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Daily Journal Corp. v. County of Los Angeles

April 15, 2009

DAILY JOURNAL CORPORATION, PLAINTIFF AND APPELLANT,
v.
COUNTY OF LOS ANGELES, DEFENDANT AND RESPONDENT;
METROPOLITAN NEWS COMPANY, REAL PARTY IN INTEREST.



APPEAL from a judgment of the Superior Court of Los Angeles County. Dzintra Janavs, Judge. Affirmed in part, dismissed in part. (Los Angeles County Super. Ct. No. BS107267)

The opinion of the court was delivered by: Rubin, Acting P. J.

CERTIFIED FOR PUBLICATION

The Daily Journal Corporation appeals from the dismissal of its mandate petition after the trial court sustained without leave to amend the demurrers of respondent Los Angeles County and real party in interest Metropolitan News Company. We hold that the petition is moot to the extent it seeks to unwind the County's 2004 contract with Metropolitan News to place ads for various legal notices. To the extent the petition seeks to force the County to seek reimbursement from Metropolitan News in order to recoup certain alleged overpayments as waste, we affirm because the action does not fall within the parameters of a taxpayer claim for government waste.

PROCEDURAL HISTORY

In October 2004, Los Angeles County awarded the Metropolitan News Company (Met News) a contract to place legal advertising in its own and various others newspapers throughout the County. Met News was selected over its competitor, the Daily Journal Corp., after both companies submitted bids in response to the County's invitation to bid for the contract. The three-year contract took effect in November 2004, and could be extended for up to another two years. The Daily Journal protested the decision and for many months complained that the contract was awarded improperly and that Met News was overbilling the County. When its efforts were rebuffed, the Daily Journal sued the County in February 2007 in a mandate petition (Code Civ. Proc., § 1085) seeking (1) an order that the County cancel the contract and award it instead to the Daily Journal, and (2) an order that the County force Met News to repay the County for alleged overcharges.*fn1

Following the County's successful demurrer, Met News was added as a real party in interest. Demurrers by the County and Met News to a first amended petition were sustained with leave to amend. Demurrers to the second amended petition were sustained without leave to amend on the ground that the allegations did not show a violation of a prescribed duty by the County in regards to either the bidding and contract award process or its alleged decision to forego a reimbursement claim for supposed overcharges by Met News.*fn2 Daily Journal appeals from the judgment of dismissal that followed.

FACTS*fn3

Government Code section 25502 states that whenever a county board of supervisors "employs a purchasing agent it shall not be necessary for it to advertise for bids for furnishing county supplies . . . with the exception of advertising." The parties agree that this imposes a duty on counties to call for bids for advertising services. The bid invitation at issue here solicited quotes for advertising rates at newspapers with circulations ranging up to 125,000. Daily Journal's bid included price quotes on such newspapers, as well as ones with circulations greater than 125,000. The County told Daily Journal that the bid invitation did not call for such bids. However, after the contract was awarded, the County agreed that Met News could place legal ads in newspapers with larger circulations at rates negotiated by Met News and those publications. Therefore, the petition alleges, while the County fulfilled its duty to take bids for ads in smaller newspapers, it violated Government Code section 25502 because it never took bids to place ads in papers with circulations over 125,000. As a result, the County ended up paying more for those services.

Daily Journal also alleged that the Met News bid understated the true advertising rates from several newspapers where it intended to place County legal ads, and that those papers complained to the Met News about its use of unethical and strong arm tactics in connection with those rates. Daily Journal brought these matters to the County's attention, and demanded that the County cancel the Met News contract and award it to the Daily Journal instead. Although the petition includes as exhibits letters from the County insisting that Met News abide by the contract rates, documents obtained by Daily Journal from the County's response to the Daily Journal's public information requests allegedly showed that the County was overpaying for the placement of legal notices by as much as $375,000 a year. The Daily Journal also alleged this led to a windfall of excess commissions for Met News of $56,000 each year. According to the amended petition, in February 2006, after receiving complaints from the publisher of the Eastside Sun about Met News's unauthorized ad rates, the County amended its contract to allow Met News to double the rates charged in papers with circulations up to 125,000.

The County refused to cancel the contract and, in a letter attached as an exhibit to the petition, said it believed Met News was adhering to the contract rates and that it refused to pay Met News any more than the contract allowed.

Respondents contended, and the trial court agreed, that the County's bidding process did not violate Government Code section 25502. The County was free to structure its bid requests as it had, and was not required to solicit any particular information, such as the rates to be charged for ads placed in newspapers with circulations greater than 125,000. In short, the court read the bid invitation as a request to bid for legal ad placements in newspapers of any size, with a request for rate information as to only newspapers with circulations less than 125,000. As for seeking reimbursement of any alleged Met News overcharges, the trial court ruled that the decision whether to pursue reimbursement, including a possible lawsuit, involved an exercise of discretion by the County that took Daily Journal's claim outside the realm of a cause of action for waste.

STANDARD OF REVIEW

In reviewing a judgment of dismissal after a demurrer is sustained without leave to amend, we must assume the truth of all facts properly pleaded by the plaintiff-appellant. Regardless of the label attached to the cause of action, we must examine the complaint's factual allegations to determine whether they state a cause of action on any available legal theory. (Black v. Department of Mental Health (2000) 83 Cal.App.4th 739, 745.)

The judgment will be affirmed if it is proper on any of the grounds raised in the demurrer, even if the court did not rely on those grounds. (Pang v. Beverly ...


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