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Mao's Kitchen, Inc v. Thomas Mundy

September 10, 2012

MAO'S KITCHEN, INC., CROSS- COMPLAINANT AND APPELLANT,
v.
THOMAS MUNDY, CROSS-DEFENDANT AND RESPONDENT; MORSE MEHRBAN, CROSS-DEFENDANT AND APPELLANT.



(Los Angeles County Super. Ct. No. BC423688) APPEAL from a judgment and several orders of the Superior Court of Los Angeles County, Conrad R. Aragon and Deidre Hill, Judges.

The opinion of the court was delivered by: Manella, J.

CERTIFIED FOR PUBLICATION

Affirmed in part, reversed in part, and remanded for further proceedings.

INTRODUCTION

Mao's Kitchen, Inc. (MKI) appeals from an order granting summary judgment in favor of Thomas Mundy and Morse Mehrban. MKI contends the superior court erred in determining that it lacked subject-matter jurisdiction over MKI's qui tam cross-complaint because the cross-complaint was based upon publicly disclosed information.*fn1 MKI also appeals from a judgment following the grant of summary judgment, awarding costs to Mehrban. Mehrban cross-appeals from the judgment and prior orders.*fn2 As a party who fully prevailed, however, Mehrban cannot file a cross-appeal. (See Danielson v. Stokes (1963) 214 Cal.App.2d 234, 237 ["Ordinarily if the judgment or order is in favor of a party he is not aggrieved and cannot appeal."]; Glendale v. Crescenta Mut. Water Co. (1955) 135 Cal.App.2d 784, 798 ["Ordinarily a respondent cannot assert error."].) Nevertheless, we have considered Mehrban's arguments as they relate to the summary judgment. We conclude that the superior court had subject-matter jurisdiction over the qui tam cross-complaint, but that the conspiracy cause of action should be dismissed. Accordingly, we reverse the grant of summary judgment and remand the matter for further proceedings.

FACTUAL AND PROCEDURAL HISTORY

A. Complaint and Qui Tam Cross-Complaint

On October 14, 2009, Mundy filed a complaint for damages and permanent injunctive relief against MKI, alleging that MKI's restaurant was not accessible, in violation of the Americans with Disabilities Act of 1990, Title 42 of the United States Code, section 12182(b)(2)(A)(iv) (ADA) and the Unruh Civil Rights Act, Civil Code section 51 et seq. Mehrban was Mundy's attorney of record in the case.

On December 21, 2009, MKI filed an answer, generally denying the allegations. On the same date, MKI filed a qui tam cross-complaint, alleging two causes of action. In the first cause of action, MKI alleged that Mundy and Mehrban were liable under Government Code section 12651, subdivision (a)(7) of the California False Claims Act (CFCA), section 12650 et seq., for knowingly filing false statements in fee waiver applications to avoid paying court fees.*fn3

During most of the period alleged in the cross-complaint, the fee waiver application form asked an applicant to respond to several questions. First, the applicant was requested to state whether he or she was able to pay any court fees or costs. Next, the applicant was required to list his or her address and occupation. Finally, the applicant was required to check one of three boxes indicating: (1) whether the applicant was receiving certain listed governmental benefits, namely SSI, SSP, CalWORKS, Food Stamps, County Relief, General Relief, General Assistance (and after July 1, 2009, Medi-Cal); (2) whether the applicant's total gross monthly income was less than a certain threshold amount, listed on an "Information Sheet on Waiver of Court Fees and Costs" available from the clerk's office; or (3) whether the applicant's "income [was] not enough to pay for the common necessaries of life for me and the people in my family whom I support and also pay court fees and costs." In the latter two cases, the applicant was required to fill out the back of the form, which asked questions about the applicant's monthly income and expenses. In addition, the application advised, "You must immediately tell the court if you become able to pay court fees and costs during this action."

In the qui tam action filed in December 2009, MKI alleged (1) that beginning in 2008 and continuing "through the present," Mehrban filed in excess of 200 lawsuits on behalf of Mundy, (2) that in most of those cases, Mundy, at the direction of and with the knowledge and assistance of Mehrban, filed an application for waiver of required filing fees, (3) that in all or most of those cases, a waiver of filing fees was granted, and (4) that Mundy was financially able to pay the filing fees.

MKI further alleged the following: (1) "Qui Tam Defendant Mundy has testified under oath that the only form of assistance received by him is and was Social Security Disability Insurance (SSDI), which is not one of the forms of assistance listed on the fee waiver application"; (2) "Qui Tam Defendant Mundy has testified that he received monetary settlements from between sixty and seventy of the lawsuits filed on his behalf by Attorney Mehrban as [of] November 2008, and that in 2008 his receipt of funds from settlements in lawsuits was at least $65,000"; (3) "Qui Tam Defendant Mundy has testified under oath that he has not reported settlements of his lawsuits to the Los Angeles Superior Court as of December 2008"; (4) "Qui Tam Plaintiff is informed and believes and thereon alleges that Qui Tam Defendant Mundy has testified that he commonly frequents restaurants between two to four times per day spending as much as $70 in a single day"; and (5) "Qui Tam Defendant Mundy has testified under oath that at no time in 2008 was he financially unable to pay for the common necessaries of life." MKI further alleged that Mehrban filed in excess of 200 additional lawsuits on behalf of other clients, and violated the CFCA by improperly seeking fee waivers in those lawsuits as well.

MKI also alleged a second cause of action, that Mundy and Mehrban were liable under section 12651, subdivision (a)(3) for conspiring to violate the CFCA.*fn4

B. Demurrer and Special Motion to Strike

On June 18, 2010, Mundy and Mehrban filed a demurrer to the qui tam cross-complaint. In the demurrer, they contended, inter alia, that the superior court lacked subject-matter jurisdiction over the causes of action in the cross-complaint because those causes of action were based upon publicly disclosed information, specifically "third parties' disclosure of transactions in prior civil actions, i.e., testimony in those actions." (Italics omitted.) They further contended that MKI did not qualify for the "original source" exception to the public disclosure jurisdictional bar. In addition, Mehrban contended he was not liable under the CFCA, as there was no evidence that he had a legal duty or obligation to pay court filing fees.

MKI opposed the demurrer on the ground that the gravamen of the cross-complaint was based on information that was not publicly disclosed. In the alternative, MKI argued it was an original source of the publicly disclosed information because it "investigated through numerous cases, compiled many dockets, created a detailed case compilation, identified defense counsel and secured copies of deposition transcripts and documents from private party sources" in order to file the cross-complaint. MKI also alleged that Mehrban was personally liable under the CFCA because he had stated under oath that he had a contractual duty to pay the court filing fees for his clients.

MKI's counsel, Gail S. Cooper-Folb, filed a declaration detailing her investigative work with a "colleague, James Link," into Mundy's fee waiver applications. Cooper-Folb stated that attorneys representing defendants in two other matters, Mundy v. Hennessey Group-Garden Grove Boulevard, LLC (Super. Ct. Orange County, 2008, No. 30-2008-00085508) (Mundy v. Hennessey) and Mundy v. Taghizadeh (Super. Ct. L.A. County, 2008, No. 08C04152) (Mundy v. Taghizadeh) provided her and Link with copies of Mundy's deposition transcripts in those matters. In Mundy v. Taghizadeh, Mundy admitted that he made about $60,000 from lawsuits in 2008. In Mundy v. Hennessey, Mundy made the following admissions over the course of three separate days.

During his deposition on November 7, 2008, Mundy admitted that he filed fee waiver applications in his earlier ADA lawsuits, but stated that he stopped filing for waivers in later ADA lawsuits because Mehrban had told him "they weren't required anymore." The process of filing the applications was explained after further questioning:

"Q. Did you personally fill out the fee waiver applications that were filed on your behalf, or were they filled out for you by Mr. Mehrban?

"A. They were filled out for me.

"Q. Did you personally sign all the fee waiver applications, or were they signed for you?

"A. I signed them.

"[¶] . . .[¶]

"Q. And do you recall which box was checked when you would receive these [applications]? Was it always 'A' ["I am not able to pay any of the court fees and costs."] or was it always 'B' ["I am able to pay ...


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