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Ada Cordero-Sacks v. Housing Authority of the City of Los Angeles

November 17, 2011


APPEAL from a judgment of the Superior Court of Los Angeles County. John P. Shook, Judge. (Los Angeles County Super. Ct. No. BC386177)

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


Affirmed as modified.

The Housing Authority of the City of Los Angeles appeals from the judgment following a jury trial in favor of its former employee, Ada Cordero-Sacks. We affirm the judgment as modified.


Applying the usual rules of appellate review, we state the evidence in the light most favorable to the judgment. (Mammoth Lakes Land Acquisition, LLC v. Town of Mammoth Lakes (2010) 191 Cal.App.4th 435, 462-463.) Appellant is the Housing Authority of the City of Los Angeles (the Authority). Respondent is Ada Cordero-Sacks, a licensed attorney hired in October 2006 to work in the Authority's Office of Internal Control. The Office of Internal Control investigates internal misconduct and fraud within the Authority.

For reasons not pertinent to this appeal, in 2007 the director of the Authority's technical services department, Victor Taracena, fell under suspicion that he was awarding contracts to unqualified corporations that he had secretly set up with family members. The contracts were for retrofitting public housing to bring the housing into compliance with accessibility laws for the disabled. In May 2007, Rudolf Montiel, who was the Authority's president and chief executive officer, authorized the Office of Internal Control (OIC) to investigate Taracena. OIC quickly discovered Taracena had steered over $800,000 in the Authority's contracts to corporations his family controlled.

During OIC's investigation of Taracena, information surfaced that may have suggested the Authority's president Montiel was involved in Taracena's fraud. One seemingly incriminating, but eventually debunked, link between Montiel and Taracena was the fact that Montiel's brother was related by marriage to a man named Gustavo Valdiva, which was the name of one of Taracena's accomplices. As part of OIC's investigation, Cordero-Sacks in August 2007 conducted an on-line search of Montiel's relative using the Choicepoint commercial database. A key factual dispute in the case, which the jury resolved against appellant Authority, is whether Montiel authorized OIC to investigate himself as part of the Taracena investigation; the jury implicitly found he did. Eventually, OIC established that the relative and Taracena's accomplice were different men.

About six weeks later, on October 9, 2007, the Authority fired Cordero-Sacks. At the time of her discharge, the Authority did not tell Cordero-Sacks why it was terminating her. Her notice of discharge merely stated she was "being separated" from her position. In February 2008, Cordero-Sacks filed her complaint for wrongful termination.*fn1 The complaint asserted that the Authority fired Cordero-Sacks because she had participated in investigating Taracena's misuse of the Authority's funds. The complaint alleged a cause of action for wrongful termination in violation of public policy. It also alleged a cause of action for violation of the statutory prohibition against retaliatory discharge in California's False Claims Act. (Gov. Code, § 12653.)*fn2 The retaliatory discharge provision of the False Claims Act states: "No employer shall discharge . . . an employee . . . because of lawful acts done by the employee on behalf of the employee or others in disclosing information to a government or law enforcement agency or in furthering a false claims action, including investigation for, initiation of, testimony for, or assistance in, an action filed or to be filed under" the False Claims Act. (§ 12653, subd. (b).)*fn3

During pretrial discovery, the Authority stated it terminated Cordero-Sacks for three reasons. First, she conducted the Choicepoint search of Montiel's relative without Montiel's approval (a claim which we have noted the jury implicitly rejected). Second, she had been sanctioned $100 in August 2007 by the superior court in an Authority lawsuit she was overseeing when she missed a court deadline in the lawsuit, resulting in its dismissal. (The court reinstated the lawsuit after Cordero-Sacks paid the sanction and filed a motion under Code of Civil Procedure section 473 admitting her negligence.) And third, she had not told the Los Angeles City Attorney's office, which is the Authority's general counsel, about the $100 sanction.

The trial court granted in part and denied in part the Authority's motion for summary judgment and adjudication. The court granted summary adjudication of Cordero-Sacks's cause of action for wrongful termination in violation of public policy (a so-called Tameny claim) because that cause of action cannot lie against a public entity. (Miklosy v. Regents of University of California (2008) 44 Cal.4th 876, 899.) The court rejected, however, the Authority's assertion that Cordero-Sacks's duty to maintain the confidentiality of her attorney-client communications with Authority personnel made it impossible for her to prove the Authority unlawfully discharged her. Hence, Cordero-Sacks's single cause of action for retaliatory discharge under the False Claims Act was tried to a jury, which issued a special verdict in her favor. The thrust of the jury's findings was that Cordero-Sacks acted lawfully when she conducted the Choicepoint searches in furtherance of a False Claims action, and the Authority would not have fired her but for those searches. The jury awarded Cordero-Sacks $98,889 in past economic damages, $330,000 in future economic losses, and $10,000 in past non-economic loss.*fn4 This appeal followed.


1. Cordero-Sacks Sued the Authority for Retaliatory Discharge

Cordero-Sacks sued the Authority under the False Claims Act. (§ 12650 et seq.) The False Claims Act prohibits a "person" from defrauding the government of money, property, or services by submitting to the government a "false or fraudulent claim" for payment. Section 12651 of the act allows for treble damages against a person who submits such a claim. (§ 12651, subd. (a).) The Authority contends we must reverse the judgment because, as a governmental entity, the Authority is not a "person" under the act, which defines a "person" as "any natural person, corporation, firm, association, organization, partnership, limited liability company, business, or trust." (§ 12650, subd. (b)(8).) The definition does not include governmental agencies, a point affirmed by our Supreme Court in Wells v. One2One Learning Foundation (2006) 39 Cal.4th 1164, 1192-1193. In a case involving a lawsuit against a school district that supposedly defrauded the state of California, Wells stated "governmental agencies . . . may not be sued under California's false claims statute." (Wells at p. 1193; accord State ex rel. Dockstader v. Hamby (2008) 162 Cal.App.4th 480, 484 [may not circumvent bar against suing governmental agency for filing a false claim by suing the agency's employee because agency's duty to indemnify employee makes suit against employee tantamount to a suit ...

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