22, 2019, the trial court
12
adopted its earlier rulings, but nevertheless found that waiver and estoppel
had been sufficiently pled.
The Motions For Summary Judgment/Summary Adjudication
On December 7, 2018, Marina filed a motion for summary judgment or,
in the alternative, summary adjudication, as against Monterey, arguing, as
relevant here, that the negligence cause of action was barred by the two-year
statute of limitations in Code of Civil Procedure section 339, subdivision (1).
The motion was scheduled for hearing on February 20, 2019. And quite a
motion it was.
The motion began with the notice of motion, the memorandum of points
and authorities, and a declaration of attorney Kyle Brochard, which
combined totaled 41 pages. There was also a 31-page separate statement.
And then there was a request for judicial notice, of 37 exhibits, totaling 922
more pages.
On February 6, 2019, Monterey filed its opposition, which included
among other things its own request for judicial notice of 21 exhibits. The
opposition totaled 618 pages.
On February 15, Marina filed its reply, including objections to evidence.
So, what was before the trial court was over 1500 pages of material, a
trial court that was new to the case, it having been reassigned effective
January 2, 2019.
Marina’s motion came on for hearing as scheduled. And on February
22, the trial court filed its 26-page order granting the motion, going on at
length in its effort to justify its holding, an order described in detail below.
A week later, on March 1, Marina filed a motion for summary
judgment/summary adjudication against Cal-Am, with moving papers more
voluminous than in the motion against Monterey. In addition to the
13
memorandum and a 25-page separate statement, there were eight
declarations, one of which had 18 exhibits, totaling 580 pages, and a request
for judicial notice for 65 exhibits, totaling 749 more pages—almost 1400
pages of material.
On May 15, Cal-Am filed its opposition, totaling over 300 pages. And
on May 24, Marina filed its reply, totaling 135 pages. 6
To prevail on any cause of action subject to the claim-presentation
requirement, a plaintiff must demonstrate it either substantially complied
with that requirement or was excused from compliance. Thus, a claim-
presentation requirement constitutes an element of any cause of action
subject to the act. (State of California v. Superior Court (2004) 32 Cal.4th
1234, 1243.) Marina sought to demonstrate that Cal-Am could not establish
that element, either through the substantial compliance doctrine or any of
the theories pled, including implied waiver, express waiver, estoppel, or
Government Code section 930.2. 7
With respect to implied waiver, Marina argued that whatever actions
Marina took that constituted implied waiver, Cal-Am did not detrimentally
6 In Nazir v. United Airlines (2009) 178 Cal.App.4th 243, 253 (Nazir),
we quoted from an article co-authored by an experienced Superior Court
judge describing the problems he had “ ‘encountered’ ” in connection with
summary judgment motions, at the very top of which are motions “ ‘that
attempt to “hide” triable issues of material fact.’ (Brenner & March, Use and
Abuse of MSJs: A View From the Bench (2007) 49 Orange County Law, 34,
37, boldface omitted.)” And, we added, the 1,056-page motion with the pages
it generated “may well be the most oppressive motion ever presented to a
superior court.” (Nazir, supra, 178 Cal.App.4th at p. 248.)
7 As pertinent here, Government Code section 930.2 allows local public
entities like Marina to include in their contracts a procedural alternative to
the statutory process.
14
rely on those actions, because it did submit a claim. Cal-Am responded by
pointing out that reliance is not an element of waiver.
As to express waiver, Marina submitted 33 months of its meeting
minutes (from January 2010 through September 2012) and declarations of
two past or present General Managers (James Heitzman and Keith Van Der
Maaten), and Mr. Fogelman, the attorney Cal-Am contended made the
statements constituting express waiver. Marina argued that only its Board
had the authority to waive any obligation to submit a claim; that the Board
acts only through passage of ordinance, resolution, or motion; and that the
Board never took such “formal action” expressly waiving Cal-Am’s obligation.
Moreover, Marina added, the Board did not specifically authorize any agent,
including Mr. Fogelman, to waive its right to receive a claim. Thus, to the
extent Mr. Fogelman “purported to waive a right on behalf of Marina, it does
not amount to an express waiver because the individual did not have the
authority to take that action.”
In opposition, Cal-Am submitted the engagement agreement between
Marina and its counsel and numerous letters and e-mails, including e-mails
from attorney Fogelman containing the statements constituting the express
waiver. Cal-Am argued that Marina, like any entity, acts through agents,
including outside counsel, and Marina’s engagement of counsel constituted a
general delegation of authority to negotiate with Cal-Am, which included the
authority to waive Marina’s procedural right to notice under the Act.
With respect to section 930.4, Marina argued that the WPA’s procedure
could not supplant the statutory procedure because the WPA was declared
void. Cal-Am responded that the void status of the WPA was irrelevant, that
what mattered was the fact that Marina entered into a contract containing
an alternative procedure, and the parties complied with it.
15
As to the Mediation Agreement, Marina argued that it likewise did not
supplant the statutory procedure because the tort causes of action were based
on Collins’s actions in 2010, which pre-dated the formation of the Agreement,
and that claims arising before a contract’s formation could not, as a matter of
law, meet the “arising out of or related to” limitation in Government Code
section 930.2.
Finally, with respect to substantial compliance, Marina argued Cal-
Am’s claim did not disclose the factual circumstances giving rise to the tort
causes of action, i.e., Marina’s “hiring and supervision” of Collins.
Hearing on the motion was held on May 29, prior to which the trial
court issued a tentative ruling denying the motion. The tentative ruling
observed that Marina failed to meet its initial burden on the express waiver
issue because its evidence of Board votes was limited to January 2010 to
September 2012, noting that “the record is silent as to whether Marina’s
Board of Directors delegated authority . . . to waive compliance with the act,
to any employees or agents . . . in the time period before January 2010.”
Following argument, on June 20, the trial court filed its order granting
the motion, this one, 26 pages long, also described in detail below. The only
explanation provided for the court’s change-of-heart was the following
statement: “During oral argument, Marina clarified that the Board could not
have waived Cal-Am’s compliance earlier than January 2010 because no
claims had accrued. In other words, there can be no waiver of a right until
the Board of Directors knew Cal-Am had a tort claim, which did not arise
until after January 2010.” Nothing was cited to support that statement.
Cal-Am filed a petition in this court to reverse the order immediately,
before the parties proceeded to trial on the remaining claims, to prevent the
possibility of having to conduct a duplicative, second trial in the event this
16
court reversed the order in an appeal from the final judgment. (California-
American Water Company v. Superior Court for the City and County of San
Francisco, A157849.) We denied the petition.
On January 22, 2020, trial began on the remaining damage claims by
Monterey and Cal-Am against Marina and RMC. A jury was empaneled, but
on January 27, before testimony began, the parties entered into a settlement
agreement under which all claims against RMC were settled, as were some of
Cal-Am’s claims against Marina. The settlement agreement expressly
preserved Monterey’s and Cal-Am’s right to appeal the judgment based on
the summary adjudication orders.
Judgment in accordance with the settlement agreement was entered on
June 9. And on July 10, Monterey and Cal-Am filed notices of appeal.
DISCUSSION
The Law of Summary Judgment/Summary Adjudication
“A party may move for summary judgment in an action or proceeding if
it is contended that the action has no merit or that there is no defense to the
action or proceeding.” (Code Civ. Proc., § 437c, subd. (a)(1).) “A party may
move for summary adjudication as to one or more causes of action within an
action, one or more affirmative defenses, one or more claims for
damages, . . . . A motion for summary adjudication shall be granted only if it
completely disposes of a cause of action, an affirmative defense, a claim for
damages, or an issue of duty.” (Id., § 437c, subd. (f)(1).) In short, to prevail, a
defendant must show that one or more elements of the challenged cause of
action cannot be established or that there is a complete defense to it.
(Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476−477; Aguilar v. Atlantic
Richfield Co. (2001) 25 Cal.4th 826, 849 (Aguilar).)
17
Our review is under well-settled principles, as we confirmed in Nazir:
“On appeal ‘[w]e review a grant of summary judgment de novo; we must
decide independently whether the facts not subject to triable dispute warrant
judgment for the moving party as a matter of law. [Citations.]’ (Intel Corp. v.
Hamidi (2003) 30 Cal.4th 1342, 1348.) Put another way, we exercise our
independent judgment, and decide whether undisputed facts have been
established that negate plaintiff’s claims. (Romano v. Rockwell Internat., Inc.
[(1996)]14 Cal.4th [479,] 487.) As we put it in Fisherman’s Wharf Bay Cruise
Corp. v. Superior Court (2003) 114 Cal.App.4th 309, 320: ‘[W]e exercise an
independent review to determine if the defendant moving for summary
judgment met its burden of establishing a complete defense or of negating
each of the plaintiff’s theories and establishing that the action was without
merit.’ (Accord, Certain Underwriters at Lloyd’s of London v. Superior
Court (2001) 24 Cal.4th 945, 972.)
“But other principles guide us as well, including that ‘[w]e accept as
true the facts . . . in the evidence of the party opposing summary judgment
and the reasonable inferences that can be drawn from them.’ (Morgan v.
Regents of University of California (2000) 88 Cal.App.4th 52, 67.) And we
must ‘ “view the evidence in the light most favorable to plaintiff[] as the
losing part[y]” and “liberally construe plaintiff[’s] evidentiary submissions
and strictly scrutinize defendant[’s] own evidence, in order to resolve any
evidentiary doubts or ambiguities in plaintiff[’s] favor.” ’ (McDonald v.
Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, 96–97.)”
(Nazir, supra, 178 Cal.App.4th at pp. 253−254.)
Against that background, we turn to the two appeals before us,
beginning with that of the first-named appellant, Cal-Am.
18
Cal-Am’s Appeal Has Merit: The Summary Adjudication Was
Error
The Law of Government Claims
Government Code section 945.4 provides that “no suit for money or
damages may be brought against a public entity on a cause of action for
which a claim is required to be presented in accordance with . . . section
910 . . . until a written claim therefor has been presented to the public entity
and has been acted upon by the board, or has been deemed to have been
rejected by the board . . . .” And the referenced section 910 requires that the
claim state the “date, place, and other circumstances of the occurrence or
transaction which gave rise to the claim asserted” and provides “[a] general
description of the . . . injury, damage or loss incurred so far as it may be
known at the time of presentation of the claim.”
The public policies underlying the claims presentation requirement
include that the claim affords the entity an opportunity to promptly remedy
the condition giving rise to the inquiry, thus minimizing the risk of similar
harm to others, and permits the entity to investigate while tangible evidence
is still available, memories are fresh, and witnesses can be located. The
requirement also permits early assessment by the public entity, allows its
governing board to settle meritorious disputes without incurring the added
cost of litigation, and gives it time to engage in appropriate budgetary
planning. (See generally DiCampli-Mintz v. County of Santa Clara (2012)
55 Cal.4th 983, 991; City of Stockton v. Superior Court (2007) 42 Cal.4th 730,
738; Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1234
[summarizing policy considerations].)
Our Supreme Court expounded on the purposes of the law in Stockett v.
Association of California Water Agencies Joint Powers Ins. Authority (2004)
34 Cal.4th 441, 446 (Stockett): “The purpose of these statutes is ‘to provide
19
the public entity sufficient information to enable it to adequately investigate
claims and to settle them, if appropriate, without the expense of litigation.’
(City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 455.) Consequently,
a claim need not contain the detail and specificity required of a pleading, but
need only ‘fairly describe what [the] entity is alleged to have done.’
(Shoemaker v. Myers (1992) 2 Cal.App.4th 1407, 1426; Turner v. State of
California (1991) 232 Cal.App.3d 883, 888.) As the purpose of the claim is to
give the government entity notice sufficient for it to investigate and evaluate
the claim, not to eliminate meritorious actions (Blair v. Superior Court (1990)
218 Cal.App.3d 221, 225), the claims statute ‘should not be applied to snare
the unwary where its purpose has been satisfied’ (Elias v. San Bernardino
County Flood Control Dist. (1977) 68 Cal.App.3d 70, 74.)”
On the next page the Court elaborated, noting that “The claim,
however, need not specify each particular act or omission later proven to have
caused the injury. (Blair v. Superior Court, supra, 218 Cal.App.3d at p. 225.)
A complaint’s fuller exposition of the factual basis beyond that given in the
claim is not fatal, so long as the complaint is not based on an ‘entirely
different set of facts.’ (Stevenson v. San Francisco Housing Authority (1994)
24 Cal.App.4th 269, 278.) Only where there has been a ‘complete shift in
allegations, usually involving an effort to premise civil liability on acts or
omissions committed at different times or by different persons than those
described in the claim,’ have courts generally found the complaint barred.
(Blair v. Superior Court, supra, at p. 226.) Where the complaint merely
elaborates or adds further detail to a claim, but is predicated on the same
fundamental actions or failures to act by the defendants, courts have
generally found the claim fairly reflects the facts pled in the complaint.
20
(White v. Superior Court (1990) 225 Cal.App.3d 1505, 1510−1511.” (Stockett,
supra, 34 Cal.4th at p. 447.)
Applying these, and other principles, our de novo review leads to the
conclusion that the trial court erred in granting summary adjudication
against Cal-Am. There are several reasons why, beginning with the fact the
trial court erred in applying the law of waiver.
Implied Waiver
As noted, Cal-Am pled various theories excusing compliance with the
Claims Act, one of which was implied waiver. As also noted, Marina argued
there could not be a waiver unless Cal-Am showed detrimental reliance, that
is, unless Marina’s actions caused Cal-Am to not submit a claim. And since
Cal-Am did submit a claim, there was no reliance. The trial court agreed.
The court first recognized that Cal-Am “relies on a handful of cases,”
going on to list five. Never taking issue with, or distinguishing, any of the
five cases, the trial court made this one-paragraph conclusion:
“The question here is narrow—whether a plaintiff can show that a
public entity impliedly waived compliance with the Government Claims Act
without demonstrating reliance. Estoppel and waiver doctrines have been
read into the Government Claims Act to prevent public entities from using
the claims statues as traps for the unwary. (Hill v. Newkirk (1994)
26 Cal.App.4th 1047, 1059.) The Court is not aware of cases finding an
implied waiver of the claim requirement in the absence of reliance in the form
of a failure to submit a timely claim. (Compare Castaneda v. Department of
Corrections & Rehabilitation (2013) 212 Cal.App.4th 1051, 1064; City of
Stockton v. Superior Court[, supra,] 42 Cal.4th [at pp.] 743−746 [rejecting
estoppel argument because conduct could not have deterred plaintiff from
presenting a claim after the defendants failed to keep their promises;
21
rejecting waiver argument that was raised based only on a ground found in
the statute itself].) Cal-Am has not directed the Court to any such authority.
Accordingly, the Court concludes that Cal-Am cannot prevail on an implied
waiver argument because it submitted a timely claim.”
This was wrong.
Waiver means “the intentional relinquishment or abandonment of a
known right.” (Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1048
(Bickel), superseded by statute on another ground as noted in DeBerard
Properties, Ltd. v. Lim (1999) 20 Cal.4th 659, 668; see Waller v. Truck Ins.
Exchange, Inc. (1995) 11 Cal.4th 1, 31 (Waller).) And whether there has been
waiver is a question of fact. (Bickel, supra, 16 Cal.4th at p. 1052.) Waiver “
‘always rests upon intent.’ ” (City of Ukiah v. Fones (1966) 64 Cal.2d 104,
107.) The intention may be express, based on the waiving party’s words, or
implied, based on conduct that is “ ‘so inconsistent with an intent to enforce
the right as to induce a reasonable belief that such right has been
relinquished.’ ” (Savaglio v. Wal-Mart Stores, Inc. (2007) 149 Cal.App.4th
588, 598; see Waller, supra, 11 Cal.4th at pp. 31, 33–34.)
As numerous cases have held, “Waiver differs from estoppel, which
generally requires a showing that a party’s words or acts have induced
detrimental reliance by the opposing party.” (Lynch v. California Coastal
Com. (2017) 3 Cal.5th 470, 475−476; Rubin v. Los Angeles Federal Savings &
Loan Assn. (1984) 159 Cal.App.3d 292, 298 [“detrimental reliance is not a
necessary element of waiver, only of estoppel”]; City of Hollister v. Monterey
Ins. Co. (2008) 165 Cal.App.4th 455, 487 [same]; DuBeck v. California
Physicians’ Service (2015) 234 Cal.App.4th 1254, 1265 [“ ‘ “The party who has
the right may waive it without reliance by another” ’ ”].)
22
As Witkin distills it, citing numerous cases and authorities, “Waiver is
the intentional relinquishment of a known right. [Citations.] [¶]
Technically, therefore, waiver is the affirmative act of one party and does not
require an act or conduct by the other party. [Citations.]” (13 Witkin,
Summary of California Law (11th ed., Supp. May 2022 update) Equity, § 215,
p. 569.) 8
The cases cited by Marina below, and adopted without analysis by the
trial court, provide no support for the court’s ruling. Castaneda v.
Department of Corrections & Rehabilitation, supra, 212 Cal.App.4th at
pp. 1064−1065 addressed only estoppel, not waiver; and in City of Stockton v.
Superior Court, supra, 42 Cal.4th 730, the Supreme Court analyzed the
estoppel and waiver defenses separately, rejecting the estoppel argument for
lack of reliance and then rejecting the waiver defense for other reasons,
without any mention of reliance. (Id. at pp. 744−745.)
For this reason alone, summary adjudication was wrong, as there was a
triable issue of fact as to implied waiver. Likewise as to express waiver.
In light of all this, we reject Marina’s statement that the law of
8
whether reliance is necessary for waiver is “not uniform,” as the cases it cites
are easily distinguishable. Marina cites, for example, Applera Corp. v. MP
Biomedicals, LLC (2009) 173 Cal.App.4th 769, 791, which suggested, without
analysis, that there can be no waiver unless “it has ripened into an estoppel
by reason of prejudice to the adverse party.” The only case cited for that
proposition, however, is an old insurance coverage case, McDanels v. General
Insurance Co. of America (1934) 1 Cal.App.2d 454, which, most improperly,
used “waiver” and “estoppel” interchangeably. As to this, Witkin is again apt
which, citing to McDanels, says this: “The doctrine [of waiver] is, however,
frequently confused with that of estoppel.” (13 Witkin, Summary of
California Law, supra, Equity, § 215, p. 569.)
23
Express Waiver
Cal-Am also alleged express waiver based on the representations by
Marina’s attorney Fogelman at the conclusion of the many months devoted to
possible resolution of the issues among the parties. Marina did not contend
that Mr. Fogelman’s statements did not support waiver, but rather argued
that as a matter of law only its Board had the power to waive Marina’s right
to notice under the Claims Act and did not do so. Again, the trial court
agreed. This, too, was error. For several reasons.
To begin with, Cal-Am pled detailed facts, including by quoting the
statements constituting the waiver, demonstrating that the express waiver
argument was predicated on statement made by Marina’s attorney—not
votes cast by the Board—at the end of the unsuccessful pre-lawsuit dispute
resolution process. Marina’s focus on the Board’s actions addressed
allegations not pled in the complaint, and thus failed to negate the express
allegations pled in the complaint. Thus, summary adjudication was error.
(See Laabs v. Victorville (2008) 163 Cal.App.4th 1242, 1258 [“It is the
allegations in the complaint to which the summary judgment motion must
respond”].)
Indeed, Marina addressed the allegations in the complaint only insofar
as to dismiss them out of hand as inconsistent with Marina’s late in the
game—Cal-Am describes it as “made up”—Board-waiver theory. Citing
Horsemen’s Benevolent & Protective Assn. v. Valley Racing Assn. (1992)
4 Cal.App.4th 1538 (Horsemen’s) and Burchett v. City of Newport Beach
(1995) 33 Cal.App.4th 1472 (Burchett), Marina simply stated: “To the extent
an officer or agent purported to waive a right on behalf of Marina, it does not
amount to an express waiver because the individual did not have the
authority to take that action.” The trial court cited both cases. But neither is
24
pertinent, as they applied a rule limited to public officers. (See Horsemen’s,
supra, 4 Cal.App.4th at p. 1564 [“any act of an officer to be valid must find
express authority in the law or be necessarily incidental to a power expressly
granted”]; Burchett, supra, 33 Cal.App.4th at p. 1479.) That rule has no
application here, as attorney Fogelman was not a public officer. In short, by
failing to negate the express waiver theory as pled, Marina failed to meet its
initial burden.
But even assuming Marina had met its initial burden, Cal-Am
demonstrated triable issues of fact. Cal-Am based its express waiver theory
on representations made by an attorney retained by Marina who was at the
time he made them engaging in pre-lawsuit negotiations with Cal-Am as
precedent to legal action. And there was a triable issue whether Cal-Am
could rely on them.
“As a general proposition, the attorney-client relationship, insofar as it
concerns the authority of the attorney to bind his client by agreement or
stipulation, is governed by the principles of agency. [Citation.] Hence, ‘the
client as principal is bound by the acts of the attorney-agent within the scope
of his actual authority (express or implied) or his apparent or ostensible
authority . . . .’ [Citations.] [¶] . . . [¶] An attorney retained to represent a
client in litigation is clothed with certain authority by reason of that
relationship. ‘The attorney is authorized by virtue of his employment to bind
the client in procedural matters arising during the course of the action. . . .’
[Citation.] [¶] The authority thus conferred upon an attorney is in part
apparent authority—i.e., the authority to do that which attorneys are
normally authorized to do in the course of litigation manifested by the client’s
act of hiring an attorney—and in part actual authority implied in law.”
(Blanton v. Womancare, Inc. (1985) 38 Cal.3d 396, 403−404 (Blanton).)
25
As Witkin distills the rule, “The attorney’s apparent authority covers
all the ordinary procedural steps in the prosecution of a legal proceeding,
such as pleadings, remedies, trial, etc., and the attorney’s actions in these
matters will bind the client. [¶] A typical statement of the rule appears in
Redsted v. Weiss (1945) 71 Cal.App.2d 660: An attorney has ‘the general
implied or apparent authority to enter into or make such agreements or
stipulations, with respect to procedural or remedial matters, as appear, in the
progress of the cause, to be necessary or expedient for the advancement of his
client’s interests or to accomplishment of the purpose for which the attorney
was employed.’ ([Redsted v. Weiss, supra,] 71 Cal.App.2d [at p.] 663.)”
(1 Witkin, Cal. Procedure (6th ed. 2021) Attorneys, § 263, p. 326.)
Cal-Am’s evidence—liberally construed, as it must be—and the
reasonable inferences from all that evidence demonstrated a triable issue of
fact whether Mr. Fogelman had the authority to waive Marina’s right to
statutory notice. That evidence included the 2009 Board minutes approving
the retention of Mr. Fogelman, and letters, e-mails, and other evidence
demonstrating his interactions and negotiations with Cal-Am’s attorneys
throughout the pre-lawsuit resolution process regarding Cal-Am’s potential
claims against Marina. A factfinder could reasonably infer that Marina’s
counsel, who had received abundant information regarding Cal-Am’s
potential claims, had the apparent authority to waive Marina’s statutory
right to receive a formal claim. It is reasonable to infer that the attorney put
in a position by Marina’s Board to negotiate the substance of Cal-Am’s
potential claims against Marina also had the authority to waive Marina’s
right merely to receive formal notice of those claims. (See Blanton, supra,
38 Cal.3d at p. 406 [“apparent authority is created, and its scope defined, by
26
the acts of the principal in placing the agent in such a position that he
appears to have the authority which he claims or exercises”].)
Not only that, two Marina Board members (Dan Burns and Ken Nishi)
were copied on one of the e-mails sent by Mr. Fogelman in which he made
some of the statements on which Cal-Am’s express waiver theory was
premised. Neither objected to the statements.
The trial court ignored almost all of Cal-Am’s evidence and failed to
draw all reasonable inferences from other evidence in Cal-Am’s favor. The
trial court ignored all of the letters, e-mails, and other evidence of Mr.
Fogelman’s interactions with Cal-Am, distilling Cal-Am’s evidentiary
showing to essentially one thing—the engagement agreement. The court
then determined that the agreement did not constitute any evidence of Mr.
Fogelman’s authority because it “does not expressly authorize” counsel “to
waive compliance” with the Act.
Certainly any such non-authorization was not known to Cal-Am.
In any event, the court’s conclusion ran afoul of the principle that a
court cannot grant summary judgment based on inferences that are
contradicted by other inferences or evidence. And a triable issue of fact exists
when the evidence permits a reasonable trier of fact to find a contested fact in
favor of the party opposing the motion. (Aguilar, supra, 25 Cal.4th at pp.
856−857.) Put slightly differently, a summary judgment may not be granted
unless the evidence is incapable of supporting a judgment for the losing
party. As one court put it, “ ‘even though it may appear that a trial court
took a “reasonable” view of the evidence, a summary judgment cannot
properly be affirmed unless a contrary view would be unreasonable as a
matter of law in the circumstances presented.’ ” (Faust v. California
27
Portland Cement Co. (2007) 150 Cal.App.4th 864, 877, citing Binder v. Aetna
Life Ins. Co. (1999) 75 Cal.App.4th 832, 838.)
The trial court rejected Cal-Am’s express waiver argument, in part,
because it believed that accepting Cal-Am’s argument would require it “to
make the unreasonable inference that each of the declarations of Marina’s
Board of Directors were [sic] crafted to be misleading.” Preliminarily, we do
not understand the comment about “unreasonable inference,” as Marina
submitted two declarations, both of which contained the identical—not to
mention, narrowly phrased—testimony that the Board did not formally vote
to either waive Cal-Am’s compliance with the Act or grant anyone else that
specific power. But an attorney has more authority than what a client
specifically authorizes, and the declaration testimony did not address that
issue at all, such as by attesting to the limits of the scope of the engagement.
Cal-Am’s argument therefore suggested nothing more than that the
declarants’ testimony was incomplete—not misleading. 9
Finally on this issue, we note another fundamental principle of
summary judgment law that was disregarded—that the procedural rules
required by statute must be strictly applied. (Brantley v. Pisaro (1996)
42 Cal.App.4th 1591, 1607; see generally Weil & Brown, Cal. Practice Guide:
Civil Procedure Before Trial (The Rutter Group, 2022) ¶ 10:279, p. 10-139.)
9 Perhaps more improper in the summary adjudication setting was the
trial court’s refusal to infer the declarations were “misleading,” as it meant
the court deemed that testimony to be sufficiently credible to outweigh
competing inferences from Cal-Am’s evidence. This was wrong. (See
Binder v. Aetna Life Ins. Co., supra, 75 Cal.App.4th at p. 840 [“The trial court
may not weigh the evidence in the manner of a fact finder to determine whose
version is more likely true. [Citation.] Nor may the trial court grant
summary judgment based on the court’s evaluation of credibility”].)
28
Here, Marina’s separate statement violated the so-called “golden rule” of
summary judgment, which is this: “[I]f it is not set forth in the separate
statement, it does not exist.” (United Community Church v. Garcin (1991)
231 Cal.App.3d 327, 337, superseded by statute on another ground as stated
in Certain Underwriters at Lloyd’s of London v. Superior Court (1997) 56
Cal.App.4th 952, 957, fn. 4; Weil & Brown, Civil Procedure Before Trial,
supra, ¶ 10:94, p. 10-37.)
“Both the court and the opposing party are entitled to have all the facts
upon which the moving party bases its motion plainly set forth in the
separate statement.” (United Community Church v. Garcin, supra,
231 Cal.App.3d at p. 337.) And if the separate statement does not contain all
material facts on which the motion is based, the moving party has failed to
meet its initial burden of production and is “not entitled to summary
adjudication as a matter of law.” (Troyk v. Farmers Group, Inc. (2009)
171 Cal.App.4th 1305, 1350; Roger H. Proulx & Co. v. Crest-Liners, Inc.
(2002) 98 Cal.App.4th 182, 201 [“Without facts set forth in a separate
statement to support a ground for summary judgment, summary judgment
cannot be granted on that ground”].)
Marina’s attempt to negate Cal-Am’s express waiver theory was based
on facts that included that Marina has a Board; that the Board acts by voting
to pass a resolution, ordinance, and/or motion; that any actions are recorded
in the Board minutes; that from January 2010 to September 2012, its Board
did not vote to pass any resolution, ordinance, or motion waiving Cal-Am’s
obligation to submit a claim; and that the Board did not vote to delegate the
authority to waive that obligation to anyone else.
Marina’s declarants attested to additional purportedly material facts.
Two of Marina’s former General Managers attested to facts regarding the
29
scope of their authority, an essential factual component of Marina’s argument
that only its Board had authority to waive its rights. Marina’s outside
counsel Fogelman similarly declared that the Board did not specifically
authorize him or “any other agent” to waive Cal-Am’s obligation to present a
claim during the time period in which he represented Marina.
All of these facts were material to Marina’s express waiver argument.
Not one of them appears in Marina’s separate statement. 10 In short,
Marina’s separate statement flouted the requirements of Code of Civil
Procedure section 437c, subdivision (b)(1). Regardless, the trial court swept
this aside, declaring that this “is not a case where the moving party failed to
cite evidence in its separate statement,” and affirming its “discretion to
consider evidence not set forth in the separate statement where the opposing
party has had notice of the evidence and an opportunity to respond.” This
misses the point. The “golden rule” applies to the absence of the fact from the
separate statement, “not the underlying evidence supporting the fact.”
(Parkview Villas Assn. Inc. v. State Farm Fire & Casualty Co. (2005)
133 Cal.App.4th 1197, 1214; see North Coast Business Park v. Nielsen
Construction Co. (1993) 17 Cal.App.4th 22, 31 [“when the ‘fact’ is not
mentioned in the separate statement, it is irrelevant that such fact might be
buried in the mound of paperwork filed with the court”].)
10The only “fact” relevant to the express waiver issue that Marina
included in the separate statement was that “Marina did not intentionally
waive the right to receive written notice of Cal-Am’s tort theories pursuant to
the Government Claims Act.” But waiver is a legal conclusion made by a
factfinder based on the facts; it is not a fact itself. (See CACI No. 336.) It
does not belong in a separate statement. (See Masonite Corp. v. Superior
Court (1994) 25 Cal.App.4th 1045, 1050.)
30
In sum, there was a triable issue of fact as to express waiver. And
another, as to the applicability of alternatives to the Claims Act.
The WPA
As noted, section 930.2 allows local public entities like Marina to
include in their contracts a procedural alternative to the statutory process.
And if an entity enters into an agreement containing such an alternative
procedure, that procedure “exclusively governs. . . .” (§ 930.4.) As we put it
in Arntz Builders v. City of Berkeley (2008) 166 Cal.App.4th 276, 289 (Arntz),
“We detect no legislative intent, nor any practical need, to require
presentation of a statutory claim after a claimant has complied with a local
entity’s contractual claims procedure.”
Here, the WPA contained a detailed pre-litigation procedure; the
parties also entered into the separate Mediation Agreement. And in its
complaint, Cal-Am detailed at length—some 29 paragraphs—its efforts to
fulfill the requirements of the dispute resolution provisions in those
agreements.
As also noted, in 2012, before any lawsuit was filed, Marina took the
position that Monterey had to comply with the WPA. But in its motion
Marina argued that the dispute resolution procedure in the WPA did not
“exclusively govern[]” within the meaning of section 930.4, because the
agreement was declared void in Cal-Am One. Thus, Marina argued, section
930.4 could not apply because such application “would treat the WPA as in
effect.” The trial court agreed, but provided no analysis, instead referring to
a previous order that had been entered on a motion for judgment on the
pleadings and stating it “does not modify the prior legal analysis.”
Passing over whether a ruling on a judgment on the pleadings should—
or even can—govern determination of a motion for summary adjudication,
and the strict scrutiny required, such incorporation by reference was error. A
31
trial court must “state its reasons” for any determination made in a summary
judgment order. (Code Civ. Proc., § 437c, subd. (g); Santa Barbara Pistachio
Ranch v. Chowchilla Water Dist. (2001) 88 Cal.App.4th 439, 448−449.) What
the court did here did not comply: the “statement of reasons-by-reference
was noncompliant.” (Ruoff v. Harbor Creek Community Assn. (1992)
10 Cal.App.4th 1624, 1627.)
Highlighting the impropriety of relying on a prior ruling is this
observation in Cal-Am One: “Although the court had concluded in its first
summary judgment order that California-American’s cause of action under
Government Code section 1090 was barred by the short statute of limitations
governing validation actions, it revisited and rejected this conclusion in the
statement of decision.” (Cal-Am One, supra, 2 Cal.App.5th at p. 757.) In
other words, the trial court there—the same judge who made the earlier
ruling here— recognized its earlier decision was wrong, and reversed it.
In any event, the trial court’s decision was error. It is probably enough
to note that Cal-Am Two affirmed the award of attorney fees based on a
provision in the void contract. The Court of Appeal held “[t]he award of
attorney fees did not violate public policy because the trial court’s
determination that the parties’ agreements were void ab initio did not render
illegal the subject matter of the agreements, which set forth the parties’
relationships and rights in connection with a lawful project, and thus the
illegality exception to the rule of mutuality of remedies did not apply.”
Reaching that conclusion, the court noted among other things that a
“determination that the agreements were void ab initio . . .” did not render
the agreements illegal. (Cal-Am Two, supra, 18 Cal.App.5th at pp. 571, 579.)
In its opening brief here, Cal-Am made a four-part argument regarding
why the void ab initio status of the WPA did not retroactively render the
32
dispute resolution procedure in that agreement inapplicable. Marina chose
not to respond to any of Cal-Am’s arguments except for the analogy Cal-Am
drew to Civil Code section 1717. And on that issue, Marina offers only a
conclusion, not an argument: “There is no similar statutory purpose negated
here by enforcing the Claims Act in the wake of the void WPA claims
procedure.” This is inadequate.
The purpose of section 930.4 is to make clear that the statutory claims
process does not apply if the parties entered into a contract containing an
alternate procedure. (Arntz, supra, 166 Cal.App.4th at p. 290.) Exempting
contracts later declared void ab initio from section 930.4’s “exclusive
governance” clause—as the trial court did here—negates the purpose of the
statute. The trial court’s conclusion would also cause confusion as to which
claims procedure governed, undermining the related statutory goal of
“eliminating uncertainty in the claims-presentation requirements.”
(DiCampli-Mintz v. County of Santa Clara, supra, 55 Cal.4th at p. 997.)
Finally, in what can only be called an inconsistent position, Marina
suggests that “in lieu of submitting a claim,” Cal-Am should have provided
“notice of alleged tort causes of action” pursuant to the WPA’s procedure,
which supposedly would have “avoided the consequences” of the WPA’s void
status. Yet, according to Marina’s own argument, any such notice under the
WPA would have been a nullity given the void status of that agreement.
Marina cannot have it both ways.
The Mediation Agreement
In addition to the WPA, the parties entered into a second agreement
with a dispute resolution procedure, i.e., the Mediation Agreement, which
Cal-Am contended also applied and was complied with. In a tortuous, three-
page argument, Marina essentially contends that Cal-Am’s claims “fall
outside the Mediation Agreement’s claims procedure,” which, it asserts,
33
refers to agreements containing “provisions governing the presentation . . . of
any or all claims arising out of or related to the agreement . . . .” (§ 930.2.)
According to Marina, the tort causes of action are not such claims because
they “arise out of the hiring and supervision of Collins and his violation of
Government Code section 1090 in 2010, more than a year before the
Mediation Agreement was executed.” In other words, Marina construes
“claims arising out of or related to the agreement” to have a temporal
limitation, including only claims accruing after formation of the agreement.
But section 930.2 refers to claims “related to the agreement. . . .” Cal-
Am’s tort causes of action are “related to” the Mediation Agreement because
it was formed for the purpose of enabling the parties “to negotiate and
discuss all RDP-related disputes.” And the tort causes of action are premised
on these allegations, as detailed in the complaint.
Superimposed on all the above is the fact that, in light of the extensive
settlement discussions in 2011 through 2012, all the policy reasons that
underlie the claim-filing requirement were met here: opportunity to the
entity to promptly remedy the condition giving rise to the inquiry; allowing
the entity to investigate while tangible evidence is still available, memories
are fresh, and witnesses can be located; and early assessment by the entity,
allowing it to settle meritorious disputes without incurring the added cost of
litigation.
We close with the observation that the claimed absence of any
government claim was such a non-issue for Marina that it actively litigated
the tort causes of action for nearly two-and-a-half-years, raising the claim-
presentation procedure as a defense for the first time in its December 2017
motion for judgment on the pleadings—a non-issue made more apparent by
the fact Marina counter-sued Cal-Am for its own damages stemming from the
34
collapse of the RDP. (See People ex rel. Dept. of Parks & Recreation v. West-A-
Rama, Inc. (1973) 35 Cal.App.3d 786, 794 [“Presumably, [the State] has
already made the decision that the claim should not be settled, since State
itself decided to litigate”].)
Monterey’s Appeal Has Merit: The Summary Adjudication Was
Error
Introduction
Monterey’s sixth amended complaint alleged a negligence claim against
Marina based on respondeat superior and vicarious liability under sections
815.2 and 815.4, liability under the former section predicated on an
employment relationship, under the latter an independent contractor
relationship. In short, Monterey alleged Marina failed to supervise
Heitzman, and Heitzman failed to supervise Collins.
Marina’s motion for summary adjudication against the claim for
negligence was based on the two-year statute of limitations in Code of Civil
Procedure section 339, subdivision (1). 11 The introduction section of Marina’s
memorandum of points and authorities asserted that Monterey’s negligence
claim “arises from the Government Code Section 1090 violation committed”
by Collins, and that the harm caused by this violation “occurred by April 6,
2010, at the latest, when Monterey entered into the contracts tainted by
Collins’s violation.” The argument section went on to assert that Monterey’s
“causes of action accrued no later than April 6, 2010,” as “by then, the
Reimbursement Agreement, Settlement Agreement, and WPA had been
made in violation of section 1090.”
11 Marina also moved for summary adjudication of the two interference
claims, which the court granted on different grounds. Monterey does not
contest these rulings on appeal.
35
Following its description—however erroneous—that Monterey’s claim
is “predicated on Collins’s violation of section 1090,” Marina’s moving papers
focused entirely on Collins’s conduct, when Monterey supposedly knew about
it, and when a cause of action for violation of section 1090 accrued. And
Marina’s separate statement is focused almost entirely on Collins’s violation
of section 1090.
Collins’s violation of section 1090 was established in Phase One. It is
not being litigated again. Marina did not violate section 1090 and Monterey
is not suing Marina for violating section 1090. Indeed, as Marina itself
writes, it could not have violated section 1090 itself because it is a public
agency and not a public official. Monterey is suing Marina for breaching its
duty of care to Monterey by negligently supervising its employee Heitzman
and its subcontractors RMC and Collins. That claim did not accrue in 2010.
The Governing Law
Our Supreme Court distilled the general principles in Norgart v.
Upjohn Co. (1999) 21 Cal.4th 383, 397 (Norgart): “Under the statute of
limitations, a plaintiff must bring a cause of action within the limitations
period applicable thereto after accrual of the cause of action. (Code Civ.
Proc., § 312; see generally, 3 Witkin, Cal. Procedure, supra, Actions, § 459,
pp. 580−581.)
“The general rule for defining the accrual of a cause of action sets the
date as the time, ‘when, under the substantive law, the wrongful act is done,’
or the wrongful result occurs, and the consequent ‘liability arises.’ [Citation.]
In other words, it sets the date as the time when the cause of action is
complete with all of its elements (see Neel v. Magana, Olney, Levy, Cathcart
& Gelfand (1971) 6 Cal.3d 176, 187 [stating that ‘[i]n ordinary . . . actions, the
statute of limitations . . . begins to run upon the occurrence of the last
36
element essential to the cause of action’]; [citation] . . .—the elements being
generically referred to by sets of terms such as ‘wrongdoing’ or ‘wrongful
conduct,’ ‘cause’ or ‘causation,’ and ‘harm’ or ‘injury.’ [Citations.]
“An exception to the general rule for defining the accrual of a cause of
action—indeed, the ‘most important’ one—is the discovery rule. [Citation.] It
may be expressed by the Legislature or implied by the courts. [Citation.] It
postpones accrual of a cause of action until the plaintiff discovers, or has
reason to discover, the cause of action. ([Citation]; see Neel v. Magana,
Olney, Levy, Cathcart & Gelfand, supra, 6 Cal.3d at p. 179 [postponing
accrual ‘until the [plaintiff] discovers, or should discover, his cause of
action’].)”
The date of accrual of a cause of action is a question of fact.
(Jefferson v. County of Kern (2002) 98 Cal.App.4th 606, 611.)
Whether a statute of limitations is viewed as “favored” or “disfavored,”
(Norgart, supra, 21 Cal.4th at 396), the competing policies underlying such
statutes are well-recognized: “One purpose is to give defendants reasonable
repose, thereby protecting parties from ‘defending stale claims, where factual
obscurity through the loss of time, memory or supporting documentation may
present unfair handicaps.’ [Citations.] A statute of limitations also
stimulates plaintiffs to pursue their claims diligently. [Citations.] A
countervailing factor, of course, is the policy favoring disposition of cases on
the merits rather than on procedural grounds. [Citations.]” (Fox v. Ethicon
Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806 (Fox).)
Here, of course, the two policies favoring the defense—guarding against
stale claims and diligent pursuit by plaintiff—were present, again because of
the extensive negotiations in 2011 through 2012.
37
The Motion and the Trial Court’s Order Did Not Address the
Pleading
Marina’s motion, and the trial court’s order, focused exclusively on
Collins’s conduct and when Monterey might have learned of it. But Collins’s
conduct, standing alone, is insufficient to support a negligence claim against
Marina under section 815.4 without evidence that Monterey knew he was
acting as an independent contractor to Marina. And Collins’s role as an
independent contractor is only part of the vicarious liability cause of action
Monterey pled. The other part deals with the negligence of Marina’s
employee Heitzman. Monterey’s vicarious liability claim against Marina
could not accrue unless and until Monterey knew Heitzman, in his capacity
as an employee, and Collins, in his capacity as an independent contractor,
caused Monterey to suffer harm. And without knowledge of Heitzman’s
negligence as to Collins, no cause of action under section 815.2 could accrue.
In sum, in order for Monterey’s negligence claim against Marina to have
accrued by April 6, 2010, Monterey needed to know at least two things before
that date: first, that it had suffered “harm” as the result of some wrongdoing;
and second, that it had a cause of action against Marina for the harm based
on conduct by an employee or an independent contractor or both. Marina’s
motion failed to establish either of these elements.
Marina’s motion for summary adjudication was silent on this. Nothing
in Marina’s motion addressed Marina’s conduct or the actual negligence
claim Monterey pled against Marina. Indeed, aside from a few references
identifying Marina as a public agency and as a party to the RDP, Marina’s
separate statement contains no references to Marina’s operation, its
employees, or its representatives. Marina’s motion was directed at a claim
Monterey had not pled—and was devoid of any facts relevant to the claim it
had. Again, summary adjudication was error. (See Laabs v. Victorville,
38
supra, 163 Cal.App.4th at p. 1258 [“It is the allegations in the complaint to
which the summary judgment motion must respond”].)
Much as it did in its decision against Cal-Am, the trial court noted
Monterey’s position on this, and then dismissed it, with this discussion:
“Monterey argues that the motion should be denied because the notice
of motion and the separate statement do not match. [Citation.] Marina
replies that (1) the deficiency does not impact Marina’s request for summary
judgment; and (2) the court has and should exercise discretion to overlook
any deficiency in the notice. [Citation.]” Then, after quoting California Rules
of Court, rule 3.1350(b) and rule 3.1350(d), the trial court went on:
“Marina points to Truong v. Glasser (2009) 181 Cal.App.4th 112, 118.
[Citation.] There, the court began by holding that the moving party was not
required to separately list issues because the moving party was seeking
summary judgment. (Truong, 181 Cal.App.4th at [p.] 118.) The court
proceeded to state, in the alternative, that even if additional headings had
been required, the facts critical to the ruling were adequately identified and
the plaintiffs had not identified any defect that impacted their ability to
marshal evidence in opposition. (Ibid.) Accordingly, the trial court properly
exercised its discretion to overlook and infirmity in the document.
“Here, the separate statement is clearly adequate to provide notice of
the issues as to: (1) the statute of limitations challenge to the negligence
claim; and (2) the challenge to the economic interest element of each of the
interference torts. . . .” The court then noted its conclusion: “summary
adjudication is granted as to the negligence claim on the basis of the statute
of limitations.”
There followed a brief recitation of background law, which included this
observation: “[r]esolution of the statute of limitations issue is normally a
39
question of fact. (Nguyen v. Western Digital Corp. (2014) 229 Cal.App.4th
1522, 1552; Stella v. Asset Management Consultants, Inc. (2017)
8 Cal.App.5th 181, 193.) However, summary judgment is proper if the court
can draw only one legitimate inference from uncontradicted evidence about
the limitations issue. (Choi v. Sagemark Consulting (2017) 18 Cal.App.5th
308, 323−[3]24.)”
The trial court’s order then had a section entitled “Marina’s Burden”
where, under the heading “Accrual,” the court recited for some six lines
Collins’s conduct in 2010. And then the order said this: “Because Collins was
financially interested in the Reimbursement Agreement, WPA, and
Settlement Agreement—i.e., as a paid consultant on the RDP, Collins could
expect, and did receive, additional work as a result of those contracts being
approved—at a time when he was a public official, Collins’s making of those
contracts violated Government Code § 1090 and rendered those contracts
void ab initio. [Citation.] The WPA was the principal agreement among
Marina, Monterey, and Cal-Am regarding the construction and operation of
the RDP. [Citation.] The parties executed the WPA on April 6, 2010,
although it was not approved by the California Public Utilities Commission
(‘PUC’) until December 3, 2010. [Citation.] RMC was a consultant to Marina
on the RDP for all of 2010. [Citation.]
“These undisputed facts satisfy Marina’s initial burden on the
wrongdoing element by showing that Marina’s wrongdoing occurred by at
least the end of April 2010. The wrongdoing preceded the execution of the
WPA on April 6, 2010.
“With respect to the causation and harm elements, Marina argues that
harm occurred on or before either March 30, 2010 or April 6, 2010, the dates
on which the Reimbursement Agreement and WPA were executed.
40
[Citation.] In support, Marina cites two cases for the proposition that the
harm from a Government Code § 1090 violation occurs when the tainted
contract is executed. ([]; Marin Healthcare [Dist. v. Sutter Health (2002)]
103 Cal.App.4th [861] at [p.] 879; Santa Clarita Org. for Planning and the
Environment (SCOPE) v. Abercrombie (2015) 240 Cal.App.4th 300, 310.)
Marina produces Monterey’s discovery responses to show that Monterey
would have had to incur costs to mitigate any damages caused by the
invalidity of the RDP Agreements. [Citation.] [¶] . . . [¶]
“Marina’s evidence is sufficient to carry its initial burden of
establishing that causation and harm occurred by April 6, 2010. Focusing on
the WPA because it was the principal agreement between the parties, the
Government Code § 1090 violation was intractable on April 6, 2010. Even if
PUC approval would still have been necessary to ratify the WPA, the WPA,
as executed by the parties, could not be ratified because Collins had
participated in making the contract while he had an impermissible conflict of
interest. (See, e.g., SCOPE, 240 Cal.App.4th at [p.] 311.) Accordingly,
Monterey had suffered harm on April 6, 2010 because it had invested
resources in obtaining a contract that was void. [Citation.]
“Monterey counters that this does not suffice to satisfy Marina’s initial
burden because it does not establish the date that the project irrevocably
collapsed and because this is not an action pursuant to Government Code
§ 1090. [Citation.] First, Marina’s evidence is sufficient to require the
inference that there was harm as of April 6, 2010. While it may have
remained possible that Monterey could have mitigated most of its damages
by salvaging the project, there was appreciable and actual harm on April 6,
2010. Second, the fact that this is not a direct Government Code § 1090 claim
does not change the foregoing analysis.”
41
This, we conclude, was wrong for several reasons.
To begin with, we do not understand how the court’s final sentence can
withstand the scrutiny required in a court’s determination of a summary
adjudication motion. It is the complaint that frames the motion, the
complaint that must frame the analysis. How could the fact that the
complaint was not based on a section 1090 claim not change the analysis?
We also do not understand the court’s focus on the April 6 execution of
what the court termed the “principal agreement,” as the reality of the
situation here involved a series of agreements—five to be exact—none of
which was designated “principal.” The court’s focus also ignores the fact that
two of the RDP Agreements, the Credit Line Agreement and Project
Management Agreement, were not even executed until 2011. As the Court of
Appeal described in Cal-Am One, it agreed “with the trial court that ‘the
contracts were not made in a day.’ ” (Cal-Am One, supra, 2 Cal.App.5th at
p. 766.)
Moreover, the Settlement Agreement provided that “no Party assumes
any liability under the Implementing Agreements solely by reason of such
Party entering into the Implementing Agreements and this Settlement
Agreement.” The WPA was one of the Implementing Agreements.
In addition, the WPA provided that approval by the PUC was a
condition precedent to it becoming effective. That did not happen until
December 2010. And because the PUC approval was an express condition
precedent to the agreements becoming effective, and the agreements
expressly provided that no liability attached to any party’s preliminary
approval before final PUC approval was obtained, Monterey’s preliminary
approval of the agreements on April 6, 2010 was not a legally significant
42
event in terms of “investing resources” or sustaining “harm.” The contracts
were not in effect.
The trial court dismissed the importance of the condition precedent by
stating, without citation to anything, the WPA “could not be ratified [by the
PUC] because Collins had participated in making the contract while he had
an impermissible conflict of interest.” But no one knew in 2010 that Collins
had violated section 1090. And the contracts were not actually declared void
until years later—and then only after overcoming years of Marina’s
aggressive arguments that the contracts were valid. (Cal-Am One, supra,
2 Cal.App.5th at pp. 758−762.) The court’s statement was also in disregard
of the fact that Monterey did not know in April 2010 it had “invested
resources in obtaining a contract that was void,” because neither the WPA
nor the Settlement Agreement had been approved by the PUC by that date.
In dismissing the importance of the PUC’s subsequent approval of the
contracts, the trial court wrote they “could not be ratified” by the PUC
because of Collins’s conflict of interest. Certainly the PUC did not know it
could not “ratify” the Settlement Agreement and WPA, because it did so on
December 2, 2010. The Credit Line Agreement and Project Management
Agreement were not approved until January 2011. And Collins’s violation of
section 1090 was not established until the Phase One trial in 2015. The trial
court’s conclusion is at odds with these facts.
The trial court’s conclusion that Monterey suffered “harm” on April 6,
2010 because of its preliminary approval of two agreements that were
expressly not in effect on that date is not supported by the record. But even if
Monterey’s preliminary approval of those agreements could be considered a
type of “harm,” there was no evidence in 2010 it had been caused by Marina’s
negligent supervision of anyone.
43
The trial court also violated the fundamental principle that it must
liberally construe the evidence in favor of Monterey and resolve all doubts in
its favor. (Lonicki v. Sutter Health Central (2008) 43 Cal.4th 201, 206; Nazir,
supra, 178 Cal.App.4th at p. 254.) It did not, but simply dismissed
Monterey’s contrary evidence, writing this: “Monterey’s evidence that there
was ongoing uncertainty [in 2010] regarding whether the contracts were void
as a result of the conflict and whether the project could be salvaged does not
create a triable issue of fact as to the accrual of the harm . . . .”
The trial court cited deposition testimony from Monterey lawyers Dan
Carroll and Kevin O’Brien about a telephone conversation they had with
Collins on June 4, 2010, which call was in response to a vague message from
Marina lawyer Fogelman that “Lloyd [Lowrey] began to wonder whether
Steve Collins might face any [section] 1090 issues as a witness or otherwise.”
Carrol and O’Brien took the initiative to inquire and arranged a
telephone conference with Collins. As to it, O’Brien testified that Collins said
he was “working as a sub for RMC” and helping with financing for the
project. And, O’Brien added, “Collins didn’t tell us very much about the
nature of the relationship with RMC. In fact, he was pretty vague,” and
concluded “[w]e don’t know if there had been a [section] 1090 violation.” The
call left O’Brien wondering whether Collins “had some financial interest in
the project that might or might not be a [section] 1090 violation,” adding that
he “thought it was a serious issue as to whether there was a [section] 1090
violation.” O’Brien also testified that the “key question, which was still
unanswered, . . . what was this relationship? And that was very fuzzy as a
result of the call.” And he added, “we tried to understand what was going on
here. And all we really were told was that, ‘I’m helping with the financing.’ ”
Finally, Carroll testified he thought Collins’s “work” for RMC consisted in
44
doing “some consulting with Lyndel [Melton],” and, indeed, was not sure
Collins was actually working for RMC.
The most that can be said of this testimony is that it was inconclusive
as to whether Collins had a conflict. Neither Carroll nor O’Brien came away
from their conversation with Collins with an understanding that he had
violated section 1090. Significantly, there was no mention, at all, of Marina
or of any fact that would have put Carroll or O’Brien on notice of a
relationship between Collins and Marina.
Despite all that, the court dismissed the conflicts in the evidence in two
footnotes, footnotes Monterey describes as “stunning.” These are those
footnotes:
(1) “Monterey’s evidence that there was ongoing uncertainty
regarding whether the contracts were void as a result of the conflict and
whether the project could be salvaged does not create a triable issue of fact as
to the accrual of the harm. [Citation.]”
(2) “Monterey also argues that there are inconsistencies within the
deposition testimony supplied by Marina that show material factual disputes.
[Citation.] As discussed in the previous section, the deposition testimony
supplied by Marina is susceptible to only one legitimate inference. To the
extent there are inconsistencies on particulars, those particulars are
immaterial.”
The trial court was obligated to resolve the inferences in favor of
Monterey, but did not. It should not have relied on ambiguous evidence, but
did. It should not have imputed to Monterey, in 2010, knowledge of facts that
were not established until 2015. And it should not have attributed the
assumed “harm” from Collins’s as-yet unestablished violation of section 1090
to a tort claim against Marina that Monterey did not know it had.
45
Regardless, whether Carroll and O’Brien believed Collins was violating
section 1090 in June 2010 is not the issue. The issue was tortious conduct by
Marina, and there was no reason to suspect that in 2010 Monterey had
knowledge that Marina had retained Collins and failed to supervise him—no
notice of any cause of action.
After holding that Monterey had been “harmed” by its approval of
contracts, the court wrote, it “may have remained possible that Monterey
could have mitigated most of its damages.” “May,” “possible,” “could,” and
“most” are hardly words one would expect in granting summary
adjudication—not to mention words that reveal the speculative and
unsupported nature of the court’s conclusion. And the “harm” the court
concluded that flowed from the as-then unproved violation of section 1090
flies in the face of the Supreme Court’s admonition that “The mere breach
of . . . duty, causing only nominal damages, speculative harm, or the threat of
future harm—not yet realized—does not suffice to create a cause of action for
negligence.” (Budd v. Nixen (1971) 6 Cal.3d 195, 200, italics added,
superseded by statute on other grounds as stated in Adams v. Paul (1995) 11
Cal.4th 583, 588–589 & fn. 2; see also, Davies v. Krasna (1975) 14 Cal.3d 502,
514.)
No “actual harm” had been inflicted on Monterey in April 2010. Not
only was Collins’s violation of section 1090 not proven until the Phase One
trial, the parties continued to proceed with the project after June 2010, which
included the 2011 approval of the Credit Line Agreement and Project
Management Agreement, and Marina (and RMC) publicly distributing
announcements of the project’s continuing viability and progress into 2012. 12
12 Illustrations of such announcements include these:
46
The court’s conclusion there was “harm as of April 6, 2010” is wrong for
another reason—the court misapplied the concept of void ab initio. The RDP
Agreements had not been adjudicated void in 2010, only when the superior
court rendered its Phase One statement of decision in April 2015. And no one
knew in April 2010 that the contracts would be declared void five years later.
No authority supports such a retroactive application of void ab initio to
extinguish a cause of action without notice. And no authority suggests the
finding that a contract is void ab initio can be wielded offensively to
extinguish independent torts outside the contractual relationship in question.
According to the trial court’s analysis, the two-year statute of
limitations on Monterey’s tort claim expired before the RDP Agreements
were declared void. The court interpreted the 2015 adjudications of Collins’s
section 1090 violation to mean the contracts were actually void in 2010. But
the court took it a step further and held that Monterey was harmed in 2010
by a future determination of voidness made years later—a determination, we
hasten to repeat, made over Marina’s vigorous opposition.
Not only did the court misapply the concept of void ab initio, its
conclusion eliminated the concept of notice. A plaintiff has to know about a
cause of action before it can accrue. (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d
1103, 1110.) In 2010, Monterey did not know Collins was violating section
1090; did not know Marina had orchestrated Collins’s retention to work on
the project; did not know Marina had negligently supervised Collins; and did
• July 1, 2011: Marina will “[p]roceed with the [RDP]” and “[w]ork
with its [RDP] partners to ensure that the project moves forward”;
• December 6, 2011: RMC is “still on board” and Monterey may
“revote on the agreements”;
• January 12, 2012: “work was still going on on the project” and
RMC was still getting paid.
47
not know Collins had been allowed to work outside the scope of his intended
assignment. Monterey did not discover what Marina had done until
Heitzman testified in November 2014 that, despite Collins’s assignment had
been limited, he had been allowed to perform unauthorized work—“scope
creep,” he called it—outside that limited assignment.
In light of all this, just what causes of action was Monterey to allege in
early 2010? And how it would play out alongside Phase One—and Marina’s
vigorous position that the agreements were not void? Finally, given Marina’s
apparently litigious nature, what would have happened if Marina had in fact
filed a lawsuit and then Marina succeeded in Phase One and the contracts
were upheld? A malicious prosecution claim perhaps? Another observation
in Fox is apt: “It would be contrary to public policy to require plaintiffs to file
a lawsuit ‘at a time when the evidence available to them failed to indicate a
cause of action.’ (Leaf v. City of San Mateo (1980) 104 Cal.App.3d 398, 408;
see also Enfield v. Hunt (1979) 91 Cal.App.3d 417, 424.) Were plaintiffs
required to file all causes of action when one cause of action accrued, as they
would be under the Bristol-Myers Squibb [Co. v. Superior Court (1995)
32 Cal.App.4th 959] rule, they would run the risk of sanctions for filing a
cause of action without any factual support. (Code Civ. Proc., § 128.5; see
Finnie v. Town of Tiburon (1988) 199 Cal.App.3d 1, 14 [holding lack of factual
basis for claim to be grounds for imposing sanctions].) Indeed, it would be
difficult to describe a cause of action filed by a plaintiff, before that plaintiff
reasonable suspects that the cause of action is a meritorious one, as anything
but frivolous.” (Fox, supra, 35 Cal.4th at p. 815.)
DISPOSITION
The judgment is reversed and the matter is remanded with instructions
to the trial court to vacate the orders dated February 22, 2019 and June 20,
48
2019 granting the motions for summary adjudication and to enter new orders
denying the motions. Monterey and Cal-Am shall recover their costs on
appeal.
49
_________________________
Richman, J.
We concur:
_________________________
Stewart, P.J.
_________________________
Miller, J.
California-American Water Company et al. v. Marina Coast Water
District (A160662)
50
Trial Court: San Francisco County
Superior Court
Trial Judge: Honorable Anne-Christine
Massullo
Attorney for Plaintiff and Allen Matkins Leck Gamble
Appellant, California Mallory & Natsis, LLP, Robert
American Water Company: R. Moore, Michael J. Betz,
Alexander J. Doherty
Attorney for Plaintiff and Law Offices of Mark A.
Appellant, Monterey County Wasser, Mark A. Wasser;
Water Resources Agency County of Monterey, Leslie J.
Girard, County Counsel, Kelly
L. Donlon, Deputy County
Counsel
Attorney for Defendant and Richards, Watson & Gershon,
Respondent, Marina Coast Saskia T. Asamura, T. Peter
Water District Pierce, Kyle H. Brochard;
Friedman & Springwater LLP,
Ruth Muzzin
51