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Joan Brown Kearney v. Foley and Lardner

July 22, 2011


The opinion of the court was delivered by: Hon. Anthony J. Battaglia U.S. District Judge


Defendants Foley & Lardner, Gregory v. Moser, and Larry L. Marshall (collectively "Attorney Defendants") move to dismiss plaintiff's Third Amended Complaint. The Plaintiff filed an opposition, [Doc. No. 132], and the Defendants filed a reply, [Doc. No. 134]. Based upon the parties moving papers, arguments of counsel made at the hearing on June 20, 2011, and for the reasons set forth herein, the Defendants' motion to dismiss is hereby GRANTED.

Factual Background

Unless otherwise specified, the following facts are drawn from Plaintiff's Third Amended Complaint ("TAC").

Plaintiff is the former owner of a 52.06-acre parcel located in Ramona, California. In June of 2000, the Ramona Unified School District ("RUSD") initiated a condemnation process to acquire that property through eminent domain pursuant to Government Code § 66499.34. Defendants include the law firm of Foley and Lardner, LLC ("F&L"), and two individuals, Moser and Marshall, who were F&L partners during the relevant time and who represented the RUSD in the eminent domain action. Defendant McCarthy was the Business Manager of RUSD. In preparation for the eminent domain proceeding, RUSD hired Construction Testing & Engineering ("CTE") to conduct a septic system, including percolation testing, of Plaintiff's land, and to prepare a report with the results. Those results would show how many residential plots the land could support, thus determining the land's value.

CTE entered Plaintiff's property in December of 2002 to conduct the perc test without her approval. On December 26, 2002 the RUSD and Plaintiff reached an agreement in which she would consent for the RUSD to conduct perc testing in exchange for copies of any reports prepared from the testing. In late January and early February 2001, CTE completed the percolation testing on the Property, however, it did not prepare a formal report of the results. Plaintiff, through her counsel, sent broad document requests to RUSD, but did not receive any test results though other documents produced suggested testing had been done.

The trial to determine the value of Plaintiff's property lasted from April 29 to May 9, 2002. Plaintiff's expert testified that the parcel could support up to sixteen residential lots based upon the percolation test performed in 1996. This gave the property a value of $1.4 million. RUSD's expert appraised the property at $850,000 based upon the understanding that the parcel could support six to eight lots. Defendant Marshall, one of RUSD's attorneys, said in trial that no new percolation testing had been performed. The jury awarded Plaintiff $935,000 in compensation.

After trial, Plaintiff learned from a school expense itemization report that percolation testing had in fact been performed. She submitted a California Public Records Act ("CPRA") request in May 2002, but nothing was produced. RUSD said it did not possess anything that had not been provided during discovery. It also said that, to the extent any documents existed in the offices of the professionals it employed, the documents were exempt from CPRA. Plaintiff moved for a new trial based on the itemization rerpot. The state trial court denied her motion. Plaintiff appealed.

While the appeal was pending, Plaintiff made another CPRA request and exchanged letters with Marshall. Marshall said RUSD would waive its CPRA exemption. On November 12, 2002, it produced a copy of the testing results, stating that the document was not in RUSD's possession and was obtained only after the trial. Plaintiff had RUSD's experts review the report, and they determined that the results were significant to valuation and would support a higher value for the property. Plaintiff filed more motions for a new trial which were denied on jurisdictional grounds. She appealed those as well. On March 3, 2004, the California Court of Appeal issued its ruling denying her relief. The California Supreme Court denied review.

Procedural Background

Plaintiff commenced the present action on November 14, 2005 in federal court against the law firm that represented RUSD in the state proceedings, two of the firm's attorneys, and RUSD's business manager. Her complaint alleged federal causes of action under 18 U.S.C. §§ 1961-1968, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), conspiracy to violate RICO, and 42 U.S.C. § 1983. She also had many state causes of actions. Defendants filed motions to dismiss and the District Court granted them. Her federal claims were dismissed under the Noerr-Pennington doctrine because the conduct on which Plaintiff relied to establish liability was incidental to First Amendment protected petitioning activity and the complaint did not fit into the "sham" exception. The district court also dismissed her state causes of actions under California's anti-SLAPP statute.

Plaintiff appealed and the Ninth Circuit accepted review. The Ninth Circuit found that the "sham exception" applied to her claims which prevent the Defendants from claiming immunity. Kearney v. Foley & Lardner, 590 F.3d 638 (9th Cir. 2009). The Ninth circuit affirmed the dismissal of Plaintiff's state law claims and remanded the case back to the District Court to entertain Plaintiff's federal RICO claims. After remand, Plaintiff filed a second amended complaint ("SAC"). Defendants moved to have the SAC dismissed. [Doc. No. 106.] That motion was granted with leave for Plaintiff to amend her RICO claim. [Doc. No. 122.] Plaintiff filed her Third Amended complaint ("TAC") on April 4, 2011, in which she sought relief based on two causes of actions against Defendants Foley and Lardner, LLP. (F&L), Gregory Moser and Larry Marshall (Attorney Defendants), as well as Michael McCarty. The first cause of action is for violation of 18 U.S.C. § 1963(c), the Racketeer Influence and Corrupt Organization Act (RICO), against all named defendants. The second cause of action is for conspiracy to violate RICO against Defendant F&L. The Honorable Judge Lorenz, who previously presided over this case, issued a recusal on April 26, 2011. Defendant F&L and Attorney Defendants move to dismiss the TAC. For the following reasons, this Court GRANTS the motion to dismiss.

Legal Standard

A motion to dismiss under Rule 12(b)(6), tests the legal sufficiency of the pleadings, and allows a court to dismiss a complaint upon a finding that the plaintiff has failed to state a claim upon which relief may be granted. See Novarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The court may dismiss a complaint as a matter of law for: (1) "lack of cognizable legal theory," or (2) "insufficient facts under a cognizable legal claim." SmileCare Dental Grp. v. Delta Dental Plan of Cal., 88 F.3d 780, 783 (9th Cir. 1996) (citation omitted). However, a complaint survives a motion to ...

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