City of Industry v. City of Fillmore
129 Cal. Rptr. 3d 433
Cal. Ct. App.2011Background
- Industry and Livermore sue Fillmore, Inspired Development, MTS, and Owens & Minor over alleged diversion of local sales tax revenues; trial court demurred, granted anti-SLAPP motion to strike several counts, and dismissed.
- Industry/Livermore claim Fillmore entered contracts to divert revenues via sham Fillmore offices and misreporting to the SBE (Board of Equalization).
- Administrative proceedings at the SBE involved reallocations; appeals were pending; some decisions were final.
- Complaint alleges multiple counts including gift of public funds, debt limits, contracting away police power, fraud/conspiracy, racketeering, unjust enrichment, conversion, UBP, 1983, and declaratory relief.
- Trial court sustained demurrers and granted a special motion to strike as to counts 5–10; awards of attorney fees to defendants were issued.
- Appellate court reverses in part: counts 5 and 10 (fraud/conspiracy) are a single fraud count; anti-SLAPP dismissal of those counts erroneous; remands to reassess demurrers and fee awards
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness and entitlement to claims presentation | Industry/Livermore complied with claims procedure or can challenge untimeliness. | Fillmore properly deemed untimely; statutes require timely presentation and exhaustion where applicable. | Demurrers based on timeliness not affirmed; claims presentation issue requires further fact development. |
| Standing of Industry/Livermore | Cities have an interest in freed revenues and need not prove taxpayer standing. | Only taxpayers or statutorily authorized parties may sue. | Industry/Livermore have standing to counts 1–4 and 12, and for fraud count (5) notwithstanding taxpayer standing. |
| Exhaustion of administrative remedies | Exhaustion not required for counts that are non-exclusively in SEE’s domain. | Exhaustion required before court relief on administrative matters. | Exhaustion not required for counts 1, 3–5, 10, and 12; applicable to other counts may be limited. |
| Fraud/conspiracy pleadings | Fraud and conspiracy allegations adequately plead misrepresentation and concealment by all defendants as coconspirators. | Fraud/conspiracy poorly pled and misattributed to SEE or non-parties. | Fifth and 10th counts, treated as a single fraud claim, adequately pled as to all defendants. |
| Anti-SLAPP applicability | Fraud/conspiracy claims arise from protected activity under 425.16. | Fraud/conspiracy arise from petitioning or speech related to public issues. | Fraud/conspiracy counts do not arise from protected activity; anti-SLAPP dismissal improper for those counts; remand on fees. |
Key Cases Cited
- McCall v. PacifiCare of Cal., Inc., 25 Cal.4th 412 (Cal. 2001) (standards for demurrers and legal sufficiency)
- Cryolife, Inc. v. Superior Court, 110 Cal.App.4th 1145 (Cal. App. 2003) (standard for demurrer review)
- Schifando v. City of Los Angeles, 31 Cal.4th 1074 (Cal. 2003) (construction of pleadings; judicial notice)
- Waller v. Truck Ins. Exchange, Inc., 11 Cal.4th 1 (Cal. 1995) (evidence and pleading considerations on appeal)
- Jonathan Neil & Assoc., Inc. v. Jones, 33 Cal.4th 917 (Cal. 2004) (exhaustion and primary jurisdiction distinctions)
- Rojo v. Kliger, 52 Cal.3d 65 (Cal. 1990) (internal remedies and exhaustion concepts)
- Farmers Ins. Exchange v. Superior Court, 2 Cal.4th 377 (Cal. 1992) (primary jurisdiction doctrine guidance)
- City of Cotati v. Cashman, 29 Cal.4th 69 (Cal. 2002) (anti-SLAPP aris[es] from protected activity analysis)
- Zamos v. Stroud, 32 Cal.4th 958 (Cal. 2004) (arising from protected activity standard in anti-SLAPP)
- Briggs v. Eden Council for Hope & Opportunity, 19 Cal.4th 1106 (Cal. 1999) (scope of anti-SLAPP clause (e))
- Kajima Engineering & Construction, Inc. v. City of Los Angeles, 95 Cal.App.4th 921 (Cal. App. 2002) (contractual claims not inherently protected)
- Blackburn v. Brady, 116 Cal.App.4th 670 (Cal. App. 2004) (official proceeding concept in anti-SLAPP context)
- A.F. Brown Electrical Contractor, Inc. v. Rhino Electric Supply, Inc., 137 Cal.App.4th 1118 (Cal. App. 2006) (stop notices and official proceedings exclusion)