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Innovative Business Partnerships, Inc v. Inland Counties Regional Center

April 19, 2011

INNOVATIVE BUSINESS PARTNERSHIPS, INC., PLAINTIFF AND APPELLANT,
v.
INLAND COUNTIES REGIONAL CENTER, INC., DEFENDANT AND RESPONDENT.



APPEAL from the Superior Court of San Bernardino County. Steve Malone, Judge. (Super.Ct.No. CIVVS700287)

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

CERTIFIED FOR PUBLICATION

OPINION

Reversed with directions.

I. INTRODUCTION

Plaintiff and appellant Innovative Business Partnerships, Inc. (IBP) appeals from judgment following the trial court's grant of summary judgment in favor of defendant and respondent Inland Counties Regional Center (IRC) in IBP's action for breach of contract, contractual and tortious breach of the covenant of good faith and fair dealing, and defamation. IBP contends triable issues of fact exist as to all its alleged causes of action. We conclude the trial court erred in granting summary judgment; however, summary adjudication is proper as to the cause of action for defamation.

II. BACKGROUND

The Lanterman Developmental Disabilities Services Act (hereafter, Lanterman Act) (Welf. & Inst. Code § 4500 et seq.) and implementing regulations (hereafter, regulations) (Cal. Code Regs., tit. 17, § 50201 et seq.) provide a comprehensive approach to providing services for developmentally disabled persons (sometimes referred to herein as consumers) in this state. Under the Lanterman Act, regional centers have been established to ensure those consumers receive the "services and supports best suited to them throughout their lifetime." (Welf. & Inst. Code, § 4620.) IRC, a nonprofit corporation, is the regional center that contracts with the State of California to manage and fund services for consumers in Riverside and San Bernardino Counties. IBP provides living care and adult day care for consumers through programs in Apple Valley and Victorville and also provides transportation for consumers to and from its programs.

The state provides funding to IRC, which in turn purchases services from service providers (vendors) such as IBP. Any agency that wishes to provide services for consumers within the region must contract with IRC. In contracting with vendors, a regional center must comply with the Lanterman Act and the regulations. (E.g., Cal. Code Regs., tit. 17, §§ 50607-50611, 54326, 56013.)

In 2007, IBP filed a lawsuit against IRC alleging causes of action for breach of contract, contractual and tortious breach of the covenant of good faith and fair dealing, and defamation. The gravamen of IBP's breach of contract cause of action was that IRC failed to comply with the Lanterman Act and the regulations in making payments to IBP for services provided. Although the dealings between the parties had been covered by a written contract in previous years, the most recent written contract had expired in 2003. IBP continued to provide services for which it now claims it was entitled to be paid at IRC's standard rate schedule. In the causes of action based on the breach of the implied covenant of good faith and fair dealing, IBP alleged bad faith on IRC's part in the performance of its obligations. In the defamation cause of action, IBP alleged that IRC falsely told people IBP was refusing to accept new consumers.

IRC filed a motion for summary judgment, arguing (1) there were no triable issues of material fact as to the cause of action for breach of contract because no written contract had existed between the parties since 2003; (2) in the absence of a contract between the parties, the causes of action based on breach of the covenant of good faith and fair dealing could not stand; and (3) there were no triable issues of material fact as to the cause of action for defamation because the alleged defamatory statement was true. IBP opposed the motion, arguing that the parties' conduct evidenced an implied-in-fact or implied-in-law contract under which it was entitled to reasonable compensation, which, under the Lanterman Act and the regulations, was compensation at IRC's standard rate schedule. IBP also submitted declarations to support its defamation claim. IRC filed a reply, arguing that even if an implied-in-fact contract existed, IBP had waived damages by continuing to request and accept reimbursement at a lower rate.

The trial court found that at the expiration of the written contracts, an implied-in-fact contract existed under which IBP transported consumers at the public rate. The trial court further ruled that because there was no breach of contract, the causes of action for breach of the covenant of good faith and fair dealing also failed. The trial court found that the alleged defamatory statements were truthful and could therefore not support a defamation claim.

III. DISCUSSION

A. Request for Judicial Notice

IBP has filed two requests for judicial notice, and this court reserved its ruling on those requests for consideration with the appeal. IRC has filed oppositions to both requests.

First, IBP requested this court to take judicial notice of the Web site of the State of California Department of Developmental Services, and more specifically, a document entitled "Reimbursement Rates FAQs." Second, IBP requested this court to take judicial notice of an August 2010 report of the California State Auditor entitled "A More Uniform and Transparent Procurement and Rate-Setting Process Would Improve the Cost-Effectiveness of Regional Centers." IBP asserts the report purportedly supported IBP's position that IRC "intentionally and improperly managed its funding of transportation services . . . ."

Neither the Web site nor the auditor's report was presented to the trial court. In the absence of exceptional circumstances, the appellate court does not consider evidence that was not presented to the trial court. (Vons Companies., Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3 ["Reviewing courts generally do not take judicial notice of evidence not presented to the trial court. Rather, normally 'when reviewing the correctness of a trial court's judgment, an appellate court will consider only matters which were part of the record at the time the judgment was entered.'"].) IBP has not demonstrated any exceptional circumstances, and we therefore deny IBP's requests for judicial notice.

B. Administrative Remedies

On our own motion, we requested the parties to provide additional briefing to address whether IBP was required to exhaust administrative remedies and whether its failure to do so was fatal to its claims. We are now persuaded that the administrative remedies provided in the regulations do not apply to the specific situation before us.

Under the regulations, a vendor must appeal certain specific decisions of a regional center to the Deputy Director of the Department of ...


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